UNITED STATES
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 March 31, 2000.
Transition report pursuant to Section 13 or 15(d) of the
- -------- Securities Exchange Act of 1934. For the transition period
from _____ to _____.
Commission File Number
0-27410
INCARA PHARMACEUTICALS CORPORATION
----------------------------------
(Exact Name of Registrant as Specified in its Charter)
Delaware 56-1924222
------------------------------ -----------------------
(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification Number)
P.O. Box 14287
3200 East Highway 54
Cape Fear Building, Suite 300
Research Triangle Park, NC 27709
- --------------------------- ----------------------
(Address of Principal Executive Office) (Zip Code)
Registrant's Telephone Number, Including Area Code 919-558-8688
----------------------
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 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 as of May 9, 2000
------------------ -----------------------------
Common Stock, par value $.001 7,284,261 Shares
<PAGE>
INCARA PHARMACEUTICALS CORPORATION
INDEX TO FORM 10-Q
<TABLE>
<CAPTION>
PAGE
PART I. FINANCIAL INFORMATION
<S> <C>
Item 1. Financial Statements
Consolidated Balance Sheets as of March 31, 2000 (unaudited)
and September 30, 1999 . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . 3
Consolidated Statements of Operations for the Three Months and Six
Months ended March 31, 2000 and 1999 (unaudited) . . . . . . . . . . . . . . . . . . . 4
Consolidated Statements of Cash Flows for the Six Months ended
March 31, 2000 and 1999 (unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . . . . . . . . 9
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . . . 14
SIGNATURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
INCARA PHARMACEUTICALS CORPORATION
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share data)
March 31, September 30,
2000 1999
----------------- ------------------
(Unaudited)
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 10,522 $ 2,407
Marketable securities - 2,553
Accounts receivable 213 282
Prepaids and other current assets 255 237
----------------- ------------------
Total current assets 10,990 5,479
Property and equipment, net 161 2,483
Other assets - 82
----------------- ------------------
$ 11,151 $ 8,044
================= ==================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 450 $ 654
Accrued expenses 1,637 1,933
Current portion of capital lease obligations 9 488
Current portion of notes payable 27 197
----------------- ------------------
Total current liabilities 2,123 3,272
Long-term portion of capital lease obligations 27 399
Long-term portion of notes payable - 582
Stockholders' equity:
Common stock, $.001 par value per share, 40,000,000 shares
authorized, 7,144,261 and 5,226,969 shares issued and
outstanding at March 31, 2000 and September 30, 1999,
respectively 7 5
Additional paid-in capital 88,093 81,772
Restricted stock (320) (744)
Accumulated deficit (78,779) (77,242)
----------------- ------------------
Total stockholders' equity 9,001 3,791
----------------- ------------------
$ 11,151 $ 8,044
================= ==================
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
3
<PAGE>
<TABLE>
<CAPTION>
INCARA PHARMACEUTICALS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share data)
Three Months Ended Six Months Ended
March 31, March 31,
-------------------------------- --------------------------------
2000 1999 2000 1999
-------------- --------------- -------------- ---------------
Revenue:
<S> <C> <C> <C> <C>
Contract and license fee revenue $ - $ 209 $ 100 $ 400
-------------- --------------- -------------- ---------------
Costs and expenses:
Research and development 1,246 5,602 3,625 11,420
Purchased in-process research
and development 6,664 - 6,664 -
General and administrative 690 842 1,252 1,489
-------------- --------------- -------------- ---------------
Total costs and expenses 8,600 6,444 11,541 12,909
-------------- --------------- -------------- ---------------
Loss from operations (8,600) (6,235) (11,441) (12,509)
Gain on sale of division - - 9,751 -
Investment income, net 140 59 153 212
-------------- --------------- -------------- ---------------
Net loss $(8,460) $(6,176) $(1,537) $(12,297)
============== =============== ============== ===============
Net loss per common share:
Basic $ (1.53) $ (0.85) $ (0.29) $ (1.68)
============== =============== ============== ===============
Diluted $ (1.53) $ (0.85) $ (0.29) $ (1.68)
============== =============== ============== ===============
Weighted average common shares
outstanding 5,535 7,306 5,379 7,301
============== =============== ============== ===============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
4
<PAGE>
<TABLE>
<CAPTION>
INCARA PHARMACEUTICALS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
Six Months Ended
March 31,
---------------------------------
2000 1999
-------------- ---------------
<S> <C> <C>
Cash flows from operating activities:
Net loss $(1,537) $(12,297)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 210 390
Purchased in-process research and development 6,664 -
Gain on sale of division (9,751) -
Loss on disposal of property and equipment 35 -
Noncash compensation 363 659
Change in assets and liabilities:
Accounts receivable 69 1,061
Prepaids and other assets (22) (5)
Accounts payable and accrued expenses (1,010) (351)
-------------- ---------------
Net cash used in operating activities (4,979) (10,543)
-------------- ---------------
Cash flows from investing activities:
Proceeds from sale of division 11,000 -
Proceeds from sales and maturities of marketable securities 2,553 7,799
Purchases of marketable securities - (1,044)
Purchases of property and equipment (31) (278)
-------------- ---------------
Net cash provided by investing activities 13,522 6,477
-------------- ---------------
Cash flows from financing activities:
Net proceeds from issuance of stock 52 166
Repurchase of Incara stock (332) -
Advances from former parent, net - 98
Principal payments on notes payable (56) (93)
Principal payments on capital lease obligations (92) (163)
-------------- ---------------
Net cash provided by (used in) financing activities (428) 8
-------------- ---------------
Net increase (decrease) in cash and cash equivalents 8,115 (4,058)
Cash and cash equivalents at beginning of period 2,407 10,647
-------------- ---------------
Cash and cash equivalents at end of period $10,522 $ 6,589
============== ===============
</TABLE>
The accompanying notes are integral part of these unaudited consolidated
financial statements.
5
<PAGE>
INCARA PHARMACEUTICALS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. Basis of Presentation
The "Company" or "Incara" refers collectively to Incara Pharmaceuticals
Corporation and its wholly owned subsidiaries, Aeolus Pharmaceuticals, Inc., a
Delaware corporation ("Aeolus") and Renaissance Cell Technologies, Inc., a
Delaware corporation ("Renaissance").
Incara conducts discovery and development programs in three areas: (1)
inflammatory bowel disease, using an ultra-low molecular weight heparin; (2)
liver disorders, using hepatic precursor cell therapy; and (3) small molecule
antioxidants for disorders such as stroke, asthma and chronic bronchitis.
All significant intercompany activity has been eliminated in the
preparation of the consolidated financial statements. The unaudited consolidated
financial statements have been prepared in accordance with the requirements of
Form 10-Q and Rule 10-01 of Regulation S-X. Some information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to those rules and regulations. In the opinion of management, the
accompanying unaudited consolidated financial statements include all adjustments
(consisting only of normal recurring adjustments) necessary to present fairly
the consolidated financial position, results of operations and cash flows of the
Company. The consolidated balance sheet at September 30, 1999 was derived from
the Company's audited financial statements included in the Company's Annual
Report on Form 10-K. The unaudited consolidated financial statements included
herein should be read in conjunction with the audited consolidated financial
statements and the notes thereto included in the Company's Annual Report on Form
10-K for the fiscal year ended September 30, 1999 and in the Company's other
Securities and Exchange Commission ("SEC") filings. Results for the interim
period are not necessarily indicative of the results for any other interim
period or for the full fiscal year.
B. Recent Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities" ("SFAS 133"). SFAS 133 establishes
accounting and reporting standards for derivative instruments, including some
derivative instruments embedded in other contracts (collectively referred to as
derivatives), and for hedging activities. SFAS 133 will be effective for all
fiscal quarters of all fiscal years beginning after June 15, 2000, with earlier
application encouraged. The Company does not currently use derivative
instruments, nor does it intend in the future to use derivative instruments.
Therefore, the Company does not expect that the adoption of SFAS 133 will have
any impact on its financial position or results of operations.
6
<PAGE>
In December 1999, the SEC issued Staff Accounting Bulletin No. 101,
"Revenue Recognition in Financial Statements," ("SAB 101"), which provides
guidance on the recognition, presentation, and disclosures of revenue in
financial statements filed with the SEC. SAB 101, as amended by SAB 101A,
outlines the basic criteria that must be met to recognize revenue and provides
guidance for disclosures related to revenue recognition policies. The Company
does not expect SAB 101 to have a significant impact on the Company's revenue
recognition policies.
C. Purchased In-Process Research and Development
The acquisition cost of in-process technology that at the date of
purchase has not achieved technological feasibility and has no alternative
future use is charged to operations in the period such technology is acquired.
Purchased in-process research and development costs for the three months and six
months ended March 31, 2000 relate to the acquisition of the minority interests
of Renaissance and Aeolus (see Note F).
D. Net Loss Per Common Share
The Company computes basic net loss per common share using the weighted
average number of shares of common stock outstanding during the period. The
Company computes diluted net loss per common share using the weighted average
number of shares of common and dilutive potential common shares outstanding
during the period. Potential common shares consist of stock options using the
treasury stock method and are excluded if their effect is antidilutive. For the
three-month and six-month periods ended March 31, 2000 and 1999, the weighted
average shares outstanding used in the calculation of net loss per common share
did not include potential shares outstanding because they had the effect of
reducing net loss per common share.
E. Sale of IRL
On December 29, 1999, the Company sold its anti-infective division,
known as Incara Research Laboratories ("IRL"), to a private pharmaceutical
company for $11,000,000 in cash and the right to receive up to an additional
$4,000,000 if a compound originating from a collaboration between the Company
and Merck & Co., Inc. (the "Merck Collaboration") reaches preclinical and
clinical trial milestones. The transaction involved the sale of assets
associated with Incara's anti-infective division, including rights under the
Merck Collaboration and the assumption of related liabilities by the purchaser.
In December 1999, the Company recognized a gain of $9,751,000 on the sale of
IRL. The Company remains contingently liable through May 2007 on some debt and
lease obligations of approximately $9,000,000 assumed by the purchaser,
including the IRL facility lease in Cranbury, New Jersey.
F. Acquisitions
On March 31, 2000, Incara purchased all of the minority interests of
Renaissance and Aeolus. Prior to the acquisition, Incara owned 78.0% of
Renaissance and 65.8% of Aeolus. Incara issued 1,220,041 shares of its common
stock in exchange for the subsidiaries' minority ownership. The acquisition has
been accounted for using the purchase method of accounting.
7
<PAGE>
The total purchase price of $6,664,000 consisted of 1,220,041 shares of
Incara's common stock with a fair value of $5.46 per share, based on the price
of the Company's common stock at the date of acquisition. The total purchase
price was allocated to purchased in-process research and development and
immediately charged to operations because the in-process research purchased was
in preclinical stages and feasibility had not been established at the date of
the acquisition and was deemed to have no alternative future use. Additionally,
Renaissance and Aeolus had no workforce or other tangible fixed assets.
Renaissance and Aeolus had incurred approximately $10,000,000 in
research and development costs prior to the acquisition of the minority
interests by Incara. Incara expects that it will take until at least 2006 and
that Renaissance and Aeolus will spend in excess of an additional $50,000,000 to
complete development of all aspects of the research.
G. Stock Transactions
In May 1998, Incara acquired Transcell Technologies, Inc.
("Transcell"), which became IRL. Incara issued the third and final installment
of the purchase price of 856,861 shares of Incara common stock to the former
stockholders of Transcell on February 8, 2000. The number of shares issued was
calculated using a formula based on the average market price of Incara common
stock prior to the stock issuance date. The issuance of these additional shares
did not impact the Company's fiscal 2000 operating results, because the value of
these shares was included in the determination of the purchase price of
Transcell in fiscal 1998.
On January 18, 2000, the Company's Board of Directors authorized the
repurchase of up to $2,000,000 of Incara's common stock during the following two
months through purchases on the stock market. During that period, the Company
repurchased 104,100 shares of common stock at a cost of $332,000.
8
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Introduction
Unless otherwise noted, the phrase "we" or "our" refers collectively to
Incara Pharmaceuticals Corporation and its wholly owned subsidiaries, Aeolus
Pharmaceuticals, Inc. and Renaissance Cell Technologies, Inc.
This Report contains, in addition to historical information, statements
by us with respect to expectations about its business and future results, which
are "forward-looking" statements under the Private Securities Litigation Reform
Act of 1995. These statements and other statements made elsewhere by us or our
representatives, which are identified or qualified by words such as "likely,"
"will," "suggests," "expects," "might," "believe," "could," "should," "would,"
"anticipates," "targets, " "plans" or similar expressions, are based on a number
of assumptions that are subject to risks and uncertainties. Actual results could
differ materially from those currently anticipated or suggested due to a number
of factors, including those set forth herein, those set forth in our Annual
Report on Form 10-K and in our other SEC filings, and including risks relating
to the early stage of products under development, uncertainties relating to
clinical trials and regulatory reviews, the need for additional funds,
competition and dependence on collaborative partners. All forward-looking
statements are based on information available as of the date hereof, and we do
not assume any obligation to update forward-looking statements.
We conduct discovery and development programs in three areas: (1)
inflammatory bowel disease, using an ultra-low molecular weight heparin known as
OP2000; (2) liver disorders, using hepatic precursor cell therapy; and (3) small
molecule antioxidants for disorders such as stroke, asthma and chronic
bronchitis.
On December 29, 1999, we sold our anti-infective division, known as
Incara Research Laboratories, or IRL, to a private pharmaceutical company for
$11,000,000 in cash and the right to receive future payments totaling up to an
additional $4,000,000 in the event a compound originating from a collaboration
with Merck & Co., Inc. reaches preclinical and clinical trial milestones. The
transaction involved the sale of assets associated with Incara's anti-infective
division, including rights under the collaboration with Merck and the assumption
of related liabilities by the purchaser. We remain contingently liable through
May 2007 on some debt and lease obligations of approximately $9,000,000 assumed
by the purchaser, including the IRL facility lease in Cranbury, New Jersey. We
recognized a gain of $9,751,000 on the sale of IRL, which was recorded as other
income.
On March 31, 2000, Incara acquired all of the minority interests of
Renaissance and Aeolus. Prior to the acquisition, Incara owned 78.0% of
Renaissance and 65.8% of Aeolus. Incara issued 1,220,041 shares of its common
stock for the subsidiaries' minority ownership. The acquisition has been
accounted for using the purchase method of accounting with a total purchase
price of $6,664,000. The total purchase price was allocated to purchased
in-process research and development and immediately charged to operations
because the in-process research purchased was in preclinical stages and
feasibility had not been established at the date of the
9
<PAGE>
acquisition and was deemed to have no alternative future use. We estimated at
the acquisition date that Renaissance and Aeolus will spend in excess of an
additional $50,000,000 to complete the research and development and that it
would be at least 2006 before the research and development is completed. The
cost to complete research and development for these programs may be shared with
collaborative partners in the future.
Results of Operations
We incurred net losses of $8,460,000 and $1,537,000 for the three and
six months ended March 31, 2000, respectively. The net loss for the six months
ended March 31, 2000 resulted from the net effect of recognizing a $9,751,000
gain on the sale of IRL in December 1999, offset by operating expenses for the
six months of $4,877,000 and the expensing of $6,664,000 for purchased
in-process research and development in March 2000. We had net losses of
$6,176,000 and $12,297,000 for the three and six months ended March 31, 1999,
respectively.
We did not have any revenue during the three months ended March 31,
2000. Contract and license fee revenue was $100,000 and $400,000 for the six
months ended March 31, 2000 and 1999, respectively. All of this revenue resulted
from an IRL collaboration with Merck & Co., Inc. We will not receive any
additional revenue from this collaboration, because it was sold with the other
IRL assets.
Our research and development ("R&D") expenses decreased $4,356,000
(78%) to $1,246,000 for the for the three months ended March 31, 2000 from
$5,602,000 for the three months ended March 31, 1999. R&D expenses decreased
$7,795,000 (68%) to $3,625,000 for the six months ended March 31, 2000 from
$11,420,000 for the six months ended March 31, 1999. The lower expenses were
primarily due to the result of discontinuing our bucindolol development program
in the fourth quarter of fiscal 1999 and to the sale of our IRL operation in
December 1999.
During the last quarter of fiscal 1999, we discontinued our bucindolol
development program and, therefore, we did not incur any bucindolol related
expenses this fiscal year. During the six months ended March 31, 1999, we
incurred $4,073,000 of bucindolol related R&D expenses. We do not anticipate any
additional expenses for bucindolol.
Because we sold IRL at the end of December 1999, we did not incur any
significant R&D expenses for IRL during the three months ended March 31, 2000.
R&D expenses for IRL were $1,376,000 for the three months ended December 31,
1999 and for the six months ended March 31, 2000, respectively. IRL expenses
were $2,143,000 and $4,615,000 for the three and six months ended March 31,
1999, respectively. We do not expect any additional expense for IRL in the
future.
We incurred $461,000 and $733,000 of R&D expenses for OP2000 during the
three months and six months ended March 31, 2000, respectively. OP2000 expenses
were $44,000 and $80,000 for the three months and six months ended March 31,
1999, respectively. The higher expenses in fiscal 2000 were primarily due to
costs incurred in connection with our Phase 1 clinical trials that began in
October 1999.
10
<PAGE>
R&D expenses for our liver cell program increased $123,000 (82%) to
$273,000 for the three months ended March 31, 2000 from $150,000 for the three
months ended March 31, 1999. These R&D expenses increased $164,000 (50%) to
$493,000 for the six months ended March 31, 2000 from $329,000 for the six
months ended March 31, 1999. The higher expenses in the current fiscal year
resulted primarily from higher patent fees and expenses and more R&D staff time
being devoted to the program.
R&D expenses for our antioxidant program decreased $359,000 (54%) to
$309,000 for the three months ended March 31, 2000 from $668,000 for the three
months ended March 31, 1999. These R&D expenses decreased $670,000 (54%) to
$574,000 for the six months ended March 31, 2000 from $1,244,000 for the six
months ended March 31, 1999. The decrease in expenses from fiscal 1999 to fiscal
2000 was primarily due to the reduction of outside contract services and
sponsored research costs.
General and administrative ("G&A") expenses decreased $152,000 (18%) to
$690,000 for the three months ended March 31, 2000 from $842,000 for the three
months ended March 31, 1999. G&A expenses decreased $237,000 (16%) to $1,252,000
for the six months ended March 31, 2000 from $1,489,000 for the six months ended
March 31, 1999. The higher G&A expenses in fiscal 1999 were primarily for
expenses related to the bucindolol program, which was terminated in the last
quarter of fiscal 1999.
In May 1998, we acquired Transcell Technologies, Inc., which became
IRL. We issued the third and final installment of the purchase price of 856,861
shares of Incara common stock to the former stockholders of Transcell on
February 8, 2000. The number of shares issued was calculated using a formula
based on the market price of Incara common stock prior to the stock issuance
date. The issuance of these additional shares did not impact our fiscal 2000
operating results, because the value of these shares was included in the
determination of the purchase price of Transcell in fiscal 1998.
For the three months and six months ended March 31, 2000, we recognized an
in-process research and development charge of $6,664,000 as a result of the
acquisition of the minority interests of Renaissance and Aeolus. We allocated
the total purchase price to in-process research and development because it had
not reached feasibility and it had no alternative future use at the date of
acquisition. Renaissance and Aeolus have spent approximately $10,000,000 through
March 31, 2000 and estimate that in excess of $50,000,000 over at least the next
five years will be spent to complete the research and development. The cost to
complete a portion of this research and development may be shared with a
collaborative partner in the future.
Liquidity and Capital Resources
At March 31, 2000, we had cash and cash equivalents and marketable
securities of $10,522,000, an increase of $5,562,000 from September 30, 1999.
Cash increased due to the receipt of $11,000,000 from the sale of IRL, offset by
operating costs for the six months. We believe we have adequate financial
resources to fund our current operations at least into calendar 2001.
11
<PAGE>
We expect to incur substantial additional costs and losses over the
next few years. Our cash requirements for subsequent periods will depend on
numerous factors, particularly the progress of our research and development
programs. Significant additional funds will be required for us to continue our
clinical program evaluating the use of OP2000 and to complete preclinical
activities and begin clinical trials for our liver precursor cell and
antioxidant programs.
We have completed two Phase 1 clinical trials for OP2000, the most
recent having been completed in April 2000. These trials looked at single and
multiple dose administrations of the drug, and preliminary results indicate that
we will be able to give OP2000 on a once a day basis. We plan to begin a Phase
2/3 safety and efficacy trial in ulcerative colitis patients in the fall of
2000. We have an exclusive license from Opocrin, in all countries other than
Japan and Korea, for an issued patent claiming certain oligosaccharides derived
from heparin and their use in antiatherosclerotic activity to develop and
commercialize OP2000. We are aware of a recently issued patent claiming the use
of certain fractions of heparin for the treatment of inflammatory bowel disease.
