<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 11, 1996
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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COULTER PHARMACEUTICAL, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 2834 94-3219075
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>
------------------------
550 CALIFORNIA AVENUE, SUITE 200
PALO ALTO, CALIFORNIA 94306-1440
(415) 842-7300
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
MICHAEL F. BIGHAM
PRESIDENT AND CHIEF EXECUTIVE OFFICER
COULTER PHARMACEUTICAL, INC.
550 CALIFORNIA AVENUE, SUITE 200
PALO ALTO, CALIFORNIA 94306-1440
(415) 842-7300
(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)
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COPIES TO:
<TABLE>
<S> <C>
JAMES C. KITCH, ESQ. ALAN K. AUSTIN, ESQ.
JOHN A. DADO, ESQ. ELIZABETH R. FLINT, ESQ.
COOLEY GODWARD LLP WILSON SONSINI GOODRICH & ROSATI
FIVE PALO ALTO SQUARE PROFESSIONAL CORPORATION
3000 EL CAMINO REAL 650 PAGE MILL ROAD
PALO ALTO, CALIFORNIA 94306 PALO ALTO, CALIFORNIA 94304
</TABLE>
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APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC: As soon as practicable
after the effective date of this Registration Statement.
------------------------
If any of the Securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the Prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
------------------------
CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
TITLE OF SECURITIES AMOUNT TO BE PROPOSED MAXIMUM OFFERING PROPOSED MAXIMUM AGGREGATE AMOUNT OF
TO BE REGISTERED REGISTERED(1) PRICE PER SHARE(2) OFFERING PRICE(2) REGISTRATION FEE
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<S> <C> <C> <C> <C>
Common Stock,
$0.001 par value.............. $ $30,000,000 $9,091
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</TABLE>
(1) Includes shares of Common Stock issuable upon exercise of the
Underwriters' over-allotment option.
(2) Estimated solely for the purpose of calculating the amount of the
registration fee in accordance with Rule 457 under the Securities Act of
1933.
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE> 2
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED , 1996
PROSPECTUS
- ----------------
SHARES
COULTPHARM.LOGO
COMMON STOCK
All of the shares of Common Stock offered hereby are being sold by
Coulter Pharmaceutical, Inc. ("Coulter Pharmaceutical" or the "Company"). Prior
to this offering there has been no public market for the Common Stock of the
Company. It is currently estimated that the initial public offering price will
be between $ and $ per share. See "Underwriting" for a
discussion of the factors to be considered in determining the initial public
offering price. The Company has applied to have the Common Stock approved for
quotation on the Nasdaq National Market under the symbol CLTR.
------------------
THE SHARES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK.
SEE "RISK FACTORS," COMMENCING ON PAGE 6.
------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<S> <C> <C> <C>
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</TABLE>
<TABLE>
<CAPTION>
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC DISCOUNT(1) COMPANY(2)
<S> <C> <C> <C>
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Per Share............................. $ $ $
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Total(3).............................. $ $ $
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</TABLE>
(1) See "Underwriting" for indemnification arrangements with the several
Underwriters.
(2) Before deducting expenses payable by the Company estimated at
$ .
(3) The Company has granted the Underwriters a 30-day option to purchase up to
additional shares of Common Stock solely to cover over-allotments, if
any. If all such shares are purchased, the total Price to Public,
Underwriting Discount and Proceeds to Company will be $ ,
$ and $ , respectively. See "Underwriting."
------------------
The shares of Common Stock are offered by the several Underwriters subject
to prior sale, receipt and acceptance by them and subject to the right of the
Underwriters to reject any order in whole or in part and certain other
conditions. It is expected that certificates for such shares will be available
for delivery on or about , 1997, at the office of the agent of
Hambrecht & Quist LLC in New York, New York.
HAMBRECHT & QUIST
ALEX.BROWN & SONS
INCORPORATED
PACIFIC GROWTH EQUITIES, INC.
, 1997
<PAGE> 3
Depicted above is a computer screen display from the interactive database
of clinical trial data which the Company intends to submit to the FDA in
connection with its application for marketing approval of its B-1 Therapy. The
four medical images represent a time sequence response of a non-Hodgkin's
lymphoma patient treated with the Company's B-1 Therapy. This patient had failed
three prior regimens of chemotherapy and was treated with the B-1 Therapy as
part of the Company's completed Phase I/II clinical trial. The lymph nodes of
the patient's upper chest (outlined in yellow) are depicted (1) immediately
prior to B-1 Therapy, (2) three months and (3) six months after treatment as the
malignancy disappears, as well as (4) 28 months after treatment where the lymph
nodes have returned to normal or have become residual scar tissue. The images
depicted represent the results of treatment for only one patient and are not
necessarily indicative of results that will be obtained from extensive clinical
testing. See "Risk Factors -- Uncertainties Related to Product Development and
"Business -- Clinical Results and Development Plan." The Company's B-1 Therapy
has not been approved for sale in the United States or elsewhere. The Company
will be required to conduct additional clinical trials prior to submitting an
application to the FDA for marketing approval of the B-1 Therapy.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK OF
THE COMPANY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ NATIONAL MARKET, IN THE
OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.
2
<PAGE> 4
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and the Consolidated Financial Statements and Notes thereto
appearing elsewhere in this Prospectus. The Common Stock offered hereby involves
a high degree of risk. See "Risk Factors."
THE COMPANY
Coulter Pharmaceutical is engaged in the development of novel drugs and
therapies for the treatment of people with cancer. The Company currently is
developing a family of cancer therapeutics based upon two platform technologies:
conjugated antibodies and tumor-activated peptide ("TAP") pro-drugs. The
Company's most advanced product candidate, the "B-1 Therapy," consists of a
monoclonal antibody conjugated with a radioisotope. In a Phase I/II clinical
trial of the B-1 Therapy, 40 patients with low-grade or transformed low-grade
non-Hodgkin's lymphoma ("NHL") who had relapsed from previous chemotherapy
regimens achieved an 82% overall response rate and a 45% complete response rate.
The Company has commenced a pivotal Phase II/III clinical trial for the
treatment of NHL in low-grade and transformed low-grade patients refractory to
chemotherapy. The Company intends to file for U.S. Food and Drug Administration
("FDA") marketing approval of its B-1 Therapy for this indication in the second
half of 1998. The Company believes that the B-1 Therapy, if successfully
developed, could become the first radioimmunotherapy approved in the United
States for the treatment of people with cancer. The Company's TAP pro-drug
program is designed to broaden significantly the therapeutic windows of
conventional chemotherapies. The Company currently is developing a pro-drug
version of doxorubicin to treat certain solid tumor cancers with the objective
of commencing clinical trials in early 1998.
Cancer is a family of more than one hundred diseases that can be
categorized into two broad groups: hematologic ("blood-borne") malignancies and
solid tumor cancers. The Company's B-1 Therapy addresses NHL, a blood-borne
cancer of the immune system affecting B-cells that is categorized as low-,
intermediate- or high-grade disease. In the United States, the Company estimates
that approximately 140,000 patients have low-grade or transformed low-grade NHL.
While patients with low-grade and transformed low-grade NHL often can achieve
one or more remissions with chemotherapy, eventually these patients relapse and
ultimately die from the disease or from complications of treatment.
The B-1 Therapy is designed to optimize therapeutic benefit for each
patient without the debilitating side effects typically associated with
conventional cancer treatments. The Company's B-1 Therapy consists of a
radioisotope, (131)Iodine ("(131)I"), combined with a monoclonal antibody (the
"B-1 Antibody") which recognizes and binds to the CD20 antigen, an antigen
commonly expressed on the surface of B-cells primarily during that stage of
their life cycle when NHL arises. The B-1 Therapy is administered to patients
pursuant to a proprietary therapeutic protocol consisting of a single, two-dose
regimen that the Company believes can be administered primarily on an outpatient
basis.
The Company's strategy includes seeking expedited initial approval of the
B-1 Therapy for the treatment of low-grade and transformed low-grade NHL in
patients who are refractory to chemotherapy, while simultaneously pursuing
trials to broaden the initial label indication. For its initial indication, the
Company will pursue approval under the "Clinton-Kessler Cancer Initiative," a
regulatory initiative intended to accelerate the testing, review and approval of
therapies for patients suffering from life-threatening or disabling cancers who
have limited treatment options. Based on this initiative and on guidance from
FDA staff, the Company has designed its pivotal Phase II/III trial to include 60
patients and a post-treatment follow-up period of six months. The Company
intends to seek approval for other NHL indications and, accordingly, is planning
to commence a Phase III/IV "post-approval" clinical trial during the second half
of 1997 in patients with low-grade or transformed low-grade NHL in first or
second relapse. The Company also has commenced a Phase II trial of the B-1
Therapy as a stand-alone, first-line treatment for patients newly diagnosed with
low-grade NHL. The
3
<PAGE> 5
Company believes that this Phase II trial is the first clinical trial of a
radioimmunotherapy as a stand-alone, first-line treatment for people with
cancer.
In its second technology platform, the Company is developing TAP pro-drug
versions of cytotoxic drugs designed to be activated preferentially in the
proximity of metastatic cancer cells, yet stable in circulation and normal
tissues. Accordingly, relatively larger quantities of cytotoxic agents are
expected to reach and enter malignant cells as opposed to normal cells, which
could permit a significant increase in maximum tolerated dosages, potentially
overcoming drug resistance in cancer cells.
The Company is engaged in preclinical development of "Super-Leu-Dox," a
pro-drug version of doxorubicin, with the objective of commencing clinical
trials in early 1998. In vitro studies have shown that Super-Leu-Dox is 40 times
more likely to be absorbed and chemically activated by tumor cells than by
normal cells. An earlier leucine-doxorubicin conjugate was tested as a
stand-alone therapy in the treatment of solid tumors in two separate dose
escalation trials in Europe in a total of 59 patients. Patients in these trials
safely tolerated doses well in excess of those associated with unmodified
doxorubicin.
The Company intends to market and sell its products in the United States
through a direct sales force and, where appropriate, in collaboration with
marketing partners. The Company believes that an established sales and marketing
capability will enable it to compete effectively for opportunities to license or
distribute later-stage product candidates and even approved products.
Internationally, the Company intends to distribute its products through
marketing partners.
The Company's conjugated antibody program is based upon the antibody
therapeutics program which originated in the late 1970s at Coulter Corporation,
a recognized leader in the field of hematology. Upon its formation in February
1995, the Company acquired worldwide rights to the B-1 Therapy and related
intellectual property, know-how and other assets from Coulter Corporation.
Coulter Corporation will own % of the Company's stock subsequent to the
offering.
The Company was incorporated under the laws of Delaware in February 1995.
The Company's executive offices are located at 550 California Avenue, Suite 200,
Palo Alto, California 94306, and its telephone number is (415) 842-7300.
4
<PAGE> 6
THE OFFERING
<TABLE>
<S> <C>
Common Stock offered by the Company..........
Common Stock to be outstanding after the
offering................................... shares (1)
Use of proceeds.............................. For funding of clinical trials,
manufacturing, initial prelaunch marketing of
the B-1 Therapy; and for research and
development, working capital and general
corporate purposes
Proposed Nasdaq National Market symbol....... CLTR
</TABLE>
SUMMARY CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
NINE MONTHS
ENDED SEPTEMBER
YEAR ENDED DECEMBER 31, 30,
------------------------------------- ------------------
1992 1993 1994 1995 1995 1996
------- ------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF
OPERATIONS DATA:
Research and development
expenses......................... $ 1,574 $ 1,838 $ 2,798 $ 2,739 $ 1,688 $ 9,896
Net loss........................... $(1,701) $(2,016) $(3,086) $(3,229) $(2,031) $(10,821)
Pro forma net loss per share....... $ (1.40)
Shares used in per share
calculations(2).................. 7,736
</TABLE>
<TABLE>
<CAPTION>
SEPTEMBER 30, 1996
--------------------------
ACTUAL AS ADJUSTED(3)
------- --------------
<S> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash, cash equivalents and short-term investments............ $18,835 $
Working capital.............................................. 13,497
Total assets................................................. 20,484
Deficit accumulated during the development stage............. (13,814) (13,814)
Total stockholders' equity................................... 14,806
</TABLE>
- ---------------
(1) Based on the number of shares outstanding at September 30, 1996, after
giving effect to the automatic conversion of all outstanding shares of
Preferred Stock into Common Stock and the assumed cash exercise of warrants
to purchase 498,705 shares of Common Stock prior to the closing of this
offering. Excludes 548,604 shares which were subject to outstanding options
at such date at a weighted average exercise price of $0.62 per share. As of
December 6, 1996, 802,305 shares were subject to outstanding options at such
date at a weighted average exercise price of $1.38 per share, and an
additional 24,666 shares were subject to an outstanding warrant at such date
at an exercise price of $9.75 per share. See "Capitalization,"
"Management -- Stock Option Plans" and Note 8 of Notes to Consolidated
Financial Statements.
(2) See Note 1 of Notes to Consolidated Financial Statements for an explanation
of the determination of shares used in computing pro forma net loss per
share.
(3) As adjusted to reflect the sale of shares of Common Stock offered by
the Company hereby at an assumed public offering price of $ per share and
the receipt of the estimated proceeds therefrom and after giving effect to
the assumed cash exercise of warrants to purchase 498,705 shares of Common
Stock prior to the closing of this offering. See "Use of Proceeds" and
"Capitalization."
------------------------------
Except as otherwise noted, all information in this Prospectus (a) assumes
no exercise of the Underwriters' over-allotment option, (b) reflects a
one-for-three reverse split of capital stock of the Company effected prior to
the effectiveness of this offering and (c) reflects the conversion of all
outstanding Preferred Stock of the Company into Common Stock upon the closing of
this offering. See "Description of Capital Stock," "Underwriting" and Notes to
Consolidated Financial Statements.
5
<PAGE> 7
RISK FACTORS
This Prospectus contains forward-looking statements that involve risks and
uncertainties. Actual results could differ materially from those discussed in
the forward-looking statements as a result of certain factors, including those
set forth below and elsewhere in this Prospectus. The following risk factors
should be considered carefully in addition to the other information in this
Prospectus before purchasing the shares of Common Stock offered hereby.
Uncertainties Related to Product Development. The Company's product
candidates are generally in early stages of development, with only one in
clinical trials. The development of safe and effective therapies for the
treatment of people with cancer is highly uncertain and subject to numerous
risks. Product candidates that may appear to be promising at early stages of
development may not reach the market for a number of reasons. Product candidates
may be found ineffective or cause harmful side effects during clinical trials,
may take longer to progress through clinical trials than had been anticipated,
may fail to receive necessary regulatory approvals, may prove impracticable to
manufacture in commercial quantities at reasonable cost and with acceptable
quality or may fail to achieve market acceptance.
The results of initial preclinical and clinical testing of the products
under development by the Company are not necessarily indicative of results that
will be obtained from subsequent or more extensive preclinical studies and
clinical testing. The Company's clinical data gathered to date with respect to
its B-1 Therapy are primarily from a Phase I/II dose escalation trial which was
designed to develop and refine the therapeutic protocol, to determine the
maximum tolerated dose of total body radiation and to assess the safety and
efficacy profile of treatment with a radiolabeled antibody. Further, the data
from this Phase I/II dose escalation trial were compiled from testing conducted
at a single site and with a relatively small number of patients per NHL
histology and disease stage. Substantial additional development and clinical
testing and investment will be required prior to seeking any regulatory approval
for commercialization of this potential product. There can be no assurance that
clinical trials of the B-1 Therapy or other product candidates under development
will demonstrate the safety and efficacy of such products to the extent
necessary to obtain regulatory approvals for the indications being studied, or
at all. Companies in the pharmaceutical and biotechnology industries have
suffered significant setbacks in advanced clinical trials, even after obtaining
promising results in earlier trials. The failure to demonstrate adequately the
safety and efficacy of the B-1 Therapy or any other therapeutic product under
development could delay or prevent regulatory approval of the product and would
have a material adverse effect on the Company's business, financial condition
and results of operations.
Furthermore, the timing and completion of current and planned clinical
trials of the B-1 Therapy, as well as clinical trials of other products, are
dependent upon, among other factors, the rate at which patients are enrolled,
which is a function of many factors, including the size of the patient
population, the proximity of patients to the clinical sites, the eligibility
criteria for the study and the existence of competing clinical trials. There can
be no assurance that delays in patient enrollment in clinical trials will not
occur, and any such delays may result in increased costs, program delays or
both, which could have a material adverse effect on the Company's business,
financial condition and results of operations.
Early Stage of Development. Since its inception in 1995, the Company has
been engaged in the development of drugs and related therapies for the treatment
of people with cancer. The Company's product candidates are generally in early
stages of development, with only one in clinical trials. No revenues have been
generated from product sales or product royalties; and products resulting from
the Company's research and development efforts, if any, are not expected to be
available commercially for at least the next few years. No assurance can be
given that the Company's product development efforts, including clinical trials,
will be successful, that required regulatory approvals for the indications being
studied can be obtained, that its products can be manufactured at acceptable
cost and with appropriate quality or that any approved products can be
successfully marketed. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations."
6
<PAGE> 8
Government Regulation; No Assurance of Regulatory Approvals. All new drugs
and biologics, including the Company's products under development, are subject
to extensive and rigorous regulation by the federal government, principally the
FDA under the Food, Drug and Cosmetic Act and other laws including, in the case
of biologics, the Public Health Services Act, and by state and local
governments. Such regulations govern, among other things, the development,
testing, manufacture, labeling, storage, premarket clearance or approval,
advertising, promotion, sale and distribution of such products. If drug products
are marketed abroad, they also are subject to extensive regulation by foreign
governments.
The regulatory process, which includes preclinical studies and clinical
trials of each potential product, is lengthy, expensive and uncertain. Prior to
commercial sale in the United States, most new drugs and biologics, including
the Company's products under development, must be cleared or approved by the
FDA. Securing FDA marketing clearances and approvals often requires the
submission of extensive preclinical and clinical data and supporting information
to the FDA. Product clearances and approvals, if granted, can be withdrawn for
failure to comply with regulatory requirements or upon the occurrence of
unforeseen problems following initial marketing. Moreover, regulatory clearances
or approvals for products such as new drugs and biologics, even if granted, may
include significant limitations on the uses for which such products may be
marketed.
There can be no assurance that the Company will be able to obtain necessary
regulatory clearances or approvals on a timely basis, if at all, for any of its
product candidates, and delays in receipt or failures to receive such clearances
or approvals or failures to comply with existing or future regulatory
requirements could have a material adverse effect on the Company's business,
financial condition and results of operations. Certain material manufacturing
changes to new drugs and biologics also are subject to FDA review and clearance
or approval. There can be no assurance that any clearances or approvals that are
required, once obtained, will not be withdrawn or that compliance with other
regulatory requirements can be maintained. Further, failure to comply with
applicable FDA and other regulatory requirements can result in sanctions being
imposed on the Company or the manufacturers of its products, including warning
letters, fines, product recalls or seizures, injunctions, refusals to permit
products to be imported into or exported out of the United States, refusals of
the FDA to grant premarket clearance or premarket approval of drugs and
biologics or to allow the Company to enter into government supply contracts,
withdrawals of previously approved marketing applications and criminal
prosecutions.
Manufacturers of drugs and biologics also are required to comply with the
applicable FDA good manufacturing practice ("GMP") regulations, which include
requirements relating to quality control and quality assurance as well as the
corresponding maintenance of records and documentation. Manufacturing facilities
are subject to inspection by the FDA, including unannounced inspection, and must
be licensed before they can be used in commercial manufacturing of the Company's
products. There can be no assurance that the Company or its suppliers will be
able to comply with the applicable GMP regulations and other FDA regulatory
requirements. Such failure could have a material adverse effect on the Company's
business, financial condition and results of operations.
An important part of the Company's strategy is to obtain expedited
marketing approval for its B-1 Therapy based upon policy changes in the
regulatory environment broadly referred to as the Clinton-Kessler Cancer
Initiative, announced in March 1996. Significant uncertainty exists as to the
extent to which such initiative will result in accelerated review and approval.
Further, the FDA has not made available comprehensive guidelines with respect to
this initiative, retains considerable discretion to determine eligibility for
accelerated review and approval and is not bound by discussions that an
applicant may have had with FDA staff. Accordingly, the FDA could employ such
discretion to deny eligibility of the B-1 Therapy as a candidate for accelerated
review or to require additional clinical trials or other information before
approving the B-1 Therapy. A determination that the B-1 Therapy is not eligible
for accelerated review or delays and additional expenses associated with
generating a response to any such request for additional trials could have a
material adverse effect on the Company's business, financial condition and
results of operations. See "Business -- Government Regulation."
7
<PAGE> 9
Dependence on Suppliers; Manufacturing and Scale-up Risk. The Company has
no existing capacity or experience with respect to manufacturing products for
large-scale clinical trials or commercial purposes. The Company is supplying the
B-1 Antibody to clinical trial sites from an existing, finite inventory produced
by Coulter Corporation. There can be no assurance that existing supplies of B-1
Antibody are sufficient to meet the Company's clinical trial requirements or
that supplies can be obtained from a third-party supplier on a timely basis, if
at all. To achieve the levels of production necessary to support ongoing
clinical trials and for early commercialization of its B-1 Therapy, the Company
has contracted with a third-party manufacturer, LONZA Biologics plc ("Lonza"),
to produce unlabeled B-1 Antibody for use in clinical trials and intends to
enter into a commercial supply agreement. However, in order to begin using
Lonza-produced material in clinical trials, the Company must seek an FDA
clearance of an Investigational New Drug ("IND") supplement showing that the
Lonza-produced material is biologically equivalent to the material currently in
use in clinical trials. There can be no assurance that the FDA will provide such
clearance in a timely manner, if at all, and that clinical trials will not be
delayed or disrupted as a result of the planned transition to the Lonza-produced
material. Lonza has limited experience producing the B-1 Antibody on a
commercial scale, and there can be no assurance that Lonza will be able to
produce the Company's requirements at commercially reasonable prices or with
acceptable quality.
The Company also has contracted with MDS Nordion International ("Nordion")
to radiolabel the B-1 Antibody with (131)I at a centralized site. Radiolabeling
of the B-1 Antibody currently is conducted at individual clinical trial sites,
but the Company plans to switch to centrally radiolabeled antibody from Nordion
in mid-1997, for both completion of clinical trials and commercial supplies.
However, before using Nordion-labeled material, an IND supplement must be
cleared by the FDA. There can be no assurance that the FDA will provide such
clearance in a timely manner, if at all, and that clinical trials will not be
delayed or disrupted as a result. Furthermore, if the B-1 Therapy is approved
and is successful in the market, Nordion's initial capacity to radiolabel
antibodies will not be sufficient to meet all of the Company's commercial
requirements, and additional capacity will have to be developed. There can be no
assurance that Nordion will be able to complete any such expansion scale-up in a
timely or cost effective manner, if at all, or that the Company could obtain
such capacity from others.
The Company is aware of only a limited number of manufacturers capable of
producing the B-1 Antibody in commercial quantities or radiolabeling the
antibody with (131)I on a commercial scale. Should either of the Company's
existing contractual relationships for production or radiolabeling of the B-1
Antibody cease or be interrupted, or if its existing suppliers are unable to
meet the Company's requirements for any reason, there can be no assurance that
any additional or alternative third parties could be engaged to carry out said
production or radiolabeling on a timely basis or on commercially acceptable
terms, if at all. To establish and qualify a new facility to centrally
radiolabel antibodies could take as long as two years. Further, radiolabeled
antibody cannot be stockpiled against future shortages due to the eight-day
half-life of the (131)I radioisotope. Accordingly, any change in the Company's
existing contractual relationships with, or interruption in supply from, its
producer of unlabeled antibody or its radiolabeler could affect adversely the
Company's ability to complete its ongoing clinical trials and to market the B-1
Therapy, if approved. Any such change or interruption would have a material
adverse effect on the Company's business, financial condition and results of
operations.
Third-party manufacturers must comply with GMP regulations prescribed by
the FDA and other standards prescribed by various federal, state and local
regulatory agencies in the United States and any other relevant country. Failure
to comply with these regulations could have a material adverse effect on the
Company's business, financial condition and results of operations. See
"-- Government Regulation; No Assurance of Regulatory Approvals" and
"Business -- Government Regulation."
8
<PAGE> 10
Future Capital Needs; Uncertainty of Additional Funding. The Company's
operations to date have consumed substantial and increasing amounts of cash. The
negative cash flow from operations is expected to continue and to accelerate in
the foreseeable future. The development of the Company's technology and
potential products will require a commitment of substantial funds. The Company
expects that its existing capital resources, including the net proceeds of this
offering and interest thereon, will be adequate to satisfy the requirements of
its current and planned operations through 1998. However, the rate at which the
Company expends its resources is variable, may be accelerated and will depend on
many factors, including the scope and results of preclinical studies and
clinical trials, continued progress of the Company's research and development of
product candidates, the cost, timing and outcome of regulatory approvals, the
expenses of establishing a sales and marketing force, the timing and cost of
establishment or procurement of requisite production, radiolabeling and other
manufacturing capacities, the cost involved in preparing, filing, prosecuting,
maintaining, defending and enforcing patent claims, the acquisition of
technology licenses, the status of competitive products and the availability of
other financing.
The Company will need to raise substantial additional capital to fund its
operations. The Company intends to seek such additional funding through public
or private equity or debt financings from time to time, as market conditions
permit. There can be no assurance that additional financing will be available on
acceptable terms, if at all. If additional funds are raised by issuing equity
securities, substantial dilution to stockholders may result. If adequate funds
are not available, the Company may be required to delay, reduce the scope of, or
eliminate one or more of its research and development programs or obtain funds
through arrangements with collaborative partners or others that may require the
Company to relinquish rights to certain of its technologies, product candidates
or products that the Company would otherwise seek to develop or commercialize.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations."
Uncertainty of Market Acceptance of the B-1 Therapy. Even if the Company's
product candidates are approved for marketing by the FDA and other regulatory
authorities, there can be no assurance that the Company's products will be
commercially successful. If the Company's most advanced product candidate, the
B-1 Therapy, is approved, it would represent a significant departure from
currently approved methods of treatment for NHL and would require the handling
of radioactive materials. Accordingly, the B-1 Therapy may experience
under-utilization by oncologists and hematologists who are unfamiliar with the
application of the B-1 Therapy in the treatment of NHL. Further, oncologists and
hematologists are not typically licensed to administer radioimmunotherapies such
as the Company's B-1 Therapy and will need to engage a nuclear medicine
physician or receive specialty training to administer the B-1 Therapy. Market
acceptance of the B-1 Therapy also could be affected adversely if recently
enacted regulations of the Nuclear Regulatory Commission are not interpreted in
a manner to permit the B-1 Therapy to be administered on an outpatient basis in
most cases as is currently contemplated by the Company. Furthermore, market
acceptance could be affected adversely because some hospitals may be required to
administer the therapeutic dose of the B-1 Therapy on an inpatient basis under
applicable state or local or individual hospital regulations. Market acceptance
also could be affected by the availability of third-party reimbursement. See
"-- Uncertainty Related to Health Care Reform and Third-Party Reimbursement,"
"-- Hazardous and Radioactive Materials," and "Business -- Radioactive and Other
Hazardous Materials."
Absence of Commercialization Resources and Experience. The Company intends
to sell its products in the United States through a direct sales force and,
where appropriate, in collaboration with marketing partners, and internationally
through marketing partners. The Company currently does not possess the resources
and experience necessary to commercialize any of its product candidates. If and
when the FDA approves the Company's B-1 Therapy, the Company's ability to market
the product will be contingent upon recruitment, training and deployment of a
sales and marketing force. Development of an effective sales force will require
significant financial resources and time. There can be no assurance that the
Company will be able to establish such a sales force in a timely or cost
effective manner, if at all, or that such a sales force will be capable of
generating demand for the Company's B-1
9
<PAGE> 11
Therapy or other product candidates. The Company has no arrangements for the
international distribution of its B-1 Therapy, and there can be no assurance
that the Company will be able to enter into any such arrangements in a timely
manner or on commercially favorable terms, if at all. See "Business -- Marketing
and Sales."
Dependence Upon Proprietary Technology; Uncertainty of Patents and
Proprietary Technology. The pharmaceutical and biotechnology fields are
characterized by a large number of patent filings. A substantial number of
patents have already been issued to other pharmaceutical and biotechnology
companies. Research has been conducted for many years in the monoclonal antibody
field by pharmaceutical and biotechnology companies and other organizations.
Competitors may have filed applications for or have been issued patents and may
obtain additional patents and proprietary rights related to products or
processes competitive with or similar to those of the Company. Patent
applications are maintained in secrecy for a period after filing. Publication of
discoveries in the scientific or patent literature tends to lag behind actual
discoveries and the filing of related patent applications. The Company may not
be aware of all of the patents potentially adverse to the Company's interests
that may have been issued to other companies, research or academic institutions,
or others. No assurance can be given that such patents do not exist, have not
been filed, or could not be filed or issued, which contain claims relating to
the Company's technology, products or processes.
To date, no consistent policy has emerged regarding the breadth of claims
allowed in pharmaceutical and biotechnology patents. If patents have been or are
issued to others containing preclusive or conflicting claims and such claims are
determined ultimately to be valid, the Company may be required to obtain
licenses to one or more of such patents or to develop or obtain alternative
technology. The Company is aware of certain patents that have been issued to
others that pertain to a portion of the Company's prospective business; however,
the Company believes based on the advice of counsel that it does not infringe
any patents that ultimately would be determined to be valid. There can be no
assurance that patents do not exist in the United States or in other foreign
countries or that patents will not be issued to third parties that contain
preclusive or conflicting claims with respect to the B-1 Therapy or any of the
Company's other product candidates or programs. Commercialization of monoclonal
antibody-based products may require licensing and/or cross-licensing of one or
more patents with other organizations in the field. There can be no assurance
that the licenses that might be required for the Company's processes or products
would be available on commercially acceptable terms, if at all.
The Company's breach of an existing license or failure to obtain a license
to technology required to commercialize its product candidates may have a
material adverse effect on the Company's business, financial condition and
results of operations. Litigation, which could result in substantial costs to
the Company, may also be necessary to enforce any patents issued to the Company
or to determine the scope and validity of third-party proprietary rights. If
competitors of the Company prepare and file patent applications in the United
States that claim technology also claimed by the Company, the Company may have
to participate in interference proceedings declared by the United States Patent
and Trademark Office to determine priority of invention, which could result in
substantial cost to the Company, even if the eventual outcome is favorable to
the Company. An adverse outcome could subject the Company to significant
liabilities to third parties and require the Company to license disputed rights
from third parties or to cease using such technology.
The Company also relies on trade secrets to protect its technology,
especially where patent protection is not believed to be appropriate or
obtainable. The Company protects its proprietary technology and processes, in
part, by confidentiality agreements with its employees, consultants,
collaborators and certain contractors. There can be no assurance that these
agreements will not be breached, that the Company would have adequate remedies
for any breach, or that the Company's trade secrets or those of its
collaborators or contractors will not otherwise become known or be discovered
independently by competitors.
Patents issued and patent applications filed internationally relating to
biologics are numerous and there can be no assurance that current and potential
competitors and other third parties have not filed or in the future will not
file applications for, or have not received or in the future will not receive,
10
<PAGE> 12
patents or obtain additional proprietary rights relating to products or
processes used or proposed to be used by the Company. Moreover, there is certain
subject matter which is patentable in the United States and not generally
patentable outside of the United States. Statutory differences in patentable
subject matter may limit the protection the Company can obtain on some of its
inventions outside of the United States. For example, methods of treating humans
are not patentable in many countries outside of the United States. These and/or
other issues may prevent the Company from obtaining patent protection outside of
the United States which would have a material adverse effect on the Company's
business, financial condition and results of operations. See
"Business -- Patents and Other Intellectual Property."
History of Operating Losses; Anticipated Future Losses. The Company has a
limited history of operations and has experienced significant losses since
inception. As of September 30, 1996, the Company's accumulated deficit was
approximately $13.8 million. The Company expects to incur significant additional
operating losses over the next several years and expects cumulative losses to
increase substantially due to expanded research and development efforts,
preclinical studies and clinical trials and development of manufacturing,
marketing and sales capabilities. The Company expects that losses will fluctuate
from quarter to quarter and that such fluctuations may be substantial. All of
the Company's product candidates are in development in preclinical studies and
clinical trials, and no revenues have been generated from product sales. To
achieve and sustain profitable operations, the Company, alone or with others,
must develop successfully, obtain regulatory approval for, manufacture,
introduce, market and sell its products. The time frame necessary to achieve
market success is long and uncertain. The Company does not expect to generate
product revenues for at least the next few years. There can be no assurance that
the Company will ever generate sufficient product revenues to become profitable
or to sustain profitability. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations."
Highly Competitive Industry; Risk of Technological Obsolescence. The
pharmaceutical and biotechnology industries are intensely competitive. Any
product candidate developed by the Company would compete with existing drugs and
therapies. There are many pharmaceutical companies, biotechnology companies,
public and private universities and research organizations actively engaged in
research and development of products for the treatment of people with cancer.
Many of these organizations have financial, technical, manufacturing and
marketing resources greater than those of the Company. Several of them may have
developed or are developing therapies that could be used for treatment of the
same diseases targeted by the Company. One competitor known to the Company
currently is conducting Phase III clinical trials of a chimeric antibody
treatment for NHL. If a competing company were to develop or acquire rights to a
more efficacious or safer cancer therapy for treatment of the same diseases
targeted by the Company, or one which offers significantly lower costs of
treatment, the Company's business, financial condition and results of operations
could be materially adversely affected. The Company believes that its product
development programs will be subject to significant competition from companies
utilizing alternative technologies as well as to increasing competition from
companies that develop and apply technologies similar to the Company's
technologies. Other companies may succeed in developing products earlier than
the Company, obtaining approvals for such products from the FDA more rapidly
than the Company or developing products that are safer and more effective than
those under development or proposed to be developed by the Company. There can be
no assurance that research and development by others will not render the
Company's technology or product candidates obsolete or non-competitive or result
in treatments superior to any therapy developed by the Company, or that any
therapy developed by the Company will be preferred to any existing or newly
developed technologies. See "Business -- Competition."
Dependence on Management and Other Key Personnel. The Company is dependent
upon a limited number of key management and technical personnel. The loss of the
services of one or more of such key employees could have a material adverse
effect on the Company's business, financial condition and results of operations.
In addition, the Company's success will be dependent upon its ability to attract
and retain additional highly qualified sales, management, manufacturing and
research and develop-
11
<PAGE> 13
ment personnel. The Company faces intense competition in its recruiting
activities, and there can be no assurance that the Company will be able to
attract and/or retain qualified personnel.
Exposure to Product Liability. The manufacture and sale of human
therapeutic products involve an inherent risk of product liability claims and
associated adverse publicity. The Company has only limited product liability
insurance for clinical trials and no commercial product liability insurance.
There can be no assurance that the Company will be able to maintain existing
insurance or obtain additional product liability insurance on acceptable terms
or with adequate coverage against potential liabilities. Such insurance is
expensive, difficult to obtain and may not be available in the future on
acceptable terms, if at all. An inability to obtain sufficient insurance
coverage on reasonable terms or to otherwise protect against potential product
liability claims brought against the Company in excess of its insurance
coverage, if any, or a product recall could have a material adverse effect upon
the Company's business, financial condition and results of operations. See
"Business -- Product Liability and Insurance."
Uncertainty Related to Health Care Reform and Third-Party
Reimbursement. Political, economic and regulatory influences are subjecting the
health care industry in the United States to fundamental change. Recent
initiatives to reduce the federal deficit and to reform health care delivery are
increasing cost-containment efforts. The Company anticipates that Congress,
state legislatures and the private sector will continue to review and assess
alternative benefits, controls on health care spending through limitations on
the growth of private health insurance premiums and Medicare and Medicaid
spending, the creation of large insurance purchasing groups, price controls on
pharmaceuticals and other fundamental changes to the health care delivery
system. Any such proposed or actual changes could cause the Company to limit or
eliminate spending on development projects and affect the Company's ultimate
profitability. Legislative debate is expected to continue in the future, and
market forces are expected to drive reductions of health care costs. The Company
cannot predict what impact the adoption of any federal or state health care
reform measures or future private sector reforms may have on its business.
In both domestic and foreign markets, sales of the Company's proposed
products will depend in part upon the availability of reimbursement from
third-party payors, such as government health administration authorities,
managed care providers, private health insurers and other organizations.
Third-party payors are increasingly challenging the price and cost effectiveness
of medical products and services. Significant uncertainty exists as to the
reimbursement status of newly approved health care products. The Company's B-1
Therapy, as potentially the first radioimmunotherapy for cancer, faces
particular uncertainties due to the absence of a comparable, approved therapy to
serve as a model for pricing and reimbursement decisions. Further, if the B-1
Therapy is not administered in most cases on an outpatient basis, as is
contemplated currently by the Company, the projected cost of the therapy will be
higher than anticipated. In addition, there can be no assurance that products
can be manufactured on a commercial scale for a cost that will enable the
Company to price its products within reimbursable rates. Consequently, there can
be no assurance that the Company's product candidates will be considered cost
effective or that adequate third-party reimbursement will be available to enable
the Company to maintain price levels sufficient to realize an appropriate return
on its investment in product development. If adequate coverage and reimbursement
rates are not provided by the government and third-party payors for the
Company's products, the market acceptance of these products could be adversely
affected, which could have a material adverse effect on the Company's business,
financial condition and results of operations. See "Business -- Pharmaceutical
Pricing and Reimbursement."
Hazardous and Radioactive Materials. The manufacturing and use of the
Company's B-1 Therapy requires the handling and disposal of (131)I, a
radioactive isotope of iodine. The radiolabeling of the B-1 Antibody currently
is performed by radiopharmacies at the individual clinical trial sites. These
sites must comply with various state and federal regulations regarding the
handling and use of radioactive materials. Violation of these state and federal
regulations by a clinical trial site could delay significantly completion of
such trials. For the continuation of its ongoing clinical trials and for
commercial-scale
12
<PAGE> 14
production, the Company plans to rely on a contract manufacturer, Nordion, to
radiolabel the B-1 Antibody with (131)I, initially at a single location in
Canada. Violations of safety regulations could occur with this manufacturer,
and, therefore, there is a risk of accidental contamination or injury. In the
event of any such noncompliance or accident, the supply of radiolabeled B-1
Antibody for use in clinical trials or commercially could be interrupted, which
could have a material adverse effect on the Company's business, financial
condition and results of operations.
The Company also expects to use hazardous chemicals and radioactive
compounds in its ongoing research activities. The Company could be held liable
for any damages that result from such an accident, contamination or injury from
the handling and disposal of these materials, as well as for unexpected remedial
costs and penalties that may result from any violation of applicable
regulations, which could result in a material adverse effect on the Company's
business, financial condition and results of operations. In addition, the
Company may incur substantial costs to comply with environmental regulations.
See "Business -- Radioactive and Other Hazardous Materials."
Control By Officers, Directors and Principal Stockholders. Following
completion of this offering, directors, executive officers and principal
stockholders of the Company, will beneficially own approximately % of the
outstanding shares of the Company's Common Stock. Further, two of the Company's
stockholders, Coulter Corporation and InterWest Partners, together with persons
associated with them, will beneficially own approximately % of the outstanding
shares of the Company's Common Stock. Accordingly, these stockholders,
individually and as a group, may be able to control the Company and direct its
affairs and business, including any determination with respect to a change in
control of the Company, future issuances of Common Stock or other securities by
the Company, declaration of dividends on the Common Stock and the election of
directors. See "Principal Stockholders."
No Prior Public Market for Common Stock; Potential Volatility of Stock
Price. Prior to this offering, there has been no public market for the
Company's Common Stock, and there can be no assurance that an active trading
market for the Common Stock will develop or continue after this offering. The
initial public offering price will be determined through negotiations between
the Company and the Underwriters. In addition, the securities markets have from
time to time experienced significant price and volume fluctuations that are
unrelated to the operating performance of particular companies. The market
prices of the common stock of many publicly held biotechnology and
pharmaceutical companies have in the past been, and can in the future be
expected to be, especially volatile. Announcements of technological innovations
or new products by the Company or its competitors, release of reports by
securities analysts, developments or disputes concerning patents or proprietary
rights, regulatory developments, changes in regulatory or medical reimbursement
policies, economic and other external factors, as well as period-to-period
fluctuations in the Company's financial results, may have a significant and
adverse impact on the market price of the Common Stock. See "Underwriting."
Potential Adverse Impact of Shares Eligible for Future Sale. Sales of
shares of Common Stock (including shares issued upon the exercise of outstanding
options) in the public market after this offering could adversely affect the
market price of the Common Stock. Such sales also might make it more difficult
for the Company to sell equity securities or equity-related securities in the
future at a time and price that the Company deems appropriate. Upon completion
of this offering, the Company will have outstanding an aggregate of
shares of Common Stock, assuming no exercise of the Underwriters' over-allotment
option and no exercise of options outstanding as of December 6, 1996. Of these
shares, the shares of Common Stock sold in this offering will be freely
tradable without restriction or further registration under the Securities Act,
unless held by affiliates of the Company as that term is defined in Rule 144
under the Securities Act ("Affiliates"). The remaining 7,535,604 shares of
Common Stock held by existing stockholders are restricted securities as that
term is defined in Rule 144 under the Securities Act (the "Restricted Shares").
Restricted Shares may be sold in the public market only if registered or if they
qualify for an exemption from registration under Rules 144 or 701, promulgated
under the Securities Act. As a result of agreements not to sell such shares (the
13
<PAGE> 15
"Lock-up Agreements") and the provisions of Rules 144 and 701, additional shares
will be available in the public market as follows: (i) no Restricted Shares will
be eligible for immediate sale on the effective date of this offering; (ii)
2,937,608 Restricted Shares (plus 154,794 shares of Common Stock issuable to
employees and consultants pursuant to stock options that are then vested) will
be eligible for sale upon expiration of Lock-up Agreements 180 days after the
date of this Prospectus; and (iii) the remainder of the Restricted Shares will
be eligible for sale from time to time thereafter upon expiration of their
respective two-year holding periods. However, proposals currently under
consideration by the Securities and Exchange Commission ("SEC") would permit
shares to be sold under Rule 144 upon completion of a one-year holding period.
Upon completion of this offering, the holders of 7,097,994 shares of Common
Stock, or their transferees, will be entitled to certain rights with respect to
the registration of such shares under the Securities Act. Registration of such
shares under the Securities Act would result in such shares becoming freely
tradable without restriction under the Securities Act (except for shares
purchased by Affiliates) immediately upon the effectiveness of such
registration.
Dilution. Purchasers of the shares of Common Stock offered hereby will
experience immediate dilution of $ in net tangible book value per share
after deducting the underwriting discounts and estimated offering expenses. Such
investors will experience additional dilution upon the exercise of outstanding
options. See "Dilution."
Adverse Impact of Possible Issuances of Preferred Stock; Anti-Takeover
Effect of Certain Charter and Bylaw Provisions. Upon completion of this
offering, the Board of Directors will have authority to issue up to 3,000,000
shares of Preferred Stock and to fix the price, rights, preferences, privileges
and restrictions, including voting rights, of those shares without any further
vote or action by the stockholders. The rights of the holders of Common Stock
will be subject to, and may be adversely affected by, the rights of the holders
of any Preferred Stock that may be issued in the future. The issuance of
Preferred Stock could affect adversely the voting power of holders of Common
Stock and the likelihood that such holders will receive dividend payments and
payments upon liquidation. Additionally, the issuance of Preferred Stock may
have the effect of delaying, deferring or preventing a change in control of the
Company, may discourage bids for the Common Stock at a premium over the market
price of the Common Stock and may affect adversely the market price of and the
voting and other rights of the holders of the Common Stock. In addition, the
Company's Bylaws provide that special meetings of stockholders may be called
only by the Chairman of the Board of Directors, the Chief Executive Officer or
the Board of Directors pursuant to a resolution approved by a majority of the
Board of Directors. In addition, the Company is subject to the anti-takeover
provisions of Section 203 of the Delaware General Corporation Law, which
prohibits the Company from engaging in a "business combination" with an
"interested stockholder" for a period of three years after the date of the
transaction in which the person became an interested stockholder, unless the
business combination is approved in a prescribed manner. These provisions, along
with certain provisions of California law applicable to the Company, could have
the effect of discouraging certain attempts to acquire the Company which could
deprive the Company's stockholders of the opportunity to sell their shares of
Common Stock at prices higher than prevailing market prices. See "Description of
Capital Stock."
Forward-looking Statements. This prospectus contains forward-looking
statements, which may be deemed to include the Company's plans to continue
development of its B-1 Therapy, conduct clinical trials with respect to the B-1
Therapy and other product candidates, seek regulatory approvals, engage
third-party manufacturers to supply its clinical trials and commercial
requirements, establish a sales and marketing capability, evaluate additional
product candidates for subsequent clinical and commercial development and expend
the proceeds of this offering. Actual results could differ materially from those
projected in any forward-looking statements for a variety of reasons, including
those detailed in the other sections of this "Risk Factors" portion of the
Prospectus or elsewhere in this Prospectus.
14
<PAGE> 16
USE OF PROCEEDS
The net proceeds to the Company from the sale of the shares of
Common Stock offered by the Company hereby at an assumed initial public offering
price of $ per share are estimated to be $ ($ if the
Underwriters' over-allotment option is exercised in full).
The Company anticipates that approximately $24 million of the proceeds of
this offering will be used to support the development of its B-1 Therapy,
including clinical trials, manufacturing and initial prelaunch marketing. The
balance of the net proceeds of this offering, including interest earned thereon,
is expected to be used primarily in the Company's other research and development
programs such as its TAP pro-drug program and for working capital and other
general corporate purposes. The Company may also use a portion of the net
proceeds to acquire technologies or products complementary to its business,
although no material expenditures in connection with any such acquisitions
currently are anticipated. Pending application as described above, the Company
intends to invest the net proceeds of this offering in short-term,
investment-grade, interest-bearing securities.
The amounts and timing of the Company's actual expenditure for the purposes
described above will depend upon a number of factors, including: the scope and
results of preclinical studies and clinical trials; continued progress of the
Company's research and development of potential products; the cost, timing and
outcome of regulatory approvals; the expenses of establishing a sales and
marketing force; the timing and cost of establishment or procurement of
requisite production, radiolabeling and other manufacturing capacities; the cost
involved in preparing, filing, prosecuting, maintaining, defending and enforcing
patent claims; the acquisition of technology licenses; the status of competitive
products and the availability of other financing. The Company will require
substantial additional funds to conduct its operations in the future, and there
can be no assurance that such funding will be available on acceptable terms, if
at all. The Company expects that its existing capital resources, including the
net proceeds of this offering and interest thereon, will be adequate to satisfy
the requirements of its current and planned operations through 1998.
DIVIDEND POLICY
The Company has never paid a cash dividend on its capital stock and does
not anticipate paying any cash dividends in the foreseeable future.
15
<PAGE> 17
CAPITALIZATION
The following table sets forth the capitalization of the Company as of
September 30, 1996 (i) on an actual basis, (ii) or a pro forma basis to give
effect to the issuance of 498,705 shares of Common Stock upon the assumed cash
exercise of certain outstanding warrants for aggregate proceeds to the Company
of approximately $4.5 million. and (iii) as adjusted to give effect to the sale
by the Company of the shares of Common Stock offered hereby at an
assumed offering price of per share and the application of the
estimated proceeds therefrom. This table should be read in conjunction with the
Consolidated Financial Statements of the Company and the Notes thereto included
elsewhere in this Prospectus.
<TABLE>
<CAPTION>
SEPTEMBER 30, 1996
--------------------------------------------
PRO FORMA
ACTUAL (1) ACTUAL AS ADJUSTED (2)
---------- --------- ---------------
<S> <C> <C> <C>
(IN THOUSANDS)
Stockholders' equity:
Preferred Stock, $0.001 par value, 3,000,000 shares
authorized; no shares issued or outstanding....... $ -- $ -- $ --
Common Stock, $0.001 par value, 30,000,000 shares
authorized; 7,011,563 shares issued and
outstanding actual; 7,510,268 shares issued and
outstanding pro forma actual; shares
issued and outstanding as adjusted................ 7 8
Additional paid-in capital........................... 29,135 33,622
Net unrealized loss on securities
available-for-sale................................ (24) (24) (24)
Deferred compensation................................ (498) (498) (498)
Deficit accumulated during the development stage..... (13,814) (13,814) (13,814)
Total stockholders' equity........................ 14,806 19,294
-------- -------- --------
Total capitalization......................... $ 14,806 $ 19,294 $
======== ======== ========
</TABLE>
- ---------------
(1) Excludes 548,604 shares reserved for issuance upon exercise of stock options
outstanding at September 30, 1996, at a weighted average exercise price of
$0.62 and 498,705 shares issuable upon the assumed cash exercise of warrants
outstanding at the same date at a weighted average exercise price of $9.00
per share. At September 30, 1996, options to purchase 65,148 shares and
warrants to purchase 498,705 shares were immediately exercisable. At
December 6, 1996, the Company had 802,305 shares reserved for issuance upon
exercise of outstanding stock options, at a weighted average price of $1.38
per share, and 523,371 shares issuable upon exercise of warrants outstanding
at a weighted average price of $9.04. At December 6, 1996, options to
purchase 58,563 shares and warrants to purchase 523,371 shares were
immediately exercisable, including warrants to purchase 498,705 shares which
warrants terminate upon the closing of the offering if not exercised prior
thereto. See "Management -- Equity Incentive Plans" and Note 8 of Notes to
Consolidated Financial Statements.
(2) Reflects the sale of shares of Common Stock offered by the Company
hereby at an assumed initial public offering price of $ per share and
the receipt of the estimated proceeds therefrom and includes the issuance of
498,705 shares of Common Stock upon the assumed cash exercise of certain
outstanding warrants for aggregate proceeds to the Company of approximately
$4.5 million.
16
<PAGE> 18
DILUTION
As of September 30, 1996, the Company had a net tangible book value of
approximately $19,282,000 or $2.57 per share of Common Stock (including
approximately $4,488,000 from the assumed cash exercise of warrants to purchase
498,705 shares of Common Stock). Net tangible book value represents the amount
of total tangible assets less total liabilities divided by the number of shares
of Common Stock outstanding. Without taking into account any other changes in
the net tangible book value after September 30, 1996, other than to give effect
to the receipt by the Company of the net proceeds from the sale of the
shares of Common Stock offered by the Company hereby at an assumed
initial public offering price of $ per share, the pro forma net tangible
book value of the Company as of September 30, 1996 would have been approximately
$ or $ per share. This represents an immediate increase in net
tangible book value of $ per share to existing stockholders and an
immediate dilution of $ per share to new investors. The following table
illustrates this per share dilution:
<TABLE>
<S> <C> <C>
Assumed initial public offering price per share...................... $
Net tangible book value before the offering........................ $2.57
Increase per share attributable to new investors................... -----
Pro forma net tangible book value per share after the offering.......
-----
Dilution per share to new investors.................................. $
=====
</TABLE>
The following table summarizes, on a pro forma basis as of September 30,
1996, the difference between existing stockholders and the new investors with
respect to the number of shares of Common Stock purchased from the Company, the
total consideration paid and the average price per share paid:
<TABLE>
<CAPTION>
TOTAL CASH
SHARES PURCHASED CONSIDERATION
---------------------- ----------------------- AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
----------- ------- ----------- ------- -------------
<S> <C> <C> <C> <C> <C>
Existing stockholders.... 7,510,268 --% $33,093,553 % $4.41
New investors............ --
---------- --- ---------- ---
Total.......... 100.0% $ 100.0%
========== === ========== ===
</TABLE>
Other than as noted above, the foregoing computations assume the exercise
of no stock options or warrants after September 30, 1996. As of September 30,
1996 options were outstanding to purchase 548,604 shares of Common Stock at a
weighted average exercise price of $0.62 per share. As of December 6, 1996,
options were outstanding to purchase 802,305 shares of Common Stock at a
weighted average exercise price of $1.38 and warrants were outstanding to
purchase 523,371 shares of Common Stock at a weighted average exercise price of
$9.04 per share, including warrants to purchase 498,705 shares which warrants
terminate upon the closing of the offering if not exercised prior thereto. See
"Management -- Equity Incentive Plans" and Note 8 of Notes to Consolidated
Financial Statements.
17
<PAGE> 19
SELECTED CONSOLIDATED FINANCIAL DATA
The following selected consolidated financial data as of December 31, 1993,
1994 and 1995 and September 30, 1996 and for each of the two years in the period
ended December 31, 1994, the periods from January 1, 1995 to February 15, 1995
and from inception (February 16, 1995) to December 31, 1995, for the nine months
ended September 30, 1996, and for the period from inception (February 16, 1995)
to September 30, 1996 are derived from the Consolidated Financial Statements of
Coulter Pharmaceutical, Inc. and the Financial Statements of the Antibody
Therapeutics Business Operations of Coulter Corporation that have been audited
by Ernst & Young LLP, independent auditors, which are included elsewhere in this
Prospectus. The statement of operations data for the period from inception
(February 16, 1995) to September 30, 1995 are derived from unaudited financial
statements of the Company included elsewhere herein and the statement of
operations data for the year ended December 31, 1992 are derived from unaudited
financial statements of the Antibody Therapeutics Business Operations of Coulter
Corporation not included herein which, in the opinion of management of the
Company and the management of Coulter Corporation, respectively, reflect all
adjustments, consisting only of normal recurring adjustments, that the Company
and Coulter Corporation consider necessary for a fair presentation of the
results of operations for these periods. The operating results of the nine
months ended September 30, 1996 are not necessarily indicative of the results
that may be expected for the entire year.
<TABLE>
<CAPTION>
FIRST NINE
MONTHS 1995
------------
ANTIBODY
THERAPEUTICS
BUSINESS
FULL YEAR 1995
-----------------------------
ANTIBODY THERAPEUTICS BUSINESS OPERATIONS
OPERATIONS
OF COULTER CORPORATION COMPANY OF COULTER
--------------------------------------------- ------------ CORPORATION
INCEPTION ------------
YEAR ENDED DECEMBER 31, JANUARY 1, (FEBRUARY JANUARY 1,
1995 TO 16, 1995) TO 1995 TO
----------------------------- FEBRUARY 15, DECEMBER 31, FEBRUARY 15,
1992 1993 1994 1995 1995 1995
------- ------- ------- ------------ ------------ ------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Operating expenses:
Research and development........ $ 1,574 $ 1,838 $ 2,798 $ 200 $ 2,539 $ 200
General and administrative...... 127 178 288 36 581 36
---- ---- ------ ---- ------ ----
Total operating expenses.... 1,701 2,016 3,086 236 3,120 236
Interest income................. -- -- -- -- 127 --
---- ---- ------ ---- ------ ----
Net loss........................ $(1,701) $(2,016) $(3,086) $ (236) $ (2,993) $ (236)
==== ==== ====== ==== ====== ====
Pro forma net loss per share.... $ (0.44)
======
Shares used in computing pro
forma net loss per share...... 6,798
======
<CAPTION>
COMPANY
-------------------------------------------------
INCEPTION INCEPTION
(FEBRUARY 16, NINE MONTHS (FEBRUARY 16,
1995) TO ENDED 1995) TO
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
1995 1996 1996
------------- ------------- -------------
<S> <<C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Operating expenses:
Research and development........ $ 1,488 $ 9,896 $ 12,435
General and administrative...... 380 1,453 2,034
------ ------- -------
Total operating expenses.... 1,868 11,349 14,469
Interest income................. 73 528 655
------ ------- -------
Net loss........................ $(1,795) $ (10,821) $ (13,814)
====== ======= =======
Pro forma net loss per share.... $ (1.40)
=======
Shares used in computing pro
forma net loss per share...... 7,736
=======
</TABLE>
<TABLE>
<CAPTION>
ANTIBODY THERAPEUTICS
BUSINESS OPERATIONS OF
COULTER CORPORATION COMPANY
------------------------------ -------------------------------
DECEMBER 31, DECEMBER 31, DECEMBER 31, SEPTEMBER 30,
1993 1994 1995 1996
------------ ------------ ------------ -------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash, cash equivalents and short-term investments....... $ -- $ -- $ 3,438 $18,835
Working capital (deficit)............................... (124) (50) 2,878 13,497
Total assets............................................ 109 135 3,628 20,484
Deficit accumulated during the development stage........ -- -- (2,993) (13,814)
Total stockholders' equity.............................. -- -- 2,997 14,806
Coulter Corporation's net investment.................... (15) 85 -- --
</TABLE>
18
<PAGE> 20
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with
"Selected Consolidated Financial Data" and the Company's Consolidated Financial
Statements and Notes thereto included elsewhere in this Prospectus. Except for
the historical information contained herein, the discussion in this Prospectus
contains certain forward-looking statements that involve risks and
uncertainties, such as statements of the Company's plans, objectives,
expectations and intentions. The cautionary statements made in this Prospectus
should be read as being applicable to all related forward-looking statements
wherever they appear in this Prospectus. The Company's actual results could
differ materially from those discussed here. Factors that could cause or
contribute to such differences include those discussed in "Risk Factors," as
well as those discussed elsewhere herein.
OVERVIEW
Coulter Pharmaceutical is engaged in the development of novel drugs and
therapies for the treatment of people with cancer. The Company's first product
candidate, the B-1 Therapy, is based upon the antibody therapeutics program
which originated in the late 1970s at Coulter Corporation. Coulter Corporation
conducted research and development on the potential therapeutic applications of
the B-1 Antibody as part of a broader antibody therapeutics program. To
accelerate the pace of development of the B-1 Therapy and to obtain external
sources of capital for the program, Coulter Corporation decided to create a
separate Company into which it placed its conjugated antibody therapeutics
assets. Thus, in February 1995, Coulter Pharmaceutical was incorporated and
acquired worldwide rights to the B-1 Therapy and related intellectual property,
know-how and other assets from Coulter Corporation.
To date, the Company has devoted substantially all of its resources to its
research and development programs. No revenues have been generated from product
sales, and products resulting from the Company's research and development
efforts, if any, are not expected to be available commercially for at least the
next few years. The Company has a limited history of operations and has
experienced significant operating losses to date. The Company expects to incur
significant additional operating losses over the next several years and expects
cumulative losses to increase substantially due to expanded research and
development efforts, preclinical studies and clinical trials and development of
manufacturing, marketing and sales capabilities. The Company expects that losses
will fluctuate from quarter to quarter and that such fluctuations may be
substantial. There can be no assurance that the Company will successfully
develop, manufacture and commercialize its products or ever achieve or sustain
product revenues or profitability. As of September 30, 1996, the Company's
accumulated deficit was approximately $13.8 million.
RESULTS OF OPERATIONS
The following table consists of operating data for the years ended December
1993 and 1994 for the Antibody Therapeutics Business Operations of Coulter
Corporation. The table combines data for the Antibody Therapeutics Business
Operations of Coulter Corporation (for the period January 1, 1995 to February
15, 1995) and the Company (for the period from February 16, 1995 to December 31,
1995) in order to facilitate management's discussion of financial results.
Certain costs and expenses presented in the statements of operations of the
Antibody Therapeutics Business Operations of Coulter Corporation represent
allocations and Coulter Corporation's management's estimates. As a result, the
statements of operations presented for periods prior to February 16, 1995 are
not strictly comparable to those of subsequent periods and may not be indicative
of the results of operations that would have been achieved had the Antibody
Therapeutics Business Operations of Coulter Corporation operated as a
non-affiliated entity during such period.
19
<PAGE> 21
<TABLE>
<CAPTION>
ANTIBODY THERAPEUTICS
BUSINESS OPERATIONS OF
COULTER CORPORATION COMBINED COMPANY
-------------------------- -------------------------------- -----------------
YEAR ENDED YEAR ENDED YEAR ENDED NINE MONTHS ENDED NINE MONTHS ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, SEPTEMBER 30, SEPTEMBER 30,
1993 1994 1995 1995 1996
------------ ------------ ------------ ------------------ -----------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Operating expenses:
Research and development... $ 1,838 $ 2,798 $ 2,739 $ 1,688 $ 9,896
General and administrative... 178 288 617 416 1,453
----- ------- ------- ------- --------
Total operating expenses... 2,016 3,086 3,356 2,104 11,349
Interest income............ -- -- 127 73 528
----- ------- ------- ------- --------
Net loss................... $ (2,016) $ (3,086) $ (3,229) $ (2,031) $ (10,821)
===== ======= ======= ======= ========
</TABLE>
COMPARISON OF NINE MONTHS ENDED SEPTEMBER 30, 1996 AND COMBINED NINE MONTHS
ENDED SEPTEMBER 30, 1995
Operating Expenses. Research and development expenses were $9.9 million
for the nine months ended September 30, 1996, compared to $1.7 million for the
combined nine month period ended September 30, 1995, an increase of $8.2
million. This increase was due primarily to increases in staffing and
expenditures associated with the development of the B-1 Therapy, including costs
of clinical trials and manufacturing expenses. These manufacturing expenses
included certain expenses associated with scaled-up production of monoclonal
antibodies and the establishment of a centralized radiolabeling capability. The
Company expects its research and development expenses to grow during the
remainder of 1996 and in 1997, reflecting anticipated increased costs related to
additions to staffing, preclinical studies, clinical trials and manufacturing.
General and administrative expenses were $1.5 million for the nine months
ended September 30, 1996, compared to $0.4 million for the combined nine month
period ended September 30, 1995, an increase of $1.1 million. This increase was
incurred to support the Company's facilities expansion, increased research and
development efforts, and related legal and patent activities. The Company
expects its general and administrative expenses to continue to increase during
the remainder of 1996 and in 1997, in support of its increased research and
development, patent and corporate development activities, as well as increasing
commercialization efforts in anticipation of potential product sales.
Interest Income. Interest income was $0.5 million for the nine months
ended September 30, 1996, compared to $0.1 million for the combined nine month
period ended September 30, 1995, an increase of $0.4 million. This increase was
due to higher average cash, cash equivalent and short-term investment balances
as a result of the Company's sale of Preferred Stock in August 1995 and April
1996.
COMPARISON OF COMBINED YEAR ENDED DECEMBER 31, 1995 AND THE ANTIBODY
THERAPEUTICS BUSINESS OPERATIONS OF COULTER CORPORATION FOR THE YEARS ENDED
DECEMBER 31, 1994 AND 1993
Operating Expenses. Research and development expenses were $2.7 million
for the combined year ended December 31, 1995, compared to $2.8 million and $1.8
million for the years ended December 31, 1994 and 1993, respectively. The $0.1
million decrease in expenses from the year ended December 31, 1994 to the
combined year ended December 31, 1995 was due primarily to the net effect of
decreased expenses resulting from the elimination of payments to the Dana-Farber
Cancer Institute for prepaid royalties and sponsored research, primarily offset
by increases in staffing and in expenditures associated with the development of
the B-1 Therapy, including costs of clinical trials and manufacturing expenses.
The $1.0 million increase in expenses from 1993 to 1994 was due primarily to
increased clinical development costs associated with the B-1 Therapy.
General and administrative expenses were $0.6 million for the combined year
ended December 31, 1995, compared to $0.3 million and $0.2 million for the years
ended December 31, 1994 and 1993, respectively. The $0.3 million increase in
expenses for the combined year ended December 31, 1995
20
<PAGE> 22
from the year ended December 31, 1994 primarily represents expenses associated
with the formation of the Company and investment in infrastructure. The $0.1
million increase in expenses from 1993 to 1994 was incurred to support
increasing research and development activities of Coulter Corporation's antibody
therapeutics program.
Interest Income. The Company first reported interest income of $0.1
million for the combined year ended December 31, 1995, which resulted from
investment of the net proceeds from the sale of the Company's Preferred Stock in
1995.
LIQUIDITY AND CAPITAL RESOURCES
Since its inception, the Company has financed its operations primarily
through private placements of equity securities totaling $28.4 million through
September 30, 1996. In December 1996, the Company entered into a $3.8 million
equipment financing agreement, all of which is currently available.
Cash, cash equivalents and short-term investments totaled $18.8 million at
September 30, 1996. The negative cash flow from operations is expected to
continue and to accelerate in the foreseeable future. The Company expects to
incur substantial and increasing research and development expenses, including
expenses related to additions to personnel, preclinical studies, clinical
trials, manufacturing and commercialization efforts. The Company will need to
raise substantial additional capital to fund its operations. The Company intends
to seek such additional funding through public or private equity or debt
financings from time to time, as market conditions permit. There can be no
assurance that additional financing will be available on acceptable terms, if at
all. If adequate funds are not available, the Company may be required to delay,
reduce the scope of, or eliminate one or more of its research and development
programs or obtain funds through arrangements with collaborative partners or
others that may require the Company to relinquish rights to certain of its
technologies, product candidates or products that the Company would otherwise
seek to develop or commercialize.
Net cash used in operations was $6.3 million for the nine months ended
September 30, 1996, compared to $1.4 million for the combined nine month period
ended September 30, 1995. This increase is primarily the net result of the
increased net loss for the period ended September 30, 1996, partially offset by
an increase in accrued liabilities. The Company's capital expenditures increased
to $0.8 million for the nine months ended September 30, 1996 from $0.1 million
for the combined nine month period ended September 30, 1995, primarily
representing investment in equipment associated with the centralized
radiolabeling capability. Net cash provided by financing activities increased to
$22.6 million for the nine months ended September 30, 1996 from $6.1 million for
the combined nine month period ended September 30, 1995, resulting from the sale
of the Company's Preferred Stock in April 1996.
The Company expects that its existing capital resources, including the net
proceeds of this offering and interest thereon, will be adequate to satisfy the
requirements of its current and planned operations through 1998. The Company's
future capital requirements will depend on a number of factors, including: the
scope and results of preclinical studies and clinical trials; continued progress
of the Company's research and development of potential products; the cost,
timing and outcome of regulatory approvals; the expenses of establishing a sales
and marketing force; the timing and cost of establishment or procurement of
requisite production, radiolabeling and other capacities; the cost involved in
preparing, filing, prosecuting, maintaining, defending and enforcing patent
claims; the need to acquire licenses to new technology; the status of
competitive products; and the availability of other financing.
21
<PAGE> 23
BUSINESS
OVERVIEW
Coulter Pharmaceutical is engaged in the development of novel drugs and
therapies for the treatment of people with cancer. The Company currently is
developing a family of cancer therapeutics based upon two platform technologies:
conjugated antibodies and tumor-activated peptide pro-drugs. The Company's most
advanced product candidate, the "B-1 Therapy," consists of a monoclonal antibody
conjugated with a radioisotope. In a Phase I/II clinical trial of the B-1
Therapy, 40 patients with low-grade or transformed low-grade non-Hodgkin's
lymphoma who had relapsed from previous chemotherapy regimens achieved an 82%
overall response rate and a 45% complete response rate. The Company has
commenced a pivotal Phase II/III clinical trial for the treatment of NHL in
low-grade and transformed low-grade patients refractory to chemotherapy. The
Company intends to file for U.S. Food and Drug Administration marketing approval
of its B-1 Therapy for this indication in the second half of 1998. The Company
believes that the B-1 Therapy, if successfully developed, could become the first
radioimmunotherapy approved in the United States for the treatment of people
with cancer. The Company has commenced and plans additional clinical trials to
broaden the label indication of the B-1 Therapy. The Company's TAP pro-drug
program is designed to broaden significantly the therapeutic windows of
conventional chemotherapies. The Company currently is developing a pro-drug
version of doxorubicin to treat certain solid tumor cancers with the objective
of commencing clinical trials in early 1998.
The Company was incorporated under the laws of Delaware in February 1995.
The Company's conjugated antibody program is based upon the antibody
therapeutics program which originated in the late 1970s at Coulter Corporation,
a recognized leader in the field of hematology. Upon its formation in February
1995, the Company acquired worldwide rights to the B-1 Therapy and related
intellectual property, know-how and other assets from Coulter Corporation.
BACKGROUND
Cancer: The Disease and Its Treatment
Cancer afflicts millions of people worldwide. It is currently the second
leading cause of death in the United States and is projected to account for more
than 550,000 deaths in 1996 alone. Some forty percent of Americans are expected
to develop cancer and, despite noteworthy success in the treatment of some
cancers, half of these cancer patients will die from the disease.
Cancer is a family of more than one hundred diseases that can be
categorized into two broad groups: (i) hematologic or blood-borne malignancies
(e.g., lymphomas and leukemias) and (ii) solid tumor cancers (e.g., lung,
prostate, breast and colon cancers). Both groups are generally characterized by
a breakdown of the cellular mechanisms that regulate cell growth and cell death
("apoptosis") in normal tissues.
Blood-borne cancers involve a disruption of the developmental processes of
blood cell formation, preventing these cells from functioning normally in the
blood and lymph systems. Death from blood-borne cancers ultimately is caused by
infection, organ failure or bleeding. While chemotherapy is the primary
treatment for blood-borne malignancies, many such malignancies are
radiosensitive and some localized lymphomas can be treated with radiation
therapy. Nonetheless, radiation therapy cannot be used in the treatment of most
blood-borne malignancies because the levels of radiation necessary to destroy
diseases that are widely disseminated within the body would result in severe
damage to the bone marrow of the patient, leading to life-threatening
suppression of the immune system, and other serious side effects.
In solid tumor cancers, malignant tumors invade and disrupt nearby tissues
and can also spread throughout the body or "metastasize." The impact of these
tumors on vital organs such as the lungs and the liver frequently leads to
death. Surgery is used to remove solid tumors that are accessible to
22
<PAGE> 24
the surgeon and can be effective if the cancer has not metastasized. Radiation
therapy also can be employed to irradiate a solid tumor and surrounding tissues
and is a first-line therapy for inoperable tumors, but side effects are a
limiting factor in treatment. Radiation therapy is used frequently in
conjunction with surgery either to reduce the tumor mass prior to surgery or to
destroy tumor cells that may remain at the tumor site after surgery. However,
radiation therapy cannot assure that all tumor cells will be destroyed and has
only limited utility for treating widespread metastases. While surgery and
radiation therapy are the primary treatments for solid tumors, chemotherapy and
hormonal treatments often are used as adjunctive therapies and also are used as
primary therapies for inoperable or metastatic cancers.
Chemotherapy, which typically involves the intravenous administration of
drugs designed to destroy malignant cells, is used for the treatment of both
solid tumors and blood-borne malignancies. Chemotherapeutic drugs generally
interfere with cell division and are therefore more toxic to rapidly dividing
cancer cells. Since cancer cells can often survive the effect of a single drug,
several different drugs usually are given in a combination therapy designed to
target overlapping mechanisms of cellular metabolism to overwhelm the ability of
cancer cells to develop resistance to chemotherapy. Combination chemotherapy is
used widely as first-line therapy for leukemias and lymphomas and has had
considerable success in the treatment of some forms of these cancers.
Nevertheless, partial and even complete remissions obtained through chemotherapy
often are not durable, and the cancer may reappear and/or resume its progression
within a few months or years of treatment. The relapsed patient's response
typically becomes shorter and shorter with each successive treatment regimen as
the cancer becomes resistant to the chemotherapy. Eventually, patients may
become "refractory" to chemotherapy, meaning that the length of their response,
if any, to treatment is so brief as to lead to the conclusion that further
chemotherapy regimens would be of little or no benefit.
Chemotherapeutic drugs are not sufficiently specific to cancer cells to
avoid affecting normal cells, especially those that are growing rapidly. As a
result, patients often experience debilitating side effects such as nausea,
vomiting, hair loss, anemia and fatigue, as well as life-threatening side
effects such as immune system suppression. Such side effects can limit the
effectiveness of therapy because the clinician must avoid exceeding the maximum
dose of drug that the patient can tolerate. Since dosages must be limited to
avoid unacceptable side effects, it may not be possible to administer
sufficiently high doses of chemotherapeutic drugs to overcome the natural
ability of cancer cells to become resistant. A number of chemotherapeutic agents
originally thought to have promise as cancer drugs have failed in the clinic
because the minimum effective dose exceeded the maximum tolerable dose. Ideally,
a chemotherapeutic agent would have a minimum effective dose well below the
maximum tolerable dose, thereby providing physicians with a wide "therapeutic
window" or a range of doses within which all patients could be treated
effectively.
In cases of certain severe blood-borne malignancies and metastatic solid
tumor cancers, bone marrow transplants ("BMT") may be performed to treat
patients who typically have exhausted all other treatment options. Transplants
generally are performed in connection with regimens of aggressive chemotherapy
and/or radiation therapy. While techniques are improving, BMTs are associated
with significant mortality and high rates of morbidity and remain a very
expensive alternative.
Emerging Methods of Treatment
Scientific progress in the elucidation of the underlying molecular biology
of cancer in recent years has yielded a number of promising treatment
approaches. These approaches generally are designed to enhance the specificity
and potency of cancer therapeutics, to improve overall efficacy and to reduce
side effects. The Company believes that two of the most promising of these
approaches are (i) monoclonal antibodies that bind to targeted cells to
stimulate the body's immune system and/or to deliver cytotoxic agents to destroy
malignant cells and (ii) modifications of conventional chemotherapeutic drugs
and drug formulations to improve efficacy by expanding their therapeutic
windows.
23
<PAGE> 25
Monoclonal Antibodies
The human immune system is composed of specialized cells, including B-cells
and T-cells, that function in the recognition, destruction and elimination of
disease-causing foreign substances and of virally infected or malignant cells.
Human antibodies, which are produced by the B-cells, play a vital role in the
proper functioning of the immune system. They have predetermined functions based
primarily upon their ability to recognize specific antigens, which are molecular
structures on the surface of disease-causing substances or diseased cells. Each
antigen serves as a binding site for the antibody specific to that antigen, and
each disease-causing substance or diseased cell can be identified by its
antigens.
The ability of specific antibodies to bind to specific antigens that are
expressed on the surface of targeted cells, and to trigger an immune system
attack on those cells, provides the theoretical basis for the development of
cancer immunotherapeutics. In the 1970s, researchers discovered techniques to
produce unlimited supplies of identical murine (mouse-derived) antibodies,
referred to as monoclonal antibodies, by cloning antibody producing cells that
were derived from hybridization of a single B-cell. These techniques provided
researchers with the tools to identify and study specific antigens and to
produce potential therapeutics. In principle, once an antigen expressed by
malignant cells has been identified, a monoclonal antibody specific to that
antigen can be created. If an antibody could be produced that binds to an
antigen expressed exclusively by human cancer cells, the antibody would be
specific to only those cells. As a result, the use of such a monoclonal antibody
as a therapeutic would have few, if any, side effects. However, the development
of such a therapy has proven to be more problematic than originally hoped.
Immunotherapies based solely upon monoclonal antibodies have had only limited
clinical effectiveness, particularly in solid tumors where the uneven supply of
blood throughout such tumors prevents adequate exposure of monoclonal antibodies
to malignant cells.
The effectiveness of a particular monoclonal antibody in the treatment of
cancer fundamentally is linked to the characteristics of the antigen to which it
binds. For example, while researchers have identified numerous antigens on
cancer cells that can be recognized by monoclonal antibodies, most of these
antigens are also expressed to some degree by other types of cells. An antibody
to such an antigen may not be sufficiently specific to the cancer cells to avoid
or minimize unintended side effects caused by damage to normal cells. Moreover,
the behavior of antigens following binding with an antibody is quite variable:
the bound antibody-antigen complex can remain on the cell surface, can be
internalized into the cell or can be released from the cell surface. Thus, the
identification of suitable antigens to serve as targets for therapeutic
monoclonal antibodies must account for these and other complexities.
Once a suitable antigen has been identified, researchers have found that
different antibodies binding to different sites on the antigen may not have the
same biological activity, introducing another element of variability. Antibodies
also differ in the degree to which they stimulate an immune system response and
in the extent to which they have other effects on the cell. Even the most
effective antibodies have limited biological activity. In addition, research
conducted since the late 1970s has revealed the importance of selecting the
proper type of antibody for use in the intended therapy. Murine antibodies are
appropriate in treatments involving a single dose or other short treatment
regimen where it is beneficial that the antibodies, together with any
therapeutic conjugate, are metabolized and cleared from the body fairly quickly.
Chimerized or humanized antibodies are desirable for multi-dose or chronic
treatment regimens as they reduce the risk of a human immune response to the
antibodies themselves. While these manipulations of the antibodies have
permitted more extended therapeutic regimens in some circumstances, they do not
overcome the inherent limitations in the biological activity of the underlying
antibodies. Thus, despite early expectations, no monoclonal antibody has yet
been shown to be effective as a stand-alone, first-line therapy in the treatment
of cancer.
Researchers have attempted to increase the effectiveness of antibodies by
attaching radioisotopes or other cytotoxic agents for use in
"radioimmunotherapy" or "chemoimmunotherapy," respectively.
24
<PAGE> 26
By using an antibody to deliver a radioisotope or other cytotoxic agent to the
targeted cells, the effect of the radiation or cytotoxic agent can be
concentrated in the immediate vicinity of malignant cells. Development of
effective radioimmunotherapies, however, presents an additional set of
challenges, including the need to select an appropriate radioisotope for the
intended therapy, to develop a reliable means of linking the radioisotope to the
antibody and to devise a therapeutic protocol that optimizes therapeutic effect
while minimizing undesirable side effects. The development of effective
chemoimmunotherapies presents similar challenges.
Enhancements of Conventional Chemotherapies
A number of organizations have explored methods of improving the delivery
of cytotoxic drugs to tumor cells, with the objective of expanding the
therapeutic window for these drugs in the treatment of cancer. Approaches that
have been commercialized include encapsulation of the drug in a liposome to
regulate the rate at which it is released and impregnation of an implantable
matrix with the drug to enable its delivery locally over time as the matrix
dissolves. Sustained release of cytotoxic drugs using liposomal formulations has
modestly enhanced the therapeutic window for these compounds, but instability of
the formulations and accumulations in the skin have produced undesirable side
effects. Surgical implantation of a matrix is limited inherently to the
treatment of localized tumor masses and is not applicable to blood-borne or
metastatic cancers.
Another approach, the development of pro-drugs, involves the chemical
modification of cytotoxic drugs to render them inactive until they are delivered
to, or into the proximity of, targeted cancer cells. The pro-drug is transformed
into its active form only in the presence of enzymes or other chemicals produced
by the tumor cells. The preferential activation of a pro-drug in the tumor
milieu increases its lethal effect on tumor cells while limiting side effects to
non-malignant tissues. Pro-drug versions of cytotoxic drugs offer the potential
to broaden significantly the therapeutic windows of such drugs beyond that which
can be achieved using existing approaches such as liposomal formulations.
Challenges that have constrained the development of effective pro-drugs to date
have included the inability to construct or identify suitable tumor-specific
activation mechanisms and difficulties in designing pro-drugs that will have
adequate stability in circulation.
COULTER PHARMACEUTICAL'S APPROACH
Coulter Pharmaceutical is developing a family of cancer therapeutics to
address the shortcomings of current therapies based upon two platform
technologies: (i) conjugated antibodies (primarily radioimmunotherapies) and
(ii) tumor-activated peptide pro-drugs.
The Company is developing conjugated antibody therapies to overcome the
inherent limitations of monoclonal antibodies when used as stand-alone
therapeutics and to provide advantages over current chemotherapy and radiation
therapy treatments. The Company believes that the B-1 Therapy, its first product
candidate, incorporates each of the principle attributes of an effective
radioimmunotherapy for the treatment of NHL: (i) an antigen specific to B-cells,
(ii) a therapeutically active monoclonal antibody, (iii) the radioisotope
appropriate for the disease profile and (iv) an optimized therapeutic protocol.
In a Phase I/II clinical trial conducted at the University of Michigan Medical
Center, 40 patients with low-grade and transformed low-grade NHL, who on average
had failed more than three prior treatment regimens with chemotherapy, achieved
an 82% overall response rate and a 45% complete response rate. The B-1 Therapy
is currently the subject of a pivotal Phase II/III trial for the treatment of
low-grade and transformed low-grade NHL patients refractory to chemotherapy as
its initial indication. To broaden this initial label indication, the Company
currently is planning to commence a Phase III/IV "post-approval" clinical trial
in patients in first or second relapse and also has commenced a Phase II
clinical trial of its B-1 Therapy in patients newly diagnosed with low-grade
NHL. The Company believes that this Phase II trial is the first clinical trial
of a radioimmunotherapy as a stand-alone, first-line treatment for people with
cancer. See " -- Clinical Results and Development Plan."
25
<PAGE> 27
The Company believes that radioimmunotherapies will emerge as important
treatments for blood-borne cancers due to the radiosensitivity of these
malignancies and the ready accessibility of the blood and lymph systems to
monoclonal antibodies. Radioimmunotherapy also may become an important
adjunctive therapy for the treatment of certain solid tumor cancers following
surgery, radiation therapy or chemotherapy, where it may be useful in
eliminating circulating and other undetected malignant cells missed by primary
therapies. In the future, the Company intends to use its expertise in conjugated
antibodies to expand beyond radioimmunotherapy to develop effective
chemoimmunotherapies for the treatment of certain cancers.
The Company's second technology platform, its TAP pro-drug technology, has
the potential to broaden significantly the therapeutic windows of conventional
chemotherapies based on the Company's understanding of biochemical mechanisms
involved in metastasis and the identification of a potential means for
exploiting these mechanisms. TAP pro-drug versions of existing cytotoxic drugs
are designed to be activated preferentially in the proximity of metastatic
cancer cells, yet stable in circulation and in normal tissues. Accordingly,
relatively larger quantities of cytotoxic agents are expected to reach and enter
malignant cells as opposed to normal cells, which could permit a significant
increase in maximum tolerated dosages, potentially overcoming drug resistance in
cancer cells. The Company also believes that cytotoxic agents currently
considered too toxic to be used in their unmodified forms may be suitable
candidates to become TAP pro-drugs.
COULTER PHARMACEUTICAL'S STRATEGY
The Company's goal is to develop and commercialize novel drugs and drug
therapies for the treatment of people with cancer based on selected insights
from the emerging understanding of the molecular biology of malignant cells. The
Company's conjugated antibody program is based upon the antibody therapeutics
program which originated in the late 1970s at Coulter Corporation, a recognized
leader in the field of hematology. Upon its formation, Coulter Pharmaceutical
obtained worldwide rights to the B-1 Therapy and related intellectual property,
as well as a significant body of expertise pertaining to the selection and
development of suitable antibodies and appropriate radioisotopes (and other
cytotoxic agents) and methods for devising optimized therapies. The Company's
TAP pro-drug program is based upon technology that has been under development at
Catholique Universite de Louvain, Belgium, since 1986 and which was exclusively
licensed to the Company in 1996. Based on this foundation, the Company has
established a strategy comprised of the following primary elements:
Pursue Expedited Initial Approval of the B-1 Therapy. The Company intends
to seek expedited FDA marketing approval for its B-1 Therapy for the treatment
of low-grade and transformed low-grade NHL in patients who are refractory to
chemotherapy, while simultaneously pursuing studies to broaden the initial label
indication. The recently commenced pivotal Phase II/III clinical trial of the
B-1 Therapy has been designed to comply with the guidelines of the
Clinton-Kessler Cancer Initiative, which is intended to accelerate the testing,
review and approval of therapies for patients suffering from life-threatening or
disabling cancers who have limited treatment options. Based on this initiative
and on guidance from FDA staff, the Company is focusing on chemotherapy
refractory patients in this pivotal Phase II/III clinical trial. The trial will
include 60 patients and a post-treatment follow-up period of six months. The
Company intends to file for FDA marketing approval for this indication in the
second half of 1998. The Company also intends to seek approval for other NHL
indications and, accordingly, is currently planning to commence a Phase III/IV
"post-approval" clinical trial during the second half of 1997 in patients with
low-grade or transformed low-grade NHL in first or second relapse. The Company
also has commenced a Phase II clinical trial of the B-1 Therapy as a
stand-alone, first-line treatment for patients newly diagnosed with low-grade
NHL.
Establish Sales and Marketing Capability. The Company intends to market
and sell its products in the United States through a direct sales force and,
where appropriate, in collaboration with marketing partners. This strategy is
intended to enable the Company to establish a commercial presence in the cancer
therapeutics market with its B-1 Therapy, if approved, and to create the
capability to sell other products that it may develop or in-license. The Company
believes that an established sales and
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marketing capability will enable it to compete effectively for opportunities to
license or distribute later-stage product candidates and even approved products.
Internationally, the Company intends to distribute its products through
marketing partners.
Leverage Existing Technology Platforms. The Company intends to develop
additional products based on the lead compounds being generated in its TAP
pro-drug program and by leveraging its expertise in conjugated antibodies to
develop other immunotherapies. In its TAP pro-drug program, the Company
currently is engaged in preclinical development of Super-Leu-Dox, a pro-drug
version of doxorubicin, with the objective of commencing clinical trials in
early 1998. The Company also intends to apply its TAP pro-drug technology to
other classes of cytotoxic drugs, including the vinca alkaloids, to broaden
significantly the therapeutic windows of such agents. The Company is evaluating
potential conjugated antibody therapies for the treatment of other blood-borne
malignancies and selected solid tumor cancers.
Leverage Development Expertise. The Company believes that it has built
substantial product development capabilities and expertise in the cancer field
due in part to the advanced stage of the B-1 Therapy program at the time that it
was obtained from Coulter Corporation. The Company believes it can leverage this
development expertise to accelerate the development of other products in the
cancer therapeutics field. The Company intends to pursue other product
candidates derived from sponsored research or available for in-licensing in both
blood-borne malignancies and solid tumor cancers, particularly in areas that may
be complementary to its existing technology platforms.
Utilize Contract Manufacturers. The Company intends to manufacture its
commercial products through contract manufacturers. This strategy is expected to
(i) accelerate the scale-up of manufacturing processes to commercial scale, (ii)
reduce initial capital investment, (iii) result in competitive manufacturing
costs and (iv) provide access to a wide range of manufacturing technologies.
B-1 RADIOIMMUNOTHERAPY FOR NON-HODGKIN'S LYMPHOMA
The Company's first product candidate, the B-1 Therapy, is in clinical
trials for the treatment of NHL. The Company believes that the B-1 Therapy, if
successfully developed, could become the first radioimmunotherapy approved in
the United States for the treatment of people with cancer.
