AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 15, 2000
(Exact name of Registrant as specified in its charter)
DELAWARE 54171 84-1460811
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
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Copies to
ALAN L. DYE CHARLES K. RUCK
CHRISTOPHER D. OZEROFF R. SCOTT SHEAN
HOGAN & HARTSON L.L.P. LATHAM & WATKINS
1800 BROADWAY, SUITE 200 650 TOWN CENTER DRIVE, 20TH FLOOR
BOULDER, CO 80302 COSTA MESA, CA 92626
(720) 406-5300 (714) 540-1235
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CALCULATION OF REGISTRATION FEE
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TITLE OF EACH CLASS OF SECURITIES PROPOSED MAXIMUM AGGREGATE
TO BE REGISTERED OFFERING PRICE(1) AMOUNT OF REGISTRATION FEE
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Common Stock, $.001 par value............. $72,000,000 $19,008
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THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND WE ARE NOT SOLICITING OFFERS TO BUY.
Subject to completion, dated , 2000
PROSPECTUS
6,000,000 Shares
[Array BioPharma Logo]
Common Stock
This is our initial public offering of shares of common stock. We are offering 6,000,000 shares. No public market currently exists for our shares.
We intend to apply to have our common stock approved for quotation on the Nasdaq National Market under the symbol "ARRY." We expect the public offering price to be between $10.00 and $12.00 per share.
INVESTING IN THE SHARES INVOLVES RISKS. "RISK FACTORS" BEGIN ON PAGE 6.
Per Share Total
--------- ------
Public offering price....................................... $ $
Underwriting discount....................................... $ $
Proceeds to Array BioPharma Inc. ........................... $ $
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We have granted the underwriters a 30-day option to purchase up to 800,000 additional shares of common stock, and two of our stockholders have granted the underwriters a 30-day option to purchase up to 100,000 additional shares of their common stock, on the same terms and conditions as set forth above, solely to cover over-allotments, if any.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Lehman Brothers, on behalf of the underwriters, expects to deliver the shares on or about , 2000.
LEHMAN BROTHERS DEUTSCHE BANC ALEXJ BROWN
LEGG MASON WOOD WALKER
INCORPORATED
, 2000
[Inside front cover graphic depicts Array's range of drug discovery products and services within the entire drug research and discovery process. Text below graphic describes this process.]
TABLE OF CONTENTS
PAGE
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Prospectus Summary.................... 1
Risk Factors.......................... 6
Special Note Regarding Forward-Looking
Statements and Industry Data........ 17
Use of Proceeds....................... 17
Dividend Policy....................... 17
Capitalization........................ 18
Dilution.............................. 19
Selected Financial Data............... 20
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 21
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PAGE
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Business.............................. 27
Management............................ 45
Related Party Transactions............ 55
Principal Stockholders................ 57
Description of Capital Stock.......... 60
Shares Eligible for Future Sale....... 64
Underwriting.......................... 66
Legal Matters......................... 69
Experts............................... 69
Where You Can Find More Information... 69
Index To Financial Statements......... F-1
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ABOUT THIS PROSPECTUS
You should rely only on the information contained in this prospectus. We have not authorized anyone to provide you with information different from that contained in this prospectus. This prospectus is not an offer to sell or a solicitation of an offer to buy our common stock in any jurisdiction where it is unlawful. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of common stock. This preliminary prospectus is subject to completion prior to this offering.
See the section of this prospectus entitled "Risk Factors" for a discussion of various factors that you should consider before investing in the common stock offered in this prospectus.
"Array BioPharma," the Array BioPharma logo, "Array BioPharma The Discovery Research Company," "The Discovery Research Company," "Optimer" and "Radical" are trademarks of Array BioPharma Inc. Other trademarks and trade names appearing in this prospectus are the property of their holders.
Until , 2000 (25 days after commencement of this offering), all dealers selling shares of our common stock, whether or not participating in the public offerings, may be required to deliver a prospectus. This is in addition to the obligation of dealers to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.
PROSPECTUS SUMMARY
You should read the following summary together with the more detailed information regarding our company and the common stock being sold in this offering and the financial statements and notes to those statements appearing elsewhere in this prospectus.
ARRAY BIOPHARMA
Array BioPharma is a discovery research company creating drug candidates through innovations in chemistry. Our experienced scientists provide premium products and services to create, evaluate and optimize potential drug candidates in collaboration with pharmaceutical and biotechnology companies. We believe our information-based approach improves the efficiency of the drug discovery process and increases the quality of potential drug candidates. In addition, we apply these capabilities internally for our own drug discovery programs.
The drug industry is experiencing revolutionary change fueled by genomics, or the study of all genes, and by the tremendous progress in the biological understanding of disease. We believe the drug research and development bottleneck is shifting from the discovery by biologists of new disease-related proteins, or targets, to the creation by chemists of safe and effective new drugs for these targets. Drugs created through chemistry accounted for a significant percentage of the estimated $337 billion worldwide drug market in 1999. Small changes in chemistry design can differentiate drugs and determine their potential success or failure in the marketplace. Despite recent advances in technology, the process of drug discovery remains slow, expensive and risky. To address these inefficiencies, it is critical to apply high quality chemistry and predictive information-based technologies early in the discovery process to identify and eliminate inferior drug candidates and to design safe and effective new drugs.
We provide a broad range of premium drug discovery products and services to bridge the gap between target discovery and drug candidate testing in animals and humans, including:
- Optimer building blocks, or starting materials used to create chemical compounds for drug discovery;
- Lead generation, or the process of identifying chemical compounds that have the potential to become drug candidates through further optimization, including the sale of subscriptions to collections of these compounds, which we call our Diversity Library;
- Lead optimization, or the iterative process of optimizing the drug characteristics for a potential drug candidate; and
- Process research and development, or the design and refinement of the drug manufacturing process.
We believe our information-driven technology platform enables our scientists to make better decisions throughout the drug discovery process and thereby create higher quality drugs more quickly and less expensively. Our technology platform includes:
- Proprietary software and predictive databases to facilitate drug discovery;
- Proprietary high-speed chemical synthesis technology;
- Analytical and computational technologies to determine and predict the three-dimensional structure of drug targets and drug candidates; and
- Assay development and high-throughput screening for the rapid identification of leads and potential drug candidates.
Our objective is to become the leading creator of high quality potential drug candidates by providing premium discovery chemistry products and services. Key elements of our strategy are to: (1) provide an integrated chemistry solution to drug discovery and become the partner of choice for pharmaceutical and biotechnology companies; (2) combine state-of-the-art technology with innovative chemistry to accelerate drug
discovery; (3) create our own drug candidates for partnering with pharmaceutical and biotechnology companies; (4) increase our scientific resources by continuing to attract world-class scientists; and (5) expand our capabilities through acquisitions and internal development.
Our achievements to date include:
- Initiating collaborations with pharmaceutical companies such as Eli Lilly and Company and Merck & Co., Inc.;
- Initiating collaborations with biotechnology companies such as Celltech Chiroscience Ltd., ICOS Corporation and Tularik Inc.;
- Discovering a drug candidate for clinical trials with our first collaboration partner, ICOS;
- Creating a technology platform to identify new drug candidates from genomic information;
- Creating our own potential drug candidates; and
- Growing our staff from our inception in 1998 to over 100 employees as of September 2000, including 75 scientists, of whom 69 are chemists, 42 have Ph.D's and 34 have large pharmaceutical company experience.
We have a multi-faceted business model based on rapid revenue growth. We
plan to achieve profitability through fee-for-service revenue and product sales
while increasing value by sharing in the success we create for our
collaborators. To maximize the value we capture, we intend to allocate our
scientific resources to: (1) build upon our foundation of fee-for-service
business with leading pharmaceutical and biotechnology companies; (2) leverage
our drug discovery products and services through sales to multiple customers;
(3) initiate additional collaborations with leading pharmaceutical and
biotechnology companies that include fee-for-service revenue plus milestone
and/or royalty payments; and (4) generate our own potential drug candidates for
partnering with pharmaceutical and biotechnology companies under terms that
include licensing fees, fee-for-service revenue and milestone and/or royalty
payments.
We have assembled a scientific team with experience in both the pharmaceutical and biotechnology industries and with a proven track record of success in drug discovery. At our inception, we had the distinct advantage of recruiting 20 former Amgen scientists, who had previously been recruited from large pharmaceutical companies. This nucleus afforded us a critical mass of experienced chemists, which we believe has proven to be a competitive advantage in recruiting additional scientists. During their careers, our scientists have collectively contributed to multiple drug candidates approved by the Food and Drug Administration for human testing and to over 100 patents and patent applications.
We incorporated in Delaware in February 1998 under the name Array BioPharma Inc. Our principal executive offices are located at 1885 33rd Street, Boulder, Colorado 80301, and our telephone number is 303-381-6600. We can be visited on the World Wide Web at www.arraybiopharma.com. Information contained on our Web site does not constitute any part of this prospectus.
THE OFFERING
Common stock offered by
us....................... 6,000,000 shares
Common stock to be
outstanding after the
offering................. 21,367,409 shares
Use of proceeds............ We expect to use the net proceeds of this offering
to fund our operations, including continued
development and manufacturing of existing products
as well as research and development of additional
products and services, hiring expenses and
expansion of our facilities. We may also use a
portion of the proceeds in strategic acquisitions
or to pay down indebtedness. We intend to use the
balance of the net proceeds for general corporate
purposes, including working capital requirements.
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See the section entitled "Use of Proceeds" for more information.
Proposed Nasdaq National
Market symbol............ ARRY
The number of shares of common stock to be outstanding after this offering is based on the number of shares outstanding as of August 31, 2000. This number:
- includes 495,536 shares of common stock issued upon the exercise of options during July and August 2000;
- excludes 3,018,139 shares of common stock underlying options outstanding as of August 31, 2000, at a weighted-average exercise price of $0.46 per share, of which 273,794 were exercisable;
- excludes 110,750 shares of common stock, assuming the automatic conversion of our Series A preferred stock and Series B preferred stock, underlying warrants to purchase preferred stock outstanding as of August 31, 2000, at a weighted-average exercise price of $3.15 per share;
- excludes 3,029,484 shares that will be available for issuance under our stock option plan following this offering; and
- excludes 800,000 shares that will be available for purchase under our employee stock purchase plan following this offering.
ASSUMPTIONS IN THIS PROSPECTUS
Unless we indicate otherwise, all information in this prospectus assumes:
- the automatic conversion of our Series A preferred stock, Series B preferred stock and Series C preferred stock, on a one-for-one basis, into 11,501,666 shares of our common stock upon the closing of this offering;
- the filing of our amended and restated certificate of incorporation that provides for, among other things, an increase in the number of our authorized shares of common stock from 20,225,000 to 60,000,000 to be effected concurrently with this offering;
- no exercise by the underwriters of their over-allotment option to purchase up to 800,000 additional shares of common stock from us and up to 100,000 shares of common stock from two of our stockholders; and
- no exercise by any of our security holders of any outstanding options or warrants prior to the closing of this offering.
SUMMARY FINANCIAL DATA
The following tables summarize our financial data, which have been derived from our historical financial statements and related notes for the following periods: (1) our statements of operations data from February 6, 1998 (inception) to June 30, 1998, and for the twelve-month periods ended June 30, 1999 and June 30, 2000; and (2) our balance sheet data at June 30, 1999 and June 30, 2000.
The pro forma net loss per share data gives effect to the automatic conversion of all of our outstanding preferred stock upon the closing of this offering. The pro forma balance sheet data at June 30, 2000 reflects our receipt of the estimated net proceeds from the sale of 1,666,667 shares of our Series C preferred stock at $6.00 per share in August 2000 after deducting related offering expenses and the conversion of all of our outstanding shares of preferred stock into common stock upon the closing of this offering. The pro forma as adjusted balance sheet data at June 30, 2000 reflects our receipt of the estimated net proceeds from the sale of 6,000,000 shares of our common stock in this offering at an assumed initial public offering price of $11.00 per share, after deducting the estimated underwriting discount and offering expenses. The cost of revenue, research and development expense, and selling, general and administrative expense data below excludes compensation related to stock option grants.
The summary financial data for the periods indicated should be read together with our audited financial statements and related notes and other financial information, including the "Management's Discussion and Analysis of Financial Condition and Results of Operations," all of which are included elsewhere in this prospectus.
PERIOD FROM
FEBRUARY 6, YEARS ENDED JUNE 30,
1998 (INCEPTION) ----------------------------
TO JUNE 30, 1998 1999 2000
------------------ ------------ -------------
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
STATEMENTS OF OPERATIONS DATA:
Revenue.............................................. $ -- $ 1,504 $ 6,774
Cost of revenue...................................... -- 1,033 4,402
-------- ---------- -----------
Gross profit......................................... -- 471 2,372
Research and development expenses.................... -- 3,301 3,928
Selling, general and administrative expenses......... 62 1,522 2,430
Compensation related to stock option grants.......... -- -- 716
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Total operating expenses............................. 62 4,823 7,074
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Loss from operations................................. (62) (4,352) (4,702)
Interest expense..................................... -- (136) (384)
Interest income...................................... 13 181 356
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Net loss............................................. $ (49) $ (4,307) $ (4,730)
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Basic and diluted net loss per basic and diluted
share.............................................. $ (0.06) $ (1.48) $ (1.54)
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Shares used in computing basic and diluted net loss
per share.......................................... 863,964 2,918,367 3,063,439
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Pro forma basic and diluted net loss per share
(unaudited)........................................ $ (0.40)
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Shares used in computing pro forma basic and diluted
net loss per share (unaudited)..................... 11,697,343
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AS OF JUNE 30, 2000
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AS OF PRO FORMA
JUNE 30, PRO FORMA AS ADJUSTED
1999 ACTUAL (UNAUDITED) (UNAUDITED)
-------- ------- ------------ -----------
(IN THOUSANDS)
BALANCE SHEET DATA:
Total current assets............................... $ 4,005 $ 8,548 $18,513 $79,093
Property, plant and equipment, net................. 2,872 6,911 6,911 6,911
Total assets....................................... 7,125 15,823 25,788 86,368
Total current liabilities.......................... 2,744 6,338 6,338 6,338
Long-term debt, less current portion............... 1,824 2,833 2,833 2,833
Total stockholders' equity......................... 2,557 6,652 16,617 77,197
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RISK FACTORS
Any investment in shares of our common stock is risky. You should carefully consider the following risks below before making a decision to buy our common stock. The risks and uncertainties described below are not the only ones facing us. Additional risks and uncertainties not presently known to us, or that we currently consider immaterial also could harm our business. If any of the following risks actually occurs, our business could be harmed. In that case, the trading price of our common stock could decline, and you may lose all or part of your investment. You should also refer to the other information contained in this prospectus, including the financial statements and related notes, before deciding to buy our common stock.
RISKS RELATED TO OUR BUSINESS
WE MAY NOT ACHIEVE OR SUSTAIN PROFITABILITY.
We are at an early stage of executing our business plan, and we have a limited history of offering our products and services. We have incurred operating and net losses and negative cash flows from operations since our inception. As of June 30, 2000, we had an accumulated deficit of $9,087,000. For the fiscal years ended June 30, 1999 and June 30, 2000, we had net losses of $4,307,000 and $4,730,000, respectively. We may continue to incur operating and net losses and negative cash flows from operations, due in part to anticipated increases in expenses for research and product development, acquisitions of complementary businesses and technologies and expansion of our personnel and our business development capabilities. We may not be able to achieve or maintain profitability. Moreover, if we do achieve profitability, the level of any profitability cannot be predicted and may vary significantly from quarter to quarter.
IF OUR PRODUCTS AND SERVICES DO NOT BECOME WIDELY USED IN THE PHARMACEUTICAL AND BIOTECHNOLOGY INDUSTRIES, IT IS UNLIKELY THAT WE WILL BE PROFITABLE.
We are dependent on the pharmaceutical and biotechnology industries to purchase our products and services, including our drug-relevant building block and compound library products and our lead generation and lead optimization services. It is uncertain whether our current customers will continue to use these products and services or whether new customers will use these products and services. In order to be successful, our products and services must meet the requirements of the pharmaceutical and biotechnology industries, and we must convince potential customers to use our products and services instead of competing products and services. Market acceptance will depend on many factors, including our ability to:
- convince potential customers that our technologies are attractive alternatives to other technologies for drug discovery;
- convince potential customers, especially large pharmaceutical and biotechnology companies, to purchase our drug discovery products and services rather than developing them internally;
- perform contracted services in a timely fashion with acceptable quality and at an acceptable cost; and
- design, create and manufacture sufficient quantities of our chemical compounds for our customers and collaborators with acceptable quality and at an acceptable cost.
Because of these and other factors, our products and services may not gain market acceptance and we may not achieve profitability.
WE MAY NOT BE ABLE TO RECRUIT AND RETAIN THE EXPERIENCED SCIENTISTS AND OTHER SKILLED EMPLOYEES WE NEED.
Our future success depends on our ability to attract, retain and motivate highly skilled scientists and other skilled employees, including business development personnel. Our ability to maintain, expand or renew existing engagements with our customers, enter into new engagements, and provide additional services to our existing customers depends on our ability to hire and retain scientists with the skills necessary to keep pace
with continuing changes in drug discovery technologies. We compete with pharmaceutical and biotechnology companies, including our customers and collaborators, medicinal chemistry outsourcing companies, contract research companies, and academic and research institutions to recruit scientists. Our inability to hire additional qualified personnel may also require an increase in the workload for both existing and new personnel. We may not be successful in attracting new scientists or other skilled personnel or in retaining or motivating our existing personnel. The shortage of experienced scientists, and other factors, may lead to increased recruiting, relocation and compensation costs for such scientists, which may exceed our expectations. These increased costs may reduce our profit margins or make hiring new scientists impracticable. If we cannot attract and retain scientists and other skilled employees, we will not be able to continue our existing services or expand the services we currently provide to our customers.
WE MAY LOSE ONE OR MORE OF OUR MAJOR CUSTOMERS.
A relatively small number of customers account for a significant portion of our revenue. During the fiscal year ended June 30, 2000, our revenue from our three largest customers represented approximately 45%, 11% and 8% of our total revenue, respectively. We expect that revenue from a limited number of customers will account for a large portion of our revenue in future quarters. The terms of our contracts generally permit our customers to cancel them for a variety of reasons, many of which are beyond our control. If any one of our major customers cancels its contract with us, our revenue may decrease.
WE MAY NOT BE SUCCESSFUL IN ENTERING INTO COLLABORATIONS THAT ALLOW US TO PARTICIPATE IN THE FUTURE SUCCESS OF OUR PROPRIETARY DRUG CANDIDATES THROUGH MILESTONE AND/OR ROYALTY PAYMENTS.
One of our business strategies is to create our own proprietary drug candidates and to then enter into collaborations for the development of these drug candidates that will allow us to earn milestone and/or royalty payments. Our proprietary drug discovery program is in its early stage development and is unproven. Although we have expended, and continue to expend, time and money on internal research and development programs, we may be unsuccessful in creating valuable proprietary drug candidates that would enable us to form such collaborations and receive milestone and/or royalty payments. Only one of our current contracts provides for milestone payments, and none of our current contracts provides for royalty payments. We have not received any milestone or royalty payments since our inception. If we are unable to form collaborations under which we receive substantial milestone and/or royalty payments, we may fail to fully execute our business strategy.
EVEN IF WE ARE SUCCESSFUL IN NEGOTIATING COLLABORATIONS PROVIDING MILESTONE AND/OR ROYALTY PAYMENTS, WE MAY FAIL TO DISCOVER AND DEVELOP NEW DRUG PRODUCTS FOR OUR CUSTOMERS OR TO ACHIEVE ANY PERFORMANCE MILESTONES, AND THEREFORE, WE MAY NOT EARN ANY SUCH PAYMENTS.
We may fail to negotiate collaborations under which we receive milestone payments based on achievement of performance milestones or royalty payments based on future sales of drug products. However, if we are able to negotiate such collaborations, the use of our services or technologies may not result in the discovery of potential drug candidates that will be safe or effective and we may never receive any milestone or royalty payments. Our receipt of milestone or royalty payments may be beyond our control and will be determined by many factors, including the desire of our collaborator to continue to pursue a potential drug candidate and the ultimate commercial success of the drug. Development and commercialization of potential drug candidates depend not only on the achievement of research objectives by us and our collaborators, but also on each collaborator's financial, competitive, marketing and strategic considerations and regulation by the Food and Drug Administration and other governmental entities in the United States and other countries, all of which are beyond our control. Pharmaceutical products developed by our collaborators will require lengthy and costly pre-clinical and clinical trials and regulatory approval by governmental agencies prior to commercialization. Approvals may not be granted despite the substantial time and resources required to obtain approvals and comply with appropriate statutes and regulations. If unforeseen complications arise in the development or commercialization of the potential drug candidates by our collaborators, we may not realize milestone or royalty payments as expected, and therefore, we may fail to fully execute our business strategy.
WE MAY FAIL TO EXPAND CUSTOMER RELATIONSHIPS THROUGH INTEGRATION OF PRODUCTS AND SERVICES.
One of our business strategies is to expand our existing customer relationships across the full spectrum of our drug discovery capabilities. We may be unsuccessful in selling our full range of products and services to particular customers. We may not be able to expand existing relationships with customers that currently purchase a limited number of other products and services to cause them to purchase additional products and services; certain of our customers and collaborators have chosen not to expand their relationships with us. If we are unable to expand our customer relationships to include additional products and services, we may not be able to take full advantage of potential revenue opportunities.
OUR CONTRACTS ARE SUBJECT TO STANDARD INDUSTRY TERMINATION RISKS AND RISKS OF COST OVERRUNS ASSOCIATED WITH FIXED PRICE CONTRACTS.
In general, our contracts are terminable by our customers with 30 to 90 days' notice for a number of reasons or, in some cases, for no reason. Many of our contracts may be terminated for reasons that may be beyond our control, such as the bankruptcy or insolvency of our customers. The loss of a large contract or multiple smaller contracts, or a significant decrease in revenue derived from such contracts, could have a material adverse effect on our business. Additionally, some of our contracts for the provision of our services have a fixed price or are subject to a maximum fee. As a result, we bear the risk of cost overruns with respect to such contracts. We may not be able to perform our obligations with respect to any of these contracts at a cost equal to or less than the prescribed fixed fees or applicable maximum fees. Significant cost overruns with respect to such contracts could have a material adverse effect on our business.
WE MAY NOT BE ABLE TO ACCELERATE THE DRUG DISCOVERY PROCESS.
One of our business strategies is to facilitate the drug discovery process by identifying potential drug candidates. We have never identified a drug candidate that has been developed into a commercial drug. It is uncertain whether we will be able to make the drug discovery process more efficient or make higher quality drug candidates. The ability to accelerate the drug discovery process is dependent on many factors, including the performance and decision-making capabilities of our scientists. Although we have created an information-driven technology platform which we believe enables our scientists to make better decisions, there can be no assurance that the decisions of our scientists will be correct or that our scientists will develop viable drug candidates. If we are unable to identify potential drug candidates and facilitate the drug discovery process, our products, services and technologies may not be commercially successful.
WE MAY LOSE OUR PROPRIETARY PRODUCTS AND TECHNOLOGIES IF WE ARE UNABLE TO PROTECT THEM.
Our success will depend in part on our ability to protect our proprietary drug candidates as well as our drug screening and compound synthesis processes and other technologies we develop. One of our business strategies is to develop our own proprietary drug candidates and enter into collaborations with pharmaceutical and biotechnology companies for the development of these drug candidates. In order to protect our rights to our proprietary drug candidates we must obtain the intellectual property rights to such drug candidates. Although we have seven patent applications on file in the United States, including three provisional applications, we have not received a patent for any of our proprietary products or technologies. Some of the products and technologies that we develop already may be patented by other companies which may prevent us from obtaining patents on the products or technologies we develop. Even if we are able to obtain patents, they may be insufficient to protect our interest in these products and technologies. Protecting our patents, if obtained, may be costly and time consuming. To the extent we are unable to protect our proprietary products and technologies, our investment in them may not yield the benefits we anticipated. We also may be subject to claims that we are infringing on the intellectual property of others. We could incur significant costs in defending such claims, and if we were unsuccessful, we would be subject to liability for infringement.
OUR SUCCESS WILL DEPEND ON OUR ABILITY TO GROW AND TO MANAGE OUR GROWTH.
We have recently experienced, and expect to continue to experience, growth in the number of our employees and the scope of our operating and financial systems. Growth in our operations has placed and is expected to place a significant strain on our operational, human and financial resources. Our ability to compete effectively will depend, in large part, on our ability to hire, train and assimilate additional management, professional, scientific and technical personnel and our ability to expand, improve and effectively use our operating, management, business development and financial systems to accommodate our expanded operations. The physical expansion of our facilities to accommodate future growth may lead to significant costs and may divert management and business development resources. If we fail to effectively anticipate, implement or manage the changes required to sustain our growth, we may not be able to compete successfully.
WE MAY NOT BE ABLE TO MEET THE DELIVERY AND PERFORMANCE REQUIREMENTS SET FORTH IN OUR CUSTOMER CONTRACTS.
In order to maintain our current customer relationships and to meet the performance and delivery requirements in our customer contracts, we must be able to provide products and services at appropriate levels and with acceptable quality and at an acceptable cost. Our ability to deliver the products and provide the services we offer to our customers is limited by many factors, including the difficulty of the chemistry associated with our products and services, the lack of predictability in the scientific process and the shortage of qualified scientific personnel. In particular, revenue from our compound libraries is dependent on producing compounds, and our current commitments to provide library compounds to our customers exceeds our current rate of compound synthesis. If we are unable to meet our contractual commitments, we may delay or lose revenue, lose customers or fail to expand our existing relationships.
WE HAVE LIMITED MARKETING EXPERIENCE, AND OUR FUTURE SUCCESS DEPENDS ON OUR ABILITY TO EXPAND OUR SALES AND MARKETING ACTIVITIES.
To date, we have sold our services and products primarily through the efforts of our senior management and scientists and through customer referrals. If we are unable to attract and retain additional business development personnel and to expand our business development activities, we may not be able to achieve significant long-term growth. Further, even if we are able to build and maintain a sales and marketing force, we may not be successful in attracting new customers.
WE DEPEND ON KEY PERSONNEL FOR THE SUCCESS AND CONTINUATION OF OUR OPERATIONS.
Our performance is highly dependent on the principal members of our senior management and scientific staff, including Robert E. Conway, our Chief Executive Officer; Dr. Kevin Koch, our President and Chief Science Officer; Dr. David L. Snitman, our Chief Operating Officer and Vice President, Business Development; Dr. Anthony D. Piscopio, our Vice President, Chemistry and Director of Process Chemistry; Michael Carruthers, our Chief Financial Officer; Dr. John A. Josey, our Senior Director of High-Speed Synthesis; Dr. Laurence Burgess, our Senior Director of Medicinal Chemistry and Lead Optimization and Dr. Joanna K. Money, our Director of Business Development. Although we have employment agreements with each of the above personnel, we do not have employment agreements with all of our key personnel, and the employment agreements we do have are terminable by the employees upon 30 days' prior notice. We may not be able to retain key personnel or attract and retain additional key personnel in the future. The loss of one or more members of our senior management or scientific staff could have a material adverse effect on our business, financial condition and results of operations.
OUR QUARTERLY OPERATING RESULTS COULD FLUCTUATE SIGNIFICANTLY.
Sales of our compound libraries, lead optimization services, process research and development services and our proprietary drug candidates can typically involve significant technical evaluation and/or commitment of capital by our customers. Accordingly, the sales cycles associated with these products and services are
lengthy and subject to a number of significant risks, including customers' budgetary constraints and internal acceptance reviews that are beyond our control. Due to these lengthy and unpredictable sales cycles, our operating results could fluctuate significantly from quarter to quarter. In addition, we expect to continue to experience significant fluctuations in quarterly operating results due to a variety of factors, such as general and industry specific economic conditions that may affect the research and development expenditures of pharmaceutical and biotechnology companies.
A large portion of our expenses, including expenses for facilities, equipment and personnel, are relatively fixed. Accordingly, if our revenue declines or does not grow as anticipated, we might not be able to correspondingly reduce our operating expenses. Failure to achieve anticipated levels of revenue could significantly harm our operating results for a particular fiscal period.
Due to the possibility of fluctuations in our revenue and expenses, we believe that quarter-to-quarter comparisons of our operating results are not a good indication of our future performance. Our operating results in some quarters may not meet the expectations of stock market analysts and investors. In that case, our stock price could decline.
OUR OPERATIONS EXPOSE US TO POTENTIAL LIABILITY AND RISKS.
We develop, test and manufacture the precursors to pharmaceutical products intended for use in humans. These activities could expose us to the risk of liability for personal injury or death to persons using these products. We may be required to pay substantial damages or incur defense costs in connection with any of these claims. Our product liability insurance may not be adequate, and we may be unable to acquire or maintain adequate insurance at acceptable costs or at all. The failure of our insurance policies to protect us from these claims or liabilities could have a material adverse effect on our business, financial condition and results of operations.
WE FACE RISKS ASSOCIATED WITH ACCOMPLISHING POTENTIAL FUTURE ACQUISITIONS AND INTEGRATING THEM INTO OUR BUSINESS.
We plan to continue to review potential acquisition candidates in the ordinary course of our business and may use a portion of the proceeds from this offering for acquisitions. Acquisitions involve numerous risks, including, among others, difficulties and expenses incurred in the consummation of acquisitions and assimilation of the operations, personnel and services or products of the acquired companies, difficulties of operating new businesses, the diversion of management's attention from other business concerns and the potential loss of key employees of the acquired companies. If we do not successfully integrate any businesses we may acquire in the future, our business will suffer. Additionally, we may fail to identify suitable acquisition candidates or, if we do identify suitable acquisition candidates, we may not be able to complete such acquisitions on terms and conditions acceptable to us. We currently have no agreements or commitments with respect to any acquisition, and we may never successfully complete an acquisition.
OUR OPERATIONS COULD BE INTERRUPTED BY DAMAGE TO OUR FACILITIES.
Our operations are dependent upon the continued use of our highly specialized laboratories and equipment in Boulder, Colorado and Longmont, Colorado. Natural disasters, such as floods, could damage our laboratories or equipment, and these events may materially interrupt our business. We maintain business interruption insurance to cover lost revenue caused by such occurrences. However, this insurance would not compensate us for the loss of opportunity and potential adverse impact on relations with existing customers created by our inability to meet our customers' needs in a timely manner.
OUR CUSTOMERS MAY RESTRICT OUR USE OF SCIENTIFIC INFORMATION.
Our ability to improve the efficiency of the drug discovery services we
provide by, among other things, developing an effective informatics database,
depends in part on our ability to generate and use information that is not
proprietary to our customers and that we derive from performing these services.
However, our customers may not allow us to use information with other customers,
such as the general interaction between
types of chemistries and types of drug targets that we generate when performing drug discovery services for them. Without the ability to use this information, we may not be able to develop a database, which may limit our ability to improve the efficiency of the drug discovery services we provide.
WE MAY BE SUBJECT TO LIABILITY REGARDING HAZARDOUS WASTE MATERIALS.
Our products and services as well as our research and development processes involve the controlled use of hazardous materials. We are subject to federal, state and local laws and regulations governing the use, manufacture, storage, handling and disposal of such materials and certain waste products. We cannot eliminate the risk of accidental contamination or injury from these materials. In the event of such an accident, we could be held liable for any damages that result, and any such liability could exceed our resources and disrupt our business. In addition, we may have to incur significant costs to comply with environmental laws and regulations related to the handling or disposal of such materials or waste products in the future.
BECAUSE WE HAVE A LIMITED NUMBER OF SUPPLIERS, WE MAY INCUR INCREASED SUPPLY COSTS OR EXPERIENCE DELAY IN DELIVERING OUR PRODUCTS OR PERFORMING OUR SERVICES.
Certain key components of biological and chemical materials that we use in our products and services are currently purchased from a limited number of outside sources and may only be available through a single or only a few sources. Our reliance on our suppliers exposes us to risks, including:
- the possibility that one or more of our suppliers could terminate their services at any time without penalty;
- the potential inability of our suppliers to obtain required materials;
- the potential delays and expenses of seeking alternative sources of supply; and
- reduced control over pricing, quality and timely delivery due to the difficulties in switching to alternative suppliers.
Consequently, if materials from our suppliers are delayed or interrupted for any reason, our ability to deliver our products and perform our services could be delayed or require us to incur increased costs which could have a material adverse effect on our business.
RISKS RELATED TO OPERATING IN OUR INDUSTRY
THE DRUG RESEARCH AND DEVELOPMENT INDUSTRY IS HIGHLY COMPETITIVE.
We compete with companies in the United States and abroad that are engaged in the development and production of chemistry discovery products and services, including pharmaceutical companies, biotechnology companies, medicinal chemistry outsourcing companies, compound library suppliers and contract research companies. Academic institutions, governmental agencies and other research organizations also are conducting research and developing technologies in areas in which we provide services, either on their own or through collaborative efforts. Our pharmaceutical and biotechnology company customers have internal departments that provide products and services that directly compete with the products and services we offer. We face competition based on several factors, including size, relative expertise and sophistication, speed and costs of identifying and optimizing lead compounds and of developing and optimizing chemical processes. As new companies enter the market, we expect to face increased competition. Many of our competitors offer a broader range of products and services and have greater access to financial, technical, scientific, business development, recruiting and other resources than we do. Some of our competitors may also operate with a lower cost structure.
THE DRUG RESEARCH AND DEVELOPMENT INDUSTRY IS SUBJECT TO RAPID TECHNOLOGICAL CHANGE, AND WE MAY NOT HAVE THE RESOURCES NECESSARY TO COMPETE SUCCESSFULLY.
The pharmaceutical and biotechnology industries are characterized by rapid and continuous technological innovation. We anticipate that we will face increased competition in the future as new companies enter the market and advanced technologies become available. Our products, services and expertise may become obsolete or uneconomical due to technological advances or entirely different approaches developed by us, our customers or one or more of our competitors. For example, advances in informatics may render some of our technologies, such as our compound libraries, obsolete. While we plan to develop technologies that will give us a competitive advantage, we may not be able to develop the technologies necessary for us to successfully compete in the future. Additionally, the existing approaches of our competitors or new approaches or technologies developed by our competitors may be more effective than those we develop. We may not be able to compete successfully with existing or future competitors.
OUR SUCCESS WILL DEPEND ON THE PROSPECTS OF THE PHARMACEUTICAL AND BIOTECHNOLOGY INDUSTRIES AND THE EXTENT TO WHICH THESE INDUSTRIES USE THIRD-PARTY ASSISTANCE WITH ONE OR MORE ASPECTS OF THEIR DRUG DISCOVERY PROCESS.
Our revenue is highly dependent on research and development expenditures and the outsourcing of these expenditures by the pharmaceutical and biotechnology industries. These expenditures are based on a wide variety of factors, including the resources available for purchasing research services, the spending priorities among various types of research and the policies regarding expenditures during recessionary periods. Our financial condition and results of operations could be materially adversely affected by general economic downturns in our customers' industries, any decrease in research and development expenditures or the trend to outsource these services. Any decrease in drug discovery spending by pharmaceutical and biotechnology companies could cause our revenue to decline and adversely impact our profitability.
OUR CUSTOMERS AND COLLABORATORS ARE SUBJECT TO SUBSTANTIAL GOVERNMENT REGULATION AND THE POTENTIAL FOR FUTURE REGULATION.
We expect that a substantial portion of our revenue in the foreseeable future will come from services provided to the pharmaceutical and biotechnology industries. Accordingly, our future success is dependent upon the success of the companies within those industries and their continued demand for our services. Our customers are subject to substantial regulation by governmental entities in the United States and other countries. Various federal, and in some cases state, statutes and regulations also govern or influence the manufacture, safety, labeling, storage, record keeping and marketing of pharmaceutical products. The process of obtaining these approvals and the subsequent compliance with appropriate federal and foreign statutes and regulations are time consuming and require substantial resources.
If our customers are found to have failed to comply with applicable regulatory requirements, a wide variety of enforcement actions are possible, including fines, injunctions and civil penalties, recall or seizure of products, the issuance of public notices or warnings, operating restrictions, partial suspension or total shutdown of production, termination of ongoing research, refusal of requests for approval, withdrawal of prior approvals and criminal prosecution. If our customers fail to comply with these regulations, it could have a material adverse effect on our business. In addition, to the extent our revenue is based on successful commercialization of drug products developed by our customers, their failure to obtain necessary regulatory approvals and to gain market acceptance for these drugs could harm our financial condition and results of operations.
Our customers may be affected by the continuing efforts of governmental and third party payors to contain or reduce the costs of health care. For example, in certain foreign markets, pricing or profitability of pharmaceutical products is subject to government control. In the United States, there have been, and we expect that there will continue to be, a number of federal and state proposals to implement similar government pricing controls. It is uncertain what legislative proposals may be adopted or what actions federal, state or private third party payors for health care goods or services may take in response to any health care
reform proposals or legislation. To the extent that such proposals or reforms have a material adverse effect on pharmaceutical and biotechnology companies that are actual or prospective customers, our business may suffer.
THE CONCENTRATION OF THE PHARMACEUTICAL INDUSTRY AND THE CURRENT TREND TOWARD INCREASING CONSOLIDATION COULD REDUCE THE NUMBER OF OUR POTENTIAL CUSTOMERS.
The market for our products and services has become increasingly concentrated as a result of recent mergers and acquisitions among major pharmaceutical companies. The number of our potential customers could be reduced even further if the current trend toward consolidation of the pharmaceutical industry continues. Accordingly, we expect that we will rely on a relatively small number of customers for a substantial portion of our revenue.
Additional risks associated with a highly concentrated customer base include:
- larger companies may develop in-house technology and expertise rather than using our products and services;
- larger customers may negotiate price discounts or other terms for our products and services that are unfavorable to us; and
- the market for our products and services may become saturated.
THE INTELLECTUAL PROPERTY RIGHTS WE RELY ON TO PROTECT THE TECHNOLOGY UNDERLYING OUR PRODUCTS AND TECHNIQUES MAY BE INADEQUATE TO PREVENT THIRD PARTIES FROM USING OUR TECHNOLOGY OR DEVELOPING COMPETING PRODUCTS AND SERVICES BASED ON VERY SIMILAR TECHNOLOGY OR TO PROTECT OUR INTERESTS IN OUR PROPRIETARY DRUG CANDIDATES, AND COULD REDUCE OUR ABILITY TO COMPETE IN THE MARKET.
Our success will depend on our ability to obtain, protect and enforce patents on our technology. Although we have seven United States patent applications on file, including three provisional applications, we have not received any patents. We have engaged in limited patent prosecution in foreign countries. Any patents that we may own or license in the future may not afford meaningful protection for our technology and products. Our efforts to enforce and maintain our intellectual property rights may not be successful and may result in substantial costs and diversion of management time. In addition, others may challenge patents we may obtain in the future and, as a result, these patents could be narrowed, invalidated or rendered unenforceable or we may be forced to stop using the technology covered by these patents or to license the technology from third parties. In addition, current and future patent applications on which we depend may not result in the issuance of patents in the United States or foreign countries. Even if our rights are valid, enforceable and broad in scope, competitors may develop products based on similar technology that is not covered by our patents. Further, since there is a substantial backlog of patent applications at the U.S. Patent and Trademark Office, the approval or rejection of our or our competitors' patent applications may take several years.
In addition to patent protection, we also rely on copyright and trademark protection, trade secrets, know-how, continuing technological innovation and licensing opportunities. In an effort to maintain the confidentiality and ownership of our trade secrets and proprietary information, we require our employees, consultants and advisors to execute confidentiality and proprietary information agreements. However, these agreements may not provide us with adequate protection against improper use or disclosure of confidential information and there may not be adequate remedies in the event of unauthorized use or disclosure. Furthermore, like many companies in our industry, we may from time to time hire scientific personnel formerly employed by other companies involved in one or more areas similar to the activities conducted by us. In some situations, our confidentiality and proprietary information agreements may conflict with, or be subject to, the rights of third parties with whom our employees, consultants or advisors have prior employment or consulting relationships. Although we require our employees and consultants to maintain the confidentiality of all confidential information of previous employers, we or these individuals may be subject to allegations of trade secret misappropriation or other similar claims as a result of their prior affiliations.
Finally, others may independently develop substantially equivalent proprietary information and techniques, or otherwise gain access to our trade secrets. Our failure to protect our proprietary information and techniques may inhibit or limit our ability to exclude certain competitors from the market and execute our business strategies.
OUR SUCCESS DEPENDS IN PART ON OUR ABILITY TO OPERATE WITHOUT VIOLATING THE INTELLECTUAL PROPERTY RIGHTS OF OTHERS, WHICH MAY RESULT IN COSTLY INTELLECTUAL
PROPERTY LAWSUITS.
The drug research and development industry has a history of patent and other intellectual property litigation and patent lawsuits concerning drug discovery technologies will likely continue. Because we produce and provide many different products and services, we face potential patent infringement suits by a wide variety of companies that control patents for similar products and services. In order to protect or enforce our intellectual property rights, we may have to initiate legal proceedings against third parties. In addition, others may sue us for infringing their intellectual property rights or we may initiate a lawsuit seeking a declaration from a court that we do not infringe the proprietary rights of others. The patent positions of pharmaceutical, biotechnology and drug discovery companies are generally uncertain and involve complex legal and factual questions. No consistent policy has emerged from the U.S. Patent and Trademark Office or the courts regarding the breadth of claims allowed or the degree of protection afforded under patents like those for which we have applied. Legal proceedings relating to intellectual property would be expensive, take significant time and divert management's attention from other business concerns, whether we win or lose. The cost of such litigation could affect our profitability.
Further, if we do not prevail in an infringement lawsuit brought against us, we might have to pay substantial damages, including treble damages, and we could be required to stop the infringing activity or obtain a license to use the patented technology. Any required license may not be available to us on acceptable terms, or at all. In addition, some licenses may be nonexclusive, and therefore, our competitors may have access to the same technology licensed to us. If we fail to obtain a required license or are unable to design around a patent, we may be unable to sell some of our products or services.
RISKS RELATED TO THE OFFERING
OUR STOCK PRICE WILL LIKELY BE VOLATILE, AND YOUR INVESTMENT COULD DECLINE IN VALUE.
The trading price of our common stock is likely to be volatile and subject to wide fluctuations in price in response to various factors, many of which are beyond our control, including:
- actual or anticipated variations in quarterly operating results;
- introductions or announcements of technological innovations or new products or services by us, our collaborators or our competitors;
- disputes or other developments relating to proprietary rights, including patents, litigation matters and our ability to patent our technologies;
- changes in financial estimates by securities analysts;
- conditions or trends in the pharmaceutical and biotechnology industries;
- additions or departures of key personnel;
- the loss of a significant customer or collaborator;
- announcements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures or capital commitments;
- regulatory developments in the United States and abroad;
- public concern as to the efficacy of new drug discovery techniques; and
- economic and political factors.
In addition, the stock market in general, and the market for life sciences companies in particular, have experienced significant price and volume fluctuations that have often been unrelated or disproportionate to operating performance. These broad market and industry factors may seriously harm the market price of our common stock, regardless of our operating performance. In the past, following periods of volatility in the market price of a company's securities, securities class action litigation has often been instituted. A securities class action suit against us could result in potential liabilities, substantial costs and the diversion of management's attention and resources, regardless of whether we win or lose.
THERE MAY NOT BE AN ACTIVE, LIQUID TRADING MARKET FOR OUR COMMON STOCK.
Prior to this offering, there has been no public market for our common stock. An active trading market for our common stock may not develop or be maintained following this offering. As a result, you may not be able to sell your shares quickly or at the market price. The initial public offering price will be determined by negotiation between us and representatives of the underwriters based upon a number of factors and may not be indicative of prices that will prevail in the trading market. The market price of our common stock may decline below the initial public offering price, and you may not be able to resell your shares at or above the initial offering price. See "Underwriting" below for a discussion of the factors to be considered in determining the initial public offering price.
WE MAY INVEST OR SPEND THE PROCEEDS OF THIS OFFERING IN WAYS THAT DO NOT YIELD A FAVORABLE RETURN.
We have not yet determined the allocation of the proceeds from this offering, and we will retain broad discretion over the use of the proceeds. You may not agree with how we spend the proceeds, and our use of the proceeds may not yield a significant return or any return at all. For example, we may use the proceeds to acquire new businesses or technologies that are unproven and may not ultimately generate revenue for us.
IF WE NEED BUT ARE UNABLE TO OBTAIN ADDITIONAL FUNDING TO SUPPORT OUR OPERATIONS, WE WOULD HAVE TO REDUCE OR CEASE OPERATIONS OR ATTEMPT TO SELL ALL OR A PART OF OUR OPERATIONS.
We may need substantial funds to continue to research, develop and enhance our products and services. To the extent that our capital resources are insufficient to meet future capital requirements, we will have to raise additional funds to continue the development of our products and services. We may not be able to raise funds on favorable terms, if at all. Our current operating plan could change as a result of many factors, and we could require additional funding sooner than anticipated. Our requirements for additional capital may be substantial and will depend on many factors, some of which are beyond our control, including:
- market acceptance of our products and services;
- continued progress of our research and development of our products and services;
- acquisitions of other companies in exchange for cash, and the capital needs of any acquired companies;
- competing technological and market developments;
- the cost of protection of patent and other intellectual property rights; and
- further development of our production and business development capabilities.
To the extent that we raise additional capital through the sale of equity or convertible debt securities, the issuance of those securities would result in dilution to our stockholders. Moreover, incurring debt financing could result in a substantial portion of our operating cash flow being dedicated to the payment of principal and interest on such indebtedness, could render us more vulnerable to competitive pressures and economic downturns and could impose restrictions on our operations. If adequate funds are not available, we may be required to curtail operations significantly or to obtain funds through other arrangements on unattractive terms.
FUTURE SALES OF OUR COMMON STOCK MAY DEPRESS OUR STOCK PRICE.
The market price of our common stock could decline as a result of sales of substantial amounts of our common stock in the public market after the closing of this offering, or the perception that these sales could occur. In addition, these factors could make it more difficult for us to raise funds through future offerings of common stock. There will be 21,367,409 shares of common stock outstanding immediately after this offering, or 22,167,409 shares if the underwriters exercise their over-allotment option in full, based on the number of shares outstanding at August 31, 2000. All of the shares sold in the offering will be freely transferable without restriction or further registration under the Securities Act of 1933, except for any shares purchased by our "affiliates" as defined in Rule 144 under the Securities Act. Assuming the underwriters do not exercise their overallotment option, the remaining 15,367,409 shares of common stock outstanding will be "restricted securities" as defined in Rule 144, of which 782,107 shares will, subject to Rule 144, be available for sale immediately following this offering, and 14,585,302 will, subject to Rule 144, be available for sale following the expiration of the 180 day lock-up period. These shares may be sold in the future without registration under the Securities Act to the extent permitted by Rule 144 or other exemptions under the Securities Act.
After this offering, we intend to register 7,800,000 shares of common stock that are reserved for issuance upon exercise of options granted or reserved for grant under our stock option plan and our employee stock purchase plan. Once we register these shares, they can be sold in the public market upon issuance, subject to restrictions under the securities laws applicable to resales by affiliates. The number of shares that are reserved for issuance under our stock option plan may increase based on our issued and outstanding shares of common stock, and we may register such additional shares in the future.
BECAUSE IT IS UNLIKELY THAT WE WILL PAY DIVIDENDS, YOU WILL BE ABLE TO BENEFIT FROM HOLDING OUR STOCK ONLY IF THE STOCK PRICE APPRECIATES.
We have never paid cash dividends on our capital stock and do not anticipate paying any cash dividends in the foreseeable future. Therefore, an investment in our common stock will only generate value if our stock price appreciates.
YOU WILL EXPERIENCE IMMEDIATE AND SUBSTANTIAL DILUTION AS A RESULT OF THIS OFFERING AND MAY EXPERIENCE ADDITIONAL DILUTION IN THE FUTURE.
The initial public offering price of our common stock is expected to be substantially higher than the net tangible book value per share of our common stock. Therefore, if you purchase shares of our common stock in this offering, you will incur immediate and substantial dilution of approximately $7.30 in the pro forma net tangible book value per share of common stock from the price per share that you pay for the common stock, based upon an assumed initial public offering price of $11.00 per share. If the holders of outstanding options or warrants exercise those options or warrants at prices below the initial public offering price, you will incur further dilution. We may also acquire other companies or technologies or finance strategic alliances by issuing equity, which may result in additional dilution to our stockholders.
ANTI-TAKEOVER PROVISIONS IN OUR CHARTER AND BYLAWS MAKE A THIRD PARTY ACQUISITION OF US DIFFICULT.
Our certificate of incorporation and bylaws contain provisions that could make it more difficult for a third party to acquire us, even if doing so would be beneficial to our stockholders. These provisions could limit the price that investors might be willing to pay in the future for shares of our common stock. We are also subject to provisions of Delaware law that could delay, deter or prevent a change in control. See "Description of Capital Stock -- Anti-Takeover Provisions" for additional information.
OUR EXECUTIVE OFFICERS, DIRECTORS AND PRINCIPAL STOCKHOLDERS OWN A LARGE PERCENTAGE OF OUR VOTING COMMON STOCK AND COULD LIMIT NEW STOCKHOLDERS FROM INFLUENCING CORPORATE DECISIONS.
Immediately after this offering, our executive officers, directors and current principal stockholders, and their respective affiliates, will beneficially own approximately 64% of our outstanding common stock. These stockholders, if acting together, would be able to control substantially all matters requiring approval by our stockholders, including mergers, sales of assets, the election of all directors and approval of other significant corporate transactions.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS AND INDUSTRY DATA
This prospectus contains forward-looking statements. We use words like "believe," "intend," "expect," "may," "will," "should," "plan," "project," "contemplate," "anticipate" and similar expressions to identify these forward-looking statements. We have based these forward-looking statements on our current expectations and projections about the growth of our business, our financial performance and the development of our industry. Because these statements reflect our current views concerning future events, these forward- looking statements involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of many factors, including the risks described in "Risk Factors," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Business" and elsewhere in this prospectus. We undertake no obligation to update publicly any forward-looking statements for any reason, even if new information becomes available or other events occur in the future.
Information regarding market and industry statistics contained in the "Prospectus Summary" and "Business" sections of this prospectus is included based on information available to us that we believe is accurate. It is generally based on academic and other publications that are not produced for purposes of securities offerings or economic analysis. We have not reviewed or included data from all sources and cannot assure you of the accuracy of the data we have included.
USE OF PROCEEDS
We estimate our net proceeds from the sale of 6,000,000 shares of common stock in this offering will be approximately $60,580,000, or approximately $68,764,000 if the underwriters exercise their over-allotment option in full, based on an assumed initial public offering price of $11.00 per share, after deducting the estimated underwriting discount and offering expenses.
We currently intend to use the net proceeds to fund our operations, including continued development and manufacturing of existing products as well as research and development of additional products and services, hire additional personnel and expand our facilities to be able to meet the growing needs of our business. We also may use a portion of the net proceeds to acquire or invest in new products, businesses or technologies and pay down our indebtedness. We intend to use the balance of the net proceeds for general corporate purposes, including working capital. Our management may spend the proceeds from this offering in ways that the stockholders may not deem desirable.
Pending the application of the net proceeds towards one of the above uses, we intend to invest the net proceeds in investment-grade, interest-bearing securities. We cannot predict whether the investment of the proceeds will yield a favorable return.
The foregoing represents our current intentions based upon our present plans and business condition. Our management will have broad discretion in the application of the net proceeds from this offering, and the occurrence of unforeseen events or changed business conditions could result in the application of the net proceeds from this offering in a manner other than as described in this prospectus.
DIVIDEND POLICY
We have never declared or paid any cash dividends on our capital stock, and we do not intend to pay any cash dividends in the foreseeable future. We currently intend to retain all available funds and any future earnings for use in the operation of our business and to fund future growth.
CAPITALIZATION
The following table sets forth our total long-term debt, including current portion, and capitalization as of June 30, 2000 presented:
- on an actual basis;
- on a pro forma basis to give effect to the issuance of 1,666,667 shares of our Series C preferred stock in August 2000 and the automatic conversion of our Series A preferred stock, Series B preferred stock and Series C preferred stock into shares of our common stock upon the closing of this offering on a one-for-one basis, as if these events had occurred as of June 30, 2000; and
- on a pro forma as adjusted basis to give effect to the sale of 6,000,000 shares of our common stock at an assumed initial public offering price of $11.00 per share, after deducting the estimated underwriting discount and offering expenses.
The following table should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the financial statements and related notes thereto included elsewhere in this prospectus.
AS OF JUNE 30, 2000
---------------------------------
PRO FORMA
ACTUAL PRO FORMA AS ADJUSTED
------- --------- -----------
(IN THOUSANDS, EXCEPT SHARE
AND PER SHARE AMOUNTS)
Long-term debt, including current portion................... $ 4,556 $ 4,556 $ 4,556
------- ------- -------
Stockholders' equity:
Preferred stock, par value $.001 per share; 10,100,000
shares
authorized actual, 11,825,000 shares authorized pro forma
and
10,000,000 shares authorized pro forma as adjusted
Series A convertible preferred stock; 6,635,000 shares
issued
and outstanding actual and no shares issued and
outstanding
pro forma and pro forma as adjusted.................. 7 -- --
Series B convertible preferred stock; 3,199,999 shares
issued
and outstanding actual and no shares issued and
outstanding
pro forma and pro forma as adjusted.................. 3 -- --
Series C convertible preferred stock; no shares issued
and outstanding actual, pro forma and pro forma as
adjusted............................................. -- -- --
------- ------- -------
Total preferred stock............................. 10 -- --
------- ------- -------
Common stock, par value $.001 per share; 17,000,000 shares
authorized actual, 20,225,000 shares authorized pro forma
and 60,000,000 shares authorized pro forma as adjusted;
3,370,207 shares issued and outstanding actual, 14,871,873
shares issued and outstanding pro forma and 20,871,873
shares issued and outstanding pro forma as adjusted....... 3 15 21
Additional paid-in capital.................................. 17,430 27,393 87,967
Accumulated deficit......................................... (9,087) (9,087) (9,087)
Notes receivable for common stock -- (related party)........ (394) (394) (394)
Deferred compensation....................................... (1,310) (1,310) (1,310)
------- ------- -------
Total stockholders' equity........................ 6,652 16,617 77,197
------- ------- -------
Total capitalization.............................. $11,208 $21,173 $81,753
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The above table does not reflect the following:
- 2,854,844 shares of common stock underlying options outstanding as of June 30, 2000 at a weighted-average exercise price of $0.384 per share;
- 110,750 shares of common stock, assuming the automatic conversion of our Series A and Series B preferred stock, underlying warrants to purchase preferred stock outstanding as of June 30, 2000 at a weighted-average exercise price of $3.15 per share; and
- 25,816 shares available as of June 30, 2000 for issuance or future grants under our stock option plan.
DILUTION
As of June 30, 2000, our pro forma net tangible book value would have been $16.5 million, or $1.11 per share of common stock. Our pro forma net tangible book value per share represents our pro forma total tangible assets less pro forma total liabilities, divided by the number of shares of common stock outstanding on that date and assumes the issuance of 1,666,667 shares of our Series C preferred stock in August 2000 and the conversion of all outstanding shares of our preferred stock, which convert automatically into shares of common stock on a one-for-one basis upon the closing of this offering. Without taking into account any other changes in our pro forma net tangible book value per share after June 30, 2000, other than to give effect to the sale of the 6,000,000 shares of common stock offered by this prospectus at an assumed initial public offering price of $11.00 per share, after deducting the estimated underwriting discount and offering expenses, our pro forma as adjusted net tangible book value as of June 30, 2000 would have been $77.1 million, or $3.70 per share. This represents an immediate increase in pro forma as adjusted net tangible book value to existing stockholders of $2.59 per share and an immediate dilution to new investors who purchase shares of common stock in this offering of $7.30 per share. Dilution equals the difference between the amount per share paid by new investors who purchase shares of common stock in this offering and the pro forma as adjusted net tangible book value per share upon the closing of this offering. The following table illustrates the per share dilution:
Assumed initial public offering price per share............. $11.00
Pro forma net tangible book value per share as of June 30,
2000................................................... $1.11
Increase per share attributable to new investors.......... 2.59
-----
Pro forma as adjusted net tangible book value per share
after this offering....................................... 3.70
------
Dilution in pro forma net tangible book value per share to
new investors............................................. $ 7.30
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The following table illustrates, on a pro forma as adjusted basis, as of June 30, 2000, the differences between the number of shares of common stock purchased from us, the total consideration paid to us and the average price per share paid to us (1) by existing stockholders, and (2) by the new investors who purchase shares of common stock in this offering at the assumed initial public offering price of $11.00 per share, before deducting the estimated underwriting discount and offering expenses.
SHARES
PURCHASED TOTAL CONSIDERATION AVERAGE PRICE
---------- --------------------- -------------------
NUMBER PERCENT AMOUNT PERCENT PER SHARE
---------- ------- ----------- ------- ---------
Existing stockholders.................... 14,871,873 71% $25,426,762 28% $ 1.71
New investors............................ 6,000,000 29% 66,000,000 72% 11.00
---------- ------- ----------- -------
Total.......................... 20,871,873 100% $91,426,762 100%
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The discussion and table assume:
- the automatic conversion of our Series A, Series B and Series C preferred stock on a one-for-one basis into 11,501,666 shares of our common stock;
- no exercise of options outstanding under our stock option plan as of June 30, 2000;
- no exercise by the underwriters of their over-allotment option to purchase up to 800,000 additional shares of common stock from us and up to 100,000 shares of common stock from two of our stockholders; and
- no exercise by any of our security holders of any outstanding warrants.
As of June 30, 2000, there were options outstanding to purchase a total of 2,854,844 shares of common stock at a weighted-average price of $0.384 per share. As of the same date, there were warrants to purchase a total of 110,750 shares of common stock, assuming the automatic conversion of our Series A and Series B preferred stock, at a weighted-average exercise price of $3.15 per share. There will be further dilution to new investors who purchase shares of common stock in this offering to the extent any of our options or warrants are exercised.
SELECTED FINANCIAL DATA
The selected financial data presented below are derived from our audited financial statements appearing elsewhere in this prospectus for the following periods: (1) our statements of operations data from February 6, 1998 (inception) to June 30, 1998, and for the twelve-month periods ended June 30, 1999 and June 30, 2000; and (2) our balance sheet data at June 30, 1998, June 30, 1999 and June 30, 2000.
The pro forma net loss per share data gives effect to the automatic conversion of all of our outstanding preferred stock upon the closing of this offering. The cost of revenue, research and development expense, and selling, general and administrative expense data below excludes compensation related to stock option grants.
The financial statements as of and for the periods ended June 30, 1998, June 30, 1999 and June 30, 2000 have been audited by Ernst & Young LLP, independent auditors. It is important that you also read "Management's Discussion and Analysis of Financial Condition and Results of Operations," as well as our audited financial statements and the related notes included elsewhere in this prospectus. The historical results presented below are not necessarily indicative of the results to be expected for any future period.
PERIOD FROM
FEBRUARY 6, 1998 YEARS ENDED JUNE 30,
(INCEPTION) TO ------------------------------
JUNE 30, 1998 1999 2000
------------------- ------------- --------------
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
STATEMENTS OF OPERATIONS DATA:
Revenue.............................................. $ -- $ 1,504 $ 6,774
Cost of revenue...................................... -- 1,033 4,402
----------- ---------- -----------
Gross profit......................................... -- 471 2,372
Research and development expenses.................... -- 3,301 3,928
Selling, general and administrative expenses......... 62 1,522 2,430
Compensation related to stock option grants.......... -- -- 716
----------- ---------- -----------
Total operating expenses............................. 62 4,823 7,074
----------- ---------- -----------
Loss from operations................................. (62) (4,352) (4,702)
Interest expense..................................... -- (136) (384)
Interest income...................................... 13 181 356
----------- ---------- -----------
Net loss............................................. $ (49) $ (4,307) $ (4,730)
=========== ========== ===========
Basic and diluted net loss per share................. $ (0.06) $ (1.48) $ (1.54)
=========== ========== ===========
Shares used in computing basic and diluted
net loss per share................................. 863,964 2,918,367 3,063,439
=========== ========== ===========
Pro forma basic and diluted net loss
per share (unaudited).............................. $ (0.40)
===========
Shares used in computing pro forma basic and diluted
net loss per share (unaudited)..................... 11,697,343
===========
|
AS OF JUNE 30,
---------------------------
1998 1999 2000
------- ------- -------
(IN THOUSANDS)
BALANCE SHEET DATA:
Cash, cash equivalents and marketable securities............ $ 2,608 $ 2,186 $ 5,784
Other current assets........................................ 192 1,819 2,764
Property, plant and equipment, net.......................... 6 2,872 6,911
Other assets................................................ 4 248 364
Total assets.............................................. $ 2,810 $ 7,125 $15,823
Total current liabilities................................... 57 2,744 6,338
Long-term debt, less current portion........................ -- 1,824 2,833
Total stockholders' equity.................................. 2,753 2,557 6,652
Total liabilities and stockholders' equity................ $ 2,810 $ 7,125 $15,823
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion of our financial condition and results of operations should be read in conjunction with the financial statements and the notes to those statements included elsewhere in this prospectus. This discussion may contain forward-looking statements that involve risks and uncertainties. As a result of many factors, such as those set forth under "Risk Factors" and elsewhere in this prospectus, our actual results may differ materially from those anticipated in these forward-looking statements.
OVERVIEW
We offer a broad range of products and services to pharmaceutical and biotechnology companies to bridge the gap between target discovery and pre-clinical and clinical development of potential drug candidates. Our experienced scientists provide premium products and services to create, evaluate and optimize potential drug candidates. In addition, we have developed an information-driven technology platform to support our scientists in making better decisions at each stage of the drug discovery process. We also leverage our capabilities internally to develop proprietary drug candidates in collaboration with our customers. We have incurred net losses since inception and expect to incur losses in the near future as we expand our scientific staff and continue the scale-up of our operations. To date, we have funded our operations primarily through the issuance of equity securities, borrowings and revenue from our collaborators. As of June 30, 2000, we had an accumulated deficit of $9.1 million.
We generate revenue by selling products and providing services to our collaborators. Since our existing collaboration agreements provide commingled revenue, we do not report product and service revenue separately in our financial statements. In general, we sell our compounds, including our Optimer building blocks and Diversity Library, on a per-compound basis, although some of our contracts allow our customers to obtain exclusive rights to particular compounds upon the payment of additional fees. We are typically paid for our services under our collaboration agreements based on the number of full-time equivalent employees contractually assigned to a project, at an annual full-time equivalent price, plus certain expenses. Custom libraries and other custom synthesis performed by us under our service agreements are typically charged on a per-delivered compound basis, plus a charge for research and development. In addition, one of our collaboration agreements provides for additional payments upon our achievement of certain milestones. Under future contracts, we may also receive license fees and royalties. We have not yet generated any license fees or milestone or royalty payments. In general, our collaborators may terminate our collaboration agreements with them on 30 to 90 days' prior notice. During fiscal year 2000, ICOS Corporation, Celltech Chiroscience Ltd. and Merck & Co., Inc. accounted for 45%, 11% and 8%, respectively, of our total revenue. We will seek to generate revenue from new collaboration agreements that will reduce our concentration of revenue.
We generally recognize revenue upon shipment of our products or upon performance under our collaboration agreements. Revenue from our full-time equivalent collaboration service agreements is recognized on a monthly or per diem basis as work is performed. Revenue from our development, fixed-fee and fee-per-compound collaboration service agreements is recognized either on a percentage of completion basis or as compounds are shipped.
Cost of revenue consists mainly of compensation, associated fringe benefits, and other product- or service-related costs, including recruiting and relocation, fine chemicals, supplies, small tools, facilities, depreciation, and other direct and indirect chemical handling and laboratory support costs, excluding any costs related to research and development.
Research and development expenses consist of the same type of scientific expenditures that comprise cost of revenue, except that the expenses are related to the development of our early-stage intellectual property and products where we have not yet proven technological feasibility. Costs of routine, or production-related, activities are charged to cost of revenue.
Selling, general and administrative expenses consist mainly of compensation and associated fringe benefits and other management, business development, accounting, information technology and administration
costs, including consulting and professional services, travel and meals, advertising, sales commissions, facilities, depreciation and other office expenses.
We currently sell our products and services directly to pharmaceutical and biotechnology companies through our senior management and scientists and through customer referrals. In addition, we sell our products and services in Japan through an agent. International revenue represented 9% of our total revenue during fiscal year 2000. The majority of our international revenue was attributed to European sales, and the remaining was attributed to sales in Japan. All of our collaboration agreements and purchase orders are denominated in United States dollars.
We intend to grow our revenue with existing customers and to realize new revenue streams through collaborations with a diversified group of pharmaceutical and biotechnology companies. In addition, we expect to enter into contracts that allow us to participate in the success of potential drug candidates with our collaborators through milestone and/or royalty payments and to participate in the success of our proprietary potential drug candidates through a combination of licensing fees, milestone and/or royalty payments. We expect our growth to require significant ongoing investment in facilities, scientific personnel and business development resources.
RESULTS OF OPERATIONS
The following table presents our results of operations for the eight quarters in the period ending June 30, 2000. This information has been compiled from our unaudited interim financial statements. Our unaudited financial statements have been prepared on the same basis as our audited financial statements. All adjustments, consisting only of normal recurring accruals considered necessary for a fair presentation, have been included. The cost of revenue, research and development expense, and selling, general and administrative expense data in the following table excludes compensation related to stock option grants. The results of operations for any quarter are not necessarily indicative of the results of operations for any future period.
THREE MONTHS ENDED
--------------------------------------------------------------------------------------------
SEPTEMBER 30, DECEMBER 31, MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31,
1998 1998 1999 1999 1999 1999
------------- ------------ ------------- ------------- ------------- -------------
(IN THOUSANDS)
Revenue.............. $ -- $ 39 $ 462 $ 1,002 $1,350 $ 1,351
Cost of revenue...... 11 23 328 671 817 801
----- ------- ------- ------- ------ -------
Gross profit......... (11) 16 134 331 533 550
Research and
development
expenses........... 778 751 962 810 696 920
Selling, general and
administrative
expenses........... 206 462 354 500 439 739
Compensation related
to stock option
grants............. -- -- -- -- -- 283
----- ------- ------- ------- ------ -------
Total operating
expenses........... 984 1,213 1,316 1,310 1,135 1,942
----- ------- ------- ------- ------ -------
Loss from
operations......... (995) (1,197) (1,182) (979) (602) (1,392)
----- ------- ------- ------- ------ -------
Interest expense..... -- (16) (44) (75) (84) (87)
Interest income...... 58 48 36 39 25 86
----- ------- ------- ------- ------ -------
Net loss..... $(937) $(1,165) $(1,190) $(1,015) $ (661) $(1,393)
===== ======= ======= ======= ====== =======
THREE MONTHS ENDED
-----------------------------
MARCH 31, JUNE 30,
2000 2000
------------- -------------
(IN THOUSANDS)
Revenue.............. $ 1,825 $ 2,248
Cost of revenue...... 1,168 1,616
------- -------
Gross profit......... 657 632
Research and
development
expenses........... 1,016 1,296
Selling, general and
administrative
expenses........... 550 702
Compensation related
to stock option
grants............. 199 234
------- -------
Total operating
expenses........... 1,765 2,232
------- -------
Loss from
operations......... (1,108) (1,600)
------- -------
Interest expense..... (87) (126)
Interest income...... 126 119
------- -------
Net loss..... $(1,069) $(1,607)
======= =======
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FISCAL YEARS ENDED JUNE 30, 2000 AND 1999
Revenue. Total revenue increased to $6.8 million in fiscal year 2000 from $1.5 million in fiscal year 1999. The revenue increase from fiscal year 1999 to fiscal year 2000 was primarily a result of a full year of operations in fiscal year 2000 versus start-up activities during a portion of fiscal year 1999. Sales increased in all products and services offered, and most significantly in lead optimization services, process chemistry services and subscriptions to our Diversity Library.
Cost of revenue. Cost of revenue increased to $4.4 million in fiscal year 2000 from $1.0 million in fiscal year 1999, reflecting the increased cost to support our revenue growth in the same period. The cost increases were primarily attributed to recruiting and relocating additional scientific staff, associated salaries and benefits and the start-up expenditures associated with equipping and commencing operations in our new and expanded facilities. These and other costs are expected to continue to increase in the future to support our growth. We expect salaries for our scientific personnel to increase in future years at a rate in excess of general inflation because of the increased market demand for scientists. Cost of revenue was 65% of revenue in fiscal year 2000, compared to 69% in fiscal year 1999. The reduction in cost of revenue as a percentage of revenue in 2000 as compared to 1999 was due primarily to a larger revenue base against which to apply certain fixed costs.
Research and development expenses. Research and development expenses increased to $3.9 million in fiscal year 2000 from $3.3 million in fiscal year 1999. The increase in research and development expenses in fiscal year 2000 was primarily attributed to expanded research efforts for our collections of our Diversity Library compounds and custom synthesis collaborations. These expanded research efforts required the recruitment and relocation of additional scientific staff, associated salaries and benefits and the start-up expenditures associated with equipping and commencing operations in our new and expanded facilities. We plan to increase our research and development efforts related to the discovery of additional intellectual property, which will result in increased research and development expenses.
Selling, general and administrative expenses. Selling, general and administrative expenses totaled $2.4 million in fiscal year 2000, compared to $1.5 million in fiscal year 1999. The increase in selling, general and administrative expenses in fiscal year 2000 was primarily attributed to our increased staffing levels and expanded management. The recruitment and relocation of senior management was a significant component of our selling, general and administrative expense in fiscal year 2000.
Compensation related to stock option grants. Compensation related to stock option grants was $716,000 in fiscal year 2000. There was no compensation related to stock option grants in fiscal year 1999. In fiscal year 2000, we recorded deferred stock compensation of $1.3 million. Both the current and deferred compensation related to stock option grants are the result of options awarded to employees with exercise prices below the fair value of our common stock for financial accounting purposes on the dates these options were granted. This expense relates primarily to the selling, general and administrative functional area. Additional deferred compensation totaling $3.9 million will be recorded for options granted between June 30, 2000 and August 31, 2000. Assuming the consummation of this offering, we expect to amortize deferred stock compensation as follows: $2.2 million in fiscal year 2001; $1.2 million in fiscal year 2002; $931,000 in fiscal year 2003; $883,000 in fiscal year 2004 and $19,000 in fiscal year 2005. Of the $2.2 million in deferred compensation we expect to amortize in fiscal year 2001, $793,000 is directly attributable to unvested options that will be accelerated and exercisable upon the closing of this offering. To date, we have granted our employees stock options as annual incentive bonus awards. Any future annual incentive bonus awards may include a partial cash component in addition to stock-based compensation. You should read Note 5 of the notes to our financial statements included elsewhere in this prospectus for additional information.
Interest income or expense. We had net interest expense of approximately $28,000 in fiscal year 2000, compared to net interest income of approximately $45,000 in fiscal year 1999. The net interest expense in fiscal year 2000 compared with net interest income in fiscal year 1999 was primarily due to increased borrowing to finance equipment purchases, offset partially by larger interest income from our larger balances of cash, cash equivalents and marketable securities in fiscal year 2000.
FOR THE PERIOD FROM FEBRUARY 6, 1998 (INCEPTION) TO JUNE 30, 1998
We were formed in February 1998, but we did not begin incurring costs until May 1998. Our operations in May and June of 1998 consisted primarily of obtaining equity financing, leasing facilities, hiring personnel and travelling to prospective customer locations. A comparison of this period to operations data from fiscal year 1999 would not be meaningful.
LIQUIDITY AND CAPITAL RESOURCES
We have funded our operations principally with $25.3 million of private equity financing and $7.9 million in short-term and long-term debt and equipment financing arrangements. Equity investments came from a common stock offering and a series of three preferred stock offerings that occurred from May 1998 through August 2000.
Between May 19, 1998 and January 15, 1999, we issued 6,635,000 shares of our Series A preferred stock resulting in gross proceeds of $6.6 million and 2,913,367 shares of our common stock resulting in gross proceeds of $685,000. On November 16, 1999, we issued 3,199,999 shares of our Series B preferred stock resulting in gross proceeds of $8.0 million. On August 31, 2000, we issued 1,666,667 shares of our Series C preferred stock resulting in gross proceeds of $10.0 million.
In May 1998, we loaned an aggregate of $350,000 to three of our founders to purchase shares of our common stock. These loans are secured by pledges of certain shares of common stock owned by these founders, bear interest at a rate of 6.0% per annum and, in the case of two of the founders who are employees, are due on the earlier of September 1, 2002 or the date the founder's employment with us is terminated. In the case of the third founder, who is not an employee, the note is due on May 18, 2002. As of June 30, 2000, approximately $394,000 in principal and accrued interest remains outstanding under these loans. See "Related Party Transactions" included elsewhere in this prospectus.
In November 1998 and February 1999, we drew down the entirety of a $1.5 million loan from Silicon Valley Bank for the acquisition of equipment pursuant to a Loan and Security Agreement dated as of October 9, 1998. The notes reflecting this loan are payable in monthly installments with a final payment of 8.0% of the initial loan draw due at maturity, mature 42 months from the date of the initial funding under the loan and bear interest at a rate equal to the yield to maturity of the 42-month United States Treasury note as of the funding date, plus 3.0%. As of June 30, 2000, approximately $1.0 million in principal and accrued interest remained outstanding under these notes. In addition, on October 9, 1998, we issued a warrant to Silicon Valley Bank in connection with this loan to purchase 40,000 shares of our Series A preferred stock at an exercise price of $1.00 per share, subject to certain adjustments.
In February 1999, we entered into a Master Note and Security Agreement with Leasing Technologies International, Inc. for a $1.5 million secured installment loan to finance our acquisition of equipment. We drew down the entire loan during the following 13 months. The notes reflecting this loan are payable in monthly installments with a final payment of 8.0% of the initial funding due at maturity, mature 42 months from the date of the initial funding and bear interest at a rate averaging approximately 11.9%. As of June 30, 2000, approximately $1.4 million in principal and accrued interest remained outstanding under this loan. In addition, on March 30, 1999, we issued a warrant to Leasing Technologies International, Inc. in connection with this loan to purchase 13,750 shares of our Series A preferred stock at an exercise price of $3.00 per share, subject to certain adjustments.
In April 1999, we drew down the entirety of a $500,000 loan from Silicon Valley Bank for the acquisition of equipment pursuant to a Loan and Security Agreement dated as of March 26, 1999. The notes reflecting this loan are payable in monthly installments with a final payment of 8.0% of the initial loan draw due at maturity, mature 42 months from the date of the initial funding under the loan and bear interest at a rate equal to the yield to maturity of the 42-month United States Treasury note as of the funding date, plus 3.0%. The notes do not have a prepayment option. As of June 30, 2000, approximately $354,000 in principal and interest remained outstanding under these notes. In addition, on March 31, 1999, we issued a warrant to Silicon Valley Bank in connection with this loan to purchase 7,000 shares of our Series B preferred stock at an exercise price of $2.50 per share, subject to certain adjustments.
In May 2000, we entered into a Loan and Security Agreement with Silicon Valley Bank for a $4.0 million line of credit permitting advances over a one-year period to finance the acquisition of equipment. Each advance plus interest must be paid in monthly installments within 36 months of the date of such advance. Interest accrues on outstanding amounts at a rate of 1.25% over Silicon Valley Bank's prime rate, which may be reduced based on our financial performance. We may prepay the line of credit upon paying an
early termination fee. As of June 30, 2000, approximately $2.0 million was outstanding, and in July 2000, we drew down the remaining $2.0 million. In addition, we issued Silicon Valley Bank a warrant to purchase 50,000 shares of our Series B preferred stock at an exercise price of $5.00 per share, subject to certain adjustments.
At June 30, 2000, cash, cash equivalents and marketable securities totaled $5.8 million compared to $2.2 million at June 30, 1999. Net cash used in operating activities was $1.3 million for fiscal year 2000. Our net loss of $4.7 million was offset by non-cash charges of $1.7 million, while a reduction in working capital of $1.3 million accounted for most of the remainder of net cash used in operations. Working capital declined due to increased accounts payable, and advances from customers which exceeded the increases in accounts receivable and inventories. The increase in these operating assets and liabilities reflect the expansion of our business during fiscal year 2000.
In fiscal year 2000, we invested in capital equipment and leasehold improvements totaling $5.0 million. Financing activities provided $10.1 million consisting of $8.0 million from the sale of our Series B preferred stock and $2.9 million from borrowings under our bank loans, less the repayment of $871,000 in equipment financing.
Our future capital requirements will depend on a number of factors, including our success in increasing sales of both existing and new products and services, expenses associated with unforeseen litigation, regulatory changes, competition, technological developments and potential future merger and acquisition activity. We believe that our existing cash, cash equivalents and marketable securities and anticipated cash flow from existing collaboration agreements together with the net proceeds of this public offerings will be sufficient to support our current operating plan for at least the next 12 months. We have based this estimate on assumptions that may prove to be wrong. Our forecast of the period of time through which our financial resources will be adequate to support our operations is a forward-looking statement that involves risks and uncertainties, and actual results could vary as a result of a number of factors. Our future capital requirements will depend on many factors, including:
- the progress of our research activities;
- the number and scope of our research programs;
- the progress of our preclinical and clinical development activities;
- the progress of the development efforts of our collaborators;
- our ability to establish and maintain current and new collaboration agreements;
- the costs involved in enforcing patent claims and other intellectual property rights;
- the costs and timing of regulatory approvals; and
- the costs of establishing business development and distribution capabilities.
Future capital requirements will also depend on the extent to which we acquire or invest in businesses, products and technologies. Until we can generate sufficient levels of cash from our operations, which we do not expect to achieve for at least several years, we expect to finance future cash needs through the sale of equity securities, strategic collaboration agreements and debt financing as well as interest income earned on cash balances. We cannot assure you that additional financing or collaboration agreements will be available when needed or that, if available, this financing will be obtained on terms favorable to us or our stockholders. Insufficient funds may require us to delay, scale back or eliminate some or all of our research or development programs or to relinquish greater or all rights to product candidates at an earlier stage of development or on less favorable terms than we would otherwise choose or may adversely affect our ability to operate as a going concern. If additional funds are raised by issuing equity securities, substantial dilution to existing stockholders may result.
At June 30, 2000, we had federal and Colorado income tax net operating loss
carryforwards for income tax purposes of approximately $8.4 million, which will
expire through 2020. We have provided a
100% valuation allowance against the related deferred tax assets as realization of such tax benefits is not assured.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Short-term investments. Our interest income is sensitive to changes in the general level of United States interest rates, particularly since a significant portion of our investments are and will be in short-term marketable securities. Due to the nature and maturity of our short-term investments, we have concluded that there is no material market risk exposure.
Foreign currency rate fluctuations. We have not taken any action to reduce our exposure to changes in foreign currency exchange rates, such as options or futures contracts, with respect to transactions with our worldwide customers.
Inflation. We do not believe that inflation has had a material impact on our business or operating results during the periods presented.
RECENT ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board issued SFAS 133, Accounting for Derivative Instruments and Hedging Activities. SFAS No. 133 establishes new standards of accounting and reporting for derivative instruments and hedging activities. SFAS No. 133 requires that all derivatives be recognized at fair value in the statement of financial position, and that the corresponding gains or losses be reported either in the statement of operations or as a component of comprehensive income, depending on the type of relationship that exists. In July 1999, the Financial Accounting Standards Board issued SFAS 137, Accounting for Derivative Instruments and Hedging Activities -- Deferral of the Effective Date of FASB Statement No. 133. SFAS No. 137 deferred the effective date until fiscal years beginning after June 15, 2000. We have not engaged in hedging activities or invested in derivative instruments.
In December 1999, the Securities and Exchange Commission issued SAB 101, Revenue Recognition, which provides guidance on the recognition, presentation and disclosure on revenue in financial statements filed with the Securities and Exchange Commission. SAB 101 outlines the basic criteria that must be met to recognize revenue and provides guidance for disclosure related to revenue recognition policies. We believe that our current revenue recognition policy is in compliance with SAB 101.
In March 2000, the Financial Accounting Standards Board issued
Interpretation No. 44, Accounting for Certain Transactions Involving Stock
Compensation -- an Interpretation of APB 25 ("FIN 44"). This interpretation
clarifies (1) the definition of employee for purposes of applying APB 25, (2)
the criteria for determining whether a plan qualifies as a noncompensatory plan,
(3) the accounting consequences of various modifications to the terms of a
previously fixed stock option or award, and (4) the accounting for an exchange
of stock compensation awards in a business combination. This interpretation is
effective July 1, 2000, but certain conclusions in this interpretation cover
specific events that occur after either December 15, 1998, or January 12, 2000.
To the extent that this interpretation covers events occurring during the period
after December 15, 1998, or January 12, 2000, but before the effective date of
July 1, 2000, the effects of applying this interpretation are recognized on a
prospective basis from July 1, 2000. The adoption of FIN 44 will not have a
material impact on our financial statements.
BUSINESS
OVERVIEW OF ARRAY'S BUSINESS
Array BioPharma is a discovery research company creating drug candidates through innovations in chemistry. Our experienced scientists provide premium products and services to create, evaluate and optimize potential drug candidates in collaboration with pharmaceutical and biotechnology companies. We believe our information-based approach improves the efficiency of the drug discovery process and increases the quality of potential drug candidates. We also apply these capabilities internally for our own drug discovery programs.
The drug industry is experiencing revolutionary change fueled by genomics, or the study of all genes, and by the tremendous progress in the biological understanding of disease. We believe the drug research and development bottleneck is shifting from the discovery by biologists of new disease-causing proteins, or targets, to the creation by chemists of safe and effective new drugs for these targets. We provide a broad range of premium drug discovery products and services to bridge the gap between target discovery and drug candidate testing in animals and humans. We believe that our integrated approach to drug discovery combined with our information-driven technology platform will enable both our collaborators and our internal discovery teams to create higher quality drugs and to do so more quickly and less expensively.
Our objective is to become the leading creator of high quality potential drug candidates by providing premium discovery chemistry products and services. Our achievements to date include:
- Initiating collaborations with pharmaceutical companies such as Eli Lilly and Company and Merck & Co., Inc.;
- Initiating collaborations with biotechnology companies such as Celltech Chiroscience Ltd., ICOS Corporation and Tularik Inc.;
- Discovering a drug candidate for clinical trials with our first collaboration partner, ICOS;
- Creating a technology platform to identify new drug candidates from genomic information;
- Creating our own potential drug candidates; and
- Growing our staff from our inception in 1998 to over 100 employees as of September 2000, including 75 scientists, of whom 69 are chemists, 42 have Ph.D's and 34 have large pharmaceutical company experience.
We have a multi-faceted business model based on growing revenue and achieving profitability while sharing in the success we create for our collaborators. We intend to maximize the value we capture by focusing our scientific resources on our proprietary drug programs and collaborations that utilize our full breadth of products and services and that enable us to participate in the success of the potential drug candidates we create.
Our company was founded in 1998 in Boulder, Colorado by four Ph.D. chemists. Our early employees included 20 former Amgen scientists who had previously been recruited from large pharmaceutical companies. The founders were able to obtain venture capital financing, lease part of Amgen's former research facilities and begin operations in May 1998.
DRUG RESEARCH AND DEVELOPMENT
Drug research and development is the process of creating drugs for the treatment of human disease. The drug research process aims to generate safe and effective drugs while drug development tests these drugs for safety and efficacy in animals and humans. The role of biology in drug research is primarily focused on the early stages of drug research, including understanding the mechanism of diseases and the identification of potential drug targets, or targets for therapeutic intervention. The role of chemistry in drug research is the actual creation of potentially safe and effective drug candidates to address these targets.
Drug Characteristics
Drug characteristics, which are the criteria against which all drugs are measured, include:
- Potency, or the amount of a drug required to effectively treat the disease; the greater the potency, the smaller the required dose and therefore the smaller the likelihood of harmful side effects;
- Selectivity, or the extent to which a drug interacts only with the disease-causing target; the greater the selectivity, the lower the probability of harmful side effects;
- Toxicity, or the presence and significance of any harmful side effects;
- Metabolism, or how rapidly the drug works and how long it stays effective; and
- Formulation, or how the drug is administered to patients, for example, orally or by injection.
Drugs created through chemistry are known as small molecule drugs. These drugs, which are generally administered orally, remain the preferred treatment for most diseases and are particularly appropriate for the treatment of chronic diseases requiring the daily administration of medications over many years. In 1999, small molecule drugs accounted for a significant percentage of the estimated $337 billion worldwide drug market.
Drug Research and Development Process
Currently, the process of researching and developing a safe and effective drug is slow and expensive and has a high failure rate. This process is estimated to take an average of 12 years and to have a risk adjusted cost of $500 million per drug. This long and costly process is due largely to the inability of science to predict which of a virtually infinite number of possible small molecule drugs will prove to be safe and effective. We believe that improved decision making by chemists early in drug discovery can improve the success rate of, and lower the cost and time required for, the development of safe and effective drugs.
The following is a more detailed description of the drug research and development process, which includes:
- Target discovery, including target identification and validation;
- Drug discovery, including lead generation, lead optimization, and process research and development;
- Pre-clinical development, or testing a potential drug candidate for safety and efficacy in animals; and
- Clinical development, or testing a drug candidate for safety and efficacy in humans.
DRUG RESEARCH AND DEVELOPMENT PROCESS
[GRAPHIC DEPICTING THE DRUG RESEARCH AND DEVELOPMENT PROCESS]
Target Discovery
The mapping and sequencing of the human genome, or set of all human genes, has identified large numbers of genes that encode the chemical information for cells to produce proteins. These proteins determine human physiology, and some cause disease. These disease-related proteins are potential targets for therapeutic intervention with a drug. Biologists identify the targets against which chemists create drugs. Organizations that develop new drugs, principally pharmaceutical and biotechnology companies, are advancing many of these newly identified potential drug targets into drug discovery. Many of these potential drug targets have not yet been validated, in that their roles in disease are imperfectly understood.
Drug Discovery
LEAD GENERATION
Lead generation is the process of finding a hit, or chemical compound, that interacts with a potential drug target with sufficient potency and selectivity to become a possible lead, or drug candidate, for further optimization.
Assay development and compound screening. Once a potential drug target has been identified, assays, or tests, must be developed to screen, or evaluate, potential drug compounds for their therapeutic value. Depending on the target and what is understood about its biology, many types of primary in vitro, or test tube, assays can be developed to measure the relative potency and specificity of interaction of a potential drug compound with a target. More complex, secondary in vitro and in vivo, or animal model-based, assays are developed to evaluate other drug characteristics. A typical screening campaign for a given target entails screening small amounts of thousands of chemical compounds from collections known as libraries.
Compound libraries. Chemists design screening libraries to provide a starting point in the drug discovery process. A well-designed library increases the likelihood of finding a hit that is suitable for optimization of its drug characteristics. High-throughput screening of low quality libraries often produces either numerous false hits or hits that are not suitable for optimization, creating a bottleneck in secondary screening and downstream chemistry. Therefore, we believe high quality libraries should produce better candidates at a lower cost.
Libraries can consist of newly synthesized compounds or of historical collections of synthetic compounds or natural products. It is estimated that over 10(60), or virtually an infinite number, of possible chemical structures are of an appropriate size and contain the right elements to be potential drugs. Since it would be impossible to create or screen even a small fraction of this universe of possible compounds, the choice of which compounds to synthesize is based on several factors, including ease of synthesis, desired drug characteristics and chemical properties. A high quality library for drug discovery will have high purity compounds with valuable drug characteristics, from which hits can be rapidly optimized to leads. At the same time, the design of a high quality library should maximize the differences between compounds, also known as diversity, so that each compound provides important information about its potential as a drug candidate against a specific target. Furthermore, high quality libraries should not contain compounds with metabolic or toxic liabilities or compounds that may interact nonspecifically with many different targets.
Compound synthesis. New compounds are typically synthesized from a small set of commercially available starting materials called building blocks. Compound synthesis is accomplished by adding building blocks to a scaffold, or core chemical structure, through a chemical reaction, either one reaction at a time or in a parallel fashion using automated high-speed synthesis. Chemists determine which compounds to prepare and try to choose a method that will minimize the number of steps and the time required for synthesis. Compound synthesis often involves multiple separate chemical steps. While new technologies have increased productivity, the synthesis of drug-relevant compounds remains a rate limiting step in the drug discovery process.
LEAD OPTIMIZATION
Lead optimization is an iterative process of engineering a hit's chemical structure to improve its drug characteristics with the goal of producing a pre-clinical drug candidate. The process of lead optimization typically falls between two extremes of empirical lead optimization and rational drug design. Empirical lead optimization emphasizes screening large numbers of compounds, often generated through combinatorial chemistry, to optimize leads. Combinatorial chemistry relates to the mechanics of mixing and matching different building blocks, in combination with a scaffold, to create a library that may or may not be designed to have optimal drug characteristics and maximum diversity. Combinatorial chemistry libraries are typically created using high-speed synthesis. Rational drug design is accomplished through a detailed knowledge of the three-dimensional structure of the target and the required chemical structure for a potential drug compound to interact with that target. We believe a combination of the two approaches that optimizes leads through an iterative process based on knowledge gained at each stage generally results in higher quality potential drug candidates at lower cost than either one alone.
Hits to quality leads. By definition, a quality lead can be readily optimized into a potential drug candidate. At the initiation of a drug discovery project, goals defining the desired drug characteristics, or candidate criteria, are established. Medicinal chemistry involves the design, selection and synthesis of compounds to achieve these specified drug characteristics. Any hits obtained from screening against targets are evaluated relative to these candidate criteria. Typically, one or more hits are evaluated in secondary assays, and a set of structurally-related compounds, or analogs, are synthesized and screened as well. Chemists determine which hits or analogs to optimize based on a combination of their potential drug characteristics, ease of synthesis and structure-activity relationship, or SAR. SAR is quantitative information that correlates changes in chemical structure to biological data generated from screening assays. The ability of chemists to make informed decisions as to which changes in structure will lead to valuable drug characteristics, which is based mostly on experience, is a key parameter for productivity in drug discovery.
This optimization process can be accomplished by an empirical, linear approach where each analog is evaluated to determine its drug characteristics and, based upon this analysis, an additional analog is synthesized. Alternatively, a rational, parallel approach can be used to simultaneously create multiple analogs, called focused libraries. These focused libraries can be screened against targets to generate a matrix of SAR information, resulting in accelerated optimization.
Leads to pre-clinical candidates. A pre-clinical candidate is a lead that has been optimized to meet the drug candidate criteria. Chemists utilize SAR information, derived from focused libraries, complex secondary assays, x-ray crystallography, molecular modeling and other chemoinformatic tools, to engineer desired drug characteristics into leads. Complex secondary assays, such as those using human tissues and animal models, can help define the potential of drugs to be safe and effective in humans. Technologies that help improve the prediction of clinical success include x-ray crystallography, which can determine the exact three-dimensional structure of potential drug compounds bound to targets, and molecular modeling, a computational method that helps chemists to design more potent and selective compounds. In addition, databases correlating chemical structure to biology, or chemoinformatics, can be used to help predict SAR to optimize desired drug characteristics. While historically performed in a linear process, drug characteristics are now refined in parallel at every point in the lead optimization process, even in library creation. Ultimately, the experience, intuition and synthetic skills of medicinal chemists are still the determining factors in creating a successful drug candidate.
PROCESS RESEARCH AND DEVELOPMENT
The compounds created for screening in lead generation and lead optimization are typically synthesized in relatively small, milligram quantities. The synthetic process to make compounds for screening typically uses a parallel synthesis approach to explore drug characteristics, rather than to optimize ease of synthesis. Before a drug candidate can be taken into pre-clinical and clinical trials, kilogram quantities must be synthesized. The goal of process research is to improve the ease with which compounds can be synthesized in these larger quantities, typically by minimizing the number of synthetic steps, and to determine how to reduce the time and cost of production. Process development refers to the production scale up and further refinement required for clinical trials and commercial manufacturing.
Pre-Clinical Development
For regulatory purposes, a potential drug candidate must undergo extensive in vitro and in vivo studies to predict human drug safety, including toxicity over a wide range of doses, and how the drug is metabolized. The objective of pre-clinical testing is to obtain results that will enable the pre-clinical drug candidate to be approved for human testing by the Food and Drug Administration, or FDA, through an Investigational New Drug, or IND, application.
Clinical Development
Clinical trials, or human tests of a potential drug candidate to determine safety and efficacy, are typically conducted in three sequential phases, although the phases may overlap. A successful clinical trial will result in the filing of a New Drug Application, or NDA, with the FDA to grant permission to market the drug in the United States. Similarly, clinical trials must be conducted and regulatory approvals secured before a drug can be marketed in other countries.
THE OPPORTUNITY
The drug industry. In 1999, worldwide drug sales were an estimated $337 billion, with overall sales growing 10.7%. Pharmaceutical companies in particular are under increasing pressure to introduce novel drugs to grow revenue. It is estimated that research and development spending over the last 20 years has increased approximately five fold, growing from nearly 12% in 1980 to an estimated 20% of pharmaceutical company revenue in 2000. Despite this increase in research spending, the FDA approved only 36 new drugs in 1999, compared with 22 new drugs in 1989.
Problems with current drug discovery and development. Despite all of the recent technological advances in genomics, biology and chemistry, drug research and development remains slow, expensive and risky. Currently, fewer than 1% of all drug discovery programs yield marketable drugs. The drug industry faces multiple challenges in reducing the cost and time of drug discovery and development. These include the early identification and elimination of unsuccessful potential drug candidates and increasing the success rate at each stage of the drug development process.
Capitalizing on the genomics revolution. The drug research and development process is experiencing a fundamental change fueled by the revolution in genomics and the tremendous progress in the biological understanding of disease. The success of publicly and privately funded genomics initiatives, including the Human Genome Project, in sequencing the entire human genome heralds a new era in drug research and development. Heavy investment in the technologies to work out the biological understanding of gene function is widely expected to result in a dramatic increase in the number of potential drug targets. All of the human therapeutic drugs on the market today are directed at approximately 500 targets. The genomics revolution is projected to expand the number of potential therapeutic targets to between 5,000 and 10,000.
The importance of chemistry. We believe the bottleneck in drug research and development is shifting from the identification and validation of new targets to the creation of safe and effective new drugs for these targets. During the next decade, we believe the significant investment in genomics and biology will give rise to a dramatic increase in investment in discovery chemistry.
The chemical make-up of a drug is the key determinant of its safety and efficacy. Modifications in chemical structure can differentiate drugs and determine their success or failure in the marketplace. A good example of the importance of chemistry is the rapid growth of Lipitor, a cholesterol lowering drug. While on the market for only 3 years, Lipitor has matched the sales of the prior market leader Zocor, which has been on the market for 12 years, for the first half of 2000. During that period, sales of Lipitor grew 43% compared to Zocor's 19% growth rate. While the biological target, and therefore the mechanism of action, for Lipitor and Zocor are identical, small changes in chemistry resulted in Lipitor's improved efficacy and greater market acceptance.
While targets are generally used as tools for screening potential drug candidates, chemistry is necessary to create the actual drug provided to a patient. Therefore, while the ultimate value of intellectual property associated with newly identified targets is currently unknown, the value of intellectual property associated with drugs has proven to be significant.
Pharmaceutical industry challenges. The demand for new and improved drugs coupled with the emerging potential of new targets has created a shortage of qualified chemistry resources. Some pharmaceutical companies have revealed plans to significantly increase their internal discovery chemistry capacity over the next five years. However, we believe there will be a continuing shortage of qualified chemists to fill these positions. To the extent that they cannot hire qualified chemists, these companies must substantially increase the productivity of their internal chemistry departments, outsource these activities or otherwise acquire additional discovery capabilities. In fact, many pharmaceutical companies are augmenting their internal chemistry research capacities by outsourcing to discovery research companies.
Biotechnology industry challenges. Many biotechnology companies are increasing their focus on creating drugs against their proprietary targets. Historically, they have partnered with pharmaceutical companies to create small molecule drugs. These arrangements have often resulted in biotechnology companies relinquishing much of the economic value of their potential drug candidates. Accordingly, several biotechnology companies have announced their intention to develop an internal discovery chemistry capability. However, they face barriers in the form of the scale required to justify creating internal chemistry discovery capabilities, hiring and effectively integrating capable chemists and the significant investment necessary to create chemistry laboratories.
THE ARRAY SOLUTION
We address the discovery chemistry bottleneck by offering a broad range of products and services to bridge the gap between target discovery and pre-clinical and clinical development of a potential drug candidate. We are a discovery research company run by experienced chemists. We offer our products and services both individually and on a fully integrated basis. We provide lead generation and optimization products, including building blocks and compound libraries, on both a custom and nonexclusive basis. We also provide a broad spectrum of drug discovery services, including lead generation, lead optimization and process research and development. Furthermore, we are leveraging our internal capabilities to create our own potential drug candidates, which we plan to optimize, develop and commercialize in collaboration with pharmaceutical and biotechnology companies.
We have developed an information-driven technology platform that we believe enables our scientists to make better decisions at each step of the drug discovery process. Our organizational structure emphasizes large, multi-disciplinary teams to improve problem solving, which streamlines the drug discovery process. We believe that our integrated approach to drug discovery will enable both our collaborators and our internal discovery teams to create higher quality drugs and to do so more quickly and less expensively.
We have assembled a scientific team with experience in both the pharmaceutical and biotechnology industries and with a proven track record of success in drug discovery. We had the distinct advantage of recruiting 20 former Amgen scientists at our inception. This nucleus afforded us a critical mass of experienced chemists, which we believe has proven to be a competitive advantage in recruiting additional scientists. As of September 2000, after two years in operation, our workforce exceeds 100 employees, including 75 scientists. Of our scientists, 69 are chemists, 42 have Ph.D.'s and 34 have large pharmaceutical company experience. Importantly, we have recruited scientists who during their careers have contributed collectively to multiple IND's and over 100 drug-related patents and patent applications.
STRATEGY
Our objective is to become the leading creator of high quality potential drug candidates by providing premium discovery chemistry products and services. Our strategies to achieve this objective are as follows:
Provide an integrated chemistry solution to drug discovery. We provide a broad range of premium drug discovery products and services to bridge the gap between target discovery and pre-clinical testing. In addition to selling our chemistry products and services individually, we seek to expand our existing customer relationships across the full spectrum of our drug discovery capabilities. We further intend to enhance the value we provide by entering into new collaborations that leverage our integrated capabilities. Because of the breadth and quality of our products and services, we expect to become the discovery chemistry partner of choice for pharmaceutical and biotechnology companies.
Combine state-of-the-art technology with innovative chemistry to accelerate drug discovery. We intend to provide premium discovery chemistry to create drugs more efficiently in collaboration with the leading pharmaceutical and biotechnology companies and for our internal drug discovery programs. Central to this strategy are our integrated approach and our proprietary information-driven platform, which support our ability to provide premium products and services across the entire drug discovery process. We rely on our highly qualified and experienced chemists and our proprietary chemoinformatics tools to create the highest quality potential drug candidates by understanding the complex relationships between chemical structure and desirable drug characteristics. We are committed to continuous process improvement, implementation of new technologies, shared learning among our scientists and innovative organizational design.
Create our own potential drug candidates. We intend to maximize the value we extract from our integrated drug discovery platform by creating our own potential drug candidates. We intend to commercialize these potential drug candidates by entering into collaborations in which we both optimize these potential drug candidates and provide other services in exchange for licensing fees, fee-for-service revenue and future value through milestone and/or royalty payments.
Attract world-class scientists. We intend to grow our business by continuing to aggressively recruit world-class scientific talent. Our success in recruiting and retaining these scientists depends on our continued focus on quality science and the maintenance of our culture, which emphasizes innovation and empowerment of our chemists, and our ability to provide industry competitive salaries and equity participation in our company.
Expand our capabilities through internal development and acquisitions. We intend to increase our current capacity by expanding our state-of-the art facilities. In addition, we intend to acquire additional laboratory sites both domestically and internationally to meet our collaborators' needs and improve access to regional scientific talent. We further intend to acquire or develop new technologies and capabilities to expand our existing products and services.
ARRAY'S TECHNOLOGY PLATFORM
We believe we have created an organization able to make better decisions across every aspect of the drug discovery process through the application of predictive tools. We believe our integrated, information-driven technology platform, as described below, will enable us to reduce the cost and improve the efficiency of drug discovery resulting in more successful clinical development candidates.
Biology. We have assembled an experienced team of biologists from some of the leading biotechnology companies who are experts in protein cloning, expression and purification. We focus this team on the creation of large quantities of highly pure protein and protein crystals that are critical for use in the lead generation and optimization stages of drug discovery.
Assay development and compound screening. We develop assays, format them to run automated high-throughput screens and screen against multiple classes of targets. In addition, we have developed complex secondary assays, including those that can help define specificity and predict metabolism. Our automated high-throughput screening capacity can accommodate tens of thousands of compounds per week.
High-speed synthesis automation. As a result of our focus on the creation of quality compound libraries, we have integrated commercial and proprietary instrumentation to create multiple platforms for the automation of high-speed synthesis. These platforms provide us with the flexibility to synthesize multiple classes of compounds in order to identify potential drug candidates with desirable drug characteristics.
Structure-based drug design. Our structure-based drug design process is an iterative method for lead identification and optimization. We integrate high-speed synthesis, high-throughput screening and our predictive databases, as well as x-ray crystallography and molecular modeling, to rapidly create high quality potential drug candidates. Utilizing target proteins that we have cloned, expressed and crystallized, our scientists determine their x-ray crystal structure and conduct screening assays. Based on the SAR information generated, our chemists synthesize focused libraries, which are evaluated for biological relevance in secondary high-throughput screens. The crystal structure is then re-determined with active hits bound to the protein. Based on what is learned from that interaction and utilizing computer modeling, second generation focused libraries are created to improve drug characteristics. These focused libraries are then screened against the therapeutic target, against related family members of the target and in predictive metabolism assays to select the potential drug candidate with the most desirable drug characteristics.
Chemoinformatics. We are continuing to develop a customized database to capture information generated by our scientists, which is accessible to our entire scientific staff. This database provides our scientists with access to this shared information, thereby facilitating experimental design, scientific calculations, data analysis and patent filing.
We have also developed a number of specialized software programs that facilitate the generation of high quality drug leads and their rapid optimization into potential drug candidates. We have created proprietary software to identify promising building blocks, to help design diverse libraries and to evaluate potential drug candidates against the candidate criteria. These tools, which we do not make available commercially, facilitate the drug discovery efforts of our scientists working with our collaborators, as well as our own drug discovery efforts. These software products include:
- Radical, which identifies promising building blocks by analyzing a database of small molecules that have entered into clinical trials and determining which fragments of these molecules occur repeatedly in drug candidates;
- Cracker, which is designed to eliminate drug-irrelevant building blocks from library design; and
- Eigen, Combiner and Select, which are designed to support optimization of chemical diversity in our libraries.
Predictive databases for human metabolism and toxicology. A majority of
drugs fail in clinical development because they cannot be taken in doses
sufficient to provide efficacy without unacceptable side effects. We are
currently developing a relational database that uses our Diversity Library as a
basis to predict
human metabolism and toxicity. Our libraries are profiled through well-defined human and in vitro metabolism and toxicity assays to create this predictive SAR database. We expect this information will allow our chemists to make improved drug design choices and therefore create potential drug candidates with a higher probability of clinical success.
Chemical genomics. The recent mapping of the human genome has created a wealth of information for the development of potential new drugs. However, full elucidation of the function of newly discovered potential targets and their role in disease is expected to require decades of research. Our libraries can be utilized both to identify novel leads and to better understand the biochemistry and therapeutic relevance of orphan targets, or targets with unknown function. We currently participate in a chemical genomics collaboration with Neurocrine Biosciences, Inc., in which we create focused libraries that are designed to modulate families of orphan targets and define their therapeutic importance.
ARRAY'S PRODUCTS AND SERVICES
We provide a broad range of premium drug discovery products and services, including:
- Optimer building blocks;
- Lead generation;
- Lead optimization; and
- Process research and development.
We offer products and services to collaborators across the drug discovery process and also use them internally for our own drug discovery programs. Our proprietary chemoinformatics platform supports the entire drug discovery process.
[Graphic depicting Array's role in the Drug Discovery Process.]
Optimer building blocks
Quality building blocks enable chemists to make higher quality compounds more rapidly. We have recognized that a rate-limiting step in drug discovery is the availability of high-quality building blocks for initiating chemical synthesis. Our chemists have designed a series of drug-relevant building blocks using our proprietary Radical software and based on their experience in assessing the chemical structures that are likely to have drug-relevant properties. These building blocks are added to a scaffold during compound synthesis.
Our proprietary building blocks have become an important component of our overall drug discovery strategy. We produce primary building blocks for construction of lead generation libraries, and we use sets of complementary, secondary building blocks for creating focused libraries to determine SAR in lead optimization programs. In addition, we sell approximately 300 of these building blocks under the trade name Optimer. Our building block customers include a number of large pharmaceutical companies, such as Astra-Zeneca, Merck and Schering Plough Research Institute, biotechnology companies such as Biogen, Inc., Millennium Pharmaceuticals, Inc. and Vertex Pharmaceutics, Inc., and combinatorial chemistry companies such as ArQule, Inc., BioFocus plc and Siddco, Inc.
Lead generation
Another rate-limiting step in the discovery chemistry process is the availability of high quality compound libraries that have been designed with structures relevant for screening specifically against important target classes and that are designed for rapid lead optimization. We believe that the production of large compound libraries, by itself, has limited value for creating high quality leads. Instead, we design our libraries so that any leads generated require less optimization and will result in clinical candidates with a greater likelihood of clinical success.
Our library design criteria. We design our libraries according to the following criteria:
- Incorporation of drug-relevant building blocks. We use our drug-relevant building blocks to create libraries that facilitate our ability to rapidly optimize a hit due to the availability of secondary building blocks to create a focused library to study the SAR around that hit. More than 30% of the building blocks used to create our Diversity Library are proprietary to us and not commercially available.
- Target-directed scaffolds. Our chemists create scaffolds directed toward disease-related families of targets. We attach building blocks to these scaffolds to create library compounds.
- Best-in-class quality. Our scientists recognize that it is the best-in-class drug that wins the market. Our library compounds are designed to economically achieve optimal drug characteristics.