We do not believe OP2000 falls within the scope of this patent. If OP2000 were
to be determined to fall within the scope of this patent and if the patent's
claims were found to be valid, we would have to license this patent in order to
commercialize OP2000. If this were the case, we might not be able to license
this patent at a reasonable cost, which would result in our not being able to
market OP2000.
Incara is exploring two patient populations for the initial clinical
trials of liver precursor cell transplantation. The first group consists of
infants with life-threatening inborn errors of metabolism who are too young for
liver transplants. This patient population represents a group with limited
alternatives where improvement in patient condition and production of the
missing gene products would demonstrate the function of the transplanted cells.
The second series of clinical trials being planned involves adults with such
severe cirrhosis and other forms of chronic liver failure that they could become
candidates for a transplant. Incara targets these initial clinical trials to
begin in the first half of 2001.
In a model of ischemic stroke, where the middle cerebral artery of a
rat is blocked for 90 minutes and then unblocked, our lead antioxidant compound
reduced infarct size significantly when introduced as late as 7 1/2 hours after
the start of the stroke. Stroke is a form of ischemia/reperfusion injury, and
this compound is also highly active in a model of liver ischemia/reperfusion
injury. We are currently dual-tracking another antioxidant compound and we
anticipate selecting the most promising drug candidate for stroke by the fall of
2000, once more data is available. Assuming satisfactory completion of the
preclinical studies, we intend to initiate Phase 1 clinical trials for an
antioxidant compound in mid 2001.
We might acquire other products, technologies or businesses that
complement our existing or planned products or programs, although we currently
have no understanding, commitment or agreement with respect to any such
acquisitions.
We intend to seek additional capital necessary to execute our business
plan through one or more potential sources, including the sale of common or
preferred stock in private equity
12
<PAGE>
offerings and from new collaborations related to one or more of our product
development programs. Adequate funds might not be available at all or on terms
acceptable or favorable to us. It is currently difficult for biotechnology
companies to raise funds in the equity markets. Any additional equity financing,
if available, would likely result in substantial dilution to Incara's
stockholders. If we are successful in obtaining collaborations for any of our
programs, we expect to relinquish rights to technologies, product candidates or
markets which we might otherwise develop ourselves. If we are unable to enter
into new collaborations or raise additional capital to support our current level
of operations, we might be required to scale back, delay or discontinue one or
more of our research and development programs, or obtain funds on terms that are
not favorable to us, which could have a material adverse affect on our business.
Reduction or discontinuation of research and development programs could result
in additional charges, which would be reflected in the period of the reduction
or discontinuation.
On January 18, 2000, our Board of Directors authorized the repurchase
of up to $2,000,000 of our common stock during the following two months through
purchases on the stock market. During this period, we repurchased 104,100 shares
of our common stock at a cost of $332,000.
13
<PAGE>
<TABLE>
<CAPTION>
Item 6. Exhibits and Reports on Form 8-K.
--------------------------------
(a) Exhibits
<S> <C> <C>
2.7 Agreement and Plan of Merger dated as of March 24, 2000, by and among Incara Pharmaceuticals
Corporation, Aeolus Acquisition Corporation and Aeolus Pharmaceuticals, Inc.
2.8 Agreement and Plan of Merger dated as of March 24, 2000, by and among Incara Pharmaceuticals
Corporation, RCT Acquisition Corporation and Renaissance Cell Technologies, Inc.
10.8 Incara Pharmaceuticals Corporation 1994 Stock Option Plan, as amended
10.49* License Agreement dated August 23, 1999 between The University of North Carolina at Chapel
Hill and Renaissance Cell Technologies, Inc.
10.50* License Agreement, effective July 1996, between Albert Einstein College of Medicine of
Yeshiva University and Renaissance Cell Technologies, Inc.
27 Financial Data Schedule, which is submitted electronically to the Securities and Exchange
Commission for information only and not filed.
</TABLE>
* Confidential treatment requested.
(b) The following report on Form 8-K was filed by the Company during the six
months ended March 31, 2000.
Date Filed Event
October 11, 1999 Issuances under 1999 Equity Incentive Plan
14
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
INCARA PHARMACEUTICALS CORPORATION
Date: May 12, 2000 By: /s/ Richard W. Reichow
---------------------------------------------
Richard W. Reichow, Executive Vice President,
Chief Financial Officer and Treasurer
(Principal Financial and Accounting Officer)
15
EXHIBIT 2.7
AGREEMENT AND PLAN OF MERGER
AMONG
INCARA PHARMACEUTICALS CORPORATION,
AEOLUS ACQUISITION CORPORATION,
AND
AEOLUS PHARMACEUTICALS, INC.
MARCH 24, 2000
<PAGE>
AGREEMENT AND PLAN OF MERGER
Agreement and Plan of Merger (the "Agreement") entered into on March
24, 2000, by and among Incara Pharmaceuticals Corporation, a Delaware
corporation (the "Buyer"), Aeolus Acquisition Corporation, a Delaware
corporation and a wholly-owned subsidiary of the Buyer (the "Transitory
Subsidiary"), and Aeolus Pharmaceuticals, Inc., a Delaware corporation (the
"Target"). The Buyer, the Transitory Subsidiary, and the Target are referred to
collectively herein as the "Parties".
This Agreement contemplates a tax-free merger of the Target Subsidiary
with and into the Target in a transaction qualifying as a reorganization
pursuant to Section 368(a)(2)(E) of the Internal Revenue Code of 1986, as
amended. The Target Stockholders will receive capital stock in the Buyer in
exchange for their capital stock in the Target.
Now, therefore, in consideration of the premises and the mutual
promises herein made, and in consideration of the representations, warranties,
and covenants herein contained, the Parties agree as follows.
1. Definitions.
"Agreement" has the meaning set forth in the preface above.
"Buyer" has the meaning set forth in the preface above.
"Buyer-owned Share" means any Target Share that the Buyer or the
Transitory Subsidiary owns beneficially.
"Buyer Share" means any share of the Common Stock, $0.001 par value per
share, of the Buyer.
"Certificate of Merger" has the meaning set forth in ss.2(c) below.
"Closing" has the meaning set forth in ss.2(b) below.
"Closing Date" has the meaning set forth in ss.2(b) below.
"Definitive Target Proxy Materials" means the Definitive Target Proxy
Materials, if any, relating to the Special Meeting.
"Delaware General Corporation Law" means the General Corporation Law of
the State of Delaware, as amended.
<PAGE>
"Disclosure Schedule" has the meaning set forth in ss.3 below.
"Dissenting Share" means any Target Share with respect to which any
Target Stockholder of record has exercised his or its appraisal rights under the
Delaware General Corporation Law.
"Effective Time" has the meaning set forth in ss.2(d)(i) below.
"GAAP" means United States generally accepted accounting principles as
in effect from time to time.
"Joint Disclosure Document" means the disclosure document combining the
Prospectus and the Definitive Target Proxy Materials.
"Knowledge" means actual knowledge after reasonable investigation.
"Merger" has the meaning set forth in ss.2(a) below.
"Merger Shares" means the Buyers Shares issued to the Target
Stockholders upon conversion of their Target Shares in accordance with ss.2(d)
and ss.2(e) below.
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency).
"Outstanding Option" means stock options of the Target that are
outstanding at the Effective Time.
"Party" has the meaning set forth in the preface above.
"Person" means an individual, a partnership, a corporation, an
association, a joint stock Buyer, a trust, a joint venture, an unincorporated
organization, or a governmental entity (or any department, agency, or political
subdivision thereof).
"Prospectus" means the final prospectus relating to the registration of
the Merger Shares under the Securities Act.
"Registration Period" has the meaning set forth in ss.2(f)(i) below.
"Registration Statement" has the meaning set forth in ss.2(f)(i) below.
"Requisite Target Stockholder Approval" means the affirmative vote of
the holders of at least a majority of the Target Shares in favor of this
Agreement and the Merger.
2
<PAGE>
"Requisite Transitory Subsidiary Stockholder Approval" means the
affirmative vote of the holders of at least a majority of the Transitory
Subsidiary Shares in favor of this Agreement and the Merger.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Security Interest" means any mortgage, pledge, lien, encumbrance,
charge, or other security interest, other than (a) mechanic's, materialman's,
and similar liens, (b) liens for taxes not yet due and payable or for taxes that
the taxpayer is contesting in good faith through appropriate proceedings, (c)
purchase money liens and liens securing rental payments under capital lease
arrangements, and (d) other liens arising in the Ordinary Course of Business and
not incurred in connection with the borrowing of money.
"Special Meeting" has the meaning set forth in ss.5(c)(ii) below.
"Surviving Corporation" has the meaning set forth in ss.2(a) below.
"Target" has the meaning set forth in the preface above.
"Target Share" means any share of the Common Stock, $0.001 par value
per share, of the Target.
"Target Stockholder" means any Person who or which holds any Target
Shares.
"Transitory Subsidiary" has the meaning set forth in the preface above.
"Transitory Subsidiary Share" means any share of the Common Stock,
$0.001 par value per share, of the Transitory Subsidiary.
"Transitory Subsidiary Stockholder" means the Buyer, which legally and
beneficially owns all of the Transitory Subsidiary Shares.
2. Basic Transaction.
(a) The Merger. On and subject to the terms and conditions of this
Agreement, the Transitory Subsidiary will merge with and into the Target (the
"Merger") at the Effective Time. The Target shall be the corporation surviving
the Merger (the "Surviving Corporation").
(b) The Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Wyrick Robbins
Yates & Ponton LLP in Raleigh, North
3
<PAGE>
Carolina, commencing at 9:00 a.m. local time on the business day following the
satisfaction or waiver of all conditions to the obligations of the Parties to
consummate the transactions contemplated hereby (other than conditions with
respect to actions the respective Parties will take at the Closing itself) or
such other date as the Parties may mutually determine (the "Closing Date").
(c) Actions at the Closing. At the Closing, (i) the Target will deliver
to the Buyer and the Transitory Subsidiary the various certificates,
instruments, and documents referred to in ss.6(a) below, (ii) the Buyer and the
Transitory Subsidiary will deliver to the Target the various certificates,
instruments, and documents referred to in ss.6(b) below, and (iii) the Target
and the Transitory Subsidiary will file with the Secretary of State of the State
of Delaware a Certificate of Merger in the form attached hereto as Exhibit A
(the "Certificate of Merger").
(d) Effect of Merger.
(i) General. The Merger shall become effective at the time
(the "Effective Time") the Target and the Transitory Subsidiary file
the Certificate of Merger with the Secretary of State of the State of
Delaware. The Merger shall have the effect set forth in the Delaware
General Corporation Law. The Surviving Corporation may, at any time
after the Effective Time, take any action (including executing and
delivering any document) in the name and on behalf of either the Target
or the Transitory Subsidiary in order to carry out and effectuate the
transactions contemplated by this Agreement.
(ii) Certificate of Incorporation. The Certificate of
Incorporation of the Transitory Subsidiary as of the Effective Time
will remain the Certificate of Incorporation of the Surviving
Corporation without any modification or amendment in the Merger.
(iii) Bylaws. The Bylaws of the Transitory Subsidiary as of
the Effective Time will remain the Bylaws of the Surviving Corporation
without any modification or amendment in the Merger.
(iv) Directors and Officers. The directors and officers of the
Transitory Subsidiary as of the Effective Time will remain the
directors and officers of the Surviving Corporation (retaining their
respective positions and terms of office).
(v) Conversion of Target Shares. At and as of the Effective
Time, (A) each Target Share (other than any Dissenting Share or
Buyer-owned Share) shall be converted into the right to receive
2.270572 Merger Shares (the ratio of 2.270572 Buyer Shares to one
Target Share is referred to herein as the "Conversion Ratio"), (B) each
Dissenting Share shall be converted into the right to receive payment
from the Surviving Corporation with respect thereto in accordance with
the provisions of the Delaware General Corporation Law, (C) each
Outstanding Option shall be converted into the right to receive a
replacement option to purchase the Buyer Shares ("Replacement Options")
on terms as set forth below:
(I) Each Replacement Option will represent the right
to purchase a number of Buyer Shares (rounded to the nearest
whole share) equal to the number of
4
<PAGE>
shares of stock issuable upon exercise of the corresponding
Outstanding Option multiplied by the Conversion Ratio.
(II) The exercise price of the Buyer Shares (rounded
to the nearest cent) of each Replacement Option will equal the
per share exercise price of the corresponding Outstanding
Option divided by the Conversion Ratio.
(III) The term of each Replacement Option will be the
same as the remaining term of the corresponding Outstanding
Option.
(IV) The vesting restrictions contained in each
Replacement Option will be the same as the vesting
restrictions contained in the corresponding Outstanding
Option, except as otherwise agreed.
and (D) each Buyer-owned Share and each share of Preferred Stock of
Target owned by Buyer shall be canceled; provided, however, that the
Conversion Ratio shall be subject to equitable adjustment in the event
of any stock split, stock dividend, reverse stock split, or other
change in the number of Target Shares outstanding. No Target Share
shall be deemed to be outstanding or to have any rights other than
those set forth above in this ss.2(d)(v) after the Effective Time.
(vi) Conversion of Transitory Subsidiary Shares. At and as of
the Effective Time, each share of Common Stock, $0.001 par value per
share, of the Transitory Subsidiary shall be converted into one share
of Common Stock, $0.001 par value per share, of the Surviving
Corporation.
(e) Procedure for Conversion.
(i) Immediately after the Effective Time, (A) the Buyer will
mail a letter of transmittal (with instructions for its use) to each
record holder of outstanding Target Shares and Outstanding Options for
the holder to use in surrendering the certificates which represented
his or its Target Shares and Outstanding Options in exchange for a
certificate representing the number of Merger Shares or Replacement
Options to which he or it is entitled, in lieu of issuing any
fractional shares, the Buyer shall pay the Target Shareholder an amount
in cash equal to such fraction multiplied by the closing stock price of
the Buyer on the last trading day prior to the Closing Date; (B) the
Buyer will furnish to a Target Shareholder upon his or its surrender of
the certificates representing his or its Target Shares a stock
certificate (issued in the name of the Target Shareholder or its
nominee) representing that number of Merger Shares to which he or it is
entitled, which shall be equal to the product of (I) the Conversion
Ratio times (II) the number of outstanding Target Shares surrendered to
the Buyer by the Target Stockholder; and (C) the Buyer will furnish to
an Outstanding Option holder upon his surrender of the agreement
representing the Outstanding Options a Replacement Option agreement
representing that number of Buyer option shares to which he is
entitled, which shall be equal to the product of (I) the
5
<PAGE>
Conversion Ratio times (II) the number of Outstanding Option shares
surrendered to the Buyer.
(ii) The Buyer will not pay any dividend or make any
distribution on Merger Shares (with a record date at or after the
Effective Time) to any record holder of outstanding Target Shares until
the holder surrenders for exchange his or its certificates that
represented Target Shares. In no event, however, will any holder of
outstanding Target Shares be entitled to any interest or earnings on
the dividend or distribution pending receipt.
(f) Registration of Merger Shares.
(i) Registration of Shares. The Buyer shall file with the SEC,
as promptly as practicable following the Closing, a registration
statement under the Securities Act covering the resale to the public of
the Merger Shares (the "Registration Statement"). The Buyer shall use
its best efforts to cause the Registration Statement to be declared
effective by the SEC as soon as practicable within 120 days following
the Closing. The Buyer shall use its best efforts to cause the
Registration Statement to remain effective up until the Merger Shares
can be sold under Rule 144 within a period of three (3) consecutive
months, not to exceed two (2) years form the Closing Date (the
"Registration Period").
(ii) Registration Procedures.
(1) In connection with the filing by the Buyer of the
Registration Statement, the Buyer shall furnish to each Target
Stockholder a copy of the prospectus, including a preliminary
prospectus, in conformity with the requirements of the
Securities Act and such additional copies as are reasonably
requested by the Target Stockholder.
(2) The Buyer shall use its best efforts to register
or qualify the Merger Shares covered by the Registration
Statement under the securities laws of such states as the
Target Stockholders shall reasonably request; provided,
however, that the Buyer shall not be required in connection
with this paragraph (2) to qualify as a foreign corporation or
execute a general consent to service of process in any
jurisdiction.
(3) If the Buyer has delivered final prospectuses to
the Target Stockholders and after having done so the
prospectus is amended to comply with the requirements of the
Securities Act, the Buyer shall promptly notify the Target
Stockholders and, if requested by the Buyer, the Target
Stockholders shall immediately cease making offers or sales of
shares under the Registration Statement and return all
prospectuses to the Buyer. The Buyer shall promptly provide
the Target Stockholders with revised prospectuses and,
following receipt of the revised prospectuses, the Target
Stockholders shall be free to resume making offers and sales
under the Registration Statement.
6
<PAGE>
(4) The Buyer shall pay the expenses incurred by it
in complying with its obligations under this Section 2(f),
including all registration and filing fees, exchange listing
fees, fees and expenses of counsel for the Buyer, and fees and
expenses of accountants for the Buyer, but excluding (x) any
brokerage fees, selling commissions or underwriting discounts
incurred by the Target Stockholders in connection with sales
under the Registration Statement and (y) the fees and expenses
of any counsel retained by any Target Stockholder.
(g) Closing of Transfer Records. After the close of business on the
Closing Date, transfers of Target Shares outstanding prior to the Effective Time
shall not be made on the stock transfer books of the Surviving Corporation.
3. Representations and Warranties of the Target. The Target represents
and warrants to the Buyer and the Transitory Subsidiary that the statements
contained in this ss.3 are correct and complete as of the date of this Agreement
and will be correct and complete as of the Closing Date (as though made then and
as though the Closing Date were substituted for the date of this Agreement
throughout this ss.3), except as set forth in the disclosure schedule
accompanying this Agreement and initialed by the Parties (the "Disclosure
Schedule"). The Disclosure Schedule will be arranged in paragraphs corresponding
to the lettered and numbered paragraphs contained in this ss.3.
(a) Organization, Qualification, and Corporate Power. The Target is a
corporation duly organized, validly existing, and in good standing under the
laws of the jurisdiction of its incorporation. The Target is duly authorized to
conduct business and is in good standing under the laws of each jurisdiction
where such qualification is required. The Target has full corporate power and
authority to carry on the businesses in which it is engaged and to own and use
the properties owned and used by it.
(b) Capitalization. The entire authorized capital stock of the Target
consists of (i) 7,500,000 shares of common stock, par value $0.001 per share,
282,500 of which are issued and outstanding, (ii) 2,500,000 shares of preferred
stock, par value $0.001 per share, of which 500,000 have been designated Series
A Preferred Stock and are issued and outstanding, and of which 2,000,000 have
not been designated and remain unissued or held in treasury. All of the issued
and outstanding Target Shares have been duly authorized and are validly issued,
fully paid, and nonassessable. In addition, options to purchase 7,500 shares of
common stock are outstanding with an exercise price of $0.08 per share. There
are no other outstanding or authorized options, warrants, purchase rights,
subscription rights, conversion rights, exchange rights, or other contracts or
commitments that could require the Target to issue, sell, or otherwise cause to
become outstanding any of its capital stock. There are no outstanding or
authorized stock appreciation, phantom stock, profit participation, or similar
rights with respect to the Target.
(c) Authorization of Transaction. The Target has full power and
authority (including full corporate power and authority) to execute and deliver
this Agreement and to perform its obligations hereunder; provided, however, that
the Target cannot consummate the Merger unless and until it receives the
Requisite Target Stockholder Approval and approval of this Agreement by
7
<PAGE>
its Board of Directors. This Agreement constitutes the valid and legally binding
obligation of the Target, enforceable in accordance with its terms and
conditions.
(d) Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
(i) violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which the Target is subject or any provision of
the charter or bylaws of any of the Target or (ii) conflict with, result in a
breach of, constitute a default under, result in the acceleration of, create in
any party the right to accelerate, terminate, modify, or cancel, or require any
notice under any agreement, contract, lease, license, instrument, or other
arrangement to which the Target is a party or by which it is bound or to which
any of its assets is subject (or result in the imposition of any Security
Interest upon any of its assets). Other than in connection with the provisions
of the Delaware General Corporation Law, the Securities Exchange Act, the
Securities Act, and the state securities laws, the Target need not give any
notice to, make any filing with, or obtain any authorization, consent, or
approval of any government or governmental agency in order for the Parties to
consummate the transactions contemplated by this Agreement.
(e) Brokers' Fees. The Target has no liability or obligation to pay any
fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement.