Non-Hodgkin's Lymphoma and Its Current Treatment
Non-Hodgkin's lymphomas are blood-borne cancers of the immune system, all
sharing the common feature of a proliferation of malignant B-cells. According to
statistics from the National Cancer Institute, approximately 270,000 people are
afflicted with NHL in the United States. More than 52,000 new cases are expected
to be diagnosed in 1996. NHL is currently the sixth leading cause of death among
cancers in the United States and has the second fastest growing mortality rate.
NHL is categorized by histology as either low-, intermediate- or high-grade
disease. These classifications differ significantly with respect to the speed of
disease progression, the pattern of response to and relapse after conventional
chemotherapy and the average life expectancy. In the United States, the Company
estimates that approximately 140,000 patients have low-grade or transformed
low-grade, 100,000 have intermediate-grade and 30,000 have high-grade NHL.
Initially, the Company is pursuing clinical development of its B-1 Therapy for
the treatment of patients with low-grade and transformed low-grade NHL. Patients
with low-grade NHL have a fairly long life expectancy from the time of diagnosis
with a median survival of more than six years. While patients with low-grade and
transformed low-grade NHL can often achieve one or more remissions with
chemotherapy, eventually these patients relapse. Relapsed patients are more
difficult to treat as remissions are harder to achieve and, if achieved, last
for shorter periods of time as the disease becomes more resistant to
chemotherapy and/or transforms to an intermediate- or high-grade histology.
Patients ultimately die from the disease or from complications of treatment.
Intermediate- and high-grade NHL are more rapidly growing forms of the disease.
However, approximately one-half of all intermediate- and high-grade cases can be
treated effectively with conventional chemotherapy.
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Description of the B-1 Therapy
The Company's B-1 Therapy consists of a radioisotope, (131)I, combined
with a monoclonal antibody that recognizes and binds to the CD20 antigen, an
antigen commonly expressed on the surface of B-cells primarily during that stage
of their life cycle when NHL arises. The B-1 Therapy is administered to patients
in a proprietary therapeutic protocol consisting of a single, two-dose regimen.
The Company believes that the potential benefits of its B-1 Therapy result from
the following four constituent elements:
Proprietary Protocol
The B-1 Therapy is administered intravenously in a single, two-dose regimen
consisting of an imaging dose, three gamma camera scans and a therapeutic dose.
The proprietary protocol is flexible: the timing of the gamma camera scans and
of the therapeutic dose can be adjusted to some extent to accommodate the
schedules of clinicians and patients. The chart below depicts an example of the
B-1 Therapy protocol as proposed for use in the Company's current Phase II/III
pivotal trial. The imaging dose consists of 50 mg of B-1 Antibody trace-labeled
with 5 millicuries ("mCi") of (131)I. Immediately after the imaging dose, the
patient is scanned with a gamma camera to provide an image of the initial
distribution of radiolabeled antibody in the patient's body. The patient returns
for additional gamma camera scans on the third and eighth days of the therapy to
show how much of the radiolabeled antibody is bound to targeted cells and how
much has been eliminated from the body at each point in time. This information
is used to calculate the correct therapeutic dose to achieve a total body
radiation of 75 centigray ("cGy"). The amount of radiolabeled antibody needed to
achieve this optimal radiation level ranges from approximately 50 to 180 mCi of
(131)I due to wide patient-to-patient variability in the rates at which the
antibody is eliminated. Both the imaging dose and the therapeutic dose
immediately are preceded by a 450 mg dose of unlabeled B-1 Antibody to improve
the targeting of malignant B-cells by the radiolabeled B-1 Antibody. These
pre-doses of unlabeled B-1 Antibody serve to protect the spleen, liver and other
vital organs from excessive radiation exposure by binding to some of the CD20
antigens on circulating B-cells which naturally accumulate in these organs.
Additionally, the patient takes non-radioactive iodine drops orally during the
course of the therapy to prevent uptake of (131)I into the thyroid gland.
[DIAGRAM OF STEPS OF PROPRIETARY PROTOCOL]
Relying upon the imaging properties of (131)I to account for critical
patient-to-patient variability in the rate at which the antibody is cleared
makes it possible to deliver predictably a total body radiation dose that has
been determined to maximize therapeutic benefit with manageable side effects and
without the need for bone marrow rescue. Because the B-1 Therapy is administered
in a single, two-dose regimen and is well tolerated, it is expected to require
relatively little patient follow-up and physician intervention. In contrast,
chemotherapy requires administration of several cytotoxic agents in repeated
cycles of therapy over a six- to eight-month period during which the patient
must be monitored carefully and/or treated for side effects. Although patients
to date have been kept in the hospital to monitor radiation levels for up to
three days following the therapeutic dose, under recently
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enacted regulations of the Nuclear Regulatory Commission, the Company believes
that the B-1 Therapy can be administered primarily on an outpatient basis.
However, some hospitals may be required to administer the therapeutic dose on an
inpatient basis under their own or under applicable state or local regulations.
See "-- Radioactive and Other Hazardous Materials."
CD20 Antigen
The CD20 antigen is a highly selective cell surface marker found on
B-cells: expression of the CD20 antigen is limited to B-cells, is found on 95%
of such cells and occurs on B-cells primarily during that stage of their life
cycle when NHL arises. The CD20 antigen is not expressed by stem cells, B-cell
progenitor cells or plasma cells; thus, these cells are not targeted by the B-1
Therapy. As a result, while the B-1 Therapy targets and destroys both normal and
malignant B-cells, unaffected plasma cells continue to function in the immune
system and B-cell populations can be regenerated after therapy by unaffected
B-cell progenitor cells.
[DIAGRAM OF LIFE-CYCLE OF A B-CELL]
In addition, the CD20 antigen is neither internalized by the B-cell nor
released into circulation after it has been bound to the B-1 Antibody, ensuring
that the antibody-radioisotope conjugate will remain in place to destroy the
B-cell.
The B-1 Antibody
The B-1 Antibody exhibits very high specificity for the CD20 antigen and,
because it is a murine sub-class IgG(2)a antibody, is capable of recruiting an
immune response to those B-cells to which it binds. Further, the B-1 Antibody
directly affects cell function, triggering apoptosis in a portion of the B-cells
to which it binds. The use of a murine antibody promotes rapid clearance of
unbound radiolabeled antibody from circulation, which reduces radiotoxicity. Due
to the impaired state of the NHL patient's immune system and the short course of
therapy, the human immune response to the murine antibody ( the "HAMA response")
has been minimal to date and has not been a limiting factor in treatment under
the protocol.
The B-1 Antibody used in the Company's B-1 Therapy was generated in 1978 by
the Dana-Farber Cancer Institute in collaboration with Coulter Corporation. The
B-1 Antibody has been available commercially from Coulter Corporation as a
diagnostic reagent since 1982 and is generally accepted as the reference
standard for the identification of B-cells. Rights to the antibody for
therapeutic applications were transferred to Coulter Pharmaceutical from Coulter
Corporation in February 1995.
(131)Iodine Radioisotope
The (131)I radioisotope was selected over other radioisotopes for use in
the B-1 Therapy because it (i) produces both gamma emissions which permit
imaging for dose optimization and compact beta emissions for a concentrated
therapeutic effect, (ii) provides additional commercial and clinical benefits
based on its relatively long half-life, (iii) has characteristics which reduce
the risk of bone
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marrow damage without sacrificing efficacy and (iv) has long-established medical
uses in other cancer treatments.
Gamma emissions from (131)I permit dose optimization by enabling clinicians
to calculate the actual clearance rate of radiolabeled antibody for each
patient. Use of the same radioisotope for both the imaging and the therapeutic
dose provides assurance that the clearance rates observed in imaging also will
apply for the therapeutic dose. Having established the patient's actual
clearance rate, the clinician can determine reliably the therapeutic dose which
will deliver the optimized level of total body radiation.
The lower relative energy and short path length of the beta emission of
(131)I concentrate the destructive energy of the radioisotope on the B-cell to
which the antibody is bound and, in a so-called bystander effect, on adjacent
B-cells in the microscopic clusters of malignant cells which are common to NHL.
Moreover, (131)I causes minimal damage to nearby normal tissues in contrast to
other radioisotopes that have longer path length beta emissions which extend too
far beyond the targeted area.
The relatively long half-life of (131)I, approximately eight days, permits
radiolabeling at a centralized facility to ensure consistent quality, increase
the number of clinical sites capable of administering this radioimmunotherapy
and reduce overall manufacturing costs. The eight-day half-life also provides
the therapeutic advantage of exposing bound malignant cells to radiation over a
longer period of time.
When bound to a B-cell, (131)I's lower relative energy and short path
length, together with its relatively long half-life, minimize bone marrow damage
while optimizing the therapeutic effect of the radiation. Further, as the B-1
Antibody is metabolized, the released (131)I radioisotope is eliminated rapidly
and unlike other radioisotopes does not concentrate naturally in the bone
matrix.
(131)Iodine is an inexpensive radioisotope that has long-established
medical uses in other cancer treatments. Hence, medical facilities and
clinicians are accustomed to its handling, use and disposal and already have
developed the appropriate procedures and facilities for its safe therapeutic
application.
Clinical Results and Development Plan
The B-1 Therapy was developed in the course of an extended Phase I/II dose
escalation clinical trial at the University of Michigan Medical Center which
completed patient enrollment in early 1996. This trial was used to develop and
refine the proprietary therapeutic protocol, to determine the maximum tolerated
dose of total body radiation and to assess the safety and efficacy profile of
treatment with the radiolabeled B-1 Antibody in patients representing a full
range of NHL histologies. Based on the data generated in this clinical trial,
the Company has decided to pursue clinical development of the B-1 Therapy for
the treatment of low-grade and transformed low-grade NHL.
Phase I/II Trial Results
A total of 59 patients were enrolled in the Phase I/II dose escalation
clinical trial. Preliminary data from this clinical trial were first published
in August 1993 in the New England Journal of Medicine and updated, interim
clinical results were reported in July 1996 in the Journal of Clinical Oncology.
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<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
RELAPSED AND REFRACTORY RELAPSED PATIENTS ONLY REFRACTORY PATIENTS ONLY
PATIENTS
- ------------------------------------------------------------------------------------------------------------------
LOW-GRADE AND
TRANSFORMED No. of Overall Complete No. of Overall Complete No. of Overall Complete
LOW-GRADE NHL PATIENTS Patients Response Response Patients Response Response Patients Response Response
- ------------------------------------------------------------------------------------------------------------------
- All Patients 40 82% 45% 17 94% 64% 23 73% 30%
- Treated Patients Only 36 86% 50% 14 100% 78% 22 77% 31%
- Treated Patients 28 92% 68% 9 100% 66% 19 89% 36%
Excluding Prior
BMT Recipients
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
- ---------------
"Overall response" is the sum of complete and partial responses.
"Complete response" is defined as the disappearance of all detectable
disease and all signs and symptoms of the disease. A complete response
must be verified by two measurements no less than four weeks apart and
by a bone marrow biopsy. A complete response classification also
requires that the measurements detect no progression at any disease
site and no new sites of disease.
"Partial response" is defined as a 50% or greater reduction in
detectable disease, as verified by two measurements no less than four
weeks apart. A partial response classification also requires that the
measurements detect no progression at any disease site and no new
sites of disease.
"Relapsed patients" are patients who have failed previous regimens of
chemotherapy but who experienced a response duration that lasted six
months or longer after their last treatment regimen.
"Refractory patients" are patients who received two or more previous
regimens of chemotherapy and who experienced no response or a response
duration that lasted less than six months after their last treatment
regimen.
Of the 59 patients enrolled in this trial, 40 had low-grade or transformed
low-grade NHL, which are the histologies the Company is pursuing in its clinical
trials. These 40 patients had failed on average more than three prior treatment
regimens with chemotherapy. These patients exhibited an 82% overall response
rate and a 45% complete response rate. This 40-patient cohort included eight
patients who previously had received and failed an autologous bone marrow
transplant prior to participation in the clinical trial. The 40 patients in this
cohort received total body radiation doses of up to 85 cGy in this dose
escalation trial. Of these patients, 17 have been classified as relapsed and 23
as refractory to chemotherapy. The overall response rate in relapsed patients
was 94% and the complete response rate was 64%. The overall response rate in
refractory patients was 73% and the complete response rate was 30%. Four out of
the 40 patients did not receive the therapeutic dose of radiolabeled antibody
due to their rapidly deteriorating medical condition or the presence of a HAMA
response, which arose prior to May 1993 in the early stages of the Phase I/II
dose escalation clinical trial under a non-optimized treatment protocol. Of the
36 patients who received a therapeutic dose, 50% experienced a complete response
with an average duration of response of 18.1 months, with a range of two to 44
months as of October 1996. As of such date, nine of these patients were still in
complete response.
On an intent-to-treat basis, which includes all enrolled patients whether
treated or not, the 59 enrolled patients achieved an overall response rate of
71% and a complete response rate of 32%. Of the 19 patients who had
intermediate- or high-grade NHL, the overall response rate was 47% and the
complete response rate was 5%. While response rates in these histologies were
encouraging, the
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Company currently is pursuing clinical development of the B-1 Therapy in
low-grade and transformed low-grade NHL patients.
The B-1 Therapy was generally well tolerated by patients. Dose limiting
side effects were hematologic, consisting primarily of reversible declines in
blood cell counts. These toxicities were generally mild to moderate, with no
patient requiring a bone marrow transplant. Other side effects observed were
mild and consisted primarily of temporary flu-like symptoms.
Results presented are based upon interim data which have been submitted to
the FDA, certain portions of which have not yet been published in a peer
reviewed publication. No assurance can be given that the Company's future
clinical results will be consistent with the results of the Phase I/II dose
escalation trial, which was conducted at a single site with a relatively small
number of patients per NHL histology and disease stage and had different
clinical objectives than the Company's current or planned clinical trials. See
"Risk Factors -- Uncertainties Related to Product Development."
Clinical Development of the B-1 Therapy
Based on the foregoing results of the Phase I/II clinical trial, the
Company is conducting three additional clinical trials to support an application
to the FDA for the initial marketing approval of the B-1 Therapy: (i) a pivotal
Phase II/III clinical trial for the treatment of patients refractory to
chemotherapy, (ii) a Phase II dosimetry validation clinical trial and (iii) a
Phase II clinical trial to evaluate the extent to which the therapeutic benefit
of the B-1 Therapy is derived from the combination of the B-1 Antibody and the
radioisotope, in comparison to the B-1 Antibody alone. To broaden the initial
label indication, the Company also has commenced a Phase II clinical trial of
its B-1 Therapy in patients newly diagnosed with low-grade NHL and plans to
commence a Phase III/IV "post-approval" clinical trial in patients with
low-grade or transformed low-grade NHL in first or second relapse.
Pivotal Phase II/III Clinical Trial. The Company's pivotal Phase II/III
clinical trial, which commenced in December 1996, is designed to enroll a total
of 60 patients who have low-grade and transformed low-grade NHL, who have proven
refractory to chemotherapy and who have not received prior bone marrow
transplants. This clinical trial, to be conducted at six to eight clinical
sites, is focused on the refractory segment of this NHL population in an effort
to qualify for expedited FDA approval of the B-1 Therapy under the
Clinton-Kessler Cancer Initiative. Based on this initiative and on guidance from
FDA staff, the Company designed this clinical trial with a relatively short
post-treatment follow-up period of six months. Because of the limited
alternative treatment options for refractory patients, each patient's response
to the B-1 Therapy will be measured against his or her own response to the
previous regimen of chemotherapy, rather than by comparison to patients in a
separate control arm.
Phase II Dosimetry Validation Clinical Trial. Prior to commencing the
pivotal Phase II/III clinical trial, the Company conducted a dosimetry
validation clinical trial in a total of 48 patients, designed to demonstrate
that the B-1 Therapy's treatment protocol could be implemented consistently at
multiple clinical sites. In connection with this clinical trial, the Company
also was able to refine its proprietary protocol to streamline the therapeutic
dose calculation, establishing that accurate antibody elimination rates could be
determined from three gamma camera scans. Based upon interim data from this
clinical trial showing consistent implementation of the treatment protocol, the
FDA agreed in September 1996 that this clinical trial could be ended. The
Company then was able to commence its pivotal Phase II/III clinical trial in
December 1996.
Phase II Unlabeled Versus Labeled Antibody Clinical Trial. In August 1996,
the Company commenced a Phase II clinical trial at a single site in 28 patients
with relapsed, low-grade NHL. One-half of the patients will receive two 500 mg
doses of unlabeled B-1 Antibody eight days apart in a treatment regimen that is
parallel to the B-1 Therapy; the other half will receive the B-1 Therapy in a
treatment protocol equivalent to that used in the pivotal Phase II/III clinical
trial. The objective of this clinical trial is to assess the incremental
clinical activity from radiolabeling the B-1 Antibody as
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compared to the clinical activity of the unlabeled B-1 Antibody alone.
Administration of the unlabeled B-1 Antibody has not been designed for use as a
stand-alone therapy, nor has the treatment regimen been optimized for such use.
The Company is evaluating the possibility of expanding this study to other
sites. The Company's objective is to complete enrollment of patients in this
clinical trial in the second half of 1997.
Phase III/IV "Post-Approval" Clinical Trial. To comply with the
Clinton-Kessler Cancer Initiative and to broaden the label indication, the
Company plans to carry out a randomized, controlled Phase III/IV"post-approval"
clinical trial in patients with low-grade or transformed low-grade NHL in first
or second relapse. To evaluate the efficacy and safety of the B-1 Therapy versus
conventional chemotherapy, the Phase III/IV clinical trial will be conducted
with a control arm in which a portion of the patients in the trial will be
treated with a further regimen of conventional chemotherapy. The Company
currently expects to commence this clinical trial during the second half of
1997.
Phase II First-Line, Stand-Alone Treatment Clinical Trial. In June 1996,
the Company has also commenced a 60-patient Phase II clinical trial at a single
site to evaluate the safety and efficacy of the B-1 Therapy as a first-line,
stand-alone treatment of patients with newly diagnosed low-grade NHL. This
single-arm clinical trial includes a planned interim analysis after 14 patients
have been treated. The Company's objective is to complete patient enrollment for
this clinical trial by early 1998.
The ability of the Company to conduct and complete its ongoing and planned
clinical trials in a timely manner is subject to a number of uncertainties and
risks, including the rate at which patients can be accrued in each clinical
trial, the Company's ability to obtain necessary regulatory approvals, the
capacity of the Company's contract manufacturers to supply unlabeled and
radiolabeled B-1 Antibody as needed for patient treatment and the occurrence of
unanticipated adverse events. Any suspension or delay of one or more of such
clinical trials could have a material adverse effect on the Company's business,
financial condition and results of operation. See "Risk Factors -- Uncertainties
Related to Product Development," "-- Government Regulation; No Assurance of
Regulatory Approvals," and "-- Dependence on Suppliers; Manufacturing and
Scale-up Risk."
Other Clinical Trials
The radiolabeled B-1 Antibody has been the subject of other clinical trials
to assess the efficacy of using the radiolabeled B-1 Antibody to deliver the
high levels of radiation necessary to prepare patients for autologous bone
marrow transplants. The conventional preparation for autologous bone marrow
transplants is chemotherapy and total body irradiation. These clinical trials
were designed to demonstrate improved tolerability, response rate and duration
of response.
The first of two clinical trials conducted at the University of Washington
Cancer Center and the Fred Hutchinson Cancer Research Center tested radiolabeled
B-1 Antibody as a single agent to prepare patients for an autologous bone marrow
transplant by achieving a total body radiation level of up to 570 cGy (over
seven times the B-1 Therapy's dose). As reported in The Lancet in August 1995,
of the 21 patients receiving the full radiotherapeutic regimen, the overall
response rate was 86% and the complete response rate was 73%. High incidences of
radiotoxicity-related side effects were reported due to the extreme dosages
employed. Interim data from this clinical trial were published in the New
England Journal of Medicine in October 1993.
The second clinical trial, currently ongoing, is designed to test the
combination of similarly high doses of radiolabeled B-1 Antibody and standard
doses of chemotherapy in preparation for autologous bone marrow transplant. This
clinical trial has enrolled 23 patients since its commencement in January 1995.
Data from this clinical trial have not yet appeared in a peer reviewed
publication.
The Company intends to commence a dose refinement clinical trial in the
second half of 1997 for the combined use of lower doses of radiolabeled B-1
Antibody and standard chemotherapy as preparation for autologous bone marrow
transplant.
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TAP PRO-DRUG PLATFORM
The Company's second technology platform, its tumor-activated peptide
pro-drug technology, has the potential to broaden significantly the therapeutic
window of cytotoxic agents. The TAP pro-drug technology is based upon an
understanding of the biochemical mechanisms utilized by cancer cells to
metastasize and the identification of a potential means for exploiting these
mechanisms and is being developed in collaboration with the Catholique
Universite de Louvain, Belgium. TAP pro-drugs are designed to be (i) activated
preferentially at the tumor site by enzymes secreted by the tumor, (ii) stable
in circulation and in normal tissues and (iii) unable to penetrate normal cells
or malignant cells until activated. As a result, relatively larger quantities of
cytotoxic agents are expected to reach and enter malignant cells as opposed to
normal cells, which could permit a significant increase in maximum tolerated
dosages, potentially overcoming drug resistance in cancer cells.
The Company's lead preclinical pro-drug candidate is a pro-drug version of
doxorubicin known as Super-Leu-Dox. Doxorubicin is an off-patent
chemotherapeutic drug which currently is used in the treatment of a number of
solid tumor cancers, including breast, prostrate, ovarian and soft-tissue
sarcoma cancers. Super-Leu-Dox is based on a proprietary peptide of four amino
acids (a "tetrapeptide") that can be linked to doxorubicin's active site. In the
first step of a two-step activation process, the extracellular tumor enzyme
cleaves three amino acids from the tetrapeptide leaving a leucine amino
acid-doxorubicin conjugate that is able to penetrate cells. Since this first
activation step occurs in the immediate vicinity of tumor cells that are
secreting the enzyme, the probability that the cytotoxic drug will enter tumor
cells as opposed to normal cells is increased. Moreover, the conjugate remains
inactive inside the cell until the remaining leucine is removed from
doxorubicin's active site by an intracellular enzyme. Although it is expressed
in both normal and tumor cells, this intracellular enzyme is present in tumor
cells in concentrations three to five times higher than in normal cells. As a
result, the doxorubicin is activated to a greater extent in tumor cells relative
to normal cells.
This two-step activation process is designed to produce a significantly
higher ratio of active to inactive doxorubicin in cancer cells relative to
normal cells. In in vitro studies of Super-Leu-Dox, researchers have found that
the concentration of activated to inactivated doxorubicin in tumor cells was 40
times higher than in normal cells. These results, if confirmed in clinical
trials, offer the potential to improve significantly the therapeutic window of
doxorubicin. The Company currently plans to complete preclinical development of
Super-Leu-Dox during 1997 and to commence clinical trials during early 1998.
Prior to the licensing of the TAP pro-drug technology by Coulter
Pharmaceutical, an earlier generation leucine-doxorubicin conjugate was tested
as a stand-alone therapy for the treatment of solid tumors in two separate dose
escalation clinical trials in Europe. A total of 59 patients were enrolled in
these clinical trials, and patients safely tolerated doses well in excess of
those associated with unmodified doxorubicin. Results from these clinical
trials, along with data from preclinical studies, will be used by the Company to
select the initial indication to pursue in clinical trials of Super-Leu-Dox.
Selection of the particular indication or indications to be evaluated in such
clinical trials has not been finalized.
While the Company will focus initially on previously approved
chemotherapeutic drugs, it also plans to evaluate TAP pro-drug versions of
cytotoxic agents currently considered too toxic to be used in their unmodified
forms. The Company believes that the Super-Leu technology potentially can be
applied to several classes of cytotoxic agents, including the vinca alkaloids,
which are used commonly to treat blood-borne malignancies and some solid tumors.
The Company also plans to develop and evaluate other peptide structures for
possible use in pro-drug versions of cytotoxic agents and other cancer
therapeutics.
MANUFACTURING
The Company intends to utilize contract manufacturers for most of the
preclinical and clinical requirements for its potential products and for all of
its commercial needs. This strategy is expected to (i) accelerate the scale-up
of manufacturing processes to commercial scale, (ii) reduce initial capital
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<PAGE> 36
investment, (iii) result in competitive manufacturing costs, and (iv) provide
access to a wide range of manufacturing technologies. For its clinical trials of
the B-1 Therapy, the Company currently is supplying B-1 Antibody to clinical
trial sites from an existing, finite inventory of the antibody produced by
Coulter Corporation from the B-1 Antibody cell line originally developed by the
Dana-Farber Cancer Institute in 1978. Labeling with (131)I currently is
performed by radiopharmacies at the individual clinical trial sites.
Pursuant to a development contract with the Company, Lonza has re-cloned
the B-1 Antibody cell line to improve the productivity of the cell line in
intermediate-scale production and currently is preparing to supply the B-1
Antibody for use in ongoing clinical trials and to meet initial commercial
requirements. In order to begin using Lonza-produced material in clinical
trials, the Company must seek an FDA clearance of an IND supplement showing that
the Lonza-produced material is biologically equivalent to the material currently
in use in clinical trials. To date, Lonza has produced three batches of the B-1
Antibody under GMP conditions. Lonza-produced B-1 Antibody has been tested to
confirm biological equivalency to the existing inventory of B-1 Antibody.
Subject to clearance by the FDA, the Company plans to start using Lonza-produced
antibody in its clinical trials of the B-1 Therapy in early 1997. There can be
no assurance that the FDA will provide such clearance in a timely manner, if at
all, and that clinical trials will not be delayed or disrupted as a result of
the planned transition to Lonza-produced material.
While radiolabeling of the B-1 Antibody at the individual trial sites has
been sufficient to date to support clinical trials, the Company believes that
radiolabeling should be performed at a central site to supply clinics that do
not have requisite radiolabeling capability, to ensure consistency and to reduce
cost. To this end, the Company has contracted with Nordion to establish a
central radiolabeling capability for both ongoing clinical trials and
commercialization and expects that Nordion will start producing centrally
radiolabeled antibody for use in clinical trials in mid-1997. However, before
using Nordion-labeled material, an IND supplement must be cleared by the FDA.
There can be no assurance that the FDA will provide such clearance in a timely
manner, if at all, and that clinical trials will not be delayed or disrupted as
a result.
Thus, if the B-1 Therapy is developed successfully and is approved for
marketing by the FDA, production for commercialization will consist of (i)
production of bulk B-1 Antibody by Lonza, (ii) the filling and labeling of
individual product vials with B-1 Antibody by another third-party supplier, and
(iii) radiolabeling of B-1 Antibody at Nordion. While the Company plans to
develop additional suppliers of these services, it expects to rely on its
current suppliers for all or a significant portion of its requirements for the
B-1 Therapy for the foreseeable future. Radiolabeled antibody cannot be
stockpiled against future shortages due to the eight-day half-life of the (131)I
radioisotope. Accordingly, any change in the Company's existing contractual
relationships with, or interruption in supply from, its third-party suppliers
could adversely affect the Company's ability to complete its ongoing clinical
trials and to market the B-1 Therapy, if approved. Any such change or
interruption would have a material adverse effect on the Company's business,
financial condition and results of operators. See "Risk Factors -- Dependence on
Suppliers; Manufacturing and Scale-up Risk."
The Company believes that the products it expects to develop in its TAP
pro-drug program can be produced with standard chemical synthesis processes and
expects to utilize third parties to meet clinical trial and any commercial
requirements for these products. The Company currently intends to produce these
products in Belgium in order to take advantage of local government research
grants that are providing support for the TAP pro-drug program. The Company is
in early discussions with potential manufacturers of Super-Leu-Dox, its initial
pro-drug product candidate.
MARKETING AND SALES
The Company intends to market its products in the United States through its
own sales force and, where appropriate, in collaboration with marketing
partners. This strategy is intended to enable the Company to establish a
commercial presence in the cancer therapeutics market with its B-1 Therapy, if
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<PAGE> 37
approved, and to create the capability to sell other products that it may
develop or in-license. The sales force is expected to initially call upon
oncologists, hematologists and nuclear medicine physicians in connection with
the sale of the Company's B-1 Therapy. The Company initially will focus its
sales force on those physicians who treat the largest volume of NHL patients.
These physicians generally are concentrated in large metropolitan areas. Because
of the characteristics of the B-1 Therapy, the target physician must have access
to a facility with radiopharmaceutical and gamma camera scan capabilities. The
Company believes such facilities generally are available in large metropolitan
areas such that a significant portion of physicians who treat NHL patients will
be able to prescribe the B-1 Therapy. The Company intends to distribute its
products internationally through marketing partners. The Company has not yet
identified or entered into any agreements with any such partners, and there is
no assurance that it will be able to do so in a timely manner, if at all. The
Company has not yet established a sales and marketing capability in North
America, and there is no assurance that it will be able to do so in a timely or
cost effective manner, if at all.
The current purchasers of cancer therapeutics are hospitals, clinics,
physicians, pharmacies, large HMOs and state and federal governments.
Historically, physicians made treatment decisions and prescribed therapeutics
which then were dispensed through the clinic, hospital or pharmacy. However, the
United States health care system is undergoing significant changes and the
decision-making authority of the physician varies. These changes may make it
necessary for the Company to alter its strategy prior to launch of the B-1
Therapy or even after launch and could affect adversely the ability of the
Company to generate revenues.
The Company's ability to market effectively the B-1 Therapy may be affected
adversely by a number of factors including physicians' resistance to change from
established methods of treatment such as chemotherapy or radiation therapy and
the special handling and administration requirements of a radioimmunotherapy.
Further, the Company can provide no assurance as to whether its B-1 Therapy will
be priced competitively compared to existing methods of treatment such as
chemotherapy and radiation therapy. See "Risk Factors -- Uncertainty of Market
Acceptance of the B-1 Therapy."
PHARMACEUTICAL PRICING AND REIMBURSEMENT
Political, economic and regulatory influences are subjecting the health
care industry in the United States to fundamental change. Recent initiatives to
reduce the federal deficit and to reform health care delivery are increasing
cost-containment efforts. The Company anticipates that Congress, state
legislatures and the private sector will continue to review and assess
alternative benefits, controls on health care spending through limitations on
the growth of private health insurance premiums and Medicare and Medicaid
spending, the creation of large insurance purchasing groups, price controls on
pharmaceuticals and other fundamental changes to the health care delivery
system. Any such proposed or actual changes could cause the Company to limit or
eliminate spending on development projects and affect the Company's ultimate
profitability. Legislative debate is expected to continue in the future, and
market forces are expected to drive reductions of health care costs. The Company
cannot predict what impact that adoption of any federal or state health care
reform measures or future private sector reforms may have on its business.
In both domestic and foreign markets, sales of the Company's proposed
products will depend in part upon the availability of reimbursement from
third-party payors, such as government health administration authorities,
managed care providers, private health insurers and other organizations. In
addition, other third-party payors increasingly are challenging the price and
cost effectiveness of medical products and services. Significant uncertainty
exists as to the reimbursement status of newly approved health care products.
The Company's B-1 Therapy, as potentially the first radioimmunotherapy for
cancer, faces particular uncertainties due to the absence of a comparable,
approved therapy to serve as a model for pricing and reimbursement decisions.
There can be no assurance that the Company's product candidates will be
considered cost effective or that adequate third-party reimbursement will be
available to enable the Company to maintain price levels sufficient to realize
an
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appropriate return on its investment in product development. Further, there can
be no assurance that products can be manufactured on a commercial scale, for a
cost that will enable the Company to price its products within reimbursable
rates. Legislation and regulations affecting the pricing of pharmaceuticals may
change before the Company's proposed products are approved for marketing.
Adoption of such legislation could further limit reimbursement for medical
products. If adequate coverage and reimbursement rates are not provided by the
government and third-party payors for the Company's products, the market
acceptance of these products would be adversely affected, which would have a
material adverse effect on the Company's business, financial condition and
results of operations.
GOVERNMENT REGULATION
The testing, manufacturing, labeling, advertising, promotion, export and
marketing, among other things, of the Company's proposed products are subject to
extensive regulation by governmental authorities in the United States and other
countries. In the United States, pharmaceutical products are regulated by the
Food and Drug Administration under the Federal Food, Drug and Cosmetic Act and
other laws, including, in the case of biologics, the Public Health Service Act.
At the present time, the Company believes that its B-1 Therapy and other
immunotherapeutics that it may develop will be regulated by the FDA as biologics
and that other products to be developed by the Company, including Super-Leu-Dox
and other TAP pro-drugs, are likely to be regulated as drugs.
The steps required before a drug or biologic may be approved for marketing
in the United States generally include (i) preclinical laboratory tests and
animal tests, (ii) the submission to the FDA of an IND for human clinical
testing, which must become effective before human clinical trials may commence,
(iii) adequate and well-controlled human clinical trials to establish the safety
and efficacy of the product, (iv) in the case of a biologic, the submission to
the FDA of a biologic license application ("BLA"), or in the alternative a
Product License Application ("PLA") for the product and an Establishment License
Application ("ELA") for the facility at which the product is manufactured, or in
the case of a drug, a New Drug Application ("NDA"), (v) FDA review of the BLA
(or PLA/ELA) or NDA and (vi) satisfactory completion of an FDA inspection of the
manufacturing facilities at which the product is made to assess compliance with
GMP. The testing and approval process requires substantial time, effort and
financial resources, and there can be no assurance that any approval will be
granted on a timely basis, if at all.
Preclinical studies include laboratory evaluation of the product, as well
as animal studies to assess the potential safety and efficacy of the product.
The results of the preclinical studies, together with manufacturing information
and analytical data, are submitted to the FDA as part of the IND, which must
become effective before clinical trials may be commenced. The IND automatically
will become effective thirty days after receipt by the FDA, unless the FDA
before that time raises concerns or questions about the conduct of the trials as
outlined in the IND. In such case, the IND sponsor and the FDA must resolve any
outstanding concerns before clinical trials can proceed. There can be no
assurance that submission of an IND will result in FDA authorization to commence
clinical trials.
Clinical trials involve the administration of the investigational products
to healthy volunteers or patients under the supervision of a qualified principal
investigator. Further, each clinical trial must be reviewed and approved by an
independent Institutional Review Board ("IRB") at each institution at which the
study will be conducted. The IRB will consider, among other things, ethical
factors, the safety of human subjects and the possible liability of the
institution.
Clinical trials typically are conducted in three sequential phases, but the
phases may overlap. In Phase I, the initial introduction of the drug into human
subjects, the drug is usually tested for safety (adverse effects), dosage
tolerance, absorption, metabolism, distribution, excretion and pharmacodynamics.
Phase II clinical trials usually involve studies in a limited patient population
to (i) evaluate the efficacy of the drug for specific, targeted indications,
(ii) determine dosage tolerance and optimal dosage and (iii) identify possible
adverse effects and safety risks. Phase III clinical trials generally further
evaluate clinical efficacy and test further for safety within an expanded
patient population.
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Phase IV clinical trials are conducted after approval to gain additional
experience from the treatment of patients in the intended therapeutic indication
and to document a clinical benefit in the case of drugs approved under
accelerated approval regulations. If the FDA approves a product while a company
has ongoing clinical trials that were not necessary for approval, a company may
be able to use the data from these clinical trials to meet all or part of any
Phase IV clinical trial requirement. These clinical trials are often referred to
as "Phase III/IV post-approval clinical trials." Failure to conduct promptly
Phase IV clinical trials could result in withdrawal of approval for products
approved under accelerated approval regulations.
In the case of products for severe or life-threatening diseases, the
initial clinical trials are sometimes done in patients rather than in healthy
volunteers. Since these patients are afflicted already with the target disease,
it is possible that such clinical trials may provide evidence of efficacy
traditionally obtained in Phase II clinical trials. These trials are referred to
frequently as Phase I/II trials. There can be no assurance that Phase I, Phase
II or Phase III testing will be completed successfully within any specific time
period, if at all, with respect to any of the Company's product candidates.
Furthermore, the FDA may suspend clinical trials at any time on various grounds,
including a finding that the subjects or patients are being exposed to an
unacceptable health risk.
The results of the preclinical studies and clinical trials, together with
detailed information on the manufacture and composition of the product, are
submitted to the FDA in the form of a BLA requesting approval to market the
product. Before approving a BLA or NDA, the FDA will inspect the facilities at
which the product is manufactured and will not approve the product unless the
manufacturing facility is in GMP compliance. The FDA may delay a BLA or NDA if
applicable regulatory criteria are not satisfied, require additional testing or
information, and/or require postmarketing testing and surveillance to monitor
safety or efficacy of a product. There can be no assurance that FDA approval of
any BLA or NDA submitted by the Company will be granted on a timely basis, if at
all. Also, if regulatory approval of a product is granted, such approval may
entail limitations on the indicated uses for which such product may be marketed.
The Company also will be subject to a variety of foreign regulations
governing clinical trials and sales of its products. Whether or not FDA approval
has been obtained, approval of a product by the comparable regulatory
authorities of foreign countries must be obtained prior to the commencement of
marketing of the product in those countries. The approval process varies from
country to country and the time needed to secure approval may be longer or
shorter than that required for FDA approval.
Clinton-Kessler Cancer Initiative
In March 1996, the FDA announced a new policy intended to accelerate the
approval process for cancer therapies addressing disease conditions in which
patients have limited treatment options. The Company believes that the B-1
Therapy may qualify for this accelerated approval process and designed its Phase
II/III clinical trial of the B-1 Therapy with the objective of securing
accelerated approval. Significant uncertainty exists as to the extent to which
such initiative will result in accelerated review and approval. Further, the FDA
has not made available comprehensive guidelines with respect to this initiative,
and it retains considerable discretion in determining eligibility for
accelerated review and approval and is not bound by discussions that an
applicant may have with FDA staff. Accordingly, the FDA could employ such
discretion to deny eligibility of the B-1 Therapy as a candidate for accelerated
review or require additional clinical trials or other information before
approving the B-1 Therapy. The Company cannot predict the ultimate impact, if
any, of the new approval process on the timing or likelihood of FDA approval of
its B-1 Therapy or any of its other potential products.
Orphan Drug Designation
Under the Orphan Drug Act, the FDA may grant orphan drug designation to
drugs intended to treat a "rare disease or condition," which is generally a
disease or condition that affects fewer than 200,000 individuals in the United
States. Orphan drug designation must be requested before submitting
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a BLA. After the FDA grants orphan drug designation, the generic identity of the
therapeutic agent and its potential orphan use are disclosed publicly by the
FDA. Orphan drug designation does not convey any advantage in, or shorten the
duration of, the regulatory review and approval process. If a product that has
orphan drug designation subsequently receives FDA approval for the indication
for which it has such designation, the product is entitled to orphan
exclusivity, i.e., the FDA may not approve any other applications to market the
same drug for the same indication, except in very limited circumstances, for
seven years. The Company's B-1 Therapy has received orphan drug designation from
the FDA. Although the FDA recently decided to remove NHL from the list of
diseases for which orphan drug designation may be obtained, the previous
designation of the Company's B-1 Therapy will not be affected. In any event,
there can be no assurance that competitors will not receive approval of other,
different drugs or biologics for low-grade NHL. Thus, although obtaining FDA
approval to market a product with orphan drug exclusivity can be advantageous,
there can be no assurance that it would provide the Company with a material
commercial benefit.
RADIOACTIVE AND OTHER HAZARDOUS MATERIALS
The manufacturing and use of the Company's B-1 Therapy requires the
handling and disposal of 131)I, a radioactive isotope of iodine. The
radiolabeling of the B-1 Antibody currently is performed by radiopharmacies at
the individual clinical trial sites. These sites must comply with various state
and federal regulations regarding the handling and use of radioactive materials.
Violation of these state and federal regulations by a clinical trial site could
significantly delay completion of such trials. For the continuation of its
ongoing clinical trials and for commercial-scale production, the Company plans
to rely on a contract manufacturer, Nordion, to radiolabel the B-1 Antibody with
(131)I, initially at a single location in Canada. Although this vendor is
experienced in the handling and use of radioactive materials, violation of
safety regulations could occur and the risk of accidental contamination or
injury cannot be eliminated completely. In the event of any such noncompliance
or accident, the supply of radiolabeled B-1 Antibody for use in clinical trials
or commercially could be interrupted, which could have a material adverse effect
on the Company's business, financial condition and results of operations. See
"-- Manufacturing."
The administration of the B-1 Therapy entails the introduction of
radioactive materials into patients. These patients emit radioactivity at levels
that pose a safety concern to others around them, especially healthcare workers
for whom the cumulative effect of repeated exposure to radioactivity is of
particular concern. These concerns are addressed in regulations promulgated by
the Nuclear Regulatory Commission, as well as by various state and local
governments and individual hospitals. Generally, patients who emit radioactivity
above specified levels must be admitted to the hospital, where they can be
isolated from others, until radiation falls to acceptable levels. The NRC
recently enacted revised regulations that are likely to make it easier for
hospitals to treat patients with radioactive materials on an outpatient basis.
Under these regulations, the Company believes that its B-1 Therapy could be
administered on an outpatient basis in most cases. Although state and local
governments often follow the lead of the NRC, there can be no assurance that
they will do so or that patients receiving the B-1 Therapy will not have to
remain in the hospital for one to three days following administration of the
therapeutic dose, adding to the overall cost of the therapy.
The Company also expects to use hazardous chemicals and radioactive
compounds in its ongoing research activities. Although the Company believes that
safety procedures for handling and disposing of such materials will comply with
the standards prescribed by state and federal regulations, the risk of
accidental contamination or injury from these materials cannot be completely
eliminated. The Company could be held liable for any damages that result from
such an accident, as well as for unexpected remedial costs and penalties that
may result from any violation of applicable regulations, which could result in a
material adverse effect on the Company's business, financial condition and
results of operations. In addition, the Company may incur substantial costs to
comply with environmental regulations.
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PATENTS AND OTHER INTELLECTUAL PROPERTY
The Company believes that patent and trade secret protection is important
to its business and that its future will depend in part on its ability to
maintain its technology licenses, protect its trade secrets, secure additional
patents and operate without infringing the proprietary rights of others. The
Company currently holds exclusive rights to an allowed United States patent
application that relates to a therapeutic protocol used in the B-1 Therapy. The
Company also holds an exclusive license to patent applications filed in Europe
relating to its TAP pro-drug program.
The pharmaceutical and biotechnology fields are characterized by a large
number of patent filings. A substantial number of patents have already been
issued to other pharmaceutical and biotechnology companies. Research has been
conducted for many years in the monoclonal antibody field by pharmaceutical and
biotechnology companies and other organizations. Competitors may have filed
applications for or have been issued patents and may obtain additional patents
and proprietary rights related to products or processes competitive with or
similar to those of the Company. Patent applications are maintained in secrecy
for a period after filing. Publication of discoveries in the scientific or
patent literature tends to lag behind actual discoveries and the filing of
related patent applications. The Company may not be aware of all of the patents
potentially adverse to the Company's interest that may have been issued to other
companies, research or academic institutions, or others. No assurances can be
given that such patents do not exist, have not been filed, or could not be filed
or issued, which contain claims relating to the Company's technology, products
or processes.
To date, no consistent policy has emerged regarding the breadth of claims
allowed in pharmaceutical and biotechnology patents. If patents have been or are
issued to others containing preclusive or conflicting claims and such claims are
ultimately determined to be valid, the Company may be required to obtain
licenses to one or more patents or to develop or obtain alternative technology.
The Company is aware of certain patents that have been issued to others that
pertain to a portion of the Company's prospective business; however, the Company
believes based on the advice of counsel that it does not infringe any patents
that ultimately would be determined to be valid. There can be no assurance that
patents do not exist in the United States or in other foreign countries or that
patents will not be issued to third parties that contain preclusive or
conflicting claims with respect to the B-1 Therapy or any of the Company's other
product candidates or programs. Commercialization of monoclonal antibody-based
products may require licensing and/or cross-licensing of one or more patents
with other organizations in the field. There can be no assurance that the
licenses that might be required for the Company's processes or products would be
available on commercially acceptable terms, if at all.
The Company's breach of an existing license or failure to obtain a license
to technology required to commercialize its product candidates may have a
material adverse effect on the Company's business, financial condition and
results of operations. Litigation, which could result in substantial costs to
the Company, may also be necessary to enforce any patents issued to the Company
or to determine the scope and validity of third-party proprietary rights. If
competitors of the Company prepare and file patent applications in the United
States that claim technology also claimed by the Company, the Company may have
to participate in interference proceedings declared by the United States Patent
and Trademark Office to determine priority of invention, which could result in
substantial cost to the Company, even if the eventual outcome is favorable to
the Company. An adverse outcome could subject the Company to significant
liabilities to third parties and require the Company to license disputed rights
from third parties or to cease using such technology.
The Company also relies on trade secrets to protect its technology,
especially where patent protection is not believed to be appropriate or
obtainable. The Company protects its proprietary technology and processes, in
part, by confidentiality agreements with its employees, consultants,
collaborators and certain contractors. There can be no assurance that these
agreements will not be breached, that the Company would have adequate remedies
for any breach, or that the Company's
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trade secrets or those of its collaborators or contractors will not otherwise
become known or be discovered independently by competitors.
Patents issued and patent applications filed internationally relating to
biologics are numerous and there can be no assurance that current and potential
competitors and other third parties have not filed or in the future will not
file applications for, or have not received or in the future will not receive,
patents or obtain additional proprietary rights relating to products or
processes used or proposed to be used by the Company. Moreover, there is certain
subject matter which is patentable in the United States and not generally
patentable outside of the United States. Statutory differences in patentable
subject matter may limit the protection the Company can obtain on some of its
inventions outside of the United States. For example, methods of treating humans
are not patentable in many countries outside of the United States. These and/or
other issues may prevent the Company from obtaining patent protection outside of
the United States which would have a material adverse effect on the Company's
business, financial condition and results of operations.
Rights to use the name "Coulter Pharmaceutical, Inc." are licensed from
Coulter Corporation.
COMPETITION
The pharmaceutical and biotechnology industries are intensely competitive.
Any product candidate developed by the Company would compete with existing drugs
and therapies. There are many pharmaceutical companies, biotechnology companies,
public and private universities and research organizations actively engaged in
research and development of products for the treatment of people with cancer.
Many of these organizations have financial, technical, manufacturing and
marketing resources greater than those of the Company. Several of them have
developed or are developing therapies that could be used for treatment of the
same diseases targeted by the Company. One competitor known to the Company is
currently conducting Phase III clinical trials of a chimeric antibody treatment
for NHL. If a competing company were to develop or acquire rights to a more
efficient or safer cancer therapy for treatment of the same diseases targeted by
the Company, or one which offers significantly lower costs of treatment, the
Company's business, financial condition and results of operations could be
materially adversely affected.
The Company believes that competition in the development and marketing of
new cancer therapies will be based primarily on product efficacy and safety,
time to market and price. To the extent the Company's product programs are
successful, it also intends to rely to some degree on patents and other
intellectual property and orphan drug designations to protect its products from
competition.
The Company believes that its product development programs will be subject
to significant competition from companies utilizing alternative technologies as
well as to increasing competition from companies that develop and apply
technologies similar to the Company's technologies. Other companies may succeed
in developing products earlier than the Company, obtaining approvals for such
products from the FDA more rapidly than the Company or developing products that
are safer and more effective than those under development or proposed to be
developed by the Company. There can be no assurance that research and
development by others will not render the Company's technology or potential
products obsolete or non-competitive or result in treatments superior to any
therapy developed by the Company, or that any therapy developed by the Company
will be preferred to any existing or newly developed technologies.
PRODUCT LIABILITY AND INSURANCE
The manufacture and sale of human therapeutic products involve an inherent
risk of product liability claims and associated adverse publicity. The Company
has only limited product liability insurance for clinical trials and no
commercial product liability insurance. There can be no assurance that the
Company will be able to maintain existing insurance or obtain additional product
liability insurance on acceptable terms or with adequate coverage against
potential liabilities. Such insurance is
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expensive, difficult to obtain and may not be available in the future on
acceptable terms, if at all. An inability to obtain sufficient insurance
coverage on reasonable terms or to otherwise protect against potential product
liability claims brought against the Company in excess of its insurance
coverage, if any, or a product recall could have a material adverse effect upon
the Company's business, financial condition and results of operations.
HUMAN RESOURCES
The Company currently has 27 employees, 17 of whom are engaged in product
development activities. Fourteen of the Company's current employees hold
post-graduate degrees, including four with medical degrees and eight with
Ph.D.s. The Company's employees are not represented by a collective bargaining
agreement. The Company believes its relations with its employees are good.
FACILITIES
The Company currently leases approximately 9,000 square feet of office
space located in Palo Alto, California, under a short-term lease agreement.
Management is looking currently for a larger facility and expects to relocate
during 1997.
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MANAGEMENT
EXECUTIVE OFFICERS, DIRECTORS AND KEY EMPLOYEES
The executive officers, directors and key employees of the Company, and
their ages as of December 6, 1996, are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
-------------------------------------- --- --------------------------------------
<S> <C> <C>
Michael F. Bigham..................... 39 President, Chief Executive Officer and
Director
William G. Harris..................... 38 Vice President and Chief Financial
Officer
Peter J. Langecker, M.D., Ph.D.(1).... 45 Vice President, Clinical Research
Arlene M. Morris(1)................... 44 Vice President, Business Development
Linda L. Nardone, Ph.D.(1)............ 51 Vice President, Regulatory Affairs
Dan Shochat, Ph.D. ................... 56 Vice President, Research and
Development
Bobbie F. Wallace(1).................. 64 Vice President, Operations
James C. Kitch, J.D.(1)............... 49 Secretary
Arnold Oronsky, Ph.D.(2).............. 56 Chairman of the Board
Brian G. Atwood(3).................... 44 Director
Donald L. Lucas(2)(3)................. 66 Director
Robert Momsen(2)...................... 49 Director
Sue Van(2)(3)......................... 50 Director
</TABLE>
- ------------------------------
(1) Non-executive officer or key employee.
(2) Member of the Compensation Committee.
(3) Member of the Audit Committee.
Michael F. Bigham has served as President, Chief Executive Officer and a
director of the Company since July 1996. During June 1996, Mr. Bigham provided
consulting services to the Company. Mr. Bigham served as Executive Vice
President of Operations from April 1994 to June 1996 and Chief Financial Officer
from April 1989 to June 1996 at Gilead Sciences, Inc., a biotechnology company.
While at Gilead, he also served as Vice President of Corporate Development from
July 1988 to March 1992. Mr. Bigham was Co-head of Healthcare Investment Banking
for Hambrecht & Quist LLC, an investment banking firm where he was employed from
1984 to 1988. Mr. Bigham is a member of the Board of Directors of Datron
Systems, Inc., a publicly-held electronics company, and two privately-held
companies. Mr. Bigham received a B.S. degree in Commerce with distinction from
the University of Virginia and an M.B.A. from the Stanford University Graduate
School of Business.
William G. Harris has served as Vice President, Finance and Chief Financial
Officer of the Company since July 1996. From July 1992 to July 1996, Mr. Harris
served as Director of Finance at Gilead Sciences, Inc., a biotechnology company.
While at Gilead, Mr. Harris also served as Controller and Manager of
Administration from July 1991 to July 1992, and as Assistant Controller and
Manager of Administration from October 1990 to July 1992. From July 1988 to
October 1990, he was a Staff Accountant at Ernst & Young, LLP. Mr. Harris
received a B.A. degree in Economics from the University of California, San
Diego, and an M.B.A. from the University of Santa Clara Leavey School of
Business and Administration.
Peter J. Langecker, M.D., Ph.D. has served as Vice President, Clinical
Research of the Company since August 1995. From March 1992 to July 1995, Dr.
Langecker served as Director of Clinical Research in Oncology at Schering-Plough
Corp., a pharmaceutical and biologics company, where he was responsible for the
worldwide clinical program for several oncology products. From July 1988 to
February 1992, Dr. Langecker served as Central Medical Adviser in Clinical
Research and Development, Oncology at Ciba-Geigy Corporation, a Swiss chemical
and pharmaceutical company, where he was responsible for the clinical
development of several oncology products. From March 1984 to
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June 1988, he served as a physician in the Oncology Department at the University
of Munich Hospital. Dr. Langecker received M.D. and Ph.D. degrees from the
University of Munich in Germany and is the author of more than 30 scientific
papers on clinical drug development in oncology.
Arlene M. Morris has served as Vice President, Business Development of the
Company since October 1996. From April 1993 to October 1996, Ms. Morris served
as Vice President, Business Development at Scios, Inc., a biotechnology company.
From November 1988 to April 1993, she served as Vice President, Business
Development at McNeil Pharmaceutical, a subsidiary of Johnson & Johnson, where
she was responsible for new product planning and business development. Ms.
Morris received a B.A. degree from Carlow College.
Linda L. Nardone, Ph.D. has served as Vice President, Regulatory Affairs of
the Company since August 1995. From September 1989 to July 1995, Dr. Nardone
served as Vice President of Drug Regulatory Affairs at Sterling
Winthrop/Nycomed, a pharmaceutical company, where she was responsible for
strategy, operations and FDA interactions for drugs in development and marketed
drugs including three new drug applications and multiple supplemental approvals.
From 1986 to 1989, Dr. Nardone worked for Immunomedics, Inc., a biotechnology
company, where she had regulatory responsibility for three monoclonal
antibody-based diagnostic and therapeutic agents for cancer, and served as
Director of Regulatory Affairs, Director of Corporate Affairs and Vice
President, Regulatory Affairs. Dr. Nardone received a B.S. degree from Fairleigh
Dickinson University, M.S. and Ph.D. degrees from Pennsylvania State University
and held a post-doctoral fellowship at Yale University School of Medicine.
Dan Shochat, Ph.D. has served as Vice President, Research and Development
of the Company since March 1995. From July 1988 to April 1995, Dr. Shochat
served as Director of Biotechnology Development at Lederle Laboratories, a
division of American Cyanamid, Inc., a pharmaceutical company, where he was
responsible for the worldwide program in monoclonal antibodies for the treatment
of cancer. He received B.S. and M.S. degrees from Hebrew University in Israel
and a Ph.D. in Biochemistry from L.S.U. Medical School in New Orleans. Dr.
Shochat is the author of 25 scientific papers on tumor antigens and on
antibodies for diagnostic and therapeutic use in cancer.
Bobbie F. Wallace has served as Vice President, Operations for the Company
since its inception in February 1995. From February 1995 to December 1996, she
served as a director of the Company. Ms. Wallace, an employee of Coulter
Corporation, a research, development and manufacturing company of precision
medical devices, has also served as a liaison between Coulter Pharmaceutical and
Coulter Corporation. Since 1982, Ms. Wallace has served as Director of
Pharmaceutical Programs and Immunology Research at Coulter Corporation where she
was responsible for the Anti-B1 research and development. Ms. Wallace received a
B.A. in Pre-Med and completed specialized post-graduate courses in hematology at
the University of Texas in Denton.
James C. Kitch, J.D. has served as the Secretary of the Company since
December 1996. He has been a partner for more than ten years of Cooley Godward
LLP, a law firm which has provided legal services to the Company. Mr. Kitch is
currently a director of Lynx Therapeutics, Inc., a life sciences company.
Arnold Oronsky, Ph.D. has served as Chairman of the Board of Directors of
the Company since its inception in February 1995. From February 1995 to July
1996, Dr. Oronsky also served as President and Chief Executive Officer of the
Company. Since March 1994, Dr. Oronsky has been a general partner at InterWest
Partners, a private venture capital firm. From 1984 to 1994, Dr. Oronsky served
as Vice President for Discovery Research at Lederle Laboratories, a division of
American Cyanamid, Inc., a pharmaceutical company, where he was responsible for
the research of new drugs. Dr. Oronsky has won numerous grants and awards and
has published over 125 scientific articles. Since
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<PAGE> 46
1988, Dr. Oronsky has served as a senior lecturer in the Department of Medicine
at John Hopkins Medical School.
Brian Atwood has served as a director of the Company since April 1996. From
March to December 1995, Mr. Atwood was a consultant on business development to
the Company. Since November 1995, Mr. Atwood has been a Venture Partner of
Brentwood Venture Capital, a private venture capital firm, and since June 1995
has served as the acting President and Chief Executive Officer of gene/Networks,
Inc., a genomics company. He was a founder and served as President and Chief
Executive Officer from December 1993 to May 1995 and Vice President, Operations
from July 1988 to November 1993 of Glycomed Incorporated, a company dedicated to
the discovery and development of novel drugs based on complex carbohydrates.
From January 1986 to June 1987, Mr. Atwood was a Director at Perkin Elmer/Cetus
Instrument Systems, a joint venture formed by Perkin Elmer and Cetus
Corporation, where he oversaw the development and launch of three biotechnology
instrument research systems.
Donald L. Lucas has served as a director of the Company since April 1996.
Since 1967, Mr. Lucas has been actively engaged in venture capital activities as
a private individual. Mr. Lucas currently serves as a board member of Amati
Communications Corporation, Cadence Design Systems, Inc., Delphi Information
Systems, Inc., Macromedia, Inc., Oracle Corporation, Racotek, Inc., Transcend
Services, Inc. and Tricord Systems, Inc.
Robert Momsen has served as a director of the Company since its inception
in February 1995. Since August 1982, Mr. Momsen has been a General Partner at
InterWest Partners, a private venture capital firm. From 1977 to 1981, Mr.
Momsen served as General Manager and Chief Financial Officer of Life Instruments
Corporation, a medical diagnostic imaging company that he co-founded. Mr. Momsen
currently serves as a director of ArthroCare Corp., COR Therapeutics, Inc.,
Cornerstone, EMCC, First Medical, Innovasive Devices, Integ, Inc., IVT, Mercator
Genetics, Urologix, Inc. and Ventritex, Inc.
Sue Van has served as a director of the Company since its inception in
February 1995. Since November 1996, she has been Executive Vice President of
Coulter Corporation, a research, development and manufacturing company of
precision medical devices. Since May 1992, Ms. Van has served as the Chief
Financial Officer of Coulter Corporation and since January 1984, Ms. Van has
served as the Corporate Treasurer of Coulter Corporation.
Certain of the current directors of the Company were nominated and elected
in accordance with voting rights which terminate upon the closing of this
offering.
BOARD COMMITTEES
The Audit Committee of the Board of Directors was formed in October 1996 to
review the internal accounting procedures of the Company and consult with and
review the services provided by the Company's independent auditors. The
Compensation Committee of the Board of Directors was formed in October 1996 to
establish salaries, incentives and other forms of compensation paid to officers
and employees of the Company. The Compensation Committee also administers the
issuance of stock options and other awards under the Company's stock plans.
DIRECTOR COMPENSATION
Directors currently do not receive any cash compensation from the Company
for their services as members of the Board of Directors, although they are
reimbursed for certain expenses in connection with attendance at Board and
Committee meetings. Upon completion of the offering, directors will be eligible
to participate in the 1996 Equity Incentive Plan. See "-- Equity Incentive
Plans."
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Prior to the formation of the Compensation Committee in October 1996, the
Board of Directors made all determinations with respect to executive officer
compensation. Of the directors who
45
<PAGE> 47
participated in deliberations concerning executive officer compensation, either
prior to the formation of the Compensation Committee or in their capacity as a
member of the Compensation Committee, Dr. Oronsky served as acting President and
Chief Executive Officer of the Company from February 1995 to June 1996, Ms.
Wallace has served as Vice President, Operations of the Company since February
1995 and Mr. Bigham has served as President and Chief Executive Officer of the
Company since July 1996. Each of the Company's directors has purchased
securities of the Company individually or through an affiliated entity. See
"Certain Transactions" and "Principal Stockholders."
EXECUTIVE COMPENSATION
Summary Compensation Table. The following table sets forth the
compensation earned by the Company's Chief Executive Officer and the other
executive officer who earned in excess of $100,000 during the fiscal year ended
December 31, 1996, based on anticipated compensation as of November 31, 1996,
(collectively, the "Named Executive Officers") and the compensation of the Named
Executive Officers during the fiscal year ended December 31, 1995:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION ------------
SECURITIES
-------------------- OTHER ANNUAL UNDERLYING
NAME AND PRINCIPAL POSITION SALARY($) BONUS($) COMPENSATION($) OPTIONS(#)
- ----------------------------------------- --------- -------- --------------- ------------
<S> <C> <C> <C> <C> <C>
Michael F. Bigham(1)..................... 1995 -- -- -- --
President and Chief Executive Officer 1996 150,000 50,000 57,000(1) 0
Arnold Oronsky, Ph.D.(2) ................ 1995 0 0 0 0
President and Chief Executive Officer 1996 0 0 0 0
Dan Shochat, Ph.D. ...................... 1995 138,721 26,250 13,332(3) 58,333
Vice President, Research and
Development 1996 160,008 8,750 11,084(3) 41,666
</TABLE>
- ---------------
(1) Mr. Bigham joined the Company as its President and Chief Executive Officer
in July 1996. During June 1996, Mr. Bigham provided consulting services to
the Company and received compensation for those services.
(2) Mr. Oronsky, Chairman of the Company's Board of Directors, served as acting
President and Chief Executive Officer from February 1995 to June 1996.
(3) Represents reimbursement for moving expenses.
EQUITY INCENTIVE PLANS
Equity Incentive Plans. In March 1995, the Company adopted the 1995 Equity
Incentive Plan (the "1995 Plan") under which an aggregate of 866,666 shares of
Common Stock have been reserved for issuance upon exercise of options granted to
employees, directors of and consultants to the Company. As of December 6, 1996,
options to purchase an aggregate of 802,305 shares of Common Stock were
outstanding under the 1995 Plan. In December 1996, the Board of Directors
determined that upon the closing of the offering, no additional options would be
granted under the 1995 Plan and the 1995 Plan would be terminated.
In December 1996, the Company adopted the 1996 Equity Incentive Plan,
subject to stockholder approval (the "1996 Plan" and, together with the 1995
Plan, the "Incentive Plans"). A total of 1,400,000 shares of Common Stock have
been reserved under the 1996 Plan. As of December 6, 1996, no options have been
granted under the 1996 Plan. The 1996 Plan will terminate in December 2006,
unless sooner terminated by the Board of Directors.
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<PAGE> 48
The Incentive Plans provide for the granting to employees (including
officers and employee directors) of incentive stock options within the meaning
of Section 422 of the Internal Revenue Code, as amended (the "Code"), and for
the granting of nonstatutory stock options, restricted stock purchase awards,
and stock bonuses (collectively, "Stock Awards") to employees, directors of and
consultants to the Company. The Company's Board of Directors has delegated
administration of the Incentive Plans to the Compensation Committee (the
"Committee"). The Committee membership is intended to satisfy the provisions of
Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as amended,
and Code section 162(m), in each case to the extent applicable. The Committee
has the authority, subject to the terms of the Incentive Plans, to determine the
recipients and types of awards to be granted, the terms of the awards granted,
including the exercise price, number of shares subject to the award the
exercisability thereof, and the form of consideration payable upon exercise.
The terms of stock options granted under the Incentive Plans generally may
not exceed 10 years. The exercise price of options granted under the Incentive
Plans is determined by the Board of Directors, provided that the exercise price
for an incentive stock option cannot be less than 100% of the fair market value
of the Common Stock on the date of the option grant and the exercise price for a
nonstatutory stock option cannot be less than 85% of the fair market value of
the Common Stock on the date of option grant. The exercise price of options
under the 1995 Plan or incentive stock options under the 1996 Plan granted to
any person who at the time of grant owns stock possessing more than 10% of the
total combined voting power of all classes of stock must be at least 110% of the
fair market value of such stock on the date of grant and the terms of these
options cannot exceed five years. The aggregate fair market value, determined at
the time of grant, of the shares of Common Stock with respect to which incentive
stock option are exercisable for the first time by an optionee during any
calendar year (under all such plans of the Company and its affiliates) may not
exceed $100,000. No optionee shall be eligible for option grants under the 1996
Plan covering more than 280,000 shares of Common Stock in any calendar year at
such time as Section 162(m) of the Code becomes applicable to the Plan.
Options granted under the Incentive Plans vest at the rate specified in the
option agreement; provided, however, that options granted under the 1995 must
vest at least 20% per year. No stock option granted under the Incentive Plans
may be transferred by the optionee other than by will or the laws of descent or
distribution or, for a nonstatutory option, pursuant to a domestic relations
order, provided that an optionee may designate a beneficiary who may exercise
the option following the optionee's death, and, provided further, that the
Compensation Committee may grant a nonstatutory stock option that is
transferable under the 1996 Plan.
An optionee under the 1995 Plan whose relationship with the Company or any
affiliate ceases for any reason (other than by death or disability) may exercise
options in the thirty-day period following such cessation (unless such options
terminate or expire sooner or later by their terms). An optionee under the 1996
Plan whose relationship with the Company or any affiliate ceases for any reason
(other than by death or disability) may exercise options in the three-month
period following such cessation (unless such options terminate or expire sooner
or later by their terms). Options granted under the Incentive Plans may be
exercised for up to twelve months after an Optionee's relationship with the
Company and its affiliates ceases due to disability and for up to eighteen
months after an Optionee's relationship with the Company and its affiliates
ceases due to death (unless such options expire sooner or later by their terms).
Shares subject to stock options under the 1996 Plan that have expired or
otherwise terminated without having been exercised in full become available for
the grant of options under the 1996 Plan. Furthermore, the Board of Directors
may offer to exchange new options for existing options under the 1996 Plan, with
the shares subject to the existing options again becoming available for grant
under the 1996 Plan. The Board of Directors has the authority to reprice
outstanding options and to offer optionees the opportunity to replace
outstanding options with new options for the same or a different number of
shares.
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<PAGE> 49
Restricted stock purchase awards granted under the 1996 Plan may be granted
pursuant to a repurchase option in favor of the Company in accordance with a
service vesting schedule determined by the Board. The purchase price of such
awards will be at least 85% of the fair market value of the Common Stock on the
date of grant. Stock bonuses may be awarded in consideration for past services
without a purchase payment.
Upon certain changes in control of the Company, all outstanding awards
under the Incentive Plans shall be continued, assumed or substituted by the
surviving entity. If the surviving entity determines not to continue, assume or
substitute such awards, then the vesting of such awards shall be accelerated and
shall be terminated if not exercised prior to such event. In the event of a
dissolution or liquidation of the Company, outstanding, unexercised awards shall
be terminated.
Employee Stock Purchase Plan. In December 1996, the Company's Board of
Directors adopted the Employee Stock Purchase Plan (the "Purchase Plan"),
subject to stockholder approval, covering an aggregate of 350,000 shares of
Common Stock. The Purchase Plan is intended to qualify as an employee stock
purchase plan within the meaning of Section 423 of the Code. Under the Purchase
Plan, the Board of Directors may authorize participation by eligible employees,
including officers, in periodic offerings following the adoption of the Purchase
Plan. The offering period for any offering will be no more than 27 months. The
Board has currently authorized an offering period to begin with the
effectiveness of this offering and ending December 31, 1998 and additional
24-month offering periods to begin each July 1 and January 1 thereafter.
Employees are eligible to participate if they are employed by the Company
or an affiliate of the Company designated by the Board of Directors, provided
that under the currently authorized offerings an employee's customary employment
must be for at least 20 hours per week and five months per calendar year.
Employees who participate in an offering can have up to 15% of their earnings
withheld pursuant to the Purchase Plan and applied, on specified dates
determined by the Board of Directors, to the purchase of shares of Common Stock.
Under the currently authorized offerings, the purchase dates are each June 30
and December 31. The price of Common Stock purchased under the Purchase Plan
will be equal to 85% of the lower of the fair market value of the Common Stock
on the commencement date of each offering or the relevant purchase date.
Employees may end their participation in an offering at any time during the
offering, and participation ends automatically on termination of employment with
the Company or, under the currently authorized offerings, when the employee
elects to enroll in another offering.
In the event of certain changes of control, the Board of Directors has
discretion to provide that each right to purchase Common Stock may be assumed or
an equivalent right substituted by the successor corporation, or the Board may
shorten the offering period and provide for all sums collected by payroll
deductions to be applied to purchase stock immediately prior to the change in
control. The Board has the authority to amend or terminate the Purchase Plan,
subject to the limitation that no such action may adversely affect any
outstanding rights to purchase Common Stock.
401(k) Plan. As of October 31, 1996, the Company adopted a tax-qualified
employee savings and retirement plan (the "401(k) Plan") covering the Company's
employees. Pursuant to the 401(k) Plan, eligible employees may elect to reduce
their current compensation by up to the lesser of 15% of their annual
compensation or the statutorily prescribed annual limit ($9,500 in 1996 and
1997) and have the amount of such reduction contributed to the 401(k) Plan.
Although the Company does not currently match contributions by employees, the
401(k) Plan allows for matching contributions to be made by the Company in an
amount determined by the Company. The trustees under the 401(k) Plan, at the
direction of each participant, invest the assets of the 401(k) Plan in
designated investment options. The 401(k) Plan is intended to qualify under
Section 401 of the Internal Revenue Code of 1986, as amended (the "Code"), so
that contributions to the 401(k) Plan, and income earned on the 401(k) Plan
contributions, are not taxable until withdrawn, and so that the contributions by
the Company will be deductible when made.
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<PAGE> 50
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth for each of the Named Executive Officers
each grant of stock options granted during the fiscal year ended December 31,
1995:
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
---------------------------------------------
PERCENTAGE
OF TOTAL POTENTIAL REALIZABLE
NUMBER OF OPTIONS VALUE AT ASSUMED
SECURITIES GRANTED ANNUAL RATES OF STOCK
UNDERLYING IN FISCAL EXERCISE PRICE APPRECIATION
OPTIONS 1995 PRICE EXPIRATION FOR OPTION TERM(4)
NAME GRANTED(1) (%)(2) ($/SH)(3) DATE 5% $ 10% $
- ------------------------------------ ---------- ---------- --------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Michael F. Bigham................... -- -- -- -- --
Arnold Oronsky, Ph.D. .............. -- -- -- -- -- --
Dan Shochat, Ph.D. ................. 58,333 26.4% $ .30 07/31/05 $11,006 $27,890
</TABLE>
- ---------------
(1) Options granted in 1995 generally vest over four years, with 25% of the
option shares becoming fully vested one year from the grant date and 1/48th
vesting in each successive month, with full vesting occurring on the fourth
anniversary date. As of December 1, 1996, the only Named Executive Officer
granted stock options in 1996 was Dan Shochat, who was granted options to
purchase 25,000 and 16,666 shares of Common Stock at exerise prices of $0.75
and $2.25, respectively.
(2) Based on an aggregate of 220,756 options granted to employees and directors
of and consultants to the Company in 1995, including the Named Executive
Officers.
(3) The exercise price per share of each option was equal to the fair market
value of the Common Stock on the date of grant, as determined by the Board
of Directors.
(4) The potential realizable value is calculated by assuming that the stock
price on the date of grant as determined by the Board of Directors
appreciates at the indicated annual rate compounded annually for the entire
term of the option (ten years) and the option is exercised and sold on the
last day of its term for the appreciated stock price. The 5% and 10% assumed
rates of appreciation are mandated by the rules of the Securities and
Exchange Commission and do not represent the Company's estimate or
projection of the future Common Stock price.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table sets forth for each of the Named Executive Officers the
shares acquired and the value realized on the exercise of stock options during
the fiscal year ended December 31, 1995 and the number and value of securities
underlying unexercised options held by the Named Executive Officers at December
31, 1995:
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
SHARES VALUE DECEMBER 31, 1995(#) DECEMBER 31, 1995($)(1)
ACQUIRED ON REALIZED -------------------------- --------------------------
NAME EXERCISE(#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------------------- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Michael F. Bigham................. -- -- -- -- -- --
Arnold Oronsky, Ph.D. ............ -- -- -- -- -- --
Dan Shochat, Ph.D. ............... -- -- 0 58,333 0 8,750
</TABLE>
- ---------------
(1) Based on the fair market value of $0.45 per share on December 31, 1995, as
determined by the Company's Board of Directors minus the exercise price
multiplied by the number of shares underlying the option.
LIMITATION OF LIABILITY AND INDEMNIFICATION
As permitted by the Delaware General Corporation Law (the "Delaware Law"),
the Company's Certificate of Incorporation provides that no director of the
Company will be personally liable to the
49
<PAGE> 51
Company or its stockholders for monetary damages for breach of fiduciary duty as
a director, except (i) for any breach of the directors' duty of loyalty to the
Company or its stockholders, (ii) for acts or omissions not in good faith or
involving intentional misconduct or a knowing violation of law, (iii) unlawful
payments of dividends or unlawful stock repurchases or redemptions, or (iv) for
any transaction from which the director derives any improper personal benefit.
In addition, the Company's Bylaws provide that the Company shall indemnify any
director and may indemnify any officer, to the fullest extent permitted by the
Delaware Law, who was or is a party or is threatened to be made a party to any
action or proceeding by reason of his or her services to the Company.
The Company has entered into indemnification agreements with each of its
directors and executive officers pursuant to which the Company has indemnified
each of them against expenses and losses incurred for claims brought against
them by reason of their being a director or executive officer of the Company. In
addition, the Company intends to purchase directors' and officers' liability
insurance.
There is no pending litigation or proceeding involving a director or
officer of the Company as to which indemnification is being sought, nor is the
Company aware of any pending or threatened litigation that may result in claims
for indemnification by any director or executive officer.
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<PAGE> 52
CERTAIN TRANSACTIONS
The Company was incorporated in February 1995. In connection with its
formation, the Company issued 5,000,000 shares of its Series A Preferred Stock
(the "Series A Stock") to Coulter Corporation in exchange for rights to certain
intellectual property, know-how, contractual rights and other assets pertaining
to the Company's B-1 Therapy pursuant to an assignment agreement dated February
24, 1995, and issued 2,500,000 shares of Series A Stock to InterWest Partners V,
L.P. ("InterWest") and certain parties related thereto in exchange for
$2,500,000 in cash.
Coulter Corporation has also supplied B-1 Antibody and certain services at
its cost to support the Company's ongoing development of the B-1 Therapy. See
Note 7 of Notes to Financial Statements. The need for such services is
declining, and the Company believes that this arrangement will be ended during
1997. In addition, the Company has agreed to reimburse Coulter Corporation for
royalties (payable upon sales of the B-1 Therapy, if any) due to a third party
for certain intellectual property rights sublicensed to the Company. Coulter
Corporation has the right to convert the initial reimbursements of royalties, up
to a maximum of $4,500,000, into Common Stock of the Company at the fair market
value thereof at the time such reimbursements are due. Additionally, in April
1995, the Company reimbursed Coulter Corporation $100,000 for a one-time license
issue fee previously paid by Coulter Corporation in connection with certain
intellectual property rights assigned to the Company. Sue Van, a director of the
Company, is an executive officer of Coulter Corporation.
In August and September 1995, the Company issued 2,333,333 shares of its
Series B Preferred Stock (the "Series B Stock") for aggregate consideration of
$3,500,000 in cash, including: (i) 2,266,667 shares of Series B Stock to
InterWest and certain parties related thereto, (ii) 16,667 shares of Series B
Stock to the Richard M. Lucas Foundation, of which Donald L. Lucas, a director
of the Company, is the Chairman of the Board and (iii) 16,666 shares of Series B
Stock to the Donald L. Lucas Profit Sharing Trust of which Mr. Lucas is the
successor trustee.
In April 1996, the Company issued 9,964,607 shares of its Series C
Preferred Stock (the "Series C Stock") and warrants to purchase 498,705 shares
of its Common Stock (after giving effect to the one-for-three reverse stock
split), at an exercise price of $9.00 per share (the "Warrants") for aggregate
consideration of $22,420,366 in cash, including: (i) 888,889 shares of Series C
Stock and Warrants to purchase 44,488 shares of Common Stock to InterWest and
certain parties related thereto, (ii) 1,111,111 shares of Series C Stock and
Warrants to purchase 55,611 shares of Common Stock to BankAmerica Ventures and
certain parties related thereto, (iii) 1,122,222 shares of Series C Stock and
Warrants to purchase 56,167 shares of Common Stock to Brentwood Associates VII,
L.P. ("Brentwood") and certain parties related thereto, (iv) 948,884 shares of
Series C Stock and Warrants to purchase 47,490 shares of Common Stock to certain
entities affiliated with Donald L. Lucas, a director of the Company, (v) 102,222
shares of Series C Stock and Warrants to purchase 5,116 shares of Common Stock
to a charitable trust formed by Michael F. Bigham, Chief Executive Officer and
President of the Company, (vi) 100,000 shares of Series C Stock and Warrants to
purchase 5,005 shares of Common Stock to Sue Van, a director of the Company,
(vii) 22,222 shares of Series C Stock and Warrants to purchase 1,112 shares of
Common Stock to Bryan Oronsky, the adult son of Arnold Oronsky, a director of
the Company and (viii) 11,111 shares of Series C Stock and Warrants to purchase
566 shares of Common Stock to Brian Atwood, a director of the Company.
Each share of Preferred Stock will automatically convert into one-third of
a share of Common Stock upon completion of this offering.
Pursuant to an offer letter dated February 9, 1995 from the Company to Dr.
Dan Shochat, Vice President, Research and Development of the Company, if the
Company terminates Dr. Shochat's employment for any reason prior to March 1997,
the Company will pay Dr. Shochat, a sum equal to six months annual salary.
In August 1995 and February 1996, in connection with consulting services
provided to the Company, the Company granted Mr. Atwood, a director of the
Company, options to purchase 2,059 and 4,021 shares of Common Stock,
respectively, at an exercise price of $.30 per share. Such options were
immediately exercisable and fully vested. Mr. Atwood received compensation of
$94,863 for such consulting services.
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<PAGE> 53
In March 1996, Michael F. Bigham, Chief Executive Officer and President of
the Company, purchased 400,000 shares of Common Stock at $0.45, the fair market
value of such shares and purchased the shares by delivering a promissory note in
the amount of $180,000. The Company has a right to repurchase these shares in
the event Mr. Bigham's employment is terminated. Such repurchase right lapses
over a four year period which may be accelerated if Mr. Bigham's employment is
involuntarily terminated for a reason other than gross misconduct. If the
Company terminates Mr. Bigham's employment for any reason, other than gross
misconduct, the Company will continue to pay his salary and provide full
benefits for one year after such termination. In the event of a change in
control of the Company, Mr. Bigham will receive severance equal to at least two
years salary plus a 30% bonus and full benefits for two years. In addition, all
repurchase right expirations will be accelerated in full. During June 1996, Mr.
Bigham provided consulting services to the Company for which he was paid
$57,000. In July 1996, the Company entered into an agreement with Mr. Bigham
pursuant to which he repaid an outstanding loan to the Company in the amount of
$180,000 and obtained from the Company a home loan in the amount of $280,000,
which new loan is secured by a second deed of trust on his principal residence.
This loan will be forgiven semiannually at the rate of 12.5% per semiannual
period so long as Mr. Bigham remains employed by the Company. If Mr. Bigham's
employment is terminated, interest shall commence and begin to accrue at the
prime rate plus two percentage points and will become due and payable within 60
days of his termination. If Mr. Bigham's employment is terminated for other than
gross misconduct or death, the principal of such loan shall become due upon the
earlier of Mr. Bigham securing other employment or the date 60 days from the
date of his termination.
In June 1996 and October 1996, the Company granted Mr. Harris, Vice
President and Chief Financial Officer of the Company, options to purchase 58,333
shares of Common Stock at $0.75 per share and 8,333 shares of Common Stock at
$2.25 per share, respectively. Such options vest over a four-year period. In
October, the Company also granted Mr. Harris an option to purchase 16,666 shares
of Common Stock at $2.25 per share which will begin vesting in October 2000. If
the Company terminates Mr. Harris' employment for any reason other than good
cause prior to July 1997, the Company will continue to pay his salary for six
months after such termination.
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<PAGE> 54
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of December 6, 1996 for (i) each
stockholder who is known by the Company to own beneficially more than five
percent of the Company's Common Stock; (ii) each Named Executive Officer; (iii)
each director of the Company and (iv) all executive officers and directors of
the Company as a group. Except as otherwise provided below, the address of each
person listed is c/o the Company, 550 California Avenue, Suite 200, Palo Alto,
California 94306.
<TABLE>
<CAPTION>
PERCENTAGE OF SHARES
NUMBER OF BENEFICIALLY OWNED(1)
SHARES -----------------------
BENEFICIALLY BEFORE AFTER
BENEFICIAL OWNER OWNED(1) OFFERING OFFERING
- ------------------------------------------------------------- --------------------- -------- --------
<S> <C> <C> <C>
Entities Affiliated with InterWest Partners(2)............... 1,896,339 25.2%
3000 Sand Hill Road
Building 3, Suite 255
Menlo Park, CA 94025
Robert Momsen(2)............................................. 1,896,339 25.2
Arnold Oronsky(2)............................................ 1,885,020 25.0
Coulter Corporation.......................................... 1,666,666 22.1
Coulter Technology Center
11800 SW 147th Avenue
Miami, FL 33196
Michael F. Bigham(3)......................................... 439,190 5.8
Brian G. Atwood(4)........................................... 436,320 5.8
Brentwood Associates VII, L.P.(5)............................ 430,240 5.7
3000 Sand Hill Road
Building 1, Suite 260
Menlo Park, CA 94025
Entities Affiliated with BankAmerica Ventures(6)............. 425,981 5.7
950 Tower Lane, #700
Foster City, CA 94404
Donald L. Lucas(7)........................................... 374,894 5.0
Sue Van(8)................................................... 38,338 *
Dan Shochat(9)............................................... 26,736 *
All executive officers and directors as a
group (8 persons)(10)...................................... 3,211,818 42.6
</TABLE>
- ---------------
* Represents beneficial ownership of less than 1% of the outstanding shares
of the Company's Common Stock.
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or
investment power with respect to securities. Except as indicated by
footnote, and subject to community property laws where applicable, the
Company believes, based on information furnished by such persons, that the
persons named in the table above have sole voting and investment power with
respect to all shares of Common Stock shown as beneficially owned by them.
Percentage of beneficial ownership is based on 7,535,604 shares of Common
Stock outstanding as of December 6, 1996 (including 498,705 shares to be
issued upon the exercise of outstanding warrants prior to the closing of
this offering), and shares of Common Stock outstanding after
completion of this offering. Beneficial ownership of Common Stock issuable
pursuant to outstanding warrants is calculated on a cash exercise basis.
(2) Includes 1,766,666 shares held by InterWest Partners V, L.P., 11,111 shares
held by InterWest Investors V, 74,074 shares held by MedVenture Associates
II, 33,158 shares to be issued to InterWest Partners V, L.P. upon the
exercise of an outstanding warrant prior to the closing of this offering
208 shares to be issued to InterWest Investors V upon the exercise of an
outstanding warrant prior to the closing of this offering, and 11,122
shares to be issued to MedVenture Associates II upon the exercise of an
outstanding warrant prior to the closing of this offering; provided that
shares attributable to Dr. Oronsky do not include any shares
53
<PAGE> 55
owned or warrants held by InterWest Investors V. Mr. Momsen and Dr. Oronsky,
directors of the Company, are general partners of InterWest Management Partners
V, L.P. which is the general partner of InterWest Partners V, L.P. InterWest
Partners V L.P. is the general partner and a limited partner of MedVenture
Associates II. Mr. Momsen is a general partner of InterWest Investors V.
Mr. Momsen and Dr. Oronsky disclaim beneficial ownership of the shares held
by InterWest Partners V, L.P., MedVenture Associates II and InterWest
Investors V, except to the extent of their respective pecuniary interest
therein.
(3) Includes 375,000 shares that were issued pursuant to a restricted stock
purchase agreement 341,666 of which are subject to repurchase by the
Company as of February 1, 1996. Also includes 34,074 shares held by a
charitable trust formed by Michael F. Bigham and 5,116 shares to be issued
to such trust upon the exercise of an outstanding warrant prior to the
closing of this offering and 25,000 shares held by an irrevocable trust
formed for members of Mr. Bigham's family. Mr. Bigham disclaims beneficial
ownership of the shares held in each such trust except to the extent of his
pecuniary interest therein.
(4) Includes 556 shares to be issued to Mr. Atwood upon the exercise of an
outstanding warrant prior to the closing of this offering. Also includes
shares owned and warrants held by Brentwood Associates VII, L.P. identified
in footnote (5) below. Mr. Atwood, a director of the Company, is a venture
partner of Brentwood VII Ventures, L.P., which is the general partner of
Brentwood Associates VII, L.P. Mr. Atwood disclaims beneficial ownership of
the shares held by Brentwood Associates VII, L.P., except to the extent of
his pecuniary interest therein.
(5) Includes 370,370 shares held by Brentwood Associates VII, 3,703 shares held
by the Brentwood Associates Venture Capital 1982 Profit Sharing Trust (the
"BAVC Profit Sharing Trust"), 55,611 shares to be issued to Brentwood
Associates VII, L.P. upon the exercise of an outstanding warrant prior to
the closing of this offering and 556 shares to be issued to the BAVC Profit
Sharing Trust upon the exercise of an outstanding warrant prior to the
closing of this offering.
(6) Includes 333,333 shares held by BankAmerica Ventures, 37,037 shares held by
BA Venture Partners II, 50,050 shares to be issued to BankAmerica Ventures
upon the exercise of an outstanding warrant prior to the closing of this
offering, 5,561 shares to be issued to BA Venture Partners II upon the
exercise of an outstanding warrant prior to the closing of this offering.
(7) Includes 5,555 shares held by Donald Lucas Profit Sharing Trust, 31,850
shares held by Donald L. Lucas & Lygia S. Lucas Trust, 37,407 shares held
by the Richard M. Lucas Foundation, 74,074 shares held by Sand Hill
Financial Company, and 178,519 shares held by Teton Capital Company. Also
includes 4,782 shares to be issued to the Donald L. Lucas Trust upon the
exercise of an outstanding warrant prior to the closing of this offering,
4,782 shares to be issued to the Richard M. Lucas Foundation upon the
exercise of an outstanding warrant prior to the closing of this offering.
11,122 shares to be issued to Sand Hill Financial Company upon the exercise
of an outstanding warrant prior to the closing of this offering and 26,804
shares to be issued to Teton Capital Company upon the exercise of an
outstanding warrant prior to the closing of this offering. Donald L. Lucas,
a director of the Company, is trustee of the Donald Lucas Profit Sharing
Trust, trustee of the Donald L. Lucas & Lygia S. Lucas Trust, Chairman of
the Board of the Richard M. Lucas Foundation, a general partner of the Sand
Hill Financial Company and the general partner of Teton Capital Company.