- Optimized chemical synthetic processes. We invest significant effort in the process design and synthesis of each library to ensure that the compounds generated are of high purity and can be readily optimized. The library undergoes analysis during each stage of its development to ensure the identity of each compound and maintain quality.
- Biologically-relevant diversity. We have created a number of parameters to define the diversity in a compound library. Our proprietary chemoinformatics tools analyze how changes in chemical structure correlate with biological activity, or SAR, by analyzing published data of known drug candidates and correlating this information with our diversity parameters. Libraries can be constructed to optimize diversity and therefore maximize the information provided by each hit.
Diversity Library. We sell nonexclusive subscriptions to our Diversity Library and retain the right to utilize these compounds for our internal and collaborative programs, as well as the rights to the synthetic processes used to create these compounds. In future years, we intend to increase our compound production for our Diversity Library up to 100,000 compounds annually. We create sub-libraries that interact with specific target families, including G-protein coupled receptors, nuclear receptors, enzymes and protein-protein interactions. The majority of all drugs on the market today are aimed at targets within these families. Both Celltech Chiroscience and Tularik have multi-year subscriptions to our Diversity Library. We have also sold
portions of our Diversity Library to Asahi Chemical Industry Co., Ltd., Curis, Inc., DuPont, Fujisawa Pharmaceutical Co., Ltd., ICOS, Schering Plough and Suntory Pharmaceutical Research Laboratories LLC, among others.
Custom libraries. We design custom libraries for our collaborators. These libraries are generally focused towards specific target families or our collaborators' proprietary scaffolds, and the compounds are of very high purity. Merck has been the largest purchaser of custom libraries, working with us for over a year.
Screening. We have the capability to perform high-throughput screening of our compound libraries for lead generation on behalf of our collaborators and in our internal drug discovery programs. Collaborators would pay a per-compound charge and compensate us on a headcount basis for the service. We have the capability to create our own assays or to format assays supplied by a collaborator for high-throughput screening. We also screen our compound libraries against metabolism and toxicology assays both to establish quality and to populate our predictive database.
[Graphic depicting lead optimization of a hit.]
Lead optimization
Our chemists optimize leads generated from multiple starting points, including:
- Leads provided by our collaborators;
- Leads generated internally or by our collaborators through screening our Diversity Library; and
- Leads generated through structure-based drug design.
Regardless of a lead's source, we take an iterative, structure-based approach to lead optimization. This typically begins with the design and synthesis of focused libraries developed to identify the SAR of a lead. From this, we can utilize x-ray crystallography and our chemoinformatics platform to iteratively design and synthesize additional focused libraries until we achieve the drug candidate criteria. We screen these libraries against secondary assays to minimize the potential for toxicity or metabolic deficiencies.
Because no single technology exists to accurately predict clinical outcomes for potential drug candidates, experienced chemists with success in generating clinical candidates are vital to an effective lead optimization program. Our approach is to work closely with our collaborators, putting multi-disciplinary teams of experienced chemists on projects to identify potential drug candidates. We have successfully validated this approach to lead optimization with a lead provided to us by ICOS. Within 12 months from the initiation of the program, Array and ICOS scientists identified a potential drug candidate. In addition, our lead optimization capabilities have been recognized by Eli Lilly, which selected us to collaborate on multiple lead optimization programs. We have contracted to supply Eli Lilly with up to 30 scientists to work on some of their medicinal chemistry programs.
Process research and development
The processes to synthesize many pre-clinical candidates can be long, complex and costly to scale-up. Our process chemists have solved significant synthetic challenges in their careers, including the development of patentable processes for synthesizing drugs that have entered clinical trials, and have contributed to the synthesis of several complex drugs derived from natural products, such as rapamycin, brevetoxin and taxol. Our goal is to apply these skills and experience to create novel yet efficient processes to synthesize complex molecules.
Process design. Once a potential drug candidate has been identified, it is critical to be able to reach a rapid decision whether to advance that candidate into the clinic. In many cases, lack of an adequate quantity of a specific compound for pre-clinical testing is a bottleneck to that decision. Our efforts are designed to take complex medicinal chemistry processes and reduce the number of steps and improve yields to allow for the rapid synthesis and scale-up of pre-clinical and clinical drug candidates.
Custom synthesis. Our chemists can undertake challenging syntheses to produce building blocks, complex intermediates and final products on a custom basis or from small-scale through bulk quantities. We synthesize compounds both on a proprietary and non-proprietary basis. A number of customers have asked us to synthesize larger quantities of compounds we previously produced for them. We expect to create proprietary processes that can be licensed to collaborators as they advance potential drug candidates into clinical trials.
Process scale-up. Often a synthetic process can face unknown challenges upon scale-up. Our chemists have demonstrated their ability to rapidly scale-up compound production to meet customer deadlines. We have the capacity to produce lots of up to 10 kilograms.
PROPRIETARY DRUG DISCOVERY
We leverage all of our capabilities internally to create our own potential drug candidates for partnering with pharmaceutical and biotechnology companies. We generate our own early-stage leads against therapeutically important targets and target families that have been identified in the academic literature or through patent applications. We typically focus on targets to which we believe no promising lead has been identified. We generate quality leads by screening our Diversity Library against the target and applying our chemoinformatic tools. We then apply our iterative structure-based drug design approach. Once we have qualified a valuable lead through secondary screening, we will seek to initiate a collaboration in which we license the lead to a partner for subsequent development and commercialization and in which we participate in the lead optimization program. To date, we have not entered into any such collaboration agreements. We expect these collaborations to provide up-front fees and headcount reimbursement and to allow us to participate in the success of these potential drug candidates through milestones and/or royalty payments.
We have worked on a number of targets, including those related to asthma,
diabetes and cancer. Two programs have developed early-stage leads for which we
are currently seeking licensing partners for further optimization. These
programs address a target for diabetes, phosphotyrosine phosphatase 1B, called
PTP1B, and a target for asthma, called tryptase. For example, shortly after the
publication of PTP1B as a key target for diabetes in March 1999, we initiated
structure-based lead generation and have now identified very promising leads. We
are currently in discussions with several companies that have expressed interest
in
licensing our intellectual property and in working with us for further lead optimization. These discussions may not, however, lead to any definitive agreement.
COMMERCIALIZATION
We have a multi-faceted business model based on growing revenue and achieving profitability while sharing in the success we create for our collaborators. We intend to maximize the value we capture by focusing our scientific resources on our proprietary drug programs and collaborations that utilize our full breadth of products and services and that enable us to participate in the success of the potential drug candidates that we create.
Our diverse products and services provide multiple revenue streams. Our products, including our Diversity Library and Optimer building blocks, once synthesized, can be sold to multiple customers, creating a recurring revenue stream. Our services are sold on a fee-for-service basis to pharmaceutical and biotechnology companies. Generally, a collaboration begins through a single service or product area. Our intent is to increase revenue by expanding customer relationships across our multiple products and services to eventually collaborate across the entire discovery chemistry process. As we become more valuable to our collaborators, we intend to add milestones and/or royalty payments to capture a larger portion of the value we create. To date, one of our collaborations includes milestone payments for achieving key drug discovery events, and none have included royalty payments.
We create proprietary drug candidates with the intent of furthering their development and increasing their potential commercial value through collaborating with biotechnology or pharmaceutical partners. We expect generally to license potential drug candidates to a partner prior to lead optimization. We will seek the collaboration to provide us with an initial licensing fee for exclusive rights to the compound, fee-for-service lead optimization and downstream payments that may include milestone and/or royalty payments.
CUSTOMERS
The following table lists, in alphabetical order, 12 of our top customers based on revenue from our inception and indicates the products and services we have provided:
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PROCESS OPTIMER
LEAD LEAD RESEARCH & BUILDING CHEMICAL
CUSTOMER/COLLABORATOR GENERATION OPTIMIZATION DEVELOPMENT BLOCKS GENOMICS
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Biogen, Inc. X X
Celltech Chiroscience Limited X
CV Therapeutics, Inc. X X X
DuPont X X
Eli Lilly and Company X
Fujisawa Pharmaceuticals Co., Ltd. X
Gilead Sciences, Inc. X
ICOS Corporation X X X
Merck & Co., Inc. X X X
Neurocrine Biosciences, Inc. X X
Schering Plough Research Institute X X
Tularik, Inc. X
|
A key element of our strategy is to increase the value we provide to our customers by expanding our relationships with them across complementary products and services. Below we describe several customers that chose to expand their initial relationship with us.
ICOS. ICOS was one of our first customers. Our first agreement with ICOS addressed lead optimization of up to four ICOS targets. This agreement, initiated in December 1998, called for our scientists, in collaboration with ICOS' scientists, to develop clinical candidates from ICOS' preliminary leads. Based upon the success of this program, ICOS expanded this relationship in the spring of 1999, by both initiating a second lead optimization program on a separate set of targets, and subscribing to our Diversity Library. In less than one year, our initial collaboration led to the development of a potential clinical candidate for a target called phosphodiesterase 4, or PDE 4. In order to speed the development of this clinical candidate, ICOS chose to access our chemistry process research service to refine the production process in order to produce sufficient quantities for pre-clinical and early phase clinical testing. In July 2000, ICOS announced that they have expanded and consolidated these earlier lead optimization agreements, providing additional milestones and more favorable terms. This new agreement includes lead generation on hits identified during ICOS' screening of our Diversity Library.
ICOS has now taken advantage of our lead generation, lead optimization and process chemistry. We anticipate that clinical trials for this PDE 4 inhibitor will be initiated approximately in mid-2001. We are entitled to milestone payments based on the successful clinical development of this drug.
Tularik. Our initial interaction with Tularik came through their interest in our approach to creating lead generation libraries. In order to evaluate the quality of our libraries, Tularik acquired a small subset of our Diversity Library in April 1999. Within three months they initiated a one-year subscription to our entire Diversity Library. Six months later, Tularik exercised an option to subscribe to our entire second-year Diversity Library. We have also expanded our relationship with Tularik by creating focused libraries to an important class of targets called orphan nuclear receptors.
Merck. Merck began working with us in May 1999 by purchasing building blocks from our Optimer collection on a non-exclusive basis. This initial introduction led to an agreement between the parties for the exclusive development and supply of custom synthesized compounds for Merck. Building on this relationship, we announced in September 2000 an agreement with Merck for the exclusive synthesis, development and supply of custom libraries, whereby we will supply high quality focused libraries for Merck's drug discovery programs.
Eli Lilly. In March 2000, Eli Lilly purchased from us medicinal chemistry services of up to 30 of our scientists. To date, this collaboration is moving forward successfully. Our scientists are fully integrated into some of Eli Lilly's drug discovery project teams. Initially this collaboration focused on certain aspects of our lead optimization chemistry; however, Eli Lilly is exploring expansion of joint efforts to other aspects of our technology platform for drug discovery. This exploration may not result in an expanded collaboration.
BUSINESS DEVELOPMENT
To date, our business development activities have been conducted primarily through direct customer contact by our senior management and scientists and through customer referrals. Because our customers are primarily skilled scientists, we use our scientific expertise to initiate and to build upon strong customer relationships. In Japan, we have relied upon the services of a consulting company, Transpect, Inc. to help introduce and promote our company. We market our Optimer building blocks through multiple channels, including targeted mailing of a hardcopy catalog and through an Internet catalog. We plan to continue to grow our business development resources.
RESEARCH AND DEVELOPMENT
Our research and development expenses were approximately $3.3 million in fiscal year 1999, and $3.9 million in fiscal year 2000. We conduct research and development in the following areas:
Assay development and high-throughput screening automation. We are investing in the development of new assay and high speed screening technologies in order to more effectively evaluate potential drug compounds for their therapeutic value, including specificity and metabolism, and to increase the speed of our screening capability.
Chemoinformatics. We are continuing our development of database technology, to more effectively capture, organize and link the data generated by our scientists, and to make this information more seamlessly accessible to any of our drug discovery efforts. In addition, we are continuing the development of internal software technologies designed to increase the speed and efficacy of our lead generation and lead optimization chemistry.
Libraries. We have ongoing projects to develop and refine technologies necessary to create high quality compound libraries composed of drug-relevant compounds that can be rapidly optimized. Our research is focused in the areas of designing drug-relevant building blocks and scaffolds, maximizing drug-like characteristics of our library compounds, optimizing library synthesis processes and maximizing biologically-relevant compound diversity.
Internal Drug Discovery Projects. We will continue to invest in internal drug discovery programs intended to create our own potential drug candidates. We intend to commercialize any potential drug candidates that we are successful in developing in these programs through partnerships with pharmaceutical and biotechnology companies.
COMPETITORS
Competition across the range of our drug discovery products and services is currently fragmented. We compete, however, with a number of companies in each of the functional areas of drug discovery that we serve. In addition, we compete with the internal research departments of biotechnology, pharmaceutical and contract research companies. Many of these companies, which also represent a significant market for our products and services and some of which are our collaborators or customers, are developing or already possess internally the technologies and services that we offer. Academic institutions and other research organizations are also conducting research in areas in which we provide services, either on their own or through collaborative efforts.
Many of our competitors are larger than we are and have greater financial and other resources. We expect that we will face increased competition in the future as new companies enter the market and advanced technologies become available. Any of our competitors could broaden the scope of their drug discovery offerings through acquisition, collaboration or internal development to integrate their offerings or compete with us comprehensively across the drug discovery process. Our competitors may also develop new, more effective or affordable approaches or technologies that compete with our products and services or render them obsolete.
In addition, we compete with pharmaceutical and biotechnology companies, including our customers and collaborators, academic and research institutions, contract research companies and other firms to hire qualified scientists. Some of our competitors may have stronger financial resources, offer more attractive equity compensation or have a proven operating history, any of which may make our competitors more attractive employers than us to potential employees.
GOVERNMENT REGULATION
In the course of our business, we handle, store and dispose of chemicals. We are subject to various federal, state and local laws and regulations relating to the use, manufacture, storage, handling and disposal of hazardous materials and waste products. These environmental laws generally impose liability regardless of the negligence or fault of a party and may expose us to liability for the conduct of, or conditions caused by, others. We have not incurred, and do not expect to incur, material costs to comply with these laws and regulations. Because the requirements imposed by these laws and regulations change frequently, however, we may be unable to accurately predict the cost of complying with these laws and regulations. In addition, although we believe that we currently comply with the standards prescribed by these laws and regulations, the risk of accidental contamination or injury from these materials cannot be eliminated. In that event, we could be liable for any resulting damages, which could exceed our resources and harm our results of operations.
Our customers and collaborators are subject to substantial regulation by governmental agencies in the United States and other countries. Virtually all pharmaceutical products are subject to rigorous pre-clinical and clinical testing and other approval procedures by the FDA and by foreign regulatory agencies. Various federal and state laws and regulations also govern or influence the manufacturing, safety, labeling, storage, record keeping and marketing of these pharmaceutical products. This approval process is time-consuming and expensive and there are no assurances that approval will be granted on a timely basis, or at all. Even if regulatory approvals are granted, a marketed product is subject to continual review. Later discovery of previously unknown problems or a failure to comply with applicable regulatory requirements may result in restrictions on the marketing of a product or the withdrawal of the product, as well as possible civil or criminal sanctions. To the extent our customers or collaborators are unable to obtain the necessary regulatory approvals to market their products, or fail to continue to comply with regulatory requirements, we may be unable to realize revenue from milestone and/or royalty payments.
We are subject to other regulations, including regulations under the Occupational Safety and Health Act, regulations promulgated by the United States Department of Agriculture, and other federal, state and local laws.
INTELLECTUAL PROPERTY
Our success will depend in part on our ability to protect our proprietary software, potential drug candidates and other intellectual property rights. To establish and protect our proprietary technologies and products, we rely on a combination of patent, copyright, trademark and trade secret laws, as well as confidentiality provisions in our contracts with our collaborators, customers, employees, consultants and other third parties.
We attempt to protect our trade secrets in part by entering into confidentiality agreements with third parties, employees and consultants. Our employees also sign agreements requiring that they assign to us their interests in inventions and original expressions and any corresponding patents and copyrights arising from their work for us. However, it is possible that these agreements may be breached, invalidated or rendered unenforceable, and if so, there may not be an adequate corrective remedy available. Despite the measures we have taken to protect our intellectual property, parties to our agreements may breach the confidentiality provisions in our contracts or infringe or misappropriate our patents, copyrights, trademarks, trade secrets and other proprietary rights. In addition, third parties may independently discover or invent competing technologies or reverse engineer our trade secrets or other technology.
We also have implemented a patent strategy designed to protect technology, inventions and improvements to inventions that are commercially important to our business. We currently have seven patent applications on file in the United States, including three provisional applications, and we are pursuing limited patent coverage in foreign countries. Provisional patent applications provide no substantive rights but do secure a priority date on which later patent applications may be based, including both United States and foreign patent applications. Provisional applications expire one year from the date of filing. Four of our patent applications filed in the United States relate to proprietary compounds that are pharmaceutical candidates, two relate to inventions based on and used in our research efforts, and one relates to compounds that are pharmaceutical candidates and the compound synthesis process. Two of the United States patent applications relating to proprietary pharmaceutical candidates, along with related foreign patent rights, were assigned to us by Amgen Inc. in November 1998.
United States patents issued from applications filed on or after June 8, 1995 have a term of 20 years from the application filing date or earlier claimed priority. All of our patent applications were filed after June 8, 1995. Patents in most other countries have a term of 20 years from the date of filing of the patent application. Because the time from filing patent applications to issuance of patents is often several years, this process may result in a period of patent protection significantly shorter than 20 years, which may adversely affect our ability to exclude competitors from our markets. Our success will depend in part upon our ability to develop proprietary products and technologies and to obtain patent coverage for these products and technologies. We intend to continue to file patent applications covering newly developed products and
technologies. We may not, however, commercialize the technology underlying any or all of our existing or future patent applications.
Patents provide some degree of protection for our proprietary technology. However, the pursuit and assertion of patent rights, particularly in areas like pharmaceuticals and biotechnology, involve complex legal and factual determinations and, therefore, are characterized by some uncertainty. In addition, the laws governing patentability and the scope of patent coverage continue to evolve, particularly in biotechnology. As a result, patents may not issue from any of our patent applications or from applications licensed to us. The scope of any of our patents, if issued, may not be sufficiently broad to offer meaningful protection. In addition, our patents or patents licensed to us, if they are issued, may be successfully challenged, invalidated, circumvented or rendered unenforceable so that our patent rights might not create an effective competitive barrier. Moreover, the laws of some foreign countries may not protect our proprietary rights to the same extent as do the laws of the United States. Any patents issued to us or our strategic partners may not provide a legal basis for establishing an exclusive market for our products or provide us with any competitive advantages. Moreover, the patents held by others may adversely affect our ability to do business or to continue to use our technologies freely. In view of these factors, our intellectual property positions bear some degree of uncertainty.
The source code for our proprietary software programs is protected both as a trade secret and as a copyrighted work.
We have registrations pending in the United States for the following trademarks: "Array BioPharma," "Array Biopharma The Discovery Research Company," the Array Biopharma logo, "The Discovery Research Company," "Optimer" and "Radical." We may not be able to obtain registrations for these marks in the United States or other jurisdictions in which we may submit applications, or to protect the use of these marks effectively.
Although we are not a party to any legal proceedings, in the future, third parties may file claims asserting that our technologies or products infringe on their intellectual property. We cannot predict whether third parties will assert such claims against us or our licensees or against the licensors of technology licensed to us, or whether those claims will harm our business. If we are forced to defend against such claims, whether they are with or without merit, and whether they are resolved in favor of or against us, our licensees or our licensors, we may incur significant expenses and diversion of management's attention and resources. As a result of such disputes, we may have to develop at a substantial cost non-infringing technology or enter into licensing agreements.
LEGAL PROCEEDINGS
We are not a party to any legal proceedings.
EMPLOYEES
As of September 2000, we had over 100 employees, consisting of 75 scientists, 42 with Ph.D. degrees in chemistry and 34 with large pharmaceutical company experience. None of our employees is covered by a collective bargaining agreement. We consider our employee relations to be good.
FACILITIES
We are headquartered in Boulder, Colorado, where we lease approximately 26,400 square feet of space under a lease that expires July 15, 2001, or on July 15, 2003 if we exercise our option to extend the term. In February 2000, we leased approximately 24,000 square feet of space in a building in Longmont, Colorado under a lease that expires on May 31, 2005, and has an option to renew for two additional five-year terms. We also have an option to lease an additional 19,200 square feet after October 1, 2001 at our Longmont facility and an additional 28,800 square feet in a building adjacent to this facility when it becomes available for lease. We believe that these facilities, including our option to expand our Longmont facility, will be sufficient for our anticipated growth for the next 12 months.
CERTAIN KEY CONTRACTS
ICOS. In July 2000, we consolidated and expanded our lead optimization agreements with ICOS into a drug discovery collaboration agreement for lead optimization on undisclosed targets. Under the agreement, ICOS has the exclusive worldwide right to develop and market any products resulting from the collaboration. We are compensated based on an annual rate for each full-time equivalent employee working on an ICOS project and will receive milestone payments upon achievement of identified development and commercialization goals for products resulting from the collaboration. The agreement expires in July 2002, and may be terminated upon 90 days' notice by ICOS following the first anniversary of the agreement.
Merck. In May 1999, we entered into a custom synthesis agreement with Merck under which we provide custom compounds. Under the terms of this agreement, we have entered into multiple exclusive custom library agreements with Merck in which we are reimbursed on a headcount and per compound basis. In September 2000, we entered into a custom synthesis development and supply agreement with Merck under which we synthesize and develop custom libraries specified by Merck. We are compensated for development services and for the delivery of compounds. The agreement begins in January 2001 and expires in December 2003, and may be terminated by Merck upon six months' prior notice after the first anniversary of the agreement.
Eli Lilly. In March 2000, we entered into a Research Services Agreement with Eli Lilly to form a chemistry-based research collaboration. Under the terms of the agreement, up to 30 of our scientists will provide drug research services in collaboration with Eli Lilly scientists on identified Eli Lilly drug discovery projects. We are compensated based on an annual rate for each full-time equivalent employee working on an Eli Lilly project. Eli Lilly may terminate the agreement upon payment of an early termination payment.
Compound Library Agreements. We have entered into agreements with customers, including Celltech Chiroscience in April 1999, Tularik in June 1999, which Tularik extended in April 2000, and DuPont in August 2000, providing nonexclusive access on a fee basis to compounds in our Diversity Library for their internal lead generation efforts. These customers have the option to gain exclusive rights to compounds they intend to commercialize upon payment of either a one-time activation fee or annual fees. We retain ownership of the intellectual property rights to the compounds, our Diversity Library and to any inventions made by our scientists working under these agreements. These agreements are terminable upon breach or insolvency of a party.
SCIENTIFIC ADVISORS
We have established a group of scientific advisors made up of leading scholars in various functional disciplines of synthetic and medicinal chemistry. Our scientific advisors are as follows:
ADVISOR TITLE AND INSTITUTION
------------------------------------- -----------------------------------------------
Gregory C. Fu, Ph.D.................. Professor, Department of Chemistry,
Massachusetts Institute of Technology
Ashit Ganguly, Ph.D.................. Former Vice President of Chemistry, Schering
Plough, Professor of Chemistry, Stevens
Institute of Technology
K.C. Nicolaou, Ph.D.................. Chairman, Department of Chemistry, The Scripps
Research Institute
Nicos A. Petasis, Ph.D............... Professor of Chemistry, University of Southern
California
Masakatsu Shibasaki, Ph.D............ Professor, The University of Tokyo
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MANAGEMENT
EXECUTIVE OFFICERS, DIRECTORS AND OTHER KEY EMPLOYEES
Shown below are the names, ages and positions of our executive officers, directors and other key employees as of August 31, 2000:
NAME AGE POSITION WITH US
--------------------------------------- --- --------------------------------------------
Robert E. Conway....................... 46 Chief Executive Officer and Director
Kevin Koch, Ph.D....................... 40 President, Chief Science Officer and
Director
David L. Snitman, Ph.D................. 48 Chief Operating Officer, Vice President,
Business Development and Director
Michael Carruthers..................... 42 Chief Financial Officer and Secretary
Anthony D. Piscopio, Ph.D.............. 38 Vice President, Chemistry and Director of
Process Chemistry
John A. Josey, Ph.D.................... 39 Senior Director of High-Speed Synthesis
Laurence Burgess, Ph.D................. 38 Senior Director of Medicinal Chemistry and
Lead Optimization
Joanna K. Money, Ph.D.................. 39 Director of Business Development
Kyle Lefkoff (a)(b).................... 41 Chairman
Francis J. Bullock, Ph.D. (a)(b)....... 63 Director
Marvin H. Caruthers, Ph.D.............. 60 Director
Kirby L. Cramer (a).................... 62 Director
Robert W. Overell, Ph.D. (b)........... 45 Director
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(a) Member of our audit committee.
(b) Member of our compensation committee.
Robert E. Conway has served as our Chief Executive Officer and a member of our board of directors since November 1999. From October 1996 to October 1999, Mr. Conway was the Chief Operating Officer and Executive Vice President of the Clinical Trials Division of Hill Top Research, Inc. where he managed 22 company-owned research centers conducting clinical trials for pharmaceutical and biotechnology companies. From 1979 until 1996, Mr. Conway held various executive positions with Corning, Inc., including Corporate Vice President and General Manager of Corning Hazleton, Inc., a pre-clinical contract research organization, where he was responsible for North American operations. Mr. Conway serves on the board of directors of DEMCO, Inc. Mr. Conway received a B.S. in accounting from Marquette University, received an M.B.A. from the University of Cincinnati and is a Certified Public Accountant.
Kevin Koch, Ph.D. has served as our President, our Chief Science Officer and a member of our board of directors since May 1998. Prior to joining us, Dr. Koch was an Associate Director of Medicinal Chemistry and Project Leader for the Protease Inhibitor and New Leads project teams from May 1995 to April 1998 for Amgen Inc. From September 1988 until May 1995, Dr. Koch held various positions with Pfizer Central Research, including Senior Research Investigator-Project Coordinator for the Cellular Migration and Immunology Project Teams. Dr. Koch is chairman of the Strategic Research Institute's Anti-inflammatory Drug Discovery Summit and is an elected board member of the Inflammation Research Association. Dr. Koch received a B.S. in chemistry and in biochemistry from the State University of New York at Stony Brook and a Ph.D. in synthetic organic chemistry from the University of Rochester.
David L. Snitman, Ph.D. has served as our Vice President, Business Development, our Chief Operating Officer and a member of our board of directors since May 1998. Prior to joining us, Dr. Snitman held various positions with Amgen Inc. since December 1981, including Associate Director, New Products and Technology and Manager of Amgen's Boulder facility. Dr. Snitman received a B.S. in chemistry from Northeastern University, received a Ph.D. in the synthesis of natural products from the University of Colorado and was a National Institute of Health Postdoctoral Fellow at the Massachusetts Institute of Technology.
Michael Carruthers has served as our Chief Financial Officer and Secretary since December 1998. Prior to joining us, Mr. Carruthers was Chief Financial Officer from October 1993 until December 1998 of Sievers Instrument, Inc. From May 1989 until October 1993 Mr. Carruthers was the treasurer and controller for the Waukesha division of Dover Corporation. Mr. Carruthers is a Certified Public Accountant and was previously employed as an accountant with Coopers & Lybrand, LLP. Mr. Carruthers received a B.S. in accounting from the University of Colorado and an M.B.A. from the University of Chicago.
Anthony D. Piscopio, Ph.D. has served as our Vice President, Chemistry and Director of Process Chemistry since May 1998. Prior to joining us, Dr. Piscopio had been employed by Amgen Inc. since June 1995 in various capacities, including as a founder of Amgen's small molecule drug discovery program. While at Amgen, Dr. Piscopio worked in the area of protease inhibition and pioneered novel high-speed synthesis methodologies for the preparation of B-turn mimetics and other heterocyclic classes. From August 1992 until June 1995, Dr. Piscopio was employed with Pfizer, Inc.'s Inflammation Group and worked in the areas of G-protein coupled receptor modulation and computer-assisted design of protease inhibitors. Dr. Piscopio received a B.A. in chemistry from West Virginia University, received a Ph.D. in synthetic organic chemistry from the University of Wisconsin-Madison and completed his postdoctoral fellowship at the Scripps Research Institute in La Jolla, California as a National Institute of Health Postdoctoral Fellow.
John A. Josey, Ph.D. has served as our Senior Director of High-Speed Synthesis since May 1998. Prior to joining us, Dr. Josey had been employed by Amgen Inc. since September 1995 in the New Leads/ Combinatoral Chemistry Group of Amgen's small molecule drug discovery program. From August 1991 until September 1995, Dr. Josey was a research investigator in the Medicinal Chemistry Department of Glaxo Research Institute. Dr. Josey received a B.S. in chemistry from Colorado State University, received a Ph.D. in organic chemistry from the University of Texas at Austin and was a Damon Runyon-Walter Winchell Fellow at the California Institute of Technology.
Laurence Burgess, Ph.D. has served as our Senior Director of Medicinal Chemistry and Lead Optimization since May 1998. Prior to joining us, Dr. Burgess had been employed by Amgen Inc. since August 1995 in various capacities, including as a project leader in its small molecule drug discovery research program in the areas of respiratory and allergic disease. From February 1992 until August 1995, Dr. Burgess was employed by Pfizer Central Research working in the areas of inflammation and immunology. Dr. Burgess received a B.S. in chemistry from the Georgia Institute of Technology, received a Ph.D. from the University of Texas and completed his postdoctoral research at Colorado State University.
Joanna K. Money, Ph.D. has served as our Director of Business Development since September 1999. Prior to joining us, Dr. Money was the Director of Business Development from May 1998 to July 1999 for NeXstar Pharmaceuticals. From September 1987 to April 1998, Dr. Money held various positions with Amoco Chemical Company's Research Center, including research chemist and business development manager for the Asia Pacific Region as well as positions in marketing, strategic planning and product management. Dr. Money received a B.Sc. in chemistry from Imperial College, London and a Ph.D. in inorganic chemistry from Indiana University.
Kyle Lefkoff has served as the Chairman of our board of directors since May 1998. Since 1995, Mr. Lefkoff has been a General Partner of Boulder Ventures Limited, a venture capital firm and investor in our company. From June 1986 until June 1995, Mr. Lefkoff was employed by Colorado Venture Management, a venture capital firm. Mr. Lefkoff serves on the boards of directors of Trust Company of America, Vexcel Corporation and Metabolite Laboratories Inc. Mr. Lefkoff received a B.A. in economics from Vassar College and an M.B.A. from the University of Chicago.
Francis J. Bullock, Ph.D. has served as a member of our board of directors since May 1998. Since 1993, Dr. Bullock has been a senior consultant for Arthur D. Little, Inc., concentrating on pharmaceutical and biotechnology research and development, as well as the fine chemicals and agricultural chemicals industries. From April 1981 until September 1993, Dr. Bullock served as Senior Vice President, Research Operations at Schering Plough Research Institute. Dr. Bullock serves on the boards of directors of Genzyme Transgenics Corporation, Neogenesis and Atherex. Dr. Bullock received a B.S. in pharmacy from the Massachusetts
College of Pharmacy, an A.M. in organic chemistry from Harvard University and a Ph.D. in organic chemistry from Harvard University.
Marvin H. Caruthers, Ph.D. has served as a member of our board of directors since August 1998. Since 1979, Dr. Caruthers has been a Professor of Biochemistry and Bioorganic Chemistry at the University of Colorado. Dr. Caruthers is a member of the National Academy of Sciences and the American Academy of Arts and Sciences and was previously a member of the scientific advisory board of Amgen Inc. Dr. Caruthers serves on the boards of directors of Oxigene and Genomics, Inc. Dr. Caruthers received a B.S. in chemistry from Iowa State University and a Ph.D. in chemistry from Northwestern University.
Kirby L. Cramer has served as a member of our board of directors since August 2000. Mr. Cramer is the Chairman Emeritus of Hazleton Laboratories Corporation, a Covance company, Chairman of the Board of Directors of Northwestern Trust and Investors Advisory Company and Chairman of the Board of Directors of SonoSite, Inc. From 1987 until 1991, Mr. Cramer served as the Chairman of the Board of Directors of Kirschner Medical Corporation. Mr. Cramer serves on the boards of directors of Immunex Corporation, SonoSite, Inc., Huntingdon Life Sciences Group plc, Landec Corporation, D.J. Orthopedics, Inc. and Commerce Bank of Washington. Mr. Cramer received a B.A. in history from Northwestern University, received an M.B.A. from the University of Washington and is a graduate of Harvard Business School's Advanced Management Program. Mr. Cramer is a Chartered Financial Analyst.
Robert W. Overell, Ph.D. has served as a member of our board of directors since December 1999. Since 1996, Dr. Overell has been with Frazier & Company, a venture capital firm and investor in our company, and has served as a General Partner since 1998 and a venture partner from 1996 until 1998. Dr. Overell's operational experience in biotechnology companies includes joining Immunex Corporation early in its development and co-founding Target Genetics. Dr. Overell serves on the board of directors of FastTrack Systems, GeneMachines, InPharos, Inc., SkeleTech, Inc. and XenoPort, Inc. Dr. Overell received his B.S. in biological sciences from the University of Newcastle-upon-Tyne and a Ph.D. in biochemistry from the Institute of Cancer Research, University of London.
Certain of our current directors were elected as designees of our preferred stockholders and our founders in accordance with voting agreements that will terminate following this offering. The current designees of our preferred stockholders are Dr. Caruthers, Dr. Overell and Messrs. Lefkoff and Cramer, and the current designees of our founders are Dr. Bullock, Dr. Koch and Dr. Snitman.
BOARD COMPOSITION
Our board of directors currently consists of eight directors. Upon completion of this offering, our board of directors will be divided into three classes: Class I, whose term will expire at the annual meeting of stockholders to be held in 2001; Class II, whose term will expire at the annual meeting of stockholders to be held in 2002; and Class III, whose term will expire at the annual meeting of stockholders to be held in 2003. The initial Class I directors will be Dr. Overell and Dr. Snitman, the initial Class II directors will be Messrs. Conway and Lefkoff and Dr. Caruthers, and the initial Class III directors will be Dr. Bullock, Dr. Koch and Mr. Cramer.
At each annual meeting of the stockholders beginning in 2001, the successors to the class of directors whose terms expired will be elected to serve three-year terms. If the number of directors on our board increases, the newly created directorships will be distributed among the three classes so that each class will, as nearly as possible, consist of one-third of the directors. The classification of our board of directors may delay or prevent changes in our control or management. In addition, our directors may be removed only with cause and upon the vote of holders of two-thirds of our outstanding common stock.
BOARD COMMITTEES
Our board of directors has established an audit committee and a compensation committee.
The audit committee consists of Dr. Bullock, Mr. Cramer and Mr. Lefkoff. The audit committee meets periodically with management and our independent accountants to review their work and confirm that they are properly discharging their respective responsibilities. The audit committee also:
- recommends the appointment of independent accountants to audit our financial statements and perform services related to the audit;
- reviews the scope and results of the audit with the independent accountants;
- reviews with management and the independent accountants our annual operating results;
- considers the adequacy of the internal accounting control procedures; and
- considers the independence of our accountants.
The compensation committee consists of Dr. Bullock, Mr. Lefkoff and Dr. Overell. The compensation committee determines the salary and incentive compensation of our officers and provides recommendations for the salaries and incentive compensation of our other employees. The compensation committee also administers our stock option plan and our employee stock purchase plan, including reviewing management recommendations with respect to option grants and taking other actions as may be required in connection with our compensation and incentive plans.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The compensation committee currently consists of Dr. Bullock, Mr. Lefkoff and Dr. Overell. No current member of the compensation committee has been an officer or employee of ours at any time. None of our executive officers serve as a member of the board of directors or compensation committee of any other company that has one or more executive officers serving as a member of our board of directors, nor has such a relationship existed in the past. Prior to July 2000, our board of directors, as a whole, including Mr. Conway, Dr. Koch and Dr. Snitman, made decisions relating to the compensation of our executive officers following recommendations from the compensation committee. In July 2000, our board of directors delegated its authority to determine salaries of our executive officers and administer our benefit plan to the compensation committee. Mr. Conway, our Chief Executive Officer, served as a member of the compensation committee from November 1999 through August 2000.
DIRECTOR COMPENSATION
We reimburse our directors for reasonable out-of-pocket expenses related to attending board and committee meetings. Following the completion of this offering, we intend to compensate each non-employee director who is not affiliated with one of our preferred stock investors $12,000 annually, $1,000 for attending each board meeting and each committee meeting and $1,000 for serving as chairman of a board meeting or a committee meeting. We have granted certain non-employee directors non-qualified options to purchase our common stock, including 10,000 options to Dr. Bullock in July 2000 for service during fiscal year 2000 and 20,000 options to each of Dr. Bullock and Mr. Cramer in August 2000 for service during fiscal year 2001. It is our current intent that non-employee directors who are not affiliated with our venture capital investors will receive a yearly grant of non-qualified options to purchase shares of our common stock in an amount and with a vesting schedule to be determined by the compensation committee.
EXECUTIVE COMPENSATION
The following table sets forth summary information concerning the compensation we paid during the fiscal year ended June 30, 2000 to our chief executive officer and each of our other four most highly compensated executive officers who were serving as executive officers at June 30, 2000. We refer to these individuals as our named executive officers.
EXECUTIVE COMPENSATION SUMMARY
COMPENSATION FOR THE LONG-TERM
FISCAL YEAR ENDED COMPENSATION
JUNE 30, 2000 ------------------
-------------------- SECURITIES ALL OTHER
NAME AND PRINCIPAL POSITION SALARY BONUS UNDERLYING OPTIONS COMPENSATION
--------------------------- --------- -------- ------------------ ------------
Robert E. Conway(a)........................ $141,477 $60,000 800,000 $78,458(b)
Chief Executive Officer
Kevin Koch, Ph.D. ......................... 160,500 -- 58,125 --
President and Chief Science Officer
David L. Snitman, Ph.D. ................... 160,500 -- 58,125 --
Chief Operating Officer and Vice
President, Business Development
Anthony D. Piscopio, Ph.D. ................ 139,800 -- 50,625 --
Vice President, Chemistry and Director of
Process Chemistry
Michael Carruthers......................... 112,300 -- 41,250 --
Chief Financial Officer and Secretary
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(a) Mr. Conway became Chief Executive Officer in November 1999. His annual
salary during the first year of his employment agreement is $225,000.
(b) Consists of reimbursement of relocation expenses.
OPTION GRANTS DURING THE FISCAL YEAR ENDED JUNE 30, 2000
The following table sets forth information related to each grant of stock options to our named executive officers during the fiscal year ended June 30, 2000. We have never granted any stock appreciation rights.
INDIVIDUAL GRANTS
---------------------------------------------------- POTENTIAL REALIZABLE VALUE AT
NUMBER OF PERCENT OF ASSUMED ANNUAL RATES
SECURITIES TOTAL OPTIONS OF SHARE PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE FOR OPTION TERM(C)
OPTIONS EMPLOYEES IN PRICE PER EXPIRATION -----------------------------
NAME GRANTED FISCAL YEAR(A) SHARE(B) DATE 5% 10%
---- ---------- -------------- --------- ---------- ------------- -------------
Robert E. Conway(d)........... 800,000 44.1% $0.600 11/15/09 $13,854,273 $22,344,934
Kevin Koch, Ph.D.(e).......... 58,125 3.2% 0.235 7/1/09 1,027,815 1,644,715
David L. Snitman, Ph.D.(e).... 58,125 3.2% 0.235 7/1/09 1,027,815 1,644,715
Anthony D. Piscopio,
Ph.D.(e).................... 50,625 2.8% 0.235 7/1/09 895,194 1,432,493
Michael Carruthers(e)......... 41,250 2.3% 0.235 7/1/09 729,417 1,167,217
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(a) Based on options to purchase an aggregate of 1,815,740 shares of common
stock granted to our employees between June 30, 1999 and June 30, 2000.
(b) The exercise price per share of each option was equal to the fair market
value of our common stock on the date of grant as determined by the board
of directors.
(c) Potential realizable values are computed by (1) multiplying the number of
shares of common stock subject to a given option by the assumed initial
public offering price of $11.00 per share, (2) assuming that the aggregate
stock value derived from that calculation compounds at the annual 5% or 10%
rate shown in the table for the entire ten-year term of the option, and (3)
subtracting from that result the aggregate option exercise price. The 5%
and 10% assumed annual rates of stock price appreciation are
mandated by the rules of the Securities and Exchange Commission and do not
represent our estimate or projection of future common stock prices.
(d) Of Mr. Conway's 800,000 options, 133,333 vested on December 31, 1999 based
on his continuous service as of such date and 106,667 vested on July 1,
2000 based on our achievement of certain performance milestones. If we do
not close an initial public offering of our common stock, the vesting of
the remaining 560,000 unvested options is based on Mr. Conway's continuous
service in accordance with the following schedule: 55,000 will vest on
November 15, 2000; 5,000 will vest each month between December 15, 2000 and
October 15, 2003; 10,000 will vest on November 15, 2003 and 320,000 will
vest on July 1, 2005. Upon the closing of this offering, the vesting of
420,000 of Mr. Conway's unvested options will be accelerated and become
immediately exercisable, and the remaining 140,000 unvested options will
vest and become exercisable one year from the date of the consummation of
this offering.
(e) All options vest monthly over a four-year period ending June 1, 2003.
OPTIONS EXERCISED DURING THE FISCAL YEAR ENDED JUNE 30, 2000, AND OPTION VALUES
AS OF JUNE 30, 2000
The following table provides summary information for each of our named executive
officers with respect to stock options held as of June 30, 2000, and with
respect to stock options exercised during the fiscal year ended June 30, 2000.
The value realized upon exercise and the value of unexercised in-the-money
options shown below have been calculated on the basis of the assumed initial
public offering price of $11.00 per share, less the applicable exercise price
per share, multiplied by the number of shares underlying these options.
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED IN-THE-
OPTIONS AS OF MONEY OPTIONS AS OF
SHARES JUNE 30, 2000 JUNE 30, 2000
ACQUIRED ON VALUE --------------------------- -----------------------------
NAME EXERCISE REALIZED UNEXERCISABLE EXERCISABLE UNEXERCISABLE EXERCISABLE
---- ----------- -------- ------------- ----------- -------------- ------------
Robert E. Conway................. -- $ -- 666,667 133,333 $7,176,670 $1,435,330
Kevin Koch, Ph.D................. 7,265 78,208 43,594 7,266 469,289 78,218
David L. Snitman, Ph.D........... -- -- 43,594 14,531 469,289 156,426
Anthony D. Piscopio, Ph.D........ 10,546 113,528 38,969 2,110 419,501 22,714
Michael Carruthers............... 34,401 370,327 80,938 5,911 871,298 63,632
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EMPLOYMENT AGREEMENTS
Effective November 15, 1999, we entered into an employment agreement with Mr. Conway to serve as our Chief Executive Officer. The agreement is for an initial term of two years and may be then renewed for additional one-year terms. Either party may terminate the agreement for any reason upon 30 days' prior notice to the other party. Under the agreement, we will pay Mr. Conway an annual salary of $225,000 subject to subsequent adjustment. In addition, we granted to Mr. Conway options to purchase 800,000 shares of our common stock that vest periodically over a six-year term subject to his continued employment. Upon a change in control of our company or the closing of this offering, 75% of Mr. Conway's options will vest and become immediately exercisable prior to the event and all remaining options will vest one year from that date. Mr. Conway is also eligible to receive a cash bonus each fiscal year beginning in 2001 based on a percentage of his base salary provided he meets minimum performance criteria to be established by our board of directors. The cash bonus, if any, may be paid in equity in lieu of cash. We also agreed to reimburse Mr. Conway for reasonable out-of-pocket expenses he incurred in connection with his performance of services under this agreement and for relocation costs of up to $80,000 for moving him and his family from Cincinnati, Ohio to Boulder, Colorado.
If Mr. Conway's employment is terminated as a result of his disability or by us without cause, we agreed to pay him a severance payment equal to one year of his then current base salary in equal monthly installments and he will be entitled to receive, pro-rated to the date of termination, any cash performance bonus he would have received for that year and any performance options that would have vested in that year.
Mr. Conway agreed to execute a release acceptable to us in consideration for our severance obligations under the agreement. If Mr. Conway terminates his employment without cause, he will not receive any performance bonus for that year or acceleration of any of his options granted under the agreement. Mr. Conway is also subject to a non-compete agreement in which he agreed for a period of two years not to engage in any competing activities in a 50-mile radius of any area where we are doing business and not to recruit or solicit any of our employees or customers.
Effective September 1, 2000, we entered into employment agreements with Dr. Koch, Dr. Snitman, Dr. Piscopio, Mr. Carruthers, Dr. Josey, Dr. Burgess and Dr. Money. These agreements are for an initial term of two years and may then be renewed for additional one-year terms. Either party may terminate for any reason upon 30 days' prior notice to the other. Under these agreements we will pay the employees annual salaries ranging from $120,000 to $175,000. If the employee is terminated as a result of disability or by us without cause, including a reduction in the employee's salary, we have agreed to pay the employee a severance payment equal to the greater of one year, or the remaining term, of his or her then-current base salary in equal monthly installments. Upon a change of control of the company, 75% of each employee's outstanding options will vest and the remaining 25% of such options will vest one year later, if the employee is still working for us. Each of these employees is also subject to a non-compete agreement in which he or she has agreed for a period of two years following his or her termination not to engage in any competing activities within a 50-mile radius of any area where we are doing business and not to recruit or solicit any of our employees or customers.
In connection with our employment agreements with Dr. Koch and Dr. Piscopio, we agreed to extend the due dates for a $100,000 note that we hold from Dr. Koch and a $125,000 note that we hold from Dr. Piscopio to coincide with the initial term of their employment agreements and to reduce the number of shares of our common stock pledged as security for these notes to 50,000 shares each.
EMPLOYEE BENEFIT PLANS
Amended and Restated Stock Option and Incentive Plan
Our Amended and Restated Stock Option and Incentive Plan is the successor equity incentive program to our 1998 Stock Option Plan. Our amended stock option plan was adopted by our board of directors and approved by our stockholders in September 2000. Upon the closing of this offering, our amended stock option plan will become effective, and we will make no further grants under our current stock option plan. At that time, all awards under our current stock option plan will be transferred to our amended stock option plan, however, such awards will continue to be subject to their existing terms. The primary differences between our current stock option plan and our amended stock option plan are described below. This summary is qualified in its entirety by the detailed provisions of our current stock option plan and our amended stock option plan, which have been filed as exhibits to the registration statement of which this prospectus is a part.
At August 31, 2000, there were 4,837,500 shares of common stock reserved for issuance under the stock option plan and options to purchase 866,984 shares of common stock remain available for issuance under the stock option plan. Effective as of the closing of this offering, there will be 7,000,000 shares of common stock reserved for issuance under the stock option plan. The stock option plan provides that the number of shares reserved for issuance under the stock option plan shall be increased, but not decreased, by any additional authorized shares. Additional authorized shares, for purposes of the stock option plan, means on any given day the difference between:
- 25% of our issued and outstanding shares of common stock, on a fully diluted, as converted basis, minus
- the number of outstanding shares relating to awards under the stock option plan plus the number of shares available for future grants of awards under the stock option plan on that date.
The number of shares available for issuance under the stock option plan as incentive stock options may not initially exceed 7,000,000 shares, provided that this number will be increased each January 1 for the next
five years beginning in 2001 by 250,000 shares. At no time can the number of shares available for issuance under our stock option plan as incentive stock options exceed the total number of shares reserved for issuance under our stock option plan.
The maximum number of shares subject to options that can be awarded under the stock option plan to any person is 2,000,000 per year. The maximum number of shares that can be awarded under the stock option plan to any person, other than pursuant to an option, is 400,000 per year. The maximum amount that may be earned as an annual incentive award or other cash award in any fiscal year by any one person is $1,000,000 and the maximum amount that may be earned as a performance award or other cash award in respect of a performance period by any one person is $3,000,000.
Administration. The stock option plan is administered by our compensation committee. Subject to the terms of the stock option plan, the compensation committee may select participants to receive awards, determine the types of awards and terms and conditions of awards, and interpret provisions of the stock option plan.
The common stock issued or to be issued under the stock option plan consists of authorized but unissued shares. Shares covered by an award that are not purchased or that are forfeited will again be available for issuance as awards under the stock option plan.
Eligibility. Awards may be made under our stock option plan to our employees, officers, directors or consultants, or to any of our affiliates, or their officers or directors, and to any other individual whose participation in the stock option plan our compensation committee determines to be in our best interests.
Amendment or Termination of the Plan. The board of directors may terminate or amend the stock option plan at any time and for any reason as long as the amendment does not adversely impair the rights of grantees with respect to outstanding awards. Further, unless terminated earlier, the stock option plan will terminate on the date 10 years from the date of the closing of this offering. Amendments will be submitted for stockholder approval to the extent required by the Internal Revenue Code or other applicable laws.
Options. We may grant options under the stock option plan that are either intended to qualify as incentive stock options under the Internal Revenue Code or not to qualify as incentive stock options, referred to as non-qualified stock options.
The exercise price of each stock option may not be less than 100% of the fair market value of our common stock on the date of grant. In the case of specified 10% stockholders who receive incentive stock options, the exercise price may not be less than 110% of the fair market value of our common stock on the date of grant. An exception to these requirements is made for options that we grant in substitution for options held by employees of companies that we acquire. In this case, the exercise price is adjusted to preserve the economic value of the employee's stock option from his or her former employer.
The term of each stock option is fixed by the compensation committee and may not exceed 10 years from the date of grant. The compensation committee determines when each option may be exercised and the period of time, if any, after retirement, death, disability or termination of employment during which options may be exercised. Options granted under our current stock option plan, however, are generally exercisable, to the extent vested, for up to 30 days after the optionee terminates employment without cause if the termination occurs more than six months after the option is granted, unless the option agreement provides otherwise.
Options may be exercisable in installments. Options granted under our current stock option plan vest 25% per year over a four-year period based on continued service with us, unless the option agreement provides otherwise. The exercisability of options may be accelerated by the compensation committee.
In general, an optionee may pay the exercise price of an option by cash, certified check, by tendering shares of our common stock, which if acquired from us have been held by the optionee for at least six months, or by means of a broker-assisted cashless exercise.
Stock options granted under our stock option plan may not be sold, transferred, pledged, or assigned other than by will or under applicable laws of descent and distribution. However, we may permit limited
transfers of non-qualified options for the benefit of immediate family members of grantees to help with estate planning concerns.
Other Awards. The compensation committee may also award under the stock option plan:
- shares of common stock subject to restrictions;
- deferred stock, credited as deferred stock units, but ultimately payable in the form of unrestricted shares of common stock in accordance with the participant's deferral election;
- common stock units subject to restrictions;
- unrestricted shares of common stock, which are shares of common stock issued at no cost or for a purchase price determined by the compensation committee which are free from any restrictions under the stock option plan;
- dividend equivalent rights entitling the grantee to receive credits for dividends that would be paid if the grantee had held a specified number of shares of common stock;
- a right to receive a number of shares or, in the discretion of the compensation committee, an amount in cash or a combination of shares and cash, based on the increase in the fair market value of the shares underlying the right during a stated period specified by the compensation committee;
- a right to receive a number of shares, subject to the attainment of specified performance goals; and
- performance and annual incentive awards, ultimately payable in stock or cash, as determined by the compensation committee. The compensation committee may grant multi-year and annual incentive awards subject to achievement of specified performance goals tied to business criteria described below.
Section 162(m) of the Internal Revenue Code limits publicly-held companies to an annual deduction for federal income tax purposes of $1,000,000 for compensation paid to their chief executive officer and the four highest compensated executive officers (other than the chief executive officer) determined at the end of each year. However, performance-based compensation is excluded from this limitation. Although our stock option plan is currently not subject to Section 162(m) because Section 162(m) provides for a grace period following an initial public offering, the stock option plan is designed to permit the compensation committee to grant awards that qualify as performance-based for purposes of satisfying the conditions of Section 162(m) after the stock option plan becomes subject to Section 162(m).
Business Criteria. The compensation committee may use exclusively one or more of the following business criteria to establish performance goals for awards granted to "covered employees" as defined by to Section 162(m) of the Internal Revenue Code:
- total stockholder return;
- such total stockholder return as compared to total return, on a comparable basis, of a publicly available index such as, but not limited to, the Standard & Poor's 500 Stock Index;
- net income;
- pretax earnings;
- earnings before interest expense, taxes, depreciation and amortization;
- pretax operating earnings after interest expense and before bonuses, service fees, and extraordinary or special items;
- operating margin;
- earnings per share;
- return on equity;
- return on capital;
- return on investment;
- operating earnings;
- working capital;
- ratio of debt to stockholders' equity; and
- revenue.
Effect of Certain Corporate Transactions. Certain change of control transactions involving us, such as a sale of all or substantially all of our assets or stock, may cause awards granted under the stock option plan to vest, unless the awards are continued or substituted for by the surviving company in connection with the change of control transaction.
Adjustments for Stock Dividends and Similar Events. The compensation committee will make appropriate adjustments in outstanding awards and the number of shares available for issuance under the stock option plan, including the individual limitations on awards, to reflect common stock dividends, stock splits and other similar events.
Employee Stock Purchase Plan
The following is a summary description of our Employee Stock Purchase Plan, which our board of directors adopted and stockholders approved in September 2000, effective upon the closing of this offering. Our stock purchase plan has been filed as an exhibit to the registration statement of which this prospectus is a part.
The purpose of our stock purchase plan is to permit eligible employees to purchase shares of our common stock at a discount. Our stock purchase plan is administered by the compensation committee. All of our employees whose customary employment is more than 20 hours per week and for more than 5 months in any calendar year will be eligible to participate in this plan, provided that any employee who would own 5% or more of the total combined voting power or value of our common stock immediately after any grant is not eligible to participate.
We have reserved 800,000 shares of common stock for issuance under our stock purchase plan. We intend that our stock purchase plan meet the requirements for an employee stock purchase plan under Section 423 of the Internal Revenue Code.
During an offering period, we will withhold amounts through payroll deductions for eligible employees who elect to participate in the stock purchase plan. At the end of each offering period, we will use accumulated payroll deductions to purchase, on behalf of eligible employees who are participating in the plan, stock at a price equal to the lesser of 85% of the market price of the common stock at either the beginning of the offering period or the end of the offering period. The duration of each offering period will be determined by the compensation committee.
An employee may not sell shares of common stock purchased under the stock purchase plan until three months have elapsed from the date the shares were purchased on the employee's behalf. Shares of common stock purchased under the stock purchase plan will be held in the custody of an agent appointed by the board of directors until two years have elapsed since the first day of the offering period in which the shares were purchased and one year has elapsed since the date the shares were purchased.
401(k) Plan
We sponsor a 401(k) Savings Plan, a defined contribution plan intended to qualify under Section 401 of the Internal Revenue Code. All employees who are at least 21 years old are eligible to participate. Participants may make pre-tax contributions to our 401(k) plan of up to 15% of their eligible earnings, subject to a statutorily prescribed annual limit. We may make matching contributions at 50% up to the first 4% contributed by employees under the 401(k) plan. Each participant is fully vested in his or her contributions. Our matching contributions vest over four years. Contributions by the participants or by us to the 401(k) plan, and the income earned on such contributions, are generally not taxable to the participants until withdrawn. Our contributions, if any, are generally deductible when made. All contributions are held in trust as required by law. Individual participants may direct the trustee to invest their accounts in authorized investment alternatives.
RELATED PARTY TRANSACTIONS
Since our inception, we have issued shares of common and preferred stock in private placement transactions as follows:
On May 18, 1998, we issued and sold 2,913,367 shares of our common stock at a purchase price of $0.235 per share and 2,500,000 shares of our Series A preferred stock at a purchase price of $1.00 per share. Between August 8, 1998 and January 15, 1999, we issued and sold an additional 4,135,000 shares of our Series A preferred stock at a purchase price of $1.00 per share. On November 16, 1999, we issued and sold 3,199,999 shares of our Series B preferred stock at a purchase price of $2.50 per share. On August 31, 2000, we issued and sold 1,666,667 shares of our Series C preferred stock at a purchase price of $6.00 per share. Each share of Series A preferred stock, Series B preferred stock and Series C preferred stock currently converts into one share of common stock. Upon the closing of this offering, the following shares of preferred stock convert into common stock at a rate of one share of common stock for each share of preferred stock.
The following table identifies our executive officers, directors and five percent stockholders who have made equity investments in our company, excluding the exercise of options to purchase shares of our common stock. See "Principal Stockholders" for additional information relating to the beneficial ownership of shares of our preferred and common stock of these stockholders.
SHARES OF SHARES OF SHARES OF
SHARES OF SERIES A SERIES B SERIES C
COMMON PREFERRED PREFERRED PREFERRED
NAME STOCK STOCK STOCK STOCK
---- --------- --------- --------- ---------
EXECUTIVE OFFICERS
Kevin Koch, Ph.D.(a)................................. 648,654 5,000 54,000 --
David L. Snitman, Ph.D. ............................. 648,654 250,000 385,548 266,667
Anthony D. Piscopio, Ph.D. .......................... 648,654 -- 30,000 1,667
Michael Carruthers................................... -- 25,000 16,000 3,332
DIRECTORS
Kyle Lefkoff(b)...................................... 150,000 1,000,000 463,409 161,163
Marvin H. Caruthers, Ph.D.(c)........................ 18,750 250,000 80,000 33,936
Kirby L. Cramer...................................... -- -- -- 83,333
Robert Overell, Ph.D.(d)............................. -- 1,500,000 604,446 16,667
FIVE PERCENT STOCKHOLDERS
ARCH Venture Fund III, L.P. ......................... -- 1,500,000 604,446 204,779
Boulder Ventures II, L.P.(e)......................... 150,000 1,000,000 463,409 156,997
Falcon Technology Partners L.P. ..................... 150,000 1,000,000 463,409 156,997
Frazier Healthcare II, L.P. ......................... -- 1,500,000 604,446 16,667
K.C. Nicolaou, Ph.D. ................................ 648,654 -- 252,000 50,000
Rovent II Limited Partnership........................ -- 750,000 120,000 50,000
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(a) Includes 5,000 shares of Series A preferred stock and 2,000 shares of Series B preferred stock purchased by Dr. Koch's spouse.
(b) Includes 130,500 shares of common stock, 870,000 shares of Series A preferred stock, 403,166 shares of Series B preferred stock and 136,587 shares of Series C preferred stock purchased by Boulder Ventures II, L.P.; 19,500 shares of common stock, 130,000 shares of Series A preferred stock, 60,243 shares of Series B preferred stock and 20,410 shares of Series C preferred stock purchased by Boulder Ventures II (Annex), L.P., an affiliate of Boulder Ventures II, L.P. and 4,166 shares of Series C preferred stock purchased by Mr. Lefkoff's father. The general partner of Boulder Ventures II L.P. and Boulder Ventures II (Annex), L.P. is BV Partners II, LLC. Mr. Lefkoff is a member and manager of BV Partners II, LLC, and he disclaims beneficial ownership in the above shares except to the extent of his pecuniary interest in Boulder Ventures II L.P. and Boulder Ventures II (Annex), L.P.
(c) All shares of common stock and preferred stock were purchased by the Caruthers Family, L.L.C., of which Dr. Caruthers is the manager and a member. Dr. Caruthers disclaims beneficial ownership of such shares except to the extent of his pecuniary interest in the Caruthers Family, L.L.C.
(d) Includes 1,500,000 shares of Series A preferred stock, 604,446 shares of Series B preferred stock and 16,667 shares of Series C preferred stock purchased by Frazier Healthcare II, L.P. The general partner of Frazier Healthcare II, L.P. is Frazier Healthcare Management II, LLC. Dr. Overell is a member and manager of Frazier Healthcare Management II, LLC, and he disclaims beneficial ownership in the above shares except to the extent of his pecuniary interest in Frazier Healthcare II, L.P.
(e) Includes 19,500 shares of common stock, 130,000 shares of Series A preferred stock, 60,243 shares of Series B preferred stock and 20,410 shares of Series C preferred stock purchased by Boulder Ventures II, (Annex) L.P., an affiliate of Boulder Ventures II, L.P.
We believe that the shares issued in the above described transactions were sold at the then fair market value and that the terms of all the above-described transactions were no less favorable than we could have obtained from unaffiliated third parties.
In connection with the above-described transactions, we entered into an agreement with the investors providing for registration rights with respect to the shares of common stock, including those issuable upon conversion of each series of preferred stock. For more information, please see "Description of Capital Stock -- Registration Rights."
Mr. Lefkoff is a general partner of Boulder Ventures II, L.P. and Boulder Ventures II (Annex), L.P. and was appointed as one of our directors by our stockholders under the terms of a voting agreement that will terminate upon the consummation of this offering. Dr. Overell is a member and manager of Frazier Healthcare Management II, LLC and was appointed as one of our directors by Frazier Healthcare Management II, LLC.
In connection with Dr. Koch's purchase of 648,655 shares of our common stock on May 18, 1998, he issued us a promissory note with a principal balance of $100,000, an interest rate of 6.0% per annum and a maturity date on the earlier of May 18, 2001 or the date he voluntarily terminates his employment with us. Dr. Koch initially pledged all 648,655 shares of common stock as security for his loan. On September 1, 2000, we released 598,655 shares of common stock from Dr. Koch's pledge and extended the maturity date of his loan to the earlier of September 1, 2002 or the date Dr. Koch voluntarily terminates his employment with us.
In connection with Dr. Nicolaou's purchase of 648,655 shares of our common stock on May 18, 1998, he issued us a promissory note with a principal balance of $125,000, an interest rate of 6.0% per annum and a maturity date of the earlier of May 18, 2002 or the date Dr. Nicolaou terminates his consulting arrangement with us. Dr. Nicolaou pledged all 648,655 shares of common stock as security for his loan.
In connection with Dr. Piscopio's purchase of 648,655 shares of our common stock on May 18, 1998, he issued us a promissory note with a principal balance of $125,000, an interest rate of 6.0% per annum and a maturity date of the earlier of May 18, 2002 or the date Dr. Piscopio terminates his employment with us. Dr. Piscopio initially pledged all 648,655 shares of common stock as security for his loan. On September 1, 2000, we released 598,655 shares of common stock from Dr. Piscopio's pledge and extended the maturity date of his loan to the earlier of September 1, 2002 or the date Dr. Piscopio terminates his employment with us.
Stock option grants to our directors and executive officers are described in this prospectus under the heading "Management -- Director Compensation" and "Management -- Executive Compensation." In addition, we have employment agreements with our executive officers and some of our other employees which are discussed under "Management -- Employment Agreements."
PRINCIPAL STOCKHOLDERS
The following table shows information with respect to beneficial ownership of our common stock, as of August 31, 2000, after giving pro forma effect to the conversion of all of our outstanding shares of preferred stock into common stock on a one-for-one basis, and as adjusted to reflect the sale of the common stock offered by us in this offering, for:
- each of our named executive officers;
- each of our directors;
- all of our directors and executive officers as a group; and
- each person known by us to beneficially own more than 5% of our common stock.
We have calculated the percentage of stock beneficially owned based on 15,367,409 shares of common stock outstanding as of August 31, 2000, after giving effect to the conversion of our convertible preferred stock, and 21,367,409 shares of common stock outstanding after completion of this offering.
PERCENTAGE OF SHARES
NUMBER OF BENEFICIALLY OWNED(A)
SHARES ---------------------
BENEFICIALLY BEFORE AFTER
NAME OWNED OFFERING OFFERING
---- ------------ -------- --------
NAMED EXECUTIVE OFFICERS
Robert E. Conway(b)......................................... 640,000 4.1% 2.9%
Kevin Koch, Ph.D.(c)........................................ 726,570 4.7 3.4
David L. Snitman, Ph.D.(d).................................. 1,537,659 10.0 7.2
Anthony D. Piscopio, Ph.D.(e)............................... 699,648 4.6 3.3
Michael Carruthers(f)....................................... 90,385 * *
DIRECTORS
Kyle Lefkoff(g)............................................. 1,770,406 11.5 8.3
Francis J. Bullock, Ph.D.(h)................................ 40,000 * *
Marvin H. Caruthers, Ph.D.(i)............................... 382,686 2.5 1.8
Kirby L. Cramer(j).......................................... 103,333 * *
Robert W. Overell, Ph.D.(k)................................. 2,121,113 13.8 9.9
All directors and executive officers as a group (10
persons)(l)............................................... 8,110,133 51.1 38.0
FIVE PERCENT STOCKHOLDERS
ARCH Venture Fund III, L.P.(m).............................. 2,309,225 15.0 10.8
Boulder Ventures II, L.P.(n)................................ 1,770,406 11.5 8.3
Falcon Technology Partners L.P.(o).......................... 1,770,406 11.5 8.3
Frazier Healthcare II, L.P.(p).............................. 2,121,113 13.8 9.9
K.C. Nicolaou, Ph.D.(q)..................................... 950,654 6.2 4.4
Rovent II Limited Partnership(r)............................ 920,000 6.0 4.3
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* Less than 1% beneficial ownership.
(a) Beneficial ownership is determined under the rules of the Securities and Exchange Commission and includes voting or investment power with respect to the securities. Unless indicated by footnote, the address for each listed director, officer and principal stockholder is Array BioPharma Inc., 1885 33rd Street, Boulder, Colorado 80301. Except as indicated by footnote, the persons named in the table have sole voting and investment power with respect to all shares of common stock shown as beneficially owned by them. The number of shares of common stock outstanding used in calculating the percentage for each listed person includes the shares of common stock underlying options held by that person that are currently exercisable or are exercisable within 60 days of August 31, 2000, but excludes shares of common stock underlying options held by any other person.
(b) Includes 20,000 shares of common stock held in uniform gift to minor accounts for the benefit of Mr. Conway's children and options to purchase 420,000 shares that will vest upon the closing of this offering.
(c) Includes options to purchase 6,448 shares of common stock that are exercisable within 60 days of August 31, 2000, and the following shares held by Dr. Koch's spouse: options to purchase 1,769 shares of common stock that are exercisable within 60 days of August 31, 2000, 10,457 shares of common stock, 5,000 shares of Series A preferred stock and 12,500 shares of Series B preferred stock. Dr. Koch has granted the underwriters an over-allotment option. If the over-allotment option is exercised in full, Dr. Koch will sell 50,000 shares of common stock in this offering. The percentage of shares after the offering in the table above assumes no exercise of the over-allotment option. If the over-allotment option is exercised in full, Dr. Koch's percentage of shares beneficially owned would be 3.1%.
(d) Includes options to purchase 6,448 shares of common stock that are exercisable within 60 days of August 31, 2000, and 100,000 shares of common stock held in trust for the benefit of Dr. Snitman's children.
(e) Includes options to purchase 5,004 shares of common stock that are exercisable within 60 days of August 31, 2000. Dr. Piscopio has granted the underwriters an over-allotment option. If the over-allotment option is exercised in full, Dr. Piscopio will sell 50,000 shares of common stock in this offering. The percentage of shares after the offering in the table above assumes no exercise of the over-allotment option. If the over-allotment option is exercised in full, Dr. Piscopio's percentage of shares beneficially owned would be 2.9%.
(f) Includes options to purchase 7,881 shares of common stock that are exercisable within 60 days of August 31, 2000.
(g) Includes 130,500 shares of common stock, 870,000 shares of Series A preferred stock, 403,166 shares of Series B preferred stock and 136,587 shares of Series C preferred stock held by Boulder Ventures II, L.P., and 19,500 shares of common stock, 130,000 shares of Series A preferred stock, 60,243 shares of Series B preferred stock and 20,410 shares of Series C preferred stock held by Boulder Ventures II (Annex), L.P., an affiliate of Boulder Ventures II, L.P. The general partner of Boulder Ventures II L.P. and Boulder Ventures II (Annex), L.P. is BV Partners II, LLC. Mr. Lefkoff is a member and manager of BV Partners II, LLC, and he disclaims beneficial ownership in the above shares except to the extent of his pecuniary interest in Boulder Ventures II L.P. and Boulder Ventures II (Annex), L.P.
(h) Includes options to purchase 30,000 shares of common stock that are exercisable within 60 days of August 31, 2000.
(i) All shares of common stock and preferred stock are held by the Caruthers Family, L.L.C., of which Dr. Caruthers is the manager and a member. Dr. Caruthers disclaims beneficial ownership of such shares except to the extent of his pecuniary interest in the Caruthers Family, L.L.C.
(j) Includes options to purchase 20,000 shares of common stock that are exercisable within 60 days of August 31, 2000.
(k) Includes 1,500,000 shares of Series A preferred stock, 604,446 shares of Series B preferred stock and 16,667 shares of Series C preferred stock owned by Frazier Healthcare II, L.P. The general partner of Frazier Healthcare II, L.P. is Frazier Healthcare Management II, LLC. Dr. Overell is a member and manager of Frazier Healthcare Management II, LLC, and he disclaims beneficial ownership in the above shares except to the extent of his pecuniary interest in Frazier Healthcare II, L.P.
(l) Includes options to purchase 497,550 shares of common stock that are exercisable within 60 days of August 31, 2000 or upon consummation of this offering.
(m) The business address of ARCH Venture Fund III, L.P. is 8725 West Higgins Road, Suite 290, Chicago, IL 60631.
(n) Includes 19,500 shares of common stock, 130,000 shares of our Series A preferred stock, 60,243 shares of Series B preferred stock and 20,410 shares of Series C preferred stock held by Boulder Ventures II (Annex), L.P., an affiliate of Boulder Ventures II, L.P. The business address of Boulder Ventures II, L.P. and Boulder Ventures II (Annex), L.P. is 1941 Pearl Street, No. 300, Boulder, CO 80302.
(o) The business address of Falcon Technology Partners L.P. is 600 Dorset Road, Devon, PA 19333.
(p) The business address of Frazier Healthcare II, L.P. is 601 Union Street, Suite 3300, Seattle, WA 98101.
(q) The business address of Dr. Nicolaou is 10550 North Torrey Pines Road, La Jolla, CA 92037.
(r) The business address of Rovent II Limited Partnership is 75 State Street, Boston, MA 02109.
DESCRIPTION OF CAPITAL STOCK
The following description of our capital stock and material provisions of our certificate of incorporation and bylaws, which will become effective upon the closing of this offering, is only a summary. The description is qualified in its entirety by the complete provisions of our certificate of incorporation and bylaws, which have been filed as exhibits to the registration statement of which this prospectus is a part. Upon the closing of this offering, our certificate of incorporation will authorize the issuance of up to 60,000,000 shares of common stock, par value $0.001 per share, and 10,000,000 shares of preferred stock, par value $0.001 per share. As of August 31, 2000, 3,865,743 shares of common stock were outstanding and 11,501,666 shares of convertible preferred stock, convertible on a one-for-one basis into shares of common stock upon the completion of this offering, were issued and outstanding. As of August 31, 2000, we had 85 stockholders.
COMMON STOCK
Each holder of common stock is entitled to one vote for each share on all matters to be voted upon by the stockholders. Holders of common stock are not entitled to cumulative voting rights with respect to the election of directors. Subject to preferences that may be applicable to any preferred stock outstanding at the time, holders of common stock are entitled to receive ratable dividends, if any, as may be declared from time to time by the board of directors out of funds legally available for that purpose. In the event of our liquidation, dissolution or winding up, holders of common stock would be entitled to share ratably in all assets remaining after the payment of liabilities and liquidation preferences on any outstanding preferred stock. Holders of common stock have no preemptive or conversion rights or other subscription rights and there are no redemption or sinking fund provisions applicable to the common stock. All outstanding shares of common stock are, and shares of common stock offered by us in this offering, when issued and paid for, will be, fully paid and nonassessable.
PREFERRED STOCK
Upon the closing of this offering, all outstanding shares of our preferred stock will convert into shares of common stock on a one-for-one basis. Thereafter, our board of directors will be authorized, without stockholder approval, to issue up to an aggregate of 10,000,000 shares of preferred stock in one or more series. The board of directors can fix the rights, preferences and privileges of, and any qualifications, limitations or restrictions on, the shares of each series of our preferred stock.
The issuance of preferred stock may have the effect of delaying or preventing a change in our control or make removal of our management more difficult. Additionally, the issuance of preferred stock could decrease the amount of earnings and assets available for distribution to the holders of the common stock or could adversely affect the rights and powers, including voting rights, of the holders of our common stock. The issuance of preferred stock could also cause the market price of our common stock to decline. At present, we have no plans to issue any shares of preferred stock.
WARRANTS
Prior to the closing of this offering, we will have outstanding warrants to purchase a total of 53,750 shares of Series A preferred stock and 57,000 shares of Series B preferred stock, including warrants to purchase 40,000 shares of Series A preferred stock at $1.00 per share held by Silicon Valley Bank, which will expire on October 9, 2005; warrants to purchase 13,750 shares of Series A preferred stock at $3.00 per share held by Leasing Technologies International, Inc., which will expire on March 31, 2006; warrants to purchase 7,000 shares of Series B preferred stock at $2.50 per share held by Silicon Valley Bank, which will expire on March 9, 2006; and warrants to purchase 50,000 shares of Series B preferred stock at $5.00 per share held by Silicon Valley Bank, which will expire on May 17, 2007. Upon completion of this offering, warrants to purchase 110,750 shares of preferred stock will convert automatically into warrants to purchase an equal number of shares of common stock.
REGISTRATION RIGHTS
At any time following three months from the effective date of this offering, the holders of up to 14,356,901 shares of our common stock, or their transferees, will be entitled to require the registration of those shares under the Securities Act. Under an agreement with these holders, the holders of at least 30% of these shares may on up to two occasions require us to register their shares under the Securities Act, subject to some limitations described in the agreement. In connection with this offering, some of our stockholders have agreed with the underwriters not to exercise any demand registration rights for a period of 365 days from the effective date of this offering. In addition, these holders can require us to include their shares in future registrations of our shares for our account or the account of another stockholder. After we become eligible to register securities on Form S-3, these holders may require us to register their shares on up to two occasions in any calendar year on Form S-3. These registration rights are subject to limitations and conditions, including the right of underwriters to limit the number of shares of common stock held by existing stockholders to be included in a registration. The registration rights as to any holder will terminate when all securities held by the holder entitled to registration rights can be sold within a three-month period under Rule 144 of the Securities Act and when the number of shares held by the holder is less than 1% of our outstanding capital stock on an as converted to common stock basis. In addition, we are generally required to bear all expenses of registration, including the reasonable fees of a single counsel acting on behalf of all selling stockholders, except underwriting discounts and selling commissions.
Registration of any shares with registration rights would result in those shares becoming freely tradeable without restriction under the Securities Act. Sales of these shares could have a material adverse effect on the trading price of our common stock.
LIMITATION OF LIABILITY OF DIRECTORS AND OFFICERS
As permitted by the Delaware General Corporation Law, our certificate of incorporation effective upon the closing of this offering provides that our directors are not personally liable to us or our stockholders for monetary damages for breach of fiduciary duty as a director, except for liability:
- for any breach of the director's duty of loyalty to us or our stockholders;
- for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law;
- under Section 174 of the Delaware General Corporation Law, relating to unlawful dividends or unlawful stock purchases or redemptions; or
- for any transaction from which the director derives an improper personal benefit.
As a result of this provision, we and our stockholders may be unable to obtain monetary damages from a director for breach of his or her duty of care.
Upon the closing of this offering, our bylaws will provide for the indemnification of our directors and officers to the fullest extent authorized by the Delaware General Corporation Law. We will indemnify a director or officer in connection with an action initiated by that person if the action was authorized by our board of directors. The indemnification provided under our bylaws includes the right to be paid expenses in advance of the final disposition of a proceeding for which indemnification may be had if the director or officer agrees to repay all amounts paid in advance if it is ultimately determined that the director or officer is not entitled to be indemnified. Under our bylaws, if we do not pay a claim for indemnification within 60 days after we have received a written claim, the director or officer may bring an action to recover the unpaid amount of the claim. If successful, the director or officer also will be entitled to be paid the expense of prosecuting the action to recover these unpaid amounts.
Our bylaws also authorize us to purchase and maintain insurance on behalf of any person who is or was one of our directors, officers, employees or agents, or is or was serving at our request as a director, officer, employee, partner or agent of another corporation or other entity or enterprise, against any liability asserted
against the person or incurred by the person in any of these capacities, or arising out of the person's fulfilling one of these capacities, and related expenses. We may obtain this insurance whether or not we would have the power to indemnify the person against the claim under the provisions of the Delaware General Corporation Law. We have purchased director and officer liability insurance on behalf of our directors and officers. The indemnification provisions under our certificate of incorporation and bylaws are not exclusive of any other rights to indemnification under any bylaw, agreement, vote of stockholders or disinterested directors or otherwise.
ANTI-TAKEOVER PROVISIONS
General
Upon the closing of this offering, our certificate of incorporation and bylaws will contain some provisions that are intended to enhance the likelihood of continuity and stability in the composition of our board of directors and in the policies formulated by our board of directors. In addition, provisions of Delaware law may hinder or delay an attempted takeover of us other than through negotiation with our board of directors. These provisions could have the effect of discouraging attempts to acquire us or remove incumbent management even if some or a majority of our stockholders believe this action is in their best interest, including attempts that might result in the stockholders receiving a premium over the market price for the shares of common stock they hold.
Classified Board
Our certificate of incorporation provides for the division of our board of directors into three classes of directors serving staggered three-year terms. Our certificate of incorporation further provides that the approval of the holders of at least two-thirds of the shares entitled to vote is necessary for the alteration, amendment or repeal of sections of our certificate of incorporation relating to the election and classification of our board of directors, limitation of director liability, indemnification and the vote requirements for these amendments to our certificate of incorporation. These provisions may have the effect of deterring hostile takeovers or delaying changes in control or management.
Removal of Directors and Vacancies
Our certificate of incorporation provides that directors may be removed only with cause upon the affirmative vote of holders representing two-thirds of our outstanding shares. In addition, vacancies and newly created directorships resulting from any increase in the size of the board of directors may be filled only by the affirmative vote of a majority of the directors then in office, even if they do not constitute a quorum, or by the sole remaining director. These provisions would prevent stockholders from removing incumbent directors without cause and filling the resulting vacancies with their own nominees.
Advance Notice Provisions for Stockholder Proposals and Stockholder Nominations of Directors
Our bylaws establish an advance notice procedure with regard to the nomination, other than by the board of directors, of candidates for election to the board of directors and with regard to matters to be brought before an annual meeting of our stockholders by a stockholder. For nominations and other business to be brought properly before an annual meeting by a stockholder, the stockholder must notify us between 60 and 90 days prior to the first anniversary of the preceding year's annual meeting. Separate provisions based on public notice by us specify how this advance notice requirement operates if the date of the annual meeting is advanced by more than 30 days or delayed by more than 60 days from the anniversary date. The stockholder's notice must contain specified information regarding the stockholder and its holdings, as well as background information regarding any director nominee, together with that person's written consent to being named in the proxy statement as a nominee and to serving as a director if elected, and a brief description of any business desired to be brought before the meeting, the reasons for conducting the business at the meeting and any material interest of the stockholder in the business proposed. Although our bylaws do not give our
board of directors any power to approve or disapprove stockholder nominations for the election of directors or any other business desired by stockholders to be conducted at an annual meeting, the bylaws:
- may have the effect of precluding a nomination for the election of directors or precluding the conduct of business at a particular annual meeting if the proper procedures are not followed; or
- may discourage or deter a third party from conducting a solicitation of proxies to elect its own slate of directors or otherwise attempting to obtain control of us, even if the conduct of this solicitation or the attempt to obtain control might be beneficial to us and our stockholders.
Special Stockholders' Meetings
Under our certificate of incorporation and bylaws, special meetings of stockholders, unless otherwise prescribed by statute, may be called only by the board of directors, the chairperson, or the chief executive officer.
Stockholder Action Only by Written Consent
Our certificate of incorporation provides that any action required or permitted to be taken at a stockholders' meeting may be taken only by unanimous written consent.
Section 203 of the Delaware General Corporation Law
Under Section 203 of the Delaware General Corporation Law, we may not engage in a "business combination," which includes a merger or sale of more than 10% of our assets, with any "interested stockholder," namely, a stockholder who owns 15% or more of our outstanding voting stock, as well as affiliates and associates of any of these persons, for three years following the time that stockholder became an interested stockholder, unless:
- the transaction in which the stockholder became an interested stockholder is approved by our board of directors prior to the time the interested stockholder attained that status;
- upon completion of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of our voting stock outstanding at the time the transaction commenced, excluding those shares owned by persons who are directors and also officers; or
- at or after the time the stockholder became an interested stockholder the business combination is approved by the board of directors and authorized at an annual or special meeting of stockholders by the affirmative vote of at least two-thirds of the outstanding voting stock that is not owned by the interested stockholder.
Authorized but Unissued Shares
The authorization of undesignated preferred stock makes it possible for the board of directors to issue preferred stock with voting or other rights or preferences that could impede the success of any attempt to change control of our company. These and other provisions may have the effect of deterring hostile takeovers or delaying changes in control or management of our company.
TRANSFER AGENT AND REGISTRAR
We will retain a transfer agent and registrar for our common stock prior to the closing of this offering.
LISTING
We intend to apply to have our common stock approved for quotation on the Nasdaq National Market under the trading symbol "ARRY."
SHARES ELIGIBLE FOR FUTURE SALE
If our stockholders sell substantial amounts of common stock, including shares issued upon the exercise of outstanding options, in the public market following this offering, the market price of our common stock could fall. These sales also may make it more difficult for us to sell equity or equity-related securities in the future and at a time and price that we deem appropriate.
Upon completion of this offering, we will have outstanding an aggregate of 21,367,409 shares of our common stock, assuming no exercise of the underwriters' over-allotment option and no exercise of outstanding options, based on the number of shares issued and outstanding as of August 31, 2000. Of these shares, all of the shares sold in this offering will be freely tradeable without restriction or further registration under the Securities Act, unless these shares are purchased by "affiliates" as that term is defined in Rule 144 under the Securities Act. This leaves 15,367,409 shares eligible for sale in the public market as follows:
NUMBER OF SHARES DATE
----------------------------------------- -----------------------------------------
782,107.................................. After 90 days from the date of this
prospectus.
12,889,235............................... After 180 days from the date of this
prospectus (subject, in some cases, to
volume limitations).
1,696,067................................ At various times after 180 days from the
date of this prospectus (subject, in some
cases, to volume limitations).
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LOCK-UP AGREEMENTS
All of our officers and directors and stockholders holding substantially all of our outstanding stock have signed lock-up agreements with our underwriters under which they agreed not to transfer or dispose of, directly or indirectly, any shares of our common stock or any securities convertible into or exercisable or exchangeable for shares of our common stock, for a period of 180 days after the date of this prospectus. Transfers or dispositions can be made sooner with the prior written consent of Lehman Brothers Inc. This consent may be given at any time without public notice.
RULE 144
In general, under Rule 144 as currently in effect, beginning 90 days after the date of this prospectus, a person who has beneficially owned shares of our common stock for at least one year would be entitled to sell within any three-month period a number of shares that does not exceed the greater of:
- 1% of the number of shares of our common stock then outstanding, which will equal approximately 213,674 shares immediately after this offering; or
- the average weekly trading volume of our common stock on the Nasdaq National Market during the four calendar weeks preceding the filing of a notice on Form 144 with respect to that sale.
Sales under Rule 144 are also subject to manner of sale provisions and notice requirements and to the availability of current public information about us.
Under Rule 144(k), a person who is not deemed to have been one of our affiliates at any time during the 90 days preceding a sale, and who has beneficially owned the shares proposed to be sold for at least two years, including the holding period of any prior owner other than an affiliate, is entitled to sell those shares without complying with the manner of sale, public information, volume limitation or notice provisions of Rule 144. Therefore, unless otherwise restricted, Rule 144(k) shares may be sold immediately upon the completion of this offering.
RULE 701
In general, under Rule 701 of the Securities Act as currently in effect, any of our employees, consultants or advisors who purchase shares of our common stock from us in connection with a compensatory stock or
option plan or other written agreement is eligible to resell those shares 90 days after the effective date of this offering in reliance on Rule 144, but without compliance with some of the restrictions, including the holding period, contained in Rule 144. As of August 31, 2000, a total of 3,970,516 shares of common stock had been issued or were issuable upon the exercise of options. Of these shares of common stock, 1,720,658 will be restricted by lock-up agreements.
REGISTRATION RIGHTS
After this offering, the holders of 14,356,901 shares of our common stock, or their transferees, will be entitled to rights with respect to the registration of those shares under the Securities Act. After such a registration, these shares of our common stock become freely tradeable without restriction under the Securities Act. Sales of these shares could have a material adverse effect on the trading price of our common stock.
STOCK OPTIONS
As soon as practicable after this offering, we intend to file a registration statement on Form S-8 covering the shares of common stock reserved for issuance under our stock option plan and our employee stock purchase plan. As of August 31, 2000, options to purchase 3,018,139 shares of common stock were outstanding. The registration statement is expected to be filed and become effective as soon practicable after the effective date of this offering. Shares of common stock registered under any registration statement will, subject to Rule 144 volume limitations applicable to affiliates, be available for sale in the open market, unless the shares are subject to vesting restrictions or the lock-up agreements described above.
UNDERWRITING
Under the underwriting agreement, which is filed as an exhibit to the registration statement relating to this prospectus, the underwriters named below, for whom Lehman Brothers Inc., Deutsche Bank Securities Inc. and Legg Mason Wood Walker, Incorporated are acting as representatives, have each agreed to purchase from us the respective number of shares of common stock shown opposite its name below:
NUMBER OF
UNDERWRITER SHARES
----------- ---------
Lehman Brothers Inc. .......................................
Deutsche Bank Securities Inc. ..............................
Legg Mason Wood Walker, Incorporated........................
---------
Total............................................. 6,000,000
=========
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The underwriting agreement provides that the underwriters' obligations to purchase shares of common stock depend on the satisfaction of the conditions contained in the underwriting agreement. It also provides that, if any of the shares of common stock are purchased by the underwriters under the underwriting agreement, all of the shares of common stock that the underwriters have agreed to purchase under the underwriting agreement must be purchased. The conditions contained in the underwriting agreement include the requirements that:
- the representations and warranties made by us to the underwriters are true;
- there is no material change in the financial markets; and
- we deliver to the underwriters customary closing documents.
The representatives have advised us that the underwriters propose to offer the shares of common stock directly to the public at the public offering price set forth on the cover page of this prospectus, and to dealers, who may include the underwriters, at this public offering price. The underwriters may allow, and the dealers may reallow, a concession not in excess of $ per share to brokers and dealers. After completion of the offering, the underwriters may change the offering price and other selling terms.
We have granted the underwriters an option to purchase up to an additional 800,000 shares of common stock and two of our founding stockholders, Dr. Koch and Dr. Piscopio, have granted the underwriters an option to purchase up to an additional 100,000 shares of common stock, exercisable solely to cover over- allotments, if any, at the public offering price less the underwriting discount shown on the cover page of this prospectus. The underwriters may exercise this option at any time until 30 days after the date of the underwriting agreement. If this option is exercised, each underwriter will be committed, so long as the conditions of the underwriting agreement are satisfied, to purchase a number of additional shares of common stock proportionate to the underwriter's initial commitment as indicated in the table above, and we and the selling stockholders will be obligated, under the over-allotment option, to sell the shares of common stock to the underwriters. If this option is exercised and the selling stockholders fail to deliver some or all of the 100,000 shares, we have agreed to deliver to the underwriters an amount of shares that will permit the underwriters to exercise this option in full.
We have agreed not to, without the prior consent of Lehman Brothers Inc., directly or indirectly, offer, sell or otherwise dispose of any shares of common stock or any securities which may be converted into or exchanged for any such shares of common stock for a period of 180 days from the date of this prospectus. All of our executive officers and directors, and stockholders holding an aggregate of at least % of the shares of our capital stock, have agreed under lock-up agreements that, without the prior written consent of Lehman Brothers Inc., they will not, directly or indirectly, offer, sell or otherwise dispose of any shares of common stock or any securities which may be converted into or exchanged for any such shares for the period ending 180 days after the date of this prospectus. See "Shares Eligible for Future Sale," included elsewhere in this prospectus.
The underwriting discount is equal to the public offering price per share of common stock less the amount paid by the Underwriters to us per share of common stock. The underwriting discount is % of the public offering price. We have agreed to pay the underwriters the following total amount, assuming either no exercise or full exercise by the underwriters of their over-allotment option:
TOTAL FEES
---------------------------------
NO FULL
EXERCISE EXERCISE
OF OVER- OF OVER-
PER ALLOTMENT ALLOTMENT
SHARE OPTIONS OPTIONS
--------- --------- ---------
Underwriting discount paid by Array BioPharma.......... $ $ $
Underwriting discount paid by selling stockholders..... --
--- ---
Total........................................ $ $
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In addition, we estimate that our share of the total expenses of this offering, excluding the underwriting discount, will be approximately $800,000.
Before this offering, there has been no public market for the shares of common stock. The initial public offering price was negotiated between the representatives and us. In determining the initial public offering price of the common stock, the representatives considered, among other things and in addition to prevailing market conditions:
- our historical performance and capital structure;
- estimates of our business potential and earning prospects;
- an overall assessment of our management; and
- the consideration of the above factors in relation to market valuations of companies in related businesses.
We intend to apply to list our common stock for quotation on the Nasdaq National Market under the symbol "ARRY."
We have agreed to indemnify the underwriters against liabilities, including liabilities under the Securities Act and liabilities arising from breaches of the representations and warranties contained in the underwriting agreement, and to contribute to payments that the underwriters may be required to make for these liabilities.
Until the distribution of the common stock is completed, rules of the Securities and Exchange Commission may limit the ability of the underwriters and selling group members to bid for and purchase shares of common stock. As an exception to these rules, the representatives are permitted to engage in transactions that stabilize the price of the common stock. These transactions may consist of bids or purchases for the purposes of pegging, fixing or maintaining the price of the common stock.
The underwriters have informed us that they do not intend to confirm sales to discretionary accounts that exceed 5% of the total number of shares of common stock offered by them.
The underwriters may purchase and sell shares of common stock in the open
market. These transactions may include short sales, stabilizing transactions and
purchases to cover positions created by short sales. Short sales involve the
sale by the underwriters of a greater number of shares than they are required to
purchase in the offering. "Covered" short sales are sales made in an amount not
greater than the underwriters' option to purchase additional shares from the
issuer in the offering. The underwriters may close out any covered short
position by either exercising their option to purchase additional shares or
purchasing shares in the open market. In determining the source of shares to
close out the covered short position, the underwriters will consider, among
other things, the price of shares available for purchase in the open market as
compared to the price at which they may purchase shares through the
over-allotment option. "Naked" short sales are any sales in excess of such
option. The underwriters must close out any naked short position by purchasing
shares in the open market. A naked short position is more likely to be created
if the underwriters are concerned that
there may be downward pressure on the price of the common stock in the open market after pricing that could adversely affect investors who purchase in the offering. Stabilizing transactions consist of various bids for or purchases of common stock made by the underwriters in the open market prior to the completion of the offering.
The underwriters may also impose a penalty bid. This occurs when a particular underwriter repays to the underwriters a portion of the underwriting discount received by it because the representatives have repurchased shares sold by or for the account of such underwriter in stabilizing or short covering transactions.
Similar to other purchase transactions, the underwriters' purchases to cover the syndicate short sales may have the effect of raising or maintaining the market price of the common stock or preventing or retarding a decline in the market price of the common stock. As a result, the price of the common stock may be higher than the price that might otherwise exist in the open market.
Neither we nor any of the underwriters makes any representation or prediction as to the direction or magnitude of any effect that the transactions described above may have on the price of the common stock. In addition, neither we nor any of the underwriters makes any representation that the representatives will engage in these transactions or that these transactions, once commenced, will not be discontinued without notice.
Any offers in Canada will be made only under an exemption from the requirements to file a prospectus in the relevant province of Canada in which the sale is made.
Purchasers of the shares of common stock offered in this prospectus may be required to pay stamp taxes and other charges under the laws and practices of the country of purchase, in addition to the offering price listed on the cover of this prospectus.
At our request, the underwriters have reserved up to 300,000 shares of the common stock offered by this prospectus for sale to our officers, directors, employees and their family members and to our business associates at the initial public offering price set forth on the cover page of this prospectus. These persons must commit to purchase no later than the close of business on the day following the date of this prospectus. The number of shares available for sale to the general public will be reduced to the extent these persons purchase the reserved shares.
LEGAL MATTERS
The validity of the shares of common stock offered in this prospectus will be passed upon for us by Hogan & Hartson L.L.P., Boulder, Colorado. Legal matters relating to the sale of common stock in this offering will be passed upon for the underwriters by Latham & Watkins, Costa Mesa, California. William R. Roberts and Christopher D. Ozeroff, partners of Hogan & Hartson L.L.P., own 13,607 shares and 37,621 shares, respectively, of our preferred stock. These shares will be converted into shares of our common stock upon completion of this offering.
EXPERTS
Ernst & Young LLP, independent auditors, have audited our financial statements at June 30, 2000 and 1999, and for each of the two years in the period ended June 30, 2000 and the period from February 6, 1998 (inception) to June 30, 1998, as set forth in their report. We have included our financial statements in the prospectus and elsewhere in the registration statement in reliance on Ernst & Young LLP's report, given on their authority as experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the SEC a registration statement on Form S-1, including amendments to it, relating to the common stock offered by us. This prospectus does not contain all of the information in the registration statement and its exhibits and schedules. For further information with respect to our company and our common stock, you should review the registration statement and its exhibits and schedules. You may inspect a copy of the registration statement and the exhibits and schedules to the registration statement without charge at the SEC's principal office in Washington, D.C. You may obtain copies of all or any part of the registration statement from the Public Reference Section of the SEC, 450 Fifth Street, N.W., Washington, D.C. 20549, the New York Regional Office located at Seven World Trade Center, New York, New York 10048, and the Chicago Regional Office located at Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661, upon payment of fees prescribed by the SEC. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains a Web site that contains reports, proxy and information statements and other information regarding companies that file electronically with the SEC. The address of the SEC's Web site is www.sec.gov.
We intend to furnish our stockholders with annual reports containing audited financial statements certified by our independent auditors.
ARRAY BIOPHARMA INC.
INDEX TO FINANCIAL STATEMENTS
PAGE
----
Report of Ernst & Young LLP, Independent Auditors........... F-2
Balance Sheets.............................................. F-3
Statements of Operations.................................... F-4
Statements of Stockholders' Equity.......................... F-5
Statements of Cash Flows.................................... F-6
Notes to Financial Statements............................... F-7
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REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
Board of Directors
Array BioPharma Inc.
We have audited the accompanying balance sheets of Array BioPharma Inc. as of June 30, 2000 and 1999, and the related statements of operations, stockholders' equity, and cash flows for each of the two years in the period ended June 30, 2000 and the period from February 6, 1998 (inception) to June 30, 1998. 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 auditing standards generally accepted in the United States. 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 financial position of Array BioPharma Inc. at June 30, 2000 and 1999, and the results of its operations and its cash flows for each of the two years in the period ended June 30, 2000 and the period from February 6, 1998 (inception) to June 30, 1998, in conformity with accounting principles generally accepted in the United States.
/s/ Ernst & Young LLP
Denver, Colorado
July 28, 2000,
except for the fourth paragraph
of Note 9, as to which the date is
September 1, 2000
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ARRAY BIOPHARMA INC.
BALANCE SHEETS
PRO FORMA
STOCKHOLDERS'
AS OF JUNE 30, EQUITY
------------------------- AS OF JUNE 30,
1999 2000 2000
----------- ----------- --------------
(UNAUDITED)
ASSETS
Current assets:
Cash and cash equivalents................................. $ 2,185,915 $ 3,846,407
Marketable securities..................................... -- 1,937,099
Accounts receivable....................................... 507,242 885,522
Deposits.................................................. 252,888 120,129
Inventories............................................... 979,158 1,557,376
Prepaid expenses and advances............................. 79,323 201,560
----------- -----------
Total current assets............................... 4,004,526 8,548,093
Property, plant and equipment, net.......................... 2,871,854 6,910,757
Other assets................................................ 248,244 364,342
----------- -----------
Total assets....................................... $ 7,124,624 $15,823,192
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable - trade.................................. $ 713,379 $ 1,708,750
Advance payments from customers........................... 1,063,754 1,940,433
Accrued compensation...................................... 65,127 359,871
Current portion of long-term debt......................... 764,206 1,723,837
Other current liabilities................................. 137,794 605,309
----------- -----------
Total current liabilities.......................... 2,744,260 6,338,200
Long-term debt, less current portion........................ 1,823,490 2,832,423
Stockholders' equity:
Preferred stock, par value $0.001, 10,100,000 and
11,825,000 shares authorized actual and pro forma.......
Series A convertible preferred stock; 6,635,000 shares
issued and outstanding in 1999 and 2000, no shares
outstanding pro forma (unaudited); preference in
liquidation of $6,635,000 at
June 30, 2000........................................... 6,635 6,635 $ --
Series B convertible preferred stock; 3,199,999 shares
issued and outstanding in 2000, no shares outstanding
pro forma (unaudited); preference in liquidation of
$8,000,000 at June 30, 2000............................. -- 3,200 --
Series C convertible preferred stock; no shares
outstanding pro forma (unaudited)....................... -- -- --
----------- ----------- -----------
Total preferred stock.............................. 6,635 9,835 --
Common stock, $0.001 par value;
17,000,000 shares authorized actual and 20,225,000
shares authorized pro forma (unaudited), and 2,923,367,
3,370,207 and 14,871,873 shares issued and outstanding
in 1999, 2000 and pro forma (unaudited), respectively... 2,923 3,370 14,872
Additional paid-in capital................................ 7,276,776 17,430,100 27,393,433
Accumulated deficit....................................... (4,356,710) (9,087,128) (9,087,128)
Notes receivable for common stock - (related party)....... (372,750) (393,750) (393,750)
Deferred compensation..................................... -- (1,309,858) (1,309,858)
----------- ----------- -----------
Total stockholders' equity......................... 2,556,874 6,652,569 $16,617,569
----------- ----------- ===========
Total liabilities and stockholders' equity......... $ 7,124,624 $15,823,192
=========== ===========
|
See accompanying notes.
ARRAY BIOPHARMA INC.
STATEMENTS OF OPERATIONS
PERIOD FROM
FEBRUARY 6,
1998
(INCEPTION) TO YEARS ENDED JUNE 30,
JUNE 30, -------------------------
1998 1999 2000
-------------- ----------- -----------
Revenue................................................ $ -- $ 1,503,859 $ 6,773,634
Cost of revenue, excluding stock compensation.......... -- 1,032,910 4,402,269
-------- ----------- -----------
Gross profit........................................... -- 470,949 2,371,365
Expenses:
Research and development expenses, excluding stock
compensation...................................... -- 3,300,941 3,928,041
Selling, general and administrative expenses,
excluding stock compensation...................... 62,359 1,522,067 2,429,790
Compensation related to stock option grants.......... -- -- 715,811
-------- ----------- -----------
Total operating expenses.......................... 62,359 4,823,008 7,073,642
-------- ----------- -----------
Loss from operations.............................. (62,359) (4,352,059) (4,702,277)
Interest expense....................................... -- (135,904) (384,378)
Interest income........................................ 13,055 180,557 356,237
-------- ----------- -----------
Net loss............................................... $(49,304) $(4,307,406) $(4,730,418)
======== =========== ===========
Basic and diluted net loss per share................... $ (0.06) $ (1.48) $ (1.54)
======== =========== ===========
Shares used in computing basic and diluted net loss per
share................................................ 863,964 2,918,367 3,063,439
======== =========== ===========
Pro forma basic and diluted net loss per share
(unaudited).......................................... $ (0.40)
===========
Shares used in computing pro forma basic and diluted
net loss per share (unaudited)....................... 11,697,343
===========
|
See accompanying notes.
ARRAY BIOPHARMA INC.
STATEMENTS OF STOCKHOLDERS' EQUITY
NOTES
RECEIVABLE
FOR COMMON
PREFERRED STOCK COMMON STOCK ADDITIONAL STOCK
------------------ ------------------ PAID-IN ACCUMULATED (RELATED DEFERRED
SHARES AMOUNT SHARES AMOUNT CAPITAL DEFICIT PARTY) COMPENSATION
--------- ------ --------- ------ ----------- ----------- ---------- ------------
Balance at February 6, 1998
(inception)............... -- $ -- -- $ -- $ -- $ -- $ -- $ --
Issuance of common stock for
cash and notes
receivable................ -- -- 2,913,367 2,913 681,493 -- (350,000) --
Issuance of Series A
convertible preferred
stock, net of issuance
cost of $30,116........... 2,500,000 2,500 -- -- 2,467,384 -- -- --
Interest accrued on notes
receivable................ -- -- -- -- -- -- (1,750) --
Net loss for the period..... -- -- -- -- -- (49,304) -- --
--------- ------ --------- ------ ----------- ----------- --------- -----------
Balance at June 30, 1998.... 2,500,000 2,500 2,913,367 2,913 3,148,877 (49,304) (351,750) --
Issuance of Series A
convertible preferred
stock, net of issuance
costs of $60,381.......... 4,135,000 4,135 -- -- 4,070,484 -- -- --
Exercise of stock options... -- -- 10,000 10 2,340 -- -- --
Interest accrued on notes
receivable................ -- -- -- -- -- -- (21,000) --
Warrants issued in
connection with equipment
financing................. -- -- -- -- 55,075 -- -- --
Net loss.................... -- -- -- -- -- (4,307,406) -- --
--------- ------ --------- ------ ----------- ----------- --------- -----------
Balance at June 30, 1999.... 6,635,000 6,635 2,923,367 2,923 7,276,776 (4,356,710) (372,750) --
Issuance of Series B
convertible preferred
stock, net of issuance
costs of $63,204.......... 3,199,999 3,200 -- -- 7,933,594 -- -- --
Exercise of stock options... -- -- 446,840 447 104,561 -- -- --
Interest accrued on notes
receivable................ -- -- -- -- -- -- (21,000) --
Compensation related to
stock option grants....... -- -- -- -- 2,025,669 -- -- (1,309,858)
Warrants issued in
connection with equipment
financing................. -- -- -- -- 89,500 -- -- --
Net loss.................... -- -- -- -- -- (4,730,418) -- --
--------- ------ --------- ------ ----------- ----------- --------- -----------
Balance at June 30, 2000.... 9,834,999 $9,835 3,370,207 $3,370 $17,430,100 $(9,087,128) $(393,750) $(1,309,858)
========= ====== ========= ====== =========== =========== ========= ===========
TOTAL
-----------
Balance at February 6, 1998
(inception)............... $ --
Issuance of common stock for
cash and notes
receivable................ 334,406
Issuance of Series A
convertible preferred
stock, net of issuance
cost of $30,116........... 2,469,884
Interest accrued on notes
receivable................ (1,750)
Net loss for the period..... (49,304)
-----------
Balance at June 30, 1998.... 2,753,236
Issuance of Series A
convertible preferred
stock, net of issuance
costs of $60,381.......... 4,074,619
Exercise of stock options... 2,350
Interest accrued on notes
receivable................ (21,000)
Warrants issued in
connection with equipment
financing................. 55,075
Net loss.................... (4,307,406)
-----------
Balance at June 30, 1999.... 2,556,874
Issuance of Series B
convertible preferred
stock, net of issuance
costs of $63,204.......... 7,936,794
Exercise of stock options... 105,008
Interest accrued on notes
receivable................ (21,000)
Compensation related to
stock option grants....... 715,811
Warrants issued in
connection with equipment
financing................. 89,500
Net loss.................... (4,730,418)
-----------
Balance at June 30, 2000.... $ 6,652,569
===========
|
See accompanying notes.
ARRAY BIOPHARMA INC.
STATEMENTS OF CASH FLOWS
PERIOD FROM
FEBRUARY 6, 1998 YEARS ENDED JUNE 30,
(INCEPTION) TO -------------------------
JUNE 30, 1998 1999 2000
---------------- ----------- -----------
OPERATING ACTIVITIES:
Net loss............................................ $ (49,304) $(4,307,406) $(4,730,418)
Adjustments to reconcile net loss to net cash used
in operating activities:
Depreciation...................................... -- 530,932 989,127
Accrued interest on notes receivable for common
stock.......................................... (1,750) (21,000) (21,000)
Compensation related to stock option grants....... -- -- 715,811
Accreted interest related to warrants............. -- 6,683 15,053
Changes in operating assets and liabilities:
Accounts receivable............................ -- (507,242) (378,280)
Deposits....................................... (190,500) (62,388) 132,759
Inventories.................................... -- (979,158) (578,218)
Prepaid expenses and advances.................. (1,668) (77,655) (122,237)
Accounts payable -- trade...................... -- 713,379 995,371
Advance payments from customers................ -- 1,063,754 876,679
Accrued compensation........................... 37,922 27,205 294,744
Other current liabilities...................... 18,869 118,925 467,515
---------- ----------- -----------
Net cash used in operating activities..... (186,431) (3,493,971) (1,343,094)
INVESTING ACTIVITIES:
Purchases of property, plant and equipment.......... (5,794) (3,396,992) (5,028,030)
Purchase of marketable securities................... -- -- (1,937,099)
Additions to other long-term assets................. (4,144) (244,100) (116,098)
---------- ----------- -----------
Net cash used in investing activities..... (9,938) (3,641,092) (7,081,227)
FINANCING ACTIVITIES:
Proceeds from sale of preferred and common stock,
net of issuance costs............................. 2,804,290 4,074,619 7,936,794
Proceeds from exercise of stock options............. -- 2,350 105,008
Proceeds from the issuance of long-term debt........ -- 2,837,917 2,913,792
Payment on long-term debt........................... -- (201,829) (870,781)
---------- ----------- -----------
Net cash provided by financing
activities.............................. 2,804,290 6,713,057 10,084,813
---------- ----------- -----------
Net increase (decrease) in cash and cash
equivalents............................. 2,607,921 (422,006) 1,660,492
Cash and cash equivalents, beginning of year........ -- 2,607,921 2,185,915
---------- ----------- -----------
Cash and cash equivalents, end of year.............. $2,607,921 $ 2,185,915 $ 3,846,407
========== =========== ===========
|
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for interest was $0, $90,516 and $301,111 in 1998, 1999 and 2000, respectively.
See accompanying notes.
ARRAY BIOPHARMA INC.