(f) Disclosure. The Definitive Target Proxy Materials will not contain
any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements made therein, in the light of the
circumstances under which they will be made, not misleading. None of the
information that the Target will supply specifically for use in the Registration
Statement or the Prospectus will contain any untrue statement of a material fact
or omit to state a material fact necessary in order to make the statements made
therein, in the light of the circumstances under which they will be made, not
misleading.
(g) Continuity of Business Enterprise. The Target operates at least one
significant historic business line, or owns at least a significant portion of
its historic business assets, in each case within the meaning of
Reg.ss.1.368-1(d).
4. Representations and Warranties of the Buyer and the Transitory
Subsidiary. Each of the Buyer and the Transitory Subsidiary represents and
warrants to the Target that the statements contained in this ss.4 are correct
and complete as of the date of this Agreement and will be correct and complete
as of the Closing Date (as though made then and as though the Closing Date were
substituted for the date of this Agreement throughout this ss.4), except as set
forth in the Disclosure Schedule. The Disclosure Schedule will be arranged in
paragraphs corresponding to the numbered and lettered paragraphs contained in
this ss.4.
(a) Organization. Each of the Buyer and the Transitory Subsidiary is a
corporation duly organized, validly existing, and in good standing under the
laws of the jurisdiction of its incorporation.
8
<PAGE>
(b) Capitalization. The Buyer's Certificate of Incorporation authorizes
the issuance of up to 3,000,000 shares of Preferred Stock, at a par value of
$.01 per share. The Board of Directors has the authority to issue Preferred
Stock in one or more series, to fix the designation and number of shares of each
such series, and to determine or change the designation, relative rights,
preferences, and limitations of any series of Preferred Stock, without any
further vote or action by the stockholders. No shares of Preferred Stock are
currently outstanding. The entire authorized common stock of the Buyer consists
of 40,000,000 Buyer Shares, par value $0.001 per share, of which 5,864,430 Buyer
Shares are issued and outstanding and 34,135,570 Buyer Shares remain unissued or
held in treasury. Under the 1994 Stock Option Plan, options to purchase a total
of 2,500,000 shares of common stock may be granted to employees, directors and
consultants. Options and warrants to purchase 925,116 and 66,816 shares are
outstanding, respectively, at exercise prices ranging from $0.36 to $20.50. In
addition, 289,702 shares are reserved for issuance pursuant to the Buyer's
Employee Stock Purchase Plan. Buyer also intends to complete another merger, at
the same time as this Merger, with Renaissance Cell Technologies, Inc., which
merger is expected to result in the issuance of approximately 579,058 additional
Buyer Shares. All of the Merger Shares to be issued in the Merger have been duly
authorized and, upon consummation of the Merger, will be validly issued, fully
paid and nonassessable.
(c) Authorization of Transaction. Each of the Buyer and the Transitory
Subsidiary has full power and authority (including full corporate power and
authority) to execute and deliver this Agreement and to perform its obligations
hereunder; provided, however, that the Transitory Subsidiary cannot consummate
the Merger unless and until it receives the Requisite Transitory Subsidiary
Stockholder Approval and this Agreement has been approved by its Board of
Directors. This Agreement constitutes the valid and legally binding obligation
of each of the Buyer and the Transitory Subsidiary, enforceable in accordance
with its terms and conditions.
(d) Noncontravention. To the Knowledge of any director or officer of
the Buyer, neither the execution and the delivery of this Agreement, nor the
consummation of the transactions contemplated hereby, will (i) violate any
constitution, statute, regulation, rule, injunction, judgment, order, decree,
ruling, charge, or other restriction of any government, governmental agency, or
court to which either the Buyer or the Transitory Subsidiary is subject or any
provision of the charter or bylaws of either the Buyer or the Transitory
Subsidiary or (ii) conflict with, result in a breach of, constitute a default
under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under any
agreement, contract, lease, license, instrument, or other arrangement to which
either the Buyer or the Transitory Subsidiary is a party or by which it is bound
or to which any of its assets is subject, except where the violation, conflict,
breach, default, acceleration, termination, modification, cancellation, or
failure to give notice would not have a material adverse effect on the ability
of the Parties to consummate the transactions contemplated by this Agreement. To
the Knowledge of any director or officer of the Buyer, and other than in
connection with the provisions of the Delaware General Corporation Law, the
Securities Exchange Act, the Securities Act, and the state securities laws,
neither the Buyer nor the Transitory Subsidiary needs to give any notice to,
make any filing with, or obtain any authorization, consent, or approval of any
government or governmental agency in order for the Parties to consummate the
transactions contemplated by this Agreement, except where the failure to give
9
<PAGE>
notice, to file, or to obtain any authorization, consent, or approval would not
have a material adverse effect on the ability of the Parties to consummate the
transactions contemplated by this Agreement.
(e) Brokers' Fees. Neither the Buyer nor the Transitory Subsidiary has
any liability or obligation to pay any fees or commissions to any broker,
finder, or agent with respect to the transactions contemplated by this Agreement
for which any of the Target and its Subsidiaries could become liable or
obligated.
(f) Disclosure. The Registration Statement and the Prospectus will
comply with the Securities Act in all material respects. The Registration
Statement and the Prospectus will not contain any untrue statement of a material
fact or omit to state a material fact necessary in order to make the statements
made therein, in the light of the circumstances under which they will be made,
not misleading; provided, however, that the Buyer and the Transitory Subsidiary
make no representation or warranty with respect to any information that the
Target will supply specifically for use in the Registration Statement and the
Prospectus. None of the information that the Buyer and the Transitory Subsidiary
will supply specifically for use in the Definitive Target Proxy Materials will
contain any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements made therein, in the light of the
circumstances under which they will be made, not misleading.
(g) Continuity of Business Enterprise. It is the present intention of
the Buyer to continue at least one significant historic business line of the
Target, or to use at least a significant portion of the Target's historic
business assets in a business, in each case within the meaning of
Reg.ss.1.368-1(d).
5. Covenants. The Parties agree as follows with respect to the period
from and after the execution of this Agreement.
(a) General. Each of the Parties will use its reasonable best efforts
to take all action and to do all things necessary, proper, or advisable in order
to consummate and make effective the transactions contemplated by this Agreement
(including satisfaction, but not waiver, of the closing conditions set forth in
ss.6 below).
(b) Notices and Consents. The Target will give any notices to third
parties, and will use its best efforts to obtain any third party consents, that
the Buyer may request in connection with the matters referred to in ss.3(d)
above.
(c) Regulatory Matters and Approvals. Each of the Parties will give any
notices to, make any filings with, and use its reasonable best efforts to obtain
any authorizations, consents, and approvals of governments and governmental
agencies in connection with the matters referred to in ss.3(d) and ss.4(d)
above. Without limiting the generality of the foregoing:
(i) Securities Act, Securities Exchange Act, and State
Securities Laws. The Buyer will prepare and file with SEC the
Registration Statement. The Buyer will use its
10
<PAGE>
reasonable best efforts to respond to the comments of the SEC thereon
and will make any further filings (including amendments and
supplements) in connection therewith that may be necessary, proper, or
advisable. The Target will provide the Buyer with whatever information
and assistance in connection with the foregoing filings that the Buyer
reasonably may request. The Buyer will take all actions that may be
necessary, proper, or advisable under state securities laws in
connection with the offering and issuance of the Buyer Stock.
(ii) Delaware General Corporation Law. The Target will call a
special meeting of its stockholders (the "Special Meeting"), as soon as
practicable in order that the Target Stockholders may consider and vote
upon the adoption of this Agreement and the approval of the Merger in
accordance with the Delaware General Corporation Law. The Target will
mail the Joint Disclosure Document to its stockholders as soon as
practicable. The Joint Disclosure Document will contain the affirmative
recommendation of the board of directors of the Target in favor of the
adoption of this Agreement and the approval of the Merger; provided,
however, that no director or officer of the Target shall be required to
violate any fiduciary duty or other requirement imposed by law in
connection therewith.
6. Conditions to Obligation to Close.
(a) Conditions to Obligation of the Buyer and the Transitory
Subsidiary. The obligation of each of the Buyer and the Transitory Subsidiary to
consummate the transactions to be performed by it in connection with the Closing
is subject to satisfaction of the following conditions:
(i) this Agreement and the Merger shall have received the
Requisite Target Stockholder Approval and the number of Dissenting
Shares shall not exceed 20% of the number of outstanding Target Shares;
(ii) the Target shall have procured any third party consents
specified inss.5(b) above;
(iii) the representations and warranties set forth inss.3
above shall be true and correct in all material respects at and as of
the Closing Date;
(iv) the Target shall have performed and complied with all of
its covenants hereunder in all material respects through the Closing;
(v) the Parties shall have received all other authorizations,
consents, and approvals of governments and governmental agencies
referred to inss.3(d) andss.4(d) above; and
(vi) all actions to be taken by the Target in connection with
consummation of the transactions contemplated hereby and all
certificates, opinions, instruments, and other documents required to
effect the transactions contemplated hereby will be reasonably
satisfactory in form and substance to the Buyer and the Transitory
Subsidiary.
11
<PAGE>
The Buyer and the Transitory Subsidiary may waive any condition specified in
this ss.6(a) if they execute a writing so stating at or prior to the Closing.
(b) Conditions to Obligation of the Target. The obligation of the
Target to consummate the transactions to be performed by it in connection with
the Closing is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth inss.4 above
shall be true and correct in all material respects at and as of the
Closing Date;
(ii) each of the Buyer and the Transitory Subsidiary shall
have performed and complied with all of its covenants hereunder in all
material respects through the Closing;
(iii) this Agreement and the Merger shall have received the
Requisite Transitory Subsidiary Stockholder Approval;
(iv) the Parties shall have received all other authorizations,
consents, and approvals of governments and governmental agencies
referred to inss.3(d) andss.4(d) above; and
(v) all actions to be taken by the Buyer and the Transitory
Subsidiary in connection with consummation of the transactions
contemplated hereby and all certificates, opinions, instruments, and
other documents required to effect the transactions contemplated hereby
will be reasonably satisfactory in form and substance to the Target.
The Target may waive any condition specified in this ss.6(b) if it executes a
writing so stating at or prior to the Closing.
7. Termination.
(a) Termination of Agreement. Any of the Parties may terminate this
Agreement with the prior authorization of its board of directors before
stockholder approval by giving written notice to of such termination to the
other party.
(b) Effect of Termination. If any Party terminates this Agreement
pursuant to ss.7(a) above, all rights and obligations of the Parties hereunder
shall terminate without any liability of any Party to any other Party (except
for any liability of any Party then in breach).
8. Miscellaneous.
(a) Survival. None of the representations, warranties, and covenants of
the Parties (other than the provisions in ss.2 above concerning conversion of
Target Shares into, and subsequent registration of, the Merger Shares) will
survive the Effective Time.
12
<PAGE>
(b) No Third-Party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any Person other than the Parties and their respective
successors and permitted assigns; provided, however, that the provisions in ss.2
above regarding conversion of the Target Shares into, and subsequent
registration of, the Merger Shares are intended for the benefit of the Target
Stockholders are intended for the benefit of the individuals specified therein
and their respective legal representatives.
(c) Entire Agreement. This Agreement (including the documents referred
to herein) constitutes the entire agreement among the Parties and supersedes any
prior understandings, agreements, or representations by or among the Parties,
written or oral, to the extent they related in any way to the subject matter
hereof.
(d) Succession and Assignment. This Agreement shall be binding upon and
inure to the benefit of the Parties named herein and their respective successors
and permitted assigns. No Party may assign either this Agreement or any of its
rights, interests, or obligations hereunder without the prior written approval
of the other Parties.
(e) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(f) Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(g) Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given if (and then two
business days after) it is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient as set forth
below:
If to the Target:
-----------------
Aeolus Pharmaceuticals, Inc.
P.O. Box 14287
3200 East Highway 54
Cape Fear Building, Suite 300
Research Triangle Park, North Carolina 27709
13
<PAGE>
If to the Buyer:
----------------
Incara Pharmaceuticals Corporation
P.O. Box 14287
3200 East Highway 54
Cape Fear Building, Suite 300
Research Triangle Park, North Carolina 27709
If to the Transitory Subsidiary:
--------------------------------
Aeolus Acquisition Corporation
P.O. Box 14287
3200 East Highway 54
Cape Fear Building, Suite 300
Research Triangle Park, North Carolina 27709
Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been duly
given unless and until it actually is received by the intended recipient. Any
Party may change the address to which notices, requests, demands, claims, and
other communications hereunder are to be delivered by giving the other Parties
notice in the manner herein set forth.
(h) Governing Law. This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of Delaware without giving effect
to any choice or conflict of law provision or rule (whether of the State of
Delaware or any other jurisdiction) that would cause the application of the laws
of any jurisdiction other than the State of Delaware.
(i) Amendments and Waivers. The Parties may mutually amend any
provision of this Agreement at any time prior to the Effective Time with the
prior authorization of their respective boards of directors; provided, however,
that any amendment effected subsequent to stockholder approval will be subject
to the restrictions contained in the Delaware General Corporation Law. No
amendment of any provision of this Agreement shall be valid unless the same
shall be in writing and signed by all of the Parties. No waiver by any Party of
any default, misrepresentation, or breach of warranty or covenant hereunder,
whether intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence.
(j) Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
14
<PAGE>
(k) Expenses. Each of the Parties will bear its own costs and expenses
(including legal fees and expenses) incurred in connection with this Agreement
and the transactions contemplated hereby.
(l) Construction. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or disfavoring any Party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context otherwise requires. The
word "including" shall mean including without limitation.
(m) Incorporation of Exhibits and Schedules. All Exhibits and Schedules
identified in this Agreement are incorporated herein by reference and made a
part hereof.
[SIGNATURE PAGE FOLLOWS.]
15
<PAGE>
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as
of the date first above written.
INCARA PHARMACEUTICALS CORPORATION
ATTEST: By: /s/ Clayton I. Duncan
----------------------
/s/ Rich Reichow Name: Clayton I. Duncan
- -------------------------------------- --------------------
Secretary Title: President & CEO
-------------------
AEOLUS ACQUISITION CORPORATION
ATTEST: By: /s/ Clayton I. Duncan
----------------------
/s/ Rich Reichow Name: Clayton I. Duncan
- -------------------------------------- --------------------
Secretary Title: President & CEO
-------------------
AEOLUS PHARMACEUTICALS, INC.
ATTEST: By: /s/ Clayton I. Duncan
----------------------
/s/ Rich Reichow Name: Clayton I. Duncan
- -------------------------------------- --------------------
Secretary Title: President & CEO
-------------------
EXHIBIT 2.8
AGREEMENT AND PLAN OF MERGER
AMONG
INCARA PHARMACEUTICALS CORPORATION,
RCT ACQUISITION CORPORATION,
AND
RENAISSANCE CELL TECHNOLOGIES, INC.
MARCH 24, 2000
<PAGE>
AGREEMENT AND PLAN OF MERGER
Agreement and Plan of Merger (the "Agreement") entered into on March
24, 2000, by and among Incara Pharmaceuticals Corporation, a Delaware
corporation (the "Buyer"), RCT Acquisition Corporation, a Delaware corporation
and a wholly-owned subsidiary of the Buyer (the "Transitory Subsidiary"), and
Renaissance Cell Technologies, Inc., a Delaware corporation (the "Target"). The
Buyer, the Transitory Subsidiary, and the Target are referred to collectively
herein as the "Parties".
This Agreement contemplates a tax-free merger of the Target Subsidiary
with and into the Target in a transaction qualifying as a reorganization
pursuant to Section 368(a)(2)(E) of the Internal Revenue Code of 1986, as
amended. The Target Stockholders will receive capital stock in the Buyer in
exchange for their capital stock in the Target.
Now, therefore, in consideration of the premises and the mutual
promises herein made, and in consideration of the representations, warranties,
and covenants herein contained, the Parties agree as follows.
1. Definitions.
"Agreement" has the meaning set forth in the preface above.
"Buyer" has the meaning set forth in the preface above.
"Buyer-owned Share" means any Target Share that the Buyer or the
Transitory Subsidiary owns beneficially.
"Buyer Share" means any share of the Common Stock, $0.001 par value per
share, of the Buyer.
"Certificate of Merger" has the meaning set forth in ss.2(c) below.
"Closing" has the meaning set forth in ss.2(b) below.
"Closing Date" has the meaning set forth in ss.2(b) below.
"Definitive Target Proxy Materials" means the Definitive Target Proxy
Materials, if any, relating to the Special Meeting.
"Delaware General Corporation Law" means the General Corporation Law of
the State of Delaware, as amended.
<PAGE>
"Disclosure Schedule" has the meaning set forth in ss.3 below.
"Dissenting Share" means any Target Share with respect to which any
Target Stockholder of record has exercised his or its appraisal rights under the
Delaware General Corporation Law.
"Effective Time" has the meaning set forth in ss.2(d)(i) below.
"GAAP" means United States generally accepted accounting principles as
in effect from time to time.
"Joint Disclosure Document" means the disclosure document combining the
Prospectus and the Definitive Target Proxy Materials.
"Knowledge" means actual knowledge after reasonable investigation.
"Merger" has the meaning set forth in ss.2(a) below.
"Merger Shares" means the Buyers Shares issued to the Target
Stockholders upon conversion of their Target Shares in accordance with ss.2(d)
and ss.2(e) below.
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency).
"Outstanding Option" means stock options of the Target that are
outstanding at the Effective Time.
"Party" has the meaning set forth in the preface above.
"Person" means an individual, a partnership, a corporation, an
association, a joint stock Buyer, a trust, a joint venture, an unincorporated
organization, or a governmental entity (or any department, agency, or political
subdivision thereof).
"Prospectus" means the final prospectus relating to the registration of
the Merger Shares under the Securities Act.
"Registration Period" has the meaning set forth in ss.2(f)(i) below.
"Registration Statement" has the meaning set forth in ss.2(f)(i) below.
"Requisite Target Stockholder Approval" means the affirmative vote of
the holders of at least a majority of the Target Shares in favor of this
Agreement and the Merger.
2
<PAGE>
"Requisite Transitory Subsidiary Stockholder Approval" means the
affirmative vote of the holders of at least a majority of the Transitory
Subsidiary Shares in favor of this Agreement and the Merger.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Security Interest" means any mortgage, pledge, lien, encumbrance,
charge, or other security interest, other than (a) mechanic's, materialman's,
and similar liens, (b) liens for taxes not yet due and payable or for taxes that
the taxpayer is contesting in good faith through appropriate proceedings, (c)
purchase money liens and liens securing rental payments under capital lease
arrangements, and (d) other liens arising in the Ordinary Course of Business and
not incurred in connection with the borrowing of money.
"Special Meeting" has the meaning set forth in ss.5(c)(ii) below.
"Surviving Corporation" has the meaning set forth in ss.2(a) below.
"Target" has the meaning set forth in the preface above.
"Target Share" means any share of the Common Stock, $0.001 par value
per share, of the Target.
"Target Stockholder" means any Person who or which holds any Target
Shares.
"Transitory Subsidiary" has the meaning set forth in the preface above.
"Transitory Subsidiary Share" means any share of the Common Stock,
$0.001 par value per share, of the Transitory Subsidiary.
"Transitory Subsidiary Stockholder" means the Buyer, which legally and
beneficially owns all of the Transitory Subsidiary Shares.
2. Basic Transaction.
(a) The Merger. On and subject to the terms and conditions of this
Agreement, the Transitory Subsidiary will merge with and into the Target (the
"Merger") at the Effective Time. The Target shall be the corporation surviving
the Merger (the "Surviving Corporation").
(b) The Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Wyrick Robbins
Yates & Ponton LLP in Raleigh, North
3
<PAGE>
Carolina, commencing at 9:00 a.m. local time on the business day following the
satisfaction or waiver of all conditions to the obligations of the Parties to
consummate the transactions contemplated hereby (other than conditions with
respect to actions the respective Parties will take at the Closing itself) or
such other date as the Parties may mutually determine (the "Closing Date").
(c) Actions at the Closing. At the Closing, (i) the Target will deliver
to the Buyer and the Transitory Subsidiary the various certificates,
instruments, and documents referred to in ss.6(a) below, (ii) the Buyer and the
Transitory Subsidiary will deliver to the Target the various certificates,
instruments, and documents referred to in ss.6(b) below, and (iii) the Target
and the Transitory Subsidiary will file with the Secretary of State of the State
of Delaware a Certificate of Merger in the form attached hereto as Exhibit A
(the "Certificate of Merger").
(d) Effect of Merger.