Mr. Lucas disclaims beneficial ownership of the shares, except to the
extent of his pecuniary interest therein.
(8) Includes 14,333 shares held by the Sue Van Revocable Trust, 2,853 shares to
be issued to the Sue Van Rollover IRA upon the exercise of an outstanding
warrant prior to the closing of this offering and 2,152 shares to be issued
to the Sue Van Revocable Trust upon the exercise of an outstanding warrant
prior to the closing of this offering.
(9) Includes 4,861 shares of Common Stock subject to options exercisable within
60 days of December 1, 1996.
(10) Includes 1,896,339 shares held by entities affiliated with certain
directors of the Company as described in footnote (2) above, 425,981 shares
held by entities affiliated with a director of the Company as described in
footnote (4) above, 158,822 shares to be issued upon the exercise of
outstanding warrants prior to the closing of this offering and 4,861 shares
of Common Stock subject to options exercisable within 60 days of December
1, 1996.
54
<PAGE> 56
DESCRIPTION OF CAPITAL STOCK
Upon the completion of this offering, the authorized capital stock of the
Company will consist of 30,000,000 shares of Common Stock, $.001 par value, and
3,000,000 shares of Preferred Stock, $.001 par value.
COMMON STOCK
As of December 6, 1996, there were 7,535,604 shares of Common Stock
outstanding (after giving effect to the conversion of all Preferred Stock and
the one-for-three reverse stock split and the exercise of all warrants that
would otherwise terminate upon completion of the offering) held of record by 80
stockholders. The holders of Common Stock are entitled to one vote per share on
all matters to be voted on by the stockholders. Subject to preferences that may
be applicable to outstanding shares of Preferred Stock, if any, the holders of
Common Stock are entitled to receive ratably such dividends as may be declared
from time to time by the Board of Directors out of funds legally available
therefor. See "Dividend Policy". In the event of the liquidation, dissolution of
winding up of the Company, the holders of Common Stock are entitled to share
ratably in all assets remaining after payment of liabilities, subject to prior
liquidation rights of Preferred Stock, if any, then outstanding. The Common
Stock has no preemptive conversion rights or other subscription rights. There
are no redemption or sinking funds provisions applicable to the Common Stock.
All outstanding shares of Common Stock are fully paid and non-assessable, and
the shares of Common Stock to be outstanding upon completion of this offering
will be fully paid and non-assessable.
PREFERRED STOCK
Upon completion of this offering, no shares of Preferred Stock will be
outstanding. The Board of Directors will have the authority to issue up to
3,000,000 shares of Preferred Stock in one or more series and to fix the rights,
preferences, privileges and restrictions granted to or imposed upon such
Preferred Stock, including dividend rights, conversion rights, terms of
redemption, liquidation preference sinking fund terms and the number of shares
constituting any series or the designation of such series, without any further
vote or action by the stockholders. The Board of Directors, without stockholder
approval, can issue Preferred Stock with voting and conversion rights which
could adversely affect the voting power of the holders of Common Stock. The
issuance of Preferred Stock could have the effect of delaying, deferring or
preventing a change in control of the Company. The Company has no present plan
to issue any shares of Preferred Stock.
WARRANTS
Upon the completion of this offering, the Company will have a warrant
outstanding to purchase 24,666 shares of the Company's Common Stock at a
purchase price of $9.75 per share, subject to adjustment in certain
circumstances. This warrant expires in December 2002.
REGISTRATION RIGHTS
The holders (or their permitted transferees) of approximately 7,097,994
shares of Common Stock ("Holders") are entitled to certain rights with respect
to the registration of such shares under the Securities Act of 1933, as amended
(the "Securities Act"). Under the terms of an agreement between the Company and
such holders, if the Company proposes to register any of its Common Stock,
subject to certain exceptions, under the Securities Act, the Holders are
entitled to notice of the registration and are entitled to include, at the
Company's expense, shares of such Common Stock therein. The Holders have waived
their registration right with respect to this offering. In addition, the Holders
of sufficient shares with registration rights may require the Company at its
expense on no more than two occasions to file a registration statement under the
Securities Act with respect to their shares of Common Stock. Such rights may not
be exercised until 180 days after the effective date of this offering. Further,
Holders of sufficient shares with registration rights may require the Company to
register their
55
<PAGE> 57
shares on Form S-3 when such form becomes available to the Company, subject to
certain conditions and limitations. Such registration rights expire seven years
after the completion of this offering.
DELAWARE ANTI-TAKEOVER LAW AND CERTAIN CHARTER PROVISIONS
The Company is subject to the provisions of Section 203 of the Delaware
Law. In general, Section 203 prohibits a public Delaware corporation from
engaging in a "business combination" with an "interested stockholder" for a
period of three years after the date of the transaction in which the person
became an interested stockholder, unless the business combination is approved in
a prescribed manner. Generally, a "business combination" includes mergers, asset
sales and other transactions resulting in a financial benefit to the
stockholder. An "interested stockholder" is a person who, together with
affiliates and associates, owns (or within three years, did own) 15% or more of
a corporation's voting stock. The statute could have the effect of delaying,
deferring or preventing a change in control of the Company.
The Company's Certificate of Incorporation and Bylaws which will become
effective upon the closing of this offering also require that any action
required or permitted to be taken by stockholders of the Company must be
effected at a duly called annual or special meeting of the stockholders and may
not be effected by a consent in writing. In addition, special meetings of the
stockholders of the Company may be called only by the Board of Directors, the
Chairman of the Board or the Chief Executive Officer of the Company. The
Company's Certificate of Incorporation also specifies that the authorized number
of directors may be changed only by resolution of the Board of Directors. These
provisions may have the effect of deterring hostile takeovers or delaying
changes in control or management of the Company.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the Company's Common Stock is
ChaseMellon Shareholder Services.
56
<PAGE> 58
SHARES ELIGIBLE FOR FUTURE SALE
Prior to this offering, there has been no public market for the Common
Stock of the Company. Future sales of substantial amounts of Common Stock in the
public market could adversely affect the market price of the Common Stock
prevailing from time to time. Furthermore, since only a limited number of shares
will be available for sale shortly after this offering because of certain
contractual and legal restrictions on resale described below, sales of
substantial amounts of Common Stock of the Company in the public market after
the restrictions lapse could adversely affect the prevailing market price and
the ability of the Company to raise equity capital in the future.
Upon completion of this offering, the Company will have outstanding an
aggregate of shares of Common Stock, assuming no exercise of the
Underwriters' over-allotment option and no exercise of options outstanding as of
December 6, 1996. Of these shares, the shares of Common Stock sold in
this offering will be freely tradable without restriction or further
registration under the Securities Act, unless held by Affiliates of the Company.
The remaining 7,535,604 shares of Common Stock held by existing stockholders are
Restricted Shares. Restricted Shares may be sold in the public market only if
registered or if they qualify for an exemption from registration under Rules 144
or 701 promulgated under the Securities Act, which rules are summarized below.
As a result of Lock-up Agreements and the provisions of Rules 144 and 701,
additional shares will be available for sale in the public market as follows:
(i) no Restricted Shares will be eligible for immediate sale on the effective
date of this offering; (ii) 2,937,608 Restricted Shares (plus 154,794 shares of
Common Stock issuable to employees and consultants pursuant to stock options
that are then vested) will be eligible for sale upon expiration of the Lock-up
Agreements 180 days after the date of this Prospectus; and (iii) the remainder
of the Restricted Shares will be eligible for sale from time to time thereafter
upon expiration of their respective two-year holding periods.
Upon completion of this offering, the holders of 7,097,994 shares of Common
Stock, or their transferees, will be entitled to certain rights with respect to
the registration of such shares under the Securities Act. See "Description of
Capital Stock -- Registration Rights." Registration of such shares under the
Securities Act would result in such shares becoming freely tradeable without
restriction under the Securities Act (except for shares purchased by Affiliates,
if any) immediately upon the effectiveness of such registration.
The Company's officers, directors and certain stockholders, who will own in
the aggregate 7,480,228 shares of Common Stock after the offering, have agreed
that they will not, without the prior written consent of Hambrecht & Quist LLC,
offer, sell, or otherwise dispose of any shares of Common Stock, options or
warrants to acquire shares of Common Stock or securities exchangeable for or
convertible into Shares of Common Stock owned by them during the 180-day period
following the date of this Prospectus. The Company has agreed that it will not,
without the prior written consent of Hambrecht & Quist LLC, offer, sell or
otherwise dispose of any shares of Common Stock, options or warrants to acquire
shares of Common Stock or securities exchangeable for or convertible into shares
of Common Stock during the 180-day period following the date of this Prospectus,
except that the Company may issue shares upon the exercise of options granted
and warrants outstanding prior to the date hereof, and may grant additional
options under its stock option plans, provided that, without the prior written
consent of Hambrecht & Quist LLC, such additional options shall not be
exercisable during such period. Any shares subject to the Lock-up Agreements may
by released at any time without notice by Hambrecht & Quist LLC.
In general, under Rule 144 as currently in effect, beginning 90 days after
the date of this Prospectus, an Affiliate of the Company, or person (or persons
whose shares are aggregated) who has beneficially owned Restricted Shares for at
least two years will be entitled to sell in any three-month period a number of
shares that does not exceed the greater of (i) one percent of the then
outstanding shares of the Company's Common Stock (approximately
shares immediately after the offering) or (ii) the average weekly trading volume
of the Company's Common Stock in the Nasdaq
57
<PAGE> 59
National Market during the four calendar weeks immediately preceding the date on
which notice of the sale is filed with the SEC. Sales pursuant to Rule 144 are
subject to certain requirements relating to manner of sale, notice and
availability of current public information about the Company. A person (or
persons whose shares are aggregated) who is not deemed to have been an Affiliate
of the Company at any time during the 90 days immediately preceding the sale and
who has beneficially owned the shares proposed to be sold for at least three
years is entitled to sell such shares under Rule 144(k) without regard to the
limitations described above.
The SEC is currently considering a proposal to reduce the initial Rule 144
holding period to one year and the Rule 144(k) holding period to two years. This
proposal, if adopted, would substantially increase the number of shares of
Restricted Shares eligible for sale upon expiration of the Lock-up Agreements.
No assurance can be given concerning whether or when the proposal will be
adopted by the SEC.
An employee, officer or director of or consultant to the Company who
purchased shares or was granted options to purchase shares pursuant to a written
compensatory plan or contract is entitled to rely on the resale provisions of
Rule 701 under the Securities Act, which permits Affiliates and non-Affiliates
to sell their Rule 701 shares without having to comply with Rule 144's holding
period restrictions, in each case commencing 90 days after the date of this
Prospectus. In addition, non-Affiliates may sell Rule 701 shares without
complying with the public information, volume and notice provisions of Rule 144.
The Company intends to file a registration statement under the Securities
Act covering shares of Common Stock reserved for issuance under the Company's
1995 Plan, 1996 Plan and Purchase Plan. Based on the number of options
outstanding and options and shares reserved for issuance at December 6, 1996,
such registration statement would cover approximately 2,579,057 shares. Such
registration statement is expected to be filed and to become effective as soon
as practicable after the closing of this offering. Shares registered under such
registration statement will, subject to Rule 144 volume limitations applicable
to Affiliates, be available for sale in the open market upon expiration of the
Lock-up agreements or contractual restrictions and any vesting restrictions. As
of December 6, 1996, options to purchase 802,306 shares of Common Stock were
issued and outstanding under the 1995 Plan, and no options to purchase shares
had been granted under the 1996 Plan and Purchase Plan. See
"Management -- Equity Incentive Plans."
58
<PAGE> 60
UNDERWRITING
Subject to the terms and conditions of the Underwriting Agreement, the
Underwriters named below, through their Representatives, Hambrecht & Quist LLC,
Alex. Brown & Sons Incorporated and Pacific Growth Equities, Inc. have severally
agreed to purchase from the Company the following respective number of shares of
Common Stock:
<TABLE>
<CAPTION>
NUMBER OF
NAME SHARES
------------------------------------------------------------------ ---------
<S> <C>
Hambrecht & Quist LLC.............................................
Alex. Brown & Sons Incorporated...................................
Pacific Growth Equities, Inc......................................
---------
Total.............................................................
========
</TABLE>
The Underwriting Agreement provides that the obligations of the
Underwriters are subject to certain conditions precedent, including the absence
of any material adverse change in the Company's business and the receipt of
certain certificates, opinions and letters from the Company, its counsel and
independent auditors. The nature of the Underwriters' obligation is such that
they are committed to purchase all shares of Common Stock offered hereby if any
of such shares are purchased.
The Underwriters propose to offer the shares of Common Stock directly to
the public at the initial public offering price set forth on the cover page of
this Prospectus and to certain dealers at such price less a concession not in
excess of $ per share. The Underwriters may allow and such dealers may
reallow a concession not in excess of $ per share to certain other
dealers. After the initial public offering of the shares, the offering price and
other selling terms may be changed by the Representatives of the Underwriters.
The Representatives have informed the Company that the Underwriters do not
intend to confirm sales to accounts over which they exercise discretionary
authority.
The Company has granted to the Underwriters an option, exercisable no later
than 30 days after the date of this Prospectus, to purchase up to
additional shares of Common Stock at the initial public offering price, less the
underwriting discount, set forth on the cover page of this Prospectus. To the
extent that the Underwriters exercise this option, each of the Underwriters will
have a firm commitment to purchase approximately the same percentage thereof
which the number of shares of Common Stock to be purchased by it shown in the
above table bears to the total number of shares of Common Stock offered hereby.
The Company will be obligated, pursuant to the option, to sell shares to the
Underwriters to the extent the option is exercised. The Underwriters may
exercise such option only to cover over-allotments made in connection with the
sale of shares of Common Stock offered hereby.
The offering of the shares is made for delivery when, as and if accepted by
the Underwriters and subject to prior sale and to withdrawal, cancellation or
modification of the offering without notice. The Underwriters reserve the right
to reject an order for the purchase of shares in whole or in part.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act, and to contribute
to payments the Underwriters may be required to make in respect thereof.
59
<PAGE> 61
The Company's officers, directors and certain stockholders, who will own in
the aggregate shares of Common Stock after the offering, have agreed
that they will not, without the prior written consent of Hambrecht & Quist LLC,
offer, sell or otherwise dispose of any shares of Common Stock, options or
warrants to acquire shares of Common Stock or securities exchangeable for or
convertible into Shares of Common Stock owned by them during the 180-day period
following the date of this Prospectus. The Company has agreed that it will not,
without the prior written consent of Hambrecht & Quist LLC, offer, sell or
otherwise dispose of any shares of Common Stock, options or warrants to acquire
shares of Common Stock or securities exchangeable for or convertible into shares
of Common Stock during the 180-day period following the date of this Prospectus,
except that the Company may issue shares upon the exercise of options granted
and warrants outstanding prior to the date hereof, and may grant additional
options under its stock option plans, provided that, without the prior written
consent of Hambrecht & Quist LLC, such additional options shall not be
exercisable during such period.
Prior to this offering, there has been no public market for the Common
Stock. The initial public offering price for the Common Stock will be determined
by negotiation among the Company and the Representatives. Among the factors to
be considered in determining the initial public offering price are prevailing
market and economic conditions, revenues and earnings of the Company, market
valuations of other companies engaged in activities similar to the Company,
estimates of the business potential and prospects of the Company, the present
state of the Company's business operations, the Company's management and other
factors deemed relevant. The estimated initial public offering price range set
forth on the cover of this preliminary prospectus is subject to change as a
result of market conditions and other factors.
LEGAL MATTERS
The legality of the Common Stock offered hereby will be passed upon for the
Company by Cooley Godward LLP, Palo Alto, California ("Cooley Godward"). Certain
legal matters will be passed upon for the Underwriters by Wilson Sonsini
Goodrich & Rosati, Palo Alto, California. As of the date of this Prospectus, a
total of 4,444 shares of Common Stock and a warrant to purchase 667 shares of
Common Stock were beneficially owned by Cooley Godward.
EXPERTS
The Consolidated Financial Statements of Coulter Pharmaceutical, Inc. at
December 31, 1995 and September 30, 1996, and for the period from inception
(February 16, 1995) to September 30, 1996 appearing in this Prospectus and
Registration Statement have been audited by Ernst & Young LLP, independent
auditors, as set forth in their report thereon appearing elsewhere herein, and
are included in reliance upon such report given upon the authority of such firm
as experts in accounting and auditing.
The Financial Statements of the Antibody Therapeutics Business Operations
of Coulter Corporation at December 31, 1993 and 1994, and for each of the two
years in the period ended December 31, 1994 and for the period from January 1,
1995 to February 15, 1995, appearing in this Prospectus and Registration
Statement have been audited by Ernst & Young LLP, independent auditors, as set
forth in their report thereon appearing elsewhere herein, and are included in
reliance upon such report given upon the authority of such firm as experts in
accounting and auditing.
60
<PAGE> 62
ADDITIONAL INFORMATION
A Registration Statement on Form S-1, including amendments thereto,
relating to the Common Stock offered by the Company has been filed with the SEC,
Washington, D.C. 20549. This Prospectus does not contain all of the information
set forth in the Registration Statement and the exhibits and schedules thereto.
Statements contained in this Prospectus as to the contents of any contract or
any other document referred to are not necessarily complete, and in each
instance reference is made to the copy of such contract or other document filed
as an exhibit to the Registration Statement, each such statement being qualified
in all respects by such reference. For further information with respect to the
Company and the Common Stock offered hereby, reference is made to the
Registration Statement and the exhibits and schedules thereto. A copy of the
Registration Statement may be inspected by anyone without charge at the public
reference facilities maintained by the SEC in Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the SEC's regional offices located at the
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661 and Seven World Trade Center, 13th Floor, New York, New York
10048, and copies of all or any part thereof may be obtained from such offices,
upon payment of certain fees prescribed by the SEC. The SEC maintains a World
Wide Web site that contains reports, proxy and information statements and other
information filed electronically with the SEC. The address of the SEC's World
Wide Website is http://www.sec.gov.
61
<PAGE> 63
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
COULTER PHARMACEUTICAL, INC. CONSOLIDATED FINANCIAL STATEMENTS
Report of Ernst & Young LLP, Independent Auditors..................................... F-2
Consolidated Balance Sheets........................................................... F-3
Consolidated Statements of Operations................................................. F-4
Consolidated Statement of Stockholders' Equity........................................ F-5
Consolidated Statements of Cash Flows................................................. F-6
Notes to Consolidated Financial Statements............................................ F-7
ANTIBODY THERAPEUTICS BUSINESS OPERATIONS OF COULTER CORPORATION
Report of Ernst & Young LLP, Independent Auditors..................................... F-15
Balance Sheets........................................................................ F-16
Statements of Operations.............................................................. F-17
Statements of Cash Flows.............................................................. F-18
Notes to Financial Statements......................................................... F-19
</TABLE>
F-1
<PAGE> 64
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
The Board of Directors and Stockholders
Coulter Pharmaceutical, Inc.
We have audited the accompanying consolidated balance sheets of Coulter
Pharmaceutical, Inc. (a development stage company) (the "Company") as of
December 31, 1995 and September 30, 1996, and the related consolidated
statements of operations and cash flows for the periods from inception (February
16, 1995) to December 31, 1995 and September 30, 1996 and for the nine months
ended September 30, 1996, and the related consolidated statement of
stockholders' equity for the period from inception (February 16, 1995) to
September 30, 1996. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Coulter
Pharmaceutical, Inc. at December 31, 1995 and September 30, 1996, and the
consolidated results of its operations and its cash flows for the periods from
inception (February 16, 1995) to December 31, 1995 and September 30, 1996 and
for the nine months ended September 30, 1996, in conformity with generally
accepted accounting principles.
Palo Alto, California
October 31, 1996, except
for Note 10, as to which
the date is December , 1996
- --------------------------------------------------------------------------------
The foregoing report is in the form that will be signed upon completion of the
one-for-three reverse Common Stock split described in Note 10 to the
consolidated financial statements.
Palo Alto, California
December 9, 1996
F-2
<PAGE> 65
COULTER PHARMACEUTICAL, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
UNAUDITED PRO
FORMA
STOCKHOLDERS'
EQUITY AT
DECEMBER 31, SEPTEMBER 30, SEPTEMBER 30,
1995 1996 1996
------------ ------------- -------------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents............................ $ 3,438 $ 15,101
Short-term investments............................... -- 3,734
Prepaid expenses and other current assets............ 40 285
Current portion of employee loans receivable......... 31 55
------- --------
Total current assets......................... 3,509 19,175
Property and equipment, net............................ 93 900
Other assets........................................... 26 115
Employee loans receivable.............................. -- 294
------- --------
$ 3,628 $ 20,484
======= ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable..................................... $ 341 $ 1,485
Payable to Coulter Corporation....................... 25 63
Accrued liabilities.................................. 265 4,130
------- --------
Total current liabilities.................... 631 5,678
Commitments
Stockholders' equity:
Preferred stock, issuable in series, $.001 par value,
20,000,000 shares authorized: 9,833,333 and
19,797,940 shares issued and outstanding at
December 31, 1995 and September 30, 1996,
respectively; at amounts paid in; aggregate
liquidation preference of $33,420 at September 30,
1996 (pro forma: $.001 par value, 3,000,000 shares
authorized, none outstanding)..................... 5,989 28,355 $ --
Common stock, $.001 par value: 25,000,000 shares
authorized; 2,059 and 412,274 shares issued and
outstanding at December 31, 1995 and September 30,
1996, respectively (pro forma: $.001 par value,
30,000,000 shares authorized, 7,011,563 shares
issued and outstanding at September 30, 1996)..... -- 1 7
Additional paid-in capital........................... 1 786 29,135
Net unrealized loss on securities
available-for-sale................................ -- (24) (24)
Deferred compensation................................ -- (498) (498)
Deficit accumulated during the development stage..... (2,993) (13,814) (13,814)
------- -------- --------
Total stockholders' equity................... 2,997 14,806 $ 14,806
======= ======== ========
$ 3,628 $ 20,484
======= ========
</TABLE>
See accompanying notes.
F-3
<PAGE> 66
COULTER PHARMACEUTICAL, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
FOR THE PERIODS FROM FOR THE PERIOD
INCEPTION FROM INCEPTION
(FEBRUARY 16, 1995) TO NINE MONTHS (FEBRUARY 16,
---------------------------- ENDED 1995) TO
DECEMBER 31, SEPTEMBER 30, SEPTEMBER 30,
1995 1996 1996
------------ SEPTEMBER 30, ------------- --------------
1995
-------------
(UNAUDITED)
<S> <C> <C> <C> <C>
Operating expenses:
Research and development................ $ 2,539 $ 1,488 $ 9,896 $ 12,435
General and administrative.............. 581 380 1,453 2,034
------- ------- -------- --------
Total operating expenses........ 3,120 1,868 11,349 14,469
Interest income........................... 127 73 528 655
------- ------- -------- --------
Net loss.................................. $ (2,993) $(1,795) $ (10,821) $(13,814)
======= ======= ======== ========
Pro forma net loss per share.............. $ (0.44) $ (1.40)
------- --------
Shares used in computing pro forma net
loss per share.......................... 6,798 7,736
======= ========
</TABLE>
See accompanying notes.
F-4
<PAGE> 67
COULTER PHARMACEUTICAL, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
NET DEFICIT
CONVERTIBLE UNREALIZED LOSS ACCUMULATED
PREFERRED STOCK COMMON STOCK ADDITIONAL ON SECURITIES DURING THE TOTAL
-------------------- ------------------ PAID-IN AVAILABLE-FOR- DEFERRED DEVELOPMENT STOCKHOLDERS'
SHARES AMOUNT SHARES AMOUNT CAPITAL SALE COMPENSATION STAGE EQUITY
---------- ------- --------- ------ ---------- --------------- ------------ ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Issuance
of
Series A
convertible
preferred
stock to
founders
at $1.00
per
share
for cash
and
technology
in
February
1995.... 7,500,000 $ 2,500 -- $-- $ -- $ -- $ -- $ -- $ 2,500
Issuance
of
Series B
convertible
preferred
stock to
a
founder
at $1.50
per
share
for cash
in
August
and
October
1995,
less
issuance
costs of
$11..... 2,333,333 3,489 -- -- -- -- -- -- 3,489
Exercise
of
common
stock
options
by a
consultant
at $0.30
per
share
for cash
in
November
1995.... -- -- 2,059 -- 1 -- -- -- 1
Net loss.. -- -- -- -- -- -- -- (2,993) (2,993)
---------- ------- --------- --- ---- ---- ----- -------- --------
BALANCES
AT
DECEMBER
31,
1995.... 9,833,333 5,989 2,059 -- 1 -- -- (2,993) 2,997
Issuance
of
Series C
convertible
preferred
stock
and
warrants
for
498,705
shares
of
common
stock to
investors
at $2.25
per
share
for cash
in April
1996,
less
issuance
costs of
$55..... 9,964,607 22,366 -- -- -- -- -- -- 22,366
Issuance
of
common
stock to
a
prospective
officer at
$0.45 per
share
for cash
in March
1996.... -- -- 400,000 1 179 -- -- -- 180
Exercise
of
common
stock
options
by a
director
and a
consultant
at $0.30
and
$0.75
per
share
for cash
in March
1996 and
August
1996.... -- -- 10,215 -- 4 -- -- -- 4
Unrealized
loss on
securities
available-for-sale,
net..... -- -- -- -- -- (24) -- -- (24)
Deferred
compensation
related to
grants
of
certain
stock
options... -- -- -- -- 602 -- (602) -- --
Amortization
of
deferred
compensation... -- -- -- -- -- -- 104 -- 104
Net
loss.... -- -- -- -- -- -- -- (10,821) (10,821)
---------- ------- --------- --- ---- ---- ----- -------- --------
BALANCES
AT
SEPTEMBER
30,
1996.... 19,797,940 $28,355 412,274 $1 $786 $ (24) $ (498) $ (13,814) $ 14,806
========== ======= ========= === ==== ==== ===== ======== ========
</TABLE>
See accompanying notes.
F-5
<PAGE> 68
COULTER PHARMACEUTICAL, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
(IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE PERIODS FROM FOR THE PERIOD
INCEPTION (FEBRUARY 16, FROM INCEPTION
1995) TO NINE MONTHS (FEBRUARY 16,
---------------------------- ENDED 1995) TO
DECEMBER 31, SEPTEMBER 30, SEPTEMBER 30,
1995 1996 1996
------------ SEPTEMBER 30, ------------- --------------
1995
-------------
(UNAUDITED)
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss.................................. $ (2,993) $(1,795) $ (10,821) $(13,814)
Adjustments to reconcile net loss to net
cash provided by (used in) operating
activities:
Depreciation and amortization........... 15 8 34 49
Amortization of deferred compensation... -- -- 104 104
Changes in operating assets and
liabilities:
Prepaid expenses and other current
assets............................. (40) (95) (245) (285)
Employee loans receivable............ (31) (30) (318) (349)
Other assets......................... (29) (26) (92) (121)
Accounts payable..................... 341 417 1,144 1,485
Payable to Coulter Corporation....... 25 41 38 63
Accrued liabilities.................. 265 232 3,865 4,130
------- ------- -------- --------
Net cash used in operating activities..... (2,447) (1,248) (6,291) (8,738)
------- ------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of short-term investments........ -- -- (3,758) (3,758)
Purchases of property and equipment....... (105) (74) (838) (943)
------- ------- -------- --------
Net cash used in investing activities..... (105) (74) (4,596) (4,701)
------- ------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuances of convertible
preferred stock, net.................... 5,989 5,942 22,366 28,355
Proceeds from issuance of common stock.... 1 -- 184 185
------- ------- -------- --------
Net cash provided by financing
activities.............................. 5,990 5,942 22,550 28,540
------- ------- -------- --------
Net increase in cash and cash
equivalents............................. 3,438 4,620 11,663 15,101
Cash and cash equivalents at beginning of
period.................................. -- -- 3,438 --
------- ------- -------- --------
Cash and cash equivalents at end of
period.................................. $ 3,438 $ 4,620 $ 15,101 $ 15,101
======= ======= ======== ========
</TABLE>
See accompanying notes.
F-6
<PAGE> 69
COULTER PHARMACEUTICAL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(INFORMATION FOR THE PERIOD FROM INCEPTION (FEBRUARY 16, 1995) TO
SEPTEMBER 30, 1995 IS UNAUDITED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION AND PRINCIPLES OF CONSOLIDATION
Coulter Pharmaceutical, Inc. (the "Company" or "Coulter") was incorporated
in the State of Delaware on February 16, 1995 to engage in the research and
development of products for the treatment of cancer. The Company's principal
activities to date have involved conducting research and development, recruiting
management and technical personnel, obtaining financing and securing operating
facilities. Therefore, the Company is classified as a development stage company.
In the course of its development activities, the Company has sustained
continuing operating losses and expects such losses to continue over the next
several years. The Company plans to continue to finance the Company with a
combination of stock sales, such as the initial public offering contemplated by
this Prospectus and, in the longer term, revenues from product sales and
technology licenses. The Company's ability to continue as a going concern is
dependent upon successful execution of financings and, ultimately, upon
achieving profitable operations. If the public offering contemplated herein is
not consummated, the Company will have to seek other sources of capital or
adjust its operating plans.
The consolidated financial statements include the accounts of the Company
and its wholly owned subsidiary, Coulter Pharma Belgium, SA which was formed
under the laws of Belgium in June 1996. Intercompany balances and transactions
have been eliminated.
In connection with its formation, the Company issued 5,000,000 shares of
its Series A preferred stock to Coulter Corporation in exchange for rights to
certain intellectual property, contractual rights and other assets pertaining to
the Company's B-1 Therapy (convertible into 1,666,666 shares of common stock).
Under the terms of this assignment agreement, royalties are payable to Coulter
Corporation upon commercial sale of product, if any, derived from these
licenses. Coulter Corporation also has the right, in lieu of receiving cash, to
purchase additional shares of the Company's equity securities at the then
current fair market value of such securities with respect to the first $4.5
million payable to Coulter Corporation under this assignment agreement. This
transaction was accounted for as an acquisition of assets from an affiliate with
the amounts brought over at their historical basis of $0.
INTERIM FINANCIAL DATA
The interim financial data for the period from inception (February 16,
1995) to September 30, 1995 is unaudited; however, in the opinion of management,
the interim data includes all adjustments, consisting only of normal recurring
adjustments, necessary for a fair presentation of the results for the interim
period ended September 30, 1995.
The consolidated financial statements and related notes for the nine months
ended September 30, 1996 are audited. The results of operations for the nine
months ended September 30, 1996 are not necessarily indicative of the results
that may be expected for the entire year ending December 31, 1996.
NET LOSS PER SHARE
Except as noted below, historical net loss per share is computed using the
weighted average number of common shares outstanding. Common equivalent shares
from outstanding stock options, convertible preferred stock and warrants are
excluded from the computation as their effect is antidilutive, except that,
pursuant to the Securities and Exchange Commission Staff Accounting Bulletins,
common and common equivalent shares issued during the period beginning 12 months
prior
F-7
<PAGE> 70
COULTER PHARMACEUTICAL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
to the proposed initial filing of the Company's Registration Statement at prices
below the assumed public offering price have been included in the calculation as
if they were outstanding for all periods presented (using the treasury stock
method and the assumed public offering price for stock options and warrants and
the if-converted method for convertible preferred stock).
Historical net loss per share information is as follows:
<TABLE>
<CAPTION>
PERIOD FROM
INCEPTION NINE MONTHS
(FEBRUARY 16, 1995) ENDED
TO DECEMBER 31, SEPTEMBER 30,
1995 1996
------------------- -------------
<S> <C> <C>
Net loss per share..................................... $ (0.67) $ (2.43)
Share used in computing historical net loss per share
(in thousands)....................................... 4,456 4,458
</TABLE>
Pro forma net loss per share has been computed as described above and also
gives effect to the conversion of convertible preferred shares not included
above that will automatically convert upon completion of the Company's initial
public offering (using the if-converted method). Such shares are included from
the original date of issuance.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
CURRENT VULNERABILITY TO CERTAIN CONCENTRATIONS
The Company is supplying the B-1 Antibody to clinical trial sites from an
existing, finite inventory produced by Coulter Corporation, a related party. The
existing supplies of the B-1 Antibody are not sufficient to meet most of the
Company's clinical trial requirements in 1997. To achieve the levels of
production necessary to support on-going clinical trials of its B-1 Therapy, the
Company has contracted with a third-party manufacturer, LONZA Biologics plc
("Lonza"), to produce the B-1 Antibody. To date, Lonza has completed the
production of three batches of the B-1 Antibody; however, the Company must seek
FDA clearance to use Lonza-produced material and should such clearance not be
obtained in a timely manner, certain research and development activities may be
delayed.
CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS
The Company considers all highly liquid investments with maturities of
three months or less from the date of purchase to be cash equivalents.
Short-term investments consist of investments with original maturities greater
than three months, but less than one year.
The Company accounts for its cash equivalents and short-term investments
under Statement of Financial Accounting Standards No. 115 "Accounting for
Certain Investments in Debt and Equity Securities" ("SFAS No. 115"). Under the
provisions of SFAS No. 115, the Company has classified its cash equivalents and
short-term investments as "available-for-sale." Such investments are recorded at
fair value and unrealized gains and losses, which are considered to be
temporary, are recorded as a separate component of Stockholders' equity until
realized. The Company classifies all investments in its available-for-sale
portfolio as current assets.
F-8
<PAGE> 71
COULTER PHARMACEUTICAL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
FOREIGN CURRENCY TRANSLATION
The functional currency of Coulter Pharma Belgium, SA is the U.S. Dollar.
Assets and liabilities of Coulter Pharma Belgium, SA are translated at current
exchange rates, and the related revenues and expenses are translated at average
exchange rates in effect during the period. The resulting translation adjustment
is recorded in other (income) expense in the accompanying consolidated
statements of operations.
PROPERTY AND EQUIPMENT
Purchased property and equipment are stated at cost less accumulated
depreciation which is calculated using the straight-line method over the
estimated useful lives of the respective assets of three to five years.
SPONSORED RESEARCH AND LICENSE FEES
Research and development expenses paid to third parties under sponsored
research arrangements are recognized as the related services are performed,
generally ratably over the period of service. Payments for license fees are
expensed when paid.
STOCK-BASED COMPENSATION
In accordance with the provisions of Statement of Financial Accounting
Standards No. 123, "Accounting for Stock-Based Compensation" ("SFAS 123"), the
Company has elected to follow Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees" ("APB 25") and related
interpretations in accounting for its employee stock option plans. Under APB 25,
if the exercise price of the Company's employee stock options equals or exceeds
the fair value of the underlying stock on the date of grant as determined by the
Company's Board of Directors, no compensation expense is recognized.
2. CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS
As of December 31, 1995, the Company had no short-term investments and all
cash equivalents were invested in a money market mutual fund with a single
institution. The difference between cost and fair value was immaterial at
December 31, 1995. The Company's cash equivalents and short-term investments as
of September 30, 1996 are as follows (in thousands):
<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED ESTIMATED
COST GAINS LOSSES FAIR VALUE
--------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Money market funds..................... $ 1,624 $ -- $ -- $ 1,624
U.S. government and federal agency
bonds................................ 1,892 -- (3) 1,889
Commercial paper....................... 14,378 -- (21) 14,357
------- ---- -------
--
Total........................ 17,894 (24) 17,870
--
Less amounts classified as cash
equivalents.......................... (14,136 ) -- (14,136)
--
------- ---- -------
--
Total short-term
investments................ $ 3,758 $ -- $ (24) $ 3,734
======= ==== ==== =======
</TABLE>
Realized gains or losses on sales of available-for-sale securities in the
nine months ended September 30, 1996 were not significant. There were no
realized gains or losses in 1995.
F-9
<PAGE> 72
COULTER PHARMACEUTICAL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
3. PROPERTY AND EQUIPMENT
Property and equipment consists of the following (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1995 1996
------------ -------------
<S> <C> <C>
Machinery and equipment.................................... $ 66 $ 125
Furniture and fixtures..................................... 39 75
Construction in process.................................... -- 743
---- ----
105 943
Less accumulated depreciation.............................. (12) (43)
---- ----
Property and equipment, net................................ $ 93 $ 900
==== ====
</TABLE>
4. SPONSORED RESEARCH AND LICENSE AGREEMENTS
The Company has entered into numerous agreements with research
institutions, universities, and other entities for the performance of research
and development activities and for the acquisition of licenses related to those
activities. As of September 30, 1996, noncancelable commitments under these
arrangements were not material. In order to maintain certain of these licenses,
the Company must pay specified annual license fees. Certain of the licenses
provide for the payment of royalties by the Company on future product sales, if
any.
5. ACCRUED LIABILITIES
Accrued liabilities consists of the following (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1995 1996
------------ -------------
<S> <C> <C>
Accrued research and development expenses.................. $ 83 $ 3,309
Accrued clinical trial costs............................... 21 515
Other...................................................... 161 306
---- ----
Total...................................................... $265 $ 4,130
==== ====
</TABLE>
6. LEASE COMMITMENTS
The Company leases its offices under operating leases which expire on
December 31, 2000. Future minimum lease payments under all noncancelable leases
are as follows: (in thousands)
<TABLE>
<CAPTION>
OPERATING LEASES
----------------
<S> <C>
Year ending December 31, 1996 (remaining 3 months)................... $ 72
1997............................................................... 285
1998............................................................... 285
1999............................................................... 158
2000............................................................... 68
----
Total................................................................ $868
====
</TABLE>
F-10
<PAGE> 73
COULTER PHARMACEUTICAL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The above minimum payments include a lease executed in October 1996 for
additional office space.
Rent expense for the period from inception (February 16, 1995) to December
31, 1995 and for the nine months ended September 30, 1996 was $71,000 and
$122,000, respectively.
7. RELATED PARTY TRANSACTIONS
During 1995 and 1996, the Company issued loans to employees totaling
$30,000 and $455,000, respectively. Interest rates on these loans range from
6.0% to prime plus 2.0% (10.25% at September 30, 1996). The total loan amount
issued during 1996 includes imputed interest of $106,000. At December 31, 1995
and September 30, 1996, the receivable due from employee loans outstanding was
$31,000 and $349,000, respectively. These loans plus accrued interest are to be
repaid (less any amounts forgiven) at the end of their respective terms. The
loans mature at dates ranging from December 1996 to December 2000.
The Company has a continuing relationship with Coulter Corporation, an
affiliate. Coulter Corporation has supplied the B-1 antibody and certain other
services at its cost in support of the Company's ongoing development of the B-1
therapy. In addition, pursuant to a sublicense assignment agreement, the Company
has agreed to reimburse Coulter Corporation for royalties due to third parties
with respect to certain intellectual property rights sublicensed to the Company.
Coulter Corporation also has the right, in lieu of receiving cash, to purchase
additional shares of the Company's equity securities at the then current market
value of such securities with respect to the first $4.5 million payable under
the assignment agreement for royalties due upon commercial sale of product, if
any, derived from these licenses. Further, Coulter Corporation has nominated and
elected two of the Company's Board of Directors members in accordance with a
voting rights agreement which terminates upon closing of the Company's Series C
preferred stock offering. Included in research and development expense is
$291,000 and $206,000 for the period from inception (February 16, 1995) to
December 31, 1995 and for the nine months ended September 30, 1996,
respectively, related to services provided by Coulter Corporation and
reimbursements to Coulter Corporation for license fees and supplies.
8. STOCKHOLDERS' EQUITY
PREFERRED STOCK
Preferred stock authorized and outstanding at September 30, 1996 is as
follows:
<TABLE>
<CAPTION>
NUMBER OF SHARES
-------------------------- SHARES OF COMMON AGGREGATE
ISSUED AND STOCK ISSUABLE LIQUIDATION
AUTHORIZED OUTSTANDING UPON CONVERSION AMOUNT PREFERENCE
---------- ----------- ---------------- ------- -----------
(IN THOUSANDS, EXCEPT SHARES)
<S> <C> <C> <C> <C> <C>
Designated:
Series A...... 7,500,000 7,500,000 2,499,999 $ 2,500 $ 7,500
Series B...... 2,500,000 2,333,333 777,776 3,489 3,500
Series C...... 10,000,000 9,964,607 3,321,514 22,366 22,420
---------- ---------- ------- -------
20,000,000 19,797,940 6,599,289 $28,355 $33,420
========== ========== ======= =======
</TABLE>
All currently designated series of preferred stock are convertible at the
stockholders' option at any time into common stock on a three-for-one (preferred
shares-for-common shares) basis, subject to adjustment for antidilution.
Conversion is automatic immediately upon the closing of a firm commit-
F-11
<PAGE> 74
COULTER PHARMACEUTICAL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
ment underwritten public offering with gross proceeds of at least $5,000,000 and
an offering price of at least $9.00 per share (appropriately adjusted for any
stock splits, stock dividends, recapitalization or similar events) or upon the
written election of more than three-fifths of the holders of outstanding shares
of the Series A, B and C preferred stock. Each outstanding share of preferred
stock has voting rights equal to the voting rights of the common stock
obtainable upon conversion.
Holders of Series A, B and C preferred stock are entitled to noncumulative
cash dividends at the rate of 8% of the "Original Purchase Price" per annum on
each outstanding share, as adjusted, if and when declared by the Board of
Directors. The Original Issue Price of the Series A preferred stock is $1.00 and
the Series B preferred stock is $1.50 and the Series C preferred stock is $2.25.
These dividends are to be paid in advance of any distributions to common
stockholders. No dividends have been declared through September 30, 1996.
In the event of a liquidation or winding up of the Company, holders of
Series A, B and C preferred stock shall have a liquidation preference of $1.00
and $1.50 and $2.25 per share respectively, together with any declared but
unpaid dividends, over holders of common shares.
1995 EQUITY INCENTIVE PLAN
The 1995 Equity Incentive Plan (the "Plan") was adopted in 1995 by the
Board of Directors and allows for the granting of options for up to 733,333
shares of common stock to employees, consultants and directors.
Stock options granted under the Plan may be either incentive stock options
or nonqualified stock options. Incentive stock options may be granted to
employees with exercise prices not less than the fair market value at the date
of grant and nonqualified stock options may be granted at exercise prices of no
less than 85% of the fair market value of the common stock on the date of grant,
as determined by the Board of Directors. All options are to have a term not
greater than 10 years from the date of grant. Options vest as determined by the
Board of Directors, generally at the rate of 25% at the end of the first year
with the remaining balance vesting ratably over the next three years (but not
less than 20% of the total number of shares granted per year).
Activity under the Plan was as follows:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING
OPTIONS ----------------------------
AVAILABLE NUMBER OF EXERCISE PRICE
FOR GRANT SHARES PER SHARE
---------- --------- --------------
<S> <C> <C> <C>
Shares authorized............................. 333,333 -- $ --
Options granted............................... ( 220,756) 220,756 $ 0.30
Options exercised............................. -- (2,059) $ 0.30
---------- --------- --------------
Balance at December 31, 1995.................. 112,577 218,697 $ 0.30
Additional shares authorized.................. 400,000 -- $ --
Options granted............................... ( 341,121) 341,121 $ 0.30-$1.20
Options exercised............................. -- (10,215) $ 0.30-$0.75
Option canceled............................... 999 (999) $ 0.30
---------- --------- --------------
Balance at September 30, 1996................. 172,455 548,604 $ 0.30-$1.20
========= ======== ===========
</TABLE>
At September 30, 1996, options to purchase 65,148 shares were exercisable.
F-12
<PAGE> 75
COULTER PHARMACEUTICAL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The Company has reserved sufficient shares of its common stock for issuance
upon conversion of the Series A, B and C preferred stock and options to purchase
common shares which may be issued under the Plan.
The Company recorded deferred compensation expense for the difference
between the exercise price and the deemed fair value for financial statement
presentation purposes of the Company's common stock, as determined by the Board
of Directors, for common stock issued and common stock options granted in 1996.
Through September 30, 1996, such shares and options were granted at exercise
prices ranging from $0.30 to $1.20 per share. The compensation expense
aggregates to a maximum of $602,000, and is being amortized over the
corresponding vesting period of each respective share purchase or option,
generally four years. In October 1996, options to purchase an additional 225,707
shares were granted at exercise prices of $2.25 per share, resulting in
approximately $1,200,000 of additional deferred compensation.
Pro forma information regarding net income and earnings per share is
required by SFAS 123, and has been determined as if the Company had accounted
for its employee stock options under the fair value method of that Statement.
The fair value of these options was estimated at the date of grant using the
minimum value method with weighted average risk-free assumptions for 1995 and
1996 of 5.94% and 5.92%, respectively. The weighted average expected life of the
options was approximately 56 months for both periods.
For purposes of pro forma disclosures, the estimated fair value of the
options is amortized to expense over the vesting period of the options. The
Company's pro forma information follows (in thousands, except for earnings per
share information):
<TABLE>
<CAPTION>
PERIOD FROM
INCEPTION NINE MONTHS
(FEBRUARY 16, 1995) ENDED
TO DECEMBER 31, SEPTEMBER 30,
1995 1996
------------------- -------------
<S> <C> <C>
Pro forma net loss..................................... $ (2,994) $ (10,836)
Pro forma net loss per share........................... $ (0.67) $ (2.43)
</TABLE>
WARRANTS
As of September 30, 1996, warrants to purchase 498,705 shares of common
stock were outstanding at an exercise price of $9.00 per share. At September 30,
1996, the Company has reserved 498,705 shares of authorized common stock
pursuant to these warrants. All warrants are exercisable at the option of the
holders on or before dates ranging from April 19, 1996 through April 30, 2001,
or earlier upon effectiveness of an initial public offering.
9. INCOME TAXES
As of September 30, 1996, the Company had federal and state net operating
loss carryforwards of approximately $13,300,000 and $1,400,000, respectively.
The federal net operating loss carryforwards will expire at various dates
beginning on 2010 through 2011.
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amount used for income tax purposes.
F-13
<PAGE> 76
COULTER PHARMACEUTICAL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Significant components of the Company's deferred tax assets are as follows
(in thousands):
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1995 1996
------------ -------------
<S> <C> <C>
Net operating loss carryforwards........................... $ 1,000 $ 4,600
Capitalized research and development....................... 100 400
------- -------
Total deferred tax assets.................................. 1,100 5,000
Valuation allowance for deferred tax assets................ (1,100) (5,000)
------- -------
Net deferred tax assets.................................... $ -- $ --
======= =======
</TABLE>
Because of the Company's lack of earnings history, the deferred tax assets
have been fully offset by a valuation allowance. The valuation allowance
increased by $1,100,000 and $3,900,000 for the period from inception (February
16, 1995) to December 31, 1995 and for the nine months ended September 30, 1996,
respectively.
Utilization of the net operating loss may be subject to an annual
limitation due to the ownership change limitations provided by the Internal
Revenue Code of 1986. The annual limitation may result in the expiration of net
operating losses before utilization.
10. SUBSEQUENT EVENTS
On October 31, 1996, the Board of Directors approved, subject to
stockholder approval, an increase of 133,333 shares of common stock available
for grant under the 1995 Equity Incentive Plan.
In December 1996, the Company entered into a $3,827,000 equipment lease
financing facility with a financing company. The Company will make monthly
payments plus interest on amounts borrowed over the 48-month term. In connection
with this arrangement the Company issued the lender a warrant to purchase 24,666
shares of the Company's common stock at an exercise price of the lower of $9.75
per share or the per-share price of the Company's next round of equity
financing.
Subsequent to September 30, 1996 and through December 5, 1996, in addition
to the October 1996 option grants, the Company granted options to purchase
71,664 shares of common stock at $4.50 per share, resulting in approximately
$506,500 of additional deferred compensation.
Subsequent to September 30, 1996 and through December 5, 1996 options were
exercised for 25,070 shares of common stock at prices from $0.30 to $1.20. One
option for 18,333 shares of common stock at an exercise price of $0.75 was
cancelled.
On December 5, 1996, the Board of Directors approved the following actions:
- - A one-for-three reverse common stock split, subject to stockholder approval,
to become effective prior to the commencement of the offering contemplated by
this Prospectus. All common share and per share amounts have been
retroactively restated to reflect the reverse stock split.
- - The filing of a registration statement with the Securities and Exchange
Commission permitting the Company to sell shares of its common stock to the
public. If the offering is consummated under terms presently anticipated,
19,797,940 shares of currently outstanding preferred stock will automatically
convert to shares of common stock on a one-for-three basis. The pro forma
effect of these conversions has been reflected in the accompanying unaudited
pro forma balance sheet assuming they had occurred at September 30, 1996.
- - The adoption of the 1996 Employee Stock Purchase Plan under which a total of
350,000 shares of the Company's authorized but unissued common stock has been
reserved for issuance thereunder.
- - The adoption of the 1996 Equity Incentive Plan under which a total of
1,400,000 shares of the Company's authorized but unissued common stock has
been reserved for issuance thereunder. At the same meeting, the Board of
Directors determined that upon closing of the offering contemplated by this
Prospectus the 1995 Equity Incentive Plan would be terminated.
F-14
<PAGE> 77
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
The Board of Directors
Coulter Pharmaceutical, Inc.
We have audited the accompanying balance sheets of the Antibody
Therapeutics Business Operations of Coulter Corporation (the "Business") as of
December 31, 1993 and 1994, and the related statements of operations and cash
flows for the years ended December 31, 1993 and 1994 and for the period from
January 1, 1995 to February 15, 1995. These financial statements are the
responsibility of the management of the Business. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
Certain costs and expenses presented in the accompanying financial
statements represent allocations of the estimated cost of services provided to
the Antibody Therapeutics Business by Coulter Corporation. As a result, the
financial statements presented may not be indicative of the financial position
or results of operations that would have been reported had the Antibody
Therapeutics Business Operations of Coulter Corporation operated as an
independent entity.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of the Antibody Therapeutics
Business Operations of Coulter Corporation at December 31, 1993 and 1994, and
the results of its operations and its cash flows for the years ended December
31, 1993 and 1994 and for the period from January 1, 1995 to February 15, 1995,
in conformity with generally accepted accounting principles.
Palo Alto, California
November 27, 1996
F-15
<PAGE> 78
ANTIBODY THERAPEUTICS BUSINESS OPERATIONS OF
COULTER CORPORATION
BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31,
-------------
1993 1994
---- ----
<S> <C> <C>
ASSETS
Property and equipment, net................................................... $109 $135
---- ----
$109 $135
==== ====
LIABILITIES AND NET INVESTMENT
Current liabilities -- Accounts payable....................................... $124 $ 50
Commitments
Coulter Corporation's net investment in the Antibody Therapeutics (15) 85
Business Operations.........................................................
---- ----
$109 $135
==== ====
</TABLE>
See accompanying notes.
F-16
<PAGE> 79
ANTIBODY THERAPEUTICS BUSINESS OPERATIONS OF
COULTER CORPORATION
STATEMENTS OF OPERATIONS
(IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE PERIOD
YEARS ENDED FROM JANUARY 1,
DECEMBER 31, 1995 TO
------------------- FEBRUARY 15,
1993 1994 1995
------- ------- ---------------
<S> <C> <C> <C>
Operating expenses:
Research and development............................... $ 1,838 $ 2,798 $ 200
General and administrative............................. 178 288 36
------- ------- -------
Total operating expenses................................. 2,016 3,086 236
------- ------- -------
Net loss................................................. $(2,016) $(3,086) $(236)
======= ======= ============
</TABLE>
See accompanying notes.
F-17
<PAGE> 80
ANTIBODY THERAPEUTICS BUSINESS OPERATIONS OF
COULTER CORPORATION
STATEMENT OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEARS ENDED FOR THE PERIOD
DECEMBER 31, FROM
------------------- JANUARY 1, 1995 TO
1993 1994 FEBRUARY 15, 1995
------- ------- ------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss................................................ $(2,016) $(3,086) $ (236)
Adjustments to reconcile net loss to net cash provided
by (used in) operating activities:
Depreciation and amortization......................... 11 27 5
Changes in operating assets and liabilities:
Accounts payable................................... 98 (74) 62
----- ------- -----
Net cash used in operating activities................... (1,907) (3,153) (169)
----- ------- -----
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment..................... (96) (66) --
----- ------- -----
Net cash used in investing activities................... (96) (66) --
----- ------- -----
CASH FLOWS FROM FINANCING ACTIVITIES
Coulter Corporation's investment in the Antibody
Therapeutics Business................................. 2,003 3,199 169
----- ------- -----
Net cash provided by financing activities............... 2,003 3,199 169
----- ------- -----
Net increase in cash and cash equivalents............... -- -- --
Cash and cash equivalents at beginning of period........ -- -- --
----- ------- -----
Cash and cash equivalents at end of period.............. $ -- $ -- $ --
===== ======= =====
</TABLE>
See accompanying notes.
F-18
<PAGE> 81
ANTIBODY THERAPEUTICS BUSINESS OPERATIONS
OF COULTER CORPORATION
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION AND BASIS OF PRESENTATION
Coulter Corporation (the "Corporation" or "Coulter") is incorporated in the
State of Delaware and is engaged in the business of manufacturing, distributing,
financing, and servicing certain medical equipment (predominantly hematology
instruments) and related consumable products used in the health care industry,
research centers and universities. The Company's principal markets are North
American, Europe and the Far East. The Corporation has also conducted extensive
research and development programs in the area of human therapeutics as discussed
in Note 3. The antibody therapeutics research and development activities,
including various license agreements, were acquired by Coulter Pharmaceutical,
Inc. in exchange for preferred stock on February 24, 1995, pursuant to an
assignment agreement between the two parties.
The financial statements of the Antibody Therapeutics Business Operations
of Coulter Corporation (the "Business") include all direct materials and
personnel costs in addition to pro rata allocations of overhead costs from
Coulter to the Business on a basis which management believes represents a
reasonable allocation of such costs. These charges comprise Coulter's net
investment in the Business. Coulter has been performing research and development
activities under its antibody therapeutics programs for several years.
PROPERTY AND EQUIPMENT
Purchased property and equipment are stated at cost less accumulated
depreciation and amortization which is calculated using the straight-line method
over the estimated useful lives of the respective assets of three to eight
years.
INCOME TAXES
The Business operations have historically been included in the consolidated
income tax returns filed by Coulter. Income taxes in the accompanying financial
statements have been computed based on the stand-alone operations of the
Business as if such operations had filed separate income tax returns. Any net
operating loss carryforwards from the Business would not be available for use by
the Business for federal or state income tax purposes.
2. PROPERTY AND EQUIPMENT
Property and equipment consists of the following at December 31 (in
thousands):
<TABLE>
<CAPTION>
1993 1994
----- -----
<S> <C> <C>
Equipment............................................................. $ 511 $ 561
Leasehold improvements................................................ 379 289
----- -----
890 850
Less accumulated depreciation and amortization........................ (781) (715)
----- -----
Property and equipment, net........................................... $ 109 $ 135
===== =====
</TABLE>
3. SUBSEQUENT EVENT
On February 24, 1995, Coulter and Coulter Pharmaceutical, Inc. entered into
an assignment agreement. Pursuant to this agreement, Coulter received 5,000,000
shares of Series A preferred stock from Coulter Pharmaceutical, Inc.
(convertible into 1,666,666 shares of common stock) in exchange for sublicensed
rights to various license agreements and patents and confidential information
relating to the Business.
F-19
<PAGE> 82
Super-Leu-Dox, a TAP pro-drug version of the approved chemotherapeutic drug
doxorubicin, consists of a proprietary peptide of four amino acids, a
"tetrapeptide", linked to the active site on doxorubicin. Stable in circulation
and in normal tissues, Super-Leu-Dox undergoes its first activation step when
(1) an enzyme secreted by metastatic tumor cells cleaves three of the amino
acids leaving a leucine doxorubicin conjugate that is able to penetrate cells.
This activation step occurs in the immediate vicinity of tumor cells, increasing
the probability that the doxorubicin will (2) enter tumor cells as opposed to
normal cells. Once inside the cell, the leucine-doxorubicin conjugate undergoes
the second activation step when (3) the leucine is cleaved from the doxorubicin
by an intracellular enzyme found in much higher concentrations in tumor cells
than in normal cells. Once the leucine is cleaved, the doxorubicin is (4)
activated within the cell. This two-step activation process leads to a
significantly higher concentration of activated doxorubicin in tumor cells than
in normal cells. Super-Leu-Dox is in preclinical development. The Company will
be required to conduct clinical trials prior to submitting Super-Leu-Dox to
regulatory authorities for marketing approval. See "TAP Pro-drug Platform."
<PAGE> 83
APPENDIX
DESCRIPTION OF GRAPHICS
INSIDE FRONT COVER GRAPHIC DESCRIPTION
[Photograph of a computer screen displaying four medical images of a tumor,
representing a time-sequence response of a non-Hodgkin's lymphoma patient
treated with the Company's B-1 Therapy.]
INSIDE BACK COVER GRAPHIC DESCRIPTION
[Illustration of the steps involved in the activation of the Company's
Super-Leu-Dox product candidate as it moves from the blood stream into the
vicinity of, and then into, a metastatic tumor cell where doxorubicin, an
approved cytotoxic agent, is activated to destroy the tumor cell.]
<PAGE> 84
- ------------------------------------------------------------
- ------------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN
THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE
UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY TO ANY PERSON IN ANY JURISDICTION IN WHICH
SUCH OFFER OR SOLICITATION WOULD BE UNLAWFUL OR TO ANY PERSON TO WHOM IT IS
UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY OFFER OR SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE
HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY OR THAT THE INFORMATION
CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.
------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary................ 3
Risk Factors...................... 6
Use of Proceeds................... 15
Dividend Policy................... 15
Capitalization.................... 16
Dilution.......................... 17
Selected Consolidated Financial
Data............................ 18
Management's Discussion and
Analysis of Financial Condition
and Results of Operations........ 19
Business.......................... 22
Management........................ 43
Certain Transactions.............. 51
Principal Stockholders............ 53
Description of Capital Stock...... 55
Shares Eligible for Future Sale... 57
Underwriting...................... 59
Legal Matters..................... 60
Experts........................... 60
Additional Information............ 61
Index to Consolidated Financial
Statements...................... F-1
</TABLE>
------------------
UNTIL , 1997 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS),
ALL DEALERS EFFECTING TRANSACTIONS IN THE COMMON STOCK, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATIONS OF DEALERS TO DELIVER A PROSPECTUS
WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------------------------------------------------------------
[ ] SHARES
LOGO
COMMON STOCK
-----------------------
PROSPECTUS
-----------------------
HAMBRECHT & QUIST
ALEX.BROWN & SONS
INCORPORATED
PACIFIC GROWTH EQUITIES, INC.
, 1997
- ------------------------------------------------------------
- ------------------------------------------------------------
<PAGE> 85
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth all expenses, other than the underwriting
discounts and commissions, payable by the Registrant in connection with the sale
of the Common Stock being registered. All the amounts shown are estimates except
for the registration fee, the NASD filing fee and the Nasdaq National Market
application fee.
<TABLE>
<S> <C>
SEC Registration fee..................................................... $ 9,091
NASD filing fee..........................................................
Nasdaq National Market application fee...................................
Blue sky qualification fee and expenses..................................
Printing and engraving expenses..........................................
Legal fees and expenses..................................................
Accounting fees and expenses.............................................
Transfer agent and registrar fees........................................
Miscellaneous fees.......................................................
----------
Total.......................................................... $
==========
</TABLE>
ITEM 14. INDEMNIFICATION OF OFFICERS AND DIRECTORS.
Under Section 145 of the Delaware General Corporation Law, the Registrant
has broad powers to indemnify its directors and officers against liabilities
they may incur in such capacities, including liabilities under the Securities
Act of 1933, as amended (the "Securities Act"). The Registrant's Bylaws also
provide that the Registrant will indemnify its directors and executive officers
and may indemnify its other officers, employees and other agents to the fullest
extent not prohibited by Delaware law.
The Registrant's Certificate of Incorporation provides for the elimination
of liability for monetary damages for breach of the directors' fiduciary duty of
care to the Registrant and its stockholders. These provisions do not eliminate
the directors' duty of care and, in appropriate circumstances, equitable
remedies such as injunctive or other forms of non-monetary relief will remain
available under Delaware law. In addition, each director will continue to be
subject to liability for breach of the director's duty of loyalty to the
Registrant, for acts or omissions not in good faith or involving intentional
misconduct, for knowing violations of law, for any transaction from which the
director derived an improper personal benefit, and for payment of dividends or
approval of stock repurchases or redemptions that are unlawful under Delaware
law. The provision does not affect a director's responsibilities under any other
laws, such as the federal securities laws or state or federal environmental
laws.
The Registrant has entered into agreements with its directors and executive
officers that require the Registrant to indemnify such persons against expenses,
judgments, fines, settlements and other amounts actually and reasonably incurred
(including expenses of a derivative action) in connection with any proceeding,
whether actual or threatened, to which any such person may be made a party by
reason of the fact that such person is or was a director or officer of the
Registrant or any of its affiliated enterprises, provided such person acted in
good faith and in a manner such person reasonably believed to be in or not
opposed to the best interests of the Registrant and, with respect to any
criminal proceeding, had no reasonable cause to believe his or her conduct was
unlawful. The indemnification agreements also set forth certain procedures that
will apply in the event of a claim for indemnification thereunder.
II-1
<PAGE> 86
The Underwriting Agreement filed as Exhibit 1.1 to this Registration
Statement provides for indemnification by the Underwriters of the Registrant and
its officers and directors for certain liabilities arising under the Securities
Act or otherwise.
The Registrant intends to purchase a general liability insurance policy
which covers certain liabilities of directors and officers of the Registrant
arising out of claims based on acts or omissions in their capacity as directors
or officers.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
Since its inception in February 1995, the Registrant has sold and issued
the following unregistered securities:
(1) In February 1995, the Registrant sold and issued an aggregate of
7,500,000 shares of Series A Preferred Stock to two accredited investors
for cash in the aggregate amount of $2,500,000 and the assignment of
certain intellectual property rights.
(2) In August 1995, the Registrant sold and issued an aggregate of
2,333,333 shares of Series B Preferred Stock to six accredited investors
for cash in the aggregate amount of $3,500,000.
(3) In March 1996, the Registrant sold and issued 1,200,000 shares of
Common Stock to one accredited investor in exchange for a promissory note
in the amount of $180,000.
(4) In April 1996, the Registrant sold and issued an aggregate of
9,964,607 shares of Series C Preferred Stock and Warrants to purchase
1,496,182 shares of Common Stock to a group of accredited investors for
$22,420,363.74.
(5) From March 1995 to December 6, 1996, the Registrant granted
incentive stock options and nonstatutory stock options to employees,
directors and consultants covering an aggregate of 2,362,803 shares of the
Registrant's Common Stock, at a weighted average exercise price of $.36 per
share. As of December 6, 1996, the Registrant has sold 112,038 shares of
its Common Stock to employees, directors and consultants pursuant to
exercise of stock options.
(6) In December 1996, the Registrant issued a warrant to purchase
74,000 shares of Common Stock to one accredited investor in connection with
an equipment lease financing.
The share amounts set forth above do not take into account the
one-for-three reverse stock split that will be effected prior to the closing of
this offering.
The sale and issuance of securities in the transactions described in
paragraphs (1), (2), (4) and (6) above were deemed to be exempt from
registration under the Securities Act by virtue of Section 4(2) adopted
thereunder. The purchasers in each case represented their intention to acquire
the securities for investment only and not with a view to distribution thereof.
Appropriate legends are affixed to the stock certificates or warrants issued in
such transactions. All recipients either received adequate information about the
Registrant or had access, through employment or other relationships, to such
information.
The sale and issuance of securities in the transactions described in
paragraph (3) and (5) above were deemed to be exempt from registration under the
Securities Act by virtue of Rule 701 promulgated thereunder, in that they were
issued either pursuant to written compensatory benefit plans or pursuant to a
written contract relating to compensation, as provided by Rule 701.
II-2
<PAGE> 87
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- ------ ----------------------------------------------------------------------------------
<C> <S>
1.1 * Form of Underwriting Agreement.
3.1 Amended and Restated Certificate of Incorporation of the Registrant.
3.2 Form of Amendment to Certificate of Incorporation to be filed prior to the
offering.
3.3 Form of Amended and Restated Certificate of Incorporation of the Registrant to be
filed upon the closing of the offering.
3.4 Bylaws of the Registrant.
3.5 Bylaws of the Registrant to be effective upon the closing of the offering.
4.1 Reference is made to Exhibits 3.1 through 3.5
4.2 * Specimen stock certificate.
4.3 Amended and Restated Investors' Rights Agreement, dated April 18, 1996, between
the Registrant and certain investors.
4.4 Warrant Agreement to purchase Common Stock, dated December 6, 1996, between the
Registrant and Lease Management Services, Inc.
5.1 * Opinion of Cooley Godward LLP.
10.1 Form of Indemnity Agreement to be entered into between the Registrant and its
officers and directors.
10.2 1996 Equity Incentive Stock Option Plan.
10.3 Form of Equity Incentive Stock Option.
10.4 Form of Nonstatutory Stock Option.
10.5 1996 Employee Stock Purchase Plan.
10.6 + Assignment Agreement, dated February 24, 1995, between the Registrant, Coulter
Corporation and certain investors.
10.7 + Manufacturing Agreement, dated August 20, 1996, between Lonza Biologics PLC and
the Registrant.
10.8 Equipment Lease Financing Agreement, dated December 6, 1996, between the
Registrant and Lease Management Services, Inc.
11.1 Statement regarding computation of loss per share.
21.1 Subsidiaries of the Registrant.
23.1 Consent of Ernst & Young LLP. Reference is made to page II-6.
23.2 * Consent of Cooley Godward LLP. Reference is made to Exhibit 5.1.
24.1 Power of Attorney. Reference is made to page II-5.
27.1 Financial Data Schedule
</TABLE>
- ------------------------------
* To be filed by amendment.
+ Portions omitted pursuant to a request of confidentiality filed separately
with the Commission.
(b) FINANCIAL STATEMENT SCHEDULES.
All other schedules are omitted because they are not required, they are not
applicable or the information is already included in the financial statements or
notes thereto.
II-3
<PAGE> 88
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes to provide the Underwriters at
the closing specified in the Underwriting Agreement certificates in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers, and controlling persons of the
Registrant pursuant to the provisions described in Item 14 or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer, or controlling
person of the Registrant in the successful defense of any action, suit, or
proceeding) is asserted by such director, officer, or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
The undersigned Registrant hereby undertakes that: (1) for purposes of
determining any liability under the Securities Act, the information omitted from
the form of prospectus as filed as part of the registration statement in
reliance upon Rule 430A and contained in the form of prospectus filed by the
Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act
shall be deemed to be part of the registration statement as of the time it was
declared effective, and (2) for the purpose of determining any liability under
the Securities Act, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to the
securities offered therein, and this offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
II-4
<PAGE> 89
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Palo Alto, County of
Santa Clara, State of California, on the eleventh day of December, 1996.
COULTER PHARMACEUTICAL, INC.
By: /s/ Michael F. Bigham
------------------------------------
Michael F. Bigham
President and Chief Executive
Officer
(Principal Executive Officer)
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints Michael
F. Bigham and William G. Harris as his or her true and lawful attorney-in-fact
and agent, each acting alone, with full power of substitution and
resubstitution, for him or her and in his or her name, place and stead, in any
and all capacities, to sign any or all amendments (including post-effective
amendments) to the Registration Statement on Form S-1 and any Registration
Statements filed pursuant to Rule 462(b), and to file the same, with all
exhibits thereto, and all documents in connection therewith, with the Securities
and Exchange Commission, granting unto said attorney-in-fact and agent, full
power and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he or she might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agent, or his or her substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------- ---------------------------------- ------------------
<C> <S> <C>
/s/ MICHAEL F. BIGHAM President, Chief Executive Officer December 11, 1996
- ------------------------------------- and Director (Principal
Michael F. Bigham Executive Officer)
Vice President and Chief Financial December 11, 1996
/s/ WILLIAM G. HARRIS Officer (Principal Financial and
- ------------------------------------- Accounting Officer)
William G. Harris
/s/ BRIAN ATWOOD Director December 11, 1996
- -------------------------------------
Brian Atwood
/s/ DONALD L. LUCAS Director December 11, 1996
- -------------------------------------
Donald L. Lucas
/s/ ROBERT MOMSEN Director December 11, 1996
- -------------------------------------
Robert Momsen
/s/ ARNOLD ORONSKY Director December 11, 1996
- -------------------------------------
Arnold Oronsky
/s/ SUE VAN Director December 11, 1996
- -------------------------------------
Sue Van
</TABLE>
II-5
<PAGE> 90
EXHIBIT 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" and to
the use of our report dated October 31, 1996 (except for Note 10, as to which
the date is December , 1996) with respect to the consolidated financial
statements of Coulter Pharmaceutical, Inc. and our report dated November 27,
1996 with respect to the Antibody Therapeutics Business Operations of Coulter
Corporation, in the Registration Statement (Form S-1) and related Prospectus of
Coulter Pharmaceutical, Inc. for the registration of shares of its common stock.
Ernst & Young LLP
Palo Alto, California
December , 1996
- --------------------------------------------------------------------------------
The foregoing consent is in the form that will be signed upon completion of
the one-for-three reverse common stock split as described in Note 10 to the
consolidated financial statements of Coulter Pharmaceutical, Inc.
Palo Alto, California
December 9, 1996
II-6
<PAGE> 91
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION OF DOCUMENT PAGE
- ------- ----------------------------------------------------------------------
<C> <S> <C>
1.1* Form of Underwriting Agreement........................................
3.1 Amended and Restated Certificate of Incorporation of the Registrant...
3.2 Form of Amendment to Certificate of Incorporation to be filed prior to
the offering..........................................................
3.3 Form of Amended and Restated Certificate of Incorporation of the
Registrant to be filed upon the closing of the offering...............
3.4 Bylaws of the Registrant..............................................
3.5 Bylaws of the Registrant to be effective upon the closing of the
offering..............................................................
4.1 Reference is made to Exhibits 3.1 through 3.5.........................
4.2* Specimen stock certificate............................................
4.3 Amended and Restated Investors' Rights Agreement, dated April 18,
1996, between the Registrant and certain investors....................
4.4 Warrant Agreement to purchase Common Stock, dated December 6, 1996,
between the Registrant and Lease Management Services, Inc.............
5.1* Opinion of Cooley Godward LLP.........................................
10.1 Form of Indemnity Agreement to be entered into between the Registrant
and its officers and directors........................................
10.2 1996 Equity Incentive Stock Option Plan...............................
10.3 Form of Equity Incentive Stock Option.................................
10.4 Form of Nonstatutory Stock Option.....................................
10.5 1996 Employee Stock Purchase Plan.....................................
10.6 + Assignment Agreement, dated February 24, 1995, between the Registrant,
Coulter Corporation and certain investors.............................
10.7 + Manufacturing Agreement, dated August 20, 1996, between Lonza
Biologics PLC and the Registrant......................................
10.8 Equipment Lease Financing Agreement, dated December 6, 1996, between
the Registrant and Lease Management Services, Inc.....................
11.1 Statement regarding computation of loss per share.....................
21.1 Subsidiaries of the Registrant........................................
23.1 Consent of Ernst & Young LLP. Reference is made to page II-6..........
23.2* Consent of Cooley Godward LLP. Reference is made to Exhibit 5.1.......
24.1 Power of Attorney. Reference is made to page II-5.....................
27.1 Financial Data Schedule...............................................
</TABLE>
- ------------------------------
* To be filed by amendment.
+ Portions omitted pursuant to a request of confidentiality filed separately
with the Commission.
<PAGE> 1
EXHIBIT 3.1
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF
COULTER PHARMACEUTICAL, INC.
Arnold Oronsky and Robert Momsen hereby certify that:
1. The date of filing the original Certificate of Incorporation of this
corporation with the Secretary of State of the State of Delaware is February 16,
1995.
2. They are the duly elected and acting Chief Executive Officer and
Secretary, respectively, of Coulter Pharmaceutical, Inc., a Delaware
corporation.
3. The Certificate of Incorporation of this corporation is hereby amended
and restated to read as follows:
I.
The name of the Corporation is Coulter Pharmaceutical, Inc. (the
"Corporation" or the "Company").
II.
The address of the registered office of the Corporation in the State of
Delaware is:
The Prentice-Hall Corporation System, Inc.
1013 Centre Road
Wilmington, DE 19805
County of New Castle
The name of the Corporation's registered agent at said address is The
Prentice-Hall Corporation System, Inc.
III.
The purpose of the Corporation is to engage in any lawful act or activity
for which a corporation may be organized under the General Corporation Law of
the State of Delaware.
IV.
A. This Corporation is authorized to issue two classes of stock to be
designated, respectively, "Common Stock" and "Preferred Stock." The total number
of shares which the corporation is authorized to issue is Forty-Five Million
(45,000,000) shares, Twenty-Five Million (25,000,000) shares of which shall be
Common Stock (the "Common Stock") and Twenty Million (20,000,000) shares of
which shall be Preferred Stock (the "Preferred Stock"). The Preferred
1.
<PAGE> 2
Stock shall have a par value of one-tenth of one cent ($.001) per share and the
Common Stock shall have a par value of one-tenth of one cent ($.001) per share.
B. The number of authorized shares of Common Stock may be increased or
decreased (but not below the number of shares of Common Stock then outstanding)
by the affirmative vote of the holders of a majority of the stock of the
Corporation (voting together on an as-if- converted basis).
C. The Preferred Stock may be issued from time to time in one or more
series. Except as provided in this Article IV, the Board of Directors is hereby
authorized, within the limitations and restrictions stated in this Certificate,
to fix or alter the dividend rights, dividend rate, conversion rights, voting
rights, rights and terms of redemption (including sinking fund provisions), the
redemption price or prices, the liquidation preferences of any wholly unissued
series of Preferred Stock, and the number of shares constituting any such series
and the designation thereof, or any of them; and to increase or decrease the
number of shares of any series subsequent to the issue of shares of that series,
but not below the number of shares of such series then outstanding. In case the
number of shares of any series shall be so decreased, the shares constituting
such decrease shall resume the status which they had prior to the adoption of
the resolution originally fixing the number of shares of such series.
D. Seven Million Five Hundred Thousand (7,500,000) of the authorized
shares of Preferred Stock are hereby designated "Series A Preferred Stock" (the
"Series A Preferred"). Two Million Five Hundred Thousand (2,500,000) of the
authorized shares of Preferred Stock are hereby designated "Series B Preferred
Stock" (the "Series B Preferred"). Ten Million (10,000,000) of the authorized
shares of Preferred Stock are hereby designated "Series C Preferred Stock" (the
"Series C Preferred"). The Series A Preferred, Series B Preferred and Series C
Preferred are hereinafter collectively referred to as the Series Preferred.
E. The rights, preferences, privileges, restrictions and other matters
relating to the Series Preferred are as follows:
1. Dividend Rights.
(a) Holders of Series Preferred, in preference to the holders of any
other stock of the Company ("Junior Stock"), shall be entitled to receive, when
and as declared by the Board of Directors, but only out of funds that are
legally available therefor, cash dividends at the rate of eight percent (8%) of
the "Original Issue Price" per annum on each outstanding share of Series
Preferred (as adjusted for any stock dividends, combinations or splits with
respect to such shares) payable out of funds legally available therefor. The
Original Issue Price of the Series A Preferred shall be one dollar ($1.00). The
Original Issue Price of the Series B Preferred shall be one dollar and fifty
cents ($1.50). The Original Issue Price of the Series C Preferred shall be two
dollars and twenty five cents ($2.25). Such dividends shall be payable only
when, as and if declared by the Board of Directors and shall be non-cumulative
from the Original Issue Date of the Series Preferred (as defined in Section 4(e)
below).
2.
<PAGE> 3
(b) So long as any shares of Series Preferred shall be outstanding,
no dividend, whether in cash or property, shall be paid or declared, nor shall
any other distribution be made, on any Junior Stock, nor shall any shares of any
Junior Stock of the Company be purchased, redeemed, or otherwise acquired for
value by the Company (except for acquisitions of Common Stock by the Company
pursuant to agreements which permit the Company to repurchase such shares upon
termination of services to the Company or in exercise of the Company's right of
first refusal upon a proposed transfer) until all dividends (set forth in
Section 1(a) above) on the Series Preferred shall have been paid or declared and
set apart. In the event dividends are paid on any share of Common Stock, an
additional dividend shall be paid with respect to all outstanding shares of
Series Preferred in an amount equal per share (on an as-if-converted to Common
Stock basis) to the amount paid or set aside for each share of Common Stock. The
provisions of this Section 1(b) shall not, however, apply to (i) a dividend
payable in Common Stock, (ii) the acquisition of shares of any Junior Stock in
exchange for shares of any other Junior Stock, or (iii) any repurchase of any
outstanding securities of the Company that is unanimously approved by the
Company's Board of Directors.
2. Voting Rights.
(a) General Rights. Except as otherwise provided herein or as
required by law, the Series Preferred shall be voted equally with the shares of
the Common Stock of the Company and not as a separate class, at any annual or
special meeting of shareholders of the Company, and may act by written consent
in the same manner as the Common Stock, in either case upon the following basis:
each holder of shares of Series Preferred shall be entitled to such number of
votes as shall be equal to the whole number of shares of Common Stock into which
such holder's aggregate number of shares of Series Preferred are convertible
(pursuant to Section 4 hereof) immediately after the close of business on the
record date fixed for such meeting or the effective date of such written
consent.
(b) Separate Vote of Series Preferred. For so long as at least
2,000,000 shares of Series Preferred remain outstanding (subject to adjustment
for any stock split, reverse stock split or similar event affecting the Series
Preferred), in addition to any other vote or consent required herein or by law,
the vote or written consent of the holders of at least sixty-six and two-thirds
percent (66-2/3%) of the outstanding Series Preferred shall be necessary for
effecting or validating the following actions:
(i) Any amendment, alteration, or repeal of any provision of
the Certificate or the Bylaws of the Company (including any filing of a
Certificate of Determination), that affects adversely the voting powers,
preferences, or other special rights or privileges, qualifications, limitations,
or restrictions of the Series Preferred;
(ii) Any increase or decrease (other than by redemption or
conversion) in the authorized number of shares of Common or Preferred Stock;
(iii) Any authorization or any increase, whether by
reclassification or otherwise, in the authorized amount of any class of shares
or series of equity securities of the
3.
<PAGE> 4
Company ranking on a parity with or senior to the Series Preferred in right of
redemption, liquidation preference, voting, dividends or conversion;
(iv) Any redemption, repurchase, payment of dividends or other
distributions with respect to Junior Stock (except for acquisitions of Common
Stock by the Company pursuant to agreements which permit the Company to
repurchase such shares upon termination of services to the Company or in
exercise of the Company's right of first refusal upon a proposed transfer);
(v) Any agreement by the Company or its stockholders regarding
an Asset Transfer or Acquisition (each as defined in Section 3(c));
(vi) Any increase or decrease in the authorized number of
members of the Company's Board of Directors;
(vii) Any action that results in the payment or declaration of
any dividend on any shares of Common Stock or Preferred Stock; or
(viii) Any voluntary dissolution or liquidation of the
Company.
(c) Election of Board of Directors. For so long as at least
2,000,000 shares of Series Preferred remain outstanding (subject to adjustment
for any stock split, reverse stock split or similar event affecting the Series
Preferred) and the authorized size of the Company's Board of Directors is five
(5) or more, (i) the holders of Series A Preferred, voting as a separate class,
shall be entitled to elect one (1) member of the Company's Board of Directors at
each meeting or pursuant to each consent of the Company's shareholders for the
election of directors, and to remove from office such director and to fill any
vacancy caused by the resignation, death or removal of such director; (ii) the
holders of Series B Preferred, voting as a separate class, shall be entitled to
elect one (1) member of the Company's Board of Directors at each meeting or
pursuant to each consent of the Company's shareholders for the election of
directors, and to remove from office such director and to fill any vacancy
caused by the resignation, death or removal of such director; (iii) the holders
of Series C Preferred, voting as a separate class, shall be entitled to elect
one (1) member of the Company's Board of Directors at each meeting or pursuant
to each consent of the Company's shareholders for the election of directors, and
to remove from office such director and to fill any vacancy caused by the
resignation, death or removal of such director; and (iv) the holders of the
Series Preferred and Common Stock, voting equally and not as a separate class,
shall be entitled to elect any remaining members of the Board of Directors at
each meeting or pursuant to each consent of the Company's shareholders for the
election of directors, and to remove from office such directors and to fill any
vacancy caused by the resignation, death or removal of such directors.
4.
<PAGE> 5
3. Liquidation Rights.
(a) Upon any liquidation, dissolution, or winding up of the Company,
whether voluntary or involuntary, before any distribution or payment shall be
made to the holders of any Junior Stock, the holders of Series Preferred shall
be entitled to be paid out of the assets of the Company an amount per share of
Series Preferred equal to the sum of (i) Original Issue Price for each such
series of preferred stock and (ii) all declared and unpaid dividends on such
shares of Series Preferred for each share of Series Preferred held by such
holders.
(b) After the payment of the full liquidation preference of the
Series Preferred as set forth in Section 3(a) above, the remaining assets of the
Company legally available for distribution, if any, shall be distributed ratably
to the holders of the Common Stock.
(c) The following events shall be considered a liquidation under
Section 3(a):
(i) any consolidation or merger of the Company with or into
any other corporation or other entity or person, or any other corporate
reorganization, in which the stockholders of the Company immediately prior to
such consolidation, merger or reorganization, own less than 50% of the Company's
voting power immediately after such consolidation, merger or reorganization, or
any transaction or series of related transactions in which in excess of fifty
percent (50%) of the Company's voting power is transferred (an "Acquisition");
or
(ii) a sale, lease or other disposition of all or
substantially all of the assets of the Company (an "Asset Transfer").
(d) If, upon any liquidation, distribution, or winding up, the
assets of the Company shall be insufficient to make payment in full to all
holders of Series Preferred, then such assets shall be distributed among the
holders of Series Preferred at the time outstanding, ratably in proportion to
the full amounts to which they would otherwise be respectively entitled.
4. Conversion Rights.
The holders of the Series Preferred shall have the following rights
with respect to the conversion of the Series Preferred into shares of Common
Stock:
(a) Optional Conversion. Subject to and in compliance with the
provisions of this Section 4, any shares of Series Preferred may, at the option
of the holder, be converted at any time into fully-paid and nonassessable shares
of Common Stock. The number of shares of Common Stock to which a holder of
Series Preferred shall be entitled upon conversion shall be the product obtained
by multiplying the "Conversion Rate" then in effect for such series of Preferred
Stock (determined as provided in Section 4(b)) by the number of shares of Series
Preferred being converted.
(b) Conversion Rate. The conversion rate in effect at any time for
conversion of the Series A Preferred (the "Series A Conversion Rate") shall be
the quotient obtained by dividing the Original Issue Price of the Series A
Preferred plus any accumulated and unpaid
5.
<PAGE> 6
dividends thereon, by the "Series A Conversion Price," calculated as provided in
Section 4(c). The conversion rate in effect at any time for conversion of the
Series B Preferred (the "Series B Conversion Rate") shall be the quotient
obtained by dividing the Original Issue Price of the Series B Preferred plus any
accumulated and unpaid dividends thereon, by the "Series B Conversion Price",
calculated as provided in Section 4(c). The conversion rate in effect at any
time for conversion of the Series C Preferred (the "Series C Conversion Rate")
shall be the quotient obtained by dividing the Original Issue Price of the
Series C Preferred plus any accumulated and unpaid dividends thereon, by the
"Series C Conversion Price", calculated as provided in Section 4(c).
(c) Conversion Price. The conversion price for the Series A
Preferred shall initially be the Original Issue Price of the Series A Preferred
(the "Series A Conversion Price"). Such initial Series A Conversion Price shall
be adjusted from time to time in accordance with this Section 4. All references
to the Series A Conversion Price herein shall mean the Series A Conversion Price
as so adjusted. The conversion price for the Series B Preferred shall initially
be the Original Issue Price of the Series B Preferred (the "Series B Conversion
Price"). Such initial Series B Conversion Price shall be adjusted from time to
time in accordance with this Section 4. All references to the Series B
Conversion Price herein shall mean the Series B Conversion Price as so adjusted.
The conversion price for the Series C Preferred shall initially be the Original
Issue Price of the Series C Preferred (the "Series C Conversion Price"). Such
initial Series C Conversion Price shall be adjusted from time to time in
accordance with this Section 4. All references to the Series C Conversion Price
herein shall mean the Series C Conversion Price as so adjusted. Those sections
of this amended and restated Certificate of Incorporation which refer to
adjustment of the Conversion Price shall apply independently to the Series A
Conversion Price, the Series B Conversion Price and the Series C Conversion
Price.
(d) Mechanics of Conversion. Each holder of Series Preferred who
desires to convert the same into shares of Common Stock pursuant to this Section
4 shall surrender the certificate or certificates therefor, duly endorsed, at
the office of the Company or any transfer agent for the Series Preferred, and
shall give written notice to the Company at such office that such holder elects
to convert the same. Such notice shall state the number of shares of Series
Preferred being converted. Thereupon, the Company shall promptly issue and
deliver at such office to such holder a certificate or certificates for the
number of shares of Common Stock to which such holder is entitled and shall
promptly pay in cash or, to the extent sufficient funds are not then legally
available therefor, in Common Stock (at the Common Stock's fair market value
determined by the Board of Directors as of the date of such conversion), any
declared and unpaid dividends on the shares of Series Preferred being converted.
Such conversion shall be deemed to have been made at the close of business on
the date of such surrender of the certificates representing the shares of Series
Preferred to be converted, and the person entitled to receive the shares of
Common Stock issuable upon such conversion shall be treated for all purposes as
the record holder of such shares of Common Stock on such date. As necessary, the
Company shall promptly issue and deliver to such converting holder a certificate
or certificates representing the balance of any shares of Series Preferred not
being converted.
6.