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business Operations
Array BioPharma Inc. (the "Company") offers a broad range of products and services to biotechnology and pharmaceutical companies to bridge the gap between target discovery and pre-clinical and clinical development of a potential drug candidate. In addition, the Company has developed an information-driven technology platform to enable its scientists to make better decisions at each stage of the drug discovery process. The Company also leverages its capabilities internally to develop proprietary drug candidates in collaboration with its customers.
Initial Public Offering
In August 2000, the Board of Directors authorized management of the Company to file a registration statement with the Securities and Exchange Commission permitting the Company to sell shares of its common stock to the public. If the initial public offering ("IPO") is closed under the terms presently anticipated, all of the convertible preferred stock outstanding at the time of the IPO will automatically convert into shares of common stock. Unaudited pro forma stockholders' equity, as adjusted for the assumed conversion of the preferred stock, is set forth on the balance sheets.
Cash, Cash Equivalents and Marketable Securities
Cash and cash equivalents consists of money market accounts, commercial paper and overnight deposits. The Company considers all highly liquid investments purchased with a maturity of three months or less to be cash equivalents. The Company's marketable securities, classified as available-for-sale securities for purposes of SFAS No. 115, Accounting for Certain Investments in Debt and Equity Securities, consist of high-grade corporate bonds maturing between July 15, 2000 and June 15, 2003. As of June 30, 2000, there were no unrealized gains or losses related to the Company's marketable securities.
Inventories
Inventories primarily consisting of finished goods, diversity libraries in process and raw materials, are stated at the lower of cost (first-in, first-out basis) or market. The Company designs and produces diversity libraries and optimer building blocks and begins capitalizing costs into inventory only after technological feasibility has been established.
Property, Plant and Equipment
Property, plant and equipment are stated at cost. Repairs and maintenance are charged to operations as incurred, and significant expenditures for additions and improvements are capitalized. Depreciation and amortization of equipment are computed using the straight-line method based on the following estimated useful lives:
ESTIMATED
TYPE OF PROPERTY AND EQUIPMENT USEFUL LIFE
------------------------------ -----------
Laboratory and analytical equipment...................... 5 years
Computer hardware and software........................... 3 years
Leasehold improvements................................... 4 years
Furniture and fixtures................................... 7 years
|
ARRAY BIOPHARMA INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)
Long-lived Assets
Long-lived assets are reviewed for impairment when events or changes in circumstances indicate the carrying amount of the assets may not be recoverable. Recoverability is measured by comparison of the assets' carrying amount to future net undiscounted cash flows the assets are expected to generate. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceed the projected discounted future net cash flows arising from the assets.
Revenue Recognition
Net revenue from product sales is recognized as products are shipped and revenues from the Company's full-time equivalent contracts are recognized on a per diem basis as work is performed. Development and fixed fee type contract revenues are recognized on a percentage of completion basis. In general, contract provisions include predetermined payment schedules, or the submission of appropriate billing detail establishing prerequisites for billings. During fiscal year 2000, revenue from the Company's three largest customers represented approximately 45%, 11% and 8% of total revenue, respectively.
Research and Development Costs
Research and development costs are expensed as incurred.
Advertising and Promotion Expenses
Advertising and promotion costs are expensed when incurred. The amount charged against operations for the years ended June 30, 1999 and 2000 was approximately $18,000 and $70,000, respectively. There were no such expenses incurred during the period ended June 30, 1998.
Fair Value of Financial Instruments
Financial instruments consist of cash and cash equivalents, accounts receivable, accounts payable, and long-term debt. The carrying values of cash, accounts receivable and accounts payable approximate fair value due to their short-term nature. The carrying amount of the Company's long-term debt approximates fair value as these borrowings are at an interest rate comparable to the current market rate.
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.
Accounting for Stock-Based Compensation
The Company accounts for its stock compensation arrangements under the provisions of Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees ("APB 25"), and related pronouncements. Under the provisions of APB 25, no compensation expense is recognized when stock options are granted with exercise prices equal to or greater than market value on the date of grant.
Employee Savings Plan
The Company has a 401(k) plan which allows participants to contribute 1% to 15% of their salary, subject to eligibility requirements and annual limits. All employees are eligible to participate in the plan on
ARRAY BIOPHARMA INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED) January 1, April 1, July 1, or October 1. The Company's Board of Directors may, at its sole discretion, approve matching contributions and profit sharing contributions. No such matching contributions were made during fiscal 1998, 1999 or 2000.
Net Loss Per Share
Basic net loss per share is computed by dividing net loss for the period by the weighted average number of common shares outstanding during the period. Diluted net loss per share is computed by dividing the net loss for the period by the weighted average number of common and potential common shares outstanding during the period, if their effect is dilutive. Potential common shares include incremental shares of common stock issuable upon the exercise of stock options and warrants and upon the conversion of convertible preferred stock. The potential shares of common stock have not been included in the diluted net loss per share calculation because to do so would be anti-dilutive.
Pro Forma Stockholders' Equity and Pro Forma Net Loss Per Share
Immediately prior to the effective date of the offering, all of the convertible preferred stock outstanding will automatically convert into common stock at a one-to-one ratio. The pro forma effects of these transactions, including the proceeds received from the Series C convertible preferred stock in the private placement closed in August 2000 (see note 9), are unaudited and have been reflected in the accompanying Pro Forma Stockholders' Equity as of June 30, 2000. Pro forma net loss per share for the year ended June 30, 2000 is computed using the weighted average number of common shares outstanding including the pro forma effects of the automatic conversion of the Company's convertible preferred stock into shares of the Company's common stock effective upon the closing of the Company's initial public offering as if such conversion occurred on July 1, 1999, or at the date of original issue, if later. The resulting pro forma adjustment includes an increase in the weighted average shares used to compute basic net loss of 8,633,904 shares for the year ended June 30, 2000. The calculation of pro forma diluted net loss per share excludes incremental common stock issuable upon the exercise of stock options and warrants as their effect would be anti-dilutive.
Recent Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board ("FASB") issued SFAS 133, Accounting for Derivative Instruments and Hedging Activities. SFAS No. 133 establishes new standards of accounting and reporting for derivative instruments and hedging activities. SFAS No. 133 requires that all derivatives be recognized at fair value in the statement of financial position, and that the corresponding gains or losses be reported either in the statement of operations or as a component of comprehensive income, depending on the type of relationship that exists. In July 1999, the Financial Accounting Standards Board issued SFAS 137, Accounting for Derivative Instruments and Hedging Activities -- Deferral of the Effective Date of FASB Statement No. 133. SFAS No. 137 deferred the effective date until fiscal years beginning after June 15, 2000. The Company has not engaged in hedging activities or invested in derivative instruments.
In December 1999, the Securities and Exchange Commission ("SEC") issued SAB 101, Revenue Recognition, which provides guidance on the recognition, presentation and disclosure on revenue in financial statements filed with the SEC. SAB 101 outlines the basic criteria that must be met to recognize revenue and provides guidance for disclosure related to revenue recognition policies. The Company believes that its current revenue recognition policy is in compliance with SAB 101.
In March 2000, the FASB issued Interpretation No. 44, Accounting for Certain Transactions Involving Stock Compensation -- an Interpretation of APB 25 ("FIN 44"). This interpretation clarifies (1) the definition
ARRAY BIOPHARMA INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED) of employee for purposes of applying APB 25; (2) the criteria for determining whether a plan qualifies as a noncompensatory plan; (3) the accounting consequences of various modifications to the terms of a previously fixed stock option or award; and (4) the accounting for an exchange of stock compensation awards in a business combination. This interpretation is effective July 1, 2000, but certain conclusions in this interpretation cover specific events that occur after either December 15, 1998, or January 12, 2000. To the extent that this interpretation covers events occurring during the period after December 15, 1998, or January 12, 2000, but before the effective date of July 1, 2000, the effects of applying this interpretation are recognized on a prospective basis from July 1, 2000. The adoption of FIN 44 will not have a material impact on the Company's financial statements.
2. BALANCE SHEET COMPONENTS
AS OF JUNE 30,
------------------------
1999 2000
---------- -----------
Property, plant and equipment:
Laboratory and analytical equipment......................... $2,571,256 $ 5,875,863
Computer hardware and software.............................. 692,554 1,369,293
Leasehold improvements...................................... 97,954 751,132
Furniture and fixtures...................................... 41,022 409,866
---------- -----------
3,402,786 8,406,154
Less accumulated depreciation............................... (530,932) (1,495,397)
---------- -----------
Total property, plant and equipment, net.......... $2,871,854 $ 6,910,757
========== ===========
Inventories:
Fine chemicals and solvents................................. $ 393,827 $ 372,562
Building blocks and diversity libraries..................... 585,331 1,184,814
---------- -----------
Total inventories................................. $ 979,158 $ 1,557,376
========== ===========
|
3. LEASES
The Company leases office space and equipment under various noncancelable operating lease agreements. Rental expense was $540,242 and $682,551 for the years ended June 30, 1999 and 2000, respectively, and was immaterial for the period ended June 30, 1998. As of June 30, 2000, future minimum rental commitments, by fiscal year and in the aggregate, for the Company's operating leases are as follows:
AMOUNT
----------
2001..................................................... $ 854,952
2002..................................................... 317,419
2003..................................................... 248,244
2004..................................................... 7,332
2005..................................................... 4,800
----------
Total minimum lease payments................... $1,432,747
==========
|
4. INCOME TAXES
The Company accounts for income taxes in accordance with SFAS 109, Accounting for Income Taxes. Under the provisions of Statement No. 109, a deferred tax liability or asset (net of a valuation allowance) is provided in the financial statements by applying the provisions of applicable tax laws to measure the deferred
ARRAY BIOPHARMA INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
4. INCOME TAXES -- (CONTINUED) tax consequences of temporary differences that will result in net taxable or deductible amounts in future years as a result of events recognized in the financial statements in the current or preceding years.
At June 30, 2000, the Company has federal and state net operating loss carryforwards for income tax purposes of approximately $8,403,000 which expire through 2020.
The Tax Reform Act of 1986 contains provisions that limit the utilization of net operating loss and tax credit carryforwards if there has been a "change of ownership" as described in Section 382 of the Internal Revenue Code. Such a change of ownership may limit the Company's utilization of its net operating loss and tax credit carryforwards, and could be triggered by an initial public offering or by subsequent sales of securities by the Company or its stockholders.
The components of the Company's deferred tax assets and liabilities as of June 30 are as follows:
AS OF JUNE 30,
-------------------------
1999 2000
----------- -----------
Deferred tax assets:
Net operating loss carryforwards......................... $ 1,485,891 $ 2,856,869
Organizational costs..................................... 3,575 2,680
----------- -----------
1,489,466 2,859,549
Valuation allowance........................................ (1,425,586) (2,780,379)
----------- -----------
63,880 79,170
Deferred tax liabilities:
Depreciation............................................. (63,880) (79,170)
----------- -----------
Net deferred tax assets and liabilities.................... $ -- $ --
=========== ===========
|
The Company has recorded a valuation allowance equal to the excess of deferred tax assets over deferred tax liabilities as the Company was unable to determine that it is more likely than not that the deferred tax asset will be realized.
5. EMPLOYEE AND CONSULTANT STOCK OPTION PLAN AND STOCK WARRANTS
Stock Options
In July 1998, the Company's Board of Directors approved the Option Plan (the "1998 Plan") pursuant to which (including subsequent amendments) a total of 3,337,500 shares of common stock have been reserved for issuance to eligible employees, consultants and directors of the Company.
The 1998 Plan provides for awards of both nonstatutory stock options and incentive stock options within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended, and stock purchase rights to purchase shares of the Company's common stock.
The 1998 Plan is administered by the Board of Directors, which has the authority to select the individuals to whom awards will be granted and to determine whether and to what extent stock options and stock purchase rights are to be granted, the number of shares of common stock to be covered by each award,
ARRAY BIOPHARMA INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
5. EMPLOYEE AND CONSULTANT STOCK OPTION PLAN AND STOCK WARRANTS -- (CONTINUED) the vesting schedule of stock options, and all other terms and conditions of each award. A summary of activity in the Plan is as follows:
NUMBER OF WEIGHTED-AVERAGE
OPTIONS EXERCISE PRICE
--------- ----------------
Balance, July 1, 1998
Granted................................................. 1,532,500 $0.235
Exercised............................................... 10,000 0.235
Terminated or expired................................... 26,000 0.235
--------- ------
Balance, June 30, 1999.................................... 1,496,500 0.235
Granted................................................. 1,815,740 0.469
Exercised............................................... 446,840 0.235
Terminated or expired................................... 10,556 0.235
--------- ------
Balance, June 30, 2000.................................... 2,854,844 $0.384
========= ======
|
A summary of options outstanding as of June 30, 2000 is as follows:
OUTSTANDING OPTIONS EXERCISABLE OPTIONS
-------------------------------------------------- ------------------------------
WEIGHTED-AVERAGE SHARES
EXERCISE SHARES UNDER REMAINING WEIGHTED-AVERAGE CURRENTLY WEIGHTED-AVERAGE
PRICE OPTION CONTRACTUAL LIFE EXERCISE PRICE EXERCISABLE EXERCISE PRICE
------------ ------------ ---------------- ---------------- ----------- ----------------
$0.235 1,688,544 8.5 $0.235 366,741 $0.235
0.600 1,166,300 9.5 0.600 133,333 0.600
--------- --- ------ ------- ------
2,854,844 8.9 $0.384 500,074 $0.332
========= === ====== ======= ======
|
Fair Value Disclosure
As described in Note 1, the Company accounts for its stock compensation arrangements under the provisions of APB 25, Accounting for Stock Issued to Employees, and intends to continue to do so.
Pro forma information regarding net loss is required by SFAS 123, Accounting and Disclosure of Stock-Based Compensation, 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 for these options was estimated at the date of grant using the minimum value method available to nonpublic companies under SFAS 123. Under this method, option value is determined as the excess of the fair value of the stock at the date of grant over the present value of both the exercise price (lump sum) and the expected dividend payments (annuity), each discounted at the risk-free rate, over the expected exercise life of the option. A risk-free interest rate of 5.0% for 1999 and 6.25% for 2000, a dividend yield of 0% for 1999 and 2000, and an expected life of 5 years were applied for 1999 and 2000 grants. The weighted average fair value of options granted during 1999 and 2000 was $0.05 and $1.34 per share, respectively.
Option valuation models such as the minimum value method described above require the input of highly subjective assumptions. Because the Company's employee stock options have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, in management's opinion, the existing models do not necessarily provide a reliable single measure of the fair value of its employee stock options.
ARRAY BIOPHARMA INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
5. EMPLOYEE AND CONSULTANT STOCK OPTION PLAN AND STOCK WARRANTS -- (CONTINUED) The following summarized, pro forma results of operations assume the estimated fair value of the options granted is amortized to expense over the option vesting period.
YEARS ENDED JUNE 30,
-------------------------
1999 2000
----------- -----------
Net loss................................................... $(4,307,406) $(4,730,418)
Pro forma expense under Statement No. 123................ (76,625) (406,706)
----------- -----------
Pro forma net loss....................................... $(4,384,031) $(5,137,124)
----------- -----------
Pro forma basic and diluted net loss per share........... $ (1.50) $ (1.68)
=========== ===========
|
Deferred Stock-Based Compensation
As of June 30, 2000, the Company has recorded $1,309,858 of deferred stock compensation in accordance with APB 25 and SFAS 123, related to stock options granted to employees. Stock compensation expense is being recognized over the vesting periods of the related options, generally four years or when certain performance criteria have been met. The Company recognized stock compensation expense of $715,811 for the year ended June 30, 2000. This expense relates primarily to the selling, general and administrative functional area.
Stock Warrants
The Company has issued warrants to purchase shares of the Company's preferred stock, generally in connection with the Company's equipment financing. Upon consummation of an IPO, assuming the automatic conversion of the Series A and Series B preferred stock, these warrants are exercisable into the same number of shares of common stock. The warrants expire on various dates through fiscal 2009.
The following table summarizes warrant data at June 30, 2000:
Issued and outstanding.................................. 110,750 Exercise price.......................................... $1.00-$5.00 Weighted-average exercise price......................... $3.15 |
6. PREFERRED AND COMMON STOCK
Common Stock
On May 18, 1998, the Company completed a private sale of 2,913,367 shares of its common stock to a group of private investors and founders at a purchase price of $0.235 per share. The net proceeds to the Company from the sale were $334,406, plus notes receivable from founders of $350,000. The notes, including accrued interest at 6% per year, totaled $393,750 as of June 30, 2000, and are payable in full in May 2002. The notes are secured only by the underlying stock certificates and have been included with related accrued interest as a component of stockholders' equity. During fiscal year 2000 various employees exercised stock options to purchase 446,840 shares of common stock.
Preferred Stock
Concurrent with the May 1998 sale of common stock, the Company sold 2,500,000 shares of Series A convertible preferred stock (Series A preferred), in a first closing, to a group of private investors at a purchase price of $1.00 per share. The net proceeds to the Company from the sale were $2,469,884. During August 1998, the Company completed issuance of 4,135,000 shares of Series A preferred stock, in a second
ARRAY BIOPHARMA INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
6. PREFERRED AND COMMON STOCK -- (CONTINUED) closing, to another group of private investors in which the net proceeds to the Company were $4,074,619. In November 1999, the Company issued 3,199,999 shares of Series B convertible preferred stock (Series B preferred) to substantially the same owners as Series A preferred, at a purchase price of $2.50 per share. The net proceeds to the Company were $7,936,794. All of the preferred shares have preferences before common stock in liquidation equal to the initial preferred purchase price, plus any accrued but unpaid non-cumulative dividends.
The preferred shares are convertible into common on a one-to-one basis (subject to certain anti-dilution provisions) at the option of the preferred shareholder and automatically convert in the event of an initial public offering exceeding $15.0 million. The preferred shares have voting rights, on a per share basis, equal to the Company's common stock.
7. LONG-TERM DEBT
Long-term debt as of June 30, 2000 is for equipment loan facilities negotiated with financial institutions. The facilities allow for $2.0 million in borrowings beyond the $4.7 million outstanding as of June 30, 2000. The agreements require monthly principal and interest payments over a term of 36 to 42 months, at which time, on certain facilities, a final payment representing 8% of the amount borrowed is due.
The interest rate on these borrowings approximates 11.4% at June 30, 2000. All assets acquired under the equipment loan facilities represent collateral for the amounts outstanding and the Company must conform to certain loan covenants, for which the Company was in compliance as of June 30, 2000.
In connection with the negotiated equipment loan facilities during 2000 and 1999, the Company issued warrants to purchase 110,750 shares of its preferred stock at exercise prices ranging from $1.00 to $5.00 per share. The warrants expire during, or prior to fiscal year 2009. In accordance with EITF 86-35, Debenture with Detachable Stock Purchase Warrants, the Company is required to assess the value of these warrants, and allocate the debt proceeds between the debt liability and the related warrant. The Company assessed the value of these warrants using the Black-Scholes methodology, which ascribed a cumulative value of approximately $145,000 to these warrants. As a result, an allocation between the warrant and the related loan has been made for these warrant grants. Total accreted interest expense was $6,683 and $15,053, respectively, during fiscal years 1999 and 2000.
Aggregate debt maturities as of June 30, 2000 in each of the following fiscal years are:
2001..................................................... $1,723,837
2002..................................................... 1,765,719
2003..................................................... 1,101,392
2004..................................................... 88,151
----------
4,679,099
Less unamortized discount associated with warrants....... (122,839)
----------
$4,556,260
==========
|
8. COLLABORATIVE AGREEMENTS
ICOS Corporation. In July 2000, the Company consolidated and expanded its lead optimization agreements with ICOS into a drug discovery collaboration agreement for lead optimization on undisclosed targets. Under the agreement, ICOS has the exclusive worldwide right to develop and market any products resulting from the collaboration. The Company compensated based on an annual rate for each full-time equivalent employee working on an ICOS project and will receive milestone payments upon achievement of
ARRAY BIOPHARMA INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
8. COLLABORATIVE AGREEMENT -- (CONTINUED) identified development and commercialization goals for products resulting from the collaboration. The agreement expires in July 2002 and may be terminated upon 90 days notice by ICOS following the first anniversary of the agreement.
Eli Lilly and Company. In March of 2000, the Company entered into a Research Services Agreement with Eli Lilly to form a chemistry-based research collaboration. Under the terms of the agreement, up to 30 of the Company's scientists will provide drug research services in collaboration with Eli Lilly scientists on identified Eli Lilly drug discovery projects. The Company is compensated based on an annual rate for each full-time equivalent employee working on an Eli Lilly project. Eli Lilly may terminate the agreement upon payment of an early termination payment.
Compound Library Agreements. The Company has entered into agreements with customers, including Celltech Chiroscience in April 1999, Tularik in June 1999, which Tularik extended in January 2000, and DuPont in August 2000, providing nonexclusive access on a fee basis to compounds in the Company's Diversity Library for their internal lead generation efforts. These customers have the option to gain exclusive rights to compounds they intend to commercialize upon payments of either a one-time activation fee or annual fees. The Company retains all ownership of the intellectual property rights to the compounds and to the Company's Diversity Library, and to any inventions made by its scientists working under these agreements. These agreements are terminable only upon breach or insolvency of a party.
9. SUBSEQUENT EVENTS
In July 2000, the Company's Board of Directors adopted and in August 2000 the stockholders approved an amendment to the 1998 Plan increasing the number of shares of common stock reserved for issuance under the 1998 Plan from 3,337,500 to 4,837,500. In addition, on July 1, 2000 the Board authorized and directed officers of the Company to execute and deliver approximately 436,000 bonus stock options to existing employees subject to terms and conditions of the 1998 Plan, at an exercise price of $0.60 per share.
Subsequent to year end, the Company borrowed the remaining $2.0 million on its $4.0 million line of credit.
In August 2000, the Company completed a private placement, under which it issued 1,666,667 shares of Series C convertible preferred stock to substantially the same owners as Series A preferred and Series B preferred, at $6.00 per share. This offering closed on August 31, 2000 resulting in gross proceeds of approximately $10,000,000.
[Inside back cover graphic depicts an inverted triangle with the text "Products," "Services" and "Innovation," respectively, on each corner, and the text "The Discovery Research Company" placed in the center, of the triangle. Text below this graphic reads "Array's sole focus is the chemistry of drug discovery."]
6,000,000 SHARES
[Array BioPharma Logo]
COMMON STOCK
LEHMAN BROTHERS
DEUTSCHE BANC ALEXJ BROWN
LEGG MASON WOOD WALKER
(INCORPORATED)
LOGO
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table shows the various fees and expenses, other than the underwriting discounts and commissions, payable by Registrant in connection with the sale of the common stock being registered under this registration statement. All amounts shown are estimates except for the Securities and Exchange Commission registration fee and the NASD filing fee.
INITIAL ONGOING
-------- --------
Registration fee............................................ $ 19,008
NASD filing fee............................................. 7,700
Nasdaq National Market listing fee.......................... *
Printing and engraving expenses............................. *
Legal fees and expenses..................................... *
Accounting fees and expenses................................ *
Blue Sky fees and expenses (including legal fees)........... *
Transfer agent and registrar fees and expenses.............. *
Miscellaneous............................................... *
--------
Total............................................. $800,000
========
Array BioPharma will bear all expenses shown above
|
* To be filed by amendment.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Upon completion of this offering, the Bylaws of Registrant will provide for the indemnification of Registrant's directors and officers to the fullest extent authorized by, and subject to the conditions set forth in the Delaware General Corporation Law (the "DGCL"), except that Registrant will indemnify a director or officer in connection with a proceeding (or part thereof) initiated by the person only if the proceeding (or part thereof) was authorized by Registrant's Board of Directors. The indemnification provided under the Bylaws includes the right to be paid by Registrant, the expenses (including attorneys' fees) for any proceeding for which indemnification may be had in advance of its final disposition, provided that the payment of those expenses (including attorneys' fees) incurred by a director or officer in advance of the final disposition of a proceeding may be made only upon delivery to Registrant of an undertaking by or on behalf of the director or officer to repay all amounts so paid in advance if it is ultimately determined that the director or officer is not entitled to be indemnified. Under the Bylaws of Registrant, if Registrant does not pay a claim for indemnification within 60 days after it has received a written claim, the director or officer may bring an action to recover the unpaid amount of the claim and, if successful, the director or officer also will be entitled to be paid the expense of prosecuting the action to recover these unpaid amounts.
As permitted by the DGCL, Registrant's Certificate of Incorporation will
provide that directors of Registrant shall not be liable to Registrant or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability (i) for any breach of the director's duty of loyalty to
Registrant 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 DGCL, relating to unlawful payment of dividends or unlawful
stock purchase or redemption or (iv) for any transaction from which the director
derived an improper personal benefit. As a result of this provision, Registrant
and its stockholders may be unable to obtain monetary damages from a director
for breach of his or her duty of care.
Under the Bylaws, Registrant will have the power to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of Registrant, or is or was serving at the request of Registrant as a
director, officer, employee, partner or agent of another corporation or of a
partnership, joint
II-1
venture, limited liability company, trust or other enterprise, against any liability asserted against the person or incurred by the person in that capacity, or arising out of the person's fulfilling one of these capacities, and related expenses, whether or not Registrant would have the power to indemnify the person against the claim under the provisions of the DGCL. Registrant has in force as of date of this offering director and officer liability insurance on behalf of its directors and officers in the amount of $2 million.
The Underwriting Agreement provides that the underwriters must, under specified circumstances, indemnify Registrant's directors, officers and controlling persons against specified liabilities, including liabilities under the Securities Act of 1933, as amended. Reference is made to the form of Underwriting Agreement to be filed as Exhibit 1.1 hereto.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
The following information relates to securities issued or sold by Registrant within the last three years. All such securities were offered and sold in reliance upon the exemption from registration under Section 4(2) of the Securities Act, relating to sales by an issuer not involving any public offering, including offers and sales under Regulation D or Rule 701 under the Securities Act.
The sales of securities were made without the use of an underwriter and the certificates evidencing the shares bear a restrictive legend permitting the transfer thereof only upon registration of the shares or an exemption under the Securities Act.
(1) On February 6, 1998, Registrant issued in total 1,000 shares of its common stock to Kevin Koch, K.C. Nicolaou, Anthony Piscopio and David Snitman in connection with its incorporation for an aggregate purchase price of $400.
(2) On May 18, 1998, Registrant entered into a Preferred and Common Stock Purchase Agreement, as amended on August 7, 1998, with certain accredited investors pursuant to which Registrant issued between May 19, 1998 and January 15, 1999 a total of 6,635,000 shares of Series A preferred stock for an aggregate purchase price of $6,635,000 and 2,912,367 shares of common stock for an aggregate purchase price of $684,406.
(3) From July 1, 1998 to June 30, 2000, Registrant granted options to purchase an aggregate of 3,348,240 shares of common stock to employees, directors and consultants under its 1998 Stock Option Plan dated July 1, 1998, as amended. As of June 30, 2000, 456,840 shares have been purchased for an aggregate purchase price of $107,358. In addition, 500,074 shares were fully vested and 36,556 shares have been cancelled.
(4) On October 9, 1998, Registrant entered into a Loan and Security Agreement with Silicon Valley Bank and, in connection with the loan, Registrant issued the bank a warrant to purchase 40,000 shares of Series A preferred stock at an initial exercise price of $1.00 per share.
(5) On February 26, 1999, Registrant entered into a Master Note and Security Agreement with Leasing Technologies International, Inc. and in connection with the line of credit, Registrant issued Leasing Technologies International, Inc. a warrant to purchase 13,750 shares of Series A preferred stock at an initial exercise price of $3.00 per share.
(6) On March 26, 1999, Registrant entered into a Loan and Security Agreement with Silicon Valley Bank and in connection with the loan, Registrant issued the bank a warrant to purchase 7,000 shares of Series B preferred stock at an initial exercise price of $2.50 per share.
(7) On November 16, 1999, Registrant entered into a Series B Preferred Stock Purchase Agreement with certain accredited investors for the issuance of 3,199,999 shares of Series B preferred stock for an aggregate purchase price of approximately $8,000,000.
(8) On May 17, 2000, Registrant entered into a Loan and Security Agreement with Silicon Valley Bank and, in connection with the loan, Registrant issued the bank a warrant to purchase 50,000 shares of Series B preferred stock at an initial exercise price of $5.00 per share.
II-2
(9) On August 31, 2000, Registrant entered into a Series C Preferred Stock Purchase Agreement with certain accredited investors for the issuance of 1,666,667 shares of Series C preferred stock for an aggregate purchase price of approximately $10,000,000.
The issuances of securities described in paragraph (3) above were deemed to be exempt from the registration requirements of the Securities Act in reliance on Rule 701 promulgated under Section 3(b) of the Securities Act as transactions by an issuer pursuant to compensatory benefit plans and contracts relating to compensation as provided under Rule 701.
The issuances described in paragraphs (1), (2) and (4) through (9) above were deemed to be exempt from registration under the Securities Act in reliance on Section 4(2) and pursuant to Regulation D, Rule 506 of the Securities Act.
The recipients of securities in each such transaction represented their intention to acquire the securities for investment only and not with a view to or for sale in connection with any distribution thereof and appropriate legends were affixed to the share certificates and other instruments issued in such transactions. All recipients either received adequate information about the Registrant or had access, through employment or other relationships, to information about the Registrant.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits:
EXHIBIT
NUMBER DESCRIPTION
------- -----------
1.1* -- Form of Underwriting Agreement
3.1 -- Amended and Restated Certificate of Incorporation of
Array BioPharma Inc.
3.2* -- Form of Amended and Restated Certificate of Incorporation
of Array BioPharma Inc. to be effective upon the closing
of the offering being made pursuant to this Registration
Statement
3.3 -- Amended and Restated Bylaws of Array BioPharma Inc.
3.4* -- Form of Amended and Restated Bylaws of Array BioPharma
Inc. to be effective upon the closing of the offering
being made pursuant to this Registration Statement
4.1* -- Specimen certificate representing the common stock
5.1* -- Opinion of Hogan & Hartson L.L.P. with respect to
legality of the common stock
10.1 -- 1998 Stock Option Plan effective July 1, 1998, as amended
10.2* -- Form of Amended and Restated Stock Option and Incentive
Plan to be effective upon the closing of the offering
being made pursuant to this Registration Statement
10.3* -- Form of Employee Stock Purchase Plan to be effective upon
the closing of the offering being made pursuant to this
Registration Statement
10.4 -- Preferred and Common Stock Purchase Agreement between
Registrant and the parties whose signatures appear on the
signature pages thereto dated May 18, 1998
10.5 -- Amendment to Preferred and Common Stock Purchase
Agreement dated August 7, 1998
10.6 -- Series B Preferred Stock Purchase Agreement between
Registrant and the parties whose signatures appear on the
signature pages thereto dated November 16, 1999
10.7 -- Series C Preferred Stock Purchase Agreement between
Registrant and the parties whose signatures appear on the
signature pages thereto dated August 31, 2000
10.8 -- Lease Agreement by and between Registrant, as Tenant, and
Amgen Inc., as Landlord, dated July 1998
|
II-3
EXHIBIT
NUMBER DESCRIPTION
------- -----------
10.9 -- First Amendment to Lease Agreement by and between
Registrant, as Tenant, and Amgen Inc., as Landlord, dated
April 1, 1999
10.10 -- Lease Agreement by and between Registrant, as Tenant, and
Pratt Land Limited Liability Company, as Landlord, dated
February 28, 2000
10.11 -- Revised Employment Agreement by and between Registrant
and Robert E. Conway dated November 16, 1999
10.12* -- Form of Employment Agreement dated September 1, 2000 by
and between Registrant and each of Laurence Burgess,
Jonathan Josey, Anthony D. Piscopio, David L. Snitman,
Kevin Koch, Michael Carruthers and Joanna Money
10.13 -- Promissory Note and Pledge Agreement of Kevin Koch to
Registrant dated May 18, 1998, as amended
10.14 -- Promissory Note and Pledge Agreement of KC Nicolaou to
Registrant dated May 18, 1998
10.15 -- Promissory Note and Pledge Agreement of Anthony D.
Piscopio to Registrant dated May 18, 1998, as amended
10.16 -- Amended and Restated Investors Rights Agreement between
Registrant and the parties whose signatures appear on the
signature pages thereto dated November 16, 1999
10.17 -- Amendment No. 1 to Amended and Restated Investors Rights
Agreement between Registrant and the parties listed on
the signature pages thereto dated August 31, 2000
10.18 -- Amended and Restated Stockholders Agreement between
Registrant and the parties whose signatures appear on the
signature pages thereto dated November 16, 1999
10.19 -- First Amendment to Amended and Restated Stockholders
Agreement between Registrant and the parties listed on
the signature pages thereto dated April 2000
10.20 -- Amendment No. 2 to Amended and Restated Stockholders
Agreement between Registrant and the parties listed on
the signature pages thereto dated August 31, 2000
10.21 -- Loan and Security Agreement by and between Registrant and
Silicon Valley Bank dated October 9, 1998
10.22 -- Warrant to Purchase 40,000 Shares of Series A Preferred
Stock issued to Silicon Valley Bank, issue date October
9, 1998
10.23 -- Loan and Security Agreement by and between Registrant and
Silicon Valley Bank dated March 26, 1999
10.24 -- Warrant to Purchase Shares of Series Preferred Stock
issued to Silicon Valley Bank, issue date March 31, 1999
10.25 -- Loan and Security Agreement by and between Registrant and
Silicon Valley Bank dated May 17, 2000
10.26 -- Warrant to Purchase Stock issued to Silicon Valley Bank,
issue date May 17, 2000
10.27 -- Master Note and Security Agreement by and between
Registrant and Leasing Technologies International, Inc.
dated February 26, 1999
10.28 -- Warrant to Purchase 13,750 Shares of Series A Preferred
Stock issued to Leasing Technologies International, Inc.,
issue date March 30, 1999
10.29+ -- Custom Synthesis Fee-For-Service Agreement between
Registrant and Merck & Co., Inc. dated May 14, 1999
|
II-4
EXHIBIT
NUMBER DESCRIPTION
------- -----------
10.30+ -- Array Library Screening Agreement between Registrant and
E.I. du Pont de Nemours and Company dated August 1, 2000
10.31+ -- Lead Optimization Agreement between Registrant and ICOS
Corporation dated December 22, 1998
10.32+ -- Cell Cycle Checkpoint Optimization Agreement between
Registrant and ICOS Corporation dated April 6, 1999
10.33+ -- Drug Discovery Collaboration Agreement between Registrant
and ICOS Corporation dated July 31, 2000
10.34+ -- Compound Library Agreement between Registrant and Darwin
Discovery Limited dated April 22, 1999
10.35+ -- Diversity Library Screening Agreement between Registrant
and Tularik Inc. dated June 10, 1999, as amended
10.36+ -- Research Services Agreement between Registrant and Eli
Lilly and Company dated March 22, 2000, as amended
10.37+ -- Custom Synthesis Development and Supply Agreement between
Registrant and Merck & Co., Inc. dated September 6, 2000
16.1 -- List of Subsidiaries
23.1 -- Consent of Independent Auditors -- Ernst & Young LLP
23.2* -- Consent of Hogan & Hartson L.L.P. (included in Exhibit
5.1)
24.1 -- Power of Attorney (included on signature page)
27.1 -- Financial Data Schedule
|
* To be filed by amendment.
+ Confidential treatment applied for.
(b) Financial Statement Schedules:
All other schedules are omitted because they are not required, are not applicable or the information is included in the consolidated financial statements or notes thereto.
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes to provide to the underwriters at the closing specified in the Underwriting Agreement certificates in such denominations and registered in such names as required by the Underwriters to permit prompt delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of Registrant pursuant to the foregoing provisions, or otherwise, Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by Registrant of expenses incurred or paid by a director, officer or controlling person of 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, 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 Act and will be governed by the final adjudication of such issue.
II-5
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
II-6
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the city of Boulder, State of Colorado, on September 15, 2000.
Array BioPharma Inc.
By: /s/ ROBERT E. CONWAY
----------------------------------
Robert E. Conway
Chief Executive Officer
|
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints Robert E. Conway, Michael Carruthers, David L. Snitman and each of them, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, from such person and in each person's name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this registration statement or any registration statement relating to this registration statement under Rule 462 under the Securities Act of 1933 and to file the same, with all exhibits thereto and all documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them, or his or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities indicated on the dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ ROBERT E. CONWAY Chief Executive Officer and September 15, 2000
----------------------------------------------------- Director (Principal
Robert E. Conway Executive Officer)
/s/ KYLE LEFKOFF Chairman of the Board of September 15, 2000
----------------------------------------------------- Directors
Kyle Lefkoff
/s/ MICHAEL CARRUTHERS Chief Financial Officer September 15, 2000
----------------------------------------------------- (Principal Financial and
Michael Carruthers Accounting Officer)
/s/ FRANCIS J. BULLOCK, PH.D. Director September 15, 2000
-----------------------------------------------------
Francis J. Bullock, Ph.D.
/s/ MARVIN H. CARUTHERS, PH.D. Director September 15, 2000
-----------------------------------------------------
Marvin H. Caruthers, Ph.D.
/s/ KIRBY L. CRAMER Director September 15, 2000
-----------------------------------------------------
Kirby L. Cramer
|
II-7
SIGNATURE TITLE DATE
--------- ----- ----
/s/ KEVIN KOCH, PH.D. Director September 15, 2000
-----------------------------------------------------
Kevin Koch, Ph.D.
/s/ ROBERT W. OVERELL, PH.D. Director September 15, 2000
-----------------------------------------------------
Robert W. Overell, Ph.D.
/s/ DAVID L. SNITMAN, PH.D. Director September 15, 2000
-----------------------------------------------------
David L. Snitman, Ph.D.
|
II-8
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
------- -----------
1.1* -- Form of Underwriting Agreement
3.1 -- Amended and Restated Certificate of Incorporation of
Array BioPharma Inc.
3.2* -- Form of Amended and Restated Certificate of Incorporation
of Array BioPharma Inc. to be effective upon the closing
of the offering being made pursuant to this Registration
Statement
3.3 -- Amended and Restated Bylaws of Array BioPharma Inc.
3.4* -- Form of Amended and Restated Bylaws of Array BioPharma
Inc. to be effective upon the closing of the offering
being made pursuant to this Registration Statement
4.1* -- Specimen certificate representing the common stock
5.1* -- Opinion of Hogan & Hartson L.L.P. with respect to
legality of the common stock
10.1 -- 1998 Stock Option Plan effective July 1, 1998, as amended
10.2* -- Form of Amended and Restated Stock Option and Incentive
Plan to be effective upon the closing of the offering
being made pursuant to this Registration Statement
10.3* -- Form of Employee Stock Purchase Plan to be effective upon
the closing of the offering being made pursuant to this
Registration Statement
10.4 -- Preferred and Common Stock Purchase Agreement between
Registrant and the parties whose signatures appear on the
signature pages thereto dated May 18, 1998
10.5 -- Amendment to Preferred and Common Stock Purchase
Agreement dated August 7, 1998
10.6 -- Series B Preferred Stock Purchase Agreement between
Registrant and the parties whose signatures appear on the
signature pages thereto dated November 16, 1999
10.7 -- Series C Preferred Stock Purchase Agreement between
Registrant and the parties whose signatures appear on the
signature pages thereto dated August 31, 2000
10.8 -- Lease Agreement by and between Registrant, as Tenant, and
Amgen Inc., as Landlord, dated July 1998
10.9 -- First Amendment to Lease Agreement by and between
Registrant, as Tenant, and Amgen Inc., as Landlord, dated
April 1, 1999
10.10 -- Lease Agreement by and between Registrant, as Tenant, and
Pratt Land Limited Liability Company, as Landlord, dated
February 28, 2000
10.11 -- Revised Employment Agreement by and between Registrant
and Robert E. Conway dated November 16, 1999
10.12* -- Form of Employment Agreement dated September 1, 2000 by
and between Registrant and each of Laurence Burgess,
Jonathan Josey, Anthony D. Piscopio, David L. Snitman,
Kevin Koch, Michael Carruthers and Joanna Money
10.13 -- Promissory Note and Pledge Agreement of Kevin Koch to
Registrant dated May 18, 1998, as amended
10.14 -- Promissory Note and Pledge Agreement of KC Nicolaou to
Registrant dated May 18, 1998
10.15 -- Promissory Note and Pledge Agreement of Anthony D.
Piscopio to Registrant dated May 18, 1998, as amended
10.16 -- Amended and Restated Investors Rights Agreement between
Registrant and the parties whose signatures appear on the
signature pages thereto dated November 16, 1999
|
EXHIBIT
NUMBER DESCRIPTION
------- -----------
10.17 -- Amendment No. 1 to Amended and Restated Investors Rights
Agreement between Registrant and the parties listed on
the signature pages thereto dated August 31, 2000
10.18 -- Amended and Restated Stockholders Agreement between
Registrant and the parties whose signatures appear on the
signature pages thereto dated November 16, 1999
10.19 -- First Amendment to Amended and Restated Stockholders
Agreement between Registrant and the parties listed on
the signature pages thereto dated April 2000
10.20 -- Amendment No. 2 to Amended and Restated Stockholders
Agreement between Registrant and the parties listed on
the signature pages thereto dated August 31, 2000
10.21 -- Loan and Security Agreement by and between Registrant and
Silicon Valley Bank dated October 9, 1998
10.22 -- Warrant to Purchase 40,000 Shares of Series A Preferred
Stock issued to Silicon Valley Bank, issue date October
9, 1998
10.23 -- Loan and Security Agreement by and between Registrant and
Silicon Valley Bank dated March 26, 1999
10.24 -- Warrant to Purchase Shares of Series Preferred Stock
issued to Silicon Valley Bank, issue date March 31, 1999
10.25 -- Loan and Security Agreement by and between Registrant and
Silicon Valley Bank dated May 17, 2000
10.26 -- Warrant to Purchase Stock issued to Silicon Valley Bank,
issue date May 17, 2000
10.27 -- Master Note and Security Agreement by and between
Registrant and Leasing Technologies International, Inc.
dated February 26, 1999
10.28 -- Warrant to Purchase 13,750 Shares of Series A Preferred
Stock issued to Leasing Technologies International, Inc.,
issue date March 30, 1999
10.29+ -- Custom Synthesis Fee-For-Service Agreement between
Registrant and Merck & Co., Inc. dated May 14, 1999
10.30+ -- Array Library Screening Agreement between Registrant and
E.I. du Pont de Nemours and Company dated August 1, 2000
10.31+ -- Lead Optimization Agreement between Registrant and ICOS
Corporation dated December 22, 1998
10.32+ -- Cell Cycle Checkpoint Optimization Agreement between
Registrant and ICOS Corporation dated April 6, 1999
10.33+ -- Drug Discovery Collaboration Agreement between Registrant
and ICOS Corporation dated July 31, 2000
10.34+ -- Compound Library Agreement between Registrant and Darwin
Discovery Limited dated April 22, 1999
10.35+ -- Diversity Library Screening Agreement between Registrant
and Tularik Inc. dated June 10, 1999, as amended
10.36+ -- Research Services Agreement between Registrant and Eli
Lilly and Company dated March 22, 2000, as amended
10.37+ -- Custom Synthesis Development and Supply Agreement between
Registrant and Merck & Co., Inc. dated September 6, 2000
16.1 -- List of Subsidiaries
|
EXHIBIT
NUMBER DESCRIPTION
------- -----------
23.1 -- Consent of Independent Auditors -- Ernst & Young LLP
23.2* -- Consent of Hogan & Hartson L.L.P. (included in Exhibit
5.1)
24.1 -- Power of Attorney (included on signature page)
27.1 -- Financial Data Schedule
|
* To be filed by amendment.
+ Confidential treatment applied for.
EXHIBIT 3.1
State of Delaware PAGE 1
Office of the Secretary of State
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE RESTATED CERTIFICATE OF
"ARRAY BIOPHARMA INC.", FILED IN THIS OFFICE ON THE THIRTY-FIRST DAY OF AUGUST,
A.D. 2000, AT 11:30 O'CLOCK A.M.
A FILED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW CASTLE
COUNTY RECORDER OF DEEDS.
/s/ EDWARD J. FREEL
[SEAL] -----------------------------------
Edward J. Freel, Secretary of State
2856233 8100 AUTHENTICATION: 0650953
001441765 DATE: 08-31-00
|
STATE OF DELAWARE
SECRETARY OF STATE
DEPARTMENT OF CORPORATIONS
FILED 11.30 AM 08/31/2000
001441765 - 2856233
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION OF
ARRAY BIOPHARMA INC.
(PURSUANT TO SECTIONS 242 AND 245)
Array BioPharma Inc., a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware (the "Corporation"), does hereby certify as follows for the purpose of amending and restating its Certificate of Incorporation:
1. The Corporation was originally incorporated under the same name, and the original Certificate of Incorporation of the Corporation was filed with the Secretary of State of the State of Delaware on February 6, 1998.
2. The Board of Directors of the Corporation duly adopted resolutions containing provisions of this Amended and Restated Certificate of Incorporation of the Corporation, declaring such amendment and restatement to be advisable and called for the approval of the stockholders of the Corporation to such amendment and restatement in accordance with Sections 242 and 245 of the General Corporation Law of the State of Delaware.
3. That the holders of at least 66 2/3% of the outstanding shares of the Corporation's Series A Preferred Stock voting as a single class, 66 2/3% of the outstanding shares of the Corporation's Series B Preferred Stock voting as a single class and 50% of the outstanding shares of the Corporation's Common Stock and Preferred Stock voting as a single class, in each case acting by means of written consent in lieu of a meeting pursuant to Section 228(a) of the General Corporation Law of the State of Delaware, adopted and approved this Amended and Restated Certificate of Incorporation in accordance with Sections 242 and 245 of the General Corporation Law of the State of Delaware.
4. That the text of the Corporation's Certificate of Incorporation as heretofore amended and supplemented is hereby further amended and restated in its entirety to read as follows:
ARTICLE I
NAME
The name of the corporation is Array BioPharma Inc.
ARTICLE II
REGISTERED OFFICE AND AGENT
The address of its registered office in the State of Delaware is 1209 Orange Street, in the City of Wilmington, County of New Castle 19801. The name of its registered agent at such address is The Corporation Trust Company.
ARTICLE III
NATURE OF BUSINESS
The nature of the business or purposes to be conducted or promoted is to engage in any lawful act or activities for which corporations may be organized under the General Corporation Law of the State of Delaware.
ARTICLE IV
CAPITAL; SHAREHOLDERS
4.1 Authorized Capital. The aggregate number of shares that the Corporation shall have authority to issue is 20,225,000 shares of common stock, each having a par value of $0.001 (the "Common Stock"), and 11,825,000 shares of preferred stock, each having a par value of $0.001, 6,800,000 shares of which shall be designated as Series A Preferred Stock, 3,300,000 shares of which shall be designated as Series B Preferred Stock and 1,725,000 shares of which shall be designated as Series C Preferred Stock. The Series A Preferred Stock, Series B Preferred Stock and the Series C Preferred Stock is sometimes collectively referred to herein as the "Preferred Stock."
4.2 Relative Rights and Preferences. The designations, preferences and rights of the shares of each class of stock which the Corporation is authorized to issue, and the limitations thereof, are as set forth in the following provisions of this Section 4.2:
(a) Common Stock.
(i) General. The dividend and liquidation rights of the holders of the Common Stock are junior to, subject to and qualified by the rights of the holders of the Preferred Stock.
(ii) Dividends. Dividends may be declared and paid on the Common Stock from funds lawfully available therefor as and when determined by the Board of Directors, subject to any preferential dividend rights of any then-outstanding Preferred Stock.
(iii) Liquidation. In the event of any liquidation, dissolution or winding-up of the Corporation, whether voluntary or involuntary, the holders of the Common Stock shall be entitled, out of the assets of the Corporation available for distribution to its shareholders, subject to any preferential rights of any then-outstanding Preferred Stock, to share ratably among themselves in proportion to the respective amounts that would otherwise be payable in respect of the shares
held by them upon such distribution if all amounts payable on or with respect to such shares were paid in full.
(iv) Voting. Each holder of Common Stock of record shall have one vote for each share of stock outstanding in his name and on the books of the Corporation except that, in the election of directors, he shall have the right to vote each such share for as many persons as there are directors to be elected. Cumulative voting shall not be allowed in the election of directors or for any other purpose.
(b) Series Preferred Stock. The designations, dividend rights, voting powers, rights on liquidation and other preferences and relative, participating, optional or other special rights and the qualifications, limitations or restrictions of the shares of the series of Preferred Stock shall be as follows:
(i) Certain Definitions. Unless the context otherwise requires, for purposes of Section 4.2(b), the terms defined in this Section 4.2(b)(i) shall have the meanings herein specified (with terms defined in the singular having comparable meanings when used in the plural).
"Common Stock" shall mean the common stock, $0.001 par value per share, of the Corporation.
"Disposition Proceeds" shall have the meaning set forth in
Section 4.2(b)(iii)(C).
"Equivalent Common Dividend" shall have the meaning set forth in Section 4.2(b)(ii).
"Liquidation Preferences" shall have the meaning set forth in Section 4.2(b)(iii)(C).
"Mandatory Conversion Date" shall have the meaning set forth in Section 4.2(b)(iv)(B).
"Preferred Stock" shall mean any authorized series of preferred stock of the Corporation, including, without limitation, the Series A Preferred Stock, the Series B Preferred Stock and the Series C Preferred Stock.
"Qualifying IPO" shall mean an underwritten public offering pursuant to an effective registration statement under the Securities Act of 1933 of shares of Common Stock, at a price per share of at least $8.00, and the aggregate
gross proceeds of which equal or exceed $20,000,000 (before underwriting discounts and commissions).
"Required Consent" shall mean (i) the affirmative vote of the holders of at least 66 2/3% of the outstanding shares of Preferred Stock or a series of such Preferred Stock, as the case may be, taken at a duly called meeting of the holders of such Preferred Stock or series of such Preferred Stock; or (ii) the written consent of the holders of at least 66 2/3% of the outstanding shares of Preferred Stock or a series of such Preferred Stock, as the case may be.
"Series A Initial Purchase Price" shall mean $1.00 per share (adjusted for stock dividends, stock splits, reverse stock splits, combinations and the like).
"Series A Liquidation Preference" shall have the meaning set forth in Section 4.2(b)(iii)(C).
"Series A Preferred Stock" shall mean the Series A Preferred Stock, $0.001 par value per share, of the Corporation.
"Series B Initial Purchase Price" shall mean $2.50 per share (adjusted for stock dividends, stock splits, reverse stock splits, combinations and the like).
"Series B Liquidation Preference" shall have the meaning set forth in Section 4.2(b)(iii)(C).
"Series B Preferred Stock" shall mean the Series B Preferred Stock, $0.001 par value per share, of the Corporation.
"Series C Initial Purchase Price" shall mean $6.00 per share (adjusted for stock dividends, stock splits, reverse stock splits, combinations and the like).
"Series C Liquidation Preference" shall have the meaning set forth in Section 4.2(b)(iii)(C).
"Series C Preferred Stock" shall mean the Series C Preferred Stock, $0.001 par value per share, of the Corporation.
"Subordinate Stock" shall mean any class or series of capital stock of the Corporation, however designated, which is junior in right to the Preferred Stock, including without limitation the Common Stock and any other capital stock
of the Corporation that is not entitled to receive (i) any dividends unless all dividends required to have been paid or declared and set apart for payment on the Preferred Stock shall have been so paid or declared and set apart for payment; or (ii) any assets upon liquidation, dissolution or winding up of the affairs of the Corporation until the Preferred Stock shall have received the entire amount to which such stock is entitled upon such liquidation, dissolution or winding up.
(ii) Dividends. If at any time during which any shares of Series A Preferred Stock, Series B Preferred Stock or Series C Preferred Stock remain outstanding the Corporation declares, pays or sets apart for payment any dividend on the Common Stock, whether in cash, property or otherwise, each holder of shares of Series A Preferred Stock, Series B Preferred Stock or Series C Preferred Stock shall be entitled to receive the equivalent per share dividend (an "Equivalent Common Dividend"), when and as declared by the Corporation, based on the number of shares of Common Stock into which each share of Preferred Stock is convertible on the record date. For any Equivalent Common Dividend that is not paid in full when due, then on such due date such accrued and unpaid Equivalent Common Dividend shall be added to the Liquidation Preference of the Preferred Stock effective at such due date when such Equivalent Common Dividend was not paid. If any accrued and unpaid Equivalent Common Dividend is so added to the Liquidation Preference, such Liquidation Preference shall be reduced, effective on the date of payment, to the extent any accrued and unpaid Equivalent Common Dividend is subsequently paid.
(iii) Distributions Upon Liquidation, Dissolution or Winding Up.
(A) The Corporation shall deliver to each holder of Preferred Stock notice of any Disposition (as defined in Section 4.2(b)(iii)(B)) at least 90 days prior to such event, which notice shall state all material facts and common terms relating to such Disposition, including, without limitation, (1) the nature of such Disposition, including, without limitation, the amount, terms and conditions of payment to the holders of the Preferred Stock and the holders of Common Stock in connection with such Disposition; (2) the date on which such Disposition shall occur; and (3) the procedures that must be followed (and the latest date that such procedures must be completed) in order for such holder to effect a conversion of shares of Preferred Stock into shares of Common Stock, if such a conversion is so desired.
(B) The following events shall be considered a "Disposition" under this Section:
(1) any consolidation or merger of the Corporation with or into any other corporation or other entity or person, or any other
corporate reorganization, in which the stockholders of the Corporation immediately prior to such consolidation, merger or reorganization, own less than 50% of the Corporation's voting power immediately after such consolidation, merger or reorganization, or any transaction or series of related transactions in which in excess of 50% of the Corporation's voting power is transferred;
(2) a sale, lease or other disposition of all or substantially all of the assets of the Corporation; or
(3) any voluntary or involuntary liquidation, dissolution or other winding up of the affairs of the Corporation.
(C) In the event of any such Disposition, before any payment or distribution shall be made to the holders of the Common Stock, the holders of Preferred Stock shall be entitled to be paid out of the Disposition Proceeds in cash, or, if the Corporation does not have sufficient cash on hand to pay such amounts, property of the Corporation at its fair market value as determined by the Board of Directors, an amount (the "Series A Liquidation Preference", the "Series B Liquidation Preference" and the "Series C Liquidation Preference") equal to either the Series A Initial Purchase Price, the Series B Initial Purchase Price or the Series C Initial Purchase Price, as appropriate, plus any accrued but unpaid dividends. If upon any such Disposition, the remaining assets of the Corporation available for distribution to its shareholders shall be insufficient to pay the holders of the Preferred Stock the full amount of their respective Liquidation Preferences, the holders of the Preferred Stock shall share ratably among themselves in any distribution of the remaining assets and funds of the Corporation in proportion to the respective amounts that would otherwise be payable in respect of the shares held by them upon such distribution if all amounts payable on or with respect to such shares were paid in full.
(iv) Conversion Rights.
(A) Conversion at the Option of the Holder. The holders of the Preferred Stock shall have the right, at their option, to convert shares of Preferred Stock into shares of Common Stock of the Corporation at any time and from time to time on the following terms and conditions:
(1) Each share of Preferred Stock shall be converted at the option of the holder thereof, without the payment of additional
consideration, into such number of fully paid and nonassessable shares of Common Stock as is determined by dividing the Series A Initial Purchase Price, the Series B Initial Purchase Price or the Series C Initial Purchase Price, as applicable, by the Series A Conversion Rate, the Series B Conversion Rate or the Series C Conversion Rate, respectively, in effect at the time of conversion. For purposes of this section, the "Series A Conversion Rate", the "Series B Conversion Rate" and the "Series C Conversion Rate" shall initially shall be equal to the Series A Initial Purchase Price, Series B Initial Purchase Price and the Series C Initial Purchase Price, respectively, and shall each be subject to adjustment as provided in Section 4.2(b)(iv)(C)(2) below.
(2) The Corporation shall not issue, in connection with the conversion of shares of Preferred Stock, certificates for fractional shares, but in lieu thereof shall pay to any person who would otherwise be entitled thereto an amount of cash equal to such fraction multiplied by the fair value of one share of Common Stock, as determined by the Board of Directors, whose determination shall be conclusive.
(3) In order for any holder of shares of Preferred Stock to convert the same into Common Stock, he shall surrender the certificate or certificates therefor, duly endorsed, at the office of the Corporation and shall give written notice to the Corporation that he elects to convert all or part of the shares represented by the certificate or certificates and shall state in writing therein the name or names in which he wishes the certificate or certificates for Common Stock to be issued. The Corporation shall, as soon as practicable thereafter, issue and deliver to such holder of shares of Preferred Stock, or to his nominee or nominees, certificates for the full number of shares of Common Stock to which he shall be entitled as aforesaid. Shares of Preferred Stock shall be deemed to have been converted as of the date of the surrender of such shares for conversion as provided above, and the person or persons entitled to receive Common Stock issuable upon such conversion shall be treated for all purposes as the record holder or holders of such Common Stock on such date.
(4) If a holder converts shares of Preferred Stock, the Corporation shall pay any documentary , stamp or similar issue or transfer tax due on the issue of shares of Common Stock upon the conversion; provided, however, that the holder shall pay any such
tax that is due because the shares are issued in a name other than the holder's name pursuant to Section 4.2(b)(iv)(A)(3).
(B) Mandatory Conversion. Subject to the adjustments set
forth in Section 4.2(b)(iv)(C), each share of Preferred Stock
shall be converted automatically into shares of the Corporation's
Common Stock at the Series A Conversion Rate, Series B Conversion
Rate or Series C Conversion Rate, as applicable, on the date a
Qualifying IPO is consummated (the "Mandatory Conversion Date").
At least 60 days prior to the Mandatory Conversion Date, the
Corporation shall (1) notify all holders of the Preferred Stock
of such event; (2) demand that all shares representing the
Preferred Stock be returned to the Corporation's offices or to
the designated transfer agent; and (3) pay any transfer or
similar tax with respect to the conversion, if any. As soon as
practical but in any event within 30 days after the Mandatory
Conversion Date, the Corporation shall deliver a certificate to
and in the name of the holder of the Preferred Stock for the
number of shares of Common Stock issuable upon the conversion and
a check in an amount calculated in accordance with Section
4.2(b)(iv)(A)(2) for any fractional shares, if any, for the
shares of Preferred Stock represented by the certificate. The
name of the person in which the Preferred Stock was issued shall
be treated as the stockholder of record of the Common Stock in
which the Preferred Stock was converted on and after the
Mandatory Conversion Date. Adjustment (or cash payment, if
applicable) shall be made for accrued and previously declared and
unpaid dividends, as of the Mandatory Conversion Date, on shares
of Preferred Stock converted pursuant to this Section
4.2(b)(iv)(B). Upon such conversion, the rights of the holders of
Preferred Stock with respect to the shares of Preferred Stock so
converted shall cease.
(C) Certain Matters With Respect to Conversion.
(1) The Corporation has reserved and shall continue to reserve out of its authorized but unissued Common Stock or its Common Stock held in treasury enough shares of Common Stock to permit the conversion of the Preferred Stock in full. All shares of Common Stock that may be issued upon conversion of Preferred Stock shall be duly authorized, validly issued, fully paid and nonassessable.
(2) The Series A Conversion Rate, Series B Conversion Rate and Series C Conversion Rate shall be subject to adjustment as follows:
(a) In case the Corporation shall (i) pay a dividend or make a distribution on its Common Stock in shares of Common Stock of the Corporation, (ii) subdivide or split its outstanding Common Stock, or (iii) combine the outstanding Common Stock into a smaller number of shares, the Series A Conversion Rate, Series B Conversion Rate and Series C Conversion Rate following the effective date of such event shall be equal to the product of the Series A Conversion Rate, Series B Conversion Rate or Series C Conversion Rate, respectively, in effect immediately prior to such adjustment multiplied by a fraction, the denominator of which is the number of shares of Common Stock outstanding immediately after such event and the numerator of which is the number of shares outstanding immediately prior to such event.
(b) In the event the Corporation at any time or from time to time shall make or issue, or fix a record date for the determination of holders of Common Stock entitled to receive a dividend or other distribution payable in securities of the Corporation other than shares of Common Stock, then and in each such event provision shall be made so that the holders of Preferred Stock shall receive upon conversion thereof in addition to the number of shares of Common Stock receivable thereupon, the amount of securities of the Corporation that they each would have received had the Preferred Stock been converted into Common Stock on the date of such event and had they each 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, giving application to all adjustments called for during such period under this section with respect to the rights of the holders of Preferred Stock; provided, however, that no such adjustment shall be made if the holders of Preferred Stock simultaneously receive a dividend or other distribution of such securities as they would have received if all outstanding shares of Preferred Stock had been converted into Common Stock on the date of such event.
(c) If Common Stock issuable upon the conversion of Preferred Stock shall be changed into the same or a different number of shares of any class or classes of stock, whether by capital reorganization, reclassification, or otherwise (other than a subdivision or combination of shares or stock dividend provided for above, or a reorganization, merger, consolidation, or sale of assets provided for below), then and in each such event the holder of each such share of Preferred Stock shall have the right thereafter
to convert such share into the kind and amount of shares of stock and other securities and property receivable upon such reorganization, reclassification, or other change, by holders of the number of shares of Common Stock into which such share of Preferred Stock might have been converted immediately prior to such reorganization, reclassification, or change, all subject to further adjustment as provided herein.
(d) Adjustments to the Series A Conversion Rate, Series
B Conversion Rate and Series C Conversion Rate shall also be
made for certain dilutive issuances of additional shares of
capital stock by the Corporation as set forth in this
Section 4.2(b)(iv)(C)(2)(d).
(i) Special Definitions. For purposes of this Section 4.2(b)(iv)(C)(2)(d), the following definitions shall apply:
(A) "Option" means rights, options, warrants or other securities convertible into or exchangeable or exercisable for shares of Common Stock or Preferred Stock.
(B) "Additional Shares of Stock" (i) with respect to the Series A Preferred Stock, all shares of Common Stock or Preferred Stock issued by the Corporation after the date that shares of Series A Preferred Stock are first issued by the Corporation (the "Series A Initial Issue Date") for which the consideration per share (determined pursuant to Section 4.2(b)(iv)(C)(2)(d)(iii)) is less than the Series A Conversion Rate in effect on the date of, and immediately prior to, the issuance of such Additional Shares of Stock; (ii) with respect to the Series B Preferred Stock, all shares of Common Stock or Preferred Stock issued by the Corporation after the date that shares of Series B Preferred Stock are first issued by the Corporation (the "Series B Initial Issue Date") for which the consideration per share (determined pursuant to Section 4.2(b)(iv)(C)(2)(d)(iii)) is less than the Series B Conversion Rate in effect on the date of, and immediately prior to, the issuance of such Additional Shares of Stock;
(iii) with respect to the Series C Preferred
Stock, all shares of Common Stock or Preferred
Stock issued by the Corporation after the date
that shares of Series C Preferred Stock are first
issued by the Corporation (the "Series C Initial
Issue Date") for which the consideration per share
(determined pursuant to Section 4.2(b)(iv)(C)(2)
(d)(iii)) is less than the Series C Conversion
Rate in effect on the date of, and immediately
prior to, the issuance of such Additional Shares
of Stock, provided, however that in the case of
any series of Preferred Stock, not including any
shares of Common Stock or Preferred Stock issued
or issuable:
(I) upon exercise of any Options outstanding on the Series C Initial Issue Date; provided, however that if the Corporation, after the Series C Initial Issue Date, amends the exercise price or the number of shares covered by any Options outstanding on the Series C Initial Issue Date, then such Options, as so amended, shall be deemed to have been issued after the Series C Initial Issue Date;
(II) by reason of a dividend, stock split, split-up or other distribution on shares of Common Stock that is covered by Section 4.2(b)(iv)(C)(2)(b) or (c) above;
(III) upon exercise of Options granted to employees or directors of, or consultants to, the Corporation pursuant to a valid option plan adopted by the Corporation;
(IV) to employees or directors of, or consultants to, the Corporation pursuant to a valid stock purchase plan adopted by the Corporation; or
(V) upon exercise of warrants or other securities convertible into Common or Preferred Stock issued in connection with a credit facility, but not to exceed an aggregate
of $200,000 in value (as determined by the exercise price) in any six month period.
(ii) Adjustment of Conversion Rates Upon Issuance of Additional Shares of Stock. In the event the Corporation shall at any time issue Additional Shares of Stock with respect to the Series A Preferred Stock, the Series B Preferred Stock or the Series C Preferred Stock, then and in such event, such Series A Conversion Rate, Series B Conversion Rate or Series C Conversion Rate, as applicable, shall be reduced, concurrently with such issuance, to a price (calculated to the nearest cent) determined by multiplying the Series A Conversion Rate, the Series B Conversion Rate or Series C Conversion Rate, as applicable, then in effect by a fraction:
(A) the numerator of which shall be (1) the number of shares of Common Stock outstanding immediately prior to such issue plus (2) the number of shares of Common Stock which the aggregate consideration received or to be received by the Corporation for the total number of Additional Shares of Stock so issued would purchase at such Series A Conversion Rate, Series B Conversion Rate or Series C Conversion Rate, as applicable; and
(B) the denominator of which shall be the number of shares of Common Stock outstanding immediately prior to such issue plus the number of such Additional Shares of Stock so issued.
(iii) Determination of Consideration. For purposes of this Section 4.2(b)(iv)(C)(3)(d)(iii), the consideration received by the Corporation for the issue of any Additional Shares of Stock shall be computed as follows:
(A) in case of the issuance of shares of Common Stock for cash, the consideration shall be the amount of such cash, provided that in no case shall any deduction be made for any commissions,
discounts or other expenses incurred by the Corporation for any underwriting of the issue or otherwise in connection therewith;
(B) in the case of the issuance of shares of Common Stock for a consideration in whole or in part other than cash, the consideration other than cash shall be deemed to be the fair market value thereof as determined by the Board of Directors of the Corporation in its reasonable judgment exercised in good faith (irrespective of the accounting treatment thereof); and
(C) in the case of the issuance of Options, the aggregate consideration received therefor shall be deemed to be the consideration received by the Corporation for the issuance of such Options plus the additional minimum consideration, if any, to be received by the Corporation upon the conversion or exchange or exercise thereof (the consideration in each case to be determined in the same manner as provided in clauses (i) and (ii) of this Section).
(3) Whenever the number of shares of Common Stock into which any share of Preferred Stock is convertible is adjusted, the Corporation shall promptly mail to holders of the affected Preferred Stock, first class, postage prepaid, a notice of the adjustment. The Corporation shall file with the transfer agent, if any, for the Preferred Stock a certificate from the Corporation's independent public accountants briefly stating the facts requiring the adjustment and the manner of computing it. Subject to Section 4.2(b)(iv)(C)(9) below, the certificate shall be conclusive evidence that the adjustment is correct.
(4) The adjustments herein provided for shall be made successively when the event giving rise to such adjustment occurs and shall become effective immediately following the record date for any event for which a record date is designated and on the effective date for any other event.
(5) Shares of Preferred Stock that have been converted as provided herein shall revert to the status of authorized but unissued shares of Preferred Stock.
(6) For purposes of any computation of the number of shares of Common Stock outstanding, such computation shall be made assuming conversion of all then outstanding shares of Preferred Stock and all outstanding currently exercisable warrants and vested options.
(7) No adjustment in the number of shares of Common Stock into which each share of Preferred Stock is convertible need be made unless the adjustment would require an increase of at least one-half of one percent (.5%) in the number of shares of Common Stock into which each share of Preferred Stock is convertible. Any adjustments that are not made shall be carried forward and taken into account in any subsequent adjustment. All calculations under this Section 4.2(b)(iv)(C) shall be made to the nearest cent or to the nearest 1/100th of a share, as the case may be.
(8) In any case in which this Section 4.2(b)(iv)(C) shall require that an adjustment as a result of any event become effective from and after a record date, the Corporation may elect to defer until after the occurrence of such event (a) the issuance to the holder of any shares of Preferred Stock converted after such record date and before the occurrence of such event of the additional shares of Common Stock issuable upon such conversion over and above the shares issuable immediately prior to adjustment; and (b ) the delivery of a check for any remaining fractional shares as provided in Section 4.2(b)(iv)(A)(2) above.
(9) Except as provided in the immediately following sentence, any determination that the Corporation or its Board of Directors must make pursuant to this Section 4.2(b)(iv)(C) shall be conclusive. Whenever the Corporation or its Board of Directors shall be required to make a determination under this Section 4.2(b)(iv)(C), such determination shall be made in good faith and may be challenged in good faith by the holders of a majority of the affected Series A Preferred Stock, Series B Preferred Stock and/or Series C Preferred Stock, as applicable, and any dispute shall be resolved promptly (and in no event later than 90 days after any challenge), at the Corporation's expense, by an investment banking firm of recognized national standing selected by the Corporation and acceptable to such holders of Series A Preferred Stock, Series B Preferred Stock and/or Series C Preferred Stock, as applicable. Any such determination shall be deemed approved if the requisite holders have not notified the Corporation of any challenge within
30 days after receiving notice (including a statement in reasonable detail of the bases therefor) of such determination.
(v) Voting Rights.
(A) Except as otherwise set forth in this Section 4.2(b)(v)
or as otherwise required by law, each share of Preferred Stock
issued and outstanding shall have the right to vote on all
matters presented to the holders of the Common Stock for vote in
the number of votes equal at any time to the number of shares of
Common Stock into which each share of Preferred Stock would then
be convertible, and the holders of the Preferred Stock shall vote
with the holders of the Common Stock as a single class.
(B) In addition to any vote or consent of shareholders or directors required by law or this Amended and Restated Certificate of Incorporation, so long as any originally issued Series A Preferred Stock, Series B Preferred Stock or Series C Preferred Stock remains outstanding, the Required Consent of the holders of the Series A Preferred Stock, Series B Preferred Stock and/or Series C Preferred Stock shall be necessary for effecting, validating or permitting:
(1) any amendment, alteration or repeal of any of the provisions of the Corporation's Amended and Restated Certificate of Incorporation or the Bylaws affecting the rights, powers and preferences of the Series A Preferred Stock, Series B Preferred Stock or Series C Preferred Stock, as applicable, provided, however that the Required Consent for this subparagraph (1) shall be of the holders of Series A Preferred Stock, Series B Preferred Stock or Series C Preferred Stock, voting as separate classes and only if such series is affected; or
(2) any consolidation or merger of the Corporation with or into any other corporation, or any other corporate reorganization, in which the stockholders of the Corporation immediately prior to such consolidation, merger or reorganization, own less than 50% of the Corporation's voting power immediately after such consolidation, merger or reorganization; any transaction or series of related transactions in which excess of 50% of the Corporation's voting power is transferred; any reclassification or recapitalization of any capital stock of the Corporation; any dissolution, liquidation, or winding up of the Corporation; or any sale of more than 50% of the assets of the Corporation, or any agreement to become so obligated; provided, however that the Required Consent for this subparagraph (2) shall be of the holders
of Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock, voting together as a single class.
(C) The rights of the holders of the Preferred Stock set forth in this Section 4.2(b)(v) may be exercised either at a special meeting of the holders of each series of Preferred Stock, called as hereinafter provided, or at any annual meeting of stockholders held for the purpose of electing directors, and thereafter at such annual meetings, special meetings or by the written consent of the holders of Preferred Stock, as applicable.
(D) A special meeting of the holders of Preferred Stock for purposes of voting on matters with respect to which the holders of such shares are entitled to vote as a class may be called by the Secretary of the Corporation or by a holder of Preferred Stock designated in writing by the holders of record of 10% of the shares of such series of Preferred Stock then outstanding. Such meeting may be called at the expense of the Corporation by any such person. At any meeting of the holders of each series of Preferred Stock, the presence in person or by proxy of the holders of a majority of the shares of such series of Preferred Stock then outstanding shall constitute a quorum of the such series of Preferred Stock.
(vi) Miscellaneous.
(A) Headings of Sections. The headings of the various subdivisions hereof are for convenience of reference only and shall not affect the interpretation of any of the provisions hereof.
(B) Severability of Provisions. If any voting powers, preferences and relative, participating, optional and other special rights of the Preferred Stock and qualifications, limitations and restrictions thereof set forth herein (as may be amended from time to time) is invalid, unlawful or incapable of being enforced by reason of any rule of law or public policy, all other voting powers, preferences and relative, participating, optional and other special rights of Preferred Stock and qualifications, limitations and restrictions thereof set forth herein (as so amended) that can be given effect without the invalid, unlawful or unenforceable voting powers, preferences and relative, participating, optional and other special rights of Preferred Stock and qualifications, limitations and restrictions thereof shall, nevertheless, remain in full force and effect, and no voting powers, preferences and relative, participating, optional or other special rights of Preferred Stock and qualifications, limitations and restrictions thereof herein set forth shall be deemed dependent upon any other such voting powers, preferences and relative,
participating, optional or other special rights of Preferred Stock and qualifications, limitations and restrictions thereof unless so expressed herein.
(c) Other Series of Preferred Stock. Subject to the approval requirements contained herein, the Board of Directors is hereby expressly authorized by resolution from time to time adopted providing for the issuance of preferred stock, to fix and state the designations, powers, preferences and relative, optional and other special rights of the shares of each series of preferred stock, and the qualifications, limitations and restrictions thereof, including (but without limiting the generality of the foregoing) any of the following with respect to which the Board of Directors shall determine to make effective provisions:
(i) the distinctive name and serial designation;
(ii) the dividend payment dates;
(iii) the rate or rates at which dividends if any shall be paid;
(iv) whether dividends are to be cumulative or noncumulative, and any preferential or other special rights with respect to the payment of dividends;
(v) whether any series shall be redeemable and if so, the terms, conditions and manner of redemption, and the redemption price or prices;
(vi) he rights of any series on voluntary or involuntary liquidation, dissolution or winding up, including the amounts or amounts of preferential or other payments to which any series is entitled over any other series or over the common stock;
(vii) any sinking fund or other retirement provisions and the extent to which the charges therefor are to have priority over the payment of dividends on or the making of sinking fund or other like retirement provisions for shares of any other series or over dividends on the common stock;
(viii) the number of shares of such series;
(ix) the voting rights, if any, for such series; and
(x) the conversion rights, if any, for such series.
Unless otherwise provided in the resolution of the Board of Directors providing for the issue thereof, the shares of any series of preferred stock which shall be issued and thereafter
acquired by the Corporation through purchase, redemption, conversion or otherwise may by resolution of the Board of Directors be returned to the status of authorized but unissued preferred stock of the same or other series. Unless otherwise provided in the resolution of the Board of Directors providing for the issue thereof, the number of authorized shares of stock of any such series may be increased or decreased (but not below the number of shares thereof then outstanding) by resolution by the Board of Directors. In case the number of shares of any such series of preferred stock shall be decreased, the shares representing such decrease shall, unless otherwise provided in the resolution of the Board of Directors providing for the issuance thereof, resume the status of authorized but unissued preferred stock, undesignated as to series.
ARTICLE V
LIMITATION ON LIABILITY
To the fullest extent permitted by the General Corporation Law of Delaware, as the same exists or may hereafter be amended, a director of the Corporation shall not be liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director. Any repeal or modification of this Article by the stockholders of the Corporation shall be prospective only and shall not adversely affect any right or protection of a director of the Corporation existing at the time of such repeal or modification.
ARTICLE VI
INDEMNIFICATION
Each person who is or was a director or officer of the Corporation, and each such person who is or was serving at the request of the Corporation as a director or officer of another Corporation, or in a similar capacity of a partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans maintained or sponsored by the Corporation (including the heirs, executors, administrators and estate of such person) shall be indemnified by the Corporation, in accordance with the procedures specified in the Bylaws of the Corporation, to the fullest extent permitted from time to time by the General Corporation Law of the State of Delaware. The Corporation may, to the extent authorized from time to time by the Board of Directors, grant rights to indemnification and to the advancement of expenses to any employee or agent of the Corporation to the fullest extent of the provisions of this Article with respect to the indemnification and advancement of expenses of directors and officers of the Corporation, without limiting the generality of the foregoing, the Corporation may enter into one or more agreements with any person that provide for indemnification and advancement of expenses greater or different than that provided in this Article. No amendment or repeal of this Article shall adversely affect any right or protection existing under or pursuant to this Article immediately before the amendment or repeal.
ARTICLE VII
ELECTION OF DIRECTORS
Elections of directors need not be by written ballot unless the bylaws of the Corporation so provide.
ARTICLE VIII
AMENDMENTS TO BYLAWS
The Board of Directors of the Corporation is expressly authorized to make, alter or repeal the bylaws of the Corporation.
[signature page follows]
IN WITNESS WHEREOF, this Amended and Restated Certificate of Incorporation of the Corporation has been executed this 31st day of August 2000.
ARRAY BIOPHARMA INC.
By: /s/ ROBERT CONWAY
--------------------------------------
Robert Conway, Chief Executive Officer
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EXHIBIT 3.3
AMENDED AND RESTATED BYLAWS
OF
ARRAY BIOPHARMA INC.
Adopted
as of
December 1, 1999
TABLE OF CONTENTS
Item Page
1 Offices.................................................................1
1.1 REGISTERED OFFICE....................................................1
1.2 OTHER OFFICES........................................................1
2 Meetings of Stockholders................................................1
2.1 PLACE OF MEETINGS....................................................1
2.2 ANNUAL MEETINGS......................................................1
2.3 SPECIAL MEETINGS.....................................................1
2.4 NOTICE OF MEETINGS...................................................2
2.5 WAIVERS OF NOTICE....................................................2
2.6 BUSINESS AT SPECIAL MEETINGS.........................................2
2.7 LIST OF STOCKHOLDERS.................................................2
2.8 QUORUM AT MEETINGS...................................................3
2.9 VOTING AND PROXIES...................................................3
2.10 REQUIRED VOTE.....................................................3
2.11 ACTION WITHOUT A MEETING..........................................4
3 Directors...............................................................4
3.1 POWERS...............................................................4
3.2 NUMBER AND ELECTION..................................................4
3.3 NOMINATION OF DIRECTORS..............................................4
3.4 VACANCIES............................................................5
3.5 MEETINGS.............................................................5
3.5.1 Regular Meetings...............................................5
3.5.2 Special Meetings...............................................5
3.5.3 Telephone Meetings.............................................5
3.5.4 Action Without Meeting.........................................6
3.5.5 Waiver of Notice of Meeting....................................6
3.6 QUORUM AND VOTE AT MEETINGS..........................................6
3.7 COMMITTEES OF DIRECTORS..............................................6
3.8 COMPENSATION OF DIRECTORS............................................7
3.9 CHAIRMAN OF THE BOARD................................................7
3.10 REMOVAL AND RESIGNATION...........................................7
4 Officers................................................................8
4.1 POSITIONS............................................................8
4.2 CHIEF EXECUTIVE OFFICER..............................................8
4.3 PRESIDENT............................................................8
4.4 VICE PRESIDENT.......................................................9
4.5 SECRETARY............................................................9
4.6 TREASURER............................................................9
4.7 CHIEF FINANCIAL OFFICER..............................................9
4.8 CHIEF OPERATING OFFICER..............................................9
4.9 CHIEF SCIENCE OFFICER................................................9
4.10 TERM OF OFFICE...................................................10
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4.11 COMPENSATION.....................................................10
5 Capital Stock..........................................................10
5.1 CERTIFICATES OF STOCK; UNCERTIFICATED SHARES........................10
5.2 LOST CERTIFICATES...................................................10
5.3 RECORD DATE.........................................................11
5.3.1 Actions by Stockholders.......................................11
5.3.2 Payments......................................................11
5.4 STOCKHOLDERS OF RECORD..............................................12
6 Indemnification; Insurance.............................................12
6.1 AUTHORIZATION OF INDEMNIFICATION....................................12
6.2 RIGHT OF CLAIMANT TO BRING ACTION AGAINST THE CORPORATION...........13
6.3 NON-EXCLUSIVITY.....................................................13
6.4 SURVIVAL OF INDEMNIFICATION.........................................13
6.5 INSURANCE...........................................................14
7 General Provisions.....................................................14
7.1 INSPECTION OF BOOKS AND RECORDS.....................................14
7.2 DIVIDENDS...........................................................14
7.3 RESERVES............................................................14
7.4 EXECUTION OF INSTRUMENTS............................................15
7.5 FISCAL YEAR.........................................................15
7.6 SEAL................................................................15
7.7 VOTING OF SECURITIES BY THE CORPORATION.............................15
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AMENDED AND RESTATED BYLAWS
OF
ARRAY BIOPHARMA INC.
1 OFFICES
1.1 REGISTERED OFFICE
The initial registered office of the Corporation shall be
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located at The Corporate Trust Center, 1209 Orange Street, in the City of Wilmington, County of New Castle, Delaware, and the initial registered agent in charge thereof shall be The Corporation Trust Company. The registered office and/or registered agent of the Corporation may be changed from time to time by action of the board of directors.
1.2 OTHER OFFICES
The Corporation 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 as may be necessary or useful in connection with the business of the Corporation.
2 MEETINGS OF STOCKHOLDERS
2.1 PLACE OF MEETINGS
All meetings of the stockholders shall be held at such place
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as may be fixed from time to time by the Board of Directors or the Chief Executive Officer.
2.2 ANNUAL MEETINGS
The Corporation shall hold annual meetings of stockholders on such date and at such time as shall be designated from time to time by the Board of Directors or the Chief Executive Officer, at which stockholders shall elect a Board of Directors and transact such other business as may properly be brought before the meeting.
2.3 SPECIAL MEETINGS
Special meetings of the stockholders, for any purpose or purposes, unless otherwise prescribed by statute, may be called by the Board of Directors or the Chief Executive
Officer. The Corporation shall also hold a special meeting of the stockholders in the event it receives one or more written demands for the meeting stating the purpose or purposes for which it is to be held, signed and dated by the holders of stock representing at least ten percent of all the votes entitled to be cast on any issue proposed to be considered at the meeting. Special meetings shall be held at the principal office of the Corporation or at such other place as the Board of Directors or Chief Executive Officer may determine.
2.4 NOTICE OF MEETINGS
Notice of any meeting of stockholders, stating the place, date and hour of the meeting, and (if it is a special meeting) the purpose or purposes for which the meeting is called, shall be given to each stockholder entitled to vote at such meeting not less than ten nor more than sixty days before the date of the meeting (except to the extent that such notice is waived or is not required as provided in the General Corporation Law of the State of Delaware (the "DELAWARE GENERAL CORPORATION LAW") or these Bylaws). Such notice shall be given in accordance with, and shall be deemed effective as set forth in, Section 222 (or any successor section) of the Delaware General Corporation Law. If a meeting is adjourned to another time or place, notice need not be given of the new time or place if the new time or place is announced at the meeting at which the adjournment is taken. If after the adjournment a new record date is or must be fixed under Section 5.3 for the adjourned meeting, or if the adjournment is for more than 30 days, notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting.
2.5 WAIVERS OF NOTICE
Whenever the giving of any notice is required by statute, the Certificate of Incorporation, or these Bylaws, a waiver thereof, in writing and delivered to the Corporation, signed by the person or persons entitled to said notice, whether before or after the event as to which such notice is required, shall be deemed equivalent to notice. Attendance of a stockholder at a meeting shall constitute a waiver of notice (1) of such meeting, except when the stockholder at the beginning of the meeting objects to holding the meeting or transacting business at the meeting, and (2) (if it is a special meeting) of consideration of a particular matter at the meeting that is not within the purpose or purposes described in the meeting notice, unless the stockholder objects to considering the matter at the beginning of the meeting.
2.6 BUSINESS AT SPECIAL MEETINGS
Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the notice (except to the extent that such notice is waived or is not required as provided in the Delaware General Corporation Law or these Bylaws).
2.7 LIST OF STOCKHOLDERS
After the record date for a meeting of stockholders has been fixed, at least ten days before such meeting, the officer who has charge of the stock ledger of the Corporation shall
make a list of all stockholders entitled to vote at the meeting, arranged in alphabetical order and 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 days prior to the meeting, either at a place in the city where the meeting is to be held, which place is to be specified in the notice of the meeting, or at the place where the meeting is to be held. Such list shall also, for the duration of the meeting, be produced and kept open to the examination of any stockholder who is present at the time and place of the meeting.
2.8 QUORUM AT MEETINGS
Stockholders may take action on a matter at a meeting only if a quorum exists with respect to that matter. Except as otherwise provided by statute or by the Certificate of Incorporation, the holders of a majority of the shares entitled to vote at the meeting, and who are present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business. 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. Once a share is represented for any purpose at a meeting (other than solely to object (1) to holding the meeting or transacting business at the meeting, or (2) (if it is a special meeting) to consideration of a particular matter at the meeting that is not within the purpose or purposes described in the meeting notice), it is deemed present for quorum purposes for the remainder of the meeting and for any adjournment of that meeting unless a new record date is or must be set for the adjourned meeting. The holders of a majority of the voting shares represented at a meeting, whether or not a quorum is present, may adjourn such meeting from time to time.
2.9 VOTING AND PROXIES
Unless otherwise provided in the Delaware General Corporation Law or in the Corporation's Certificate of Incorporation, and subject to the other provisions of these Bylaws, each stockholder shall be entitled to one vote on each matter, in person or by proxy, for each share of the Corporation's capital stock that has voting power and that is held by such stockholder. No proxy shall be voted or acted upon after three years from its date, unless the proxy provides for a longer period. A duly executed appointment of proxy shall be irrevocable if the appointment form states that it is irrevocable and if, and only as long as, it is coupled with an interest sufficient in law to support an irrevocable power.
2.10 REQUIRED VOTE
When a quorum is present at any meeting of stockholders, all matters shall be determined, adopted and approved by the affirmative vote (which need not be by ballot) of the holders of a majority of the shares present in person or represented by proxy at the meeting and entitled to vote with respect to the matter, unless the proposed action is one upon which, by express provision of statutes or of the Certificate of Incorporation, a different vote is specified and required, in which case such express provision shall govern and control with respect to that
vote on that matter. Where a separate vote by a class or classes is required, the affirmative vote of the holders of a majority of the shares of such class or classes present in person or represented by proxy at the meeting shall be the act of such class. Notwithstanding the foregoing, 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.
2.11 ACTION WITHOUT A MEETING
Any action required or permitted to be taken at a stockholders' meeting may be taken without a meeting, without prior notice, and without a vote, if the action is taken by persons who would be entitled to vote at a meeting and who hold shares having voting power equal to not less than the minimum number of votes that would be necessary to authorize or take the action at a meeting at which all shares entitled to vote were present and voted. The action must be evidenced by one or more written consents describing the action taken, signed by the stockholders entitled to take action without a meeting, and delivered to the Corporation in the manner prescribed by the Delaware General Corporation Law for inclusion in the minute book. No consent shall be effective to take the corporate action specified unless the number of consents required to take such action are delivered to the Corporation within sixty days of the delivery of the earliest-dated consent. Written notice of the action taken shall be given in accordance with the Delaware General Corporation Law to all stockholders who do not participate in taking the action who would have been entitled to notice if such action had been taken at a meeting having a record date on the date that written consents signed by a sufficient number of holders to take the action were delivered to the Corporation.
3 DIRECTORS
3.1 POWERS
The business and affairs of the Corporation shall be managed
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by or under the direction of the Board of Directors, which may exercise all such powers of the Corporation and do all such lawful acts and things, subject to any limitation set forth in the Certificate of Incorporation or as otherwise may be provided in the Delaware General Corporation Law.
3.2 NUMBER AND ELECTION
The number of directors shall be fixed from time to time by resolution of the Board of Directors or the stockholders.
3.3 NOMINATION OF DIRECTORS
The Board of Directors shall nominate candidates to stand for election as directors; and other candidates also may be nominated by any Corporation stockholder, provided such other nomination(s) are submitted in writing to the Secretary of the Corporation no later than 60 days prior to the meeting of stockholders at which such directors are to be elected,
together with the identity of the nominator and the number of shares of the Corporation's stock owned, directly or indirectly, by the nominator. The directors shall be elected at the annual meeting of the stockholders, except as provided in SECTION 3.4 hereof, and each director elected shall hold office until such director's successor is elected and qualified or until the director's earlier death, resignation, or removal. Directors need not be stockholders.
3.4 VACANCIES
Vacancies and newly created directorships resulting from any increase in the authorized number of directors elected by all of the stockholders having the right to vote as a single class may be filled by the affirmative vote of a majority of the directors then in office, although fewer than a quorum, or by a sole remaining director. Whenever the holders of any class or classes of stock or series thereof are entitled to elect one or more directors by the provisions of the Certificate of Incorporation, vacancies and newly created directorships of such class or classes or series may be filled by the affirmative vote of a majority of the directors elected by such class or classes or series thereof then in office, or by a sole remaining director so elected. Each director so chosen shall hold office until the next election of directors of the class to which such director was appointed, and until such director's successor is elected and qualified, or until the director's earlier death, resignation, or removal. In the event that one or more directors resign from the Board, 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 until the next election of directors, and until such director's successor is elected and qualified, or until the director's earlier death, resignation, or removal.
3.5 MEETINGS
3.5.1 REGULAR MEETINGS
Regular meetings of the Board of Directors may be held without notice at such time and at such place as shall from time to time be determined by the Board of Directors.
3.5.2 SPECIAL MEETINGS
Special meetings of the Board may be called by the Chief Executive Officer on one day's notice to each director, either personally or by telephone, express delivery service (so that the scheduled delivery date of the notice is at least one day in advance of the meeting), telegram, or facsimile transmission, and on five days' notice by mail (effective upon deposit of such notice in the mail). The notice need not describe the purpose of a special meeting.
3.5.3 TELEPHONE MEETINGS
Upon the approval of the majority of the Board of Directors, members of the Board of Directors may be authorized to participate in a meeting of the board by any communication designated by the Board of Directors by means of which all participating
directors can simultaneously hear each other during the meeting. A director participating in a meeting by such approved means is deemed to be present in person at the meeting.
3.5.4 ACTION WITHOUT MEETING
Any action required or permitted to be taken at any meeting of the Board of Directors may be taken without a meeting if the action is taken by all members of the Board. The action must be evidenced by one or more written consents describing the action taken, signed by each director, and delivered to the Corporation for inclusion in the minute book.
3.5.5 WAIVER OF NOTICE OF MEETING
A director may waive any notice required by statute, the Certificate of Incorporation, or these Bylaws before or after the date and time stated in the notice. Except as set forth below, the waiver must be in writing, signed by the director entitled to the notice, and delivered to the Corporation for inclusion in the minute book. Notwithstanding the foregoing, a director's attendance at or participation in a meeting waives any required notice to the director of the meeting unless the director at the beginning of the meeting objects to holding the meeting or transacting business at the meeting and does not thereafter vote for or assent to action taken at the meeting.
3.6 QUORUM AND VOTE AT MEETINGS
At all meetings of the board, a quorum of the Board of Directors consists of a majority of the total number of directors prescribed pursuant to SECTION 3.2 of these Bylaws. The vote of a majority of the directors present at any meeting at which there is a quorum shall be the act of the Board of Directors, except as may be otherwise specifically provided by statute or by the Certificate of Incorporation or by these Bylaws.
3.7 COMMITTEES OF DIRECTORS
The Board of Directors shall initially designate three committees: an Executive Committee, an Audit Committee, and a Compensation Committee. Three directors nominated by the Board will sit on each such committee; provided, however, that the Board will appoint, or shall cause the chief executive officer of the Corporation to be appointed to the Executive Committee. An affirmative vote by two of the three directors on one of such committees shall be the action of such committee.
The Board of Directors may also designate one or more additional committees, each committee to consist of one or more directors. The Board 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. If a member of a committee shall be absent from any meeting, or disqualified from voting thereat, the remaining member or members present and not disqualified from voting, whether or not such member or members constitute a quorum, may, by unanimous vote, appoint another member of the Board of Directors to act at the meeting in the place of such absent or disqualified member. Any such committee, to the extent provided in the
resolution of the Board of Directors, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to approving or adopting, or recommending to the stockholders, any action or matter expressly required by the Delaware General Corporation Law to be submitted to stockholders for approval or adopting, amending, or repealing any bylaw of the Corporation; and unless the resolution designating the committee, these Bylaws or the Certificate of Incorporation expressly so provide, no such committee shall have the power or authority to declare a dividend, to authorize the issuance of stock, or to adopt a certificate of ownership and merger pursuant to Section 253 of the Delaware General Corporation Law. Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the Board of Directors. Each committee shall keep regular minutes of its meetings and report the same to the Board of Directors, when required. Unless otherwise specified in the Board resolution appointing the Committee, all provisions of the Delaware General Corporation Law and these Bylaws relating to meetings, action without meetings, notice (and waiver thereof), and quorum and voting requirements of the Board of Directors apply, as well, to such committees and their members.
3.8 COMPENSATION OF DIRECTORS
The Board of Directors or a committee of the Board of Directors shall have the authority to fix the compensation of directors. No such payment shall preclude any director from serving the Corporation in any other capacity and receiving compensation therefor.
3.9 CHAIRMAN OF THE BOARD
The Chairman of the Board, who shall be elected from among the directors, shall preside at all meetings of the stockholders and directors of the corporation and shall have and may exercise all such powers and perform such other duties as may be assigned to him from time to time by the Board of Directors.
3.10 REMOVAL AND RESIGNATION
Any director may resign at any time by giving written notice of resignation to the Chief Executive Officer (or to the President, if such director also serves as the Chief Executive Officer) or by giving oral notice of resignation to the Board of Directors. Such resignation shall be effective upon the earlier to occur of (1) receipt by the Chief Executive Officer (or the President, as applicable) of written notice of resignation, or (2) acceptance of oral notice of resignation by a majority of the Board of Directors. Directors may be removed in the manner prescribed by law.
4 OFFICERS
4.1 POSITIONS
The officers of the Corporation shall be a Chief Executive
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Officer, a President, a Secretary, a Treasurer and a Chief Financial Officer, and such other officers as the Board of Directors (or an officer authorized by the Board of Directors) from time to time may appoint, including but not limited to one or more Vice Presidents, a Chief Operating Officer and a Chief Science Officer. Each such officer shall exercise such powers and perform such duties as shall be set forth below and such other powers and duties as from time to time may be specified by the Board of Directors or by any officer(s) authorized by the Board of Directors to prescribe the duties of such other officers. Any number of offices may be held by the same person, except that in no event shall the Chief Executive Officer and the Secretary be the same person. As set forth below, each of the Chief Executive Officer, and/or the President may execute bonds, mortgages, and other contracts under the seal of the Corporation, if required, except where required or permitted by law to be otherwise executed and except where the execution thereof shall be expressly delegated by the Board of Directors to some other officer or agent of the Corporation. If and at all times during which the Corporation does not have an officer with the title of "Chief Executive Officer," all references in these bylaws to the "Chief Executive Officer" of the Corporation (other than those in Section 4.2) shall be deemed to refer to the officer or officers whose duties most correspond to the duties described in Section 4.2. If and all times during which the Corporation does not have an officer with the title of "Secretary," all references in these bylaws to the "Secretary" of the corporation (other than those in Section 4.4) shall be deemed to refer to the officer or officers appointed by the board of directors to be responsible for the duties specified in Section 4.4.
4.2 CHIEF EXECUTIVE OFFICER
The Chief Executive Officer shall have full responsibility and authority for management of the operations of the Corporation (subject to the authority of the Board of Directors), shall (when present) and in the absence of a Chairman of the Board, preside at all meetings of the Board of Directors and stockholders, and shall ensure that all orders and resolutions of the Board of Directors and stockholders are carried into effect. The Chief Executive Officer may execute bonds, mortgages, and other contracts, under the seal of the Corporation, if required, except where required or permitted by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the Board of Directors to some other officer or agent of the Corporation.
4.3 PRESIDENT
The President shall assist the Chief Executive Officer and shall perform such duties as may be assigned to him by the Chief Executive Officer or by the Board of Directors. If there is no Chief Executive Officer, the President shall perform all duties of the Chief Executive Officer set forth in Section 4.2.
4.4 VICE PRESIDENT
In the absence of the Chief Executive Officer or President or in the event of the Chief Executive Officer or President's inability or refusal to act, the Vice President (or in the event there be more than one Vice President, the Vice Presidents in the order designated, or in the absence of any designation, then in the order of their election) shall perform the duties of the President (or Chief Executive Officer, as applicable), and when so acting shall have all the powers of, and be subject to all the restrictions upon, the President (or Chief Executive Officer, as applicable).
4.5 SECRETARY
The Secretary shall have responsibility for preparation of minutes of meetings of the Board of Directors and of the stockholders and for authenticating records of the Corporation. The Secretary shall give, or cause to be given, notice of all meetings of the stockholders and special meetings of the Board of Directors. The Secretary or an Assistant Secretary may also attest all instruments signed by any other officer of the Corporation.
4.6 TREASURER
The Treasurer shall assist the Chief Financial Officer and shall perform such duties as may be assigned to him by the Chief Financial Officer, the Chief Executive Officer or by the Board of Directors. If there is no Chief Financial Officer, the Treasurer shall perform all duties of the Chief Financial Officer set forth in Section 4.7.
4.7 CHIEF FINANCIAL OFFICER
The Chief Financial Officer shall be the principal financial officer of the Corporation and shall have responsibility for the custody of the corporate funds and securities and shall see to it that full and accurate accounts of receipts and disbursements are kept in books belonging to the Corporation. The Chief Financial Officer shall render to the Chief Executive Officer and the Board of Directors, upon request, an account of all financial transactions and of the financial condition of the Corporation.
4.8 CHIEF OPERATING OFFICER
The Chief Operating Officer, if any, shall assist the Chief Executive Officer in the operations of the Corporation and shall perform such duties as may be assigned to him by the Chief Executive Officer or by the Board of Directors.
4.9 CHIEF SCIENCE OFFICER
The Chief Science Officer, if any, shall be the principal science officer of the Corporation, shall assist the Chief Executive Officer in all science-related aspects of the
Corporation and shall perform such duties as may be assigned to him by the Chief Executive Officer or by the Board of Directors.
4.10 TERM OF OFFICE
The officers of the Corporation shall hold office until their successors are chosen and qualify or until their earlier resignation or removal. Any officer may resign at any time upon written notice to the Corporation. Any officer elected or appointed by the Board of Directors may be removed at any time, with or without cause, by the affirmative vote of a majority of the Board of Directors.
4.11 COMPENSATION
The compensation of officers of the Corporation shall be fixed by the Board of Directors or by any officer(s) authorized by the Board of Directors to prescribe the compensation of such other officers.
5 CAPITAL STOCK
5.1 CERTIFICATES OF STOCK; UNCERTIFICATED SHARES
The shares of the Corporation shall be represented by certificates, provided that the Board of Directors may provide by resolution that some or all of any or all classes or series of the Corporation's stock shall be uncertificated shares. Any such resolution shall not apply to shares represented by a certificate until such certificate is surrendered to the Corporation. Notwithstanding the adoption of such a resolution by the Board of Directors, every holder of stock represented by certificates, and upon request every holder of uncertificated shares, shall be entitled to have a certificate (representing the number of shares registered in certificate form) signed in the name of the Corporation by the either the Chief Executive Officer, Vice President or Chief Financial Officer, and the Secretary of the Corporation. Any or all the signatures on the certificate may be a facsimile. In case any officer, transfer agent, or registrar whose signature or facsimile signature appears on a certificate shall have ceased to be such officer, transfer agent, or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if such person were such officer, transfer agent, or registrar at the date of issue.
5.2 LOST CERTIFICATES
The Board of Directors, Chief Executive Officer or Secretary may direct a new certificate of stock to be issued in place of any certificate theretofore issued by the Corporation and alleged to have been lost, stolen, or destroyed, upon the making of an affidavit of that fact by the person claiming that the certificate of stock has been lost, stolen, or destroyed. When authorizing such issuance of a new certificate, the board or any such officer may, as a condition precedent to the issuance thereof, require the owner of such lost, stolen, or destroyed certificate or certificates, or such owner's legal representative, to advertise the same in such manner as the
board or such officer shall require and/or to give the Corporation a bond or indemnity, in such sum or on such terms and conditions as the board or such officer may direct, as indemnity against any claim that may be made against the Corporation on account of the certificate alleged to have been lost, stolen, or destroyed or on account of the issuance of such new certificate or uncertificated shares.
5.3 RECORD DATE
5.3.1 ACTIONS BY STOCKHOLDERS
In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which record date shall not be more than sixty days nor less than ten 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 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, unless the Board of Directors fixes a new record date for the adjourned meeting.
In order that the Corporation may determine the stockholders entitled to consent to corporate action in writing without a meeting, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which record date shall not be more than ten 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 the Delaware General Corporation 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 in the manner prescribed by Section 213(b) of the Delaware General Corporation Law. If no record date has been fixed by the Board of Directors and prior action by the Board of Directors is required by the Delaware General Corporation 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.
5.3.2 PAYMENTS
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 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 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.
5.4 STOCKHOLDERS OF RECORD
The Corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, to receive notifications, to vote as such owner, and to exercise all the rights and powers of an owner. The Corporation 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 may be provided by the Delaware General Corporation Law.
6 INDEMNIFICATION; INSURANCE
6.1 AUTHORIZATION OF INDEMNIFICATION
Each person who was or is a party or is threatened to be made
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a party to or is involved in any threatened, pending, or completed action, suit, or proceeding, whether civil, criminal, administrative, or investigative and whether by or in the right of the Corporation or otherwise (a "proceeding"), by reason of the fact that he or she, or a person of whom he or she is the legal representative, is or was a director or officer of the Corporation or is or was serving at the request of the Corporation as a director, officer, employee, partner (limited or general), or agent of another corporation or of a partnership, joint venture, limited liability company, trust, or other enterprise, including service with respect to an employee benefit plan, shall be (and shall be deemed to have a contractual right to be) indemnified and held harmless by the Corporation (and any successor to the Corporation by merger or otherwise) to the fullest extent authorized by, and subject to the conditions and (except as provided herein) procedures set forth in the Delaware General Corporation Law, as the same exists or may hereafter be amended (but any such amendment shall not be deemed to limit or prohibit the rights of indemnification hereunder for past acts or omissions of any such person insofar as such amendment limits or prohibits the indemnification rights that said law permitted the Corporation to provide prior to such amendment), against all expenses, liabilities, and losses (including attorneys' fees, judgments, fines, ERISA taxes or penalties, and amounts paid or to be paid in settlement) reasonably incurred or suffered by such person in connection therewith; provided, however, that the Corporation shall indemnify any such person seeking indemnification in connection with a proceeding (or part thereof) initiated by such person (except for a suit or action pursuant to SECTION 6.2 hereof) only if such proceeding (or part thereof) was authorized by the Board of Directors of the Corporation. Persons who are not directors or officers of the Corporation and are not so serving at the request of the Corporation may be similarly indemnified in respect of such service to the extent authorized at any time by the Board of Directors of the Corporation. The indemnification conferred in this SECTION 6 also shall include the right to be paid by the Corporation (and such successor) the expenses (including attorneys' fees) incurred in the defense of or other involvement in any such proceeding in advance of its final disposition; provided, however, that, if and to the extent the Delaware General Corporation Law requires, the payment
of such expenses (including attorneys' fees) incurred by a director or officer in advance of the final disposition of a proceeding shall be made only upon delivery to the Corporation of an undertaking by or on behalf of such director or officer to repay all amounts so paid in advance if it shall ultimately be determined that such director or officer is not entitled to be indemnified under this SECTION 6.1 or otherwise; and provided further, that, such expenses incurred by other employees and agents may be so paid in advance upon such terms and conditions, if any, as the Board of Directors deems appropriate.
6.2 RIGHT OF CLAIMANT TO BRING ACTION AGAINST THE CORPORATION
If a claim under SECTION 6.1 is not paid in full by the Corporation within sixty days after a written claim has been received by the Corporation, the claimant may at any time thereafter bring an action against the Corporation to recover the unpaid amount of the claim and, if successful in whole or in part, the claimant shall be entitled to be paid also the expense of prosecuting such action. It shall be a defense to any such action (other than an action brought to enforce a claim for expenses incurred in connection with any proceeding in advance of its final disposition where the required undertaking, if any is required, has been tendered to the Corporation) that the claimant has not met the standards of conduct which make it permissible under the Delaware General Corporation Law for the Corporation to indemnify the claimant for the amount claimed or is otherwise not entitled to indemnification under SECTION 6.1, but the burden of proving such defense shall be on the Corporation. The failure of the Corporation (in the manner provided under the Delaware General Corporation Law) to have made a determination prior to or after the commencement of such action that indemnification of the claimant is proper in the circumstances because he or she has met the applicable standard of conduct set forth in the Delaware General Corporation Law shall not be a defense to the action or create a presumption that the claimant has not met the applicable standard of conduct. Unless otherwise specified in an agreement with the claimant, an actual determination by the Corporation (in the manner provided under the Delaware General Corporation Law) after the commencement of such action that the claimant has not met such applicable standard of conduct shall not be a defense to the action, but shall create a presumption that the claimant has not met the applicable standard of conduct.
6.3 NON-EXCLUSIVITY
The rights to indemnification and advance payment of expenses provided by SECTION 6 hereof shall not be deemed exclusive of any other rights to which those seeking indemnification and advance payment of expenses may be entitled under any by-law, agreement, vote of stockholders or disinterested directors, or otherwise, both as to action in his or her official capacity and as to action in another capacity while holding such office.
6.4 SURVIVAL OF INDEMNIFICATION
The indemnification and advance payment of expenses and rights thereto provided by, or granted pursuant to, SECTION 6.1 hereof shall, unless otherwise provided when authorized or ratified, continue as to a person who has ceased to be a director, officer, employee, partner, or
agent and shall inure to the benefit of the personal representatives, heirs, executors, and administrators of such person.
6.5 INSURANCE
The Corporation shall have power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee, or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee, partner (limited or general), or agent of another corporation or of a partnership, joint venture, limited liability company, trust, or other enterprise, against any liability asserted against such person or incurred by such person in any such capacity, or arising out of such person's status as such, and related expenses, whether or not the Corporation would have the power to indemnify such person against such liability under the provisions of the Delaware General Corporation Law.
7 GENERAL PROVISIONS
7.1 INSPECTION OF BOOKS AND RECORDS
Any stockholder, in person or by attorney or other agent,
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shall, upon written demand under oath stating the purpose thereof, have the right during the usual hours for business to inspect for any proper purpose the Corporation's stock ledger, a list of its stockholders, and its other books and records, and to make copies or extracts therefrom. A proper purpose shall mean a purpose reasonably related to such person's interest as a stockholder. In every instance where an attorney or other agent shall be the person who seeks the right to inspection, the demand under oath shall be accompanied by a power of attorney or such other writing which authorizes the attorney or other agent to so act on behalf of the stockholder. The demand under oath shall be directed to the Corporation at its registered office or at its principal place of business.