(i) General. The Merger shall become effective at the time
(the "Effective Time") the Target and the Transitory Subsidiary file
the Certificate of Merger with the Secretary of State of the State of
Delaware. The Merger shall have the effect set forth in the Delaware
General Corporation Law. The Surviving Corporation may, at any time
after the Effective Time, take any action (including executing and
delivering any document) in the name and on behalf of either the Target
or the Transitory Subsidiary in order to carry out and effectuate the
transactions contemplated by this Agreement.
(ii) Certificate of Incorporation. The Certificate of
Incorporation of the Transitory Subsidiary as of the Effective Time
will remain the Certificate of Incorporation of the Surviving
Corporation without any modification or amendment in the Merger.
(iii) Bylaws. The Bylaws of the Transitory Subsidiary as of
the Effective Time will remain the Bylaws of the Surviving Corporation
without any modification or amendment in the Merger.
(iv) Directors and Officers. The directors and officers of the
Transitory Subsidiary as of the Effective Time will remain the
directors and officers of the Surviving Corporation (retaining their
respective positions and terms of office).
(v) Conversion of Target Shares. At and as of the Effective
Time, (A) each Target Share (other than any Dissenting Share or
Buyer-owned Share) shall be converted into the right to receive
4.211333 Merger Shares (the ratio of 4.211333 Buyer Shares to one
Target Share is referred to herein as the "Conversion Ratio"), (B) each
Dissenting Share shall be converted into the right to receive payment
from the Surviving Corporation with respect thereto in accordance with
the provisions of the Delaware General Corporation Law, (C) each
Outstanding Option shall be converted into the right to receive a
replacement option to purchase the Buyer Shares ("Replacement Options")
on terms as set forth below:
(I) Each Replacement Option will represent the right
to purchase a number of Buyer Shares (rounded to the nearest
whole share) equal to the number of
4
<PAGE>
shares of stock issuable upon exercise of the corresponding
Outstanding Option multiplied by the Conversion Ratio.
(II) The exercise price of the Buyer Shares (rounded
to the nearest cent) of each Replacement Option will equal the
per share exercise price of the corresponding Outstanding
Option divided by the Conversion Ratio.
(III) The term of each Replacement Option will be the
same as the remaining term of the corresponding Outstanding
Option.
(IV) The vesting restrictions contained in each
Replacement Option will be the same as the vesting
restrictions contained in the corresponding Outstanding
Option, except as otherwise agreed.
and (D) each Buyer-owned Share and each share of Preferred Stock of
Target owned by Buyer shall be canceled; provided, however, that the
Conversion Ratio shall be subject to equitable adjustment in the event
of any stock split, stock dividend, reverse stock split, or other
change in the number of Target Shares outstanding. No Target Share
shall be deemed to be outstanding or to have any rights other than
those set forth above in this ss.2(d)(v) after the Effective Time.
(vi) Conversion of Transitory Subsidiary Shares. At and as of
the Effective Time, each share of Common Stock, $0.001 par value per
share, of the Transitory Subsidiary shall be converted into one share
of Common Stock, $0.001 par value per share, of the Surviving
Corporation.
(e) Procedure for Conversion.
(i) Immediately after the Effective Time, (A) the Buyer will
mail a letter of transmittal (with instructions for its use) to each
record holder of outstanding Target Shares and Outstanding Options for
the holder to use in surrendering the certificates which represented
his or its Target Shares and Outstanding Options in exchange for a
certificate representing the number of Merger Shares or Replacement
Options to which he or it is entitled, in lieu of issuing any
fractional shares, the Buyer shall pay the Target Shareholder an amount
in cash equal to such fraction multiplied by the closing stock price of
the Buyer on the last trading day prior to the Closing Date; (B) the
Buyer will furnish to a Target Shareholder upon his or its surrender of
the certificates representing his or its Target Shares a stock
certificate (issued in the name of the Target Shareholder or its
nominee) representing that number of Merger Shares to which he or it is
entitled, which shall be equal to the product of (I) the Conversion
Ratio times (II) the number of outstanding Target Shares surrendered to
the Buyer by the Target Stockholder; and (C) the Buyer will furnish to
an Outstanding Option holder upon his surrender of the agreement
representing the Outstanding Options a Replacement Option agreement
representing that number of Buyer option shares to which he is
entitled, which shall be equal to the product of (I) the
5
<PAGE>
Conversion Ratio times (II) the number of Outstanding Option shares
surrendered to the Buyer.
(ii) The Buyer will not pay any dividend or make any
distribution on Merger Shares (with a record date at or after the
Effective Time) to any record holder of outstanding Target Shares until
the holder surrenders for exchange his or its certificates that
represented Target Shares. In no event, however, will any holder of
outstanding Target Shares be entitled to any interest or earnings on
the dividend or distribution pending receipt.
(f) Registration of Merger Shares.
(i) Registration of Shares. The Buyer shall file with the SEC,
as promptly as practicable following the Closing, a registration
statement under the Securities Act covering the resale to the public of
the Merger Shares (the "Registration Statement"). The Buyer shall use
its best efforts to cause the Registration Statement to be declared
effective by the SEC as soon as practicable within 120 days following
the Closing. The Buyer shall use its best efforts to cause the
Registration Statement to remain effective up until the Merger Shares
can be sold under Rule 144 within a period of three (3) consecutive
months, not to exceed two (2) years form the Closing Date (the
"Registration Period").
(ii) Registration Procedures.
(1) In connection with the filing by the Buyer of the
Registration Statement, the Buyer shall furnish to each Target
Stockholder a copy of the prospectus, including a preliminary
prospectus, in conformity with the requirements of the
Securities Act and such additional copies as are reasonably
requested by the Target Stockholder.
(2) The Buyer shall use its best efforts to register
or qualify the Merger Shares covered by the Registration
Statement under the securities laws of such states as the
Target Stockholders shall reasonably request; provided,
however, that the Buyer shall not be required in connection
with this paragraph (2) to qualify as a foreign corporation or
execute a general consent to service of process in any
jurisdiction.
(3) If the Buyer has delivered final prospectuses to
the Target Stockholders and after having done so the
prospectus is amended to comply with the requirements of the
Securities Act, the Buyer shall promptly notify the Target
Stockholders and, if requested by the Buyer, the Target
Stockholders shall immediately cease making offers or sales of
shares under the Registration Statement and return all
prospectuses to the Buyer. The Buyer shall promptly provide
the Target Stockholders with revised prospectuses and,
following receipt of the revised prospectuses, the Target
Stockholders shall be free to resume making offers and sales
under the Registration Statement.
6
<PAGE>
(4) The Buyer shall pay the expenses incurred by it
in complying with its obligations under this Section 2(f),
including all registration and filing fees, exchange listing
fees, fees and expenses of counsel for the Buyer, and fees and
expenses of accountants for the Buyer, but excluding (x) any
brokerage fees, selling commissions or underwriting discounts
incurred by the Target Stockholders in connection with sales
under the Registration Statement and (y) the fees and expenses
of any counsel retained by any Target Stockholder.
(g) Closing of Transfer Records. After the close of business on the
Closing Date, transfers of Target Shares outstanding prior to the Effective Time
shall not be made on the stock transfer books of the Surviving Corporation.
3. Representations and Warranties of the Target. The Target represents
and warrants to the Buyer and the Transitory Subsidiary that the statements
contained in this ss.3 are correct and complete as of the date of this Agreement
and will be correct and complete as of the Closing Date (as though made then and
as though the Closing Date were substituted for the date of this Agreement
throughout this ss.3), except as set forth in the disclosure schedule
accompanying this Agreement and initialed by the Parties (the "Disclosure
Schedule"). The Disclosure Schedule will be arranged in paragraphs corresponding
to the lettered and numbered paragraphs contained in this ss.3.
(a) Organization, Qualification, and Corporate Power. The Target is a
corporation duly organized, validly existing, and in good standing under the
laws of the jurisdiction of its incorporation. The Target is duly authorized to
conduct business and is in good standing under the laws of each jurisdiction
where such qualification is required. The Target has full corporate power and
authority to carry on the businesses in which it is engaged and to own and use
the properties owned and used by it.
(b) Capitalization. The entire authorized capital stock of the Target
consists of (i) 2,000,000 shares of common stock, par value $0.001 per share,
137,500 of which are issued and outstanding, (ii) 1,000,000 shares of preferred
stock, par value $0.001 per share, of which 487,500 have been designated Series
A Preferred Stock and are issued and outstanding, and of which 512,500 have not
been designated and remain unissued or held in treasury. All of the issued and
outstanding Target Shares have been duly authorized and are validly issued,
fully paid, and nonassessable. There are no outstanding or authorized options,
warrants, purchase rights, subscription rights, conversion rights, exchange
rights, or other contracts or commitments that could require the Target to
issue, sell, or otherwise cause to become outstanding any of its capital stock.
There are no outstanding or authorized stock appreciation, phantom stock, profit
participation, or similar rights with respect to the Target.
(c) Authorization of Transaction. The Target has full power and
authority (including full corporate power and authority) to execute and deliver
this Agreement and to perform its obligations hereunder; provided, however, that
the Target cannot consummate the Merger unless and until it receives the
Requisite Target Stockholder Approval and approval of this Agreement by
7
<PAGE>
its Board of Directors. This Agreement constitutes the valid and legally binding
obligation of the Target, enforceable in accordance with its terms and
conditions.
(d) Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
(i) violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which the Target is subject or any provision of
the charter or bylaws of any of the Target or (ii) conflict with, result in a
breach of, constitute a default under, result in the acceleration of, create in
any party the right to accelerate, terminate, modify, or cancel, or require any
notice under any agreement, contract, lease, license, instrument, or other
arrangement to which the Target is a party or by which it is bound or to which
any of its assets is subject (or result in the imposition of any Security
Interest upon any of its assets). Other than in connection with the provisions
of the Delaware General Corporation Law, the Securities Exchange Act, the
Securities Act, and the state securities laws, the Target need not give any
notice to, make any filing with, or obtain any authorization, consent, or
approval of any government or governmental agency in order for the Parties to
consummate the transactions contemplated by this Agreement.
(e) Brokers' Fees. The Target has no liability or obligation to pay any
fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement.
(f) Disclosure. The Definitive Target Proxy Materials will not contain
any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements made therein, in the light of the
circumstances under which they will be made, not misleading. None of the
information that the Target will supply specifically for use in the Registration
Statement or the Prospectus will contain any untrue statement of a material fact
or omit to state a material fact necessary in order to make the statements made
therein, in the light of the circumstances under which they will be made, not
misleading.
(g) Continuity of Business Enterprise. The Target operates at least one
significant historic business line, or owns at least a significant portion of
its historic business assets, in each case within the meaning of
Reg.ss.1.368-1(d).
4. Representations and Warranties of the Buyer and the Transitory
Subsidiary. Each of the Buyer and the Transitory Subsidiary represents and
warrants to the Target that the statements contained in this ss.4 are correct
and complete as of the date of this Agreement and will be correct and complete
as of the Closing Date (as though made then and as though the Closing Date were
substituted for the date of this Agreement throughout this ss.4), except as set
forth in the Disclosure Schedule. The Disclosure Schedule will be arranged in
paragraphs corresponding to the numbered and lettered paragraphs contained in
this ss.4.
(a) Organization. Each of the Buyer and the Transitory Subsidiary is a
corporation duly organized, validly existing, and in good standing under the
laws of the jurisdiction of its incorporation.
8
<PAGE>
(b) Capitalization. The Buyer's Certificate of Incorporation authorizes
the issuance of up to 3,000,000 shares of Preferred Stock, at a par value of
$.01 per share. The Board of Directors has the authority to issue Preferred
Stock in one or more series, to fix the designation and number of shares of each
such series, and to determine or change the designation, relative rights,
preferences, and limitations of any series of Preferred Stock, without any
further vote or action by the stockholders. No shares of Preferred Stock are
currently outstanding. The entire authorized common stock of the Buyer consists
of 40,000,000 Buyer Shares, par value $0.001 per share, of which 5,864,430 Buyer
Shares are issued and outstanding and 34,135,570 Buyer Shares remain unissued or
held in treasury. Under the 1994 Stock Option Plan, options to purchase a total
of 2,500,000 shares of common stock may be granted to employees, directors and
consultants. Options and warrants to purchase 925,116 and 66,816 shares are
outstanding, respectively, at exercise prices ranging from $0.36 to $20.50. In
addition, 289,702 shares are reserved for issuance pursuant to the Buyer's
Employee Stock Purchase Plan. Buyer also intends to complete another merger, at
the same time as this Merger, with Aeolus Pharmaceuticals, Inc., which merger is
expected to result in the issuance of approximately 658,021 additional Buyer
Shares. All of the Merger Shares to be issued in the Merger have been duly
authorized and, upon consummation of the Merger, will be validly issued, fully
paid and nonassessable.
(c) Authorization of Transaction. Each of the Buyer and the Transitory
Subsidiary has full power and authority (including full corporate power and
authority) to execute and deliver this Agreement and to perform its obligations
hereunder; provided, however, that the Transitory Subsidiary cannot consummate
the Merger unless and until it receives the Requisite Transitory Subsidiary
Stockholder Approval and this Agreement has been approved by its Board of
Directors. This Agreement constitutes the valid and legally binding obligation
of each of the Buyer and the Transitory Subsidiary, enforceable in accordance
with its terms and conditions.
(d) Noncontravention. To the Knowledge of any director or officer of
the Buyer, neither the execution and the delivery of this Agreement, nor the
consummation of the transactions contemplated hereby, will (i) violate any
constitution, statute, regulation, rule, injunction, judgment, order, decree,
ruling, charge, or other restriction of any government, governmental agency, or
court to which either the Buyer or the Transitory Subsidiary is subject or any
provision of the charter or bylaws of either the Buyer or the Transitory
Subsidiary or (ii) conflict with, result in a breach of, constitute a default
under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under any
agreement, contract, lease, license, instrument, or other arrangement to which
either the Buyer or the Transitory Subsidiary is a party or by which it is bound
or to which any of its assets is subject, except where the violation, conflict,
breach, default, acceleration, termination, modification, cancellation, or
failure to give notice would not have a material adverse effect on the ability
of the Parties to consummate the transactions contemplated by this Agreement. To
the Knowledge of any director or officer of the Buyer, and other than in
connection with the provisions of the Delaware General Corporation Law, the
Securities Exchange Act, the Securities Act, and the state securities laws,
neither the Buyer nor the Transitory Subsidiary needs to give any notice to,
make any filing with, or obtain any authorization, consent, or approval of any
government or governmental agency in order for the Parties to consummate the
transactions contemplated by this Agreement, except where the failure to give
9
<PAGE>
notice, to file, or to obtain any authorization, consent, or approval would not
have a material adverse effect on the ability of the Parties to consummate the
transactions contemplated by this Agreement.
(e) Brokers' Fees. Neither the Buyer nor the Transitory Subsidiary has
any liability or obligation to pay any fees or commissions to any broker,
finder, or agent with respect to the transactions contemplated by this Agreement
for which any of the Target and its Subsidiaries could become liable or
obligated.
(f) Disclosure. The Registration Statement and the Prospectus will
comply with the Securities Act in all material respects. The Registration
Statement and the Prospectus will not contain any untrue statement of a material
fact or omit to state a material fact necessary in order to make the statements
made therein, in the light of the circumstances under which they will be made,
not misleading; provided, however, that the Buyer and the Transitory Subsidiary
make no representation or warranty with respect to any information that the
Target will supply specifically for use in the Registration Statement and the
Prospectus. None of the information that the Buyer and the Transitory Subsidiary
will supply specifically for use in the Definitive Target Proxy Materials will
contain any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements made therein, in the light of the
circumstances under which they will be made, not misleading.
(g) Continuity of Business Enterprise. It is the present intention of
the Buyer to continue at least one significant historic business line of the
Target, or to use at least a significant portion of the Target's historic
business assets in a business, in each case within the meaning of
Reg.ss.1.368-1(d).
5. Covenants. The Parties agree as follows with respect to the period
from and after the execution of this Agreement.
(a) General. Each of the Parties will use its reasonable best efforts
to take all action and to do all things necessary, proper, or advisable in order
to consummate and make effective the transactions contemplated by this Agreement
(including satisfaction, but not waiver, of the closing conditions set forth in
ss.6 below).
(b) Notices and Consents. The Target will give any notices to third
parties, and will use its best efforts to obtain any third party consents, that
the Buyer may request in connection with the matters referred to in ss.3(d)
above.
(c) Regulatory Matters and Approvals. Each of the Parties will give any
notices to, make any filings with, and use its reasonable best efforts to obtain
any authorizations, consents, and approvals of governments and governmental
agencies in connection with the matters referred to in ss.3(d) and ss.4(d)
above. Without limiting the generality of the foregoing:
(i) Securities Act, Securities Exchange Act, and State
Securities Laws. The Buyer will prepare and file with SEC the
Registration Statement. The Buyer will use its
10
<PAGE>
reasonable best efforts to respond to the comments of the SEC thereon
and will make any further filings (including amendments and
supplements) in connection therewith that may be necessary, proper, or
advisable. The Target will provide the Buyer with whatever information
and assistance in connection with the foregoing filings that the Buyer
reasonably may request. The Buyer will take all actions that may be
necessary, proper, or advisable under state securities laws in
connection with the offering and issuance of the Buyer Stock.
(ii) Delaware General Corporation Law. The Target will call a
special meeting of its stockholders (the "Special Meeting"), as soon as
practicable in order that the Target Stockholders may consider and vote
upon the adoption of this Agreement and the approval of the Merger in
accordance with the Delaware General Corporation Law. The Target will
mail the Joint Disclosure Document to its stockholders as soon as
practicable. The Joint Disclosure Document will contain the affirmative
recommendation of the board of directors of the Target in favor of the
adoption of this Agreement and the approval of the Merger; provided,
however, that no director or officer of the Target shall be required to
violate any fiduciary duty or other requirement imposed by law in
connection therewith.
6. Conditions to Obligation to Close.
(a) Conditions to Obligation of the Buyer and the Transitory
Subsidiary. The obligation of each of the Buyer and the Transitory Subsidiary to
consummate the transactions to be performed by it in connection with the Closing
is subject to satisfaction of the following conditions:
(i) this Agreement and the Merger shall have received the
Requisite Target Stockholder Approval and the number of Dissenting
Shares shall not exceed 20% of the number of outstanding Target Shares;
(ii) the Target shall have procured any third party consents
specified inss.5(b) above;
(iii) the representations and warranties set forth inss.3
above shall be true and correct in all material respects at and as of
the Closing Date;
(iv) the Target shall have performed and complied with all of
its covenants hereunder in all material respects through the Closing;
(v) the Parties shall have received all other authorizations,
consents, and approvals of governments and governmental agencies
referred to inss.3(d) andss.4(d) above; and
(vi) all actions to be taken by the Target in connection with
consummation of the transactions contemplated hereby and all
certificates, opinions, instruments, and other documents required to
effect the transactions contemplated hereby will be reasonably
satisfactory in form and substance to the Buyer and the Transitory
Subsidiary.
11
<PAGE>
The Buyer and the Transitory Subsidiary may waive any condition specified in
this ss.6(a) if they execute a writing so stating at or prior to the Closing.
(b) Conditions to Obligation of the Target. The obligation of the
Target to consummate the transactions to be performed by it in connection with
the Closing is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth inss.4 above
shall be true and correct in all material respects at and as of the
Closing Date;
(ii) each of the Buyer and the Transitory Subsidiary shall
have performed and complied with all of its covenants hereunder in all
material respects through the Closing;
(iii) this Agreement and the Merger shall have received the
Requisite Transitory Subsidiary Stockholder Approval;
(iv) the Parties shall have received all other authorizations,
consents, and approvals of governments and governmental agencies
referred to inss.3(d) andss.4(d) above; and
(v) all actions to be taken by the Buyer and the Transitory
Subsidiary in connection with consummation of the transactions
contemplated hereby and all certificates, opinions, instruments, and
other documents required to effect the transactions contemplated hereby
will be reasonably satisfactory in form and substance to the Target.
The Target may waive any condition specified in this ss.6(b) if it executes a
writing so stating at or prior to the Closing.
7. Termination.
(a) Termination of Agreement. Any of the Parties may terminate this
Agreement with the prior authorization of its board of directors before
stockholder approval by giving written notice to of such termination to the
other party.
(b) Effect of Termination. If any Party terminates this Agreement
pursuant to ss.7(a) above, all rights and obligations of the Parties hereunder
shall terminate without any liability of any Party to any other Party (except
for any liability of any Party then in breach).
8. Miscellaneous.
(a) Survival. None of the representations, warranties, and covenants of
the Parties (other than the provisions in ss.2 above concerning conversion of
Target Shares into, and subsequent registration of, the Merger Shares) will
survive the Effective Time.