<PAGE> 7
(e) Adjustment for Stock Splits and Combinations. If the Company
shall at any time or from time to time after the date that the first share of
Series Preferred is issued (the "Original Issue Date") effect a subdivision of
the outstanding Common Stock, the Conversion Price in effect immediately before
that subdivision shall be proportionately decreased. Conversely, if the Company
shall at any time or from time to time after the Original Issue Date combine the
outstanding shares of Common Stock into a smaller number of shares, the
Conversion Price in effect immediately before the combination shall be
proportionately increased. Any adjustment under this Section 4(e) shall become
effective at the close of business on the date the subdivision or combination
becomes effective.
(f) Adjustment for Common Stock Dividends and Distributions. If the
Company at any time or from time to time after the Original Issue Date makes, or
fixes a record date for the determination of holders of Common Stock entitled to
receive, a dividend or other distribution payable in additional shares of Common
Stock, in each such event the Conversion Price that is then in effect shall be
decreased as of the time of such issuance or, in the event such record date is
fixed, as of the close of business on such record date, by multiplying the
Conversion Price then in effect by a fraction (1) the numerator of which is the
total number of shares of Common Stock issued and outstanding immediately prior
to the time of such issuance or the close of business on such record date, and
(2) the denominator of which is the total number of shares of Common Stock
issued and outstanding immediately prior to the time of such issuance or the
close of business on such record date plus the number of shares of Common Stock
issuable in payment of such dividend or distribution; provided, however, that if
such record date is fixed and such dividend is not fully paid or if such
distribution is not fully made on the date fixed therefor, the Conversion Price
shall be recomputed accordingly as of the close of business on such record date
and thereafter the Conversion Price shall be adjusted pursuant to this Section
4(f) to reflect the actual payment of such dividend or distribution.
(g) Adjustments for Other Dividends and Distributions. If the
Company at any time or from time to time after the Original Issue Date makes, or
fixes a record date for the determination of holders of Common Stock entitled to
receive, a dividend or other distribution payable in securities of the Company
other than shares of Common Stock, in each such event provision shall be made so
that the holders of the Series Preferred shall receive upon conversion thereof,
in addition to the number of shares of Common Stock receivable thereupon, the
amount of other securities of the Company which they would have received had
their Series Preferred been converted into Common Stock on the date of such
event and had they thereafter, during the period from the date of such event to
and including the conversion date, retained such securities receivable by them
as aforesaid during such period, subject to all other adjustments called for
during such period under this Section 4 with respect to the rights of the
holders of the Series Preferred or with respect to such other securities by
their terms.
(h) Adjustment for Reclassification, Exchange and Substitution. If
at any time or from time to time after the Original Issue Date, the Common Stock
issuable upon the conversion of the Series Preferred is changed into the same or
a different number of shares of any class or classes of stock, whether by
recapitalization, reclassification or otherwise (other than an Acquisition or
Asset Transfer as defined in Section 3(c) or a subdivision or combination of
shares
7.
<PAGE> 8
or stock dividend or a reorganization, merger, consolidation or sale of assets
provided for elsewhere in this Section 4), in any such event each holder of
Series Preferred shall have the right thereafter to convert such stock into the
kind and amount of stock and other securities and property receivable upon such
recapitalization, reclassification or other change by holders of the maximum
number of shares of Common Stock into which such shares of Series Preferred
could have been converted immediately prior to such recapitalization,
reclassification or change, all subject to further adjustment as provided herein
or with respect to such other securities or property by the terms thereof.
(i) Reorganizations, Mergers, Consolidations or Sales of Assets. If
at any time or from time to time after the Original Issue Date, there is a
capital reorganization of the Common Stock (other than an Acquisition or Asset
Transfer as defined in Section 3(c)), or recapitalization, subdivision,
combination, reclassification, exchange or substitution of shares provided for
elsewhere in this Section 4, as a part of such capital reorganization, provision
shall be made so that the holders of the Series Preferred shall thereafter be
entitled to receive upon conversion of the Series Preferred the number of shares
of stock or other securities or property of the Company to which a holder of the
number of shares of Common Stock deliverable upon conversion would have been
entitled on such capital reorganization, subject to adjustment in respect of
such stock or securities by the terms thereof. In any such case, appropriate
adjustment shall be made in the application of the provisions of this Section 4
with respect to the rights of the holders of Series Preferred after the capital
reorganization to the end that the provisions of this Section 4 (including
adjustment of the Conversion Price then in effect and the number of shares
issuable upon conversion of the Series Preferred) shall be applicable after that
event and be as nearly equivalent as practicable.
(j) Sale of Shares Below Conversion Price.
(1) Subject to subsection (j)(5) below, if at any time or from
time to time after the Original Issue Date, the Company issues or sells, or is
deemed by the express provisions of this subsection (j) to have issued or sold,
Additional Shares of Common Stock (as hereinafter defined), other than as a
dividend or other distribution on any class of stock as provided in Section 4(f)
above, and other than a subdivision or combination of shares of Common Stock as
provided in Section 4(e) above, for an Effective Price (as hereinafter defined)
less than the then effective Conversion Price, then and in each such case the
then existing Conversion Price shall be reduced, as of the opening of business
on the date of such issue or sale, to a price determined by multiplying the
Conversion Price by a fraction (i) the numerator of which shall be (A) the
number of shares of Common Stock deemed outstanding (as defined below)
immediately prior to such issue or sale, plus (B) the number of shares of Common
8.
<PAGE> 9
Stock into which the then outstanding shares of Series Preferred could be
converted if fully converted on the day immediately preceding the given date,
and (C) the number of shares of Common Stock which could be obtained through the
exercise or conversion of all other rights, options and convertible securities
on the day immediately preceding the given date.
(2) For the purpose of making any adjustment required under
this Section 4(j), the consideration received by the Company for any issue or
sale of securities shall (A) to the extent it consists of cash, be computed at
the net amount of cash received by the Company after deduction of any
underwriting or similar commissions, compensation or concessions paid or allowed
by the Company in connection with such issue or sale but without deduction of
any expenses payable by the Company, (B) to the extent it consists of property
other than cash, be computed at the fair value of that property as determined in
good faith by the Board of Directors, and (C) if Additional Shares of Common
Stock, Convertible Securities (as hereinafter defined) or rights or options to
purchase either Additional Shares of Common Stock or Convertible Securities are
issued or sold together with other stock or securities or other assets of the
Company for a consideration which covers both, be computed as the portion of the
consideration so received that may be reasonably determined in good faith by the
Board of Directors to be allocable to such Additional Shares of Common Stock,
Convertible Securities or rights or options.
(3) For the purpose of the adjustment required under this
Section 4(j), if the Company issues or sells any rights or options for the
purchase of, or stock or other securities convertible into, Additional Shares of
Common Stock (such convertible stock or securities being herein referred to as
"Convertible Securities") and if the Effective Price of such Additional Shares
of Common Stock is less than the Conversion Price, in each case the Company
shall be deemed to have issued at the time of the issuance of such rights or
options or Convertible Securities the maximum number of Additional Shares of
Common Stock issuable upon exercise or conversion thereof and to have received
as consideration for the issuance of such shares an amount equal to the total
amount of the consideration, if any, received by the Company for the issuance of
such rights or options or Convertible Securities, plus, in the case of such
rights or options, the minimum amounts of consideration, if any, payable to the
Company upon the exercise of such rights or options, plus, in the case of
Convertible Securities, the minimum amounts of consideration, if any, payable to
the Company (other than by cancellation of liabilities or obligations evidenced
by such Convertible Securities) upon the conversion thereof; provided that if in
the case of Convertible Securities the minimum amounts of such consideration
cannot be ascertained, but are a function of antidilution or similar protective
clauses, the Company shall be deemed to have received the minimum amounts of
consideration without reference to such clauses; provided further that if the
minimum amount of consideration payable to the Company upon the exercise or
conversion of rights, options or Convertible Securities is reduced over time or
on the occurrence or non-occurrence of specified events other than by reason of
antidilution adjustments, the Effective Price shall be recalculated using the
figure to which such minimum amount of consideration is reduced; provided
further that if the minimum amount of consideration payable to the Company upon
the exercise or conversion of
9.
<PAGE> 10
such rights, options or Convertible Securities is subsequently increased, the
Effective Price shall be again recalculated using the increased minimum amount
of consideration payable to the Company upon the exercise or conversion of such
rights, options or Convertible Securities. No further adjustment of the
Conversion Price, as adjusted upon the issuance of such rights, options or
Convertible Securities, shall be made as a result of the actual issuance of
Additional Shares of Common Stock on the exercise of any such rights or options
or the conversion of any such Convertible Securities. If any such rights or
options or the conversion privilege represented by any such Convertible
Securities shall expire without having been exercised, the Conversion Price as
adjusted upon the issuance of such rights, options or Convertible Securities
shall be readjusted to the Conversion Price which would have been in effect had
an adjustment been made on the basis that the only Additional Shares of Common
Stock so issued were the Additional Shares of Common Stock, if any, actually
issued or sold on the exercise of such rights or options or rights of conversion
of such Convertible Securities, and such Additional Shares of Common Stock, if
any, were issued or sold for the consideration actually received by the Company
upon such exercise, plus the consideration, if any, actually received by the
Company for the granting of all such rights or options, whether or not
exercised, plus the consideration received for issuing or selling the
Convertible Securities actually converted, plus the consideration, if any,
actually received by the Company (other than by cancellation of liabilities or
obligations evidenced by such Convertible Securities) on the conversion of such
Convertible Securities, provided that such readjustment shall not apply to prior
conversions of Series Preferred.
(4) "Additional Shares of Common Stock" shall mean all shares
of Common Stock issued by the Company or deemed to be issued pursuant to this
Section 5(j), whether or not subsequently reacquired or retired by the Company
other than (1) shares of Common Stock issued upon conversion of the Series
Preferred; (2) shares of Common Stock (and/or options, warrants or other Common
Stock purchase rights, and the Common Stock issued pursuant to such options,
warrants or other rights) issued or to be issued to employees, officers or
directors of, or consultants or advisors to the Company or any subsidiary
pursuant to stock purchase or stock option plans or other arrangements that are
approved by the Board; and (3) shares of Common Stock issued pursuant to the
exercise of options, warrants or convertible securities outstanding as of the
Original Issue Date. The "Effective Price" of Additional Shares of Common Stock
shall mean the quotient determined by dividing the total number of Additional
Shares of Common Stock issued or sold, or deemed to have been issued or sold by
the Company under this Section 4(j), into the aggregate consideration received,
or deemed to have been received by the Company for such issue under this Section
4(j), for such Additional Shares of Common Stock.
(5) Notwithstanding any other provision of this subsection
(j), if at any time or from time to time after the Original Issue Date, the
Company issues or sells, or is deemed by the express provisions of this
subsection (j) to have issued or sold, Additional Shares of Common Stock (as
defined in subsection (j)(4)), and other than a subdivision or combination of
shares of Common Stock as provided in Section 4(e) above, for an Effective Price
(as defined in subsection (j)(4)) less than the Series C Conversion Price, than
in lieu of the adjustment described in subsection (j)(1), the Series C
Conversion Price shall be reduced to the Effective Price of such Additional
Shares of Common Stock issued or deemed issued by the Company; provided,
however, in no event shall the Series C Conversion Price be reduced below $1.80
by virtue of this subsection (j)(5). After the Series C Conversion Price has
been reduced to $1.80 pursuant to this
10.
<PAGE> 11
subsection (j)(5), any further Series C Conversion Price adjustments, if any,
shall be governed by subsection (j)(1).
(k) Accountants' Certificate of Adjustment. In each case of an
adjustment or readjustment of the Conversion Price for the number of shares of
Common Stock or other securities issuable upon conversion of the Series
Preferred, if the Series Preferred is then convertible pursuant to this Section
4, the Company, at its expense, shall compute such adjustment or readjustment in
accordance with the provisions hereof and prepare a certificate showing such
adjustment or readjustment, and shall mail such certificate, by first class
mail, postage prepaid, to each registered holder of Series Preferred at the
holder's address as shown in the Company's books. The certificate shall set
forth such adjustment or readjustment, showing in detail the facts upon which
such adjustment or readjustment is based, including a statement of (1) the
consideration received or deemed to be received by the Company for any
Additional Shares of Common Stock issued or sold or deemed to have been issued
or sold, (2) the Conversion Price at the time in effect, (3) the number of
Additional Shares of Common Stock and (4) the type and amount, if any, of other
property which at the time would be received upon conversion of the Series
Preferred.
(l) Notices of Record Date. Upon (i) any taking by the Company of a
record of the holders of any class of securities for the purpose of determining
the holders thereof who are entitled to receive any dividend or other
distribution, or (ii) any Acquisition (as defined in Section 3(c)) or other
capital reorganization of the Company, any reclassification or recapitalization
of the capital stock of the Company, any merger or consolidation of the Company
with or into any other corporation, or any Asset Transfer (as defined in Section
3(c)), or any voluntary or involuntary dissolution, liquidation or winding up of
the Company, the Company shall mail to each holder of Series Preferred at least
twenty (20) days prior to the record date specified therein a notice specifying
(1) the date on which any such record is to be taken for the purpose of such
dividend or distribution and a description of such dividend or distribution, (2)
the date on which any such Acquisition, reorganization, reclassification,
transfer, consolidation, merger, Asset Transfer, dissolution, liquidation or
winding up is expected to become effective, and (3) the date, if any, that is to
be fixed as to when the holders of record of Common Stock (or other securities)
shall be entitled to exchange their shares of Common Stock (or other securities)
for securities or other property deliverable upon such Acquisition,
reorganization, reclassification, transfer, consolidation, merger, Asset
Transfer, dissolution, liquidation or winding up.
(m) Automatic Conversion.
(1) Each share of Series Preferred shall automatically be
converted into shares of Common Stock, based on the then-effective Conversion
Price, at any time upon the affirmative vote of the holders of at least sixty
six and two thirds percent (66 2/3%) of the outstanding shares of the Series
Preferred, or immediately upon the closing of a firmly underwritten public
offering pursuant to an effective registration statement under the Securities
Act of 1933, as amended, covering the offer and sale of Common Stock for the
account of the Company in which (i) the per share price is at least $3.00 (as
adjusted for stock splits, recapitalizations and the like), and (ii) the gross
cash proceeds to the Company (before
11.
<PAGE> 12
underwriting discounts, commissions and fees) are at least $15,000,000. Upon
such automatic conversion, any accumulated and unpaid dividends shall be paid in
accordance with the provisions of Section 4(d).
(2) Upon the occurrence of the event specified in paragraph
(1) above, the outstanding shares of Series Preferred shall be converted
automatically without any further action by the holders of such shares and
whether or not the certificates representing such shares are surrendered to the
Company or its transfer agent; provided, however, that the Company shall not be
obligated to issue certificates evidencing the shares of Common Stock issuable
upon such conversion unless the certificates evidencing such shares of Series
Preferred are either delivered to the Company or its transfer agent as provided
below, or the holder notifies the Company or its transfer agent that such
certificates have been lost, stolen or destroyed and executes an agreement
satisfactory to the Company to indemnify the Company from any loss incurred by
it in connection with such certificates. Upon the occurrence of such automatic
conversion of the Series Preferred, the holders of Series Preferred shall
surrender the certificates representing such shares at the office of the Company
or any transfer agent for the Series Preferred. Thereupon, there shall be issued
and delivered to such holder promptly at such office and in its name as shown on
such surrendered certificate or certificates, a certificate or certificates for
the number of shares of Common Stock into which the shares of Series Preferred
surrendered were convertible on the date on which such automatic conversion
occurred, and the Company shall promptly pay in cash or, at the option of the
Company, Common Stock (at the Common Stock's fair market value determined by the
Board as of the date of such conversion), or, at the option of the Company,
both, all declared and unpaid dividends on the shares of Series Preferred being
converted, to and including the date of such conversion.
(n) Fractional Shares. No fractional shares of Common Stock shall be
issued upon conversion of Series Preferred. All shares of Common Stock
(including fractions thereof) issuable upon conversion of more than one share of
Series Preferred by a holder thereof shall be aggregated for purposes of
determining whether the conversion would result in the issuance of any
fractional share. If, after the aforementioned aggregation, the conversion would
result in the issuance of any fractional share, the Corporation shall, in lieu
of issuing any fractional share, pay cash equal to the product of such fraction
multiplied by the Common Stock's fair market value (as determined by the Board)
on the date of conversion.
(o) Reservation of Stock Issuable Upon Conversion. The Company shall
at all times reserve and keep available out of its authorized but unissued
shares of Common Stock, solely for the purpose of effecting the conversion of
the shares of the Series Preferred, such number of its shares of Common Stock as
shall from time to time be sufficient to effect the conversion of all
outstanding shares of the Series Preferred. If at any time the number of
authorized but unissued shares of Common Stock shall not be sufficient to effect
the conversion of all then outstanding shares of the Series Preferred, the
Company will take such corporate action as may, in the opinion of its counsel,
be necessary to increase its authorized but unissued shares of Common Stock to
such number of shares as shall be sufficient for such purpose.
12.
<PAGE> 13
(p) Notices. Any notice required by the provisions of this Section 4
shall be in writing and shall be deemed effectively given: (i) upon personal
delivery to the party to be notified, (ii) when sent by confirmed telex or
facsimile if sent during normal business hours of the recipient; if not, then on
the next business day, (iii) five (5) days after having been sent by registered
or certified mail, return receipt requested, postage prepaid, or (iv) one (1)
day after deposit with a nationally recognized overnight courier, specifying
next day delivery, with written verification of receipt. All notices shall be
addressed to each holder of record at the address of such holder appearing on
the books of the Company.
(q) Payment of Taxes. The Company will pay all taxes (other than
taxes based upon income) and other governmental charges that may be imposed with
respect to the issue or delivery of shares of Common Stock upon conversion of
shares of Series Preferred, excluding any tax or other charge imposed in
connection with any transfer involved in the issue and delivery of shares of
Common Stock in a name other than that in which the shares of Series Preferred
so converted were registered.
(r) No Dilution or Impairment. The Company shall not amend its
Certificate of Incorporation or participate in any reorganization, transfer of
assets, consolidation, merger, dissolution, issue or sale of securities or any
other voluntary action, for the purpose of avoiding or seeking to avoid the
observance or performance of any of the terms to be observed or performed
hereunder by the Company, but shall at all times in good faith assist in
carrying out all such action as may be reasonably necessary or appropriate in
order to protect the conversion rights of the holders of the Series Preferred
against dilution or other impairment.
5. No Reissuance of Series Preferred. No share or shares of Series
Preferred acquired by the Corporation by reason of redemption, purchase,
conversion or otherwise shall be reissued.
6. No Preemptive Rights. Stockholders shall have no preemptive rights
except as granted by the Company pursuant to written agreements.
V.
A. A director of the corporation shall not be personally liable to the
Corporation or its stockholders for monetary damages for any breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the Delaware General Corporation
Law, or (iv) for any transaction from which the director derived an improper
personal benefit. If the Delaware General Corporation Law is amended after
approval by the stockholders of this Article to authorize corporate action
further eliminating or limiting the personal liability of directors, then the
liability of a director shall be eliminated or limited to the fullest extent
permitted by the Delaware General Corporation Law, as so amended.
13.
<PAGE> 14
B. Any repeal or modification of this Article V shall be prospective and
shall not affect the rights under this Article V in effect at the time of the
alleged occurrence of any act or omission to act giving rise to liability or
indemnification.
VI.
For the management of the business and for the conduct of the affairs of
the Corporation, and in further definition, limitation and regulation of the
powers of the Corporation, of its directors and of its stockholders or any class
thereof, as the case may be, it is further provided that:
1. The management of the business and the conduct of the affairs of the
Corporation shall be vested in its Board of Directors. The number of directors
which shall constitute the whole Board of Directors shall be fixed by the Board
of Directors in the manner provided in the Bylaws.
2. The Board of Directors may from time to time make, amend, supplement or
repeal the Bylaws; provided, however, that the stockholders may change or repeal
any Bylaw adopted by the Board of Directors by the affirmative vote of the
holders of a majority of the voting power of all of the then outstanding shares
of the capital stock of the Corporation; and, provided further, that no
amendment or supplement to the Bylaws adopted by the Board of Directors shall
vary or conflict with any amendment or supplement thus adopted by the
stockholders.
3. The directors of the Corporation need not be elected by written ballot
unless the Bylaws so provide.
VII.
The Corporation reserves the right to amend, alter, change or repeal any
provision contained in this Certificate of Incorporation, in the manner now or
hereafter prescribed by statute, and all rights conferred upon the stockholders
herein are granted subject to this right."
3. This Amended and Restated Certificate of Incorporation has been duly
approved by the Board of Directors of this Corporation.
4. This Amended and Restated Certificate of Incorporation has been duly
adopted in accordance with the provisions of Sections 228, 241 and 245 of the
General Corporation Law of the State of Delaware by the Board of Directors and
the stockholders of the Corporation. The total number of outstanding shares of
Common Stock entitled to vote or act by written consent was 1,217,031. In excess
of a majority of the outstanding shares of Common Stock approved this Amended
and Restated Certificate by written consent in accordance with section 228 of
the General Corporation Law. The total number of outstanding shares of Series A
and Series B Preferred Stock entitled to vote or act by written consent was
9,833,333 shares. In excess of sixty percent (60%) of the outstanding shares of
Series A and Series B Preferred Stock approved this
14.
<PAGE> 15
Amended and Restated Certificate of Incorporation by written consent in
accordance with section 228 of the General Corporation Law.
15.
<PAGE> 16
IN WITNESS WHEREOF, Coulter Pharmaceutical, Inc. has caused this Amended
and Restated Certificate of Incorporation to be signed by the Chief Executive
Officer and the Secretary in Palo Alto, California this 16th day of April,
1996.
COULTER PHARMACEUTICAL, INC.
By /s/ Arnold Oronsky
---------------------------
Arnold Oronsky,
Chief Executive Officer
ATTEST:
By /s/ Robert Momsen
----------------------------
Robert Momsen
Secretary
<PAGE> 1
EXHIBIT 3.2
CERTIFICATE OF AMENDMENT OF
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION OF
COULTER PHARMACEUTICAL, INC.
COULTER PHARMACEUTICAL, INC., a corporation organized and existing under
and by virtue of the General Corporation Law of the State of Delaware (the
"Company"), DOES HEREBY CERTIFY:
1. The name of the corporation is Coulter Pharmaceutical, Inc.
2. The Amended and Restated Certificate of Incorporation of the Company
was filed with the Secretary of State of the State of Delaware on April 16,
1996. The original Certificate of Incorporation of the Company was filed on
February 16, 1995.
3. The Board of Directors of the Company, acting in accordance with the
provisions of Sections 141 and 242 of the General Corporation Law of the State
of Delaware, duly adopted resolutions to amend Article IV Section A to read in
its entirety as follows:
" IV.
A. This Corporation is authorized to issue two classes of stock to
be designated, respectively, "Common Stock" and "Preferred Stock." The
total number of shares which the corporation is authorized to issue is
Forty-Five Million (45,000,000) shares, Twenty-Five Million (25,000,000)
shares of which shall be Common Stock (the "Common Stock") and Twenty
Million (20,000,000) shares of which shall be Preferred Stock (the
"Preferred Stock"). The Preferred Stock shall have a par value of
one-tenth of one cent ($.001) per share and the Common Stock shall have a
par value of one-tenth of one cent ($.001) per share. Upon the filing of
this Amendment to the Amended and Restated Certificate of Incorporation,
every three (3) outstanding shares of Common Stock shall be combined into
one (1) share of Common Stock."
4. Thereafter, pursuant to a resolution of the Board of Directors, this
Certificate of Amendment was submitted to the stockholders of the Company for
their approval and was duly approved by the holders of the necessary number of
shares of the Company's voting securities in accordance with the provisions of
Sections 228 and 242 of the General Corporation Law of the State of Delaware.
Written notice of such action has been given to the remaining stockholders in
accordance with Section 228 of the General Corporation Law of Delaware.
<PAGE> 2
IN WITNESS WHEREOF, the Company has caused this Certificate of Amendment
to be signed by its duly authorized officer this ___ day of ___________, 199_.
COULTER PHARMACEUTICAL, INC.
______________________________________
Michael J. Bigham
President and Chief
Executive Officer
ATTEST:
By:________________________________
James C. Kitch
Secretary
2.
<PAGE> 1
EXHIBIT 3.3
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF
COULTER PHARMACEUTICAL, INC.
Michael J. Bigham and James C. Kitch hereby certify that:
1. The date of filing the original Certificate of Incorporation of this
corporation with the Secretary of State of the State of Delaware is February 16,
1995.
2. They are the duly elected and acting Chief Executive Officer and
Secretary, respectively, of Coulter Pharmaceutical, Inc., a Delaware
corporation.
3. The Certificate of Incorporation of this corporation is hereby
amended and restated to read as follows:
I.
The name of the Corporation is Coulter Pharmaceutical, Inc. (the
"Corporation" or the "Company").
II.
The address of the registered office of the Corporation in the State of
Delaware is:
The Prentice-Hall Corporation System, Inc.
1013 Centre Road
Wilmington, DE 19805
County of New Castle
The name of the Corporation's registered agent at said address is The
Prentice-Hall Corporation System, Inc.
III.
The purpose of the Corporation is to engage in any lawful act or
activity for which a corporation may be organized under the General Corporation
Law of the State of Delaware.
IV.
A. This Corporation is authorized to issue two classes of stock to be
designated, respectively, "Common Stock" and "Preferred Stock." The total number
of shares which the corporation is authorized to issue is Thirty-Three Million
(33,000,000) shares, Thirty Million (30,000,000) shares of which shall be Common
Stock (the "Common Stock") and Three Million (3,000,000) shares of which shall
be Preferred Stock (the "Preferred Stock"). The Preferred Stock shall have a par
value of one-tenth of one cent ($.001) per share and the Common Stock shall have
a par value of one-tenth of one cent ($.001) per share.
1.
<PAGE> 2
B. The Preferred Stock may be issued from time to time in one or more
series. The Board of Directors is hereby authorized, within the limitations and
restrictions stated in this Certificate, to fix or alter the dividend rights,
dividend rate, conversion rights, voting rights, rights and terms of redemption
(including sinking fund provisions), the redemption price or prices, the
liquidation preferences of any wholly unissued series of Preferred Stock, and
the number of shares constituting any such series and the designation thereof,
or any of them; and to increase or decrease the number of shares of any series
subsequent to the issue of shares of that series, but not below the number of
shares of such series then outstanding. In case the number of shares of any
series shall be so decreased, the shares constituting such decrease shall resume
the status which they had prior to the adoption of the resolution originally
fixing the number of shares of such series.
V.
A. A director of the corporation shall not be personally liable to the
Corporation or its stockholders for monetary damages for any breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the Delaware General Corporation
Law, or (iv) for any transaction from which the director derived an improper
personal benefit. If the Delaware General Corporation Law is amended after
approval by the stockholders of this Article to authorize corporate action
further eliminating or limiting the personal liability of directors, then the
liability of a director shall be eliminated or limited to the fullest extent
permitted by the Delaware General Corporation Law, as so amended.
B. Any repeal or modification of this Article V shall be prospective
and shall not affect the rights under this Article V in effect at the time of
the alleged occurrence of any act or omission to act giving rise to liability or
indemnification.
VI.
For the management of the business and for the conduct of the affairs
of the Corporation, and in further definition, limitation and regulation of the
powers of the Corporation, of its directors and of its stockholders or any class
thereof, as the case may be, it is further provided that:
A.
1. The management of the business and the conduct of the affairs of the
Corporation shall be vested in its Board of Directors. The number of directors
which shall constitute the whole Board of Directors shall be fixed by the Board
of Directors in the manner provided in the Bylaws.
2.
<PAGE> 3
2. The management of the business and the conduct of the affairs of the
Corporation shall be vested in its Board of Directors. The number of directors
which shall constitute the whole Board of Directors shall be fixed exclusively
by one or more resolutions adopted by the Board of Directors.
3. Subject to the rights of the holders of any series of Preferred
Stock to elect additional directors under specified circumstances, directors
shall be elected at each annual meeting of stockholders for a term of one year.
Each director shall serve until his successor is duly elected and qualified or
until his death, resignation or removal. No decrease in the number of directors
constituting the Board of Directors shall shorten the term of any incumbent
director.
4. Subject to the rights of the holders of any series of Preferred
Stock, the Board of Directors or any individual director may be removed from
office at any time (i) with cause by the affirmative vote of the holders of a
majority of the voting power of all the then-outstanding shares of voting stock
of the Corporation, entitled to vote at an election of directors (the "Voting
Stock") or (ii) without cause by the affirmative vote of the holders of at least
sixty-six and two-thirds percent (66-2/3%) of the voting power of all the
then-outstanding shares of the Voting Stock.
5. Subject to the rights of the holders of any series of Preferred
Stock, any vacancies on the Board of Directors resulting from death,
resignation, disqualification, removal or other causes and any newly created
directorships resulting from any increase in the number of directors, shall,
unless the Board of Directors determines by resolution that any such vacancies
or newly created directorships shall be filled by the stockholders, except as
otherwise provided by law, be filled only by the affirmative vote of a majority
of the directors then in office, even though less than a quorum of the Board of
Directors, and not by the stockholders. Any director elected in accordance with
the preceding sentence shall hold office for the remainder of the full term of
the director for which the vacancy was created or occurred and until such
director's successor shall have been elected and qualified.
B.
1. Subject to paragraph (i) of Section 42 of the Bylaws, the Bylaws may
be altered or amended or new Bylaws adopted by the affirmative vote of at least
sixty-six and two-thirds percent (66-2/3%) of the voting power of all of the
then-outstanding shares of the Voting Stock. The Board of Directors shall also
have the power to adopt, amend, or repeal Bylaws.
2. The directors of the Corporation need not be elected by written
ballot unless the Bylaws so provide.
3. No action shall be taken by the stockholders of the Corporation
except at an annual or special meeting of stockholders called in accordance with
the Bylaws. No action shall be taken by the stockholders of the Corporation by
written consent following the effectiveness of the registration of any class of
securities of the Corporation under the Securities Act of 1934, as amended.
3.
<PAGE> 4
4. Special meetings of the stockholders of the Corporation may be
called, for any purpose or purposes, by (i) the Chairman of the Board of
Directors, (ii) the Chief Executive Officer or (iii) the Board of Directors
pursuant to a resolution adopted by a majority of the total number of authorized
directors (whether or not there exist any vacancies in previously authorized
directorships at the time any such resolution is presented to the Board of
Directors for adoption).
5. Advance notice of stockholder nominations for the election of
directors and of business to be brought by stockholders before any meeting of
the stockholders of the Corporation shall be given in the manner provided in the
Bylaws of the Corporation.
VII.
A. The Corporation reserves the right to amend, alter, change or repeal
any provision contained in this Certificate of Incorporation, in the manner now
or hereafter prescribed by statute, except as provided in paragraph B. of this
Article VII, and all rights conferred upon the stockholders herein are granted
subject to this right."
B. Notwithstanding any other provisions of this Certificate of
Incorporation or any provision of law which might otherwise permit a lesser vote
or no vote, but in addition to any affirmative vote of the holders of any
particular class or series of the Voting Stock required by law, this Certificate
of Incorporation or any Preferred Stock Designation, the affirmative vote of the
holders of at least sixty-six and two-thirds percent (66-2/3%) of the voting
power of all of the then-outstanding shares of the Voting Stock, voting together
as a single class, shall be required to alter, amend or repeal Articles V, VI,
and VII.
3. Thereafter, pursuant to a resolution of the Board of Directors, this
Certificate of Amendment was submitted to the stockholders of the Company for
their approval and was duly approved by the holders of the necessary number of
shares of the Company's voting securities in accordance with the provisions of
Sections 228 and 242 of the General Corporation Law of the State of Delaware.
Written notice of such action has been given to the remaining stockholders in
accordance with Section 228 of the General Corporation Law of Delaware.
4.
<PAGE> 5
IN WITNESS WHEREOF, the Company has caused this Amended and Restated
Certificate of Incorporation to be signed by the Chief Executive Officer and the
Secretary in Palo Alto, California this _______ day of ___________, 1997.
COULTER PHARMACEUTICAL, INC.
______________________________
Michael J. Bigham
President and Chief
Executive Officer
ATTEST:
By:________________________________
James C. Kitch
Secretary
5.
<PAGE> 1
EXHIBIT 3.4
BYLAWS
OF
COULTER PHARMACEUTICAL, INC.
(A DELAWARE CORPORATION)
<PAGE> 2
TABLE OF CONTENTS
PAGE
----
ARTICLE I
OFFICES....................... 1
Section 1. Registered Office............................... 1
Section 2. Other Offices................................... 1
ARTICLE II
CORPORATE SEAL.................... 1
Section 3. Corporate Seal.................................. 1
ARTICLE III
STOCKHOLDERS' MEETINGS................ 1
Section 4. Place of Meetings............................... 1
Section 5. Annual Meeting.................................. 2
Section 6. Special Meetings................................ 3
Section 7. Notice of Meetings.............................. 4
Section 8. Quorum.......................................... 4
Section 9. Adjournment and Notice of Adjourned Meetings.... 5
Section 10. Voting Rights................................... 5
Section 11. Beneficial Owners of Stock...................... 5
Section 12. List of Stockholders............................ 6
Section 13. Action without Meeting.......................... 6
Section 14. Organization.................................... 7
ARTICLE IV
DIRECTORS...................... 8
Section 15. Number and Term of Office....................... 8
Section 16. Powers.......................................... 8
Section 17. Vacancies....................................... 8
Section 18. Resignation..................................... 8
Section 19. Removal......................................... 9
Section 20. Meetings........................................ 9
(a) Annual Meetings................................. 9
(b) Regular Meetings................................ 9
(c) Special Meetings................................ 9
(d) Telephone Meetings.............................. 9
(e) Notice of Meetings.............................. 9
(f) Waiver of Notice................................ 9
i.
<PAGE> 3
TABLE OF CONTENTS
(CONTINUED)
PAGE
----
Section 21. Quorum and Voting.............................. 10
Section 22. Action without Meeting......................... 10
Section 23. Fees and Compensation.......................... 10
Section 24. Committees..................................... 10
(a) Executive Committee............................ 10
(b) Other Committees............................... 11
(c) Term........................................... 11
(d) Meetings....................................... 11
Section 25. Organization................................... 12
ARTICLE V
OFFICERS...................... 12
Section 26. Officers Designated............................ 12
Section 27. Tenure and Duties of Officers.................. 12
(a) General........................................ 12
(b) Duties of Chairman of the Board of Directors... 12
(c) Duties of President............................ 12
(d) Duties of Vice Presidents...................... 13
(e) Duties of Secretary............................ 13
(f) Duties of Chief Financial Officer or Treasurer. 13
Section 28. Delegation of Authority........................ 13
Section 29. Resignations................................... 13
Section 30. Removal........................................ 14
ARTICLE VI
EXECUTION OF CORPORATE INSTRUMENTS AND
VOTING OF SECURITIES OWNED BY THE CORPORATION... 14
Section 31. Execution of Corporate Instruments............. 14
Section 32. Voting of Securities Owned by the Corporation.. 14
ARTICLE VII
SHARES OF STOCK.................. 15
Section 33. Form and Execution of Certificates............. 15
Section 34. Lost Certificates.............................. 15
Section 35. Transfers...................................... 15
Section 36. Fixing Record Dates............................ 16
ii.
<PAGE> 4
TABLE OF CONTENTS
(CONTINUED)
PAGE
Section 37. Registered Stockholders.......................... 16
ARTICLE VIII
OTHER SECURITIES OF THE CORPORATION.......... 17
Section 38. Execution of Other Securities.................... 17
ARTICLE IX
DIVIDENDS....................... 17
Section 39. Declaration of Dividends......................... 17
Section 40. Dividend Reserve................................. 17
ARTICLE X
FISCAL YEAR...................... 18
Section 41. Fiscal Year...................................... 18
ARTICLE XI
INDEMNIFICATION.................... 18
Section 42. Indemnification of Directors, Officers,
Employees and Other Agents....................... 18
(a) Directors........................................ 18
(b) Officers, Employees and Other Agents............. 18
(c) Good Faith....................................... 18
(d) Expenses......................................... 19
(e) Enforcement...................................... 19
(f) Non-Exclusivity of Rights........................ 20
(g) Survival of Rights............................... 20
(h) Insurance........................................ 20
(i) Amendments....................................... 20
(j) Saving Clause.................................... 20
(k) Certain Definitions.............................. 20
ARTICLE XII
NOTICES........................ 21
Section 43. Notices.......................................... 21
iii.
<PAGE> 5
TABLE OF CONTENTS
(CONTINUED)
(a) Notice to Stockholders.......................... 21
(b) Notice to Directors............................. 22
(c) Address Unknown................................. 22
(d) Affidavit of Mailing............................ 22
(e) Time Notices Deemed Given....................... 22
(f) Methods of Notice............................... 22
(g) Failure to Receive Notice....................... 22
(h) Notice to Person with Whom Communication
Is Unlawful................................... 22
(i) Notice to Person with Undeliverable Address..... 23
ARTICLE XIII
AMENDMENTS...................... 23
Section 44. Amendments...................................... 23
ARTICLE XIV
Section 45. Right of First Refusal.......................... 23
ARTICLE XV
LOANS TO OFFICERS.................. 26
Section 46. Loans to Officers............................... 26
ARTICLE XVI
MISCELLANEOUS.................... 27
Section 47. Annual Report................................... 27
iv.
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BYLAWS
OF
COULTER PHARMACEUTICAL, INC.
(A DELAWARE CORPORATION)
ARTICLE I
OFFICES
SECTION 1. REGISTERED OFFICE. The registered office of the corporation
in the State of Delaware shall be in the City of Dover, County of Kent.
SECTION 2. OTHER OFFICES. The corporation shall also have and maintain
an office or principal place of business, at such place as may be fixed by the
Board of Directors, and may also have offices at such other places, both within
and without the State of Delaware as the Board of Directors may from time to
time determine or the business of the corporation may require.
ARTICLE II
CORPORATE SEAL
SECTION 3. CORPORATE SEAL. The corporate seal, if adopted by the Board
of Directors, shall consist of a die bearing the name of the corporation and the
inscription, "Corporate Seal-Delaware." Said seal may be used by causing it or a
facsimile thereof to be impressed or affixed or reproduced or otherwise.
ARTICLE III
STOCKHOLDERS' MEETINGS
SECTION 4. PLACE OF MEETINGS. Meetings of the stockholders of the
corporation shall be held at such place, either within or without the State of
Delaware, as may be designated from time to time by the Board of Directors, or,
if not so designated, then at the office of the corporation required to be
maintained pursuant to Section 2 hereof.
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SECTION 5. ANNUAL MEETING.
(a) The annual meeting of the stockholders of the corporation,
for the purpose of election of Directors and for such other business as may
lawfully come before it, shall be held on such date and at such time as may be
designated from time to time by the Board of Directors.
(b) At an annual meeting of the stockholders, only such
business shall be conducted as shall have been properly brought before the
meeting. To be properly brought before an annual meeting, business must be: (A)
specified in the notice of meeting (or any supplement thereto) given by or at
the direction of the Board of Directors, (B) otherwise properly brought before
the meeting by or at the direction of the Board of Directors, or (C) otherwise
properly brought before the meeting by a stockholder. For business to be
properly brought before an annual meeting by a stockholder, the stockholder must
have given timely notice thereof in writing to the Secretary of the corporation.
To be timely, a stockholder's notice must be delivered to or mailed and received
at the principal executive offices of the corporation not less than one hundred
twenty (120) calendar days in advance of the date of the corporation's proxy
statement released to stockholders in connection with the previous year's annual
meeting of stockholders; provided, however, that in the event that no annual
meeting was held in the previous year or the date of the annual meeting has been
changed by more than thirty (30) days from the date contemplated at the time of
the previous year's proxy statement, notice by the stockholder to be timely must
be so received a reasonable time before the solicitation is made. A
stockholder's notice to the Secretary shall set forth as to each matter the
stockholder proposes to bring before the annual meeting: (i) a brief description
of the business desired to be brought before the annual meeting and the reasons
for conducting such business at the annual meeting, (ii) the name and address,
as they appear on the corporation's books, of the stockholder proposing such
business, (iii) the class and number of shares of the corporation which are
beneficially owned by the stockholder, (iv) any material interest of the
stockholder in such business and (v) any other information that is required to
be provided by the stockholder pursuant to Regulation 14A under the Securities
Exchange Act of 1934, as amended, in his capacity as a proponent to a
stockholder proposal. Notwithstanding the foregoing, in order to include
information with respect to a stockholder proposal in the proxy statement and
form of proxy for a stockholder's meeting, stockholders must provide notice as
required by the regulations promulgated under the Securities and Exchange Act of
1934, as amended. Notwithstanding anything in these Bylaws to the contrary, no
business shall be conducted at any annual meeting except in accordance with the
procedures set forth in this paragraph (b). The chairman of the annual meeting
shall, if the facts warrant, determine and declare at the meeting that business
was not properly brought before the meeting and in accordance with the
provisions of this paragraph (b), and, if he should so determine, he shall so
declare at the meeting that any such business not properly brought before the
meeting shall not be transacted.
(c) Only persons who are nominated in accordance with the
procedures set forth in this paragraph (c) shall be eligible for election as
Directors. Nominations of persons for election to the Board of Directors of the
corporation may be made at a meeting of stockholders by or at the direction of
the Board of Directors or by any stockholder of the corporation entitled to vote
in the election of Directors at the meeting who complies with the
2.
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notice procedures set forth in this paragraph (c). Such nominations, other than
those made by or at the direction of the Board of Directors, shall be made
pursuant to timely notice in writing to the Secretary of the corporation in
accordance with the provisions of paragraph (b) of this Section 5. Such
stockholder's notice shall set forth (i) as to each person, if any, whom the
stockholder proposes to nominate for election or re-election as a Director: (A)
the name, age, business address and residence address of such person, (B) the
principal occupation or employment of such person, (C) the class and number of
shares of the corporation which are beneficially owned by such person, (D) a
description of all arrangements or understandings between the stockholder and
each nominee and any other person or persons (naming such person or persons)
pursuant to which the nominations are to be made by the stockholder, and (E) any
other information relating to such person that is required to be disclosed in
solicitations of proxies for election of Directors, or is otherwise required, in
each case pursuant to Regulation 14A under the Securities Exchange Act of 1934,
as amended (including without limitation such person's written consent to being
named in the proxy statement, if any, as a nominee and to serving as a Director
if elected); and (ii) as to such stockholder giving notice, the information
required to be provided pursuant to paragraph (b) of this Section 5. At the
request of the Board of Directors, any person nominated by a stockholder for
election as a Director shall furnish to the Secretary of the corporation that
information required to be set forth in the stockholder's notice of nomination
which pertains to the nominee. No person shall be eligible for election as a
Director of the corporation unless nominated in accordance with the procedures
set forth in this paragraph (c). The chairman of the meeting shall, if the facts
warrant, determine and declare at the meeting that a nomination was not made in
accordance with the procedures prescribed by these Bylaws, and if he should so
determine, he shall so declare at the meeting and the defective nomination shall
be disregarded.
SECTION 6. SPECIAL MEETINGS.
(a) Special meetings of the stockholders of the corporation
may be called, for any purpose or purposes, by (i) the Chairman of the Board,
(ii) the President, (iii) the Board of Directors pursuant to a resolution
adopted by a majority of the total number of authorized directors (whether or
not there exist any vacancies in previously authorized directorships at the time
any such resolution is presented to the Board for adoption) or (iv) by the
holders of shares entitled to cast not less than ten percent (10%) of the votes
at the meeting, and shall be held at such place, on such date, and at such time
as they or he shall fix; provided, however, that following registration of any
of the classes of equity securities of the corporation pursuant to the
provisions of the Securities Exchange Act of 1934, as amended, special meetings
of the stockholders may only be called by the Board of Directors pursuant to a
resolution adopted by a majority of the total number of authorized Directors.
(b) If a special meeting is called by any person or persons
other than the Board of Directors, the request shall be in writing, specifying
the time of such meeting and the general nature of the business proposed to be
transacted, and shall be delivered personally or sent by registered mail or by
telegraphic or other facsimile transmission to the Chairman of the Board, the
President, any Vice President, or the Secretary of the corporation. No business
may be transacted at such special meeting otherwise than specified in such
notice. The officer receiving
3.
<PAGE> 9
the request shall cause notice to be promptly given to the stockholders entitled
to vote, in accordance with the provisions of Section 7 of these Bylaws, that a
meeting will be held not less than thirty-five (35) nor more than sixty (60)
days after the receipt of the request. If the notice is not given within twenty
(20) days after the receipt of the request, the person or persons requesting the
meeting may give the notice. Nothing contained in this paragraph (b) shall be
construed as limiting, fixing, or affecting the time when a meeting of
stockholders called by action of the Board of Directors may be held.
SECTION 7. NOTICE OF MEETINGS. Except as otherwise provided by law or
the Certificate of Incorporation, written notice of each meeting of stockholders
shall be given not less than ten (10) nor more than sixty (60) days before the
date of the meeting to each stockholder entitled to vote at such meeting, such
notice to specify the place, date and hour and purpose or purposes of the
meeting. Notice of the time, place and purpose of any meeting of stockholders
may be waived in writing, signed by the person entitled to notice thereof,
either before or after such meeting, and will be waived by any stockholder by
his attendance thereat in person or by proxy, except when the stockholder
attends a meeting for the express purpose of objecting, at the beginning of the
meeting, to the transaction of any business because the meeting is not lawfully
called or convened. Any stockholder so waiving notice of such meeting shall be
bound by the proceedings of any such meeting in all respects as if due notice
thereof had been given.
SECTION 8. QUORUM. At all meetings of stockholders, except where
otherwise provided by statute or by the Certificate of Incorporation, or by
these Bylaws, the presence, in person or by proxy duly authorized, of the
holders of a majority of the outstanding shares of stock entitled to vote shall
constitute a quorum for the transaction of business. Any shares, the voting of
which at said meeting has been enjoined, or which for any reason cannot be
lawfully voted at such meeting, shall not be counted to determine a quorum at
such meeting. In the absence of a quorum any meeting of stockholders may be
adjourned, from time to time, either by the chairman of the meeting or by vote
of the holders of a majority of the shares represented thereat, but no other
business shall be transacted at such meeting. The stockholders present at a duly
called or convened meeting, at which a quorum is present, may continue to
transact business until adjournment, notwithstanding the withdrawal of enough
stockholders to leave less than a quorum. Except as otherwise provided by law,
the Certificate of Incorporation or these Bylaws, all action taken by the
holders of a majority of the voting power represented at any meeting at which a
quorum is present shall be valid and binding upon the corporation; provided,
however, that Directors shall be elected by a plurality of the votes of the
shares present in person or represented by proxy at the meeting and entitled to
vote on the election of Directors. Where a separate vote by a class or classes
is required, a majority of the outstanding shares of such class or classes,
present in person or represented by proxy, shall constitute a quorum entitled to
take action with respect to that vote on that matter and the affirmative vote of
the majority (plurality, in the case of the election of Directors) of shares of
such class or classes present in person or represented by proxy at the meeting
shall be the act of such class.
4.
<PAGE> 10
SECTION 9. ADJOURNMENT AND NOTICE OF ADJOURNED MEETINGS. Any meeting of
stockholders, whether annual or special, may be adjourned from time to time
either by the chairman of the meeting or by the vote of a majority of the shares
represented thereat. When a meeting is adjourned to another time or place,
notice need not be given of the adjourned meeting if the time and place thereof
are announced at the meeting at which the adjournment is taken. At the adjourned
meeting the corporation may transact any business which might have been
transacted at the original meeting. If the adjournment is for more than thirty
(30) days, or if after the adjournment a new record date is fixed for the
adjourned meeting, a notice of the adjourned meeting shall be given to each
stockholder of record entitled to vote at the meeting.
SECTION 10. VOTING RIGHTS.
(a) For the purpose of determining those stockholders entitled
to vote at any meeting of the stockholders, except as otherwise provided by law,
only persons in whose names shares stand on the stock records of the corporation
on the record date, as provided in Section 12 of these Bylaws, shall be entitled
to vote at any meeting of stockholders. Except as may be otherwise provided in
the Certificate of Incorporation or these Bylaws, each stockholder shall be
entitled to one vote for each share of capital stock held by such stockholder.
Every person entitled to vote or execute consents shall have the right to do so
either in person or by an agent or agents authorized by a written proxy executed
by such person or his duly authorized agent, which proxy shall be filed with the
Secretary at or before the meeting at which it is to be used. An agent so
appointed need not be a stockholder. No proxy shall be voted after three (3)
years from its date of creation unless the proxy provides for a longer period.
All elections of Directors shall be by written ballot, unless otherwise provided
in the Certificate of Incorporation.
(b) Every stockholder entitled to vote in any election of
Directors of this corporation may cumulate such stockholder's votes and give one
candidate a number of votes equal to the number of Directors to be elected
multiplied by the number of votes to which the stockholder's shares are
otherwise entitled, or distribute the stockholder's votes on the same principle
among as many candidates as such stockholder thinks fit. No stockholder,
however, may cumulate such stockholder's votes for one or more candidates unless
(i) the names of such candidates have been properly placed in nomination, in
accordance with these Bylaws, prior to the voting, (ii) the stockholder has
given advance notice to the corporation of the intention to cumulate votes
pursuant to paragraph (c) of Section 5 of these Bylaws, and (iii) the
stockholder has given proper notice to the other stockholders at the meeting,
prior to voting, of such stockholder's intention to cumulate such stockholder's
votes for any candidates who have been properly placed in nomination. The
candidates receiving the highest number of votes of the shares entitled to be
voted for them up to the number of Directors to be elected by such shares shall
be declared elected.
SECTION 11. BENEFICIAL OWNERS OF STOCK.
(A) If shares or other securities having voting power stand of
record in the names of two (2) or more persons, whether fiduciaries, members of
a partnership, joint tenants,
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<PAGE> 11
tenants in common, tenants by the entirety, or otherwise, or if two (2) or more
persons have the same fiduciary relationship respecting the same shares, unless
the Secretary is given written notice to the contrary and is furnished with a
copy of the instrument or order appointing them or creating the relationship
wherein it is so provided, their acts with respect to voting shall have the
following effect: (a) if only one (1) votes, his act binds all; (b) if more than
one (1) votes, the act of the majority so voting binds all; (c) if more than one
(1) votes, but the vote is evenly split on any particular matter, each faction
may vote the securities in question proportionally, or may apply to the Delaware
Court of Chancery for relief as provided in the General Corporation Law of
Delaware, Section 217(b). If the instrument filed with the Secretary shows that
any such tenancy is held in unequal interests, a majority or even-split for the
purpose of this subsection (c) shall be a majority or even-split in interest.
(b) Persons holding stock in a fiduciary capacity shall be
entitled to vote the shares so held. Persons whose stock is pledged shall be
entitled to vote, unless in the transfer by the pledgor on the books of the
corporation he has expressly empowered the pledgee to vote thereon, in which
case only the pledgee, or his proxy, may represent such stock and vote thereon.
SECTION 12. LIST OF STOCKHOLDERS. The Secretary shall prepare and make,
at least ten (10) days before every meeting of stockholders, a complete list of
the stockholders entitled to vote at said meeting, arranged in alphabetical
order, showing the address of each stockholder and the number of shares
registered in the name of each stockholder. Such list shall be open to the
examination of any stockholder, for any purpose germane to the meeting, during
ordinary business hours, for a period of at least ten (10) days prior to the
meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not
specified, at the place where the meeting is to be held. The list shall be
produced and kept at the time and place of meeting during the whole time
thereof, and may be inspected by any stockholder who is present.
SECTION 13. ACTION WITHOUT MEETING.
(a) Any action required by statute to be taken at any annual
or special meeting of the stockholders, or any action which may be taken at any
annual or special meeting of the stockholders, may be taken without a meeting,
without prior notice and without a vote, if a consent or consents in writing,
setting forth the action so taken, are signed by the holders of outstanding
stock having not less than the minimum number of votes that would be necessary
to authorize or take such action at a meeting at which all shares entitled to
vote thereon were present and voted.
(b) Every written consent shall bear the date of signature of
each stockholder who signs the consent, and no written consent shall be
effective to take the corporate action referred to therein unless, within sixty
(60) days of the earliest dated consent delivered to the Corporation in the
manner herein required, written consents signed by a sufficient number of
stockholders to take action are delivered to the corporation by delivery to its
registered office in the State of Delaware, its principal place of business or
an officer or agent of the corporation
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having custody of the book in which proceedings of meetings of stockholders are
recorded. Delivery made to a corporation's registered office shall be by hand or
by certified or registered mail, return receipt requested.
(c) Prompt notice of the taking of the corporate action
without a meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing. If the action which is consented
to is such as would have required the filing of a certificate under any section
of the General corporation Law of Delaware if such action had been voted on by
stockholders at a meeting thereof, then the certificate filed under such section
shall state, in lieu of any statement required by such section concerning any
vote of stockholders, that written notice and written consent have been given as
provided in Section 228 of the General Corporation Law of Delaware.
(d) Notwithstanding the foregoing, no such action by written
consent may be taken following the effectiveness of the registration of any
class of securities of the corporation under the Securities Exchange Act of
1934, as amended.
SECTION 14. ORGANIZATION.
(a) At every meeting of stockholders, the Chairman of the
Board of Directors, or, if a Chairman has not been appointed or is absent, the
President, or, if the President is absent, the most senior Vice President
present, or in the absence of any such officer, a chairman of the meeting chosen
by a majority in interest of the stockholders entitled to vote, present in
person or by proxy, shall act as chairman. The Secretary, or, in his absence, an
Assistant Secretary directed to do so by the President, shall act as secretary
of the meeting.
(b) The Board of Directors of the corporation shall be
entitled to make such rules or regulations for the conduct of meetings of
stockholders as it shall deem necessary, appropriate or convenient. Subject to
such rules and regulations of the Board of Directors, if any, the chairman of
the meeting shall have the right and authority to prescribe such rules,
regulations and procedures and to do all such acts as, in the judgment of such
chairman, are necessary, appropriate or convenient for the proper conduct of the
meeting, including, without limitation, establishing an agenda or order of
business for the meeting, rules and procedures for maintaining order at the
meeting and the safety of those present, limitations on participation in such
meeting to stockholders of record of the corporation and their duly authorized
and constituted proxies, and such other persons as the chairman shall permit,
restrictions on entry to the meeting after the time fixed for the commencement
thereof, limitations on the time allotted to questions or comments by
participants and regulation of the opening and closing of the polls for
balloting on matters which are to be voted on by ballot. Unless, and to the
extent determined by the Board of Directors or the chairman of the meeting,
meetings of stockholders shall not be required to be held in accordance with
rules of parliamentary procedure.
7.
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ARTICLE IV
DIRECTORS
SECTION 15. NUMBER AND TERM OF OFFICE. The Board of Directors shall
consist of not less than three (3) and not more than seven (7) members, the
number thereof to be determined from time to time by resolution of the Board of
Directors. The number of directors is currently set at seven (7). The number of
authorized Directors may be modified from time to time by amendment of this
Section 15 in accordance with the provisions of Section 44 hereof. Except as
provided in Section 17, the Directors shall be elected by the stockholders at
their annual meeting in each year and shall hold office until the next annual
meeting and until their successors shall be duly elected and qualified.
Directors need not be stockholders unless so required by the Certificate of
Incorporation. If for any cause, the Directors shall not have been elected at an
annual meeting, they may be elected as soon thereafter as convenient at a
special meeting of the stockholders called for that purpose in the manner
provided in these Bylaws. No reduction of the authorized number of Directors
shall have the effect of removing any Director before the Director's term of
office expires, unless such removal is made pursuant to the provisions of
Section 19 hereof.
SECTION 16. POWERS. The powers of the corporation shall be exercised,
its business conducted and its property controlled by the Board of Directors,
except as may be otherwise provided by statute or by the Certificate of
Incorporation.
SECTION 17. VACANCIES. Unless otherwise provided in the Certificate of
Incorporation, vacancies and newly created directorships resulting from any
increase in the authorized number of Directors may be filled by a majority of
the Directors then in office, although less than a quorum, or by a sole
remaining Director, and each Director so elected shall hold office for the
unexpired portion of the term of the Director whose place shall be vacant and
until his successor shall have been duly elected and qualified. A vacancy in the
Board of Directors shall be deemed to exist under this Section 17 in the case of
the death, removal or resignation of any Director, or if the stockholders fail
at any meeting of stockholders at which Directors are to be elected (including
any meeting referred to in Section 19 below) to elect the number of Directors
then constituting the whole Board of Directors.
SECTION 18. RESIGNATION. Any Director may resign at any time by
delivering his written resignation to the Secretary, such resignation to specify
whether it will be effective at a particular time, upon receipt by the Secretary
or at the pleasure of the Board of Directors. If no such specification is made,
it shall be deemed effective at the pleasure of the Board of Directors. When one
or more Directors shall resign from the Board of Directors, effective at a
future date, a majority of the Directors then in office, including those who
have so resigned, shall have power to fill such vacancy or vacancies, the vote
thereon to take effect when such resignation or resignations shall become
effective, and each Director so chosen shall hold office for the unexpired
portion of the term of the Director whose place shall be vacated and until his
successor shall have been duly elected and qualified.
8.
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SECTION 19. REMOVAL. At a special meeting of stockholders called for
the purpose in the manner hereinabove provided, subject to any limitations
imposed by law of the Certificate of Incorporation, the Board of Directors, or
any individual Director, may be removed from office, with or without cause, and
a new Director or Directors elected by a vote of stockholders holding a majority
of the outstanding shares entitled to vote at an election of Directors.
SECTION 20. MEETINGS.
(a) ANNUAL MEETINGS. The annual meeting of the Board of
Directors shall be held immediately after the annual meeting of stockholders and
at the place where such meeting is held. No notice of an annual meeting of the
Board of Directors shall be necessary and such meeting shall be held for the
purpose of electing officers and transacting such other business as may lawfully
come before it.
(b) REGULAR MEETINGS. Except as hereinafter otherwise
provided, regular meetings of the Board of Directors shall be held in the office
of the corporation required to be maintained pursuant to Section 2 hereof.
Unless otherwise restricted by the Certificate of Incorporation, regular
meetings of the Board of Directors may also be held at any place within or
without the State of Delaware which has been determined by the Board of
Directors.
(c) SPECIAL MEETINGS. Unless otherwise restricted by the
Certificate of Incorporation, special meetings of the Board of Directors may be
held at any time and place within or without the State of Delaware whenever
called by the President or a majority of the Directors.
(d) TELEPHONE MEETINGS. Any member of the Board of Directors,
or of any committee thereof, may participate in a meeting by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and participation in a meeting
by such means shall constitute presence in person at such meeting.
(e) NOTICE OF MEETINGS. Written notice of the time and place
of all special meetings of the Board of Directors shall be given at least one
(1) day before the date of the meeting. Notice of any meeting may be waived in
writing at any time before or after the meeting and will be waived by any
Director by attendance thereat, except when the Director attends the meeting for
the express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened.
(f) WAIVER OF NOTICE. The transaction of all business at any
meeting of the Board of Directors, or any committee thereof, however called or
noticed, or wherever held, shall be as valid as though had at a meeting duly
held after regular call and notice, if a quorum be present and if, either before
or after the meeting, each of the Directors not present shall sign a written
waiver of notice, or a consent to holding such meeting, or an approval of the
minutes thereof. Neither the business to be transacted at, nor the purpose of,
any regular or special meeting of the Board of Directors need be specified in
any written waiver of notice or consent
9.
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unless so required by the Certificate of Incorporation or these Bylaws. All such
waivers, consents or approvals shall be filed with the corporate records or made
a part of the minutes of the meeting.
SECTION 21. QUORUM AND VOTING.
(a) Unless the Certificate of Incorporation requires a greater
number and except with respect to indemnification questions arising under
Section 42 hereof, for which a quorum shall be one-third of the exact number of
Directors fixed from time to time in accordance with Section 15 hereof, but not
less than one (1), a quorum of the Board of Directors shall consist of a
majority of the exact number of Directors fixed from time to time in accordance
with Section 15 of these Bylaws, but not less than one (1); provided, however,
at any meeting whether a quorum be present or otherwise, a majority of the
Directors present may adjourn from time to time until the time fixed for the
next regular meeting of the Board of Directors, without notice other than by
announcement at the meeting.
(b) At each meeting of the Board of Directors at which a
quorum is present all questions and business shall be determined by a vote of a
majority of the Directors present, unless a different vote be required by law,
the Certificate of Incorporation or these Bylaws.
SECTION 22. ACTION WITHOUT MEETING. Unless otherwise restricted by the
Certificate of Incorporation or these Bylaws, any action required or permitted
to be taken at any meeting of the Board of Directors or of any committee thereof
may be taken without a meeting, if all members of the Board of Directors or
committee, as the case may be, consent thereto in writing, and such writing or
writings are filed with the minutes of proceedings of the Board of Directors or
committee.
SECTION 23. FEES AND COMPENSATION. Directors shall be entitled to such
compensation for their services as may be approved by the Board of Directors,
including, if so approved, by resolution of the Board of Directors, a fixed sum
and expenses of attendance, if any, for attendance at each regular or special
meeting of the Board of Directors and at any meeting of a committee of the Board
of Directors. Nothing herein contained shall be construed to preclude any
Director from serving the corporation in any other capacity as an officer,
agent, employee, or otherwise and receiving compensation therefor.
SECTION 24. COMMITTEES.
(a) EXECUTIVE COMMITTEE. The Board of Directors may by
resolution passed by a majority of the whole Board of Directors, appoint an
Executive Committee to consist of one (1) or more members of the Board of
Directors. The Executive Committee, to the extent permitted by law and
specifically granted by the Board of Directors, shall have and may exercise when
the Board of Directors is not in session all powers of the Board of Directors in
the management of the business and affairs of the corporation, including,
without limitation, the power and authority to declare a dividend or to
authorize the issuance of stock, except such committee shall not have the power
or authority to amend the Certificate of Incorporation, to
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adopt an agreement of merger or consolidation, to recommend to the stockholders
the sale, lease or exchange of all or substantially all of the corporation's
property and assets, to recommend to the stockholders of the corporation a
dissolution of the corporation or a revocation of a dissolution or to amend
these Bylaws.
(b) OTHER COMMITTEES. The Board of Directors may, by
resolution passed by a majority of the whole Board of Directors, from time to
time appoint such other committees as may be permitted by law. Such other
committees appointed by the Board of Directors shall consist of one (1) or more
members of the Board of Directors, and shall have such powers and perform such
duties as may be prescribed by the resolution or resolutions creating such
committees, but in no event shall such committee have the powers denied to the
Executive Committee in these Bylaws.
(c) TERM. The members of all committees of the Board of
Directors shall serve a term coexistent with that of the Board of Directors
which shall have appointed such committee. The Board of Directors, subject to
the provisions of subsections (a) or (b) of this Section 24, may at any time
increase or decrease the number of members of a committee or terminate the
existence of a committee. The membership of a committee member shall terminate
on the date of his death or voluntary resignation from the committee or from the
Board of Directors. The Board of Directors may at any time for any reason remove
any individual committee member and the Board of Directors may fill any
committee vacancy created by death, resignation, removal or increase in the
number of members of the committee. The Board of Directors may designate one or
more Directors as alternate members of any committee, who may replace any absent
or disqualified member at any meeting of the committee, and, in addition, in the
absence or disqualification of any member of a committee, the member or members
thereof present at any meeting and not disqualified from voting, whether or not
he or they constitute a quorum, may unanimously appoint another member of the
Board of Directors to act at the meeting in the place of any such absent or
disqualified member.
(d) MEETINGS. Unless the Board of Directors shall otherwise
provide, regular meetings of the Executive Committee or any other committee
appointed pursuant to this Section 24 shall be held at such times and places as
are determined by the Board of Directors, or by any such committee, and when
notice thereof has been given to each member of such committee, no further
notice of such regular meetings need be given thereafter. Special meetings of
any such committee may be held at any place which has been determined from time
to time by such committee, and may be called by any Director who is a member of
such committee, upon written notice to the members of such committee of the time
and place of such special meeting given in the manner provided for the giving of
written notice to members of the Board of Directors of the time and place of
special meetings of the Board of Directors. Notice of any special meeting of any
committee may be waived in writing at any time before or after the meeting and
will be waived by any Director by attendance thereat, except when the Director
attends such special meeting for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business because the meeting
is not lawfully called or convened. A majority of the authorized number of
members of any such committee shall
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constitute a quorum for the transaction of business, and the act of a majority
of those present at any meeting at which a quorum is present shall be the act of
such committee.
SECTION 25. ORGANIZATION. At every meeting of the Directors, the
Chairman of the Board of Directors, or, if a Chairman has not been appointed or
is absent, the President, or if the President is absent, the most senior Vice
President, or, in the absence of any such officer, a chairman of the meeting
chosen by a majority of the Directors present, shall preside over the meeting.
The Secretary, or in his absence, an Assistant Secretary directed to do so by
the President, shall act as secretary of the meeting.
ARTICLE V
OFFICERS
SECTION 26. OFFICERS DESIGNATED. The officers of the corporation shall
be the Chairman of the Board of Directors, the President, one or more Vice
Presidents, the Secretary and the Chief Financial Officer or Treasurer, all of
whom shall be elected at the annual organizational meeting of the Board of
Directors. The order of the seniority of the Vice Presidents shall be in the
order of their nomination, unless otherwise determined by the Board of
Directors. The Board of Directors may also appoint one or more Assistant
Secretaries, Assistant Treasurers, and such other officers and agents with such
powers and duties as it shall deem necessary. The Board of Directors may assign
such additional titles to one or more of the officers as it shall deem
appropriate. Any one person may hold any number of offices of the corporation at
any one time unless specifically prohibited therefrom by law. The salaries and
other compensation of the officers of the corporation shall be fixed by or in
the manner designated by the Board of Directors.
SECTION 27. TENURE AND DUTIES OF OFFICERS.
(a) GENERAL. All officers shall hold office at the pleasure of
the Board of Directors and until their successors shall have been duly elected
and qualified, unless sooner removed. Any officer elected or appointed by the
Board of Directors may be removed at any time by the Board of Directors. If the
office of any officer becomes vacant for any reason, the vacancy may be filled
by the Board of Directors.
(b) DUTIES OF CHAIRMAN OF THE BOARD OF DIRECTORS. The Chairman
of the Board of Directors, when present, shall preside at all meetings of the
stockholders and the Board of Directors. The Chairman of the Board of Directors
shall perform other duties commonly incident to his office and shall also
perform such other duties and have such other powers as the Board of Directors
shall designate from time to time.
(c) DUTIES OF PRESIDENT. The President shall preside at all
meetings of the stockholders and at all meetings of the Board of Directors,
unless the Chairman of the Board of Directors has been appointed and is present.
The President shall be the Chief Executive Officer
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of the corporation and shall, subject to the control of the Board of Directors,
have general supervision, direction and control of the business and officers of
the corporation. The President shall perform other duties commonly incident to
his office and shall also perform such other duties and have such other powers
as the Board of Directors shall designate from time to time.
(d) DUTIES OF VICE PRESIDENTS. The Vice Presidents, in the
order of their seniority, may assume and perform the duties of the President in
the absence or disability of the President or whenever the office of President
is vacant. The Vice Presidents shall perform other duties commonly incident to
their office and shall also perform such other duties and have such other powers
as the Board of Directors or the President shall designate from time to time.
(e) DUTIES OF SECRETARY. The Secretary shall attend all
meetings of the stockholders and of the Board of Directors, and shall record all
acts and proceedings thereof in the minute book of the corporation. The
Secretary shall give notice in conformity with these Bylaws of all meetings of
the stockholders, and of all meetings of the Board of Directors and any
committee thereof requiring notice. The Secretary shall perform all other duties
given him in these Bylaws and other duties commonly incident to his office and
shall also perform such other duties and have such other powers as the Board of
Directors shall designate from time to time. The President may direct any
Assistant Secretary to assume and perform the duties of the Secretary in the
absence or disability of the Secretary, and each Assistant Secretary shall
perform other duties commonly incident to his office and shall also perform such
other duties and have such other powers as the Board of Directors or the
President shall designate from time to time.
(f) DUTIES OF CHIEF FINANCIAL OFFICER OR TREASURER. The Chief
Financial Officer or Treasurer shall keep or cause to be kept the books of
account of the corporation in a thorough and proper manner, and shall render
statements of the financial affairs of the corporation in such form and as often
as required by the Board of Directors or the President. The Chief Financial
Officer or Treasurer, subject to the order of the Board of Directors, shall have
the custody of all funds and securities of the corporation. The Chief Financial
Officer or Treasurer shall perform other duties commonly incident to his office
and shall also perform such other duties and have such other powers as the Board
of Directors or the President shall designate from time to time. The President
may direct any Assistant Treasurer to assume and perform the duties of the Chief
Financial Officer or Treasurer in the absence or disability of the Chief
Financial Officer or Treasurer, and each Assistant Treasurer shall perform other
duties commonly incident to his office and shall also perform such other duties
and have such other powers as the Board of Directors or the President shall
designate from time to time.
SECTION 28. DELEGATION OF AUTHORITY. The Board of Directors may from
time to time delegate the powers or duties of any officer to any other officer
or agent, notwithstanding any provision hereof.
SECTION 29. RESIGNATIONS. Any officer may resign at any time by giving
written notice to the Board of Directors or to the President or to the
Secretary. Any such resignation shall be effective when received by the person
or persons to whom such notice is given, unless a later time is specified
therein, in which event the resignation shall become effective at such later
time.
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Unless otherwise specified in such notice, the acceptance of any such
resignation shall not be necessary to make it effective. Any resignation shall
be without prejudice to the rights, if any, of the corporation under any
contract with the resigning officer.
SECTION 30. REMOVAL. Any officer may be removed from office at any
time, either with or without cause, by the vote or written consent of a majority
of the Directors in office at the time, or by any committee or superior officers
upon whom such power of removal may have been conferred by the Board of
Directors.
ARTICLE VI
EXECUTION OF CORPORATE INSTRUMENTS AND
VOTING OF SECURITIES OWNED BY THE CORPORATION
SECTION 31. EXECUTION OF CORPORATE INSTRUMENTS. The Board of Directors
may, in its discretion, determine the method and designate the signatory officer
or officers, or other person or persons, to execute on behalf of the corporation
any corporate instrument or document, or to sign on behalf of the corporation
the corporate name without limitation, or to enter into contracts on behalf of
the corporation, except where otherwise provided by law or these Bylaws, and
such execution or signature shall be binding upon the corporation.
Unless otherwise specifically determined by the Board of Directors or
otherwise required by law, promissory notes, deeds of trust, mortgages and other
evidences of indebtedness of the corporation, and other corporate instruments or
documents requiring the corporate seal, and certificates of shares of stock
owned by the corporation, shall be executed, signed or endorsed by the Chairman
of the Board of Directors, or the President or any Vice President, and by the
Secretary or Chief Financial Officer or Treasurer or any Assistant Secretary or
Assistant Treasurer. All other instruments and documents requiring the corporate
signature, but not requiring the corporate seal, may be executed as aforesaid or
in such other manner as may be directed by the Board of Directors.
All checks and drafts drawn on banks or other depositaries on funds to
the credit of the corporation or in special accounts of the corporation shall be
signed by such person or persons as the Board of Directors shall authorize so to
do.
Unless authorized or ratified by the Board of Directors or within the
agency power of an officer, no officer, agent or employee shall have any power
or authority to bind the corporation by any contract or engagement or to pledge
its credit or to render it liable for any purpose or for any amount.
SECTION 32. VOTING OF SECURITIES OWNED BY THE CORPORATION. All stock
and other securities of other corporations owned or held by the corporation for
itself, or for other parties in any capacity, shall be voted, and all proxies
with respect thereto shall be executed, by the
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person authorized so to do by resolution of the Board of Directors, or, in the
absence of such authorization, by the Chairman of the Board of Directors, the
President, or any Vice President.
ARTICLE VII
SHARES OF STOCK
SECTION 33. FORM AND EXECUTION OF CERTIFICATES. Certificates for the
shares of stock of the corporation shall be in such form as is consistent with
the Certificate of Incorporation and applicable law. Every holder of stock in
the corporation shall be entitled to have a certificate signed by or in the name
of the corporation by the Chairman of the Board of Directors, or the President
or any Vice President and by the Treasurer or Assistant Treasurer or the
Secretary or Assistant Secretary, certifying the number of shares owned by him
in the corporation. Where such certificate is countersigned by a transfer agent
other than the corporation or its employee, or by a registrar other than the
corporation or its employee, any other signature on the certificate may be a
facsimile. In case any officer, transfer agent, or registrar who has signed or
whose facsimile signature has been placed upon a certificate shall have ceased
to be such officer, transfer agent, or registrar before such certificate is
issued, it may be issued with the same effect as if he were such officer,
transfer agent, or registrar at the date of issue. Each certificate shall state
upon the face or back thereof, in full or in summary, all of the designations,
preferences, limitations, restrictions on transfer and relative rights of the
shares authorized to be issued.
SECTION 34. LOST CERTIFICATES. A new certificate or certificates shall
be issued in place of any certificate or certificates theretofore issued by the
corporation alleged to have been lost, stolen, or destroyed, upon the making of
an affidavit of that fact by the person claiming the certificate of stock to be
lost, stolen, or destroyed. The corporation may require, as a condition
precedent to the issuance of a new certificate or certificates, the owner of
such lost, stolen, or destroyed certificate or certificates, or his legal
representative, to advertise the same in such manner as it shall require or to
give the corporation a surety bond in such form and amount as it may direct as
indemnity against any claim that may be made against the corporation with
respect to the certificate alleged to have been lost, stolen, or destroyed.
SECTION 35. TRANSFERS.
(a) Transfers of record of shares of stock of the corporation
shall be made only upon its books by the holders thereof, in person or by
attorney duly authorized, and upon the surrender of a properly endorsed
certificate or certificates for a like number of shares.
(b) The corporation shall have power to enter into and perform
any agreement with any number of stockholders of any one or more classes of
stock of the corporation to restrict the transfer of shares of stock of the
corporation of any one or more classes owned by such stockholders in any manner
not prohibited by the General Corporation Law of Delaware.
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SECTION 36. FIXING RECORD DATES.
(a) In order that the Corporation may determine the
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, the Board of Directors may fix, in advance, a record
date, which record date shall not precede the date upon which the resolution
fixing the record date is adopted by the Board of Directors, and which record
date shall not be more than sixty (60) nor less than ten (10) days before the
date of such meeting. If no record date is fixed by the Board of Directors, the
record date for determining stockholders entitled to notice of or to vote at a
meeting of stockholders shall be at the close of business on the day next
preceding the day on which notice is given, or if notice is waived, at the close
of business on the day next preceding the day on which the meeting is held. A
determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting; provided,
however, that the Board of Directors may fix a new record date for the adjourned
meeting.
(b) In order that the Corporation may determine the
stockholders entitled to consent to corporate action in writing without a
meeting, the Board of Directors may fix, in advance, a record date, which record
date shall not precede the date upon which the resolution fixing the record date
is adopted by the Board of Directors, and which date shall not be more than ten
(10) days after the date upon which the resolution fixing the record date is
adopted by the Board of Directors. If no record date has been fixed by the Board
of Directors, the record date for determining stockholders entitled to consent
to corporate action in writing without a meeting, when no prior action by the
Board of Directors is required by law, shall be the first date on which a signed
written consent setting forth the action taken or proposed to be taken is
delivered to the Corporation by delivery to its registered office in the State
of Delaware, its principal place of business or an officer or agent of the
Corporation having custody of the book in which proceedings of meetings of
stockholders are recorded. Delivery made to a Corporation's registered office
shall be by hand or by certified or registered mail, return receipt requested.
If no record date has been fixed by the Board of Directors and prior action by
the Board of Directors is required by law, the record date for determining
stockholders entitled to consent to corporate action in writing without a
meeting shall be at the close of business on the day on which the Board of
Directors adopts the resolution taking such prior action.
(c) In order that the corporation may determine the
stockholders entitled to receive payment of any dividend or other distribution
or allotment of any rights or the stockholders entitled to exercise any rights
in respect of any change, conversion or exchange of stock, or for the purpose of
any other lawful action, the Board of Directors may fix, in advance, a record
date, which record date shall not precede the date upon which the resolution
fixing the record date is adopted, and which record date shall be not more than
sixty (60) days prior to such action. If no record date is fixed, the record
date for determining stockholders for any such purpose shall be at the close of
business on the day on which the Board of Directors adopts the resolution
relating thereto.
SECTION 37. REGISTERED STOCKHOLDERS. The corporation shall be entitled
to recognize the exclusive right of a person registered on its books as the
owner of shares to receive
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dividends, and to vote as such owner, and shall not be bound to recognize any
equitable or other claim to or interest in such share or shares on the part of
any other person whether or not it shall have express or other notice thereof,
except as otherwise provided by the laws of Delaware.
ARTICLE VIII
OTHER SECURITIES OF THE CORPORATION
SECTION 38. EXECUTION OF OTHER SECURITIES. All bonds, debentures and
other corporate securities of the corporation, other than stock certificates
(covered in Section 33), may be signed by the Chairman of the Board of
Directors, the President or any Vice President, or such other person as may be
authorized by the Board of Directors, and the corporate seal impressed thereon
or a facsimile of such seal imprinted thereon and attested by the signature of
the Secretary or an Assistant Secretary, or the Chief Financial Officer or
Treasurer or an Assistant Treasurer; provided, however, that where any such
bond, debenture or other corporate security shall be authenticated by the manual
signature of a trustee under an indenture pursuant to which such bond, debenture
or other corporate security shall be issued, the signatures of the persons
signing and attesting the corporate seal on such bond, debenture or other
corporate security may be the imprinted facsimile of the signatures of such
persons. Interest coupons appertaining to any such bond, debenture or other
corporate security, authenticated by a trustee as aforesaid, shall be signed by
the Treasurer or an Assistant Treasurer of the corporation or such other person
as may be authorized by the Board of Directors, or bear imprinted thereon the
facsimile signature of such person. In case any officer who shall have signed or
attested any bond, debenture or other corporate security, or whose facsimile
signature shall appear thereon or on any such interest coupon, shall have ceased
to be such officer before the bond, debenture or other corporate security so
signed or attested shall have been delivered, such bond, debenture or other
corporate security nevertheless may be adopted by the corporation and issued and
delivered as though the person who signed the same or whose facsimile signature
shall have been used thereon had not ceased to be such officer of the
corporation.
ARTICLE IX
DIVIDENDS
SECTION 39. DECLARATION OF DIVIDENDS. Dividends upon the capital stock
of the corporation, subject to the provisions of the Certificate of
Incorporation, if any, may be declared by the Board of Directors pursuant to law
at any regular or special meeting. Dividends may be paid in cash, in property,
or in shares of the capital stock, subject to the provisions of the Certificate
of Incorporation.
SECTION 40. DIVIDEND RESERVE. Before payment of any dividend, there may
be set aside out of any funds of the corporation available for dividends such
sum or sums as the Board of Directors from time to time, in their absolute
discretion, think proper as a reserve or reserves
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to meet contingencies, or for equalizing dividends, or for repairing or
maintaining any property of the corporation, or for such other purpose as the
Board of Directors shall think conducive to the interests of the corporation,
and the Board of Directors may modify or abolish any such reserve in the manner
in which it was created.
ARTICLE X
FISCAL YEAR
SECTION 41. FISCAL YEAR. The fiscal year of the corporation shall be
fixed by resolution of the Board of Directors.
ARTICLE XI
INDEMNIFICATION
SECTION 42. INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES AND OTHER
AGENTS.
(a) DIRECTORS. The corporation shall indemnify its Directors
to the fullest extent not prohibited by the Delaware General Corporation Law;
provided, however, that the corporation shall not be required to indemnify any
Director in connection with any proceeding (or part thereof) initiated by such
person or any proceeding by such person against the corporation or its
Directors, officers, employees or other agents unless (i) such indemnification
is expressly required to be made by law, (ii) the proceeding was authorized by
the Board of Directors of the corporation or (iii) such indemnification is
provided by the corporation, in its sole discretion, pursuant to the powers
vested in the corporation under the Delaware General Corporation Law.
(b) OFFICERS, EMPLOYEES AND OTHER AGENTS. The corporation
shall have power to indemnify its officers, employees and other agents as set
forth in the Delaware General Corporation Law.
(c) GOOD FAITH.
(1) For purposes of any determination under this
Bylaw, a Director or executive officer shall be deemed to have acted in good
faith and in a manner he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, to have had no reasonable cause to believe that his conduct was
unlawful, if his action is based on information, opinions, reports and
statements, including financial statements and other financial data, in each
case prepared or presented by:
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(i) one or more officers or employees of the
corporation whom the Director or executive officer believed to be reliable and
competent in the matters presented;
(ii) counsel, independent accountants or
other persons as to matters which the Director or executive officer believed to
be within such person's professional competence; and
(iii) with respect to a Director, a
committee of the Board upon which such Director does not serve, as to matters
within such Committee's designated authority, which committee the Director
believes to merit confidence; so long as, in each case, the Director or
executive officer acts without knowledge that would cause such reliance to be
unwarranted.
(2) The termination of any proceeding by judgment,
order, settlement, conviction or upon a plea of nolo contendere or its
equivalent shall not, of itself, create a presumption that the person did not
act in good faith and in a manner which he reasonably believed to be in or not
opposed to the best interests of the corporation, and, with respect to any
criminal proceeding, that he had reasonable cause to believe that his conduct
was unlawful.
(3) The provisions of this paragraph (c) shall not be
deemed to be exclusive or to limit in any way the circumstances in which a
person may be deemed to have met the applicable standard of conduct set forth by
the Delaware General Corporation Law.
(d) EXPENSES. The corporation shall advance, prior to the
final disposition of any proceeding, promptly following request therefor, all
expenses incurred by any Director or executive officer in connection with such
proceeding upon receipt of an undertaking by or on behalf of such person to
repay said amounts if it should be determined ultimately that such person is not
entitled to be indemnified under this Bylaw or otherwise.
(e) ENFORCEMENT. Without the necessity of entering into an
express contract, all rights to indemnification and advances to Directors and
executive officers under this Bylaw shall be deemed to be contractual rights and
be effective to the same extent and as if provided for in a contract between the
corporation and the Director or executive officer. Any right to indemnification
or advances granted by this Bylaw to a Director or executive officer shall be
enforceable by or on behalf of the person holding such right in any court of
competent jurisdiction if (i) the claim for indemnification or advances is
denied, in whole or in part, or (ii) no disposition of such claim is made within
ninety (90) days of request therefor. The claimant in such enforcement action,
if successful in whole or in part, shall be entitled to be paid also the expense
of prosecuting his claim. The corporation shall be entitled to raise as a
defense to any such action that the claimant has not met the standards of
conduct that make it permissible under the Delaware General Corporation Law for
the corporation to indemnify the claimant for the amount claimed. Neither the
failure of the corporation (including its Board of Directors, independent legal
counsel or its stockholders) to have made a determination prior to the
commencement of such action that indemnification of the claimant is proper in
the circumstances
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because he has met the applicable standard of conduct set forth in the Delaware
General Corporation Law, nor an actual determination by the corporation
(including its Board of Directors, independent legal counsel or its
stockholders) that the claimant has not met such applicable standard of conduct,
shall be a defense to the action or create a presumption that claimant has not
met the applicable standard of conduct.
(f) NON-EXCLUSIVITY OF RIGHTS. The rights conferred on any
person by this Bylaw shall not be exclusive of any other right which such person
may have or hereafter acquire under any statute, provision of the Certificate of
Incorporation, Bylaws, agreement, vote of stockholders or disinterested
Directors or otherwise, both as to action in his official capacity and as to
action in another capacity while holding office. The corporation is specifically
authorized to enter into individual contracts with any or all of its Directors,
officers, employees or agents respecting indemnification and advances, to the
fullest extent not prohibited by the Delaware General Corporation Law.
(g) SURVIVAL OF RIGHTS. The rights conferred on any person by
this Bylaw shall continue as to a person who has ceased to be a Director,
officer, employee or other agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.
(h) INSURANCE. To the fullest extent permitted by the Delaware
General Corporation Law, the corporation, upon approval by the Board of
Directors, may purchase insurance on behalf of any person required or permitted
to be indemnified pursuant to this Bylaw.
(i) AMENDMENTS. Any repeal or modification of this Bylaw shall
only be prospective and shall not affect the rights under this Bylaw in effect
at the time of the alleged occurrence of any action or omission to act that is
the cause of any proceeding against any agent of the corporation.
(j) SAVING CLAUSE. If this Bylaw or any portion hereof shall
be invalidated on any ground by any court of competent jurisdiction, then the
corporation shall nevertheless indemnify each Director and executive officer to
the full extent not prohibited by any applicable portion of this Bylaw that
shall not have been invalidated, or by any other applicable law.
(k) CERTAIN DEFINITIONS. For the purposes of this Bylaw, the
following definitions shall apply:
(1) The term "proceeding" shall be broadly construed
and shall include, without limitation, the investigation, preparation,
prosecution, defense, settlement, arbitration and appeal of, and the giving of
testimony in, any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative.
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(2) The term "expenses" shall be broadly construed
and shall include, without limitation, court costs, attorneys' fees, witness
fees, fines, amounts paid in settlement or judgment and any other costs and
expenses of any nature or kind incurred in connection with any proceeding.
(3) The term the "corporation" shall include, in
addition to the resulting corporation, any constituent corporation (including
any constituent of a constituent) absorbed in a consolidation or merger which,
if its separate existence had continued, would have had power and authority to
indemnify its directors, officers, and employees or agents, so that any person
who is or was a director, officer, employee or agent of such constituent
corporation, or is or was serving at the request of such constituent corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, shall stand in the same position under
the provisions of this Bylaw with respect to the resulting or surviving
corporation as he would have with respect to such constituent corporation if its
separate existence had continued.
(4) References to a "director," "officer,"
"employee," or "agent" of the corporation shall include, without limitation,
situations where such person is serving at the request of the corporation as a
director, officer, employee, trustee or agent of another corporation,
partnership, joint venture, trust or other enterprise.