7.2 DIVIDENDS
The Board of Directors may declare dividends upon the capital stock of the Corporation, subject to the provisions of the Certificate of Incorporation and the laws of the State of Delaware.
7.3 RESERVES
The directors of the Corporation may set apart, out of the funds of the Corporation available for dividends, a reserve or reserves for any proper purpose and may abolish any such reserve.
7.4 EXECUTION OF INSTRUMENTS
All checks, drafts, or other orders for the payment of money, and promissory notes of the Corporation shall be signed by such officer or officers or such other person or persons as the Board of Directors may from time to time designate.
7.5 FISCAL YEAR
The fiscal year of the Corporation shall be fixed by resolution of the Board of Directors.
7.6 SEAL
The corporate seal, if any, shall be in such form as the Board of Directors shall approve. The seal may be used by causing it or a facsimile thereof to be impressed or affixed or otherwise reproduced.
7.7 VOTING OF SECURITIES BY THE CORPORATION
Unless otherwise provided by resolution of the Board of Directors, on behalf of the Corporation, the Chief Executive Officer or Chief Financial Officer shall, unless otherwise directed by the Board of Directors, attend in person or by substitute appointed by him or her, or shall execute on behalf of the Corporation written instruments appointing a proxy or proxies to represent the Corporation at, all meetings of the stockholders or members of any other corporation or entity in which the Corporation holds an interest, and may, on behalf of the Corporation, in person or by substitute or by proxy, execute written waivers of notice and consents with respect to any such meetings. At all such meetings or otherwise, the Chief Executive Officer or Chief Financial Officer, in person or by substitute or by proxy, may vote and execute written consents and other instruments with respect to such interest and may exercise any and all rights and powers incident to the ownership of such interest, subject, however, to the instructions, if any, of the Board of Directors.
* * * * *
[Signature page follows]
SIGNATURE
The foregoing Amended and Restated Bylaws of Array BioPharma Inc. were adopted by the Board of Directors on this 1st day of December, 1999.
/s/ MICHAEL CARRUTHERS ----------------------------- MICHAEL CARRUTHERS Secretary |
EXHIBIT 10.1
Array BioPharma Inc.
1998 STOCK OPTION PLAN
Effective July 1, 1998
Array BioPharma Inc.
1998 STOCK OPTION PLAN
TABLE OF CONTENTS
Page
----
ARTICLE I - INTRODUCTION........................................................................................-1-
1.1 Establishment...................................................................................-1-
1.2 Purposes........................................................................................-1-
1.3 Effective Date..................................................................................-1-
ARTICLE II - DEFINITIONS........................................................................................-1-
ARTICLE III - PLAN ADMINISTRATION...............................................................................-3-
ARTICLE IV - STOCK SUBJECT TO THE PLAN..........................................................................-3-
4.1 Number of Shares................................................................................-3-
4.2 Adjustments for Stock Split, Stock Dividend, Etc................................................-4-
4.3 Adjustments for Certain Distributions of Property...............................................-4-
4.4 Distributions of Capital Stock and Indebtedness.................................................-4-
4.5 No Rights as Shareholder........................................................................-4-
4.6 Fractional Shares...............................................................................-4-
4.7 Determination by the Committee, Etc.............................................................-5-
ARTICLE V - PARTICIPATION.......................................................................................-5-
ARTICLE VI - STOCK OPTIONS......................................................................................-5-
6.1 Grant of Options to Eligible Employees and Eligible Consultants.................................-5-
6.2 Option Certificates.............................................................................-6-
6.3 Certain Option Terms............................................................................-6-
(a) Number of Shares.......................................................................-6-
(b) Price..................................................................................-6-
(c) Duration and Exercise of Options.......................................................-6-
(d) Termination of Employment or Service, Death, Disability, Etc...........................-6-
(e) Exercise, Payments, Etc................................................................-7-
(f) Withholding............................................................................-8-
6.4 Restrictions on Incentive Stock Options.........................................................-9-
(a) Initial Exercise.......................................................................-9-
(b) Ten Percent Shareholders...............................................................-9-
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ARTICLE VII - CORPORATE REORGANIZATION; CHANGE OF CONTROL.......................................................-9-
7.1 Reorganization..................................................................................-9-
7.2 Required Notice.................................................................................-9-
7.3 Acceleration of Exercisability.................................................................-10-
7.4 Change of Control..............................................................................-10-
ARTICLE VIII - EMPLOYMENT; TRANSFERABILITY.....................................................................-10-
8.1 Employment.....................................................................................-10-
8.2 Other Employee Benefits........................................................................-10-
8.3 Transferability................................................................................-11-
ARTICLE IX - SECURITIES LAW RESTRICTIONS.......................................................................-11-
ARTICLE X - WITHHOLDING........................................................................................-11-
10.1 Withholding Requirement........................................................................-11-
10.2 Withholding With Stock.........................................................................-11-
ARTICLE XI - MISCELLANEOUS.....................................................................................-12-
11.1 Expiration.....................................................................................-12-
11.2 Amendments, Etc................................................................................-12-
11.3 Treatment of Proceeds..........................................................................-12-
11.4 Section Headings...............................................................................-12-
11.5 Severability...................................................................................-12-
11.6 Gender and Number..............................................................................-12-
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Array BioPharma Inc.
1998 STOCK OPTION PLAN
ARTICLE I
INTRODUCTION
1.1 Establishment. Array BioPharma Inc., a Delaware corporation (the "Company") hereby establishes the Array BioPharma Inc. 1998 Stock Option Plan (the "Plan") for certain employees and consultants of the Company.
1.2 Purposes. The purposes of the Plan are to provide those who are selected for participation in the Plan with added incentive to continue in the long-term service of the Company and to create in such persons a more direct interest in the future success of the operations of the Company by relating incentive compensation to increases in shareholder value, so that the income of those participating in the Plan is more closely aligned with the income of the Company's shareholders. The Plan is also designed to provide a financial incentive that will help the Company attract, retain and motivate the most qualified employees and consultants.
1.3 Effective Date. The effective date of the Plan shall be July 1, 1998 (the "Effective Date"), subject to approval by the affirmative votes of the holders of a majority of the shares of the Company present or represented and entitled to vote at a meeting duly held in accordance with law within one year following the Effective Date. If the shareholders of the Company do not approve the Plan as specified above, Options granted under the Plan shall be deemed to be rescinded without any further action by the Board or the Company, and the Plan shall automatically terminate.
ARTICLE II
DEFINITIONS
The following terms shall have the meanings set forth below:
(a) "Board" means the Board of Directors of the Company.
(b) "Code" means the Internal Revenue Code of 1986, as amended from time to time.
(c) "Committee" means the committee designated or appointed pursuant to Article III.
(d) "Disabled" or "Disability" shall have the meaning given to such terms in Section 22(e)(3) of the Code.
(e) "Eligible Consultants" means those consultants and other individuals who provide services to the Company and whose judgment, initiative and effort are important to the Company for the management and growth of its business. For purposes of the Plan, Directors of the Company shall be considered consultants, unless also employees. For purposes of the Plan, Eligible Consultants include only those individuals who do not receive wages subject to the withholding of federal income tax under Section 3401 of the Code.
(g) "Eligible Employees" means those employees (including, without limitation, officers and directors who are also employees) of the Company, whose judgment, initiative and efforts are important to the Company for the growth of its business. For purposes of the Plan, an employee is an individual whose wages are subject to the withholding of federal income tax under Section 3401 of the Code. A determination by the Committee to grant Options to an employee shall be controlling.
(h) "Fair Market Value" of a share of Stock shall be the last reported sale price of the Stock on the NASDAQ National Market on the day the determination is to be made, or if no sale took place on such day, the average of the closing bid and asked prices of the Stock on the NASDAQ National Market on such day, or if the market is closed on such day, the last day prior to the date of determination on which the market was open for the transaction of business, as reported by NASDAQ. If, however, the Stock should be listed or admitted for trading on a national securities exchange, the Fair Market Value of a share of the Stock shall be the last sales price, or if no sales took place, the average of the closing bid and asked prices on the day the determination is to be made, or if the market is closed on such day, the last day prior to the date of determination on which the market was open for the transaction of business, as reported in the principal consolidated transaction reporting system for the principal national securities exchange on which the Stock is listed or admitted for trading. If the Stock is not listed or traded on NASDAQ or on any national securities exchange, the Fair Market Value of the Stock for purposes of the grant of Options under the Plan shall be determined by the Committee in good faith.
(i) "Incentive Stock Option" means any Option designated as such and granted in accordance with the requirements of Section 422 of the Code.
(j) "Non-Qualified Option" means any Option other than an Incentive Stock Option.
(k) "Option" means a right granted under the Plan to purchase Stock at a stated price for a specified period of time.
(l) "Option Certificate" shall have the meaning given to such term in Section 6.2.
(m) "Option Holder" means an Eligible Employee or Eligible Consultant designated by the Committee from time to time during the term of the Plan to receive one or more Options under the Plan.
(n) "Option Price" means the price at which shares of Stock subject to an Option may be purchased, determined in accordance with subsection 6.3(b).
(o) "Share" means a share of Stock.
(p) "Stock" means the common stock of the Company.
ARTICLE III
PLAN ADMINISTRATION
Initially, the Committee shall consist of the entire Board. The Board may at any time designate some of its members to constitute the Committee. The Committee shall be responsible for administration of the Plan and is empowered hereunder to take actions in administration of the Plan. If the Committee does not consist of the entire Board, members of the Committee shall be appointed from time to time by the Board, shall serve at the pleasure of the Board and may resign at any time upon written notice to the Board. The Committee shall determine the form or forms of the Option Certificates and other agreements with Option Holders which shall evidence the particular provisions, terms, conditions, rights and duties of the Company and the Option Holders with respect to Options granted pursuant to the Plan, which provisions need not be identical except as may be provided herein. The Committee may from time to time adopt such rules and regulations for carrying out the purposes of the Plan as it may deem proper and in the best interests of the Company. The Committee may correct any defect, supply any omission or reconcile any inconsistency in the Plan or in any agreement entered into hereunder in the manner and to the extent it shall deem expedient and it shall be the sole and final judge of such expediency. No member of the Committee shall be liable for any action or determination made in good faith. The determinations, interpretations and other actions of the Committee pursuant to the provisions of the Plan shall be binding and conclusive for all purposes and on all persons.
ARTICLE IV
STOCK SUBJECT TO THE PLAN
4.1 Number of Shares. The total number of Shares as to which Options may be granted pursuant to the Plan shall be 1,107,500 in the aggregate. Such number shall be adjusted in accordance with the provisions of Section 4.2. Shares issued upon the exercise of Options shall be applied to reduce the maximum number of Shares remaining available for use under the Plan. Shares underlying Options that expire or terminate unexercised are available for grant of Options under the Plan. Shares used to pay the Option Price, and shares transferred to or withheld by the Company in satisfaction of withholding tax obligations, are not available for the grant of Options under the Plan.
The Company shall at all times during the term of the Plan and while any Options are outstanding retain as authorized and unissued Stock, or as treasury Stock, at least the number of Shares from time to time required under the provisions of the Plan, or otherwise assure itself of its ability to perform its obligations hereunder.
4.2 Adjustments for Stock Split, Stock Dividend, Etc. If the Company shall at any time increase or decrease the number of its outstanding Shares by means of payment of a stock dividend or any other distribution upon such Shares payable in Stock, or through a stock split, subdivision, consolidation, combination, reclassification or recapitalization involving the Stock, or change in any way the rights and privileges of such Shares, then the numbers, rights and privileges of both (a) the Shares as to which Options may be granted under the Plan and (b) the Shares then subject to each outstanding Option shall be increased, decreased or changed in like manner as if the corresponding Shares had been issued and outstanding, fully paid and nonassessable at the time of such occurrence. Upon any occurrence described in this Section 4.2, the total Option Price under each then outstanding Option (i.e., the Option Price per share multiplied by the number of shares subject to the Option immediately before such occurrence) shall remain unchanged but shall be apportioned ratably over the increased or decreased number of Shares subject to the Option.
4.3 Adjustments for Certain Distributions of Property. If the Company shall at any time distribute with respect to its Stock assets or securities of other persons (excluding cash dividends or distributions payable out of capital surplus and dividends or other distributions referred to in Sections 4.2 or 4.4), then either (a) the Option Price of outstanding Options shall be adjusted to reflect the fair market value of the assets or securities distributed, (b) the Company shall provide for the delivery upon exercise of such Options of cash in an amount equal to the fair market value of the assets or securities distributed or (c) a combination of such actions shall be taken, all as determined by the Committee in its discretion, which determination need not be the same for all holders of options granted by the Company. Fair market value of the assets or securities distributed for this purpose shall be as determined by the Committee.
4.4 Distributions of Capital Stock and Indebtedness. If the Company shall at any time distribute with respect to its Stock shares of its capital stock (other than Stock) or evidences of indebtedness, then a proportionate part of such capital stock and evidences of indebtedness shall be set aside for each outstanding Option and, upon the exercise of such Option, delivered to the Option Holder.
4.5 No Rights as Shareholder. An Option Holder shall have none of the rights of a shareholder with respect to the Shares subject to an Option until such Shares are transferred to the Option Holder upon the exercise of such Option. Except as provided in this Article IV, no adjustment shall be made for dividends, rights or other property distributed to shareholders (whether ordinary or extraordinary) for which the record date is prior to the date such Shares are so transferred.
4.6 Fractional Shares. No adjustment or substitution provided for in this Article IV shall require the Company to issue a fractional share. The total substitution or adjustment with respect to each Option shall be limited by deleting any fractional share.
4.7 Determination by the Committee, Etc. Adjustments under this Article IV shall be made by the Committee, whose determinations with regard thereto shall be final and binding.
ARTICLE V
PARTICIPATION
In accordance with the provisions of the Plan, the Committee shall, in its sole discretion, select Option Holders from among Eligible Employees and Eligible Consultants to whom Options will be granted and shall specify the number of Shares subject to each Option and such other terms and conditions of each Option as the Committee may deem necessary or desirable and consistent with the terms of the Plan. Eligible Employees shall be selected from the employees of the Company who are performing services in the management, operation and growth of the Company, and contribute, or are expected to contribute, to the achievement of long-term corporate objectives. Eligible Consultants shall be selected from the consultants and other individuals who provide services to the Company with respect to the operation and growth of the Company and who contribute, or are expected to contribute, to the achievement of long-term corporate objectives. Generally, it is anticipated that the Company will grant options only to Eligible Consultants who are Directors of the Company who do not otherwise own stock in the Company. Eligible Employees and Eligible Consultants may be granted one or more Options from time-to-time. The grant of each such Option shall be separately approved by the Committee, and receipt of one such Option shall not result in automatic receipt of any other Option. Upon determination by the Committee that an Option is to be granted to an Eligible Employee or Eligible Consultant, written notice shall be given to such person, specifying the terms, conditions, rights and duties related thereto.
ARTICLE VI
STOCK OPTIONS
6.1 Grant of Options to Eligible Employees and Eligible Consultants. Coincident with or following designation for participation in the Plan, Eligible Employees and Eligible Consultants may be granted one or more Options. The Committee in its sole discretion shall designate whether an Option is to be considered an Incentive Stock Option or a Non-Qualified Option. Incentive Stock Options may be granted only to Eligible Employees. The Committee may grant both an Incentive Stock Option and a Non-Qualified Option to an Eligible Employee at the same time or at different times. Incentive Stock Options and Non-Qualified Options, whether granted at the same or different times, shall be deemed to have been awarded in separate grants and shall be clearly identified, and in no event shall the exercise of one Option affect the right to exercise any other Option or affect the number of Shares for which any other Option may be exercised. An Option shall be considered as having been granted on the date specified in the grant resolution of the Committee.
6.2 Option Certificates. Each Option granted under the Plan shall be evidenced by a written stock option certificate (an "Option Certificate") issued in the name of the Option Holder and in such form as may be approved by the Committee. The Option Certificate shall and shall be deemed to incorporate and conform to the terms and conditions set forth herein, and may also include such other terms and conditions, not inconsistent herewith, as the Committee may consider appropriate in each case.
6.3 Certain Option Terms. Options granted pursuant to the Plan shall have terms and conditions consistent with the following in addition to the terms and conditions set forth elsewhere herein:
(a) Number of Shares. Each Option shall relate to a specified number of Shares determined by the Committee.
(b) Price. Each Option shall have an Option Price that is determined by the Committee. Incentive Stock Options shall have an Option Price that is equal to or greater than the Fair Market Value of the Stock on the date the Option is granted.
(c) Duration and Exercise of Options. Each Option shall relate to a specified period of time, as determined by the Committee, within which the Option may be exercised by the Option Holder (the "Option Period"). The Option Period must end, in all cases, not more than ten years from the date the Option is granted. In the absence of specific provisions in the Option Certificate, each Option shall have an Option Period ending ten years from the date the Option is granted. Each Option shall become exercisable (vest) over such period of time, if any, as is determined by the Committee. In the absence of specific provisions in the Option Certificate, each Option shall vest as to one-quarter of the underlying Shares one year from the grant date, then, as to the remaining underlying Shares, 1/36th of those Shares monthly for the next three years.
(d) Termination of Employment or Service, Death, Disability, Etc. The Committee may specify the period after which an Option may be exercised following termination of the employment of an Eligible Employee or termination of relationship with an Eligible Consultant. The effect of this subsection 6.3(d) shall be limited to determining the consequences of a termination and nothing in this subsection 6.3(d) shall restrict or otherwise interfere with the Company's discretion with respect to the termination of any person's employment or other relationship. If the Committee does not so specify, or in the absence of specific provisions in the Option Certificate, the following shall apply:
(i) If the employment or consulting relationship of an Option Holder by or with the Company terminates by action of the Option Holder for any reason other than death or Disability within six months after the date the Option is granted or if the employment or consulting relationship of the Option Holder by or with the Company is terminated within the Option Period for cause, as determined by the Company, the Option shall be void for all purposes. As used in this subsection 6.3(d), "cause" shall include without limitation a gross violation, as determined by the Company, of the Company's established policies and procedures,
any event permitting termination for cause under any applicable employment agreement, any act of dishonesty, fraud or wilful misconduct toward the Company.
(ii) If the employment or consulting relationship of the Option Holder terminates because the Option Holder becomes Disabled within the Option Period, the Option may be exercised by the Option Holder (or, in the case of his death after becoming disabled, by those entitled to do so under his will or by the laws of descent and distribution) within 30 days following such termination (if otherwise within the Option Period), but not thereafter. In any such case, the Option may be exercised only as to the Shares as to which the Option had become exercisable on or before the date of termination because of Disability.
(iii) If the Option Holder dies within the Option
Period, while employed by the Company, while a consultant to
the Company or within the three-month period referred to in
(iv) below, the Option may be exercised by those entitled to
do so under his will or by the laws of descent and
distribution within 30 days following his death (if otherwise
within the Option Period), but not thereafter. In any such
case the Option may be exercised only as to the Shares as to
which the Option had become exercisable on or before the date
of the Option Holder's death.
(iv) If the employment or relationship of the Option Holder by or with the Company terminates within the Option Period for any reason other than for cause, Disability or death(and, in the case of a termination by action of the Option Holder, such termination occurs more than six months after the Option is granted), the Option may be exercised by the Option Holder within 30 days following the date of such termination (if otherwise within the Option Period), but not thereafter. In any such case, the Option may be exercised only as to the Shares as to which the Option had become exercisable on or before the date of termination.
(e) Exercise, Payments, Etc.
(i) Manner of Exercise. The method for exercising each Option granted hereunder shall be by delivery to the Company of written notice specifying the number of Shares with respect to which such Option is exercised. The purchase of such Shares shall take place at the principal offices of the Company within thirty days following delivery of such notice, at which time the Option Price of the Shares shall be paid in full by any of the methods set forth below or a combination thereof. If the purchase price is paid by means of a broker's loan transaction described in clause (C) of Section 6.3(f)(ii), in whole or in part, the closing of the purchase of the Stock under the Option shall take place on the date on which, and only if, the sale of Stock upon which the broker's loan was based has been closed and settled, unless the Option Holder makes an irrevocable written election, at the time of exercise of the Option, to have the exercise treated as fully effective for all purposes upon receipt of the purchase price by the Company regardless of whether or not the sale of the Stock by the broker is closed and settled. The Company may require, as a condition to the exercise of the
Option and delivery of the Shares, that the Option Holder execute a Shareholders' Agreement in the form then being used for the Company's Shareholders, which may or may not be substantially in the form of the Shareholders Agreement attached as Exhibit A to this Plan. A properly executed certificate or certificates representing the Shares shall be delivered to or at the direction of the Option Holder upon payment therefor. If Options on less than all shares evidenced by an Option Certificate are exercised, the Company shall deliver a new Option Certificate evidencing the Option on the remaining shares upon delivery of the Option Certificate for the Option being exercised.
(ii) Manner of Payment. The Option Price shall be paid by any of the following methods or any combination of the following methods at the option of the Option Holder, or by any other method approved by the Committee upon the request of the Option Holder: (A) cash; (B) certified, cashier's or other check acceptable to the Company, payable to the order of the Company; (C) delivery to the Company of irrevocable instructions to a broker to deliver promptly to the Company the amount of sale or loan proceeds required to pay the Option Price; (D) delivery to the Company of certificates representing the number of Shares then owned by the Option Holder, the Fair Market Value of which (determined as of the date the notice of exercise is delivered to the Company) equals the Option Price of the Stock to be purchased pursuant to the Option, properly endorsed for transfer to the Company. No Option may be exercised by delivery to the Company of certificates representing Stock that has been held by the Option Holder for less than six months or such other period as is specified by the Committee.
(f) Withholding.
(i) Non-Qualified Options. Upon exercise of an Option, the Option Holder shall make appropriate arrangements with the Company to provide for the amount of additional withholding required by Sections 3102 and 3402 of the Code and applicable state income tax laws, including payment of such taxes through delivery of shares of Stock or by withholding Stock to be issued under the Option, as provided in Section 10.
(ii) Incentive Options. If an Option Holder makes a
disposition (as defined in Section 424(c) of the Code) of any
Stock acquired pursuant to the exercise of an Incentive Stock
Option prior to the expiration of two years from the date on
which the Incentive Stock Option was granted or prior to the
expiration of one year from the date on which the Option was
exercised, the Option Holder shall send written notice to the
Company at its principal executive office (Attention:
Corporate Secretary) of the date of such disposition, the
number of shares disposed of, the amount of proceeds received
from such disposition and any other information relating to
such disposition as the Company may reasonably request. The
Option Holder shall, in the event of such a disposition, make
appropriate arrangements with the Company
to provide for the amount of additional withholding, if any, required by Sections 3102 and 3402 of the Code and applicable state income tax laws.
6.4 Restrictions on Incentive Stock Options.
(a) Initial Exercise. The aggregate Fair Market Value of the Shares with respect to which Incentive Stock Options are exercisable for the first time by an Option Holder in any calendar year, under the Plan or otherwise, shall not exceed $100,000. For this purpose, the Fair Market Value of the Shares shall be determined as of the date of grant of the Option.
(b) Ten Percent Shareholders. Incentive Stock Options granted to an Option Holder who is the holder of record of 10% or more of the outstanding Stock of the Company shall have an Option Price equal to 110% of the Fair Market Value of the Shares on the date of grant of the Option and the Option Period for any such Option shall not exceed five years.
ARTICLE VII
CORPORATE REORGANIZATION; CHANGE OF CONTROL
7.1 Reorganization. Upon the occurrence of any of the following events, if the notice required by Section 7.2 shall have first been given, the Plan and (to the extent not exercised before the event occurs) all Options then outstanding hereunder shall automatically terminate and be of no further force and effect whatsoever, without the necessity for any additional notice or other action by the Board or the Company: (a) the merger or consolidation of the Company with or into another corporation (other than a consolidation or merger in which the Company is the continuing corporation and which does not result in any reclassification or change of outstanding shares of Common Stock); or (b) the sale or conveyance of the property of the Company as an entirety or substantially as an entirety (other than a sale or conveyance in which the Company continues as holding company of an entity or entities that conduct the business or businesses formerly conducted by the Company); or (c) the dissolution or liquidation of the Company.
7.2 Required Notice. The Company shall give each Option Holder
at least 30 days' prior written notice of any event described in Section 7.1,
except as otherwise provided in this Section 7.2. No notice shall be required in
the case of the events described in clauses (a) or (b) of Section 7.1 if the
Company, or the successor or purchaser, as the case may be, shall make adequate
provision for the assumption of the outstanding Options or the substitution of
new options for the outstanding Options on terms comparable to the outstanding
Options. Any such assumption or substitution shall give the Option Holder the
right thereafter to purchase the kind and amount of securities or property or
cash receivable upon such merger, consolidation, sale or conveyance by a holder
of the number of Shares that would have been receivable upon exercise of the
Option immediately prior to such merger, consolidation, sale or conveyance
(assuming such holder of Stock failed to exercise any rights of election and
received per share the kind and amount received per share by a majority of the
non-electing shares). The provisions of this Article VII shall similarly apply
to successive mergers, consolidations, sales or conveyances. Notice under this
Section 7.2
shall be deemed to have been given when delivered personally to an Option Holder or when mailed to an Option Holder by registered or certified mail, postage prepaid, at such Option Holder's address last known to the Company.
7.3 Acceleration of Exercisability. Option Holders notified in accordance with Section 7.2 may exercise their Options at any time before the occurrence of the event requiring the giving of notice (but subject to occurrence of such event), regardless of whether all conditions of exercise relating to length of service have been satisfied.
7.4 Change of Control. The Committee shall have the authority
to provide that, as to any Option, if a Change in Control (as defined below)
occurs, such Option shall become exercisable in full, regardless of whether all
conditions of exercise relating to length of service have been satisfied. In the
absence of such a specific provision in the Option Certificate, such Option
shall become exercisable in full on a Change of Control. A "Change in Control"
shall mean each of (i) the acquisition from the Company and/or shareholders of
the Company, by one or more persons in one or more related transactions over a
period of up to 24 months, of stock that, upon completion of those transactions
and exercise of any associated option or conversion rights, represents or would
represent more than 50 percent of the outstanding common stock of the Company,
(ii) the closing of the sale of all or substantially all of the assets of the
Company, or (iii) any consolidation or merger involving the Company (other than
a consolidation or merger in which the Company is the surviving entity and no
change in the capital stock or ownership or control of the Company occurs).
Notwithstanding anything to the contrary in this Section 7.4, no Option will
become exercisable by virtue of the occurrence of a Change in Control if the
Option Holder of that Option or any group of which that Option Holder is a
member is the person whose acquisition constituted the Change in Control.
ARTICLE VIII
EMPLOYMENT; TRANSFERABILITY
8.1 Employment. Nothing contained in the Plan or in any Option granted under the Plan shall confer upon any Option Holder any right with respect to the continuation of his or her employment by or service with the Company, or interfere in any way with the right of the Company, subject to the terms of any separate employment agreement or other contract to the contrary, at any time to terminate the employment or service of such Option Holder or to increase or decrease the compensation of the Option Holder from the rate in existence at the time of the grant of an Option. The Committee shall determine whether an authorized leave of absence, or absence in military or government service, shall constitute a termination of employment.
8.2 Other Employee Benefits. The amount of any compensation deemed to be received by an Option Holder as a result of the exercise of an Option shall not constitute "earnings" with respect to which any other employee benefits of such person are determined, including without limitation benefits under any pension, profit sharing, life insurance or salary continuation plan.
8.3 Transferability. No right or interest of any Option Holder in an Option granted pursuant to the Plan shall be assignable or transferable during the lifetime of the Option Holder, either voluntarily or involuntarily, or be subjected to any lien, directly or indirectly, by operation of law, or otherwise, including execution, levy, garnishment, attachment, pledge or bankruptcy. In the event of an Option Holder's death, an Option Holder's rights and interests in Options shall be transferable by will or pursuant to the laws of descent and distribution. Each Option granted under the Plan shall be exercisable during the Holder's lifetime only by the Option Holder or, in the event of Disability or incapacity, by the Option Holder's guardian or legal representative.
ARTICLE IX
SECURITIES LAW RESTRICTIONS
Each Option shall be subject to the requirement that if at any time counsel to the Company shall determine that the listing, registration or qualification of the Shares subject to such Option upon any securities exchange or under any state or federal law, or the consent or approval of any governmental or regulatory body, is necessary as a condition of, or in connection with, the issuance or purchase of Shares thereunder, such Option may not be exercised in whole or in part unless such listing, registration, qualification, consent or approval shall have been effected or obtained on conditions acceptable to the Committee. Nothing herein shall be deemed to require the Company to apply for or obtain such listing, registration or qualification.
ARTICLE X
WITHHOLDING
10.1 Withholding Requirement. The Company's obligations to deliver Shares upon the exercise of an Option shall be subject to the Option Holder's satisfaction of all applicable federal, state and local income and other tax withholding requirements.
10.2 Withholding With Stock. The Committee may from time to time, in its sole discretion, grant Option Holders the right to pay all such amounts of tax withholding, or any part thereof, by electing to transfer to the Company, or to have the Company withhold from Shares otherwise issuable to the Option Holder, Shares having a value equal to the amount required to be withheld or such lesser amount as may be specified by the Option Holder. The value of Shares to be withheld shall be based on the Fair Market Value of the Stock on the date that the amount of tax to be withheld is to be determined (the "Tax Date"). Any such election by Option Holders to have Shares withheld for this purpose will be subject to the following restrictions and any additional restrictions imposed by the Committee: (a) all elections must be made prior to the Tax Date; and (b) all elections shall be irrevocable.
ARTICLE XI
MISCELLANEOUS
11.1 Expiration. The Plan shall terminate whenever the Board adopts a resolution to that effect. If not sooner terminated by the Board, the Plan shall terminate and expire on June 1, 2008. After termination, no additional Options shall be granted under the Plan, but the Company shall continue to recognize Options previously granted.
11.2 Amendments, Etc. The Board may from time to time amend, modify, suspend or terminate the Plan. Nevertheless, no such amendment, modification, suspension or termination shall, without the consent of the Option Holder, impair any Option previously granted under the Plan or deprive any Option Holder of any Shares that he may have acquired through or as a result of the Plan.
11.3 Treatment of Proceeds. Proceeds from the sale of Stock pursuant to Options granted under the Plan shall constitute general funds of the Company.
11.4 Section Headings. The section headings are included herein only for convenience, and they shall have no effect on the interpretation of the Plan.
11.5 Severability. If any article, section, subsection or specific provision is found to be illegal or invalid for any reason, such illegality or invalidity shall not affect the remaining provisions of the Plan, and the Plan shall be construed and enforced as if such illegal and invalid provision had never been set forth in the Plan.
11.6 Gender and Number. Except when otherwise indicated by the context, the masculine gender shall include the feminine gender, and the definition of any term herein in the singular shall also include the plural.
Adopted August 8, 1998 to be effective as of July 1, 1998.
Array BioPharma Inc., a Delaware corporation
By: /s/ KEVIN KOCH
----------------------
Kevin Koch, President
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EXHIBIT 10.4
PREFERRED AND COMMON STOCK PURCHASE AGREEMENT
ARRAY BIOPHARMA INC.
TABLE OF CONTENTS PAGE
RECITALS ..................................................................................1
SECTION 1. PURCHASE AND SALE............................................................1
1.1 Authorization of Shares......................................................1
1.2 Sale and Purchase............................................................2
SECTION 2. CLOSING......................................................................2
2.1 First Closing................................................................2
2.2 Final Closing................................................................2
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY................................3
3.1 Organization, Good Standing and Qualification................................3
3.2 Capitalization...............................................................3
3.3 Authorization................................................................4
3.4 Financial Statements.........................................................4
3.5 Liabilities..................................................................4
3.8 Obligations to Related Parties...............................................6
3.9 Assets.......................................................................7
3.10 Intellectual Property........................................................7
3.11 Compliance with Other Instruments............................................8
3.12 Litigation...................................................................8
3.13 Taxes........................................................................8
3.14 Employees and Consultants....................................................8
3.15 Employee Benefits Matters....................................................9
3.16 Registration Rights..........................................................9
3.17 Governmental Approvals/Third Party Consents..................................9
3.18 Compliance with Laws.........................................................9
3.19 Environmental Matters.......................................................10
3.20 Offering Valid..............................................................10
3.21 Accuracy of Information Furnished...........................................10
3.22 Insurance...................................................................10
3.23 Investment Company Act......................................................10
SECTION 4. REPRESENTATIONS AND WARRANTIES OF PURCHASERS................................10
4.1. Requisite Power and Authority...............................................10
4.2. Investment Representations..................................................11
(a) Purchaser Bears Economic Risk......................................11
(b) Acquisition for Own Account........................................11
(c) Purchaser Can Protect Its Interest.................................11
(d) Accredited Investor................................................11
(e) Company Information................................................11
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TABLE OF CONTENTS PAGE
(f) Rule 144..........................................................11
(g) Residence.........................................................12
4.3 Restrictive Legends........................................................12
SECTION 5. REPRESENTATIONS AND WARRANTIES OF FOUNDERS.................................12
5.1. Requisite Power and Authority..............................................13
5.2. Investment Representations.................................................13
(a) Founder Bears Economic Risk.......................................13
(b) Acquisition for Own Account.......................................13
(c) Rule 144..........................................................13
(d) Residence.........................................................13
5.3 Restrictive Legends........................................................13
SECTION 6. CONDITIONS TO CLOSING......................................................14
6.1 Conditions to Purchasers' Obligations at the First Closing.................14
(a) Representations and Warranties True; Performance of Obligations...14
(b) Legal Investment..................................................14
(c) Consents, Permits, and Waivers....................................14
(d) Filing of Amended Certificate.....................................15
(e) Corporate Documents...............................................15
(f) Reservation of Conversion Shares..................................15
(g) ..................................................................15
(h) Investor Rights Agreement.........................................15
(i) Shareholders Agreement............................................15
(j) Legal Opinion. ...................................................15
(k) Proceedings and Documents.........................................16
(l) Other Employees...................................................16
6.2 Conditions to Obligations of the Company at First Closing..................16
(a) Representations and Warranties True...............................16
(b) Performance of Obligations........................................16
(c) Filing of Amended Certificate.....................................16
(d) Investor Rights Agreement. .......................................16
(e) Shareholders Agreement............................................16
(f) Consents, Permits, and Waivers....................................16
(g) Minimum Investment................................................17
6.3 Conditions to Purchasers' Obligations at the Final Closing.................17
(a) Board Approval....................................................17
(b) Legal Investment..................................................17
(c) Consents, Permits, and Waivers....................................17
(d) Corporate Documents...............................................17
(e) Certificates......................................................17
(f) Legal Opinion.....................................................17
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(g) Proceedings and Documents.........................................18
6.4 Conditions to Obligations of the Company at Final Closing..................18
(a) Representations and Warranties True...............................18
(b) Performance of Obligations........................................18
(c) Investor Rights Agreement.........................................18
(d) Shareholders Agreement............................................18
(e) Consents, Permits, and Waivers....................................18
(f) Minimum Investment................................................18
SECTION 7. COVENANTS OF THE COMPANY FOR THE PERIOD FOLLOWING CLOSING..................18
7.1 Use of Proceeds............................................................19
7.2 Maintenance of Corporate Status............................................19
7.3 Compliance with Governing Documents........................................19
7.4 Compliance with Laws, Licenses and Permits; No Infringement................19
7.5 Discharge of Obligations...................................................19
7.6 Maintenance of Properties..................................................19
7.7 Maintenance of Proprietary Information.....................................19
7.8 Significant Transactions...................................................20
7.9 Compensation of Directors..................................................20
7.10 Books and Records..........................................................20
SECTION 8. MISCELLANEOUS..............................................................20
8.1 Governing Law..............................................................20
8.2 Survival...................................................................20
8.3 Successors and Assigns.....................................................21
8.4 Entire Agreement...........................................................21
8.5 Severability...............................................................21
8.6 Amendment and Waiver.......................................................21
8.7 Delays or Omissions........................................................21
8.8 Notices....................................................................21
8.9 Expenses...................................................................22
8.10 Indemnification by the Company.............................................22
8.11 Indemnification by the Purchasers..........................................22
8.12 Titles and Subtitles.......................................................22
8.13 Counterparts...............................................................22
8.14 Broker's Fees..............................................................22
8.15 Arbitration................................................................23
8.16 Exculpation Among Purchasers...............................................23
8.17 Pronouns...................................................................23
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TABLE OF EXHIBITS
Exhibit A - Certificate of Amendment to the Certificate of Incorporation
Exhibit B - Schedule of Purchasers
Exhibit C - Promissory Note and Pledge Agreement
Exhibit D - Disclosure Schedule
Exhibit E - Investor Rights Agreement
Exhibit F - Shareholders Agreement
Exhibit G - Capitalization Table
Exhibit H - First Closing Opinion
Exhibit I - Final Closing Opinion
Exhibit J - Confidentiality Agreement
Exhibit K - Noncompete Agreement
PREFERRED AND COMMON STOCK
PURCHASE AGREEMENT
This Preferred And Common Stock Purchase Agreement (the "Agreement") is made and entered into as of the 18th day of May 1998, by and among ARRAY BIOPHARMA INC., a Delaware corporation (the "Company"), FALCON TECHNOLOGY PARTNERS, L.P., a Delaware limited partnership ("Falcon"), BOULDER VENTURES II, L.P. and BOULDER VENTURES II (ANNEX), L.P., both Delaware limited partnerships (collectively "BV") , THE CARUTHERS FAMILY, L.L.C. ("Caruthers") (Falcon, BV and Caruthers are hereafter each referred to as a "Purchaser" and together as "Purchasers"), those Additional Purchasers, as defined below, identified on the signature pages hereto, and David Snitman, Ph.D., Kevin Koch, Ph.D., Anthony D. Piscopio, Ph.D. and K. C. Nicolaou, Ph.D. (hereafter each referred to as a "Founder" and together as "Founders.")
RECITALS
A. The Company has authorized the issuance and sale of a total of 4,500,000 shares (the "Preferred Shares") of Series A Preferred Stock of the Company, par value $0.001 per share, and the issuance and sale of a total of 2,912,367 shares (the "Common Shares") of Common Stock of the Company, par value $0.001 per share, (collectively, the Preferred Shares and the Common Shares are referred to as the "Shares").
B. The Company desires to sell the Shares to Purchasers and Founders, and Purchasers and Founders desire to purchase the Shares, pursuant to the terms and conditions contained herein.
AGREEMENT
NOW THEREFORE, in consideration of the mutual covenants, agreements, conditions, representations, and warranties contained in this Agreement, the Company, Purchasers and Founders hereby each agree as follows:
SECTION 1. PURCHASE AND SALE.
1.1 AUTHORIZATION OF SHARES. On or prior to the First Closing (as defined in Section 2.1 below), the Company shall have authorized (i) the sale and issuance to Purchasers of the Preferred Shares; (ii) the sale and issuance to the Purchasers and the Founders of the Common Shares and (iii) such shares of Common Stock issuable upon conversion of the Preferred Shares (the "Conversion Shares"). The Preferred Shares, Common Shares and the Conversion Shares shall have the rights, preferences, privileges and restrictions set forth in the Certificate of Amendment to the Certificate of Incorporation of the Company, in the form attached hereto as Exhibit A (the "Amended Certificate").
1.2 SALE AND PURCHASE. Subject to the terms and conditions hereof, at the Closings (as described in Section 2 hereof) the Company hereby agrees to issue and sell to each Purchaser and Founder, severally and not jointly, and each Purchaser and Founder agrees to purchase from the Company, severally and not jointly, the number of Preferred Shares and Common Shares set forth opposite such Purchaser's and Founder's name on Exhibit B hereto, at the purchase price of $1.00 per share for the Preferred Shares, and $0.235 per share for the Common Shares.
SECTION 2. CLOSING.
2.1 FIRST CLOSING. The initial closing of the sale and purchase of the Shares under this Agreement (the "First Closing") shall take place at 11 a.m. on the date hereof, at the offices of Holme Roberts & Owen, LLP, 1401 Pearl Street, Suite 400, Boulder Colorado 80302, or at such other time or place as the Company, Founders and Purchasers may mutually agree (such date is hereinafter referred to as the "First Closing Date"). At the First Closing, subject to the terms and conditions hereof, the Company will deliver to the Purchasers and Founders certificates representing the number of Shares to be purchased at the First Closing by each Purchaser and Founder as set forth opposite such Purchaser's and Founder's name on Exhibit B under the heading First Closing, against payment of the purchase price therefor by check or wire transfer made payable to the order of the Company; provided, that the Founders may finance up to $350,000 of the purchase price of the Shares they purchase at the First Closing pursuant to a Promissory Note and Pledge Agreement in substantially the form attached hereto as Exhibit C. The Purchasers shall purchase at least 2,250,000 Preferred Shares and 318,750 Common Shares at the First Closing, and the Founders shall purchase at least 2,593,617 Common Shares at the First Closing.
2.2 FINAL CLOSING. The final closing of the sale and purchase of the
Shares under this Agreement (the "Final Closing") shall take place at 11:00
a.m. on September 15, 1998 at the same location as the First Closing, or at
such other time or place as the Company, Founders and Purchasers may mutually
agree (such date is hereinafter referred to as the "Final Closing Date"). At the
Final Closing, subject to the terms and conditions hereof, the Company will
deliver to the Purchasers, and to such additional persons (the "Additional
Purchasers") as may be acceptable to the Board of Directors of the Company,
certificates representing the number of Shares to be purchased at the Final
Closing by each Purchaser, and each Additional Purchaser as set forth opposite
such persons name on Exhibit B under the heading Final Closing, against payment
of the purchase price therefor by check or wire transfer made payable to the
order of the Company. At the Final Closing, each Additional Purchaser shall
execute (i) a signature page hereto whereupon such Additional Purchaser shall
become a "Purchaser" hereunder; (ii) a signature page to the Investor Rights
Agreement (as defined herein) and (iii) a signature page to the Shareholders
Agreement (as defined herein); and the Company shall cause Exhibit B to be
amended to reflect the purchase made by each Additional Purchaser at the Final
Closing. The Purchasers, by themselves or with the Additional Purchasers, may
purchase at least 2,250,000 Preferred Shares at the Final Closing.
SECTION 3 REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
Except as set forth on the Disclosure Schedule attached hereto as Exhibit D, the Company hereby represents and warrants to each Purchaser and Founder that is purchasing the Shares as follows:
3.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. The Company has all requisite corporate power and authority to own and operate its properties and assets, to execute and deliver this Agreement, the Investor Rights Agreement in the form attached hereto as Exhibit E (the "Investor Rights Agreement") and the Shareholders Agreement attached hereto as Exhibit F (the "Shareholders Agreement") (collectively with this Agreement and the Amended Certificate, the "Financing Documents"), to issue and sell the Shares and to carry out the provisions of the Financing Documents, and to carry on its business as presently conducted and as presently proposed to be conducted. The Company is duly qualified and is authorized to do business and is in good standing in each jurisdiction in which the nature of its activities and of its properties (both owned and leased) makes such qualification necessary, except for those jurisdictions in which failure to do so would not have a material adverse effect on the Company or its business. The Company does not own, directly or indirectly, equity securities of any other corporation, limited partnership, limited liability company or other similar entity. The Company is not a participant in any joint venture, partnership or similar arrangement.
3.2 CAPITALIZATION. The authorized capital stock of the Company,
immediately prior to the First Closing, will consist of (a) 9,100,000 shares of
Common Stock, 1,000 shares of which are issued and outstanding, 1,107,500 shares
of which are reserved for future issuance to key employees and consultants
pursuant to the Company's proposed option plan, and 4,500,000 shares of which
are reserved for issuance upon conversion of the Series A Preferred Stock, and
(b) 4,500,000 shares of Preferred Stock, all of which are designated Series A
Preferred Stock. All issued and outstanding shares of the Company's Common Stock
(i) have been duly authorized and validly issued, (ii) are fully paid and
nonassessable, and (iii) were issued in compliance with all applicable state and
federal laws concerning the issuance of securities. The rights, preferences,
privileges and restrictions of the Shares are as stated in the Amended
Certificate. The Conversion Shares have been duly and validly reserved for
issuance. Except as may be granted pursuant to the Financing Documents, there
are no outstanding options, warrants, rights (including conversion or preemptive
rights and rights of first refusal), proxy or shareholders agreements, or
agreements of any kind for the purchase or acquisition from the Company of any
of its securities. When issued in compliance with the provisions of this
Agreement and the Amended Certificate, the Shares and the Conversion Shares will
be validly issued, fully paid and nonassessable, and will be free of any liens
or encumbrances; provided, however, that the Shares and the Conversion Shares
may be subject to restrictions on transfer under state and/or federal securities
laws. A schedule describing the anticipated capitalization of the Company as of
the First and Final Closings is attached as Exhibit G hereto.
3.3 AUTHORIZATION. All corporate action on the part of the Company, its
officers, directors and stockholders necessary for the authorization of this
Agreement and the Financing Documents, the performance of all obligations of the
Company hereunder and thereunder at the Closings and the authorization, sale,
issuance and delivery of the Shares pursuant hereto and the Conversion Shares
pursuant to the Amended Certificate has been taken or will be taken prior to the
First Closing. The Agreement and the Financing Documents, when executed and
delivered, will be valid and binding obligations of the Company enforceable
against the Company in accordance with their terms, except (i) as limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other laws of
general application affecting enforcement of creditors' rights; (ii) general
principles of equity that restrict the availability of equitable remedies; and
(iii) to the extent that the enforceability of the indemnification provisions in
the Investor Rights Agreement may be limited by applicable laws. The sale of the
Shares and the subsequent conversion of the Shares into Conversion Shares are
not and will not be subject to any preemptive rights or rights of first refusal
that have not been properly waived or complied with.
3.4 FINANCIAL STATEMENTS. The Company's unaudited consolidated balance sheet (the "Latest Balance Sheet") as of 15 days prior to the First and Final Closing (each, a "Balance Sheet Date"), and unaudited consolidated statements of operations of the Company for the period from May 1, 1998 through the Balance Sheet Date, delivered to the Purchasers in connection with the investment contemplated hereby (the "Financial Statements"), fairly present in all material respects the financial position and the results of operations of the Company for the period covered thereby.
3.5 LIABILITIES. The Company has no material liabilities and, to the best of its knowledge, the Company knows of no material contingent liabilities not disclosed in the Latest Balance Sheet, except current liabilities incurred in the ordinary course of business subsequent to the Balance Sheet Date which have not been, either in any individual case or in the aggregate, materially adverse.
3.6 CHANGES. Since the Balance Sheet Date, and excluding the transactions contemplated by the Financing Documents, there has not been:
(a) Any change in the assets, liabilities, financial condition or operations of the Company or any Subsidiary from that reflected in the Financial Statements, other than changes in the ordinary course of business, none of which individually or in the aggregate has had or is expected to have a material adverse effect on such assets, liabilities, financial condition or operations of the Company.
(b) Any resignation or termination of any key officers of the Company; and the Company, to the best of its knowledge, does not know of the impending resignation or termination of employment of any such officer;
(c) Any material change, except in the ordinary course of business, in the contingent obligations of the Company by way of guaranty, endorsement, indemnity, warranty or otherwise;
(d) Any damage, destruction or loss, whether or not covered by insurance, materially and adversely affecting the properties, business or prospects or financial condition of the Company;
(e) Any waiver by the Company of a valuable right or of a material debt owed to it;
(f) Any direct or indirect loans made by the Company to any stockholder, employee, officer or director of the Company, other than advances made in the ordinary course of business;
(g) Any material change in any compensation arrangement or agreement with any employee, officer, director or stockholder of the Company;
(h) Any declaration or payment of any dividend or other distribution of the assets of the Company;
(i) Any labor organization activity;
(j) Any debt, obligation or liability incurred, assumed or guaranteed by the Company, except those for immaterial amounts and for current liabilities incurred in the ordinary course of business;
(k) Any sale, assignment or transfer of any patents, trademarks, copyrights, trade secrets or other intangible assets of the Company;
(l) Any change in any material agreement to which the Company is a party or by which it is bound which materially and adversely affects the business, assets, liabilities, financial condition, operations or prospects of the Company, including compensation agreements with the Company's employees; or
(m) Any other event or condition of any character that, either individually or cumulatively, has materially and adversely affected the business, assets, liabilities, financial condition, operations or prospects of the Company.
3.7 MATERIAL CONTRACTS.
(a) Except as set forth on Item 3.7 of the Disclosure Schedule, the Company has no, and is not bound by, any contract, agreement, lease, commitment, or proposed transaction,
judgment, order, writ or decree, written or oral, absolute or contingent, other than (i) contracts for the purchase of supplies and services that were entered into in the ordinary course of business and that do not involve more than $10,000, and do not extend for more than one year beyond the date hereof; (ii) sales contracts entered into in the ordinary course of business; and (iii) contracts terminable at will by the Company on no more than 30 days' notice without cost or liability to the Company and that do not involve any employment or consulting arrangement and are not material to the conduct of the Company's business. For the purpose of this paragraph, employment and consulting contracts and contracts with labor unions, and license agreements and any other agreements relating to the Company's acquisition or disposition of patent, copyright, trade secret or other proprietary rights or technology (other than standard end-user license agreements) shall not be considered to be contracts entered into in the ordinary course of business. Every contract disclosed on Item 3.7 of the Disclosure Schedule (collectively, the "Material Contracts") is a legal, valid and binding obligation, enforceable in accordance with its terms with respect to the Company and any other parties bound thereby, and true and complete copies of all Material Contracts have been provided to Purchasers. The Company has not been given notice that any other party is currently in breach of any of the terms of any Material Contract. There is no default or event that, with notice or lapse of time, or both, would conflict with or constitute a breach of any Material Contract or would result in the creation or imposition of any lien or encumbrance on the Company, or any of the Company's property. The Company has not received notice that any party to any Material Contract intends to cancel, amend or terminate any such agreement.
(b) The Company has not engaged in the past three months in any discussion (i) with any representative of any corporation or corporations regarding the consolidation or merger of the Company with or into any such corporation or corporations; (ii) with any corporation, partnership, association or other business entity or any individual regarding the sale, conveyance or disposition of all or substantially all of the assets of the Company, or a transaction or series of related transactions in which more than 50% of the voting power of the Company is or was to be disposed; or (iii) regarding any other form of acquisition, liquidation, dissolution or winding up of the Company.
3.8 OBLIGATIONS TO RELATED PARTIES. There are no obligations of the Company to officers, directors, stockholders, or employees of the Company other than (i) for payment of salary for services rendered since the commencement of the Company's most recent payroll period; (ii) reimbursement for reasonable expenses incurred on behalf of the Company; and (iii) for other standard employee benefits made generally available to all employees (including stock option agreements outstanding under any stock option plan approved by the Board of Directors of the Company). Except as disclosed on the Disclosure Schedule hereto, none of the officers, directors or stockholders of the Company, or any members of their immediate families, are indebted to the Company or have any direct or indirect ownership interest in any firm or corporation with which the Company is affiliated or with which the Company has a business relationship, or any firm or corporation which competes with the Company, except that officers, directors and/or stockholders of the Company may own stock in publicly traded companies which may compete with the Company. No officer, director or stockholder, or any member of
their immediate families, is, directly or indirectly, interested in any material contract with the Company (other than such contracts as relate to any such person's ownership of capital stock or other securities of the Company). Except as may be disclosed in the Financial Statements, the Company is not a guarantor or indemnitor of any indebtedness of any other person, firm or corporation.
3.9 ASSETS. The Company has good and, with respect to real property, marketable, title to all of its real and personal property, including all assets reflected on the balance sheets included in the Financial Statements or acquired by the Company since the Balance Sheet Date, all of which are in good operating condition and free and clear of material restrictions on or conditions to transfer or assignment, and free and clear of all liens, claims, mortgages, pledges, charges, equities, easements, rights of way, covenants, conditions, security interests, encumbrances, or restrictions, except for liens for current taxes or materialmen not yet due and payable or being contested in good faith. Set forth on Item 3.9 of the Disclosure Schedule is a correct and complete list of all real property owned by the Company, and a list (including the amount of annual rents called for and a summary description of the leased property) of all leases under which the Company is a lessee. The properties and leases listed on Item 3.9 of the Disclosure Schedule are sufficient for the conduct of the Company's business as now being and presently planned to be conducted. The Company holds a valid leasehold interest in all leases listed on Item 3.9 of the Disclosure Schedule, free of any liens, claims, or encumbrances granted by the Company, except for those described in the first sentence of this Section 3.9, and is not in default under any such lease. The Company enjoys peaceful and undisturbed possession of all premises owned by them, or leased to them from others, and does not occupy any real property in material violation of any law, regulations, or decree.
3.10 INTELLECTUAL PROPERTY.
(a) The Company owns or possesses sufficient legal rights to all patents, trademarks, service marks, trade names, copyrights, trade secrets, information and other proprietary rights and processes necessary for its business as now conducted and as proposed to be conducted, without any known infringement of the rights of others. There are no outstanding options, licenses or agreements of any kind relating to the foregoing, nor is the Company bound by or a party to any options, licenses or agreements of any kind with respect to the patents, trademarks, service marks, trade names, copyrights, trade secrets, licenses, information and other proprietary rights and processes of any other person or entity other than such licenses or agreements arising from the purchase of "off the shelf" or standard products. The Company has received no communication alleging that the Company has violated or, by conducting its business as proposed, would violate any of the patents, trademarks, service marks, trade names, copyrights or trade secrets or other proprietary rights of any other person or entity. The Company is not aware that any of its employees is obligated under any contract (including licenses, covenants or commitments of any nature) or other agreement, or subject to any judgment, decree or order of any court or administrative agency, that would interfere with their duties to the Company or that would conflict with the Company's business as proposed to be conducted. Neither the execution nor delivery of this Agreement, nor the carrying on of the Company's business by the employees
of the Company, nor the conduct of the Company's business as proposed, will, to the Company's knowledge, conflict with or result in a breach of the terms, conditions or provisions of, or constitute a default under, any contract, covenant or instrument under which any employee is now obligated.
(b) The Company will not use, nor does the conduct of the Company's business as proposed require the use of, any proprietary intellectual property or information of Amgen, Inc.
3.11 COMPLIANCE WITH OTHER INSTRUMENTS. The Company is not in violation or default of any term of its Amended Certificate or Bylaws, or of any provision of any mortgage, indenture, contract, agreement, instrument or contract to which it is party or by which it is bound or of any judgment, decree, order, writ or, to its knowledge, any statute, rule or regulation applicable to the Company which would materially and adversely affect the business, assets, liabilities, financial condition, operations or prospects of the Company. The execution, delivery, and performance of and compliance with this Agreement, and the Financing Documents, and the issuance and sale of the Shares pursuant hereto and of the Conversion Shares pursuant to the Amended Certificate, will not, with or without the passage of time or giving of notice, result in any such material violation, or be in conflict with or constitute a default under any such term, or result in the creation of any mortgage, pledge, lien, encumbrance or charge upon any of the properties or assets of the Company or the suspension, revocation, impairment, forfeiture or nonrenewal of any permit license, authorization or approval applicable to the Company, their business or operations or any of their assets or properties.
3.12 LITIGATION. There are no actions, suits, or legal, administrative, or other proceedings or investigations pending or, to the best of the Company's knowledge, threatened before any court, agency, or other tribunal to which the Company is a party or against or affecting any of the property, assets, businesses, or financial condition of the Company. The Company is not in default with respect to any order, writ, injunction, or decree of any federal, state, local or foreign court, department, agency, or instrumentality to which it is a party.
3.13 TAXES. The Company has timely filed all federal, state, county, local and foreign tax returns and reports within the times and in the manner prescribed by law and has paid (or made adequate provision in the Financial Statements for) all taxes shown due on such returns, as well as all other assessments and penalties which have become due and payable. The Company's federal income and other tax returns have not been audited by the Internal Revenue Service or any other taxing authority and no notice of audit has been received. The Company has received no notice of any disputes, deficiency assessments, or proposed adjustments to taxes payable by the Company.
3.14 EMPLOYEES AND CONSULTANTS. Except as set forth on Item 3.14 of the Disclosure Schedule, the Company has not entered into any arrangement with any present or former employee that will result in any obligation of the Company to make any payment to such employee upon termination. True and complete copies of all written employment agreements
with the key executive officers of the Company listed on Item 3.14 of the Disclosure Schedule have been delivered to Purchasers prior to the Closing Date. To the Company's knowledge, no employee of or consultant to the Company is in material violation of any term of any employment contract or any other contract or agreement relating to the relationship of any such employee or consultant with the Company. The Company has not received notice that any executive officer intends to terminate his employment with the Company, nor does the Company have any present intention to terminate the employment of any executive officer. To the Company's knowledge, none of its employees are obligated under any contract (including licenses, covenants, or commitments of any nature) or other agreement, or subject to any judgment, decree, or order of any court or administrative agency, that would interfere with the use of his/her reasonable diligence to promote the interests of the Company or that would conflict with the Company's business as proposed to be conducted. Neither the execution nor delivery of this Agreement, nor the carrying on of the Company's business by the employees of the Company, nor the conduct of the Company's business as proposed, will, to the Company's knowledge, conflict with or result in a breach of the terms, conditions or provisions of, or constitute a default under, any contract, covenant, or instrument under which any of such employees is obligated, which conflict, breach, or default would be materially adverse to the Company.
3.15 EMPLOYEE BENEFITS MATTERS. The Company does not maintain or contribute to any plan or arrangement that constitutes an "employee pension benefit plan" as defined in Section 3(2) of ERISA, and is not obligated to contribute to or accrue or pay benefits under any deferred compensation or retirement funding arrangement.
3.16 REGISTRATION RIGHTS. Except as required pursuant to the Investor Rights Agreement, the Company is presently not under any obligation, and has not granted any rights, to register any of the Company's presently outstanding securities or any of its securities that may hereafter be issued.
3.17 GOVERNMENTAL APPROVALS/THIRD PARTY CONSENTS. All consents, approvals, or authorizations of, or registrations, qualifications, designations, declarations, or filings with any federal or state governmental authority, and all consents, approvals or authorizations of any third party required in connection with the execution of the Financing Documents and the performance of the transactions contemplated hereby (including the issuance and sale of the Shares) have been obtained by the Company. The Company has, or has rights to acquire, all licenses, permits, and other similar authority necessary for the conduct of its business as now being conducted by it and as planned to be conducted, the lack of which could materially and adversely affect the operations or condition, financial or otherwise, of the Company, and it is not in default in any material respect under any of such licenses, permits or other similar authority.
3.18 COMPLIANCE WITH LAWS. (a) The Company has complied with and is in compliance in all material respects with all foreign, federal, state and local statutes, laws, ordinances, regulations, rules, judgments, orders and decrees applicable to it and its assets, business and operations, and (b) the Company has received no written notice of any claim of
default under or violation of any statute, law, ordinance, regulation, rule, judgment, order or decree except for any such noncompliance or claim of default or violation, if any, which in the aggregate do not and will not have a material adverse effect the property, operations, financial condition or prospects of the Company.
3.19 ENVIRONMENTAL MATTERS. The Company is in compliance in all material respects with all environmental and occupational health and safety laws and, to its knowledge, no material expenditures are or will be required in order to comply with any such laws.
3.20 OFFERING VALID. Assuming the accuracy of the representations and warranties of the Purchasers contained in Section 4 hereof, the offer, sale and issuance of the Shares and the Conversion Shares will be exempt from the registration requirements of the Securities Act of 1933, as amended (the "Securities Act") and will have been registered or qualified (or are exempt from registration and qualification) under the registration, permit or qualification requirements of all applicable state securities laws.
3.21 ACCURACY OF INFORMATION FURNISHED. The Financing Documents, as well as any exhibit, certificate, written statement, material or information furnished by or on behalf of the Company pursuant thereto or in connection with the transactions contemplated thereby to the Purchasers, do not contain any untrue statement of a material fact or omit to state any material fact that is necessary to make the statements contained herein or therein not misleading.
3.22 INSURANCE. The Company has or will obtain promptly following the First Closing fire and casualty insurance policies with coverage customary for companies similarly situated to the Company.
3.23 INVESTMENT COMPANY ACT. The Company is not an "investment company," or a company "controlled" by an "investment company," within the meaning of the Investment Company Act of 1940, as amended.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF PURCHASERS.
Each Purchaser makes the following representations and warranties to the Company as to itself that:
4.1. REQUISITE POWER AND AUTHORITY. Purchaser is a corporation, limited liability company, or limited partnership duly organized, validly existing and in good standing under the laws of the jurisdiction of its formation, and has all requisite partnership or corporate power and authority to own its assets and operate its business. Purchaser has all necessary corporate or partnership power and authority under all applicable provisions of law to execute and deliver this Agreement and the Financing Documents and to carry out their provisions. All action on Purchaser's part required for the lawful execution and delivery of this Agreement and the Financing Documents have been or will be effectively taken prior to each Closing Date. Upon their execution and delivery, this Agreement and the Financing Documents will be valid and
binding obligations of Purchaser, enforceable in accordance with their terms, except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws of general application affecting enforcement of creditors' rights; (ii) general principles of equity that restrict the availability of equitable remedies; and (iii) to the extent that the enforceability of the indemnification provisions of the Investor Rights Agreement may be limited by applicable laws.
4.2. INVESTMENT REPRESENTATIONS. Purchaser understands that the Shares have not been registered under the Securities Act. Purchaser also understands that the Shares are being offered and sold pursuant to an exemption from registration contained in the Securities Act based in part upon Purchaser's representations contained in this Agreement. Purchaser hereby represents and warrants as follows:
(a) PURCHASER BEARS ECONOMIC RISK. Purchaser has substantial experience in evaluating and investing in private placement transactions of securities in companies similar to the Company so that it is capable of evaluating the merits and risks of its investment in the Company and has the capacity to protect its own interests. Purchaser must bear the economic risk of this investment indefinitely unless the Shares are registered pursuant to the Securities Act, or an exemption from registration is available. Purchaser understands that there is no assurance that any exemption from registration under the Securities Act will be available and that, even if available, such exemption may not allow Purchaser to transfer all or any portion of the Shares under the circumstances, in the amounts or at the times Purchaser might propose.
(b) ACQUISITION FOR OWN ACCOUNT. Purchaser is acquiring the Shares for Purchaser's own account for investment only, and not with a view towards their distribution.
(c) PURCHASER CAN PROTECT ITS INTEREST. Purchaser represents that by reason of its, or of its management's, business or financial experience, Purchaser has the capacity to protect its own interests in connection with the transactions contemplated in this Agreement and the Financing Documents.
(d) ACCREDITED INVESTOR. Purchaser represents that it is an accredited investor within the meaning of Regulation D under the Securities Act.
(e) COMPANY INFORMATION. Purchaser has received and read the Financial Statements and has had an opportunity to discuss the Company's business, management and financial affairs with directors, officers and management of the Company and has had the opportunity to review the Company's operations and facilities. Purchaser also has had the opportunity to ask questions of and receive answers from, the Company and its management regarding the terms and conditions of this investment.
(f) RULE 144. Purchaser acknowledges and agrees that the Shares must be held indefinitely unless they are subsequently registered under the Securities Act or an exemption from such registration is available. Purchaser has been advised or is aware of the provisions of Rule 144 promulgated under the Securities Act, which permits limited resale of shares purchased
in a private placement subject to the satisfaction of certain conditions, including, among other things: the availability of certain current public information about the Company, the resale occurring not less than one year after a party has purchased and paid for the security to be sold, the sale being through an unsolicited "broker's transaction" or in transactions directly with a market maker (as said term is defined under the Exchange Act) and the number of shares being sold during any three-month period not exceeding specified limitations.
(g) RESIDENCE. The office or offices of the Purchaser in which its investment decision was made is located at the address or addresses of the Purchaser as stated on the signature pages of this Agreement.
4.3 RESTRICTIVE LEGENDS. Purchaser agrees to the imprinting, so long as required by law, of a legend on certificates representing all of the Shares or the Conversion Stock to the following effect:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION TO THE REGISTRATION REQUIREMENTS OF SUCH ACT OR SUCH LAWS.
THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A SHAREHOLDERS AGREEMENT DATED AS OF MAY 18, 1998 AS MAY BE AMENDED FROM TIME TO TIME, AND SAID SHARES MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT IN ACCORDANCE WITH THE TERMS OF SUCH AGREEMENT. SUCH AGREEMENT MAY BE EXAMINED AT THE PRINCIPAL PLACE OF BUSINESS OF THE COMPANY AND A COPY THEREOF WILL BE FURNISHED WITHOUT CHARGE TO THE HOLDER OF THIS CERTIFICATE UPON RECEIPT BY THE COMPANY AT ITS PRINCIPAL PLACE OF BUSINESS OR REGISTERED OFFICE OF A WRITTEN REQUEST FROM THE SHAREHOLDER."
SECTION 5. REPRESENTATIONS AND WARRANTIES OF FOUNDERS
Each Founder makes the following representations and warranties to the Company as to himself that:
5.1. REQUISITE POWER AND AUTHORITY. Founder is an individual and has all necessary authority under all applicable provisions of law to execute and deliver this Agreement and the Financing Documents and to carry out their provisions. All action on Founder's part required for the lawful execution and delivery of this Agreement and the Financing Documents have been or will be effectively taken prior to each Closing Date. Upon their execution and delivery, this Agreement and the Financing Documents will be valid and binding obligations of Founder, enforceable in accordance with their terms, except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws of general application affecting enforcement of creditors' rights; and (ii) general principles of equity that restrict the availability of equitable remedies.
5.2. INVESTMENT REPRESENTATIONS. Founder understands that the Shares have not been registered under the Securities Act. Founder also understands that the Shares are being offered and sold pursuant to an exemption from registration contained in the Securities Act based in part upon Founder's representations contained in this Agreement. Founder hereby represents and warrants as follows:
(a) FOUNDER BEARS ECONOMIC RISK. Founder must bear the economic risk of this investment indefinitely unless the Shares are registered pursuant to the Securities Act, or an exemption from registration is available. Founder understands that there is no assurance that any exemption from registration under the Securities Act will be available and that, even if available, such exemption may not allow Founder to transfer all or any portion of the Shares under the circumstances, in the amounts or at the times Founder might propose.
(b) ACQUISITION FOR OWN ACCOUNT. Founder is acquiring the Shares for Founder's own account for investment only, and not with a view towards their distribution.
(c) RULE 144. Founder acknowledges and agrees that the Shares must be held indefinitely unless they are subsequently registered under the Securities Act or an exemption from such registration is available. Founder has been advised or is aware of the provisions of Rule 144 promulgated under the Securities Act, which permits limited resale of shares purchased in a private placement subject to the satisfaction of certain conditions, including, among other things: the availability of certain current public information about the Company, the resale occurring not less than one year after a party has purchased and paid for the security to be sold, the sale being through an unsolicited "broker's transaction" or in transactions directly with a market maker (as said term is defined under the Exchange Act) and the number of shares being sold during any three-month period not exceeding specified limitations.
(d) RESIDENCE. Founder's residence is located at the address or addresses of the Founder as stated on Exhibit B of this Agreement.
5.3 RESTRICTIVE LEGENDS. Founder agrees to the imprinting, so long as required by law, of a legend on certificates representing all of the Shares or the Conversion Stock to the following effect:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION TO THE REGISTRATION REQUIREMENTS OF SUCH ACT OR SUCH LAWS.
THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A SHAREHOLDERS AGREEMENT DATED AS OF MAY 18, 1998 AS MAY BE AMENDED FROM TIME TO TIME, AND SAID SHARES MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT IN ACCORDANCE WITH THE TERMS OF SUCH AGREEMENT. SUCH AGREEMENT MAY BE EXAMINED AT THE PRINCIPAL PLACE OF BUSINESS OF THE COMPANY AND A COPY THEREOF WILL BE FURNISHED WITHOUT CHARGE TO THE HOLDER OF THIS CERTIFICATE UPON RECEIPT BY THE COMPANY AT ITS PRINCIPAL PLACE OF BUSINESS OR REGISTERED OFFICE OF A WRITTEN REQUEST FROM THE SHAREHOLDER."
SECTION 6. CONDITIONS TO CLOSING.
6.1 CONDITIONS TO PURCHASERS' AND FOUNDERS' OBLIGATIONS AT THE FIRST CLOSING. Purchasers' and Founders' obligations to purchase the Shares at the First Closing are subject to the satisfaction, at or prior to the First Closing, of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES TRUE; PERFORMANCE OF OBLIGATIONS. The representations and warranties made by the Company in Section 3 hereof shall be true and correct in all material respects as of the First Closing Date with the same force and effect as if they had been made as of the First Closing Date, and the Company shall have performed all obligations and conditions herein required to be performed or observed by it on or prior to the First Closing.
(b) LEGAL INVESTMENT. On the First Closing Date, the sale and issuance of the Shares, and the proposed issuance of the Conversion Shares, shall be legally permitted by all laws and regulations to which Purchasers, Founders and the Company are subject.
(c) CONSENTS, PERMITS, AND WAIVERS. The Company shall have obtained any and all consents, permits and waivers necessary or appropriate for consummation of the transactions contemplated by the Agreement and the Financing Documents (except for such as may be properly obtained subsequent to the First Closing).
(d) FILING OF AMENDED CERTIFICATE. The Amended Certificate shall have been filed with the Secretary of State of the State of Delaware.
(e) CORPORATE DOCUMENTS. The Company shall have delivered to Purchasers or their counsel, copies of all corporate documents of the Company as Purchasers shall reasonably request.
(f) RESERVATION OF CONVERSION SHARES. The Conversion Shares issuable upon conversion of the Shares shall have been duly authorized and reserved for issuance upon such conversion.
(g) CERTIFICATES. The Company shall have delivered to Purchasers:
(1) proof of filing of the Amended Certificate, and a certificate, as of the most recent practical date, of the Secretary of State of Delaware as to the Company's good standing;
(2) a certificate of the Secretary of the Company dated as of the Closing Date, certifying as to (i) the incumbency of officers of the Company executing the Financing Agreements and all other documents executed and delivered in connection therewith; (ii) a copy of the Amended Certificate, in effect as of the Closing; (iii) a copy of the Bylaws of the Company, in effect on the Closing Date; and (iv) a copy of the resolutions or consents of the Board of Directors and stockholders of the Company authorizing and approving the Company's execution, delivery and performance of the Financing Agreements; and
(3) a certificate, executed by the President of the Company as of the Closing Date, certifying to the fulfillment of all of the conditions of the Purchasers' obligations under this Agreement, as set forth in this Section 6.
(h) INVESTOR RIGHTS AGREEMENT. The Investor Rights Agreement substantially in the form attached hereto as Exhibit E shall have been executed and delivered by the parties thereto.
(i) SHAREHOLDERS AGREEMENT. The Shareholders Agreement substantially in the form attached hereto as Exhibit F shall have been executed and delivered by the parties thereto.
(j) LEGAL OPINION. The Purchasers shall have received from legal counsel to the Company an opinion addressed to them, dated as of the First Closing Date, in substantially the form attached hereto as Exhibit H.
(k) PROCEEDINGS AND DOCUMENTS. All corporate and other proceedings in connection with the transactions contemplated at the First Closing hereby and all documents and instruments incident to such transactions shall be reasonably satisfactory in substance and form to the Purchasers and their special counsel, and the Purchasers and their special counsel shall have received all such counterpart originals or certified or other copies of such documents as they may reasonably request.
(l) OTHER EMPLOYEES. The Purchasers shall have approved the management and professional team proposed by the Founders, and all such persons shall have executed, at Purchasers' discretion, letters of intent to join the Company and/or employment agreements, acceptable to Purchasers. In addition, all employees hired as of the First Closing shall have executed Confidential Information and Noncompete Agreements with the Company, in substantially the form attached hereto at Exhibits J and K.
(m) NOTE PURCHASE AGREEMENT. The Purchasers shall have approved the Note Purchase Agreement, in form attached hereto as Exhibit C.
6.2 CONDITIONS TO OBLIGATIONS OF THE COMPANY AT FIRST CLOSING. The Company's obligation to issue and sell the Shares at the First Closing is subject to the satisfaction, on or prior to the First Closing, of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES TRUE. The representations and warranties made by Purchasers in Section 4 and by Founders in Section 5 hereof shall be true and correct in all material respects at the First Closing Date, with the same force and effect as if they had been made on and as of said date.
(b) PERFORMANCE OF OBLIGATIONS. Purchasers shall have performed and complied with all agreements and conditions herein required to be performed or complied with by Purchasers on or before the First Closing.
(c) FILING OF AMENDED CERTIFICATE. The Amended Certificate shall have been filed with the Secretary of State of the State of Delaware.
(d) INVESTOR RIGHTS AGREEMENT. The Investor Rights Agreement substantially in the form attached hereto as Exhibit E shall have been executed and delivered by the parties thereto.
(e) SHAREHOLDERS AGREEMENT. The Shareholders Agreement substantially in the form attached hereto as Exhibit F shall have been executed and delivered by the parties thereto.
(f) CONSENTS, PERMITS, AND WAIVERS. The Company shall have obtained any and all consents, permits and waivers necessary or appropriate for consummation of the transactions contemplated by the Agreement and the Financing Documents (except for such as may be properly obtained subsequent to the First Closing).
(g) MINIMUM INVESTMENT. The Purchasers shall purchase at least 2,250,000 Preferred Shares at the First Closing.
6.3 CONDITIONS TO PURCHASERS' OBLIGATIONS AT THE FINAL CLOSING. Purchasers' and Additional Purchasers' obligations to purchase the Shares at the Final Closing are subject to the satisfaction, at or prior to the Final Closing, of the following conditions:
(a) BOARD APPROVAL. A majority of the Company's Board of Directors shall have approved the Final Closing.
(b) LEGAL INVESTMENT. On the Final Closing Date, the sale and issuance of the Shares, and the proposed issuance of the Conversion Shares, shall be legally permitted by all laws and regulations to which Purchasers, Additional Purchasers and the Company are subject.
(c) CONSENTS, PERMITS, AND WAIVERS. The Company shall have obtained any and all consents, permits and waivers necessary or appropriate for consummation of the transactions contemplated by the Agreement and the Financing Documents (except for such as may be properly obtained subsequent to the Final Closing).
(d) CORPORATE DOCUMENTS. The Company shall have delivered to Purchasers and Additional Purchasers or their counsel, copies of all corporate documents of the Company as Purchasers or Additional Purchasers shall reasonably request.
(e) CERTIFICATES. The Company shall have delivered to Additional Purchasers:
(1) a certified copy of the Amended Certificate, and a certificate, as of the most recent practical date, of the Secretary of State of Delaware as to the Company's good standing;
(2) a certificate of the Secretary of the Company dated as of the Final Closing Date, certifying as to (i) the incumbency of officers of the Company executing the Financing Agreements and all other documents executed and delivered in connection therewith; (ii) a copy of the Bylaws of the Company, in effect on the Final Closing Date; and (iii) a copy of the resolutions or consents of the Board of Directors and stockholders of the Company authorizing and approving the Company's execution, delivery and performance of the Financing Agreements; and
(3) a certificate, executed by the President of the Company as of the Final Closing Date, certifying to the fulfillment of all of the conditions of the Purchasers' obligations under this Agreement, as set forth in this Section 6.
(f) LEGAL OPINION. The Purchasers and Additional Purchasers shall have received from legal counsel to the Company an opinion addressed to them, dated as of the Final Closing Date, in substantially the form attached hereto as Exhibit I.
(g) PROCEEDINGS AND DOCUMENTS. All corporate and other proceedings in connection with the transactions contemplated at the Final Closing hereby and all documents and instruments incident to such transactions shall be reasonably satisfactory in substance and form to the Purchasers, Additional Purchasers and their counsel, and the Purchasers, Additional Purchasers and their counsel shall have received all such counterpart originals or certified or other copies of such documents as they may reasonably request.
6.4 CONDITIONS TO OBLIGATIONS OF THE COMPANY AT FINAL CLOSING. The Company's obligation to issue and sell the Shares at the Final Closing is subject to the satisfaction, on or prior to the Final Closing, of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES TRUE. The representations and warranties made by Purchasers and Additional Purchasers in Section 4 hereof shall be true and correct in all material respects at the Final Closing Date, with the same force and effect as if they had been made on and as of said date.
(b) PERFORMANCE OF OBLIGATIONS. Purchasers and Additional Purchasers shall have performed and complied with all agreements and conditions herein required to be performed or complied with by Purchasers or Additional Purchasers on or before the Final Closing.
(c) INVESTOR RIGHTS AGREEMENT. The Investor Rights Agreement substantially in the form attached hereto as Exhibit E shall have been executed and delivered by the Additional Purchasers.
(d) SHAREHOLDERS AGREEMENT. The Shareholders Agreement substantially in the form attached hereto as Exhibit F shall have been executed and delivered by the Additional Purchasers.
(e) CONSENTS, PERMITS, AND WAIVERS. The Company shall have obtained any and all consents, permits and waivers necessary or appropriate for consummation of the transactions contemplated by the Agreement and the Financing Documents (except for such as may be properly obtained subsequent to the Final Closing).
(f) Minimum Investment. The Purchasers and Additional Purchasers shall purchase, in the aggregate, at least 2,250,000 Preferred Shares at the Final Closing.
SECTION 7. COVENANTS OF THE COMPANY FOR THE PERIOD FOLLOWING CLOSING.
Until the date upon which all Shares held by Purchasers (including any capital stock of the Company issued upon conversion of the Series A Preferred Stock) are no longer outstanding, the Company covenants to each Purchaser (and, as applicable, to each Founder) and agrees as follows:
7.1 USE OF PROCEEDS. The Company shall use all proceeds from the sale of the Shares to Purchasers pursuant to this Agreement for financing of expenditures related start-up of the Company, product development and general working capital.
7.2 MAINTENANCE OF CORPORATE STATUS. The Company shall maintain, and shall cause each affiliate to maintain, its corporate or partnership existence in good standing or effective under the laws of its jurisdiction of organization and any other states or jurisdictions in which its failure to qualify as a foreign corporation or entity would have a material adverse effect on its operations or financial condition.
7.3 COMPLIANCE WITH GOVERNING DOCUMENTS. The Company shall comply, and shall cause each affiliate to comply, in all material respects with its Amended Certificate, Bylaws or other governing documents.
7.4 COMPLIANCE WITH LAWS, LICENSES AND PERMITS; NO INFRINGEMENT. The Company shall comply with all applicable federal, state, local, foreign and other laws, regulations and ordinances, and with all applicable federal, state, local and foreign governmental licenses and permits necessary for conducting its business, except to the extent that any noncompliance would not have a material adverse effect upon the Company. The Company shall not knowingly engage in any activities that infringe upon the intellectual property rights of any other person, corporation, partnership or other entity which could have a material adverse effect upon the Company.
7.5 DISCHARGE OF OBLIGATIONS. The Company shall pay and discharge all taxes, assessments, and governmental charges lawfully levied or imposed upon it (in each case before they become delinquent and before penalties accrue), all lawful claims for labor, materials, supplies and rents, and all other debts and liabilities that if unpaid would by law be a lien or charge upon any of the asserts or properties of the Company or lead to suspension of the business of the Company (except to the extent contested in good faith by the Company and for which adequate reserves are established).
7.6 MAINTENANCE OF PROPERTIES. The Company shall maintain all real and personal property used in the business of the Company in good operating condition, and shall make all repairs, renewals, replacements, additions and improvements to those properties as are necessary or appropriate in the ordinary course of business.
7.7 MAINTENANCE OF PROPRIETARY INFORMATION. The Company shall maintain all proprietary information, and all applications and registrations therefor owned or held by the Company, in full force and effect, except as otherwise determined in the ordinary course of business. The Company shall not encumber or license others to use its proprietary information owned by it except in the ordinary course of the Company's business, and shall maintain the confidentiality and trade secret status of all proprietary information that is confidential except
where disclosure is necessary to obtain copyright registrations or patents, or is necessary or desirable in the ordinary course of the Company's business. The Company shall enter into and maintain a Confidentiality Agreement, in the form attached at Exhibit J with each employee and, as appropriately modified, each consultant to the Company, and shall enter into and maintain a Noncompete Agreement, in the form attached at Exhibit K with each key management employee of the Company.
7.8 SIGNIFICANT TRANSACTIONS. In addition to any vote or consent of shareholders or directors required by law or the Company's Amended Certificate, so long as any originally issued Series A Preferred Stock remains outstanding, the consent of the holders of two thirds of the shares of the Series A Preferred Stock and of the shares of Common Stock held by the Founders, each voting as a class, either in writing without a meeting or by vote at any meeting called for the purpose, shall be necessary for effecting, validating or permitting (i) any consolidation or merger involving the Company (other than a consolidation or merger in which the Company is the surviving entity and no change in the capital stock or ownership of the Company occurs), (ii) any transaction or series of transactions in which an excess of 50% of the Company's voting power is transferred, (iii) any dissolution, liquidation, or winding up of the Company, or (iv) any sale of more than 50% of the assets of the Company, or any agreement to become so obligated.
7.9 COMPENSATION OF DIRECTORS. Each member of the Board of Directors shall be entitled to (a) customary liability insurance obtained at commercially reasonable rates, and (b) reimbursement by the Company for all out-of-pocket expenses, including, without limitation, travel expenses, incurred by such director in connection with the performance of such directors duties, subject to approval by the Board of Directors, such approval not to be unreasonably withheld.
7.10 BOOKS AND RECORDS. The Company shall, and shall cause each affiliate to, keep proper books of records and account, in which full and correct entries shall be made of all financial transactions and the assets and business of the Company and each affiliate, in accordance with generally accepted accounting principles in effect from time to time. The Company shall provide Purchasers with access to all such books and records and allow Purchasers to make copies and abstracts thereof at reasonable times.
SECTION 8 MISCELLANEOUS.
8.1 GOVERNING LAW. This Agreement shall be governed by the laws of the State of Colorado as such laws are applied to agreements between Colorado residents entered into and performed entirely in Colorado, except that the Delaware General Corporation Law will govern as to matters of corporate law.
8.2 SURVIVAL. The representations, warranties, covenants and agreements made herein shall survive any investigation made by any Purchaser and the closing of the transactions
contemplated hereby. All statements as to factual matters contained in any certificate or other instrument delivered by or on behalf of the Company pursuant hereto in connection with the transactions contemplated hereby shall be deemed to be representations and warranties by the Company hereunder solely as of the date of such certificate or instrument.
8.3 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 the Shares from time to time.
8.4 ENTIRE AGREEMENT. This Agreement, the Exhibits and Schedules hereto, the Financing Documents and the other documents delivered pursuant hereto constitute 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 any representations, warranties, covenants and agreements except as specifically set forth herein and therein.
8.5 SEVERABILITY. In case any provision of the Agreement shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.
8.6 AMENDMENT AND WAIVER. This Agreement may be amended or modified only upon the written consent of the Company, the holders of at least sixty-six percent (66%) of the Preferred Shares (treated as if converted and including any Conversion Shares into which the Preferred Shares have been converted that have not been sold), and the holders of at least sixty-six percent (66%) of the Common Shares.
8.7 DELAYS OR OMISSIONS. It is agreed that no delay or omission to exercise any right, power or remedy accruing to any party, upon any breach, default or noncompliance by another party under this Agreement, the Financing Documents or the Amended Certificate, shall impair any such right, power or remedy, nor shall it be construed to be a waiver of any such breach, default or noncompliance, or any acquiescence therein, or of or in any similar breach, default or noncompliance thereafter occurring. It is further agreed that any waiver, permit, consent or approval of any kind or character on any Purchaser's part of any breach, default or noncompliance under this Agreement, the Financing Documents or under the Amended Certificate or any waiver on such party's part of any provisions or conditions of the Agreement, the Financing Documents, or the Amended Certificate must be in writing and shall be effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement, the Financing Documents, the Amended Certificate, by law, or otherwise afforded to any party, shall be cumulative and not alternative.
8.8 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 facsimile if sent during normal business hours of the recipient, if not, then on the
next business day; (iii) three (3) business 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 Company and to Purchasers at the addresses set forth on the signature pages attached hereto or at such other address as the Company or Purchaser may designate by ten (10) days advance written notice to the other parties hereto.
8.9 EXPENSES. The Company hereby agrees to reimburse each Purchaser for its out-of-pocket expenses incurred in connection with the transactions contemplated hereby, including all expenses incurred in connection with its due diligence examination of the Company, the preparation and negotiation of the Financing Documents, including the reasonable fees (not to exceed $25,000) and expenses of special counsel to the Purchasers, and in connection with the enforcement of rights and remedies of the Purchasers hereunder and under the Shareholders Agreement and all other documents evidencing the transactions contemplated herein.
8.10 INDEMNIFICATION BY THE COMPANY. The Company agrees to indemnify and hold each Purchaser harmless against any loss, liability, damage or expense (including reasonable legal fees and costs) which such Purchasers may suffer, sustain or become subject to as a result of or in connection with the breach by the Company of any representation, warranty, covenant or agreement of the Company contained in this Agreement or the Financing Documents.
8.11 INDEMNIFICATION BY THE PURCHASERS. Each Purchaser, severally and not jointly, agrees to indemnify and hold the Company harmless against any loss, liability, damage or expense (including reasonable legal fees and costs) which the Company may suffer, sustain or become subject to as a result of or in connection with the breach by such Purchaser of any representation, warranty, covenant or agreement of such Purchaser contained in this Agreement or the Financing Documents.
8.12 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.
8.13 COUNTERPARTS. This Agreement may be delivered via facsimile and may be executed in any number of counterparts, each of which shall be an original, but all of which together shall constitute one instrument.
8.14 BROKER'S FEES. Each party hereto represents and warrants that no agent, broker, investment banker, person or firm acting on behalf of or under the authority of such party hereto is or will be entitled to any broker's or finder's fee or any other commission directly or indirectly in connection with the transactions contemplated herein. Each party hereto further agrees to indemnify each other party for any claims, losses or expenses incurred by such other party as a result of the representation in this Section 8.14 being untrue.
8.15 ARBITRATION. The parties hereby covenant and agree that any legal suit, dispute, claim, demand, controversy or cause of action of every kind and nature whatsoever, known or unknown, fixed or contingent, that any party may now have or at any time in the future claim to have based in whole or in part, or arising from or out of or that in any way is related to the negotiations, execution, interpretation or enforcement of this Agreement (collectively, the "Disputes") shall be completely and finally settled by submission of any such Disputes to arbitration under the rules of the American Arbitration Association ("AAA") then in effect. There shall be one arbitrator, and such arbitrator shall be chosen by mutual agreement of the parties in accordance with AAA rules. Unless the parties agree otherwise, the arbitration proceedings shall take place in Denver, Colorado. The arbitrator shall apply Colorado law to all issues in dispute, in accordance with Section 8.1 above. Notice of demand for arbitration shall be filed in writing with the other party to this Agreement and with the AAA. In no event shall the demand for arbitration be made after the date when institution of legal or equitable proceedings based on such Dispute would be barred by the applicable statute of limitations. The findings of the arbitrator shall be final and binding on the parties. Judgment on such award may be entered in any court of competent jurisdiction, or application may be made to that court for a judicial acceptance of the award and an order or enforcement, as the party seeking to enforce that award may elect. The prevailing party in any such action shall be entitled to receive from the losing party all reasonable costs and expenses, including the reasonable fees of attorneys, accountants, and other experts, incurred by the prevailing party in investigating and prosecuting (or defending) such action, together with any such fees which may be incurred in enforcing any award of judgment.
8.16 EXCULPATION AMONG PURCHASERS. Each Purchaser acknowledges that it is not relying upon any person, firm, or corporation, other than the Company and its officers and directors, in making its investment or decision to invest in the Company. Each Purchaser agrees that no Purchaser nor the respective controlling persons, officers, directors, partners, agents, or employees of any Purchaser shall be liable for any action heretofore or hereafter taken or omitted to be taken by any of them in connection with the Shares and Conversion Shares.
8.17 PRONOUNS. All pronouns contained herein, and any variations thereof, shall be deemed to refer to the masculine, feminine or neutral, singular or plural, as the identity of the parties hereto may require.
[SIGNATURE PAGES FOLLOW]
IN WITNESS WHEREOF, the parties hereto have executed the PREFERRED AND COMMON STOCK PURCHASE AGREEMENT as of the date set forth in the first paragraph hereof.
COMPANY:
ARRAY BIOPHARMA INC., a Delaware corporation
By: /s/ KEVIN KOCH ---------------------------- Kevin Koch, Ph.D., President |
PURCHASERS:
FALCON TECHNOLOGY PARTNERS, L.P., a
Delaware limited partnership
By: /s/ JAMES L. RATHMANN
--------------------------------------
James L. Rathmann, General Partner
|
BOULDER VENTURES II, L.P., a Delaware
limited partnership
By: /s/ KYLE LEFKOFF -------------------------------------- Kyle Lefkoff, General Partner |
BOULDER VENTURES II (ANNEX), L.P., a
Delaware limited partnership
By: /s/ KYLE LEFKOFF -------------------------------------- Kyle Lefkoff, General Partner |
THE CARUTHERS FAMILY, L.L.C.
By: /s/ MARVIN H. CARUTHERS -------------------------------------- Marvin H. Caruthers, Ph.D., Manager |
FOUNDERS:
/s/ DAVID SNITMAN ------------------------------------ DAVID SNITMAN, PH.D. /s/ KEVIN KOCH ------------------------------------ KEVIN KOCH, PH.D. /s/ ANTHONY D. PISCOPIO ------------------------------------ ANTHONY D. PISCOPIO, PH.D. /s/ K.C. NICOLAOU ----------------------------------- K.C. NICOLAOU, PH.D. |
Exhibit A
[Certificate of Amendment to the Certificate of Incorporation]
Exhibit B
[Schedule of Purchasers]
Exhibit C
[Promissory Note and Pledge Agreement]
Exhibit D
[Disclosure Schedule]
Exhibit E
[Investor Rights Agreement]
Exhibit F
[Shareholders Agreement]
Exhibit G
[Capitalization Table]
Exhibit H
[First Closing Opinion]
Exhibit I
[Final Closing Opinion]
Exhibit J
[Confidentiality Agreement]
Exhibit K
[Noncompete Agreement]
EXHIBIT 10.5
AMENDMENT TO PREFERRED AND COMMON STOCK
PURCHASE AGREEMENT
THIS AMENDMENT TO PREFERRED AND COMMON STOCK PURCHASE AGREEMENT (the "Agreement") is entered into as of the 7th day of August, 1998, by and among ARRAY BIOPHARMA INC., a Delaware corporation (the "Company"), the Founders and Purchasers (as defined in the Purchase Agreement) and each of those persons and entities, severally and not jointly, whose names are set forth under the heading "Additional Purchasers" on the signature pages attached hereto. The Purchasers are sometimes referred to herein as the "Prior Purchasers", and together with the Additional Purchasers are hereinafter collectively referred to as "Purchasers" and each individually as a "Purchaser."
RECITALS
WHEREAS, the Company, Founders and Prior Purchasers previously entered into that certain Preferred and Common Stock Purchase Agreement (the "Purchase Agreement"), dated as of May 18, 1998, pursuant to which Founders and Prior Purchasers purchased certain shares of the Company's Series A Preferred Stock and Common Stock; and
WHEREAS, the Company has authorized the sale and issuance of an additional 4,100,000 shares of Series A Preferred Stock to Additional Purchasers, for an aggregate of 6,800,000 authorized shares of the Series A Preferred Stock, and in connection therewith, the Company, Founders, Prior Purchasers and Additional Purchasers desire to amend the Purchase Agreement as set forth herein.
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual promises hereinafter set forth, the parties hereto agree as follows:
AGREEMENT
1. Amendments. The Purchase Agreement shall be amended as follows:
(a) Section 7.7 is hereby amended by inserting the following after the third sentence thereof:
"The foregoing sentence shall apply to both the employees, consultants and key management employees that are employed or engaged on the date of this Agreement and all employees, consultants and key management employees that the Company may hire or engage in the future."
(b) Section 7.8 is hereby amended by deleting the first sentence in its entirety and inserting the following in lieu thereof:
"In addition to any vote or consent of shareholders or directors required by law or the Company's Amended Certificate, so long as any originally issued Series A Preferred Stock remains outstanding, the consent of the holders of two thirds of the then-outstanding shares of the Series A Preferred Stock and of the shares of Common Stock held by the Founders, each voting as a class, either in writing without a meeting or by vote at any meeting called for the purpose, shall be necessary for a period of two years commencing on the date of this Agreement for effecting, validating or permitting (i) any consolidation or merger involving the Company (other than a consolidation or merger in which the Company is the surviving entity and no change in the capital stock or ownership of the Company occurs), (ii) any transaction or series of transactions in which an excess of 50% of the Company's voting power is transferred, (iii) any dissolution, liquidation, or winding up of the Company, or (iv) any sale of more than 50% of the assets of the Company, or any agreement to become so obligated. After the expiration of the two year period specified in the foregoing sentence, in addition to any vote or consent of shareholders or directors required by law or the Company's Amended Certificate, so long as any originally issued Series A Preferred Stock remains outstanding, the consent of the holders of two thirds of the then-outstanding shares of the Series A Preferred Stock and a majority of the then-outstanding shares of Common Stock, each voting as a class, either in writing without a meeting or by vote at any meeting called for the purpose, shall be necessary for effecting, validating or permitting (i) any consolidation or merger involving the Company (other than a consolidation or merger in which the Company is the surviving entity and no change in the capital stock or ownership of the Company occurs), (ii) any transaction or series of transactions in which an excess of 50% of the Company's voting power is transferred, (iii) any dissolution, liquidation, or winding up of the Company, or (iv) any sale of more than 50% of the assets of the Company, or any agreement to become so obligated."
(c) A new Section 7.11 shall be added that reads as follows:
"The Company shall retain a "Big Five Accounting Firm" as its principal outside accountants."
2. Interpretation. Except as expressly amended by this Agreement, the Purchase Agreement shall remain in full force and effect without change, provided, however, that the Additional Purchasers shall be deemed to be Purchasers for all purposes of the Purchase Agreement.
3. Counterparts. This Agreement may be executed in any number of counterparts, each of which when executed and delivered shall be an original, but all of which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date above first written.
COMPANY: ADDITIONAL PURCHASERS:
ARRAY BIOPHARMA INC., a Delaware FRAZIER HEALTHCARE II, L.P.
corporation
By: /s/ KEVIN KOCH By: /s/ ALAN D. FRAZIER
-------------------------------- ------------------------------
Kevin Koch, Ph.D., President Print Name: Alan D. Frazier
----------------------
Title: Member, Frazier Management, L.L.C.
--------------------------------
Member, FHM II, L.L.C.
--------------------------------
General Partner, Frazier Healthcare II, L.P.
--------------------------------
ARCH VENTURE FUND III, L.P.
By: Arch Venture Partners LLC, its Managing
Director
By: /s/ ROBERT NELSEN
------------------------------
Print Name: Robert Nelsen
----------------------
Title: Managing Director
---------------------------
ROVENT II LIMITED PARTNERSHIP
By: Advent International Limited Partnership,
its General Partner
By: Advent International Corporation, its
General Partner
By: /s/ JASON S. FISHERMAN
------------------------------
Print Name: Jason S. Fisherman
----------------------
Title: Vice President
---------------------------
MITSUI & CO. (U.S.A.), INC.
By: /s/ YOICHIRO ENDO
----------------------------
Print Name: Yoichiro Endo
--------------------
Title: General Manager
-------------------------
Corporate Development Dept.
|
PURCHASERS:
FALCON TECHNOLOGY PARTNERS, L.P., a
Delaware limited partnership
By: /s/JAMES L. RATHMANN
------------------------------------
James L. Rathmann, General Partner
|
BOULDER VENTURES II, L.P., a Delaware
limited partnership
By: /s/ KYLE LEFKOFF
------------------------------------
Kyle Lefkoff, General Partner
|
BOULDER VENTURES II (ANNEX), L.P., a
Delaware limited partnership
By: /s/ KYLE LEFKOFF
------------------------------------
Kyle Lefkoff, General Partner
|
THE CARUTHERS FAMILY, L.L.C.
By:/s/ MARVIN H. CARUTHERS
------------------------------------
Marvin H. Caruthers, Ph.D., Manager
|
FOUNDERS:
/s/ DAVID SNITMAN --------------------------------------- DAVID SNITMAN, PH.D. /s/ KEVIN KOCH --------------------------------------- KEVIN KOCH, PH.D. /s/ ANTHONY D. PISCOPIO --------------------------------------- ANTHONY D. PISCOPIO, PH.D. /s/ K.C. NICOLAOU --------------------------------------- K.C. NICOLAOU, PH.D. |
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date above first written.
PURCHASER:
By: /s/ FRANK A. BONSAL ----------------------------------- Frank A. Bonsal, Jr. |
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date above first written.
PURCHASER:
By: /s/ RICHARD J. DALY ----------------------------------- Richard J. Daly |
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date above first written.
PURCHASER:
By: /s/ MICHAEL CARUTHERS ----------------------------------- Michael Caruthers |
IN WITNESS WHEREOF, the party hereto has executed this Agreement as of the date above first written.
ADDITIONAL PURCHASER:
By: /s/ THERESA KOCH ----------------------------------- Theresa Koch |
IN WITNESS WHEREOF, the party hereto has executed this Agreement as of the date above first written.
ADDITIONAL PURCHASER:
By: /s/ CHRISTOPHER D. OZEROFF ----------------------------------- Christopher D. Ozeroff |
IN WITNESS WHEREOF, the party hereto has executed this Agreement as of the date above first written.
ADDITIONAL PURCHASER:
By: /s/ WILLIAM R. ROBERTS ----------------------------------- William R. Roberts |
EXHIBIT 10.6
SERIES B PREFERRED STOCK PURCHASE AGREEMENT
ARRAY BIOPHARMA INC.
TABLE OF CONTENTS
Page
----
RECITALS ...............................................................1
SECTION 1. PURCHASE AND SALE..............................................1
1.1 Authorization of Shares........................................1
1.2 Sale and Purchase..............................................1
SECTION 2. CLOSING........................................................1
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY..................2
3.1 Organization, Good Standing and Qualification..................2
3.2 Capitalization.................................................2
3.3 Authorization..................................................3
3.4 Financial Statements...........................................3
3.5 Liabilities....................................................3
3.6 Changes........................................................3
3.7 Material Contracts.............................................5
3.8 Obligations to Related Parties.................................5
3.9 Assets.........................................................6
3.10 Intellectual Property..........................................6
3.11 Compliance with Other Instruments..............................7
3.12 Litigation.....................................................7
3.13 Taxes..........................................................7
3.14 Employees and Consultants......................................7
3.15 Employee Benefits Matters......................................8
3.16 Registration Rights............................................8
3.17 Governmental Approvals/Third Party Consents....................8
3.18 Compliance with Laws...........................................8
3.19 Environmental Matters..........................................9
3.20 Offering Valid.................................................9
3.21 Accuracy of Information Furnished..............................9
3.22 Insurance......................................................9
3.23 Investment Company Act.........................................9
SECTION 4. REPRESENTATIONS AND WARRANTIES OF PURCHASERS...................9
4.1. Requisite Power and Authority..................................9
4.2. Investment Representations....................................10
4.3 Restrictive Legends...........................................11
SECTION 5. CONDITIONS TO CLOSING.........................................11
5.1 Conditions to Purchasers' Obligations at the Closing..........11
5.2 Conditions to Obligations of the Company at Closing...........13
|
SECTION 6. COVENANTS OF THE COMPANY FOR THE PERIOD FOLLOWING CLOSING.....13
6.1 Use of Proceeds...............................................13
6.2 Maintenance of Corporate Status...............................14
6.3 Compliance with Governing Documents...........................14
6.4 Compliance with Laws, Licenses and Permits; No Infringement...14
6.5 Discharge of Obligations......................................14
6.6 Maintenance of Properties.....................................14
6.7 Maintenance of Proprietary Information........................14
6.8 Compensation of Directors.....................................14
6.9 Books and Records.............................................15
SECTION 7. MISCELLANEOUS.................................................15
7.1 Governing Law.................................................15
7.2 Survival......................................................15
7.3 Successors and Assigns........................................15
7.4 Entire Agreement..............................................15
7.5 Severability..................................................15
7.6 Amendment and Waiver..........................................15
7.7 Delays or Omissions...........................................16
7.8 Notices.......................................................16
7.9 Expenses......................................................16
7.10 Indemnification by the Company................................16
7.11 Indemnification by the Purchasers.............................16
7.12 Titles and Subtitles..........................................17
7.13 Counterparts..................................................17
7.14 Broker's Fees.................................................17
7.15 Arbitration...................................................17
7.16 Exculpation Among Purchasers..................................17
7.17 Pronouns......................................................18
|
SERIES B PREFERRED STOCK PURCHASE AGREEMENT
ARRAY BIOPHARMA INC.
This Series B Preferred Stock Purchase Agreement (the "Agreement") is made and entered into as of the 16th day of November 1999, by and among ARRAY BIOPHARMA INC., a Delaware corporation (the "Company"), and each of the "Purchasers" identified on the signature pages hereto.
RECITALS
A. The Company has authorized the issuance and sale of a total of 3,200,000 shares (the "Shares") of Series B Preferred Stock of the Company, par value $0.001 per share.
B. The Company desires to sell the Shares to Purchasers, and Purchasers desire to purchase the Shares, pursuant to the terms and conditions contained herein.
AGREEMENT
NOW THEREFORE, in consideration of the mutual covenants, agreements, conditions, representations, and warranties contained in this Agreement, the Company and Purchasers hereby each agree as follows:
SECTION 1. PURCHASE AND SALE.
1.1 AUTHORIZATION OF SHARES. On or prior to the Closing (as defined in
Section 2 below), the Company shall have authorized (i) the sale and issuance to
Purchasers of the Shares; and (ii) such shares of Common Stock issuable upon
conversion of the Shares (the "Conversion Shares"). The Shares and the
Conversion Shares shall have the rights, preferences, privileges and
restrictions set forth in the Amended and Restated Certificate of Incorporation
of the Company, in the form attached hereto as Exhibit A (the "Amended
Certificate").
1.2 SALE AND PURCHASE. Subject to the terms and conditions hereof, at the Closing (as defined in Section 2 below) the Company hereby agrees to issue and sell to each Purchaser, severally and not jointly, and each Purchaser agrees to purchase from the Company, severally and not jointly, the number of Shares set forth opposite such Purchaser's name on Exhibit B hereto, at the purchase price of $2.50 per Share.
SECTION 2. CLOSING.
The closing of the sale and purchase of the Shares under this Agreement (the "Closing") shall take place at 11 a.m. on the date hereof, at the offices of Hogan & Hartson L.L.P., 1800 Broadway, Suite 200, Boulder Colorado 80302, or at such other time or place as the Company and Purchasers may mutually agree (such date is hereinafter referred to as the "Closing Date"). At the Closing, subject to the terms and conditions hereof, the Company will deliver to the Purchasers certificates representing the number of Shares to be purchased at the Closing by each
Purchaser as set forth opposite such Purchaser's name on Exhibit B, against payment of the purchase price therefor by check or wire transfer made payable to the order of the Company.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
Except as set forth on the Disclosure Schedule attached hereto as Exhibit C, the Company hereby represents and warrants to each Purchaser that is purchasing the Shares as follows:
3.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. The Company has all requisite corporate power and authority to own and operate its properties and assets, to execute and deliver this Agreement, the Amended and Restated Investor Rights Agreement in the form attached hereto as Exhibit D (the "Investor Rights Agreement"), and the Amended and Restated Shareholders Agreement in the form attached hereto as Exhibit E (the "Shareholders Agreement") (collectively with this Agreement and the Amended Certificate, the "Financing Documents"), to issue and sell the Shares and to carry out the provisions of the Financing Documents, and to carry on its business as presently conducted and as presently proposed to be conducted. The Company is duly qualified and is authorized to do business and is in good standing in each jurisdiction in which the nature of its activities and of its properties (both owned and leased) makes such qualification necessary, except for those jurisdictions in which failure to do so would not have a material adverse effect on the Company or its business. The Company does not own, directly or indirectly, equity securities of any other corporation, limited partnership, limited liability company or other similar entity. The Company is not a participant in any joint venture, partnership or similar arrangement.
3.2 CAPITALIZATION. The authorized capital stock of the Company, immediately prior to the Closing, will consist of (a) 17,000,000 shares of Common Stock, 2,999,617 shares of which are issued and outstanding, 3,337,500 shares of which are reserved for future issuance to employees and consultants pursuant to the Company's 1998 Option Plan, as amended, 6,694,270 shares of which are reserved for issuance upon conversion of the Series A Preferred Stock and warrants, and 3,200,000 shares of which are reserved for issuance upon conversion of the Series B Preferred Stock; and (b) 10,000,000 shares of Preferred Stock, 6,800,000 shares all of which are designated Series A Preferred Stock, and 3,200,000 shares of which are designated Series B Preferred Stock. All issued and outstanding shares of the Company's Common Stock and Series A Preferred Stock (i) have been duly authorized and validly issued, (ii) are fully paid and nonassessable, and (iii) were issued in compliance with all applicable state and federal laws concerning the issuance of securities. The rights, preferences, privileges and restrictions of the Shares are as stated in the Amended Certificate. The Conversion Shares have been duly and validly reserved for issuance. Except as may be granted pursuant to the Financing Documents, the Company's Preferred and Common Stock Purchase Agreement dated May 18, 1998, as amended, and the Agreements referred therein, the Company's 1998 Option Plan, and certain credit facilities, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or shareholders agreements, or agreements of any kind for the purchase or acquisition from the Company of any of its securities. When issued in compliance with the provisions of this Agreement and the Amended Certificate, the Shares and the Conversion Shares will be validly issued, fully paid and nonassessable, and will be free
of any liens or encumbrances; provided, however, that the Shares and the Conversion Shares may be subject to restrictions on transfer under state and/or federal securities laws. A schedule describing the anticipated capitalization of the Company as of the Closing is attached as Exhibit F hereto.
3.3 AUTHORIZATION. All corporate action on the part of the Company, its officers, directors and stockholders necessary for the authorization of this Agreement and the Financing Documents, the performance of all obligations of the Company hereunder and thereunder at the Closing, and the authorization, sale, issuance and delivery of the Shares pursuant hereto and the Conversion Shares pursuant to the Amended Certificate has been taken or will be taken prior to the Closing. The Agreement and the Financing Documents, when executed and delivered, will be valid and binding obligations of the Company enforceable against the Company in accordance with their terms, except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws of general application affecting enforcement of creditors' rights; (ii) general principles of equity that restrict the availability of equitable remedies; and (iii) to the extent that the enforceability of the indemnification provisions in the Investor Rights Agreement may be limited by applicable laws. The sale of the Shares and the subsequent conversion of the Shares into Conversion Shares are not and will not be subject to any preemptive rights or rights of first refusal that have not been properly waived or complied with.