12
<PAGE>
(b) No Third-Party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any Person other than the Parties and their respective
successors and permitted assigns; provided, however, that the provisions in ss.2
above regarding conversion of the Target Shares into, and subsequent
registration of, the Merger Shares are intended for the benefit of the Target
Stockholders are intended for the benefit of the individuals specified therein
and their respective legal representatives.
(c) Entire Agreement. This Agreement (including the documents referred
to herein) constitutes the entire agreement among the Parties and supersedes any
prior understandings, agreements, or representations by or among the Parties,
written or oral, to the extent they related in any way to the subject matter
hereof.
(d) Succession and Assignment. This Agreement shall be binding upon and
inure to the benefit of the Parties named herein and their respective successors
and permitted assigns. No Party may assign either this Agreement or any of its
rights, interests, or obligations hereunder without the prior written approval
of the other Parties.
(e) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(f) Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(g) Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given if (and then two
business days after) it is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient as set forth
below:
If to the Target:
-----------------
Renaissance Cell Technologies, Inc.
P.O. Box 14287
3200 East Highway 54
Cape Fear Building, Suite 300
Research Triangle Park, North Carolina 27709
13
<PAGE>
If to the Buyer:
----------------
Incara Pharmaceuticals Corporation
P.O. Box 14287
3200 East Highway 54
Cape Fear Building, Suite 300
Research Triangle Park, North Carolina 27709
If to the Transitory Subsidiary:
--------------------------------
RCT Acquisition Corporation
P.O. Box 14287
3200 East Highway 54
Cape Fear Building, Suite 300
Research Triangle Park, North Carolina 27709
Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been duly
given unless and until it actually is received by the intended recipient. Any
Party may change the address to which notices, requests, demands, claims, and
other communications hereunder are to be delivered by giving the other Parties
notice in the manner herein set forth.
(h) Governing Law. This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of Delaware without giving effect
to any choice or conflict of law provision or rule (whether of the State of
Delaware or any other jurisdiction) that would cause the application of the laws
of any jurisdiction other than the State of Delaware.
(i) Amendments and Waivers. The Parties may mutually amend any
provision of this Agreement at any time prior to the Effective Time with the
prior authorization of their respective boards of directors; provided, however,
that any amendment effected subsequent to stockholder approval will be subject
to the restrictions contained in the Delaware General Corporation Law. No
amendment of any provision of this Agreement shall be valid unless the same
shall be in writing and signed by all of the Parties. No waiver by any Party of
any default, misrepresentation, or breach of warranty or covenant hereunder,
whether intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence.
(j) Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
14
<PAGE>
(k) Expenses. Each of the Parties will bear its own costs and expenses
(including legal fees and expenses) incurred in connection with this Agreement
and the transactions contemplated hereby.
(l) Construction. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or disfavoring any Party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context otherwise requires. The
word "including" shall mean including without limitation.
(m) Incorporation of Exhibits and Schedules. All Exhibits and Schedules
identified in this Agreement are incorporated herein by reference and made a
part hereof.
[SIGNATURE PAGE FOLLOWS.]
15
<PAGE>
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as
of the date first above written.
INCARA PHARMACEUTICALS CORPORATION
ATTEST: By: /s/ Clayton I. Duncan
----------------------
/s/ Rich Reichow Name: Clayton I. Duncan
- ------------------------------------- --------------------
Secretary Title: President & CEO
-------------------
RCT ACQUISITION CORPORATION
ATTEST: By: /s/ Clayton I. Duncan
----------------------
/s/ Rich Reichow Name: Clayton I. Duncan
- ------------------------------------- --------------------
Secretary Title: President & CEO
-------------------
RENAISSANCE CELL TECHNOLOGIES, INC.
ATTEST: By: /s/ Clayton I. Duncan
----------------------
/s/ Rich Reichow Name: Clayton I. Duncan
- ------------------------------------- --------------------
Secretary Title: President & CEO
-------------------
EXHIBIT 10.8
INCARA PHARMACEUTICALS CORPORATION
1994 STOCK OPTION PLAN, AS AMENDED
1. Purpose.
--------
The purpose of this plan (the "Plan") is to secure for INCARA
PHARMACEUTICALS CORPORATION (the "Company") and its shareholders the benefits
arising from capital stock ownership by employees, officers and directors of,
and consultants or advisors to, the Company and the Company's subsidiary
corporations who are expected to contribute to the Company's future growth and
success. Those provisions of the Plan which make express reference to Section
422 shall apply only to Incentive Stock Options (as that term is defined in the
Plan).
2. Type of Options and Administration.
-----------------------------------
(a) Types of Options. Options granted pursuant to the Plan
shall be authorized by action of the Board of Directors of the Company (or a
Committee designated by the Board of Directors) and may be either incentive
stock options ("Incentive Stock Options") meeting the requirements of Section
422 of the Internal Revenue Code of 1986, as amended or replaced from time to
time (the "Code") or non-statutory options which are not intended to meet the
requirements of Section 422 of the Code.
(b) Administration. The Plan will be administered by the Board
of Directors or a committee (the "Committee") appointed by the Board of
Directors of the Company, whose construction and interpretation of the terms and
provisions of the Plan shall be final and conclusive. The delegation of powers
to the Committee shall be consistent with applicable laws or regulations
(including, without limitation, applicable state law and Rule 16b-3 promulgated
under the Securities Exchange Act of 1934 (the "Exchange Act"), or any successor
rule ("Rule 16b-3")). The Committee may in its sole discretion grant options to
purchase shares of the Company's Common Stock, $.001 par value per share
("Common Stock"), and issue shares upon exercise of such options as provided in
the Plan. The Committee shall have authority, subject to the express provisions
of the Plan, to construe the respective option agreements and the Plan, to
prescribe, amend and rescind rules and regulations relating to the Plan, to
determine the terms and provisions of the respective option agreements, which
need not be identical, and to make all other determinations in the judgment of
the Committee necessary or desirable for the administration of the Plan. The
Committee may correct any defect or supply any omission or reconcile any
inconsistency in the Plan or in any option agreement in the manner and to the
extent it shall deem expedient to carry the Plan into effect and it shall be the
sole and final judge of such expediency. No director or person acting pursuant
to authority delegated by the Board of Directors shall be liable for any action
or determination under the Plan made in good faith. Subject to adjustment as
provided in Section 15 below, the aggregate number of shares of Common Stock
that may be subject to options granted to any person in a calendar year shall
not
1
<PAGE>
exceed 300,000 shares.
(c) Applicability of Rule 16b-3. Those provisions of the Plan
which make express reference to Rule 16b-3 shall apply to the Company only at
such time as the Company's Common Stock is registered under the Exchange Act,
subject to the last sentence of Section 3(b), and then only to such persons as
are required to file reports under Section 16(a) of the Exchange Act (a
"Reporting Person").
3. Eligibility.
-----------
(a) General. Options may be granted to persons who are, at the
time of grant, employees, officers or directors of, or consultants or advisors
to, the Company or any subsidiaries of the Company as defined in Sections 424(e)
and 424(f) of the Code ("Participants") provided, that Incentive Stock Options
may only be granted to individuals who are employees of the Company (within the
meaning of Section 3401(c) of the Code). A person who has been granted an option
may, if he or she is otherwise eligible, be granted additional options if the
Committee shall so determine.
(b) Grant of Options to Reporting Persons. The selection of a
director or an officer who is a Reporting Person (as the terms "director" and
"officer" are defined for purposes of Rule 16b-3) as a recipient of an option,
the timing of the option grant, the exercise price of the option and the number
of shares subject to the option shall be determined either (i) by the Board of
Directors, (ii) by a committee of the Board of Directors that is composed solely
of two or more Non-Employee Directors having full authority to act in the matter
or (iii) pursuant to provisions for automatic grants set forth in Section 3(c)
below. For the purposes of the Plan, a director shall be deemed to be a
"Non-Employee Director" only if such person is described in Rule 16b-3(b)(3) as
interpreted from time to time.
(c) Fair Market Value. "Fair Market Value" of a share of
Common Stock of the Company as of a specified date for the purposes of the Plan
shall mean the closing price of a share of the Common Stock on the principal
securities exchange (including the Nasdaq National Market) on which such shares
are traded on the day as of which Fair Market Value is being determined, or on
the next preceding date on which such shares are traded if no shares were traded
on such day, or if the shares are not traded on a securities exchange, Fair
Market Value shall be deemed to be the average of the high bid and low asked
prices of the shares in the over-the-counter market on the day immediately
preceding the date as of which Fair Market Value is being determined or on the
next preceding date on which such high bid and low asked prices were recorded.
If the shares are not publicly traded, Fair Market Value of a share of Common
Stock (including, in the case of any repurchase of shares, any distributions
with respect thereto which would be repurchased with the shares) shall be
determined in good faith by the Board of Directors. In no case shall Fair Market
Value be determined with regard to restrictions other than restrictions which,
by their terms, will never lapse.
2
<PAGE>
(d) Directors' Options. Directors of the Company who are not
employees ("Eligible Directors") will receive an option ("Initial Director
Option") to purchase 10,000 shares of Common Stock on the date that such person
first becomes an Eligible Director. As long as an Eligible Director is a member
of the Board of Directors, such Eligible Director will automatically be granted
a stock option ("Automatic Grant") to purchase 6,000 shares of Common Stock on
the day of each annual meeting of stockholders ("Stockholder Meeting"), except
for Eligible Directors who received an Initial Director Option since the most
recent Automatic Grant. The exercise price for each share subject to a Director
Option shall be equal to the Fair Market Value of the Common Stock on the date
of grant. Director Options shall become exercisable in 36 equal monthly
installments commencing one month from the date the option is granted and will
expire 10 years after the date of grant.
(e) Directors' Compensation. On the date that each Eligible
Director is elected or re-elected to the Board of Directors, the Director will
receive an annual retainer ("Annual Retainer") of an amount to be determined by
the Board of Directors. Directors may elect to receive all or a portion of their
Annual Retainer as an option to purchase Common Stock ("Retainer Option"). Any
remainder will be paid in cash. Any Retainer Option elected will enable the
Director to purchase a number of shares equal to three times the number of
shares that could have been purchased with the portion of the Annual Retainer
elected to be received as a Retainer Option. The exercise price per share for
the Retainer Option will be the Fair Market Value of the Common Stock on the
date of the grant. The date of grant will be the date the Annual Retainer is
granted to the director. The Retainer Options will be fully vested and will be
exercisable for ten years from the date of the grant. This director compensation
program was adopted on January 18, 2000, subject to the following transition
rule. The date of the Annual Retainer and the grant date shall be January 18,
2000 for each Eligible Director who was a Director on the date the program was
adopted and the Director shall not receive any additional retainer at the
Stockholder Meeting to be held in 2000.
4. Stock Subject to Plan.
---------------------
The stock subject to options granted under the Plan shall be
shares of authorized but unissued or reacquired Common Stock. Subject to
adjustment as provided in Section 15 below, the maximum number of shares of
Common Stock of the Company which may be issued and sold under the Plan is
2,500,000. If an option granted under the Plan shall expire, terminate or is
cancelled for any reason without having been exercised in full, the unpurchased
shares subject to such option shall again be available for subsequent option
grants under the Plan.
5. Forms of Option Agreements.
--------------------------
As a condition to the grant of an option under the Plan, each
recipient of an option shall execute an option agreement in such form not
inconsistent with the Plan as may be approved by the Board of Directors. Such
option agreements may differ among recipients.
3
<PAGE>
6. Purchase Price.
--------------
(a) General. The purchase price per share of stock deliverable
upon the exercise of an option shall be determined by the Board of Directors or
the Committee at the time of grant of such option; provided, however, that in
the case of an Incentive Stock Option, the exercise price shall not be less than
100% of the Fair Market Value of such stock, at the time of grant of such
option, or less than 110% of such Fair Market Value in the case of options
described in Section 11(b).
(b) Payment of Purchase Price. Options granted under the Plan
may provide for the payment of the exercise price by delivery of cash or a check
to the order of the Company in an amount equal to the exercise price of such
options, or by any other means which the Board of Directors in its discretion
determines are consistent with the purpose of the Plan and with applicable laws
and regulations (including, without limitation, the provisions of Rule 16b-3 and
Regulation T promulgated by the Federal Reserve Board).
7. Option Period.
-------------
Subject to earlier termination as provided in the Plan, each
option and all rights thereunder shall expire on such date as determined by the
Board of Directors or the Committee and set forth in the applicable option
agreement, provided, that such date shall not be later than (10) ten years after
the date on which the option is granted.
8. Exercise of Options.
-------------------
Each option granted under the Plan shall be exercisable either
in full or in installments at such time or times and during such period as shall
be set forth in the option agreement evidencing such option, subject to the
provisions of the Plan. If an option is not at the time of grant immediately
exercisable, the Board of Directors may (i) in the agreement evidencing such
option, provide for the acceleration of the exercise date or dates of the
subject option upon the occurrence of specified events, and/or (ii) at any time
prior to the complete termination of an option, accelerate the exercise date or
dates of such option.
9. Transferability of Options.
--------------------------
(a) No Incentive Stock Option granted under this Plan shall be
assignable or otherwise transferable by the optionee except by will or by the
laws of descent and distribution. An Incentive Stock Option may be exercised
during the lifetime of the optionee only by the optionee.
(b) Any option granted under the Plan other than an Incentive
Stock Option shall be transferable by the optionee to members of his or her
family or otherwise by will or by the laws of descent and distribution or
pursuant to a qualified domestic relations order as defined
4
<PAGE>
in the Code or Title I of the Employee Retirement Income Security Act, or the
rules thereunder. For purposes of the Plan, an optionee's "family members" shall
be deemed to consist of his or her spouse, parents, children, grandparents,
grandchildren and any trusts created for the benefit of such individuals. A
family member to whom an option has been transferred pursuant to this Section
9(b) shall be hereinafter referred to as a "Permitted Transferee". An option
shall be transferred to a Permitted Transferee in accordance with the foregoing
provisions by the optionee's execution of an assignment in writing in such form
approved by the Board of Directors or the Committee. The Company shall not be
required to recognize the rights of a Permitted Transferee until such time as it
receives a copy of the assignment from the optionee.
(c) In the event an optionee dies during his employment by the
Company or any of its subsidiaries, or during the three-month period following
the date of termination of such employment, his options shall thereafter be
exercisable, during the period specified in the option agreement, by his
executors, administrators or Permitted Transferees to the full extent to which
such options were exercisable by the optionee at the time of his death during
the periods set forth in Section 10 or 11(d).
10. Effect of Termination of Employment or Other Relationship.
---------------------------------------------------------
Except as provided in Section 11(d) with respect to Incentive
Stock Options and except as otherwise determined by the Committee at the date of
grant of an option, and subject to the provisions of the Plan, an optionee or
his Permitted Transferee may exercise an option at any time within three (3)
months following the termination of the optionee's employment or other
relationship with the Company or within one (1) year if such termination was due
to the death or disability of the optionee but, except in the case of the
optionee's death, in no event later than the expiration date of the option. If
the termination of the optionee's employment or other relationship with the
Company is for cause or is otherwise attributable to a breach by the optionee of
an employment, consulting, confidentiality or non-disclosure agreement, the
option shall expire immediately upon such termination. The Board or Directors
shall have the power to determine what constitutes a termination for cause or a
breach of an employment, consulting, confidentiality or non-disclosure
agreement, whether an optionee has been terminated for cause or has breached
such an agreement, and the date upon such termination for cause or breach
occurs. Any such determinations shall be final and conclusive and binding upon
the optionee.
11. Incentive Stock Options
-----------------------
Options granted under the Plan which are intended to be
Incentive Stock Options shall be subject to the following additional terms and
conditions:
(a) Express Designation. All Incentive Stock Options granted
under the Plan shall, at the time of grant, be specifically designated as such
in the option agreement covering such Incentive Stock Options.
5
<PAGE>
(b) 10% Stockholder. If any employee to whom an Incentive
Stock Option is to be granted under the Plan is, at the time of the grant of
such option, the owner of stock possessing more than 10% of the total combined
voting power of all classes of stock of the Company (after taking into account
the attribution of stock ownership rules of Section 424(d) of the Code), then
the following special provisions shall be applicable to the Incentive Stock
Option granted to such individual:
(i) the purchase price per share of the Common Stock
subject to such Incentive Stock Option shall not be less than 110% of
the Fair Market Value of one share of Common Stock at the time of
grant; and
(ii) the option exercise period shall not exceed five
years from the date of grant.
(c) Dollar Limitation. For so long as the Code shall so
provide, options granted to any employee under the Plan (and any other incentive
stock option plans of the Company) which are intended to constitute Incentive
Stock Options shall not constitute Incentive Stock Options to the extent that
such options, in the aggregate, become exercisable for the first time in any one
calendar year for shares of Common Stock with an aggregate Fair Market Value, as
of the respective date or dates of grant, of more than $100,000.
(d) Termination of Employment, Death or Disability. No
Incentive Stock Option may be exercised unless, at the time of such exercise,
the optionee is, and has been continuously since the date of grant of his or her
option, employed by the Company, except that:
(i) an Incentive Stock Option may be exercised within
the period of three months after the date the optionee ceases to be an
employee of the Company (or within such lesser period as may be
specified in the applicable option agreement), provided, that the
agreement with respect to such option may designate a longer exercise
period and that the exercise after such three-month period shall be
treated as the exercise of a non-statutory option under the Plan;
(ii) if the optionee dies while in the employ of the
Company, or within three months after the optionee ceases to be such an
employee, the Incentive Stock Option may be exercised by the person to
whom it is transferred by will or the laws of descent and distribution
within the period of one year after the date of death (or within such
lesser period as may be specified in the applicable option agreement);
and
(iii) if the optionee becomes disabled (within the
meaning of Section 22(e)(3) of the Code or any successor provisions
thereto) while in the employ of the Company, the Incentive Stock Option
may be exercised within the period of one year after the date the
optionee ceases to be such an employee because of such disability (or
6
<PAGE>
within such lesser period as may be specified in the applicable option
agreement).
For all purposes of the Plan and any option granted hereunder, "employment"
shall be defined in accordance with the provisions of Section 1.421-7(h) of the
Income Tax Regulations (or any successor regulations). Notwithstanding the
foregoing provisions, no Incentive Stock Option may be exercised after its
expiration date.
12. Additional Provisions.
---------------------
(a) Additional Option Provisions. The Board of Directors or
the Committee may, in its sole discretion, include additional provisions in
option agreements covering options granted under the Plan, including without
limitation restrictions on transfer, repurchase rights, rights of first refusal,
commitments to pay cash bonuses, to make, arrange for or guaranty loans or to
transfer other property to optionees upon exercise of options, or such other
provisions as shall be determined by the Board of Directors; provided, that such
additional provisions shall not be inconsistent with any other term or condition
of the Plan and such additional provisions shall not cause any Incentive Stock
Option granted under the Plan to fail to qualify as an Incentive Stock Option
within the meaning of Section 422 of the Code.
(b) Acceleration, Extension, Etc. The Board of Directors may,
in its sole discretion, (i) accelerate the date or dates on which all or any
particular option or options granted under the Plan may be exercised or (ii)
extend the dates during which all, or any particular, option or options granted
under the Plan may be exercised; provided, however, that no such extension shall
be permitted if it would cause the Plan to fail to comply with Section 422 of
the Code or with Rule 16b-3 (if applicable).
13. General Restrictions.
--------------------
(a) Investment Representations. The Company may require any
person to whom an option is granted, as a condition of exercising such option or
award, to give written assurances in substance and form satisfactory to the
Company to the effect that such person is acquiring the Common Stock subject to
the option or award, for his or her own account for investment and not with any
present intention of selling or otherwise distributing the same, and to such
other effects as the Company deems necessary or appropriate in order to comply
with federal and applicable state securities laws, or with covenants or
representations made by the Company in connection with any public offering of
its Common Stock, including any "lock-up" or other restriction on
transferability.
(b) Compliance With Securities Law. Each option shall be
subject to the requirement that if, at any time, counsel to the Company shall
determine that the listing, registration or qualification of the shares subject
to such option or award upon any securities exchange or automated quotation
system or under any state or federal law, or the consent or approval of any
governmental or regulatory body, or that the disclosure of non-public
7
<PAGE>
information or the satisfaction of any other condition is necessary as a
condition of, or in connection with the issuance or purchase of shares
thereunder, such option or award may not be exercised, in whole or in part,
unless such listing, registration, qualification, consent or approval, or
satisfaction of such condition shall have been effected or obtained on
conditions acceptable to the Board of Directors or the Committee. Nothing herein
shall be deemed to require the Company to apply for or to obtain such listing,
registration or qualification, or to satisfy such condition.