(5) References to "other enterprises" shall include
employee benefit plans; references to "fines" shall include any excise taxes
assessed on a person with respect to an employee benefit plan; and references to
"serving at the request of the corporation" shall include any service as a
director, officer, employee or agent of the corporation which imposes duties on,
or involves services by, such director, officer, employee, or agent with respect
to an employee benefit plan, its participants, or beneficiaries; and a person
who acted in good faith and in a manner he reasonably believed to be in the
interest of the participants and beneficiaries of an employee benefit plan shall
be deemed to have acted in a manner "not opposed to the best interests of the
corporation" as referred to in this Bylaw.
ARTICLE XII
NOTICES
SECTION 43. NOTICES.
(a) NOTICE TO STOCKHOLDERS. Whenever, under any provisions of
these Bylaws, notice is required to be given to any stockholder, it shall be
given in writing, timely and duly deposited in the United States mail, postage
prepaid, and addressed to his last known post office address as shown by the
stock record of the corporation or its transfer agent.
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(b) NOTICE TO DIRECTORS. Any notice required to be given to
any Director may be given by the method stated in subsection (a), or by
facsimile, telex or telegram, except that such notice other than one which is
delivered personally shall be sent to such address as such Director shall have
filed in writing with the Secretary, or, in the absence of such filing, to the
last known post office address of such Director.
(c) ADDRESS UNKNOWN. If no address of a stockholder or
Director be known, notice may be sent to the office of the corporation required
to be maintained pursuant to Section 2 hereof.
(d) AFFIDAVIT OF MAILING. An affidavit of mailing, executed by
a duly authorized and competent employee of the corporation or its transfer
agent appointed with respect to the class of stock affected, specifying the name
and address or the names and addresses of the stockholder or stockholders, or
Director or Directors, to whom any such notice or notices was or were given, and
the time and method of giving the same, shall be conclusive evidence of the
statements therein contained.
(e) TIME NOTICES DEEMED GIVEN. All notices given by mail, as
above provided, shall be deemed to have been given as at the time of mailing and
all notices given by facsimile, telex or telegram shall be deemed to have been
given as of the sending time recorded at time of transmission.
(f) METHODS OF NOTICE. It shall not be necessary that the same
method of giving notice be employed in respect of all Directors, but one
permissible method may be employed in respect of any one or more, and any other
permissible method or methods may be employed in respect of any other or others.
(g) FAILURE TO RECEIVE NOTICE. The period or limitation of
time within which any stockholder may exercise any option or right, or enjoy any
privilege or benefit, or be required to act, or within which any Director may
exercise any power or right, or enjoy any privilege, pursuant to any notice sent
him in the manner above provided, shall not be affected or extended in any
manner by the failure of such stockholder or such Director to receive such
notice.
(h) NOTICE TO PERSON WITH WHOM COMMUNICATION IS UNLAWFUL.
Whenever notice is required to be given, under any provision of law or of the
Certificate of Incorporation or Bylaws of the corporation, to any person with
whom communication is unlawful, the giving of such notice to such person shall
not be required and there shall be no duty to apply to any governmental
authority or agency for a license or permit to give such notice to such person.
Any action or meeting which shall be taken or held without notice to any such
person with whom communication is unlawful shall have the same force and effect
as if such notice had been duly given. In the event that the action taken by the
corporation is such as to require the filing of a certificate under any
provision of the Delaware General Corporation Law, the certificate shall state,
if such is the fact and if notice is required, that notice was given to all
persons entitled to receive notice except such persons with whom communication
is unlawful.
22.
<PAGE> 28
(i) NOTICE TO PERSON WITH UNDELIVERABLE ADDRESS. Whenever
notice is required to be given, under any provision of law or the Certificate of
Incorporation or Bylaws of the corporation, to any stockholder to whom (i)
notice of two consecutive annual meetings, and all notices of meetings or of the
taking of action by written consent without a meeting to such person during the
period between such two consecutive annual meetings, or (ii) all, and at least
two, payments (if sent by first class mail) of dividends or interest on
securities during a twelve month period, have been mailed addressed to such
person at his address as shown on the records of the Corporation and have been
returned undeliverable, the giving of such notice to such person shall not be
required. Any action or meeting which shall be taken or held without notice to
such person shall have the same force and effect as if such notice had been duly
given. If any such person shall deliver to the corporation a written notice
setting forth his then current address, the requirement that notice be given to
such person shall be reinstated. In the event that the action taken by the
corporation is such as to require the filing of a certificate under any
provision of the Delaware General Corporation Law, the certificate need not
state that notice was not given to persons to whom notice was not required to be
given pursuant to this paragraph.
ARTICLE XIII
AMENDMENTS
SECTION 44. AMENDMENTS. Except as otherwise set forth in paragraph (i)
of Section 42 of these Bylaws, these Bylaws may be amended or repealed and new
Bylaws adopted by the stockholders entitled to vote. The Board of Directors
shall also have the power, if such power is conferred upon the Board of
Directors by the Certificate of Incorporation, to adopt, amend or repeal Bylaws
(including, without limitation, the amendment of any Bylaw setting forth the
number of Directors who shall constitute the whole Board of Directors.
ARTICLE XIV
RIGHT OF FIRST REFUSAL
SECTION 45. RIGHT OF FIRST REFUSAL. No stockholder shall sell, assign,
pledge,or in any manner transfer any of the shares of common stock of the
corporation or any right or interest therein, whether voluntarily or by
operation of law, or by gift or otherwise, except by a transfer which meets the
requirements hereinafter set forth in this Bylaw:
(a) If the stockholder receives from anyone a bona fide offer
acceptable to the stockholder to purchase any of his shares of common stock,
then the stockholder shall first give written notice thereof to the corporation.
The notice shall name the proposed transferee and state the number of shares to
be transferred, the price per share and all other terms and conditions of the
offer.
(b) For fifteen (15) days following receipt of such notice,
the corporation shall have the option to purchase all or any lesser part of the
shares specified in the notice at the price
23.
<PAGE> 29
and upon the terms set forth in such bona fide offer. In the event the
corporation elects to purchase all the shares, it shall give written notice to
the selling stockholder of its election and settlement for said shares shall be
made as provided below in paragraph (d).
(c) In the event the corporation does not elect to acquire all
of the shares specified in the selling stockholder's notice, the Secretary of
the corporation shall, within fifteen (15) days of receipt of said selling
stockholder's notice, give written notice thereof to the stockholders of the
corporation other than the selling stockholder. Said written notice shall state
the number of shares that the corporation has elected to purchase and the number
of shares remaining available for purchase (which shall be the same as the
number contained in said selling stockholder's notice, less any such shares that
the corporation has elected to purchase). Each of the other holders of common
stock shall have the option to purchase that proportion of the shares available
for purchase as the number of shares owned by each of said other holders of
common stock bears to the total issued and outstanding shares of common stock of
the corporation, excepting those shares owned by the selling stockholder. A
stockholder electing to exercise such option shall, within ten (10) days after
mailing of the corporation's notice, give notice to the corporation specifying
the number of shares such stockholder will purchase. Within such ten-day period,
each of said other stockholders shall give written notice stating how many
additional shares such stockholder will purchase if additional shares are made
available. Failure to respond in writing within said ten-day period to the
notice given by the Secretary of the corporation shall be deemed a rejection of
such stockholder's right to acquire a proportionate part of the shares of the
selling stockholder. In the event one or more stockholders do not elect to
acquire the shares available to them, said shares shall be allocated on a pro
rata basis to the stockholders who requested shares in addition to their pro
rata allotment.
(d) In the event the corporation and/or stockholders, other
than the selling stockholder, elect to acquire any of the shares of the selling
stockholder as specified in said selling stockholder's notice, the Secretary of
the corporation shall so notify the selling stockholder and settlement thereof
shall be made in cash within thirty (30) days after the Secretary of the
corporation receives said selling stockholder's notice; provided that if the
terms of payment set forth in said selling stockholder's notice were other than
cash against delivery, the corporation and/or its other stockholders shall pay
for said shares on the same terms and conditions set forth in said selling
stockholder's notice.
(e) In the event the corporation and/or its other stockholders
do not elect to acquire al of the shares specified in the selling stockholder's
notice, said selling stockholder may, within the sixty-day period following the
expiration of the option rights granted to the corporation and other
stockholders herein, sell elsewhere the shares specified in said selling
stockholder's notice which were not acquired by the corporation and/or its other
stockholders, in accordance with the provisions of paragraph (d) of this bylaw,
provided that said sale shall not be on terms and conditions more favorable to
the purchaser that those contained in the bona fide offer set forth in said
selling stockholder's notice. All shares so sold by said selling stockholder
shall continue to be subject to the provisions of this Bylaw in the same manner
as before said transfer.
24.
<PAGE> 30
(f) Anything to the contrary contained herein notwithstanding,
the following transactions shall be exempt from the provisions of this Bylaw:
(1) A stockholder's transfer of any or all shares
held either during such stockholder's lifetime or on death by will or
intestacy to such stockholder's immediate family. "Immediate family" as
used herein shall mean spouse, lineal descendant, father, mother,
brother, or sister of the stockholder making such transfer and shall
include any trust established primarily for the benefit of the
stockholder or his immediate family.
(2) A stockholder's bona fide pledge or mortgage of
any shares with a commercial lending institution, provided than any
subsequent transfer of said shares by said institution shall be
conducted in the manner set forth in this Section 45.
(3) A stockholder's transfer of any or all of such
stockholder's shares to the corporation or to any other stockholder of
the corporation.
(4) A stockholder's transfer of any or all of such
stockholder's shares to a person who, at the time of such transfer, is
an officer or director of the corporation.
(5) A corporate stockholder's transfer of any or all
of its shares pursuant to and in accordance with the terms of any
merger, consolidation, reclassification of shares or capital
reorganization of the corporate stockholder, or pursuant to a sale of
all or substantially all of the stock or assets of a corporate
stockholder.
(6) A corporate stockholder's transfer of any or all
of its shares to any or all of its stockholders.
(7) A transfer by a stockholder which is a limited or
general partnership to any or all of its partners.
(8) A transfer which is in compliance with any other
agreement which provides for a right of first refusal, including
without limitation, that certain Investors' Rights Agreement by and
between the Corporation and certain purchasers of its Preferred Stock,
dated on or about February 24, 1995.
In any such case, the transferee, assignee, or other recipient
shall receive and hold such stock subject to the provisions of this Bylaw, and
there shall be no further transfer of such stock except in accordance with this
Bylaw.
(g) The provisions of this Section 45 may be waived with
respect to any transfer either by the corporation, upon duly authorized action
of its Board of Directors, or by the stockholders, upon the express written
consent of the owners of a majority of the voting power of the corporation
(excluding the votes represented by those shares to be sold by the selling
stockholder). This Section 45 may be amended or repealed either by a duly
authorized
25.
<PAGE> 31
action of the Board of Directors or by the stockholders, upon the express vote
or written consent of the owners of a majority of the voting power of the
corporation.
(h) Any sale or transfer, or purported sale or transfer, of
common stock of the corporation shall be null and void unless the terms,
conditions, and provisions of this Bylaw are strictly observed and followed.
(i) The foregoing right of first refusal shall terminate on
either of the following dates, whichever shall first occur:
(1) On February __, 2005; or
(2) Upon the date securities of the corporation are
first offered to the public pursuant to a registration statement filed with, and
declared effective by, the United States Securities and Exchange Commission
under the Securities Act of 1933, as amended.
(j) The certificates representing shares of common stock of
the corporation shall bear on their face the following legend so long as the
foregoing right of first refusal remains in effect:
"The shares represented by this certificate are subject to a
right of first refusal option in favor of the corporation and its other
stockholders, as provided in the bylaws of the corporation."
ARTICLE XV
LOANS TO OFFICERS
SECTION 46. LOANS TO OFFICERS. The corporation may lend money to, or
guarantee any obligation of, or otherwise assist any officer or other employee
of the corporation or of its subsidiaries, including any officer or employee who
is a Director of the corporation or its subsidiaries, whenever, in the judgment
of the Board of Directors, such loan, guarantee or assistance may reasonably be
expected to benefit the corporation. The loan, guarantee or other assistance may
be with or without interest and may be unsecured, or secured in such manner as
the Board of Directors shall approve, including, without limitation, a pledge of
shares of stock of the corporation. Nothing in this Section 46 shall be deemed
to deny, limit or restrict the powers of guaranty or warranty of the corporation
at common law or under any statute.
26.
<PAGE> 32
ARTICLE XVI
MISCELLANEOUS
SECTION 47. ANNUAL REPORT.
(a) Subject to the provisions of Section 47(b) below, the
Board of Directors shall cause an annual report to be sent to each stockholder
of the corporation not later than one hundred twenty (120) days after the close
of the corporation's fiscal year. Such report shall include a balance sheet as
of the end of such fiscal year and an income statement and statement of changes
in financial position for such fiscal year, accompanied by any report thereon of
independent accounts or, if there is no such report, the certificate of an
authorized officer of the corporation that such statements were prepared without
audit from the books and records of the corporation. When there are more than
100 stockholders of record of the corporation's shares, as determined by Section
605 of the California Corporations Code, additional information as required by
Section 1501(b) of the California Corporations Code shall also be contained in
such report, provided that if the corporation has a class of securities
registered under Section 12 of the United States Securities Exchange Act of
1934, that Act shall take precedence. Such report shall be sent to stockholders
at least fifteen (15) days prior to the next annual meeting of stockholders
after the end of the fiscal year to which it relates.
(b) If and so long as there are fewer than 100 holders of
record of the corporation's shares, the requirement of sending of an annual
report to the stockholders of the corporation is hereby expressly waived.
27.
<PAGE> 1
EXHIBIT 3.5
BYLAWS
OF
COULTER PHARMACEUTICAL, INC.
(A DELAWARE CORPORATION)
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE I
OFFICES................................................... 1
Section 1. Registered Office........................................................... 1
Section 2. Other Offices............................................................... 1
ARTICLE II
CORPORATE SEAL................................................ 1
Section 3. Corporate Seal.............................................................. 1
ARTICLE III
STOCKHOLDERS' MEETINGS............................................ 1
Section 4. Place of Meetings........................................................... 1
Section 5. Annual Meeting.............................................................. 2
Section 6. Special Meetings............................................................ 3
Section 7. Notice of Meetings.......................................................... 4
Section 8. Quorum...................................................................... 4
Section 9. Adjournment and Notice of Adjourned Meetings................................ 5
Section 10. Voting Rights............................................................... 5
Section 11. Beneficial Owners of Stock.................................................. 5
Section 12. List of Stockholders........................................................ 6
Section 13. Action without Meeting...................................................... 6
Section 14. Organization................................................................ 7
ARTICLE IV
DIRECTORS.................................................. 7
Section 15. Number and Term of Office................................................... 7
Section 16. Powers...................................................................... 8
Section 17. Vacancies................................................................... 8
Section 18. Resignation................................................................. 8
Section 19. Removal..................................................................... 8
Section 20. Meetings.................................................................... 8
(a) Annual Meetings.............................................................. 8
(b) Regular Meetings............................................................. 9
(c) Special Meetings............................................................. 9
(d) Telephone Meetings........................................................... 9
(e) Notice of Meetings........................................................... 9
(f) Waiver of Notice............................................................. 9
</TABLE>
i.
<PAGE> 3
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Section 21. Quorum and Voting........................................................... 9
Section 22. Action without Meeting...................................................... 10
Section 23. Fees and Compensation....................................................... 10
Section 24. Committees.................................................................. 10
(a) Executive Committee......................................................... 10
(b) Other Committees............................................................ 10
(c) Term........................................................................ 11
(d) Meetings.................................................................... 11
Section 25. Organization................................................................ 11
ARTICLE V
OFFICERS................................................... 12
Section 26. Officers Designated......................................................... 12
Section 27. Tenure and Duties of Officers............................................... 12
(a) General..................................................................... 12
(b) Duties of Chairman of the Board of Directors................................ 12
(c) Duties of President......................................................... 12
(d) Duties of Vice Presidents................................................... 12
(e) Duties of Secretary......................................................... 13
(f) Duties of Chief Financial Officer or Treasurer.............................. 13
Section 28. Delegation of Authority..................................................... 13
Section 29. Resignations................................................................ 13
Section 30. Removal..................................................................... 13
ARTICLE VI
EXECUTION OF CORPORATE INSTRUMENTS AND
VOTING OF SECURITIES OWNED BY THE CORPORATION................................ 14
Section 31. Execution of Corporate Instruments.......................................... 14
Section 32. Voting of Securities Owned by the Corporation............................... 14
ARTICLE VII
SHARES OF STOCK............................................... 15
Section 33. Form and Execution of Certificates.......................................... 15
Section 34. Lost Certificates........................................................... 15
Section 35. Transfers................................................................... 15
Section 36. Fixing Record Dates......................................................... 16
</TABLE>
ii.
<PAGE> 4
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Section 37. Registered Stockholders..................................................... 16
ARTICLE VIII
OTHER SECURITIES OF THE CORPORATION..................................... 17
Section 38. Execution of Other Securities............................................... 17
ARTICLE IX
DIVIDENDS.................................................. 17
Section 39. Declaration of Dividends.................................................... 17
Section 40. Dividend Reserve............................................................ 17
ARTICLE X
FISCAL YEAR................................................. 18
Section 41. Fiscal Year................................................................. 18
ARTICLE XI
INDEMNIFICATION............................................... 18
Section 42. Indemnification of Directors, Officers, Employees and Other
Agents...................................................................... 18
(a) Directors.................................................................... 18
(b) Officers, Employees and Other Agents......................................... 18
(c) Good Faith................................................................... 18
(d) Expenses..................................................................... 19
(e) Enforcement.................................................................. 19
(f) Non-Exclusivity of Rights.................................................... 20
(g) Survival of Rights........................................................... 20
(h) Insurance.................................................................... 20
(i) Amendments................................................................... 20
(j) Saving Clause................................................................ 20
(k) Certain Definitions.......................................................... 20
ARTICLE XII
NOTICES................................................... 21
Section 43. Notices..................................................................... 21
</TABLE>
iii.
<PAGE> 5
<TABLE>
<S> <C>
(a) Notice to Stockholders...................................................... 21
(b) Notice to Directors......................................................... 22
(c) Address Unknown............................................................. 22
(d) Affidavit of Mailing........................................................ 22
(e) Time Notices Deemed Given................................................... 22
(f) Methods of Notice........................................................... 22
(g) Failure to Receive Notice................................................... 22
(h) Notice to Person with Whom Communication Is Unlawful........................ 22
(i) Notice to Person with Undeliverable Address................................. 23
ARTICLE XIII
AMENDMENTS.................................................. 23
Section 44. Amendments.................................................................. 23
ARTICLE XV
LOANS TO OFFICERS.............................................. 23
Section 45. Loans to Officers........................................................... 23
ARTICLE XVI
MISCELLANEOUS................................................ 24
Section 46. Annual Report............................................................... 24
</TABLE>
iv.
<PAGE> 6
BYLAWS
OF
COULTER PHARMACEUTICAL, INC.
(A DELAWARE CORPORATION)
ARTICLE I
OFFICES
SECTION 1. REGISTERED OFFICE. The registered office of the corporation
in the State of Delaware shall be in the City of Dover, County of Kent.
SECTION 2. OTHER OFFICES. The corporation shall also have and maintain
an office or principal place of business, at such place as may be fixed by the
Board of Directors, and may also have offices at such other places, both within
and without the State of Delaware as the Board of Directors may from time to
time determine or the business of the corporation may require.
ARTICLE II
CORPORATE SEAL
SECTION 3. CORPORATE SEAL. The corporate seal, if adopted by the Board
of Directors, shall consist of a die bearing the name of the corporation and the
inscription, "Corporate Seal-Delaware." Said seal may be used by causing it or a
facsimile thereof to be impressed or affixed or reproduced or otherwise.
ARTICLE III
STOCKHOLDERS' MEETINGS
SECTION 4. PLACE OF MEETINGS. Meetings of the stockholders of the
corporation shall be held at such place, either within or without the State of
Delaware, as may be designated from time to time by the Board of Directors, or,
if not so designated, then at the office of the corporation required to be
maintained pursuant to Section 2 hereof.
1.
<PAGE> 7
SECTION 5. ANNUAL MEETING.
(a) The annual meeting of the stockholders of the corporation,
for the purpose of election of Directors and for such other business as may
lawfully come before it, shall be held on such date and at such time as may be
designated from time to time by the Board of Directors.
(b) At an annual meeting of the stockholders, only such business
shall be conducted as shall have been properly brought before the meeting. To be
properly brought before an annual meeting, business must be: (A) specified in
the notice of meeting (or any supplement thereto) given by or at the direction
of the Board of Directors, (B) otherwise properly brought before the meeting by
or at the direction of the Board of Directors, or (C) otherwise properly brought
before the meeting by a stockholder. For business to be properly brought before
an annual meeting by a stockholder, the stockholder must have given timely
notice thereof in writing to the Secretary of the corporation. To be timely, a
stockholder's notice must be delivered to or mailed and received at the
principal executive offices of the corporation not later than the close of
business on the sixtieth (60th) day nor earlier than the close of business on
the ninetieth (90th) day prior to the first anniversary of the preceding year's
annual meeting; provided, however, that in the event that no annual meeting was
held in the previous year or the date of the annual meeting has been changed by
more than thirty (30) days from the date contemplated at the time of the
previous year's proxy statement, notice by the stockholder to be timely must be
so received not earlier than the close of business on the ninetieth (90th) day
prior to such annual meeting and not later than the close of business on the
later of the sixtieth (60th) day prior to such annual meeting or, in the event
public announcement of the date of such annual meeting is first made by the
corporation fewer than seventy (70) days prior to the date of such annual
meeting, the close of business on the tenth (10th) day following the day on
which public announcement of the date of such meeting is first made by the
corporation. A stockholder's notice to the Secretary shall set forth as to each
matter the stockholder proposes to bring before the annual meeting: (i) a brief
description of the business desired to be brought before the annual meeting and
the reasons for conducting such business at the annual meeting, (ii) the name
and address, as they appear on the corporation's books, of the stockholder
proposing such business, (iii) the class and number of shares of the corporation
which are beneficially owned by the stockholder, (iv) any material interest of
the stockholder in such business and (v) any other information that is required
to be provided by the stockholder pursuant to Regulation 14A under the
Securities Exchange Act of 1934, as amended (the "1934 Act"), in his capacity as
a proponent to a stockholder proposal. Notwithstanding the foregoing, in order
to include information with respect to a stockholder proposal in the proxy
statement and form of proxy for a stockholder's meeting, stockholders must
provide notice as required by the regulations promulgated under the 1934 Act.
Notwithstanding anything in these Bylaws to the contrary, no business shall be
conducted at any annual meeting except in accordance with the procedures set
forth in this paragraph (b). The chairman of the annual meeting shall, if the
facts warrant, determine and declare at the meeting that business was not
properly brought before the meeting and in accordance with the provisions of
this paragraph (b), and, if he should so determine, he shall so declare at the
meeting that any such business not properly brought before the meeting shall not
be transacted.
2.
<PAGE> 8
(c) Only persons who are nominated in accordance with the
procedures set forth in this paragraph (c) shall be eligible for election as
Directors. Nominations of persons for election to the Board of Directors of the
corporation may be made at a meeting of stockholders by or at the direction of
the Board of Directors or by any stockholder of the corporation entitled to vote
in the election of Directors at the meeting who complies with the notice
procedures set forth in this paragraph (c). Such nominations, other than those
made by or at the direction of the Board of Directors, shall be made pursuant to
timely notice in writing to the Secretary of the corporation in accordance with
the provisions of paragraph (b) of this Section 5. Such stockholder's notice
shall set forth (i) as to each person, if any, whom the stockholder proposes to
nominate for election or re-election as a Director: (A) the name, age, business
address and residence address of such person, (B) the principal occupation or
employment of such person, (C) the class and number of shares of the corporation
which are beneficially owned by such person, (D) a description of all
arrangements or understandings between the stockholder and each nominee and any
other person or persons (naming such person or persons) pursuant to which the
nominations are to be made by the stockholder, and (E) any other information
relating to such person that is required to be disclosed in solicitations of
proxies for election of Directors, or is otherwise required, in each case
pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended
(including without limitation such person's written consent to being named in
the proxy statement, if any, as a nominee and to serving as a Director if
elected); and (ii) as to such stockholder giving notice, the information
required to be provided pursuant to paragraph (b) of this Section 5. At the
request of the Board of Directors, any person nominated by a stockholder for
election as a Director shall furnish to the Secretary of the corporation that
information required to be set forth in the stockholder's notice of nomination
which pertains to the nominee. No person shall be eligible for election as a
Director of the corporation unless nominated in accordance with the procedures
set forth in this paragraph (c). The chairman of the meeting shall, if the facts
warrant, determine and declare at the meeting that a nomination was not made in
accordance with the procedures prescribed by these Bylaws, and if he should so
determine, he shall so declare at the meeting and the defective nomination shall
be disregarded.
(d) For purposes of this Section 5, "public announcement" shall
mean disclosure in a press release reported by the Dow Jones News Service,
Associated Press or comparable national news service or in a document publicly
filed by the corporation with the Securities and Exchange Commission pursuant to
Section 13, 14 or 15(d) of the Exchange Act.
SECTION 6. SPECIAL MEETINGS.
(a) Special meetings of the stockholders of the corporation may
be called, for any purpose or purposes, by (i) the Chairman of the Board, (ii)
the President or (iii) the Board of Directors pursuant to a resolution adopted
by a majority of the total number of authorized directors (whether or not there
exist any vacancies in previously authorized directorships at the time any such
resolution is presented to the Board for adoption).
(b) If a special meeting is called by any person or persons
other than the Board of Directors, the request shall be in writing, specifying
the time of such meeting and the general
3.
<PAGE> 9
nature of the business proposed to be transacted, and shall be delivered
personally or sent by registered mail or by telegraphic or other facsimile
transmission to the Chairman of the Board, the President, any Vice President, or
the Secretary of the corporation. No business may be transacted at such special
meeting otherwise than specified in such notice. The officer receiving the
request shall cause notice to be promptly given to the stockholders entitled to
vote, in accordance with the provisions of Section 7 of these Bylaws, that a
meeting will be held not less than thirty-five (35) nor more than sixty (60)
days after the receipt of the request. If the notice is not given within twenty
(20) days after the receipt of the request, the person or persons requesting the
meeting may give the notice. Nothing contained in this paragraph (b) shall be
construed as limiting, fixing, or affecting the time when a meeting of
stockholders called by action of the Board of Directors may be held.
SECTION 7. NOTICE OF MEETINGS. Except as otherwise provided by law or
the Certificate of Incorporation, written notice of each meeting of stockholders
shall be given not less than ten (10) nor more than sixty (60) days before the
date of the meeting to each stockholder entitled to vote at such meeting, such
notice to specify the place, date and hour and purpose or purposes of the
meeting. Notice of the time, place and purpose of any meeting of stockholders
may be waived in writing, signed by the person entitled to notice thereof,
either before or after such meeting, and will be waived by any stockholder by
his attendance thereat in person or by proxy, except when the stockholder
attends a meeting for the express purpose of objecting, at the beginning of the
meeting, to the transaction of any business because the meeting is not lawfully
called or convened. Any stockholder so waiving notice of such meeting shall be
bound by the proceedings of any such meeting in all respects as if due notice
thereof had been given.
SECTION 8. QUORUM. At all meetings of stockholders, except where
otherwise provided by statute or by the Certificate of Incorporation, or by
these Bylaws, the presence, in person or by proxy duly authorized, of the
holders of a majority of the outstanding shares of stock entitled to vote shall
constitute a quorum for the transaction of business. Any shares, the voting of
which at said meeting has been enjoined, or which for any reason cannot be
lawfully voted at such meeting, shall not be counted to determine a quorum at
such meeting. In the absence of a quorum any meeting of stockholders may be
adjourned, from time to time, either by the chairman of the meeting or by vote
of the holders of a majority of the shares represented thereat, but no other
business shall be transacted at such meeting. The stockholders present at a duly
called or convened meeting, at which a quorum is present, may continue to
transact business until adjournment, notwithstanding the withdrawal of enough
stockholders to leave less than a quorum. Except as otherwise provided by law,
the Certificate of Incorporation or these Bylaws, all action taken by the
holders of a majority of the voting power represented at any meeting at which a
quorum is present shall be valid and binding upon the corporation; provided,
however, that Directors shall be elected by a plurality of the votes of the
shares present in person or represented by proxy at the meeting and entitled to
vote on the election of Directors. Where a separate vote by a class or classes
is required, a majority of the outstanding shares of such class or classes,
present in person or represented by proxy, shall constitute a quorum entitled to
take action with respect to that vote on that matter and the affirmative vote of
the
4.
<PAGE> 10
majority (plurality, in the case of the election of Directors) of shares of such
class or classes present in person or represented by proxy at the meeting shall
be the act of such class.
SECTION 9. ADJOURNMENT AND NOTICE OF ADJOURNED MEETINGS. Any meeting of
stockholders, whether annual or special, may be adjourned from time to time
either by the chairman of the meeting or by the vote of a majority of the shares
represented thereat. When a meeting is adjourned to another time or place,
notice need not be given of the adjourned meeting if the time and place thereof
are announced at the meeting at which the adjournment is taken. At the adjourned
meeting the corporation may transact any business which might have been
transacted at the original meeting. If the adjournment is for more than thirty
(30) days, or if after the adjournment a new record date is fixed for the
adjourned meeting, a notice of the adjourned meeting shall be given to each
stockholder of record entitled to vote at the meeting.
SECTION 10. VOTING RIGHTS.
(a) For the purpose of determining those stockholders entitled
to vote at any meeting of the stockholders, except as otherwise provided by law,
only persons in whose names shares stand on the stock records of the corporation
on the record date, as provided in Section 12 of these Bylaws, shall be entitled
to vote at any meeting of stockholders. Except as may be otherwise provided in
the Certificate of Incorporation or these Bylaws, each stockholder shall be
entitled to one vote for each share of capital stock held by such stockholder.
Every person entitled to vote or execute consents shall have the right to do so
either in person or by an agent or agents authorized by a written proxy executed
by such person or his duly authorized agent, which proxy shall be filed with the
Secretary at or before the meeting at which it is to be used. An agent so
appointed need not be a stockholder. No proxy shall be voted after three (3)
years from its date of creation unless the proxy provides for a longer period.
All elections of Directors shall be by written ballot, unless otherwise provided
in the Certificate of Incorporation.
SECTION 11. BENEFICIAL OWNERS OF STOCK.
(a) If shares or other securities having voting power stand of
record in the names of two (2) or more persons, whether fiduciaries, members of
a partnership, joint tenants, tenants in common, tenants by the entirety, or
otherwise, or if two (2) or more persons have the same fiduciary relationship
respecting the same shares, unless the Secretary is given written notice to the
contrary and is furnished with a copy of the instrument or order appointing them
or creating the relationship wherein it is so provided, their acts with respect
to voting shall have the following effect: (a) if only one (1) votes, his act
binds all; (b) if more than one (1) votes, the act of the majority so voting
binds all; (c) if more than one (1) votes, but the vote is evenly split on any
particular matter, each faction may vote the securities in question
proportionally, or may apply to the Delaware Court of Chancery for relief as
provided in the General Corporation Law of Delaware, Section 217(b). If the
instrument filed with the Secretary shows that any such tenancy is held in
unequal interests, a majority or even-split for the purpose of this subsection
(c) shall be a majority or even-split in interest.
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(b) Persons holding stock in a fiduciary capacity shall be
entitled to vote the shares so held. Persons whose stock is pledged shall be
entitled to vote, unless in the transfer by the pledgor on the books of the
corporation he has expressly empowered the pledgee to vote thereon, in which
case only the pledgee, or his proxy, may represent such stock and vote thereon.
SECTION 12. LIST OF STOCKHOLDERS. The Secretary shall prepare and make,
at least ten (10) days before every meeting of stockholders, a complete list of
the stockholders entitled to vote at said meeting, arranged in alphabetical
order, showing the address of each stockholder and the number of shares
registered in the name of each stockholder. Such list shall be open to the
examination of any stockholder, for any purpose germane to the meeting, during
ordinary business hours, for a period of at least ten (10) days prior to the
meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not
specified, at the place where the meeting is to be held. The list shall be
produced and kept at the time and place of meeting during the whole time
thereof, and may be inspected by any stockholder who is present.
SECTION 13. ACTION WITHOUT MEETING.
(a) Any action required by statute to be taken at any annual or
special meeting of the stockholders, or any action which may be taken at any
annual or special meeting of the stockholders, may be taken without a meeting,
without prior notice and without a vote, if a consent or consents in writing,
setting forth the action so taken, are signed by the holders of outstanding
stock having not less than the minimum number of votes that would be necessary
to authorize or take such action at a meeting at which all shares entitled to
vote thereon were present and voted.
(b) Every written consent shall bear the date of signature of
each stockholder who signs the consent, and no written consent shall be
effective to take the corporate action referred to therein unless, within sixty
(60) days of the earliest dated consent delivered to the Corporation in the
manner herein required, written consents signed by a sufficient number of
stockholders to take action are delivered to the corporation by delivery to its
registered office in the State of Delaware, its principal place of business or
an officer or agent of the corporation having custody of the book in which
proceedings of meetings of stockholders are recorded. Delivery made to a
corporation's registered office shall be by hand or by certified or registered
mail, return receipt requested.
(c) Prompt notice of the taking of the corporate action without
a meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing. If the action which is consented
to is such as would have required the filing of a certificate under any section
of the General corporation Law of Delaware if such action had been voted on by
stockholders at a meeting thereof, then the certificate filed under such section
shall state, in lieu of any statement required by such section concerning any
vote of stockholders, that written notice and written consent have been given as
provided in Section 228 of the General Corporation Law of Delaware.
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(d) Notwithstanding the foregoing, no such action by written
consent may be taken following the effectiveness of the registration of any
class of securities of the corporation under the Securities Exchange Act of
1934, as amended.
SECTION 14. ORGANIZATION.
(a) At every meeting of stockholders, the Chairman of the Board
of Directors, or, if a Chairman has not been appointed or is absent, the
President, or, if the President is absent, the most senior Vice President
present, or in the absence of any such officer, a chairman of the meeting chosen
by a majority in interest of the stockholders entitled to vote, present in
person or by proxy, shall act as chairman. The Secretary, or, in his absence, an
Assistant Secretary directed to do so by the President, shall act as secretary
of the meeting.
(b) The Board of Directors of the corporation shall be entitled
to make such rules or regulations for the conduct of meetings of stockholders as
it shall deem necessary, appropriate or convenient. Subject to such rules and
regulations of the Board of Directors, if any, the chairman of the meeting shall
have the right and authority to prescribe such rules, regulations and procedures
and to do all such acts as, in the judgment of such chairman, are necessary,
appropriate or convenient for the proper conduct of the meeting, including,
without limitation, establishing an agenda or order of business for the meeting,
rules and procedures for maintaining order at the meeting and the safety of
those present, limitations on participation in such meeting to stockholders of
record of the corporation and their duly authorized and constituted proxies, and
such other persons as the chairman shall permit, restrictions on entry to the
meeting after the time fixed for the commencement thereof, limitations on the
time allotted to questions or comments by participants and regulation of the
opening and closing of the polls for balloting on matters which are to be voted
on by ballot. Unless, and to the extent determined by the Board of Directors or
the chairman of the meeting, meetings of stockholders shall not be required to
be held in accordance with rules of parliamentary procedure.
ARTICLE IV
DIRECTORS
SECTION 15. NUMBER AND TERM OF OFFICE. The Board of Directors shall
consist of not less than three (3) and not more than seven (7) members, the
number thereof to be determined from time to time by resolution of the Board of
Directors. The number of directors is currently set at seven (7). The number of
authorized Directors may be modified from time to time by amendment of this
Section 15 in accordance with the provisions of Section 44 hereof. Except as
provided in Section 17, the Directors shall be elected by the stockholders at
their annual meeting in each year and shall hold office until the next annual
meeting and until their successors shall be duly elected and qualified.
Directors need not be stockholders unless so required by the Certificate of
Incorporation. If for any cause, the Directors shall not have been elected at an
annual meeting, they may be elected as soon thereafter as convenient at a
special meeting of the stockholders called for that purpose in the manner
provided in these Bylaws. No reduction of the authorized number of Directors
shall have the effect of removing any Director
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before the Director's term of office expires, unless such removal is made
pursuant to the provisions of Section 19 hereof.
SECTION 16. POWERS. The powers of the corporation shall be exercised,
its business conducted and its property controlled by the Board of Directors,
except as may be otherwise provided by statute or by the Certificate of
Incorporation.
SECTION 17. VACANCIES. Unless otherwise provided in the Certificate of
Incorporation, vacancies and newly created directorships resulting from any
increase in the authorized number of Directors may be filled by a majority of
the Directors then in office, although less than a quorum, or by a sole
remaining Director, and each Director so elected shall hold office for the
unexpired portion of the term of the Director whose place shall be vacant and
until his successor shall have been duly elected and qualified. A vacancy in the
Board of Directors shall be deemed to exist under this Section 17 in the case of
the death, removal or resignation of any Director, or if the stockholders fail
at any meeting of stockholders at which Directors are to be elected (including
any meeting referred to in Section 19 below) to elect the number of Directors
then constituting the whole Board of Directors.
SECTION 18. RESIGNATION. Any Director may resign at any time by
delivering his written resignation to the Secretary, such resignation to specify
whether it will be effective at a particular time, upon receipt by the Secretary
or at the pleasure of the Board of Directors. If no such specification is made,
it shall be deemed effective at the pleasure of the Board of Directors. When one
or more Directors shall resign from the Board of Directors, effective at a
future date, a majority of the Directors then in office, including those who
have so resigned, shall have power to fill such vacancy or vacancies, the vote
thereon to take effect when such resignation or resignations shall become
effective, and each Director so chosen shall hold office for the unexpired
portion of the term of the Director whose place shall be vacated and until his
successor shall have been duly elected and qualified.
SECTION 19. REMOVAL. Subject to the rights of the holders of any series
of Preferred Stock, the Board of Directors or any individual director may be
removed from office at any time (i) with cause by the affirmative vote of the
holders of a majority of the voting power of all the then-outstanding shares of
voting stock of the Corporation, entitled to vote at an election of directors
(the "Voting Stock") or (ii) without cause by the affirmative vote of the
holders of at least sixty-six and two-thirds percent (66 2/3%) of the voting
power of all the then-outstanding shares of the Voting Stock.
SECTION 20. MEETINGS.
(a) ANNUAL MEETINGS. The annual meeting of the Board of
Directors shall be held immediately after the annual meeting of stockholders and
at the place where such meeting is held. No notice of an annual meeting of the
Board of Directors shall be necessary and such meeting shall be held for the
purpose of electing officers and transacting such other business as may lawfully
come before it.
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(b) REGULAR MEETINGS. Except as hereinafter otherwise provided,
regular meetings of the Board of Directors shall be held in the office of the
corporation required to be maintained pursuant to Section 2 hereof. Unless
otherwise restricted by the Certificate of Incorporation, regular meetings of
the Board of Directors may also be held at any place within or without the State
of Delaware which has been determined by the Board of Directors.
(c) SPECIAL MEETINGS. Unless otherwise restricted by the
Certificate of Incorporation, special meetings of the Board of Directors may be
held at any time and place within or without the State of Delaware whenever
called by the President or a majority of the Directors.
(d) TELEPHONE MEETINGS. Any member of the Board of Directors, or
of any committee thereof, may participate in a meeting by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and participation in a meeting
by such means shall constitute presence in person at such meeting.
(e) NOTICE OF MEETINGS. Written notice of the time and place of
all special meetings of the Board of Directors shall be given at least one (1)
day before the date of the meeting. Notice of any meeting may be waived in
writing at any time before or after the meeting and will be waived by any
Director by attendance thereat, except when the Director attends the meeting for
the express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened.
(f) WAIVER OF NOTICE. The transaction of all business at any
meeting of the Board of Directors, or any committee thereof, however called or
noticed, or wherever held, shall be as valid as though had at a meeting duly
held after regular call and notice, if a quorum be present and if, either before
or after the meeting, each of the Directors not present shall sign a written
waiver of notice, or a consent to holding such meeting, or an approval of the
minutes thereof. Neither the business to be transacted at, nor the purpose of,
any regular or special meeting of the Board of Directors need be specified in
any written waiver of notice or consent unless so required by the Certificate of
Incorporation or these Bylaws. All such waivers, consents or approvals shall be
filed with the corporate records or made a part of the minutes of the meeting.
SECTION 21. QUORUM AND VOTING.
(a) Unless the Certificate of Incorporation requires a greater
number and except with respect to indemnification questions arising under
Section 42 hereof, for which a quorum shall be one-third of the exact number of
Directors fixed from time to time in accordance with Section 15 hereof, but not
less than one (1), a quorum of the Board of Directors shall consist of a
majority of the exact number of Directors fixed from time to time in accordance
with Section 15 of these Bylaws, but not less than one (1); provided, however,
at any meeting whether a quorum be present or otherwise, a majority of the
Directors present may
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adjourn from time to time until the time fixed for the next regular meeting of
the Board of Directors, without notice other than by announcement at the
meeting.
(b) At each meeting of the Board of Directors at which a quorum
is present all questions and business shall be determined by a vote of a
majority of the Directors present, unless a different vote be required by law,
the Certificate of Incorporation or these Bylaws.
SECTION 22. ACTION WITHOUT MEETING. Unless otherwise restricted by the
Certificate of Incorporation or these Bylaws, any action required or permitted
to be taken at any meeting of the Board of Directors or of any committee thereof
may be taken without a meeting, if all members of the Board of Directors or
committee, as the case may be, consent thereto in writing, and such writing or
writings are filed with the minutes of proceedings of the Board of Directors or
committee.
SECTION 23. FEES AND COMPENSATION. Directors shall be entitled to such
compensation for their services as may be approved by the Board of Directors,
including, if so approved, by resolution of the Board of Directors, a fixed sum
and expenses of attendance, if any, for attendance at each regular or special
meeting of the Board of Directors and at any meeting of a committee of the Board
of Directors. Nothing herein contained shall be construed to preclude any
Director from serving the corporation in any other capacity as an officer,
agent, employee, or otherwise and receiving compensation therefor.
SECTION 24. COMMITTEES.
(a) EXECUTIVE COMMITTEE. The Board of Directors may by
resolution passed by a majority of the whole Board of Directors, appoint an
Executive Committee to consist of one (1) or more members of the Board of
Directors. The Executive Committee, to the extent permitted by law and
specifically granted by the Board of Directors, shall have and may exercise when
the Board of Directors is not in session all powers of the Board of Directors in
the management of the business and affairs of the corporation, including,
without limitation, the power and authority to declare a dividend or to
authorize the issuance of stock, except such committee shall not have the power
or authority to amend the Certificate of Incorporation, to adopt an agreement of
merger or consolidation, to recommend to the stockholders the sale, lease or
exchange of all or substantially all of the corporation's property and assets,
to recommend to the stockholders of the corporation a dissolution of the
corporation or a revocation of a dissolution or to amend these Bylaws.
(b) OTHER COMMITTEES. The Board of Directors may, by resolution
passed by a majority of the whole Board of Directors, from time to time appoint
such other committees as may be permitted by law. Such other committees
appointed by the Board of Directors shall consist of one (1) or more members of
the Board of Directors, and shall have such powers and perform such duties as
may be prescribed by the resolution or resolutions creating such committees, but
in no event shall such committee have the powers denied to the Executive
Committee in these Bylaws.
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(c) TERM. The members of all committees of the Board of
Directors shall serve a term coexistent with that of the Board of Directors
which shall have appointed such committee. The Board of Directors, subject to
the provisions of subsections (a) or (b) of this Section 24, may at any time
increase or decrease the number of members of a committee or terminate the
existence of a committee. The membership of a committee member shall terminate
on the date of his death or voluntary resignation from the committee or from the
Board of Directors. The Board of Directors may at any time for any reason remove
any individual committee member and the Board of Directors may fill any
committee vacancy created by death, resignation, removal or increase in the
number of members of the committee. The Board of Directors may designate one or
more Directors as alternate members of any committee, who may replace any absent
or disqualified member at any meeting of the committee, and, in addition, in the
absence or disqualification of any member of a committee, the member or members
thereof present at any meeting and not disqualified from voting, whether or not
he or they constitute a quorum, may unanimously appoint another member of the
Board of Directors to act at the meeting in the place of any such absent or
disqualified member.
(d) MEETINGS. Unless the Board of Directors shall otherwise
provide, regular meetings of the Executive Committee or any other committee
appointed pursuant to this Section 24 shall be held at such times and places as
are determined by the Board of Directors, or by any such committee, and when
notice thereof has been given to each member of such committee, no further
notice of such regular meetings need be given thereafter. Special meetings of
any such committee may be held at any place which has been determined from time
to time by such committee, and may be called by any Director who is a member of
such committee, upon written notice to the members of such committee of the time
and place of such special meeting given in the manner provided for the giving of
written notice to members of the Board of Directors of the time and place of
special meetings of the Board of Directors. Notice of any special meeting of any
committee may be waived in writing at any time before or after the meeting and
will be waived by any Director by attendance thereat, except when the Director
attends such special meeting for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business because the meeting
is not lawfully called or convened. A majority of the authorized number of
members of any such committee shall constitute a quorum for the transaction of
business, and the act of a majority of those present at any meeting at which a
quorum is present shall be the act of such committee.
SECTION 25. ORGANIZATION. At every meeting of the Directors, the
Chairman of the Board of Directors, or, if a Chairman has not been appointed or
is absent, the President, or if the President is absent, the most senior Vice
President, or, in the absence of any such officer, a chairman of the meeting
chosen by a majority of the Directors present, shall preside over the meeting.
The Secretary, or in his absence, an Assistant Secretary directed to do so by
the President, shall act as secretary of the meeting.
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ARTICLE V
OFFICERS
SECTION 26. OFFICERS DESIGNATED. The officers of the corporation shall
be the Chairman of the Board of Directors, the President, one or more Vice
Presidents, the Secretary and the Chief Financial Officer or Treasurer, all of
whom shall be elected at the annual organizational meeting of the Board of
Directors. The order of the seniority of the Vice Presidents shall be in the
order of their nomination, unless otherwise determined by the Board of
Directors. The Board of Directors may also appoint one or more Assistant
Secretaries, Assistant Treasurers, and such other officers and agents with such
powers and duties as it shall deem necessary. The Board of Directors may assign
such additional titles to one or more of the officers as it shall deem
appropriate. Any one person may hold any number of offices of the corporation at
any one time unless specifically prohibited therefrom by law. The salaries and
other compensation of the officers of the corporation shall be fixed by or in
the manner designated by the Board of Directors.
SECTION 27. TENURE AND DUTIES OF OFFICERS.
(a) GENERAL. All officers shall hold office at the pleasure of
the Board of Directors and until their successors shall have been duly elected
and qualified, unless sooner removed. Any officer elected or appointed by the
Board of Directors may be removed at any time by the Board of Directors. If the
office of any officer becomes vacant for any reason, the vacancy may be filled
by the Board of Directors.
(b) DUTIES OF CHAIRMAN OF THE BOARD OF DIRECTORS. The Chairman
of the Board of Directors, when present, shall preside at all meetings of the
stockholders and the Board of Directors. The Chairman of the Board of Directors
shall perform other duties commonly incident to his office and shall also
perform such other duties and have such other powers as the Board of Directors
shall designate from time to time.
(c) DUTIES OF PRESIDENT. The President shall preside at all
meetings of the stockholders and at all meetings of the Board of Directors,
unless the Chairman of the Board of Directors has been appointed and is present.
The President shall be the Chief Executive Officer of the corporation and shall,
subject to the control of the Board of Directors, have general supervision,
direction and control of the business and officers of the corporation. The
President shall perform other duties commonly incident to his office and shall
also perform such other duties and have such other powers as the Board of
Directors shall designate from time to time.
(d) DUTIES OF VICE PRESIDENTS. The Vice Presidents, in the
order of their seniority, may assume and perform the duties of the President in
the absence or disability of the President or whenever the office of President
is vacant. The Vice Presidents shall perform other duties commonly incident to
their office and shall also perform such other duties and have such other powers
as the Board of Directors or the President shall designate from time to time.
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(e) DUTIES OF SECRETARY. The Secretary shall attend all
meetings of the stockholders and of the Board of Directors, and shall record all
acts and proceedings thereof in the minute book of the corporation. The
Secretary shall give notice in conformity with these Bylaws of all meetings of
the stockholders, and of all meetings of the Board of Directors and any
committee thereof requiring notice. The Secretary shall perform all other duties
given him in these Bylaws and other duties commonly incident to his office and
shall also perform such other duties and have such other powers as the Board of
Directors shall designate from time to time. The President may direct any
Assistant Secretary to assume and perform the duties of the Secretary in the
absence or disability of the Secretary, and each Assistant Secretary shall
perform other duties commonly incident to his office and shall also perform such
other duties and have such other powers as the Board of Directors or the
President shall designate from time to time.
(f) DUTIES OF CHIEF FINANCIAL OFFICER OR TREASURER. The Chief
Financial Officer or Treasurer shall keep or cause to be kept the books of
account of the corporation in a thorough and proper manner, and shall render
statements of the financial affairs of the corporation in such form and as often
as required by the Board of Directors or the President. The Chief Financial
Officer or Treasurer, subject to the order of the Board of Directors, shall have
the custody of all funds and securities of the corporation. The Chief Financial
Officer or Treasurer shall perform other duties commonly incident to his office
and shall also perform such other duties and have such other powers as the Board
of Directors or the President shall designate from time to time. The President
may direct any Assistant Treasurer to assume and perform the duties of the Chief
Financial Officer or Treasurer in the absence or disability of the Chief
Financial Officer or Treasurer, and each Assistant Treasurer shall perform other
duties commonly incident to his office and shall also perform such other duties
and have such other powers as the Board of Directors or the President shall
designate from time to time.
SECTION 28. DELEGATION OF AUTHORITY. The Board of Directors may from
time to time delegate the powers or duties of any officer to any other officer
or agent, notwithstanding any provision hereof.
SECTION 29. RESIGNATIONS. Any officer may resign at any time by giving
written notice to the Board of Directors or to the President or to the
Secretary. Any such resignation shall be effective when received by the person
or persons to whom such notice is given, unless a later time is specified
therein, in which event the resignation shall become effective at such later
time. Unless otherwise specified in such notice, the acceptance of any such
resignation shall not be necessary to make it effective. Any resignation shall
be without prejudice to the rights, if any, of the corporation under any
contract with the resigning officer.
SECTION 30. REMOVAL. Any officer may be removed from office at any
time, either with or without cause, by the vote or written consent of a majority
of the Directors in office at the time, or by any committee or superior officers
upon whom such power of removal may have been conferred by the Board of
Directors.
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ARTICLE VI
EXECUTION OF CORPORATE INSTRUMENTS AND
VOTING OF SECURITIES OWNED BY THE CORPORATION
SECTION 31. EXECUTION OF CORPORATE INSTRUMENTS. The Board of Directors
may, in its discretion, determine the method and designate the signatory officer
or officers, or other person or persons, to execute on behalf of the corporation
any corporate instrument or document, or to sign on behalf of the corporation
the corporate name without limitation, or to enter into contracts on behalf of
the corporation, except where otherwise provided by law or these Bylaws, and
such execution or signature shall be binding upon the corporation.
Unless otherwise specifically determined by the Board of Directors or
otherwise required by law, promissory notes, deeds of trust, mortgages and other
evidences of indebtedness of the corporation, and other corporate instruments or
documents requiring the corporate seal, and certificates of shares of stock
owned by the corporation, shall be executed, signed or endorsed by the Chairman
of the Board of Directors, or the President or any Vice President, and by the
Secretary or Chief Financial Officer or Treasurer or any Assistant Secretary or
Assistant Treasurer. All other instruments and documents requiring the corporate
signature, but not requiring the corporate seal, may be executed as aforesaid or
in such other manner as may be directed by the Board of Directors.
All checks and drafts drawn on banks or other depositaries on funds to
the credit of the corporation or in special accounts of the corporation shall be
signed by such person or persons as the Board of Directors shall authorize so to
do.
Unless authorized or ratified by the Board of Directors or within the
agency power of an officer, no officer, agent or employee shall have any power
or authority to bind the corporation by any contract or engagement or to pledge
its credit or to render it liable for any purpose or for any amount.
SECTION 32. VOTING OF SECURITIES OWNED BY THE CORPORATION. All stock
and other securities of other corporations owned or held by the corporation for
itself, or for other parties in any capacity, shall be voted, and all proxies
with respect thereto shall be executed, by the person authorized so to do by
resolution of the Board of Directors, or, in the absence of such authorization,
by the Chairman of the Board of Directors, the President, or any Vice President.
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ARTICLE VII
SHARES OF STOCK
SECTION 33. FORM AND EXECUTION OF CERTIFICATES. Certificates for the
shares of stock of the corporation shall be in such form as is consistent with
the Certificate of Incorporation and applicable law. Every holder of stock in
the corporation shall be entitled to have a certificate signed by or in the name
of the corporation by the Chairman of the Board of Directors, or the President
or any Vice President and by the Treasurer or Assistant Treasurer or the
Secretary or Assistant Secretary, certifying the number of shares owned by him
in the corporation. Where such certificate is countersigned by a transfer agent
other than the corporation or its employee, or by a registrar other than the
corporation or its employee, any other signature on the certificate may be a
facsimile. In case any officer, transfer agent, or registrar who has signed or
whose facsimile signature has been placed upon a certificate shall have ceased
to be such officer, transfer agent, or registrar before such certificate is
issued, it may be issued with the same effect as if he were such officer,
transfer agent, or registrar at the date of issue. Each certificate shall state
upon the face or back thereof, in full or in summary, all of the designations,
preferences, limitations, restrictions on transfer and relative rights of the
shares authorized to be issued.
SECTION 34. LOST CERTIFICATES. A new certificate or certificates shall
be issued in place of any certificate or certificates theretofore issued by the
corporation alleged to have been lost, stolen, or destroyed, upon the making of
an affidavit of that fact by the person claiming the certificate of stock to be
lost, stolen, or destroyed. The corporation may require, as a condition
precedent to the issuance of a new certificate or certificates, the owner of
such lost, stolen, or destroyed certificate or certificates, or his legal
representative, to advertise the same in such manner as it shall require or to
give the corporation a surety bond in such form and amount as it may direct as
indemnity against any claim that may be made against the corporation with
respect to the certificate alleged to have been lost, stolen, or destroyed.
SECTION 35. TRANSFERS.
(a) Transfers of record of shares of stock of the corporation
shall be made only upon its books by the holders thereof, in person or by
attorney duly authorized, and upon the surrender of a properly endorsed
certificate or certificates for a like number of shares.
(b) The corporation shall have power to enter into and perform
any agreement with any number of stockholders of any one or more classes of
stock of the corporation to restrict the transfer of shares of stock of the
corporation of any one or more classes owned by such stockholders in any manner
not prohibited by the General Corporation Law of Delaware.
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SECTION 36. FIXING RECORD DATES.
(a) In order that the Corporation may determine the
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, the Board of Directors may fix, in advance, a record
date, which record date shall not precede the date upon which the resolution
fixing the record date is adopted by the Board of Directors, and which record
date shall not be more than sixty (60) nor less than ten (10) days before the
date of such meeting. If no record date is fixed by the Board of Directors, the
record date for determining stockholders entitled to notice of or to vote at a
meeting of stockholders shall be at the close of business on the day next
preceding the day on which notice is given, or if notice is waived, at the close
of business on the day next preceding the day on which the meeting is held. A
determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting; provided,
however, that the Board of Directors may fix a new record date for the adjourned
meeting.
(b) In order that the Corporation may determine the
stockholders entitled to consent to corporate action in writing without a
meeting, the Board of Directors may fix, in advance, a record date, which record
date shall not precede the date upon which the resolution fixing the record date
is adopted by the Board of Directors, and which date shall not be more than ten
(10) days after the date upon which the resolution fixing the record date is
adopted by the Board of Directors. If no record date has been fixed by the Board
of Directors, the record date for determining stockholders entitled to consent
to corporate action in writing without a meeting, when no prior action by the
Board of Directors is required by law, shall be the first date on which a signed
written consent setting forth the action taken or proposed to be taken is
delivered to the Corporation by delivery to its registered office in the State
of Delaware, its principal place of business or an officer or agent of the
Corporation having custody of the book in which proceedings of meetings of
stockholders are recorded. Delivery made to a Corporation's registered office
shall be by hand or by certified or registered mail, return receipt requested.
If no record date has been fixed by the Board of Directors and prior action by
the Board of Directors is required by law, the record date for determining
stockholders entitled to consent to corporate action in writing without a
meeting shall be at the close of business on the day on which the Board of
Directors adopts the resolution taking such prior action.
(c) In order that the corporation may determine the
stockholders entitled to receive payment of any dividend or other distribution
or allotment of any rights or the stockholders entitled to exercise any rights
in respect of any change, conversion or exchange of stock, or for the purpose of
any other lawful action, the Board of Directors may fix, in advance, a record
date, which record date shall not precede the date upon which the resolution
fixing the record date is adopted, and which record date shall be not more than
sixty (60) days prior to such action. If no record date is fixed, the record
date for determining stockholders for any such purpose shall be at the close of
business on the day on which the Board of Directors adopts the resolution
relating thereto.
SECTION 37. REGISTERED STOCKHOLDERS. The corporation shall be entitled
to recognize the exclusive right of a person registered on its books as the
owner of shares to receive
16.
<PAGE> 22
dividends, and to vote as such owner, and shall not be bound to recognize any
equitable or other claim to or interest in such share or shares on the part of
any other person whether or not it shall have express or other notice thereof,
except as otherwise provided by the laws of Delaware.
ARTICLE VIII
OTHER SECURITIES OF THE CORPORATION
SECTION 38. EXECUTION OF OTHER SECURITIES. All bonds, debentures and
other corporate securities of the corporation, other than stock certificates
(covered in Section 33), may be signed by the Chairman of the Board of
Directors, the President or any Vice President, or such other person as may be
authorized by the Board of Directors, and the corporate seal impressed thereon
or a facsimile of such seal imprinted thereon and attested by the signature of
the Secretary or an Assistant Secretary, or the Chief Financial Officer or
Treasurer or an Assistant Treasurer; provided, however, that where any such
bond, debenture or other corporate security shall be authenticated by the manual
signature of a trustee under an indenture pursuant to which such bond, debenture
or other corporate security shall be issued, the signatures of the persons
signing and attesting the corporate seal on such bond, debenture or other
corporate security may be the imprinted facsimile of the signatures of such
persons. Interest coupons appertaining to any such bond, debenture or other
corporate security, authenticated by a trustee as aforesaid, shall be signed by
the Treasurer or an Assistant Treasurer of the corporation or such other person
as may be authorized by the Board of Directors, or bear imprinted thereon the
facsimile signature of such person. In case any officer who shall have signed or
attested any bond, debenture or other corporate security, or whose facsimile
signature shall appear thereon or on any such interest coupon, shall have ceased
to be such officer before the bond, debenture or other corporate security so
signed or attested shall have been delivered, such bond, debenture or other
corporate security nevertheless may be adopted by the corporation and issued and
delivered as though the person who signed the same or whose facsimile signature
shall have been used thereon had not ceased to be such officer of the
corporation.
ARTICLE IX
DIVIDENDS
SECTION 39. DECLARATION OF DIVIDENDS. Dividends upon the capital stock
of the corporation, subject to the provisions of the Certificate of
Incorporation, if any, may be declared by the Board of Directors pursuant to law
at any regular or special meeting. Dividends may be paid in cash, in property,
or in shares of the capital stock, subject to the provisions of the Certificate
of Incorporation.
SECTION 40. DIVIDEND RESERVE. Before payment of any dividend, there may
be set aside out of any funds of the corporation available for dividends such
sum or sums as the Board of Directors from time to time, in their absolute
discretion, think proper as a reserve or reserves
17.
<PAGE> 23
to meet contingencies, or for equalizing dividends, or for repairing or
maintaining any property of the corporation, or for such other purpose as the
Board of Directors shall think conducive to the interests of the corporation,
and the Board of Directors may modify or abolish any such reserve in the manner
in which it was created.
ARTICLE X
FISCAL YEAR
SECTION 41. FISCAL YEAR. The fiscal year of the corporation shall be
fixed by resolution of the Board of Directors.
ARTICLE XI
INDEMNIFICATION
SECTION 42. INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES AND OTHER
AGENTS.
(a) DIRECTORS. The corporation shall indemnify its Directors to
the fullest extent not prohibited by the Delaware General Corporation Law;
provided, however, that the corporation shall not be required to indemnify any
Director in connection with any proceeding (or part thereof) initiated by such
person or any proceeding by such person against the corporation or its
Directors, officers, employees or other agents unless (i) such indemnification
is expressly required to be made by law, (ii) the proceeding was authorized by
the Board of Directors of the corporation or (iii) such indemnification is
provided by the corporation, in its sole discretion, pursuant to the powers
vested in the corporation under the Delaware General Corporation Law.
(b) OFFICERS, EMPLOYEES AND OTHER AGENTS. The corporation shall
have power to indemnify its officers, employees and other agents as set forth in
the Delaware General Corporation Law.
(c) GOOD FAITH.
(1) For purposes of any determination under this Bylaw, a
Director or executive officer shall be deemed to have acted in good faith and in
a manner he reasonably believed to be in or not opposed to the best interests of
the corporation, and, with respect to any criminal action or proceeding, to have
had no reasonable cause to believe that his conduct was unlawful, if his action
is based on information, opinions, reports and statements, including financial
statements and other financial data, in each case prepared or presented by:
18.
<PAGE> 24
(i) one or more officers or employees of the
corporation whom the Director or executive officer believed to be reliable and
competent in the matters presented;
(ii) counsel, independent accountants or other
persons as to matters which the Director or executive officer believed to be
within such person's professional competence; and
(iii) with respect to a Director, a committee of the
Board upon which such Director does not serve, as to matters within such
Committee's designated authority, which committee the Director believes to merit
confidence; so long as, in each case, the Director or executive officer acts
without knowledge that would cause such reliance to be unwarranted.
(2) The termination of any proceeding by judgment, order,
settlement, conviction or upon a plea of nolo contendere or its equivalent shall
not, of itself, create a presumption that the person did not act in good faith
and in a manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal proceeding, that
he had reasonable cause to believe that his conduct was unlawful.
(3) The provisions of this paragraph (c) shall not be deemed
to be exclusive or to limit in any way the circumstances in which a person may
be deemed to have met the applicable standard of conduct set forth by the
Delaware General Corporation Law.
(d) EXPENSES. The corporation shall advance, prior to the final
disposition of any proceeding, promptly following request therefor, all expenses
incurred by any Director or executive officer in connection with such proceeding
upon receipt of an undertaking by or on behalf of such person to repay said
amounts if it should be determined ultimately that such person is not entitled
to be indemnified under this Bylaw or otherwise.
(e) ENFORCEMENT. Without the necessity of entering into an
express contract, all rights to indemnification and advances to Directors and
executive officers under this Bylaw shall be deemed to be contractual rights and
be effective to the same extent and as if provided for in a contract between the
corporation and the Director or executive officer. Any right to indemnification
or advances granted by this Bylaw to a Director or executive officer shall be
enforceable by or on behalf of the person holding such right in any court of
competent jurisdiction if (i) the claim for indemnification or advances is
denied, in whole or in part, or (ii) no disposition of such claim is made within
ninety (90) days of request therefor. The claimant in such enforcement action,
if successful in whole or in part, shall be entitled to be paid also the expense
of prosecuting his claim. The corporation shall be entitled to raise as a
defense to any such action that the claimant has not met the standards of
conduct that make it permissible under the Delaware General Corporation Law for
the corporation to indemnify the claimant for the amount claimed. Neither the
failure of the corporation (including its Board of Directors, independent legal
counsel or its stockholders) to have made a determination prior to the
commencement of such action that indemnification of the claimant is proper in
the circumstances
19.
<PAGE> 25
because he has met the applicable standard of conduct set forth in the Delaware
General Corporation Law, nor an actual determination by the corporation
(including its Board of Directors, independent legal counsel or its
stockholders) that the claimant has not met such applicable standard of conduct,
shall be a defense to the action or create a presumption that claimant has not
met the applicable standard of conduct.
(f) NON-EXCLUSIVITY OF RIGHTS. The rights conferred on any
person by this Bylaw shall not be exclusive of any other right which such person
may have or hereafter acquire under any statute, provision of the Certificate of
Incorporation, Bylaws, agreement, vote of stockholders or disinterested
Directors or otherwise, both as to action in his official capacity and as to
action in another capacity while holding office. The corporation is specifically
authorized to enter into individual contracts with any or all of its Directors,
officers, employees or agents respecting indemnification and advances, to the
fullest extent not prohibited by the Delaware General Corporation Law.
(g) SURVIVAL OF RIGHTS. The rights conferred on any person by
this Bylaw shall continue as to a person who has ceased to be a Director,
officer, employee or other agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.
(h) INSURANCE. To the fullest extent permitted by the Delaware
General Corporation Law, the corporation, upon approval by the Board of
Directors, may purchase insurance on behalf of any person required or permitted
to be indemnified pursuant to this Bylaw.
(i) AMENDMENTS. Any repeal or modification of this Bylaw shall
only be prospective and shall not affect the rights under this Bylaw in effect
at the time of the alleged occurrence of any action or omission to act that is
the cause of any proceeding against any agent of the corporation.
(j) SAVING CLAUSE. If this Bylaw or any portion hereof shall be
invalidated on any ground by any court of competent jurisdiction, then the
corporation shall nevertheless indemnify each Director and executive officer to
the full extent not prohibited by any applicable portion of this Bylaw that
shall not have been invalidated, or by any other applicable law.
(k) CERTAIN DEFINITIONS. For the purposes of this Bylaw, the
following definitions shall apply:
(1) The term "proceeding" shall be broadly construed and
shall include, without limitation, the investigation, preparation, prosecution,
defense, settlement, arbitration and appeal of, and the giving of testimony in,
any threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative.
20.
<PAGE> 26
(2) The term "expenses" shall be broadly construed and shall
include, without limitation, court costs, attorneys' fees, witness fees, fines,
amounts paid in settlement or judgment and any other costs and expenses of any
nature or kind incurred in connection with any proceeding.
(3) The term the "corporation" shall include, in addition to
the resulting corporation, any constituent corporation (including any
constituent of a constituent) absorbed in a consolidation or merger which, if
its separate existence had continued, would have had power and authority to
indemnify its directors, officers, and employees or agents, so that any person
who is or was a director, officer, employee or agent of such constituent
corporation, or is or was serving at the request of such constituent corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, shall stand in the same position under
the provisions of this Bylaw with respect to the resulting or surviving
corporation as he would have with respect to such constituent corporation if its
separate existence had continued.
(4) References to a "director," "officer," "employee," or
"agent" of the corporation shall include, without limitation, situations where
such person is serving at the request of the corporation as a director, officer,
employee, trustee or agent of another corporation, partnership, joint venture,
trust or other enterprise.
(5) References to "other enterprises" shall include employee
benefit plans; references to "fines" shall include any excise taxes assessed on
a person with respect to an employee benefit plan; and references to "serving at
the request of the corporation" shall include any service as a director,
officer, employee or agent of the corporation which imposes duties on, or
involves services by, such director, officer, employee, or agent with respect to
an employee benefit plan, its participants, or beneficiaries; and a person who
acted in good faith and in a manner he reasonably believed to be in the interest
of the participants and beneficiaries of an employee benefit plan shall be
deemed to have acted in a manner "not opposed to the best interests of the
corporation" as referred to in this Bylaw.
ARTICLE XII
NOTICES
SECTION 43. NOTICES.
(a) NOTICE TO STOCKHOLDERS. Whenever, under any provisions of
these Bylaws, notice is required to be given to any stockholder, it shall be
given in writing, timely and duly deposited in the United States mail, postage
prepaid, and addressed to his last known post office address as shown by the
stock record of the corporation or its transfer agent.
21.
<PAGE> 27
(b) NOTICE TO DIRECTORS. Any notice required to be given to any
Director may be given by the method stated in subsection (a), or by facsimile,
telex or telegram, except that such notice other than one which is delivered
personally shall be sent to such address as such Director shall have filed in
writing with the Secretary, or, in the absence of such filing, to the last known
post office address of such Director.
(c) ADDRESS UNKNOWN. If no address of a stockholder or Director
be known, notice may be sent to the office of the corporation required to be
maintained pursuant to Section 2 hereof.
(d) AFFIDAVIT OF MAILING. An affidavit of mailing, executed by a
duly authorized and competent employee of the corporation or its transfer agent
appointed with respect to the class of stock affected, specifying the name and
address or the names and addresses of the stockholder or stockholders, or
Director or Directors, to whom any such notice or notices was or were given, and
the time and method of giving the same, shall be conclusive evidence of the
statements therein contained.
(e) TIME NOTICES DEEMED GIVEN. All notices given by mail, as
above provided, shall be deemed to have been given as at the time of mailing and
all notices given by facsimile, telex or telegram shall be deemed to have been
given as of the sending time recorded at time of transmission.
(f) METHODS OF NOTICE. It shall not be necessary that the same
method of giving notice be employed in respect of all Directors, but one
permissible method may be employed in respect of any one or more, and any other
permissible method or methods may be employed in respect of any other or others.
(g) FAILURE TO RECEIVE NOTICE. The period or limitation of time
within which any stockholder may exercise any option or right, or enjoy any
privilege or benefit, or be required to act, or within which any Director may
exercise any power or right, or enjoy any privilege, pursuant to any notice sent
him in the manner above provided, shall not be affected or extended in any
manner by the failure of such stockholder or such Director to receive such
notice.
(h) NOTICE TO PERSON WITH WHOM COMMUNICATION IS UNLAWFUL.
Whenever notice is required to be given, under any provision of law or of the
Certificate of Incorporation or Bylaws of the corporation, to any person with
whom communication is unlawful, the giving of such notice to such person shall
not be required and there shall be no duty to apply to any governmental
authority or agency for a license or permit to give such notice to such person.
Any action or meeting which shall be taken or held without notice to any such
person with whom communication is unlawful shall have the same force and effect
as if such notice had been duly given. In the event that the action taken by the
corporation is such as to require the filing of a certificate under any
provision of the Delaware General Corporation Law, the certificate shall state,
if such is the fact and if notice is required, that notice was given to all
persons entitled to receive notice except such persons with whom communication
is unlawful.
22.
<PAGE> 28
(i) NOTICE TO PERSON WITH UNDELIVERABLE ADDRESS. Whenever
notice is required to be given, under any provision of law or the Certificate of
Incorporation or Bylaws of the corporation, to any stockholder to whom (i)
notice of two consecutive annual meetings, and all notices of meetings or of the
taking of action by written consent without a meeting to such person during the
period between such two consecutive annual meetings, or (ii) all, and at least
two, payments (if sent by first class mail) of dividends or interest on
securities during a twelve month period, have been mailed addressed to such
person at his address as shown on the records of the Corporation and have been
returned undeliverable, the giving of such notice to such person shall not be
required. Any action or meeting which shall be taken or held without notice to
such person shall have the same force and effect as if such notice had been duly
given. If any such person shall deliver to the corporation a written notice
setting forth his then current address, the requirement that notice be given to
such person shall be reinstated. In the event that the action taken by the
corporation is such as to require the filing of a certificate under any
provision of the Delaware General Corporation Law, the certificate need not
state that notice was not given to persons to whom notice was not required to be
given pursuant to this paragraph.
ARTICLE XIII
AMENDMENTS
SECTION 44. AMENDMENTS. Except as otherwise set forth in paragraph (i)
of Section 42 of these Bylaws, these Bylaws may be amended or repealed and new
Bylaws adopted by the affirmative vote of at least sixty-six and two-thirds
percent (66-2/3%) of the voting power of all of the then-outstanding shares of
the Voting Stock. The Board of Directors shall also have the power, if such
power is conferred upon the Board of Directors by the Certificate of
Incorporation, to adopt, amend or repeal Bylaws (including, without limitation,
the amendment of any Bylaw setting forth the number of Directors who shall
constitute the whole Board of Directors).
ARTICLE XV
LOANS TO OFFICERS
SECTION 45. LOANS TO OFFICERS. The corporation may lend money to, or
guarantee any obligation of, or otherwise assist any officer or other employee
of the corporation or of its subsidiaries, including any officer or employee who
is a Director of the corporation or its subsidiaries, whenever, in the judgment
of the Board of Directors, such loan, guarantee or assistance may reasonably be
expected to benefit the corporation. The loan, guarantee or other assistance may
be with or without interest and may be unsecured, or secured in such manner as
the Board of Directors shall approve, including, without limitation, a pledge of
shares of stock of the corporation. Nothing in this Section 45 shall be deemed
to deny, limit or restrict the powers of guaranty or warranty of the corporation
at common law or under any statute.
23.
<PAGE> 29
ARTICLE XVI
MISCELLANEOUS
SECTION 46. ANNUAL REPORT.
(a) Subject to the provisions of Section 46(b) below, the Board
of Directors shall cause an annual report to be sent to each stockholder of the
corporation not later than one hundred twenty (120) days after the close of the
corporation's fiscal year. Such report shall include a balance sheet as of the
end of such fiscal year and an income statement and statement of changes in
financial position for such fiscal year, accompanied by any report thereon of
independent accounts or, if there is no such report, the certificate of an
authorized officer of the corporation that such statements were prepared without
audit from the books and records of the corporation. When there are more than
100 stockholders of record of the corporation's shares, as determined by Section
605 of the California Corporations Code, additional information as required by
Section 1501(b) of the California Corporations Code shall also be contained in
such report, provided that if the corporation has a class of securities
registered under Section 12 of the United States Securities Exchange Act of
1934, that Act shall take precedence. Such report shall be sent to stockholders
at least fifteen (15) days prior to the next annual meeting of stockholders
after the end of the fiscal year to which it relates.
(b) If and so long as there are fewer than 100 holders of
record of the corporation's shares, the requirement of sending of an annual
report to the stockholders of the corporation is hereby expressly waived.
24.
<PAGE> 30
CERTIFICATE OF ASSISTANT SECRETARY
I hereby certify that:
I am the duly elected and acting Assistant Secretary of
COULTER PHARMACEUTICAL, INC., a Delaware corporation (the "Company"); and
Attached hereto is a complete and accurate copy of the Bylaws
of the Company as duly adopted by the Board of Directors by Unanimous Written
Consent dated as of February 24, 1995 and said Bylaws are presently in effect.
IN WITNESS WHEREOF, I have hereunto subscribed my name and
affixed the seal of the Company as of February 24, 1995.
/s/ John A. Dado
-----------------------------------
John A. Dado, Assistant Secretary
<PAGE> 1
Exhibit 4.3
COULTER PHARMACEUTICAL, INC.
AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
1. GENERAL....................................................................................... 1
1.1 Amendment of Prior Agreement......................................................... 1
1.2 Definitions.......................................................................... 2
2. REGISTRATION; RESTRICTIONS ON TRANSFER........................................................ 3
2.1 Restrictions on Transfer............................................................. 3
2.2 Demand Registration.................................................................. 4
2.3 Piggyback Registrations.............................................................. 5
2.4 Form S-3 Registration................................................................ 6
2.5 Expenses of Registration............................................................. 7
2.6 Obligations of the Company........................................................... 7
2.7 Termination of Registration Rights................................................... 8
2.8 Delay of Registration................................................................ 8
2.9 Indemnification...................................................................... 8
2.10 Assignment of Registration Rights.................................................... 11
2.11 Amendment of Registration Rights..................................................... 11
2.12 Limitation on Subsequent Registration Rights......................................... 11
2.13 "Market Stand-Off" Agreement......................................................... 11
2.14 Rule 144 Reporting................................................................... 12
3. COVENANTS OF THE COMPANY...................................................................... 12
3.1 Basic Financial Information and Reporting............................................ 12
3.2 Inspection Rights.................................................................... 13
3.3 Confidentiality of Records........................................................... 13
3.4 Reservation of Common Stock.......................................................... 14
3.5 Stock Vesting........................................................................ 14
3.6 Proprietary Information and Inventions Agreement..................................... 14
3.7 Insurance............................................................................ 14
3.8 Real Property Holding Corporation.................................................... 14
3.9 Certain Covenants Relating to SBA Matters............................................ 15
3.10 Termination of Covenants............................................................. 16
4. RIGHTS OF FIRST REFUSAL....................................................................... 16
4.1 Subsequent Offerings................................................................. 16
4.2 Exercise of Rights................................................................... 17
4.3 Issuance of Equity Securities to Other Persons....................................... 17
4.4 Termination of Rights of First Refusal............................................... 17
4.5 Transfer of Rights of First Refusal.................................................. 17
4.6 Excluded Securities.................................................................. 17
</TABLE>
i
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
5. CO-SALE RIGHTS................................................................................ 18
5.1 Purchase Rights; Co-Sale Rights...................................................... 18
5.2 Exempt Transfers..................................................................... 20
5.3 Prohibited Transfers................................................................. 20
5.4 Legend............................................................................... 21
5.5 Termination of Rights................................................................ 21
6. MISCELLANEOUS................................................................................. 22
6.1 Governing Law........................................................................ 22
6.2 Survival............................................................................. 22
6.3 Successors and Assigns............................................................... 22
6.4 Separability......................................................................... 22
6.5 Amendment and Waiver................................................................. 22
6.6 Delays or Omissions.................................................................. 22
6.7 Notices.............................................................................. 23
6.8 Attorneys' Fees...................................................................... 23
6.9 Titles and Subtitles................................................................. 23
6.10 Counterparts......................................................................... 23
</TABLE>
ii
<PAGE> 4
AMENDED AND RESTATED
INVESTORS' RIGHTS AGREEMENT
This AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT (the "Agreement")
is entered into as of the 18th day of April, 1996, by and among COULTER
PHARMACEUTICAL, INC., a Delaware corporation (the "Company") and the other
undersigned parties for the purposes of amending certain rights previously
granted to purchasers of the Company's Series A and Series B Preferred Stock and
granting similar rights to the purchasers of the Company's Series C Preferred
Stock (the holders of Series A, Series B and Series C Preferred Stock are noted
on Exhibit A hereto and shall collectively be referred to hereinafter as the
"Purchasers" and each individually as a "Purchaser") as more fully set forth
below.
RECITALS
A. The Company has granted certain holders of its Series A and Series B
Preferred Stock (collectively, the "Existing Holders") registration and other
rights under that certain Amended and Restated Investors' Rights Agreement dated
as of August 29, 1995 (the "Prior Agreement").
B. The Company proposes to sell and issue up to 10,000,000 shares of
its Series C Preferred Stock (the "Series C Stock") and warrants exercisable for
the purchase of up to 1,501,501 shares of the Company's Common Stock pursuant to
that certain Series C Stock and Warrant Purchase Agreement of even date herewith
(the "Purchase Agreement").
C. As a condition of entering into the Purchase Agreement, the
Purchasers of the Series C Stock and warrants have requested that the Company
extend to them registration and other rights with respect to the Series C
Preferred Stock as set forth below, and the Existing Holders who are signatories
of the Agreement are willing to amend the rights given to them pursuant to the
Prior Agreement by replacing such rights in their entirely with the rights set
forth in this Agreement.
D. Furthermore, the Purchasers desire to extend to each other certain
rights of co-sale, as more fully set forth below.
NOW, THEREFORE, in consideration of the mutual promises,
representations, warranties, covenants and conditions set forth in this
Agreement and in the Purchase Agreement, the parties mutually agree as follows:
1. GENERAL
1.1 AMENDMENT OF PRIOR AGREEMENT. The undersigned parties, who
constitute the requisite parties necessary to amend the Prior Agreement, hereby
agree that effective upon the date hereof, the Prior Agreement is null and void
and superseded by the rights and obligations set forth in this Agreement.
1
<PAGE> 5
1.2 DEFINITIONS. As used in this Agreement the following terms shall
have the following respective meanings:
"HOLDER" means any person owning of record Registrable Securities that
have not been sold to the public or any assignee of record of such Registrable
Securities in accordance with Section 2.10 hereof.
"MAJOR PURCHASER" means any Purchaser (with its affiliates) who owns
not less than two hundred fifty thousand (250,000) shares of Registrable
Securities.
"REGISTER," "REGISTERED," and "REGISTRATION" refer to a registration
effected by preparing and filing a registration statement in compliance with the
Securities Act, and the declaration or ordering of effectiveness of such
registration statement or document.
"REGISTRABLE SECURITIES" means (i) Common Stock of the Company issued
or issuable upon conversion of the Shares or exercise of the Warrants; and (ii)
any Common Stock of the Company issued as (or issuable upon the conversion or
exercise of any warrant, right or other security which is issued as) a dividend
or other distribution with respect to, or in exchange for or in replacement of,
such above-described securities. Notwithstanding the foregoing, Registrable
Securities shall not include any securities sold by a person to the public
either pursuant to a registration statement or Rule 144 or sold in a private
transaction in which the transferror's rights under Article II of this Agreement
are not assigned.
"REGISTRABLE SECURITIES THEN OUTSTANDING" shall be the number of
shares determined by calculating the total number of shares of the Company's
Common Stock that are Registrable Securities and either (1) are then issued and
outstanding or (2) are issuable pursuant to then exercisable or convertible
securities.
"REGISTRATION EXPENSES" shall mean all expenses incurred by the Company
in complying with Sections 2.2, 2.3 and 2.4 hereof, including, without
limitation, all registration and filing fees, printing expenses, transfer taxes,
fees and disbursements of counsel for the Company, reasonable fees and
disbursements not to exceed Fifteen Thousand Dollars ($15,000) of a single
special counsel for the Holders, blue sky fees and expenses and the expense of
any special audits incident to or required by any such registration (but
excluding the compensation of regular employees of the Company which shall be
paid in any event by the Company).
"SBIC INVESTOR" shall mean any Purchaser which is organized as a small
business investment company under the Small Business Investment Act of 1958, as
amended.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
"SELLING EXPENSES" shall mean all underwriting discounts and selling
commissions applicable to the sale.
"SHARES" shall mean the Company's Series A, Series B and Series C
Preferred Stock.
2
<PAGE> 6
"TRANSFEROR" shall have that meaning ascribed thereto in Section 5.1.1
below.
"FORM S-3" means such form under the Securities Act as in effect on the
date hereof or any successor registration form under the Securities Act
subsequently adopted by the SEC which permits inclusion or incorporation of
substantial information by reference to other documents filed by the Company
with the SEC.
"SEC" or "COMMISSION" means the Securities and Exchange Commission.
"WARRANTS" shall mean those certain warrants to purchase shares of the
Company's common stock issued pursuant to the Purchase Agreement.
2. REGISTRATION; RESTRICTIONS ON TRANSFER
2.1 RESTRICTIONS ON TRANSFER.
(a) Each Holder agrees not to make any disposition of all or
any portion of the Registrable Securities (or the Common Stock issuable upon the
conversion thereof) unless and until:
(i) There is then in effect a registration statement
under the Securities Act covering such proposed disposition and such disposition
is made in accordance with such registration statement; or
(ii) (A)The transferee has agreed in writing to be bound
by the terms of this Agreement; (B) Such Holder shall have notified the Company
of the proposed disposition and shall have furnished the Company with a detailed
statement of the circumstances surrounding the proposed disposition, and (C) if
reasonably requested by the Company, such Holder shall have furnished the
Company with an opinion of counsel, reasonably satisfactory to the Company, that
such disposition will not require registration of such shares under the
Securities Act. It is agreed that the Company will not require opinions of
counsel for transactions made pursuant to Rule 144 except in unusual
circumstances.
(iii) Notwithstanding the provisions of paragraphs (i)
and (ii) above, no such registration statement or opinion of counsel shall be
necessary for a transfer by a Holder which is (A) a partnership to its partners
in accordance with partnership interests, (B) a private corporation to its
shareholders in accordance with shareholder interests or any Affiliate (as that
term is defined under the Securities Act), (c) a corporation to its parent
corporation or another entity controlled by its parent corporation, or (D) to
the Holder's family member, estate or trust for the benefit of an individual
Holder (including a transfer to a transferee Holder's family member, estate or
trust for the benefit of an individual transferee Holder), provided that any
such transferee under clauses (A), (B), (C) or (D) will be subject to the terms
of this Section 2.1 to the same extent as if he, she or it were an original
Holder hereunder.
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(b) Each certificate representing Shares or Registrable
Securities shall (unless otherwise permitted by the provisions of the Agreement)
be stamped or otherwise imprinted with a legend substantially similar to the
following (in addition to any legend required under applicable state securities
laws or as provided elsewhere in the Agreement):
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE "ACT") AND MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL
REGISTERED UNDER THE ACT OR, IN THE OPINION OF COUNSEL OR BASED ON
OTHER WRITTEN EVIDENCE IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER
OF THESE SECURITIES, SUCH OFFER, SALE OR TRANSFER, PLEDGE OR
HYPOTHECATION IS IN COMPLIANCE THEREWITH.
(c) The Company shall be obligated to reissue promptly
unlegended certificates at the request of any holder thereof if the holder shall
have obtained an opinion of counsel (which counsel may be counsel to the
Company) reasonably acceptable to the Company to the effect that the securities
proposed to be disposed of may lawfully be so disposed of without registration,
qualification or legend.
(d) Any legend endorsed on an instrument pursuant to
applicable state securities laws and the stop-transfer instructions with respect
to such securities shall be removed upon receipt by the Company of an order of
the appropriate blue sky authority authorizing such removal.
2.2 DEMAND REGISTRATION.
(a) Subject to the conditions of this Section 2.2, if the
Company shall receive at any time after the earlier of (i) April 15, 2000, or
(ii) the date 180 days following the effective date of the registration
statement pertaining to the initial public offering of the Company's Common
Stock (the "Initial Offering") a written request from the Holders of more than
thirty percent (30%) of the Registrable Securities then outstanding (the
"Initiating Holders") that the Company file a registration statement under the
Securities Act covering the registration of Registrable Securities having an
aggregate offering price to the public in excess of $7,500,000, then the Company
shall, within thirty (30) days of the receipt thereof, give written notice of
such request to all Holders, and subject to the limitations of this Section 2.2,
effect, as soon as practicable, the registration under the Securities Act of all
Registrable Securities that the Holders request to be registered.