3.4 FINANCIAL STATEMENTS. The Company's audited financial statements for its fiscal year ended June 30, 1999, and its unaudited consolidated balance sheet (the "Balance Sheet") as of 15 days prior to the Closing (the "Balance Sheet Date"), and unaudited consolidated statements of operations of the Company for the period from July 1, 1999 through the Balance Sheet Date, delivered to the Purchasers in connection with the investment contemplated hereby (collectively, the "Financial Statements"), fairly present in all material respects the financial position and the results of operations of the Company for the period covered thereby.
3.5 LIABILITIES. The Company has no material liabilities and, to the best of its knowledge, the Company knows of no material contingent liabilities not disclosed in the Balance Sheet, except current liabilities incurred in the ordinary course of business subsequent to the Balance Sheet Date which have not been, either in any individual case or in the aggregate, materially adverse.
3.6 CHANGES. Since the Balance Sheet Date, and excluding the transactions contemplated by the Financing Documents, there has not been:
(a) Any change in the assets, liabilities, financial condition or operations of the Company from that reflected in the Financial Statements, other than changes in the ordinary course of business, none of which individually or in the aggregate has had or is expected to have a material adverse effect on such assets, liabilities, financial condition or operations of the Company.
(b) Any resignation or termination of any key officers of the Company; and the Company, to the best of its knowledge, does not know of the impending resignation or termination of employment of any such officer;
(c) Any material change, except in the ordinary course of business, in the contingent obligations of the Company by way of guaranty, endorsement, indemnity, warranty or otherwise;
(d) Any damage, destruction or loss, whether or not covered by insurance, materially and adversely affecting the properties, business or prospects or financial condition of the Company;
(e) Any waiver by the Company of a valuable right or of a material debt owed to it;
(f) Any direct or indirect loans made by the Company to any stockholder, employee, officer or director of the Company, other than advances made in the ordinary course of business;
(g) Any material change in any compensation arrangement or agreement with any employee, officer, director or stockholder of the Company;
(h) Any declaration or payment of any dividend or other distribution of the assets of the Company;
(i) Any labor organization activity;
(j) Any debt, obligation or liability incurred, assumed or guaranteed by the Company, except those for immaterial amounts and for current liabilities incurred in the ordinary course of business;
(k) Any sale, assignment or transfer of any patents, trademarks, copyrights, trade secrets or other intangible assets of the Company;
(1) Any change in any material agreement to which the Company is a party or by which it is bound which materially and adversely affects the business, assets, liabilities, financial condition, operations or prospects of the Company, including compensation agreements with the Company's employees; or
(m) Any other event or condition of any character that, either individually or cumulatively, has materially and adversely affected the business, assets, liabilities, financial condition, operations or prospects of the Company.
3.7 MATERIAL CONTRACTS.
(a) Except as set forth on Item 3.7 of the Disclosure Schedule, the Company has no, and is not bound by, any contract, agreement, lease, commitment, or proposed transaction, judgment, order, writ or decree, written or oral, absolute or contingent, other than (i) contracts for the purchase of supplies and services that were entered into in the ordinary course of business and that do not involve more than $10,000, and do not extend for more than one year beyond the date hereof; (ii) sales contracts entered into in the ordinary course of business; and (iii) contracts terminable at will by the Company on no more than 30 days' notice without cost or liability to the Company and that do not involve any employment or consulting arrangement and are not material to the conduct of the Company's business. For the purpose of this paragraph, employment and consulting contracts and contracts with labor unions, and license agreements and any other agreements relating to the Company's acquisition or disposition of patent, copyright, trade secret or other proprietary rights or technology (other than standard end-user license agreements) shall not be considered to be contracts entered into in the ordinary course of business. Every contract disclosed on Item 3.7 of the Disclosure Schedule (collectively, the "Material Contracts") is a legal, valid and binding obligation, enforceable in accordance with its terms with respect to the Company and any other parties bound thereby, and true and complete copies of all Material Contracts have been provided to Purchasers. The Company has not been given notice that any other party is currently in breach of any of the terms of any Material Contract. There is no default or event that, with notice or lapse of time, or both, would conflict with or constitute a breach of any Material Contract or would result in the creation or imposition of any lien or encumbrance on the Company, or any of the Company's property. The Company has not received notice that any party to any Material Contract intends to cancel, amend or terminate any such agreement.
(b) Except as set forth on Item 3.7 of the Disclosure
Schedule, the Company has not engaged in the past three months in any discussion
(i) with any representative of any corporation or corporations regarding the
consolidation or merger of the Company with or into any such corporation or
corporations; (ii) with any corporation, partnership, association or other
business entity or any individual regarding the sale, conveyance or disposition
of all or substantially all of the assets of the Company, or a transaction or
series of related transactions in which more than 50% of the voting power of the
Company is or was to be disposed; or (iii) regarding any other form of
acquisition, liquidation, dissolution or winding up of the Company.
3.8 OBLIGATIONS TO RELATED PARTIES. There are no obligations of the Company to officers, directors, stockholders, or employees of the Company other than (i) for payment of salary for services rendered since the commencement of the Company's most recent payroll period; (ii) reimbursement for reasonable expenses incurred on behalf of the Company; and (iii) for other standard employee benefits made generally available to all employees (including stock option agreements outstanding under any stock option plan approved by the Board of Directors of the Company). Except as set forth on Item 3.8 of the Disclosure Schedule, none of the officers, directors or stockholders of the Company, or any members of their immediate families, are indebted to the Company or have any direct or indirect ownership interest in any firm or corporation with which the Company is affiliated or with which the Company has a business relationship, or any firm or corporation which competes with the Company, except that officers,
directors and/or stockholders of the Company may own stock in publicly traded companies which may compete with the Company. No officer, director or stockholder, or any member of their immediate families, is, directly or indirectly, interested in any material contract with the Company (other than such contracts as relate to any such person' s ownership of capital stock or other securities of the Company). Except as may be disclosed in the Financial Statements, the Company is not a guarantor or indemnitor of any indebtedness of any other person, firm or corporation.
3.9 ASSETS. The Company has good and, with respect to real property, marketable, title to all of its real and personal property, including all assets reflected on the balance sheets included in the Financial Statements or acquired by the Company since the Balance Sheet Date, all of which are in good operating condition and free and clear of material restrictions on or conditions to transfer or assignment, and free and clear of all liens, claims, mortgages, pledges, charges, equities, easements, rights of way, covenants, conditions, security interests, encumbrances, or restrictions, except for liens for current taxes or materialmen not yet due and payable or being contested in good faith. Set forth on Item 3.9 of the Disclosure Schedule is a correct and complete list of all real property owned by the Company, and a list (including the amount of annual rents called for and a summary description of the leased property) of all leases under which the Company is a lessee. The properties and leases listed on Item 3.9 of the Disclosure Schedule are sufficient for the conduct of the Company's business as now being and presently planned to be conducted. The Company holds a valid leasehold interest in all leases listed on Item 3.9 of the Disclosure Schedule, free of any liens, claims, or encumbrances granted by the Company, except for those described in the first sentence of this Section 3.9, and is not in default under any such lease. The Company enjoys peaceful and undisturbed possession of all premises owned by it, or leased to it from others, and does not occupy any real property in material violation of any law, regulations, or decree.
3.10 INTELLECTUAL PROPERTY. The Company owns or possesses sufficient legal rights to all patents, trademarks, service marks, trade names, copyrights, trade secrets, information and other proprietary rights and processes necessary for its business as now conducted and as proposed to be conducted, without any known infringement of the rights of others. There are no outstanding options, licenses or agreements of any kind relating to the foregoing, nor is the Company bound by or a party to any options, licenses or agreements of any kind with respect to the patents, trademarks, service marks, trade names, copyrights, trade secrets, licenses, information and other proprietary rights and processes of any other person or entity other than such licenses or agreements arising from the purchase of "off the shelf" or standard products. The Company has received no communication alleging that the Company has violated or, by conducting its business as proposed, would violate any of the patents, trademarks, service marks, trade names, copyrights or trade secrets or other proprietary rights of any other person or entity. The Company is not aware that any of its employees is obligated under any contract (including licenses, covenants or commitments of any nature) or other agreement, or subject to any judgment, decree or order of any court or administrative agency, that would interfere with their duties to the Company or that would conflict with the Company's business as proposed to be conducted. Neither the execution nor delivery of this Agreement, nor the carrying on of the Company's business by the employees of the Company, nor the conduct of the Company's business as proposed, will, to the Company's knowledge, conflict with or result in a breach of
the terms, conditions or provisions of, or constitute a default under, any contract, covenant or instrument under which any employee is now obligated.
3.11 COMPLIANCE WITH OTHER INSTRUMENTS. The Company is not in violation or default of any term of its Amended Certificate or Bylaws, or of any provision of any mortgage, indenture, contract, agreement, instrument or contract to which it is party or by which it is bound or of any judgment, decree, order, writ or, to its knowledge, any statute, rule or regulation applicable to the Company which would materially and adversely affect the business, assets, liabilities, financial condition, operations or prospects of the Company. The execution, delivery, and performance of and compliance with this Agreement, and the Financing Documents, and the issuance and sale of the Shares pursuant hereto and of the Conversion Shares pursuant to the Amended Certificate, will not, with or without the passage of time or giving of notice, result in any such material violation, or be in conflict with or constitute a default under any such term, or result in the creation of any mortgage, pledge, lien, encumbrance or charge upon any of the properties or assets of the Company or the suspension, revocation, impairment, forfeiture or nonrenewal of any permit license, authorization or approval applicable to the Company, its business or operations or any of its assets or properties.
3.12 LITIGATION. Except as set forth on Item 3.12 of the Disclosure Schedule, there are no actions, suits, or legal, administrative, or other proceedings or investigations pending or, to the best of the Company's knowledge, threatened before any court, agency, or other tribunal to which the Company is a party or against or affecting any of the property, assets, businesses, or financial condition of the Company. The Company is not in default with respect to any order, writ, injunction, or decree of any federal, state, local or foreign court, department, agency, or instrumentality to which it is a party .
3.13 TAXES. The Company has timely filed all federal, state, county, local and foreign tax returns and reports within the times and in the manner prescribed by law and has paid (or made adequate provision in the Financial Statements for) all taxes shown due on such returns, as well as all other assessments and penalties which have become due and payable. The Company's federal income and other tax returns have not been audited by the Internal Revenue Service or any other taxing authority and no notice of audit has been received. The Company has received no notice of any disputes, deficiency assessments, or proposed adjustments to taxes payable by the Company.
3.14 EMPLOYEES AND CONSULTANTS. Except as set forth on Item 3.14 of the Disclosure Schedule, the Company has not entered into any arrangement with any present or former employee that will result in any obligation of the Company to make any payment to such employee upon termination. True and complete copies of all written employment agreements with the key executive officers of the Company listed on Item 3.14 of the Disclosure Schedule have been delivered to Purchasers prior to the Closing Date. To the Company's knowledge, no employee of or consultant to the Company is in material violation of any term of any employment contract or any other contract or agreement relating to the relationship of any such employee or consultant with the Company. The Company has not received notice that any executive officer intends to terminate his employment with the Company, nor does the Company have any present intention to terminate the employment of any executive officer. To the
Company's knowledge, none of its employees are obligated under any contract (including licenses, covenants, or commitments of any nature) or other agreement, or subject to any judgment, decree, or order of any court or administrative agency, that would interfere with the use of his/her reasonable diligence to promote the interests of the Company or that would conflict with the Company's business as proposed to be conducted. Neither the execution nor delivery of this Agreement, nor the carrying on of the Company's business by the employees of the Company, nor the conduct of the Company's business as proposed, will, to the Company's knowledge, conflict with or result in a breach of the terms, conditions or provisions of, or constitute a default under, any contract, covenant, or instrument under which any of such employees is obligated, which conflict, breach, or default would be materially adverse to the Company.
3.15 EMPLOYEE BENEFITS MATTERS. Except as set forth on Item 3.15 of the
Disclosure Schedule, the Company does not maintain or contribute to any plan or
arrangement that constitutes an "employee pension benefit plan" as defined in
Section 3(2) of ERISA, and is not obligated to contribute to or accrue or pay
benefits under any deferred compensation or retirement funding arrangement.
3.16 REGISTRATION RIGHTS. Except as required pursuant to the Investor Rights Agreement, the Company is presently not under any obligation, and has not granted any rights, to register any of the Company's presently outstanding securities or any of its securities that may hereafter be issued.
3.17 GOVERNMENTAL APPROVALS/THIRD PARTY CONSENTS. All consents, approvals, or authorizations of, or registrations, qualifications, designations, declarations, or filings with any federal or state governmental authority, and all consents, approvals or authorizations of any third party required in connection with the execution of the Financing Documents and the performance of the transactions contemplated hereby (including the issuance and sale of the Shares) have been obtained by the Company. The Company has, or has rights to acquire, all licenses, permits, and other similar authority necessary for the conduct of its business as now being conducted by it and as planned to be conducted, the lack of which could materially and adversely affect the operations or condition, financial or otherwise, of the Company, and it is not in default in any material respect under any of such licenses, permits or other similar authority .
3.18 COMPLIANCE WITH LAWS. The Company (a) has complied with and is in compliance in all material respects with all foreign, federal, state and local statutes, laws, ordinances, regulations, rules, judgments, orders and decrees applicable to it and its assets, business and operations, and (b) has received no written notice of any claim of default under or violation of any statute, law, ordinance, regulation, rule, judgment, order or decree except for any such noncompliance or claim of default or violation, if any, which in the aggregate do not and will not have a material adverse effect the property , operations, financial condition or prospects of the Company.
3.19 ENVIRONMENTAL MATTERS. The Company is in compliance in all material respects with all environmental and occupational health and safety laws and, to its knowledge, except as set forth on Item 3.19 of the Disclosure Schedule, no material expenditures are or will be required in order to comply with any such laws.
3.20 OFFERING VALID. Assuming the accuracy of the representations and warranties of the Purchasers contained in Section 4 hereof, the offer, sale and issuance of the Shares and the Conversion Shares will be exempt from the registration requirements of the Securities Act of 1933, as amended (the "Securities Act") and will have been registered or qualified (or are exempt from registration and qualification) under the registration, permit or qualification requirements of all applicable state securities laws.
3.21 ACCURACY OF INFORMATION FURNISHED. The Financing Documents, as well as any exhibit, certificate, written statement, material or information furnished by or on behalf of the Company pursuant thereto or in connection with the transactions contemplated thereby to the Purchasers, do not contain any untrue statement of a material fact or omit to state any material fact that is necessary to make the statements contained herein or therein not misleading.
3.22 INSURANCE. The Company has obtained fire and casualty insurance policies with coverage customary for companies similarly situated to the Company.
3.23 INVESTMENT COMPANY ACT. The Company is not an "investment company," or a company "controlled" by an "investment company," within the meaning of the Investment Company Act of 1940, as amended.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF PURCHASERS.
Each Purchaser makes the following representations and warranties to the Company as to itself that:
4.1. REQUISITE POWER AND AUTHORITY. Purchaser is an individual, or a corporation, limited liability company, or limited partnership duly organized, validly existing and in good standing under the laws of the jurisdiction of its formation, and has all requisite partnership or corporate power and authority to own its assets and operate its business. Purchaser has all necessary corporate or partnership power and authority under all applicable provisions of law to execute and deliver this Agreement and the Financing Documents and to carry out their provisions. All action on Purchaser's part required for the lawful execution and delivery of this Agreement and the Financing Documents have been or will be effectively taken prior to each Closing Date. Upon their execution and delivery, this Agreement and the Financing Documents will be valid and binding obligations of Purchaser, enforceable in accordance with their terms, except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws of general application affecting enforcement of creditors' rights; (ii) general principles of equity that restrict the availability of equitable remedies; and (iii) to the extent that the enforceability of the indemnification provisions of the Investor Rights Agreement may be limited by applicable laws.
4.2. INVESTMENT REPRESENTATIONS. Purchaser understands that the Shares have not been registered under the Securities Act. Purchaser also understands that the Shares are being offered and sold pursuant to an exemption from registration contained in the Securities Act based in part upon Purchaser's representations contained in this Agreement. Purchaser hereby represents and warrants as follows:
(a) PURCHASER BEARS ECONOMIC RISK. Purchaser has substantial experience in evaluating and investing in private placement transactions of securities in companies similar to the Company so that it is capable of evaluating the merits and risks of its investment in the Company and has the capacity to protect its own interests. Purchaser must bear the economic risk of this investment indefinitely unless the Shares are registered pursuant to the Securities Act, or an exemption from registration is available. Purchaser understands that there is no assurance that any exemption from registration under the Securities Act will be available and that, even if available, such exemption may not allow Purchaser to transfer all or any portion of the Shares under the circumstances, in the amounts or at the times Purchaser might propose.
(b) ACQUISITION FOR OWN ACCOUNT. Purchaser is acquiring the Shares for Purchaser's own account for investment only, and not with a view towards their distribution.
(c) PURCHASER CAN PROTECT ITS INTEREST. Purchaser represents that by reason of its, or of its management's, business or financial experience, Purchaser has the capacity to protect its own interests in connection with the transactions contemplated in this Agreement and the Financing Documents.
(d) ACCREDITED INVESTOR. Purchaser represents that it is an "accredited investor" within the meaning of Regulation D under the Securities Act.
(e) COMPANY INFORMATION. Purchaser has received and read the Financial Statements and has had an opportunity to discuss the Company's business, management and financial affairs with directors, officers and management of the Company and has had the opportunity to review the Company's operations and facilities. Purchaser also has had the opportunity to ask questions of and receive answers from, the Company and its management regarding the terms and conditions of this investment.
(f) RULE 144. Purchaser acknowledges and agrees that the Shares must be held indefinitely unless they are subsequently registered under the Securities Act or an exemption from such registration is available. Purchaser has been advised or is aware of the provisions of Rule 144 promulgated under the Securities Act, which permits limited resale of shares purchased in a private placement subject to the satisfaction of certain conditions, including, among other things: the availability of certain current public information about the Company, the resale occurring not less than one year after a party has purchased and paid for the security to be sold, the sale being through an unsolicited "broker's transaction" or in transactions directly with a market maker (as said term is defined under the Exchange Act) and the number of shares being sold during any three-month period not exceeding specified limitations.
(g) RESIDENCE. The residence of Purchaser (if an individual), or the office or offices of the Purchaser in which its investment decision was made is located at the address or addresses of the Purchaser as stated on the signature pages of this Agreement.
4.3 RESTRICTIVE LEGENDS. Purchaser agrees to the imprinting, so long as required by law, of a legend on certificates representing all of the Shares or the Conversion Stock to the following effect:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION TO THE REGISTRATION REQUIREMENTS OF SUCH ACT OR SUCH LAWS.
THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A SHAREHOLDERS AGREEMENT DATED AS OF MAY 18, 1998 AS MAY BE AMENDED FROM TIME TO TIME, AND SAID SHARES MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT IN ACCORDANCE WITH THE TERMS OF SUCH AGREEMENT. SUCH AGREEMENT MAY BE EXAMINED AT THE PRINCIPAL PLACE OF BUSINESS OF THE COMP ANY AND A COPY THEREOF WILL BE FURNISHED WITHOUT CHARGE TO THE HOLDER OF THIS CERTIFICATE UPON RECEIPT BY THE COMPANY AT ITS PRINCIPAL PLACE OF BUSINESS OR REGISTERED OFFICE OF A WRITTEN REQUEST FROM THE SHAREHOLDER."
SECTION 5. CONDITIONS TO CLOSING.
5.1 CONDITIONS TO PURCHASERS' OBLIGATIONS AT THE CLOSING. Purchasers' obligations to purchase the Shares at the Closing are subject to the satisfaction, at or prior to the Closing, of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES TRUE; PERFORMANCE OF OBLIGATIONS. The representations and warranties made by the Company in Section 3 hereof shall be true and correct in all material respects as of the Closing Date with the same force and effect as if they had been made as of the Closing Date, and the Company shall have performed all obligations and conditions herein required to be performed or observed by it on or prior to the Closing.
(b) LEGAL INVESTMENT. On the Closing Date, the sale and issuance of the Shares, and the proposed issuance of the Conversion Shares, shall be legally permitted by all laws and regulations to which Purchasers and the Company are subject.
(c) CONSENTS, PERMITS, AND WAIVERS. The Company shall have obtained any and all consents, permits and waivers necessary or appropriate for consummation of the
transactions contemplated by the Agreement and the Financing Documents (except for such as may be properly obtained subsequent to the Closing).
(d) FILING OF AMENDED CERTIFICATE. The Amended Certificate shall have been filed with the Secretary of State of the State of Delaware.
(e) CORPORATE DOCUMENTS. The Company shall have delivered to Purchasers or their counsel, copies of all corporate documents of the Company as Purchasers shall reasonably request.
(f) RESERVATION OF CONVERSION SHARES. The Conversion Shares issuable upon conversion of the Shares shall have been duly authorized and reserved for issuance upon such conversion.
(g) CERTIFICATES. The Company shall have delivered to Purchasers:
(1) proof of filing of the Amended Certificate, and a certificate, as of the most recent practical date, of the Secretary of State of Delaware as to the Company's good standing;
(2) a certificate of the Secretary of the Company dated as of the Closing Date, certifying as to (i) the incumbency of officers of the Company executing the Financing Agreements and all other documents executed and delivered in connection therewith; (ii) a copy of the Amended Certificate, in effect as of the Closing; (iii) a copy of the Bylaws of the Company, in effect on the Closing Date; and (iv) a copy of the resolutions or consents of the Board of Directors and stockholders of the Company authorizing and approving the Company's execution, delivery and performance of the Financing Agreements; and
(3) a certificate, executed by the President of the Company as of the Closing Date, certifying to the fulfillment of all of the conditions of the Purchasers' obligations under this Agreement, as set forth in this Section 5.
(h) INVESTOR RIGHTS AGREEMENT. The Investor Rights Agreement shall have been executed and delivered by the parties thereto.
(i) SHAREHOLDERS AGREEMENT. The Shareholders Agreement shall have been executed and delivered by the parties thereto.
(j) LEGAL OPINION. The Purchasers shall have received from legal counsel to the Company an opinion addressed to them, dated as of the Closing Date, in substantially the form attached hereto as Exhibit G.
(k) PROCEEDINGS AND DOCUMENTS. All corporate and other proceedings in connection with the transactions contemplated at the Closing hereby and all documents and instruments incident to such transactions shall be reasonably satisfactory in substance and form
to the Purchasers and their special counsel, and the Purchasers and their special counsel shall have received all such counterpart originals or certified or other copies of such documents as they may reasonably request.
5.2 CONDITIONS TO OBLIGATIONS OF THE COMPANY AT CLOSING. The Company's obligation to issue and sell the Shares at the Closing is subject to the satisfaction, on or prior to the Closing, of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES TRUE. The representations and warranties made by Purchasers in Section 4 hereof shall be true and correct in all material respects at the Closing Date, with the same force and effect as if they had been made on and as of said date.
(b) PERFORMANCE OF OBLIGATIONS. Purchasers shall have performed and complied with all agreements and conditions herein required to be performed or complied with by Purchasers on or before the Closing.
(c) FILING OF AMENDED CERTIFICATE. The Amended Certificate shall have been filed with the Secretary of State of the State of Delaware.
(d) INVESTOR RIGHTS AGREEMENT. The Investor Rights Agreement shall have been executed and delivered by the parties thereto.
(e) SHAREHOLDERS AGREEMENT. The Shareholders Agreement shall have been executed and delivered by the parties thereto.
(f) CONSENTS, PERMITS, AND WAIVERS. The Company shall have obtained any and all consents, permits and waivers necessary or appropriate for consummation of the transactions contemplated by the Agreement and the Financing Documents (except for such as may be properly obtained subsequent to the Closing).
(g) MINIMUM INVESTMENT. The Purchasers shall purchase at least 2,000,000 Shares in the aggregate at the Closing.
SECTION 6. COVENANTS OF THE COMPANY FOR THE PERIOD FOLLOWING CLOSING.
Until the date upon which all Shares held by Purchasers (including any capital stock of the Company issued upon conversion of the Shares) are no longer outstanding, the Company covenants to each Purchaser and agrees as follows:
6.1 USE OF PROCEEDS. The Company shall use all proceeds from the sale of the Shares to Purchasers pursuant to this Agreement for financing of expenditures related to product development and general working capital.
6.2 MAINTENANCE OF CORPORATE STATUS. The Company shall maintain, and shall cause each affiliate to maintain, its corporate or partnership existence in good standing or effective under the laws of its jurisdiction of organization and any other states or jurisdictions in which its failure to qualify as a foreign corporation or entity would have a material adverse effect on its operations or financial condition.
6.3 COMPLIANCE WITH GOVERNING DOCUMENTS. The Company shall comply, and shall cause each affiliate to comply, in all material respects with its Amended Certificate, Bylaws or other governing documents.
6.4 COMPLIANCE WITH LAWS, LICENSES AND PERMITS; NO INFRINGEMENT. The Company shall comply with all applicable federal, state, local, foreign and other laws, regulations and ordinances, and with all applicable federal, state, local and foreign governmental licenses and permits necessary for conducting its business, except to the extent that any noncompliance would not have a material adverse effect upon the Company. The Company shall not knowingly engage in any activities that infringe upon the intellectual property rights of any other person, corporation, partnership or other entity which could have a material adverse effect upon the Company.
6.5 DISCHARGE OF OBLIGATIONS. The Company shall pay and discharge all taxes, assessments, and governmental charges lawfully levied or imposed upon it (in each case before they become delinquent and before penalties accrue), all lawful claims for labor, materials, supplies and rents, and all other debts and liabilities that if unpaid would by law be a lien or charge upon any of the asserts or properties of the Company or lead to suspension of the business of the Company (except to the extent contested in good faith by the Company and for which adequate reserves are established).
6.6 MAINTENANCE OF PROPERTIES. The Company shall maintain all real and personal property used in the business of the Company in good operating condition, and shall make all repairs, renewals, replacements, additions and improvements to those properties as are necessary or appropriate in the ordinary course of business.
6.7 MAINTENANCE OF PROPRIETARY INFORMATION. The Company shall maintain all proprietary information, and all applications and registrations therefor owned or held by the Company, in full force and effect, except as otherwise determined in the ordinary course of business. The Company shall not encumber or license others to use its proprietary information owned by it except in the ordinary course of the Company's business, and shall maintain the confidentiality and trade secret status of all proprietary information that is confidential except 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.
6.8 COMPENSATION OF DIRECTORS. Each member of the Board of Directors shall be entitled to (a) customary liability insurance obtained at commercially reasonable rates, and (b) reimbursement by the Company for all out-of-pocket expenses, including, without limitation,
travel expenses, incurred by such director in connection with the performance of such directors duties, subject to approval by the Board of Directors, such approval not be unreasonably withheld.
6.9 BOOKS AND RECORDS. The Company shall, and shall cause each affiliate to, keep proper books of records and accounts, in which full and correct entries shall be made of all financial transactions and the assets and business of the Company and each affiliate, in accordance with generally accepted accounting principles in effect from time to time. The Company shall provide Purchasers with access to all such books and records and allow Purchasers to make copies and abstracts thereof at reasonable times.
SECTION 7. MISCELLANEOUS
7.1 GOVERNING LAW. This Agreement shall be governed by the laws of the State of Colorado as such laws are applied to agreements between Colorado residents entered into and performed entirely in Colorado, except that the Delaware General Corporation Law will govern as to matters of corporate law.
7.2 SURVIVAL. The representations, warranties, covenants and agreement made herein shall survive any investigation made by any Purchaser and the closing of the transactions contemplated hereby. All statements as to factual matters contained in any certificate or other instrument delivered by or on behalf of the Company pursuant hereto in connection with the transactions contemplated hereby shall be deemed to be representations and warranties by the Company hereunder solely as of the date of such certificate or instrument.
7.3 SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided herein, the provisions hereof shall inure to the benefit of, and be binding upon, the successors, assigns, 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 the Shares from time to time.
7.4 ENTIRE AGREEMENT. This Agreement, the Exhibits and Schedules hereto, the Financing Documents and the other documents delivered pursuant hereto constitute 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 any representations, warranties, covenants and agreements except as specifically set forth herein and therein.
7.5 SEVERABILITY. In case any provision of the Agreement shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.
7.6 AMENDMENT AND WAIVER. This Agreement may be amended or modified only upon the written consent of the Company, and the holders of at least sixty-six percent (66%) of the Shares (treated as if converted and including any Conversion Shares into which the Shares have been converted that have not been sold).
7.7 DELAYS OR OMISSIONS. It is agreed that no delay or omission to exercise any right, power or remedy accruing to any party, upon any breach, default or noncompliance by another party under this Agreement, the Financing Documents or the Amended Certificate, shall impair any such right, power or remedy, nor shall it be construed to be a waiver of any such breach, default or noncompliance, or any acquiescence therein, or of or in any similar breach, default or noncompliance thereafter occurring. It is further agreed that any waiver, permit, consent or approval of any kind or character on any Purchaser's part of any breach, default or noncompliance under this Agreement, the Financing Documents or under the Amended Certificate or any waiver on such party's part of any provisions or conditions of the Agreement, the Financing Documents, or the Amended Certificate must be in writing and shall be effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement, the Financing Documents, the Amended Certificate, by law, or otherwise afforded to any party, shall be cumulative and not alternative.
7.8 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 facsimile if sent during
normal business hours of the recipient, if not, then on the next business day;
(iii) three (3) business 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 Company and to Purchasers at the addresses set forth on the signature
pages attached hereto or at such other address as the Company or Purchaser may
designate by ten (10) days advance written notice to the other parties hereto.
7.9 EXPENSES. The Company hereby agrees to reimburse each Purchaser for its out-of-pocket expenses incurred in connection with the transactions contemplated hereby, including all expenses incurred in connection with its due diligence examination of the Company, the preparation and negotiation of the Financing Documents, including the reasonable fees and expenses of special counsel to the Purchasers, (Heller Ehrman White & McAuliffe) and in connection with the enforcement of rights and remedies of the Purchasers hereunder and under the Shareholders Agreement and all other documents evidencing the transactions contemplated herein.
7.10 INDEMNIFICATION BY THE COMPANY. The Company agrees to indemnify and hold each Purchaser harmless against any loss, liability, damage or expense (including reasonable legal fees and costs) which such Purchasers may suffer, sustain or become subject to as a result of or in connection with the breach by the Company of any representation, warranty, covenant or agreement of the Company contained in this Agreement or the Financing Documents.
7.11 INDEMNIFICATION BY THE PURCHASERS. Each Purchaser, severally and not jointly, agrees to indemnify and hold the Company harmless against any loss, liability, damage or expense (including reasonable legal fees and costs) which the Company may suffer, sustain or become subject to as a result of or in connection with the breach by such Purchaser of any representation, warranty, covenant or agreement of such Purchaser contained in this Agreement or the Financing Documents.
7.12 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.
7.13 COUNTERPARTS. This Agreement may be delivered via facsimile and may be executed in any number of counterparts, each of which shall be an original, but all of which together shall constitute one instrument.
7.14 BROKER'S FEES. Each party hereto represents and warrants that no agent, broker, investment banker, person or firm acting on behalf of or under the authority of such party hereto is or will be entitled to any broker's or finder's fee or any other commission directly or indirectly in connection with the transactions contemplated herein. Each party hereto further agrees to indemnify each other party for any claims, losses or expenses incurred by such other party as a result of the representation in this Section 7.14 being untrue.
7.15 ARBITRATION. The parties hereby covenant and agree that any legal suit, dispute, claim, demand, controversy or cause of action of every kind and nature whatsoever, known or unknown, fixed or contingent, that any party may now have or at any time in the future claim to have based in whole or in part, or arising from or out of or that in any way is related to the negotiations, execution, interpretation or enforcement of this Agreement (collectively, the "Disputes") shall be completely and finally settled by submission of any such Disputes to arbitration under the rules of the American Arbitration Association ("AAA") then in effect. There shall be one arbitrator, and such arbitrator shall be chosen by mutual agreement of the parties in accordance with AAA rules. Unless the parties agree otherwise, the arbitration proceedings shall take place in Denver, Colorado. The arbitrator shall apply Colorado law to all issues in dispute, in accordance with Section 7.1 above. Notice of demand for arbitration shall be filed in writing with the other party to this Agreement and with the AAA In no event shall the demand for arbitration be made after the date when institution of legal or equitable proceedings based on such Dispute would be barred by the applicable statute of limitations. The findings of the arbitrator shall be final and binding on the parties. Judgment on such award may be entered in any court of competent jurisdiction, or application may be made to that court for a judicial acceptance of the award and an order or enforcement, as the party seeking to enforce that award may elect. The prevailing party in any such action shall be entitled to receive from the losing party all reasonable costs and expenses, including the reasonable fees of attorneys, accountants, and other experts, incurred by the prevailing party in investigating and prosecuting (or defending) such action, together with any such fees which may be incurred in enforcing any award of judgment.
7.16 EXCULPATION AMONG PURCHASERS. Each Purchaser acknowledges that it is not relying upon any person, firm, or corporation, other than the Company and its officers and directors, in making its investment or decision to invest in the Company.
Each Purchaser agrees that no Purchaser nor the respective controlling persons, officers, directors, partners, agents, or employees of any Purchaser shall be liable for any action heretofore or hereafter taken or omitted to be taken by any of them in connection with the Shares and Conversion Shares.
7.17 PRONOUNS. All pronouns contained herein, and any variations thereof, shall be deemed to refer to the masculine, feminine or neutral, singular or plural, as the identity of the parties hereto may require.
[SIGNATURE PAGES FOLLOW]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date above first written.
COMPANY: INVESTORS:
ARRAY BIOPHARMA, INC, a Delaware FRAZIER HEALTHCARE II, L.P.
Corporation
By: /s/ ROBERT CONWAY By: /s/ ALAN D. FRAZIER
-------------------------------------- ---------------------------------
Robert Conway, Chief Executive Officer Name: Alan D. Frazier
-------------------------------
Title:
------------------------------
ARCH VENTURE FUND III, L.P.
By: Arch Venture Partners, LLC, its
General Partner
By: /s/ KEITH L. CRANDELL
---------------------------------
Name: Keith L. Crandell
-------------------------------
Title: General Managing Director
------------------------------
ROVENT II LIMITED PARTNERSHIP
By: Advent International Limited
Partnership, its General Partner
By: Advent International Corporation,
its General Partner
By: /s/ JASON S. FISHERMAN
---------------------------------
Name: Jason S. Fisherman
-------------------------------
Title: Vice President
------------------------------
MITSUI & CO. (U.S.A.), INC.
By: /s/ YOICHIRO ENDO
---------------------------------
Name: Yoichiro Endo
-------------------------------
Title: General Manager
------------------------------
FALCON TECHNOLOGY PARTNERS, L.P.,
a Delaware limited partnership
By: /s/ JAMES L. RATHMANN
----------------------------------
James L. Rathmann, General Partner
|
BOULDER VENTURES II, L.P.,
A DELAWARE LIMITED PARTNERSHIP
By: /s/ KYLE LEFKOFF
------------------------------------
Kyle Lefkoff, General Partner
|
BOULDER VENTURES II, (ANNEX) L.P.,
A DELAWARE LIMITED PARTNERSHIP
By: /s/ KYLE LEFKOFF
------------------------------------
Kyle Lefkoff, General Partner
|
THE CARUTHERS FAMILY, L.L.C.
By: /s/ MARVIN H. CARUTHERS
------------------------------------
Marvin H. Caruthers, Ph.D., Manager
/s/ DAVID SNITMAN
------------------------------------
DAVID SNITMAN, PH.D.
/s/ KEVIN KOCH
------------------------------------
KEVIN KOCH, PH.D.
/s/ ANTHONY D. PISCOPIO
------------------------------------
ANTHONY D. PISCOPIO, PH.D.
/s/ K.C. NICOLAOU
------------------------------------
K.C. NICOLAOU, PH.D.
/s/ FRANK A. BONSAL
------------------------------------
FRANK A. BONSAL, JR.
/s/ RICHARD J. DALY
------------------------------------
RICHARD J. DALY
/s/ MICHAEL CARRUTHERS
------------------------------------
MICHAEL CARRUTHERS
/s/ CHRISTOPHER D. OZEROFF
------------------------------------
CHRISTOPHER D. OZEROFF
/s/ THERESA KOCH
------------------------------------
THERESA KOCH
/s/ WILLIAM R. ROBERTS
------------------------------------
WILLIAM R. ROBERTS
|
EXHIBIT A
[AMENDED AND RESTATED CERTIFICATE OF INCORPORATION]
EXHIBIT B
[SCHEDULE OF PURCHASERS]
EXHIBIT C
[DISCLOSURE SCHEDULE]
EXHIBIT D
[AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT]
EXHIBIT E
[AMENDED AND RESTATED SHAREHOLDERS AGREEMENT]
EXHIBIT F
[CAPITALIZATION TABLE POST-CLOSING]
EXHIBIT G
[FORM LEGAL OPINION]
EXHIBIT 10.7
SERIES C PREFERRED STOCK PURCHASE AGREEMENT
ARRAY BIOPHARMA INC.
TABLE OF CONTENTS
Page
RECITALS .......................................................................................1
SECTION 1. PURCHASE AND SALE......................................................................1
1.1 Authorization of Shares................................................................1
1.2 Sale and Purchase......................................................................1
SECTION 2. CLOSING................................................................................1
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY..........................................2
3.1 Organization, Good Standing and Qualification..........................................2
3.2 Capitalization.........................................................................2
3.3 Authorization..........................................................................3
3.4 Financial Statements...................................................................3
3.5 Liabilities............................................................................3
3.6 Changes................................................................................3
3.7 Material Contracts.....................................................................5
3.8 Obligations to Related Parties.........................................................5
3.9 Assets.................................................................................6
3.10 Intellectual Property..................................................................6
3.11 Compliance with Other Instruments......................................................7
3.12 Litigation.............................................................................7
3.13 Taxes..................................................................................7
3.14 Employees and Consultants..............................................................7
3.15 Employee Benefits Matters..............................................................8
3.16 Registration Rights....................................................................8
3.17 Governmental Approvals/Third Party Consents............................................8
3.18 Compliance with Laws...................................................................8
3.19 Environmental Matters..................................................................9
3.20 Offering Valid.........................................................................9
3.21 Accuracy of Information Furnished......................................................9
3.22 Insurance..............................................................................9
3.23 Investment Company Act.................................................................9
SECTION 4. REPRESENTATIONS AND WARRANTIES OF PURCHASERS...........................................9
4.1 Requisite Power and Authority..........................................................9
4.2 Investment Representations............................................................10
4.3 Restrictive Legends...................................................................11
SECTION 5. CONDITIONS TO CLOSING.................................................................11
5.1 Conditions to Purchasers' Obligations at the First Closing............................11
5.2 Conditions to Obligations of the Company at First Closing.............................13
|
SECTION 6. COVENANTS OF THE COMPANY FOR THE PERIOD FOLLOWING CLOSING.............................13
6.1 Use of Proceeds.......................................................................13
6.2 Maintenance of Corporate Status.......................................................14
6.3 Compliance with Governing Documents...................................................14
6.4 Compliance with Laws, Licenses and Permits; No Infringement...........................14
6.5 Discharge of Obligations..............................................................14
6.6 Maintenance of Properties.............................................................14
6.7 Maintenance of Proprietary Information................................................14
6.8 Compensation of Directors.............................................................15
6.9 Books and Records.....................................................................15
SECTION 7. MISCELLANEOUS.........................................................................15
7.1 Governing Law.........................................................................15
7.2 Survival..............................................................................15
7.3 Successors and Assigns................................................................15
7.4 Entire Agreement......................................................................15
7.5 Severability..........................................................................15
7.6 Amendment and Waiver..................................................................15
7.7 Delays or Omissions...................................................................16
7.8 Notices...............................................................................16
7.9 Expenses..............................................................................16
7.10 Indemnification by the Company........................................................16
7.11 Indemnification by the Purchasers.....................................................16
7.12 Titles and Subtitles..................................................................17
7.13 Counterparts..........................................................................17
7.14 Broker's Fees.........................................................................17
7.15 Arbitration...........................................................................17
7.16 Exculpation Among Purchasers..........................................................17
7.17 Pronouns..............................................................................18
|
SERIES C PREFERRED STOCK PURCHASE AGREEMENT
ARRAY BIOPHARMA INC.
This Series C Preferred Stock Purchase Agreement (the "AGREEMENT") is made and entered into as of the 31st day of August 2000, by and among ARRAY BIOPHARMA INC., a Delaware corporation (the "COMPANY"), and each of the "PURCHASERS" identified on the signature pages hereto.
RECITALS
A. The Company has authorized the issuance and sale of a total of 1,666,667 shares (the "SHARES") of Series C Preferred Stock of the Company, par value $0.001 per share.
B. The Company desires to sell the Shares to Purchasers, and Purchasers desire to purchase the Shares from the Company, pursuant to the terms and conditions contained herein.
AGREEMENT
NOW THEREFORE, in consideration of the mutual covenants, agreements, conditions, representations, and warranties contained in this Agreement, the Company and Purchasers hereby each agree as follows:
SECTION 1. PURCHASE AND SALE.
1.1 AUTHORIZATION OF SHARES. On or prior to the Closing (as defined in
Section 2 below), the Company shall have authorized (i) the sale and issuance to
Purchasers of the Shares; and (ii) such shares of Common Stock issuable upon
conversion of the Shares (the "CONVERSION SHARES"). The Shares and the
Conversion Shares shall have the rights, preferences, privileges and
restrictions set forth in the Amended and Restated Certificate of Incorporation
of the Company, in the form attached hereto as Exhibit A (the "AMENDED
Certificate").
1.2 SALE AND PURCHASE. Subject to the terms and conditions hereof, at the Closing (as defined in Section 2 below) the Company hereby agrees to issue and sell to each Purchaser, severally and not jointly, and each Purchaser agrees to purchase from the Company, severally and not jointly, the number of Shares set forth opposite such Purchaser's name on Exhibit B hereto, at the purchase price of $6.00 per Share.
SECTION 2. CLOSING.
The closing of the sale and purchase of the Shares under this Agreement (the "CLOSING") shall take place at 9:00 a.m. on the date hereof, at the offices of Hogan & Hartson L.L.P., 1800 Broadway, Suite 200, Boulder Colorado 80302, or at such other time or place as the Company and Purchasers may mutually agree (such date is hereinafter referred to as the "CLOSING DATE"). At the Closing, subject to the terms and conditions hereof, the Company will deliver to the Purchasers certificates representing the number of Shares to be purchased at the Closing by each
Purchaser as set forth opposite such Purchaser's name on Exhibit B, against payment of the purchase price therefor by check or wire transfer made payable to the order of the Company.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
Except as set forth on the Disclosure Schedule attached hereto as Exhibit C, the Company hereby represents and warrants to each Purchaser that is purchasing the Shares as follows:
3.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. The Company has all requisite corporate power and authority to own and operate its properties and assets, to execute and deliver this Agreement, the Amendment No. 1 to Amended and Restated Investor Rights Agreement in the form attached hereto as Exhibit D (the "AMENDED INVESTOR RIGHTS AGREEMENT"), and the Amendment No. 2 to Amended and Restated Shareholders Agreement in the form attached hereto as Exhibit E (the "AMENDED SHAREHOLDERS AGREEMENT") (collectively with this Agreement and the Amended Certificate, the "FINANCING DOCUMENTS"), to issue and sell the Shares and to carry out the provisions of the Financing Documents, and to carry on its business as presently conducted and as presently proposed to be conducted. The Company is duly qualified and is authorized to do business and is in good standing in each jurisdiction in which the nature of its activities and of its properties (both owned and leased) makes such qualification necessary, except for those jurisdictions in which failure to do so would not have a material adverse effect on the Company or its business. The Company does not own, directly or indirectly, equity securities of any other corporation, limited partnership, limited liability company or other similar entity. The Company is not a participant in any joint venture, partnership or similar arrangement.
3.2 CAPITALIZATION. The authorized capital stock of the Company, immediately prior to the Closing, will consist of (a) 20,225,000 shares of Common Stock, 3,865,743 shares of which are issued and outstanding as of August 31, 2000, 4,837,500 shares of which are reserved for issuance to employees and consultants pursuant to the Company's 1998 Stock Option Plan, as amended, 6,800,000 shares of which are reserved for issuance upon conversion of the Series A Preferred Stock and warrants, 3,300,000 shares of which are reserved for issuance upon conversion of the Series B Preferred Stock, 1,725,000 shares of which are reserved for issuance upon conversion of the Series C Preferred Stock; and (b) 11,825,000 shares of Preferred Stock, 6,800,000 shares of which are designated Series A Preferred Stock, 6,635,000 shares of which are issued and outstanding; 3,300,000 shares of which are designated Series B Preferred Stock, 3,199,999 shares of which are issued and outstanding; and 1,725,000 shares of which are designated as Series C Preferred Stock, no shares of which are issued and outstanding. All issued and outstanding shares of the Company's Common Stock, Series A Preferred Stock and Series B Preferred Stock (i) have been duly authorized and validly issued, (ii) are fully paid and nonassessable, and (iii) were issued in compliance with all applicable state and federal laws concerning the issuance of securities. The rights, preferences, privileges and restrictions of the Shares are as stated in the Amended Certificate. The Conversion Shares have been duly and validly reserved for issuance. Except as may be granted pursuant to the Financing Documents, the Company's Preferred and Common Stock Purchase Agreement dated May 18, 1998, as amended, the Company's Series B Stock Purchase Agreement dated November 16, 1999, and the
agreements referred therein, options granted pursuant to the Company's 1998 Stock Option Plan, and warrants granted pursuant to certain of the Company's credit facilities, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or shareholders agreements, or agreements of any kind for the purchase or acquisition from the Company of any of its securities. When issued in compliance with the provisions of this Agreement and the Amended Certificate, and upon receipt of the consideration therefor, the Shares and the Conversion Shares will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances; provided, however, that the Shares and the Conversion Shares may be subject to restrictions on transfer under state and federal securities laws. A schedule describing the anticipated capitalization of the Company as of the Closing is attached as Exhibit F hereto.
3.3 AUTHORIZATION. All corporate action on the part of the Company, its officers, directors and stockholders necessary for the authorization of the Financing Documents, the performance of all obligations of the Company hereunder and thereunder at the Closing, and the authorization, sale, issuance and delivery of the Shares pursuant hereto and the Conversion Shares pursuant to the Amended Certificate has been taken or will be taken prior to the Closing. The Financing Documents, when executed and delivered, will be valid and binding obligations of the Company enforceable against the Company in accordance with their terms, except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws of general application affecting enforcement of creditors' rights; (ii) general principles of equity that restrict the availability of equitable remedies; and (iii) to the extent that the enforceability of the indemnification provisions in the Amended Investor Rights Agreement may be limited by applicable laws. The sale of the Shares and the subsequent conversion of the Shares into Conversion Shares are not and will not be subject to any preemptive rights or rights of first refusal that have not been properly waived or complied with.
3.4 FINANCIAL STATEMENTS. The Company's unaudited financial statements for its fiscal year ended June 30, 2000, and its unaudited balance sheet (the "BALANCE SHEET") as of July 31, 2000 (the "BALANCE SHEET Date"), and unaudited statements of operations of the Company for the period from July 1, 2000 through the Balance Sheet Date, made available to the Purchasers in connection with the investment contemplated hereby (collectively, the "FINANCIAL STATEMENTS"), fairly present in all material respects the financial position and the results of operations of the Company for the period covered thereby.
3.5 LIABILITIES. The Company has no material liabilities and, to the best of its knowledge, the Company knows of no material contingent liabilities not disclosed in the Balance Sheet, except current liabilities incurred in the ordinary course of business subsequent to the Balance Sheet Date which have not been, either in any individual case or in the aggregate, materially adverse.
3.6 CHANGES. Since the Balance Sheet Date, and excluding the transactions contemplated by the Financing Documents, there has not been:
(a) Any change in the assets, liabilities, financial condition or operations of the Company from that reflected in the Financial Statements, other than changes in the ordinary
course of business, none of which individually or in the aggregate has had or is expected to have a material adverse effect on such assets, liabilities, financial condition or operations of the Company;
(b) Any resignation or termination of any key officers of the Company; and the Company, to the best of its knowledge, does not know of the impending resignation or termination of employment of any such officer;
(c) Any material change, except in the ordinary course of business, in the contingent obligations of the Company by way of guaranty, endorsement, indemnity, warranty or otherwise;
(d) Any damage, destruction or loss, whether or not covered by insurance, materially and adversely affecting the properties, business or prospects or financial condition of the Company;
(e) Any waiver by the Company of a valuable right or of a material debt owed to it;
(f) Any direct or indirect loans made by the Company to any stockholder, employee, officer or director of the Company, other than advances made in the ordinary course of business;
(g) Any material change in any compensation arrangement or agreement with any employee, officer, director or stockholder of the Company;
(h) Any declaration or payment of any dividend or other distribution of the assets of the Company;
(i) Any labor organization activity;
(j) Any debt, obligation or liability incurred, assumed or guaranteed by the Company, except those for immaterial amounts and for current liabilities incurred in the ordinary course of business;
(k) Any sale, assignment or transfer of any patents, trademarks, copyrights, trade secrets or other intangible assets of the Company;
(1) Any change in any material agreement to which the Company is a party or by which it is bound that materially and adversely affects the business, assets, liabilities, financial condition, operations or prospects of the Company, including compensation agreements with the Company's employees; or
(m) Any other event or condition of any character that, either individually or cumulatively, has materially and adversely affected the business, assets, liabilities, financial condition, operations or prospects of the Company.
3.7 MATERIAL CONTRACTS.
(a) Except as set forth on Item 3.7(a) of the Disclosure Schedule, the Company has no, and is not bound by, any contract, agreement, lease, commitment, or proposed transaction, judgment, order, writ or decree, written or oral, absolute or contingent, other than (i) contracts for the purchase of supplies and services that were entered into in the ordinary course of business and that do not involve more than $20,000, and do not extend for more than one year beyond the date hereof; (ii) sales contracts entered into in the ordinary course of business; and (iii) contracts terminable at will by the Company on no more than 30 days' notice without cost or liability to the Company and that do not involve any employment or consulting arrangement and are not material to the conduct of the Company's business. For the purpose of this paragraph, employment and consulting contracts and contracts with labor unions, and license agreements and any other agreements relating to the Company's acquisition or disposition of patent, copyright, trade secret or other proprietary rights or technology (other than standard end-user license agreements) shall not be considered to be contracts entered into in the ordinary course of business. Every contract disclosed on Item 3.7(a) of the Disclosure Schedule (collectively, the "MATERIAL CONTRACTS") is a legal, valid and binding obligation, enforceable in accordance with its terms with respect to the Company and any other parties bound thereby, and true and complete copies of all Material Contracts have been provided to Purchasers. The Company has not been given notice that any other party is currently in breach of any of the terms of any Material Contract. There is no default or event that, with notice or lapse of time, or both, would conflict with or constitute a breach of any Material Contract or would result in the creation or imposition of any lien or encumbrance on the Company, or any of the Company's property. The Company has not received notice that any party to any Material Contract intends to cancel, amend or terminate any such agreement.
(b) Except as set forth on Item 3.7(b) of the Disclosure
Schedule, the Company has not engaged in the past three months in any discussion
(i) with any representative of any corporation or corporations regarding the
consolidation or merger of the Company with or into any such corporation or
corporations; (ii) with any corporation, partnership, association or other
business entity or any individual regarding the sale, conveyance or disposition
of all or substantially all of the assets of the Company, or a transaction or
series of related transactions in which more than 50% of the voting power of the
Company is or was to be disposed; or (iii) regarding any other form of
acquisition, liquidation, dissolution or winding up of the Company.
3.8 OBLIGATIONS TO RELATED PARTIES. There are no obligations of the Company to officers, directors, stockholders, or employees of the Company other than (i) for payment of salary for services rendered since the commencement of the Company's most recent payroll period; (ii) reimbursement for reasonable expenses incurred on behalf of the Company; and (iii) for other standard employee benefits made generally available to all employees (including stock option agreements outstanding under any stock option plan approved by the Board of Directors of the Company). Except as set forth on Item 3.8 of the Disclosure Schedule, none of the
officers, directors or stockholders of the Company, or any members of their immediate families, are indebted to the Company or have any direct or indirect ownership interest in any firm or corporation with which the Company is affiliated or with which the Company has a business relationship, or any firm or corporation which competes with the Company, except that officers, directors and/or stockholders of the Company may own stock in publicly traded companies which may compete with the Company. No officer, director or stockholder, or any member of their immediate families, is, directly or indirectly, interested in any material contract with the Company (other than such contracts as relate to any such person's ownership of capital stock or other securities of the Company). Except as may be disclosed in the Financial Statements, the Company is not a guarantor or indemnitor of any indebtedness of any other person, firm or corporation.
3.9 ASSETS; REAL PROPERTY. The Company has good title to all of its
personal property, including all assets reflected on the balance sheets included
in the Financial Statements or acquired by the Company since the Balance Sheet
Date, all of which are in good operating condition and free and clear of
material restrictions on or conditions to transfer or assignment, and free and
clear of all liens, claims, mortgages, pledges, charges, equities, easements,
rights of way, covenants, conditions, security interests, encumbrances, or
restrictions, except for liens for current taxes or materialmen not yet due and
payable or being contested in good faith and as set forth on Item 3.9 of the
Disclosure Schedule. The Company does not own any real property. Set forth on
Item 3.9 of the Disclosure Schedule is a correct and complete list (including
the amount of annual rents called for and a summary description of the leased
property) of all leases under which the Company is a lessee. The properties and
leases listed on Item 3.9 of the Disclosure Schedule are sufficient for the
conduct of the Company's business as now being and presently planned to be
conducted. The Company holds a valid leasehold interest in all leases listed on
Item 3.9 of the Disclosure Schedule, free of any liens, claims, or encumbrances
granted by the Company, except for those described in the first sentence of this
Section 3.9, and is not in default under any such lease. The Company enjoys
peaceful and undisturbed possession of all premises leased to it from others,
and does not occupy any real property in material violation of any law,
regulations, or decree.
3.10 INTELLECTUAL PROPERTY. The Company owns or possesses sufficient legal rights to all patents, trademarks, service marks, trade names, copyrights, trade secrets, information and other proprietary rights and processes necessary for its business as now conducted and as currently proposed to be conducted, without any known infringement of the rights of others. There are no outstanding options, licenses or agreements of any kind relating to the foregoing, nor is the Company bound by or a party to any options, licenses or agreements of any kind with respect to the patents, trademarks, service marks, trade names, copyrights, trade secrets, licenses, information and other proprietary rights and processes of any other person or entity other than such licenses or agreements arising from the purchase of "off the shelf" or standard products. The Company has received no communication alleging that the Company has violated or, by conducting its business as proposed, would violate any of the patents, trademarks, service marks, trade names, copyrights or trade secrets or other proprietary rights of any other person or entity. The Company is not aware that any of its employees is obligated under any contract (including licenses, covenants or commitments of any nature) or other agreement, or subject to any judgment, decree or order of any court or administrative agency, that would interfere with his or
her duties to the Company or that would conflict with the Company's business as currently proposed to be conducted. Neither the execution nor delivery of this Agreement, nor the carrying on of the Company's business by the employees of the Company, nor the conduct of the Company's business as proposed, will, to the Company's knowledge, conflict with or result in a breach of the terms, conditions or provisions of, or constitute a default under, any contract, covenant or instrument under which any employee is now obligated.
3.11 COMPLIANCE WITH OTHER INSTRUMENTS. The Company is not in violation or default of any term of its Amended Certificate or Bylaws, or of any provision of any mortgage, indenture, contract, agreement, instrument or contract to which it is party or by which it is bound or of any judgment, decree, order, writ or, to its knowledge, any statute, rule or regulation applicable to the Company which would materially and adversely affect the business, assets, liabilities, financial condition, operations or prospects of the Company. The execution, delivery, and performance of and compliance with the Financing Documents, and the issuance and sale of the Shares pursuant hereto and of the Conversion Shares pursuant to the Amended Certificate, will not, with or without the passage of time or giving of notice, result in any such material violation, or be in conflict with or constitute a default under any such term, or result in the creation of any mortgage, pledge, lien, encumbrance or charge upon any of the properties or assets of the Company or the suspension, revocation, impairment, forfeiture or nonrenewal of any permit license, authorization or approval applicable to the Company, its business or operations or any of its assets or properties.
3.12 LITIGATION. There are no actions, suits, or legal, administrative, or other proceedings or investigations pending or, to the best of the Company's knowledge, threatened before any court, agency, or other tribunal to which the Company is a party or against or affecting any of the property, assets, businesses, or financial condition of the Company. The Company is not in default with respect to any order, writ, injunction, or decree of any federal, state, local or foreign court, department, agency, or instrumentality to which it is a party.
3.13 TAXES. The Company has timely filed all federal, state, county, local and foreign tax returns and reports within the times and in the manner prescribed by law and has paid (or made adequate provision in the Financial Statements for) all taxes shown due on such returns, as well as all other assessments and penalties which have become due and payable. The Company's federal income and other tax returns have not been audited by the Internal Revenue Service or any other taxing authority and no notice of audit has been received. The Company has received no notice of any disputes, deficiency assessments, or proposed adjustments to taxes payable by the Company.
3.14 EMPLOYEES AND CONSULTANTS. Except as set forth on Item 3.14 of the Disclosure Schedule, the Company has not entered into any arrangement with any present or former employee that will result in any obligation of the Company to make any payment to such employee upon termination of his or her employment with the Company. Item 3.14 of the Disclosure Schedule lists all key executive officers of the Company with whom the Company has entered into an employment agreement. True and complete copies of all written employment agreements with the key executive officers of the Company listed on Item 3.14 of the Disclosure Schedule have been made available to Purchasers prior to the Closing Date. To the Company's
knowledge, no employee of or consultant to the Company is in material violation of any term of any employment contract or any other contract or agreement relating to the relationship of any such employee or consultant with the Company. The Company has not received notice that any executive officer intends to terminate his employment with the Company, nor does the Company have any present intention to terminate the employment of any executive officer. To the Company's knowledge, none of its employees are obligated under any contract (including licenses, covenants, or commitments of any nature) or other agreement, or subject to any judgment, decree, or order of any court or administrative agency, that would interfere with the use of his/her reasonable diligence to promote the interests of the Company or that would conflict with the Company's business as proposed to be conducted. Neither the execution nor delivery of this Agreement, nor the carrying on of the Company's business by the employees of the Company, nor the conduct of the Company's business as proposed, will, to the Company's knowledge, conflict with or result in a breach of the terms, conditions or provisions of, or constitute a default under, any contract, covenant, or instrument under which any of such employees is obligated, which conflict, breach, or default would be materially adverse to the Company.
3.15 EMPLOYEE BENEFITS MATTERS. The Company does not maintain or contribute to any plan or arrangement that constitutes an "employee pension benefit plan" as defined in Section 3(2) of ERISA except as set forth on Item 3.15, and is not obligated to contribute to or accrue or pay benefits under any deferred compensation or retirement funding arrangement.
3.16 REGISTRATION RIGHTS. Except as required pursuant to the Amended Investor Rights Agreement, the Company is presently not under any obligation, and has not granted any rights, to register any of the Company's presently outstanding securities or any of its securities that may hereafter be issued.
3.17 GOVERNMENTAL APPROVALS/THIRD PARTY CONSENTS. All consents, approvals, or authorizations of, or registrations, qualifications, designations, declarations, or filings with any federal or state governmental authority, and all consents, approvals or authorizations of any third party required in connection with the execution of the Financing Documents and the performance of the transactions contemplated thereby (including the issuance and sale of the Shares) have been obtained by the Company. The Company has, or has rights to acquire, all licenses, permits, and other similar authority necessary for the conduct of its business as now being conducted by it and as planned to be conducted, the lack of which could materially and adversely affect the operations or condition, financial or otherwise, of the Company, and it is not in default in any material respect under any of such licenses, permits or other similar authority.
3.18 COMPLIANCE WITH LAWS. The Company (a) has complied with and is in compliance in all material respects with all foreign, federal, state and local statutes, laws, ordinances, regulations, rules, judgments, orders and decrees applicable to it and its assets, business and operations, and (b) has received no written notice of any claim of default under or violation of any statute, law, ordinance, regulation, rule, judgment, order or decree except for any such noncompliance or claim of default or violation, if any, which in the aggregate do not and will not have a material adverse effect the property, operations, financial condition or prospects of the Company.
3.19 ENVIRONMENTAL MATTERS. The Company is in compliance in all material respects with all environmental and occupational health and safety laws and, to its knowledge, except as set forth on Item 3.19 of the Disclosure Schedule, no material expenditures are or will be required in order to comply with any such laws.
3.20 OFFERING VALID. Assuming the accuracy of the representations and warranties of the Purchasers contained in Section 4 hereof, the offer, sale and issuance of the Shares and the Conversion Shares will be exempt from the registration requirements of the Securities Act of 1933, as amended (the "SECURITIES ACT") and will have been registered or qualified, or are exempt from registration and qualification, under the registration, permit or qualification requirements of all applicable state securities laws.
3.21 ACCURACY OF INFORMATION FURNISHED. The Financing Documents, as well as any exhibit, certificate, written statement, material or information furnished to the Purchasers by or on behalf of the Company pursuant thereto or in connection with the transactions contemplated thereby, do not contain any untrue statement of a material fact or omit to state any material fact that is necessary to make the statements contained herein or therein not misleading.
3.22 INSURANCE. The Company has obtained fire and casualty insurance policies with coverage customary for companies similarly situated to the Company.
3.23 INVESTMENT COMPANY ACT. The Company is not an "investment company," or a company "controlled" by an "investment company," within the meaning of the Investment Company Act of 1940, as amended.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF PURCHASERS.
Each Purchaser makes the following representations and warranties to the Company as to itself that:
4.1. REQUISITE POWER AND AUTHORITY. Purchaser is an individual, or a corporation, limited liability company, or limited partnership duly organized, validly existing and in good standing under the laws of the jurisdiction of its formation, and has all requisite limited liability company, partnership or corporate power and authority to own its assets and operate its business. Purchaser has all necessary corporate, limited liability company or partnership power and authority under all applicable provisions of law to execute and deliver each of the Financing Documents to which it is a party and to carry out their provisions. All action on Purchaser's part required for the lawful execution and delivery of the Financing Documents have been or will be effectively taken prior to each Closing Date. Upon their execution and delivery, the Financing Documents will be valid and binding obligations of Purchaser, enforceable in accordance with their terms, except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws of general application affecting enforcement of creditors' rights; (ii) general principles of equity that restrict the availability of equitable remedies; and (iii) to the extent that the enforceability of the indemnification provisions of the Amended Investor Rights Agreement may be limited by applicable laws.
4.2. INVESTMENT REPRESENTATIONS. Purchaser understands that the Shares have not been registered under the Securities Act. Purchaser also understands that the Shares are being offered and sold pursuant to an exemption from registration contained in the Securities Act based in part upon Purchaser's representations contained in this Agreement. Purchaser hereby represents and warrants as follows:
(a) PURCHASER BEARS ECONOMIC RISK. Purchaser has substantial experience in evaluating and investing in private placement transactions of securities in companies similar to the Company so that it is capable of evaluating the merits and risks of its investment in the Company and has the capacity to protect its own interests. Purchaser must bear the economic risk of this investment indefinitely unless the Shares are registered pursuant to the Securities Act, or an exemption from registration is available. Purchaser understands that there is no assurance that any exemption from registration under the Securities Act will be available and that, even if available, such exemption may not allow Purchaser to transfer all or any portion of the Shares under the circumstances, in the amounts or at the times Purchaser might propose.
(b) ACQUISITION FOR OWN ACCOUNT. Purchaser is acquiring the Shares for Purchaser's own account for investment purposes only, and not with a view towards their distribution.
(c) PURCHASER CAN PROTECT ITS INTEREST. Purchaser represents that by reason of its, or of its management's, business or financial experience, Purchaser has the capacity to protect its own interests in connection with the transactions contemplated in the Financing Documents.
(d) ACCREDITED INVESTOR. Purchaser represents that it is an "accredited investor" within the meaning of Regulation D under the Securities Act.
(e) COMPANY INFORMATION. Purchaser has received and read the Financial Statements and has had an opportunity to ask questions of, and receive answers from, directors, officers and management of the Company relating to the Company's business, management and financial affairs and to the terms and conditions of this investment, and has had the opportunity to review the Company's operations and facilities.
(f) RULE 144. Purchaser acknowledges and agrees that the Shares must be held indefinitely unless they are subsequently registered under the Securities Act or an exemption from such registration is available. Purchaser has been advised or is aware of the provisions of Rule 144 promulgated under the Securities Act, which permits limited resale of shares purchased in a private placement subject to the satisfaction of certain conditions, including, among other things: the availability of certain current public information about the Company, the resale occurring not less than one year after a party has purchased and paid for the security to be sold, the sale being through an unsolicited "broker's transaction" or in transactions directly with a market maker (as said term is defined under the Securities Act) and the number of shares being sold during any three-month period not exceeding specified limitations.
(g) RESIDENCE. The residence of Purchaser (if an individual), or the office or offices of the Purchaser in which its investment decision was made is located at the address or addresses of the Purchaser as stated in the Company's shareholder records.
4.3 RESTRICTIVE LEGENDS. Purchaser agrees to the imprinting, so long as required by law, of a legend on certificates representing all of the Shares or the Conversion Stock to the following effect:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION TO THE REGISTRATION REQUIREMENTS OF SUCH ACT OR SUCH LAWS.
THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO AN AMENDED AND RESTATED SHAREHOLDERS AGREEMENT DATED AS OF NOVEMBER 19, 1999, AS MAY BE AMENDED FROM TIME TO TIME, AND SAID SHARES MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT IN ACCORDANCE WITH THE TERMS OF SUCH AGREEMENT. SUCH AGREEMENT MAY BE EXAMINED AT THE PRINCIPAL PLACE OF BUSINESS OF THE COMP ANY AND A COPY THEREOF WILL BE FURNISHED WITHOUT CHARGE TO THE HOLDER OF THIS CERTIFICATE UPON RECEIPT BY THE COMPANY AT ITS PRINCIPAL PLACE OF BUSINESS OR REGISTERED OFFICE OF A WRITTEN REQUEST FROM THE SHAREHOLDER."
SECTION 5. CONDITIONS TO CLOSING.
5.1 CONDITIONS TO PURCHASERS' OBLIGATIONS AT THE CLOSING. Purchasers' obligations to purchase the Shares at the Closing are subject to the satisfaction, at or prior to the Closing, of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES TRUE; PERFORMANCE OF OBLIGATIONS. The representations and warranties made by the Company in Section 3 hereof shall be true and correct in all material respects as of the Closing Date with the same force and effect as if they had been made as of the Closing Date, and the Company shall have performed all obligations and conditions herein required to be performed or observed by it on or prior to the Closing.
(b) LEGAL INVESTMENT. On the Closing Date, the sale and issuance of the Shares, and the proposed issuance of the Conversion Shares, shall be legally permitted by all laws and regulations to which Purchasers and the Company are subject.
(c) CONSENTS, PERMITS, AND WAIVERS. The Company shall have obtained any and all consents, permits and waivers necessary or appropriate for consummation of the
transactions contemplated by the Financing Documents (except for such as may be properly obtained subsequent to the Closing).
(d) FILING OF AMENDED CERTIFICATE. The Amended Certificate shall have been filed with the Secretary of State of the State of Delaware.
(e) CORPORATE DOCUMENTS. The Company shall have delivered to Purchasers or their counsel, copies of all corporate documents of the Company as Purchasers shall reasonably request.
(f) RESERVATION OF CONVERSION SHARES. The Conversion Shares issuable upon conversion of the Shares shall have been duly authorized and reserved for issuance upon such conversion.
(g) CERTIFICATES. The Company shall have delivered to Purchasers:
(1) proof of filing of the Amended Certificate, and a certificate, as of the most recent practical date, of the Secretary of State of Delaware as to the Company's good standing;
(2) a certificate of the Secretary of the Company dated as of the Closing Date, certifying as to (i) the incumbency of the officers of the Company executing the Financing Agreements and all other documents executed and delivered in connection therewith; (ii) a copy of the Amended Certificate, in effect as of the Closing Date; (iii) a copy of the Bylaws of the Company, in effect as of the Closing Date; and (iv) a copy of the resolutions or consents of the Board of Directors and stockholders of the Company authorizing and approving the Company's execution, delivery and performance of the Financing Agreements; and
(3) a certificate, executed by the Chief Executive Officer of the Company as of the Closing Date, certifying to the fulfillment of all of the conditions of the Purchasers' obligations under this Agreement, as set forth in this Section 5.
(h) AMENDED INVESTOR RIGHTS AGREEMENT. The Amended Investor Rights Agreement shall have been executed and delivered by the parties thereto.
(i) AMENDED SHAREHOLDERS AGREEMENT. The Amended Shareholders Agreement shall have been executed and delivered by the parties thereto.
(j) LEGAL OPINION. The Purchasers shall have received from legal counsel to the Company an opinion addressed to them, dated as of the Closing Date, in substantially the form attached hereto as Exhibit ------- G.
(k) PROCEEDINGS AND DOCUMENTS. All corporate and other proceedings in connection with the transactions contemplated at the Closing hereby and all documents and instruments incident to such transactions shall be reasonably satisfactory in substance and form
to the Purchasers and their special counsel, and the Purchasers and their special counsel shall have received all such counterpart originals or certified or other copies of such documents as they may reasonably request.
5.2 CONDITIONS TO OBLIGATIONS OF THE COMPANY AT CLOSING. The Company's obligation to issue and sell the Shares at the Closing is subject to the satisfaction, on or prior to the Closing, of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES TRUE. The representations and warranties made by Purchasers in Section 4 hereof shall be true and correct in all material respects at the Closing Date, with the same force and effect as if they had been made on and as of said date.
(b) PERFORMANCE OF OBLIGATIONS. Purchasers shall have performed and complied with all agreements and conditions herein required to be performed or complied with by Purchasers on or before the Closing.
(c) FILING OF AMENDED CERTIFICATE. The Amended Certificate shall have been filed with the Secretary of State of the State of Delaware.
(d) AMENDED INVESTOR RIGHTS AGREEMENT. The Amended Investor Rights Agreement shall have been executed and delivered by the Purchasers.
(e) AMENDED SHAREHOLDERS AGREEMENT. The Amended Shareholders Agreement shall have been executed and delivered by the Purchasers.
(f) CONSENTS, PERMITS, AND WAIVERS. The Company shall have obtained any and all consents, permits and waivers necessary or appropriate for consummation of the transactions contemplated by the Financing Documents (except for such as may be properly obtained subsequent to the Closing).
(g) MINIMUM INVESTMENT. The Purchasers shall purchase at least 1,666,667 Shares in the aggregate at the Closing.
SECTION 6. COVENANTS OF THE COMPANY FOR THE PERIOD FOLLOWING CLOSING.
Until the date upon which all Shares held by Purchasers (including any capital stock of the Company issued upon conversion of the Shares) are no longer outstanding, the Company covenants to each Purchaser and agrees as follows:
6.1 USE OF PROCEEDS. The Company shall use all proceeds from the sale of the Shares to Purchasers pursuant to this Agreement for financing of expenditures related to product
development, equipment and facilities expansion, funding ongoing operating costs and general working capital.
6.2 MAINTENANCE OF CORPORATE STATUS. The Company shall maintain, and shall cause each affiliate to maintain, its corporate or partnership existence in good standing or effective under the laws of its jurisdiction of organization and any other states or jurisdictions in which its failure to qualify as a foreign corporation or entity would have a material adverse effect on its operations or financial condition.
6.3 COMPLIANCE WITH GOVERNING DOCUMENTS. The Company shall comply, and shall cause each affiliate to comply, in all material respects with its Amended Certificate, Bylaws or other governing documents.
6.4 COMPLIANCE WITH LAWS, LICENSES AND PERMITS; NO INFRINGEMENT. The Company shall comply with all applicable federal, state, local, foreign and other laws, regulations and ordinances, and with all applicable federal, state, local and foreign governmental licenses and permits necessary for conducting its business, except to the extent that any noncompliance would not have a material adverse effect upon the Company. The Company shall not knowingly engage in any activities that infringe upon the intellectual property rights of any other person, corporation, partnership or other entity which could have a material adverse effect upon the Company.
6.5 DISCHARGE OF OBLIGATIONS. The Company shall pay and discharge all taxes, assessments, and governmental charges lawfully levied or imposed upon it (in each case before they become delinquent and before penalties accrue), all lawful claims for labor, materials, supplies and rents, and all other debts and liabilities that if unpaid would by law be a lien or charge upon any of the asserts or properties of the Company or lead to suspension of the business of the Company (except to the extent contested in good faith by the Company and for which adequate reserves are established).
6.6 MAINTENANCE OF PROPERTIES. The Company shall maintain all real and personal property used in the business of the Company in good operating condition, and shall make all repairs, renewals, replacements, additions and improvements to those properties as are necessary or appropriate in the ordinary course of business.
6.7 MAINTENANCE OF PROPRIETARY INFORMATION. The Company shall maintain all proprietary information, and all applications and registrations therefor owned or held by the Company, in full force and effect, except as otherwise determined in the ordinary course of business. The Company shall not encumber or license others to use its proprietary information owned by it except in the ordinary course of the Company's business, and shall maintain the confidentiality and trade secret status of all proprietary information that is confidential except 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.
6.8 COMPENSATION OF DIRECTORS. Each member of the Board of Directors shall be entitled to (a) customary liability insurance obtained at commercially reasonable rates, and (b) reimbursement by the Company for all out-of-pocket expenses, including, without limitation, travel expenses, incurred by such director in connection with the performance of such directors duties, subject to approval by the Board of Directors, such approval not be unreasonably withheld.
6.9 BOOKS AND RECORDS. The Company shall, and shall cause each affiliate to, keep proper books of records and accounts, in which full and correct entries shall be made of all financial transactions and the assets and business of the Company and each affiliate, in accordance with generally accepted accounting principles in effect from time to time. The Company shall provide Purchasers with access to all such books and records and allow Purchasers to make copies and abstracts thereof at reasonable times.
SECTION 7. MISCELLANEOUS.
7.1 GOVERNING LAW. This Agreement shall be governed by the laws of the State of Colorado as such laws are applied to agreements between Colorado residents entered into and performed entirely in Colorado, except that the Delaware General Corporation Law will govern as to matters of corporate law.
7.2 SURVIVAL. The representations, warranties, covenants and agreement made herein shall survive any investigation made by any Purchaser and the closing of the transactions contemplated hereby. All statements as to factual matters contained in any certificate or other instrument delivered by or on behalf of the Company pursuant hereto in connection with the transactions contemplated hereby shall be deemed to be representations and warranties by the Company hereunder solely as of the date of such certificate or instrument.
7.3 SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided herein, the provisions hereof shall inure to the benefit of, and be binding upon, the successors, assigns, 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 the Shares from time to time.
7.4 ENTIRE AGREEMENT. The Financing Documents, the Exhibits and Schedules hereto, and the other documents delivered pursuant hereto constitute 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 any representations, warranties, covenants and agreements except as specifically set forth herein and therein.
7.5 SEVERABILITY. In case any provision of this Agreement shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.
7.6 AMENDMENT AND WAIVER. This Agreement may be amended or modified only upon the written consent of the Company, and the holders representing at least two-thirds of the
Shares (treated as if converted and including any Conversion Shares into which the Shares have been converted that have not been sold).
7.7 DELAYS OR OMISSIONS. It is agreed that no delay or omission to exercise any right, power or remedy accruing to any party, upon any breach, default or noncompliance by another party under any of the Financing Documents, shall impair any such right, power or remedy, nor shall it be construed to be a waiver of any such breach, default or noncompliance, or any acquiescence therein, or of or in any similar breach, default or noncompliance thereafter occurring. It is further agreed that any waiver, permit, consent or approval of any kind or character of any breach, default or noncompliance under any of the Financing Documents or any waiver of any provisions or conditions of any of the Financing Documents must be in writing and shall be effective only to the extent specifically set forth in such writing. All remedies under any of the Financing Documents, under any law or otherwise afforded to any party, shall be cumulative and not alternative.
7.8 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 facsimile if sent during
normal business hours of the recipient, if not, then on the next business day;
(iii) three (3) business 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 Company at its principal place of business and to Purchasers at the
addresses set forth in the shareholder records of the Company or at such other
address as the Company or Purchaser may designate by ten (10) days advance
written notice to the other parties hereto.
7.9 EXPENSES. The Company hereby agrees to reimburse each Purchaser for its out-of-pocket expenses incurred in connection with the transactions contemplated hereby, including all expenses incurred in connection with its due diligence examination of the Company, the preparation and negotiation of the Financing Documents, including the reasonable fees and expenses of special counsel to the Purchasers, (HELLER EHRMAN WHITE & MCAULIFFE) and in connection with the enforcement of rights and remedies of the Purchasers hereunder and under the Amended Shareholders Agreement and all other documents evidencing the transactions contemplated herein.
7.10 INDEMNIFICATION BY THE COMPANY. The Company agrees to indemnify and hold each Purchaser harmless against any loss, liability, damage or expense (including reasonable legal fees and costs) which such Purchasers may suffer, sustain or become subject to as a result of or in connection with the breach by the Company of any representation, warranty, covenant or agreement of the Company contained in the Financing Documents.
7.11 INDEMNIFICATION BY THE PURCHASERS. Each Purchaser, severally and not jointly, agrees to indemnify and hold the Company harmless against any loss, liability, damage or expense (including reasonable legal fees and costs) which the Company may suffer, sustain or become subject to as a result of or in connection with the breach by such Purchaser of any
representation, warranty, covenant or agreement of such Purchaser contained in the Financing Documents.
7.12 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.
7.13 COUNTERPARTS. This Agreement may be delivered via facsimile and may be executed in any number of counterparts, each of which shall be an original, but all of which together shall constitute one instrument.
7.14 BROKER'S FEES. Each party hereto represents and warrants that no agent, broker, investment banker, person or firm acting on behalf of or under the authority of such party hereto is or will be entitled to any broker's or finder's fee or any other commission directly or indirectly in connection with the transactions contemplated herein. Each party hereto further agrees to indemnify each other party for any claims, losses or expenses incurred by such other party as a result of the representation in this Section 7.14 being untrue.
7.15 ARBITRATION. The parties hereby covenant and agree that any legal suit, dispute, claim, demand, controversy or cause of action of every kind and nature whatsoever, known or unknown, fixed or contingent, that any party may now have or at any time in the future claim to have based in whole or in part, or arising from or out of or that in any way is related to the negotiations, execution, interpretation or enforcement of this Agreement (collectively, the "DISPUTES") shall be completely and finally settled by submission of any such Disputes to arbitration under the rules of the American Arbitration Association ("AAA") then in effect. There shall be one arbitrator, and such arbitrator shall be chosen by mutual agreement of the parties in accordance with AAA rules. Unless the parties agree otherwise, the arbitration proceedings shall take place in the Denver, Colorado metropolitan area. The arbitrator shall apply Colorado law to all issues in dispute, except issues with respect to corporate law in which case the arbitrator shall apply Delaware law, in accordance with Section 7.1 above. Notice of demand for arbitration shall be filed in writing with the other party to this Agreement and with the AAA. In no event shall the demand for arbitration be made after the date when institution of legal or equitable proceedings based on such Dispute would be barred by the applicable statute of limitations. The findings of the arbitrator shall be final and binding on the parties. Judgment on such award may be entered in any court of competent jurisdiction, or application may be made to that court for a judicial acceptance of the award and an order or enforcement, as the party seeking to enforce that award may elect. The prevailing party in any such action shall be entitled to receive from the losing party all reasonable costs and expenses, including the reasonable fees of attorneys, accountants, and other experts, incurred by the prevailing party in investigating and prosecuting (or defending) such action, together with any such fees which may be incurred in enforcing any award of judgment.
7.16 EXCULPATION AMONG PURCHASERS. Each Purchaser acknowledges that it is not relying upon any person, firm, or corporation, other than the Company and its officers and directors, in making its investment or decision to invest in the Company.
Each Purchaser agrees that no Purchaser nor the respective controlling persons, officers, directors, partners, agents, or employees of any Purchaser shall be liable for any action heretofore or hereafter taken or omitted to be taken by any of them in connection with the Shares and Conversion Shares.
7.17 PRONOUNS. All pronouns contained herein, and any variations thereof, shall be deemed to refer to the masculine, feminine or neutral, singular or plural, as the identity of the parties hereto may require.
[Signature Pages Follow]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date above first written.
COMPANY:
ARRAY BIOPHARMA INC. PURCHASERS:
By: /s/ ROBERT CONWAY FRAZIER HEALTHCARE II, L.P.
--------------------------------------
Robert Conway, Chief Executive Officer By: /s/ ROBERT W. OVERELL
-----------------------------
Name: Robert W. Overell
---------------------------
Title: General Partner
--------------------------
|
ARCH VENTURE FUND III, L.P.
By: Arch Venture Partners, LLC,
its General Partner
By: /s/ ROBERT T. NELSON
-----------------------------
Name: Robert T. Nelson
---------------------------
Title: Managing Director
--------------------------
|
ROVENT II LIMITED PARTNERSHIP
By: Advent International Limited
Partnership, its General
Partner
By: Advent International
Corporation,
its General Partner
By: /s/ JASON FISHERMAN
-----------------------------
Name: Jason Fisherman
---------------------------
Title: Vice President
--------------------------
|
MITSUI & CO. (U.S.A.), INC.
By: /s/ YOUICHIRO ENDO
-----------------------------
Name: Youichiro Endo
---------------------------
Title: General Manager
--------------------------
|
FALCON TECHNOLOGY PARTNERS, L.P.,
By: /s/ JAMES L. RATHMANN
-----------------------------
James L. Rathmann,
General Partner
|
BOULDER VENTURES II, L.P.
By: /s/ KYLE LEFKOFF
------------------------------------------
Kyle Lefkoff, General Partner
|
BOULDER VENTURES II, (ANNEX) L.P.
By: /s/ KYLE LEFKOFF
------------------------------------------
Kyle Lefkoff, General Partner
|
THE CARUTHERS FAMILY, L.L.C.
By: /s/ MARVIN H. CARUTHERS
------------------------------------------
Marvin H. Caruthers, Ph.D., Manager
/s/ DAVID SNITMAN
----------------------------------------------
DAVID SNITMAN, PH.D.
/s/ ANTHONY D. PISCOPIO
----------------------------------------------
ANTHONY D. PISCOPIO, PH.D.
/s/ K.C. NICOLAOU
----------------------------------------------
K.C. NICOLAOU, PH.D.
/s/ FRANK A. BONSAL
----------------------------------------------
FRANK A. BONSAL, JR.
/s/ MICHAEL CARRUTHERS
----------------------------------------------
MICHAEL CARRUTHERS
/s/ CHRISTOPHER D. OZEROFF
----------------------------------------------
CHRISTOPHER D. OZEROFF
/s/ WILLIAM R. ROBERTS
----------------------------------------------
WILLIAM R. ROBERTS
|
/s/ KIRBY L. CRAMER ---------------------------------------------- KIRBY L. CRAMER /s/ JOSEPH LEFKOFF ---------------------------------------------- JOSEPH LEFKOFF |
VECTOR LATER-STAGE EQUITY FUND II, L.P.
By: Vector Fund Management II, L.L.C., its
General Partner
By: /s/ BARCLAY A. PHILLIPS
-------------------------------------------
Print Name: Barclay A. Phillips
----------------------------------
Title: Managing Director
---------------------------------------
|
VECTOR LATER-STAGE EQUITY FUND II (Q.P.), L.P.
By: Vector Fund Management II, L.L.C., its
General Partner
By: /s/ BARCLAY A. PHILLIPS
-------------------------------------------
Print Name: Barclay A. Phillips
----------------------------------
Title: Managing Director
---------------------------------------
|
MOSAIX VENTURES, LP
By: Mosaix Ventures Management, LLC,
its General Partner
By: /s/ RANJAN LAL
------------------------------------------
Ranjan Lal, Managing Partner
|
EXHIBIT A
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
State of Delaware PAGE 1
Office of the Secretary of State
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE RESTATED CERTIFICATE OF
"ARRAY BIOPHARMA INC.", FILED IN THIS OFFICE ON THE THIRTY-FIRST DAY OF AUGUST,
A.D. 2000, AT 11:30 O'CLOCK A.M.
A FILED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW CASTLE
COUNTY RECORDER OF DEEDS.
/s/ EDWARD J. FREEL
[SEAL] -----------------------------------
Edward J. Freel, Secretary of State
2856233 8100 AUTHENTICATION: 0650953
001441765 DATE: 08-31-00
|
STATE OF DELAWARE
SECRETARY OF STATE
DEPARTMENT OF CORPORATIONS
FILED 11.30 AM 08/31/2000
001441765 - 2856233
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION OF
ARRAY BIOPHARMA INC.
(PURSUANT TO SECTIONS 242 AND 245)
Array BioPharma Inc., a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware (the "Corporation"), does hereby certify as follows for the purpose of amending and restating its Certificate of Incorporation:
1. The Corporation was originally incorporated under the same name, and the original Certificate of Incorporation of the Corporation was filed with the Secretary of State of the State of Delaware on February 6, 1998.
2. The Board of Directors of the Corporation duly adopted resolutions containing provisions of this Amended and Restated Certificate of Incorporation of the Corporation, declaring such amendment and restatement to be advisable and called for the approval of the stockholders of the Corporation to such amendment and restatement in accordance with Sections 242 and 245 of the General Corporation Law of the State of Delaware.
3. That the holders of at least 66 2/3% of the outstanding shares of the Corporation's Series A Preferred Stock voting as a single class, 66 2/3% of the outstanding shares of the Corporation's Series B Preferred Stock voting as a single class and 50% of the outstanding shares of the Corporation's Common Stock and Preferred Stock voting as a single class, in each case acting by means of written consent in lieu of a meeting pursuant to Section 228(a) of the General Corporation Law of the State of Delaware, adopted and approved this Amended and Restated Certificate of Incorporation in accordance with Sections 242 and 245 of the General Corporation Law of the State of Delaware.
4. That the text of the Corporation's Certificate of Incorporation as heretofore amended and supplemented is hereby further amended and restated in its entirety to read as follows:
ARTICLE I
NAME
The name of the corporation is Array BioPharma Inc.
ARTICLE II
REGISTERED OFFICE AND AGENT
The address of its registered office in the State of Delaware is 1209 Orange Street, in the City of Wilmington, County of New Castle 19801. The name of its registered agent at such address is The Corporation Trust Company.
ARTICLE III
NATURE OF BUSINESS
The nature of the business or purposes to be conducted or promoted is to engage in any lawful act or activities for which corporations may be organized under the General Corporation Law of the State of Delaware.
ARTICLE IV
CAPITAL; SHAREHOLDERS
4.1 Authorized Capital. The aggregate number of shares that the Corporation shall have authority to issue is 20,225,000 shares of common stock, each having a par value of $0.001 (the "Common Stock"), and 11,825,000 shares of preferred stock, each having a par value of $0.001, 6,800,000 shares of which shall be designated as Series A Preferred Stock, 3,300,000 shares of which shall be designated as Series B Preferred Stock and 1,725,000 shares of which shall be designated as Series C Preferred Stock. The Series A Preferred Stock, Series B Preferred Stock and the Series C Preferred Stock is sometimes collectively referred to herein as the "Preferred Stock."
4.2 Relative Rights and Preferences. The designations, preferences and rights of the shares of each class of stock which the Corporation is authorized to issue, and the limitations thereof, are as set forth in the following provisions of this Section 4.2:
(a) Common Stock.
(i) General. The dividend and liquidation rights of the holders of the Common Stock are junior to, subject to and qualified by the rights of the holders of the Preferred Stock.
(ii) Dividends. Dividends may be declared and paid on the Common Stock from funds lawfully available therefor as and when determined by the Board of Directors, subject to any preferential dividend rights of any then-outstanding Preferred Stock.
(iii) Liquidation. In the event of any liquidation, dissolution or winding-up of the Corporation, whether voluntary or involuntary, the holders of the Common Stock shall be entitled, out of the assets of the Corporation available for distribution to its shareholders, subject to any preferential rights of any then-outstanding Preferred Stock, to share ratably among themselves in proportion to the respective amounts that would otherwise be payable in respect of the shares
held by them upon such distribution if all amounts payable on or with respect to such shares were paid in full.
(iv) Voting. Each holder of Common Stock of record shall have one vote for each share of stock outstanding in his name and on the books of the Corporation except that, in the election of directors, he shall have the right to vote each such share for as many persons as there are directors to be elected. Cumulative voting shall not be allowed in the election of directors or for any other purpose.
(b) Series Preferred Stock. The designations, dividend rights, voting powers, rights on liquidation and other preferences and relative, participating, optional or other special rights and the qualifications, limitations or restrictions of the shares of the series of Preferred Stock shall be as follows:
(i) Certain Definitions. Unless the context otherwise requires, for purposes of Section 4.2(b), the terms defined in this Section 4.2(b)(i) shall have the meanings herein specified (with terms defined in the singular having comparable meanings when used in the plural).
"Common Stock" shall mean the common stock, $0.001 par value per share, of the Corporation.
"Disposition Proceeds" shall have the meaning set forth in
Section 4.2(b)(iii)(C).
"Equivalent Common Dividend" shall have the meaning set forth in Section 4.2(b)(ii).
"Liquidation Preferences" shall have the meaning set forth in Section 4.2(b)(iii)(C).
"Mandatory Conversion Date" shall have the meaning set forth in Section 4.2(b)(iv)(B).
"Preferred Stock" shall mean any authorized series of preferred stock of the Corporation, including, without limitation, the Series A Preferred Stock, the Series B Preferred Stock and the Series C Preferred Stock.
"Qualifying IPO" shall mean an underwritten public offering pursuant to an effective registration statement under the Securities Act of 1933 of shares of Common Stock, at a price per share of at least $8.00, and the aggregate
gross proceeds of which equal or exceed $20,000,000 (before underwriting discounts and commissions).
"Required Consent" shall mean (i) the affirmative vote of the holders of at least 66 2/3% of the outstanding shares of Preferred Stock or a series of such Preferred Stock, as the case may be, taken at a duly called meeting of the holders of such Preferred Stock or series of such Preferred Stock; or (ii) the written consent of the holders of at least 66 2/3% of the outstanding shares of Preferred Stock or a series of such Preferred Stock, as the case may be.
"Series A Initial Purchase Price" shall mean $1.00 per share (adjusted for stock dividends, stock splits, reverse stock splits, combinations and the like).
"Series A Liquidation Preference" shall have the meaning set forth in Section 4.2(b)(iii)(C).
"Series A Preferred Stock" shall mean the Series A Preferred Stock, $0.001 par value per share, of the Corporation.
"Series B Initial Purchase Price" shall mean $2.50 per share (adjusted for stock dividends, stock splits, reverse stock splits, combinations and the like).
"Series B Liquidation Preference" shall have the meaning set forth in Section 4.2(b)(iii)(C).
"Series B Preferred Stock" shall mean the Series B Preferred Stock, $0.001 par value per share, of the Corporation.
"Series C Initial Purchase Price" shall mean $6.00 per share (adjusted for stock dividends, stock splits, reverse stock splits, combinations and the like).
"Series C Liquidation Preference" shall have the meaning set forth in Section 4.2(b)(iii)(C).
"Series C Preferred Stock" shall mean the Series C Preferred Stock, $0.001 par value per share, of the Corporation.
"Subordinate Stock" shall mean any class or series of capital stock of the Corporation, however designated, which is junior in right to the Preferred Stock, including without limitation the Common Stock and any other capital stock
of the Corporation that is not entitled to receive (i) any dividends unless all dividends required to have been paid or declared and set apart for payment on the Preferred Stock shall have been so paid or declared and set apart for payment; or (ii) any assets upon liquidation, dissolution or winding up of the affairs of the Corporation until the Preferred Stock shall have received the entire amount to which such stock is entitled upon such liquidation, dissolution or winding up.
(ii) Dividends. If at any time during which any shares of Series A Preferred Stock, Series B Preferred Stock or Series C Preferred Stock remain outstanding the Corporation declares, pays or sets apart for payment any dividend on the Common Stock, whether in cash, property or otherwise, each holder of shares of Series A Preferred Stock, Series B Preferred Stock or Series C Preferred Stock shall be entitled to receive the equivalent per share dividend (an "Equivalent Common Dividend"), when and as declared by the Corporation, based on the number of shares of Common Stock into which each share of Preferred Stock is convertible on the record date. For any Equivalent Common Dividend that is not paid in full when due, then on such due date such accrued and unpaid Equivalent Common Dividend shall be added to the Liquidation Preference of the Preferred Stock effective at such due date when such Equivalent Common Dividend was not paid. If any accrued and unpaid Equivalent Common Dividend is so added to the Liquidation Preference, such Liquidation Preference shall be reduced, effective on the date of payment, to the extent any accrued and unpaid Equivalent Common Dividend is subsequently paid.
(iii) Distributions Upon Liquidation, Dissolution or Winding Up.
(A) The Corporation shall deliver to each holder of Preferred Stock notice of any Disposition (as defined in Section 4.2(b)(iii)(B)) at least 90 days prior to such event, which notice shall state all material facts and common terms relating to such Disposition, including, without limitation, (1) the nature of such Disposition, including, without limitation, the amount, terms and conditions of payment to the holders of the Preferred Stock and the holders of Common Stock in connection with such Disposition; (2) the date on which such Disposition shall occur; and (3) the procedures that must be followed (and the latest date that such procedures must be completed) in order for such holder to effect a conversion of shares of Preferred Stock into shares of Common Stock, if such a conversion is so desired.
(B) The following events shall be considered a "Disposition" under this Section:
(1) any consolidation or merger of the Corporation with or into any other corporation or other entity or person, or any other
corporate reorganization, in which the stockholders of the Corporation immediately prior to such consolidation, merger or reorganization, own less than 50% of the Corporation's voting power immediately after such consolidation, merger or reorganization, or any transaction or series of related transactions in which in excess of 50% of the Corporation's voting power is transferred;
(2) a sale, lease or other disposition of all or substantially all of the assets of the Corporation; or
(3) any voluntary or involuntary liquidation, dissolution or other winding up of the affairs of the Corporation.
(C) In the event of any such Disposition, before any payment or distribution shall be made to the holders of the Common Stock, the holders of Preferred Stock shall be entitled to be paid out of the Disposition Proceeds in cash, or, if the Corporation does not have sufficient cash on hand to pay such amounts, property of the Corporation at its fair market value as determined by the Board of Directors, an amount (the "Series A Liquidation Preference", the "Series B Liquidation Preference" and the "Series C Liquidation Preference") equal to either the Series A Initial Purchase Price, the Series B Initial Purchase Price or the Series C Initial Purchase Price, as appropriate, plus any accrued but unpaid dividends. If upon any such Disposition, the remaining assets of the Corporation available for distribution to its shareholders shall be insufficient to pay the holders of the Preferred Stock the full amount of their respective Liquidation Preferences, the holders of the Preferred Stock shall share ratably among themselves in any distribution of the remaining assets and funds of the Corporation in proportion to the respective amounts that would otherwise be payable in respect of the shares held by them upon such distribution if all amounts payable on or with respect to such shares were paid in full.
(iv) Conversion Rights.
(A) Conversion at the Option of the Holder. The holders of the Preferred Stock shall have the right, at their option, to convert shares of Preferred Stock into shares of Common Stock of the Corporation at any time and from time to time on the following terms and conditions:
(1) Each share of Preferred Stock shall be converted at the option of the holder thereof, without the payment of additional
consideration, into such number of fully paid and nonassessable shares of Common Stock as is determined by dividing the Series A Initial Purchase Price, the Series B Initial Purchase Price or the Series C Initial Purchase Price, as applicable, by the Series A Conversion Rate, the Series B Conversion Rate or the Series C Conversion Rate, respectively, in effect at the time of conversion. For purposes of this section, the "Series A Conversion Rate", the "Series B Conversion Rate" and the "Series C Conversion Rate" shall initially shall be equal to the Series A Initial Purchase Price, Series B Initial Purchase Price and the Series C Initial Purchase Price, respectively, and shall each be subject to adjustment as provided in Section 4.2(b)(iv)(C)(2) below.
(2) The Corporation shall not issue, in connection with the conversion of shares of Preferred Stock, certificates for fractional shares, but in lieu thereof shall pay to any person who would otherwise be entitled thereto an amount of cash equal to such fraction multiplied by the fair value of one share of Common Stock, as determined by the Board of Directors, whose determination shall be conclusive.
(3) In order for any holder of shares of Preferred Stock to convert the same into Common Stock, he shall surrender the certificate or certificates therefor, duly endorsed, at the office of the Corporation and shall give written notice to the Corporation that he elects to convert all or part of the shares represented by the certificate or certificates and shall state in writing therein the name or names in which he wishes the certificate or certificates for Common Stock to be issued. The Corporation shall, as soon as practicable thereafter, issue and deliver to such holder of shares of Preferred Stock, or to his nominee or nominees, certificates for the full number of shares of Common Stock to which he shall be entitled as aforesaid. Shares of Preferred Stock shall be deemed to have been converted as of the date of the surrender of such shares for conversion as provided above, and the person or persons entitled to receive Common Stock issuable upon such conversion shall be treated for all purposes as the record holder or holders of such Common Stock on such date.
(4) If a holder converts shares of Preferred Stock, the Corporation shall pay any documentary , stamp or similar issue or transfer tax due on the issue of shares of Common Stock upon the conversion; provided, however, that the holder shall pay any such
tax that is due because the shares are issued in a name other than the holder's name pursuant to Section 4.2(b)(iv)(A)(3).
(B) Mandatory Conversion. Subject to the adjustments set
forth in Section 4.2(b)(iv)(C), each share of Preferred Stock
shall be converted automatically into shares of the Corporation's
Common Stock at the Series A Conversion Rate, Series B Conversion
Rate or Series C Conversion Rate, as applicable, on the date a
Qualifying IPO is consummated (the "Mandatory Conversion Date").
At least 60 days prior to the Mandatory Conversion Date, the
Corporation shall (1) notify all holders of the Preferred Stock
of such event; (2) demand that all shares representing the
Preferred Stock be returned to the Corporation's offices or to
the designated transfer agent; and (3) pay any transfer or
similar tax with respect to the conversion, if any. As soon as
practical but in any event within 30 days after the Mandatory
Conversion Date, the Corporation shall deliver a certificate to
and in the name of the holder of the Preferred Stock for the
number of shares of Common Stock issuable upon the conversion and
a check in an amount calculated in accordance with Section
4.2(b)(iv)(A)(2) for any fractional shares, if any, for the
shares of Preferred Stock represented by the certificate. The
name of the person in which the Preferred Stock was issued shall
be treated as the stockholder of record of the Common Stock in
which the Preferred Stock was converted on and after the
Mandatory Conversion Date. Adjustment (or cash payment, if
applicable) shall be made for accrued and previously declared and
unpaid dividends, as of the Mandatory Conversion Date, on shares
of Preferred Stock converted pursuant to this Section
4.2(b)(iv)(B). Upon such conversion, the rights of the holders of
Preferred Stock with respect to the shares of Preferred Stock so
converted shall cease.
(C) Certain Matters With Respect to Conversion.
(1) The Corporation has reserved and shall continue to reserve out of its authorized but unissued Common Stock or its Common Stock held in treasury enough shares of Common Stock to permit the conversion of the Preferred Stock in full. All shares of Common Stock that may be issued upon conversion of Preferred Stock shall be duly authorized, validly issued, fully paid and nonassessable.
(2) The Series A Conversion Rate, Series B Conversion Rate and Series C Conversion Rate shall be subject to adjustment as follows:
(a) In case the Corporation shall (i) pay a dividend or make a distribution on its Common Stock in shares of Common Stock of the Corporation, (ii) subdivide or split its outstanding Common Stock, or (iii) combine the outstanding Common Stock into a smaller number of shares, the Series A Conversion Rate, Series B Conversion Rate and Series C Conversion Rate following the effective date of such event shall be equal to the product of the Series A Conversion Rate, Series B Conversion Rate or Series C Conversion Rate, respectively, in effect immediately prior to such adjustment multiplied by a fraction, the denominator of which is the number of shares of Common Stock outstanding immediately after such event and the numerator of which is the number of shares outstanding immediately prior to such event.
(b) In the event the Corporation at any time or from time to time shall make or issue, or fix a record date for the determination of holders of Common Stock entitled to receive a dividend or other distribution payable in securities of the Corporation other than shares of Common Stock, then and in each such event provision shall be made so that the holders of Preferred Stock shall receive upon conversion thereof in addition to the number of shares of Common Stock receivable thereupon, the amount of securities of the Corporation that they each would have received had the Preferred Stock been converted into Common Stock on the date of such event and had they each 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, giving application to all adjustments called for during such period under this section with respect to the rights of the holders of Preferred Stock; provided, however, that no such adjustment shall be made if the holders of Preferred Stock simultaneously receive a dividend or other distribution of such securities as they would have received if all outstanding shares of Preferred Stock had been converted into Common Stock on the date of such event.
(c) If Common Stock issuable upon the conversion of Preferred Stock shall be changed into the same or a different number of shares of any class or classes of stock, whether by capital reorganization, reclassification, or otherwise (other than a subdivision or combination of shares or stock dividend provided for above, or a reorganization, merger, consolidation, or sale of assets provided for below), then and in each such event the holder of each such share of Preferred Stock shall have the right thereafter
to convert such share into the kind and amount of shares of stock and other securities and property receivable upon such reorganization, reclassification, or other change, by holders of the number of shares of Common Stock into which such share of Preferred Stock might have been converted immediately prior to such reorganization, reclassification, or change, all subject to further adjustment as provided herein.
(d) Adjustments to the Series A Conversion Rate, Series
B Conversion Rate and Series C Conversion Rate shall also be
made for certain dilutive issuances of additional shares of
capital stock by the Corporation as set forth in this
Section 4.2(b)(iv)(C)(2)(d).
(i) Special Definitions. For purposes of this Section 4.2(b)(iv)(C)(2)(d), the following definitions shall apply:
(A) "Option" means rights, options, warrants or other securities convertible into or exchangeable or exercisable for shares of Common Stock or Preferred Stock.
(B) "Additional Shares of Stock" (i) with respect to the Series A Preferred Stock, all shares of Common Stock or Preferred Stock issued by the Corporation after the date that shares of Series A Preferred Stock are first issued by the Corporation (the "Series A Initial Issue Date") for which the consideration per share (determined pursuant to Section 4.2(b)(iv)(C)(2)(d)(iii)) is less than the Series A Conversion Rate in effect on the date of, and immediately prior to, the issuance of such Additional Shares of Stock; (ii) with respect to the Series B Preferred Stock, all shares of Common Stock or Preferred Stock issued by the Corporation after the date that shares of Series B Preferred Stock are first issued by the Corporation (the "Series B Initial Issue Date") for which the consideration per share (determined pursuant to Section 4.2(b)(iv)(C)(2)(d)(iii)) is less than the Series B Conversion Rate in effect on the date of, and immediately prior to, the issuance of such Additional Shares of Stock;
(iii) with respect to the Series C Preferred Stock, all shares of Common Stock or Preferred Stock issued by the Corporation after the date that shares of Series C Preferred Stock are first issued by the Corporation (the "Series C Initial Issue Date") for which the consideration per share (determined pursuant to Section 4.2(b)(iv)(C)(2)(d)(iii)) is less than the Series C Conversion Rate in effect on the date of, and immediately prior to, the issuance of such Additional Shares of Stock, provided, however that in the case of any series of Preferred Stock, not including any shares of Common Stock or Preferred Stock issued or issuable:
(I) upon exercise of any Options outstanding on the Series C Initial Issue Date; provided, however that if the Corporation, after the Series C Initial Issue Date, amends the exercise price or the number of shares covered by any Options outstanding on the Series C Initial Issue Date, then such Options, as so amended, shall be deemed to have been issued after the Series C Initial Issue Date;
(II) by reason of a dividend, stock split, split-up or other distribution on shares of Common Stock that is covered by Section 4.2(b)(iv)(C)(2)(b) or (c) above;
(III) upon exercise of Options granted to employees or directors of, or consultants to, the Corporation pursuant to a valid option plan adopted by the Corporation;
(IV) to employees or directors of, or consultants to, the Corporation pursuant to a valid stock purchase plan adopted by the Corporation; or
(V) upon exercise of warrants or other securities convertible into Common or Preferred Stock issued in connection with a credit facility, but not to exceed an aggregate
of $200,000 in value (as determined by the exercise price) in any six month period.
(ii) Adjustment of Conversion Rates Upon Issuance of Additional Shares of Stock. In the event the Corporation shall at any time issue Additional Shares of Stock with respect to the Series A Preferred Stock, the Series B Preferred Stock or the Series C Preferred Stock, then and in such event, such Series A Conversion Rate, Series B Conversion Rate or Series C Conversion Rate, as applicable, shall be reduced, concurrently with such issuance, to a price (calculated to the nearest cent) determined by multiplying the Series A Conversion Rate, the Series B Conversion Rate or Series C Conversion Rate, as applicable, then in effect by a fraction:
(A) the numerator of which shall be (1) the number of shares of Common Stock outstanding immediately prior to such issue plus (2) the number of shares of Common Stock which the aggregate consideration received or to be received by the Corporation for the total number of Additional Shares of Stock so issued would purchase at such Series A Conversion Rate, Series B Conversion Rate or Series C Conversion Rate, as applicable; and
(B) the denominator of which shall be the number of shares of Common Stock outstanding immediately prior to such issue plus the number of such Additional Shares of Stock so issued.
(iii) Determination of Consideration. For purposes of this Section 4.2(b)(iv)(C)(3)(d)(iii), the consideration received by the Corporation for the issue of any Additional Shares of Stock shall be computed as follows:
(A) in case of the issuance of shares of Common Stock for cash, the consideration shall be the amount of such cash, provided that in no case shall any deduction be made for any commissions,
discounts or other expenses incurred by the Corporation for any underwriting of the issue or otherwise in connection therewith;
(B) in the case of the issuance of shares of Common Stock for a consideration in whole or in part other than cash, the consideration other than cash shall be deemed to be the fair market value thereof as determined by the Board of Directors of the Corporation in its reasonable judgment exercised in good faith (irrespective of the accounting treatment thereof); and
(C) in the case of the issuance of Options, the aggregate consideration received therefor shall be deemed to be the consideration received by the Corporation for the issuance of such Options plus the additional minimum consideration, if any, to be received by the Corporation upon the conversion or exchange or exercise thereof (the consideration in each case to be determined in the same manner as provided in clauses (i) and (ii) of this Section).