14. Rights as a Stockholder.
-----------------------
The holder of an option shall have no rights as a stockholder
with respect to any shares covered by the option (including, without limitation,
any rights to receive dividends or non-cash distributions with respect to such
shares) until the date of issue of a stock certificate to him or her for such
shares. No adjustment shall be made for dividends or other rights for which the
record date is prior to the date such stock certificate is issued.
15. Adjustment Provisions for Recapitalizations, Reorganizations
------------------------------------------------------------
and Related Transactions.
-------------------------
(a) Recapitalizations and Related Transactions. If, through or
as a result of any recapitalization, reclassification, stock dividend, stock
split, reverse stock split or other similar transaction, (i) the outstanding
shares of Common Stock are increased, decreased or exchanged for a different
number or kind of shares or other securities of the Company, or (ii) additional
shares or new or different shares or other non-cash assets are distributed with
respect to such shares of Common Stock or other securities, an appropriate and
proportionate adjustment shall be made in (x) the maximum number and kind of
shares reserved for issuance under or otherwise referred to in the Plan, (y) the
number and kind of shares or other securities subject to any then outstanding
options under the Plan, and (z) the price for each share subject to any then
outstanding options under the Plan, without changing the aggregate purchase
price as to which such options remain exercisable. Notwithstanding the
foregoing, no adjustment shall be made pursuant to this Section 15 if such
adjustment (i) would cause the Plan to fail to comply with Section 422 of the
Code or with Rule 16b-3 or (ii) would be considered as the adoption of a new
plan requiring stockholder approval.
(b) Reorganization, Merger and Related Transactions. All
outstanding options under the Plan shall become fully exercisable for a period
of sixty (60) days following the occurrence of any Trigger Event, whether or not
such options are then exercisable under the provisions of the applicable
agreements relating thereto. For purposes of the Plan, a "Trigger Event" is any
one of the following events:
(i) the date on which shares of Common Stock are
first purchased pursuant to a tender offer or exchange offer (other
than such an offer by the Company, any Subsidiary, any employee benefit
plan of the Company or of any Subsidiary or any
8
<PAGE>
entity holding shares or other securities of the Company for or
pursuant to the terms of such plan), whether or not such offer is
approved or opposed by the Company and regardless of the number of
shares purchased pursuant to such offer;
(ii) the date the Company acquires knowledge that any
person or group deemed a person under Section 13(d)-3 of the Exchange
Act (other than the Company, any Subsidiary, any employee benefit plan
of the Company or of any Subsidiary or any entity holding shares of
Common Stock or other securities of the Company for or pursuant to the
terms of any such plan or any individual or entity or group or
affiliate thereof which acquired its beneficial ownership interest
prior to the date the Plan was adopted by the Board), in a transaction
or series of transactions, has become the beneficial owner, directly or
indirectly (with beneficial ownership determined as provided in Rule
13d-3, or any successor rule, under the Exchange Act), of securities of
the Company entitling the person or group to 30% or more of all votes
(without consideration of the rights of any class or stock to elect
directors by a separate class vote) to which all stockholders of the
Company would be entitled in the election of the Board of Directors
were an election held on such date;
(iii) the date, during any period of two consecutive
years, when individuals who at the beginning of such period constitute
the Board of Directors of the Company cease for any reason to
constitute at least a majority thereof, unless the election, or the
nomination for election by the stockholders of the Company, of each new
director was approved by a vote of at least two-thirds of the directors
then still in office who were directors at the beginning of such
period; and
(iv) the date of approval by the stockholders of the
Company of an agreement (a "reorganization agreement") providing for:
(A) the merger or consolidation of the
Company with another corporation where the stockholders of the
Company, immediately prior to the merger or consolidation, do
not beneficially own, immediately after the merger or
consolidation, shares of the corporation issuing cash or
securities in the merger or consolidation entitling such
stockholders to more than 50% of all votes (without
consideration of the rights of any class of stock to elect
directors by a separate class vote) to which all stockholders
of such corporation would be entitled in the election of
directors or where the members of the Board of Directors of
the Company, immediately prior to the merger or consolidation,
do not, immediately after the merger or consolidation,
constitute a majority of the Board of Directors of the
corporation issuing cash or securities in the merger or
consolidation; or
(B) the sale or other disposition of all or
substantially all the assets of the Company.
9
<PAGE>
(c) Board Authority to Make Adjustments. Any adjustments under
this Section 15 will be made by the Board of Directors or the Committee, whose
determination as to what adjustments, if any, will be made and the extent
thereof will be final, binding and conclusive. No fractional shares will be
issued under the Plan on account of any such adjustments.
16. Merger, Consolidation, Asset Sale, Liquidation, Etc.
----------------------------------------------------
(a) General. In the event of any sale, merger, transfer or
acquisition of the Company or substantially all of the assets of the Company in
which the Company is not the surviving corporation, and provided that after the
Company shall have requested the acquiring or succeeding corporation (or an
affiliate thereof), that equivalent options shall be substituted and such
successor corporation shall have refused or failed to assume all options
outstanding under the Plan or issue substantially equivalent options, then any
or all outstanding options under the Plan shall accelerate and become
exercisable in full immediately prior to such event. The Committee will notify
holders of options under the Plan that any such options shall be fully
exercisable for a period of fifteen (15) days from the date of such notice, and
the options will terminate upon expiration of such notice.
(b) Substitute Options. The Company may grant options under
the Plan in substitution for options held by employees of another corporation
who become employees of the Company, or a subsidiary of the Company, as the
result of a merger or consolidation of the employing corporation with the
Company or a subsidiary of the Company, or as a result of the acquisition by the
Company, or one of its subsidiaries, of property or stock of the employing
corporation. The Company may direct that substitute options be granted on such
terms and conditions as the Board of Directors considers appropriate in the
circumstances.
17. No Special Employment Rights.
----------------------------
Nothing contained in the Plan or in any option shall confer
upon any optionee any right with respect to the continuation of his or her
employment by the Company or interfere in any way with the right of the Company
at any time to terminate such employment or to increase or decrease the
compensation of the optionee.
18. Other Employee Benefits.
-----------------------
Except as to plans which by their terms include such amounts
as compensation, the amount of any compensation deemed to be received by an
employee as a result of the exercise of an option or the sale of shares received
upon such exercise will not constitute compensation with respect to which any
other employee benefits of such employee are determined, including, without
limitation, benefits under any bonus, pension, profit-sharing, life insurance or
salary continuation plan, except as otherwise specifically determined by the
Board of Directors.
10
<PAGE>
19. Amendment of the Plan.
---------------------
(a) The Board of Directors may at any time, and from time to
time, modify or amend the Plan in any respect; provided, however, that if at any
time the approval of the stockholders of the Company is required under Section
422 of the Code or any successor provision with respect to Incentive Stock
Options, or under Rule 16b-3, the Board of Directors may not effect such
modification or amendment without such approval; and provided, further, that the
provisions of Section 3(d) hereof shall not be amended more than once every six
months, other than to comport with changes in the Code, the Employer Retirement
Income Security Act of 1974, as amended, or the rules thereunder.
(b) The modification or amendment of the Plan shall not,
without the consent of an optionee, affect his or her rights under an option
previously granted to him or her. With the consent of the optionee affected, the
Board of Directors or the Committee may amend outstanding option agreements in a
manner not inconsistent with the Plan. The Board of Directors shall have the
right to amend or modify (i) the terms and provisions of the Plan and of any
outstanding Incentive Stock Options granted under the Plan to the extent
necessary to qualify any or all such options for such favorable federal income
tax treatment (including deferral of taxation upon exercise) as may be afforded
incentive stock options under Section 422 of the Code and (ii) the terms and
provisions of the Plan and of any outstanding option to the extent necessary to
ensure the qualification of the Plan under Rule 16b-3.
20. Withholding.
-----------
(a) The Company shall have the right to deduct from payments
of any kind otherwise due to the optionee any federal, state or local taxes of
any kind required by law to be withheld with respect to any options or shares
issued upon exercise of options under the Plan. Subject to the prior approval of
the Company, which may be withheld by the Company in its sole discretion, the
optionee may elect to satisfy such obligations, in whole or in part, (i) by
causing the Company to withhold shares of Common Stock otherwise issuable
pursuant to the exercise of an option or (ii) by delivering to the Company
shares of Common Stock already owned by the optionee. The shares so delivered or
withheld shall have a Fair Market Value equal to such withholding obligation as
of the date that the amount of tax to be withheld is to be determined. An
optionee who has made an election pursuant to this Section 20(a) may only
satisfy his or her withholding obligation with shares of Common Stock which are
not subject to any repurchase, forfeiture, unfulfilled vesting or other similar
requirements.
(b) The acceptance of shares of Common Stock upon exercise of
an Incentive Stock Option shall constitute an agreement by the optionee (i) to
notify the Company if any or all of such shares are disposed of by the optionee
within two years from the date the option was granted or within one year from
the date the shares were issued to the optionee pursuant to the exercise of the
option, and (ii) if required by law, to remit to the Company, at the time of and
in
11
<PAGE>
the case of any such disposition, an amount sufficient to satisfy the Company's
federal, state and local employment and withholding tax obligations with respect
to such disposition, whether or not, as to both (i) and (ii), the optionee is in
the employ of the Company at the time of such disposition.
(c) Notwithstanding the foregoing, in the case of a Reporting
Person whose options have been granted in accordance with the provisions of
Section 3(b) herein, no election to use shares for the payment of withholding
taxes shall be effective unless made in compliance with any applicable
requirements of Rule 16b-3.
21. Cancellation and New Grant of Options, Etc.
------------------------------------------
The Board of Directors or the Committee shall have the
authority to effect, at any time and from time to time, with the consent of the
affected optionees, (i) the cancellation of any or all outstanding options under
the Plan and the grant in substitution therefor of new options under the Plan
covering the same or different numbers of shares of Common Stock and having an
option exercise price per share which may be lower or higher than the exercise
price per share of the cancelled options or (ii) the amendment of the terms of
any and all outstanding options under the Plan to provide an option exercise
price per share which is higher or lower than the then-current exercise price
per share of such outstanding options.
22. Effective Date and Duration of the Plan.
---------------------------------------
(a) Effective Date. The Plan was adopted by the Board of
Directors on October 31, 1994 and was approved by the Company's stockholders on
October 31, 1994. Amendments to the Plan not requiring stockholder approval
shall become effective when adopted by the Board of Directors; amendments
requiring stockholder approval (as provided in Section 19) shall become
effective when adopted by the Board of Directors, but no Incentive Stock Option
granted after the date of such amendment shall become exercisable (to the extent
that such amendment to the Plan was required to enable the Company to grant such
Incentive Stock Option to a particular optionee) unless and until such amendment
shall have been approved by the Company's stockholders. If such stockholder
approval is not obtained within twelve months of the Board's adoption of such
amendment, any Incentive Stock Options granted on or after the date of such
amendment shall terminate to the extent that such amendment to the Plan was
required to enable the Company to grant such option to a particular optionee.
Subject to this limitation, options may be granted under the Plan at any time
after the effective date and before the date fixed for termination of the Plan.
(b) Termination. Unless sooner terminated in accordance with
Section 16, the Plan shall terminate upon the earlier of (i) October 30, 2004,
which is the close of business on the day next preceding the tenth anniversary
of the date of its adoption by the Board of Directors, or (ii) the date on which
all shares available for issuance under the Plan shall have been issued
12
<PAGE>
pursuant to the exercise or cancellation of options granted under the Plan. If
the date of termination is determined under (i) above, then options outstanding
on such date shall continue to have force and effect in accordance with the
provisions of the instruments evidencing such options.
23. Governing Law.
-------------
The provisions of this Plan shall be governed and construed in
accordance with the laws of the State of Delaware without regard to the
principles of conflicts of laws.
As amended by the Board of Directors through January 18, 2000.
13
EXHIBIT 10.49
LICENSE AGREEMENT
THIS LICENSE AGREEMENT is made and entered into this 23rd day of
August, 1999 between THE UNIVERSITY OF NORTH CAROLINA AT CHAPEL HILL having an
address at CB #4105, 308 Bynum Hall, Chapel Hill, N.C. (hereinafter referred to
as University) and Renaissance Cell Technologies, Inc., a corporation organized
and existing under the laws of Delaware and having an address at P.O. Box 14287,
Research Triangle Park, NC 27709 (hereinafter referred to as Licensee).
W I T N E S S E T H
WHEREAS, University owns and controls inventions known as[*], and [*]
(hereafter jointly, "Bioreactor Inventions");
WHEREAS, University owns and controls inventions known as [*]
(hereafter "Progenitor Inventions"),(hereafter Bioreactor Inventions and
Progenitor Inventions may be referred to jointly as "Inventions");
WHEREAS, the Bioreactor Inventions were developed by Dr. Jeffrey
Macdonald and the Progenitor Inventions were developed by Dr. Lola Reid et. al.
(hereafter, "Inventors"), of the University in part under the Sponsored Research
Agreement between the parties dated July 1, 1997 (the "Sponsored Research
Agreement"); and
WHEREAS, Licensee was granted an option to license any inventions that
resulted from the Sponsored Research Agreement, and exercised that option with
respect to the Inventions on December 7, 1998; and
WHEREAS, University desires to facilitate a timely transfer of its
information and technology concerning the Inventions for the ultimate benefit of
the public and this transfer is best accomplished by the grant of this license;
NOW, THEREFORE, for and in consideration of the covenants, conditions,
and undertakings hereinafter set forth, it is agreed by and between the parties
as follows:
1. Definitions
1.1 "Sponsored University Technology" means any unpublished research
and development information, unpatented inventions, know-how, and technical data
in the possession of the University prior to the effective date of this
Agreement or which comes into the possession of University resulting from
research conducted by the inventors of the Patent Rights as a result of, and
during the term of the Sponsored Research Agreement which relates to and is
necessary for the practice of the Inventions and Improvements and which
University has the right to provide to Licensee.
[ * ] Confidential Treatment Requested; Certain Information Omitted and
Filed Separately with the SEC.
<PAGE>
l.2 "Licensed Products" means any method, procedure, product, service,
or component part thereof whose manufacture or sale includes any use of
University Technology or Patent Rights.
1.3 "Patent Rights" means any U.S. patents and/or patent applications
covering the Inventions and Improvements owned or controlled by University prior
to or during the term of this Agreement and which University has the right to
provide to Licensee, as well as any continuations, continuations in part,
divisionals, provisionals, continued prosecution applications, or reissues
thereof, and any foreign counterpart of any of the foregoing.
1.4 "Net Sales Price" means the invoiced sales price of Licensed
Products, less the following sums actually paid or credited by Licensee as shall
be detailed in Licensee's reports made pursuant to Paragraph 3.3 of this
Agreement: (a) sales taxes or other taxes separately stated on the invoice, (b)
shipping and insurance charges and (c) quantity, trade or cash discounts allowed
in amounts customary in the trade.
1.5 "Net Sales" means the total Net Sales Price of Licensed Products,
after deducting actual allowances for returned or defective goods. Licensed
Products will be considered sold when billed out, or when delivered or paid for
before delivery, whichever first occurs.
1.6 "Licensed Territory" means the entire world.
1.7 "Licensed Field" means, and is limited to, the practice of the
Inventions for all uses and fields.
1.8 "IDE" means Investigational Device Exemption Application or its
foreign equivalent thereto filed on a Licensed Product.
1.9 "IND" means Investigational Exemption for New Drug Application or
its foreign equivalent thereto filed on a Licensed Product.
1.10 "PMA" means Premarket Approval Application or its foreign
equivalent thereto filed on a Licensed Product.
1.11 "PLA" means a Product License Application or its foreign
equivalent thereto filed on a Licensed Product.
1.12 "NDA" means a New Drug Application or its foreign equivalent
thereto filed on a Licensed Product.
1.13 "Affiliate" means any person or entity which directly or
indirectly owns or controls 50% or more of the outstanding voting securities of
Licensee or any corporation or other business entity of which 50% or more of the
outstanding voting securities or other ownership interests are owned or
controlled, directly or indirectly, by Licensee.
1.14 "Non-Sponsored University Technology" means any unpublished
research and development information, unpatented inventions, know-how, and
technical data in the possession
<PAGE>
of the University prior to the effective date of this Agreement or which comes
into the possession of University during the term of this Agreement which
relates to and is necessary for the practice of the Inventions and which
University has the right to provide to Licensee. (Hereafter Non-Sponsored
University Technology and Sponsored University Technology may be referred to
jointly as "University Technology".)
1.15 "Sales Year" shall mean as to a specific Licensed Product, the
period beginning on the date of first commercial sale of that Licensed Product
and extending for twelve months thereafter, and each successive twelve-month
period for the life of this Agreement.
1.16 "Improvements" shall mean any improvements or inventions made
subsequent to the date of this License Agreement for the identification,
isolation, cryopreservation, purification, expansion, or culture of hepatic
progenitor cells and their use for treating liver failure and liver dysfunction,
and which result from the Sponsored Research Agreement. Improvements or
modifications to the Inventions that are included in the issued patents or
patent applications covering the Inventions shall not be considered
Improvements.
2. Grant of License and Term
2.1 University grants to Licensee in the Licensed Territory an
exclusive right and license to use Sponsored University Technology in the
Licensed Field, subject to University's reservation of rights under paragraph
9.1. For purposes of this paragraph, "exclusive" means that University will not
knowingly license any other third party the rights to such Sponsored University
Technology. University also grants to Licensee in the Licensed Territory a
non-exclusive right and license to use Non-Sponsored University Technology, in
the Licensed Field. Each license granted in this paragraph 2.1 is subject to all
the terms and conditions of this Agreement. Licensee may grant, subject to
University prior written approval, which approval shall not be unreasonably
withheld, sublicenses of its rights under this paragraph 2.1.
2.2 University grants to Licensee to the extent of the Licensed
Territory, an exclusive license, with the right to grant sublicenses, under the
Patent Rights and the right to make, use and sell Licensed Products in the
Licensed Field, upon the terms and conditions set forth herein. Licensee may
grant, subject to University prior written approval, which approval shall not be
unreasonably withheld, sublicenses of its rights under this paragraph.
2.3 Any license granted herein is for a term beginning on the date of
execution of this Agreement and, unless terminated sooner as herein provided,
ending at the expiration of the last to expire patent included in the Patent
Rights, or if no patents mature from said Patent Rights, such license shall
terminate 15 years from the date of its commencement, at which time Licensee's
license to use the Sponsored University Technology shall be fully-paid.
2.4 Licensee agrees not to use University Technology and Patent Rights
for any purpose other than that set forth in Paragraphs 2.1 and 2.2 without the
prior written consent of University. Licensee shall not disclose any unpublished
University Technology or patent applications included in Patent Rights furnished
by University pursuant to Paragraph 2.1 and 2.2 above to third parties during
the term of this Agreement or any time thereafter, provided, however, that
disclosure may be made of any such patent applications and University Technology
at any time:
<PAGE>
(1) with the prior written consent of University, or (2) after the
same shall have become public through no fault of Licensee. Licensee shall use
the same standard of care to protect University Technology and University patent
applications as it uses to protect its own confidential information, and shall
limit disclosure of such information to those of its employees who have an
actual need to know and who have a written obligation to protect the
confidentiality of such information which is substantially the same as the
agreement contained herein. Notwithstanding other provisions of this Paragraph
2.4 to the contrary, Licensee may disclose to its Affiliates, consultants,
collaborators, potential collaborators or other third parties to be engaged by
Licensee in the development or commercialization of Licensed Products, the
University Technology and patent applications without prior written consent of
University, only if those parties have signed confidentiality agreements with
Licensee on terms which are substantially the same as those contained in this
Paragraph 2.4. Licensee will promptly forward to University copies of all such
agreements.
2.5 The provisions of Paragraph 2.4 shall remain in effect for a period
of five years beyond the termination of this Agreement.
2.6 Notwithstanding the foregoing, any and all licenses granted
hereunder are subject to the rights of the United States Government if any which
arise out of its sponsorship of the research which led to the Inventions.
2.7 Pursuant to Paragraph 2.2 above, Improvements shall in each case be
incorporated in this Agreement by way of separate letter amendment to this
Agreement signed by authorized representatives of both parties.
3. License Fee, Milestone Payments and Royalties
3.1 (a) Licensee shall pay to University a license issue fee
for the Progenitor Inventions in the amount of [ * ]
dollars ($[ * ]) for [ * ] and [ * ] dollars ($[
* ]) for [ * ], and for the Bioreactor Inventions in
the amount of [ * ] dollars ($[ * ]) for a total license issue
fee of [ * ] dollars ($[ * ]), payable
within thirty (30) days of execution of this Agreement. Licensee further agrees
to pay University a [ * ] dollar ($[ * ]) license
fee for each Improvement licensed hereunder, payable within thirty (30) days of
execution of a letter amendment pursuant to Paragraph 2.7 above.