(b) If the Initiating Holders intend to distribute the
Registrable Securities covered by their request by means of an underwriting,
they shall so advise the Company as a part of their request made pursuant to
this Section 2.2 and the Company shall include such information in the written
notice referred to in Section 2.2(a). In such event, the right of any Holder to
include his, her or its Registrable Securities in such registration shall be
conditioned
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upon such Holder's participation in such underwriting and the inclusion of such
Holder's Registrable Securities in the underwriting (unless otherwise mutually
agreed by a majority in interest of the Initiating Holders and such Holder) to
the extent provided herein. All Holders proposing to distribute their securities
through such underwriting shall enter into an underwriting agreement in
customary form with the underwriter or underwriters selected for such
underwriting by a majority in interest of the Initiating Holders (which
underwriter or underwriters shall be reasonably acceptable to the Company).
Notwithstanding any other provision of this Section 2.2, if the underwriter
advises the Company in writing that marketing factors require a limitation of
the number of securities to be underwritten (including Registrable Securities)
then the Company shall so advise all Holders of Registrable Securities which
would otherwise be underwritten pursuant hereto, and the number of shares that
may be included in the underwriting shall be allocated to the Holders of such
Registrable Securities on a pro rata basis based on the number of Registrable
Securities held by all such Holders participating in such underwriting
(including the Initiating Holders). In the event that any Registrable Securities
are excluded or withdrawn from such underwriting as a result of the application
of the preceding sentence, such registration may not include shares of any
selling shareholder other than a Holder of Registrable Securities. Any
Registrable Securities excluded or withdrawn from such underwriting shall be
withdrawn from the registration.
(c) The Company shall be obligated to effect up to two (2)
registrations pursuant to this Section 2.2, but shall not be obligated to effect
more than two (2) registrations pursuant to this Section 2.2.
(d) Notwithstanding the foregoing, if the Company shall
furnish to Holders requesting a registration statement pursuant to this Section
2.2, a certificate signed by the Chairman of the Board stating that in the good
faith judgment of the Board of Directors of the Company, it would be seriously
detrimental to the Company and its shareholders for such registration statement
to be filed and it is therefore essential to defer the filing of such
registration statement, the Company shall have the right to defer such filing
for a period of not more than ninety (90) days after receipt of the request of
the Initiating Holders; provided that such right to delay a request shall be
exercised by the Company no more than once in any one-year period.
2.3 PIGGYBACK REGISTRATIONS. The Company shall notify all Holders
of Registrable Securities in writing at least thirty (30) days prior to the
filing of any registration statement under the Securities Act for purposes of a
public offering of securities of the Company (including, but not limited to,
registration statements relating to secondary offerings of securities of the
Company, but excluding registration statements relating to employee benefit
plans and corporate reorganizations) and will afford each such Holder an
opportunity to include in such registration statement all or part of such
Registrable Securities held by such Holder. Each Holder desiring to include in
any such registration statement all or any part of the Registrable Securities
held by it shall, within twenty (20) days after receipt of the above-described
notice from the Company, so notify the Company in writing. Such notice shall
state the intended method of disposition of the Registrable Securities by such
Holder. If a Holder decides not to include all of its Registrable Securities in
any registration statement thereafter filed by the
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Company, such Holder shall nevertheless continue to have the right to include
any Registrable Securities in any subsequent registration statement or
registration statements as may be filed by the Company with respect to offerings
of its securities, all upon the terms and conditions set forth herein.
(a) UNDERWRITING. If the registration statement under which the
Company gives notice under this Section 2.3 is for an underwritten offering, the
Company shall so advise the Holders of Registrable Securities. In such event,
the right of any such Holder to be included in a registration pursuant to this
Section 2.3 shall be conditioned upon such Holder's participation in such
underwriting and the inclusion of such Holder's Registrable Securities in the
underwriting to the extent provided herein. All Holders proposing to distribute
their Registrable Securities through such underwriting shall enter into an
underwriting agreement in customary form with the underwriter or underwriters
selected for such underwriting. Notwithstanding any other provision of the
Agreement, if the underwriter determines in good faith that marketing factors
require a limitation of the number of shares to be underwritten, the number of
shares that may be included in the underwriting shall be allocated, first, to
the Company; second, to the Holders on a pro rata basis based on the total
number of Registrable Securities held by the Holders; and third, to any
shareholder of the Company (other than a Holder) on a pro rata basis. No such
reduction shall reduce the securities being offered by the Company for its own
account to be included in the registration and underwriting, except that in no
event shall the amount of securities of the selling Holders included in the
registration be reduced below twenty-five percent (25%) of the total amount of
securities included in such registration. In no event will shares of any other
selling shareholder be included in such registration which would reduce the
number of shares which may be included by Holders without the written consent of
Holders of not less than two-thirds (66 2/3%) of the Registrable Securities
proposed to be sold in the offering.
2.4 FORM S-3 REGISTRATION. In case the Company shall receive from any
Holder or Holders of Registrable Securities a written request or requests that
the Company effect a registration on Form S-3 and any related qualification or
compliance with respect to all or a part of the Registrable Securities owned by
such Holder or Holders, the Company will:
(a) promptly give written notice of the proposed registration, and
any related qualification or compliance, to all other Holders of Registrable
Securities; and
(b) as soon as practicable, effect such registration and all such
qualifications and compliances as may be so requested and as would permit or
facilitate the sale and distribution of all or such portion of such Holder's or
Holders' Registrable Securities as are specified in such request, together with
all or such portion of the Registrable Securities of any other Holder or Holders
joining in such request as are specified in a written request given within
fifteen (15) days after receipt of such written notice from the Company;
provided, however, that the Company shall not be obligated to effect any such
registration, qualification or compliance pursuant to this Section 2.4: (i) if
Form S-3 is not available for such offering by the Holders, (ii) if the Holders,
together with the holders of any other securities of the Company entitled to
inclusion in such registration, propose to sell Registrable Securities and such
other securities (if
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any) at an aggregate price to the public of less than $500,000, (iii) if the
Company shall furnish to the Holders a certificate signed by the Chairman of the
Board of Directors of the Company stating that in the good faith judgment of the
Board of Directors of the Company, it would be seriously detrimental to the
Company and its shareholders for such Form S-3 Registration to be effected at
such time, in which event the Company shall have the right to defer the filing
of the Form S-3 registration statement for a period of not more than ninety (90)
days after receipt of the request of the Holder or Holders under this Section
2.4, (iv) if the Company has, within the twelve (12) month period preceding the
date of such request, already effected two (2) registrations on Form S-3 for the
Holders pursuant to this Section 2.4, or (v) in any particular jurisdiction in
which the Company would be required to qualify to do business or to execute a
general consent to service of process in effecting such registration,
qualification or compliance.
(c) Subject to the foregoing, the Company shall file a Form S-3
registration statement covering the Registrable Securities and other securities
so requested to be registered as soon as practicable after receipt of the
request or requests of the Holders. All such Registration Expenses incurred in
connection with registrations requested pursuant to this Section 2.4 after the
first two (2) registrations shall be paid by the selling Holders pro rata in
proportion to the number of shares sold by each.
2.5 EXPENSES OF REGISTRATION. All Registration Expenses incurred in
connection with any registration, qualification or compliance pursuant to
Section 2.2 or any registration under Section 2.3 or Section 2.4 herein shall be
borne by the Company. All Selling Expenses incurred in connection with any
registrations hereunder, shall be borne by the holders of the securities so
registered pro rata on the basis of the number of shares so registered. The
Company shall not, however, be required to pay for expenses of any registration
proceeding begun pursuant to Section 2.2 or 2.4, the request of which has been
subsequently withdrawn by the Initiating Holders unless (a) the withdrawal is
based upon material adverse information concerning the Company of which the
Initiating Holders were not aware at the time of such request or (b) the Holders
of a majority of Registrable Securities agree to forfeit their right to one
requested registration pursuant to Section 2.2 or Section 2.4 in which event
such right shall be forfeited by all Holders). If the Holders are required to
pay the Registration Expenses, such expenses shall be borne by the holders of
securities (including Registrable Securities) requesting such registration in
proportion to the number of shares for which registration was requested. If the
Company is required to pay the Registration Expenses of a withdrawn offering
pursuant to Section 2.5(a), then the Holders shall not forfeit their rights
pursuant to Section 2.2 or Section 2.4 to a demand registration.
2.6 OBLIGATIONS OF THE COMPANY. Whenever required to effect the
registration of any Registrable Securities, the Company shall, as expeditiously
as reasonably possible:
(a) Prepare and file with the SEC a registration statement with
respect to such Registrable Securities and use its best efforts to cause such
registration statement to become effective, and, upon the request of the Holders
of a majority of the Registrable Securities registered thereunder, keep such
registration statement effective for up to ninety (90) days.
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(b) Prepare and file with the SEC such amendments and supplements
to such registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by such
registration statement.
(c) Furnish to the Holders such number of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Securities Act, and such other documents as they may reasonably request in order
to facilitate the disposition of Registrable Securities owned by them.
(d) Use its best efforts to register and qualify the securities
covered by such registration statement under such other securities or Blue Sky
laws of such jurisdictions as shall be reasonably requested by the Holders,
provided that the Company shall not be required in connection therewith or as a
condition thereto to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions.
(e) In the event of any underwritten public offering, enter into
and perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter(s) of such offering. Each Holder
participating in such underwriting shall also enter into and perform its
obligations under such an agreement.
(f) Notify each Holder of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing.
(g) Furnish, at the request of a majority of the Holders
participating in the registration, on the date that such Registrable Securities
are delivered to the underwriters for sale, if such securities are being sold
through underwriters, or, if such securities are not being sold through
underwriters, on the date that the registration statement with respect to such
securities becomes effective, (i) an opinion, dated as of such date, of the
counsel representing the Company for the purposes of such registration, in form
and substance as is customarily given to underwriters in an underwritten public
offering and reasonably satisfactory to a majority in interest of the Holders
requesting registration, addressed to the underwriters, if any, and to the
Holders requesting registration of Registrable Securities and (ii) a letter
dated as of such date, from the independent certified public accountants of the
Company, in form and substance as is customarily given by independent certified
public accountants to underwriters in an underwritten public offering and
reasonably satisfactory to a majority in interest of the Holders requesting
registration, addressed to the underwriters, if any, and to the Holders
requesting registration of Registrable Securities.
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2.7 TERMINATION OF REGISTRATION RIGHTS. All registration rights granted
under this Article II shall terminate and be of no further force and effect
seven (7) years after the date following the Company's Initial Offering.
2.8 DELAY OF REGISTRATION. No Holder shall have any right to obtain or
seek an injunction restraining or otherwise delaying any such registration as
the result of any controversy that might arise with respect to the
interpretation or implementation of this Article II.
2.9 INDEMNIFICATION. In the event any Registrable Securities are
included in a registration statement under Sections 2.2, 2.3 or 2.4:
(a) To the extent permitted by law, the Company will indemnify and
hold harmless each Holder, the partners, officers and directors of each Holder,
any underwriter (as defined in the Securities Act) for such Holder and each
person, if any, who controls such Holder or underwriter within the meaning of
the Securities Act or the Securities Exchange Act of 1934, as amended, (the
"1934 Act"), against any losses, claims, damages, or liabilities (joint or
several) to which they may become subject under the Securities Act, the 1934 Act
or other federal or state law, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
of the following statements, omissions or violations (collectively a
"Violation") by the Company: (i) any untrue statement or alleged untrue
statement of a material fact contained in such registration statement, including
any preliminary prospectus or final prospectus contained therein or any
amendments or supplements thereto, (ii) the omission or alleged omission to
state therein a material fact required to be stated therein, or necessary to
make the statements therein not misleading, or (iii) any violation or alleged
violation by the Company of the Securities Act, the 1934 Act, any state
securities law or any rule or regulation promulgated under the Securities Act,
the 1934 Act or any state securities law in connection with the offering covered
by such registration statement; and the Company will reimburse each such Holder,
partner, officer or director, underwriter or controlling person for any legal or
other expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action; provided however,
that the indemnity agreement contained in this Section 2.9(a) shall not apply to
amounts paid in settlement of any such loss, claim, damage, liability or action
if such settlement is effected without the consent of the Company (which consent
shall not be unreasonably withheld), nor shall the Company be liable in any such
case for any such loss, claim, damage, liability or action to the extent that it
arises out of or is based upon a Violation which occurs in reliance upon and in
conformity with written information furnished expressly for use in connection
with such registration by such Holder, partner, officer, director, underwriter
or controlling person of such Holder.
(b) To the extent permitted by law, each selling Holder will
indemnify and hold harmless the Company, each of its directors, each of its
officers, each person, if any, who controls the Company within the meaning of
the Securities Act, any underwriter and any other Holder selling securities
under such registration statement or any of such other Holder's partners,
directors or officers or any person who controls such Holder, against any
losses, claims, damages or liabilities (joint or several) to which the Company
or any such director,
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officer, controlling person, underwriter or other such Holder, or partner,
director, officer or controlling person of such other Holder may become subject
under the Securities Act, the 1934 Act or other federal or state law, insofar as
such losses, claims, damages or liabilities (or actions in respect thereto)
arise out of or are based upon any Violation, in each case to the extent (and
only to the extent) that such Violation occurs in reliance upon and in
conformity with written information furnished by such Holder under an instrument
duly executed by such Holder and stated to be specifically for use in connection
with such registration; and each such Holder will reimburse any legal or other
expenses reasonably incurred by the Company or any such director, officer,
controlling person, underwriter or other Holder, or partner, officer, director
or controlling person of such other Holder in connection with investigating or
defending any such loss, claim, damage, liability or action if it is judicially
determined that there was such a Violation; provided, however, that the
indemnity agreement contained in this Section 2.9(b) shall not apply to amounts
paid in settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Holder, which consent shall
not be unreasonably withheld; provided further, that in no event shall any
indemnity under this Section 2.9 exceed the gross proceeds (net of Selling
Expenses) from the offering received by such Holder.
(c) Promptly after receipt by an indemnified party under this
Section 2.9 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 2.9, deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party shall
have the right to retain its own counsel, with the fees and expenses to be paid
by the indemnifying party, if representation of such indemnified party by the
counsel retained by the indemnifying party would be inappropriate due to actual
or potential differing interests between such indemnified party and any other
party represented by such counsel in such proceeding. The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such action, if materially prejudicial to its ability to
defend such action, shall relieve such indemnifying party of any liability to
the indemnified party under this Section 2.9, but the omission so to deliver
written notice to the indemnifying party will not relieve it of any liability
that it may have to any indemnified party otherwise than under this Section 2.9.
(d) If the indemnification provided for in this Section 2.9 is
held by a court of competent jurisdiction to be unavailable to an indemnified
party with respect to any losses, claims, damages or liabilities referred to
herein, the indemnifying party, in lieu of indemnifying such indemnified party
thereunder, shall to the extent permitted by applicable law contribute to the
amount paid or payable by such indemnified party as a result of such loss,
claim, damage or liability in such proportion as is appropriate to reflect the
relative fault of the indemnifying party on the one hand and of the indemnified
party on the other in connection with the Violation(s) that resulted in such
loss, claim, damage or liability, as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and of the
indemnified
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party shall be determined by a court of law by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission; provided, however, that in no event shall any
contribution under this Section 2.9(b) exceed the gross proceeds (net of Selling
Expenses) from the offering received by such Holder.
(e) The foregoing indemnity agreements of the Company and Holders
are subject to the condition that, insofar as they relate to any Violation made
in a preliminary prospectus but eliminated or remedied in the amended prospectus
on file with the SEC at the time the registration statement in question becomes
effective or the amended prospectus filed with the SEC pursuant to SEC Rule
424(b) (the "Final Prospectus"), such indemnity agreement shall not inure to the
benefit of any person if a copy of the Final Prospectus was furnished to the
indemnified party and was not furnished to the person asserting the loss,
liability, claim or damage at or prior to the time such action is required by
the Securities Act.
(f) The obligations of the Company and Holders under this Section
2.9 shall survive the completion of any offering of Registrable Securities in a
registration statement, and otherwise.
2.10 ASSIGNMENT OF REGISTRATION RIGHTS. The rights to cause the Company
to register Registrable Securities pursuant to this Article II may be assigned
by a Holder to a transferee or assignee of Registrable Securities; provided,
however, that no such transferee or assignee shall be entitled to registration
rights under Sections 2.2, 2.3 or 2.4 hereof unless it acquires at least fifty
thousand (50,000) shares of Registrable Securities (as adjusted for stock splits
and combinations) and the Company shall, within twenty (20) days after such
transfer, be furnished with written notice of the name and address of such
transferee or assignee and the securities with respect to which such
registration rights are being assigned. Notwithstanding the foregoing, rights to
cause the Company to register securities may be assigned to any subsidiary,
parent, general partner or limited partner of a Holder.
2.11 AMENDMENT OF REGISTRATION RIGHTS. Any provision of this Article II
may be amended and the observance thereof may be waived (either generally or in
a particular instance and either retroactively or prospectively), only with the
written consent of the Company and the Holders of at least sixty-six and
two-thirds percent (66 2/3%) of the Registrable Securities. Any amendment or
waiver effected in accordance with this Section 2.11 shall be binding upon each
Holder and the Company. By acceptance of any benefits under this Article II,
Holders of Registrable Securities hereby agree to be bound by the provisions
hereunder.
2.12 LIMITATION ON SUBSEQUENT REGISTRATION RIGHTS. After the date of
this Agreement, the Company shall not, without the prior written consent of the
Holders of a majority of the Registrable Securities, enter into any agreement
with any holder or prospective holder of any securities of the Company that
would permit such holder to require that the Company register any securities
held by such holder.
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2.13 "MARKET STAND-OFF" AGREEMENT. If requested by the Company and an
underwriter of Common Stock (or other securities) of the Company, a Purchaser
holding more than one percent (1%) of the Company's voting securities shall not
sell or otherwise transfer or dispose of any Common Stock (or other securities)
of the Company held by such Purchaser (other than those included in the
registration) for a period specified by the underwriters not to exceed one
hundred eighty (180) days following the effective date of a registration
statement of the Company filed under the Securities Act, provided that such
agreement shall apply only to the Company's Initial Offering.
The obligations described in this Section 2.13 shall not apply to a
registration relating solely to employee benefit plans on Form S-1 or Form S-8
or similar forms that may be promulgated in the future, or a registration
relating solely to a Commission Rule 145 transaction on Form S-4 or similar
forms that may be promulgated in the future. The Company may impose
stop-transfer instructions with respect to the shares (or securities) subject to
the foregoing restriction until the end of said one hundred eighty (180) day
period.
2.14 RULE 144 REPORTING. With a view to making available to the Holders
the benefits of certain rules and regulations of the SEC which may permit the
sale of the Registrable Securities to the public without registration, the
Company agrees to use its best efforts to:
(a) Make and keep public information available, as those terms are
understood and defined in SEC Rule 144 or any similar or analogous rule
promulgated under the Securities Act, at all times after the effective date of
the first registration filed by the Company for an offering of its securities to
the general public;
(b) File with the SEC, in a timely manner, all reports and other
documents required of the Company under the Exchange Act;
(c) So long as a Holder owns any Registrable Securities, furnish to
such Holder forthwith upon request: a written statement by the Company as to its
compliance with the reporting requirements of said Rule 144 of the Securities
Act, and of the Exchange Act (at any time after it has become subject to such
reporting requirements); a copy of the most recent annual or quarterly report of
the Company; and such other reports and documents as a Holder may reasonably
request in availing itself of any rule or regulation of the SEC allowing it to
sell any such securities without registration.
3. COVENANTS OF THE COMPANY.
3.1 BASIC FINANCIAL INFORMATION AND REPORTING.
(a) The Company will maintain true books and records of account in
which full and correct entries will be made of all its business transactions
pursuant to a system of accounting established and administered in accordance
with generally accepted accounting principles consistently applied, and will set
aside on its books all such proper accruals and reserves as shall be required
under generally accepted accounting principles consistently applied.
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(b) As soon as practicable after the end of each fiscal year of the
Company, and in any event within 90 days thereafter, the Company will furnish
each Purchaser a consolidated balance sheet of the Company, as at the end of
such fiscal year, and a consolidated statement of income and a consolidated
statement of cash flows of the Company, for such year, all prepared in
accordance with generally accepted accounting principles and setting forth in
each case in comparative form the figures for the previous fiscal year, all in
reasonable detail. Such financial statements shall be accompanied by a report
and opinion thereon by independent public accountants of national standing
selected by the Company's Board of Directors.
(c) The Company will furnish each Purchaser, as soon as practicable
after the end of the first, second and third quarterly accounting periods in
each fiscal year of the Company, and in any event within thirty (30) days
thereafter, a consolidated balance sheet of the Company as of the end of each
such quarterly period, and a consolidated statement of income and a consolidated
statement of cash flows of the Company for such period and for the current
fiscal year to date, prepared in accordance with generally accepted accounting
principles, with the exception that no notes need be attached to such statements
and year-end audit adjustments may not have been made.
(d) The Company will furnish each Major Purchaser (i) at least
thirty (30) days prior to the beginning of each fiscal year an annual budget and
operating plans for such fiscal year; and (ii) within thirty (30) days after the
end of each month, an unaudited balance sheet and statements of income and cash
flows, prepared in accordance with generally accepted accounting principles,
with the exception that no notes need be attached to such statements and
year-end audit adjustments may not have been made, but such statement shall set
forth applicable budget figures and variances from budget.
3.2 INSPECTION RIGHTS. Each Major Purchaser shall have the right to
visit and inspect any of the properties of the Company or any of its
subsidiaries, and to discuss the affairs, finances and accounts of the Company
or any of its subsidiaries with its officers, all at such reasonable times and
as often as may be reasonably requested; provided, however, that the Company
shall not be obligated under this Section 3.2 with respect to a competitor of
the Company or with respect to information which the Board of Directors
determines in good faith is confidential and should not, therefore, be
disclosed.
3.3 CONFIDENTIALITY OF RECORDS.
(a) Each Purchaser agrees not to use Confidential Information
(as hereinafter defined) of the Company for its own use or for any purpose
except to evaluate and enforce its equity investment in the Company. Except as
permitted under subsection 3.3(b) below, each Purchaser agrees to use its
reasonable best efforts not to disclose such Confidential Information to any
third parties. Each Purchaser shall undertake to treat such Confidential
Information in a manner consistent with the treatment of its own information of
such proprietary nature and agrees that it shall protect the confidentiality of
and use reasonable best efforts to prevent disclosure of the Confidential
Information to prevent it from falling into the public domain or the possession
of unauthorized persons. Each transferee of any Purchaser who receives
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Confidential Information shall agree to be bound by such provisions. For
purposes of this Section, "Confidential Information" means any information,
technical data, or know-how, including, but not limited to, the Company's
research, products, software, services, development, inventions, processes,
designs, drawings, engineering, marketing, or finances, disclosed by the Company
either directly or indirectly in writing, orally or by drawings or inspection of
parts or equipment.
(b) Confidential Information does not include information,
technical data or know-how which (i) is in the Purchaser's possession at the
time of disclosure as shown by Purchaser's files and records immediately prior
to the time of disclosure; (ii) before or after it has been disclosed to the
Purchaser, it is part of the public knowledge or literature, not as a result of
any action or inaction of the Purchaser; or (iii) is approved for release by
written authorization of Company. The provisions of this Section shall not apply
(i) to the extent that a Purchaser is required to disclose Confidential
Information pursuant to any law, statute, rule or regulation or any order of any
court or jurisdiction process or pursuant to any direction, request or
requirement (whether or not having the force of law but if not having the force
of law being of a type with which institutional investors in the relevant
jurisdiction are accustomed to comply) of any self-regulating organization or
any governmental, fiscal, monetary or other authority; (ii) to the disclosure of
Confidential Information to a Purchaser's employees, counsel, accountants or
other professional advisors; (iii) to the extent that a Purchaser needs to
disclose Confidential Information for the protection of any of such Purchaser's
rights or interest against the Company, whether under this Agreement or
otherwise; or (iv) to the disclosure of Confidential Information to a
prospective transferee of securities which agrees to be bound by the provisions
of this Section in connection with the receipt of such Confidential Information.
3.4 RESERVATION OF COMMON STOCK. The Company will at all times reserve
and keep available, solely for issuance and delivery upon the conversion of the
Preferred Stock or exercise of the Warrants, all Common Stock issuable from time
to time upon such conversion and exercise.
3.5 STOCK VESTING. Unless otherwise approved by the Board of Directors,
all stock options and other stock equivalents issued after the date of this
Agreement to employees, directors, consultants and other service providers shall
be subject to vesting as follows: (i) twenty-five percent (25%) of such stock
shall vest at the end of the first year following the earlier of the date of
issuance or such person's services commencement date with the Company, and (ii)
seventy-five percent (75%) of such stock shall vest over the remaining three (3)
years. With respect to any shares of stock purchased by any such person, the
Company shall have a repurchase option which shall provide that upon such
person's termination of employment or service with the Company, with or without
cause, the Company or its assignee (to the extent permissible under applicable
securities laws and other laws) shall have the option to purchase at cost any
unvested shares of stock held by such person.
3.6 PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT. The Company shall
require all employees and consultants to execute and deliver a Proprietary
Information and Inventions Agreement substantially in the form attached to the
Purchase Agreement as Exhibit E.
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3.7 INSURANCE. The Company shall promptly acquire and maintain suitable
fire, casualty and liability insurance coverage suitable for a company of its
kind, including coverage against products liability claims, in an amount deemed
appropriate by the Company's Board of Directors.
3.8 REAL PROPERTY HOLDING CORPORATION. The Company covenants that it
will operate in a manner such that it will not become a "United States real
property holding corporation" as that term is defined in Section 897(c)(2) of
the Internal Revenue Code of 1986, as amended, and the regulations thereunder
("FIRPTA"). The Company agrees to make determinations as to its status as a
USRPHC, and will file statements concerning those determinations with the
Internal Revenue Service, in the manner and at the times required under Reg.
Section 1.897-2(h), or any supplementary or successor provision thereto. Within
30 days of a request from a Purchaser or any of its partners, the Company will
inform the requesting party, in the manner set forth in Reg. Section 1.897-
2(h)(1)(iv) or any supplementary or successor provision thereto, whether that
party's interest in the Company constitutes a United States real property
interest (within the meaning of Internal Revenue Code Section 897(c)(1) and the
regulations thereunder) and whether the Company has provided to the Internal
Revenue Service all required notices as to its USRPHC status.
3.9 CERTAIN COVENANTS RELATING TO SBA MATTERS.
(a) USE OF PROCEEDS. The proceeds from the issuance and sale of the
Series C Preferred Stock and Warrants pursuant to the Purchase Agreement (the
"Proceeds") shall be used by the Company for its growth, modernization or
expansion. The Company shall provide each SBIC Investor and the Small Business
Administration (the "SBA") reasonable access to the Company's books and records
for the purpose of confirming the use of Proceeds.
(b) BUSINESS ACTIVITY. For a period of one year following the
Closing, the Company shall not change the nature of its business activity if
such change would render the Company ineligible as provided in 13 C.F.R. Section
107.720.
(c) COMPLIANCE. So long as any SBIC Investor holds any securities
of the Company, the Company will at all times comply with the non-discrimination
requirements of 13 C.F.R. Parts 112, 113 and 117.
(d) INFORMATION FOR SBIC INVESTOR. Within 45 days after the end of
each fiscal year and at such other times as an SBIC Investor may reasonably
request, the Company shall deliver to such SBIC Investor a written assessment,
in form and substance satisfactory to such SBIC Investor, of the economic impact
of such SBIC Investor's financing specifying the full-time equivalent jobs
created or retained in connection with such investment, and the impact of the
financing on the Company's business in terms of revenue and profits and on taxes
paid by the Company and its employees. Upon request, the Company promptly (and
in any event within 20 days of such request) will furnish to each SBIC Investor
all information reasonably requested by such SBIC Investor in order for such
SBIC Investor to comply with the requirements of 13 C.F.R. Section 107.620 or to
prepare and file SBA Form 468 and any other
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information requested or required by any governmental agency asserting
jurisdiction over such SBIC Investor. The Company shall afford to
representatives of the SBA reasonable access to the books, records and
properties of the Company and its subsidiaries. Any submission of any financial
information under Section 3.1 or this Section 3.6(d) shall include a certificate
of the Company's president, chief executive officer, treasurer or chief
financial officer. If an SBIC Investor requests confidential information from
the Company for the purpose of providing such information to the SBA, then if
requested in writing by the Company at the time the Company provides such
information to such SBIC Investor, the SBIC Investor shall, to the extent
permitted by law, request that such confidential information be treated
confidentially by the SBA.
(e) NUMBER OF HOLDERS OF VOTING SECURITIES. So long as any SBIC
Investor holds any securities purchased pursuant to the Purchase Agreement or
issued by the Company with respect thereto, the Company shall notify each SBIC
Investor (i) at least 15 days prior to taking any action after which the number
of record holders of the Company's voting securities would be increased from
fewer than 50 to 50 or more, and (ii) of any other action or occurrence after
which the number of record holders of the Company's voting securities was
increased (or would increase) from fewer than 50 to 50 or more, as soon as
practicable after the Company becomes aware that such other action or occurrence
has occurred or is proposed to occur.
(f) REGULATORY COMPLIANCE COOPERATION. In the event that
BankAmerica Ventures determines that it has a Regulatory Problem (as defined
below), it shall have the right to transfer its Registrable Securities without
regard to any restrictions on transfer set forth in this Agreement or the
Purchase Agreement (provided that the transferee agrees to become a party to
each such agreement), and the Company shall take all such actions as are
reasonably requested by BankAmerica Ventures in order to (i) effectuate and
facilitate any transfer by it of any securities of the Company then held by it
to any person designated by BankAmerica Ventures, (ii) permit BankAmerica
Ventures (or any of its affiliates) to exchange all or any portion of any voting
security then held by it on a share-for-share basis for shares of a nonvoting
security of the Company, which nonvoting security shall be identical in all
respects to the voting security exchanged for it, except that it shall be
nonvoting and shall be convertible into a voting security on such terms as are
requested by it in light of regulatory considerations then prevailing, and (iii)
amend this Agreement, as amended from time to time, to effectuate and reflect
the foregoing. The parties to this Agreement agree to vote all of the Company's
securities held by them in favor of such amendments and actions. For purposes of
this Agreement, a "Regulatory Problem" means any set of facts or circumstances
wherein it has been asserted by any governmental regulatory agency that
BankAmerica Ventures is not entitled to hold, or exercise any significant right
with respect to, the underlying securities into which the Shares are convertible
or the Warrants are exercisable.
3.10 TERMINATION OF COVENANTS. All covenants of the Company contained
in Article III of this Agreement shall expire and terminate as to each Purchaser
after the time of effectiveness of the Company's first firm commitment
underwritten public offering registered under the Securities Act.
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4. RIGHTS OF FIRST REFUSAL.
4.1 SUBSEQUENT OFFERINGS. Each Major Purchaser shall have a right of
first refusal to purchase its pro rata share of all Equity Securities, as
defined below, that the Company may, from time to time, propose to sell and
issue after the date of this Agreement, other than the Equity Securities
excluded by Section 4.6 hereof. Each Major Purchaser's pro rata share is equal
to the ratio of the number of shares of the Company's Common Stock (including
all shares of Common Stock issued or issuable upon conversion of the Shares)
which such Major Purchaser is deemed to be a holder immediately prior to the
issuance of such Equity Securities to the total number of shares of the
Company's outstanding Common Stock (including all shares of Common Stock
issuable upon conversion of the Shares) held by all Major Purchasers. The term
"Equity Securities" shall mean (i) any stock or similar security of the Company,
(ii) any security convertible, with or without consideration, into any stock or
similar security (including any option to purchase such a convertible security),
(iii) any security carrying any warrant or right to subscribe to or purchase any
stock or similar security or (iv) any such warrant or right.
4.2 EXERCISE OF RIGHTS. If the Company proposes to issue any Equity
Securities, it shall give each Major Purchaser written notice of its intention,
describing the Equity Securities, the price and the terms and conditions upon
which the Company proposes to issue the same. Each Major Purchaser shall have
fifteen (15) days from the giving of such notice to agree to purchase its pro
rata share of the Equity Securities for the price and upon the terms and
conditions specified in the notice by giving written notice to the Company and
stating therein the quantity of Equity Securities to be purchased.
Notwithstanding the foregoing, the Company shall not be required to offer or
sell such Equity Securities to any Major Purchaser who would cause the Company
to be in violation of applicable federal securities laws by virtue of such offer
or sale.
4.3 ISSUANCE OF EQUITY SECURITIES TO OTHER PERSONS. If not all of the
Major Purchasers elect to purchase their pro rata share of the Equity
Securities, then the Company shall promptly notify in writing the Major
Purchasers who do so elect and shall offer such Major Purchasers the right to
acquire such unsubscribed shares ("Subscription Notice"). The Major Purchasers
shall have five (5) days after receipt of the Subscription Notice to notify the
Company of its election to purchase all or a portion thereof of the unsubscribed
shares. If the Major Purchasers fail to exercise in full the rights of first
refusal, the Company shall have sixty (60) days thereafter to sell the Equity
Securities in respect of which the Major Purchasers' rights were not exercised,
at a price and upon terms and conditions no more favorable to the purchasers
thereof than specified in the Company's notice to the Major Purchasers pursuant
to Section 4.2 hereof. If the Company has not sold such Equity Securities within
such ninety (90) days, the Company shall not thereafter issue or sell any Equity
Securities, without first offering such securities to the Major Purchasers in
the manner provided above.
4.4 TERMINATION OF RIGHTS OF FIRST REFUSAL. The rights of first refusal
established by this Article IV shall terminate upon the closing of an
underwritten public offering of Common Stock of the Company made pursuant to an
effective registration statement under the Securities Act.
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4.5 TRANSFER OF RIGHTS OF FIRST REFUSAL. The rights of first refusal of
each Major Purchaser under this Article IV may be transferred to any party
described in clauses (A), (B) or (C) of Section 2.1(a)(iii), to any successor in
interest to all or substantially all the assets of such Major Purchaser, or to a
transferee who acquires two hundred fifty thousand (250,000) shares of
Registrable Securities.
4.6 EXCLUDED SECURITIES. The rights of first refusal established by
this Article IV shall have no application to any of the following Equity
Securities:
(a) shares of Common Stock (and/or options, warrants or other
Common Stock purchase rights issued pursuant to such options, warrants or other
rights) issued or to be issued to employees, officers or directors of, or
consultants or advisors to the Company or any subsidiary, pursuant to stock
purchase or stock option plans or other arrangements that are approved by the
Board;
(b) stock issued pursuant to any rights or agreements outstanding
as of the date of this Agreement, options and warrants outstanding as of the
date of this Agreement; and stock issued pursuant to any such rights or
agreements granted after the date of this Agreement, provided that the rights of
first refusal established by this Article IV applied with respect to the initial
sale or grant by the Company of such rights or agreements;
(c) any Equity Securities issued for consideration other than cash
pursuant to a merger, consolidation, acquisition or similar business
combination;
(d) any Equity Securities that are issued by the Company as part of
an underwritten public offering referred to in Section 4.4 hereof;
(e) shares of Common Stock issued in connection with any stock
split, stock dividend or recapitalization by the Company;
(f) shares of Common Stock issued upon conversion of the Preferred
Stock or exercise of the Warrants;
(g) any Equity Securities issued pursuant to any equipment leasing
arrangement, or bank financing approved by the Board of Directors.
5. CO-SALE RIGHTS
5.1 PURCHASE RIGHTS; CO-SALE RIGHTS.
(a) TRANSFER NOTICE. If a Purchaser proposes to sell or transfer
any of the Shares or the Common Stock of the Company issued or issuable upon
conversion of the Shares ("Co-Sale Stock"), then such Purchaser (the
"Transferor") shall promptly give written notice (the "Transfer Notice")
simultaneously to the Company and to each of the other Purchasers at least
thirty (30) days prior to the closing of such sale or transfer. The Transfer
Notice shall describe
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in reasonable detail the proposed sale or transfer including, without
limitation, the number of shares of Co-Sale Stock to be sold or transferred, the
nature of such sale or transfer, the consideration to be paid, and the name and
address of each prospective purchaser or transferee. In the event that the sale
or transfer is being made pursuant to the provisions of Section 5.2 hereof, the
Transfer Notice shall state under which sub-section thereof the sale or transfer
is being made.
(b) PURCHASE RIGHT. Each Purchaser (other than the Transferor)
shall have the right, exercisable upon written notice to the Transferor within
fifteen (15) days after delivery of the Transfer Notice to purchase its pro rata
share of the Co-Sale Stock subject to the Transfer Notice on the same terms and
conditions as described in the Transfer Notice. In the event that a Purchaser
requires regulatory approval from the U.S. Small Business Administration, or its
successor, in order to exercise its rights under this Section 5.1, the fifteen
(15) day period referred to in the preceding sentence may be extended by up to
an additional fifteen (15) business days upon the reasonable request of such
Purchaser.
(c) CO-SALE RIGHT. Each Purchaser who does not exercise its rights
pursuant to Section 5.1(b) above shall have the right, exercisable upon written
notice to the Transferor within ten (10) days after expiration of the notice
period described in Section 5.1(b) to participate in the sale of Co-Sale Stock
described in the Transfer Notice on the same terms and conditions. The notice
delivered by any Purchaser exercising its rights under this Section 5.1(c) shall
indicate the number of Shares (or shares of Common Stock issued or issuable upon
conversion of such Shares) such Purchaser wishes to sell under its right to
participate. To the extent one or more Purchasers exercise such right of
participation in accordance with the terms and conditions set forth below, the
number of shares of Co-Sale Stock that the Transferor may sell in the
transaction shall be correspondingly reduced.
(i) Each Purchaser may sell all or any part of that number of
Shares (or shares of Common Stock) equal to the product obtained by multiplying
(i) the aggregate number of shares of Co-Sale Stock covered by the Transfer
Notice by (ii) a fraction the numerator of which is the number of shares of
Common Stock owned by such Purchaser at the time of the sale or transfer
(calculated as if all Shares were converted to Common Stock) and the denominator
of which is the total number of shares of Common Stock owned by the Purchasers
(not including the Transferor) and the Transferor at the time of the sale or
transfer.
(ii) Each Purchaser who elects to participate in the sale
pursuant to this Section 5.1(c) (a "Participant") shall effect its participation
in the sale by promptly delivering to the Transferor for transfer to the
prospective purchaser one or more certificates, properly endorsed for transfer,
which represent:
(A) the type and number of shares of Common Stock which such
Participant elects to sell; or
(B) that number of Shares which is at such time convertible into
the number of shares of Common Stock which such Participant elects to sell;
provided, however,
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that if the prospective purchaser objects to the delivery of Series A or Series
B Preferred Stock in lieu of Common Stock, such Participant shall convert such
Series A or Series B Preferred Stock into Common Stock and deliver Common Stock
as provided in Section 5.1(c)(ii)(A) above. The Company agrees to make any such
conversion concurrent with the actual transfer of such shares to the purchaser.
(iii) The stock certificate or certificates that the
Participant delivers to the Transferor pursuant to Section 5.1(c)(ii) shall be
transferred to the prospective purchaser in consummation of the sale of the
Common Stock pursuant to the terms and conditions specified in the Transfer
Notice, and the Transferor shall concurrently therewith remit to such
Participant that portion of the sale proceeds to which such Participant is
entitled by reason of its participation in such sale. To the extent that any
prospective purchaser or purchasers prohibits such assignment or otherwise
refuses to purchase shares or other securities from a Participant exercising its
rights of co-sale hereunder, the Transferor shall not sell to such prospective
purchaser or purchasers any Co-Sale Stock unless and until, simultaneously with
such sale, the Transferor shall purchase such shares or other securities from
such Participant on the same terms and conditions specified in the Notice.
(iv) The exercise or non-exercise of the rights of the
Participants hereunder to participate in one or more sales of Co-Sale Stock made
by any Transferor shall not adversely affect their rights to participate in
subsequent sales of Co-Sale Stock.
(d) COMPLETION OF ORIGINAL TRANSFER. If none of the Purchasers
elect to participate in the sale of the Co-Sale Stock subject to the Transfer
Notice, the Transferor may, not later than sixty (60) days following delivery to
the Company of the Transfer Notice, enter into an agreement providing for the
closing of the transfer of the Co-Sale Stock covered by the Transfer Notice
within thirty (30) days of such agreement on terms and conditions not more
favorable to the transferor than those described in the Notice. Any proposed
transfer on terms and conditions more favorable than those described in the
Transfer Notice, as well as any subsequent proposed transfer of any of the
Co-Sale Stock by the Transferor, shall again be subject to the co-sale rights of
the Purchasers and shall require compliance by the Transferor with the
procedures described in this Section 5.1.
5.2 EXEMPT TRANSFERS.
(a) Notwithstanding the foregoing, the Purchasers' rights described
in 5.1 shall not apply to (i) any transfer to any subsidiary, parent, entity
controlled by the parent, shareholder, or general or limited partner of a
Purchaser, (ii) any pledge of Co-Sale Stock made pursuant to a bona fide loan
transaction with a financial institution that creates a mere security interest,
(iii) any transfer to the ancestors, descendants, spouse or estate of a
Purchaser or any trusts for the benefit of such persons, (iv) any bona fide
gift; provided that the recipient of any of the foregoing exempt transfers shall
furnish the Company with a written agreement to be bound by and comply with all
provisions of this Agreement. Any Co-Sale Stock transferred pursuant to this
Section 5.2(a) shall remain "Co-Sale Stock" hereunder.
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(b) Notwithstanding the foregoing, the provisions of Article V
shall not apply to the sale of any Co-Sale Stock to the public pursuant to a
registration statement filed with, and declared effective by, the Securities and
Exchange Commission under the Securities Act of 1933, as amended (the
"Securities Act").
5.3 PROHIBITED TRANSFERS.
(a) In the event that a Transferor should sell any Co-Sale Stock in
contravention of the co-sale rights of each Purchaser under this Agreement (a
"Prohibited Transfer"), each Purchaser (other than the Transferor) in addition
to such other remedies as may be available at law, in equity or hereunder, shall
have the put option provided below, and the Transferor shall be bound by the
applicable provisions of such option.
(b) In the event of a Prohibited Transfer, each Purchaser (other
than the Transferor) shall have the right to sell to the Transferor the type and
number of shares of Common Stock equal to the number of shares each Purchaser
would have been entitled to transfer to the purchaser under Section 5.1(c)
hereof had the Prohibited Transfer been effected pursuant to and in compliance
with the terms hereof. Such sale shall be made on the following terms and
conditions:
(c) The price per share at which the shares are to be sold to the
Transferor shall be equal to the price per share paid by the purchaser to the
Transferor in the Prohibited Transfer. The Transferor shall also reimburse each
Purchaser for any and all fees and expenses, including legal fees and expenses,
incurred pursuant to the exercise or the attempted exercise of the Purchaser's
rights under this Article V.
(d) Within ninety (90) days after the later of the dates on which
the Purchaser (a) received notice of the Prohibited Transfer or (b) otherwise
became aware of the Prohibited Transfer, each Purchaser shall, if exercising the
option created hereby, deliver to the Transferor the certificate or certificates
representing shares to be sold, each certificate to be properly endorsed for
transfer.
(e) The Transferor shall, upon receipt of the certificate or
certificates for the shares to be sold by a Purchaser, pursuant to this Section
5.3(e), pay the aggregate purchase price therefor and the amount of reimbursable
fees and expenses, as specified in Section 5.3(c), in cash or by other means
acceptable to the Purchaser.
(f) Notwithstanding the foregoing, any attempt by the Transferor to
transfer Co-Sale Stock in violation of Section 5.1 hereof shall be voidable at
the option of a majority in interest of the Purchasers (other than the
Transferor) if such Purchasers do not elect to exercise the put option set forth
in this Section 5.3, and the Company agrees it will not effect such a transfer
nor will it treat any alleged transferee as the holder of such shares without
the written consent of a majority in interest of the Purchasers (other than the
Transferor).
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5.4 LEGEND.
(a) Each certificate representing shares of Co-Sale Stock now or
hereafter owned by the Purchasers or issued to any person in connection with a
transfer pursuant to Section 5.2.1 hereof shall be endorsed with the following
legend:
"THE SALE, PLEDGE, HYPOTHECATION OR TRANSFER OF THE SECURITIES
REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO THE TERMS AND CONDITIONS
OF A CERTAIN CO-SALE AGREEMENT BY AND BETWEEN THE HOLDER, THE COMPANY
AND CERTAIN HOLDERS OF STOCK OF THE COMPANY. COPIES OF SUCH AGREEMENT
MAY BE OBTAINED UPON WRITTEN REQUEST TO THE SECRETARY OF THE COMPANY."
(b) Each Purchaser agrees that the Company may instruct its
transfer agent to impose transfer restrictions on the shares represented by
certificates bearing the legend referred to in Section 5.4.1 above to enforce
the provisions of this Agreement and the Company agrees to promptly do so. The
legend shall be removed upon termination of this Agreement.
5.5 TERMINATION OF RIGHTS. The co-sale and purchase rights established
by this Article V shall terminate upon the closing of an underwritten public
offering of Common Stock of the Company made pursuant to an effective
registration statement under the Securities Act.
6. MISCELLANEOUS.
6.1 GOVERNING LAW. This Agreement shall be governed by and construed
under the laws of the State of Delaware as applied to agreements among Delaware
residents entered into and to be performed entirely within Delaware.
6.2 SURVIVAL. The representations, warranties, covenants, and
agreements made herein shall survive any investigation made by any Holder and
the closing of the transactions contemplated hereby. All statements as to
factual matters contained in any certificate or other instrument delivered by or
on behalf of the Company pursuant hereto in connection with the transactions
contemplated hereby shall be deemed to be representations and warranties by the
Company hereunder solely as of the date of such certificate or instrument.
6.3 SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors, and administrators of the
parties hereto and shall inure to the benefit of and be enforceable by each
person who shall be a holder of Registrable Securities from time to time;
provided, however, that prior to the receipt by the Company of adequate written
notice of the transfer of any Registrable Securities specifying the full name
and address of the transferee, the Company may deem and treat the person listed
as the holder of such shares in its records as the absolute owner and holder of
such shares for all purposes, including the payment of dividends or any
redemption price.
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6.4 SEPARABILITY. In case any provision of the Agreement shall be
invalid, illegal, or unenforceable, the validity, legality, and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.
6.5 AMENDMENT AND WAIVER.
(a) Except as otherwise expressly provided, this Agreement may be
amended or modified only upon the written consent of the Company and the holders
of at least sixty-six and two-thirds percent (66-2/3 %) of the Registrable
Securities.
(b) Except as otherwise expressly provided, the obligations of the
Company and the rights of the Holders under this Agreement may be waived only
with the written consent of the holders of at least sixty-six and two-thirds
percent (66-2/3%) of the Registrable Securities.
(c) Notwithstanding the foregoing, Purchasers acquiring Shares and
Warrants pursuant to paragraph 2.3 of the Purchase Agreement shall become
"Investors", "Holders" and parties hereto upon delivery of a fully executed
signature page to this Agreement.
6.6 DELAYS OR OMISSIONS. It is agreed that no delay or omission to
exercise any right, power, or remedy accruing to any Holder, upon any breach,
default or noncompliance of the Company under this Agreement shall impair any
such right, power, or remedy, nor shall it be construed to be a waiver of any
such breach, default or noncompliance, or any acquiescence therein, or of any
similar breach, default or noncompliance thereafter occurring. It is further
agreed that any waiver, permit, consent, or approval of any kind or character on
any Holder's part of any breach, default or noncompliance under the Agreement or
any waiver on such Holder's part of any provisions or conditions of this
Agreement must be in writing and shall be effective only to the extent
specifically set forth in such writing. All remedies, either under this
Agreement, by law, or otherwise afforded to Holders, shall be cumulative and not
alternative.
6.7 NOTICES. All notices required or permitted hereunder shall be in
writing and shall be deemed effectively given: (i) upon personal delivery to the
party to be notified, (ii) when sent by confirmed telex or facsimile if sent
during normal business hours of the recipient; if not, then on the next business
day, (iii) five (5) days after having been sent by registered or certified mail,
return receipt requested, postage prepaid, or (iv) one (1) day after deposit
with a nationally recognized overnight courier, specifying next day delivery,
with written verification of receipt. All communications shall be sent to the
party to be notified at the address as set forth on the signature pages hereof
or at such other address as such party may designate by ten (10) days advance
written notice to the other parties hereto.
6.8 ATTORNEYS' FEES. In the event that any dispute among the parties to
this Agreement should result in litigation, the prevailing party in such dispute
shall be entitled to recover from the losing party all fees, costs and expenses
of enforcing any right of such prevailing party under or with respect to this
Agreement, including without limitation, such reasonable fees and expenses of
attorneys and accountants, which shall include, without limitation, all fees,
costs and expenses of appeals.
23
<PAGE> 27
6.9 TITLES AND SUBTITLES. The titles of the sections and subsections of
this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.
6.10 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
24
<PAGE> 28
IN WITNESS WHEREOF, the parties hereto have executed this Amended and
Restated Agreement as of the date set forth in the first paragraph hereof.
COMPANY:
COULTER PHARMACEUTICAL, INC.
550 California Avenue
Suite 200
Palo Alto, CA 94306
By: /s/ ARNOLD ORONSKY
---------------------------------
Chief Executive Officer
INVESTORS' RIGHTS AGREEMENT
<PAGE> 29
EXHIBIT A
PURCHASERS OF SERIES A PREFERRED STOCK
Coulter Corporation
InterWest Partners V, L.P.
InterWest Investors V
PURCHASERS OF SERIES B PREFERRED STOCK
InterWest Partners V, L.P.
InterWest Investors V
Harvey B. Cash, IRA
David F. Bellet, Trustee
D.F. Bellet Profit Sharing
DLSJ Custodian FBO
The Richard M. Lucas Cancer Foundation
Donald L. Lucas Profit Sharing Trust, U/A/D 1/1/84
PURCHASERS OF SERIES C PREFERRED STOCK
InterWest Partners V, L.P.
InterWest Investors V
Brentwood Associates VII, L.P.
BankAmerica Ventures
BA Venture Partners II
Delphi Ventures III, L.P.
Delphi Investments III, L.P.
Coral Partners IV, L.P.
MedVenture Associates II
Rainin Instrument Co., Inc.
Bigham Charitable Trust
Alan G. Carr
Axiom Venture Partners, L.P.
Bryan Oronsky
Luke Evnin
GC&H Investments
Bay View Investors
F. Louis Behrends, Trustee
The Behrends Law Offices Profit Sharing Plan, Dtd. 10/23/84
Brendan Joseph Cassin & Isabel B. Cassin, Trustees
Cassin Family Trust, UDT 1/31/96
Christianson Investment Co.
INVESTORS' RIGHTS AGREEMENT
<PAGE> 30
Tako Ventures
Bank of America Illinois, as Trustee For Walter S. Huff, Jr.
IRA Rollover Trust
Gerdes-Huff Investments
San Francisco International Investors
Richard M. Lucas Cancer Fdn.
Donald L. Lucas & Lygia S. Lucas Trust DTD 12/3/84
Sand Hill Financial Company
Royal Wulff Investment Group, L.P.
Clearwater Ventures
Transylvania University
Monmouth College
Teton Capital Company
Jackson Hole Investments Acquisitions, L.P.
Arnold Silverman
INVESTORS' RIGHTS AGREEMENT
<PAGE> 1
EXHIBIT 4.4
[GRAPHIC]
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED. NO SALE OR DISPOSITION MAY BE EFFECTED EXCEPT IN COMPLIANCE WITH RULE
144 UNDER SAID ACT OR WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED
THERETO OR AN OPINION OF COUNSEL FOR THE HOLDER, SATISFACTORY TO THE COMPANY,
THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE ACT OR RECEIPT OF A NO-ACTION
LETTER FROM THE SECURITIES AND EXCHANGE COMMISSION.
----------------------
WARRANT TO PURCHASE 74,000 SHARES OF COMMON STOCK
December 6, 1996
THIS CERTIFIES THAT, for value received, Lease Management Services, Inc.,
("Holder") is entitled to subscribe for and purchase seventy-four thousand
($74,000) shares of the fully paid and nonassessable Common Stock ("the Shares")
of Coulter Pharmaceutical, Inc., a Delaware corporation (the "Company"), at the
Warrant Price (as hereinafter defined), subject to the provisions and upon the
terms and conditions hereinafter set forth. As used herein, the term "Common
Stock" shall mean the Company's presently authorized Common Stock, and any stock
into which such Common Stock may hereafter be exchanged.
1. Warrant Price. The Warrant Price shall be the lower of (I) three and 25/100
dollars ($3.250) per share or (ii) price per share obtained by the Company in
its next round of preferred stock financing in which the aggregate consideration
received by the Company is at least $1,000,000 or in its initial public offering
of its capital stock, which ever comes first.
2. Conditions to Exercise. The purchase right represented by this Warrant
may be exercised at any time, or from time to time, in whole or in part
during the term commencing on the date hereof and ending on the earlier of:
(a) 5:00 P.M. California time on the sixth annual anniversary of this
Warrant Agreement; or
(b) the effective date of the merger of the Company with or into, the
consolidation of the Company with, or the sale by the Company of all or
substantially all of its assets to another corporation or other entity
(other than such a transaction wherein the shareholders of the Company
retain or obtain a majority of the voting capital stock of the surviving,
resulting, or purchasing corporation); provided that the Company shall
notify the registered Holder of this Warrant of the proposed effective
date of the merger, consolidation, or sale at least 30 days prior to the
effectiveness thereof.
In the event that, although the Company shall have given notice of a
transaction pursuant to subparagraph (b) hereof, the transaction does not
close on approximately the day specified by the Company, unless otherwise
elected by the Holder any exercise of the Warrant subsequent to the giving
of such notice shall be rescinded and the Warrant shall again be
exercisable until terminated in accordance with this Paragraph 2.
3. Method of Exercise; Payment; Issuance of Shares; Issuance of New
Warrant.
(a) Cash Exercise. Subject to Section 2 hereof, the purchase right represented
by this Warrant may be exercised by the Holder hereof, in whole or in part, by
the surrender of this
<PAGE> 2
LMSI/ Coulter Pharmaceutical, Inc. Warrant
Page 2 of 10
Warrant (with a duly executed Notice of Exercise in the form attached hereto) at
the principal office of the Company (as set forth in Section 18 below) and by
payment to the Company, by check, of an amount equal to the then applicable
Warrant Price per share multiplied by the number of shares then being purchased.
In the event of any exercise of the rights represented by this Warrant,
certificates for the shares of stock so purchased shall be in the name of, and
delivered to, the Holder hereof, or as such Holder may direct (subject to the
terms of transfer contained herein and upon payment by such Holder hereof of any
applicable transfer taxes). Such delivery shall be made within 10 days after
exercise of the Warrant and at the Company's expense and, unless this Warrant
has been fully exercised or expired, a new Warrant having terms and conditions
substantially identical to this Warrant and representing the portion of the
Shares, if any, with respect to which this Warrant shall not have been
exercised, shall also be issued to the Holder hereof within 10 days after
exercise of the Warrant.
(b) Net Issue Exercise. In lieu of exercising this Warrant pursuant to Section
3(a), Holder may elect to receive shares equal to the value of this Warrant (or
of any portion thereof remaining unexercised) by surrender of this Warrant at
the principal office of the Company together with notice of such election, in
which event the Company shall issue to Holder the number of shares of the
Company's Common Stock computed using the following formula:
X = Y (A-B)
-------
A
Where X = the number of shares of Common Stock to be issued to Holder.
Y = the number of shares of Common Stock purchasable under this
Warrant (at the date of such calculation).
A = the fair market value of one share of the Company's Common Stock
(at the date of such calculation).
B = Warrant exercise price (as adjusted to the date of such
calculation).
(c) Fair Market Value. For purposes of this Section 3, Fair Market Value of
one share of the Company's Common Stock shall mean:
(i) In the event of an Initial Public Offering, the per share Fair Market
Value for the Common Stock shall be the Offering Price at which the
underwriters sell Common Stock to the public; or
(ii) The average of the closing bid and asked prices of the Common Stock
quoted in the Over-The-Counter Market Summary, the last reported sale
price of the Common Stock or the closing price quoted on the Nasdaq
National Market System ("NMS") or on any exchange on which the Common
Stock is listed, whichever is applicable, as published in the Western
Edition of The Wall Street Journal for the ten (10) trading days prior to
the date of determination of fair market value; or
(iii) If the Company shall be subject to a merger, acquisition or other
consolidation in which the Company is not the surviving entity, pursuant
to Section 2(b), the per share Fair Market Value for the Common Stock
shall be the value received per share of Common Stock by all holders of
the Common Stock as determined by the Board of Directors; or
(iv) If the Common Stock is not publicly traded, the per share fair market
value of the Common Stock shall be as determined in good faith by the
Company's Board of
2
<PAGE> 3
LMSI/ Coulter Pharmaceutical, Inc. Warrant
Page 3 of 10
Directors unless Holder elects to have such fair market value determined
by an appraiser, which election must be made by Holder within ten (10)
business days of the date the Company notifies Holder of the fair market
value as determined by its Board of Directors. In the event of such an
appraisal, the cost thereof shall be borne by the Holder unless such
appraisal results in a fair market value in excess of 115% of that
determined by the Company's Board of Directors, in which event the Company
shall bear the cost of such appraisal.
In the event of 3(c)(iii) or 3(c)(iv), above, the Company's Board of
Directors shall prepare a certificate, to be signed by an authorized
Officer of the Company, setting forth in reasonable detail the basis for
and method of determination of the per share Fair Market Value of the
Common Stock. The Board will also certify to the Holder that this per
share Fair Market Value will be applicable to all holders of the Company's
Common Stock. Such certification must be made to Holder at least thirty
(30) business days prior to the proposed effective date of the merger,
consolidation, sale, or other triggering event as defined in 3(c)(iii) and
3(c)(iv).
(d) Automatic Exercise. To the extent this Warrant is not previously exercised,
it shall be automatically exercised in accordance with Sections 3(b) and 3(c)
hereof (even if not surrendered) immediately before: the consummation of any
consolidation or merger of the Company, or any sale or transfer of a majority of
a company's assets pursuant to Section 2(b).
4. Representations and Warranties of Holder and Restrictions on Transfer
Imposed by the Securities Act of 1933.
(a) Representations and Warranties by Holder. The Holder represents and
warrants to the Company with respect to this purchase as follows:
(i) The Holder has substantial experience in evaluating and investing in
private placement transactions of securities of companies similar to the
Company so that the Holder is capable of evaluating the merits and risks
of its investment in the Company and has the capacity to protect its
interests.
(ii) The Holder is acquiring the Warrant and the Shares of Common Stock
issuable upon exercise of the Warrant (collectively the "Securities") for
investment for its own account and not with a view to, or for resale in
connection with, any distribution thereof. The Holder understands that the
Securities have not been registered under the Act by reason of a specific
exemption from the registration provisions of the Act which depends upon,
among other things, the bona fide nature of the investment intent as
expressed herein. In this connection, the Holder understands that, in the
view of the Securities and Exchange Commission (the "SEC"), the statutory
basis for such exemption may be unavailable if this representation was
predicated solely upon a present intention to hold the Securities for the
minimum capital gains period specified under tax statutes, for a deferred
sale, for or until an increase or decrease in the market price of the
Securities or for a period of one year or any other fixed period in the
future.
(iii) The Holder acknowledges that the Securities must be held
indefinitely unless subsequently registered under the Act or an exemption
from such registration is available. The Holder is aware of the provisions
of Rule 144 promulgated under the Act ("Rule 144") which permits limited
resale of securities purchased in a private placement subject to the
satisfaction of certain conditions, including, in case the securities have
been held for less than three years, the existence of a public market for
the shares, the availability of certain public information about the
Company, the resale
3
<PAGE> 4
LMSI/ Coulter Pharmaceutical, Inc. Warrant
Page 4 of 10
occurring not less than two years after a party has purchased and paid for
the security to be sold, the sale being through a "broker's transaction"
or in a transaction directly with a "market maker" (as provided by Rule
144(f)) and the number of shares or other securities being sold during any
three-month period not exceeding specified limitations.
(iv) The Holder further understands that at the time the Holder wishes to
sell the Securities there may be no public market upon which such a sale
may be effected, and that even if such a public market exists, the Company
may not be satisfying the current public information requirements of Rule
144, and that in such event, the Holder may be precluded from selling the
Securities under Rule 144 unless a) a three-year minimum holding period
has been satisfied and b) the Holder was not at the time of the sale nor
at any time during the three-month period prior to such sale an affiliate
of the Company.
(v) The Holder has had an opportunity to discuss the Company's business,
management and financial affairs with its management and an opportunity to
review the Company's facilities. The Holder understands that such
discussions, as well as the written information issued by the Company,
were intended to describe the aspects of the Company's business and
prospects which it believes to be material but were not necessarily a
thorough or exhaustive description.
(b) Legends. Each certificate representing the Securities shall be endorsed
with the following legend:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933 AND MAY NOT BE TRANSFERRED UNLESS COVERED BY AN EFFECTIVE
REGISTRATION STATEMENT UNDER SAID ACT, A "NO ACTION" LETTER FROM THE
SECURITIES AND EXCHANGE COMMISSION WITH RESPECT TO SUCH TRANSFER, A
TRANSFER MEETING THE REQUIREMENTS OF RULE 144 OF THE SECURITIES AND
EXCHANGE COMMISSION, OR (IF REASONABLY REQUIRED BY THE COMPANY) AN
OPINION OF COUNSEL SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY
SUCH TRANSFER IS EXEMPT FROM SUCH REGISTRATION.
The Company need not register a transfer of Securities unless the conditions
specified in the foregoing legend are satisfied. The Company may also instruct
its transfer agent not to register the transfer of any of the Shares unless the
conditions specified in the foregoing legend are satisfied.
(c) Removal of Legend and Transfer Restrictions. The legend relating to the Act
endorsed on a certificate pursuant to paragraph 4(b) of this Warrant and the
stop transfer instructions with respect to the Securities represented by such
certificate shall be removed and the Company shall issue a certificate without
such legend to the Holder of the Securities if (i) the Securities are registered
under the Act and a prospectus meeting the requirements of Section 10 of the Act
is available or (ii) the Holder provides to the Company an opinion of counsel
for the Holder reasonably satisfactory to the Company, or a no-action letter or
interpretive opinion of the staff of the SEC reasonably satisfactory to the
Company, to the effect that public sale, transfer or assignment of the
Securities may be without registration and without compliance with any
restriction such as Rule 144.
5. Condition of Transfer or Exercise of Warrant. It shall be a condition to any
transfer or exercise of this Warrant that at the time of such transfer or
exercise, the Holder shall provide the Company with a representation in writing
that the Holder or transferee is acquiring this
4
<PAGE> 5
LMSI/ Coulter Pharmaceutical, Inc. Warrant
Page 5 of 10
Warrant and the shares of Common Stock to be issued upon exercise, for
investment purposes only and not with a view to any sale or distribution, or a
statement of pertinent facts covering any proposed distribution. As a further
condition to any transfer of this Warrant or any or all of the shares of Common
Stock issuable upon exercise of this Warrant, other than a transfer registered
under the Act, the Company must have received a legal opinion, in form and
substance satisfactory to the Company and its counsel, reciting the pertinent
circumstances surrounding the proposed transfer and stating that such transfer
is exempt from the registration and prospectus delivery requirements of the Act.
Each certificate evidencing the shares issued upon exercise of the Warrant or
upon any transfer of the shares (other than a transfer registered under the Act
or any subsequent transfer of shares so registered) shall, at the Company's
option, contain a legend in form and substance satisfactory to the Company and
its counsel, restricting the transfer of the shares to sales or other
dispositions exempt from the requirements of the Act.
As further condition to each transfer, the transferee shall receive and
accept a Warrant, of like tenor and date, executed by the Company.
6. Stock Fully Paid; Reservation of Shares. All Shares which may be issued upon
the exercise of the rights represented by this Warrant will, upon issuance, be
fully paid and nonassessable, and free from all taxes, liens, and charges with
respect to the issue thereof. During the period within which the rights
represented by this Warrant may be exercised, the Company will at all times have
authorized, and reserved for issuance upon exercise of the purchase rights
evidenced by this Warrant, a sufficient number of shares of its Common Stock to
provide for the exercise of the rights represented by this Warrant.
7. Anti-Dilution Provisions, Adjustments Etc.
7.1 Adjustment for Stock Splits and Combinations. If the Company, at any
time or from time to time, effects a subdivision of, or combines, the
outstanding shares of Common Stock, by stock split or stock dividend or by
reverse stock split, respectively, then, and in each such event, the
Warrant Price in effect immediately prior thereto shall immediately be
proportionately decreased or increased, as the case may be, and the number
of shares of Common Stock issuable at that time upon exercise of this
warrant shall be proportionately increased or decreased, as the case may
be.
7.2 Adjustment for Recapitalization, Reclassification, or Exchange. If, at
any time or from time to time, the Common Stock issuable upon exercise of
this Warrant is changed into the same or a different number of shares of
any other class or classes of stock of the Company, whether by
recapitalization, reclassification or other exchange (other than as
provided for elsewhere in this Section 7), then, and in each such event,
the Holder shall have the right thereafter to purchase the kind and amount
of stock and other securities and property receivable upon such
recapitalization, reclassification or other exchange, by holders of the
number of shares of Common Stock with respect to which this Warrant might
have been exercised immediately prior to such recapitalization,
reclassification or other exchange, all subject to further adjustment as
provided herein.
7.3 Reorganization, Mergers, Consolidations or Transfer of Assets. If, at
any time or from time to time, there is a capital reorganization of the
Common Stock (other than as provided for elsewhere in this Section 7) or a
merger or consolidation of the Company with or into another corporation,
or a transfer of all or substantially all of the Company's assets to any
other person, then, and in, and as a part of, each such event, provision
shall be made so that the Holder shall thereafter be entitled to receive
upon
5
<PAGE> 6
LMSI/ Coulter Pharmaceutical, Inc. Warrant
Page 6 of 10
exercise of this Warrant the number of shares of stock or other securities
or property of the Company, or, if applicable, of the resulting successor
corporation, to which a holder of the number of shares of Common Stock
issuable upon exercise of this Warrant would have been entitled on such
capital reorganization, merger, consolidation or transfer, all subject to
further adjustment as provided herein, and in, and as a part of, each such
event, in any such case, appropriate adjustment shall be made in the
application of the provisions of this Section 7 with respect to the rights
of the Holder after the reorganization, merger, consolidation or transfer
to the end that the provisions of this Section 7 (including adjustment of
the Warrant Price then in effect and the number of shares issuable upon
exercise of this Warrant) shall be applicable after that event and shall
be as nearly equivalent to the provisions hereof as may be practicable.
7.4 Adjustments for Sales of Securities Below Warrant Price.
7.4.1 If at any time or from time to time after the date hereof, the
Company issues or sells, or is deemed by the provisions of this Section
7.4 to have issued or sold, Additional Shares of Common Stock (as
hereinafter defined), other than as provided elsewhere in this Section
7, for an Effective Price (as hereinafter defined) less than the
Warrant Price, then, and in each such event, the Warrant Price shall be
reduced, as of the opening of business on the date of such issue or
sale, to a price determined by multiplying the Warrant Price by a
fraction (i) the numerator of which shall be (A) the number of shares
of Common Stock outstanding at the close of the business on the date
next preceding the date of such issue or sale, plus (B) the number of
shares of Common Stock which the aggregate consideration received (or
by express provision hereof deemed to have been received) by the
Company for the total number of Additional Shares of Common Stock so
issued would purchase at the Warrant Price, and (ii) the denominator of
which shall be the number of shares of Common Stock outstanding at the
close of business on the date of such issue or sale after giving effect
to such issue or sale of Additional Shares of Common Stock.
7.4.2 For the purposes of making any adjustment required under this
Section 7.4, the consideration received by the Company for any issue or
sale of securities shall (i) to the extent it consists of cash, be
computed at the net amount of cash received by the Company after
deduction of any underwriting or similar commissions, compensation, or
concessions paid or allowed by the Company in connection with such
issue or sale, (ii) to the extent it consists of property other than
cash, be computed at the fair value of that property as reasonably
determined by the Board of Directors of the Company in good faith as of
the date of such issuance and sale, and (iii) if Additional Shares of
Common Stock, Convertible Securities (as hereinafter defined) or rights
or options to Additional Shares of Common Stock or Convertible
Securities are issued or sold together with other stock or securities
or other assets of the Company for a consideration which covers both,
be computed as the portion of the consideration so received that may be
reasonably determined in good faith by the Board of Directors of the
Company to be allocable to such Additional Shares of Common Stock,
Convertible Securities or rights or options.
7.4.3 For the purpose of the adjustment required under this Section
7.4, if, at any time or from time to time after the date hereof, the
Company issues or sells any rights or options for the purchase of, or
stock or other securities convertible into, Additional Shares of Common
Stock (such convertible stock of securities being hereinafter referred
to as "Convertible Securities"), then, and in each such event, the
Company shall be deemed to have issued at the time of the issuance of
sale of such rights or options or Convertible Securities the maximum
number of Additional
6
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LMSI/ Coulter Pharmaceutical, Inc. Warrant
Page 7 of 10
Shares of Common Stock issuable upon exercise or conversion thereof and
to have received as consideration for the issuance of such shares an
amount equal to (i) the total amount of the consideration, if any,
received by the Company for the issuance of such rights or options or
Convertible Securities, plus (ii) in the case of such options or
rights, the minimum amounts of consideration, if any, payable to the
Company upon the exercise or such options or rights, and, in the case
Convertible Securities, the minimum amounts of consideration, if any,
payable to the Company (other than by cancellation of liabilities or
obligations evidenced by such Convertible Securities) upon the
conversion of such Convertible Securities. No further adjustment of the
Warrant Price adjusted upon the issuance of such rights, options or
Convertible Securities shall be made as a result of the actual issuance
of Additional Shares of Common Stock upon the exercise of any such
rights or options or the conversion of any such Convertible Securities.
If any such rights or options or the conversion privilege represented
by any such Convertible Securities shall expire without having been
exercised in full, the Warrant Price adjusted upon the issuance of such
rights or options or Convertible Securities shall be readjusted to the
Warrant Price or Prices which would have been in effect had an
adjustment been required under this Section 7.4 and made on the basis
that only the Additional Shares of Common Stock, if any, actually
issued or sold upon the exercise of such rights or options or
conversion of such Convertible Securities were issued or sold, and such
Additional Shares of Common Stock, if any, were issued or sold for (i)
in the case of rights or options, the consideration actually received
by the Company upon such exercise plus the consideration, if any,
actually received by the Company for the granting of all such rights or
options, whether or not exercised, and (ii) in the case of Convertible
Securities, the consideration received for issuing or selling all such
Convertible Securities plus the consideration, if any, actually
received by the Company (other than by cancellation of liabilities or
obligations evidenced by such Convertible Securities) upon the
conversion of such Convertible Securities.
7.4.4 For the purpose of the adjustment required under this Section
7.4, if, at any time or from time to time after the date hereof, the
Company issues or sells any rights or options for the purchase of, or
convertible securities convertible into, Convertible Securities, then,
and in each such event, the Company shall be deemed to have issued, at
the time of the issuance or sale of such rights or options or such
convertible securities, the maximum number of Additional Shares of
Common Stock issuable upon conversion of all of the Convertible
Securities covered by such rights or options or such convertible
securities and to have received as Consideration for the issuance of
such Additional Shares of Common Stock an amount equal to (i) the
amount of consideration, if any, received by the Company for the
issuance of such rights or options or such convertible securities, plus
(ii) the minimum amount of consideration, if any, payable to the
Company upon the exercise of such rights or options (other than by
cancellation of liabilities or obligations evidenced by such
convertible securities), and plus (iii) the minimum amount of
consideration, if any, payable to the Company (other than by
cancellation of liabilities or obligations evidenced by such
Convertible Securities) upon the conversion of such Convertible
Securities. No further adjustment of the Warrant Price adjusted upon
the issuance of such rights or options or such convertible securities
shall be made as a result of the actual issuance of the Convertible
Securities upon the exercise of such rights or options or conversion of
such convertible securities or upon the actual issuance of additional
shares of Common Stock upon the conversion of such Convertible
Securities. The provisions of paragraph 7.3 above with respect to the
readjustment of the Warrant Price upon the expiration of rights or
options or the rights of conversion of Convertible Securities
7
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LMSI/ Coulter Pharmaceutical, Inc. Warrant
Page 8 of 10
shall apply mutatis mutandis to the rights or options, convertible
securities and Convertible Securities referred to in this paragraph
7.4.
7.4.5 "Additional Shares of Common Stock" shall mean all shares of
Common Stock issued by the Company after the date hereof, whether or
not subsequently reacquired or retired by the Company, other than
Common Stock (and options and rights to acquire Common Stock) as may be
issued to employees, officers, directors, consultants or other
individuals performing services for the Company pursuant to any stock
option, stock purchase or other equity incentive plan for employees or
other persons performing services for the Company and which plan is
approved by the Board of Directors. The "Effective Price" of Additional
Shares of Common Stock shall mean the quotient determined by dividing
the total number of Additional Shares of Common Stock issued or sold,
or deemed to have been issued or sold, by the Company under this
Section 7.4 into the aggregate consideration received or deemed to have
been received by the Company for such issue or sale under this Section
7.4.
7.5 Notices of Record Date. In the event of (a) any taking by the Company
of a record of the holders of any class of securities for the purpose of
determining the holders thereof who are entitled to receive any dividend
or other distribution, or (b) any capital reorganization of the Company,
any reclassification, recapitalization or exchange of the capital stock of
the Company, or any merger or consolidation of the Company with or into
another corporation, or any transfer of all or substantially all of the
assets of the Company to any other person, or any voluntary or involuntary
dissolution, liquidation or winding up of the Company, the Company shall
mail to the Holder, at least 10 days prior to the record date specified
therein, a notice specifying (x) the date on which any such record is to
be taken for the purpose of such dividend or distribution, (y) the date on
which any such reorganization, recapitalization, reclassification,
exchange, consolidation, merger, transfer, dissolution, liquidation or
winding up is expected to become effective, and (z) the time, if any, that
is to be fixed, as to when the holders of record of Common Stock (or other
securities) shall be entitled to exchange their shares of Common Stock (or
other securities) for securities or other property deliverable upon such
reorganization, recapitalization, reclassification, exchange,
consolidation, merger, transfer, dissolution, liquidation or winding up.
7.6 Reservation of Stock Issuable Upon Exercise. The Company at all times
reserve and keep available out of its authorized but unissued shares of
Common Stock such number of its shares of Common Stock as shall from time
to time be sufficient to effect the exercise of this Warrant and all other
rights or options to purchase Common Stock, and to permit the conversion
of all stock or other securities convertible into Common Stock, as may be
outstanding from time to time. If at any time the number of authorized but
unissued shares of Common Stock shall not be sufficient for such purposes,
the Company will take such corporate action as may, in the opinion of its
counsel, be necessary to increase its authorized but unissued shares of
Common Stock to such number of shares as shall be sufficient for such
purposes.
8. Notice of Adjustments. Whenever any Warrant Price shall be adjusted pursuant
to Section 7 hereof, the Company shall prepare a certificate signed by its chief
financial officer setting forth, in reasonable detail, the event requiring the
adjustment, the amount of the adjustment, the method by which such adjustment
was calculated, and the Warrant Price and number of shares issuable upon
exercise of the Warrant after giving effect to such adjustment, and shall cause
copies of such certificate to be mailed (by certified or registered mail, return
receipt required, postage prepaid) within thirty (30) days of such adjustment to
the Holder of this warrant as set forth in Section 18 hereof.
8
<PAGE> 9
LMSI/ Coulter Pharmaceutical, Inc. Warrant
Page 9 of 10
9. "Market Stand-Off" Agreement. Holder hereby agrees that for a period of up to
180 days following the effective date of the first registration statement of the
Company covering common stock (or other securities) to be sold on its behalf in
an underwritten public offering, it will not, to the extent requested by the
Company and any underwriter, sell or otherwise transfer or dispose of (other
than to donees or transferees who agree to be similarly bound) any of the Shares
at any time during such period except common stock included in such
registration; provided, however, that all officers and directors of the Company
who hold securities of the Company or options to acquire securities of the
Company and all other persons with registration rights enter into similar
agreements.
10. Transferability of Warrant. This Warrant is transferable on the books of the
Company at its principal office by the registered Holder hereof upon surrender
of this Warrant properly endorsed, subject to compliance with applicable federal
and state securities laws. The Company shall issue and deliver to the transferee
a new Warrant representing the Warrant so transferred. Upon any partial
transfer, the Company will issue and deliver to Holder a new Warrant with
respect to the Warrant not so transferred. Holder shall not have any right to
transfer any portion of this Warrant to any direct competitor of the Company.
11. No Fractional Shares. No fractional share of Common Stock will be issued in
connection with any exercise hereunder, but in lieu of such fractional share the
Company shall make a cash payment therefor upon the basis of the Warrant Price
then in effect.
12. Charges, Taxes and Expenses. Issuance of certificates for shares of Common
Stock upon the exercise of this Warrant shall be made without charge to the
Holder for any United States or state of the United States documentary stamp tax
or other incidental expense in respect of the issuance of such certificate, all
of which taxes and expenses shall be paid by the Company, and such certificates
shall be issued in the name of the Holder.
13. No Shareholder Rights Until Exercise. This Warrant does not entitle the
Holder hereof to any voting rights or other rights as a shareholder of the
Company prior to the exercise hereof.
14. Registry of Warrant. The Company shall maintain a registry showing the name
and address of the registered Holder of this Warrant. This Warrant may be
surrendered for exchange or exercise, in accordance with its terms, at such
office or agency of the Company, and the Company and Holder shall be entitled to
rely in all respects, prior to written notice to the contrary, upon such
registry.
15. Loss, Theft, Destruction or Mutilation of Warrant. Upon receipt by the
Company of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Warrant, and, in the case of loss, theft, or
destruction, of indemnity reasonably satisfactory to it, and, if mutilated, upon
surrender and cancellation of this Warrant, the Company will execute and deliver
a new Warrant, having terms and conditions substantially identical to this
Warrant, in lieu hereof.
16. Miscellaneous.
(a) Issue Date. The provisions of this Warrant shall be construed
and shall be given effect in all respect as if it had been issued and
delivered by the Company on the date hereof.
(b) Successors. This Warrant shall be binding upon any successors
or assigns of the Company.
9
<PAGE> 10
LMSI/ Coulter Pharmaceutical, Inc. Warrant
Page 10 of 10
(c) Governing Law. This Warrant shall be governed by and construed in
accordance with the laws of the State of California.
(d) Headings. The headings used in this Warrant are used for convenience
only and are not to be considered in construing or interpreting this
Warrant.
(e) Saturdays, Sundays, Holidays. If the last or appointed day for the
taking of any action or the expiration of any right required or granted
herein shall be a Saturday or a Sunday or shall be a legal holiday in the
State of California, then such action may be taken or such right may be
exercised on the next succeeding day not a legal holiday.
17. No Impairment. The Company will not, by amendment of its Articles of
Incorporation or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms of this Warrant, but will at all
times in good faith assist in the carrying out of all such terms and in the
taking of all such action as may be necessary or appropriate in order to protect
the rights of the Holder hereof against impairment.
18. Addresses. Any notice required or permitted hereunder shall be in writing
and shall be mailed by overnight courier, registered or certified mail, return
receipt required, and postage pre-paid, or otherwise delivered by hand or by
messenger, addressed as set forth below, or at such other address as the Company
or the Holder hereof shall have furnished to the other party.
If to the Company: Coulter Pharmaceutical, Inc.
550 California Avenue
Palo Alto, CA 94306
Attn:______________________________
If to the Holder: Lease Management Services, Inc.
2500 Sand Hill Road, Ste 101
Menlo Park, CA 94025
Attn: Barbara B. Kaiser, EVP/GM
IN WITNESS WHEREOF, Coulter Pharmaceutical, Inc. has caused this Warrant to be
executed by its officers thereunto duly authorized.
Dated as of December 6, 1996.
COULTER PHARMACEUTICAL, INC.
BY: /s/ William Harris
___________________________
TITLE: Chief Financial Officer
________________________
10
<PAGE> 11
[GRAPHIC]
NOTICE OF EXERCISE
TO:
1. The undersigned Warrantholder ("Holder") elects to acquire shares of the
Common Stock of __________________ (the "Company"), pursuant to the terms
of the Stock Purchase Warrant dated ______, 199_ (the "Warrant").
2. The Holder exercises its rights under the Warrant as set forth below:
( ) The Holder elects to purchase ____________ shares of
Common Stock as provided in Section 3(a), (c) and
tenders herewith a check in the amount of $_____________
as payment of the purchase price.
( ) The Holder elects to convert the purchase rights into
shares of Common Stock as provided in Section 3(b),
(c) of the Warrant.
3. The Holder surrenders the Warrant with this Notice of Exercise.
4. The Holder represents that it is acquiring the aforesaid shares of Common
Stock for investment and not with a view to, or for resale in connection
with, distribution and that the Holder has no present intention of
distributing or reselling the shares.
5. Please issue a certificate representing the shares of Common Stock in the
name of the Holder or in such other name as is specified below:
Name:
Address:
Taxpayer I.D.:
__________________________________
(Holder)
By:_______________________________
Title:____________________________
Date:_____________________________
<PAGE> 1
EXHIBIT 10.1
INDEMNITY AGREEMENT
THIS AGREEMENT is made and entered into this ___ day of __________,
______ by and between COULTER PHARMACEUTICAL, INC., a Delaware corporation (the
"Corporation"), and _________________ ("Agent"). This Agreement supersedes any
and all indemnity agreement(s) previously entered into between the Corporation
and the Agent.
RECITALS
WHEREAS, Agent performs a valuable service to the Corporation in his
capacity as ______________ of the Corporation;
WHEREAS, the stockholders of the Corporation have adopted bylaws (the
"Bylaws") providing for the indemnification of the directors, officers,
employees and other agents of the Corporation, including persons serving at the
request of the Corporation in such capacities with other corporations or
enterprises, as authorized by the Delaware General Corporation Law, as amended
(the "Code");
WHEREAS, the Bylaws and the Code, by their non-exclusive nature, permit
contracts between the Corporation and its agents, officers, employees and other
agents with respect to indemnification of such persons; and
WHEREAS, in order to induce Agent to continue to serve as ___________
of the Corporation, the Corporation has determined and agreed to enter into this
Agreement with Agent;
NOW, THEREFORE, in consideration of Agent's continued service as
__________ after the date hereof, the parties hereto agree as follows:
AGREEMENT
1. SERVICES TO THE CORPORATION. Agent will serve, at the will of the
Corporation or under separate contract, if any such contract exists, as
__________ of the Corporation or as a director, officer or other fiduciary of an
affiliate of the Corporation (including any employee benefit plan of the
Corporation) faithfully and to the best of his ability so long as he is duly
elected and qualified in accordance with the provisions of the Bylaws or other
applicable charter documents of the Corporation or such affiliate; provided,
however, that Agent may at any time and for any reason resign from such position
(subject to any contractual obligation that Agent may have assumed apart from
this Agreement) and that the Corporation or any affiliate shall have no
obligation under this Agreement to continue Agent in any such position.
1.
<PAGE> 2
2. INDEMNITY OF AGENT. The Corporation hereby agrees to hold harmless
and indemnify Agent to the fullest extent authorized or permitted by the
provisions of the Bylaws and the Code, as the same may be amended from time to
time (but, only to the extent that such amendment permits the Corporation to
provide broader indemnification rights than the Bylaws or the Code permitted
prior to adoption of such amendment).
3. ADDITIONAL INDEMNITY. In addition to and not in limitation of the
indemnification otherwise provided for herein, and subject only to the
exclusions set forth in Section 4 hereof, the Corporation hereby further agrees
to hold harmless and indemnify Agent:
(a) against any and all expenses (including attorneys' fees),
witness fees, damages, judgments, fines and amounts paid in settlement and any
other amounts that Agent becomes legally obligated to pay because of any claim
or claims made against or by him in connection with any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, arbitrational,
administrative or investigative (including an action by or in the right of the
Corporation) to which Agent is, was or at any time becomes a party, or is
threatened to be made a party, by reason of the fact that Agent is, was or at
any time becomes a director, officer, employee or other agent of Corporation, or
is or was serving or at any time serves at the request of the Corporation as a
director, officer, employee or other agent of another corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise; and
(b) otherwise to the fullest extent as may be provided to Agent by
the Corporation under the non-exclusivity provisions of the Code and Section 41
of the Bylaws.
4. LIMITATIONS ON ADDITIONAL INDEMNITY. No indemnity pursuant to
Section 3 hereof shall be paid by the Corporation:
(a) on account of any claim against Agent for an accounting of
profits made from the purchase or sale by Agent of securities of the Corporation
pursuant to the provisions of Section 16(b) of the Securities Exchange Act of
1934 and amendments thereto or similar provisions of any federal, state or local
statutory law;
(b) on account of Agent's conduct that was knowingly fraudulent or
deliberately dishonest or that constituted willful misconduct;
(c) on account of Agent's conduct that constituted a breach of
Agent's duty of loyalty to the Corporation or resulted in any personal profit or
advantage to which Agent was not legally entitled;
(d) for which payment is actually made to Agent under a valid and
collectible insurance policy or under a valid and enforceable indemnity clause,
bylaw or agreement, except in respect of any excess beyond payment under such
insurance, clause, bylaw or agreement;
2.
<PAGE> 3
(e) if indemnification is not lawful (and, in this respect, both the
Corporation and Agent have been advised that the Securities and Exchange
Commission believes that indemnification for liabilities arising under the
federal securities laws is against public policy and is, therefore,
unenforceable and that claims for indemnification should be submitted to
appropriate courts for adjudication); or
(f) in connection with any proceeding (or part thereof) initiated by
Agent, or any proceeding by Agent against the Corporation or its directors,
officers, employees or other agents, unless (i) such indemnification is
expressly required to be made by law, (ii) the proceeding was authorized by the
Board of Directors of the Corporation, (iii) such indemnification is provided by
the Corporation, in its sole discretion, pursuant to the powers vested in the
Corporation under the Code, or (iv) the proceeding is initiated pursuant to
Section 9 hereof.