(3) Whenever the number of shares of Common Stock into which any share of Preferred Stock is convertible is adjusted, the Corporation shall promptly mail to holders of the affected Preferred Stock, first class, postage prepaid, a notice of the adjustment. The Corporation shall file with the transfer agent, if any, for the Preferred Stock a certificate from the Corporation's independent public accountants briefly stating the facts requiring the adjustment and the manner of computing it. Subject to Section 4.2(b)(iv)(C)(9) below, the certificate shall be conclusive evidence that the adjustment is correct.
(4) The adjustments herein provided for shall be made successively when the event giving rise to such adjustment occurs and shall become effective immediately following the record date for any event for which a record date is designated and on the effective date for any other event.
(5) Shares of Preferred Stock that have been converted as provided herein shall revert to the status of authorized but unissued shares of Preferred Stock.
(6) For purposes of any computation of the number of shares of Common Stock outstanding, such computation shall be made assuming conversion of all then outstanding shares of Preferred Stock and all outstanding currently exercisable warrants and vested options.
(7) No adjustment in the number of shares of Common Stock into which each share of Preferred Stock is convertible need be made unless the adjustment would require an increase of at least one-half of one percent (.5%) in the number of shares of Common Stock into which each share of Preferred Stock is convertible. Any adjustments that are not made shall be carried forward and taken into account in any subsequent adjustment. All calculations under this Section 4.2(b)(iv)(C) shall be made to the nearest cent or to the nearest 1/100th of a share, as the case may be.
(8) In any case in which this Section 4.2(b)(iv)(C) shall require that an adjustment as a result of any event become effective from and after a record date, the Corporation may elect to defer until after the occurrence of such event (a) the issuance to the holder of any shares of Preferred Stock converted after such record date and before the occurrence of such event of the additional shares of Common Stock issuable upon such conversion over and above the shares issuable immediately prior to adjustment; and (b ) the delivery of a check for any remaining fractional shares as provided in Section 4.2(b)(iv)(A)(2) above.
(9) Except as provided in the immediately following sentence, any determination that the Corporation or its Board of Directors must make pursuant to this Section 4.2(b)(iv)(C) shall be conclusive. Whenever the Corporation or its Board of Directors shall be required to make a determination under this Section 4.2(b)(iv)(C), such determination shall be made in good faith and may be challenged in good faith by the holders of a majority of the affected Series A Preferred Stock, Series B Preferred Stock and/or Series C Preferred Stock, as applicable, and any dispute shall be resolved promptly (and in no event later than 90 days after any challenge), at the Corporation's expense, by an investment banking firm of recognized national standing selected by the Corporation and acceptable to such holders of Series A Preferred Stock, Series B Preferred Stock and/or Series C Preferred Stock, as applicable. Any such determination shall be deemed approved if the requisite holders have not notified the Corporation of any challenge within
30 days after receiving notice (including a statement in reasonable detail of the bases therefor) of such determination.
(v) Voting Rights.
(A) Except as otherwise set forth in this Section 4.2(b)(v)
or as otherwise required by law, each share of Preferred Stock
issued and outstanding shall have the right to vote on all
matters presented to the holders of the Common Stock for vote in
the number of votes equal at any time to the number of shares of
Common Stock into which each share of Preferred Stock would then
be convertible, and the holders of the Preferred Stock shall vote
with the holders of the Common Stock as a single class.
(B) In addition to any vote or consent of shareholders or directors required by law or this Amended and Restated Certificate of Incorporation, so long as any originally issued Series A Preferred Stock, Series B Preferred Stock or Series C Preferred Stock remains outstanding, the Required Consent of the holders of the Series A Preferred Stock, Series B Preferred Stock and/or Series C Preferred Stock shall be necessary for effecting, validating or permitting:
(1) any amendment, alteration or repeal of any of the provisions of the Corporation's Amended and Restated Certificate of Incorporation or the Bylaws affecting the rights, powers and preferences of the Series A Preferred Stock, Series B Preferred Stock or Series C Preferred Stock, as applicable, provided, however that the Required Consent for this subparagraph (1) shall be of the holders of Series A Preferred Stock, Series B Preferred Stock or Series C Preferred Stock, voting as separate classes and only if such series is affected; or
(2) any consolidation or merger of the Corporation with or into any other corporation, or any other corporate reorganization, in which the stockholders of the Corporation immediately prior to such consolidation, merger or reorganization, own less than 50% of the Corporation's voting power immediately after such consolidation, merger or reorganization; any transaction or series of related transactions in which excess of 50% of the Corporation's voting power is transferred; any reclassification or recapitalization of any capital stock of the Corporation; any dissolution, liquidation, or winding up of the Corporation; or any sale of more than 50% of the assets of the Corporation, or any agreement to become so obligated; provided, however that the Required Consent for this subparagraph (2) shall be of the holders
of Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock, voting together as a single class.
(C) The rights of the holders of the Preferred Stock set forth in this Section 4.2(b)(v) may be exercised either at a special meeting of the holders of each series of Preferred Stock, called as hereinafter provided, or at any annual meeting of stockholders held for the purpose of electing directors, and thereafter at such annual meetings, special meetings or by the written consent of the holders of Preferred Stock, as applicable.
(D) A special meeting of the holders of Preferred Stock for purposes of voting on matters with respect to which the holders of such shares are entitled to vote as a class may be called by the Secretary of the Corporation or by a holder of Preferred Stock designated in writing by the holders of record of 10% of the shares of such series of Preferred Stock then outstanding. Such meeting may be called at the expense of the Corporation by any such person. At any meeting of the holders of each series of Preferred Stock, the presence in person or by proxy of the holders of a majority of the shares of such series of Preferred Stock then outstanding shall constitute a quorum of the such series of Preferred Stock.
(vi) Miscellaneous.
(A) Headings of Sections. The headings of the various subdivisions hereof are for convenience of reference only and shall not affect the interpretation of any of the provisions hereof.
(B) Severability of Provisions. If any voting powers, preferences and relative, participating, optional and other special rights of the Preferred Stock and qualifications, limitations and restrictions thereof set forth herein (as may be amended from time to time) is invalid, unlawful or incapable of being enforced by reason of any rule of law or public policy, all other voting powers, preferences and relative, participating, optional and other special rights of Preferred Stock and qualifications, limitations and restrictions thereof set forth herein (as so amended) that can be given effect without the invalid, unlawful or unenforceable voting powers, preferences and relative, participating, optional and other special rights of Preferred Stock and qualifications, limitations and restrictions thereof shall, nevertheless, remain in full force and effect, and no voting powers, preferences and relative, participating, optional or other special rights of Preferred Stock and qualifications, limitations and restrictions thereof herein set forth shall be deemed dependent upon any other such voting powers, preferences and relative,
participating, optional or other special rights of Preferred Stock and qualifications, limitations and restrictions thereof unless so expressed herein.
(c) Other Series of Preferred Stock. Subject to the approval requirements contained herein, the Board of Directors is hereby expressly authorized by resolution from time to time adopted providing for the issuance of preferred stock, to fix and state the designations, powers, preferences and relative, optional and other special rights of the shares of each series of preferred stock, and the qualifications, limitations and restrictions thereof, including (but without limiting the generality of the foregoing) any of the following with respect to which the Board of Directors shall determine to make effective provisions:
(i) the distinctive name and serial designation;
(ii) the dividend payment dates;
(iii) the rate or rates at which dividends if any shall be paid;
(iv) whether dividends are to be cumulative or noncumulative, and any preferential or other special rights with respect to the payment of dividends;
(v) whether any series shall be redeemable and if so, the terms, conditions and manner of redemption, and the redemption price or prices;
(vi) he rights of any series on voluntary or involuntary liquidation, dissolution or winding up, including the amounts or amounts of preferential or other payments to which any series is entitled over any other series or over the common stock;
(vii) any sinking fund or other retirement provisions and the extent to which the charges therefor are to have priority over the payment of dividends on or the making of sinking fund or other like retirement provisions for shares of any other series or over dividends on the common stock;
(viii) the number of shares of such series;
(ix) the voting rights, if any, for such series; and
(x) the conversion rights, if any, for such series.
Unless otherwise provided in the resolution of the Board of Directors providing for the issue thereof, the shares of any series of preferred stock which shall be issued and thereafter
acquired by the Corporation through purchase, redemption, conversion or otherwise may by resolution of the Board of Directors be returned to the status of authorized but unissued preferred stock of the same or other series. Unless otherwise provided in the resolution of the Board of Directors providing for the issue thereof, the number of authorized shares of stock of any such series may be increased or decreased (but not below the number of shares thereof then outstanding) by resolution by the Board of Directors. In case the number of shares of any such series of preferred stock shall be decreased, the shares representing such decrease shall, unless otherwise provided in the resolution of the Board of Directors providing for the issuance thereof, resume the status of authorized but unissued preferred stock, undesignated as to series.
ARTICLE V
LIMITATION ON LIABILITY
To the fullest extent permitted by the General Corporation Law of Delaware, as the same exists or may hereafter be amended, a director of the Corporation shall not be liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director. Any repeal or modification of this Article by the stockholders of the Corporation shall be prospective only and shall not adversely affect any right or protection of a director of the Corporation existing at the time of such repeal or modification.
ARTICLE VI
INDEMNIFICATION
Each person who is or was a director or officer of the Corporation, and each such person who is or was serving at the request of the Corporation as a director or officer of another Corporation, or in a similar capacity of a partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans maintained or sponsored by the Corporation (including the heirs, executors, administrators and estate of such person) shall be indemnified by the Corporation, in accordance with the procedures specified in the Bylaws of the Corporation, to the fullest extent permitted from time to time by the General Corporation Law of the State of Delaware. The Corporation may, to the extent authorized from time to time by the Board of Directors, grant rights to indemnification and to the advancement of expenses to any employee or agent of the Corporation to the fullest extent of the provisions of this Article with respect to the indemnification and advancement of expenses of directors and officers of the Corporation, without limiting the generality of the foregoing, the Corporation may enter into one or more agreements with any person that provide for indemnification and advancement of expenses greater or different than that provided in this Article. No amendment or repeal of this Article shall adversely affect any right or protection existing under or pursuant to this Article immediately before the amendment or repeal.
ARTICLE VII
ELECTION OF DIRECTORS
Elections of directors need not be by written ballot unless the bylaws of the Corporation so provide.
ARTICLE VIII
AMENDMENTS TO BYLAWS
The Board of Directors of the Corporation is expressly authorized to make, alter or repeal the bylaws of the Corporation.
[signature page follows]
IN WITNESS WHEREOF, this Amended and Restated Certificate of Incorporation of the Corporation has been executed this 31st day of August 2000.
ARRAY BIOPHARMA INC.
By: /s/ ROBERT CONWAY
--------------------------------------
Robert Conway, Chief Executive Officer
|
EXHIBIT B
PURCHASERS SHARES
---------- ------
ARCH Venture Fund III, L.P. 204,779
Frazier Healthcare II, L.P. 16,667
Boulder Ventures II, L.P. 136,587
Boulder Ventures II, (Annex) L.P. 20,410
Falcon Technology Partners, L.P. 156,997
Rovent II Limited Partnership 50,000
Mitsui & Co. (U.S.A.), Inc. 34,130
David Snitman, Ph.D. 266,667
Anthony D. Piscopio, Ph.D. 1,667
K.C. Nicolaou, Ph.D. 50,000
Frank A. Bonsal, Jr. 5,834
The Caruthers Family, L.L.C. 33,936
Michael Carruthers 3,332
Christopher D. Ozeroff 13,621
William R. Roberts 1,207
Kirby L. Cramer 83,333
Joseph Lefkoff 4,166
Mosaix Ventures, LP 166,667
Vector Later-Stage Equity Fund II, L.P. 104,167
Vector Later-Stage Equity Fund II (Q.P.), L.P. 312,500
TOTAL: 1,666,667
|
EXHIBIT C
DISCLOSURE SCHEDULE
General - The Array BioPharma Inc. unaudited financial statements for the year ended June 30, 2000 are included by reference to all applicable representations.
3.7 Material Contracts - (a) From time to time, Array BioPharma Inc. purchases analytical instruments and other capital equipment, generally pursuant to a purchase order. Such purchase orders have occasionally been in excess of $300,000, and are periodically in excess of $30,000. Array BioPharma Inc. has recently ordered various analytical instruments for on-going operations and expansion at a cost of approximately $1,200,000. Array BioPharma Inc. licenses an assortment of scientific and business software, the license fees for, which are currently as high as $80,000 per year.
Significant Sales Agreements with future commitments:
Customer Date Type of Agreement
-------- ---- -----------------
Eli Lilly 4/00 Lead Optimization
ICOS 8/00 Lead Optimization
CellTech 6/99 Diversity Library
Tularik 5/99 Diversity Library
Merck Various Custom Libraries
DuPont 8/00 Diversity Library
ICOS 1/00 Process Scale-up
Neurocrine 10/99 Custom Library
Various Other Various Building Blocks & Custom
Synthesis or Libraries
|
Leases were entered into in July 1998, and April 1999 by and between Amgen Inc. and Array BioPharma Inc. with a term of three years from the earlier date for the premises located at 1885 33rd Street, Boulder Colorado and providing for monthly rental payments of approximately $47,000 (triple net). A building lease was entered into for a facility in Longmont Co. located at 2620 Trade Centre Avenue in February 2000 by and between Pratt Management Co. and Array BioPharma with a term expiring May 2005 and monthly rental payments of approximately $23,000 (triple net).
Agreements with a laboratory cabinet manufacturer, a mechanical contractor and a general contractor were entered into in April 2000 for the purpose of providing hoods, cabinets, and improvements to the Longmont facility in the amount of approximately $3,000,000.
Software license agreement entered into in June of 1998, by and between Tripos Inc. and Array BioPharma Inc. with a term of three years and providing for yearly payments of approximately $80,000.
From time to time, Array BioPharma Inc. has had, in the normal course of business negotiations, informal and preliminary discussions with representatives of other corporations regarding the potential for various kinds of business collaborations, including the possibility of acquisition of an equity interest in Array BioPharma Inc.
Array has agreed to provide a fellowship to Scripps in the amount of $40,000.
3.8 Obligations to Related Parties - Array BioPharma Inc. has loaned the following amounts to certain of its executive officers. All of the loans were made in May 1998 and are evidenced by promissory notes that bear simple interest at 6% per annum. Principal and interest is due four years from the date the loan was made. There are no periodic interest payments required.
Kevin Koch - $100,000
KC Nicolaou - $125,000
Anthony Piscopio - $125,000
3.9 Assets - Leases were entered into in July 1998, and April 1999 by and between Amgen Inc. and Array BioPharma Inc. with a term of three years from the earlier date for the premises located at 1885 33rd Street, Boulder Colorado and providing for monthly rental payments of approximately $47,000 (triple net). A building lease was entered into for a facility in Longmont Co. located at 2620 Trade Centre Avenue in February 2000 by and between Pratt Management Co. and Array BioPharma with a term expiring May 2005 and monthly rental payments of approximately $23,000 (triple net).
Nearly all of Array BioPharma Inc.'s capitalized equipment is pledged as collateral (UCC documents filed) for a combined equipment lease line of $7,500,000 through Silicon Valley Bank and Leasing Technologies, Inc.
3.10 Intellectual Property - Array BioPharma Inc. has a federal TM application pending.
3.14 Employees and Consultants - Array BioPharma Inc. has entered into employment agreements each with a term of 2 years and that continue for one year terms from year to year with the following individuals in the respective capacity:
Robert Conway (CEO) October 1999 Kevin Koch (President) July 1998(1) David Snitman (Chief Operating Officer) July 1998(1) Anthony Piscopio (Vice President of Chemistry) July 1998(1) John Josey (Director) July 1998(1) Larry Burgess (Director) July 1998(l)
(1) indicated agreements amended and renewed effective July 2000.
As of the date hereof, Array BioPharma Inc. has entered into negotiations regarding employment agreements or amended employment agreements, as the case may be, with the following people: Michael Carruthers (CFO); Joanna Money (Director); Kevin Koch (President); David Snitman (Chief Operating Officer); Anthony Piscopio (Vice President of Chemistry); John Josey (Director); and Larry Burgess (Director).
3.15 Employee Benefit Matters - Array BioPharma Inc. maintains a 401(k) savings Plan which has the ability to match certain employee contributions. Beginning August 2000, Array BioPharma Inc. began a match of 50% of the employee's contribution applied to the first 4% of pay contributed by the employee.
Array BioPharma Inc. provides a health insurance program requiring nominal employee contributions for payment of premium. This Plan is partially self-insured by Array BioPharma Inc. with aggregate and specific stop loss insurance.
3.19 Environmental Matters - Array BioPharma Inc. estimates that it will continue to incur expenditures of approximately $30,000 to $70,000 per year related to compliance with environmental and occupational health and safety laws.
EXHIBIT D
AMENDMENT NO. 1 TO
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
AMENDMENT NO. 1 TO
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
This Amendment No. 1 to Amended and Restated Investors Rights Agreement (this "Amendment") is made and entered into as of the 31st day of August, 2000, by and among Array BioPharma Inc., a Delaware corporation (the "Company"), and each of those persons and entities whose names are set forth under the heading "Investors" or "Common Stockholders" on the signature page attached hereto,
RECITALS
A. The Company, certain of the Investors and the Common Stockholders previously entered into that certain Amended and Restated Investor Rights Agreement, dated as of November 16, 1999 (the "Investor Rights Agreement").
B. The Company, certain Investors and the Common Stockholders have entered into that certain Series C Preferred Stock Purchase Agreement, dated of even date herewith (the "Purchase Agreement"), pursuant to which the Company will issue and sell, and the Investors will purchase, certain shares of the Company's Series C Preferred Stock (the "Stock").
C. As a condition to the closing of the purchase of the Stock under the Purchase Agreement, the Company, the Investors and the Common Stockholders desire to amend the Investor Rights Agreement as provided herein.
Now, Therefore, in consideration of the premises and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree to amend the Investor Rights Agreement as follows:
AMENDMENTS
1. The following definitions in Section 1 of the Investor Rights Agreement shall be amended in their entirety to read as follows:
(j) "Preferred Stock" shall mean any series of preferred stock of the Company including, without limitation, Series A Preferred, Series B Preferred or Series C Preferred.
(s) "Shareholders Agreement" shall mean that certain Amended and Restated Shareholders Agreement dated as of November 16, 1999, as amended, by and among the Company and those certain holders of the Company's outstanding capital stock identified therein.
2. The following new definition shall be added as Section 1(r) of the Investor Rights Agreement:
(r) "Series C Preferred Stock" shall mean the Series C Preferred Stock, $.001 par value per share, of the Company, or any other capital stock of the Company into which such stock is reclassified or reconstituted, or any securities convertible into, or exchangeable or exercisable for, any of the foregoing, in each case, at any time outstanding.
3. Section 3.1 of the Investor Rights Agreement shall be amended in its entirety to read as follows:
SECTION 3. OTHER COVENANTS OF THE COMPANY
The Company shall comply with the following covenants until the conversion of Investors' Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock into Common Stock:
3.1 SIGNIFICANT TRANSACTIONS. In addition to any vote or consent of shareholders or directors required by law or the Company's Amended and Restated Certificate of Incorporation (the "Certificate"), so long as any originally issued Preferred Stock remains outstanding, the Required Consent of the Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock, voting as separate classes for the transaction described in Section 3.1(a) and together as a single class for the transactions described in Section 3.1(b), either in writing without a meeting or by vote at any meeting called for the purpose, shall be necessary for effecting, validating or permitting:
(a) any amendment, alteration or repeal of any of (i) the
provisions of the Certificate or the Bylaws of the Company affecting
the rights, powers and preferences of the Series A Preferred Stock,
Series B Preferred Stock or Series C Preferred Stock, as applicable, or
(ii) the provisions of Article IV of the Certificate; or
(b) any consolidation or merger of the Company with or into any other corporation, 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; any transaction or series of related transactions in which excess of 50% of the Company's voting power is transferred; any reclassification or recapitalization of any capital stock of the Company; any dissolution, liquidation, or winding up of the Company; or any sale of more than 50% of the assets of the Company, or any agreement to become so obligated.
MISCELLANEOUS
1. Interpretation. Except as expressly amended by this Amendment, the Investor Rights Agreement shall remain in full force and effect without change.
2. Counterparts. This Amendment may be executed in any number of counterparts, each of which when executed and delivered shall be an original, but all of which together shall constitute one and the same instrument.
3. Effective Time. This Amendment shall be effective following its execution by the holders of at least 66-2/3% of the outstanding shares held by the Holders (as defined in the Investor Rights Agreement) and at least a majority of the Common Stockholders, in accordance with Section 4.1 of the Investor Rights Agreement.
4. Additional Investors. Each party who purchases Stock pursuant to the Purchase Agreement agrees to be bound by the terms of the Investor Rights Agreement and shall be deemed an additional "Investor" for all purposes thereunder.
[signature pages follow]
EXHIBIT E
AMENDMENT NO. 2 TO
AMENDED AND RESTATED SHAREHOLDERS AGREEMENT
AMENDMENT NO. 2 TO
AMENDED AND RESTATED SHAREHOLDERS AGREEMENT
This Amendment No. 2 to Amended and Restated Shareholders Agreement (this "Amendment ") is entered into as of the 31st day of August, 2000, by and among Array BioPharma Inc., a Delaware corporation (the "Company") and each of those persons listed on the signature pages hereto as either "Investors", "Founders" or "Holders ".
RECITALS
A. The Company, Founders and certain Investors and Holders previously entered into that certain Amended and Restated Shareholders Agreement, dated as of November 16, 1999 (as amended heretofore, the "Shareholders Agreement").
B. The Company, certain Investors and Founders have entered into that certain Series C Preferred Stock Purchase Agreement, dated of even date herewith (the "Purchase Agreement"), pursuant to which the Company will issue and sell, and the Investors and Founders will purchase, certain shares of the Company's Series C Preferred Stock (the "Stock").
C. As a condition to the closing of the purchase of the Stock under the Purchase Agreement, the Company, Investors, Founders and Holders desire to amend the Shareholders Agreement as provided herein.
D. The Investors and Founders acknowledge that the Company has complied with its obligations under Section 3 of the Shareholders Agreement relating to Rights of First Refusal in connection with the issuance of the Stock under the Purchase Agreement and waive such right solely in connection with the issuance of Stock under the Purchase Agreement.
Now, Therefore, in consideration of the foregoing, the mutual covenants and agreements herein contained and other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the parties hereby agree that the Shareholders Agreement shall be amended as follows:
AMENDMENTS
1. In Section 1 of the Shareholders Agreement, the definition of "Preferred Stock" shall be amended in its entirety to read as follows:
"Preferred Stock" shall mean any series of preferred stock of the Company, including, without limitation, the Series A Preferred Stock, the Series B Preferred Stock and Series C Preferred Stock.
2. In Section 1 of the Shareholders Agreement, the following definition shall be added:
"Series C Preferred Stock" shall mean the Series C Preferred Stock, $0.001 par value per share, of the Company, or any other capital stock of the Company into which such stock is reclassified or reconstituted or any securities convertible into, or exchangeable or exercisable for, any of the foregoing, in each case, at any time outstanding.
3. Section 2.2(a) of the Shareholders Agreement shall be amended in its entirety to read as follows:
2.2 Right of First Offer.
(a) If at any time, other than pursuant to an Exempt Transfer, any Shareholder or their Related Party (each, a "Seller") desires to Transfer any or all of the Shares or any rights to Shares held by such Seller to any person, such Seller shall reduce to writing the terms pursuant to which Seller desires to Transfer such Shares (a "Transfer Offer"). The Transfer Offer shall identify the number of Shares to be transferred, the consideration for the Shares, the identity of any third party offeror, and all the other terms and conditions of such Transfer Offer. The Seller shall deliver the Transfer Offer to the Company, Founders and Investors. Notwithstanding anything to the contrary contained herein, for any Transfer by an Investor or Founder, or their Exempt Transferees, of:
(i) Series A Preferred Stock, the rights set forth in this Section 2.2 shall be limited to Transfer Offerees holding Series A Preferred Stock;
(ii) Series B Preferred Stock, the rights set forth in this Section 2.2 shall be limited to Transfer Offerees holding Series B Preferred Stock; or
(iii) Series C Preferred Stock, the rights set forth in this Section 2.2 shall be limited to Transfer Offerees holding Series C Preferred Stock.
Notwithstanding anything to the contrary contained herein, Section 2.3 shall not apply to any such Transfer of Series B Preferred Stock or Series C Preferred Stock.
MISCELLANEOUS
1. Interpretation. Except as expressly amended by this Amendment, the Shareholders Agreement shall remain in full force and effect without change.
2. Counterparts. This Amendment may be executed in any number of counterparts, each of which when executed and delivered shall be an original, but all of which together shall constitute one and the same instrument.
3. Effective Time. This Amendment shall be effective following its execution by the Founders who hold two thirds of the Shares (as defined in the Shareholders Agreement) held by
the Founders, the Investors who hold two-thirds of the Shares (as defined in the Shareholders Agreement) held by the Investors and Holders who hold 51% of the Shares (as defined in the Shareholders Agreement) held by Holders, each voting as a class, in accordance with Section 7.1 of the Shareholders Agreement.
4. Additional Investors. Each party who purchases Stock pursuant to the Purchase Agreement agrees to be bound by the terms of the Shareholders Agreement and shall be deemed an additional "Investor" for all purposes thereunder.
[signature pages follow]
EXHIBIT F
CAPITALIZATION
OF THE COMPANY AS OF THE CLOSING DATE
Array BioPharma CAPITALIZATION TABLE 8/31/2000 Confidential
Ownership Structure as of
August 31, 2000
SHARES PURCHASE PURCHASE
COMMON @ PRICE SHARES A @ PRICE SERIES B @
STOCKHOLDERS OPTIONS $0.235/SH. COMMON $1.00/SH. SERIES A $2.50/SH.
------------ ------- ---------- ----------- ---------- ----------- ----------
ARCH Venture Fund III, LP $ -- 1,500,000 $ 1,500,000 604,446
FRAZIER & Company $ -- 1,500,000 $ 1,500,000 604,446
BOULDER VENTURES II 130,500 $ 30,668 870,000 $ 870,000 403,166
BOULDER VENTURES II ANNEX 19,500 $ 4,583 130,000 $ 130,000 60,243
FALCON TECHNOLOGY 150,000 35,250 1,000,000 $ 1,000,000 463,409
ADVENT International, Inc. $ -- 750,000 $ 750,000 120,000
MITSUI & Company $ -- 250,000 $ 250,000 100,741
Marvin Caruthers 18,750 $ 4,406 250,000 $ 250,000 80,000
Frank Bonsal 50,000 $ 50,000 10,000
Mike Carruthers 100,387 44,505 $ 10,459 25,000 $ 25,000 8,000
Richard Daly 25,000 $ 25,000 9,600
Christopher Ozeroff 20,000 $ 20,000 4,000
William Roberts 10,000 $ 10,000 2,400
Theresa A. Koch 20,819 10,457 $ 2,457 5,000 $ 5,000 12,500
FOUNDING MANAGEMENT
Kevin Koch 76,172 664,396 $ 156,074 26,000
Tony Piscopio 65,734 662,977 $ 155,741 30,000
KC Nicolaou 648,654 $ 152,375 252,000
David Snitman 76,172 664,397 $ 156,075 250,000 $ 250,000 356,148
SERIES C INVESTORS
Kirby Cramer
Joseph Lefkoff
Vector Fund Management
Mosaix Ventures
--------- --------- ----------- ----------- ----------- ---------
Total Series A, B & Founders 339,284 3,014,136 $ 708,087 6,635,000 $ 6,635,000 3,147,099
Other - Preferred Series B 52,900
Other - Common 851,607 $ 287,728
SILICON VALLEY (Warrants) 47,000 50,000
LTI (Warrants) 16,500
Options Issued less included in
Founders and Investors (above) 2,658,855
--------- --------- ----------- ----------- ----------- ---------
Total 2,998,139 3,865,743 $ 995,814 6,698,500 $ 6,635,000 3,249,999
========= ========= =========== =========== =========== =========
PURCHASE PURCHASE TOTAL POST
PRICE SERIES C @ PRICE SHARES TOTAL %
STOCKHOLDERS SERIES B $6.00/SH. SERIES C (POST) OWNERSHIP
------------ ----------- ----------- ----------- ---------- ---------
ARCH Venture Fund III, LP $ 1,511,116 204,779 $ 1,228,674 2,309,225 12.50%
FRAZIER & Company $ 1,511,116 16,667 $ 100,002 2,121,113 11.48%
BOULDER VENTURES II $ 1,007,914 136,587 $ 819,522 1,540,253 8.34%
BOULDER VENTURES II ANNEX $ 150,608 20,410 $ 122,460 230,153 1.25%
FALCON TECHNOLOGY $ 1,158,522 156,997 $ 941,982 1,770,406 9.58%
ADVENT International, Inc. $ 300,000 50,000 $ 300,000 920,000 4.98%
MITSUI & Company $ 251,853 34,130 $ 204,780 384,871 2.08%
Marvin Caruthers $ 200,000 33,936 $ 203,616 382,686 2.07%
Frank Bonsal $ 25,000 5,834 $ 35,004 65,834 0.36%
Mike Carruthers $ 20,000 3,332 $ 19,992 181,224 0.98%
Richard Daly $ 24,000 34,600 0.19%
Christopher Ozeroff $ 10,000 13,621 $ 81,726 37,621 0.20%
William Roberts $ 6,000 1,207 $ 7,242 13,607 0.07%
Theresa A. Koch $ 31,250 48,776 0.26%
FOUNDING MANAGEMENT
Kevin Koch $ 65,000 766,568 4.15%
Tony Piscopio $ 75,000 1,667 $ 10,002 760,378 4.11%
KC Nicolaou $ 630,000 50,000 $ 300,000 950,654 5.14%
David Snitman $ 890,371 266,667 $ 1,600,002 1,613,384 8.73%
SERIES C INVESTORS
Kirby Cramer 83,333 $ 499,998 83,333
Joseph Lefkoff 4,166 $ 24,996 4,166
Vector Fund Management 416,667 $ 2,500,002 416,667
Mosaix Ventures 166,667 $ 1,000,002 166,667
----------- --------- ----------- ---------- ------
Total Series A, B & Founders $ 7,867,750 1,666,667 $10,000,002 14,802,186 80.10%
Other - Preferred Series B $ 132,250 52,900 0.29%
Other - Common 851,607 4.61%
SILICON VALLEY (Warrants) 97,000 0.52%
LTL (Warrants) 16,500 0.09%
Options Issued less included in
Founders and Investors (above) 2,658,855 14.39%
----------- ----------- ----------- ---------- ------
Total $ 8,000,000 $ 1,666,667 $10,000,002 18,479,048 100.00%
=========== =========== =========== ========== ======
|
EXHIBIT G
OPINION OF COUNSEL TO THE COMPANY
August 31, 2000
To: The Purchasers under the Series C Preferred Stock Purchase Agreement dated August 31, 2000
Re: Array BioPharma Inc.; Series C Preferred Stock Purchase Agreement
Ladies and Gentlemen:
This firm has acted as special counsel to Array BioPharma Inc., a Delaware corporation (the "Company"), in connection with the Series C Preferred Stock Purchase Agreement, dated of even date herewith (the "Purchase Agreement"), among the Company and certain investors identified as "Purchasers" on the signature pages thereto (collectively, the "Purchasers"). This opinion letter is furnished to you pursuant to the requirements set forth in Section 5.1(j) of the Purchase Agreement. Capitalized terms used herein that are defined in the Purchase Agreement shall have the meanings set forth in the Purchase Agreement, unless otherwise defined herein.
For purposes of this opinion letter, we have examined copies of the following documents:
1. The Purchase Agreement, Amendment No. 2 to Amended and Restated Shareholders Agreement and Amendment No. 1 to Amended and Restated Investor Rights Agreement (collectively, the "Documents").
2. The Company's Amended and Restated Certificate of Incorporation (the "Certificate"), as certified by the Secretary of State of the State of Delaware on August 31, 2000 and as certified by the Secretary of the Company on the date hereof as being complete, accurate and in effect.
3. The Bylaws of the Company, as certified by the Secretary of the Company on the date hereof as being complete, accurate and in effect.
4. A certificate of good standing of the Company issued by the Secretary of State of the State of Delaware dated August 31, 2000.
5. Foreign qualification certificate issued by the Secretary of State of the State of Colorado dated August 21, 2000.
6. Resolutions of the Board of Directors of the Company adopted by unanimous written consent dated August 22, 2000, as certified by the Secretary of the Company on the date hereof as being complete, accurate and in effect, relating to, among other things, authorization of the Purchase Agreement and the consummation of the transactions contemplated thereunder.
The Purchasers
August 31, 2000
7. A certificate of an officer of the Company dated the date hereof as to certain facts relating to the Purchase Agreement and the Company.
8. A certificate of the Secretary of the Company, dated the date hereof, as to the incumbency and signatures of certain officers of the Company.
9. The common and preferred stock ledger of the Company certified by the Secretary of the Company as being accurate and complete as of the date hereof.
We have not, except as specifically identified above, made any independent review or investigation of factual matters, including the assets, business or affairs of the Company. In our examination of the Documents and the aforesaid certificates, records, documents and agreements, we have assumed the genuineness of all signatures (other than those on behalf of the Company in the Documents), the legal capacity of all natural persons, the accuracy and completeness of all documents submitted to us, the authenticity of all original documents and the conformity to authentic original documents of all documents submitted to us as copies (including telecopies). We also have assumed the accuracy, completeness and authenticity of the foregoing certifications (of public officials, governmental agencies and departments and corporate officers) and statements of fact, on which we are relying, and have made no independent investigations thereof. In rendering the following opinions with respect to the Company, we have relied as to factual matters, without independent investigation, upon the representations, warranties and certifications made by the Company in or pursuant to the Documents and upon the officer's certificate identified in Paragraph 7 above and the Secretary's certificate identified in Paragraph 8 above. This opinion letter is given, and all statements herein are made, in the context of the foregoing.
As used in this opinion letter, the phrase "to our knowledge" means the actual knowledge (that is, the conscious awareness of facts or other information) of lawyers in the firm who have given substantive legal attention to representation of the Company since the Company has been a client of the firm.
For purposes of this opinion letter, we have assumed that (i) the Purchasers have all requisite power and authority under all applicable laws, regulations and governing documents to execute, deliver and perform their respective obligations under the Documents, (ii) the Purchasers have duly authorized, executed and delivered the Documents, (iii) the Purchasers, to the extent they are not individuals, are validly existing and in good standing in all necessary jurisdictions, (iv) the Documents constitute valid and binding obligations, enforceable against the Purchasers in accordance with their respective terms and (v) there has been no material mutual mistake of fact or misunderstanding or fraud, duress or undue influence, in connection with the negotiation, execution or delivery of the Documents.
The Purchasers
August 31, 2000
This opinion letter is based as to matters of law solely on applicable provisions of (i) the Delaware General Corporation Law and (ii) Colorado contract law (but not including any statutes, ordinances, administrative decisions, rules or regulations of any political subdivision of the State of Colorado), except as to Paragraph (i) below, which is limited to the Securities Act of 1933, as amended, and we express no opinion as to any other laws, statutes, ordinances, rules or regulations (such as state securities laws or regulations, antitrust or unfair competition laws or regulations, tax laws or regulations or communications laws or regulations).
Based upon, subject to and limited by the foregoing, we are of the opinion that:
(a) The Company was incorporated and is validly existing and in good standing as of the date specified in the certificate referred to in Paragraph 4 above under the laws of the State of Delaware.
(b) The Company is authorized to transact business as a foreign corporation in the State of Colorado as of the date of the certificate specified in Paragraph 5 above. The Company is not qualified as a foreign corporation in any jurisdiction other than the State of Colorado.
(c) The Company has the requisite corporate power and corporate authority to own or lease its properties and assets and to conduct its business as it is currently being conducted.
(d) The Company has the corporate power and corporate authority to enter into the Documents and to perform its obligations thereunder.
(e) The Documents are valid, binding and enforceable against the Company in accordance with their terms, except as may be limited by bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors' rights (including, without limitation, the effect of statutory and other law regarding fraudulent conveyances, fraudulent transfers and preferential transfers) and as may be limited by the exercise of judicial discretion and the application of principles of equity including, without limitation, requirements of good faith, fair dealing, conscionability and materiality (regardless of whether such agreements are considered in a proceeding in equity or at law). In addition, we express no opinion as to the indemnification and contribution provisions contained in Section 2 of the Amended and Restated Investor Rights Agreement.
(f) The execution, delivery and performance as of the date hereof by the Company of the Documents have been duly authorized by all necessary corporate action of the Company.
(g) The authorized, issued and outstanding capital stock of the Company as of August 31, 2000 are as set forth in Section 3.2 of the Purchase Agreement. The shares of common stock issuable upon conversion of the Series C Preferred Stock (the "Conversion Shares") have been duly and validly reserved for issuance. When issued in compliance with the Certificate and the
The Purchasers
August 31, 2000
Purchase Agreement, the Conversion Shares will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances created by the Company; provided, however, that the Conversion Shares are subject to restrictions on transfer under state and/or federal securities laws and the Documents. The shares of Series C Preferred Stock, when issued in accordance with the Certificate and the Purchase Agreement, will be validly issued, fully paid and non-assessable, and will be free of liens or encumbrances created by the Company; provided, however, that the shares of Series C Preferred Stock are subject to restrictions on transfer under state and/or federal securities laws and the Documents. Except as provided in the Documents, to our knowledge, there are no outstanding rights, options, warrants, conversion privileges, preemptive rights, or other agreements or commitments obligating the Company to issue or transfer any additional shares of Series C Preferred Stock.
(h) The execution, delivery, and performance as of the date hereof by the Company of the Documents do not violate the Certificate or Bylaws of the Company.
(i) Based on the covenants and representations of the Purchasers set forth in the Purchase Agreement and the representations of the Company officer referred to in Paragraph 7 above, the offer, issuance and sale of the Series C Preferred Stock to the Purchasers pursuant to the Purchase Agreement is exempt from the registration requirements of the Securities Act of 1933, as amended.
The opinion expressed in Paragraph (e) above shall be understood to mean only that if there is a default in performance of an obligation, (i) if a failure to pay or other damage can be shown and (ii) if the defaulting party can be brought into a court which will hear the case and apply the governing law, then, subject to the availability of defenses, and to the exceptions set forth in Paragraph (e) above, the court will provide a money damage (or perhaps injunctive or specific performance) remedy.
We assume no obligation to advise you of any changes in the foregoing subsequent to the delivery of this opinion letter. This opinion letter has been prepared solely for your use in connection with transactions contemplated by the Purchase Agreement on the date hereof, and should not be quoted in whole or in part or otherwise be referred to, nor be filed with or furnished to any governmental agency or other person or entity, without the prior written consent of this firm.
Very truly yours,
HOGAN & HARTSON L.L.P.
EXHIBIT 10.8
AMGEN INC.
1885 33RD STREET
BOULDER, COLORADO
LEASE
THIS LEASE (this "Lease") is made as of the ___ day of July, 1998, by and between AMGEN INC., a Delaware corporation, as landlord ("Landlord"), whose address is One Amgen Center Drive, Thousand Oaks, California 91320, and the Tenant named in Section 1 below.
1. BASIC PROVISIONS.
a. TENANT NAME
b. AND CONTACT PEOPLE: Array BioPharma Inc. 1885 33rd Street Building AC-1 Boulder, Colorado 80301-2505 Attn: David Snitman
c. PREMISES: Amgen Building AC-1 1885 33rd Street Boulder, CO 80301-2505
d. RENT: $41,173/mth., triple net
e. SECURITY DEPOSIT: 12 months rent (with decrease after one year pursuant to Section 6.a)
f. INITIAL TERM: Three years
g. COMMENCEMENT DATE: July 15, 1998
h. LEASE EXTENSION OPTION: One two-year option with rental increase
i. TENANT'S SHARE OF INSURANCE, PARKING LOT MAINTENANCE, FIRE AND SPRINKLER PROTECTION SYSTEM MONITORING AND MAINTENANCE, LANDSCAPING CARE AND IRRIGATION: 15%
j. PERMITTED USE: Industrial laboratory and accessory office use.
2. LEASE GRANT.
Landlord hereby leases to Tenant and Tenant hereby leases from Landlord the Premises as described on EXHIBIT A attached hereto, which is located at 1885 33rd Street, Boulder, Colorado, in Amgen Building AC-1 of the "Amgen Complex," which consists of Amgen Buildings AC-1, AC-2, AC-3 and AC-4.
3. USE.
a. Permitted Use. The premises may be used and occupied only for industrial laboratory and accessory office use and for no other purpose whatsoever.
b. Uses Prohibited. Tenant shall not do anything which will increase the existing rate of any insurance upon the Amgen Complex, or cause a cancellation of such insurance. Tenant shall not do anything which will interfere with other tenants at the Amgen Complex. Tenant shall not use the Premises for any improper, immoral, unlawful or objectional purpose. Tenant shall not permit any nuisance about the Premises or the Amgen Complex. Tenant shall not commit any waste upon the Premises or the Amgen Complex.
c. Compliance with Law. Tenant shall have sole responsibility to ensure that its use complies with all local land use regulations and zoning laws. Moreover, Tenant shall comply with all laws, statutes, ordinances and governmental rules, regulations or requirements now in force or which may hereafter be in force (including without limitation, environmental laws) and with the requirements of any board of fire underwriters or other similar bodies now or hereafter constituted relating to the Premises.
4. ACCEPTANCE OF PREMISES.
a. Commencement Date. The "Commencement Date" of this Lease shall be July 15, 1998, or sooner, at Landlord's option.
b. Acceptance of Premises. Prior to the Commencement Date, Landlord shall notify Tenant that the Premises are available for inspection. At such time, Tenant shall have the right to walk-through inspections of the Premises. When Tenant occupies the Premises, Tenant shall be deemed to have fully accepted the Premises in "as is" condition. Landlord and Landlord's agents hereby disclaim any express or implied representations, warranties or promises with respect to the physical condition of the Amgen Complex, the land upon which it is erected, the Premises, the suitability of the Premises for Tenant's intended purpose or use, or any other matter or thing affecting or related to the Premises except as herein expressly set forth.
5. TERM; HOLDOVER.
a. Term. The initial term of this Lease (the "Initial Term") shall commence on the Commencement Date and terminate at midnight on July 14, 2001, unless sooner terminated hereunder. Tenant may extend the Initial Term an additional two years under the terms set forth in Section 5.b. "Term" as used herein shall refer to the Initial Term and any extension thereof.
b. Lease Extension Option. Tenant shall have the right, exercisable by delivery of written notice to Landlord not later than nine months prior to the end of the Initial Term (the "Expiration Date"), to extend the Term of this Lease for a further period of two years commencing on the first day after the Expiration Date and expiring two years thereafter ("Extension"). All terms and conditions of this Lease shall apply to the Extension which shall include all space then occupied under this Lease, except that the Rent shall be increased as set forth in EXHIBIT B, attached hereto and incorporated herein by reference, and there shall be no more extension options.
c. Holdover. After the expiration of the Term, this Lease shall continue from month to month, if Tenant retains possession of the Premises, at the rent of 150% of the Rent due during the last month before expiration and otherwise on the same terms and conditions as herein provided, unless and until either Landlord or Tenant terminates this Lease by giving the other written notice at any time.
6. RIGHT OF FIRST OPTION.
Landlord hereby grants to Tenant a right of first option (the "Option") to lease any additional space adjacent to the Premises which becomes available for lease from time to time during the Term of this Lease. Landlord shall give notice ("Option Notice") to Tenant of the terms and conditions ("Landlord's Offer"), including the rental rate, upon which such space is available for lease. Tenant shall have ten days ("Option Exercise Period") after receipt of the Option Notice to accept or reject Landlord's Offer in writing. If Tenant has not accepted or rejected Landlord's Offer by the expiration of the Option Exercise Period, Landlord's Offer shall be deemed to be rejected by Tenant.
7. SECURITY DEPOSIT.
a. Terms of Deposit. Simultaneously with the execution of this Lease, Tenant shall pay to Landlord the sum of $494,076 to be held by Landlord as a security deposit to secure Tenant's faithful performance of all terms, conditions and covenants of this Lease, including without limitation the payment of all Rent and Additional Rent due hereunder. Such security deposit shall be in the form of a letter of credit or six-month certificate of deposit with a bank designated by Tenant satisfactory to Landlord. Such certificate of deposit shall be placed in the name of Landlord and shall automatically renew for additional six-month periods. Any and all interest earned thereon shall belong to Tenant. After the first year of this Lease and on condition that no defaults have occurred hereunder, the principal amount may be reduced to six months'
rent or $247,038. Upon full performance of this Lease and subject to the provisions of Section 7.b, the security deposit and any uncollected interest earned thereon shall be refunded to Tenant.
b. Use of Deposit. If at any time during the Term, Tenant shall be in default in the performance of any provision of this Lease, Landlord may (but shall not be required to) use the security deposit, or as much thereof as is reasonably necessary, in payment of any Rent, Additional Rent or other sums due under this Lease in default, in reimbursement of any expense incurred by Landlord on Tenant's behalf, including but not limited to repairs to or replacements on the Premises, or in payment of any damages incurred by Landlord by reason of default. In such event, Tenant shall, on written demand of Landlord, forthwith remit to Landlord a sufficient amount in cash to restore such deposit to its original amount. If the claims of Landlord exceed the deposit provided for herein, Tenant shall remain liable for the balance of such claims.
8. RENT.
Tenant shall pay to Landlord, without offset, deduction, notice or demand, rent ("Rent") for the Premises as follows:
a. Rent. Tenant shall pay the monthly sum specified in the Rent Schedule shown on EXHIBIT B ("Rent"), in advance on or before the first day of each and every calendar month commencing as of August 1, 1998, during the Term hereof, except the first month's Rent shall be prorated and due and payable on or before July 15, 1998. Rent shall be paid to Landlord in lawful money of the United States of America at the following address:
Amgen Inc.
Attn: Candace Halloran, Accounting Operations
One Amgen Center Drive
Thousand Oaks, California 91320
or such place as Landlord may from time to time designate in writing.
b. Additional Rent. Any costs that Tenant is required to pay, if paid by Landlord, shall become "Additional Rent" due under this Lease. Additional Rent shall be due to Landlord with the next installment of Rent due, or if no such installment is due, within 15 days following receipt by Tenant of a written invoice of such costs. Additional Rent may include, but is not limited to, all real property taxes for the Premises; assessments on the Premises; modifications requested by Tenant to any system used in the Amgen Complex that affect the Premises; costs of capital improvements, major structural repairs, boiler replacement and other capital replacements, and major roof repairs, provided that any Additional Rent for such items shall be amortized over the projected life of the improvement or repair; and Tenant's share of insurance, parking lot maintenance, fire and sprinkler protection system monitoring and maintenance, and landscaping care and irrigation. For example, if a boiler serving the Premises is replaced at the beginning of the second year of the Term, at a replacement cost of $200,000.00, and the boiler has a useful life of 20 years, Tenant's amortized share of the boiler replacement would be at a rate
of $10,000.00 per year during the remaining Term. Landlord has disclosed to Tenant that real property taxes and assessments for the Premises for calendar year 1997 were $32,270, and the estimated real property taxes and assessments for calendar year 1998 are $32,270. For all purposes of this Lease, the term "Rent" shall be deemed to include Additional Rent.
c. Personal Property Taxes. Tenant shall pay before delinquency any taxes upon Tenant's leasehold improvements, equipment, furniture, fixtures (including without limitation the Fixtures), and any other personal property located in the Premises. In the event any such personal property shall be assessed and taxed with the real property, Tenant shall pay to Landlord its share of such taxes within ten days after timely delivery to Tenant of a statement in writing setting forth the amount of such taxes applicable to Tenant's personal property.
d. Late Charge. Tenant hereby acknowledges that late payment by Tenant to Landlord of Rent or other sums due hereunder will cause Landlord to incur costs which will be difficult to ascertain. Such costs include, but are not limited to, processing and accounting charges, attorneys' fees, and late charges which may be imposed upon Landlord by terms of any mortgage or trust deed encumbering the Amgen Complex. Accordingly, if any installment of Rent or any sum due from Tenant shall not be received by Landlord within five business days after said amount is due, Tenant shall pay to Landlord on demand a late charge of five percent of such overdue amount. Any Rent or sums due from Tenant which are more than one month delinquent shall bear interest at the rate of 18 percent per annum from the due date. Tenant shall pay any attorneys' fees incurred by Landlord by reason of Tenant's failure to pay such amounts. Tenant shall pay on demand $25 for any check returned for insufficient funds. All such charges shall also be deemed to be Rent hereunder.
9. MAINTENANCE, UTILITIES AND SECURITY.
a. Landlord's Maintenance Obligations. Landlord shall maintain the parking lot, landscaping and structural portions of the Premises, including the exterior walls and roof, unless such repairs are caused by the act or omission of any duty of Tenant, its agents, servants, employees, invitees, subtenants, licensees, assignees or trespassers, in which case Tenant shall pay to Landlord the actual cost of such maintenance and repairs. Landlord shall be responsible for replacement of boilers and mechanical, electrical, elevator and HVAC systems, subject to the provisions of Section 8(b) of this Lease. Landlord shall also be responsible for monitoring and maintenance of the fire monitoring system and sprinkler protection system, provided that Tenant shall pay as Additional Rent 15 percent of all costs associated with such monitoring and maintenance. There shall be no abatement of Rent and no liability of Landlord by reason of any reasonable injury to or reasonable interference with Tenant's business arising from the making of any necessary repairs, alterations or improvements. Tenant waives the right to make repairs at Landlord's expense under any law, statute or ordinance now or hereafter in effect. Landlord agrees to promptly and diligently perform any such maintenance and repair for which it is responsible.
b. Tenant's Obligations. Tenant shall establish contracts with reputable contractor(s) for scheduled preventative maintenance and repair on building-specific boilers and mechanical, electrical, elevator and HVAC systems. It shall be Tenant's obligation to keep in good order, condition and repair all portions of the Premises that are not the obligation of Landlord. In addition, Tenant is responsible for monitoring and maintenance of the fire extinguishers on the Premises, including but not limited to conducting periodic fire safety inspections to ensure that the Premises complies with all local laws, codes and regulations. Tenant shall contract and pay for all water, gas, sewer charges, electricity, telephone service, pest control, trash removal and all other services and utilities supplied to the Premises, together with any taxes thereon. All telecommunications services (voice and data) desired by Tenant shall be obtained at Tenant's sole cost and risk from providers authorized by Landlord and the appropriate governmental authorities to provide such services to the Amgen Complex. Landlord agrees to provide consultative assistance to Tenant, where necessary, in the installation of such telecommunications services, but in no event shall Landlord have any liability or obligation to Tenant in connection with the failure of such telecommunications services or any interruption therein or interference therewith (even if caused by the negligent acts or omissions of Landlord, its agents, contractors, and employees) and Tenant waives and releases all claims therefor, whether now existing or hereafter arising. Furthermore, Landlord shall have no obligation of any kind or character with respect to the maintenance or operation of any such telecommunications system, irrespective of the points of demarcation therein and will coordinate access for the appropriate telecommunications carrier to the point of demarcation which is located outside of the Premises with a minimum of one hour's notice during normal business hours and a minimum of four hours' notice outside of normal business hours. In no event shall Tenant use or install in the Premises any wireless communications equipment (other than the use of cellular telephones) without the prior written consent of Landlord. Tenant shall not alter, modify, remove or add any voice and/or data cable to the Premises or the Amgen Complex without prior written consent of Landlord. Tenant shall provide Landlord with its plan for such facilities and will secure its own telecommunication demarcation point within a reasonable time. No entrance facilities services installed, purchased or owned by Tenant shall pass through or terminate within the Amgen Complex except within the Premises.
c. Building Management System. Landlord shall have no obligation to supply utility service to the Premises. Notwithstanding the foregoing, Landlord's building management system for the Amgen Complex (the "BMS") is currently programmed to regulate and control certain utilities supplied to the Premises. Therefore, Landlord agrees, as an accommodation to Tenant, to continue to operate the BMS for the Premises so long as Landlord occupies any portion of the Amgen Complex and Tenant's needs can be reasonably accommodated through the BMS, provided that Landlord will give three months' notice to Tenant prior to discontinuing operation of the BMS and Tenant may elect to continue to operate the BMS for the Premises (at Tenant's sole cost and expense, including the cost of modifications required to make the BMS control only the Premises) or to install a new system at Tenant's cost. Tenant agrees to designate an employee who will be Landlord's contact for BMS matters. In the event Tenant desires to make substantial modifications to the BMS, or to make other arrangements for its utility
management, Tenant shall first obtain the written approval of Landlord, and shall make such changes at Tenant's sole cost and expense.
Because the BMS services are being provided solely as an accommodation to Tenant, and not as an obligation of Landlord, Landlord shall not be deemed to be in default under this Lease for any reason whatsoever relating to the BMS, including without limitation, breach of quiet enjoyment, damage to property or injury to persons. Moreover, Tenant hereby waives and releases all claims against Landlord for any loss, liability or injury that arises out of or is incurred in connection with the BMS or Landlord's operation thereof.
d. Security. Landlord will provide Tenant with key locks for all entry doors. Notwithstanding the foregoing, Tenant will be responsible for providing security on the Premises and adjacent areas, including but not limited to the sidewalks and parking areas.
10. TENANT REPAIRS AND ALTERATIONS.
a. Repairs; Surrender. Tenant shall, at Tenant's sole cost and expense, keep the Premises and every part thereof in good condition and repair. Subject to the provisions of EXHIBIT C, Tenant shall, upon the expiration or sooner termination of this Lease, surrender the Premises, together with all Fixtures appurtenant thereto as described in EXHIBIT A, to Landlord in good and operating condition, broom clean, ordinary wear and tear excepted. Tenant shall not be obligated to make structural repairs or repairs necessitated by fire or other casualty. Notwithstanding the foregoing, all damage to the Premises, the Fixtures or to any other part of the Amgen Complex caused by carelessness, omission, neglect or improper conduct of Tenant, its employees, agents, subtenants, assignees, invitees or trespassers shall be repaired promptly by Tenant at its sole cost and expense, to the reasonable satisfaction of Landlord.
b. Signage. Tenant shall seek the prior written consent of Landlord,
such consent not to be unreasonably withheld, before installing any decals or
signage on or about the Premises. All decals and signage approved under this
Section 10 shall be removed from the Premises at the termination of the Lease.
c. Alterations and Modifications. Tenant shall not make any alterations, additions or improvements to the Premises without the prior written consent of Landlord. Plans and specifications for any desired building or facility modifications must be submitted to and approved by Landlord prior to implementation by Tenant. The cost of any modifications requested by Tenant to systems used in the Amgen Complex that affect the Premises, including but not limited to the fire monitoring system, sprinkler protection system and BMS, if any, shall be charged to Tenant as Additional Rent. No Fixtures shall be removed from the Premises or modified in any respect without the prior written consent of Landlord. Consent or approval of Landlord, where required for actions by Tenant in this paragraph, shall not be unreasonably withheld. Tenant shall keep posted on the Premises, and shall personally serve upon contractors and subcontractors, a notice stating that Landlord's interest in the Amgen Complex shall not be subject to any lien for Tenant's work. Tenant shall provide Landlord with certificates evidencing
that all contractors and subcontractors have adequate workman's compensation insurance and builder's risk insurance satisfactory to Landlord. Any such work including wall covering, paneling and built-in cabinet work, but excepting movable furniture and trade fixtures, shall at once become a part of the realty and belong to Landlord and shall be surrendered with the Premises. Upon the expiration of the Term hereof (the "Expiration Date"), Tenant shall, if requested by Landlord, within five days after the Expiration Date, at Tenant's sole cost and expense, remove any alterations, additions, or improvements made by Tenant, and Tenant shall, at its sole cost and expense, repair any damage to the Premises caused by such removal. If Tenant fails to remove any such alterations, additions or improvements, Landlord may remove same at Tenant's sole cost and expense. Tenant shall also remove all furnishings, equipment, trade fixtures and other removable equipment, except those Fixtures described on EXHIBIT A, within five days after the Expiration Date. If Tenant fails to remove such property, then Tenant hereby grants to Landlord the option, exercisable at any time thereafter without the requirements of any notice to Tenant, (i) to treat such property, or any portion thereof, as being abandoned by Tenant to Landlord, whereupon Landlord shall be deemed to have full rights of ownership thereof; (ii) to elect to remove and store such property, or any portion thereof, on Tenant's behalf (but without assuming any liability to any person) and at Tenant's sole cost and expense, with reimbursement therefor to be made to Landlord upon demand; and/or (iii) to sell, give away, donate or dispose of as trash or refuse any or all of such property without any responsibility to deliver to Tenant any proceeds therefrom.
d. Mechanics' and Materialmen's Liens. Tenant shall have no authority or power, express or implied, to create or cause any mechanic's or materialmen's lien, charge or encumbrance of any kind against the Premises or the Amgen Complex or any portion thereof. Tenant shall promptly cause any such liens which have arisen by reason of any work or materials claimed to have been provided to or undertaken by or through Tenant to be released by payment, bonding or otherwise within thirty days after request by Landlord, and Tenant shall indemnify Landlord against losses arising out of any such claim. In addition, Tenant shall give such notices and shall cause the Premises to be posted in accordance with Colorado Revised Statutes 38-22-105, as such may be amended from time to time, prior to the commencement of any work on the Premises, whether or not Landlord has consented to such work. Tenant's indemnification of Landlord contained in this Section 10(c) shall survive the expiration or earlier termination of this Lease.
11. INDEMNITY.
Tenant shall indemnify, defend (with counsel satisfactory to Landlord) and hold harmless Landlord and its partners, affiliates, officers, directors, shareholders, lenders, employees, agents, successors and assigns ("Indemnities") from and against any and all liabilities, claims, fines, penalties, costs, damages or injuries to persons, damages to property, losses, liens, causes of action, suits, judgments and expenses (including without limitation, consultants' and attorneys' fees) of any nature, kind or description of any person or entity directly or indirectly arising out of, caused by or resulting from (in whole or in part) (i) Tenant's construction of or use, occupancy or enjoyment of the Premises; (ii) any activity, work or things done, permitted or
suffered by Tenant and its agents or employees in or about the Premises; or
(iii) any breach or default on Tenant's part under the covenants, terms and
conditions of this Lease, or any act, omission, willful misconduct or negligence
of Tenant, or any officer, agent, employee, guest, licensee or invitee of
Tenant; even if such liabilities are caused solely or in part by the ordinary
negligence of Landlord or any other Indemnitee, but not to the extent that such
liabilities are caused by the gross negligence or willful misconduct of Landlord
or any other Indemnitee. Tenant waives all claims in respect of any of the
foregoing liabilities against Landlord. Tenant shall give prompt notice to
Landlord in case of casualty or accidents in the Premises. In the event of
failure by Tenant to fully perform hereunder, Landlord may at its option and
without relieving Tenant of its obligations hereunder, so perform, but all costs
and expenses so incurred by Landlord in such event shall be reimbursed by Tenant
to Landlord.
12. HAZARDOUS MATERIALS; HYDROGEN.
a. Hazardous Material. Except as set forth on EXHIBIT C attached hereto and incorporated herein by reference, Tenant shall not use, generate, manufacture, produce, store, release, discharge, or dispose of, on, in, under or about the Premises, or transport to or from the Premises, any Hazardous Material (as defined in EXHIBIT C) or allow its agents, employees, contractors, licensees, invitees or any other person or entity (collectively, "Tenant's Agents") to do so. The schedule of Hazardous Materials attached to EXHIBIT C may be amended from time to time as evidenced by the initials of both Landlord and Tenant, showing the date of the amended schedule.
b. Use of Hydrogen. Tenant shall not cause or permit hydrogen to be
used in any location on the Premises except for the room now designated as Room
223 (the "Hydrogen Lab").
c. Disposal of Waste. Tenant shall comply with all federal, state and local laws, orders, rules and regulations in disposing of its waste products. Notwithstanding the foregoing, no Hazardous Materials may be released, discharged or disposed of at the Premises, including into the water or sanitary sewer system servicing the Premises. Tenant shall cause any and all Hazardous Materials to be removed from the Premises, and to be removed and transported solely by duly licensed handlers to duly licensed facilities for final disposal of such materials and wastes.
13. INSURANCE.
Tenant shall, at Tenant's expense, maintain during the Term of this Lease the following insurance:
a. Commercial general liability, bodily injury and property damage comprehensive coverage insuring against injury, death or property damage, with a combined single limit coverage of not less than $3,000,000.00, and with a maximum deductible of not more than
$10,000.00, which shall include a provision for contractual liability coverage insuring Tenant for the performance of its indemnity obligations set forth in this Lease.
b. All risk personal property insurance for the full replacement value of all fixtures, equipment, furniture and inventory on the Premises.
c. All risk property insurance covering Building AC-1 for the full replacement value of Building AC-1 and all fixtures attached thereto.
d. Worker's compensation insurance to the statutory limit and employer's liability insurance to the limit of $500,000.00 per occurrence.
Insurance required hereunder shall be provided by companies with a Best's Insurance Guide Rating of "A" or better. Tenant shall deliver to Landlord copies of insurance policies required herein or certificates evidencing the existence and amounts of such insurance with loss payable clauses satisfactory to Landlord prior to occupancy of the Premises, and shall provide to Landlord copies of all renewals thereof. No policy shall be cancelable or subject to material change or reduction of coverage without 60 days' prior written notice to Landlord, and the certificate shall so state. All such policies shall be written as primary policies not contributing with and not in excess of coverage which Landlord may carry. Landlord shall be named as an additional insured on all policies required herein. Landlord shall not be responsible for, and Tenant releases and discharges Landlord from, and Tenant further waives any right of recovery from Landlord for, any loss from business interruption or loss of use of the Premises suffered by Tenant in connection with Tenant's use or occupancy of the Premises, even if such loss is caused solely or in part by the negligence of Landlord.
14. SUBROGATION.
As long as their respective insurers so permit, Landlord and Tenant hereby mutually waive their respective rights of recovery against each other for any loss or damage to property insured by fire, extended coverage or any other property insurance policies existing for the benefit of the respective parties. The foregoing waiver shall be in force only if both parties' insurance policies contain a clause providing that such a waiver shall not invalidate the insurance and such a policy can be obtained without additional premiums.
15. PARKING.
Landlord reserves the right, with reasonable notice to Tenant, to change the entrances, exits, traffic lanes and the boundaries and locations of parking areas for the Amgen Complex. Based on a pro rata allocation, Tenant is permitted to use up to 40 parking spaces in the general parking area. Such spaces shall be designated by Landlord.
16. LIMITED LIABILITY.
Landlord shall not be liable for any loss or damage resulting from (a) fire, explosion, falling plaster, steam, gas, electricity, water or rain; (b) the pipes, appliances or plumbing works in the Amgen Complex; (c) the roof, street, subsurface; (d) any variation or interruption of utility services; (e) theft; or (f) any other cause whatsoever, unless due to the gross negligence of Landlord. Tenant shall look solely to the Premises for the recovery of any judgment against Landlord. Landlord and its shareholders, directors and officers shall not be personally liable for any judgment.
17. ASSIGNMENT AND SUBLETTING.
Tenant shall not assign this Lease or sublet any part of the Premises without the prior written consent of Landlord, which consent shall not be unreasonably withheld. Any attempted assignment or subletting without Landlord's prior written consent shall be wholly void and shall constitute a breach of this Lease. Acceptance of Rent by Landlord from anyone other than Tenant shall not be construed as a release of Tenant from any obligation or liability under this Lease. The consent of Landlord to an assignment or underletting shall not be construed to relieve Tenant from obtaining the written consent of Landlord to any further assignment or underletting. If any rents or other sums received by Tenant under any approved sublease are in excess of the Rent payable by Tenant under this Lease (prorated for a sublease of less than 100% of the Premises), or if any additional consideration is paid to Tenant by any assignee under any assignment, then 50% of such excess Rents under any sublease or such additional consideration under any assignment shall be paid by Tenant to Landlord as Additional Rent hereunder within ten days after Tenant receives the same.
18. DAMAGE BY CASUALTY.
a. Subject to Sections 10 (a), 18 (b) and (c), in the event the Premises is damaged by fire or other casualty, Landlord shall repair such damage promptly and diligently. This Lease shall remain in full force and effect.
b. If the damage to the Premises exceeds 50% of its value in Landlord's reasonable determination, or if the damage is so extensive that Landlord shall decide in its sole discretion to demolish it, then Landlord may elect to terminate this Lease by delivering written notice to Tenant within 30 days following such fire or other casualty.
c. Landlord shall not be required to make any repairs or replacements of any leasehold improvements, fixtures, or other personal property of Tenant.
19. EMINENT DOMAIN AND CONDEMNATION.
a. If such portion of the Premises as shall be reasonably required for the conduct of Tenant's business shall be taken or appropriated by any public or quasi-public authority under the power of eminent domain, either party hereto shall have the right, at its option, within 60 days after notice of said taking, to terminate this Lease upon 30 days' written notice or the date of the
taking, whichever occurs first. In case of a taking of part of the Premises which leaves the remainder of the Premises reasonably satisfactory for the continued conduct of Tenant's business, Landlord shall restore the Premises to comparable condition, to the extent possible, and Rent shall be equitably reduced based on any reduction in floor area of the Premises.
b. In the event of any taking, Landlord shall be entitled to any and all awards and/or settlements which may be given and Tenant shall have no claim against Landlord for the value of any unexpired term of this Lease. Tenant shall have the right to claim from the condemning authority a separate award for damage to Tenant's business, a claim for fixtures and furnishings and relocation expenses.
20. ENTRY BY LANDLORD.
Landlord reserves the right, with 24-hour advance notice given during normal business hours, to enter the Premises during normal business hours to access the BMS equipment room on the second floor of the Premises, to inspect the Premises, to submit the Premises to prospective purchasers, lenders or tenants, to post notices of non-responsibility, to post notices of Tenant's failure to comply with this Lease, or to repair the Premises, without abatement of Rent, and may for that purpose erect scaffolding and other necessary structures where reasonably required; provided that the entrance to the Premises shall not be unreasonably blocked. Tenant hereby waives any claim for damages to Tenant's business, any loss of occupancy or quiet enjoyment of the Premises, and any other loss occasioned thereby. Landlord shall retain a key to the Premises, excluding Tenant's vaults, safes and files, and Landlord may open said doors in an emergency, without any notice or liability to Tenant except for failure to exercise due care for Tenant's property. Any entry to the Premises by Landlord shall not be construed to be a forcible or unlawful entry into the Premises, or an eviction of Tenant from the Premises.
21. DEFAULT BY TENANT.
a. Event of Default Defined. The occurrence of any one or more of the following events shall constitute a default and breach of this Lease by Tenant:
i. The failure by Tenant to make any payment of Rent or any other payment required to be made by Tenant hereunder, as and when due.
ii. The failure by Tenant to observe or perform any of the covenants, conditions or provisions of this Lease (excluding any monetary payment) to be observed or performed by Tenant.
iii. The making by Tenant of any general assignment for the benefit of creditors; or the filing by or against Tenant of a petition to have Tenant adjudged a bankrupt, or a petition of reorganization under any law relating to bankruptcy unless, in the case of a petition filed against Tenant, the same is dismissed within 60 days; or the appointment of a trustee or a receiver to take possession of substantially all of Tenant's assets located at the Premises or of
Tenant's interest in this Lease, where possession is not restored to Tenant within 30 days; or the attachment, execution or other judicial seizure of substantially all of Tenant's assets located at the Premises, or of Tenant's interest in this Lease, where such seizure is not discharged within 30 days.
Tenant shall have an opportunity to cure a default under subsection (a)(ii) above for a period of five business days after the due date for such payment. Tenant shall have an opportunity to cure a default under subsection (a)(iii) above for a period of 30 days after written notice by Landlord to Tenant; provided that if the nature of Tenant's default is such that more than 30 days is reasonably required for its cure, then Tenant must commence such cure within said 30-day period and thereafter diligently prosecute such cure to completion.
b. Remedies. In the event of any such default or breach by Tenant, Landlord may at any time thereafter, in its sole discretion, with or without notice or demand and without limiting Landlord in the exercise of a right or remedy which Landlord may have by reason of such default or breach:
i. Reenter and attempt to relet or take possession pursuant to legal proceedings and remove all persons and property from the Premises. In such event, Landlord may from time to time make such alterations and repairs as may be necessary in order to relet the Premises or any part thereof for such term (which may be for a term extending beyond the term of this Lease) and at such Rental and upon such other terms and conditions as Landlord in its sole discretion may deem advisable. Upon each such reletting, all rentals received by Landlord from such reletting shall be applied: first, to the payment of any costs and expenses of such reletting, including reasonable alterations and improvements to the Premises, reasonable brokerage fees and reasonable attorneys' fees; second, the payment of any indebtedness other than Rent due hereunder from Tenant to Landlord; third, the payment of Rent due and unpaid hereunder; and the residue, if any, shall be held by Landlord and applied to payment of future Rent as the same may become due and payable hereunder. If such Rentals received from such reletting during any month are less than that to be paid during that month by Tenant hereunder, Tenant shall pay any cash deficiency to Landlord. Such deficiency shall be calculated and paid monthly. No such reentry or taking possession of the Premises by Landlord shall be construed as an election on its part to terminate this Lease unless a notice of such intention be given to Tenant or unless the termination thereof be decreed by a court of competent jurisdiction. Notwithstanding any such reletting without termination, Landlord may at any time thereafter elect in writing to terminate this Lease for such previous breach.
ii. Terminate this Lease, in which case Tenant shall immediately surrender possession. In addition to any other remedies which Landlord may have, it shall have the right to recover from Tenant (a) as liquidated damages for loss of bargain, and not as a penalty, an amount equal to the aggregate amount of Rent and other charges equivalent to Rent reserved in this Lease for the remainder of the Term, above the reasonable rental value of the Premises; and (b) all other damages and expenses, including reasonable attorneys' fees and the cost of recovering the Premises, that Landlord has sustained because of Tenant's default. Tenant shall
pay upon demand all Landlord's costs, charges and expenses, including fees of counsel, whether or not suit is filed, incurred in connection with the recovery under this Lease or for any relief against Tenant.
22. DEFAULT BY LANDLORD.
Landlord shall not be in default unless Landlord fails to perform its obligations within a reasonable time, but in no event later than 30 days after written notice by Tenant to Landlord; provided that if the nature of Landlord's obligation is such that more than 30 days are required for performance, then Landlord shall not be in default if Landlord commences performance within such 30-day period and thereafter diligently prosecutes the same to completion. Tenant shall have the right to terminate this Lease as a result of default caused by Landlord's intentional wrongdoing or gross negligence if such default is not cured in accordance with the preceding sentence.
23. SUBORDINATION AND ATTORNMENT.
This Lease is subordinate to any mortgage or deed of trust now or hereafter placed on the Premises and to any renewal, modification, consolidation, replacement or extension of such mortgage or deed of trust. This clause shall be self-operative, and no further instrument of subordination shall be required. Within five days after written request by Landlord, Tenant shall execute any documents which may be necessary or desirable to effectuate the subordination of this Lease. In the event such documentation is not so delivered by Tenant or required herein, Landlord shall have the right to deliver such documentation on Tenant's behalf, and Tenant designates Landlord as its attorney-in-fact in providing such statement.
24. BROKERS.
Tenant warrants that it has had no dealings with any real estate broker or agents in connection with the negotiation of this Lease.
25. NOTICE.
All notices shall be in writing sent by either (i) nationally recognized overnight courier, (ii) certified mail, postage prepaid, return receipt requested, or (iii) by facsimile; addressed as set forth below, or to such other place as either party may designate by notice:
To Landlord at: Amgen Inc.
One Amgen Center Drive
Thousand Oaks, California 91320
Attn: Manager Corporate Real Estate
Facsimile No.: (805) 447-6945
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With Copy to: Amgen Inc.
One Amgen Center Drive
Thousand Oaks, California 91320
Attn: John O'Connor, Esq.
Facsimile No.: (805) 499-8011
To Tenant at: Array BioPharma Inc.
1885 33rd Street Building AC-1
Boulder, Colorado 80301-2505
Attn: David Snitman
Facsimile No.:
-----------------
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Notice shall be deemed given upon posting of same with the overnight courier service or in an official depository of the United States Postal Service or upon completed transmission of same by facsimile machine, provided that no notice of either party's change of address shall be effective until 15 days after the addressee's actual receipt thereof.
For matters relating solely to the facilities located on the Premises, Tenant should first contact Andy Graziano of Amgen, at telephone number 401-2834.
26. ESTOPPEL STATEMENT.
Tenant shall execute, acknowledge and deliver to Landlord, within five business days after receipt of Landlord's written request therefor, a statement in writing (a) certifying that this Lease is unmodified and in full force and effect (or, if modified, stating the nature of such modification and certifying that this Lease as so modified is in full force and effect); (b) acknowledging that there are not, to Tenant's knowledge, any uncured defaults on the part of the Landlord hereunder, or specifying such defaults if any are claimed; and (c) setting forth the date of commencement and expiration of the Term hereof. Any such statement may be relied upon by the prospective purchaser or encumbrancer of the Premises or the Amgen Complex. In the event such statement is not so delivered by Tenant as required herein, Landlord shall have the right to deliver such statement on behalf of Tenant, and Tenant designates Landlord as its attorney-in-fact in providing such statement.
27. GENERAL PROVISIONS.
a. The waiver by Landlord of any term, covenant or condition herein contained shall not be deemed to be a waiver of any subsequent breach. The acceptance of Rent shall not be deemed to be waiver of any default by Tenant.
b. The headings to the section of this Lease shall have no effect upon the construction or interpretation of any part hereof.
c. Time is of the essence.
d. The covenants and conditions herein contained bind the heirs, successors, executors, administrators and permitted assigns of the parties hereto.
e. Neither Landlord nor Tenant shall record this Lease.
f. Upon Tenant's paying the Rent reserved hereunder and observing and performing all of the covenants, conditions and provisions on Tenant's part to be observed and performed hereunder, Tenant shall have quiet possession of the Premises for the entire Term hereof, subject to all the provisions of this Lease.
g. No remedy or election hereunder shall be deemed exclusive but shall, whenever possible, be cumulative with all other remedies at law or in equity.
h. This Lease shall be governed by the laws of the State of Colorado.
i. Anything to the contrary herein notwithstanding, in the event of any litigation or arbitration between Landlord and Tenant arising out of this Lease, the court or arbitrator shall award to the prevailing party all reasonable costs and expenses, including costs of investigation, settlement, expert witnesses and reasonable attorneys' fees and disbursements.
j. In the event of any sale of the Premises or the Amgen Complex by Landlord, Landlord shall be relieved of all liability hereunder occurring thereafter. The purchaser shall be deemed to have assumed and agreed to carry out any and all of the covenants and obligations of the Landlord under this Lease. As a condition to any sale of the Premises by Landlord, Landlord shall cause the purchaser at or prior to the closing of such sale, to enter into a Non-disturbance and Attornment Agreement with Tenant, in substantially the same form attached hereto as EXHIBIT D .
k. This Lease contains all of the agreements of the parties hereto with respect to any matter covered or mentioned in this Lease, and no prior agreements or understandings pertaining to any such matters shall be effective for any purpose. No provision of this Lease may be amended or added to except by an agreement in writing signed by the parties hereto or their respective successors in interest.
l. This Lease and the obligations of the Tenant hereunder shall not be affected or impaired because the Landlord is unable to fulfill any of its obligations hereunder or is delayed in doing so, if such inability or delay is caused by reason of strike, labor troubles, extreme weather conditions or acts of nature, or any other cause beyond the reasonable control of the Landlord.
m. Any provision of this Lease which shall prove to be invalid, void, or illegal shall in no way affect, impair or invalidate any other provision hereof and such other provision shall remain in full force and effect.
n. Tenant shall provide its most recent financial statement to Landlord within 15 days of request.
o. Each person(s) signing this Lease as an officer of Tenant represents to Landlord that such person(s) is/are authorized to execute this Lease without the necessity of obtaining any other signature of any other officer or partner, that the execution of this Lease has been authorized by the board of directors of the corporation and that this Lease is fully binding on Tenant. Landlord reserves the right to request evidence of the approval of this Lease and authorization of Tenant's signatories to bind Tenant, which evidence shall be satisfactory in form and content to Landlord and its counsel. Tenant hereby represents to Landlord that Tenant is duly incorporated, and in good standing in the State of Delaware, and that Tenant is not a subsidiary of any other entity.
p. This Lease may be executed in one or more counterparts, each of which will be deemed an original, and all of which together will constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Lease as of the date first above written.
LANDLORD: TENANT:
AMGEN INC., ARRAY BIOPHARMA INC.,
a Delaware corporation a Delaware corporation
By: /s/ By: /s/ DAVID SNITMAN
--------------------------- ---------------------------
Its: Chief Financial Officer Its: Chief Operating Officer
--------------------------- ---------------------------
By: By:
----------------------- -----------------------
[TITLE] [TITLE]
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EXHIBIT A
TO LEASE BETWEEN
AMGEN INC.
AND
ARRAY BIOPHARMA INC.
DESCRIPTION OF PREMISES
Building: Amgen Building AC-1 with the address of 1885 33rd Street,
Boulder, Colorado
Fixtures: Those fixtures attached to the Premises as of the Commencement
Date.
Parking: Those spaces designated for Tenant's parking pursuant to Section
15 of this Lease.
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EXHIBIT B
TO LEASE BETWEEN
AMGEN INC.
AND
ARRAY BIOPHARMA INC.
RENT SCHEDULE
A. INITIAL TERM RENT
Square Rate per Annual Monthly
Period Feet Sq. Foot Base Rent Base Rent
------ -------- -------- --------- ---------
7/15/98 - 7/14/01 22,458 $22/yr. $494,076 $41,173
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B. EXTENSION TERM RENT
Rent for each additional year shall be adjusted in accordance with the percentage change in the Denver-Boulder Consumer Price Index for All Urban Consumers from the most recent twelve-month period (the sum of the last two published semiannual reports as of 7/15/01 and 7/15/02 respectively) over the prior twelve-month period; provided, however, that there shall be no negative adjustment. Notwithstanding the foregoing sentence, any annual Rent increase will be subject to a 3% minimum adjustment and a 5% maximum adjustment per year.
EXHIBIT C
TO LEASE BETWEEN
AMGEN INC.
AND
ARRAY BIOPHARMA INC.
HAZARDOUS MATERIALS
1. USE
In addition to the provisions set forth in Section 12 of the Lease, the following terms and conditions shall apply:
1.1 Permitted Hazardous Materials. Notwithstanding the provisions of Section 12 of the Lease, Tenant shall be permitted to use and store in, and transport to and from, the Premises, Hazardous Materials so long as: (a) each of the Hazardous Materials is used or stored in, or transported to and from, the Premises only to the extent necessary for Tenant's operation of its business at the Premises; and (b) the conditions set forth in 1.3 through 1.8 hereof are strictly complied with. The right to use and store in, and transport to and from, the Premises the Hazardous Materials is personal to Tenant and may not be assigned or otherwise transferred by Tenant without the prior written consent of Landlord, which consent may be withheld in Landlord's sole discretion. Landlord agrees that it will not disclose and will hold in confidence any and all of the information contained in the Documents and Plans (as defined below), and other matters of a confidential nature brought to Landlord's attention as being confidential during the Term of this Lease, whether in written or oral form.
1.2 Compliance with Environmental Laws. Tenant shall comply with and shall cause Tenant's Agents to comply with, and shall keep and maintain the Premises and cause Tenant's Agents to keep and maintain the Premises, in compliance with all Environmental Laws (as defined in Section 1.8 below). Neither Tenant nor Tenant's Agents shall violate, or cause or permit the Premises to be in violation of, any Environmental Laws.
Tenant shall, at its own expense and prior to Tenant's use and occupancy of the Premises, procure, maintain in effect and comply with all conditions of any and all permits, licenses and other governmental and regulatory approvals required for Tenant's use of the Premises.
Tenant agrees to provide Landlord with: (a) a copy of any Hazardous Material management plan or similar document required by any federal, state or local governmental or regulatory authority to be submitted by Tenant; (b) copies of all permits, licenses and other governmental and regulatory approvals with respect to
the use of Hazardous Materials, including without limitation Tenant's identification number from the Environmental Protection Agency; (c) copies of hazardous waste manifests reflecting the legal and proper disposal of all Hazardous Materials removed from the Premises; and (d) copies of all reports, studies and written results of tests or inspections concerning the Premises with respect to Hazardous Materials, including, without limitation, the "Plans" hereinafter defined (collectively "Documents"). Tenant shall deliver all Documents to Landlord promptly following the earlier of (i) Tenant's submission of such Documents to the requesting governmental agency, or (ii) Tenant's receipt of such Documents (Tenant hereby agreeing that it shall exercise diligent efforts to expeditiously obtain copies of any such Documents known by Tenant to exist).
1.3 Routine Monitoring and Delivery of Plans. Upon commencing any activity involving Hazardous Materials on the Premises, and continuing thereafter throughout the Term of this Lease, Tenant shall initiate and maintain the following systems to ensure the routine monitoring of the levels of Hazardous Materials which may be present on, under or about the Premises or properties adjoining or in the vicinity of the Premises as the result of the activities of Tenant or Tenant's Agents and to ensure continued compliance with the procedures and regulations concerning the handling, storage, use and disposal of Hazardous Materials set forth in the following (collectively, "Plans"): (a) each permit, license or other governmental or regulatory approval with respect to the use of Hazardous Materials, (b) each Hazardous Materials management plan or similar document required by any federal, state, or local governmental or regulatory entity, (c) each plan for handling and disposing of Hazardous Materials necessary to comply with Environmental Laws prepared by or on behalf of Tenant or Tenant's Agents (whether or not required to be submitted to a governmental agency). Copies of the Plans shall be appended from time to time throughout the Term of this Lease as such Plans are developed, as Attachment 1 hereto attached to this Exhibit C.
1.4 Notice to Landlord. Tenant shall give prompt written notice to Landlord of:
(a) any proceeding or inquiry by, notice from, or order of any governmental authority with respect to the presence of any Hazardous Material on, under or about the Premises or the migration thereof from or to other property;
(b) all claims made or threatened by any third party against Tenant or the Premises relating to any loss or injury resulting from any Hazardous Materials;
(c) any significant spill, release, discharge or disposal (other than routine off-site disposal) of Hazardous Materials that occurs with respect to the Premises or operations at the Premises by Tenant or Tenant's Agents;
(d) all materials of which Tenant is required to give
notice pursuant to any Environmental Laws; and
(e) Tenant's discovery of any occurrence or condition on,
under or about the Premises or any real property
adjoining or in the vicinity of the Premises that
could cause the Premises to be subject to any
restrictions on the ownership, occupancy,
transferability or use of the Premises under any
Environmental Laws.
1.4.1 Landlord's Right to Inspect. If Landlord has reason
to believe that Tenant is not in compliance with the
material terms of this Exhibit C, in addition to
Landlord's other rights and remedies pursuant to this
Lease, Landlord and its representative shall have the
right, upon five days' written notice, to enter the
Premises and to: (i) conduct appropriate testing,
monitoring and analysis for Hazardous Materials; (ii)
review any documents, materials, inventory, financial
data or notices or correspondence to or from private
parties or governmental or regulatory authorities in
connection therewith; and (iii) review all storage,
use, transportation and disposal facilities and
procedures associated with the storage, use,
transportation and disposal of Hazardous Materials
(collectively, "Inspection"). In the event that
Landlord prepares a written report of its inspection,
it agrees to provide Tenant a copy thereof, on
condition that Tenant shall have no right whatsoever
to rely upon any information contained in any such
report for any purpose of Tenant.
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1.5 Landlord's Right to Participate. Landlord shall have the right to join and participate in, as a party if it so elects, any legal proceedings or actions affecting the Premises initiated in connection with any Environmental Law and have its reasonable attorneys' fees in connection therewith paid by Tenant. In addition, Tenant shall not take any remedial action in response to the presence of any Hazardous Materials in, under, or about the Premises (except in the case where loss of life or substantial property or environmental damage is imminent or immediate action is required by any governmental entity, in which event Tenant shall take immediate remedial action), nor enter into any settlement agreement, consent decree or other compromise in respect to any claims relating to any Hazardous Materials in any way connected with the Premises, without first notifying Landlord of Tenant's intention to do so and affording Landlord ample opportunity to appear, intervene or otherwise appropriately assert and protect Landlord's interest with respect thereto.
1.6 Tenant's Indemnity. Tenant shall protect, defend (with counsel satisfactory to Landlord), indemnify and hold harmless Landlord, its directors, officers, employees, agents, successors and assigns (the "Indemnified Parties") from and against any and all claims, fines, judgments, penalties, losses, damages, costs,
expenses or liability (including reasonable attorneys' fees, reasonable consultants' fees and costs) (collectively or individually, the "Claims") directly or indirectly arising out of or attributable to the use, generation, manufacture, production, storage, release, threatened release, discharge, disposal, transportation to or from, or presence of any Hazardous Material on, in, under or about the Premises (collectively, a "Release"), regardless of whether such Claims are caused or contributed to by the gross negligence, active or passive, of an Indemnified Party, and so long as such Claims arose during the Term of this Lease or can be attributed to Tenant's occupancy or use of the Premises including, without limitation: (a) all foreseeable consequential damages, including, without limitation, loss of rental income and diminution in property value; and (b) the costs of any investigation, monitoring, removal, restoration, abatement, repair, cleanup, detoxification or other ameliorative work of any kind or nature (collectively "Remedial Work") and the preparation and implementation of any closure, remedial or other required plans. For purposes of this Section 1.7, any acts or omissions of Tenant or Tenant's Agents (whether or not they are negligent, intentional, willful or unlawful) shall be strictly attributable to Tenant. Tenant's obligations under this Section 1.6 shall survive the expiration or earlier termination of this Lease.
In no event shall Landlord be responsible to Tenant for the presence of Hazardous Materials in, on or about the Premises to the extent caused or contributed to by any third party who is not an Indemnified Party.
1.7 Remedial Work. Upon any Release that does not comply with Environmental Laws, Tenant shall, subject to Section 1.6, promptly notify Landlord of such Release and shall, at its sole expense and immediately after demand by Landlord, commence to perform and thereafter diligently prosecute to completion such Remedial Work as is necessary to restore the Premises or any other property affected by such Release to a condition that complies with all Environmental Laws and the other provisions of this Lease. All such Remedial Work shall be performed: (a) in conformance with the requirements of all applicable Environmental Laws; (b) by one or more contractors, approved in advance in writing by Landlord; and (c) under the supervision of a consulting engineer approved in advance in writing by Landlord (the "Consulting Engineer"). All costs and expenses of such Remedial Work shall be paid by Tenant, including, without limitation, the reasonable charges of such Consulting Engineer and Landlord's reasonable attorneys' fees, incurred in connection with the monitoring or review of such Remedial Work. In the event Tenant shall fail to timely commence, or cause to be commenced, or fail to diligently prosecute to completion, such Remedial Work, Landlord may, but shall not be required to, cause such Remedial Work to be performed and all costs and expenses thereof, or incurred in connection therewith, shall become immediately due and payable.
Tenant's obligations under this Section 1.7 shall survive the expiration or sooner termination of this Lease.
1.8 Definitions. For purposes of this Exhibit "C", the following definitions shall apply:
1.8.1 Hazardous Material. The term "Hazardous Material(s)"
shall include without limitation:
(a) Those substances included within the
definitions of "hazardous substances,"
"hazardous materials," "toxic substances,"
or "solid waste" under CERCLA (as defined
below), RCRA (as defined below), and the
Hazardous Materials Transportation Act, 49
U.S.C. sections 1801 et seq., and in the
regulations promulgated pursuant to said
laws;
(b) Those substances listed in the United States
Department of Transportation Table (49 CFR
172.101 and amendments thereto) or
designated by the Environmental Protection
Agency (or any successor agency) as
hazardous substances (see, e.g., 40 CFR Part
302 and amendments thereto);
(c) Such other substances, materials and wastes
which are or become regulated under
applicable local, state or federal law, or
the United States government, or which are
or become classified as hazardous or toxic
under federal, state, or local laws or
regulations; and
(d) Any material, waste or substance which is
(i) petroleum, (ii) asbestos, (iii)
polychlorinated biphenyls, (iv) designated
as a "hazardous substance" pursuant to
section 311 of the Clean Water Act of 1977,
33 U.S.C. sections 1251 et seq. (33 U.S.C.
section 1321) or listed pursuant to section
307 of the Clean Water Act of 1977 (33
U.S.C. section 1317), (v) flammable
explosives, or (vi) radioactive materials.
1.8.2 Environmental Laws. "Environmental Laws" shall mean
any federal, state or local law, statute, ordinance,
or regulation now in effect or hereafter enacted
pertaining to health, industrial hygiene, or the
environmental conditions on, under or about the
Premises, including without limitation, the
Comprehensive Environmental Response, Compensation,
and Liability Act of 1980 ("CERCLA") as amended, 42
U.S.C. section 9601 et seq., and the Resource
Conservation and Recovery Act of 1976 ("RCRA") as
amended, 42 U.S.C. sections 6901 et seq.
|
2. DECONTAMINATION PROCESS; SURRENDER
In addition to Tenant's obligations pursuant to Section 10 of the Lease, Tenant shall, on the expiration or sooner termination of this Lease, surrender the Premises to Landlord, in the condition existing at the commencement of the Lease. Tenant acknowledges that Landlord has conducted a decontamination process on the Premises immediately prior to the Commencement Date, pursuant to state and local laws and regulations. After Landlord has completed the decontamination process, Landlord will provide Tenant with copies of all significant correspondence between Landlord and the State of Colorado regarding the process, including without limitation all test data submitted by Landlord to the State. Tenant shall perform a similar decontamination process on the Premises prior to the expiration or termination of this Lease, pursuant to state and local laws and regulations. If Tenant fails to surrender the Premises in accordance with this Section 2, the provisions of Section 1.6 of this Exhibit C shall apply, and Landlord shall have the right, but not the obligation, to appoint a consultant, at Tenant's reasonable expense, to conduct an investigation to determine whether any Hazardous Materials are located in or about the Premises, and to determine the corrective measures required to remove such Hazardous Materials. Tenant, at its expense, shall comply with all recommendations of such consultant. A failure by Landlord to appoint such a consultant shall in no way relieve Tenant of any of Tenant's obligations set forth in this Lease relating to Hazardous Materials, nor constitute a waiver of Landlord's rights under this Lease. Tenant's obligations under this Section 2 shall survive the expiration or earlier termination of this Lease.
3. LESSOR'S USE OF CONSULTANTS
All costs and expenses incurred by Landlord in retaining a consultant for any purpose in accordance with this Exhibit C shall become due and payable by Tenant, as Additional Rent, within 30 days after presentation by Landlord of an invoice therefor.
4. EFFECT OF EXHIBIT C
In the event of a conflict between the terms of this Exhibit C and the terms of the Lease, the terms of this Exhibit C shall control.
ATTACHMENT 1
(ATTACHED TO AND MADE A PART OF
EXHIBIT C TO LEASE BETWEEN AMGEN INC. AND
ARRAY BIOPHARMA INC.)
PLANS
EXHIBIT D
TO LEASE BETWEEN
AMGEN INC.
AND
ARRAY BIOPHARMA INC.
NON-DISTURBANCE AND ATTORNMENT AGREEMENT
THIS NON-DISTURBANCE AND ATTORNMENT AGREEMENT (this "Agreement"), dated_________, 199__, is between ______________________________, a ________________________ ("Purchaser"), whose address is __________________________ ____________________ and Array BioPharma Inc., a Delaware corporation ("Tenant"), whose address is 1885 33rd Street, Building AC-1, Boulder, Colorado 80301-2505.
RECITALS
A. Tenant and Amgen Inc., a Delaware corporation ("Landlord") entered into a certain Lease dated July ____, 1998 (the "Lease") pursuant to which Tenant leases the premises known as 1885 33rd Street, Building AC-1, as more particularly described in the Lease ("the Premises").
B. Section 27(j) of the Lease provides that Landlord shall cause any purchaser of the Premises to enter into a non-disturbance and attornment agreement with Tenant to provide Tenant certain assurances during the pendency of the Lease.
C. Purchaser has offered to and is in the process of purchasing the Premises from Landlord.
D. Tenant and Purchaser now desire to enter into such agreement under the terms and conditions stated below.
AGREEMENT
NOW THEREFORE, in consideration of the mutual covenants, conditions, and agreements hereinabove referred to and hereinafter contained, and for other good and valuable consideration, the receipt and sufficiency of which the parties hereby acknowledge, Tenant and Purchaser hereby agree as follows:
1. If and when Purchaser obtains fee title to the Premises, and on condition that Tenant is not in default under the terms of the Lease:
(i) the Lease shall remain in full force and effect;
(ii) Tenant's rights and privileges under the Lease and use, possession and enjoyment of the Premises shall not be disturbed, interfered with, or terminated by reason of such purchase of the Premises;
(iii) upon notice that Purchaser has purchased the Premises, Tenant agrees to attorn to Purchaser and Purchasers agrees to accept Tenant's attornment as if Purchaser were the landlord under the Lease; and
(iv) Tenant and Purchaser agree to perform all their respective duties and obligations under the Lease for the duration of the Lease Term.
2. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, and shall be construed under and governed by the laws of the State of Colorado.
3. This Agreement may not be changed, altered, or modified except in writing signed by both parties hereto.
This Agreement has been executed by the parties as of the date first written above.
TENANT:
Array BioPharma Inc.,
a Delaware corporation
PURCHASER:
EXHIBIT 10.9
FIRST AMENDMENT TO LEASE
THIS FIRST AMENDMENT TO LEASE (this "First Amendment") is entered into as of the 1st day of April, 1999, by and between AMGEN INC., a Delaware corporation ("Landlord") and ARRAY BIOPHARMA INC., a Delaware corporation ("Tenant").
RECITALS:
A. On or about July 7, 1998, Landlord and Tenant entered into that certain Lease (the "Lease"), covering certain space commonly known as Amgen Building AC-1 of the Amgen Complex and located at 1885 33rd Street, Boulder, Colorado (the "Premises").
B. Tenant has requested: (i) to enlarge the Premises by leasing an
additional 3,931 rentable square feet located on the bridge of the Amgen
Complex, as shown on Exhibit A attached hereto (the "Expansion Space"); and
(ii) to further amend and modify the Lease in certain respects as provided
herein, and Landlord has agreed to such modifications, all on the terms and
conditions contained herein.
C. Unless otherwise expressly provided herein, capitalized terms used herein shall have the meanings as designated in the Lease.
AGREEMENT:
In consideration of the sum of Ten Dollars ($10.00), the mutual covenants and agreements contained herein and in the Lease, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Landlord and Tenant hereby agree as follows:
1. Addition of Expansion Space to Premises. Effective as of April 1, 1999 (the "Effective Date"), the Expansion Space is hereby added to the Premises. As of the Effective Date, all references in the Lease to the Premises shall be deemed to include the Expansion Space. The Expansion Space shall be added to the Premises, for all purposes, as of the Effective Date and for the balance of the Term (as the same may be extended pursuant to the provisions of the Lease), upon and subject to all of the terms, covenants and conditions of the Lease.
2. Expansion Space Delivery and Acceptance.
(a) Delivery of Expansion Space. On or before the Effective Date, Landlord shall deliver the Expansion Space to Tenant in its then current "as is" condition. Notwithstanding the foregoing, in the event that Landlord is unable to deliver the Expansion Space to Tenant by the Effective Date, regardless of the reason therefor, Landlord shall not be liable for any claims, damages or liabilities by reason thereof, nor shall such circumstances make the Lease or this First Amendment void or voidable, and Tenant's sole and exclusive remedy for such delay shall be a postponement of Tenant's obligation to pay Rent and Additional Rent for the Expansion Space; provided, however, that if Landlord is unable to deliver the Expansion
Space to Tenant on or before the Effective Date due to a delay caused by Tenant or for any other cause related to Tenant's acts or omissions, Tenant's rental obligations under the Lease as amended hereby with respect to the Expansion Space shall begin on the Effective Date.
(b) Tenant's Acceptance of Expansion Space and Obligation to Pay Rent. Tenant agrees to accept the Expansion Space in its "as is" condition, and acknowledges that Landlord makes no representations or warranties whatsoever with respect thereto. Notwithstanding any other provision contained in the Lease or this First Amendment, except as provided in subparagraph 2(a), Tenant agrees that its obligation to pay Rent and Additional Rent with respect to the Expansion Space shall commence on the Effective Date.
3. Rent - Expansion Space. Commencing on the Effective Date, and continuing through the Initial Term, the annual Rent due and payable for each rentable square foot contained in the Expansion Space (in addition to any other Rent payable pursuant to the terms of the Lease), shall be $17.00, payable in equal monthly installments of $5,568.92. The Rent for the Expansion Space set forth herein shall be deemed to include rental for the office furniture identified on Exhibit B attached hereto and incorporated herein by this reference. In the event that the Initial Term of the Lease is extended pursuant to Paragraph 5(b) of the Lease, Rent for the Expansion Space for any extension term of the Lease shall be increased in the same manner as provided in Exhibit B to the Lease. In addition, Tenant shall pay to Landlord all Additional Rent attributable to the Expansion Space, in accordance with the terms and provisions of Paragraph 8(b) of the Lease. All rental shall be payable in accordance with the terms and provisions of the Lease.
4. Payment for Fire Exit and Security Camera. Landlord agrees to install a separate fire exit with security camera (the "Fire Exit") at a location on the Premises to be determined by Landlord. The Fire Exit shall be installed in a good and workerlike manner and, subject to Landlord's right to partial reimbursement by Tenant as provided in this paragraph, at Landlord's cost and expense, but otherwise at such time and in such manner as Landlord shall determine in its sole discretion. Tenant agrees to reimburse Landlord for fifty percent (50%) of Landlord's costs and expenses related to the construction and installation of the Fire Exit (the "Fire Exit Payment"). Landlord shall notify Tenant of the cost of the Fire Exit and the amount of the Fire Exit Payment as soon as reasonably practicable after it is known, and Tenant shall make the Fire Exit Payment to Landlord on or before the Effective Date. In the event that Landlord has not notified Tenant of the amount of the Fire Exit Payment by the Effective Date, Tenant shall pay the amount of $1,750.00, which the parties agree is one-half of the estimated cost of the Fire Exit (the "Estimated Fire Exit Payment"), and at such time that the exact cost of the Fire Exit is calculated, Landlord shall notify Tenant of such cost and the corresponding Fire Exit Payment. If the Estimated Fire Exit Payment is less than the actual Fire Exit Payment, Tenant shall pay the difference within fifteen (15) days after receipt of such notice, and if the Estimated Fire Exit Payment is greater than the actual Fire Exit Payment, Tenant shall receive a corresponding credit of Rent for the difference. All payments to be made by Tenant pursuant to the provisions of this Paragraph 4 shall be deemed to be Additional Rent pursuant to the terms of the Lease, and Tenant's failure to make any payment as required herein shall constitute an event of default by Tenant under the Lease.
5. Removal of Cabling. Prior to the Effective Date, Tenant shall disconnect, at the Amgen VDER room, any and all fiber and copper cables that lead from the VDER room to the Expansion Space (the "Cabling"). Tenant shall pull the Cabling back to the Expansion Space and remove it from the cable trays at that point. The disconnection and removal of the Cabling shall be conducted at Tenant's sole cost and expense, in a good and workerlike manner acceptable to Amgen, and otherwise in accordance with the provisions of the Lease, including but not limited to Paragraph 10(c) thereof. Tenant may retain and use the Cabling.
6. Parking. As of the Effective Date, Tenant shall have the right to use eight (8) additional parking spaces in the general parking area of the Amgen Complex as assigned by Amgen. All of the other terms of the Lease applicable to Tenant's parking rights shall be applicable to Tenant's parking rights provided in this Paragraph 6. The parking rights provided in this Paragraph 6 are in addition to any other parking rights provided in the Lease.
7. Binding Effect. Except as modified by this First Amendment, the terms and provisions of the Lease shall remain in full force and effect, and shall be binding upon the parties hereto, their successors and permitted assigns. This First Amendment shall become effective only after the full execution and delivery hereof by Landlord and Tenant.
8. Conflict. In the event of any conflict between the provisions of this First Amendment and the provisions of the other portions of the Lease, the provisions of this First Amendment shall control.
9. Ratification of Lease. All of the terms and provisions of the Lease, as herein amended and supplemented, are hereby ratified and confirmed, and shall remain in full force and effect.
10. Time is of the Essence. Time is of the essence with regard to this First Amendment.
LANDLORD: TENANT
AMGEN INC., a Delaware corporation ARRAY BIOPHARMA INC., a Delaware
corporation
By: /s/ DAVID SNITMAN By:
-------------------------------- -------------------------------
Name: David Snitman Name:
------------------------------ -----------------------------
Title: COO Title:
----------------------------- ----------------------------
|
EXHIBIT 10.9
EXHIBIT A
[FLOOR PLAN OF EXPANSION SPACE]
EXHIBIT B
LISTING OF OFFICE FURNITURE TO BE INCLUDED IN RENT
---------------------------------------------------------------------------------------------------------------------------
ROOM # TABLES WORK SURFACE BINDERBIN TACK PANEL
---------------------------------------------------------------------------------------------------------------------------
19 42" round 30"x30", 48"x30"
---------------------------------------------------------------------------------------------------------------------------
18 42" round 48"x30", 30"x30"
---------------------------------------------------------------------------------------------------------------------------
17 Conference
---------------------------------------------------------------------------------------------------------------------------
16 (2) 48"x30", 36"x30" w/trans top (3) 48"
---------------------------------------------------------------------------------------------------------------------------
15 36" round 66"x30", 48"x24" double door 66"
---------------------------------------------------------------------------------------------------------------------------
14 5' veclor 48"x30", 30"x30", 36"x24" (3) 48" (1) 36"
---------------------------------------------------------------------------------------------------------------------------
13 36" round 60"x24", 66"x24" double door 66"
---------------------------------------------------------------------------------------------------------------------------
12 42"x24", 30"x24", 24"x24" 30", (2) 42" (2) 42", 30"
---------------------------------------------------------------------------------------------------------------------------
11 Conference
---------------------------------------------------------------------------------------------------------------------------
10 (2) 36"x60" (2) 36"x72" (2) 30"x24"
---------------------------------------------------------------------------------------------------------------------------
9 (2) 48"x30", 42"x24" (2) 48"
---------------------------------------------------------------------------------------------------------------------------
8 32"x24", 24"x24" 32" 24", 32"
---------------------------------------------------------------------------------------------------------------------------
7 36" round 48"x24", 66"x24" 66" double door 66"
---------------------------------------------------------------------------------------------------------------------------
6 (2) 36"x24"
---------------------------------------------------------------------------------------------------------------------------
5 3'x6' conf.
---------------------------------------------------------------------------------------------------------------------------
4 30" round (2) 48"x24", 42"x24" (2) 48"
---------------------------------------------------------------------------------------------------------------------------
3 48"x30", 42"x30" 48"
---------------------------------------------------------------------------------------------------------------------------
2 (2) 46"x30" 48" 48"
---------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------
ROOM # PEDESTALS FILE TOWER BOOKCASE CHAIRS
---------------------------------------------------------------------------------------------------------
19 12-12, 6-6-12 1 desk, 1 visitor
---------------------------------------------------------------------------------------------------------
18 12-12, 6-6-12 1 desk, 1 visitor
---------------------------------------------------------------------------------------------------------
17 1 half oak 5 conf. 1 visitor
---------------------------------------------------------------------------------------------------------
16 12-12, (2) 6-6-12 1 desk, 1 visitor
---------------------------------------------------------------------------------------------------------
15 6-6-12, 12-12 5 high file tower 2 desk
---------------------------------------------------------------------------------------------------------
14 (2) 6-6-12 (2) 12-12 5 high file tower 2 desk
---------------------------------------------------------------------------------------------------------
13 6-6-12, 12-12 5 high file tower 1 desk, 1 visitor
---------------------------------------------------------------------------------------------------------
12 (2) 6-6-12 (2) 12-12 5 high file tower 1 desk
---------------------------------------------------------------------------------------------------------
11 6 conf.
---------------------------------------------------------------------------------------------------------
10 6 desk, 2 visitor
---------------------------------------------------------------------------------------------------------
9 (3) 6-6-12, 12-12 5 high file tower 36"x55" 2 desk
---------------------------------------------------------------------------------------------------------
8 6-6-12, 12-12 1 desk, 2 visitor
---------------------------------------------------------------------------------------------------------
7 6-6-12, 12-12 5 high file tower 36"x55" 1 desk
---------------------------------------------------------------------------------------------------------
6 (2) 6-6-12 5 high file tower 36"x55" 1 desk
---------------------------------------------------------------------------------------------------------
5 7 desk
---------------------------------------------------------------------------------------------------------
4 (2) 6-6-12
---------------------------------------------------------------------------------------------------------
3 6-6-12, 12-12 5 high file tower 1 desk
---------------------------------------------------------------------------------------------------------
2 6/6/12 5 high file tower 1 desk
---------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------
ROOM # CORNER SURFACE MISC.
-----------------------------------------------------------------------
19 6'x48"
-----------------------------------------------------------------------
18
-----------------------------------------------------------------------
17 Plant stand
-----------------------------------------------------------------------
16 48"x48" 36"x60" table
-----------------------------------------------------------------------
15 48"x48" ergonomic adjustable
-----------------------------------------------------------------------
14 (2) 48"x6'
-----------------------------------------------------------------------
13 48"x48" ergonomic adjustable
-----------------------------------------------------------------------
12 (2) 48"x48" ergonomic adjustable
-----------------------------------------------------------------------
11 Plant stand
-----------------------------------------------------------------------
10
-----------------------------------------------------------------------
9 48"x6'
-----------------------------------------------------------------------
8 48"x48" ergonomic adjustable
-----------------------------------------------------------------------
7 48"x48" ergonomic adjustable
-----------------------------------------------------------------------
6 42"x42"
-----------------------------------------------------------------------
5 maple serving cart
-----------------------------------------------------------------------
4 (2) 42"x42"
-----------------------------------------------------------------------
3 48"x48" ergonomic adjustable
-----------------------------------------------------------------------
2 48"x48"
-----------------------------------------------------------------------
|
EXHIBIT 10.10
LEASE AGREEMENT
FOR PREMISES LOCATED AT
2620 TRADE CENTRE, SUITES A & B
LONGMONT, COLORADO
BETWEEN
ARRAY BIOPHARMA, INC.