(b) Licensee will also reimburse the University for all past
and future costs (including attorney's fees) arising out of the patenting of the
Inventions pursuant to Article 10 of this Agreement to the extent not paid by
Licensee prior to the date of this Agreement. Reimbursement of patenting costs
shall be due upon monthly billings from University.
(c) Licensee shall pay to University the following milestone
payments within thirty (30) days after each milestone is achieved.
[ * ] Confidential Treatment Requested; Certain Information Omitted and
Filed Separately with the SEC.
<PAGE>
With respect to Licensed Products incorporating or otherwise
using the Bioreactor Inventions:
(i) $[ * ] per product for the initial
IDE or equivalent approval;
(ii) $[ * ] per product at the initiation
of the initial Phase III clinical trials or its
equivalent;
(iii) $[ * ] per product for the initial
PMA, PLA or equivalent approval in the first country
where such approval is received.
With respect to Licensed Products incorporating or otherwise
using the Progenitor Inventions:
(i) $[ * ] per product for the initial
IND or equivalent approval;
(ii) $[ * ] per product at the initiation
of the initial Phase III clinical trials or its
equivalent;
(iii) $[ * ] per product for the initial
PMA, PLA or its equivalent approval in the first
country where such approval is received.
With respect to this Section 3.1 only, different indications
for native hepatic progenitor cells are not separate products.
(d) If an IND or equivalent filing for a Licensed Product
includes one or more Improvements that are covered by a valid claim of a US
patent(s) included in the Patent Rights, then an additional license payment of
[ * ] dollars ($[ * ]) for each Improvement included in that Licensed Product
shall be immediately payable to University. If the US patent on an Improvement
has not issued when the IND or equivalent filing for the Licensed Product
including such Improvement is made, then the payment will be owed upon issuance
of such US patent. For example, if an IND is filed for a Licensed Product that
includes two patented Improvements, then a [ * ] dollar ($[ * ]) license payment
will be made to University, and no subsequent [ * ] dollar license payments
shall be owed for subsequent IND filings of other Licensed Products that include
the aforementioned two Improvements.
The license issue fee, the reimbursement of patenting costs and the
milestone payments shall all be non-refundable and shall not be a credit against
any other amounts due hereunder except as may be provided for elsewhere in this
Agreement.
3.2 Beginning on the effective date of this Agreement and continuing
for the life of this Agreement, Licensee will pay University a running royalty
of all Net Sales of the Licensed Product(s). Subject to Section 5.3, the royalty
rate will be [ * ]% of the first $[ * ] of annual Net Sales of a Licensed
Product; [ * ]% of the portion of annual
[ * ] Confidential Treatment Requested; Certain Information Omitted and
Filed Separately with the SEC.
<PAGE>
Net Sales between $[ * ] and $[ * ]; and [ * ]% of
the portion of annual Net Sales in excess of $[ * ].
This schedule will be applied separately for Net Sales of Licensed
Products based on each of the Progenitor Inventions and Bioreactor Inventions.
However, if a Licensed Product consists of the Progenitor Inventions and either
a Bioreactor Invention or a component or service that does not bear a royalty,
the term "Net Sales" for purposes of determining the royalties payable with
respect to each Invention shall mean that portion of the invoiced price of the
Licensed Product represented by or attributable to such Invention on the
invoice, or the cost of goods sold, if the invoiced price is not separately
available for each Invention. For example, if a Licensed Product consists of a
bioartificial liver device, and the Progenitor Inventions contributes 50% of the
value of such product, and the Bioreactor Invention contributes 25% of the
value, the royalties for each Invention shall be calculated based on 50% of the
Net Sales of such Licensed Product and 25% of such Net Sales, respectively.
3.3 Licensee agrees to make semi-annual written reports to University
within 30 days after the first days of each January and July during the life of
this Agreement and as of such dates, stating in each such report the number,
description, and aggregate Net Selling Prices of Licensed Products sold or
otherwise disposed of during the preceding six calendar months and upon which
royalty is payable as provided in Article 3.2 hereof. The first such report
shall include all such Licensed Products so sold or otherwise disposed of prior
to the date of such report. Until Licensee has achieved a first commercial sale
of a Licensed Product a report shall be submitted by Licensee at the end of each
January and July after the effective date of this Agreement and will include a
full written report describing Licensee's technical and other efforts made
towards such first commercial sale for all Licensed Products under development.
To the extent permitted by the NC Public Records Act, N.C.G.S. Ch. 132A,
University agrees to keep all such reports confidential.
3.4 Concurrently with the making of each such report, Licensee shall
pay to the University royalties at the rate specified in Article 3.2 of this
Agreement on the Licensed Products included therein.
3.5 If in any Sales Year for a Licensed Product based on each of
the Progenitor Inventions and Bioreactor Inventions, during the term of this
Agreement, total amounts payable under Paragraph 3.2 hereof are less than the
minimum amount indicated in the Schedule below corresponding to such Sales Year,
Licensee shall pay the University within thirty (30) days after the end of such
Sales Year, the difference between the amounts payable for such calendar year
and said minimum amount.
[ * ] Confidential Treatment Requested; Certain Information Omitted and
Filed Separately with the SEC.
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE
Date of First Minimum Amounts
- ------------- ---------------
Commercial Sale or Use (X) Progenitor Inventions Bioreactor Inventions
- -------------------------- --------------------- ---------------------
<S> <C> <C>
X $[ * ] $[ * ]
X+12 months and X+24 months $[ * ] $[ * ]
X+36 months and all subsequent $[ * ] $[ * ]
12-month periods
</TABLE>
As an example, if the first commercial sale of a Licensed Product based
on the Progenitor Inventions occurs June 1, 2003, then the minimum annual
royalty obligation of $[ * ] would be owed for the Sales Year commencing June
1, 2004.
3.6 Should this Agreement terminate or expire during a Sales Year, the
minimum royalty under paragraph 3.5 for such portion of a year shall be
determined by multiplying the minimum royalty set forth in said paragraph for
the Sales Year in which this Agreement terminates or expires, by a fraction, the
numerator of which shall be the number of days during such Sales Year for which
this agreement shall be in effect and the denominator of which shall be 365.
3.7 In the event of default in payment of any payment owing to
University under the terms of this Agreement, and if it becomes necessary for
University to undertake legal action to collect said payment, Licensee shall pay
all legal fees and costs incurred by University in connection with a proceeding
resulting in a judgement in favor of University.
3.8 If Licensee has not practiced the Inventions during the calendar
year which precedes April of the year 2013 to the extent of generating earned
royalties under paragraph 3.2 of this Agreement in the amount of $[ * ],
Licensee shall furnish University with an explanation for the failure. If, after
consultation with Licensee, University determines in its sole opinion that
Licensee has not provided a reasonable explanation for the failure, University
may, by written notice to Licensee, terminate this Agreement.
3.9 In partial consideration of the license granted under paragraph 2.2
of this Agreement, Licensee shall issue to University 12,500 shares of fully
vested Common Stock of Licensee within thirty (30) days of execution of this
Agreement.
3.10 The transfer of Common Stock pursuant to Section 3.9 of this
Agreement is made with the University in reliance upon the University's
representation to the Licensee, which the University hereby confirms by
execution of this Agreement, except to the extent the University distributes
part of its Common Stock to the Inventors pursuant to University policy (which
does not require the Inventors to pay any consideration to the University for
such Common Stock), that the Common Stock to be received by the University (the
"Securities") will be acquired for investment for University's own account, not
as a nominee or agent, and not with a view to the resale or distribution of any
part thereof, and that the University has no present intention of selling,
granting any participation in, or otherwise distributing the same, except to the
University
[ * ] Confidential Treatment Requested; Certain Information Omitted and
Filed Separately with the SEC.
<PAGE>
of North Carolina Foundation, Inc., for purposes of holding the Securities. By
executing this Agreement, the University further represents that it does not
have any contract, undertaking, agreement, or arrangement with any person to
sell, transfer, or grant participation to such person or to any third person,
with respect to any of the Securities.
3.11 The University has received all the information that it considers
necessary or appropriate for deciding whether to purchase the Securities. The
University further represents that it has had sufficient opportunity to ask
questions and receive answers from the Licensee regarding the terms and
conditions of the offering of the Securities.
3.12 The University acknowledges that it is able to fend for itself,
can bear the economic risk of its investment, and has such knowledge and
experience in financial or business matters that it is capable of evaluating the
merits and risks of the investment in the Securities.
3.13 The University and the Inventors understand that the Securities
are characterized as "restricted securities" under the federal securities laws
in as much as they are being acquired from Licensee in a transaction not
involving a public offering and that under such laws and applicable regulations
such Securities may be resold without registration under the Securities Act of
1933, as amended (the "Act"), only in certain limited circumstances. In this
regard, the University and the Inventors each represent that it is familiar with
SEC Rule 144, as currently in effect, and understands the resale limitations
imposed thereby and by the Act.
4. Diligence Requirement
4.1 Licensee shall use its best efforts to proceed diligently with the
manufacture and sale of Licensed Products and shall earnestly and diligently
offer and continue to offer for sale such Licensed Products, both under
reasonable conditions, during the period of this Agreement.
4.2 In particular, Licensee or its sublicensees, shall meet the
following performance milestones. If Licensee fails to achieve these milestones,
Licensee shall furnish University with an explanation for the failure. If, after
consultation with Licensee, University determines in its sole opinion that
Licensee has not provided reasonable explanation for the failure, University may
terminate this Agreement or convert it to a non-exclusive license, at
University's sole option.
(a) Licensee agrees to extend the Sponsored Research Agreement
for an additional year beyond July 1, 2000 by providing an additional $[ * ] in
research funding to the laboratory of Dr. Lola Reid at University. Payments
shall be made beginning July 1, 2000.
(b) With respect to the Bioreactor Inventions:
(i) [ * .]
(ii) [ * .]
(iii) [ * .]
[ * ] Confidential Treatment Requested; Certain Information Omitted and
Filed Separately with the SEC.
<PAGE>
(c) With respect to the Progenitor Inventions:
(i) [ * .]
(ii) [ * .]
(iii) [ * .]
5. Sublicenses
5.1 Subject to this Article 5, Licensee may grant sublicenses of its
rights under Paragraphs 2.1 and 2.2 above.
5.2 Any sublicense granted pursuant to this Article shall be in
accordance with the terms and conditions of this Agreement. Licensee shall
provide University with a copy of all sublicense agreements within thirty (30)
days of execution.
5.3 University shall receive royalties on both sublicensee Net Sales of
Licensed Products and any other license income received by Licensee from any
sublicensees, as if they were Net Sales made by Licensee subject to Paragraph
3.2; provided, however, that the royalty paid to University will not exceed
[ * ]% of the royalty received by Licensee from its sublicensee, subject to a
minimum royalty paid to University of [ * ]% of sublicensee annual Net Sales;
and provided, further, that the term "license income" excludes amounts received
by Licensee which constitute (i) payments made, at fair market value in
arms-length transactions, for the performance of research or development
activities to the extent that such payments are specifically allocated to
develop Licensed Products and reflect overhead rates that are customary in the
biotechnology industry, (ii) payments to Licensee for the manufacture of the
Licensed Products, (iii) payments to Licensee for the performance by Licensee of
consulting or other services related to the development of Licensed Products,
such as the conduct of preclinical and clinical studies of the Licensed
Products; and (iv) payments made at fair market value in arms-length
transactions representing equity investments in Licensee or the proceeds of debt
instruments; (v) payments representing reimbursement of expenses, such as for
patent costs and fees.
5.4 Licensee shall pay to University, within thirty (30) days of
receipt from sublicensee, all royalty or other payments due to University under
Paragraph 5.3.
6. Cancellation by University
6.1 It is expressly agreed that, notwithstanding the provisions of any
other paragraph of this contract, if Licensee should fail to deliver to
University any royalty at the time or times that the same should be due to
University or if Licensee should in any material respect violate or fail to keep
or perform any covenant, condition, or undertaking of this Agreement on its part
to be kept or performed hereunder, then and in such event University shall have
the right to cancel and terminate this Agreement, and the license herein
provided for, by written notice to Licensee if
[ * ] Confidential Treatment Requested; Certain Information Omitted and
Filed Separately with the SEC.
<PAGE>
Licensee has failed to cure any such breach within 30 days of receipt of written
notice from University describing such breach. Licensee's right to cure a breach
during the cure periods specified above will apply only to the first two
breaches occurring within any twenty-four month period and properly noticed
under terms of this Agreement, regardless of the nature of those breaches. Any
subsequent material breach by Licensee will entitle University to terminate this
Agreement upon proper notice.
6.2 Alternatively, should Licensee be in breach or default as set forth
above, and should University be in a position where it could rightfully
terminate this Agreement, then in its sole discretion, University may convert
this exclusive license to a non-exclusive license upon giving notice of such
decision to Licensee.
6.3 If Licensee should enter into a composition with or assignment for
the benefit of its creditors, then in such event University shall have the right
to cancel and terminate this Agreement, and the license herein provided for, by
written notice to Licensee.
6.4 Any termination or cancellation under any provision of this
Agreement shall not relieve Licensee of its obligation to pay any royalty or
other fees (including attorney's fees pursuant to Article 3.1 hereof) due or
owing at the time of such cancellation or termination.
6.5 In the event of termination under the provisions of Article 6.1 all
sublicenses of Patent Rights and/or University Technology will be assigned to
University, and Licensee will have no further obligations to University with
respect to such sublicenses.
7. Disposition of Licensed Products On Hand Upon Cancellation or Termination
7.1 Upon cancellation of this Agreement or upon termination in whole or
in part, Licensee shall provide University with a written inventory of all
University Technology and Licensed Products in process of manufacture, in use or
in stock. Except with respect to termination pursuant to Paragraph 6.1, Licensee
shall have the privilege of disposing of the inventory of such Licensed Products
within a period of one hundred and eighty (180) days of such termination upon
conditions most favorable to University that Licensee can reasonably obtain.
Licensee will also have the right to complete performance of all contracts
requiring use of the University Technology, Patent Rights (except in the case of
termination pursuant to Paragraph 6.1) or Licensed Products within and beyond
said 180-day period provided that the remaining term of any such contract does
not exceed one year. All Licensed Products which are not disposed of as provided
above shall be delivered to University or otherwise disposed of, in University's
sole discretion, and at Licensee's sole expense.
8. Use of University's Name
8.1 The use of the name of University, or any contraction thereof, in
any manner in connection with the exercise of this license is expressly
prohibited except with prior written consent of University, and except that
Licensee may state that it holds an exclusive license with
<PAGE>
the University with respect to the Inventions and that the Inventions were the
result of research sponsored by Licensee, in communications to shareholders and
filings with the FDA, SEC, and other governmental authorities. Licensee will
obtain University's approval of any description beyond the statements permitted
in the preceding sentence; but once any additional description is approved by
University, it may be used for other purposes without further review and
approval.
9. University Use
9.1 It is expressly agreed that, notwithstanding any provisions herein,
University is free to use University Technology, Patent Rights and Licensed
Products for its own research, public service, teaching and educational purposes
without payment of royalties. Furthermore, University shall be free to publish
University Technology, as it sees fit; however, during the term of the Sponsored
Research Agreement between the parties, all publications of University
Technology shall be subject to Article 6 of that agreement.
10. Patents and Infringements
10.1 University shall, at Licensee's expense, diligently prosecute and
maintain the United States patents comprising Patent Rights using mutually
agreed upon patent counsel. The parties shall cooperate in the filing and
prosecution of the Patent Rights. University shall provide Licensee (either
directly or through patent counsel) with copies of all relevant documentation so
that Licensee may be informed and apprised of the continuing prosecution and
shall have an opportunity to review and comment on filings in advance. Licensee
will keep this documentation confidential in accordance with paragraph 2.4
hereof. University shall give due consideration to comments of Licensee related
to patent prosecution, including suggestions for amending any patent application
to include claims reasonably requested by Licensee to protect the Licensed
Products. University agrees, subject to Section 6 "Publication" of the Sponsored
Research Agreement, to treat all such documentation as confidential.
10.2 As regards filing of foreign patent applications corresponding to
the U.S. applications described in paragraph 10.1 above, Licensee shall
designate that country or those countries, if any, in which Licensee desires
such corresponding patent application(s) to be filed. Licensee shall pay all
costs and legal fees associated with the preparation and filing of such
designated foreign patent applications and such applications shall be in the
University's name. University may elect to file corresponding patent
applications in countries other than those designated by Licensee, but in that
event University shall be responsible for all costs associated with such
non-designated filings. In such event, Licensee shall forfeit its rights under
this license in the country(ies) where University exercises its option to file
such corresponding patent applications, except that if Licensee is underwriting
the prosecution and maintenance of the Patent Rights in all major markets
(defined as the United States, Canada, Japan, the United Kingdom, France,
Germany, Spain and Italy), University may not license the Patent Rights
prosecuted or maintained by University to third parties. Licensee acknowledges
that the US Government may exercise its right to patent and subsequently
out-license the Bioreactor Inventions Patent Rights in countries which are not
designated by Licensee.
10.3 If the production, sale or use of Licensed Products under this
Agreement by Licensee results in any claim for patent infringement against
Licensee, Licensee shall promptly
<PAGE>
notify the University thereof in writing, setting forth the facts of such claim
in reasonable detail. As between the parties to this Agreement, Licensee shall
have the first and primary right and responsibility at its own expense to defend
and control the defense of any such claim against Licensee, by counsel of its
own choice. It is understood that any settlement of such actions that would
affect University's financial rights or would restrict its use of the
Inventions, University Technology, or Patent Rights must be approved by
University. Such approval shall not be unreasonably withheld. University agrees
to cooperate with Licensee in any reasonable manner deemed by Licensee to be
necessary in defending any such action. Licensee shall reimburse University for
any out of pocket expenses incurred in providing such assistance.
10.4 In the event that any Patent Rights licensed to Licensee are
infringed by a third party, Licensee shall have the primary right, but not the
obligation, to institute, prosecute and control any action or proceeding with
respect to such infringement, by counsel of its choice, including any
declaratory judgment action arising from such infringement.
10.5 Notwithstanding the foregoing, and in University's sole
discretion, University shall be entitled to participate through counsel of its
own choosing in any legal action involving the Inventions. Nothing in the
foregoing sections shall be construed in any way which would limit the authority
of the Attorney General of North Carolina.
10.6 University shall cooperate with Licensee in applying for an
extension of the term of any patent included within Patent Rights if appropriate
under the Drug Price Competition and Patent Term Restoration Act of 1984 in the
United States or any other law or regulation in other countries in the
Territory. Licensee shall prepare all such documents, and University agrees to
execute such documents and to take such additional action as Licensee may
reasonably request in connection therewith.
11. Waiver
11.1 It is agreed that no waiver by either party hereto of any breach
or default of any of the covenants or agreements herein set forth shall be
deemed a waiver as to any subsequent and/or similar breach or default.
12. License Restrictions
12.1 It is agreed that the rights and privileges granted to Licensee
are each and all expressly conditioned upon the faithful performance on the part
of the Licensee of every requirement herein contained, and that each of such
conditions and requirements may be and the same are specific license
restrictions.
13. Assignments
13.1 This Agreement is binding upon and shall inure to the benefit of
the University, its successors and assigns. However, this Agreement shall be
personal to Licensee and it is not assignable by Licensee to any other entity
without the written consent of University, which consent shall not be withheld
unreasonably; provided, however, that Licensee, without University's consent,
may assign this Agreement to an entity in which at least a majority of the
<PAGE>
voting securities are owned, directly or indirectly, by Licensee at the time of
such assignment, or in the event of Licensee's merger or consolidation with
another company.
14. Indemnity
14.1 Licensee shall indemnify, hold harmless and defend (with counsel
reasonably acceptable to University) University, its trustees, officers,
employees, students, agents and the Inventors (a "University Party") against any
and all losses, liabilities, damages, costs, fees and expenses (including
reasonable attorneys' fees) incurred by a University Party resulting from a
claim, suit or action asserted by a third party arising out of the use,
development, manufacture, promotion, sale or disposition of a Licensed Product
or any other activity related to the practice of the Patent Rights and
University Technology. This indemnification shall include, but is not limited
to, any claims asserted by third parties alleging liability for personal injury
arising out of use of a Licensed Product. Licensee shall not be obligated under
this paragraph 14.1 for any loss or liabilities incurred by a University Party
resulting from such party's gross negligence or willful misconduct.