5. CONTINUATION OF INDEMNITY. All agreements and obligations of the
Corporation contained herein shall continue during the period Agent is a
director, officer, employee or other agent of the Corporation (or is or was
serving at the request of the Corporation as a director, officer, employee or
other agent of another corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise) and shall continue thereafter so long as Agent
shall be subject to any possible claim or threatened, pending or completed
action, suit or proceeding, whether civil, criminal, arbitrational,
administrative or investigative, by reason of the fact that Agent was serving in
the capacity referred to herein.
6. PARTIAL INDEMNIFICATION. Agent shall be entitled under this
Agreement to indemnification by the Corporation for a portion of the expenses
(including attorneys' fees), witness fees, damages, judgments, fines and amounts
paid in settlement and any other amounts that Agent becomes legally obligated to
pay in connection with any action, suit or proceeding referred to in Section 3
hereof even if not entitled hereunder to indemnification for the total amount
thereof, and the Corporation shall indemnify Agent for the portion thereof to
which Agent is entitled.
7. NOTIFICATION AND DEFENSE OF CLAIM. Not later than thirty (30) days
after receipt by Agent of notice of the commencement of any action, suit or
proceeding, Agent will, if a claim in respect thereof is to be made against the
Corporation under this Agreement, notify the Corporation of the commencement
thereof; but the omission so to notify the Corporation will not relieve it from
any liability which it may have to Agent otherwise than under this Agreement.
With respect to any such action, suit or proceeding as to which Agent notifies
the Corporation of the commencement thereof:
(a) the Corporation will be entitled to participate therein at its
own expense;
(b) except as otherwise provided below, the Corporation may, at its
option and jointly with any other indemnifying party similarly notified and
electing to assume such defense, assume the defense thereof, with counsel
reasonably satisfactory to Agent. After notice from the Corporation to Agent of
its election to assume the defense thereof, the Corporation will not
3.
<PAGE> 4
be liable to Agent under this Agreement for any legal or other expenses
subsequently incurred by Agent in connection with the defense thereof except for
reasonable costs of investigation or otherwise as provided below. Agent shall
have the right to employ separate counsel in such action, suit or proceeding but
the fees and expenses of such counsel incurred after notice from the Corporation
of its assumption of the defense thereof shall be at the expense of Agent unless
(i) the employment of counsel by Agent has been authorized by the Corporation,
(ii) Agent shall have reasonably concluded that there may be a conflict of
interest between the Corporation and Agent in the conduct of the defense of such
action or (iii) the Corporation shall not in fact have employed counsel to
assume the defense of such action, in each of which cases the fees and expenses
of Agent's separate counsel shall be at the expense of the Corporation. The
Corporation shall not be entitled to assume the defense of any action, suit or
proceeding brought by or on behalf of the Corporation or as to which Agent shall
have made the conclusion provided for in clause (ii) above; and
(c) the Corporation shall not be liable to indemnify Agent under
this Agreement for any amounts paid in settlement of any action or claim
effected without its written consent, which shall not be unreasonably withheld.
The Corporation shall be permitted to settle any action except that it shall not
settle any action or claim in any manner which would impose any penalty or
limitation on Agent without Agent's written consent, which may be given or
withheld in Agent's sole discretion.
8. EXPENSES. The Corporation shall advance, prior to the final
disposition of any proceeding, promptly following request therefor, all expenses
incurred by Agent in connection with such proceeding upon receipt of an
undertaking by or on behalf of Agent to repay said amounts if it shall be
determined ultimately that Agent is not entitled to be indemnified under the
provisions of this Agreement, the Bylaws, the Code or otherwise.
9. ENFORCEMENT. Any right to indemnification or advances granted by
this Agreement to Agent shall be enforceable by or on behalf of Agent in any
court of competent jurisdiction if (i) the claim for indemnification or advances
is denied, in whole or in part, or (ii) no disposition of such claim is made
within ninety (90) days of request therefor. Agent, in such enforcement action,
if successful in whole or in part, shall be entitled to be paid also the expense
of prosecuting his claim. It shall be a defense to any action for which a claim
for indemnification is made under Section 3 hereof (other than an action brought
to enforce a claim for expenses pursuant to Section 8 hereof, provided that the
required undertaking has been tendered to the Corporation) that Agent is not
entitled to indemnification because of the limitations set forth in Section 4
hereof. Neither the failure of the Corporation (including its Board of Directors
or its stockholders) to have made a determination prior to the commencement of
such enforcement action that indemnification of Agent is proper in the
circumstances, nor an actual determination by the Corporation (including its
Board of Directors or its stockholders) that such indemnification is improper
shall be a defense to the action or create a presumption that Agent is not
entitled to indemnification under this Agreement or otherwise.
4.
<PAGE> 5
10. SUBROGATION. In the event of payment under this Agreement, the
Corporation shall be subrogated to the extent of such payment to all of the
rights of recovery of Agent, who shall execute all documents required and shall
do all acts that may be necessary to secure such rights and to enable the
Corporation effectively to bring suit to enforce such rights.
11. NON-EXCLUSIVITY OF RIGHTS. The rights conferred on Agent by this
Agreement shall not be exclusive of any other right which Agent may have or
hereafter acquire under any statute, provision of the Corporation's Certificate
of Incorporation or Bylaws, agreement, vote of stockholders or directors, or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding office.
12. SURVIVAL OF RIGHTS.
(a) The rights conferred on Agent by this Agreement shall continue
after Agent has ceased to be a director, officer, employee or other agent of the
Corporation or to serve at the request of the Corporation as a director,
officer, employee or other agent of another corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise and shall inure to the
benefit of Agent's heirs, executors and administrators.
(b) The Corporation shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business or assets of the Corporation, expressly to
assume and agree to perform this Agreement in the same manner and to the same
extent that the Corporation would be required to perform if no such succession
had taken place.
13. SEPARABILITY. Each of the provisions of this Agreement is a
separate and distinct agreement and independent of the others, so that if any
provision hereof shall be held to be invalid for any reason, such invalidity or
unenforceability shall not affect the validity or enforceability of the other
provisions hereof. Furthermore, if this Agreement shall be invalidated in its
entirety on any ground, then the Corporation shall nevertheless indemnify Agent
to the fullest extent provided by the Bylaws, the Code or any other applicable
law.
14. GOVERNING LAW. This Agreement shall be interpreted and enforced in
accordance with the laws of the State of Delaware.
15. AMENDMENT AND TERMINATION. No amendment, modification, termination
or cancellation of this Agreement shall be effective unless in writing signed by
both parties hereto.
16. IDENTICAL COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall for all purposes be deemed to be an
original but all of which together shall constitute but one and the same
Agreement. Only one such counterpart need be produced to evidence the existence
of this Agreement.
5.
<PAGE> 6
17. HEADINGS. The headings of the sections of this Agreement are
inserted for convenience only and shall not be deemed to constitute part of this
Agreement or to affect the construction hereof.
18. NOTICES. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given (i)
upon delivery if delivered by hand to the party to whom such communication was
directed or (ii) upon the third business day after the date on which such
communication was mailed if mailed by certified or registered mail with postage
prepaid:
(a) If to Agent, at the address indicated on the signature page
hereof.
(B) If to the Corporation, to
Coulter Pharmaceutical, Inc.
550 California Avenue, Suite 200
Palo Alto, California 94086
Attn: Michael F. Bigham
or to such other address as may have been furnished to Agent by the Corporation.
6.
<PAGE> 7
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
and as of the day and year first above written.
COULTER PHARMACEUTICAL, INC.
By:________________________________
Title:_____________________________
AGENT
By:________________________________
Print Name:________________________
Address:___________________________
___________________________________
7.
<PAGE> 1
EXHIBIT 10.2
COULTER PHARMACEUTICAL, INC.
1996 EQUITY INCENTIVE PLAN
ADOPTED DECEMBER 5, 1996
APPROVED BY STOCKHOLDERS _______________, 1996
1. PURPOSES.
(a) The purpose of the Plan is to provide a means by which selected
Employees and Directors and Consultants may be given an opportunity to benefit
from increases in value of the common stock of the Company ("Common Stock")
through the granting of (i) Incentive Stock Options, (ii) Nonstatutory Stock
Options, (iii) stock bonuses, and (iv) rights to purchase restricted stock.
(b) The Company, by means of the Plan, seeks to retain the services of
persons who are now Employees, Directors or Consultants, to secure and retain
the services of new Employees, Directors and Consultants, and to provide
incentives for such persons to exert maximum efforts for the success of the
Company and its Affiliates.
(c) The Company intends that the Stock Awards issued under the Plan
shall, in the discretion of the Board or any Committee to which responsibility
for administration of the Plan has been delegated pursuant to subsection 3(c),
be either (i) Options granted pursuant to Section 6 hereof, including Incentive
Stock Options and Nonstatutory Stock Options, or (ii) stock bonuses or rights to
purchase restricted stock granted pursuant to Section 7 hereof. All Options
shall be separately designated Incentive Stock Options or Nonstatutory Stock
Options at the time of grant, and in such form as issued pursuant to Section 6,
and a separate certificate or certificates will be issued for shares purchased
on exercise of each type of Option.
2. DEFINITIONS.
(a) "AFFILIATE" means any parent corporation or subsidiary corporation,
whether now or hereafter existing, as those terms are defined in Sections 424(e)
and (f) respectively, of the Code.
(b) "BOARD" means the Board of Directors of the Company.
(c) "CODE" means the Internal Revenue Code of 1986, as amended.
1.
<PAGE> 2
(d) "COMMITTEE" means a Committee appointed by the Board in accordance
with subsection 3(c) of the Plan.
(e) "COMPANY" means Coulter Pharmaceutical, Inc. a Delaware
corporation.
(f) "CONSULTANT" means any person, including an advisor, engaged by the
Company or an Affiliate to render consulting services and who is compensated for
such services, provided that the term "Consultant" shall not include Directors
who are paid only a director's fee by the Company or who are not compensated by
the Company for their services as Directors.
(g) "CONTINUOUS STATUS AS AN EMPLOYEE, DIRECTOR OR CONSULTANT" means
the employment or relationship as a Director or Consultant is not interrupted or
terminated. The Board, in its sole discretion, may determine whether Continuous
Status as an Employee, Director or Consultant shall be considered interrupted in
the case of: (i) any leave of absence approved by the Board, including sick
leave, military leave, or any other personal leave; or (ii) transfers between
locations of the Company or between the Company, Affiliates or their successors.
(h) "DIRECTOR" means a member of the Board.
(i) "EMPLOYEE" means any person, including Officers and Directors,
employed by the Company or any Affiliate of the Company. Neither service as a
Director nor payment of a director's fee by the Company shall be sufficient to
constitute "employment" by the Company.
(j) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
(k) "FAIR MARKET VALUE" means, as of any date, the value of the Common
Stock of the Company determined as follows:
(1) If the Common Stock is listed on any established stock
exchange, or traded on the Nasdaq National Market or the Nasdaq SmallCap Market,
the Fair Market Value of a share of Common Stock shall be the closing sales
price for such stock (or the closing bid, if no sales were reported) as quoted
on such exchange or market (or the exchange or market with the greatest volume
of trading in Common Stock) on the last market trading day prior to the day of
determination, as reported in the Wall Street Journal or such other source as
the Board deems reliable;
(2) In the absence of such markets for the Common Stock, the Fair
Market Value shall be determined in good faith by the Board.
(l) "INCENTIVE STOCK OPTION" means an Option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.
2.
<PAGE> 3
(m) "NON-EMPLOYEE DIRECTOR" means a Director who either (i) is not a
current Employee or Officer of the Company or its parent or subsidiary, does not
receive compensation (directly or indirectly) from the Company or its parent or
subsidiary for services rendered as a consultant or in any capacity other than
as a Director (except for an amount as to which disclosure would not be required
under Item 404(a) of Regulation S-K promulgated pursuant to the Securities Act
of 1933 ("Regulation S-K"), does not possess an interest in any other
transaction as to which disclosure would be required under Item 404(a) of
Regulation S-K, and is not engaged in a business relationship as to which
disclosure would be required under Item 404(b) of Regulation S-K; or (ii) is
otherwise considered a "non-employee director" for purposes of Rule 16b-3.
(n) "NONSTATUTORY STOCK OPTION" means an Option not intended to qualify
as an Incentive Stock Option.
(o) "OFFICER" means a person who is an officer of the Company within
the meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.
(p) "OPTION" means a stock option granted pursuant to the Plan.
(q) "OPTION AGREEMENT" means a written agreement between the Company
and an Optionee evidencing the terms and conditions of an individual Option
grant. Each Option Agreement shall be subject to the terms and conditions of the
Plan.
(r) "OPTIONEE" means a person to whom an Option is granted pursuant to
the Plan.
(s) "OUTSIDE DIRECTOR" means a Director who either (i) is not a current
employee of the Company or an "affiliated corporation" (within the meaning of
Treasury regulations promulgated under Section 162(m) of the Code), is not a
former employee of the Company or an "affiliated corporation" receiving
compensation for prior services (other than benefits under a tax qualified
pension plan), was not an officer of the Company or an "affiliated corporation"
at any time, and is not currently receiving direct or indirect remuneration from
the Company or an "affiliated corporation" for services in any capacity other
than as a Director, or (ii) is otherwise considered an "outside director" for
purposes of Section 162(m) of the Code.
(t) "PLAN" means this Coulter Pharmaceutical, Inc. 1996 Equity
Incentive Plan.
(u) "RULE 16B-3" means Rule 16b-3 of the Exchange Act or any successor
to Rule 16b-3, as in effect when discretion is being exercised with respect to
the Plan.
(v) "STOCK AWARD" means any right granted under the Plan, including any
Option, any stock bonus and any right to purchase restricted stock.
(w) "STOCK AWARD AGREEMENT" means a written agreement between the
Company and a holder of a Stock Award evidencing the terms and conditions of an
individual Stock Award grant. Each Stock Award Agreement shall be subject to the
terms and conditions of the Plan.
3.
<PAGE> 4
3. ADMINISTRATION.
(a) The Plan shall be administered by the Board unless and until the
Board delegates administration to a Committee, as provided in subsection 3(c).
(b) The Board shall have the power, subject to, and within the
limitations of, the express provisions of the Plan:
(1) To determine from time to time which of the persons eligible
under the Plan shall be granted Stock Awards; when and how each Stock Award
shall be granted; whether a Stock Award will be an Incentive Stock Option, a
Nonstatutory Stock Option, a stock bonus, a right to purchase restricted stock
or a combination of the foregoing; the provisions of each Stock Award granted
(which need not be identical), including the time or times when a person shall
be permitted to receive stock pursuant to a Stock Award and the number of shares
with respect to which a Stock Award shall be granted to each such person.
(2) To construe and interpret the Plan and Stock Awards granted
under it, and to establish, amend and revoke rules and regulations for its
administration. The Board, in the exercise of this power, may correct any
defect, omission or inconsistency in the Plan or in any Stock Award Agreement,
in a manner and to the extent it shall deem necessary or expedient to make the
Plan fully effective.
(3) To amend the Plan or a Stock Award as provided in Section 13.
(4) Generally, to exercise such powers and to perform such acts as
the Board deems necessary or expedient to promote the best interests of the
Company which are not in conflict with the provisions of the Plan.
(c) The Board may delegate administration of the Plan to a committee or
committees ("Committee") of one or more members of the Board. In the discretion
of the Board, a Committee may consist solely of two or more Outside Directors,
in accordance with Code Section 162(m), or solely of two or more Non-Employee
Directors, in accordance with Rule 16(b)-3. If administration is delegated to a
Committee, the Committee shall have, in connection with the administration of
the Plan, the powers theretofore possessed by the Board (and references in this
Plan to the Board shall thereafter be to the Committee), subject, however, to
such resolutions, not inconsistent with the provisions of the Plan, as may be
adopted from time to time by the Board. The Board may abolish the Committee at
any time and revest in the Board the administration of the Plan.
4. SHARES SUBJECT TO THE PLAN.
(a) Subject to the provisions of Section 12 relating to adjustments
upon changes in stock, the stock that may be issued pursuant to Stock Awards
shall not exceed in the aggregate One Million Four Hundred Thousand (1,400,000)
shares of Common Stock. If any Stock Award shall for any reason expire or
otherwise terminate, in whole or in part, without having been exercised in full
(or
4.
<PAGE> 5
vested in the case of Restricted Stock), the stock not acquired under such Stock
Award shall revert to and again become available for issuance under the Plan.
(b) The stock subject to the Plan may be unissued shares or reacquired
shares, bought on the market or otherwise.
5. ELIGIBILITY.
(a) Incentive Stock Options may be granted only to Employees. Stock
Awards other than Incentive Stock Options may be granted only to Employees,
Directors or Consultants.
(b) No person shall be eligible for the grant of an Incentive Stock
Option if, at the time of grant, such person owns (or is deemed to own pursuant
to Section 424(d) of the Code) stock possessing more than ten percent (10%) of
the total combined voting power of all classes of stock of the Company or of any
of its Affiliates unless the exercise price of such Option is at least one
hundred ten percent (110%) of the Fair Market Value of such stock at the date of
grant and the Option is not exercisable after the expiration of five (5) years
from the date of grant.
(c) Subject to the provisions of Section 12 relating to adjustments
upon changes in stock, no person shall be eligible to be granted Options
covering more than Two Hundred Eighty Thousand (280,000) shares of the Common
Stock in any calendar year. This subsection 5(c) shall not apply until (i) the
earliest of: (A) the first material modification of the Plan (including any
increase to the number of shares reserved for issuance under the Plan in
accordance with Section 4); (B) the issuance of all of the shares of Common
Stock reserved for issuance under the Plan; (C) the expiration of the Plan; or
(D) the first meeting of stockholders at which directors are to be elected that
occurs after the close of the third calendar year following the calendar year in
which occurred the first registration of an equity security under Section 12 of
the Exchange Act; or (ii) such other date required by Section 162(m) of the Code
and the rules and regulations promulgated thereunder.
6. OPTION PROVISIONS.
Each Option shall be in such form and shall contain such terms and
conditions as the Board shall deem appropriate. The provisions of separate
Options need not be identical, but each Option shall include (through
incorporation of provisions hereof by reference in the Option or otherwise) the
substance of each of the following provisions:
(a) TERM. No Option shall be exercisable after the expiration of ten
(10) years from the date it was granted.
(b) PRICE. The exercise price of each Incentive Stock Option shall be
not less than one hundred percent (100%) of the Fair Market Value of the stock
subject to the Option on the date the Option is granted and the exercise price
of each Nonstatutory Stock Option shall be not less than eighty-five percent
(85%) of the Fair Market Value of the stock subject to the Option
5.
<PAGE> 6
on the date the Option is granted. Notwithstanding the foregoing, an Option may
be granted with an exercise price lower than that set forth in the preceding
sentence if such Option is granted pursuant to an assumption or substitution for
another option in a manner satisfying the provisions of Section 424(a) of the
Code.
(c) CONSIDERATION. The purchase price of stock acquired pursuant to an
Option shall be paid, to the extent permitted by applicable statutes and
regulations, either (i) in cash at the time the Option is exercised, or (ii) at
the discretion of the Board or the Committee, at the time of the grant of the
Option, (A) by delivery to the Company of other Common Stock of the Company, (B)
according to a deferred payment or other arrangement (which may include, without
limiting the generality of the foregoing, the use of other Common Stock of the
Company) with the person to whom the Option is granted or to whom the Option is
transferred pursuant to subsection 6(d), or (C) in any other form of legal
consideration that may be acceptable to the Board.
In the case of any deferred payment arrangement, interest shall be
payable at least annually and shall be charged at the minimum rate of interest
necessary to avoid the treatment as interest, under any applicable provisions of
the Code, of any amounts other than amounts stated to be interest under the
deferred payment arrangement.
(d) TRANSFERABILITY. An Incentive Stock Option shall not be
transferable except by will or by the laws of descent and distribution, and
shall be exercisable during the lifetime of the person to whom the Incentive
Stock Option is granted only by such person. A Nonstatutory Stock Option may be
transferred to the extent provided in the Option Agreement; provided that if the
Option Agreement does not expressly permit the transfer of a Nonstatutory Stock
Option, the Nonstatutory Stock Option shall not be transferable except by will,
by the laws of descent and distribution or pursuant to a domestic relations
order satisfying the requirements of Rule 16b-3 and shall be exercisable during
the lifetime of the person to whom the Option is granted only by such person or
any transferee pursuant to a domestic relations order. Notwithstanding the
foregoing, the person to whom the Option is granted may, by delivering written
notice to the Company, in a form satisfactory to the Company, designate a third
party who, in the event of the death of the Optionee, shall thereafter be
entitled to exercise the Option.
(e) VESTING. The total number of shares of stock subject to an Option
may, but need not, be allotted in periodic installments (which may, but need
not, be equal). The Option Agreement may provide that from time to time during
each of such installment periods, the Option may become exercisable ("vest")
with respect to some or all of the shares allotted to that period, and may be
exercised with respect to some or all of the shares allotted to such period
and/or any prior period as to which the Option became vested but was not fully
exercised. The Option may be subject to such other terms and conditions on the
time or times when it may be exercised (which may be based on performance or
other criteria) as the Board may deem appropriate. The provisions of this
subsection 6(e) are subject to any Option provisions governing the minimum
number of shares as to which an Option may be exercised.
6.
<PAGE> 7
(f) TERMINATION OF EMPLOYMENT OR RELATIONSHIP AS A DIRECTOR OR
CONSULTANT. In the event an Optionee's Continuous Status as an Employee,
Director or Consultant terminates (other than upon the Optionee's death or
disability), the Optionee may exercise his or her Option (to the extent that the
Optionee was entitled to exercise it at the date of termination) but only within
such period of time ending on the earlier of (i) the date three (3) months after
the termination of the Optionee's Continuous Status as an Employee, Director or
Consultant (or such longer or shorter period specified in the Option Agreement),
or (ii) the expiration of the term of the Option as set forth in the Option
Agreement. If, after termination, the Optionee does not exercise his or her
Option within the time specified in the Option Agreement, the Option shall
terminate, and the shares covered by such Option shall revert to and again
become available for issuance under the Plan.
An Optionee's Option Agreement may also provide that if the exercise of
the Option following the termination of the Optionee's Continuous Status as an
Employee, Director or Consultant (other than upon the Optionee's death or
disability) would be prohibited at any time solely because the issuance of
shares would violate the registration requirements under the Act, then the
Option shall terminate on the earlier of (i) the expiration of the term of the
Option set forth in the first paragraph of this subsection 6(f), or (ii) the
expiration of a period of three (3) months after the termination of the
Optionee's Continuous Status as an Employee, Director or Consultant during which
the exercise of the Option would not be in violation of such registration
requirements.
(g) DISABILITY OF OPTIONEE. In the event an Optionee's Continuous
Status as an Employee, Director or Consultant terminates as a result of the
Optionee's disability, the Optionee may exercise his or her Option (to the
extent that the Optionee was entitled to exercise it at the date of
termination), but only within such period of time ending on the earlier of (i)
the date twelve (12) months following such termination (or such longer or
shorter period specified in the Option Agreement), or (ii) the expiration of the
term of the Option as set forth in the Option Agreement. If, at the date of
termination, the Optionee is not entitled to exercise his or her entire Option,
the shares covered by the unexercisable portion of the Option shall revert to
and again become available for issuance under the Plan. If, after termination,
the Optionee does not exercise his or her Option within the time specified
herein, the Option shall terminate, and the shares covered by such Option shall
revert to and again become available for issuance under the Plan.
(h) DEATH OF OPTIONEE. In the event of the death of an Optionee during,
or within a period specified in the Option after the termination of, the
Optionee's Continuous Status as an Employee, Director or Consultant, the Option
may be exercised (to the extent the Optionee was entitled to exercise the Option
at the date of death) by the Optionee's estate, by a person who acquired the
right to exercise the Option by bequest or inheritance or by a person designated
to exercise the option upon the Optionee's death pursuant to subsection 6(d),
but only within the period ending on the earlier of (i) the date eighteen (18)
months following the date of death (or such longer or shorter period specified
in the Option Agreement), or (ii) the expiration of the term of such Option as
set forth in the Option Agreement. If, at the time of death, the Optionee was
not entitled to exercise his or her entire Option, the shares covered by the
unexercisable
7.
<PAGE> 8
portion of the Option shall revert to and again become available for issuance
under the Plan. If, after death, the Option is not exercised within the time
specified herein, the Option shall terminate, and the shares covered by such
Option shall revert to and again become available for issuance under the Plan.
(i) EARLY EXERCISE. The Option may, but need not, include a provision
whereby the Optionee may elect at any time while an Employee, Director or
Consultant to exercise the Option as to any part or all of the shares subject to
the Option prior to the full vesting of the Option. Any unvested shares so
purchased may be subject to a repurchase right in favor of the Company or to any
other restriction the Board determines to be appropriate.
(j) RE-LOAD OPTIONS. Without in any way limiting the authority of the
Board or Committee to make or not to make grants of Options hereunder, the Board
or Committee shall have the authority (but not an obligation) to include as part
of any Option Agreement a provision entitling the Optionee to a further Option
(a "Re-Load Option") in the event the Optionee exercises the Option evidenced by
the Option Agreement, in whole or in part, by surrendering other shares of
Common Stock in accordance with this Plan and the terms and conditions of the
Option Agreement. Any such Re-Load Option (i) shall be for a number of shares
equal to the number of shares surrendered as part or all of the exercise price
of such Option; (ii) shall have an expiration date which is the same as the
expiration date of the Option the exercise of which gave rise to such Re-Load
Option; and (iii) shall have an exercise price which is equal to one hundred
percent (100%) of the Fair Market Value of the Common Stock subject to the
Re-Load Option on the date of exercise of the original Option. Notwithstanding
the foregoing, a Re-Load Option which is an Incentive Stock Option and which is
granted to a 10% stockholder (as described in subsection 5(b)), shall have an
exercise price which is equal to one hundred ten percent (110%) of the Fair
Market Value of the stock subject to the Re-Load Option on the date of exercise
of the original Option and shall have a term which is no longer than five (5)
years.
Any such Re-Load Option may be an Incentive Stock Option or a
Nonstatutory Stock Option, as the Board or Committee may designate at the time
of the grant of the original Option; provided, however, that the designation of
any Re-Load Option as an Incentive Stock Option shall be subject to the one
hundred thousand dollars ($100,000) annual limitation on exercisability of
Incentive Stock Options described in subsection 11(d) of the Plan and in Section
422(d) of the Code. There shall be no Re-Load Options on a Re-Load Option. Any
such ReLoad Option shall be subject to the availability of sufficient shares
under subsection 4(a) and shall be subject to such other terms and conditions as
the Board or Committee may determine which are not inconsistent with the express
provisions of the Plan regarding the terms of Options.
7. TERMS OF STOCK BONUSES AND PURCHASES OF RESTRICTED STOCK.
Each stock bonus or restricted stock purchase agreement shall be in
such form and shall contain such terms and conditions as the Board or the
Committee shall deem appropriate. The terms and conditions of stock bonus or
restricted stock purchase agreements may change from time to time, and the terms
and conditions of separate agreements need not be identical, but each
8.
<PAGE> 9
stock bonus or restricted stock purchase agreement shall include (through
incorporation of provisions hereof by reference in the agreement or otherwise)
the substance of each of the following provisions as appropriate:
(a) PURCHASE PRICE. The purchase price under each restricted stock
purchase agreement shall be such amount as the Board or Committee shall
determine and designate in such agreement, but in no event shall the purchase
price be less than eighty-five percent (85%) of the stock's Fair Market Value on
the date such award is made. Notwithstanding the foregoing, the Board or the
Committee may determine that eligible participants in the Plan may be awarded
stock pursuant to a stock bonus agreement in consideration for past services
actually rendered to the Company for its benefit.
(b) TRANSFERABILITY. No rights under a stock bonus or restricted stock
purchase agreement shall be transferable except by will or the laws of descent
and distribution or, if the agreement so provides, pursuant to a domestic
relations order satisfying the requirements of Rule 16b-3 so long as stock
awarded under such agreement remains subject to the terms of the agreement.
(c) CONSIDERATION. The purchase price of stock acquired pursuant to a
stock purchase agreement shall be paid either: (i) in cash at the time of
purchase; (ii) at the discretion of the Board or the Committee, according to a
deferred payment or other arrangement with the person to whom the stock is sold;
or (iii) in any other form of legal consideration that may be acceptable to the
Board or the Committee in its discretion. Notwithstanding the foregoing, the
Board or the Committee to which administration of the Plan has been delegated
may award stock pursuant to a stock bonus agreement in consideration for past
services actually rendered to the Company or for its benefit.
(d) VESTING. Shares of stock sold or awarded under the Plan may, but
need not, be subject to a repurchase option in favor of the Company in
accordance with a vesting schedule to be determined by the Board or the
Committee.
(e) TERMINATION OF CONTINUOUS STATUS AS AN EMPLOYEE, DIRECTOR OR
CONSULTANT. In the event a Participant's Continuous Status as an Employee,
Director or Consultant terminates, the Company may repurchase or otherwise
reacquire any or all of the shares of stock held by that person which have not
vested as of the date of termination under the terms of the stock bonus or
restricted stock purchase agreement between the Company and such person.
8. CANCELLATION AND RE-GRANT OF OPTIONS.
(a) The Board or the Committee shall have the authority to effect, at
any time and from time to time, (i) the repricing of any outstanding Options
under the Plan and/or (ii) with the consent of any adversely affected holders of
Options, the cancellation of any outstanding Options under the Plan and the
grant in substitution therefor of new Options under the Plan
9.
<PAGE> 10
covering the same or different numbers of shares of stock, but having an
exercise price per share not less than eighty-five percent (85%) of the Fair
Market Value for a Nonstatutory Stock Option, one hundred percent (100%) of the
Fair Market Value for an Incentive Stock Option or, in the case of an Incentive
Stock Option held by a 10% stockholder (as described in subsection 5(b)), not
less than one hundred ten percent (110%) of the Fair Market Value per share of
stock on the new grant date. Notwithstanding the foregoing, the Board or the
Committee may grant an Option with an exercise price lower than that set forth
above if such Option is granted as part of a transaction to which section 424(a)
of the Code applies.
(b) Shares subject to an Option canceled under this Section 8 shall
continue to be counted against the maximum award of Options permitted to be
granted pursuant to subsection 5(c) of the Plan. The repricing of an Option
under this Section 8, resulting in a reduction of the exercise price, shall be
deemed to be a cancellation of the original Option and the grant of a substitute
Option; in the event of such repricing, both the original and the substituted
Options shall be counted against the maximum awards of Options permitted to be
granted pursuant to subsection 5(c) of the Plan. The provisions of this
subsection 8(b) shall be applicable only to the extent required by Section
162(m) of the Code.
9. COVENANTS OF THE COMPANY.
(a) During the terms of the Stock Awards, the Company shall keep
available at all times the number of shares of stock required to satisfy such
Stock Awards.
(b) The Company shall seek to obtain from each regulatory commission or
agency having jurisdiction over the Plan such authority as may be required to
issue and sell shares under Stock Awards; provided, however, that this
undertaking shall not require the Company to register under the Securities Act
of 1933, as amended (the "Securities Act") either the Plan, any Stock Award or
any stock issued or issuable pursuant to any such Stock Award. If, after
reasonable efforts, the Company is unable to obtain from any such regulatory
commission or agency the authority which counsel for the Company deems necessary
for the lawful issuance and sale of stock under the Plan, the Company shall be
relieved from any liability for failure to issue and sell stock upon exercise of
such Stock Awards unless and until such authority is obtained.
10. USE OF PROCEEDS FROM STOCK.
Proceeds from the sale of stock pursuant to Stock Awards shall
constitute general funds of the Company.
11. MISCELLANEOUS.
(a) The Board shall have the power to accelerate the time at which a
Stock Award may first be exercised or the time during which a Stock Award or any
part thereof will vest pursuant to subsection 6(e) or 7(d), notwithstanding the
provisions in the Stock Award stating the time at which it may first be
exercised or the time during which it will vest.
10.
<PAGE> 11
(b) Neither an Employee, Director nor a Consultant nor any person to
whom a Stock Award is transferred in accordance with the Plan shall be deemed to
be the holder of, or to have any of the rights of a holder with respect to, any
shares subject to such Stock Award unless and until such person has satisfied
all requirements for exercise of the Stock Award pursuant to its terms.
(c) Nothing in the Plan or any instrument executed or Stock Award
granted pursuant thereto shall confer upon any Employee, Consultant or other
holder of Stock Awards any right to continue in the employ of the Company or any
Affiliate or to continue serving as a Consultant and Director, or shall affect
the right of the Company or any Affiliate to terminate the employment of any
Employee with or without notice and with or without cause, or the right to
terminate the relationship of any Consultant pursuant to the terms of such
Consultant's agreement with the Company or Affiliate or service as a Director
pursuant to the Company's Bylaws.
(d) To the extent that the aggregate Fair Market Value (determined at
the time of grant) of stock with respect to which Incentive Stock Options are
exercisable for the first time by any Optionee during any calendar year under
all plans of the Company and its Affiliates exceeds one hundred thousand dollars
($100,000), the Options or portions thereof which exceed such limit (according
to the order in which they were granted) shall be treated as Nonstatutory Stock
Options.
(e) The Company may require any person to whom a Stock Award is
granted, or any person to whom a Stock Award is transferred in accordance with
the Plan, as a condition of exercising or acquiring stock under any Stock Award,
(1) to give written assurances satisfactory to the Company as to such person's
knowledge and experience in financial and business matters and/or to employ a
purchaser representative reasonably satisfactory to the Company who is
knowledgeable and experienced in financial and business matters, and that he or
she is capable of evaluating, alone or together with the purchaser
representative, the merits and risks of exercising the Stock Award; and (2) to
give written assurances satisfactory to the Company stating that such person is
acquiring the stock subject to the Stock Award for such person's own account and
not with any present intention of selling or otherwise distributing the stock.
The foregoing requirements, and any assurances given pursuant to such
requirements, shall be inoperative if (i) the issuance of the shares upon the
exercise or acquisition of stock under the Stock Award has been registered under
a then currently effective registration statement under the Securities Act, or
(ii) as to any particular requirement, a determination is made by counsel for
the Company that such requirement need not be met in the circumstances under the
then applicable securities laws. The Company may, upon advice of counsel to the
Company, place legends on stock certificates issued under the Plan as such
counsel deems necessary or appropriate in order to comply with applicable
securities laws, including, but not limited to, legends restricting the transfer
of the stock.
(f) To the extent provided by the terms of a Stock Award Agreement, the
person to whom a Stock Award is granted may satisfy any federal, state or local
tax withholding obligation relating to the exercise or acquisition of stock
under a Stock Award by any of the following
11.
<PAGE> 12
means or by a combination of such means: (1) tendering a cash payment; (2)
authorizing the Company to withhold shares from the shares of the Common Stock
otherwise issuable to the participant as a result of the exercise or acquisition
of stock under the Stock Award; or (3) delivering to the Company owned and
unencumbered shares of the Common Stock of the Company.
12. ADJUSTMENTS UPON CHANGES IN STOCK.
(a) If any change is made in the stock subject to the Plan, or subject
to any Stock Award, without the receipt of consideration by the Company (through
merger, consolidation, reorganization, recapitalization, reincorporation, stock
dividend, dividend in property other than cash, stock split, liquidating
dividend, combination of shares, exchange of shares, change in corporate
structure or other transaction not involving the receipt of consideration by the
Company), the Plan will be appropriately adjusted in the class(es) and maximum
number of shares subject to the Plan pursuant to subsection 4(a) and the maximum
number of shares subject to award to any person during any calendar year
pursuant to subsection 5(c), and the outstanding Stock Awards will be
appropriately adjusted in the class(es) and number of shares and price per share
of stock subject to such outstanding Stock Awards. Such adjustments shall be
made by the Board or the Committee, the determination of which shall be final,
binding and conclusive. (The conversion of any convertible securities of the
Company shall not be treated as a "transaction not involving the receipt of
consideration by the Company".)
(b) In the event of: (1) a dissolution, liquidation or sale of
substantially all of the assets of the Company; (2) a merger or consolidation in
which the Company is not the surviving corporation; or (3) a reverse merger in
which the Company is the surviving corporation but the shares of the Company's
common stock outstanding immediately preceding the merger are converted by
virtue of the merger into other property, whether in the form of securities,
cash or otherwise, then to the extent permitted by applicable law: (i) any
surviving corporation or a parent of such surviving corporation shall assume any
Stock Awards outstanding under the Plan or shall substitute similar Stock Awards
for those outstanding under the Plan, or (ii) such Stock Awards shall continue
in full force and effect. In the event any surviving corporation or its parent
refuses to assume or continue such Stock Awards, or to substitute similar Stock
Awards for those outstanding under the Plan, then, with respect to Stock Awards
held by persons then performing services as Employees, Directors or Consultants,
the time during which such Stock Awards may be exercised shall be accelerated,
the vesting of such Stock Awards shall be accelerated if so determined by the
Board and the Stock Awards terminated if not exercised prior to such event.
13. AMENDMENT OF THE PLAN AND STOCK AWARDS.
(a) The Board at any time, and from time to time, may amend the Plan.
However, except as provided in Section 12 relating to adjustments upon changes
in stock, no amendment shall be effective unless approved by the stockholders of
the Company to the extent stockholder approval is necessary for the Plan to
satisfy the requirements of Section 422 of the Code, Rule 16b-3 or any Nasdaq or
securities exchange listing requirements.
12.
<PAGE> 13
(b) The Board may in its sole discretion submit any other amendment to
the Plan for stockholder approval, including, but not limited to, amendments to
the Plan intended to satisfy the requirements of Section 162(m) of the Code and
the regulations thereunder regarding the exclusion of performance-based
compensation from the limit on corporate deductibility of compensation paid to
certain executive officers.
(c) It is expressly contemplated that the Board may amend the Plan in
any respect the Board deems necessary or advisable to provide eligible
Employees, Directors or Consultants with the maximum benefits provided or to be
provided under the provisions of the Code and the regulations promulgated
thereunder relating to Incentive Stock Options and/or to bring the Plan and/or
Incentive Stock Options granted under it into compliance therewith.
(d) Rights under any Stock Award granted before amendment of the Plan
shall not be impaired by any amendment of the Plan unless (i) the Company
requests the consent of the person to whom the Stock Award was granted and (ii)
such person consents in writing.
(e) The Board at any time, and from time to time, may amend the terms
of any one or more Stock Awards; provided, however, that the rights under any
Stock Award shall not be impaired by any such amendment unless (i) the Company
requests the consent of the person to whom the Stock Award was granted and (ii)
such person consents in writing.
14. TERMINATION OR SUSPENSION OF THE PLAN.
(a) The Board may suspend or terminate the Plan at any time. Unless
sooner terminated, the Plan shall terminate ten (10) years from the date the
Plan is adopted by the Board or approved by the stockholders of the Company,
whichever is earlier. No Stock Awards may be granted under the Plan while the
Plan is suspended or after it is terminated.
(b) Rights and obligations under any Stock Award granted while the Plan
is in effect shall not be impaired by suspension or termination of the Plan,
except with the consent of the person to whom the Stock Award was granted.
15. EFFECTIVE DATE OF PLAN.
The Plan shall become effective on the date adopted by the Board, but
no Stock Awards granted under the Plan shall be exercised unless and until the
Plan has been approved by the stockholders of the Company, which approval shall
be within twelve (12) months before or after the date the Plan is adopted by the
Board.
13.
<PAGE> 1
EXHIBIT 10.3
INCENTIVE STOCK OPTION
_________________________, Optionee:
COULTER PHARMACEUTICAL, INC. (the "Company") has granted you an option
to purchase shares of the common stock of the Company ("Common Stock") under the
Coulter Pharmaceutical, Inc. 1996 Equity Incentive Plan (the "Plan"). This
option is intended to qualify for the federal income tax benefits available to
an "incentive stock option" within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code").
The details of your option are as follows:
1. TOTAL NUMBER OF SHARES SUBJECT TO THIS OPTION. The total number of
shares of Common Stock subject to this option is ____________________ (______).
2. VESTING. The date that vesting begins on this option is__________ .
12/48ths of the shares will vest on ____________________ and 1/48 of the shares
will then vest each month after _____________________ for the next 36 months
until either (i) you cease to provide services for the Company for any reason
or (ii) this option becomes fully vested. This option may be exercised only
with respect to those shares which are vested.
3. EXERCISE PRICE AND METHOD OF PAYMENT.
(a) EXERCISE PRICE. The exercise price of this option is
____________ ($____) per share, which is not less than the fair market value of
the Common Stock on the date this option was granted to you.
(b) METHOD OF PAYMENT. Payment of the exercise price per share
is due in full upon exercise of all or any part of this option. You may make
payment of the exercise price under one or a combination of the following
alternatives:
(i) Payment of the exercise price per share in cash or by
check at the time of exercise;
(ii) If at the time of exercise the Company's Common Stock
is publicly traded and quoted regularly in the Wall Street Journal, payment
with shares of the Company's Common Stock you already own. The Common Stock
(i) will be valued at its fair market value on the date of exercise, (ii) if
originally acquired from the Company, it must have been held for the period
required to avoid a charge to the Company's reported earnings, and (iii) it must
be owned free and clear of any liens, claims, encumbrances or security
interests;
(iii) This option may also be exercised as part of a program
developed under Regulation T as promulgated by the Federal Reserve Board which
results in the receipt of cash (or a check) by the Company before Common Stock
is issued; or
1.
<PAGE> 2
(iv) Payment by a combination of the methods of
payment listed in subparagraph 3(b)(i) through 3(b)(iii) above.
4. WHOLE SHARES. You may exercise this option only for whole shares and
the Company shall be under no obligation to issue any fractional shares of
Common Stock to you.
5. SECURITIES LAW COMPLIANCE. Notwithstanding anything to the contrary
contained in this option, this option may not be exercised unless the shares
issuable upon exercise of this option are then registered under the Securities
Act of 1933, as amended (the "Act") or, if the shares are not registered at that
time, the Company has determined that the exercise and issuance would be exempt
from the registration requirements of the Act.
6. TERM OF OPTION. The term of this option begins on the date you were
granted this option and, unless it ends sooner for the reason described below,
terminates on ______________________ (the "Expiration Date") (which date shall
be no more than ten (10) years from the date this option was granted). You may
not, under any circumstances, exercise this option on or after the Expiration
Date. In addition, this option may not be exercised if it would cause a
violation of the short-swing trading profits provisions of Section 16(b) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") which are
applicable to certain shareholders of companies with publicly traded stock.
This option will also terminate prior to the end of its term if your
service as an employee or an advisor or consultant with the Company and all
Related Companies is terminated for any reason or for no reason. Your option
will then terminate three (3) months after the date on which you are no longer
providing services to the Company or any Related Company unless one of the
following circumstances exists:
(a) Your termination of service is due to your disability.
This option will then terminate on the earlier of the Expiration Date or twelve
(12) months following the termination of your service.
(b) Your termination of service is due to your death. This
option will then terminate on the earlier of the Expiration Date or eighteen
(18) months after your death.
(c) If during any part of the three (3) month period you may
not exercise your option solely because of the condition described in paragraph
5 above, then your option will not terminate until the earlier of the Expiration
Date or until this option shall become exercisable for a period of three (3)
months after the termination of your service.
(d) If your exercise of the option within three (3) months
after termination of your service with the Company and all Related Companies
will result in liability under Section 16(b) of the Exchange Act, then your
option will terminate on the earliest of (i) the Expiration Date, (ii) the tenth
(10th) day after the last date on which your exercise would result in such
liability or (iii) six (6) months and ten (10) days after the termination of
your service with the Company and all Related Companies.
2.
<PAGE> 3
(e) If your exercise of the option within three (3) months
after termination of your service with the Company and all Related Companies
will cause the Company not to be able to account for any merger, acquisition,
consolidation, reorganization, or other transaction affecting the Company's
corporate structure as a "pooling of interests," which accounting treatment
would otherwise be available to the Company, then your option will terminate on
the earlier of (i) the Expiration Date or (ii) the tenth (10th) business day
following the expiration of the "pooling period" applicable to such transaction.
Only the shares which are vested on the date of your termination of
service may be exercised following the termination of your service.
In order to obtain the federal income tax advantages associated with an
incentive stock option, the Code requires that at all times beginning on the
date of grant of the option and ending on the day three (3) months before the
date of the option's exercise, you must be an employee of the Company or a
Related Company, except in the event of your death or disability. The Company
has provided for continued vesting or extended exercisability for your option
under certain circumstances for your benefit, but cannot guarantee that your
option will necessarily be treated as an incentive stock option if you provide
services to the Company or a Related Company as a consultant or exercise your
option more than three (3) months after the date your employment with the
Company and all Related Companies terminates.
7. EXERCISE OF OPTION.
(a) You may exercise this option to the extent specified
above, by delivering the Notice of Exercise attached to this option as an
exhibit together with the exercise price to the Secretary of the Company, or
another person designated by the Company, during regular business hours,
together with any additional documents required in the Notice of Exercise.
(b) By exercising this option you agree that:
(i) the Company may require you to pay to the Company
any tax withholding obligation of the Company arising from (1) your exercise of
this option; (2) the lapse of any substantial risk of forfeiture to which the
shares are subject at the time of exercise; or (3) the disposition of the shares
of Common Stock you acquired upon the exercise of this option;
(ii) you will notify the Company in writing within
fifteen (15) days after the date on which you dispose of any of the shares of
the Common Stock issued to you upon your exercise of this option if the
disposition of shares occurs within two (2) years after the date on which you
were granted this option or within one (1) year of the date on which you
exercised this option; and
(iii) in connection with the first underwritten
registration of the offering of any securities of the Company under the Act, the
Company (or a representative of the underwriters) may require that you not sell
or otherwise transfer or dispose of any shares of Common Stock or other
securities of the Company during a period of one hundred eighty (180) days
following the effective date (the "Effective Date") of the registration
statement of the
3.
<PAGE> 4
Company filed under the Act or such longer period as may be required by the
Bylaws of the Company. You further agree that the Company may impose
stop-transfer instructions on the securities subject to these restrictions until
the end of the period.
(c) Shares of Common Stock issued to you upon your exercise of
this option will be subject to the right of first refusal provisions as set
forth in the Bylaws of the Company, which Bylaws will be open to inspection by
any shareholder as provided in such Bylaws.
8. TRANSFERABILITY. This option may not be transferred, except by will
or by the laws of descent and distribution, and may be exercised during your
life only by you. By delivering written notice to the Company, in a form
satisfactory to the Company, you may designate a third party who, in the event
of your death, shall thereafter be entitled to exercise this option.
9. OPTION NOT AN EMPLOYMENT CONTRACT. This option is not an employment
contract and nothing in this option creates in any way whatsoever any obligation
on your part to continue in the employ of the Company, or of the Company to
continue your employment with the Company.
10. NOTICES. Any notices provided for in this option or the Plan will
be given in writing and will be considered to have been given upon receipt or,
in the case of notices delivered by the Company to you, five (5) days after
deposit in the United States mail, postage prepaid, addressed to you at the
address specified below or at such other address as you later designate in
writing to the Company.
4.
<PAGE> 5
11. GOVERNING PLAN DOCUMENT. This option is subject to all the
provisions of the Plan, which is attached as an exhibit to this option. All
provisions of the Plan are hereby made a part of this option. This option is
further subject to all interpretations, amendments, rules and regulations which
may from time to time be set forth and adopted under the Plan. In the event of
any conflict between the provisions of this option and those of the Plan, the
provisions of the Plan shall control. Except to the extent preempted by federal
law, the laws of the State of Delaware shall govern this option.
Dated the ____ day of __________________, 19__.
Very truly yours,
COULTER PHARMACEUTICAL, INC.
By_____________________________
Duly authorized on behalf
of the Board of Directors
ATTACHMENTS:
Coulter Pharmaceutical, Inc. 1996 Equity Incentive Plan
Notice of Exercise
5.
<PAGE> 6
(a) I acknowledge that I have received the foregoing option and the
attachments referenced in it and I understand that all rights and liabilities
with respect to this option are set forth or referred to in the option and the
Plan; and
(b) I acknowledge that as of the date of grant of this option, this
option and its exhibits set forth the entire understanding between myself and
the Company and any Related Companies regarding the acquisition of stock in the
Company and supersedes all prior oral and written agreements on that subject
with the exception of (i) the options previously granted and delivered to me
under the Plan, and (ii) the following agreements only:
NONE ____________________
(Initial)
OTHER _________________________
_________________________
_________________________
_____________________________________
OPTIONEE
Address:
________________________
________________________
6.
<PAGE> 1
EXHIBIT 10.4
NONSTATUTORY STOCK OPTION
_________________________, Optionee:
COULTER PHARMACEUTICAL, INC. (the "Company") has granted you an option to
purchase shares of the common stock of the Company ("Common Stock") under the
Coulter Pharmaceutical, Inc. 1996 Equity Incentive Plan (the "Plan"). This
option is not intended to qualify for the federal income tax benefits available
to an "incentive stock option" within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code") and is referred to under the Plan
as a Nonstatutory Stock Option.
The details of your option are as follows:
1. TOTAL NUMBER OF SHARES SUBJECT TO THIS OPTION. The total number of
shares of Common Stock subject to this option is ____________________ (______).
2. VESTING. The date that vesting begins on this option is
_______________________. 12/48ths of the shares will vest on ________________
and 1/48 of the shares will then vest each month after ______________ for the
next 36 months until either (i) you cease to provide services for the Company
for any reason or (ii) this option becomes fully vested. This option may be
exercised only with respect to those shares which are vested.
3. EXERCISE PRICE AND METHOD OF PAYMENT.
(a) EXERCISE PRICE. The exercise price of this option is
____________ ($____) per share, which is not less than eighty-five percent (85%)
of the fair market value of the Common Stock on the date this option was granted
to you.
(b) METHOD OF PAYMENT. Payment of the exercise price per share is
due in full upon exercise of all or any part of this option. You may make
payment of the exercise price under one or a combination of the following
alternatives at the election of the Administrator:
(i) Payment of the exercise price per share in cash or by
check at the time of exercise;
(ii) If at the time of exercise the Company's Common Stock is
publicly traded and quoted regularly in the Wall Street Journal, payment with
shares of the Company's Common Stock you already own. The Common Stock (i) will
be valued at its fair market value on the date of exercise, (ii) if originally
acquired from the Company, it must have been held for the period required to
avoid a charge to the Company's reported earnings, and (iii) it must be owned
free and clear of any liens, claims, encumbrances or security interests;
1.
<PAGE> 2
(iii) This option may also be exercised as part of a program
developed under Regulation T as promulgated by the Federal Reserve Board which
results in the receipt of cash (or a check) by the Company before Common Stock
is issued; or
(iv) Payment by a combination of the methods of payment listed
in subparagraph 3(b)(i) through 3(b)(iii) above.
4. WHOLE SHARES. You may exercise this option only for whole shares and
the Company shall be under no obligation to issue any fractional shares of
Common Stock to you.
5. SECURITIES LAW COMPLIANCE. Notwithstanding anything to the contrary
contained in this option, this option may not be exercised unless the shares
issuable upon exercise of this option are then registered under the Securities
Act of 1933, as amended (the "Act") or, if the shares are not registered at that
time, the Company has determined that the exercise and issuance would be exempt
from the registration requirements of the Act.
This option has been granted under the terms of a compensatory benefit
plan established by the Company to provide financial incentives for the
Company's employees (including officers) and certain directors and consultants
to work for the financial success of the Company and is intended to comply with
the provisions of Rule 701 promulgated by the Securities and Exchange Commission
under the Act.
6. TERM OF OPTION. The term of this option begins on the date you were
granted this option and, unless it ends sooner for the reason described below,
terminates on ______________________ (the "Expiration Date") (which date shall
be no more than ten (10) years from the date this option was granted). You may
not, under any circumstances, exercise this option on or after the Expiration
Date. In addition, this option may not be exercised if it would cause a
violation of the short-swing trading profits provisions of Section 16(b) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") which are
applicable to certain shareholders of companies with publicly traded stock.
This option will also terminate prior to the end of its term if your
service as an employee or an advisor or consultant with the Company and all
Related Companies is terminated for any reason or for no reason. Your option
will then terminate three (3) months after the date on which you are no longer
providing services to the Company or any Related Company unless one of the
following circumstances exists:
(a) Your termination of service is due to your permanent and total
disability. This option will then terminate on the earlier of the Expiration
Date or twelve (12) months following the termination of your service.
(b) Your termination of service is due to your death. This option
will then terminate on the earlier of the Expiration Date or eighteen (18)
months after your death.
(c) If during any part of the three (3) month period you may not
exercise your option solely because of the condition described in paragraph 5
above, then your option will not
2.
<PAGE> 3
terminate until the earlier of the Expiration Date or until this option shall
become exercisable for a period of three (3) months after the termination of
your service.
(d) If your exercise of the option within three (3) months after
termination of your service with the Company and all Related Companies will
result in liability under Section 16(b) of the Exchange Act, then your option
will terminate on the earliest of (i) the Expiration Date, (ii) the tenth (10th)
day after the last date on which your exercise would result in such liability or
(iii) six (6) months and ten (10) days after the termination of your service
with the Company and all Related Companies.
(e) If your exercise of the option within three (3) months after
termination of your service with the Company and all Related Companies will
cause the Company not to be able to account for any merger, acquisition,
consolidation, reorganization, or other transaction affecting the Company's
corporate structure as a "pooling of interests," which accounting treatment
would otherwise be available to the Company, then your option will terminate on
the earlier of (i) the Expiration Date or (ii) the tenth (10th) business day
following the expiration of the "pooling period" applicable to such transaction.
Only the shares which are vested on the date of your termination of
service may be exercised following the termination of your service.
7. EXERCISE OF OPTION.
(a) You may exercise this option to the extent specified above, by
delivering the Notice of Exercise attached to this option as an exhibit together
with the exercise price to the Secretary of the Company, or another person
designated by the Company, during regular business hours, together with any
additional documents required in the Notice of Exercise.
(b) By exercising this option you agree that:
(i) as a condition to exercise, the Company may require you to
pay to the Company any tax withholding obligation of the Company arising from
(1) your exercise of this option; (2) the lapse of any substantial risk of
forfeiture to which the shares are subject at the time of exercise; or (3) the
disposition of the shares of Common Stock you acquired upon the exercise of this
option; and
(ii) in connection with the first underwritten registration of
the offering of any securities of the Company under the Act, the Company (or a
representative of the underwriters) may require that you not sell or otherwise
transfer or dispose of any shares of Common Stock or other securities of the
Company during a period of one hundred eighty (180) days following the effective
date (the "Effective Date") of the registration statement of the Company filed
under the Act or such longer period as may be required by the Bylaws of the
Company. You further agree that the Company may impose stop-transfer
instructions on the securities subject to these restrictions until the end of
the period.
3.
<PAGE> 4
(c) Shares of Common Stock issued to you upon your exercise of this
option will be subject to the right of first refusal provisions as set forth in
the Bylaws of the Company, which Bylaws will be open to inspection by any
shareholder as provided in such Bylaws.
8. TRANSFERABILITY. This option may not be transferred, except by will or
by the laws of descent and distribution, and may be exercised during your life
only by you or pursuant to a domestic relations order satisfying the
requirements of Rule 16b-3 of the Exchange Act and any administrative
interpretations or pronouncements thereunder. By delivering written notice to
the Company, in a form satisfactory to the Company, you may designate a third
party who, in the event of your death, shall thereafter be entitled to exercise
this option.
9. OPTION NOT AN EMPLOYMENT CONTRACT. This option is not an employment
contract and nothing in this option creates in any way whatsoever any obligation
on your part to continue in the employ of the Company, or of the Company to
continue your employment with the Company. In the event that this option is
granted to you in connection with the performance of services as a consultant or
director, references to employment, employee and similar terms shall be deemed
to include the performance of services as a consultant or a director, as the
case may be, provided, however, that no rights as an employee shall arise by
reason of the use of such terms.
10. NOTICES. Any notices provided for in this option or the Plan will be
given in writing and will be considered to have been given upon receipt or, in
the case of notices delivered by the Company to you, five (5) days after deposit
in the United States mail, postage prepaid, addressed to you at the address
specified below or at such other address as you later designate in writing to
the Company.
11. GOVERNING PLAN DOCUMENT. This option is subject to all the provisions
of the Plan, which is attached as an exhibit to this option. All provisions of
the Plan are hereby made a part of this option. This option is further subject
to all interpretations, amendments, rules and regulations which may from time to
time be set forth and adopted under the Plan. In the event of any conflict
between the provisions of this option and those of the Plan, the provisions of
the Plan shall control. Except to the extent preempted by federal law, the laws
of the State of Delaware shall govern this option.
Dated the ____ day of __________________, 19__.
Very truly yours,
COULTER PHARMACEUTICAL, INC.
By__________________________________________
Duly authorized on behalf
of the Board of Directors
4.
<PAGE> 5
ATTACHMENTS:
Coulter Pharmaceutical, Inc. 1996 Equity Incentive Plan
Notice of Exercise
5.
<PAGE> 6
(a) I acknowledge that I have received the foregoing option and the
attachments referenced in it and I understand that all rights and liabilities
with respect to this option are set forth or referred to in the option and the
Plan; and
(b) I acknowledge that as of the date of grant of this option, this option
and its exhibits set forth the entire understanding between myself and the
Company and any Related Companies regarding the acquisition of stock in the
Company and supersedes all prior oral and written agreements on that subject
with the exception of (i) the options previously granted and delivered to me
under the Plan, and (ii) the following agreements only:
NONE _________________
(Initial)
OTHER _______________________________________________
_______________________________________________
_______________________________________________
____________________________________________
OPTIONEE
Address: ______________________________
______________________________
6.
<PAGE> 1
EXHIBIT 10.5
COULTER PHARMACEUTICAL, INC.
EMPLOYEE STOCK PURCHASE PLAN
ADOPTED DECEMBER 5, 1996
APPROVED BY THE STOCKHOLDERS ON _____________, 1996
1. PURPOSE.
(a) The purpose of the Employee Stock Purchase Plan (the "Plan") is to
provide a means by which employees of Coulter Pharmaceutical, Inc., a Delaware
corporation (the "Company"), and its Affiliates, as defined in subparagraph
1(b), which are designated as provided in subparagraph 2(b), may be given an
opportunity to purchase stock of the Company.
(b) The word "Affiliate" as used in the Plan means any parent
corporation or subsidiary corporation of the Company, as those terms are defined
in Sections 424(e) and (f), respectively, of the Internal Revenue Code of 1986,
as amended (the "Code").
(c) The Company, by means of the Plan, seeks to retain the services of
its employees, to secure and retain the services of new employees, and to
provide incentives for such persons to exert maximum efforts for the success of
the Company.
(d) The Company intends that the rights to purchase stock of the
Company granted under the Plan be considered options issued under an "employee
stock purchase plan" as that term is defined in Section 423(b) of the Code.
2. ADMINISTRATION.
(a) The Plan shall be administered by the Board of Directors (the
"Board") of the Company unless and until the Board delegates administration to a
Committee, as provided in subparagraph 2(c). Whether or not the Board has
delegated administration, the Board shall have the final power to determine all
questions of policy and expediency that may arise in the administration of the
Plan.
(b) The Board shall have the power, subject to, and within the
limitations of, the express provisions of the Plan:
(i) To determine when and how rights to purchase stock of the
Company shall be granted and the provisions of each offering of such rights
(which need not be identical).
(ii) To designate from time to time which Affiliates of the Company
shall be eligible to participate in the Plan.
1.
<PAGE> 2
(iii) To construe and interpret the Plan and rights granted under
it, and to establish, amend and revoke rules and regulations for its
administration. The Board, in the exercise of this power, may correct any
defect, omission or inconsistency in the Plan, in a manner and to the extent it
shall deem necessary or expedient to make the Plan fully effective.
(iv) To amend the Plan as provided in paragraph 13.
(v) Generally, to exercise such powers and to perform such acts as
the Board deems necessary or expedient to promote the best interests of the
Company and its Affiliates and to carry out the intent that the Plan be treated
as an "employee stock purchase plan" within the meaning of Section 423 of the
Code.
(c) The Board may delegate administration of the Plan to a Committee
composed of one or more members of the Board (the "Committee"). If
administration is delegated to a Committee, the Committee shall have, in
connection with the administration of the Plan, the powers theretofore possessed
by the Board, subject, however, to such resolutions, not inconsistent with the
provisions of the Plan, as may be adopted from time to time by the Board. The
Board may abolish the Committee at any time and revest in the Board the
administration of the Plan.
3. SHARES SUBJECT TO THE PLAN.
(a) Subject to the provisions of paragraph 12 relating to adjustments
upon changes in stock, the stock that may be sold pursuant to rights granted
under the Plan shall not exceed in the aggregate Three Hundred Fifty Thousand
(350,000) shares of the Company's common stock (the "Common Stock"). If any
right granted under the Plan shall for any reason terminate without having been
exercised, the Common Stock not purchased under such right shall again become
available for the Plan.
(b) The stock subject to the Plan may be unissued shares or reacquired
shares, bought on the market or otherwise.
4. GRANT OF RIGHTS; OFFERING.
(a) The Board or the Committee may from time to time grant or provide
for the grant of rights to purchase Common Stock of the Company under the Plan
to eligible employees (an "Offering") on a date or dates (the "Offering
Date(s)") selected by the Board or the Committee. Each Offering shall be in such
form and shall contain such terms and conditions as the Board or the Committee
shall deem appropriate, which shall comply with the requirements of Section
423(b)(5) of the Code that all employees granted rights to purchase stock under
the Plan shall have the same rights and privileges. The terms and conditions of
an Offering shall be incorporated by reference into the Plan and treated as part
of the Plan. The provisions of separate Offerings need not be identical, but
each Offering shall include (through incorporation of the provisions of this
Plan by reference in the document comprising the Offering or
2.
<PAGE> 3
otherwise) the period during which the Offering shall be effective, which period
shall not exceed twenty-seven (27) months beginning with the Offering Date, and
the substance of the provisions contained in paragraphs 5 through 8, inclusive.
(b) If an employee has more than one right outstanding under the Plan,
unless he or she otherwise indicates in agreements or notices delivered
hereunder: (1) each agreement or notice delivered by that employee will be
deemed to apply to all of his or her rights under the Plan, and (2) a right with
a lower exercise price (or an earlier-granted right, if two rights have
identical exercise prices), will be exercised to the fullest possible extent
before a right with a higher exercise price (or a later-granted right, if two
rights have identical exercise prices) will be exercised.
5. ELIGIBILITY.
(a) Rights may be granted only to employees of the Company or, as the
Board or the Committee may designate as provided in subparagraph 2(b), to
employees of any Affiliate of the Company. Except as provided in subparagraph
5(b), an employee of the Company or any Affiliate shall not be eligible to be
granted rights under the Plan, unless, on the Offering Date, such employee has
been in the employ of the Company or any Affiliate for such continuous period
preceding such grant as the Board or the Committee may require, but in no event
shall the required period of continuous employment be equal to or greater than
two (2) years. In addition, unless otherwise determined by the Board or the
Committee and set forth in the terms of the applicable Offering, no employee of
the Company or any Affiliate shall be eligible to be granted rights under the
Plan, unless, on the Offering Date, such employee's customary employment with
the Company or such Affiliate is for at least twenty (20) hours per week and at
least five (5) months per calendar year.
(b) The Board or the Committee may provide that each person who, during
the course of an Offering, first becomes an eligible employee of the Company or
designated Affiliate will, on a date or dates specified in the Offering which
coincides with the day on which such person becomes an eligible employee or
occurs thereafter, receive a right under that Offering, which right shall
thereafter be deemed to be a part of that Offering. Such right shall have the
same characteristics as any rights originally granted under that Offering, as
described herein, except that:
(i) the date on which such right is granted shall be the "Offering
Date" of such right for all purposes, including determination of the exercise
price of such right;
(ii) the period of the Offering with respect to such right shall
begin on its Offering Date and end coincident with the end of such Offering; and
(iii) the Board or the Committee may provide that if such person
first becomes an eligible employee within a specified period of time before the
end of the Offering, he or she will not receive any right under that Offering.
3.
<PAGE> 4
(c) No employee shall be eligible for the grant of any rights under the
Plan if, immediately after any such rights are granted, such employee owns stock
possessing five percent (5%) or more of the total combined voting power or value
of all classes of stock of the Company or of any Affiliate. For purposes of this
subparagraph 5(c), the rules of Section 424(d) of the Code shall apply in
determining the stock ownership of any employee, and stock which such employee
may purchase under all outstanding rights and options shall be treated as stock
owned by such employee.
(d) An eligible employee may be granted rights under the Plan only if
such rights, together with any other rights granted under "employee stock
purchase plans" of the Company and any Affiliates, as specified by Section
423(b)(8) of the Code, do not permit such employee's rights to purchase stock of
the Company or any Affiliate to accrue at a rate which exceeds twenty-five
thousand dollars ($25,000) of fair market value of such stock (determined at the
time such rights are granted) for each calendar year in which such rights are
outstanding at any time.
(e) Officers of the Company and any designated Affiliate shall be
eligible to participate in Offerings under the Plan, provided, however, that the
Board may provide in an Offering that certain employees who are highly
compensated employees within the meaning of Section 423(b)(4)(D) of the Code
shall not be eligible to participate.
6. RIGHTS; PURCHASE PRICE.
(a) On each Offering Date, each eligible employee, pursuant to an
Offering made under the Plan, shall be granted the right to purchase up to the
number of shares of Common Stock of the Company purchasable with a percentage
designated by the Board or the Committee not exceeding fifteen percent (15%) of
such employee's Earnings (as defined by the Board for each Offering) during the
period which begins on the Offering Date (or such later date as the Board or the
Committee determines for a particular Offering) and ends on the date stated in
the Offering, which date shall be no later than the end of the Offering. The
Board or the Committee shall establish one or more dates during an Offering (the
"Purchase Date(s)") on which rights granted under the Plan shall be exercised
and purchases of Common Stock carried out in accordance with such Offering.
(b) In connection with each Offering made under the Plan, the Board or
the Committee may specify a maximum number of shares that may be purchased by
any employee as well as a maximum aggregate number of shares that may be
purchased by all eligible employees pursuant to such Offering. In addition, in
connection with each Offering that contains more than one Purchase Date, the
Board or the Committee may specify a maximum aggregate number of shares which
may be purchased by all eligible employees on any given Purchase Date under the
Offering. If the aggregate purchase of shares upon exercise of rights granted
under the Offering would exceed any such maximum aggregate number, the Board or
the Committee shall make a pro rata allocation of the shares available in as
nearly a uniform manner as shall be practicable and as it shall deem to be
equitable.
4.
<PAGE> 5
(c) The purchase price of stock acquired pursuant to rights granted
under the Plan shall be not less than the lesser of:
(i) an amount equal to eighty-five percent (85%) of the fair market
value of the stock on the Offering Date; or
(ii) an amount equal to eighty-five percent (85%) of the fair
market value of the stock on the Purchase Date.
7. PARTICIPATION; WITHDRAWAL; TERMINATION.
(a) An eligible employee may become a participant in the Plan pursuant
to an Offering by delivering a participation agreement to the Company within the
time specified in the Offering, in such form as the Company provides. Each such
agreement shall authorize payroll deductions of up to the maximum percentage
specified by the Board or the Committee of such employee's Earnings (as defined
by the Board for each Offering) during the Offering. The payroll deductions made
for each participant shall be credited to an account for such participant under
the Plan and shall be deposited with the general funds of the Company. A
participant may reduce (including to zero) or increase such payroll deductions,
and an eligible employee may begin such payroll deductions, after the beginning
of any Offering only as provided for in the Offering. A participant may make
additional payments into his or her account only if specifically provided for in
the Offering and only if the participant has not had the maximum amount withheld
during the Offering.
(b) At any time during an Offering, a participant may terminate his or
her payroll deductions under the Plan and withdraw from the Offering by
delivering to the Company a notice of withdrawal in such form as the Company
provides. Such withdrawal may be elected at any time prior to the end of the
Offering except as provided by the Board or the Committee in the Offering. Upon
such withdrawal from the Offering by a participant, the Company shall distribute
to such participant all of his or her accumulated payroll deductions (reduced to
the extent, if any, such deductions have been used to acquire stock for the
participant) under the Offering, without interest, and such participant's
interest in that Offering shall be automatically terminated. A participant's
withdrawal from an Offering will have no effect upon such participant's
eligibility to participate in any other Offerings under the Plan but such
participant will be required to deliver a new participation agreement in order
to participate in subsequent Offerings under the Plan.
(c) Rights granted pursuant to any Offering under the Plan shall
terminate immediately upon cessation of any participating employee's employment
with the Company and any designated Affiliate, for any reason, and the Company
shall distribute to such terminated employee all of his or her accumulated
payroll deductions (reduced to the extent, if any, such deductions have been
used to acquire stock for the terminated employee), under the Offering, without
interest.
5.
<PAGE> 6
(d) Rights granted under the Plan shall not be transferable by a
participant otherwise than by will or the laws of descent and distribution, or
by a beneficiary designation as provided in paragraph 14 and, otherwise during
his or her lifetime, shall be exercisable only by the person to whom such rights
are granted.
8. EXERCISE.
(a) On each Purchase Date specified therefor in the relevant Offering,
each participant's accumulated payroll deductions and other additional payments
specifically provided for in the Offering (without any increase for interest)
will be applied to the purchase of whole shares of stock of the Company, up to
the maximum number of shares permitted pursuant to the terms of the Plan and the
applicable Offering, at the purchase price specified in the Offering. No
fractional shares shall be issued upon the exercise of rights granted under the
Plan. The amount, if any, of accumulated payroll deductions remaining in each
participant's account after the purchase of shares which is less than the amount
required to purchase one share of stock on the final Purchase Date of an
Offering shall be held in each such participant's account for the purchase of
shares under the next Offering under the Plan, unless such participant withdraws
from such next Offering, as provided in subparagraph 7(b), or is no longer
eligible to be granted rights under the Plan, as provided in paragraph 5, in
which case such amount shall be distributed to the participant after such final
Purchase Date, without interest. The amount, if any, of accumulated payroll
deductions remaining in any participant's account after the purchase of shares
which is equal to the amount required to purchase whole shares of stock on the
final Purchase Date of an Offering shall be distributed in full to the
participant after such Purchase Date, without interest.
(b) No rights granted under the Plan may be exercised to any extent
unless the shares to be issued upon such exercise under the Plan (including
rights granted thereunder) are covered by an effective registration statement
pursuant to the Securities Act of 1933, as amended (the "Securities Act") and
the Plan is in material compliance with all applicable state, foreign and other
securities and other laws applicable to the Plan. If on a Purchase Date in any
Offering hereunder the Plan is not so registered or in such compliance, no
rights granted under the Plan or any Offering shall be exercised on such
Purchase Date, and the Purchase Date shall be delayed until the Plan is subject
to such an effective registration statement and such compliance, except that the
Purchase Date shall not be delayed more than twelve (12) months and the Purchase
Date shall in no event be more than twenty-seven (27) months from the Offering
Date. If on the Purchase Date of any Offering hereunder, as delayed to the
maximum extent permissible, the Plan is not registered and in such compliance,
no rights granted under the Plan or any Offering shall be exercised and all
payroll deductions accumulated during the Offering (reduced to the extent, if
any, such deductions have been used to acquire stock) shall be distributed to
the participants, without interest.
9. COVENANTS OF THE COMPANY.
(a) During the terms of the rights granted under the Plan, the Company
shall keep
6.
<PAGE> 7
available at all times the number of shares of stock required to satisfy such
rights.
(b) The Company shall seek to obtain from each federal, state, foreign
or other regulatory commission or agency having jurisdiction over the Plan such
authority as may be required to issue and sell shares of stock upon exercise of
the rights granted under the Plan. If, after reasonable efforts, the Company is
unable to obtain from any such regulatory commission or agency the authority
which counsel for the Company deems necessary for the lawful issuance and sale
of stock under the Plan, the Company shall be relieved from any liability for
failure to issue and sell stock upon exercise of such rights unless and until
such authority is obtained.
10. USE OF PROCEEDS FROM STOCK.
Proceeds from the sale of stock pursuant to rights granted under the
Plan shall constitute general funds of the Company.
11. RIGHTS AS A STOCKHOLDER.
A participant shall not be deemed to be the holder of, or to have any
of the rights of a holder with respect to, any shares subject to rights granted
under the Plan unless and until the participant's shareholdings acquired upon
exercise of rights hereunder are recorded in the books of the Company.
12. ADJUSTMENTS UPON CHANGES IN STOCK.
(a) If any change is made in the stock subject to the Plan, or subject
to any rights granted under the Plan (through merger, consolidation,
reorganization, recapitalization, stock dividend, dividend in property other
than cash, stock split, liquidating dividend, combination of shares, exchange of
shares, change in corporate structure or other transaction not involving the
receipt of consideration by the Company), the Plan and outstanding rights will
be appropriately adjusted in the class(es) and maximum number of shares subject
to the Plan and the class(es) and number of shares and price per share of stock
subject to outstanding rights. Such adjustments shall be made by the Board or
the Committee, the determination of which shall be final, binding and
conclusive. (The conversion of any convertible securities of the Company shall
not be treated as a "transaction not involving the receipt of consideration by
the Company.")
(b) In the event of: (1) a dissolution or liquidation of the Company;
(2) a merger or consolidation in which the Company is not the surviving
corporation; (3) a reverse merger in which the Company is the surviving
corporation but the shares of the Company's Common Stock outstanding immediately
preceding the merger are converted by virtue of the merger into other property,
whether in the form of securities, cash or otherwise; or (4) the acquisition by
any person, entity or group within the meaning of Section 13(d) or 14(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") or any
comparable successor provisions (excluding any employee benefit plan, or related
trust, sponsored or maintained by the Company or any Affiliate of the Company)
of the beneficial ownership (within the meaning of Rule 13d-3
7.
<PAGE> 8
promulgated under the Exchange Act, or comparable successor rule) of securities
of the Company representing at least fifty percent (50%) of the combined voting
power entitled to vote in the election of directors, then, as determined by the
Board in its sole discretion (i) any surviving or acquiring corporation may
assume outstanding rights or substitute similar rights for those under the Plan,
(ii) such rights may continue in full force and effect, or (iii) participants'
accumulated payroll deductions may be used to purchase Common Stock immediately
prior to the transaction described above and the participants' rights under the
ongoing Offering terminated.
13. AMENDMENT OF THE PLAN.
(a) The Board at any time, and from time to time, may amend the Plan.
However, except as provided in paragraph 12 relating to adjustments upon changes
in stock, no amendment shall be effective unless approved by the stockholders of
the Company within twelve (12) months before or after the adoption of the
amendment, where the amendment will:
(i) Increase the number of shares reserved for rights under the
Plan;
(ii) Modify the provisions as to eligibility for participation in
the Plan (to the extent such modification requires stockholder approval
in order for the Plan to obtain employee stock purchase plan treatment
under Section 423 of the Code or to comply with the requirements of
Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as
amended ("Rule 16b-3")); or
(iii) Modify the Plan in any other way if such modification
requires stockholder approval in order for the Plan to obtain employee
stock purchase plan treatment under Section 423 of the Code or to
comply with the requirements of Rule 16b-3.
It is expressly contemplated that the Board may amend the Plan in any respect
the Board deems necessary or advisable to provide eligible employees with the
maximum benefits provided or to be provided under the provisions of the Code and
the regulations promulgated thereunder relating to employee stock purchase plans
and/or to bring the Plan and/or rights granted under it into compliance
therewith.
(b) Rights and obligations under any rights granted before amendment of
the Plan shall not be altered or impaired by any amendment of the Plan, except
with the consent of the person to whom such rights were granted, or except as
necessary to comply with any laws or governmental regulations, or except as
necessary to ensure that the Plan and/or rights granted under the Plan comply
with the requirements of Section 423 of the Code.
8.
<PAGE> 9
14. DESIGNATION OF BENEFICIARY.
(a) A participant may file a written designation of a beneficiary who
is to receive any shares and cash, if any, from the participant's account under
the Plan in the event of such participant's death subsequent to the end of an
Offering but prior to delivery to the participant of such shares and cash. In
addition, a participant may file a written designation of a beneficiary who is
to receive any cash from the participant's account under the Plan in the event
of such participant's death during an Offering.
(b) Such designation of beneficiary may be changed by the participant
at any time by written notice. In the event of the death of a participant and in
the absence of a beneficiary validly designated under the Plan who is living at
the time of such participant's death, the Company shall deliver such shares
and/or cash to the executor or administrator of the estate of the participant,
or if no such executor or administrator has been appointed (to the knowledge of
the Company), the Company, in its sole discretion, may deliver such shares
and/or cash to the spouse or to any one or more dependents or relatives of the
participant, or if no spouse, dependent or relative is known to the Company,
then to such other person as the Company may designate.
15. TERMINATION OR SUSPENSION OF THE PLAN.
(a) The Board in its discretion, may suspend or terminate the Plan at
any time. No rights may be granted under the Plan while the Plan is suspended or
after it is terminated.
(b) Rights and obligations under any rights granted while the Plan is
in effect shall not be altered or impaired by suspension or termination of the
Plan, except as expressly provided in the Plan or with the consent of the person
to whom such rights were granted, or except as necessary to comply with any laws
or governmental regulation, or except as necessary to ensure that the Plan
and/or rights granted under the Plan comply with the requirements of Section 423
of the Code.
16. EFFECTIVE DATE OF PLAN.
The Plan shall become effective on the same day that the Company's
initial public offering of shares of common stock becomes effective (the
"Effective Date"), but no rights granted under the Plan shall be exercised
unless and until the Plan has been approved by the stockholders of the Company
within twelve (12) months before or after the date the Plan is adopted by the
Board or the Committee, which date may be prior to the Effective Date.
9.
<PAGE> 1
EXHIBIT 10.6
EXHIBIT C
ASSIGNMENT AGREEMENT
THIS ASSIGNMENT AGREEMENT ("Agreement") is entered into as of February
24, 1995, by and among COULTER PHARMACEUTICAL, INC. a Delaware corporation
("Company"), COULTER CORPORATION, a Delaware corporation ("Coulter") and
INTERWEST PARTNERS V, L.P. and INTERWEST INVESTORS V (collectively, "InterWest")
as follows:
1. BACKGROUND
1.1 The Company is issuing five million (5,000,000) shares of its
Series A Preferred Stock (the "Shares") to Coulter pursuant to that certain
Series A Stock Preferred Stock Purchase Agreement of even date herewith (the
"Purchase Agreement"), to which this Agreement is attached as Exhibit C.
1.2 As consideration for the Shares, Coulter has agreed to execute and
deliver this Agreement by which it will transfer intellectual property rights,
contractual rights, related to the anti-CD20 monoclonal antibody known as the
anti-B1 antibody. These rights shall include methods for using such an antibody
in therapeutic applications and diagnostic applications which are necessary for
the enjoyment of the therapeutic applications, as more fully described below,
which rights provide the basis for a development program (the "Program") that
has previously been conducted by Coulter and which will hereafter be conducted
by the Company.
1.3 Certain of the intellectual property rights will be assigned from
Coulter to Company and other intellectual property rights will be sublicensed to
Company, it being the intent of the parties that Company shall enjoy the benefit
of all technology reasonably necessary to continue the Program.
2. TRANSFER OF RIGHTS
2.1 ASSIGNMENT. Coulter assigns, transfers and sets over unto the
Company all of Coulter's rights, title and interest in the following listed
properties. The Company hereby assumes and covenants to perform all obligations
of Coulter in connection with such property and guarantees to hold Coulter
harmless from any claim or demand made thereunder. The Company shall have no
liability to Coulter or any other party as a result of the foregoing obligation
with respect to any breach or obligation attributable to any events occurring
prior to the date of this Agreement.
<PAGE> 2
A. Commercialization Agreement by and between Coulter Corporation and
the University of Michigan, dated November 1, 1994 (the "Michigan Agreement"), a
copy of which is acknowledge as having been previously given to the parties
hereto.
B. Orphan Drug Application [*] for the designation of (131)Iodine-
radiolabeled B1 monoclonal antibody as an orphan drug; and
C. Investigation New Drug Applications [*] conducted at the University
of Michigan, [*] conducted at Dana-Farber Cancer Institute and St. Bartholomews
Hospital, [*] conducted at Stanford University and Dana-Farber Cancer Institute;
[*] conducted at the University of Washington; and
D. Coulter's interest in United States Patent Application Serial No.
08/121,532 to Kaminski et al. and any continuation, divisional, reexamination,
reissue or renewal applications and all U.S. patents issuing therefrom or
extension terms thereof; and
E. Research Agreement with the University of Washington for the
employment of a data manager.
F. Roundtable Research Agreement dated September 1, 1994 with the
University of Michigan for the employment of a dosimetrist.
G. Subject to any consents necessary from the individual contractor,
the individual consulting agreements with [*] and [*].
2.2 SUBLICENSES. Coulter sublicenses to the Company the following
listed technologies and rights on the same terms and conditions for which
Coulter obtained a license:
A. Therapeutic rights of B1 and diagnostic rights of B1 which
are reasonably necessary for the enjoyment and development of the therapeutic
rights of B1, which rights have provided the basis for the Program that has
previously been conducted by Coulter and which will hereafter be conducted by
the Company. Coulter grants such therapeutic rights exclusively to Company and
Coulter grants such diagnostic rights non- exclusively to Company.
1. The rights that have been derived from agreements
between Coulter Corporation and Dana-Farber Cancer Institute (DFCI), which
include the following Agreements, a copy of which is acknowledged as having been
previously given to the parties hereto:
* Certain confidential information contained in this document, marked by
brackets, has been omitted and filed with the Securities and Exchange
Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
2.
<PAGE> 3
a. An Agreement dated July 23, 1981;
and
b. A Modification Agreement dated
March 1, 1983; and
c. An Agreement dated April 28, 1983;
and
d. A Modification Agreement No. 2,
dated April 1, 1987; and
e. An Agreement dated April 1, 1994.
2. Coulter's license rights under United States
Patent Application Serial No. 07/799,087 to Schlossman et al. and any
continuation, continuation-in-part, divisional, reexamination, reissue or
renewal applications and all U.S. patents issuing therefrom or extension terms
thereof and any corresponding foreign patent applications filed or patents
issued therefrom.
3. All other discoveries, inventions and know-how
owned or controlled by Coulter that is reasonably necessary to enable the
Company to use the B1 hybridoma cell line for the purposes of developing an in
vivo therapeutic application.
B. License Agreement by and between Coulter Corporation and
the National Technical Information Service (NTIS), a primary operating unit of
the United States Department of Commerce (whose operations as they pertain to
such agreement have been subsequently transferred to the Office of Technology
transfer within the Department of Health and Human Services), with an effective
date of March 1, 1989, pertaining to U.S. Patent No. 4,831,175 (the "NTIS
Agreement"), non-exclusively for therapeutic and diagnostic applications, with
rights to sublicense only for use with B-1, a copy of which is acknowledged as
having been previously given to the parties hereto; and
C. License Agreement by and between Otto A. Gansow and Martin
W. Brechbiel (collectively called "Licensor") and Coulter Corporation, dated May
1, 1988 pertaining to corresponding foreign rights to U.S. Patent No. 4,831,175,
non-exclusively for therapeutic and diagnostic applications, with rights to
sublicense only for use with B-1, a copy of which is acknowledged as having been
previously given to the parties hereto.
3. WARRANTIES, REPRESENTATIONS AND DISCLAIMERS
3.1 COULTER MAKES NO WARRANTY OR REPRESENTATION THAT THE B1 MATERIALS
OR METHODS USED IN MAKING OR USING SUCH MATERIALS ARE FREE FROM LIABILITY FOR
PATENT INFRINGEMENT.
3.
<PAGE> 4
3.2 COULTER MAKES NO WARRANTY, EXPRESS OR IMPLIED, INCLUDING WITHOUT
LIMITATION, ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR OF FITNESS FOR A
PARTICULAR PURPOSE WITH RESPECT TO ANY MATERIALS SUPPLIED HEREUNDER AND HEREBY
DISCLAIMS THE SAME.
3.3 COULTER HAS NO KNOWLEDGE OF ANY THIRD PARTY RIGHTS IN THE PROPERTY
THAT IS BEING ASSIGNED AND SUBLICENSED HEREUNDER, INCLUDING PATENT INFRINGEMENT
AND TRADE SECRET CLAIMS OF OTHERS, WHICH HAVE NOT HERETOFORE BEEN DISCLOSED.
3.4 COULTER REPRESENTS THAT IT HAS GOOD TITLE TO THE RIGHTS GRANTED
HEREIN SUBJECT ONLY TO THE RESERVATIONS CONTAINED IN THE AGREEMENTS UNDER WHICH
COULTER OBTAINED TITLE.
4. ROYALTIES. Without limiting any other royalties which may be payable by the
Company as a result of any assignment or sublicense hereunder, the Company
agrees to pay to Coulter any amounts which Coulter becomes obligated to pay to
DFCI (including the amount by which Coulter's advanced royalty balance with DFCI
is reduced) as a result of sales by the Company pursuant to the sublicense set
forth in this Agreement. With respect to the first $4,500,000 payable to
Coulter pursuant to the foregoing sentence, Coulter shall have the election, in
lieu of receiving cash to purchase additional shares of the Company's equity
securities at the then current fair market value of such securities.
5. INJUNCTIVE RELIEF. Each party agrees that in the event of any breach of this
Agreement the other party will suffer irreparable injury such that no remedy at
law will adequately compensate the injured party. Accordingly, in addition to
any remedy or relief available at law or in equity, the parties agree that each
shall be entitled to specific performance under this Agreement, as well as such
further interim and final injunctive relief (without the necessity of posting a
bond) as may be granted by a court.
6. ABANDONMENT. In the event that the Company determines to discontinue its
present plans to commercialize the anti-B1 antibody technology acquired pursuant
to this Agreement, the Company shall give prompt written notice to Coulter and
Coulter shall have a right of first offer to reacquire the Property Rights at
fair market value and upon such other terms and conditions as may be agreed upon
by the parties.