A DELAWARE CORPORATION
AS TENANT
AND
PRATT LAND LIMITED LIABILITY COMPANY
A COLORADO LIMITED LIABILITY COMPANY
AS LANDLORD
TABLE OF CONTENTS
LEASE
1. PREMISES LEASED; DESCRIPTION
2. COMPLETION
3. TERM
3.1 Initial Term
3.2 Occupancy Prior to Commencement Date
3.4 Delivery of Possession
4. RENT
4.1 Base Rental
4.2 Escalation of Base Rental
4.3 Maintenance Expense for Grounds, Snow Removal, Exterior and HVAC
4.4 Private Security Service
4.5 Late Charges
4.6 Security Deposit
4.7 Proration of Rent for Partial Months
5. TAXES - REAL PROPERTY - PAID BY TENANT - PROTEST
6. TAXES - TENANT'S PERSONAL PROPERTY - PAID BY TENANT
7. UTILITIES - TENANT TO OBTAIN AND PAY FOR
8. HOLDING OVER
9. MODIFICATIONS OR EXTENSIONS
10. ALTERATION - CHANGES AND ADDITIONS - RESPONSIBILITY - NO HOLES IN ROOF -
NO NEW EQUIPMENT ON ROOF
11. MECHANIC'S LIENS
12. UNIFORM SIGNS; NO "FOR RENT" SIGNS
13. MAINTENANCE AND REPAIRS OF THE BUILDING; LANDLORD NOT LIABLE
FOR DAMAGE TO CONTENTS
14. CONDITION UPON SURRENDER - RETURN OF KEYS
15. CARE OF GROUNDS; STORAGE OUTSIDE THE BUILDING; NO WASTE, NO
NUISANCE; COMPLIANCE WITH LAWS; FUTURE RULES AND REGULATIONS
16. LIABILITY FOR OVERLOAD
|
17. NO USE OF PREMISES IN VIOLATION OF INSURANCE POLICIES
18. INSURANCE
18.1 All Risk Insurance
18.2 General Liability Insurance
18.3 Tenant Improvements
18.4 Other Insurance
18.5 Waiver of Subrogation
18.6 Other Provisions Regarding Tenant's Insurance
18.7 Changes in Standard Policies
19. FIRE REGULATIONS - TENANT RESPONSIBILITY
20. REPLACEMENT OF BUILDING - CASUALTY DAMAGE
21. ENVIRONMENTAL MATTERS
21.1 Definitions
21.1.1 Hazardous Material
21.1.2 Environmental Requirements
21.1.3 Environmental Damages
21.2 Tenant's Obligation to Indemnify, Defend and Hold Harmless
21.3 Tenant's Obligation to Remediate
21.4 Notification
21.5 Negative Covenants
21.5.1 No Hazardous Material on Premises
21.5.2 No Violations of Environmental Requirements
21.5.3 No Environmental or Other Liens
21.6 Landlord's Right to Inspect and to Audit Tenant's Records
21.7 Landlord's Right to Remediate
21.8 Landlord's Obligation to Remediate
21.9 Landlord's Obligation to Indemnify, Defend and Hold Harmless
Concerning Environmental Matters
21.10 Survival of Environmental Obligations
22. ENTRY BY LANDLORD
23. DEFAULT - REMEDIES BY LANDLORD
23.1 Default Defined
23.2 Landlord's Remedies in the Event of Default
23.3 Tenant to Surrender Peaceably
23.4 No Termination by Re-Entry
23.5 Injunction
23.6 Remedies Listed are Cumulative and Non-Exclusive
23.7 Interest on Sums Past Due
23.8 Attorneys' Fees
23.9 Time to Cure Certain Non-Monetary Defaults
23.10 Landlord Default
24. LEGAL PROCEEDINGS AGAINST TENANT BY THIRD PARTIES; TENANT TO
PAY LANDLORD'S FEES
25. INDEMNIFICATION BY TENANT AND BY LANDLORD
|
26. ASSIGNMENT OR SUBLETTING 27. LANDLORD'S WARRANTY OF TITLE; QUIET ENJOYMENT 28. ADDITIONAL DEVELOPMENT OF PROPERTY - RIGHTS OF LANDLORD 29. GOVERNMENTAL ACQUISITION OF THE PREMISES 30. Number (30) intentionally not used 31. SUBORDINATION OF THE LEASEHOLD TO MORTGAGES 32. TENANT'S FINANCIAL STATEMENTS 33. MEMORANDUM OF LEASE - RECORDING 34. NO WAIVER OF BREACH; ACCEPTANCE OF PARTIAL PAYMENTS OF RENT 35. CONTROLLING LAW 36. INUREMENTS 37. TIME 38. ADDRESSES; EMPLOYER IDENTIFICATION NUMBERS; METHOD OF GIVING NOTICE 39. PARAGRAPH HEADINGS; GRAMMAR 40. FLEXIBILITY CLAUSE 41. EXPANSION OPTION 42. ADDITIONAL PROVISIONS |
EXHIBIT A: Site Plan EXHIBIT B: Space Plan & tenant finish EXHIBIT C: Detail of improvements and property of Tenant EXHIBIT D: Voice and Data Specifications EXHIBIT E: 6600 Square Feet - SW Corner of Building |
LEASE
THIS LEASE, made and entered into this day of February, 2000 by and between PRATT LAND LIMITED LIABILITY COMPANY, a Colorado limited liability company, hereinafter referred to as "Landlord," and ARRAY BIOPHARMA, INC., A Delaware Corporation, hereinafter referred to as "Tenant."
W I T N E S S E T H:
In consideration of the covenants, terms, conditions, agreements, and payments as hereinafter set forth, the parties hereto covenant and agree as follows:
1. PREMISES LEASED; DESCRIPTION. Landlord hereby leases unto Tenant the following described Premises containing approximately 24,000 square feet of building floor space measured to the outside of the walls, including overhangs, canopies and loading docks, and to approximately 1/2 the thickness of common walls; commonly known as a portion of 2620 Trade Centre Avenue, Suites A & B, in the City of Longmont, County of Boulder, State of Colorado, a more detailed description of which is a portion of Lot 1, St. Vrain Centre, parcel F, Minor Subdivision C, County of Boulder, State of Colorado, a diagram of which is attached as Exhibit A (hereinafter referred to as the "Premises"); the leasing of which is made according to the terms of this Agreement; together with all appurtenances thereto, and all fixtures attached thereto, to be constructed, and together with nonexclusive reasonable access across any other land owned by Landlord as may be required for use of the Premises by Tenant, with such access to be on such roadways, sidewalks, and other common areas of which the Premises are a part, or of any such adjacent lands owned by Landlord, as Landlord may from time to time designate.
2. COMPLETION. . No representation, statement, or warranty, express or implied, has been made by or on behalf of Landlord as to the condition of the Premises, or as to the use that may be made of same. In no event shall Landlord be liable for any defect in the Premises or for any limitation on the use of the Premises. Landlord covenants to the best of Landlord's knowledge, that on the Commencement Date the Premises comply with all Federal, State, County, and Municipal ordinances pursuant to paragraph 15 of this lease agreement.
3. TERM.
3.1 INITIAL TERM. The term of this lease shall commence at 12:00 midnight on March 1, 2000 (the "Commencement Date"), and unless terminated as herein provided for, shall end at 12:00 midnight on the 31st day of May, 2005. The Commencement Date as set forth in this Paragraph 3.1 and paragraph 2 shall be subject to those adjustments of the Commencement Date, if any, set forth in Paragraph 3.3 which relate to the performance of construction on the Premises. Upon full and complete performance of all the terms, covenants, and conditions herein contained by Tenant and payment of all rental due under the terms hereof, Tenant shall be given the option to renew this Lease for two (2) additional terms of five (5) years each at the then prevailing market rental rate, terms, conditions, allowances and concessions of other comparable properties in south Longmont area; provided that the rental rate shall not be impacted, or otherwise increased as a result of any Tenant improvements to the Premises.
3.2 OCCUPANCY PRIOR TO COMMENCEMENT DATE. Should construction of the improvements be completed to such an extent as to permit the issuance of a partial certificate of occupancy by the governing authority, Tenant may occupy the portion of the Premises so permitted prior to (or after) the Commencement Date and shall pay rent for the occupied portion, prorated in proportion to the number of square feet of building space occupied, beginning on date of delivery of possession. Rent adjustments shall be similarly prorated. In no event shall Tenant take possession prior to satisfaction of the requirements for Tenant's insurance set forth below. Landlord shall have no liability to Tenant for failure to substantially complete construction prior to any date or dates.
3.3 DELIVERY OF POSSESSION. Except as above provided with respect to construction of Tenant Improvements, Tenant shall be entitled to take possession of the Premises at midnight on the Commencement Date, as defined in Paragraph 3.1 and pay for the month of March, 2000, specifically Eleven Thousand Two Hundred Eighty and No/100 U.S. Dollars ($11,280.00). Tenant may, have access to the Premises during tenant improvement construction during February 2000 for the purpose of performing Tenant Improvements. Landlord, its agent, employees, sub-contractors, or any other person on the Premises whether invited or not invited, shall not be liable for the protection, care or security of Tenant owned items, except for the gross negligence or willful misconduct of such parties. This paragraph shall not be construed so as to permit Tenant to occupy the Premises prior to the satisfaction of all requirements for Tenant's insurance set forth below.
4. RENT. Tenant shall pay to Landlord, at the address of Landlord as herein set forth, the following as rental for the Premises:
4.1 BASE RENTAL. The base rental for the full sixty three month term, beginning on March 1, 2000 shall be One Million Four Hundred ten Thousand and No/100 U.S. Dollars, ($1,410,000) payable in monthly installments of Twenty Two Thousand Five Hundred Sixty and NO/U.S. Dollars ($22,560.00) in advance on the first day of each month during the term hereof, beginning on April 1, 2000. Notwithstanding the foregoing, Array and Nanomaterials Research Corporation ("Nano") shall each be obligated to pay one-half of the rent for the Premises for the month of March.
4.2 ESCALATION OF BASE RENTAL.
4.2.1 On the first anniversary of the commencement date of this lease, and annually thereafter, the base rental payable by Tenant shall be increased to an amount determined by multiplying the basic monthly rental by a fraction, the denominator of which shall be the most recent Consumer Price Index figure, as hereinafter defined, published prior to the Commencement Date, and the numerator of which shall be the most recent Consumer Price Index figure published prior to the particular anniversary date; provided, however, that in no event shall the rent for any month after such anniversary be less than the rent for the month immediately preceding such anniversary. As used herein, the term "Consumer Price Index" shall mean the Consumer Price Index, All Urban Consumers, All Items, Denver, Colorado (1982-84 = 100), or the successor of that Index, as published by the Bureau of Labor Statistics, U.S. Department of Labor. Should Landlord lack sufficient data to make the proper determination on the date of any adjustment, Tenant shall continue to pay the monthly rent payable immediately prior to the adjustment date. As soon as Landlord obtains the necessary data, Landlord shall determine the rent payable from and after such adjustment date and shall notify Tenant of the adjustment in writing. Should the monthly rent for the period following the adjustment date exceed the amount previously paid by Tenant for that period, Tenant shall forthwith pay the difference to Landlord. Should the Consumer Price Index as above described cease to be published, a reasonably comparable successor index shall be selected by Landlord. If Tenant objects to the successor index, the dispute will be resolved and a successor index designated by arbitration pursuant to the rules and procedures of the American Arbitration Association.
4.2.2 Notwithstanding the foregoing, the parties agree that the increase in base rental for each year shall be not less than three percent (3%) nor more than seven percent (7%) of the base rental for the previous year, each year for such purposes to commence on the anniversary of the Commencement Date.
4.2.3 Landlord may in its sole discretion, waive the escalation provided for in Paragraph 4.2.1 or Paragraph 4.2.2 for any particular year, years, or part of a year. No such waiver shall preclude Landlord from applying the escalation to any subsequent year or part of a year, and from making the subsequent application as if all subsequent escalations had been duly made to the maximum permissible extent.
4.3 MAINTENANCE EXPENSE FOR GROUNDS, SNOW REMOVAL, EXTERIOR AND HVAC. Tenant shall pay the cost incurred by Landlord in order to maintain the HVAC systems and the exterior of the Premises including parking lots, green areas, sidewalks, entrances, and corridors (but not the exterior surfaces of the building, other than glass). Cost of maintaining such areas shall include, but shall not be limited to, repairs, preventative maintenance, HVAC filters and compressors, sealing, striping, lawn mowing, snow removal (Tenant is responsible for snow removal of less than 2"), gardening, shrub care and replacements, lawn watering, parking area maintenance, electricity for lighting, sign maintenance, depreciation of equipment used for the foregoing purposes and other direct costs related to the Premises or common areas. Landlord shall perform such maintenance and charge the cost thereof to Tenant, which shall be paid as additional rent within 10 days after delivery of Landlord's invoice. Landlord shall keep reasonable and accurate records of such cost, which shall be available for Tenant's inspection during normal business hours. Certain items of such maintenance (such as landscape maintenance and snow removal) are performed by Landlord on numerous areas owned and/or maintained by Landlord, in addition to the Premises, and the cost thereof cannot be precisely ascribed to the Premises. As to such services which are performed on areas in addition to the Premises, the cost for all areas so serviced shall be allocated to the Premises in proportion to the square feet of building floor space in the Premises compared to the square feet of building floor space in the entire area to which such services are provided.
For the first year of the lease, Landlord agrees that the total of the maintenance fees referred to in this paragraph will not exceed $1.06 per square foot annually.
4.4 PRIVATE SECURITY SERVICE. Landlord may, in its sole discretion, engage a private security service, Landlord will notify Tenant of this action, as an independent contractor, to patrol an area which includes the Premises. If Landlord does so employ a private security service, the cost thereof shall be treated in the same manner as Maintenance Expense and paid by Tenant as Additional Rent under the same provisions as are applicable to Maintenance Expense.
Landlord shall have absolutely no obligation to engage a private security service and shall not be liable for any damages or loss which might have been averted had a private security service been engaged. If Landlord does engage a private security service, Landlord shall not be liable for any damages or loss which may result from actions, inactions, non-performance or quality of performance by the security service. If the Tenant desires a higher level of security services than Landlord provides, or wishes to obtain an agreement that there will be liability for actions, inactions, non-performance or quality of performance by a security service, Tenant may itself engage such security service as Tenant chooses, at Tenant's sole expense.
Nothing herein shall limit any action by Tenant against any person or entity providing private security service, provided that Landlord shall not be party to, or liable for any judgment entered in such an action, as a defendant, cross defendant, third-party defendant, or otherwise.
4.5 LATE CHARGES. If any monthly rental payment is more than five days late the Tenant will pay a late charge equal to five percent of any such late monthly rental payment or other payment not paid when due, which payment shall be in addition to any interest elsewhere provided for.
4.6 SECURITY DEPOSIT. Landlord acknowledges receipt of the sum of Forty Four Thousand One Hundred Fifty and no/100ths U.S. Dollars ($44,150.00) paid by Tenant upon the execution hereof. to be retained by Landlord as security for the performance of all of the terms and conditions of this lease Agreement to be performed by Tenant, including payment of all rental due under the terms hereof. Landlord shall not owe Tenant any interest on the deposit. At Landlord's election, deductions may be made by Landlord from the amount so retained for the reasonable cost of repairs to the Premises which should have been performed by Tenant, for any rental payment or other sum delinquent under the terms hereof, and for any sum used by Landlord in any manner to cure any default in the performance of Tenant under the terms of this lease. In the event deductions are so made during the rental term, upon notice by Landlord, Tenant shall redeposit such amounts so expended so as to maintain the security deposit in the amount as herein provided for, within 10 days after receipt of such written demand from Landlord. Nothing herein contained shall limit the liability of Tenant as to any repairs or maintenance of the Premises; and nothing herein shall limit the obligation of Tenant promptly to pay all sums otherwise due under this lease and to comply with all the terms and conditions hereof. The security deposit, less any sums withheld by Landlord pursuant to the terms hereof, shall be repaid to Tenant within forty-five days after the date of termination of the lease.
4.7 PRORATION OF RENT FOR PARTIAL MONTHS. If the lease term begins on other than the first day of a month, base rent and additional rent from such date until the first day of the next succeeding calendar month shall be prorated on the basis of the actual number of days in such calendar month and shall be payable in advance. If the lease term terminates on other than the last day of the calendar month, rent from the first day of such calendar month until such termination date shall be prorated on the basis of the actual number of days in such month, and shall be payable in advance.
5. TAXES - REAL PROPERTY - PAID BY TENANT - PROTEST. Tenant shall pay as additional rent, all real estate taxes and assessments, as shall, from and after the date hereof, be assessed upon the Premises and any appurtenances or improvements thereto. Tenant shall pay one-twelfth (1/12) of such estimated taxes and assessments as additional rent, in advance, with each monthly rental payment. Landlord shall reasonably estimate such taxes and advise Tenant in writing of the amount to be paid each month. Such payments shall be separately accounted for by Landlord, (and may be deposited with any holder of a mortgage or deed of trust on the Premises) and shall be used to make prompt payment of such taxes as they come due. If the estimated payments made by Tenant are not sufficient to fully pay such taxes as they come due, Tenant shall pay to Landlord any amount necessary to make up the deficiency within ten (10) days of notice from Landlord. Landlord shall have no obligation to pay any interest to Tenant on such additional rent, but Landlord shall give Tenant an annual accounting showing credit for such payments made by Tenant, and debits for payments made by Landlord or Landlord's lender. If Tenant fails to make any required payment to Landlord, Landlord may, but shall not be required to, pay any such tax and shall become entitled to repayment from Tenant upon demand, together with interest thereon as elsewhere provided. The real estate taxes and assessments for the year in which the term of this lease shall begin, as well as for the year in which the lease shall end, shall be apportioned so that Tenant shall pay only the portions that correspond with the portions of such years as are within such lease term. In the event that the Premises are assessed for tax purposes as a part of a larger parcel, the tax on the entire parcel shall be prorated in proportion to the number of square feet of building floor space on each portion of the entire parcel.
Upon written request from Tenant, whose request shall not be unreasonably denied, Landlord shall protest the tax assessment on the Premises, to the extent that Landlord, in good faith, believes that such protest is justifiable and likely to be successful. In the event of any such protest Tenant shall nevertheless
pay to Landlord the taxes as assessed, and Tenant shall be entitled to the appropriate share of any refund. Tenant shall not protest any real property tax assessment on the Premises.
6. TAXES - TENANT'S PERSONAL PROPERTY - PAID BY TENANT. Tenant shall be responsible for and timely pay any and all personal property taxes assessed against any furniture, fixtures, equipment and items of a similar nature installed and/or located in or about the Premises by Tenant.
7. UTILITIES - TENANT TO OBTAIN AND PAY FOR. As of the Commencement Date Landlord shall assure that all appropriate utilities are available at the Premises including water, hot water, heat, gas, electricity, light, telephone, and power, provided that Landlord shall not be required to furnish Tenant any such utility services. Tenant shall obtain and pay all charges for gas, electricity, light, heat, power, water (and lawn watering), and telephone, cable TV or other communication services or other utilities used, rendered, or supplied, upon or in connection with the Premises. Tenant irrevocably appoints Landlord as Tenant's attorney-in-fact solely for the purpose of terminating Tenant's account with any provider of such utilities, if the Premises are abandoned by Tenant or if the lease is terminated.
8. HOLDING OVER. If, after expiration of the term of this lease, Tenant shall remain in possession of the Premises and continue to pay rent without a written agreement as to such possession, then Tenant shall be deemed a month-to-month Tenant and the rental rate during such holdover tenancy shall be equivalent to one and one-half times the monthly rental paid for the last month of tenancy under this lease. Landlord to provide thirty (30) day notice to invoke an increase in the monthly base rent. This notice can be in the form of an invoice. The Landlord may terminate such month-to-month tenancy at noon on any day which is more than twenty-nine (29) days after date of delivery of Landlord's written notice of termination to Tenant.
9. MODIFICATIONS OR EXTENSIONS. No holding over by Tenant shall operate to renew or extend this lease without the written consent of Landlord. No modification of this lease shall be binding unless endorsed hereon or otherwise written and signed by the respective parties.
10. ALTERATION - CHANGES AND ADDITIONS - RESPONSIBILITY - NO HOLES IN ROOF - NO NEW EQUIPMENT ON ROOF. Landlord hereby approves and consents to those alterations and Tenant improvements as described as the attached Exhibit B and C. In addition, Subject to Landlord's consent that any alterations requested by Tenant do not negatively affect the integrity of the leased Premises, in Landlord's reasonable discretion, Tenant may, during the term of this lease, at Tenant's expense, erect inside partitions, add to existing electric power service, add telephone outlets or other communication services, add light fixtures, install additional heating and/or air conditioning or make such other changes or alterations as Tenant may desire, provided that prior to commencement of any such work, Tenant shall submit to Landlord a set of fully detailed working drawings and specifications for the proposed alteration, prepared by a licensed architect or engineer. If Tenant so requests, Landlord will have the drawings and specifications prepared for Tenant, at Tenant's expense, utilizing Landlord's in-house staff. Tenant will pay Landlord's customary hourly charges for such services, as additional rent, to be paid within 10 days after delivery of invoice. In particular, but not as a limitation, the working drawings must fully detail changes to mechanical, wiring and electrical, lighting, plumbing and HVAC systems to Landlord's satisfaction. Landlord may refuse to consent to the alterations because of the inadequacy of the drawings and specifications. Tenant may not commence the alterations until Landlord's written consent has been given. Any additions or alterations performed by Tenant of the telecommunication or data transmission equipment, facilities, lines or outlets on the Premises shall be performed only in accordance with the specifications attached hereto as Exhibit D. Such additions and alterations shall be at Tenant's expense. At the termination of this lease, Tenant shall be responsible for all expenses necessary to return the telecommunication and data transmission equipment, facilities, lines and outlets on the Premises to their
condition before such additions or alterations were made. If the drawings and specifications are adequate, to Landlord's reasonable satisfaction, then Landlord will not unreasonably withhold its consent to the alterations, except that Landlord may withhold its consent to new or altered openings (holes) in the roof, or placement of additional equipment on the roof, as follows. Landlord may withhold its consent to new openings in the roof or placement of additional equipment on the roof unless Landlord, in its sole reasonable discretion, is satisfied that the risk of increased leakage or risk of more frequent repairs or maintenance of the roof is acceptable to Landlord. Any new or altered opening in the roof, or placement of additional equipment thereon, shall be considered an alteration which requires the prior written consent of Landlord. If within thirty (30) days after such plans and specifications are submitted by Tenant to Landlord for such approval, Landlord shall have not given Tenant notice of disapproval, stating the reason for such disapproval, such plans and specifications shall be considered approved by Landlord. As a condition of approval for such alternations, Landlord shall have the right to require Tenant to furnish adequate bond or other security acceptable to Landlord for performance of and payment for the work to be performed. At the end of this lease, all such fixtures,, additions and/or alterations (except trade fixtures equipment and other property owned and installed by Tenant as described on the attached Exhibit C) shall be and remain the property of Landlord, provided, however, Landlord shall have the option to require Tenant to remove any or all such fixtures, equipment, additions, and/or alterations and restore the Premises to the condition existing immediately prior to such change and/or installation, normal wear and tear excepted, all at Tenant's cost and expense. All work done by Tenant shall conform to appropriate city, county and state building codes and health standards and OSHA standards and Tenant shall be responsible for obtaining and paying for building permits.
If any such work done by Tenant causes damage to the structural portion, exterior finish or roof of the Premises, then the costs of repair of such damage, and of all further maintenance and repairs to such structural portion, exterior finish or roof during the term of the lease shall thereafter be the responsibility of Tenant.
Neither Landlord's right of entry, nor any actual inspection by Landlord, nor Landlord's actual knowledge of any alteration accomplished or in progress shall constitute a waiver of Landlord's rights concerning alterations by Tenant.
11. MECHANIC'S LIENS. Tenant shall pay all costs for construction done by it or caused to be done by it on the Premises as permitted by this lease. Tenant shall keep the building, other improvements and land of which the Premises are a part free and clear of all mechanic's liens resulting from construction by or for Tenant. Tenant shall have the right to contest the correctness or validity of any such lien if, immediately on demand by Landlord, Tenant deposits with Landlord and/or any appropriate court or title insurance company a bond or sum of money sufficient to allow issuance of title insurance against the lien and/or to comply with the statutory requirements for discharge of the lien found in __ 38-22-130 and 131, Colorado Revised Statutes, or any successor statutory provision. Landlord shall have the right to require Tenant's contractor(s), subcontractors and materialmen to furnish to both Tenant and Landlord adequate lien waivers on work or materials paid for, in connection with all periodic or final payments, by endorsement on checks, making of joint checks, or otherwise, and Landlord shall have the right to review invoices prior to payment. Landlord reserves the right to post notices on the Premises that Landlord is not responsible for payment of work performed and that Landlord's interest is not subject to any lien.
12. UNIFORM SIGNS; NO "FOR RENT" SIGNS. It is Landlord's intent to maintain uniformity of signs throughout the area where signs may be controlled by Landlord. Tenant shall place no signs on the Premises (except inside Tenant's portion of the building on the Premises) without prior written consent of Landlord, which consent shall not be unreasonably withheld. All shall be consistent with similar properties that Landlord owns and shall comply with municipal sign codes.
Tenant may not put any signs on the Premises indicating that the same are for rent, or available for assignment or sublease, and may put no signs of real estate brokers on the Premises.
13. MAINTENANCE AND REPAIRS OF THE BUILDING; LANDLORD NOT LIABLE FOR DAMAGE TO CONTENTS. Landlord shall be responsible for maintenance and repairs of the structural portions, the roof and the exterior finish of the building (other than glass) on the Premises at the sole cost and expense of Landlord; provided, however, that if any such maintenance or repairs are necessitated by the acts of Tenant or its employees, agents, contractors, sub-contractors, licensees, invitees or guests, Tenant shall reimburse Landlord for the cost of same, as additional rent, to be paid within 10 days after delivery of invoice except to the extent that such maintenance or repairs are covered by the insurance described in Section 18.1.. All other maintenance, repairs and replacements shall be performed by Tenant, at its own expense, including all necessary maintenance, repairs and replacements to pipes, plumbing systems, electrical systems, window or other glass, doors, fixtures, interior decorations, and all other appliances and appurtenances. Landlord warrants that the plumbing and electrical systems are in good working order upon the Commencement Date of this lease. Such repairs and replacements, interior and exterior, ordinary as well as extraordinary, shall be made promptly, as and when necessary. All such maintenance, repairs and replacements shall be in quality and class at least equal to the original work. On default of Tenant in making such maintenance, repairs or replacements, Landlord may, but shall not be required to, make such repairs and replacements for Tenant's account, and the expense shall constitute and be collectable as additional rent, together with interest thereon as hereinafter provided.
Notwithstanding the Landlord's obligations elsewhere set forth in this lease, except in the case of Landlord's gross negligence or intentional misconduct, under no circumstances shall Landlord be liable for damage to the contents of the building or consequential damages to Tenant resulting from roof or window leaks or failure, or leakage of any water pipe or gas pipe, failure of any communications system or alarm, failure or leakage or discharge by any sprinkler system or other fire suppression system, power surges, power shortages or outage, sewer failure or sewage backup, or failure or malfunction of any heating or cooling system. The term "contents" shall include, but shall not be limited to, improvements made by Tenant, and data bases and other information stored or contained in computers, hard or floppy disks, tapes, computer chips and other memory or storage devices. The term "consequential damages" shall include, but not be limited to, Tenant's inability to perform any contract on which Tenant is bound, loss of sales, loss of profit, or loss of business reputation or goodwill.
14. CONDITION UPON SURRENDER - RETURN OF KEYS. Tenant shall vacate the Premises in the same condition as when received, ordinary wear and tear excepted, and shall remove all of Tenant's property, so that Landlord can repossess the Premises not later than noon on the day upon which this lease or any extension hereof ends, whether upon notice, holdover or otherwise. The Landlord shall have the same rights to enforce this covenant by ejectment and for damages or otherwise as for the breach of any other conditions or covenant of this lease. Upon termination of the lease, Tenant shall deliver to Landlord keys which operate all locks on the exterior or interior of the Premises, including, without limitation, keys to locks on cupboards and closets. Tenant shall retrieve all keys to the Premises which Tenant has delivered to employees or others, and include same with the keys delivered to Landlord.
15. CARE OF GROUNDS; STORAGE OUTSIDE THE BUILDING; NO WASTE; NO NUISANCE; COMPLIANCE WITH LAWS; FUTURE RULES AND REGULATIONS. Tenant shall use the Premises for medicinal, combinatorial, and process chemistry research and development, and manufacture, and other research and development, sales office, engineering, and light manufacturing, and other uses appurtenant thereto, and occupancy is limited to 120 employees. Except as otherwise provided herein, Tenant will maintain the grounds which are part of the Premises, keeping them free from accumulation of trash or debris and will be responsible for snow removal up to two inches of snow. Tenant shall conform to all present and future laws and ordinances of any governmental authority having
jurisdiction over the Premises, and will make no use in violation of same. No outside storage shall be allowed unless first approved by Landlord in writing and then only in such areas as are designated as storage areas by Landlord. Tenant shall not commit or suffer any waste on the Premises. Tenant shall not permit any nuisance to be maintained on the Premises nor permit any disorderly conduct, noise or other activity having a tendency to annoy or to disturb occupants of any other part of the property of which the Premises are a part and/or of any adjoining property.
As part of a common scheme for orderly development, use and protection, of its various properties and those properties adjacent to the Premises, Landlord may impose upon Tenant reasonable rules and regulations concerning parking and vehicle traffic; locations at which deliveries are to be made and access thereto; trash disposal; use of common areas such as recreation areas, corridors, and sidewalks; signs and directories; use of communication wires or cables which are used in common but which may be inadequate fully to serve all the demands placed upon them; provided that such rules and regulations shall be uniform in their application and shall not violate the express terms of this lease elsewhere set forth.
16. LIABILITY FOR OVERLOAD. Tenant shall be liable for the cost of any damage to the Premises or the building or the sidewalks and pavements adjoining the same which results from the movement of heavy articles or heavy vehicles or utility cuts made by or on behalf of Tenant. Tenant shall not overload the floors or any other part of the Premises.
17. NO USE OF PREMISES IN VIOLATION OF INSURANCE POLICIES. Tenant shall make no use of the Premises which would void or make voidable any insurance upon the Premises.
18. INSURANCE.
18.1 ALL RISK INSURANCE. Landlord shall keep the building and improvements insured throughout the term of this lease against losses covered by an "All Risk" policy, as defined in the insurance industry, which shall also cover 1) loss of rental and 2) deposit of Hazardous Materials on the Premises by those acts of third parties which constitute vandalism. The deductible amount shall not exceed $10,000. Landlord shall pay any premium on such policy and Tenant shall reimburse Landlord for one hundred percent (100%) of the insurance premium paid by Landlord. Such insurance premiums owed by Tenant shall be considered additional rent and shall be due within ten (10) days after Landlord has delivered an invoice for the same. Landlord may purchase a single policy covering buildings and grounds in addition to the Premises. In that event, the premium shall be allocated among the various covered buildings and the Premises in proportion to the number of square feet of building floor space in each area.
18.2 GENERAL LIABILITY INSURANCE. Tenant agrees to carry
comprehensive general liability insurance in the minimum total amount of ONE
MILLION Dollars ($1,000,000.00) for each occurrence of bodily injury and ONE
MILLION Dollars ($1,000,000.00) for each occurrence of property damage. Tenant
shall supply to Landlord certificates of insurance as provided in Paragraph
18.6. In the event Tenant fails to secure such insurance or to give evidence to
Landlord of such insurance by depositing with Landlord certificates as provided
below, Landlord may purchase such insurance in Tenant's name and charge Tenant
the premiums therefor. Bills for the premiums therefor shall be deemed and paid
as additional rent due within 10 days after delivery of invoice. The Landlord
shall be an additional named insured on the policy.
18.3 TENANT IMPROVEMENTS. Tenant agrees to carry insurance covering all of Tenant's leasehold improvements, alterations, additions or improvements, trade fixtures, merchandise and personal property from time to time in, on or upon the Premises, in an amount not less than one hundred percent (100%) of the full replacement cost of such items from time to time during the term of this lease, providing protection against any peril included within an "All-Risk" policy, with a deductible amount not to exceed $20,000. Any policy proceeds shall be used for the repair or replacement of the property damaged
or destroyed unless this lease shall cease and terminate due to destruction of the Premises as provided below.
18.4 OTHER INSURANCE. Tenant agrees to carry insurance against such other hazards and in such amounts in accordance with standard and commercially accepted business practices as the holder of any mortgage or deed of trust to which the lease is subordinate may reasonably require from time to time.
18.5 WAIVER OF SUBROGATION. Landlord and Tenant grant to each other on behalf of any insurer providing fire and extended insurance coverage to either of them covering the Premises, improvements thereon, and contents thereof, a waiver of any right of subrogation or recovery of any payments of loss under such insurance, such waiver to be effective so long as each is empowered to grant such waiver under the terms of its insurance policy, and to give all necessary notice of such waiver to its insurance carriers.
18.6 OTHER PROVISIONS REGARDING TENANT'S INSURANCE. All insurance required of Tenant in this lease shall be effected under enforceable policies issued by insurers of recognized good financial condition licensed to do business in this State. At least fifteen (15) days prior to the expiration date of any such policy, a certificate evidencing a new or renewal policy shall be delivered by Tenant to Landlord. Within fifteen (15) days after the premium on any policy shall become due and payable, Landlord shall be furnished with satisfactory evidence of its payment. To the extent obtainable, all policies shall contain an agreement that notwithstanding any act or negligence of Tenant which might otherwise result in forfeiture of such insurance, such policies shall not be canceled except upon ten (10) days prior written notice to Landlord, and that the coverage afforded thereby shall not be affected by the performance of any work in or about the Premises.
If Tenant provides any insurance required of Tenant by this lease in the form of a blanket policy, Tenant shall furnish satisfactory proof that such blanket policy complies in all respects with the provisions of this lease, and that the coverage thereunder is at least equal to the coverage which would be provided under a separate policy covering only the Premises.
18.7 CHANGES IN STANDARD POLICIES. If the definition of insurance industry policy language relating to "All-Risk" insurance or other term changes, the insurance requirements hereunder shall be modified to conform to the existing insurance industry language; however, the dollar amount of the coverages required under this lease shall not be less than those existing at the time of the effective beginning date of this lease.
19. FIRE REGULATIONS - TENANT RESPONSIBILITY. It shall be Tenant's sole and exclusive responsibility to meet all fire regulations of any governmental unit having jurisdiction over the Premises to the extent such regulations affect Tenant's operations, at Tenant's sole expense.
20. REPLACEMENT OF BUILDING - CASUALTY DAMAGE. If the Premises are damaged or destroyed by fire or other cause at any time after the date of commencement of this lease, Landlord shall proceed with due diligence to repair or restore the same to the same condition as existed before such damage or destruction, and as soon as possible thereafter will give possession to the Tenant of the Premises without diminution or change of location. Provided, however, that in case of total destruction of the Premises by fire, or in case the Premises are so badly damaged that, in the reasonable opinion of the Landlord, it is not feasible to repair or rebuild the same, then, Landlord shall have the right to terminate this lease instead of rebuilding the improvements; provided, however, that Landlord shall give Tenant written notice of Landlord's intention to terminate, said notice to be served not later than thirty (30) days after the occurrence of the damage to the property. In the event the Premises are rendered temporarily untenantable
because of fire or other casualty, base monthly rent shall abate on the untenantable area until the Premises are restored to their former condition, abatement to be based on the square feet of building floor space in the untenantable area compared to the total square feet of building floor space on the Premises. Provided, however, that to the extent the damage or destruction results from the negligence of Tenant or its employees, agents, contractors, subcontractors, invitees, guests or licensees, Tenant shall pay for the restoration or repair, to the extent the cost of same is not covered by insurance.
21. ENVIRONMENTAL MATTERS.
21.1 DEFINITIONS.
21.1.1 HAZARDOUS MATERIAL. Hazardous Material means any substance:
(a) the presence of which requires investigation, notice or remediation under any federal, state or local statute, regulation, ordinance, order, action, policy or common law; or
(b) which is or becomes defined as a "hazardous material," "hazardous waste," "hazardous substance," "regulated substance," "pollutant" or "contaminant" under any federal, state or local statute, regulation, rule or ordinance or amendments thereto including, without limitation, the Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C. _ 9601 et seq.), Toxic Substances Control Act (15 U.S.C. _ 2601 et seq.), the Colorado Underground Storage Tank Act (Colo. Rev. Stat. _ 25-18-101 et seq.), and/or the Resource Conservation and Recovery Act (42 U.S.C. _ 6901 et seq.); or
(c) which is toxic, explosive, corrosive, flammable, infectious, radioactive, carcinogenic, mutagenic, or otherwise hazardous and is or becomes regulated by any governmental authority, agency, department, commission, board, agency or instrumentality of the United States, the State of Colorado or any political subdivision thereof; or
(d) the presence of which on the Premises causes or threatens to cause a nuisance upon the Premises or to adjacent properties or poses or threatens to pose a hazard to the health or safety of persons on or about the Premises; or
(e) which contains gasoline, diesel fuel or other petroleum hydrocarbons; or
(f) which contains polychlorinated biphenyls (PCBs), asbestos or urea formaldehyde foam insulation; or
(g) radon gas.
21.1.2 ENVIRONMENTAL REQUIREMENTS. Environmental Requirements means all applicable present and future statutes, regulations, rules, ordinances, codes, licenses, permits, orders, approvals, plans, authorizations, concessions, franchises, and similar items, of all governmental agencies, departments, commissions, boards, bureaus, or instrumentalities of the United States, states and political subdivisions thereof and all applicable judicial, administrative, and regulatory decrees, judgments, and orders relating to the protection of human health or the environment, including, without limitation:
(a) All requirements, including but not limited to those pertaining to reporting, licensing, permitting, investigation, and remediation of emissions, discharges, releases, or threatened releases of Hazardous Materials, chemical substances, pollutants, contaminants, or hazardous or toxic substances, materials or wastes whether solid, liquid, or gaseous in nature, into the air, surface water,
groundwater, or land, or relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport, or handling of chemical substances, pollutants, contaminants, or hazardous or toxic substances, materials, or wastes, whether solid, liquid, or gaseous in nature; and
(b) All requirements pertaining to the protection of the health and safety of employees or the public.
21.1.3 ENVIRONMENTAL DAMAGES. Environmental Damages means all claims, judgments, damages, losses, penalties, fines, liabilities (including strict liability), encumbrances, liens, costs, and expenses of investigation and defense of any claim, whether or not such claim is ultimately defeated, and of any good faith settlement or judgment, of whatever kind or nature, contingent or otherwise, matured or unmatured, foreseeable or unforeseeable, including without limitation reasonable attorneys' fees and disbursements and consultants' and witnesses' fees, any of which are incurred at any time as a result of the existence of Hazardous Material upon, about, beneath the Premises or migrating or threatening to migrate to or from the Premises, or the existence of a violation of Environmental Requirements pertaining to the Premises, including without limitation:
(a) Damages for personal injury, or injury to property or natural resources occurring upon or off of the Premises, foreseeable or unforeseeable, including, without limitation, lost profits, consequential damages, the cost of demolition and rebuilding of any improvements on real property, interest and penalties including but not limited to claims brought by or on behalf of employees of Tenant;
(b) Fees incurred for the services of attorneys, consultants, contractors, experts, laboratories and all other costs incurred in connection with the investigation or remediation of such Hazardous Materials or violation of Environmental Requirements including, but not limited to, the preparation of any feasibility studies or reports or the performance of any cleanup, remediation, removal, response, abatement, containment, closure, restoration or monitoring work required by any federal, state or local governmental agency or political subdivision or court, or reasonably necessary to make full economic use of the Premises and any other property in a manner consistent with its current use or otherwise expended in connection with such conditions, and including without limitation any attorneys' fees, costs and expenses incurred in enforcing this agreement or collecting any sums due hereunder;
(c) Liability to any third person or governmental agency to indemnify such person or agency for costs expended in connection with the items referenced herein; and
(d) Diminution in the value of the Premises and adjoining property, and damages for the loss of business and restriction on the use of or adverse impact on the marketing of rentable or usable space or of any amenity of the Premises and adjoining property.
21.2 TENANT'S OBLIGATION TO INDEMNIFY, DEFEND AND HOLD HARMLESS. Tenant, its successors, assigns and guarantors, agree to indemnify, defend, reimburse and hold harmless the following persons from and against any and all Environmental Damages arising from activities of Tenant or its employees, agents, contractors, subcontractors, or guests, licensees, or invitees which (1) result in the presence of Hazardous Materials upon, about or beneath the Premises or migrating to or from the Premises, or (2) result in the violation of any Environmental Requirements pertaining to the Premises and the activities thereon:
21.2.1 LANDLORD;
21.2.2 any other person who acquires an interest in the Premises in any manner, including but not limited to purchase at a foreclosure sale or otherwise; and
21.2.3 the directors, officers, shareholders, employees, partners, agents, contractors, subcontractors, experts, licensees, affiliates, lessees, mortgagees, trustees, heirs, devisees, successors, assigns, guests and invitees of such persons.
This obligation shall include, but not be limited to, the burden and expense of the indemnified parties in defending all claims, suits and administrative proceedings, including attorneys' fees and expert witness and consulting fees, even if such claims, suits or proceedings are groundless, false or fraudulent (except to the extent such claims, suits or proceedings are brought by an indemnified party), and conducting all negotiations of any description, and paying and discharging, when and as the same become due, any and all judgments, penalties or other sums due against such indemnified persons, and all such expenses incurred in enforcing the obligation to indemnify. Tenant, at its sole expense, may employ additional counsel of its choice to associate with counsel representing the indemnified parties.
21.3 TENANT'S OBLIGATION TO REMEDIATE. Notwithstanding the
obligation of Tenant to indemnify Landlord pursuant to this agreement, Tenant
shall, upon demand of Landlord, and at its sole cost and expense, promptly take
all actions to remediate the Premises which are reasonably necessary to mitigate
Environmental Damages or to allow full economic use of the Premises, or are
required by Environmental Requirements, which remediation is necessitated by the
1) introduction of a Hazardous Material upon, about or beneath the Premises or
2) a violation of Environmental Requirements, either of which is caused by the
actions of Tenant, its employees, agents, contractors, subcontractors, guests,
invitees or licensees. Such actions shall include, but not be limited to, the
investigation of the environmental condition of the Premises, the preparation of
any feasibility studies, reports or remedial plans, and the performance of any
cleanup, remediation, containment, operation, maintenance, monitoring or
restoration work, whether on or off of the Premises. Tenant shall take all
actions necessary to restore the Premises to the condition existing prior to the
introduction of Hazardous Material upon, about or beneath the Premises by
Tenant, its employees, agents, contractors, subcontractors, guests, or invitees
or licensees,, notwithstanding any lesser standard of remediation allowable
under applicable law or governmental policies. All such work shall be performed
by one or more contractors, selected by Tenant and approved in advance and in
writing by Landlord. Tenant shall proceed continuously and diligently with such
investigatory and remedial actions, provided that in all cases such actions
shall be in accordance with all applicable requirements of governmental
entities. Any such actions shall be performed in a good, safe and workmanlike
manner and shall minimize any impact on the business conducted at the Premises.
Tenant shall pay all costs in connection with such investigatory and remedial
activities, including but not limited to all power and utility costs, and any
and all taxes or fees that may be applicable to such activities. Tenant shall
promptly provide to Landlord copies of testing results and reports that are
generated in connection with the above activities, and copies of any
correspondence with any governmental entity related to such activities. Promptly
upon completion of such investigation and remediation, Tenant shall permanently
seal or cap all monitoring wells and test holes to industrial standards in
compliance with applicable federal, state and local laws and regulations, remove
all associated equipment, and restore the Premises to the maximum extent
possible, which shall include, without limitation, the repair of any surface
damage, including paving, caused by such investigation or remediation hereunder.
Provided, however, that Tenant shall not be obligated to remediate environmental
damages which result from seepage of Hazardous Materials onto the Premises from
adjacent property unless the presence on the adjacent property was caused by
Tenant or its employees, agents, contractors, subcontractors, guests, invitees
or licensees. Provided that the Tenant is in compliance, in no event shall
Landlord demand more often than once every twelve (12) months that Tenant pay
for investigation of environmental conditions of the Premises.
21.4 NOTIFICATION. If Tenant shall become aware of or receive notice or other communication concerning any actual, alleged, suspected or threatened violation of Environmental Requirements, or liability of Tenant for Environmental Damages in connection with the Premises or past or present activities of any person thereon, or that any representation set forth in this agreement is not or is no
longer accurate, including but not limited to notice or other communication concerning any actual or threatened investigation, inquiry, lawsuit, claim, citation, directive, summons, proceeding, complaint, notice, order, writ, or injunction, relating to same, then Tenant shall deliver to Landlord, within ten days of the receipt of such notice or communication by Tenant, a written description of said violation, liability, correcting information, or actual or threatened event or condition, together with copies of any such notice or communication. Receipt of such notice shall not be deemed to create any obligation on the part of Landlord to defend or otherwise respond to any such notification or communication except to the extent provided in Section 21.9.
21.5 NEGATIVE COVENANTS.
21.5.1 NO HAZARDOUS MATERIAL ON PREMISES. Except in strict compliance with all Environmental Requirements, Tenant shall not cause, permit or suffer any Hazardous Material to be brought upon, treated, kept, stored, disposed of, discharged, released, produced, manufactured, generated, refined or used upon, about or beneath the Premises by Tenant, its agents, employees, contractors, subcontractors, guests, licensees or invitees, or any other person. Tenant shall deliver to Landlord copies of all documents which Tenant provides to any governmental body in connection with compliance with Environmental Requirements with respect to the Premises, such delivery to be contemporaneous with provision of the documents to the governmental agency.
21.5.2 NO VIOLATIONS OF ENVIRONMENTAL REQUIREMENTS. Tenant shall not cause, permit or suffer the existence or the commission by Tenant, its agents, employees, contractors, subcontractors or guests, licensees or invitees, a violation of any Environmental Requirements upon, about or beneath the Premises or any portion thereof.
21.5.3 NO ENVIRONMENTAL OR OTHER LIENS. Tenant shall not create or suffer or permit to exist with respect to the Premises, any lien, security interest or other charge or encumbrance of any kind, including without limitation, any lien imposed pursuant to section 107(f) of the Superfund Amendments and Reauthorization Act of 1986 (42 U.S.C. section 9607(1) or any similar state statute to the extent that such lien arises out of the actions of Tenant, its agents, employees, contractors, subcontractors or guests, licensees or invitees.
21.6 LANDLORD'S RIGHT TO INSPECT AND TO AUDIT TENANT'S RECORDS. Landlord shall have the right in its sole and absolute discretion, but not the duty, to enter and conduct an inspection of the Premises and to inspect and audit Tenant's records concerning Hazardous Materials at any reasonable time solely to determine whether Tenant is complying with the terms of the lease, including but not limited to the compliance of the Premises and the activities thereon with Environmental Requirements and the existence of Environmental Damages as a result of the condition of the Premises or surrounding properties and activities thereon. Landlord shall comply with Tenants reasonable and customary safety and confidentiality procedures. If Landlord has reasonable cause to believe Tenant is in default with respect to any of the provisions of this lease related to Hazardous Materials, Environmental Requirements or Environmental Damages, then Landlord shall have the right, but not the duty, to retain at the sole expense of Tenant an independent professional consultant to enter the Premises to conduct such an inspection and to inspect and audit any records or reports prepared by or for Tenant concerning such compliance; provided that if such consultant determines that Tenant is in compliance with the terms of this lease regarding Hazardous Materials, then the costs and expenses of such inspection and audit shall be borne solely by Landlord. Tenant hereby grants to Landlord the right to enter the Premises and to perform such tests on the Premises as are reasonably necessary in the opinion of Landlord to assist in such audits and investigations. Landlord shall use reasonable efforts and will cooperate with Tenant in scheduling and procedures to minimize interference with the business of Tenant by such tests inspections and audits, but Landlord shall not be liable for any interference caused thereby except to the extent resulting from Landlord's or Landlord's agent's gross negligence or intentional misconduct.
21.7 LANDLORD'S RIGHT TO REMEDIATE. Should Tenant fail to perform or observe any of its obligations or agreements pertaining to Hazardous Materials or Environmental Requirements, then Landlord shall have the right, but not the duty, without limitation upon any of the rights of Landlord pursuant to this agreement, to enter the Premises personally or through its agents, consultants or contractors and perform the same. Tenant agrees to indemnify Landlord for the costs thereof and liabilities therefrom as set forth in Paragraph 21.2.
21.8 LANDLORD'S OBLIGATION TO REMEDIATE. Landlord agrees to remediate all Environmental Damages 1) caused by Landlord, its agents, employees, contractors, subcontractors, guests, licensees or invitees, or 2) not so caused but arising prior to Commencement Date hereof including, but not limited to, those caused by Nano and not caused by Tenant, its agents, employees, contractors, subcontractors, guests, licensees or invitees.
21.9 LANDLORD'S OBLIGATION TO INDEMNIFY, DEFEND AND HOLD HARMLESS CONCERNING ENVIRONMENTAL MATTERS. Landlord, its successors, assigns and guarantors, agree to indemnify, defend, reimburse and hold harmless the following persons from and against any and all Environmental Damages arising from activities of Landlord or its employees, agents, contractors, subcontractors or guests, licensees, invitees; or which occurred prior to the Commencement Date including, but not limited to, those caused by Nano (and were not caused by Tenant, its agents, employees, contractors, subcontractors, guests, licensees or invitees) which (1) result in the presence of Hazardous Materials upon, about or beneath the Premises or migrating to or from the Premises, or (2) result in the violation of any Environmental Requirements pertaining to the Premises and the activities thereon:
21.9.1 TENANT;
21.9.2 The directors, officers, shareholders, employees, partners, agents, contractors, subcontractors, experts, licensees, affiliates, lessees, mortgagees, trustees, heirs, devisees, successors, assigns and invitees of Tenant.
This obligation shall include, but not be limited to, the burden and expense of the indemnified parties in defending all claims, suits and administrative proceedings, including attorneys' fees and expert witness and consulting fees, even if such claims, suits or proceedings are groundless, false or fraudulent, and conducting all negotiations of any description, and paying and discharging, when and as the same become due, any and all judgments, penalties or other sums due against such indemnified persons, and all such expenses incurred in enforcing the obligation to indemnify. Landlord, at its sole expense, may employ additional counsel of its choice to associate with counsel representing Tenant.
21.10 SURVIVAL OF ENVIRONMENTAL OBLIGATIONS. The obligations of Landlord and Tenant as set forth in Paragraph 21 and all of its subparagraphs shall survive termination of this lease.
22. ENTRY BY LANDLORD. Landlord, or its authorized representative, and/or any lender or prospective lender, shall have the right to enter the Premises during the lease term at all reasonable times during usual business hours for purposes of inspection, and/or the performance of any maintenance, repairs or replacement therein. Landlord shall give Tenant such advance notice of entry as is reasonable in light of the purpose for the entry. Landlord shall have the right to enter the Premises and show the same to a prospective tenant during the last 180 days of this lease or any extended term, unless the term shall have been extended by mutual written agreement or delivery of notice of exercise of any option to extend.
23. DEFAULT - REMEDIES OF LANDLORD.
23.1 DEFAULT DEFINED. Any one or more of the following events (each of which is herein sometimes called "event of default") shall constitute a default:
23.1.1 Tenant defaults in the due and punctual payment of any rent, taxes, tax deposits, insurance premiums, maintenance fees or other sums required to be paid by Tenant under this lease when and as the same shall become due and payable;
23.1.2 Tenant abandons the Premises;
23.1.3 Tenant defaults in the performance of or compliance with any of the covenants, agreements, terms and conditions contained in this lease other than those referred to in the foregoing Paragraph 23.1.1, and such default shall continue for a period of 20 days after written notice thereof from Landlord to Tenant, and shall not be cured as permitted by Paragraph 23.9;
23.1.4 Tenant files a voluntary petition in bankruptcy or is adjudicated a bankrupt or insolvent, or takes the benefit of any relevant legislation that may be in force for bankrupt or insolvent debtors or files any petition or answer seeking any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief for itself under any present or future federal, state or other statute, law or regulation, or proceedings are taken by Tenant under any relevant Bankruptcy Act in force in any jurisdiction available to Tenant, or Tenant seeks or consents to or acquiesces in the appointment of any trustee, receiver or liquidator of Tenant or of all or any substantial part of its properties or of the Premises, or makes any general assignment for the benefit of creditors;
23.1.5 A petition is filed against Tenant seeking any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any present or future federal, state or other statute, law or regulation, and shall remain undismissed for an aggregate of 120 days, or if any trustee, receiver or liquidator of Tenant or of all or any substantial part of its properties or of the Premises is appointed without the consent or acquiescence of Tenant and such appointment remains unvacated for an aggregate of 120 days.
23.2 LANDLORD'S REMEDIES IN THE EVENT OF DEFAULT. In the event of any event of default, Landlord shall have the option, without further notice to Tenant or further demand for performance exercise any one or more of the following remedies (and any other remedy available at law or in equity):
23.2.1 If Tenant has been late in payment of rent or other sums due on four or more occasions during any period of one year, Landlord, without terminating this lease, may 1) require that all future payments be made by bank cashier's check, and/or 2) require an additional security deposit in the amount of the then-current base rent for two months, and/or 3) require that rent for each month be paid on or before the 15th day of the preceding month. Such requirement shall be imposed by Landlord's written notice delivered to Tenant. The additional security deposit shall be paid within 10 days after delivery of the notice. The Landlord may or may not exercise the remedies provided in this Paragraph 23.2.1, in its sole discretion. The exercise of the remedies provided in this Paragraph 23.2.1 shall not be required prior to the exercise of any other available remedy.
23.2.2 Without obligation to seek a new tenant, to institute suit against Tenant to collect each installment of rent or other sum as it becomes due or to enforce any other obligation under this lease even though the Premises be left vacant.
23.2.3 As a matter of right, to procure the appointment of a receiver for the Premises by any court of competent jurisdiction upon ex parte application and without notice, notice being hereby expressly waived. All rents, issues and profits, income and revenue from the Premises shall be applied by such receiver to the payment of the rent, together with any other obligations of the Tenant under this lease.
23.2.4 To re-enter and take possession of the Premises and all personal property therein and to remove Tenant and Tenant's agents and employees therefrom, and either:
1) terminate this lease and sue Tenant for damages for breach of the obligations of Tenant to Landlord under this lease; or
2) without terminating this lease, relet, assign or sublet the Premises as the agent and for the account of Tenant in the name of Landlord or otherwise, upon the terms and conditions Landlord deems fit with the new Tenant for such period (which may be greater or less than the period which would otherwise have constituted the balance of the term of this lease) as Landlord may deem best, and collect any rent due upon any such reletting. In this event, the rents received on any such reletting shall be applied first to the expenses of reletting and collecting, including, without limitation, all repossession costs, reasonable attorneys' fees, and real estate brokers' commissions, alteration costs and expenses of preparing said Premises for reletting, and thereafter toward payment of the rental and of any other amounts payable by Tenant to Landlord. If the sum realized shall not be sufficient to pay the rent and other charges due from Tenant, then within five days after demand, Tenant will pay to Landlord any deficiency as it accrues. Landlord may sue therefor as each deficiency shall arise if Tenant shall fail to pay such deficiency within the time limited.
23.3 TENANT TO SURRENDER PEACEABLY. In the event Landlord elects to lawfully re-enter or take possession of the Premises as permitted in this lease, Tenant shall quit and peaceably surrender the Premises to Landlord, and Landlord may enter upon and re-enter the Premises and possess and repossess itself thereof, by force, summary proceedings, ejectment or otherwise, and may dispossess and remove Tenant and may have, hold and enjoy the Premises and the right to receive all rental income of and from the same.
23.4 NO TERMINATION BY RE-ENTRY. No re-entry or taking of possession by Landlord shall be construed as an election on Landlord's part to terminate or accept surrender of this lease unless Landlord's written notice of such intention is delivered to Tenant.
23.5 INJUNCTION. In the event of any breach by Tenant of any of the agreements, terms, conditions or covenants contained in this lease, Landlord, in addition to any and all other rights, shall be entitled to enjoin such breach and shall have the right to invoke any right and remedy allowed at law or in equity or by statute or otherwise for such breach as though re-entry, summary proceedings, and other remedies were not provided for in this lease.
23.6 REMEDIES LISTED ARE CUMULATIVE AND NON-EXCLUSIVE. The enumeration of the foregoing remedies does not exclude any other remedy, but all remedies are cumulative and shall be in addition to every other remedy now or hereafter existing at law or in equity, including, but not limited to, the remedies provided in Paragraph 23.11.
23.7 INTEREST ON SUMS PAST DUE. All rent and all other amounts due from Tenant hereunder shall bear interest at the rate of eighteen percent (18%) per annum compounded quarter-annually from their respective due dates until paid, provided that this shall in no way limit, lessen or affect any claim for damages by Landlord for any breach or default by Tenant.
23.8 ATTORNEYS' FEES. Reasonable attorneys' fees, expert witness fees, consulting fees and other expenses incurred by either party by reason of the breach by either party in complying with
any of the agreements, terms, conditions or covenants of this lease shall constitute additional sums to be paid to the prevailing party on demand.
23.9 TIME TO CURE CERTAIN NON-MONETARY DEFAULTS. In the event of any default other than those events described in Paragraph 23.1.1, for which notice has been given as provided in Paragraph 23.1.3, which because of its nature can be cured but not within the period of grace heretofore allowed, then such default shall be deemed remedied for purposes of this Paragraph 23, if the correction thereof shall have been commenced within said grace period or periods and shall, when commenced, be diligently prosecuted to completion.
23.10 LANDLORD DEFAULT. If Landlord is in default under any of its obligations and the default continues for twenty (20) days after written notice from Tenant (subject to extension pursuant to 23.9), Tenant may pursue all remedies at law or in equity. Landlord will use reasonable efforts to promptly remedy the default within twenty (20) days. Tenant may, but shall not be required to, correct such default for the Landlord's account, and the expense shall be promptly paid within ten (10) days by Landlord; however, in no event shall Tenant have the right to rental abatement, offset of expenses against rental, or the right to terminate this lease unless Tenant's legal or equitable remedies provide otherwise.
Tenant may not offset any sum due or assertedly due from Landlord to Tenant against any sum due from Tenant to Landlord.
Tenant agrees that if Tenant obtains a judgment against Landlord arising out of Landlord's obligations under this lease, such judgment shall be limited in the aggregate to $1,125,000, and such judgment may be satisfied only by execution and sale of Landlord's interest in the Premises leased hereby. Tenant may not seek execution against other property of Landlord, nor pursue any judgment, execution or other remedy against the partners or other owners of Landlord or any of their property. Immediately upon receipt of Landlord's written request, Tenant will release any property (other than the Premises leased hereby) from the lien of any judgment obtained by Tenant against Landlord arising out of Landlord's obligations under this lease. The limitation provided in this paragraph shall not apply to Landlord's obligations under Section 21.9
23.11 LANDLORD'S RIGHT TO REMOVE. In the event that Tenant is in default hereunder and has failed to cure such default after notice and opportunity to cure as provided herein, Landlord may proceed to remove, or have the appropriate governmental agencies remove all of Tenant's property from the Premises and store the same at Tenant's sole risk. The cost of such removal shall be paid by Tenant to Landlord upon demand.
24. LEGAL PROCEEDINGS AGAINST TENANT BY THIRD PARTIES; TENANT TO PAY LANDLORD'S FEES. In the event of any proceeding at law or in equity wherein Landlord, without being in default as to its covenants under the terms hereof, shall be made a party to any litigation by reason of Tenant's interest in the Premises, Landlord shall be allowed and Tenant shall be liable for and shall pay all costs and expenses incurred by Landlord, including reasonable attorneys' fees, expert witness fees and consultant's fees.
25. INDEMNIFICATION BY TENANT AND BY LANDLORD. The Tenant shall indemnify and save harmless Landlord of and from liability for damages or claims against Landlord, including costs, attorneys' fees and expenses of Landlord in defending against the same, on account of injuries to any person or property, if the injuries are caused by the negligence or willful misconduct of Tenant, its agents, servants or employees, or of any other person entering upon the Premises under express or implied invitation of Tenant or if such injuries are the result of the violation by Tenant, its agents, servants, or employees, of laws, ordinances, other governmental regulations, or of the terms of this lease.
The Landlord shall indemnify and save harmless Tenant of and from liability for damages or claims against Tenant, including costs, attorneys' fees and expenses of Tenant in defending against the same, on account of injuries to any person or property, if the injuries are caused by the negligence or willful misconduct of Landlord, its agents, servants or employees, or of any other person entering upon the Premises under express or implied invitation of Landlord or where such injuries are the result of the violation by Landlord, its agents, servants or employees, of laws, ordinances, other governmental regulations, or of the terms of this lease.
26. ASSIGNMENT OR SUBLETTING. Tenant shall not assign, mortgage, or encumber this lease, nor sublet or permit the Premises or any part thereof to be used by others, without the prior written consent of Landlord in each instance, which consent shall not be unreasonably withheld.
In connection with an assignment, sublease or encumbrance Landlord may require the submittal of detailed financial information about the prospective subtenant or assignee, to be reviewed by Landlord, and may require a guarantee of the obligations of the prospective subtenant or assignee, and may require detailed financial information about the guarantor, to be reviewed by Landlord; and there may be alterations to this lease and alterations to the building which are necessary to consummate the transaction. The Landlord may require Tenant or the prospective assignee or sub-tenant to pay for the alterations to the building, and may require that Landlord perform same. In addition, Landlord may charge a $500 administration fee due in full upon Landlord's consent, as payment to Landlord for its costs and expenses in connection with the assignment or sublease. No fee will be charged in connection with an assignment or sublease to an assignee or subtenant who is "affiliated" with Tenant. "Affiliated" means under common voting control, directly or indirectly.
If this lease is assigned, or if the Premises or any part thereof is sublet, or occupied by anyone other than Tenant, Landlord may, after default by Tenant, collect rent from the assignee, sub-tenant, or occupant and apply the net amount collected against all rent herein reserved. No such assignment, subletting, occupancy, or collection shall be deemed a waiver of this covenant, or the acceptance of the assignee, sub-tenant, or occupant as tenant, or a release of Tenant from further performance by Tenant of the covenants in this lease. The consent by Landlord to an assignment or subletting shall not be construed to relieve Tenant (or any subsequent tenant) from obtaining the consent in writing of Landlord to any further assignment or subletting.
27. LANDLORD'S WARRANTY OF TITLE; QUIET ENJOYMENT. Landlord covenants it has good right to lease the Premises in the manner described herein and that Tenant shall peaceably and quietly have, hold, occupy, and enjoy the Premises during the term of the lease; except as provided in Paragraph 31 concerning subordination to mortgage lenders.
28. ADDITIONAL DEVELOPMENT OF PROPERTY - RIGHTS OF LANDLORD. Landlord does reserve, during the term of this lease, the right to go upon and deal with the Premises or part thereof for the purpose of implementing a common development plan for the project of which the Premises are a part, and to install non-exclusive sidewalks, paths, roadways and other street improvements for use by vehicles, pedestrians, and for parking; to undertake such drainage programs to handle underground and surface drainage water and to make any other changes and/or improvements as Landlord shall deem advisable in the exercise of its sole discretion; provided, however, any such action by Landlord shall not unreasonably interfere with the rights of Tenant hereunder.
29. GOVERNMENTAL ACQUISITION OF THE PREMISES. The parties agree that Landlord shall have sole and exclusive authority to negotiate and settle all matters pertaining to the acquisition of all or part of the Premises by a governmental agency by eminent domain or threat thereof (condemnation), and to convey all or any part of the Premises under threat of condemnation. It is agreed
that any compensation for land and/or buildings to be taken whether resulting from negotiation and agreement or condemnation proceedings, shall be the exclusive property of Landlord, and that there shall be no sharing whatsoever between Landlord and Tenant of any such sum. Such taking of property shall not be considered as a breach of this lease by Landlord, nor give rise to any claims in Tenant for damages or compensation from Landlord. Tenant may separately claim and recover from the condemning authority the value of any personal property owned by Tenant which is taken, and any relocation expenses owed to Tenant by the condemning authority. If the taken portion of the Premises consists only of areas where no building is constructed, and the land area of the Premises is reduced by less than ten percent, and the parking area available for use by Tenant is reduced by less than five percent, and there is no material change in Tenant's access to the Premises, then there shall be no change in the terms of the lease except with respect to a prorated reduction in rent and expenses. If no building area is taken but the foregoing limits on parking area reductions are exceeded, then Tenant may terminate the lease unless Landlord provides sufficient reasonably adjacent parking area so that the total available parking area is reduced by less than five percent. If upon a conveyance or taking in excess of the limits described above, Tenant shall have two options. First, Tenant may terminate the lease by written notice delivered to Landlord within 60 days after the conveyance or taking. Second, Tenant may retain the remaining portion of the Premises, under all the terms and conditions hereof, but the base rental shall be reduced in proportion to the number of square feet of building floor space taken compared to the number of square feet of building floor space on the Premises prior to the taking.
31. SUBORDINATION OF THE LEASEHOLD TO MORTGAGES. This lease shall be subject and subordinate in priority at all times to the lien of any existing and/or hereafter executed mortgages and trust deeds encumbering the Premises. Although no instrument or act on the part of Tenant shall be necessary to effectuate such subordination, Tenant will execute and deliver such further instruments subordinating this lease to the lien of any such mortgages or trust deeds as may be desired by the mortgagee or holder of such trust deeds. Tenant hereby appoints Landlord as his attorney in fact, irrevocably, to execute and deliver any such instrument for Tenant. Tenant further agrees at any time and from time to time upon not less than ten (10) days prior written request by Landlord, to reasonably execute, acknowledge, and deliver to Landlord an estoppel affidavit in form acceptable to Landlord and the holder of any existing or contemplated mortgage or deed of trust encumbering the Premises. Tenant's failure to deliver such statement within such time shall be conclusive upon Tenant (1) that this lease is in full force and effect, without modification except as may be represented by Landlord; (2) that there are no uncured defaults in Landlord's performance; and (3) that not more than one (1) month's rent has been paid in advance. Further, upon request, Tenant shall supply to Landlord a corporate resolution certifying that the party signing this statement on behalf of Tenant is properly authorized to do so, if Tenant is a corporation. Tenant agrees to provide Landlord within ten business days of Landlord's request, Tenant's most recently completed financial statements and such other financial information as reasonably requested by Landlord in order to verify Tenant's financial condition to satisfy requirements of Landlord's existing or contemplated lender or mortgagee.
Tenant agrees with lender and Landlord that if there is a foreclosure of any such mortgage or deed of trust and pursuant to such foreclosure, the Public Trustee or other appropriate officer executes and delivers a deed conveying the Premises to the lender or its designee, or in the event Landlord conveys the Premises to the lender or its designee in lieu of foreclosure, Tenant will attorn to such grantee of the Premises, rather than to Landlord, to perform all of Tenant's obligations under the lease, and Tenant shall have no right to terminate the lease by reason of the foreclosure or deed given in lieu thereof.
Landlord will use best efforts to include in the terms of any mortgage or deed of trust on the Premises a provision that if Tenant is not in default under the terms of this lease and Tenant is then in possession of the Premises, Tenant's rights of quiet enjoyment arising out of the lease shall not be affected or disturbed by lender in the event of a default by Landlord and any sale of the Premises through foreclosure of any deed of trust or otherwise.
32. TENANT'S FINANCIAL STATEMENTS. A current financial statement of Tenant shall be provided to Landlord for review and approval upon execution hereof and annually thereafter if so requested by Landlord.
33. MEMORANDUM OF LEASE - RECORDING. This lease shall not be recorded in the office of the County Clerk and Recorder of Boulder County, except by Landlord as a financing statement. In order to effect public recordation, the parties hereto shall, at the time this lease is executed, execute a Memorandum of lease incorporating therein by reference the terms of this lease including any option rights hereunder, but deleting therefrom any expressed statement or mention of the amount of rent herein reserved, which instrument may be recorded by either party in the office of the Clerk and Recorder of Boulder County.
34. NO WAIVER OF BREACH; ACCEPTANCE OF PARTIAL PAYMENTS OF RENT. No assent, or waiver expressed or implied, or failure to enforce, as to any breach of any one or more of the covenants or agreements herein shall be deemed or taken to be a waiver of any succeeding or additional breach.
Payment by Tenant or receipt by Landlord of an amount less than the rent or other payment provided for herein shall not be deemed to be other than a payment on account of the earliest rent then due, nor shall any endorsement or statement on any check or any letter accompanying any check or payment of rent be deemed an accord and satisfaction, and Landlord may accept such check or other payment without prejudice to Landlord's right to recover the balance of all rent then due, and/or to pursue any or all other remedies provided for in this lease, in law, and/or in equity including, but not limited to, eviction of Tenant. Specifically, but not as a limitation, acceptance of a partial payment of rent shall not be a wavier of any default by Tenant.
35. CONTROLLING LAW. The lease, and all terms hereunder shall be governed by the laws of the State of Colorado, exclusive of its conflicts of laws rules.
36. INUREMENTS. The covenants and agreements herein contained shall bind and inure to the benefit of Landlord and Tenant and their respective successors. This lease shall be signed by the parties in duplicate, each of which shall be a complete and effective original lease.
37. TIME. Time is of the essence in this lease in each and all of its provisions in which performance is a factor.
38. ADDRESSES; EMPLOYER IDENTIFICATION NUMBERS; METHOD OF GIVING NOTICE. The street address of Landlord is 2101 Ken Pratt Blvd. Suite 200, Longmont, CO 80501. The mailing address of Landlord is P. O. Box 1937, Longmont, CO 80502-1937. All payments, notices and communications which are sent to Landlord via United States mail shall be addressed to the mailing address. Only payments, notices and communications which are hand delivered or delivered by private courier service shall be addressed to the street address.
Tenant's present street address is 1885 - 33rd Street, Boulder, CO 80301. Upon the Commencement Date of this Lease, Tenant's mailing address is 2620 Trade Centre Avenue, Suites A & B_, Longmont, CO 80503. Any notice to Tenant may be delivered to the above addresses or to the Premises.
Landlord's current fax number is (303) 776-4946. Tenant's current fax number is 303-449-5376. Any written notice required hereby may be delivered by fax, U.S. mail, private courier service, or hand delivery. Notice shall be effective at time of delivery to the address or fax number shown.
Either party may change its street or mailing address, or fax number, for purposes hereof, by written notice delivered to the other. The federal employer identification number of Landlord is 84-1165292. The federal identification number of Tenant is. 84 1460 811.
39. PARAGRAPH HEADINGS; GRAMMAR. All paragraph headings are made for the purposes of ease of location of terms and shall not affect or vary the terms hereof. Throughout this lease, wherever the words, "Landlord" and "Tenant" are used they shall include and imply to the singular, plural, persons both male and female, and all sorts of entities and in reading said lease, the necessary grammatical changes required to make the provisions hereof mean and apply as aforesaid shall be made in the same manner as though originally included in said lease.
40. FLEXIBILITY CLAUSE. Landlord hereby gives Tenant the option to terminate this lease on May 31, 2003, and all obligations as set forth thereunder, by providing Landlord with 180 days written notice. In consideration for early termination, upon written notice to terminate, Tenant shall pay to Landlord, the equivalent of one months then current base rental as a termination penalty. Upon written notice of termination Tenant shall also pay unamortized tenant finish costs to Landlord in the amount of Forty Seven Thousand Six Hundred Nineteen and 01/100 U.S. Dollars ($47,619.01).
41. EXPANSION OPTIONS: Landlord hereby grants to Tenant a right of First Offer on the remaining 19,200 SF in the building when that space becomes available for lease. Landlord also hereby grants to Tenant a right of First Offer on the building located at 2600 Trade Center Avenue, City of Longmont (the "Adjacent Building") containing approximately 28,800 square feet of floor space, a more detailed description of which is Lot 1, St. Vrain Centre, Parcel F, Minor Subdivision "B", County of Boulder, State of Colorado, when such Adjacent Building becomes available for lease.
In addition, Landlord hereby grants to Tenant an option (the "Nano Space Option") for Tenant to lease the remaining 19,200 SF of space occupied by Nano under the Nano Lease (as such Lease is amended from time to time) under the same terms and conditions as provided in this Lease. Tenant may exercise the Nano Space Option by giving Landlord and Nano at least 180 days prior written notice at any time for occupancy as early as April 1, 2001 or July 1, 2001 or any time between October 1, 2001 and May 31, 2005. If Landlord terminates the Nano Lease as a result of Nano's breach, then Landlord shall give Tenant written notice of such termination and Tenant shall have a period of 30 days following receipt of such notice to exercise the Nano Space Option to. Tenant's lease of such space shall commence 60 days following Tenant's election to exercise; provided that Tenant shall have access to the premises during such 60 day period in order to make tenant improvements. If Tenant does not elect to exercise within such 30 day period following notice from Landlord, then the Nano Space Option shall terminate.
42. ADDITIONAL PROVISIONS.
(i) Increases related to management, administrative, and accounting fees shall be capped at four percent (4%) per year.
(ii) If for any reason Nano should vacate the 6600 SF of office area on the
south-west corner of the building, shown on the attached Exhibit "E",
before May 31, 2003 in violation of its lease with Landlord (the "Nano
Lease") and provided that the Landlord has marketed the entire 19,200
SF formerly occupied by Nano and subsequently leased at least 12,600 SF
of the space, Tenant will be obligated to lease the 6600 SF portion of
the premises through the remaining term, of the Nano Lease at the
rental rate equal to the lesser of (i) the rental rate hereunder or
(ii) the rental rate under the Nano Lease. In addition, Tenant shall
have an option to terminate its lease of the 6600 SF as provided in
Section 40 of this Lease (if Tenant elects to terminate this Lease) and
an option to extend the lease of such 6600 SF to run concurrent with
the term of this Lease. The Landlord will provide at its expense the
demising wall between the 12,600 SF space and the 6,600 SF space.
Tenant shall also be subrogated to Landlord's rights under the Nano Lease to seek from Nano damages resulting from Nano's breach of the Nano Lease.
(iii) Execution of this Lease is subject to the execution of an Addendum modifying the Lease dated November 26, 1997 by and between Pratt Land Limited Liability Company and Nano and subject to the execution of an agreement between Tenant and Nano governing certain issues in connection with the Premises. The parties agree to use commercially reasonably efforts to diligently and timely accomplish the foregoing.
(iv) Notwithstanding the execution of this Lease or any other terms hereof, Tenant may terminate this Lease if any of the following occur:
(a) Nano has failed to remove its equipment and vacate the Premises prior to April 1, 2000; or
(b) Tenant has not received an acceptable Phase I and Phase II environmental report prior to April 1, 2000 or, alternatively, Landlord has not satisfactorily remediated or removed Hazardous Materials from the Premises and caused it to comply with all applicable Environmental Requirements as of April 1, 2000 or Landlord is in the process of such remediation or removal but such unreasonably interferes with Tenant's use of the Premises for more than 30 days.
Tenant shall cooperate with any Hazardous Materials testing, removal or remediation conducted by Landlord or its agents; provided that, to the extent that any such activities make the Premises or any material portion thereof untenantable during the term of this Lease, Landlord shall grant Tenant a proportionate rental abatement during such time period. Tenant agrees that it shall not commence construction of any tenant improvements until after Phase II environmental testing has been completed in the East Lab; provided that such testing shall be completed no later than March 3, 2000.
Landlord grants Tenant the right to install and maintain the HVAC components described on Exhibits B and C and Tenant shall have the right of access to the space occupied by Nano under the Nano Lease for such purposes. Such right shall include the ability to run a makeup air duct across the high bay area that will continue to be occupied by Nano. Pursuant to Section 4.3, Landlord shall be responsible for maintenance and repair of all other HVAC components and systems. The parties will cooperate regarding the coordination of HVAC maintenance and repair.
Should the 19,200 portion of the building leased by Nano, subsequently be leased to another party, Tenant and the new party shall mutually agree upon an equitable method for splitting the cost of Utilities.
Landlord agrees to provide basic construction trade workers to Tenant, or Tenant designated contractor, at market rates, to complete Tenant Improvements in a reasonable and timely manner, scheduling permitting. Further, Landlord will provide, if requested by Tenant or Nano, the appropriate trade workers to construct and finish demising walls in premise prior to April 1, 2000.
IN WITNESS WHEREOF, the Parties have executed this lease as of the date hereof.
LANDLORD: PRATT LAND LIMITED LIABILITY
A Colorado limited liability company
By /s/ RICHARD D. GONZALES
---------------------------------
Richard D. Gonzales, Manager
TENANT: ARRAY BIOPHARMA, INC.
A Delaware corporation
By /s/ C. MICHAEL CARRUTHERS
---------------------------------
C. Michael Carruthers, CFO
STATE OF COLORADO )
) ss.
COUNTY OF BOULDER )
|
The foregoing instrument was acknowledged before me this ____ day of _________, 2000 by Richard D. Gonzales , Manager, Pratt Land Limited Liability Company. Witness my hand and official seal.
My commission expires:
STATE OF _________ )
) ss.
COUNTY OF ________ )
Witness my hand and official seal.
Notary Public
List of Exhibits
Exhibit A Schematic of lease premises located at 2620 Trade Centre Ave.
Exhibit B Tenant Improvements
Exhibit C Tenant Improvements further detailed and items Tenant may
remove at end of lease
Exhibit D Voice and Data cabling Specifications
|
Exhibit A
[Schematic of lease premises located at 2620 Trade Centre Ave.]
EXHIBIT B
[Tenant Improvements]
Exhibit C
[Tenant Improvements further detailed and items Tenant may remove at end of lease]
Exhibit D
[Voice and Data cabling Specifications]
EXHIBIT 10.11
REVISED EMPLOYMENT AGREEMENT
THIS REVISED EMPLOYMENT AGREEMENT (this "Agreement"), dated as of November 16, 1999, is between Array BioPharma Inc., a Delaware corporation (the "Company"), and Robert E. Conway ("Employee").
In consideration of the mutual covenants and agreements contained herein, the parties hereto agree as follows:
1. Employment. The Company hereby employs Employee and Employee hereby agrees to be employed by the Company for the period and upon the terms and conditions hereinafter set forth. Employee's employment shall begin on November 15, 1999.
2. Capacity and Duties. Employee shall initially be employed by the Company as Chief Executive Officer, or in such other executive capacity as the officers or directors of the Company shall determine. Employee shall also be appointed to the Company's Board of Directors, subject to re-election by the Company's shareholders. During his employment Employee shall perform the duties and bear the responsibilities commensurate with his position and shall serve the Company faithfully and to the best of his ability, under the direction of the board of directors and the duly elected officers of the Company. Employee shall devote his entire working time, attention and energies to the business of the Company. His actions shall at all times be such that they do not discredit the Company or its products and services. Employee shall not engage in any other business activity or activities that, in the judgment of the board of directors, may conflict with the proper performance of Employee's duties hereunder. In general, personal investments in which Employee owns less than 5% of the outstanding capital of a particular enterprise and that do not involve any significant services by Employee shall not be deemed to conflict with the proper performance of Employee's duties. The Company agrees that Employee's continued service as a Director of DEMCO, Inc. does not currently conflict with Employee's performance of his duties hereunder.
3. Compensation.
(a) For all services rendered by Employee the Company shall pay Employee during the term of this Agreement an annual salary as set forth herein, payable semimonthly in arrears. Employee's initial annual salary shall be $225,000. Employee shall receive a cash bonus of $60,000 on January 3, 2000. During the term of this Agreement, the amount of Employee's salary shall be reviewed at periodic intervals and, upon agreement of the parties hereto, appropriate adjustments in such salary may be made on an annual or more frequent basis, as determined by, and at the discretion of the Company.
(b) Upon inception of employment, Employee shall receive an award of options to purchase 373,333 shares of the Company's common stock (the "Initial Options"). The Initial Options shall be governed by the option certificate, and the Company's 1998 Stock Option Plan, as amended. The option certificate shall provide that the Initial Options shall become exercisable upon vesting, according to the following vesting schedule: 133,333 of the shares represented by the Initial Options shall vest on December 31, 1999; 55,000 of the remaining shares represented by the Initial Options shall vest on the one year anniversary of Employee's continuous employment with the Company; 5,000 of the remaining shares shall vest after each additional month of continuous full time employment thereafter through October 15, 2003; and the final 10,000 shares shall vest after one additional month of continuous
employment, on November 15, 2003. The exercise price of the Initial Options shall be $0.60 per share, which the Company believes is greater than or equal to the fair market value of the Company's common stock at the time of grant, November 15, 1999. In the event of termination of employment, any vested but unexercised Initial Options shall terminate, unless exercised by Employee in accordance with the time limits provided by the Stock Option Plan, and any unvested Initial Options shall also terminate unless such vesting is accelerated under this Agreement.
(c) Upon inception of employment, Employee shall receive an award of options to purchase 426,667 shares of the Company's common stock (the "Performance Options"), the vesting of which options shall be conditional upon Employee satisfying certain performance criteria to be established under a management bonus plan (the "Management Bonus Plan"), which Employee shall develop and recommend to the Board of Directors of the Company for each fiscal year, beginning in fiscal year 2000, and which shall apply to Employee and other members of the Company's senior management. The performance criteria under the Management Bonus Plan shall include such items as performance of the Company to its fiscal year plan and budget; new business and customer development by the Company; and operational efficiency of the Company. The Performance Options shall be governed by an option certificate, and the Company's 1998 Stock Option Plan, as amended. The option certificate shall provide that the Performance Options shall become exercisable upon vesting, according to the following schedule: the Performance Options shall vest in four increments of up to 106,667 shares each, conditioned on the achievement by Employee of the performance criteria in the Management Bonus Plan, not later than 60 days from receipt by the Board of Directors of the Company's audited financial statements for each of the next four fiscal years during the term of this Agreement. Based on Employee's performance under the Management Bonus Plan, some or all of the Performance Options for a particular year may not vest, in which event the unvested Performance Options for such year shall terminate. In the event of any acceleration of unvested options granted to Employee pursuant to this Agreement, any such terminated Performance Options shall remain cancelled and unexercisable. The exercise price of the Performance Options shall be $0.60 per share, which the Company believes is greater than or equal to the fair market value of the Company's common stock at the time of grant, November 15, 1999. In the event of termination of employment, any vested but unexercised Performance Options shall terminate, unless exercised by Employee in accordance with the time limits provided by the Stock Option Plan, and any unvested Performance Options shall also terminate unless such vesting is accelerated under this Agreement.
(d) Employee shall also be eligible for a cash performance bonus for each fiscal year beginning in fiscal year 2001, or portion thereof, that Employee is employed by the Company (the "Performance Bonus"). The Performance Bonus shall be based on Employee's base salary and the achievement of performance criteria to be established under the Management Bonus Plan. It shall be a condition to Employee's receipt of a Performance Bonus in any given year that Employee achieves certain minimum performance criteria to be established under the Management Bonus Plan. It is anticipated that the Performance Bonus for any particular year will range between 25% and 75% of Employee's base salary; provided that the minimum performance criteria are achieved. It is the intent of the parties that the performance criteria include the Company's achievement of a net profit for each fiscal year, and that the failure to achieve this criterion in any given year may require that the Performance Bonus for that year, if any, be paid in equity in lieu of cash. The Performance Bonus shall be payable to Employee upon achievement of the minimum performance criteria and not later than 60 days from receipt by the Board of Directors of the Company's audited financial statements for that fiscal year.
(e) In addition to salary payments as provided in Section
3(a), the Company shall provide Employee, during the term of this Agreement,
with the benefits of such medical insurance
plans, hospitalization plans and other employee fringe benefit plans as shall be generally provided to employees of the Company and for which Employee may be eligible under the terms and conditions thereof. Nothing herein contained shall require the Company to adopt or maintain any such employee benefit plans.
(e) During the term of this Agreement, except as otherwise provided in Section 5(b), Employee shall be entitled to sick leave and annual vacation consistent with the Company's customary sick leave and vacation policies.
(f) During the term of this Agreement the Company shall
reimburse Employee for all reasonable out-of-pocket expenses incurred by
Employee in connection with the business of the Company and in the performance
of his duties under this Agreement upon presentation to the Company of an
itemized accounting of such expenses with reasonable supporting data. The
Company shall reimburse Employee for his and his family's expenses in moving
from Cincinnati to Boulder, which expenses shall include but not be limited to:
real estate fees and commissions, moving costs for personal property, closing
costs, travel costs to and from Boulder for commuting and househunting, and
temporary housing, in an amount not to exceed $80,000.
4. Term. Unless sooner terminated in accordance with Section 5, the initial term of this Agreement shall be for two years from the date hereof, and thereafter shall continue for one year terms from year to year unless and until either party shall give notice to the other at least 60 days prior to the end of the initial or then current renewal term of his or its intention to terminate at the end of such term. The provisions of Sections 6, 7, 8 and 10 shall remain in full force and effect for the time periods specified in such Sections notwithstanding the termination of this Agreement.
5. Termination/Severance.
(a) If Employee dies during the term of this Agreement, i) the Company shall pay his estate the compensation that would otherwise be payable to him for the month in which his death occurs; ii) this Agreement shall be considered terminated on the last day of such month; and iii) the Company shall cause any issued but unvested Initial Options granted to Employee to immediately vest.
(b) If during the term of this Agreement Employee is prevented from performing his duties by reason of illness or incapacity for a continuous period of 120 days the Company may terminate this Agreement upon 30 days' prior notice thereof to Employee or his duly appointed legal representative. For the purposes of this Section 5(b), a period of illness or incapacity shall be deemed "continuous" notwithstanding Employee's performance of his duties during such period for continuous periods of less than 15 days in duration.
(c) The Company may terminate this Agreement at any time, upon 10 days' prior notice, for Employee's intentional misconduct (including willful failure to perform his duties, fraud, criminal misconduct) or for gross negligence in the performance of his duties, or for a material breach of any obligation created by this Agreement (including the non-compete and confidentiality agreements incorporated by reference in Sections 6 and 7 below.
(d) The Company or Employee may terminate this Agreement at any time for any or no reason upon at least 30 days' notice to the other. In the event that Employee is removed from his position as Chief Executive Officer of the Company, Employee may elect to treat such event, by notice of termination within 30 days of its occurrence, as a termination by the Company pursuant to 5(d).
(e) If this Agreement is terminated by the Company pursuant to 5(b) or 5(d), then i) the Company shall pay as severance to Employee one years' current base salary, in equal monthly installments, subject to all applicable deductions and withholdings; and ii) the Company shall, within 60 days from receipt of the audited financial statements for that fiscal year, pay to Employee any Performance Bonus and cause to vest any Performance Options for which Employee would be eligible for that year, pro-rated based on the date of Employee's termination. Any severance payment obligation pursuant to termination under 5(b) shall be offset by any disability insurance payments to Employee under any Company-provided insurance plan. As a condition to receiving any severance payments under this paragraph, Employee shall execute a release reasonably acceptable to the Company, and shall comply with his obligations under the confidentiality and non-compete agreements with the Company incorporated by reference in Sections 6 and 7 of this Agreement.
(f) In the event of a consolidation or merger involving the Company in which the Company is not the surviving entity or any transaction in which more than 50% of the Company's voting power is transferred or more than 50% of the Company's assets are sold, or an initial public offering of the Company's stock, the vesting of 75% of the Initial and Performance Options granted hereunder to Employee shall be accelerated to occur immediately upon such event, and any remaining unvested Initial and Performance Options granted hereunder shall vest simultaneously one year from such event.
(g) If Employee gives notice of termination pursuant to 5(d), the Company may, at its option, terminate Employee immediately upon payment to Employee of 30 days salary or salary for the remainder of the notice period, whichever is less, subject to all applicable deductions and withholdings. A termination initiated by Employee pursuant to 5(d) shall cause no acceleration of vesting of Initial or Performance Options, shall cause Employee to forfeit his eligibility for a Performance Bonus or further vesting of Performance Options for that year, and shall create no severance obligation under 5(e).
6. Confidential Information. This Agreement incorporates by reference all the terms of that certain Confidential Information Agreement between Employee and the Company, as if fully set forth herein.
7. Covenants Not to Compete or Interfere. This Agreement incorporates all the terms of that certain Noncompete Agreement between Employee and the Company, as if fully set forth herein.
8. Waiver of Breach. A waiver by the Company of a breach of any provision of this Agreement by Employee shall not operate or be construed as a waiver of any subsequent breach by Employee.
9. Severability. It is the desire and intent of the parties that the provisions of this Agreement shall be enforced to the fullest extent permissible under the laws and public policies applied in each jurisdiction in which enforcement is sought. Accordingly, if any particular provision or portion of this Agreement shall be adjudicated to be invalid or unenforceable, this Agreement shall be deemed amended to delete therefrom the portion thus adjudicated to be invalid or unenforceable, such deletion to apply only with respect to the operation of this Section in the particular jurisdiction in which such adjudication is made.
10. Notices. All communications, requests, consents and other notices provided for in this Agreement shall be in writing and shall be deemed given if mailed by first class mail, postage prepaid, addressed as follows: i) If to the Company: to its principal office at 1885 33rd Street, Building AC-1, Boulder, Colorado 80301-2505; ii) If to Employee: to 1885 33rd Street, Building AC-1, Boulder, Colorado 80301-2505; or such other address as either party may hereafter designate by notice as herein provided. Notwithstanding the foregoing provisions of this Section 10, so long as Employee is employed by the Company any such communication, request, consent or other notice shall be deemed given if delivered as follows: if to the Company, by hand delivery to any executive officer of the Company other than Employee, and if to Employee, by hand delivery to him.
11. Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Colorado without regard to choice of law provisions thereof, and the parties each agree to exclusive jurisdiction in the state and federal courts in Colorado.
12. Assignment. The Company may assign its rights and obligations under this Agreement to any affiliate of the Company or to any acquirer of substantially all of the business of the Company, and all covenants and agreements hereunder shall inure to the benefit of and be enforceable by or against any such assignee. Neither this Agreement nor any rights or duties hereunder may be signed or delegated by Employee.
13. Entire Agreement. This Agreement sets forth the entire agreement and understanding of the parties and supersedes all prior understandings, agreements or representations by or between the parties, whether written or oral, which relate in any way to the subject matter hereof. Without limiting the foregoing, this Agreement shall supersede in its entirety that certain Employment Agreement between the Company and Employee dated effective as of November 16, 1999.
14. Amendments. No provision of this Agreement shall be altered, amended, revoked or waived except by an instrument in writing signed by the party sought to be charged with such amendment, revocation or waiver.
15. Binding Effect. Except as otherwise provided herein, this Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective legal representatives, heirs, successors and assigns.
***Signature Page Follows***
IN WITNESS WHEREOF the parties have executed this Agreement as of the date first above written.
THE COMPANY:
ARRAY BIOPHARMA INC.
By: /s/
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
|
EMPLOYEE:
/s/ ROBERT E. CONWAY ---------------------------------------- Robert E. Conway |
EXHIBIT 10.13
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THIS NOTE MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS NOTE UNDER SAID ACT AND APPLICABLE STATE SECURITIES LAWS OR AN APPLICABLE EXEMPTION TO SUCH REGISTRATION.
PROMISSORY NOTE
Principal: $100,000 May 18, 1998 Boulder, Colorado
FOR VALUE RECEIVED the undersigned, Kevin Koch, Ph.D., his successors or assigns ("Borrower"), promises to pay to the order of ARRAY BIOPHARMA INC. ("Lender") on the Due Date (as defined below), (i) $100,000 which equals the principal amount loaned to Borrower by Lender under this Note and (ii) interest on the unpaid principal outstanding, which shall accrue from the date of this Note until paid in full at the simple rate of six percent (6%) per annum. Interest shall accrue at the simple rate of twelve percent (12%) per annum, upon default under the Note, until paid in full.
DUE DATE. The "Due Date" as used in this Note shall be the earlier of
(i) three years from the date of this Note, or (ii) upon termination of
Borrower's employment with the Company.
PREPAYMENT. Principal, interest and any charges may be prepaid in whole or in part at any time without penalty or premium. Prepayments will be applied first to accrued interest, then to additional charges and then to principal.
SECURITY. Payment and performance of Borrower's obligations under this Note shall be secured by a pledge of Borrower's stock in Lender, as set forth in that certain Pledge Agreement between Borrower and Lender, of equal date herewith.
EVENTS OF DEFAULT. Borrower shall be in default under this Note upon
the happening of any of the following (each, an "Event of Default"): (a)
Borrower's failure to make any payment under this Note when due; (b) Borrower's
failure to perform or comply with any term, covenant, or condition of this Note;
(c) if the collateral or any part thereof securing Lender's security interest is
seized or levied upon under legal process, or is placed under any lien or
encumbrance; (d) if any representation, warranty or statement made by Borrower
herein proves untrue or incomplete in any material respect; (e) if Borrower
becomes insolvent or enters into negotiations with creditors with regard to a
composition or rescheduling of any material portion of his debt, makes an
assignment for the benefit of creditors, or applies for or consents to the
appointment of a trustee or receiver for Borrower or for any major part of its
property and such trustee or receiver is not discharged within 30 days after
such appointment; (f) if Bankruptcy, reorganization, arrangements, insolvency or
liquidation proceedings, or other proceedings for relief under any bankruptcy
law or similar law for the relief of debtors, are instituted by or against
Borrower, and
if instituted against Borrower, such proceedings are allowed against Borrower or
are consented to by Borrower and are not dismissed within 30 days after such
institution; provided, however, that for any event specified in clauses (a),
(b), or (c) above, an Event of Default shall not have occurred unless Borrower
has been given written notice of such default and fails to cure the default
within 30 days from the date a notice of default is given to Borrower.
Except as provided in the last clause of the immediately preceding paragraph, upon the occurrence of an Event of Default, then and in such event, Lender may declare this Note immediately due and payable.
USE OF PROCEEDS. Borrower acknowledges that all of the proceeds represented by this Note have been used to purchase Lender's Common Stock pledged to secure this Note.
WAIVER. The acceptance by Lender of any partial payment or any payment made hereunder after the time when any obligation under this Note becomes due and payable will not establish a custom, or waive any rights of Lender to enforce prompt and full payment hereof. Borrower and any endorser hereof waives presentment, demand and protest and notice of presentment, default, non-payment, maturity, release, compromise, settlement, extension or renewal of this Note.
ARBITRATION; COSTS OF COLLECTION. Any disputes arising under this Note shall be subject to final and binding arbitration under the commercial arbitration rules of the American Arbitration Association before a single independent arbitrator selected by the parties (or if the parties do not agree as to the selection of the arbitrator within ten days of the submission of the dispute to arbitration, by a commercial arbitrator selected by the AAA within ten days thereafter). Each party consents to submit to arbitration in Denver or Boulder, Colorado. The arbitrators award may, but is not required to be, submitted to a court of competent jurisdiction to be entered as a final judgment and enforced accordingly. The prevailing party shall be entitled to an award of all fees and costs, including attorneys' fees, reasonably incurred.
REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to
Lender that (i) Borrower is a resident of the state of Colorado, (ii) no
litigation, arbitration, government investigation or other action or proceeding
is pending, or to the knowledge of Borrower, threatened against Borrower; and
(iii) Borrower has no material debts, liabilities or other obligations that
subordinate Lender's security interest in, or otherwise lien or encumber the
secured collateral.
SET-OFF. Any deposits or other sums at any time credited or payable by or due from Lender to Borrower may be applied by Lender or Borrower to or set off by Lender or Borrower against Borrower's obligations hereunder. Any funds, cash, cash equivalents, securities, instruments, documents or other assets of Borrower in possession or control of Lender or its affiliates or bailees for any purpose may at any time be reduced to cash and applied by Lender to or set off by Lender against Borrower's obligations hereunder.
SEVERABILITY. If any provision of this Note or the application thereof or any party or circumstance is held invalid or unenforceable, the remainder of
this Note and the application of such provision to other parties or circumstances will not be affected thereby and the provision of this Note shall be severable in any such instance.
GOVERNING LAW. This Note is governed and controlled by the laws of Colorado (without regard to the choice to provisions thereof) as to interpretation, enforcement, validity, construction, effect and in other respects.
MODIFICATIONS. This Note may not be changed orally, but only by an agreement in writing, signed by the party against whom enforcement of any waiver, change, modification or discharge is sought.
/s/ KEVIN KOCH --------------------------------- Kevin Koch, Ph.D. |
PLEDGE AGREEMENT
PLEDGE AGREEMENT dated as of May 18, 1998, between Kevin Koch, Ph.D., ("Pledgee"), and ARRAY BIOPHARMA INC., a Delaware corporation (the "Company ").
RECITALS
A. Pledgee has executed a Promissory Note dated as of March 18, 1998 payable to the Company in the principal amount of $100,000 (the "Note").
B. Pledgee is willing to secure the due and punctual payment of the principal and interest of the Note in accordance with the terms thereof and all other amounts payable in respect thereof, including without limitation any costs and expenses incurred in connection with the realization of the security for which this Agreement provides and any costs and expenses of any proceedings to which this Agreement may give rise (all such payments, obligations, costs and expenses, collectively, the "Obligations").
AGREEMENT
In consideration of the mutual promises set forth herein and subject to the terms and conditions hereof, the parties hereto agree as follows:
ARTICLE I
PLEDGE
As collateral security for payment in full of the Obligations, Pledgee hereby pledges, hypothecates, assigns, transfers, sets over and delivers unto the Company and grants to the Company a security interest in 518,723 shares of common stock, par value $0.001 per share, of the Company, together with a separate assignment executed in blank (the "Pledged Shares").
ARTICLE II
PLEDGED SHARES
2.01 RIGHTS OF PLEDGEE IN PLEDGED SHARES. So long as there shall not have occurred and be continuing an Event of Default hereunder, Pledgee may exercise any and all rights and powers relating or pertaining to the Pledged Shares for any purpose not inconsistent with the terms of this Agreement, including without limitation the right to vote the Pledged Shares, whether at a meeting of shareholders or by consent in lieu of a meeting, and the right to receive and retain any and all cash distributions, if any, paid by the Company with respect to the Pledged Shares.
2.02 TRANSFER OF PLEDGED SHARES. The Company shall not assign, transfer or deliver any of the Pledged Shares to any person unless and until an Event of Default hereunder
shall have occurred and be continuing. Upon the occurrence and during the continuance of an Event of Default hereunder, the Company may assign, transfer or deliver any of the Pledged Shares to any transferee of any interest in the Note and thereafter shall be fully discharged from all responsibility with respect to such Pledged Shares, but the Company shall retain all rights and powers hereunder with respect to any of the Pledged Shares remaining.
ARTICLE III
DEFAULT
3.01 EVENTS OF DEFAULT. Events of Default shall be as defined in the Note.
3.02 REMEDIES. (a) If an Event of Default shall have occurred and be continuing, the Company may acquire the Pledged Shares or may arrange for their sale to another party.
(b) The proceeds of the sale of all or any part of the Pledged Shares shall be applied first to expenses of sale, including attorney's fees, and then toward the satisfaction of all amounts owing on the Note and the other Obligations and any remaining surplus shall be paid to Pledgee.
(c) No failure on the part of the Company to exercise, and no delay in exercising any right, power or remedy hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any such right, power or remedy by the Company preclude any other or further exercise thereof or the exercise of any other right, power or remedy. All remedies hereunder are cumulative and not exclusive of any other remedies provided by law.
ARTICLE IV
TERMINATION
This Agreement shall terminate, and the Company shall return to Pledgee such of the Pledged Shares as shall not have been exchanged, released, transferred, sold, conveyed or otherwise disposed of in accordance with this Agreement, upon satisfaction in full of the Obligations.
ARTICLE V
MISCELLANEOUS
5.01 THE COMPANY APPOINTED ATTORNEY-IN-FACT. Pledgee hereby constitutes and appoints the Company, with unlimited powers of substitution, the attorney-in-fact of Pledgee for the purpose of carrying out the provisions of this Agreement and taking any action and executing any instrument which the Company or such person authorized by the Company may deem necessary or advisable to accomplish the purpose hereof, which appointment is irrevocable and coupled with an interest.
5.02 GOVERNING LAW. This Agreement shall be construed in accordance with and governed by the laws of the State of Colorado.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.
PLEDGEE:
/s/ KEVIN KOCH
----------------------------------------------
Name: Kevin Koch, Ph.D.
----------------------------------------
|
COMPANY:
ARRAY BIOPHARMA INC.,
a Delaware corporation
By: /s/ ANTHONY D. PISCOPIO
-------------------------------------------
Its:
------------------------------------------
|
IRREVOCABLE STOCK POWER
KNOW ALL MEN BY THESE PRESENTS:
That Kevin Kock, Ph.D., the undersigned, FOR VALUE RECEIVED, hereby bargained, sold, assigned and transferred and by these presents hereby bargains, sells, assigns and transfers unto Array BioPharma Inc., 518,723 shares of the Common Stock of Array BioPharma Inc. standing in the name of the undersigned on the books of the said Array BioPharma Inc. represented by Certificate No. ___ AND the undersigned hereby constitutes and appoints Array BioPharma Inc. as attorney-in-fact, IRREVOCABLY, to sell, assign, transfer, hypothecate, pledge and make over all or any part of the said stock and for that purpose to make and execute all necessary acts of assignment and transfer thereof, and to substitute one or more persons with like full power, hereby ratifying and confirming all that said attorney-in-fact or a substitute or substitutes shall lawfully do by virtue hereof.
WITNESSED this 18th day of May, 1998, at
/s/ KEVIN KOCH
----------------------------------.
STATE OF COLORADO )
) ss.
COUNTY OF BOULDER )
|
The foregoing instrument was signed and acknowledged before me this 18th day of May, 1998, by Kevin Koch.
Witness by hand and official seal
My commission expires 7-17-2000
/s/ ------------------------------------- Notary |
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE RESTRICTIVE
LEGENDS ON THE REVERSE SIDE HEREOF.
INCORPORATED UNDER THE LAWS OF THE STATE OF
DELAWARE
NUMBER SHARES
C-5 648,404
|
ARRAY BIOPHARMA INC.
COMMON STOCK
SHARES ARE WITH $.001 PAR VALUE
NON-ASSESSABLE
of transferable only on the books of the Corporation by the holder hereof in person or by Attorney upon surrender of this Certificate properly endorsed.
IN WITNESS WHEREOF, the paid Corporation has caused this Certificate so to be signed by its duly authorized officers and its Corporate Seal so be hereunto affixed this 18th day of May A.D. 1998
/s/ [Illegible} /s/ KEVIN KOCH
------------------------------------ -------------------------------
SECRETARY PRESIDENT
|
AMENDMENT TO PROMISSORY NOTE
AND PLEDGE AGREEMENT
THIS AMENDMENT TO PROMISSORY NOTE AND PLEDGE AGREEMENT (this "Amendment") is entered into as of September 1, 2000 by and among Array BioPharma Inc., a Delaware corporation (the "Company") and Kevin Koch (the "Employee").
RECITALS
A. The Employee issued the Company a certain promissory noted dated May 18, 1998 with an initial principal balance of $100,000 (the "Promissory Note").
B. The Company and Employee entered into that certain pledge agreement dated May 18, 1998 (the "Pledge Agreement").
C. The Company and Employee desire to amend the Promissory Note and Pledge Agreement as set forth in this Amendment.
AGREEMENT
In consideration of the mutual promises set forth herein and other good and valuable consideration the receipt and adequacy of which are hereby acknowledged, the parties agree as follows:
1. The second paragraph of the Promissory Note titled "Due Date" shall be deleted in its entirety and replaced with the following language:
DUE DATE. The "Due Date" as used in this Note shall be the earlier of (i) September 1, 2002, or (ii) upon a voluntary termination of Borrower's employment and consultancy with the Lender.
2. Article I of the Pledge Agreement titled "Pledge" shall be deleted in its entirety and replaced with the following language:
As collateral security for payment in full of the Obligations, Pledgee hereby pledges, hypothecates, assigns, transfers, sets over and delivers unto the Company and grants to the Company a security interest in 50,000 shares of common stock, par value $0.001 per share, of the Company (the "Pledged Shares"), together with a separate assignment executed in blank, attached hereto as Exhibit A.
3. Except for the provisions of the Promissory Note and Pledge Agreement that are expressly amended by this Amendment, the Promissory Note and Pledge Agreement are hereby ratified in their entirety.
IN WITNESS WHEREOF, the undersigned have executed this Amendment to Promissory Note and Pledge Agreement as of the date first set forth above.
ARRAY BIOPHARMA INC. /s/ KEVIN KOCH
--------------------------------
KEVIN KOCH, Ph.D.
By: /s/ ROBERT E. CONWAY
------------------------------------
Robert E. Conway, Chief Executive
Officer
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EXHIBIT 10.14
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THIS NOTE MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS NOTE UNDER SAID ACT AND APPLICABLE STATE SECURITIES LAWS OR AN APPLICABLE EXEMPTION TO SUCH REGISTRATION.
PROMISSORY NOTE
Principal: $125,000 May 18, 1998 Boulder, Colorado
FOR VALUE RECEIVED the undersigned, K.C. Nicolaou, Ph.D., his successors or assigns ("Borrower"), promises to pay to the order of ARRAY BIOPHARMA INC. ("Lender") on the Due Date (as defined below), (i) $125,000 which equals the principal amount loaned to Borrower by Lender under this Note and (ii) interest on the unpaid principal outstanding, which shall accrue from the date of this Note until paid in full at the simple rate of six percent (6%) per annum. Interest shall accrue at the simple rate of twelve percent (12%) per annum, upon default under the Note, until paid in full.
DUE DATE. The "Due Date" as used in this Note shall be the earlier of
(i) four years from the date of this Note, or (ii) upon voluntary termination
of Borrower's employment and consultancy with the Company.
PREPAYMENT. Principal, interest and any charges may be prepaid in whole or in part at any time without penalty or premium. Prepayments will be applied first to accrued interest, then to additional charges and then to principal.