14.2 University shall indemnify, hold harmless and defend (with counsel
reasonably acceptable to Licensee) Licensee, its officers, directors, employees,
and agents (each, a "Licensee Party") against any and all losses, liabilities,
damages, costs, fees and expenses (including reasonable attorneys' fees)
incurred by a Licensee Party resulting from a claim, suit or action asserted by
a third party arising out of any University Party's gross negligence or willful
misconduct. Licensee acknowledges that University's indemnification obligation
is limited to the extent required by the North Carolina Tort Claims Act.
14.3 As a condition of either party's indemnification obligation, the
party seeking indemnification must promptly notify the indemnifying party in
writing of the existence of the claim or action giving rise to the
indemnification obligation under this Agreement.
15. Insurance
15.1 Licensee is required to maintain in force at its sole cost and
expense, with reputable insurance companies, general liability insurance and
products liability insurance coverage in commercially reasonable amounts to
protect against liability under paragraph 14, above. The University shall have
the right to ascertain from time to time that such coverage exists, such right
to be exercised in a reasonable manner.
16. Independent Contractor Status.
16.1 Neither party hereto is an agent of the other for any purpose.
17. Late Payments
17.1 In the event royalty payments or fees are not received by
University when due, Licensee shall pay to University interest at the annual
rate of interest equal to the prime rate on the first business day of each month
plus 2% on the total unpaid royalties or fees due.
<PAGE>
18. Warranties
18.1 University represents that it is an owner of the Inventions and to
the extent of its interest in Inventions has the full right and power to grant
the licenses set forth in this Agreement. Other than the United States
Government, University is not aware of any third party claiming rights to the
Inventions arising through University. University makes no warranties that any
patent will issue on University Technology or Inventions. University further
makes no warranties, express or implied as to any matter whatsoever, including,
without limitation, the condition of any invention(s) or product(s), that are
the subject of this Agreement; or the merchantability or fitness for a
particular purpose of any such invention or product. University shall not be
liable for any direct, consequential, or other damages suffered by Licensee or
any others resulting from the use of the Inventions or Licensed Products.
19. Accounting and Records
19.1 Licensee will keep complete, true and accurate books of account
and records for the purpose of showing the derivation of all amounts payable to
University under this Agreement. Such books and records will be kept at
Licensee's principal place of business for at least three (3) years following
the end of the calendar quarter to which they pertain, and will be open at all
reasonable times for inspection by a representative of University for the
purpose of verifying Licensee's royalty statements, or Licensee's compliance in
other respects with this Agreement. The representative will be obliged to treat
as confidential all relevant matters.
19.2 Such inspections shall be at the expense of University, unless an
underpayment exceeding U.S. $[ * ], or the equivalent, is discovered
in the course of any such inspection, whereupon all costs relating thereto shall
be paid by Licensee.
19.3 Licensee will promptly pay to University the full amount of any
underpayment, together with interest thereon at the maximum rate of interest
allowed by law.
20. Compliance with Laws
20.1 In exercising its rights under this license, Licensee shall fully
comply with the requirements of any and all applicable laws, regulations, rules
and orders of any governmental body having jurisdiction over the exercise of
rights under this license. Licensee further agrees to indemnify and hold
University harmless from and against any costs, expenses, attorney's fees,
citation, fine, penalty and liability of every kind and nature which might be
imposed by reason of any asserted or established violation of any such laws,
order, rules and/or regulations.
21. U.S. Manufacture
21.1 It is agreed that any Licensed Products sold in the United States
shall be substantially manufactured in the United States.
[ * ] Confidential Treatment Requested; Certain Information Omitted and
Filed Separately with the SEC.
<PAGE>
22. Notices
22.1 Any notice required or permitted to be given to the parties hereto
shall be deemed to have been properly given if delivered in person, mailed by
first-class certified mail or reputable overnight courier (with proof of
delivery), to the other party at the appropriate address as set forth below or
to such other addresses as may be designated in writing by the parties from time
to time during the term of this Agreement.
UNIVERSITY LICENSEE
Francis J. Meyer, Ph.D. Renaissance Cell Technologies
Associate Vice Provost P.O. Box 14287
Office of Technology Development RTP, NC 27709
CB #4105, 308 Bynum Hall Attn: W. Bennett Love
UNC-CH
Chapel Hill, NC 27599-4105
23. Governing Laws
23.1 This Agreement shall be interpreted and construed in accordance
with the laws of the State of North Carolina.
24. Complete Agreement
24.1 It is understood and agreed between University and Licensee that
this license constitutes the entire Agreement, both written and oral, between
the parties, and that all prior agreements respecting the subject matter hereof,
either written or oral, expressed or implied, shall be abrogated, canceled, and
are null and void and of no effect.
25. Severability
25.1 In the event that a court of competent jurisdiction holds any
provision of this Agreement to be invalid, such holding shall have no effect on
the remaining provisions of this Agreement, and they shall continue in full
force and effect.
26. Survival of Terms
26.1 The provisions of Articles 7, 8, 9, 10, 14, 15, 18, 19, 20, 22,
23, and 24 shall survive the expiration or termination of this Agreement.
<PAGE>
IN WITNESS WHEREOF, both University and Licensee have executed this
Agreement, in duplicate originals, by their respective officers hereunto duly
authorized, the day and year first above written. Inventors have likewise
indicated their acceptance of the terms hereof by signing below.
THE UNIVERSITY OF NORTH CAROLINA RENAISSANCE CELL
AT CHAPEL HILL TECHNOLOGIES, INC.
By: /s/ Francis J. Meyer By: /s/ W. Bennett Love
------------------------------ --------------------------
Francis J. Meyer, Ph.D. Name: W. Bennett Love
Associate Vice Provost, ------------------
Technology Development Title: Vice President
Date: August 23, 1999 Date: August 23, 1999
--------------------- ------------------------
INVENTORS:
/s/ Dr. . Lola M. Reid
- --------------------------------
Dr. Lola M. Reid
August 19, 1999
- --------------------------------
Date
/s/ Dr. Jeffrey M. Macdonald
- --------------------------------
Dr. Jeffrey M. Macdonald
August 19, 1999
- --------------------------------
Date
/s/ Dr. Hiroshi Kubota
- --------------------------------
Dr. Hiroshi Kubota
August 19, 1999
- --------------------------------
Date
EXHIBIT 10.50
LICENSE AGREEMENT
-----------------
This Agreement, effective as of July 26, 1996 ("Effective Date") and
executed in duplicate originals, by and between Albert Einstein College of
Medicine of Yeshiva University, a division of Yeshiva University, a corporation
organized and existing under the laws of the State of New York and having
offices at 1300 Morris Park Avenue, Bronx, New York 10461 ("AECOM") and
Renaissance Cell Technologies, Incorporated, P.O. Box 16415, Chapel Hill, North
Carolina 27516, a corporation organized and existing under the laws of the State
of Delaware ("Renaissance").
WHEREAS, AECOM is the owner of U.S. and foreign patent applications
relating to (l) the proliferation of hepatocyte precursors and (2) hepatoblasts
and methods of isolating same;
WHEREAS, Renaissance is desirous of acquiring an exclusive license
under such U.S. and foreign patent applications and any patents issuing thereon;
WHEREAS, AECOM is willing to grant an exclusive license under such U.S.
and foreign patent applications and any patents issuing thereon to Renaissance
under the terms and conditions set forth below.
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:
1. Definitions
-----------
1.01 "Patent Rights" means the United States and foreign patent applications
listed on Appendix A, including any divisionals, continuations and
continuations-in-part, and any patents issuing thereon, including any
substitutions, extensions, reissues, reexaminations, and inventor's
certificates.
1.02 "Licensed Product" means any product, the manufacture, use or sale of
which is covered by a claim of Patent Rights.
1.03 "Net Sales" means the total consideration received by Renaissance or
its sublicensees for sales by Renaissance or its sublicensees of
Licensed Products, less transportation charges, sales tax, use tax,
excise tax, value added taxes, custom duties, normal and customary
quantity and cash discounts, and allowances and credits for return of
Licensed Products.
Portions of this exhibit marked [ * ] have been omitted pursuant to a
request for confidential treatment.
<PAGE>
2. License Grant
-------------
2.01 Subject to the rights, if any, of the U.S. Government under 35 U.S.C.
ss. 200 et seq., AECOM grants to Renaissance a worldwide, exclusive
license with the right by Renaissance to grant sublicenses, under the
Patent Rights to make, have made, use, sell, offer for sale and import
Licensed Products. Renaissance will not grant any sublicense under
Patent Rights unless it first receives the prior written consent of
AECOM, which consent will not be unreasonably withheld.
2.02 Nothing contained in this Agreement shall be construed or interpreted
as a grant, by implication or otherwise, of any license except as
expressly specified in Paragraph 2.01 hereof.
2.03 Notwithstanding the rights granted to Renaissance pursuant to Paragraph
2.01, AECOM shall retain the right to make and use Licensed Products in
its own laboratories for scientific purposes and for continued research
provided that such Licensed Products are not sold by AECOM.
3. Payments
--------
3.01 Renaissance shall pay to AECOM [ * ]percent ([ * ]%) of Net Sales of
Licensed Products utilizing hepatic stem or progenitor cells which have
not been modified and the isolation of which is covered by a valid or
pending patent claim. For all other Licensed Products utilizing hepatic
stem or progenitor cells and based on valid or pending patent claims,
Renaissance shall pay to AECOM [ * ] percent ([ * ]%) of Net Sales.
Renaissance shall make such payments for the longer of ten (10) years
from the first commercial sale by Renaissance of a Licensed Product or
until the expiration of the Patent Rights which cover a Licensed
Product made, used or sold by Renaissance.
3.02 If Renaissance does not terminate this Agreement pursuant to paragraph
5.02 prior to January 1, 2004, then beginning in the calendar year 2004
and in each calendar year thereafter, Licensee agrees to pay to AECOM
guaranteed minimum annual royalties (to be credited against actual
royalties payable pursuant to paragraph 3.01) during each calendar year
of [ * ] Dollars ($[ * ]). This guaranteed minimum annual royalty is
non-refundable and will be paid to AECOM in equal semi-annual
installments pursuant to Article 4 during each such calendar year. In
no event shall any difference between actual royalties and minimum
guaranteed royalties in any such calendar year affect Licensee's
obligation to pay minimum guaranteed royalties in any other calendar
year.
3.03 Renaissance's failure to pay royalties under paragraph 3.01 or to make
any of the payments set forth in paragraph 3.03, after notice of such
failure and an opportunity to cure, shall be the equivalent of a
termination of this Agreement by Renaissance pursuant to paragraph
5.02.
[ * ] Confidential Treatment Requested; Certain Information Omitted and
Filed Separately with the SEC.
<PAGE>
3.04 Only one royalty will be payable on Net Sales by Renaissance of a
Licensed Product under paragraph 3.01, regardless of the number of
patent claims of Patent Rights covering such Licensed Product.
4. Payments and Records
--------------------
4.01 All payments required to be made by Renaissance to AECOM pursuant to
this Agreement shall be made to AECOM in U.S. Dollars by check payable
to AECOM and sent to the address set out in paragraph 12.01 for AECOM.
4.02 Payment due from Renaissance to AECOM pursuant to paragraphs 3.01 and
3.02 will be paid within twenty (20) days after the end of each
semi-annual period during which the payment accrued. Payment shall be
accompanied by a statement of the amount of Net Sales realized by
Renaissance, the amount of Net Proceeds received by Renaissance, the
amount of any minimum royalty due to AECOM, and the total payment due
from Renaissance to AECOM.
4.03 Renaissance shall maintain the usual books of account and records
showing sales of Licensed Products, Net Sales attributable to such
sales. Such books and records shall be open to confidential inspection
by AECOM during usual business hours, by an independent certified
public accountant to whom Renaissance has no reasonable objection, for
two (2) years after the calendar year to which they pertain, for the
sole purpose of verifying the accuracy of the payments made to AECOM by
Renaissance pursuant to this Agreement. Inspection shall be reasonably
limited to those matters related to Renaissance's payment obligations
under this Agreement.
5. Term and Termination of Agreement
---------------------------------
5.01 Unless terminated earlier under other provisions hereof, this Agreement
will expire upon the expiration of Renaissance's last obligation to pay
royalty hereunder.
5.02 Renaissance may terminate this Agreement and the licenses granted
hereunder anytime after execution of this Agreement, by giving notice
to AECOM thirty (30) days prior to such termination. Upon any such
termination, all rights in Patent Rights will revert to AECOM.
5.03 If either party defaults on or breaches any material condition of this
Agreement, the aggrieved party may serve notice upon the other party of
the alleged default or breach. If such default or breach is not
remedied within sixty (60) days from the date of such notice, the
aggrieved party may at its election terminate this Agreement. Any
failure to terminate hereunder shall not be construed as a waiver by
the aggrieved party of its right to terminate for future defaults or
breaches.
5.04 If either party becomes insolvent or makes an assignment for the
benefit of creditors or if proceedings for a voluntary bankruptcy are
instituted on behalf of either party or if either party is declared
bankrupt or insolvent, the other party may at its election terminate
this Agreement by notice to the bankrupt or insolvent party.
<PAGE>
5.05 Termination of this Agreement by either party shall not prejudice the
right of AECOM to recover any payment due at the time of termination or
which becomes due after termination based upon rights vested prior to
termination and shall not prejudice any cause of action or claim of
either party accruing under the licenses granted herein.
6. Prohibition On Use of AECOM's Name
----------------------------------
6.01 Renaissance shall not use the name of AECOM without its prior written
consent, except for the use of AECOM's name by Renaissance as required
by law, regulation or judicial order, in which events Renaissance will
promptly inform AECOM prior to any such required use.
7. Patent Prosecution And Maintenance.
-----------------------------------
7.01 Renaissance will pay the cost of prosecuting and maintaining the Patent
Rights using patent counsel selected by Renaissance and reasonably
acceptable to AECOM. The parties will keep each other fully informed
concerning such applications and will consult with each other
concerning the prosecution of such applications.
7.02 Renaissance may, upon reasonable notice to AECOM, decide to discontinue
paying the expenses associated with any particular application or
patent. If Renaissance decides to discontinue paying such expenses,
AECOM may pay such expenses. Renaissance shall retain no further rights
in any such application or patent for which Renaissance decides to
discontinue paying such expenses and AECOM assumes such responsibility.
8. Force Majeure
-------------
8.01 Each party hereto shall be relieved of its obligations hereunder to the
extent that fulfillment of such obligations shall be prevented by acts
of war, labor difficulties, riot, fire, flood, hurricane, windstorm,
acts or defaults of common carriers, governmental laws, acts or
regulations, shortage of materials or any other occurrence whether or
not similar to the foregoing beyond the reasonable control of the party
affected thereby.
9. Amendment and Assignment
------------------------
9.01 This Agreement sets fourth the entire understanding between the parties
pertaining to the subject matter hereof.
9.02 Except as otherwise provided herein, this Agreement may not be amended,
supplemented or otherwise modified except by an instrument in writing
signed by both parties.
9.03 Without the prior written approval of the other party, which approval
shall not be unreasonably withheld, neither party may assign this
Agreement except to a party
<PAGE>
acquiring substantially all of the assigning party's business to which
this Agreement relates and provided that Renaissance makes all required
payments to AECOM under paragraph 3.01.
10. Infringement
------------
10.01 Renaissance shall have the right, in its sole discretion and its
expense, to initiate legal proceedings on its behalf or in AECOM's
name, if necessary, against any infringer of Patent Rights. Renaissance
shall notify AECOM of its intention to initiate such proceedings at
least thirty (30) days prior to commencement thereof. Any settlement or
recovery received by Renaissance from any such proceeding shall be
divided [*] percent ([*]%) to Renaissance and [*] percent ([*]%)
to AECOM after Renaissance deducts from any such settlement or
recovery its reasonable counsel fees and out-of-pocket expenses
relative to any such legal proceeding. If Renaissance decides not to
initiate legal proceedings against any such infringer, then AECOM shall
have the right to initiate such legal proceedings. Any settlement or
recovery received from any such proceeding shall be divided [*]
percent ([*]%) to Renaissance and [*] percent ([*]%) to AECOM after
AECOM deducts from any such settlement or recovery its reasonable
counsel fees and out-of-pocket expenses relative to any such legal
proceeding.
10.02 In the event that either party initiates or carries on legal
proceedings to enforce any Patent Rights against an alleged infringer,
the other party shall fully cooperate with and supply all assistance
reasonably requested. Further, the other party at its expense, shall
have the right to be represented by counsel of its choice in any such
proceeding, provided that the party who initiates or carries on the
legal proceedings shall have the sole right to conduct such proceedings
and to enter into any settlement thereof for the mutual benefit of
AECOM and Renaissance.
11. Miscellaneous Provisions
------------------------
11.01 This Agreement shall be interpreted and construed in accordance with
the laws of the State of New York.
11.02 This Agreement has been prepared jointly and shall not be strictly
construed against either party.
11.03 If any term or provision of this Agreement or the application thereof
to any person or circumstance shall to any extent be invalid or
unenforceable, the remainder of this Agreement or the application of
such term or provision to persons or circumstances other than those as
to which it is held invalid or unenforceable shall not be affected
thereby and each term and provision of this Agreement shall be valid
and enforced to the fullest extent permitted by law.
[ * ] Confidential Treatment Requested; Certain Information Omitted and
Filed Separately with the SEC.
<PAGE>
11.04 Renaissance agrees to defend at its sole expense, to indemnify and to
hold AECOM, its trustees, employees and agents harmless from any
claims, liabilities, suits or judgments arising out of this Agreement,
so long as such claims, liabilities, suits, or judgments are not
attributable to negligent or intentionally wrongful acts or omissions
by AECOM, its trustees, employees and agents or a breach by AECOM of
this Agreement.
11.05 Nothing in this Agreement is or shall be construed as:
(a) A warranty or representation by AECOM that anything made or
used by Renaissance under any license granted in this
Agreement is or will be free from infringement of patents,
copyrights, and other rights of third parties; or
(b) Granting by implication, estoppel, or otherwise any license,
right or interest other than as expressly set forth herein.
11.06 Except as expressly set forth in this Agreement, the parties MAKE NO
REPRESENTATIONS AND EXTEND NO WARRANTIES OF ANY KIND, EITHER EXPRESS OR
IMPLIED, EITHER IN FACT OR BY OPERATION OF LAW, STATUTE OR OTHERWISE,
AND THE PARTIES SPECIFICALLY DISCLAIM ANY IMPLIED WARRANTY OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, OR WARRANTY OF
NON-INFRINGEMENT.
12. Notices
12.01 Any notice or report required or permitted hereunder shall be given in
writing by registered or certified mail, return receipt requested, to
the following addresses (or such other address as a party may from time
to time instruct the other party):
To AECOM:
- --------
Albert Einstein College of Medicine of Yeshiva University
1300 Morris Park Avenue Bronx
New York 10461
Attn: Dr. Sidney L. Goldfischer
With Copy To:
- ------------
Amster, Rothstein & Ebenstein
90 Park Avenue
New York, New York 10016
Attn: Kenneth P. George, Esq.
To Licensee:
- -----------
Renaissance Cell Technologies, Incorporated
P.O. Box 16415
Chapel Hill, North Carolina 27516
<PAGE>
IN WITNESS WHEREOF, the parties have entered into this Agreement as of the day
and year first above written.
ALBERT EINSTEIN COLLEGE OF MEDICINE
OF YESHIVA UNIVERSITY
By /s/ Emanuel Genn
-------------------------------
Witness: Title Associate Dean for Business Affairs
-------------------------------
/s/ [illegible] Date August 13, 1996
- ---------------- -------------------------------
RENAISSANCE CELL TECHNOLOGIES, INC.
By /s/ Lola M. Reid
--------------------------------
Witness: Title President
-------------------------------
/s/ [illegible] Date July 26, 1996
- ---------------- -----------------------------
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AND THE CONSOLIDATED STATEMENT OF INCOME FILED AS
PART OF THE QUARTERLY REPORT ON FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH QUARTERLY REPORT ON FORM 10-Q.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-2000
<PERIOD-START> OCT-01-1999
<PERIOD-END> MAR-31-2000
<CASH> 10,522
<SECURITIES> 0
<RECEIVABLES> 213
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 10,990
<PP&E> 161
<DEPRECIATION> 0
<TOTAL-ASSETS> 11,151
<CURRENT-LIABILITIES> 2,123
<BONDS> 27
0
0
<COMMON> 7
<OTHER-SE> 8,994
<TOTAL-LIABILITY-AND-EQUITY> 11,151
<SALES> 0
<TOTAL-REVENUES> 100
<CGS> 0
<TOTAL-COSTS> 11,541
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (1,537)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,537)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,537)
<EPS-BASIC> (0.29)<F1>
<EPS-DILUTED> (0.29)<F1>
<FN>
<F1> EPS BASIC
</FN>
</TABLE>