7. MISCELLANEOUS
7.1 GOVERNING LAW. This Agreement shall be governed in all respects by
the laws of the State of Delaware as such laws are applied to agreements between
Delaware residents entered into and performed entirely in Delaware.
4.
<PAGE> 5
7.2 SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
parties hereto.
7.3 ENTIRE AGREEMENT. This Agreement constitutes the full and entire
understanding and agreement between the parties with regard to the subjects
hereof and no party shall be liable or bound to any other in any manner by an
representations, warranties, covenants and agreements except as specifically set
forth herein and therein.
7.4 SEPARABILITY. In case any provision of the Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
7.5 AMENDMENT. This Agreement may be amended or modified only upon the
written consent of each of the parties hereto.
7.6 NOTICES. All notices required or permitted hereunder shall be in
writing and shall be deemed effectively given: (i) upon personal delivery to the
party to be notified; (ii) when sent by confirmed telex or facsimile if sent
during normal business hours of the recipient, if not, then on the next business
day; (iii) five (5) days after having been sent by registered or certified mail,
return receipt requested, postage prepaid; or (iv) one (1) day after deposit
with a nationally recognized overnight courier, specifying next day delivery,
with written verification of receipt. All communications shall be sent to the
parties at their respective addresses as set forth on the signature page hereof.
7.7 ATTORNEYS' FEES. In the event that any dispute among the parties to
this Agreement should result in litigation, the prevailing party in such dispute
shall be entitled to recover from the losing party all fees, costs and expenses
of enforcing any right of such prevailing party under or with respect to this
Agreement, including without limitation, such reasonable fees and expenses of
attorneys and accountants, which shall include, without limitation, all fees,
costs and expenses of appeals.
7.8 FURTHER ASSURANCES. The parties agree (i) to furnish upon request
to each other such further information, (ii) to execute and deliver to each
other such other documents, and (iii) to do such other acts and things as may be
required to carry out the purposes of this Agreement, including any further acts
which may be required in order for the Company to enjoy the full and exclusive
benefit of any Food and Drug Administration filings made by Coulter in
connection with the Property Rights.
7.9 TITLES AND SUBTITLES. The titles of the sections and subsections of
the Agreement are for convenience of reference only and are not to be considered
in construing this Agreement.
5.
<PAGE> 6
7.10 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
IN WITNESS WHEREOF, the parties have executed the Agreement as of the
date set forth in the first paragraph hereof.
COULTER PHARMACEUTICAL, INC. COULTER CORPORATION
3000 Sand Hill Road Coulter Technology Center
Building 3, Suite 255 Building 3, Suite 255
Menlo Park, CA 94025 Menlo Park, CA 94025
By: /s/ Arnold Oronsky By: /s/ Joseph R. Coulter, Jr.
------------------------------ --------------------------
Chief Executive Officer Joseph R. Coulter, Jr.
President
INTERWEST PARTNERS V, L.P. INTERWEST PARTNERS V
3000 Sand Hill Road 3000 Sand Hill Road
Building 3, Suite 255 Building 3, Suite 255
Menlo Park, CA 94025 Menlo Park, CA 94025
By: InterWest Management
Partners V, L.P.,
its general partner
By: /s/ Robert Momsen By: /s/ Robert Momsen
------------------------------ ---------------------------
General Partner General Partner
6.
<PAGE> 1
EXHIBIT 10.7
THIS AGREEMENT IS MADE THE 20th day of August 1996
BETWEEN
LONZA BIOLOGICS PLC (formerly known as Celltech Biologics plc) of 228 Bath Road,
Slough, Berkshire SL 1 4DY, England (hereinafter referred to as "Lonza"),
AND
COULTER PHARMACEUTICAL, INC. of 550, California Avenue, Suite 200, Palo Alto, CA
94306-1440, USA (hereinafter referred to as the "Customer").
WHEREAS
A. Customer is the proprietor of a murine hybridoma cell line known as
Bl, which produces IgG2a Anti-CD20 murine monoclonal antibody; and
B. Lonza has expertise in the development of manufacturing processes using
such cell lines; and
C. Customer and Lonza have entered into an agreement dated 28 April 1995
which, as subsequently amended, is herein referred to as the
"Evaluation Agreement" to carry out a programme of work to evaluate the
growth and productivity of cell line B1 in Lonza's proprietary
hybridoma media and develop a cell culture process for the cell line ;
and
D. Under the Evaluation Agreement, a sub-clone of cell line B1 known as
B1R1 was developed, and the parties agreed that this sub-clone be used
for completion of services under the Evaluation Agreement; and
E. Customer now requires Lonza to perform further Services relating to the
Cell Line as described in this Agreement.
NOW THEREFORE it is hereby agreed by and between the parties as follows:
1. In this agreement, its recitals and Schedules hereto, words and phrases
defined in the Standard Terms for Contract Services set out in Schedule
5 hereto shall have the meanings set out therein.
2. Subject to the Standard Terms for Contract Services set out in Schedule
5 hereto and the Special Terms set out in Schedule 4 Lonza agrees to
carry out the Services and the Customer agrees to pay the Price as
provided in Schedule 3 together with any additional costs and expenses
that fall due hereunder.
1.
<PAGE> 2
3. 3.1 Any notice or other communication to be given under this Agreement
shall be delivered personally or sent by first class pre-paid post or
facsimile transmission addressed as follows:
If to the Customer to Coulter Pharmaceutical, Inc.
550 California Avenue
Suite 200
Palo Alto
CA 94306-1440
USA
For the attention of: Vice President, R&D
Facsimile: 415 842 7303
If to Lonza to Lonza Biologics plc
228 Bath Road
Slough
Berkshire SLI 4DY
England
For the attention of: Chief Executive
Facsimile: 01753 777001
or to such other destination as either party hereto may
hereafter notify to the other in accordance with the
provisions of this clause.
3.2 All such notices or other communications shall be deemed to have been
served as follows:
3.2.1 if delivered personally, at the time of such delivery;
3.2.2 if sent by first class pre-paid post, five (5) business days
(Saturdays, Sundays and Bank or other public holidays
excluded) after being placed in the post;
3.2.3 if sent by first class pre-paid post, five (5) business days
(Saturdays, Sundays and Bank or other public holidays
excluded) after being placed in the post;
3.2.4 if sent by facsimile upon receipt of the transmission
confirmation slip showing completion of the transmission
3.2.5 if by express mail or by courier within two (2) days after
being despatched.
2.
<PAGE> 3
AS WITNESS the hands of the duly authorised representatives of the parties
hereto the day and year first before written
Signed for and on behalf of /s/ SIMON STURGE
LONZA BIOLOGICS PLC ------------------------------
CEO
------------------------------
Title
Signed for and on behalf of /s/ MICHAEL F. BIGHAM
COULTER PHARMACEUTICAL, INC. ------------------------------
President and CEO
------------------------------
Title
3.
<PAGE> 4
SCHEDULE 1
For the purposes of this Agreement:
"Cell Line" shall mean the mouse hybridoma cell line referred to as B1R1
recloned by Lonza from cell line B1 supplied by Customer.
"Product" shall mean the IgG2a anti-CD20 murine monoclonal antibody produced by
the Cell Line.
A. SPECIFICATION FOR BULK PURIFIED PRODUCT
[*]
* Certain confidential information contained in this document, marked by
brackets, has been omitted and filed with the Securities and Exchange
Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
4.
<PAGE> 5
[*]
* Certain confidential information contained in this document, marked by
brackets, has been omitted and filed with the Securities and Exchange
Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
5.
<PAGE> 6
[*]
* Certain confidential information contained in this document, marked by
brackets, has been omitted and filed with the Securities and Exchange
Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
6.
<PAGE> 7
[*]
*Certain confidential information contained in this document, marked by
brackets, has been omitted and filed with the Securities and Exchange
Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
7.
<PAGE> 8
B. SPECIFICATION FOR A MASTER OR WORKING CELL BANK
[*]
* Certain confidential information contained in this document, marked by
brackets, has been omitted and filed with the Securities and Exchange
Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
8.
<PAGE> 9
SCHEDULE 2
SERVICES
1. Supply of Customer Materials and Customer Information.
2. Activities to be undertaken by Lonza:
Stage 1 Master, Working and Extended Cell Bank Creation and Analysis
Stage 2 Purification Development
Stage 3 Production of Product at Pilot Scale
Stage 4 GMP Documentation
Stage 5 Production of Product to GMP at 2000 litre scale
Stage 6 Manufacturing and Control Data Packages
1. SUPPLY OF CUSTOMER MATERIALS AND CUSTOMER INFORMATION
(a) The Customer has supplied to Lonza the following:
i At least [*] containing approximately
[*].
ii A reference standard of Product for Process
development studies and for bulk purified Product
release testing.
(b) The Customer shall supply to Lonza the following:
i Information and materials including standards and a
typical [*].
* Certain confidential information contained in this document, marked by
brackets, has been omitted and filed with the Securities and Exchange
Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
9.
<PAGE> 10
2. ACTIVITIES TO BE UNDERTAKEN BY LONZA.
1. Stage 1 Master, Working and Extended Cell Bank Creation and
Analysis.
1.1 Objective
To create and characterise a master cell bank (MCB), working
cell bank (WCB), and an extended cell bank (ECB) from cells
grown on from the WCB.
1.2 Activities
1.2.1 Send ampoules of the [*] to Testing Laboratories,
for [*] testing [*] testing and [*] analysis.
1.2.2 Prepare documentation, as approved by Lonza's QA
Department for the preparation of the cell banks.
Establish a [*] and [*] according to the principles
of GMP. The MCB will be derived from [*] and the WCB
will be derived from [*]. The cell banking system
was designed to meet the requirements of the [*] and
the [*].
1.2.3 Establish standard maintenance, storage and release
procedures for the MCB and WCB on and off the Lonza
site.
1.2.4 Characterise the MCB and WCB:
- Assess [*].
- For each cell bank, assess cell bank
viability from [*] distributed
throughout the bank.
- Assess [*]
*Certain confidential information contained in this document, marked by
brackets, has been omitted and filed with the Securities and Exchange
Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
10.
<PAGE> 11
- Practice following the guidelines of the UK
GLP Compliance Programme).
- Characterise the Product following [*].
- Evaluate growth of cells from the MCB and
WCB following Lonza's [*].
- Prepare an [*].
1.2.5 Issue report of activities to the Customer. The
report shall include:
- a description of preparation of the cell
banks;
- a history of the Cell Line at Lonza;
- [*];
- an assessment of stability of Product [*];
- details of cell growth characteristics for
the Cell Line i.e. [*];
- details of materials and methods used for
activities under sections 1.2.2, 1.2.3 and
1.2.4;
- a summary of Lonza's storage and control
procedures for the cell banks.
- Testing Laboratory Reports (as described in
section 1.2. 1).
1.3 Cell Bank Characterisation
Additional cell bank characterisation will be required in order to
support regulatory applications to conduct clinical trials, or market
Product. Lonza can arrange for such testing at Lonza's approved
contractors on the Customer's behalf on terms to be agreed or
alternatively deliver ampoules of the Cell Line to the Customer so that
the Customer can have the appropriate tests completed.
*Certain confidential information contained in this document, marked by
brackets, has been omitted and filed with the Securities and Exchange
Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
11.
<PAGE> 12
1.4 Timescale
Stage 1 may commence as soon as the [*]. Therefore, if requested by the
Customer, Stage 1 can commence before completion of the stability tests
undertaken in activity 1.2.5 of the Evaluation Agreement, on the
understanding that the Customer will pay for all work undertaken by
Lonza under Stage 1 in the event that the Cell Line is shown
subsequently to be unstable and the Customer decides to terminate the
Contract in accordance with Schedule 5 Clause 9.1.
Stage 1 shall be complete with the issue of the report of activities
and it is estimated that this [*] from the start of Stage 1. It is
estimated that the [*] will be established [*] from the start of
Stage 1, the [*] will be established [*] from the start of Stage 1 and
the ECB will be established [*] from the start of Stage 1.
2. Stage 2 Purification Development
2.1 Objective
To establish a purification process suitable for manufacture of the
Product.
2.2 Activities
2.2.1 Either carry out a [*], or use [*].
2.2.2 [*].
2.2.3 Determine the [*].
2.2.4 Evaluate [*].
2.2.5 [*].
*Certain confidential information contained in this document, marked by
brackets, has been omitted and filed with the Securities and Exchange
Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
12.
<PAGE> 13
2.2.6 For each [*].
2.2.7 [*].
2.2.8 [*].
2.2.9 Deliver a sample of Product produced at laboratory scale to
the Customer for evaluation.
2.2.10 Issue a report of activities to the Customer. This report will
include the following information:
- step yields for each chromatography and buffer exchange
operation;
- copies of SDS-PAGE, IEF and HPLC analysis results;
- materials and methods used for activities under Stage
2;
- an outline of the recommended manufacturing process
including an estimate of the expected yield for the
Product at the chosen production scale.
2.3 Timescale
Stage 2 shall be complete with the issue of the report of activities
(section 2.2.10) and it is estimated that this report will be issued
[*] from the start of Stage 2.
Stage 2 may commence as soon as the [*] is available (activity 1.2.4
of the Evaluation Agreement).
3. Stage 3 Production of Product at Pilot Scale.
3.1 Objective
3.1.1 To [*].
*Certain confidential information contained in this document, marked by
brackets, has been omitted and filed with the Securities and Exchange
Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
13.
<PAGE> 14
3.1.2 To evaluate the ability of the Process to produce Product
that meets key parameters of the draft Specification.
3.2 Activities
3.2.1 [*].
3.2.2 [*].
3.2.3 [*].
3.2.4 [*].
3.2.5 Test Product against the following aspects of the draft
Specification:
[*].
3.2.6 Review requirements (if any) for Process modifications in
order to meet Specification for GMP manufacture of subsequent
batches and advise Customer of any proposed modifications.
3.2.7 Deliver Product to Customer. Quantities available depend on
the amount of Product required for activities 3.2.3-3.2.5.
3.3 Timescale
Stage 3 shall be complete upon delivery of Product to the Customer. It
is estimated that Product will be delivered [*] from commencement of
Stage 3.
4. Stage 4 GMP Documentation.
4.1 Objective
To prepare GMP documentation for use in manufacture of Product for
Phase II/III clinical trials.
Note: The process cannot be considered as fully optimised.
4.2 Activities
*Certain confidential information contained in this document, marked by
brackets, has been omitted and filed with the Securities and Exchange
Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
14.
<PAGE> 15
4.2.1 Prepare documentation approved by Lonza's QA department. The
documentation shall cover:
- Cell Banking.
[*].
- Materials specifications (as required).
- Sampling protocols.
- Product specifications.
4.3 Timescale
It is estimated that Stage 4 will take [*] from the commencement of
work and shall be complete on notification by Lonza to the Customer
that the documentation has been approved by Lonza's QA department.
Stage 4 will commence on the establishment of the MCB (Stage 1, section
1.2.2).
5. Stage 5 Production of Product to GMP at 2000 litre scale.
5.1 Objectives
5.1.1 To manufacture [*] batches of Product at 2000 litre scale in
an airlift fermenter in accordance with the principles of Good
Manufacturing Practice (GMP) it being understood and
acknowledged that the Customer intends that these batches
serves as manufacturing consistency batches to support a
Biologics Licence Application and/or an EMEA marketing
authorisation request.
5.1.2 To evaluate further the ability of the Process to produce
Product meeting the draft Specification.
5.2 Activities
Subject to first agreeing with the Customer any Process modifications
advised by Lonza under Stage 3 activity 3.2.6, Lonza shall carry out
the following activities for each of the [*] batches:
* Certain confidential information contained in this document, marked by
brackets, has been omitted and filed with the Securities and Exchange
Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
15.
<PAGE> 16
5.2.1 After receiving adequate [*].
5.2.2 [*].
5.2.3 [*].
5.2.4 [*].
5.2.5 [*].
5.2.6 Test Product against the draft Specification.
5.2.7 Undertake Quality Assurance review of lot documentation.
5.2.8 Review requirements (if any) for Process modifications in
order to meet Specification for manufacture of subsequent
batches. Any such Process modifications are subject to
agreement prior to implementation.
5.2.9 Issue lot release for Product.
5.2.10 Deliver Product to Customer.
5.3 Timescale
Stage 5 shall be complete upon delivery of the [*] batch of Product
to the Customer. It is estimated that Product from the first batch will
be delivered six (6) months from commencement of Stage 5.
6. Stage 6 Manufacturing and Control Data Packages.
6.1 Objective
To prepare Manufacturing and Control Data Packages ("data packages")
covering the work carried out in the Evaluation Agreement and in Stages
1-5 of this Agreement for submission to the Customer as an amendment to
the appropriate sections of the Customer's existing IND and CTX
documents.
6.2 Activities
* Certain confidential information contained in this document, marked by
brackets, has been omitted and filed with the Securities and Exchange
Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
16.
<PAGE> 17
6.2.1 Prepare data packages, as required by the Customer, for the
purpose of submission as amendments to the appropriate
sections of the Customers' existing IND and CTX documents.
The data packages will cover the items detailed in Appendices
1 and of this schedule.
For Product Licence, specific DNA and virus clearance
studies, plus bulk Product stability studies will be required,
which are outside the scope of this Agreement.
6.2.2 Submit amendments to the Customer.
6.3 Timescale
Stage 6 shall be complete with the submission of amendments to the
Customer, and that activity will be complete [*] from the
commencement of Stage 6.
Note: Additional cell bank characterisation is in addition to Stage 1
of the Services and to be agreed between Lonza and Customer.
* Certain confidential information contained in this document, marked by
brackets, has been omitted and filed with the Securities and Exchange
Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
17.
<PAGE> 18
APPENDIX 1 TO SCHEDULE 2
Manufacturing and Control Data Packages
(USA - Type II Drug Master File)
INDEX
1. Production and Control Information
1.1 Facilities: refer to BB-MF 2500
1.2 Flow diagram of production process
1.3 Starting Materials
1.3.1 Raw Materials
1.3.2 Preparation and testing of cell banks
1.3.2.1 Construction and serum free adaptation of cell
lines
1.3.2.2 Preparation, derivation and description of cell
banks
1.3.2.3 Cell bank testing
1.4 Manufacture of bulk product
[*]
2. Product Testing and Final Release
2.1 In process testing procedures
2.2 Final product testing and release
2.2.1 Final product specification
2.2.2 Test methods
2.2.3 Lot release
2.2.4 Photographs: IEF, SDS-PAGE and HPLC scans
2.3 Environmental monitoring
* Certain confidential information contained in this document, marked by
brackets, has been omitted and filed with the Securities and Exchange
Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
18.
<PAGE> 19
3. Process Development
3.1 Development of cell lines
3.2 Development of fermentation process
3.3 Development of purification process
4. Process Validation
4.1 DNA and virus clearance
4.2 Removal of protein contaminants
5. Stability and Expiration (if available)
6. Attachments
6.1 Construction of the cell line and serum free adaptation
6.2 Preparation and analysis of cell banks
6.3 DNA and virus clearance reports
6.4 Lot analysis
6.5 Environmental impact policy
6.6 Index to DMF Type 1 BB-MF 2500
6.7 Letter of authorisation to reference BB-MF 2500
19.
<PAGE> 20
APPENDIX 2 TO SCHEDULE 2
Manufacturing and Control Data Packages
(Europe - CTX APPLICATION)
Part II C. Control of Starting Materials
1. Active Ingredient
1.1 Specifications and routine tests
1.1.1 Specifications
1.1.2 Routine test methods
1.2 Nomenclature
1.3 Development Genetics
1.3.1 Fusion and cloning of the cell line.
1.3.2 Stability of cell line
1.4 Cell Bank System
1.4.1 Preparation and description of the cell banks
[*]
1.5 Manufacture
1.5.1 Manufacture site
1.5.2 Flow diagram of process
1.5.3 Process description
1.5.4 Quality Control during manufacture
1.5.4.1 Control of starting materials
1.5.4.2 In process controls
* Certain confidential information contained in this document, marked by
brackets, has been omitted and filed with the Securities and Exchange
Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
20.
<PAGE> 21
1.5.4.3 Environmental monitoring
1.6 Description and proof of structure
1.7 Analytical Development
1.7.1 Validation of relevant methods using during development
1.7.2 Validation and comments on the choice of routine tests
1.7.3 Characterisation of the reference material
1.8 Process validation
1.8.1 Viral clearance data
1.8.2 DNA clearance data
1.9 Impurities
1.9.1 Recognised potential impurities arising from the cell line
or during the manufacturing process
1.9.2 Analytical methods used to detect impurities and their
limits of detection
1.9.3 Consistency of the impurity profile
1.10 Batch Analysis
(Stability in part II-F)
21.
<PAGE> 22
SCHEDULE 3
PRICE AND TERMS OF PAYMENT
1. Price
In consideration for Lonza carrying out the Services as detailed in
Schedule 2 the Customer shall pay Lonza as follows:
Stage Price ((pound) Sterling)
----------------------------------------------------------------------
Stage 1 Master, Working and Extended Cell [*]
Bank Creation and Analysis
External Testing of Pre-Seed Stock [*]
Stage 2 Purification Process Development [*]
Stage 3 Production of Product at Pilot Scale [*]
Stage 4 GMP Documentation [*]
Stage 5 Production of Product to GMP at [*]
2000 litre scale x [*] batches
Stage 6 Manufacturing and Control Data
Packages [*]
---------
TOTAL PRICE [*]
Note:
1 These prices do not include testing of the cell banks. Lonza can
arrange testing of cell banks at an additional price comprising the
cost charged to Lonza by the Testing Laboratories plus a [*]
administration charge.
2 The price for Stage 5 does not include specific virus or DNA clearance
studies on the GMP batch. A list of the recommended further work
required for BLA submission is available from Lonza.
3 (a) Without prejudice to Clause 4 of Schedule 5 hereto, and
subject to the
* Certain confidential information contained in this document, marked by
brackets, has been omitted and filed with the Securities and Exchange
Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
22.
<PAGE> 23
provisions set out below Lonza shall be entitled to receive an
additional payment for Services performed pursuant to Stage 3
of the Services as follows:
i. the event that Lonza notifies the Customer that
Product deliverable pursuant to Stage 3.2.7 of the
Services is ready for delivery to Customer on or
before 21 March 1996, the Price for Stage 3 of the
Services shall be increased by [*], which additional
sum shall be due to Lonza concurrently with the
payment due pursuant to Clause 2.1.3 of this
Schedule 3.
ii. In the event that Lonza notifies the Customer that
Product deliverable pursuant to Stage 3.2.7 of the
Services is ready for delivery to Customer after 21
March 1996 but before 19 April 1996, the Price for
Stage 3 of the Services shall be increased by [*],
which additional sum shall be due to Lonza
concurrently with the payment due pursuant to
Clause 2.1.3 of this Schedule 3.
(b) Without prejudice to Clause 4 of Schedule 5 hereto and subject
to the provisions set out below Customer shall be entitled to
a credit against the sums due to Lonza for performance of
Stage 3 of the Services as follows:
i. In the event that Lonza notifies the Customer that
Product deliverable pursuant to Stage 3.2.7 of the
Services is ready for delivery to Customer after 13
June 1996 but before 13 July 1996, the credit against
the Price of Stage 3 of the Services to which
Customer shall be entitled shall be [*].
ii. In the event that Lonza notifies the Customer that
Product deliverable pursuant to Stage 3.2.7 of the
Services is ready for delivery to Customer on or
after 13 July 1996, the credit against the Price of
Stage 3 of the Services to which Customer shall be
entitled shall be [*].
4. (a) Without prejudice to Clause 4 of Schedule 5 hereto, and
subject to the provisions set out below Lonza shall be
entitled to receive an additional payment for Services
performed pursuant to Stage 5 of the Services as follows:
i. In the event that Lonza notifies the Customer that
Product deliverable from the first batch to be
delivered pursuant to Stage 5.2.9 of the Services is
ready for delivery to Customer on or before 11 July
1996, the Price for Stage 5 of the Services for the
first batch
* Certain confidential information contained in this document, marked by
brackets, has been omitted and filed with the Securities and Exchange
Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
23.
<PAGE> 24
to be delivered shall be increased by [*], which
additional sum shall be due to Lonza concurrently
with the payment due pursuant to Clause 2.1.5(a)
of this Schedule 3.
ii. In the event that Lonza notifies the Customer that
Product deliverable from the first batch to be
delivered pursuant to Stage 5.2.9 of the Services for
the first batch to be delivered is ready for delivery
to Customer after 11 July 1996 but before 9 August
1996, the Price for Stage 5 of the Services shall be
increased by [*], which additional sum shall be due
to Lonza concurrently with the payment due pursuant
to Clause 2.1.5(a) of this Schedule 3.
(b) Without prejudice to Clause 4 of Schedule 15 hereto and
subject to the provisions set out below Customer shall be
entitled to a credit against the sums due to Lonza for
performance of Stage 5 of the Services as follows:
i. In the event that Lonza notifies the Customer that
Product deliverable from the first batch to be
delivered pursuant to Stage 5.2.9 of the Services is
ready for delivery to Customer after 3 October 1996
but before 1st November 1996, the credit against the
Price of Stage 5 of the Services to which Customer
shall be entitled for the first batch to be delivered
shall be [*].
ii. In the event that Lonza notifies the Customer that
Product deliverable from the first batch to be
delivered pursuant to Stage 5.2.9 of the Services is
ready for delivery to Customer on or after 1st
November 1996, the credit against the Price of Stage
5 of the Services to which Customer shall be entitled
for the first batch to be delivered shall be [*].
2. Payment
2.1 Payment by the Customer of the Price for each stage shall be
made against Lonza's invoices to be dated as of the first date
Lonza is entitled to payment in each case, as follows:
2.1.1 For Stage 1
[*] upon commencement of Stage 1.
[*] upon completion of Stage 1.
2.1.2 For Stage 2
* Certain confidential information contained in this document, marked by
brackets, has been omitted and filed with the Securities and Exchange
Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
24.
<PAGE> 25
[*] upon commencement of Stage 2.
[*] upon completion of Stage 2.
2.1.3 For Stage 3
[*] upon delivery of Product.
2.1.4 For Stage 4
[*] on completion of Stage 4.
2.1.5 For Stage 5
(a) [*] on lot release of the first batch of
Product from 2000 litre fermenter;
(b) [*] on lot release of the [*] batch of
Product from 2000 litre fermenter,
(c) [*] on lot release of the [*] batch of
Product from 2000 litre fermenter.
2.1.6 For Stage 6
[*] on issue of Manufacturing Data Packages.
2.2 Payment or credit of any amounts due pursuant to Notes 3 and 4
of Clause 1 of this Schedule 3 shall be made as therein
provided.
2.3 For any payment due and made by the Customer before 31 March
1997, the Customer may, at its option, make payment to Lonza
in US Dollars, such amount to be calculated at a currency
exchange rate of US$1.55: 1.00 pounds sterling. All payments
made after 31 March 1997 shall be made in Pounds Sterling
unless otherwise agreed.
For the avoidance of doubt, where any additional payment or
credit is due pursuant to Notes 3 and 4 of Clause 1 of this
Schedule 3 at the same time as any payment is made pursuant to
Clause 2.1 of this Schedule 3, the said additional payment or
credit shall be accounted for in the same currency as for the
payment made pursuant to the said Clause 2.1.
* Certain confidential information contained in this document, marked by
brackets, has been omitted and filed with the Securities and Exchange
Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
25.
<PAGE> 26
SCHEDULE 4
SPECIAL TERMS
1. Definitions of GMP and GLP
1.1 Definition of GMP
For the purposes of this document, Good Manufacturing Practice
(GMP) will mean Good Manufacturing Practices and General
Biological Products Standards as promulgated under the US
Federal Food and Drug and Cosmetic Act at 21CFR, (chapters
210, 211, 600 and 610) and the Commission of the European
Communities Rules Governing Medicinal Products in the European
Community (Volume IV : Good Manufacturing Practice for
Medicinal Products, 1992) as the same may be amended or
re-enacted from time to time. Lonza's operational quality
standards are defined in internal GMP policy documents and are
based on Lonza's interpretation of the GMP legislation for
bulk clinical grade Biologicals. Additional product-specific
development, documentation and validation work may be required
to support regulatory applications to conduct clinical trials,
or market a product.
1.2 Definition of GLP
For the purposes of this document Good Laboratory Practice
(GLP) will mean practices as recommended in the guidelines of
the UK Compliance Programme.
2. Cell-Bank Access
Always provided Lonza's ability to perform the Services is not
prejudiced thereby, the Customer's authorised representative may have
access at times to be reasonably agreed to the banks containing the
Cell Line at Lonza's premises and may remove all or part of said cell
banks, as required.
3. Technology Transfer
At the Customer's request, Lonza agrees to enter into good faith
negotiations for the grant of a non-exclusive licence to the Customer
on commercially reasonable terms to manufacture Product under certain
Patent Rights and Lonza Know-How. Such grant shall be subject to
agreement on applicable terms and conditions and shall apply only to
Patent Rights and Lonza Know-How used by Lonza in the
26.
<PAGE> 27
operation of the Process for production of Product to GMP (Schedule 2
Stage 5) and only to the extent Lonza is able to grant a licence
thereto at the time of signature of such agreement.
For the avoidance of doubt the Patent Rights and Lonza Know-How which
may be the subject of any such licence grant shall be limited to the
Patent Rights and Lonza Know-How used by Lonza in the operation of the
Process for production of Product to GMP (Schedule 2 Stage 5) and
relating to [*].
* Certain confidential information contained in this document, marked by
brackets, has been omitted and filed with the Securities and Exchange
Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
27.
<PAGE> 28
SCHEDULE 5
STANDARD TERMS FOR CONTRACT SERVICES
COULTER PHARMACEUTICAL, INC.
1. Interpretation
1.1 In these Standard Terms, unless the context requires
otherwise:
1.1.1 "Affiliate" means any Company, partnership or other
entity which directly or indirectly controls, is
controlled by or is under common control with the
relevant party to this Agreement. "Control" means the
ownership of more than 50% of the issued share
capital or the legal power to direct or cause the
direction of the general management and policies of
the party in question.
1.1.2 "Agreement" means this agreement as herein dated
between Lonza and a Customer incorporating these
Standard Terms.
1.1.3 "Cell Line" has the meaning set forth in Schedule 1.
1.1.4 "Customer" means Coulter Pharmaceutical, Inc. of 550,
California Avenue, Suite 200, Palo Alto, CA
94306-1440, USA.
1.1.5 "Customer Information" means all technical and other
information, relating to the Cell Line, the Process
and the Product disclosed by the Customer to Lonza,
and not known to Lonza prior to disclosure by the
Customer.
1.1.6 "Customer Tests" means the tests to be carried out on
the Product following receipt of the Product by the
Customer, particulars of which are set out in
Schedule 1.
1.1.7 "Lonza Know-How" means all technical and other
information relating to the Process known to Lonza
from time to time other than Customer Information.
1.1.8 "Patent Rights" means all patents and patent
applications of any kind throughout the world
relating to the Process which from time to time Lonza
is the owner of or (except for any patents and patent
applications owned by the Customer or licensed to the
Customer by third party and licensed to Lonza
hereunder) is entitled to use.
28.
<PAGE> 29
1.1.9 "Price" means the price specified in Schedule 3 for
the Services.
1.1.10 "Process" means the process developed or utilized by
Lonza under this Agreement for the production of the
Product from the Cell Line, including any
improvements thereto from time to time.
1.1.11 "Product" has the meaning set forth in Schedule 1.
1.1.12 "Services" means all or any part of the services the
subject of the Agreement (including, without
limitation, cell culture evaluation, purification
evaluation, master, working and extended cell bank
creation, and sample and bulk production),
particulars of which are set out in Schedule 2.
1.1.13 "Special Term" means any term additional or
supplemental to these Standard Terms from time to
time agreed in writing between Lonza and the
Customer. Particulars of any Special Terms at the
date of the Agreement are set out in Schedule 4.
1.1.14 "Specification" means the specification for Product,
particulars of which are set out in Schedule 1.
1.1.15 "Terms of Payment" means the terms of payment
specified in Schedule 3.
1.1.16 "Testing Laboratories" means any third party
instructed by Lonza to carry out tests on the
Cell Line or the Product.
1.2 Unless the context requires otherwise, words and phrases
defined in any other part of the Agreement shall bear the same
meanings in these Standard Terms, references to the singular
number include the plural and vice versa, references to
Schedules are references to schedules to the Agreement, and
references to Clauses are references to clauses of these
Standard Terms.
1.3 In the event of a conflict between any of the terms of
Schedules 1-4 and these Standard Terms, the terms of Schedules
1-4 shall prevail.
2. Applicability of Standard Terms
No variation of or addition to these Standard Terms and the Special
Terms or any other term of an Agreement shall be effective unless in
writing and signed for and on behalf of Lonza and the Customer.
29.
<PAGE> 30
3. Supply of the Cell Line
3.1 Prior to the date of the Agreement the Customer supplied to
Lonza the Customer Information, together with cell line B1 and
full details of any hazards known to Customer and relating to
cell line B1, its storage and use. Property in the cell Line
B1 and the Cell Line supplied to Lonza shall remain vested in
the Customer.
3.2 The Customer hereby grants Lonza the non-exclusive right to
use the Cell Line, the Product and the Customer Information
for the purpose of the Agreement. Lonza hereby undertakes not
to use the Cell Line, the Product or the Customer Information
(or any part thereof) for any other purpose.
3.3 Lonza shall :
3.3.1 at all times keep the Cell Line secure and safe from
loss and damage in such manner as Lonza shall in its
sole discretion determine:
3.3.2 not part with possession of the Cell Line or the
Product, save for the purpose of tests at the Testing
Laboratories; and
3.3.3 procure that all Testing Laboratories are subject to
obligations of confidence substantially in the form
of those obligations of confidence imposed on Lonza
under these Standard Terms.
3.4 Lonza shall not be liable for any loss, damages, costs or
expenses of any nature, whether direct or consequential,
occasioned by the carrying out (in whole or in part) of tests
or the failure to carry out tests by Testing Laboratories (A
"Testing Laboratory Breach"). Lonza agrees to use commercially
reasonable efforts to enforce any rights Lonza may have
against a Testing Laboratory in the event that either Lonza or
the Customer supers any loss, damage, costs or expenses of any
nature occasioned by a Testing Laboratory Breach. In the event
Lonza recovers damages against a Testing Laboratory Lonza
shall pay to the Customer after deduction of any out-of-pocket
legal expenses such proportion of the amount of damages as the
parties shall agree and such agreement shall take account of
the loss suffered by both Lonza and the Customer.
3.5 The Customer warrants to Lonza that:
3.5.1 the Customer is and shall at all times throughout the
duration of the Agreement remain entitled to supply
the Cell Line and Customer Information to Lonza; and
30.
<PAGE> 31
3.5.2 the use by Lonza of the Cell Line and the Customer
Information in accordance with this Agreement will
not infringe any rights (including, without
limitation, any intellectual or industrial property
rights) vested in any third party.
Lonza warrants that as of the date of this Agreement Lonza's
legal or corporate departments have not received notice of nor
are aware of any claim or demand and Lonza is not party to any
court proceedings in which a third party is claiming
infringement of its intellectual property rights by Lonza's
use of the Process and Lonza agrees to notify the Customer at
any time during the term of this Agreement if it receives any
such notice or demand and of the steps it intends to take as a
result of such notice or demand.
3.6 The Customer undertakes to indemnify and to maintain Lonza
promptly indemnified against any loss, damages, costs and
expenses of any nature (including court costs and legal fees
on a full indemnity basis), whether direct or consequential,
and whether or not foreseeable or in the contemplation of
Lonza or the Customer, that Lonza may suffer arising out of or
incidental to any breach of the warranties given by the
Customer under Clause 3.5 above.
3.7 The obligations of the Customer and Lonza under Clauses 3.3,
and 3.6 shall survive the termination for whatever reason of
the Agreement.
4. Provision of the Services
4.1 Lonza shall carry out the Services as provided in Schedule 2.
4.2 The timescales set down for the performance of the Services
(including without limitation the dates for production and
delivery of Product) and the quantities of Product for
delivery set out in Schedule 2 are estimated only.
4.3 The Customer shall not be entitled to cancel any unfulfilled
part of the Services or to refuses to accept the Services on
grounds of late performance, late delivery or failure to
produce the estimated quantities of Product for delivery.
Lonza shall not be liable for any loss, damage, costs or
expenses of any nature, whether direct or consequential,
occasioned by:
4.3.1 any delay in performance or delivery howsoever
caused; or
4.3.2 any failure to produce the estimated quantities of
Product for delivery.
31.
<PAGE> 32
4.4 Lonza shall comply with all statutory, regulatory and similar
legislative requirements from time to time applicable to the
Services under the laws of European Union, United Kingdom and
USA. If the Customer requests Lonza to comply with any other
statutory, regulatory or similar legislative requirements (the
Foreign Requirements") Lonza shall use reasonable commercial
endeavours to do so provided that:
4.4.1 the Customer shall be responsible for informing Lonza
in writing of the precise Foreign Requirements which
the Customer is requesting Lonza to observe;
4.4.2 such Foreign Requirements do not conflict with any
mandatory requirements under the laws of England;
4.4.3 Lonza shall be under no obligation to ensure that
such written information complies with the applicable
Foreign Requirements; and
4.4.4 all costs and expenses incurred by Lonza in complying
with such Foreign Requirements shall be charged to
the Customer in addition to the Price.
4.5 Delivery of Product shall be ex-works. Risk in and title to
Product shall pass on delivery. Transportation of Product,
whether or not under any arrangements made by Lonza on behalf
of the Customer, shall be made at the sole risk and expense of
the Customer.
4.6 Unless otherwise agreed Lonza shall package and label Product
for delivery ex-works. It shall be the responsibility of the
Customer to inform Lonza in writing in advance of any special
packaging and labelling requirements for Product. All
reasonable additional costs and expenses of whatever nature
incurred by Lonza in complying with such special requirements
shall be charged to the Customer in addition to the Price.
5. Transportation of Product and Customer Tests
5.1 If requested by the Customer, Lonza will (acting as agent of
the Customer for such purpose) arrange the transportation of
Product from Lonza's premises to the destination indicated by
the Customer together with insurance cover for Product in
transit at its invoiced value. All additional costs and
expenses of whatever nature incurred by Lonza in arranging
such transportation and insurance shall be charged to the
Customer in addition to the Price.
32.
<PAGE> 33
5.2 Where Lonza has made arrangements for the transportation of
Product, the Customer or its designee shall diligently examine
the Product as soon as practicable after receipt. Notice of
all claims (time being of the essence) arising out of:
5.2.1 damage to or total or partial loss of Product in
transit shall be given in writing to Lonza and the
carrier within three (3) days of delivery; or
5.2.2 non-delivery shall be given in writing to Lonza
within ten (10) days after the date of Lonza's
despatch notice.
5.3 The Customer shall make damaged Product available for
inspection and shall comply with the requirements of any
insurance policy covering the Product notified by Lonza to the
Customer. Lonza shall offer the Customer all reasonable
assistance (at the cost and expense of the Customer) in
pursuing any claims arising out of the transportation of
Product. At any time, if requested by the Customer, Lonza
shall supply the Customer with Product samples retained by
Lonza prior to shipment of Product for use by the Customer in
confirming whether Product meets the Specification (always
provided that such supply of Product samples does not
prejudice Lonza's ability to meet GMP or regulatory
requirements regarding retention of Product samples).
5.4 Immediately upon receipt of Product or Product samples, the
Customer or its appointed agent shall carry out the Customer
Tests. If the Customer Tests show that the Product fails to
meet Specification, the Customer shall give Lonza written
notice thereof within sixty (60) days from the date of
delivery of the Product ex-works, and shall return such
Product to Lonza's premises for further testing. In the
absence of such written notice Product shall be deemed to have
been accepted by the Customer as meeting Specification. If
Lonza is satisfied that Product returned to Lonza fails to
meet Specification and that such failure is not due (in whole
or in pan) to acts, or omissions of the Customer or any third
party after delivery, of such Product ex-works, Lonza shall in
its sole discretion refund that part of the Price that relates
to the production of such Product or replace such Product at
its own cost and expense. Notwithstanding the foregoing, if
the Customer determines following acceptance of the Product
from Lonza that the Product has been adulterated within the
meaning of the United States Federal Food, Drug and Cosmetic
Act by Lonza, then, subject to the Customer providing Lonza
evidence of its determination and samples of adulterated
Product and subject to Lonza's right to dispute such
33.
<PAGE> 34
determination in accordance with Clause 5.5, Lonza shall in
its sole discretion refund that part of the Price that relates
to the production of such Product or replace such Product at
its own cost and expense.
5.5 If there is any dispute concerning whether Product returned to
Lonza fails to meet Specification or whether such failure is
due (in whole or in part) to acts or omissions of the
Customer or any third party after delivery of such Product
ex-works, such dispute shall be referred for decision to an
independent expert (acting as an expert and not as an
arbitrator) to be appointed by agreement between Lonza and the
Customer or, in the absence of agreement by the President for
the time being of the Association of the British
Pharmaceutical Industry. The costs of such independent expert
shall be borne equally between Lonza and the Customer. The
decision of such independent expert shall be in writing and,
save for manifest error on the face of the decision, shall be
binding on both Lonza and the Customer.
5.6 The provisions of Clauses 5.4 and 5.5 shall be the sole remedy
available to the Customer in respect of Product that fails to
meet Specification or that is adulterated.
6. Price and Terms of Payment
6.1 The Customer shall pay the Price in accordance with the Terms
of Payment.
6.2 Unless otherwise indicated in writing by Lonza, all prices and
charges are exclusive of value added tax or of any other
applicable taxes, levies, imports, duties and fees of whatever
nature imposed by or under the authority of any government or
public authority, which shall be paid by the Customer. All
invoices are strictly net and payment must be made within
thirty (30) days of date of invoice. Payment shall be made
without deduction, deferment, set-off, lien or counterclaim of
any nature.
6.3 Time for payment shall be of the essence. In default of
payment on due date:
6.3.1 interest shall accrue on any amount overdue at the
rate of 2% above the Base Rate from time to time of
Midland Bank plc, interest to accrue on a day to day
basis both before and after judgement; and
6.3.2 Lonza shall, at its sole discretion, and without
prejudice to any other of its accrued rights be
entitled to suspend the provision of the Services or
if the default of payment continues for One hundred
and fifty (150) days after the date of invoice to
treat the Agreement as
34.
<PAGE> 35
repudiated by notice in writing to the Customer
exercised at any time thereafter provided that such
right to suspend Services or treat the Agreement as
repudiated shall not apply in circumstances where the
Customer has withheld payment for amounts disputed in
good faith (it being agreed that this proviso shall
apply to disputed amounts and not to any other
amounts due for payment forming part of the same or
another invoice).
7. Warranty and Limitation of Liability
7.1 Lonza warrants that:
7.1.1 the Services shall be performed in accordance with
Clause 4.1; and
7.1.2 the Product shall meet Specification, save with
respect to the first batch of Product delivered
pursuant to Schedule 5 Stage 5 where Lonza shall be
obliged only to use its reasonable endeavours to
produce Product that meets Specification.
7.2 Clause 7.1 is in lieu of all conditions, warranties and
statements in respect of the Services and/or the Product
whether expressed or implied by statute, custom of the trade
or otherwise (including but without limitation any such
condition, warranty or statement relating to the description
or quality of the Product, its fitness for a particular
purpose or use under any conditions whether or not known to
Lonza) and any such condition, warranty or statement is hereby
excluded.
7.3 Without prejudice to the terms of Clauses 3.4, 5.6, 7.1, 7.2
and 7.4 and, subject to Clause 7.6, the liability of Lonza for
any loss or damage suffered by the Customer as a direct result
of any breach of the Agreement or of any other liability of
Lonza (including misrepresentation and negligence) in respect
of the Services (including without limitation the production
and/or supply of the Product) shall be limited to the payment
by Lonza of damages which shall not exceed [*]. The
limitation of liability set forth in the preceding sentence
shall not apply to any breach by Lonza of Clauses 3.2, 8.1,
8.2 and 8.3 of this Schedule 5.
7.4 Subject to Clause 7.6, Lonza shall not be liable for the
following loss or damage howsoever caused (even if foreseeable
or in the contemplation of Lonza or the Customer):
7.4.1 loss of profits, business or revenue whether suffered
by the Customer or any other person; or
* Certain confidential information contained in this document, marked by
brackets, has been omitted and filed with the Securities and Exchange
Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
35.
<PAGE> 36
7.4.2 indirect or consequential lost whether suffered by
the Customer or any other person.
7.5 The Customer shall indemnify and maintain Lonza promptly
indemnified against all claims, actions, costs, expenses
(including court costs and legal fees on a full indemnity
basis) or other liabilities whatsoever in respect of:
7.5.1 any liability under the Consumer Protection Act 1987,
unless, such liability is caused by the negligent act
or omission of Lonza in the production and/or supply
of the Product; and
7.5.2 any product liability (other than that referred to in
Clause 7.5.1) in respect of Product, unless such
liability is caused by the negligent act or omission
of Lonza in the production and/or supply of Product;
and
7.5.3 any negligent or wilful act or omission of the
Customer in relation to the use, processing, storage
or sale of the Product
7.6 Nothing contained in these Standard Terms shall purport to
exclude or restrict any liability for death or personal injury
resulting directly from negligence by Lonza in carrying out
the Services or any liability for breach of the implied
undertakings of Lonza as to title.
7.7 The obligations of the Customer and Lonza under this Clause 7
shall survive the termination for whatever reason of the
Agreement.
8. Customer Information, Lonza Know-How and Patent Rights
8.1 The Customer acknowledges that Lonza Know-How and Lonza
acknowledges that Customer Information with which it is
supplied by the other pursuant to the Agreement is supplied,
subject to Clause 8.4, in circumstances imparting an
obligation of confidence and each agrees to keep such Lonza
Know-How or such Customer Information secret and confidential
and to respect the other's proprietary rights therein and not
at any time for any reason whatsoever to disclose or permit
such Lonza Know-How or such Customer Information to be
disclosed to any third party.
8.2 The Customer and Lonza shall each procure that all their
respective employees, consultants and contractors having
access to confidential Lonza Know-How or confidential Customer
Information shall be subject to the same obligations of
confidence as the principals pursuant to Clause 8.1 and shall
enter into secrecy agreements in support of such obligations.
Insofar as this is not reasonably practicable, the principals
shall take all reasonable
36.
<PAGE> 37
steps to ensure that any such employees, consultants and
contractors are made aware of such obligations.
8.3 Lonza and the Customer each undertake not to disclose or
permit to be disclosed to any third party, or otherwise make
use of or permit to be made use of, any trade secrets or
confidential information relating to the technology, business
affairs or finances of the other, any subsidiary, holding
company or subsidiary or any such holding company of the
other, or of any suppliers, agents distributors, licensees or
other customers of the other which comes into its possession
under this Agreement.
8.4 The obligations of confidence referred to in this Clause 8
shall not extend to any information which :
8.4.1 is or becomes generally available to the public
otherwise than by reason of a breach by the recipient
party of the provisions of this Clause 8;
8.4.2 is known to the recipient party and is at its free
disposal prior to its receipt from the other,
8.4.3 is subsequently disclosed to the recipient party, as
a matter of right without being made subject to an
obligation of confidence by a third party;
8.4.4 Lonza or the Customer may be required to disclose
under any statutory, regulatory, or similar
legislative requirement, subject to the imposition of
obligations of secrecy whether possible in that
relation provided that the party required to make the
disclosure shall first notify the other party who
shall be allowed to take what action he considers
necessary with respect to the proposed disclosure; or
8.4.5 is developed by an employee of the recipient party,
independently and without access to or use or
knowledge of the information supplied by the
disclosing party.
8.5 The Customer acknowledges that:
8.5.1 Lonza Know-How and the Patent Rights are vested in
Lonza or Lonza is otherwise entitled thereto: and
8.5.2 the Customer shall not at any time have any right,
title, licence or interest in or to Lonza Know-How,
the Patent Rights or any other
37.
<PAGE> 38
intellectual property rights relating to the Process
which are vested in Lonza or to which Lonza is
otherwise entitled.
8.6 Lonza acknowledges that, subject to Clause 4.5 above and save
as expressly stated herein. Lonza shall not by virtue of this
Agreement be granted any right, title or interest in the Cell
Line or the Product expressed by the Cell Line.
8.7 The Customer shall not represent that it has any right, title,
or interest in or to Lonza Know-How, the Patent Rights or any
other intellectual property rights vested in Lonza or its
Affiliates and shall not seek or apply to register in its own
name any such rights. The Customer shall do all such acts and
things and sign all such deeds and documents as Lonza may in
its sole discretion reasonably require in respect of any
registration being made by Lonza or its Affiliates in
connection with such rights.
8.8 The obligations of Lonza and the Customer under this Clause 8
shall survive the termination for whatever reason of the
Agreement.
9. Termination
9.1 If it becomes apparent to either Lonza or the Customer at any
stage in the provision of the Services that it will not be
possible to complete the Services for scientific or technical
reasons, a sixty (60) day period shall be allowed for
discussion to resolve such problems. If such problems are not
resolved within such period, Lonza and the Customer shall each
have the right to terminate the Agreement forthwith by notice
in writing.
9.2 Lonza and the Customer may each terminate the Agreement
forthwith by notice in writing to the other upon the
occurrence of any of the following events:
9.2.1 if the other commits a material breach of the
Agreement which (in the case of a breach capable of
remedy) is not remedied within the time permitted
within Clause 6.3.2 for default of payment by the
Customer or otherwise within thirty (30) days of the
receipt by the other of notice identifying the breach
and requiring its remedy; or
9.2.2 if the other ceases for any reason to carry on
business or compounds with or convenes a meeting of
its creditors or has a receiver or manager appointed
in respect of all or any part of its assets or is the
subject of an application for an administration order
or of any proposal for a voluntary arrangement or
enters into liquidation
38.
<PAGE> 39
(whether compulsorily or voluntarily) or undergoes
any analogous act or proceedings under foreign law.
9.3 Notwithstanding the provisions of Clause 4.3 and Clause 10 of
this Schedule 5, if the Services listed in Stages 1-6 of
Schedule 2 as of the date of this Agreement have not been
completed by [*] the Customer may terminate the
Agreement at any time thereafter by written notice to Lonza.
9.4 In the event of termination of the Agreement by either party
under Clause 9 or by the Customer under Clause 9.3 and
provided that Lonza is not also in material breach of the
Agreement at the same time whereby the Customer exercises his
right to termination the Agreement pursuant to Clause 9.2.1
then:
(a) Customer shall pay to Lonza all amounts outstanding
and remaining to be paid for every stage of the
Services completed prior to termination and, for any
stage of the Services which remains incomplete upon
termination, a termination sum calculated by
reference to all costs incurred by Lonza (including
a reasonable profit) in carrying out activities for
any such stage of the Services and all expenses
reasonably incurred by Lonza in giving, effect to
such termination, including the costs of terminating
any commitments made pursuant to this Agreement (such
termination sum not to exceed the Price for each such
stage of the Services), and
(b) Lonza shall deliver to the Customer any Product made
in accordance with the terms of this Agreement and a
report of all activities completed prior to
termination, and
(c) Lonza shall be entitled to retain all amounts paid by
the Customer for every stage of the Services
completed prior to termination and any amount paid
for any stage of the Services which remains
incomplete upon termination.
9.5 Upon the termination of the Agreement:
9.5.1 for whatever reason Lonza shall promptly return all
Customer Information to the Customer and shall
dispose of or return to the Customer the Cell Line
and any materials therefrom, as directed by the
Customer,
* Certain confidential information contained in this document, marked by
brackets, has been omitted and filed with the Securities and Exchange
Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
39.
<PAGE> 40
9.5.2 by Lonza pursuant to Clause 9.2 the Customer shall
promptly return to Lonza all Lonza Know-How it has
received from Lonza;
9.5.3 for whatever reason the Customer shall not thereafter
use or exploit the Patent Rights or the Lonza
Know-How in any way whatsoever other than for its own
internal purposes to meet regulatory requirements for
the Product (save in circumstances where Lonza
terminates the Agreement pursuant to Clause 9.2 when
no such use or exploitation is permitted);
9.5.4 for whatever reason Lonza may thereafter use or
exploit the Patent Rights or the Lonza Know-How in
any way whatsoever without restriction; and
9.5.5 for whatever reason Lonza and the Customer shall do
all such acts and things and shall sign and execute
all such deeds and documents as the other may
reasonably require to evidence compliance with this
Clause 9.5.
9.6 Termination of the Agreement for whatever reason shall not
affect the accrued rights of either Lonza or the Customer
arising under or out of this Agreement and all provisions
which are expressed to survive the Agreement shall remain in
full force and effect.
10. Force Majeure
10.1 If Lonza is prevented or delayed in the performance of any of
its obligations under the Agreement by Force Majeure and shall
give written notice thereof to the Customer specifying the
matters constituting Force Majeure together with such evidence
as Lonza reasonably can give and specifying the period for
which it is estimated that such prevention or delay will
continue, Lonza shall be excused from the performance or the
punctual performance of such obligations as the case may be
from the date of such notice for so long as such cause of
prevention or delay shall continue and Lonza shall use its
reasonable efforts, so far as it is able, to stop the Force
Majeure. It is agreed that in the event of any delay in the
performance of Lonza's obligations for reasons of Force
Majeure under this clause, the dates applicable for the
payment of any additional sums for Lonza's Services under
Notes 3 and 4 to Clause 1 of Schedule 3 shall not change but
the dates applicable for the allowance of any credit against
the Price for Stages 3 and 5 of Schedule 2 as provided in
Notes 3 and 4, to Clause 1 of Schedule 3 shall be revised to
40.
<PAGE> 41
allow for each day's delay for reasons of Force Majeure under
this Clause 10.
10.2 The expression "Force Majeure" shall be deemed to include any
cause affecting the performance by Lonza of the Agreement
arising from or attributable to acts, events, non-happenings,
omissions or accidents beyond the reasonable control of Lonza.
11. Governing Law, Jurisdiction and Enforceability
11.1 The construction, validity and performance of the Agreement
shall be governed by the laws of England, to the jurisdiction
of whose courts Lonza and the Customer submit.
11.2 No failure or delay on the part of either Lonza or the
Customer to exercise or enforce any rights conferred on it by
the Agreement shall be construed or operate as a waiver
thereof nor shall any single or partial exercise of any
rights, power or privilege or further exercise thereof operate
so as to bar the exercise or enforcement thereof at any time
or times thereafter.
11.3 The illegality or invalidity of any provision (or any part
thereof) of the Agreement or these Standard Terms shall not
affect the legality, validity or enforceability of the
remainder of its provisions or the other pans of such
provision as the case may be.
12. Miscellaneous
12.1 Neither party shall be entitled to assign, transfer, charge or
in any way make over the benefit and/or the burden of this
Agreement without the prior written consent of the other which
consent shall not be unreasonably withheld or delayed.
12.2 The text of any press release or other communication to be
published by or in the media concerning the subject matter of
the Agreement shall require the written approval of Lonza and
the Customer.
12.3 The Agreement embodies the entire understanding of Lonza and
the Customer and there are no promises, terms, conditions or
obligations, oral or written, expressed on implied, other than
those contained in the Agreement. The terms of the Agreement
shall supersede previous agreements (if any) which may exist
or have existed between Lonza and the Customer relating to the
Services.
41.
<PAGE> 1
EXHIBIT 10.8
LEASE MANAGEMENT SERVICES, INC.
EQUIPMENT FINANCING AGREEMENT
(Number 10804)
THIS EQUIPMENT FINANCING AGREEMENT NUMBER 10804 ("Agreement") is dated as of the
date set forth at the foot hereof and is between LEASE MANAGEMENT SERVICES,
INC., ("Secured Party") and COULTER PHARMACEUTICAL, INC., ("Debtor").
1. EQUIPMENT; SECURITY INTEREST. The terms and conditions of this Agreement
cover each item of machinery, equipment and other property (individually an
"Item" or "Item of Equipment" and collectively the "Equipment") described in a
schedule now or hereafter executed by the parties hereto and made a part hereof
(individually a "Schedule" and collectively the "Schedules"). Debtor hereby
grants Secured Party a security interest in and to all Debtor's right, title and
interest in and to the Equipment under the Uniform Commercial Code, such grant
with respect to an Item of Equipment to be as of Debtor's execution of a related
Equipment Financing Commitment referencing this Agreement or, if Debtor then has
no interest in such Item, as of such subsequent time as Debtor acquires an
interest in the Item. Such security interest is granted by Debtor to secure
performance by Debtor of Debtor's obligations to Secured Party hereunder and
under any other agreements under which Debtor has or may hereafter have
obligations to Secured Party. Debtor will ensure that such security interest
will be and remain a sole and valid first lien security interest subject only to
the lien of current taxes and assessment not in default but only if such taxes
are entitled to priority as a matter of law.
2. DEBTOR'S OBLIGATIONS. The obligations of Debtor under this Agreement
respecting an Item of Equipment, except the obligation to pay installment
payments with respect thereto which will commence as set forth in Paragraph 3
below, commence upon the grant to Secured Party of a security interest in the
Item. Debtor's obligations hereunder with respect to an Item of Equipment and
Secured Party's security interest therein will continue until payment of all
amounts due, and performance of all terms and conditions required hereunder
provided, however, that if this Agreement is in default said obligations and
security interest will continue during the continuance of said default. Upon
termination of Secured Party's security interest in an Item of Equipment,
Secured Party will execute such release of interest with respect thereto as
Debtor reasonably requests.
3. INSTALLMENT PAYMENTS AND OTHER PAYMENTS. Debtor will repay advances Secured
Party makes on account of the Equipment in installment payments in the amounts
and at the times set forth in the Schedules, whether or not Secured Party has
rendered an invoice therefor, at the office of Secured Party set forth at the
foot hereof, or to such person and/or at such other place as Secured Party may
from time to time designate by notice to Debtor. Any other amounts required to
be paid Secured Party by Debtor hereunder are due upon Debtor's receipt of
Secured Party's invoice therefor and will be payable as directed in the invoice.
Payments under this Agreement may be applied to Debtor's then accrued
obligations to Secured Party in such order as Secured Party may choose.
4. NET AGREEMENT; NO OFFSET, SURVIVAL. This Agreement is a net agreement, and
Debtor will not be entitled to any abatement of installment payments or other
payments due hereunder or any reduction thereof under any circumstance or for
any reason whatsoever. Debtor hereby waives any and all existing and future
claims, as offsets, against any installment payments or other payments due
hereunder and agrees to pay the installment payments and other amounts due
hereunder as and when due regardless of any offset or claim which may be
asserted by Debtor or on its behalf. The obligations and liabilities of Debtor
hereunder will survive the termination of the Agreement.
5. FINANCING AGREEMENT. THIS AGREEMENT IS SOLELY A FINANCING AGREEMENT. DEBTOR
ACKNOWLEDGES THAT THE EQUIPMENT HAS OR WILL HAVE BEEN SELECTED AND ACQUIRED
SOLELY BY DEBTOR FOR DEBTOR'S PURPOSES, THAT SECURED PARTY IS NOT AND WILL NOT
BE THE VENDOR OF ANY
<PAGE> 2
COULTER PHARMACEUTICAL, INC.
EQUIPMENT FINANCING AGREEMENT NUMBER 10804
PAGE 2 OF 8
EQUIPMENT AND THAT SECURED PARTY HAS NOT MADE AND WILL NOT MAKE ANY AGREEMENT,
REPRESENTATION OR WARRANTY WITH RESPECT TO THE MERCHANTABILITY, CONDITION,
QUALIFICATION OR FITNESS FOR A PARTICULAR PURPOSE OR VALUE OF THE EQUIPMENT OR
ANY OTHER MATTER WITH RESPECT THERETO IN ANY RESPECT WHATSOEVER.
6. NO AGENCY. DEBTOR ACKNOWLEDGES THAT NO AGENT OF THE MANUFACTURER OR OTHER
SUPPLIER OF AN ITEM OF EQUIPMENT OR OF ANY FINANCIAL INTERMEDIARY IN CONNECTION
WITH THIS AGREEMENT IS AN AGENT OF SECURED PARTY. SECURED PARTY IS NOT BOUND BY
A REPRESENTATION OF ANY SUCH PARTY AND, AS CONTEMPLATED IN PARAGRAPH 27 BELOW,
THE ENTIRE AGREEMENT OF SECURED PARTY AND DEBTOR CONCERNING THE FINANCING OF THE
EQUIPMENT IS CONTAINED IN THIS AGREEMENT AS IT MAY BE AMENDED ONLY AS PROVIDED
IN THAT PARAGRAPH.
7. ACCEPTANCE. Execution by Debtor and Secured Party of a Schedule covering the
Equipment or any Items thereof will conclusively establish that such Equipment
has been included under and will be subject to all the terms and conditions of
this Agreement. If Debtor has not furnished Secured Party with an executed
Schedule by the earlier of fourteen (14) days after receipt thereof or
expiration of the commitment period set forth in the applicable Equipment
Financing Agreement, Secured Party may terminate its obligation to advance funds
as to the applicable Equipment.
8. LOCATION; INSPECTION; USE. Debtor will keep, or in the case of motor
vehicles, permanently garage and not remove from the United States, as
appropriate, each Item of Equipment in Debtor's possession and control at the
Equipment Location designated in the applicable Schedule, or at such other
location to which such Item may have been moved with the prior written consent
of Secured Party. Whenever requested by Secured Party, Debtor will advise
Secured Party as to the exact location of an Item of Equipment. Secured Party
will have the right to inspect the Equipment and observe its use during normal
business hours, subject to Debtor's security procedures and to enter into and
upon the premises where the Equipment may be located for such purpose. The
Equipment will at all times be used solely for commercial or business purposes
and operated in a careful and proper manner and in compliance with all
applicable laws, ordinances, rules and regulations, all conditions and
requirements of the policy or policies of insurance required to be carried by
Debtor under the terms of this Agreement and all manufacturer's instructions and
warranty requirements. Any modifications or additions to the Equipment required
by any such governmental edict or insurance policy will be promptly made by
Debtor.
9. ALTERATIONS; SECURITY INTEREST COVERAGE. Without the prior written consent of
Secured Party, Debtor will not make any alterations, additions or improvements
to any Item of Equipment which detract from its economic value or functional
utility, except as may be required pursuant to Paragraph 8 above. Secured
Party's security interest in the Equipment will include all modifications and
additions thereto and replacements and substitutions therefor, in whole or in
part. Such reference to replacements and substitutions will not grant Debtor
greater rights to replace or substitute than are provided in Paragraph 11 below
or as may be allowed upon the prior written consent of Secured Party.
10. MAINTENANCE: Debtor will maintain the Equipment in good repair, condition
and working order. Debtor will also cause each Item of Equipment for which a
service contract is generally available to be covered by such a contract which
provides coverages typical to property of the type involved and is issued by a
competent servicing entity.
11. LOSS AND DAMAGE; CASUALTY VALUE. In the event of the loss of, theft of,
requisition of, damage to or destruction of an Item of Equipment ("Casualty
Occurrence"), Debtor will give Secured Party prompt notice thereof and will
thereafter place such Item in good repair,
<PAGE> 3
COULTER PHARMACEUTICAL, INC.
EQUIPMENT FINANCING AGREEMENT NUMBER 10804
PAGE 3 OF 8
condition and working order, provided, however, that if such Item is determined
by Secured Party to be lost, stolen, destroyed or damaged beyond repair, is
requisitioned or suffers a constructive total loss as defined in any applicable
insurance policy carried by Debtor in accordance with Paragraph 14 below,
Debtor, at Secured Party's option, will (a) replace such Item with like
Equipment in good repair, condition and working order whereupon such replacement
equipment will be deemed such Item for all purposes hereof or (b) pay Secured
Party the "Casualty Value" of such Item which will equal the total of (i) all
installment payments and other amounts due from Debtor to Secured Party at the
time of such payment and (ii) future installment payments due with respect to
such Item with each such payment including any final uneven payment discounted
at a rate equal to the discount rate of the Federal Reserve Bank of San
Francisco from the date due to the date of such payment.
Upon such replacement or payment, as appropriate, this Agreement and Secured
Party's security interest will terminate with, and only with, respect to the
Item of Equipment so replaced or as to which such payment is made in accordance
with Paragraph 2 above.
12. TITLING; REGISTRATION. Each item of Equipment subject to title registration
laws will at all times be titled and/or registered by Debtor as Secured Party's
agent and attorney-in-fact with full power and authority to register (but
without power to affect title to) the Equipment in such manner and in such
jurisdiction or jurisdictions as Secured Party directs. Debtor will promptly
notify Secured Party of any necessary or advisable retitling and/or
reregistration of an Item of Equipment in a jurisdiction other than the one in
which such Item is then titled and/or registered. Any and all documents of title
will be furnished or caused to be furnished Secured Party by Debtor within sixty
(60) days of the date any titling or registering or restating or reregistering,
as appropriate, is directed by Secured Party.
13. TAXES. Debtor will make all filings as to and pay when due all personal
property and other ad valorem taxes and all other taxes, fees, charges and
assessments based on the ownership or use of the Equipment and will pay as
directed by Secured Party or reimburse Secured Party for all other taxes,
including, but not limited to, gross receipt taxes (exclusive of federal and
state taxes based on Secured Party's net income, unless such net income taxes
are in substitution for or relieve Debtor from any taxes which Debtor would
otherwise be obligated to pay under the terms of this Paragraph 13), fees,
charges and assessments whatsoever, however designated, whether based on the
installment payments or other amounts due hereunder, levied, assessed or imposed
upon the Equipment or otherwise related hereto or to the Equipment, now or
hereafter levied, assessed or imposed under the authority of a federal, state,
or local taxing jurisdiction, regardless of when and by whom payable. Filings
with respect to such other amounts will, at Secured Party's option, be made by
Secured Party or by Debtor as directed by Secured Party.
14. INSURANCE. Debtor will procure and continuously maintain all risk insurance
against loss or damage to the Equipment from any cause whatsoever for not less
than the full replacement value thereof naming Secured Party as Loss Payee. Such
insurance must be in a form and with companies approved by Secured Party, must
provide at least thirty (30) days advance written notice to Secured Party of
cancellation, change or modification in any term, condition, or amount of
protection provided therein, must provide full breach of warranty protection and
must provide that the coverage is "primary coverage" (does not require
contribution from any other applicable coverage). Debtor will provide Secured
Party with an original policy or certificate evidencing such insurance. In the
event of an assignment of this Agreement of which Debtor has notice, Debtor will
cause such insurance to provide the same protection to the assignee as its
interests may appear. The proceeds of such insurance, at the option of the
Secured Party or such assignee, as appropriate, will be applied toward (a)
repair or replacement of the appropriate Item or Items of Equipment, (b) payment
of the Casualty Value thereof and/or (c) payment of, or as provision for,
satisfaction of any other accrued obligations of Debtor hereunder. Debtor hereby
appoints Secured Party as Debtor's attorney-in-fact with full power and
authority to do all things, including, but not limited to, making claims,
receiving payments and endorsing documents, checks or drafts, necessary to
secure payments due under any policy contemplated hereby on account of a
Casualty
<PAGE> 4
COULTER PHARMACEUTICAL, INC.
EQUIPMENT FINANCING AGREEMENT NUMBER 10804
PAGE 4 OF 8
Occurrence. Debtor and Secured Party contemplate that the jurisdictions
where the Equipment will be located will not impose any liability upon Secured
Party for personal injury and/or property damage resulting out of the
possession, use, operation or condition of the Equipment. In the event Secured
Party determines that such is not or may not be the case with respect to a given
jurisdiction, Debtor will provide Secured Party with public liability and
property damage coverage applicable to the Equipment in such amounts and in such
form as Secured Party requires.
15. SECURED PARTY'S PAYMENT. If Debtor fails to pay any amounts due hereunder or
to perform any of its other obligations under this Agreement, Secured Party may,
at its option, but without any obligation to do so, pay such amounts or perform
such obligations, and Debtor will reimburse Secured Party the amount of such
payment or cost of such performance, plus interest at 1.5% per month.
16. INDEMNITY. Debtor does hereby assume liability for and does agree to
indemnify, defend, protect, save and keep harmless Secured Party from and
against any and all liabilities, losses, damages, penalties, claims, actions,
suits, costs, expenses and disbursements, including court costs and legal
expenses, of whatever kind and nature, imposed on, incurred by or asserted
against Secured Party (whether or not also indemnified against by any other
person) in any way relating to or arising out of this Agreement or the
manufacture, financing, ownership, delivery, possession, use, operation,
condition or disposition of the Equipment by Secured Party or Debtor, including,
without limitation, any claim alleging latent and other defects, whether or not
discoverable by Secured Party or Debtor, and any other claim arising out of
strict liability in tort, whether or not in either instance relating to an event
occurring while Debtor remains obligated under this Agreement, and any claim for
patent, trademark or copyright infringement. Debtor agrees to give Secured Party
and Secured Party agrees to give Debtor notice of any claim or liability hereby
indemnified against promptly following learning thereof.
17. DEFAULT. Any of the following will constitute an event of default hereunder:
(a) Debtor's failure to pay when due any installment payment or other amount due
hereunder, which failure continues for ten (10) days after the due date thereof;
(b) Debtor's default in performing any other obligation, term or condition of
this Agreement or any other agreement between Debtor and Secured Party or
default under any further agreement providing security for the performance by
Debtor of its obligations hereunder provided such default has continued for more
than twenty (20) days, except as provided in (c) and (d) hereinbelow, or,
without limiting the generality of subparagraph (l) hereinbelow, default under
any lease or any mortgage or other instrument contemplating the provision of
financial accommodation applicable to the real property where an Item of
Equipment is located; (c) any writ or order of attachment or execution or other
legal process being levied on or charged against any Item of Equipment and not
being released or satisfied within ten (10) days; (d) Debtor's failure to comply
with its obligations under Paragraph 14 above or any transfer by Debtor in
violation of Paragraph 21 below; (e) a non-appealable judgment for the payment
of money in excess of $100,000 being rendered by a court of record against
Debtor which Debtor does not discharge or make provision for discharge in
accordance with the terms thereof within ninety (90) days from the date of entry
thereof; (f) death or judicial declaration of incompetency of Debtor, if an
individual; (g) the filing by Debtor of a petition under the Bankruptcy Code or
any amendment thereto or under any other insolvency law or law providing for the
relief of debtors, including, without limitation, a petition for reorganization,
arrangement or extension, or the commission by Debtor of an act of bankruptcy;
(h) the filing against Debtor of any such petition not dismissed or permanently
stayed within thirty (30) days of the filing thereof; (i) the voluntary or
involuntary making of an assignment of substantial portion of its assets by
Debtor for the benefit of creditors, appointment of a receiver or trustee for
Debtor or for any of Debtor's assets, institution by or against Debtor or any
other type of insolvency proceeding (under the Bankruptcy Code or otherwise) or
of any formal or informal proceeding for dissolution, liquidation, settlement of
claims against or winding up of the affairs of Debtor, Debtor's cessation of
business activities or the making by Debtor of a transfer of all or a material
portion of Debtor's assets or inventory not in the ordinary course of business;
(j) the occurrence of any event described in parts (e), (f), (g), (h) or (i)
hereinabove with respect to any guarantor or
<PAGE> 5
COULTER PHARMACEUTICAL, INC.
EQUIPMENT FINANCING AGREEMENT NUMBER 10804
PAGE 5 OF 8
other party liable for payment or performance of this Agreement; (k) any
certificate, statement, representation, warranty or audit heretofore or
hereafter furnished with respect hereto by or on behalf of Debtor or any
guarantor or other party liable for payment or performance of this Agreement
proving to have been false in any material respect at the time as of which the
facts therein set forth were stated or certified or having omitted any
substantial contingent or unliquidated liability or claim against Debtor or any
such guarantor or other party; (l) breach by Debtor of any lease or other
agreement providing financial accommodation under which Debtor or its property
is bound; or (m) a transfer of effective control of Debtor, if an organization.
18. REMEDIES. Upon the occurrence of an event of default, Secured Party will
have the rights, options, duties and remedies of a Secured Party, and Debtor
will have the rights and duties of a debtor, under the Uniform Commercial Code
(regardless of whether such Code or a law similar thereto has been enacted in a
jurisdiction wherein the rights or remedies are asserted) and, without limiting
the foregoing, Secured Party may exercise any one or more of the following
remedies: (a) declare the Casualty Value or such lesser amount as may be set by
law immediately due and payable with respect to any or all Items of Equipment
without notice or demand to Debtor; (b) sue from time to time for and recover
all installment payments and other payments then accrued and which accrue during
the pendency of such action with respect to any or all Items of Equipment; (c)
take possession of and, if deemed appropriate, render unusable any or all Items
of Equipment, without demand or notice, wherever same may be located, without
any court order or other process of law and without liability for any damages
occasioned by such taking of possession and remove, keep and store the same or
use and operate or lease the same until sold; (d) require Debtor to assemble any
or all Items of Equipment at the Equipment Location therefor, or at such
location to which such Equipment may have been moved with the written consent of
Secured Party or such other location in reasonable proximity to either of the
foregoing as Secured Party designates; (e) upon ten (10) days notice to Debtor
or such other notice as may be required by law, sell or otherwise dispose of any
Item of Equipment, whether or not in Secured Party's possession, in a
commercially reasonable manner at public or private sale at any place deemed
appropriate and apply the new proceeds of such sale, after deducting all costs
of such sale, including, but not limited to, costs of transportation,
repossession, storage, refurbishing, advertising and brokers' fees, to the
obligations of Debtor to Secured Party hereunder or otherwise, with Debtor
remaining liable for any deficiency and with any excess being returned to
Debtor; (f) upon thirty (30) days notice to Debtor, retain any repossessed or
assembled Items of Equipment as Secured Party's own property in full
satisfaction of Debtor's liability for the installment payments due hereunder
with respect thereto, provided that Debtor will have the right to redeem such
Items by payment in full of its obligations to Secured Party hereunder or
otherwise or to require Secured Party to sell or otherwise dispose of such Items
in the manner set forth in subparagraph (e) hereinabove upon notice to Secured
Party within such thirty (30) day period; or (g) utilize any other remedy
available to Secured Party under the Uniform Commercial Code or similar
provision of law or otherwise at law or in equity.
No right or remedy conferred herein is exclusive of any other right or remedy
conferred herein or by law; but all such remedies are cumulative of every other
right or remedy conferred hereunder or at law or in equity, by statute or
otherwise, and may be exercised concurrently or separately from time to time.
Any sale contemplated by subparagraph (e) of this Paragraph 18 may be adjourned
from time to time by announcement at the time and place appointed for such sale,
or for any such adjourned sale, without further published notice, Secured Party
may bid and become the purchaser at any such sale. Any sale of an Item of
Equipment, whether under said subparagraph or by virtue of judicial proceedings,
will operate to divest all right, title, interest, claim and demand whatsoever;
either at law or in equity, of Debtor in and to said item and will be a
perpetual bar to any claim against such Item, both at law and in equity, against
Debtor and all persons claiming by, through or under Debtor.
19. DISCONTINUANCE OF REMEDIES. If Secured Party proceeds to enforce any right
under this Agreement and such proceedings are discontinued or abandoned for any
reason or are
<PAGE> 6
COULTER PHARMACEUTICAL, INC.
EQUIPMENT FINANCING AGREEMENT NUMBER 10804
PAGE 6 OF 8
determined adversely, then and in every such case Debtor and Secured Party will
be restored to their former positions and rights hereunder.
20. SECURED PARTY'S EXPENSES. Debtor will pay Secured Party all costs and
expenses, including attorney's fees and court costs and sales costs not offset
against sales proceeds under Paragraph 18 above, incurred by Secured Party in
exercising any of its rights or remedies hereunder or enforcing any of the
terms, conditions or provisions hereof. This obligation includes the payment or
reimbursement of all such amounts whether an action is ultimately filed and
whether an action is ultimately dismissed.
21. ASSIGNMENT. Without the prior written consent of Secured Party, Debtor will
not sell, lease, pledge or hypothecate, except as provided in this Agreement,
any Item of Equipment or any interest therein or assign, transfer, pledge, or
hypothecate this Agreement or any interest in this Agreement or permit the
Equipment to be subject to any lien, charge or encumbrance of any nature except
the security interest of Secured Party contemplated hereby. Debtor's interest
herein is not assignable and will not be assigned or transferred by operation of
law. Consent to any of the foregoing prohibited acts applies only in the given
instance and is not a consent to any subsequent like act by Debtor or any other
person.
All rights of Secured Party hereunder may be assigned, pledged, mortgaged,
transferred or otherwise disposed of, either in whole or in part, without notice
to Debtor but always, however, subject to the rights of Debtor under this
Agreement. If Debtor is given notice of any such assignment, Debtor will
acknowledge receipt thereof in writing. In the event Secured Party assigns this
Agreement or the installment payments due or to become due hereunder or any
other interest herein, whether as security for any of its indebtedness or
otherwise, no breach or default by Secured Party hereunder or pursuant to any
other agreement between Secured Party and Debtor, should there be one, will
excuse performance by Debtor of any provision hereof, it being understood that
in the event of such default or breach by Secured Party that Debtor will pursue
any rights on account thereof solely against Secured Party. No such assignee,
unless such assignee agrees in writing, will be obligated to perform any duty,
covenant or condition required to be performed by Secured Party in connection
with this Agreement.
Subject always to the foregoing, this Agreement inures to the benefit of, and is
binding upon, the heirs, legatees, personal representative, successors and
assigns of the parties hereto.
22. MARKINGS; PERSONAL PROPERTY. If Secured Party supplies Debtor with labels,
plates, decals or other markings stating that Secured Party has an interest in
the Equipment, Debtor will affix and keep the same prominently displayed on the
Equipment or will otherwise mark the Equipment or its then location or
locations, as appropriate, at Secured Party's request to indicate Secured
Party's security interest in the Equipment. The Equipment is, and at all times
will remain, personal property notwithstanding that the Equipment or any Item
thereof may now be, or hereafter become, in any manner affixed or attached to,
or embedded in, or permanently resting upon real property or any improvement
thereof or attached in any manner to what is permanent as by means of cement,
plaster, nails, bolts, screws or otherwise. If requested by Secured Party,
Debtor will obtain and deliver to Secured Party waivers of interest or liens in
recordable form satisfactory to Secured Party from all persons claiming any
interest in the real property on which an Item of Equipment is or is to be
installed or located.
23. LATE CHARGES. Time is of the essence in this Agreement and if any
Installment Payment is not paid within ten (10) days after the due date thereof,
Secured Party shall have the right to add and collect, and Debtor agrees to pay:
(a) a late charge on and in addition to, such Installment Payment equal to five
percent (5%) of such Installment Payment or a lesser amount if established by
any state or federal statute applicable thereto, and (b) interest on such
Installment Payment from thirty (30) days after the due date until paid at the
highest contract rate enforceable against Debtor under applicable law but never
to exceed eighteen percent (18%) per annum.
<PAGE> 7
COULTER PHARMACEUTICAL, INC.
EQUIPMENT FINANCING AGREEMENT NUMBER 10804
PAGE 7 OF 8
24. NON-WAIVER. No covenant or condition of this Agreement can be waived except
by the written consent of Secured Party. Forbearance or indulgence by Secured
Party in regard to any breach hereunder will not constitute a waiver of the
related covenant or condition to be performed by Debtor.
25. ADDITIONAL DOCUMENTS. In connection with and in order to perfect and
evidence the security interest in the Equipment granted Secured Party hereunder
Debtor will execute and deliver to Secured Party such financing statements and
similar documents as Secured Party requests. Debtor authorizes Secured Party
where permitted by law to make filings of such financing statements without
Debtor's signature. Debtor further will furnish Secured Party (a) on a timely
basis, Debtor's future financial statements, including Debtor's most recent
annual report, balance sheet and income statement, prepared in accordance with
generally accepted accounting principles, which reports, Debtor warrants, shall
fully and fairly represent the true financial condition of Debtor (b) any other
information normally provided by Debtor to the public and (c) such other
financial data or information relative to this Agreement and the Equipment,
including, without limitation, copies of vendor proposals and purchase orders
and agreements, listings of serial numbers or other identification data and
confirmations of such information, as Secured Party may from time to time
reasonably request. Debtor will procure and/or execute, have executed,
acknowledge, have acknowledged, deliver to Secured Party, record and file such
other documents and showings as Secured Party deems necessary or desirable to
protect its interest in and rights under this Agreement and interest in the
Equipment. Debtor will pay as directed by Secured Party or reimburse Secured
Party for all filing, search, title report, legal and other fees incurred by
Secured Party in connection with any documents to be provided by Debtor pursuant
to this Paragraph or Paragraph 22 and any further similar documents Secured
Party may procure.
26. DEBTOR'S WARRANTIES. Debtor certifies and warrants that the financial data
and other information which Debtor has submitted, or will submit, to Secured
Party in connection with this Agreement is, or will be at time of delivery, as
appropriate, a true and complete statement of the matters therein contained.
Debtor further certifies and warrants: (a) this Agreement has been duly
authorized by Debtor and when executed and delivered by the person signing on
behalf of Debtor below will constitute the legal, valid and binding obligation,
contract and agreement of Debtor enforceable against Debtor in accordance with
its respective terms; (b) this Agreement and each and every showing provided by
or on behalf of Debtor in connection herewith may be relied upon by Secured
Party in accordance with the terms thereof notwithstanding the failure of Debtor
or other applicable party to ensure proper attestation thereto, whether by
absence of a seal or acknowledgment or otherwise; (c) Debtor has the right,
power and authority to grant a security interest in the Equipment to Secured
Party for the uses and purposes herein set forth and (d) each Item of Equipment
will, at the time such Item becomes subject hereto, be in good repair, condition
and working order.
27. ENTIRE AGREEMENT. This instrument with exhibits and related documentation
constitutes the entire agreement between Secured Party and Debtor and will not
be amended, altered or changed except by a written agreement signed by the
parties.
28. NOTICES. Notices under this Agreement must be in writing and must be mailed
by United States mail, certified mail with return receipt requested, duly
addressed, with postage prepaid, to the party involved at its respective address
set forth at the foot hereof or at such other address as each party may provide
on notice to the other from time to time. Notices will be effective when
deposited. Each party will promptly notify the other of any change in that
party's address.
29. GENDER, NUMBER: JOINT AND SEVERAL LIABILITY. Whenever the context of this
Agreement requires, the neuter gender includes the feminine or masculine and the
singular number includes the plural; and whenever the words "Secured Party" are
used herein, they include all assignees of Secured Party, it being understood
that specific reference to "assignee" in
<PAGE> 8
COULTER PHARMACEUTICAL, INC.
EQUIPMENT FINANCING AGREEMENT NUMBER 10804
PAGE 8 OF 8
Paragraph 14 above is for further emphasis. If there is more than one Debtor
named in this Agreement, the liability of each will be joint and several.
30. TITLES. The titles to the Paragraphs of this Agreement are solely for the
convenience of the parties and are not an aid in the interpretation of the
instrument.
31. GOVERNING LAW; VENUE. This Agreement will be governed by and construed in
accordance with the laws of the State of California. Venue for any action
related to the Agreement will be in an appropriate court in San Mateo County,
California, to which Debtor consents, or in another court selected by Secured
Party which has jurisdiction over the parties. In the event any provision hereof
is declared invalid, such provision will be deemed severable from the remaining
provisions of this Agreement, which will remain in full force and effect.
32. TIME. Time is of the essence of this Agreement and for each and all of its
provisions.
In WITNESS WHEREOF, the undersigned have executed this Agreement as of
December 6, 1996.
DEBTOR:
COULTER PHARMACEUTICAL, INC.
550 California Avenue
Palo Alto, CA, 94306
By: /s/ William Harris
------------------------
Title: Chief Financial Officer
------------------------
SECURED PARTY:
LEASE MANAGEMENT SERVICES, INC.
2500 Sand Hill Road, Suite 101
Menlo Park, CA 94025
By:
----------------------
Title: EVP/ General Manager
----------------------
<PAGE> 1
EXHIBIT 11.1
COULTER PHARMACEUTICAL, INC.
STATEMENT OF COMPUTATION OF NET LOSS PER SHARE
<TABLE>
<S> <C> <C>
December 31, September 30,
1995 1996
------------ -------------
Historical primary EPS
Shares used in calculation of net
loss per share:
Weighted average common
stock outstanding: 257 2,059
Shares related to Staff Accounting
Bulletins Nos. 55, 64 and 83
Common stock: 401,788 401,788
Stock options: 559,600 559,600
Warrants: 173,067 173,067
Preferred stock; if converted 3,321,514 3,321,514
----------- ------------
4,456,226 4,458,028
----------- ------------
Net (loss) $(2,992,557) $(10,821,478)
----------- ------------
Net (loss) per share $(0.67) $(2.43)
=========== ============
Proforma:
Shares used in calculation of net
loss per share:
Weighted average common
stock outstanding: 257 2,059
Preferred Stock, if converted 2,341,665 3,277,775
Shares related to Staff Accounting
Bulletins Nos. 55, 64 and 83
Common stock: 401,788 401,788
Stock options: 559,600 559,600
Warrants: 173,067 173,067
Preferred stock; if converted 3,321,514 3,321,514
----------- ------------
6,797,891 7,735,803
----------- ------------
Net (loss) $(2,992,557) $(10,821,478)
----------- ------------
Net (loss) per share $(0.44) $(1.40)
=========== ============
</TABLE>
<PAGE> 1
EXHIBIT 21.1
SUBSIDIARY OF THE REGISTRANT.
Coulter Pharma Belgium, SA, a Belgian limited liability company, was
incorporated June 7, 1996. Its registered office is at:
Place Croix du Sud 5
Batiment Carnoy C 461
1348 Louvain-la-Neuva
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<EXCHANGE-RATE> 1
<CASH> 15,101
<SECURITIES> 3,734
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 19,175
<PP&E> 943
<DEPRECIATION> 43
<TOTAL-ASSETS> 20,484
<CURRENT-LIABILITIES> 5,678
<BONDS> 0
0
28,355
<COMMON> 787
<OTHER-SE> 14,336
<TOTAL-LIABILITY-AND-EQUITY> 20,484
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 9,896
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (10,821)
<INCOME-TAX> 0
<INCOME-CONTINUING> (10,821)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (10,821)
<EPS-PRIMARY> (1.40)
<EPS-DILUTED> 0
</TABLE>