SECURITY. Payment and performance of Borrower's obligations under this Note shall be secured by a pledge of Borrower's stock in Lender, as set forth in that certain Pledge Agreement between Borrower and Lender, of equal date herewith.
EVENTS OF DEFAULT. Borrower shall be in default under this Note upon the happening of any of the following (each, an "Event of Default"): (a) Borrower's failure to make any payment under this Note when due; (b) Borrower's failure to perform or comply with any term, covenant, or condition of this Note; (c) if the collateral or any part thereof securing Lender's security interest is seized or levied upon under legal process, or is placed under any lien or encumbrance; (d) if any representation, warranty or statement made by Borrower herein proves untrue or incomplete in any material respect; (e) if Borrower becomes insolvent or enters into negotiations with creditors with regard to a composition or rescheduling of any material portion of his debt, makes an assignment for the benefit of creditors, or applies for or consents to the appointment of a trustee or receiver for Borrower or for any major part of its property and such trustee or receiver is not discharged within 30 days after such appointment; (f) if Bankruptcy, reorganization, arrangements, insolvency or liquidation proceedings, or other proceedings for relief under any bankruptcy law or similar law for the relief of debtors, are instituted by or against Borrower, and if instituted against Borrower, such proceedings are allowed against Borrower or are consented to
by Borrower and are not dismissed within 30 days after such institution; provided, however, that for any event specified in clauses (a), (b), or (c) above, an Event of Default shall not have occurred unless Borrower has been given written notice of such default and fails to cure the default within 30 days from the date a notice of default is given to Borrower.
Except as provided in the last clause of the immediately preceding paragraph, upon the occurrence of an Event of Default, then and in such event, Lender may declare this Note immediately due and payable.
USE OF PROCEEDS. Borrower acknowledges that all of the proceeds represented by this Note have been used to purchase Lender's Common Stock pledged to secure this Note.
WAIVER. The acceptance by Lender of any partial payment or any payment made hereunder after the time when any obligation under this Note becomes due and payable will not establish a custom, or waive any rights of Lender to enforce prompt and full payment hereof. Borrower and any endorser hereof waives presentment, demand and protest and notice of presentment, default, non-payment, maturity, release, compromise, settlement, extension or renewal of this Note.
ARBITRATION; COSTS OF COLLECTION. Any disputes arising under this Note shall be subject to final and binding arbitration under the commercial arbitration rules of the American Arbitration Association before a single independent arbitrator selected by the parties (or if the parties do not agree as to the selection of the arbitrator within ten days of the submission of the dispute to arbitration, by a commercial arbitrator selected by the AAA within ten days thereafter). Each party consents to submit to arbitration in Denver or Boulder, Colorado. The arbitrators award may, but is not required to be, submitted to a court of competent jurisdiction to be entered as a final judgment and enforced accordingly. The prevailing party shall be entitled to an award of all fees and costs, including attorneys' fees, reasonably incurred.
REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to
Lender that (i) Borrower is a resident of the state of Colorado, (ii) no
litigation, arbitration, government investigation or other action or proceeding
is pending, or to the knowledge of Borrower, threatened against Borrower; and
(iii) Borrower has no material debts, liabilities or other obligations that
subordinate Lender's security interest in, or otherwise lien or encumber the
secured collateral.
SET-OFF. Any deposits or other sums at any time credited or payable by or due from Lender to Borrower may be applied by Lender or Borrower to or set off by Lender or Borrower against Borrower's obligations hereunder. Any funds, cash, cash equivalents, securities, instruments, documents or other assets of Borrower in possession or control of Lender or its affiliates or bailees for any purpose may at any time be reduced to cash and applied by Lender to or set off by Lender against Borrower's obligations hereunder.
SEVERABILITY. If any provision of this Note or the application thereof or any party or circumstance is held invalid or unenforceable, the remainder of this Note and the application of
such provision to other parties or circumstances will not be affected thereby and the provision of this Note shall be severable in any such instance.
GOVERNING LAW. This Note is governed and controlled by the laws of Colorado (without regard to the choice to provisions thereof) as to interpretation, enforcement, validity, construction, effect and in other respects.
MODIFICATIONS. This Note may not be changed orally, but only by an agreement in writing, signed by the party against whom enforcement of any waiver, change, modification or discharge is sought.
/s/ K.C. NICOLAOU ---------------------------- K.C. Nicolaou, Ph.D. |
PLEDGE AGREEMENT
PLEDGE AGREEMENT dated as of May 18, 1998, between K.C. Nicolaou, Ph.D., ("Pledgee"), and ARRAY BIOPHARMA INC., a Delaware corporation (the "Company ").
RECITALS
A. Pledgee has executed a Promissory Note dated as of March 18, 1998 payable to the Company in the principal amount of $125,000 (the "Note").
B. Pledgee is willing to secure the due and punctual payment of the principal and interest of the Note in accordance with the terms thereof and all other amounts payable in respect thereof, including without limitation any costs and expenses incurred in connection with the realization of the security for which this Agreement provides and any costs and expenses of any proceedings to which this Agreement may give rise (all such payments, obligations, costs and expenses, collectively, the "Obligations").
AGREEMENT
In consideration of the mutual promises set forth herein and subject to the terms and conditions hereof, the parties hereto agree as follows:
ARTICLE I
PLEDGE
As collateral security for payment in full of the Obligations, Pledgee hereby pledges, hypothecates, assigns, transfers, sets over and delivers unto the Company and grants to the Company a security interest in 648,404 shares of common stock, par value $0.001 per share, of the Company (the "Pledged Shares"), together with a separate assignment executed in blank, attached hereto as Exhibit A.
ARTICLE II
PLEDGED SHARES
2.01 RIGHTS OF PLEDGEE IN PLEDGED SHARES. So long as there shall not have occurred and be continuing an Event of Default hereunder, Pledgee may exercise any and all rights and powers relating or pertaining to the Pledged Shares for any purpose not inconsistent with the terms of this Agreement, including without limitation the right to vote the Pledged Shares, whether at a meeting of shareholders or by consent in lieu of a meeting, and the right to receive and retain any and all cash distributions, if any, paid by the Company with respect to the Pledged Shares.
2.02 TRANSFER OF PLEDGED SHARES. The Company shall not assign, transfer or deliver any of the Pledged Shares to any person unless and until an Event of Default hereunder
shall have occurred and be continuing. Upon the occurrence and during the continuance of an Event of Default hereunder, the Company may assign, transfer or deliver any of the Pledged Shares to any transferee of any interest in the Note and thereafter shall be fully discharged from all responsibility with respect to such Pledged Shares, but the Company shall retain all rights and powers hereunder with respect to any of the Pledged Shares remaining.
ARTICLE III
DEFAULT
3.01 EVENTS OF DEFAULT. Events of Default shall be as defined in the Note.
3.02 REMEDIES. (a) If an Event of Default shall have occurred and be continuing, the Company may acquire the Pledged Shares or may arrange for their sale to another party.
(b) The proceeds of the sale of all or any part of the Pledged Shares shall be applied first to expenses of sale, including attorney's fees, and then toward the satisfaction of all amounts owing on the Note and the other Obligations and any remaining surplus shall be paid to Pledgee.
(c) No failure on the part of the Company to exercise, and no delay in exercising any right, power or remedy hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any such right, power or remedy by the Company preclude any other or further exercise thereof or the exercise of any other right, power or remedy. All remedies hereunder are cumulative and not exclusive of any other remedies provided by law.
ARTICLE IV
TERMINATION
This Agreement shall terminate, and the Company shall return to Pledgee such of the Pledged Shares as shall not have been exchanged, released, transferred, sold, conveyed or otherwise disposed of in accordance with this Agreement, upon satisfaction in full of the Obligations.
ARTICLE V
MISCELLANEOUS
5.01 THE COMPANY APPOINTED ATTORNEY-IN-FACT. Pledgee hereby constitutes and appoints the Company, with unlimited powers of substitution, the attorney-in-fact of Pledgee for the purpose of carrying out the provisions of this Agreement and taking any action and executing any instrument which the Company or such person authorized by the Company may deem necessary or advisable to accomplish the purpose hereof, which appointment is irrevocable and coupled with an interest.
5.02 GOVERNING LAW. This Agreement shall be construed in accordance with and governed by the laws of the State of Colorado.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.
PLEDGEE:
/s/ K.C. NICOLAOU -------------------------- K.C. Nicolaou, Ph.D. |
COMPANY:
ARRAY BIOPHARMA INC.,
a Delaware corporation
By: /s/ KEVIN KOCH
-----------------------
Its:
----------------------
|
IRREVOCABLE STOCK POWER
KNOW ALL MEN BY THESE PRESENTS:
That K.C. Nicolaou, Ph.D., the undersigned, FOR VALUE RECEIVED,hereby bargained, sold, assigned and transferred and by these presents hereby bargains, sells, assigns and transfers unto Array BioPharma Inc., 648,404 shares of the Common Stock of Array BioPharma Inc. standing in the name of the undersigned on the books of the said Array BioPharma Inc. represented by Certificate No.____ AND the undersigned hereby constitutes and appoints Array BioPharma Inc. as attorney-in-fact, IRREVOCABLY, to sell, assign, transfer, hypothecate, pledge and make over all or any part of the said stock and for that purpose to make and execute all necessary acts of assignment and transfer thereof, and to substitute one or more persons with like full power, hereby ratifying and confirming all that said attorney-in-fact or a substitute or substitutes shall lawfully do by virtue hereof.
/s/ K.C. NICOLAOU ----------------------------- K.C. Nicolaou, Ph.D. |
STATE OF
--------------- )
COUNTY OF )SS.
- ------------- )
The foregoing instrument was signed and acknowledged before me this ___ day of ________, 1998, by K.C. Nicolaou, Ph.D.
Witness by hand and official seal
My commission expires ______________.
Notary
CALIFORNIA ALL-PURPOSE ACKNOWLEDGEMENT
On June 25, 1998 before me, Lina G. Quinsaat, Notary Public,
------------- ---------------------------------
DATE NAME, TITLE OF OFFICER o E.G.,
"JANE DOE, NOTARY PUBLIC"
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[X] personally known to me - OR - [ ] proved to me on the basis of satisfactory evidence to be the person whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his authorized capacity, and that by his signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
/s/ LINA G. QUINSAAT
-----------------------------------------
SIGNATURE OF NOTARY
[STAMP]
|
LINA G. QUINSAAT
COMM.#1031036
Notary Public - California
SAN DIEGO COUNTY
My Comm. Expires JUL 25, 1998
================================== OPTIONAL ===================================
Though the data below is not required by law, it may prove valuable to persons relying on the document and could prevent fraudulent reattachment of this form.
CAPACITY CLAIMED BY SIGNER DESCRIPTION OF ATTACHED DOCUMENT
ARRAY BIOPHARMA INC.
[X] INDIVIDUAL
[ ] CORPORATE OFFICER IRREVOCABLE STOCK POWER
--------------------------------------
-------------------------- TITLE OR TYPE OF DOCUMENT
TITLE(S)
[ ] PARTNER(S) [ ] LIMITED ONE
[ ] GENERAL --------------------------------------
[ ] ATTORNEY-IN-FACT NUMBER OF PAGES
[ ] TRUSTEE(S)
[ ] GUARDIAN/CONSERVATOR NONE
[ ] OTHER: --------------------------------------
-------------------- DATE OF DOCUMENT
--------------------------
-------------------------- NONE
--------------------------------------
SIGNER IS REPRESENTING: SIGNER(S) OTHER THAN NAMED ABOVE
NAME OF PERSON(S) OR ENTITY(IES)
-------------------------------
-------------------------------
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[CERTIFICATE]
The shares represented by this certificate are subject to the restrictive legends on the reverse side hereof.
DELAWARE
-------- ---------
NUMBER SHARES
C-6 648,404
-------- ---------
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Common Stock
THIS CERTIFIES THAT K.C. NICOLAOU, PH.D. is the owner of Six Hundred
Forty-Eight Thousand Four Hundred Four Shares of the Capital Stock of ARRAY
BIOPHARMA INC. COMMON STOCK
FULLY PAID AND NON-ASSESSABLE
transferrable only on the books of the Corporation by the holder hereof in person or by Attorney upon surrender of this Certificate properly endorsed.
IN WITNESS WHEREOF, the said Corporation has caused this Certificate to be signed by its duly authorized officers and its Corporate Seal to be hereunder affixed this 18th day of May AD. 1998
/s/ /s/ KEVIN KOCH
---------------------------------- --------------------------------------
SECRETARY PRESIDENT
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EXHIBIT 10.15
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THIS NOTE MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS NOTE UNDER SAID ACT AND APPLICABLE STATE SECURITIES LAWS OR AN APPLICABLE EXEMPTION TO SUCH REGISTRATION.
PROMISSORY NOTE
Principal: $125,000 May 18, 1998 Boulder, Colorado
FOR VALUE RECEIVED the undersigned, Anthony D. Piscopio, Ph.D., his
successors or assigns ("Borrower"), promises to pay to the order of ARRAY
BIOPHARMA INC. ("Lender") on the Due Date (as defined below), (i) $125,000 which
equals the principal amount loaned to Borrower by Lender under this Note and
(ii) interest on the unpaid principal outstanding, which shall accrue from the
date of this Note until paid in full at the simple rate of six percent (6%) per
annum. Interest shall accrue at the simple rate of twelve percent (12%) per
annum, upon default under the Note, until paid in full.
DUE DATE. The "Due Date" as used in this Note shall be the earlier of
(i) four years from the date of this Note, or (ii) upon voluntary termination of
Borrower's employment and consultancy with the Company.
PREPAYMENT. Principal, interest and any charges may be prepaid in whole or in part at any time without penalty or premium. Prepayments will be applied first to accrued interest, then to additional charges and then to principal.
SECURITY. Payment and performance of Borrower's obligations under this Note shall be secured by a pledge of Borrower's stock in Lender, as set forth in that certain Pledge Agreement between Borrower and Lender, of equal date herewith.
EVENTS OF DEFAULT. Borrower shall be in default under this Note upon
the happening of any of the following (each, an "Event of Default"): (a)
Borrower's failure to make any payment under this Note when due; (b) Borrower's
failure to perform or comply with any term, covenant, or condition of this Note;
(c) if the collateral or any part thereof securing Lender's security interest is
seized or levied upon under legal process, or is placed under any lien or
encumbrance; (d) if any representation, warranty or statement made by Borrower
herein proves untrue or incomplete in any material respect; (e) if Borrower
becomes insolvent or enters into negotiations with creditors with regard to a
composition or rescheduling of any material portion of his debt, makes an
assignment for the benefit of creditors, or applies for or consents to the
appointment of a trustee or receiver for Borrower or for any major part of its
property and such trustee or receiver is not discharged within 30 days after
such appointment; (f) if Bankruptcy, reorganization, arrangements, insolvency or
liquidation proceedings, or other proceedings for relief under any bankruptcy
law or similar law for the relief of debtors, are instituted by or against
Borrower, and
if instituted against Borrower, such proceedings are allowed against Borrower or
are consented to by Borrower and are not dismissed within 30 days after such
institution; provided, however, that for any event specified in clauses (a),
(b), or (c) above, an Event of Default shall not have occurred unless Borrower
has been given written notice of such default and fails to cure the default
within 30 days from the date a notice of default is given to Borrower.
Except as provided in the last clause of the immediately preceding paragraph, upon the occurrence of an Event of Default, then and in such event, Lender may declare this Note immediately due and payable.
USE OF PROCEEDS. Borrower acknowledges that all of the proceeds represented by this Note have been used to purchase Lender's Common Stock pledged to secure this Note.
WAIVER. The acceptance by Lender of any partial payment or any payment made hereunder after the time when any obligation under this Note becomes due and payable will not establish a custom, or waive any rights of Lender to enforce prompt and full payment hereof. Borrower and any endorser hereof waives presentment, demand and protest and notice of presentment, default, non-payment, maturity, release, compromise, settlement, extension or renewal of this Note.
ARBITRATION; COSTS OF COLLECTION. Any disputes arising under this Note shall be subject to final and binding arbitration under the commercial arbitration rules of the American Arbitration Association before a single independent arbitrator selected by the parties (or if the parties do not agree as to the selection of the arbitrator within ten days of the submission of the dispute to arbitration, by a commercial arbitrator selected by the AAA within ten days thereafter). Each party consents to submit to arbitration in Denver or Boulder, Colorado. The arbitrators award may, but is not required to be, submitted to a court of competent jurisdiction to be entered as a final judgment and enforced accordingly. The prevailing party shall be entitled to an award of all fees and costs, including attorneys' fees, reasonably incurred.
REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to
Lender that (i) Borrower is a resident of the state of Colorado, (ii) no
litigation, arbitration, government investigation or other action or proceeding
is pending, or to the knowledge of Borrower, threatened against Borrower; and
(iii) Borrower has no material debts, liabilities or other obligations that
subordinate Lender's security interest in, or otherwise lien or encumber the
secured collateral.
SET-OFF. Any deposits or other sums at any time credited or payable by or due from Lender to Borrower may be applied by Lender or Borrower to or set off by Lender or Borrower against Borrower's obligations hereunder. Any funds, cash, cash equivalents, securities, instruments, documents or other assets of Borrower in possession or control of Lender or its affiliates or bailees for any purpose may at any time be reduced to cash and applied by Lender to or set off by Lender against Borrower's obligations hereunder.
SEVERABILITY. If any provision of this Note or the application thereof or any party or circumstance is held invalid or unenforceable, the remainder of this Note and the application of such provision to other parties or circumstances will not be affected thereby and the provision of this Note shall be severable in any such instance.
GOVERNING LAW. This Note is governed and controlled by the laws of Colorado (without regard to the choice to provisions thereof) as to interpretation, enforcement, validity, construction, effect and in other respects.
MODIFICATIONS. This Note may not be changed orally, but only by an agreement in writing, signed by the party against whom enforcement of any waiver, change, modification or discharge is sought.
/s/ ANTHONY D. PISCOPIO ------------------------------ Anthony D. Piscopio, Ph.D. |
PLEDGE AGREEMENT
PLEDGE AGREEMENT dated as of May 18, 1998, between Anthony D. Piscopio, Ph.D., ("Pledgee"), and ARRAY BIOPHARMA INC., a Delaware corporation (the "Company ").
RECITALS
A. Pledgee has executed a Promissory Note dated as of March 18, 1998 payable to the Company in the principal amount of $125,000 (the "Note").
B. Pledgee is willing to secure the due and punctual payment of the principal and interest of the Note in accordance with the terms thereof and all other amounts payable in respect thereof, including without limitation any costs and expenses incurred in connection with the realization of the security for which this Agreement provides and any costs and expenses of any proceedings to which this Agreement may give rise (all such payments, obligations, costs and expenses, collectively, the "Obligations").
AGREEMENT
In consideration of the mutual promises set forth herein and subject to the terms and conditions hereof, the parties hereto agree as follows:
ARTICLE I
PLEDGE
As collateral security for payment in full of the Obligations, Pledgee hereby pledges, hypothecates, assigns, transfers, sets over and delivers unto the Company and grants to the Company a security interest in 648,404 shares of common stock, par value $0.001 per share, of the Company (the "Pledged Shares"), together with a separate assignment executed in blank, attached hereto as Exhibit A.
ARTICLE II
PLEDGED SHARES
2.01 RIGHTS OF PLEDGEE IN PLEDGED SHARES. So long as there shall not have occurred and be continuing an Event of Default hereunder, Pledgee may exercise any and all rights and powers relating or pertaining to the Pledged Shares for any purpose not inconsistent with the terms of this Agreement, including without limitation the right to vote the Pledged Shares, whether at a meeting of shareholders or by consent in lieu of a meeting, and the right to receive and retain any and all cash distributions, if any, paid by the Company with respect to the Pledged Shares.
2.02 TRANSFER OF PLEDGED SHARES. The Company shall not assign, transfer or deliver any of the Pledged Shares to any person unless and until an Event of Default hereunder shall have occurred and be continuing. Upon the occurrence and during the continuance of an Event of Default hereunder, the Company may assign, transfer or deliver any of the Pledged Shares to any transferee of any interest in the Note and thereafter shall be fully discharged from all responsibility with respect to such Pledged Shares, but the Company shall retain all rights and powers hereunder with respect to any of the Pledged Shares remaining.
ARTICLE III
DEFAULT
3.01 EVENTS OF DEFAULT. Events of Default shall be as defined in the Note.
3.02 REMEDIES. (a) If an Event of Default shall have occurred and be continuing, the Company may acquire the Pledged Shares or may arrange for their sale to another party.
(b) The proceeds of the sale of all or any part of the Pledged Shares shall be applied first to expenses of sale, including attorney's fees, and then toward the satisfaction of all amounts owing on the Note and the other Obligations and any remaining surplus shall be paid to Pledgee.
(c) No failure on the part of the Company to exercise, and no delay in exercising any right, power or remedy hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any such right, power or remedy by the Company preclude any other or further exercise thereof or the exercise of any other right, power or remedy. All remedies hereunder are cumulative and not exclusive of any other remedies provided by law.
ARTICLE IV
TERMINATION
This Agreement shall terminate, and the Company shall return to Pledgee such of the Pledged Shares as shall not have been exchanged, released, transferred, sold, conveyed or otherwise disposed of in accordance with this Agreement, upon satisfaction in full of the Obligations.
ARTICLE V
MISCELLANEOUS
5.01 THE COMPANY APPOINTED ATTORNEY-IN-FACT. Pledgee hereby constitutes and appoints the Company, with unlimited powers of substitution, the attorney-in-fact of Pledgee for the purpose of carrying out the provisions of this Agreement and taking any action and executing any instrument which the Company or such person authorized by the Company may
deem necessary or advisable to accomplish the purpose hereof, which appointment is irrevocable and coupled with an interest.
5.02 GOVERNING LAW. This Agreement shall be construed in accordance with and governed by the laws of the State of Colorado.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.
PLEDGEE:
/s/ ANTHONY D. PISCOPIO ---------------------------------- Anthony D. Piscopio, Ph.D. |
COMPANY:
ARRAY BIOPHARMA INC.,
a Delaware corporation
By: /s/ DAVID SNITMAN
-------------------------------
Its: COO
------------------------------
|
IRREVOCABLE STOCK POWER
KNOW ALL MEN BY THESE PRESENTS:
That Anthony D. Piscopio, Ph.D., the undersigned, FOR VALUE RECEIVED, hereby bargained, sold, assigned and transferred and by these presents hereby bargains, sells, assigns and transfers unto Array BioPharma Inc., 648,404 shares of the Common Stock of Array BioPharma Inc. standing in the name of the undersigned on the books of the said Array BioPharma Inc. represented by Certificate No. ____ AND the undersigned hereby constitutes and appoints Array BioPharma Inc. as attorney-in-fact, IRREVOCABLY, to sell, assign, transfer, hypothecate, pledge and make over all or any part of the said stock and for that purpose to make and execute all necessary acts of assignment and transfer thereof, and to substitute one or more persons with like full power, hereby ratifying and confirming all that said attorney-in-fact or a substitute or substitutes shall lawfully do by virtue hereof.
WITNESSED this 18th day of May, 1998, at
/s/ ANTHONY D. PISCOPIO
--------------------------------------------------
STATE OF COLORADO )
) ss.
COUNTY OF BOULDER )
|
The foregoing instrument was signed and acknowledged before me this 18th day of May, 1998, by Anthony D. Piscopio.
Witness by hand and official seal
My commission expires 7-17-2000.
/s/ ------------------------------ Notary |
INCORPORATED UNDER THE LAWS OF THE STATE OF
DELAWARE
NUMBER SHARES
C-7 648,404
|
ARRAY BIOPHARMA INC.
COMMON STOCK
SHARES ARE WITH $.001 PAR VALUE
THIS CERTIFIES THAT ANTHONY D. PISCOPIO, Ph.D. is the owner of Six Hundred Forty-Eight Thousand Four Hundred Four Shares of the Capital Stock of ARRAY BIOPHARMA INC. Common Stock FULLY PAID AND NON-ASSESSABLE transferable only on the books of the Corporation by the holder hereof in person or by Attorney upon surrender of this Certificate properly endorsed.
IN WITNESS WHEREOF, the said Corporation has caused this Certificate to be signed by its duly authorized officers and its Corporate Seal to be hereunto affixed this 18th day of May A.D. 1998
/s/ ANTHONY D. PISCOPIO /s/ KEVIN KOCH
---------------------------------- --------------------------------------
SECRETARY PRESIDENT
|
AMENDMENT TO PROMISSORY NOTE
AND PLEDGE AGREEMENT
THIS AMENDMENT TO PROMISSORY NOTE AND PLEDGE AGREEMENT (this "Amendment") is entered into as of September 1, 2000 by and among Array BioPharma Inc., a Delaware corporation (the "Company") and Anthony D. Piscopio (the "Employee").
RECITALS
A. The Employee issued the Company a certain promissory noted dated May 18, 19998 with and initial principal balance of $125,000 (the "Promissory Note").
B. The Company and Employee entered into that certain pledge agreement dated May 18, 1998 (the "Pledge Agreement").
C. The Company and Employee desire to amend the Promissory Note and Pledge Agreement as set forth in this Amendment.
AGREEMENT
In consideration of the mutual promises set forth herein and other good and valuable consideration the receipt and adequacy of which are hereby acknowledged, the parties agree as follows:
1. The second paragraph of the Promissory Note titled "Due Date" shall be deleted in its entirety and replaced with the following language:
DUE DATE. The "Due Date" as used in this Note shall be the earlier of (i) September 1, 2002, or (ii) upon a voluntary termination of Borrower's employment and consultancy with the Lender.
2. Article I of the Pledge Agreement titled "Pledge" shall be deleted in its entirety and replaced with the following language:
As collateral security for payment in full of the Obligations, Pledgee hereby pledges, hypothecates, assigns, transfers, sets over and delivers unto the Company and grants to the Company a security interest in 50,000 shares of common stock, par value $0.001 per share, of the Company (the "Pledged Shares"), together with a separate assignment executed in blank, attached hereto as Exhibit A.
3. Except for the provisions of the Promissory Note and Pledge Agreement that are expressly amended by this Amendment, the Promissory Note and Pledge Agreement are hereby ratified in their entirety.
IN WITNESS WHEREOF, the undersigned have executed this Amendment to Promissory Note and Pledge Agreement as of the date first set forth above.
ARRAY BIOPHARMA INC. /s/ ANTHONY D. PISCOPIO
------------------------------
ANTHONY D. PISCOPIO, Ph.D.
By: /s/ ROBERT E. CONWAY
----------------------------------
Robert E. Conway, Chief Executive
Officer
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EXHIBIT 10.16
ARRAY BIOPHARMA INC.
AMENDED AND RESTATED
INVESTOR RIGHTS AGREEMENT
TABLE OF CONTENTS
PAGE
RECITALS.................................................................................1
SECTION 1. DEFINITIONS...................................................................1
SECTION 2. REGISTRATION RIGHTS...........................................................4
2.1 Request for Registration.............................................4
2.2 Piggyback Registration...............................................5
2.3 S-3 Registrations....................................................6
2.4 Expenses of Registration.............................................7
2.5 Obligations of the Company...........................................7
2.6 Furnish Information..................................................9
2.7 Underwriting Requirements...........................................10
2.8 Delay of Registration...............................................11
2.9 Indemnification.....................................................11
2.10 Reports Under Exchange Act..........................................14
2.11 Assignment of Registration Rights...................................14
2.12 "Market Stand-Off" Agreement........................................15
2.13 Covenants of the Company with Respect to Registered Securities......15
2.14 Termination of Registration Rights..................................16
SECTION 3. OTHER COVENANTS OF THE COMPANY...............................................16
3.1 Significant Transactions............................................16
3.2 Basic Financial Information and Reporting Obligations...............17
3.3 Inspection; Confidentiality.........................................17
3.4 Litigation..........................................................17
3.5 SEC Filings.........................................................18
3.6 Assignment of Rights................................................18
SECTION 4. MISCELLANEOUS ...............................................................18
4.1. Modifications and Waivers...........................................18
4.2. Rights and Obligations of Third Parties............................ 18
4.3 Notices.............................................................18
4.4 Entire Agreement....................................................19
4.5 Severability........................................................19
4.6 Headings............................................................19
4.7 Counterparts........................................................20
4.8 Governing Law.......................................................20
4.9 Delays or Omissions.................................................20
4.10 Arbitration.........................................................20
4.11 No Inconsistent Agreements..........................................21
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AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
This AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT is entered into as of the 16th day of November, 1999, by and among ARRAY BIOPHARMA INC., a Delaware corporation (the "Company"), and each of those persons and entities whose names are set forth on the signature page attached hereto as either "Investors" or "Common Stockholders."
RECITALS
A. The Company, Investors and Common Stockholders previously entered into that certain Investor Rights Agreement, dated as of May 18, 1998 (the "Investor Rights Agreement"), as amended August 7, 1998.
B. The Company, Investors and Common Stockholders have entered into that certain Series B Preferred Stock Purchase Agreement, dated of even date herewith (the "Purchase Agreement"), pursuant to which the Company will issue and sell, and certain of the Investors and Common Stockholders will purchase, certain shares of the Company's Series B Preferred Stock (the "Stock").
C. As a condition to the closing of the purchase of the Stock under the Purchase Agreement, the Company, Investors and Common Stockholderes desire to amend and restate the Investor Rights Agreement as provided herein.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing, the mutual covenants and agreements herein contained and other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the parties hereby agree as follows:
SECTION 1. DEFINITIONS
Certain capitalized terms used in this Agreement are defined in the heading and the recitals hereof. The following additional terms have the meanings specified for purposes of this Agreement:
(a) "As Converted Basis" shall mean, with reference to convertible securities of the Company, the number of shares of Common Stock into which such securities may be converted while giving effect to the exercise of comparable conversion rights held by others.
(b) "Common Holder" shall mean each Common Stockholder who
holds Registrable Securities and their Permitted Transferees in accordance with
Section 2.11 hereof.
(c) "Common Stock" shall mean (i) the common stock of the Company, $0.001 par value per share; (ii) any other capital stock of the Company into which such common stock is converted, exchanged, reclassified or reconstituted; (iii) any warrants or options exercisable for any of the foregoing; and (iv) any right to receive any of the foregoing other than upon conversion of any security convertible into any of the foregoing.
(d) "Control" means the possession, directly or indirectly, of the power to direct or cause direction of the management and policies of a Person, whether through ownership of voting securities, by contract or otherwise.
(e) "Exchange Act" shall mean the Securities Exchange Act of 1934, and the rules and regulations thereunder, as amended from time to time.
(f) "Excluded Registration" shall mean (i) a registration statement on Form S-8 (or successor form) relating to the sale of securities to employees, directors or consultants of the Company pursuant to a stock option, stock purchase or similar employee benefit plan; (ii) a registration statement relating to a business combination within the meaning of Rule 145 of the Act; and (iii) a registration statement covering an underwritten offering of convertible debt securities, unless the managing underwriters or agent expressly consents thereto.
(g) "Holder" shall mean each Investor who holds Registrable Securities and their Permitted Transferees in accordance with Section 2.11 hereof at such time as such Persons shall own Registrable Securities. For purposes of Sections 2.2 - 2.14 hereof (but specifically excluding Section 2.1 hereof), Silicon Valley Bank ("SVB") and Leasing Technologies International, Inc. ("LTI") shall be Holders and any shares of Common Stock held now or in the future by SVB or LTI shall be Common Stock for purposes of this Agreement.
(h) "Qualifying IPO" shall mean an initial public offering of Common Stock pursuant to an effective registration statement under the Securities Act at a price per share of at least $8.00 and resulting in at least $20 million of gross proceeds (before underwriting discounts and commissions).
(i) "Person" shall mean any natural person, incorporated entity, limited or general partnership, business trust, association, joint venture, limited liability company, agency (government or private), division, political sovereign, or subdivision or instrumentality, or any other entity of any kind, including those groups identified as "persons" in Sections 13(d)(3) and 14(d)(2) of the Exchange Act, and any successor, by merger or otherwise, of such entity.
(j) "Preferred Stock" shall mean any series of preferred stock of the Company including, without limitation, Series A Preferred Stock or Series B Preferred Stock.
(k) The terms "register", "registered" and "registration" refer to a registration effected by preparing and filing a registration statement or similar document pursuant to and in
compliance with the Securities Act, and the declaration or ordering of effectiveness by the SEC of such registration statement or document.
(l) "Registrable Securities" shall mean any of the following:
(i) all shares of Common Stock owned now or in the future by any Holder or
Common Holder; (ii) any shares of Common Stock issued or issuable upon
conversion of the Preferred Stock; (iii) any shares of Common Stock or other
securities 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 the shares
referenced in clause (ii) above; and (iv) any securities issued in exchange for
the Common Stock referenced in clause (iii) in any merger or reorganization of
the Company excluding in all cases, however, any Registrable Securities sold or
transferred by a person in a transaction in which rights are not assigned under
Section 2.11. Securities will cease to be Registrable Securities when (a) they
have been effectively registered under the Securities Act and disposed of in
accordance with the registration statement covering them; (b) they are
transferred pursuant to Rule 144 (or any similar provision then in effect) under
the Securities Act; or (c) they have been otherwise transferred and new
certificates for them not bearing a restrictive legend have been issued by the
Company and the Company shall not have "stop transfer" instructions against
them.
(m) "Required Consent" means the affirmative vote of the holders of at least sixty-six and two-thirds percent (66 2/3%) of the outstanding shares of the applicable class of Preferred Stock.
(n) "SEC" shall mean the Securities and Exchange Commission.
(o) "Securities Act" shall mean the Securities Act of 1933, and the rules and regulations thereunder, as amended from time to time.
(p) "Series A Preferred Stock" shall mean the Series A Preferred Stock, $.001 par value per share, of the Company, or any other capital stock of the Company into which such stock is reclassified or reconstituted, or any securities convertible into, or exchangeable or exercisable for, any of the foregoing, in each case, at any time outstanding.
(q) "Series B Preferred Stock" shall mean the Series B Preferred Stock, $.001 par value per share, of the Company, or any other capital stock of the Company into which such stock is reclassified or reconstituted, or any securities convertible into, or exchangeable or exercisable for, any of the foregoing, in each case, at any time outstanding.
(r) "Shareholders Agreement" shall mean that certain Amended and Restated Shareholders Agreement, dated of even date herewith, by and among the Company and those certain holders of the Company's outstanding capital stock identified therein.
SECTION 2. REGISTRATION RIGHTS
2.1 REQUEST FOR REGISTRATION.
(a) If the Company shall receive at any time after the earlier
of May 18, 2000 or 90 days after of a Qualifying IPO a written request from
Holders of at least 30% of the Preferred Stock then outstanding that the Company
file a registration statement under the Securities Act covering the registration
of the number of Registrable Securities set forth in such notice held by such
Holders, the Company shall within ten days of the receipt thereof, give written
notice, in accordance with Section 4.3 hereof, of such request to all Holders of
then outstanding Registrable Securities and take the actions set forth in
Section 2.5. Each Holder that desires to include Registrable Securities in the
registration statement shall notify the Company of the number of Registrable
Securities to be so included within ten days following the receipt of such
notice.
(b) If the requesting Holders intend to distribute their Registrable Securities by means of an underwritten offering, they shall so advise the Company as a part of their request made pursuant to Subsection 2.1(a) and the Company shall include such information in the written notice to other Holders of Registrable Securities referred to in Subsection 2.1(a). In such event, the right of any Holder to include his, her or its Registrable Securities in such registration shall be conditioned upon such Holder's participation in such underwritten offering. All Holders proposing to distribute their securities through such underwritten offering shall (together with the Company as provided in Subsection 2.5(e)) enter into an underwriting agreement in customary form with the underwriter or underwriters selected by the Company for such underwriting. The inclusion of Registrable Securities in the registration of an underwritten offering under this Section 2.1 shall be subject to the provisions of Section 2.7.
(c) Notwithstanding the foregoing, if the Company shall furnish to the Holders a certificate signed by the Chief Executive Officer or President of the Company stating that, in the good faith reasonable judgment of the Company's Board of Directors (the "Board of Directors") (with the concurrence of the managing underwriter, if any), such registration of Registrable Securities would interfere materially with, or require premature disclosure of, any financing, acquisition or reorganization involving the Company or any of its wholly-owned subsidiaries or would otherwise have a material adverse effect on the Company or the selling Holders if undertaken at the time requested, the Company shall have the right to defer taking action with respect to such filing for a period of not more than 90 days after receipt of the request of the Holders; provided, however, that the Company may not utilize this right more than once in any twelve month period.
(d) In addition, the Company shall not be obligated to effect, or to take any action to effect, any registration pursuant to this Section 2.1:
(i) After the Company has effected two registrations pursuant to this Section 2.1 requested by the Holders and such prior registrations have been declared or ordered effective. For purposes of the preceding sentence, a registration shall not be deemed to have been effected (A) if after the applicable registration statement has become effective, such registration or the related offer, sale or distribution of Registrable Securities thereunder is interfered with by any stop order, injunction or other order or requirement of the SEC or other governmental agency or court for any reason not attributable to the selling Holders and such interference is not thereafter eliminated; or (B) if the conditions to closing specified in the underwriting agreement, if any, entered into in connection with such registration are not satisfied or waived, other than by reason of a failure on the part of the selling Holders;
(ii) During the period starting with the date 90 days prior to the Company's good faith estimate of the date of filing of, and ending 90 days after the effective date of, any registration statement for a public offering as to which registration rights may be available to Holders of Registrable Securities pursuant to Section 2.2 hereof; provided that the Company is actively employing in good faith all reasonable efforts to cause such registration statement to become effective;
(iii) If, within 30 days of receipt of a written request from the Holder or Holders pursuant to Section 2.1(a), the Company gives notice to such Holder or Holders of the Company's intention to make a public offering within 30 days;
(iv) If the Company delivers to the Holders an opinion, in form and substance reasonably acceptable to such Holders, of counsel reasonably satisfactory to the Holders, that the Registrable Securities requested to be registered by the Holders may be sold or transferred pursuant to Rule 144 of the Securities Act (or similar provision then in effect); or,
(v) If the anticipated gross offering proceeds from the registration of securities pursuant to this Section 2.1 are less than $15,000,000.
2.2 PIGGYBACK REGISTRATION. If at any time the Company proposes to
register (including for this purpose a registration effected by the Company for
shareholders other than the Holders) any of its stock or other securities under
the Securities Act (other than in connection with a Qualifying IPO or other than
an Excluded Registration), the Company shall promptly give each Holder and
Common Holder written notice of such proposed registration (which shall include,
to the extent known at the time, a list of the jurisdictions in which the
Company intends to qualify such securities under the applicable blue sky or
other state securities laws, the proposed offering price or the range thereof,
and the plan of distribution). Upon the written request of each Holder and
Common Holder within 30 days after such notice is given by the Company to such
Holder and Common Holder, the Company shall take the actions set forth in
Section 2.5 to cause to be registered under the Securities Act all of the
Registrable Securities that each such Holder and Common Holder has requested to
be registered in accordance with this Section 2.2. Neither the giving of any
notice nor the making of any request hereunder shall impose any obligation on a
Holder or Common Holder to sell any shares.
The inclusion of Registrable Securities in the registration of an underwritten offering under this Section 2.2 shall be subject to the provisions of Section 2.7.
2.3 S-3 REGISTRATIONS. At any time after the Company becomes eligible to file a registration statement on Form S-3 (or any successor to Form S-3), if the Company shall receive from any Holder of Registrable Securities a written request that the Company effect a registration on Form S-3 (or any successor to Form S-3) or any similar short form registration statement and any related qualification or compliance with respect to all or a part of the Registrable Securities owned by such Holder, 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, take the actions set forth in
Section 2.5 to 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 Registrable Securities
as are specified in such request, together with all or such portion of the
Registrable Securities of any other Holder joining in such request as are
specified in a written request given within fifteen days after receipt of such
written notice from the Company; provided, however, that the Company shall not
be obligated to effect any such registration, qualification or compliance
pursuant to this Section 2.3:
(i) if Form S-3 (or any successor or similar form) is not available for such offering by the Holders;
(ii) if the anticipated gross offering proceeds from the registration of securities pursuant to this Section 2.3, together with the holders of any other securities entitled to inclusion in such registration, are less than $5,000,000;
(iii) if the Company shall furnish to the Holders a certificate signed by the Chief Executive Officer or President of the Company stating that, in the good faith reasonable judgment of the Board of Directors (with the concurrence of the managing underwriter, if any), such Form S-3 registration of Registrable Securities would materially interfere with, or require premature disclosure of, any financing, acquisition or reorganization involving the Company or would otherwise have a material adverse effect on the Company or the selling Holders if undertaken at the time requested, the Company shall have the right to defer taking action with respect to such filing for a period of not more than 90 days after receipt of the request of the Holders; provided, however, that the Company may not utilize this right more than once in any twelve month period;
(iv) if the Company has already effected two registrations on Form S-3 for the Holders pursuant to this Section 2.3 in the then current calendar year.
2.4 EXPENSES OF REGISTRATION. All expenses, other than underwriting discounts and selling commissions incurred in connection with registration, filing or qualifications pursuant to Sections 2.1, 2.2 or 2.3, including all registration, filing and qualification fees, printers' and accounting fees, fees and disbursements of counsel for the Company and the reasonable fees and disbursements of one counsel for all Holders exercising registration rights pursuant to Section 2.1 or 2.3 shall be borne by the Company. Underwriting discounts and selling commissions shall be borne by the Holders.
2.5 OBLIGATIONS OF THE COMPANY. Whenever required under this Section 2 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 employ in good faith reasonable efforts to cause such registration statement to become effective, and keep such registration statement effective for a period of up to 120 days or until the distribution contemplated in the Registration Statement has been completed, whichever first occurs; provided, however, that before filing a registration statement or prospectus or any amendments or supplements thereto, including documents incorporated by reference after the initial filing of the registration statement and prior to effectiveness thereof, the Company shall furnish to counsel for the selling Holders (and Common Holders, if applicable) copies of all such documents in the form substantially as proposed to be filed with the SEC at least four business days prior to filing for review by such counsel.
(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 necessary to comply, in all material respects, 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 (and Common Holders, if applicable) such numbers of copies of a prospectus, including a preliminary prospectus, in conformity with the requirements of the Securities Act, and such other documents as they may reasonably request in order to facilitate the disposition of Registrable Securities owned by them.
(d) Employ in good faith reasonable efforts to register and qualify the securities covered by such registration statement under such securities or blue sky laws of such jurisdictions as shall be reasonably requested by the Holders (and Common Holders, if applicable) or managing underwriter or agent, if applicable; 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, unless the Company is already subject to service in such jurisdiction and except as may be required by the Securities Act.
(e) In the event of any underwritten or agented public offering, enter into and perform its obligations (including indemnification and contribution obligations) under an
underwriting or agency agreement, in usual and customary form, with the managing underwriter or agent of such offering. Each Holder (and Common Holder, if applicable) participating in such underwriting shall also enter into and perform its obligations under such an agreement.
(f) Notify each Holder (and Common Holder, if applicable) 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, upon the Company's discovery that, or upon 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 any material fact required to be stated therein or necessary to make the statements therein in the light of the circumstances under which they were made not misleading, and at the request of any such Holder (and Common Holder, if applicable) promptly prepare and furnish to such Holder (and Common Holder, if applicable) and each underwriter, if any, a reasonable number of copies of a supplement to or an amendment of such prospectus as may be necessary so that, as thereafter delivered to the purchasers of such securities, such prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein in the light of the circumstances under which they were made not misleading; provided, however, that, except in the case of an underwritten offering as to which Registrable Securities have been sold thereunder, the Company may delay effecting or causing to be effected a supplement or post-effective amendment to the registration statement or the related prospectus for a period not to exceed 90 days in any 365-day period.
(g) Cause all such Registrable Securities covered by such registration statement to be listed on each securities exchange, if any, or National Association of Securities Dealers Automatic Quotation System (NASDAQ), on which similar securities issued by the Company are then listed. If no similar securities issued by the Company are then listed on an exchange, facilitate listing the Registrable Securities on NASDAQ.
(h) Provide a transfer agent and registrar for all Registrable Securities registered hereunder and a CUSIP number for all such Registrable Securities, in each case not later than the effective date of such registration.
(i) Promptly notify each selling Holder (and Common Holder, if applicable) of any stop order issued or threatened in writing to be issued by the SEC in connection therewith and take all reasonable actions required to prevent the entry of such stop order or to remove it if entered.
(j) Make available to the Company's security holders upon request copies of all periodic reports, proxy statements, and other information referred to in Section 2.13 and an earnings statement satisfying the provisions of Section 11(a) of the Securities Act no later than 90 days following the end of the 12-month period beginning with the first month of the Company's first fiscal quarter commencing after the effective date of each registration statement filed pursuant to this Agreement.
(k) Use the Company's reasonable efforts to obtain a "comfort letter" from its independent public accountants, and legal opinions of counsel to the Company addressed to the selling Holders (and Common Holders, if applicable), in customary form and covering such matters of the type customarily covered by such letters, and in a form that shall be reasonably satisfactory to the selling Holders (and Common Holders, if applicable). The Company shall furnish to counsel for the selling Holders (and Common Holders, if applicable) a signed counterpart of any such comfort letter or legal opinion. Delivery of any such opinion or comfort letter shall be subject to each selling Holder (and Common Holder, if applicable) furnishing such written representations or acknowledgments as are customarily provided by selling shareholders who receive such comfort letters or opinions, and an opinion of counsel for the selling shareholders addressed to the Company and the underwriters in customary form and covering such matters of the type customarily covered by such opinion letters.
(l) Take all other reasonable actions necessary to expedite and facilitate disposition by the Holders (and Common Holders, if applicable) of the Registrable Securities pursuant to the registration statement.
Each Holder (and Common Holder, if applicable) of Registrable Securities agrees
that, upon receipt of any notice from the Company of the occurrence of any event
of the kind described in Section 2.5(f), such Holder (and Common Holder, if
applicable) shall forthwith discontinue such Holder's (and Common Holder's)
disposition of Registrable Securities pursuant to the registration statement
relating to such Registrable Securities until such Holder's (and Common
Holder's) receipt of the copies of the supplemented or amended prospectus
contemplated by Section 2.5(f) and, if so directed by the Company, shall deliver
to the Company (at the Company's expense) all copies, other than permanent file
copies, then in such Holder's (and Common Holder's) possession of the prospectus
relating to such Registrable Securities current at the time of receipt of such
notice. In the event the Company shall give any such notice, the period of time
for which the Company shall be required to keep the applicable registration
statement effective under Section 2.5(a) shall be extended by the length of the
period from and including the date when each Holder (and Common Holder) of any
Registrable Securities covered by such registration statement shall have been
given such notice to the date on which each such Holder (and Common Holder) has
received the copies of the supplemented or amended prospectus contemplated by
Section 2.5(f). The Company agrees to use its best efforts to minimize the
duration and frequency of any periods during which Holders (and Common Holders)
are required to discontinue their disposition of Registrable Securities under
Section 2.5(f) to those where distributing a supplement or filing a
post-effective amendment would materially interfere with, or require premature
disclosure of, any financing, acquisition or reorganization involving the
Company or any of its wholly-owned subsidiaries or would otherwise have a
material adverse effect on the Company.
2.6 FURNISH INFORMATION
(a) It shall be a condition precedent to the obligations of the Company to take any action pursuant to this Section 2 with respect to the Registrable Securities of any selling Holder (and
Common Holder, if applicable) that such Holder (and Common Holder) shall furnish to the Company such information regarding itself, the Registrable Securities held by it, and the intended method of disposition of such securities as shall be required to effect the registration of such Holder's (and Common Holder's) Registrable Securities.
(b) The Company shall have no obligation with respect to Registrable Securities requested to be registered pursuant to Section 2.1 if, due to the operation of Section 2.6(a), the Holders requesting registration are less than the amount required to originally trigger the Company's obligation to initiate such registration as specified in Section 2.1(a).
2.7 UNDERWRITING REQUIREMENTS.
(a) In connection with any offering involving an underwriting
of shares of the Company's capital stock or, if the managing underwriter or
agent expressly consents to the inclusion of Registrable Securities in such
underwriting, other securities under the Securities Act, the Company shall not
be required under Section 2 to include any of a Holder's (and Common Holder's,
if applicable) Registrable Securities in such underwriting unless such Holder
(and Common Holder, if applicable) accepts the terms of the underwriting as
agreed upon between the Company and the underwriters selected by it. If the
managing underwriter advises the selling Holders (and Common Holders, if
applicable) that marketing factors require any limitation as to the Registrable
Securities included in such offering, subject to Section 2.7(b), the Registrable
Securities to be included in such registration shall be allocated as follows:
(A) first, pro rata among the Holders of Registrable Securities who have
requested such demand registration or S-3 registration under Sections 2.1 and
2.3, respectively, (B) second, pro rata among the Holders of Registrable
Securities who have requested to be included in such registration statement
pursuant to Section 2.2. or otherwise, and (C) third, pro rata among the Common
Holders of Registrable Securities who have requested to be included in such
registration statement pursuant to Section 2.2. or otherwise.
(b) If the managing underwriter advises the selling Holders (and Common Holders, if applicable) that marketing factors require any limitation as to Registrable Securities to be underwritten and shares other than the selling Holders (and Common Holders) are proposed to be included in the registration, then the number of shares that may be included in the underwriting shall be allocated as follows:
(i) If the registration involves a demand registration request by Holders pursuant to Section 2.1 or a Form S-3 registration request by Holders pursuant to Section 2.3, then (A) first, pro rata among the Holders of Registrable Securities who have requested such demand registration or S-3 registration under Sections 2.1 and 2.3, respectively, (B) second, all securities being registered by the Company, (C) third, pro rata among any Holders of Registrable Securities who have requested to be included in such registration statement, pursuant to Section 2.2 or otherwise and (D) fourth, pro rata among the Common Holders of Registrable Securities who have requested to be included in such registration statement pursuant to Section 2.2. or otherwise.
(ii) If the registration is initiated by the Company
and involves a piggyback registration request by Holders and/or Common Holders
under Section 2.2, then (A) first, all securities being registered by the
Company, (B) second, pro rata among the Holders of Registrable Securities who
have requested to be included in such registration statement pursuant to Section
2.2. or otherwise, and (C) third, pro rata among the Common Holders of
Registrable Securities who have requested to be included in such registration
statement pursuant to Section 2.2. or otherwise.
(c) If any registration pursuant to Section 2.1 involves an underwritten offering (whether on a "firm," "best efforts" or "all reasonable efforts" basis or otherwise), or an agented offering, a majority of the selling Holders shall have the right to approve the managing underwriter or underwriters selected by the Company for such underwritten offering or the placement agent or agents for such agented offering, such approval not to be unreasonably withheld.
2.8 DELAY OF REGISTRATION. No Holder (or Common Holder, if applicable) 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 Agreement.
2.9 INDEMNIFICATION. In the event any Registrable Securities are included in a registration statement under this Section 2:
(a) To the extent permitted by law, the Company will indemnify and hold harmless each Holder (and Common Holder, if applicable), the officers and directors of each Holder (and Common Holder) participating in such registration, and each person, if any, who Controls such Holder (and Common Holder) within the meaning of the Securities Act or the Exchange Act, against any losses, expenses, claims, damages, or liabilities (joint or several) to which they may become subject under the Securities Act, 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"): (i) any untrue statement or alleged untrue statement of a material fact contained in such registration statement, including any preliminary prospectus or final prospectus contained therein or any amendments or supplements thereto; (ii) the omission or alleged omission to state therein a material fact required to be stated therein, or necessary to make the statements therein not misleading; or (iii) any violation or alleged violation by the Company of the Securities Act, the Exchange Act, any applicable state securities law or any rule or regulation promulgated under the Securities Act, the Exchange Act or any applicable state securities law; and the Company will pay to each such Holder or controlling person, as incurred, any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, expense, 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, expense, 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 to the Company by the otherwise indemnified party expressly for use in connection with such registration, nor shall the Company be liable in any such case for any such loss, expense, claim, damage, liability, or action to the extent that it arises out of or is based upon any untrue statement or alleged untrue statement, or omission or alleged omission made in a preliminary prospectus, if the final prospectus (or the final prospectus as amended or supplemented if the Company shall have filed with the SEC any amendment or supplement thereto) available for delivery to the purchaser corrected such untrue statement or alleged untrue statement, or omission or alleged omission. With respect to any untrue statement or alleged untrue statement made in, or omission or alleged omission from, any preliminary prospectus or prospectus, the indemnity agreement contained in this Section 2.9(a) with respect to such preliminary prospectus or prospectus, to the extent it is based on the claim of a person who purchased any Registrable Securities directly from a Holder (or Common Holder, if applicable) shall not inure to the benefit of such Holder (or Common Holder) (or to the benefit of any of its officers and directors or any person Controlling such Holder (or Common Holder, if applicable)) if the prospectus (or the prospectus as amended or supplemented if the Company shall have filed with the SEC any amendment or supplement thereto) shall not have been sent or given to such person by the Holder (or Common Holder) (and the Holder (or Common Holder) shall have been obligated so to furnish such a prospectus) and such person shall not otherwise have received a copy thereof at or prior to the written confirmation of such sale to such person.
(b) To the extent permitted by law, each selling Holder (and
Common Holder, if applicable) will, severally but not jointly, indemnify and
hold harmless the Company, each of its directors, each of its officers who has
signed the registration statement, each person, if any, who Controls the Company
within the meaning of the Securities Act, any other Holder (or Common Holder)
selling securities in such registration statement and any Controlling person of
any such other Holder (or Common Holder, if applicable), against any losses,
claims, damages, or liabilities (joint or several) to which any of the foregoing
persons may become subject under the Securities Act, 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 to the Company by such Holder (and Common Holder)
expressly for use in connection with such registration; and each such Holder
(and Common Holder) will pay, as incurred, any legal or other expenses
reasonably incurred by any person intended to be indemnified pursuant to this
Section 2.9(b), 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(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 (or Common Holder, if
applicable) (which consent shall not be unreasonably withheld); provided, that,
in no event shall any selling Holder's (or Common Holder's) liability under this
Section 2.9(b) exceed the proceeds received by such Holder (or Common Holder)
from the offering (net of any underwriting discounts and commissions).
(c) Promptly after receipt by an indemnified party under this
Section 2.9 of notice of the commencement of any action, suit, proceeding,
investigation or written threat thereof (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. The
failure to deliver written notice to the indemnifying party within a reasonable
time of the commencement of any such action, if 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.
Any reasonable fees and expenses incurred by the indemnified party (including
any fees and expenses incurred in connection with investigating or preparing to
defend such action or proceeding) shall be paid to the indemnified party, as
incurred, within 30 days of written notice thereof to the indemnifying party,
such expenses to be reimbursed within 30 days of determination by a court or
arbitrator, that an indemnified party is not entitled to indemnification
hereunder). Any such indemnified party shall have the right to employ separate
counsel in any such action, claim or proceeding and to participate in the
defense thereof, but the fees and expenses of such counsel shall be the expenses
of such indemnified party unless (i) the indemnifying party has agreed to pay
such fees and expenses; (ii) the indemnifying party shall have failed to
promptly assume the defense of such action, claim or proceeding; or (iii) the
named parties to any such action, claim or proceeding (including any impleaded
parties) include both such indemnified party and the indemnifying party, and
such indemnified party shall have been advised by counsel that there may be one
or more legal defenses available to it which are different from or in addition
to those available to the indemnifying party and that the assertion of such
defenses would create a conflict of interest such that counsel employed by the
indemnifying party could not faithfully represent the indemnified party (in
which case, if such indemnified party notifies the indemnifying party in writing
that it elects to employ separate counsel at the expense of the indemnifying
party, the indemnifying party shall not have the right to assume the defense of
such action, claim or proceeding on behalf of such indemnified party, it being
understood, however, that the indemnifying party shall not, in connection with
any one such action, claim or proceeding or separate but substantially similar
or related actions, claims or proceedings in the same jurisdiction arising out
of the same general allegations or circumstances, be liable for the reasonable
fees and expenses of more than one separate firm of attorneys (together with
appropriate local counsel) at any time for all such indemnified parties. No
indemnifying party shall be liable to an indemnified party for any settlement of
any action, proceeding or claim without the written consent of the indemnifying
party, which consent shall not be unreasonably withheld. Any separate counsel
employed by an indemnified party pursuant to this Section 2.9(c) shall be
approved by the indemnifying party, such approval not to be unreasonably
withheld.
(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 loss, liability, claim, damage, or expense referred to therein, then the indemnifying party, in lieu of indemnifying
such indemnified party hereunder, shall contribute to the amount paid or payable by such indemnified party as a result of such loss, liability, claim, damage, or expense 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 statements or omissions that resulted in such loss, liability, claim, damage, or expense as well as any other relevant equitable considerations. The relative fault of the indemnifying party and of the indemnified party shall be determined by reference to, among other things, whether any Violation has been committed by, or 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 Violation. The amount paid or payable by a party as a result of the losses, claims, damages, liabilities and expenses referred to above shall be deemed to include, subject to the limitations set forth in subparagraphs (a) and (b) of this Section 2.9, any legal or other fees or expenses reasonably incurred by such party in connection with any investigation or proceeding. The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 2.9(d) were determined by pro rata allocation or by any other method of allocation which does not take into account the equitable considerations referred to in the first sentence of this Section 2.9(d). No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation.
(e) If indemnification is available under this Section 2.9, the indemnifying parties shall indemnify each indemnified party to the full extent provided in this Section 2.9 without regard to the relative fault of such indemnifying party or indemnified party or any other equitable consideration referred to in Section 2.9(d).
(f) The obligations of the Company and selling Holders (or Common Holders, if applicable) under this Section 2.9 shall survive the completion of any offering of Registrable Securities in a registration statement under this Section 2, and otherwise.
2.10 REPORTS UNDER EXCHANGE ACT. With a view to making available to the Holders and Common Holders the benefits of Rule 144 promulgated under the Securities Act and any other rule or regulation of the SEC that may at any time permit a Holder or Common Holder to sell securities of the Company to the public without registration, the Company agrees (a) to make and keep public information available, as those terms are understood and defined in SEC Rule 144, at all times after 90 days after the effective date of the first registration statement filed under the Securities Act by the Company for the offering of its securities to the general public; and (b) to file with the SEC in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act pursuant to Section 2.13(a).
2.11 ASSIGNMENT OF REGISTRATION RIGHTS. The rights to cause the Company to register Registrable Securities pursuant to this Section 2 may be assigned (but only with all related obligations) by a Holder and Common Holder (a "Permitted Transferee"), provided: (a) the Company is, within ten business days of such transfer, 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; (b) such transferee or assignee agrees in writing to be bound by and subject to the terms and conditions of this Agreement, including without limitation the provisions of Section 2.12 below; (c) such assignment shall be effective only if immediately following such transfer the further disposition of such securities by the transferee or assignee is restricted under the Securities Act; and (d) the number of shares of Registrable Securities to be held by such transferee is at least 250,000. For purposes of Section 2.11(d), a transferee may aggregate its holdings with those of its parents, subsidiaries and affiliates in determining whether the number of shares of Registrable Securities to be held by such transferee is at least 250,000.
2.12 "MARKET STAND-OFF" AGREEMENT. Each Holder (and Common Holder, if applicable) hereby agrees, if so requested in writing by the managing underwriter or agent in connection with a registration pursuant to an underwritten offering, to enter into an agreement with such managing underwriter, in form reasonably acceptable to such managing underwriter or agent, limiting the sale or distribution such Holder (or Common Holder) may make of shares of Common Stock or any securities convertible or exchangeable or exercisable for such shares of the Company, including a sale pursuant to Rule 144 under the Securities Act, except as part of such registration, for a period of up to 180 days as requested by the managing underwriter or agent in the written notice specified above. The Company may impose stop-transfer instructions with respect to the Registrable Securities of each Holder (or Common Holder) until the end of such period in order to enforce the foregoing covenant.
2.13 COVENANTS OF THE COMPANY WITH RESPECT TO REGISTERED SECURITIES. The Company hereby agrees and covenants as follows:
(a) The Company shall file as and when applicable, on a timely basis, all reports required to be filed by it under the Exchange Act. If the Company is not required to file reports pursuant to the Exchange Act, upon the request of any Holder or Common Holder of Registrable Securities, the Company shall make publicly available the information specified in subparagraph (c)(2) of Rule 144 of the Securities Act, and take such further action as may be reasonably required from time to time and as may be within the reasonable control of the Company, to enable the Holders and Common Holders to transfer Registrable Securities without registration under the Securities Act within the limitation of the exemptions provided by Rule 144 under the Securities Act or any similar rule or regulation hereafter adopted by the SEC.
(b) (i) The Company shall not effect any registration under the Securities Act of any shares of Common Stock or any securities convertible into or exchangeable or exercisable for shares of Common Stock, during the five business days prior to, and during the 90-day period beginning on, the commencement of a public distribution of the Registrable Securities pursuant to any registration statement prepared pursuant to Section 2.1 of this Agreement, except for Excluded Registrations, until the earlier of (x) 90 days following the date as of which all securities covered by such demand registration statement shall have been sold or distributed, and (y) 90 days following the effective date of such demand registration statement.
(ii) Any agreement entered into after the date of this Agreement pursuant to which the Company issues or agrees to issue any privately placed Common Stock or securities of the Company convertible or exchangeable for Common Stock that have registration rights shall contain a provision whereby holders of such securities agree not to effect any public sale or distribution of any such securities during the periods described in Section 2.12, in each case including a sale pursuant to Rule 144 under the Securities Act (unless such Person is prevented by applicable statute or regulation from entering into such an agreement).
(c) The Company shall not, directly or indirectly, enter into any merger, consolidation or reorganization in which the Company shall not be the surviving corporation, unless prior to such merger, consolidation, or reorganization, the surviving corporation shall have agreed in writing to assume the obligations of the Company under this Agreement, and for that purpose references hereunder to "Registrable Securities" shall be deemed to include the securities that the Holders and Common Holders of Registrable Securities would be entitled to receive in exchange for Registrable Securities pursuant to any such merger, consolidation or reorganization.
2.14 TERMINATION OF REGISTRATION RIGHTS. The obligations of the Company hereunder shall terminate as to any Holder or Common Holder at such time as (i) all Registrable Securities held by such Holder can be sold within a single three month period pursuant to Rule 144 under the Securities Act (or any successor provision of such Securities Act), and (ii) the number of shares of Common Stock held by such Holder and issuable upon conversion of Preferred Stock held by such Holder is less than one percent of the outstanding capital stock of the Company on an As Converted Basis (adjusted for stock dividends, stock splits, reverse stock splits, combinations and the like occurring after the date hereof).
SECTION 3. OTHER COVENANTS OF THE COMPANY
The Company shall comply with the following covenants until the conversion of Investors' Series A and Series B Preferred Stock into Common Stock:
3.1 SIGNIFICANT TRANSACTIONS. In addition to any vote or consent of shareholders or directors required by law or the Company's Amended and Restated Certificate of Incorporation (the "Certificate"), so long as any originally issued Preferred Stock remains outstanding, the Required Consent of the Series A Preferred Stock and Series B Preferred Stock, voting as separate classes for the transaction described in Section 3.1(a) and together as a single class for the transactions described in Section 3.1(b), either in writing without a meeting or by vote at any meeting called for the purpose, shall be necessary for effecting, validating or permitting:
(a) any amendment, alteration or repeal of any of (i) the provisions of the Certificate or the Bylaws of the Company affecting the rights, powers and preferences of the Series A Preferred Stock or Series B Preferred Stock, as applicable, or (ii) the provisions of Article IV of the Certificate; or
(b) any consolidation or merger involving the Company (other than a consolidation or merger in which the Company is the surviving entity and no change in the capital stock or ownership of the Company occurs), any transaction or series of transactions in which an excess of 50% of the Company's voting power is transferred, or any reclassification or recapitalization of any capital stock of the Company or any dissolution, liquidation, or winding up of the Company, or any sale of more than 50% of the assets of the Company, or any agreement to become so obligated;
3.2 BASIC FINANCIAL INFORMATION AND REPORTING OBLIGATIONS.
(a) The Company shall provide to each Holder: (i) within 45 days of the end of each fiscal quarter, an unaudited, internally generated statement of profit or loss for such quarter and for the current fiscal year to date and an unaudited, internally generated balance sheet as of the end of each such quarter; and (ii) within 90 days of each fiscal year-end, audited financial statements for the prior fiscal year, together with the accounting firm's annual management letter to the Board of Directors, any additional reports, management letters, or other reports concerning significant aspects of the Company's operations or financial affairs given to the Company by its independent accountants (to the extent not otherwise provided hereunder). All financial statements furnished hereunder shall fairly present the financial condition and results of operations of the Company in accordance with generally accepted accounting principles ("GAAP") applied on a consistent basis; provided, however, that such financial statements are subject to normal and customary year-end audit adjustments and do not contain all the footnotes required by GAAP, and all such financial statements shall be accompanied by a certificate of the Company's Chief Financial Officer to that effect.
(b) Within ten days of each fiscal year-end, the Company shall prepare and submit to the Board of Directors and deliver to each Holder an operating plan and budget for the next fiscal year. The budget shall contain estimated statements of monthly revenues, expenses, and cash flows.
3.3 INSPECTION; CONFIDENTIALITY. The Company shall permit each Holder at such Holder's expense to visit and inspect their facilities, assets, properties, financial and accounting records, and corporate books and documents at such reasonable times and for such proper purposes as may be requested by Holders. The Company shall also make available to Holders such executive or management personnel and the Company's independent public accountants, with whom Holders may discuss the affairs of the corporation at reasonable length. At the Company's request, Holders shall enter into the Company's standard-form confidentiality agreements in order to maintain the confidentiality of any confidential information may be acquired in the course of any such inspection. The rights of Holders hereunder shall be in addition to any rights of inspection available to the Holders, as shareholders, under the Colorado Business Corporation Act.
3.4 LITIGATION. The Company shall notify each Holder and member of the Board of Directors of any litigation, arbitration or proceedings before any governmental or regulatory body
or arbitration forum to which the Company is a party which, if adversely decided, would have a material adverse impact on the Company's assets, properties, or results of operations.
3.5 SEC FILINGS. The Company shall deliver to each Holder and each member of the Board of Directors a copy of any filings made by or on behalf of the Company with the Securities and Exchange Commission, within fifteen days of any such filing.
3.6 ASSIGNMENT OF RIGHTS. Any Holder may assign the right to receive
the benefit of any of the covenants contained in Sections 3.2 through 3.5 either
(i) to any affiliate, parent or subsidiary of such Holder, or (ii) to any
transferee who acquires from such Holder 250,000 shares of Registrable
Securities, provided such transfer is otherwise in accordance with this
Agreement and the Shareholders Agreement.
SECTION 4. MISCELLANEOUS
4.1 MODIFICATIONS AND WAIVERS This Agreement may not be amended or modified, nor may the rights of any party be waived, except by a written document that is executed by the Required Consent of the Holders, at least a majority of the Common Holders and the Company.
4.2 RIGHTS AND OBLIGATIONS OF THIRD PARTIES Nothing in this Agreement, whether express or implied, is intended to confer any rights or remedies under or by reason of this Agreement on any persons other than the parties to it and their respective successors and permitted assigns, nor is anything in this Agreement intended to relieve or discharge the obligation or liability of any third parties to any party to this Agreement, nor shall any provision give any third party any right of subrogation or action against any party to this Agreement.
4.3 NOTICES. Any notice, request, consent, or other communication
hereunder shall be in writing, and shall be sent by one of the following means:
(i) by registered or certified first class mail, postage prepaid, return receipt
requested; (ii) by facsimile transmission with confirmation of receipt; (iii) by
overnight courier service; or (iv) by personal delivery, and shall be properly
addressed as follows:
If to the Company to:
Array BioPharma Inc.
1885 33rd Street
Boulder, Colorado 80301
Facsimile: (303) 449-5376
Attention: Chief Executive Officer
With a copy to:
Hogan & Hartson L.L.P.
1800 Broadway, Suite 200
Boulder, Colorado 80302
Facsimile: (720) 406-5312
Attention: Christopher D. Ozeroff, Esq.
If to Investors to:
Boulder Ventures II, L.P.
1634 Walnut Street, Suite 301
Boulder, Colorado 80302
Facsimile: (303) 449-9699
Attention: Mr. Kyle Lefkoff
and
Falcon Technology Partners, L.P.
600 Dorset Road
Devon Pennsylvania 19333
Facsimile: (610) 688-2571
Attention: James L. Rathmann
or to such other address or addresses as the Company or Holders shall hereafter designate to the other parties in writing. Notices sent by mail or by courier shall be effective seven days after they are sent, and notices delivered personally by facsimile shall be effective at the time of delivery thereof.
4.4 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement between the parties hereto in relation to the subject matter hereof. Any prior written or oral negotiations, correspondence, or understandings relating to the subject matter hereof shall be superseded by this Agreement and shall have no force or effect.
4.5 SEVERABILITY. If any provision that is not essential to the effectuation of the basic purpose of this Agreement is determined by a court of competent jurisdiction to be invalid and contrary to any existing or future law, such invalidity shall not impair the operation of the remaining provisions of this Agreement.
4.6 HEADINGS. The headings of the Sections of this Agreement are inserted for convenience of reference only and shall not affect the construction or interpretation of any provisions hereof.
4.7 COUNTERPARTS. This Agreement may be executed in any number of counterparts, each of which when executed and delivered shall be an original, but all of which together shall constitute one and the same instrument.
4.8 GOVERNING LAW. This Agreement shall be construed in accordance with and governed by the laws of the State of Colorado (as applied to contracts entered into wholly within such state).
4.9 DELAYS OR OMISSIONS. No delay or omission to exercise any right, power, or remedy accruing to either party, upon any breach or default of the other party under this Agreement, shall impair any such right, power, or remedy, nor shall it be construed to be a waiver of any such breach or default, or an acquiescence therein, or of or in any similar breach of default thereafter occurring; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring. Any waiver, permit, consent, or approval on the part of either party of any breach or default by the other party under this Agreement, or any waiver of any provisions or conditions of this Agreement must be made in writing signed by the parties and shall be effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement or by law or otherwise afforded to either party, shall be cumulative and not alternative.
4.10 ARBITRATION. The parties hereby covenant and agree that any legal suit, dispute, claim, demand, controversy or cause of action of every kind and nature whatsoever, known or unknown, fixed or contingent, that either a Holder or the Company may now have or at any time in the future claim to have based in whole or in part, or arising from or out of or that in any way is related to the negotiations, execution, interpretation or enforcement of this Agreement (collectively, the "Disputes") shall be completely and finally settled by submission of any such Disputes to arbitration under the rules of the American Arbitration Association ("AAA") then in effect. There shall be one arbitrator, and such arbitrator shall be chosen by mutual agreement of the parties in accordance with AAA rules. Unless the parties agree otherwise, the arbitration proceedings shall take place in Boulder, Colorado. The arbitrator shall apply Colorado law to all issues in dispute, in accordance with Section 4.8 above. Notice of demand for arbitration shall be filed in writing with the other parties to this Agreement and with the AAA. In no event shall the demand for arbitration be made after the date when institution of legal or equitable proceedings based on such Dispute would be barred by the applicable statute of limitations. The findings of the arbitrator shall be final and binding on the parties. Judgment on such award may be entered in any court of competent jurisdiction, or application may be made to that court for a judicial acceptance of the award and an order or enforcement, as the party seeking to enforce that award may elect. The prevailing party in any such action shall be entitled to receive from the losing party all reasonable costs and expenses, including the reasonable fees of attorneys, accountants, and other experts, incurred by the prevailing party in investigating and prosecuting (or defending) such action, together with any such fees which may be incurred in enforcing any award of judgment.
4.11 NO INCONSISTENT AGREEMENTS. The Company will not on or after the date of this Agreement enter into any agreement with respect to its securities which is inconsistent with the rights granted to the holders of Registrable Securities in this Agreement or otherwise conflicts with the provisions hereof or impairs the rights granted hereunder. The Company has not previously entered into any agreement with respect to its securities granting any registration rights to any person which has not been terminated on or prior to the date hereof.
[SIGNATURE PAGES FOLLOW]
IN WITNESS WHEREOF, the parties have executed this Investor Rights Agreement as of the date first above written.
COMPANY: INVESTORS:
ARRAY BIOPHARMA, INC, a Delaware FRAZIER HEALTHCARE II, L.P.
Corporation
By: /s/ ROBERT CONWAY By: /s/ ALAN D. FRAZIER
-------------------------------------- --------------------------------
Robert Conway, Chief Executive Officer Name: Alan D. Frazier
------------------------------
Title: Managing Member
-----------------------------
ARCH VENTURE FUND III, L.P.
By: Arch Venture Partners, LLC, its
Managing Director
By: /s/ KEITH L. CRANDELL
--------------------------------
Name: Keith L. Crandell
------------------------------
Title: Managing Director
-----------------------------
ROVENT II LIMITED PARTNERSHIP
By: Advent International Limited
Partnership, its General Partner
By: Advent International Corporation,
its General Partner
By: /s/ JOSEN S. FISHERMAN
--------------------------------
Name: Josen S. Fisherman
------------------------------
Title: Vice President
-----------------------------
MITSUI & CO. (U.S.A.), INC.
By: /s/ YOICHIRO ENDO
--------------------------------
Name: Yoichiro Endo
------------------------------
Title: General Manager
-----------------------------
FALCON TECHNOLOGY PARTNERS, L.P.,
a Delaware limited partnership
By: /s/ JAMES L. RATHMANN
--------------------------------
James L. Rathmann, General Partner
|
BOULDER VENTURES II, L.P.,
A DELAWARE LIMITED PARTNERSHIP
By: /s/ KYLE LEFKOFF
----------------------------------
Kyle Lefkoff, General Partner
|
BOULDER VENTURES II, (ANNEX) L.P.,
A DELAWARE LIMITED PARTNERSHIP
By: /s/ KYLE LEFKOFF
----------------------------------
Kyle Lefkoff, General Partner
|
THE CARUTHERS FAMILY, L.L.C.
By: /s/ MARVIN H. CARUTHERS
----------------------------------
Marvin H. Caruthers, Ph.D., Manager
/s/ FRANK A. BONSAL, JR.
--------------------------------------
FRANK A. BONSAL, JR.
/s/ RICHARD J. DALY
--------------------------------------
RICHARD J. DALY
/s/ MICHAEL CARRUTHERS
--------------------------------------
MICHAEL CARRUTHERS
/s/ CHRISTOPHER D. OZEROFF
--------------------------------------
CHRISTOPHER D. OZEROFF
/s/ THERESA KOCH
--------------------------------------
THERESA KOCH
/s/ WILLIAM R. ROBERTS
--------------------------------------
WILLIAM R. ROBERTS
|
SILICON VALLEY BANK
By: /s/ ANDREW J. ENROTH
------------------------------------
Name: Andrew J. Enroth
----------------------------------
Title: Vice President
---------------------------------
|
LEASING TECHNOLOGIES INTERNATIONAL, INC.
By: /s/ JOHN R. STRANLEY
------------------------------------
Name: John R. Stranley
----------------------------------
Title: Vice President
---------------------------------
|
COMMON STOCKHOLDERS:
/s/ DAVID SNITMAN ------------------------------------ DAVID SNITMAN, PH.D. /s/ KEVIN KOCH ------------------------------------ KEVIN KOCH, PH.D. /s/ ANTHONY D. PISCOPIO ------------------------------------ ANTHONY D. PISCOPIO, PH.D. /s/ K.C. NICOLAOU ------------------------------------ K.C. NICOLAOU, PH.D. |
EXHIBIT 10.17
AMENDMENT NO. 1 TO
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
This Amendment No. 1 to Amended and Restated Investors Rights Agreement (this "Amendment") is made and entered into as of the 31st day of August, 2000, by and among Array BioPharma Inc., a Delaware corporation (the "Company"), and each of those persons and entities whose names are set forth under the heading "Investors" or "Common Stockholders" on the signature page attached hereto.
RECITALS
A. The Company, certain of the Investors and the Common Stockholders previously entered into that certain Amended and Restated Investor Rights Agreement, dated as of November 16, 1999 (the "Investor Rights Agreement").
B. The Company, certain Investors and the Common Stockholders have entered into that certain Series C Preferred Stock Purchase Agreement, dated of even date herewith (the "Purchase Agreement"), pursuant to which the Company will issue and sell, and the Investors will purchase, certain shares of the Company's Series C Preferred Stock (the "Stock").
C. As a condition to the closing of the purchase of the Stock under the Purchase Agreement, the Company, the Investors and the Common Stockholders desire to amend the Investor Rights Agreement as provided herein.
Now, Therefore, in consideration of the premises and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree to amend the Investor Rights Agreement as follows:
AMENDMENTS
1. The following definitions in Section 1 of the Investor Rights Agreement shall be amended in their entirety to read as follows:
(j) "Preferred Stock" shall mean any series of preferred stock of the Company including, without limitation, Series A Preferred, Series B Preferred or Series C Preferred.
(s) "Shareholders Agreement" shall mean that certain Amended and Restated Shareholders Agreement dated as of November 16, 1999, as amended, by and among the Company and those certain holders of the Company's outstanding capital stock identified therein.
2. The following new definition shall be added as Section 1(r) of the Investor Rights Agreement:
(r) "Series C Preferred Stock" shall mean the Series C Preferred Stock, $.001 par value per share, of the Company, or any other capital stock of the Company into which such stock is reclassified or reconstituted, or any securities convertible into, or exchangeable or exercisable for, any of the foregoing, in each case, at any time outstanding.
3. Section 3.1 of the Investor Rights Agreement shall be amended in its entirety to read as follows:
SECTION 3. OTHER COVENANTS OF THE COMPANY
The Company shall comply with the following covenants until the conversion of Investors' Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock into Common Stock:
3.1 SIGNIFICANT TRANSACTIONS. In addition to any vote or consent of shareholders or directors required by law or the Company's Amended and Restated Certificate of Incorporation (the "Certificate"), so long as any originally issued Preferred Stock remains outstanding, the Required Consent of the Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock, voting as separate classes for the transaction described in Section 3.1(a) and together as a single class for the transactions described in Section 3.1(b), either in writing without a meeting or by vote at any meeting called for the purpose, shall be necessary for effecting, validating or permitting:
(a) any amendment, alteration or repeal of any of
(i) the provisions of the Certificate or the Bylaws of the Company
affecting the rights, powers and preferences of the Series A Preferred
Stock, Series B Preferred Stock or Series C Preferred Stock, as
applicable, or (ii) the provisions of Article IV of the Certificate;
or
(b) any consolidation or merger of the Company with or into any other corporation, 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; any transaction or series of related transactions in which excess of 50% of the Company's voting power is transferred; any reclassification or recapitalization of any capital stock of the Company; any dissolution, liquidation, or winding up of the Company; or any sale of more than 50% of the assets of the Company, or any agreement to become so obligated.
MISCELLANEOUS
1. Interpretation. Except as expressly amended by this Amendment, the Investor Rights Agreement shall remain in full force and effect without change.
2. Counterparts. This Amendment may be executed in any number of counterparts, each of which when executed and delivered shall be an original, but all of which together shall constitute one and the same instrument.
3. Effective Time. This Amendment shall be effective following its execution by the holders of at least 66-2/3% of the outstanding shares held by the Holders (as defined in the Investor Rights Agreement) and at least a majority of the Common Stockholders, in accordance with Section 4.1 of the Investor Rights Agreement.
4. Additional Investors. Each party who purchases Stock pursuant to the Purchase Agreement agrees to be bound by the terms of the Investor Rights Agreement and shall be deemed an additional "Investor" for all purposes thereunder.
[signature pages follow]
IN WITNESS WHEREOF, the parties have executed this Amendment No. 1 to Amended and Restated Investor Rights Agreement as of the date first above written.
COMPANY: COMMON STOCKHOLDERS:
ARRAY BIOPHARMA INC. /s/ DAVID SNITMAN
------------------------------
DAVID SNITMAN, PH.D.
By: /s/ ROBERT CONWAY
------------------------------------
Robert Conway, Chief Executive Officer /s/ KEVIN KOCH
------------------------------
KEVIN KOCH, PH.D.
/s/ ANTHONY D. PISCOPIO
------------------------------
ANTHONY D. PISCOPIO, PH.D.
/s/ K.C. NICOLAOU
------------------------------
K.C. NICOLAOU, PH.D.
INVESTORS:
FRAZIER HEALTHCARE II, L.P.
By: /s/ ROBERT W. OVERELL
---------------------------
Print Name: Robert W. Overell
-------------------
Title: General Partner
------------------------
ARCH VENTURE FUND III, L.P.
By: Arch Venture Partners, LLC, its
General Partner
By: /s/ ROBERT T. NELSEN
---------------------------
Name: Robert T. Nelsen
-------------------------
Title: Managing Director
------------------------
ROVENT II LIMITED PARTNERSHIP
By: Advent International Limited
Partnership, its General Partner
By: Advent International Corporation,
its General Partner
By: /s/ JASON S. FISHERMAN
---------------------------
Name: Jason S. Fisherman
-------------------------
Title: VP
------------------------
|
MITSUI & CO. (U.S.A.), INC.
By: /s/ YOUICHIRO ENDO
---------------------------
Print Name: Youichiro Endo
-------------------
Title: General Manager
------------------------
FALCON TECHNOLOGY PARTNERS, L.P.
By: /s/ JAMES L. RATHMANN
-------------------------------------------
James L. Rathmann, General Partner
BOULDER VENTURES II, L.P.
By: /s/ KYLE LEFKOFF
-------------------------------------------
Kyle Lefkoff, General Partner
BOULDER VENTURES II, (ANNEX) L.P.
By: /s/ KYLE LEFKOFF
-------------------------------------------
Kyle Lefkoff, General Partner
THE CARUTHERS FAMILY, L.L.C.
By: /s/ MARVIN H. CARUTHERS
-------------------------------------------
Marvin H. Caruthers, Ph.D., Manager
/s/ FRANK A. BONSAL, JR
--------------------------------
FRANK A. BONSAL, JR.
--------------------------------
RICHARD J. DALY
/s/ MICHAEL CARRUTHERS
--------------------------------
MICHAEL CARRUTHERS
/s/ CHRISTOPHER D. OZEROFF
--------------------------------
CHRISTOPHER D. OZEROFF
/s/ THERESA KOCH
--------------------------------
THERESA KOCH
/s/ WILLIAM R. ROBERTS
--------------------------------
WILLIAM R. ROBERTS
|
SILICON VALLEY BANK
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
LEASING TECHNOLOGIES INTERNATIONAL, INC.
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
/s/ KIRBY L. CRAMER
------------------------------
KIRBY L. CRAMER
/s/ JOSEPH LEFKOFF
-------------------------------
JOSEPH LEFKOFF
VECTOR LATER-STAGE EQUITY FUND II, L.P.
By: Vector Fund Management II, L.L.C., its
General Partner
By: BARCLAY A. PHILLIPS
------------------------------
Print Name: BARCLAY A. PHILLIPS
----------------------
Title: Managing Director
---------------------------
VECTOR LATER-STAGE EQUITY FUND II, L.P.
By: Vector Fund Management II, L.L.C., its
General Partner
By: BARCLAY A. PHILLIPS
------------------------------
Print Name: BARCLAY A. PHILLIPS
----------------------
Title: Managing Director
---------------------------
MOSAIX VENTURES, LP
By: Mosiax Ventures Management, LLC,
its General Partner
By: /s/ RANJAN LAL
------------------------------
Ranjan Lal, Managing Partner
|
EXHIBIT 10.18
AMENDED AND RESTATED
SHAREHOLDERS AGREEMENT
ARRAY BIOPHARMA INC.
TABLE OF CONTENTS PAGE
RECITALS .........................................................................................................1
SECTION 1. DEFINITIONS.....................................................................................1
SECTION 2. RESTRICTIONS ON SALE OR TRANSFER OF SHARES......................................................3
2.1 General Prohibition....................................................................3
2.2 Right of First Offer...................................................................3
2.3 Tag-Along Rights.......................................................................5
2.4 Exempt Transfer........................................................................5
2.5 Related Party..........................................................................6
2.6 Opinion of Counsel.....................................................................6
SECTION 3. RIGHTS OF FIRST REFUSAL ........................................................................6
3.1 Subsequent Offerings...................................................................6
3.2 Exercise of Rights.....................................................................6
3.3 Company Sale...........................................................................7
3.4 Termination of Rights of First Refusal.................................................7
3.5 Transfer of Rights of First Refusal....................................................7
3.6 Excluded Securities....................................................................7
SECTION 4. NUMBER OF DIRECTORS; BOARD COMMITTEES ..........................................................8
4.1. Number of Directors....................................................................8
4.2. Voting; Board of Directors............................................................ 8
4.3 Vacancies of Directors.................................................................8
4.4 Major Decisions of the Board of Directors..............................................8
4.5 Observation Rights; Board of Directors ................................................9
SECTION 5. REMEDIES FOR BREACH............................................................................ 9
5.1. General................................................................................9
5.2. No Personal Liability..................................................................9
SECTION 6. LEGEND ON STOCK CERTIFICATES....................................................................9
SECTION 7. MISCELLANEOUS..................................................................................10
7.1 Modifications and Waivers.............................................................10
7.2 Rights and Obligations of Third Parties...............................................10
7.3 Notices...............................................................................10
7.4 Entire Agreement......................................................................11
7.5 Severability..........................................................................11
7.6 Headings..............................................................................11
7.7 Counterparts..........................................................................11
7.8 Governing Law.........................................................................11
7.9 Delays or Omissions...................................................................11
7.10 Arbitration...........................................................................11
7.11 Termination...........................................................................12
|
AMENDED AND RESTATED SHAREHOLDERS AGREEMENT
This Amended and Restated Shareholders Agreement (the "Agreement") is entered into as of the 16th day of November, 1999, by and among ARRAY BIOPHARMA, INC., a Delaware corporation (the "Company"), each of those persons listed on the signature pages hereto as either "Investors" or "Founders" and those certain other holders of the Company's capital stock as may be identified on the signature pages attached hereto from time to time (the "Holders") (the Investors, Founders and Holders are sometimes referred to collectively as the "Shareholders").
RECITALS
A. The Company, Investors and Founders previously entered into that certain Shareholders Agreement, dated as of May 18, 1998 (the "Shareholders Agreement"), as amended August 7, 1998.
B. The Company, Investors and Founders have entered into that certain Series B Preferred Stock Purchase Agreement, dated of even date herewith (the "Purchase Agreement"), pursuant to which the Company will issue and sell, and the Investors and Founders will purchase, certain shares of the Company's Series B Preferred Stock (the "Stock").
C. As a condition to the closing of the purchase of the Stock under the Purchase Agreement, the Company, Investors and Founders desire to amend and restate the Shareholders Agreement as provided herein.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing, the mutual covenants and agreements herein contained and other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the parties hereby agree as follows:
SECTION 1. DEFINITIONS
As used in this Agreement, the following terms shall have the following meanings:
"Affiliate" shall mean, with respect to any specified Person, any Person that, directly or indirectly, controls, is controlled by, or is under common control with, such specified Person, whether by contract, through one or more intermediaries, or otherwise. Unless otherwise qualified, all references to an "Affiliate" or to "Affiliates" in this Agreement shall refer to an Affiliate or Affiliates of the Company.
"As Converted Basis" shall mean, with reference to convertible securities of the Company, the number of shares of Common Stock into which such securities may be converted while giving effect to the exercise of comparable conversion rights held by others.
"Business Days" shall mean all days other than Saturday or Sunday or any day on which banking institutions in Denver, Colorado are authorized or obligated by law to close.
"Common Stock" shall mean (i) the common stock of the Company, $0.001 par value per share; (ii) any other capital stock of the Company into which such common stock is converted, exchanged, reclassified or reconstituted; (iii) any warrants or options exercisable for any of the foregoing; and (iv) any right to receive any of the foregoing other than upon conversion of any security convertible into any of the foregoing.
"Exchange Act" means the Securities Exchange Act of 1934, amended from time to time.
"Fair Market Value" shall mean the fair market value per share of Common Stock as determined in good faith by the Board of Directors.
"Person" means any natural person, incorporated entity, limited or general partnership, business trust, association, joint venture, limited liability company, agency (government or private), division, political sovereign, or subdivision or instrumentality, or any other entity of any kind, including those groups identified as "persons" in ss.ss.13(d)(3) and 14(d)(2) of the Exchange Act, and any successor, by merger or otherwise, of such entity.
"Preferred Stock" shall mean any series of preferred stock of the Company, including, without limitation, the Series A Preferred Stock and the Series B Preferred Stock.
"Qualifying IPO" shall mean an initial public offering of Common Stock pursuant to an effective registration statement under the Securities Act at a price per share of at least $8.00 and resulting in at least $20 million of gross proceeds (before underwriting discounts and commissions).
"Securities Act" means the Securities Act of 1933, as amended from time to time.
"Series A Preferred Stock" shall mean the Series A Preferred Stock, $0.001 par value per share, of the Company, or any other capital stock of the Company into which such stock is reclassified or reconstituted or any securities convertible into, or exchangeable or exercisable for, any of the foregoing, in each case, at any time outstanding.
"Series B Preferred Stock" shall mean the Series B Preferred Stock, $0.001 par value per share, of the Company, or any other capital stock of the Company into which such stock is reclassified or reconstituted or any securities convertible into, or exchangeable or exercisable for, any of the foregoing, in each case, at any time outstanding.
"Shares" shall mean (i) any shares of Common Stock; (ii) any shares of Preferred Stock; (iii) any shares of any other capital stock of the Company; and (iv) any securities convertible into, or exchangeable or exercisable for, any of the foregoing, in each case, at any time outstanding.
Other Defined Terms. The following terms shall have the meanings specified in the Sections set forth below:
Term Section ---- ------- Exempt Transfer 2.4 Related Party 2.5 Right of First Offer 2.2(a) Seller 2.2(a) Tag-Along Notice, Right, Shareholders 2.3 Transfer 2.1 Transfer Offer 2.2(a) Transfer Terms 2.3(a) |
SECTION 2. RESTRICTIONS ON SALE OR TRANSFER OF SHARES
2.1 General Prohibition. No Shareholder shall sell, assign, transfer, give, pledge, encumber or in any way dispose of, (collectively, a "Transfer") any Shares, or enter into an agreement to Transfer any Shares, other than an agreement that is expressly subject to compliance with the provisions of this Article 2, unless (a) such Shareholder has complied with the provisions of this Article 2, and (b) the transferee of any such Shares has agreed to be bound by the terms of, and become a party to, this Agreement. Any purported Transfer in violation of any provision of this Agreement shall be void and ineffective and shall not operate to Transfer any interest or title to the purported transferee. The prohibitions set forth in this Section 2.1 shall include, but shall not be limited to, unless specifically permitted hereunder, any agreement to limit, restrict or grant any voting rights with respect to any Shares.
2.2 Right of First Offer.
(a) If at any time, other than pursuant to an Exempt
Transfer, any Shareholder or their Related Party (each, a "Seller") desires to
Transfer any or all of the Shares or any rights to Shares held by such Seller
to any person, such Seller shall reduce to writing the terms pursuant to which
Seller desires to Transfer such Shares (a "Transfer Offer"). The Transfer Offer
shall identify the number of Shares to be transferred, the consideration for
the Shares, the identity of any third party offeror, and all the other terms
and conditions of such Transfer Offer. The Seller shall deliver the Transfer
Offer to the Company, Founders and Investors. Notwithstanding anything to the
contrary contained herein, for any Transfer by an Investor or Founder, or their
Exempt Transferees, of (i) Series A Preferred Stock, the rights set forth in
this Section 2.2 shall be limited to Transfer Offerees holding Series A
Preferred Stock, or (ii) Series B Preferred Stock, the rights set forth in this
Section 2.2 shall be limited to Transfer Offerees holding Series B Preferred
Stock and Section 2.3 shall not apply to any such Transfer of Series B
Preferred Stock.
(b) Subject to the conditions set forth in Section 2.2(a), each Investor and Founder (collectively, the "Transfer Offerees") shall have the right to purchase up to its pro rata
share of the Shares offered in the Transfer Offer, on the terms therein, exercisable by written notice to the Seller within 20 days of receipt of the Transfer Offer. For purposes of this Section 2.2(b), pro-rata share is determined by the respective Share holdings of each Transfer Offeree, expressed as a percentage of the total number of Shares held by all Transfer Offerees, on an As Converted Basis (including all shares of Common Stock issued or issuable upon the exercise of any outstanding options or warrants).
(c) If, after expiration of the 20 day period in Section 2.2(b), any Transfer Offer Shares remain unsubscribed, then the Seller shall, by written notice (the "Second Notice") no later than 5 days after expiration of the 20 day period, offer the Transfer Offerees who have elected to purchase Shares under Section 2.2(b) the right to purchase their pro-rata share of the unsubscribed Shares, such right exercisable by written notice to the Seller within 5 business days of receipt of the Second Notice. The Second Notice shall state the number of unsubscribed Shares, and the pro-rata share of those Shares for each Transfer Offeree. For purposes of this Section 2.2(c), pro-rata share is determined by the respective Share holdings of each Transfer Offeree, expressed as a percentage of the total number of Shares held by all Transfer Offerees electing to purchase unsubscribed Shares, on an As Converted Basis, including all shares of Common Stock issued or issuable upon the exercise of any outstanding options or warrants. Transfer Offerees electing to purchase unsubscribed Shares under this Section 2.2 (c) may assign to each other some or all of their pro-rata share.
(d) The closing of the purchases of Shares by the Transfer Offerees shall take place at the principal office of the Company at least 20 business days after the expiration of the Transfer Offer, or at least 20 business days after expiration of the Second Notice, whichever is later. At such closing, the Transfer Offerees shall deliver a certified check or checks in the appropriate amount to the Seller against delivery of certificates representing the Shares so purchased, duly endorsed in blank for transfer or accompanied by a stock power duly executed in blank. In the event that the consideration specified in the Transfer Offer is other than cash, then the Transfer Offerees may, at their option, deliver at such closing cash, in lieu of such other consideration, in an amount equal to the fair market value of such other consideration (as agreed upon by the parties or as determined by an independent appraisal, agreed upon by the parties).
(e) If the Transfer Offerees agree collectively to purchase less than all of the Shares offered in the Transfer Offer, the Seller shall have the right, for a period of 90 days from expiration of the Transfer Offer, to Transfer any remaining Shares to any person at a price not less than and on terms no more favorable than contained in the Transfer Offer. If the Seller has not completed the sale of all the Shares offered under the Transfer Offer within such 90 day period, the Seller shall no longer be permitted to Transfer such Transfer Stock pursuant to this Section 2.2 without again fully complying with the provisions hereof.
(f) Notwithstanding the foregoing, no sale may be made to any third party unless such third party agrees in writing, in form and substance reasonably acceptable to the Company, to be bound by the provisions of this Agreement. Promptly after any sale pursuant to this Section 2.2, the Seller shall notify the Company of the consummation thereof and shall
furnish such evidence of the completion (including time of completion) of such sale and of the terms thereof as the Company may reasonably request.
2.3 Tag-Along Rights.
(a) If (i) one or more Sellers at any time, or from time to
time, in one transaction or in a series of related transactions, propose to
Transfer to a Third Party (other than in an Exempt Transfer) Shares
representing more than 10 percent of the Company's outstanding Common Stock, on
an As Converted Basis (including all shares of Common Stock issued or issuable
upon the exercise of any outstanding warrants or options); and (ii) such
Sellers have complied with Section 2.2 hereof with respect to such proposed
Transfer to such Third Party and are entitled to proceed with such Transfer,
then each of the Founders and the Investors (other than any Founder or Investor
who is also the Seller) (collectively, the "Tag-Along Shareholders") shall have
the right (the "Tag-Along Right") to require the proposed purchaser to purchase
from such Tag-Along Shareholder up to such Tag-Along Shareholder's pro rata
portion of the Shares to be Transferred (determined for purposes of this
Section 2.3 by multiplying the total number of Shares to be purchased by a
fraction, the numerator of which is the total number of Shares owned by the
Tag-Along Shareholder, and the denominator of which is the total number of
Shares owned by the Seller(s) and all Tag-Along Shareholders). Any Shares
purchased from Tag-Along Shareholders pursuant to this Section 2.3 shall be
paid for in cash, at the same price per share and upon the same terms and
conditions as such proposed Transfer by the Seller (the "Transfer Terms").
(b) The Seller(s) shall notify promptly the Tag-Along Shareholders in the event they propose to make a Transfer giving rise to the Tag-Along Right, and shall furnish the Tag-Along Shareholders with the Transfer Terms and a copy of any written offer or agreement pertaining thereto. The Tag-Along Right may be exercised by any Tag-Along Shareholder by delivery of a written notice to each Seller proposing to sell Shares (the "Tag-Along Notice") within 15 Business Days following its receipt of such notice from each such Seller, stating the number of Shares that such Tag-Along Shareholder proposes to include in the Transfer. In the event that the proposed purchaser does not purchase the specified number of Shares from the Tag-Along Shareholders on the Transfer Terms, and subject to the same terms and conditions as are applicable to the Seller(s) in such transaction, then the Seller(s) shall not be permitted to sell any Shares to the proposed purchaser in the proposed Transfer.
2.4 Exempt Transfer. As used herein, the term "Exempt Transfer" shall
mean (a) Transfers between any Shareholder and its respective Related Parties;
(b) Transfers pursuant to an effective registration statement under the
Securities Act; (c) Transfers that are approved in writing by all Shareholders;
(d) Transfers by a Shareholder of Shares as collateral security for loans made
to such Shareholder, the proceeds of which are used by the transferring
Shareholder in the exercise of such Shareholder's rights under Section 2.2 of
this Agreement; (e) Transfers between a Shareholder and the Company pursuant to
a validly adopted stock purchase plan for employees and directors of, or
consultants to, the Company; and (f) Transfers between existing Shareholders
provided that the proposed transferror of any such Transfer delivers notice of
all of the terms of such Transfer to all other Shareholders at least 20 days
prior to the closing of such
Transfer; provided, further, that (i) no such Transfer pursuant to this Section
2.4 (except as set forth in clause (d) above) shall be an Exempt Transfer
unless the transferee agrees in writing to be bound by this Agreement as a
Shareholder with respect to the Shares received by such transferee, and (ii)
the foreclosure upon any lien, pledge or security interest granted pursuant to
an Exempt Transfer described in clause (d) and any Transfer of such Shares
subsequent to such foreclosure shall not constitute an Exempt Transfer and
shall be subject to all provisions of this Agreement, including, without
limitation, the provisions of this Article 2.
2.5 Related Party. As used herein, the term "Related Party" with respect to any Shareholder means, as of the time of any Transfer, (a) any person or entity that, directly or indirectly, through one or more intermediaries, has voting control of, or is under common voting control with, such Shareholder; (b) with respect to individuals, such Shareholder's spouse, parents, children, siblings and/or grandchildren; (c) a trust, corporation, partnership or other entity, whose beneficiaries, shareholders, partners, or owners, or other persons or entities holding a controlling interest in which, consist of such Shareholder and/or such other persons or entities referred to in the immediately preceding clauses (a) or (b); and (d) with respect to any Shareholder which is a partnership, a limited liability company or a corporation, such Shareholders' current partners, members or shareholders in proportion to their ownership.
2.6 Opinion of Counsel. Notwithstanding any provision herein to the contrary, if timely requested by the Company, no Shareholder shall Transfer any Shares unless such Shareholder shall first obtain an opinion of counsel satisfactory to the Company to the effect that such Transfer is either exempt from the registration provisions of the Securities Act or that the Securities Act is inapplicable to such Transfer.
SECTION 3. RIGHTS OF FIRST REFUSAL
3.1 Subsequent Offerings. Each Investor and Founder 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 Equity Securities excluded by
Section 3.6 hereof. For purposes of this Section 3, each Investor's and
Founder's pro rata share is equal to the ratio of (a) the number of shares of
the Company's Common Stock that such Investor or Founder is a holder of on an
As Converted Basis immediately prior to the issuance of such Equity Securities
to (b) the total number of shares of the Company's outstanding Common Stock on
an As Converted Basis held by all Investors and Founders immediately prior to
the issuance of the Equity Securities. The term "Equity Securities" shall mean
(i) any Common Stock, Preferred Stock or other security of the Company; (ii)
any security convertible, with or without consideration, into any Common Stock,
Preferred Stock or other security (including any option to purchase such a
convertible security); (iii) any security carrying any warrant or right to
subscribe to or purchase any Common Stock, Preferred Stock or other security;
or (iv) any such warrant or right.
3.2 Exercise of Rights. If the Company proposes to sell and issue any Equity Securities, it shall give each Investor and Founder 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 Investor and Founder shall have 20 days from the giving of such notice to elect to purchase its pro rata share of the Equity Securities for the price and upon the terms and conditions specified in the Company's 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 Investor or Founder that would cause the Company to be in violation of applicable federal securities laws by virtue of such offer or sale.
3.3 Company Sale. The Company shall have 120 days from the giving of
notice under Section 3.2 to sell any Equity Securities not purchased under
Section 3.2, at a price and upon general terms and conditions materially no
more favorable than specified in such notice, without offering such Equity
Securities again to the Investors and Founders in the manner provided above.
3.4 Termination of Rights of First Refusal. The rights of first refusal established by this Section 3 shall not apply to, and shall terminate upon, the effective date of the registration statement pertaining to a Qualifying IPO.
3.5 Transfer of Rights of First Refusal. The rights of first refusal of each Investor and Founder under this Section 3 may be transferred to the same parties, subject to the same restrictions as any transfer of registration rights pursuant to the Investor Rights Agreement, dated of even date herewith, by and between the Company, the Investors and the Founders.
3.6 Excluded Securities. The rights of first refusal established by this Section 3 shall have no application to any of the following Equity Securities:
(a) to the shares of Common Stock (and/or options, warrants or other Common Stock purchase rights issued pursuant to 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 any valid option plan of the Company;
(b) stock issued pursuant to any options, warrants or other rights outstanding as of the date of this Agreement;
(c) any Equity Securities issued pursuant to the Purchase Agreement;
(d) any Equity Securities issued for consideration other than cash pursuant to a merger, consolidation, acquisition or similar business combination;
(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 any other shares of capital stock of the Company convertible into Common Stock; and
(g) any Equity Securities that are issued by the Company pursuant to a registration statement filed under the Securities Act.
SECTION 4. NUMBER OF DIRECTORS; BOARD COMMITTEES
4.1 Number of Directors. At all times during which this Agreement remains in effect, the Board of Directors of the Company (the "Board of Directors") shall consist of no less than seven directors and no more than nine directors.
4.2 Voting; Board of Directors. The Board shall be 7 members initially. Each Shareholder hereby agrees, at all times during which this Agreement remains in effect, to vote its Shares entitled to vote upon the election of directors such that (i) at least three individuals designated by the Founders are elected to the Board; and (ii) at least four individuals designated by the Investors are elected to the Board; provided, however, that the fourth member designated by the Investors shall be with the consent of Founders. The Investors agree to vote their Shares such that at least one nominee of Frazier Healthcare II, L.P. is elected to the Board. The Founders shall be given notice of, and shall be entitled to attend, all Board Meetings.
4.3 Vacancies of Directors. In the event that any vacancy occurs on the Board of Directors because of death, disability, resignation, retirement or removal of any director during the term in which the provisions for election of directors set forth in Section 4.2 remain in effect, each Shareholder shall vote all of its Shares in a manner to cause such vacancy to be filled so as to give effect to the provisions of Section 4.2. Any election necessary to fill any such vacancy shall be held as soon as practicable after the occurrence of any such vacancy, but in any event within 30 days after the occurrence thereof.
4.4 Major Decisions of the Board of Directors.
(a) In addition to any vote or consent of the shareholders required by law, the Company's Certificate of Incorporation or any other agreement to which the Company is a party, the affirmative consent of at least a majority of the members of the Board of Directors (as opposed to a majority of the members of the Board of Directors that are present at a meeting and entitled to vote on a particular issue) shall be necessary for effecting, validating or permitting:
(i) any hiring, termination or demotion of any elected officer of the Company; or
(ii) any consolidation or merger involving the Company (other than a consolidation or merger in which the Company is the surviving entity and no change in the capital stock or ownership of the Company occurs), any transaction or series of transactions in which an excess of 50% of the Company's voting power is transferred, or any dissolution, liquidation, or winding up of the Company, or any sale of more than 50% of the assets of the Company, or any agreement to become so obligated.
(b) In addition to any vote or consent of the shareholders required by law, the Company's Certificate of Incorporation or any other agreement to which the Company is a party, the affirmative consent of majority of the holders of the Company's common stock, shall be necessary for effecting, validating or permitting any transaction specified in Section 4.2(a)(ii) above.
4.5 Observation Rights; Board of Directors. The following Investors shall have the right to appoint observers to the Board of Directors (the "Board Observers"): Frazier Healthcare II, L.P. (one Board Observer); ARCH Venture Fund III, L.P. (two Board Observers); and Rovent II Limited Partnership (one Board Observer); provided, however, that one of the Board Observers for ARCH Venture Fund III, L.P. shall be Robert Nelson or Steve Lazarus. The Board Observers shall be provided with the same notice with respect to all meetings that is provided to the members of the Board of Directors, be entitled to attend each meeting of the Board of Directors (including executive sessions) and receive copies of all materials that are distributed to the members of the Board of Directors. The Board Observers shall not be considered members of the Board of Directors for any purpose whatsoever and shall not be entitled to vote on any matters before the Board of Directors or counted for purposes of determining whether a quorum exists at a meeting of the Board of Directors.
SECTION 5. REMEDIES FOR BREACH
5.1 General. If any Shareholder under this Agreement fails to give a notice, make an offer, sell Shares of the Company, close a sale or do any other act required of such Shareholder under this Agreement, then, if the failure continues for ten Business Days after notice to the Shareholder in default by the Company or one of the non-defaulting Shareholders, the Company and such non-defaulting Shareholders, or any one of them, may institute and maintain a proceeding to compel the defaulting Shareholder's specific performance of this Agreement. The remedy of specific performance shall be in addition to any and all of the remedies at law or in equity including, but not limited to, injunctive relief and an action for damages, to which any Shareholder of the Company may be entitled, subject to compliance with Section 7.10 hereof.
5.2 No Personal Liability. No Shareholder shall have any personal liability for any debts of the Company that may be created as a result of this Agreement unless otherwise agreed to in writing by such Shareholder.
SECTION 6. LEGEND ON STOCK CERTIFICATES
Each Shareholder agrees that the certificates representing Shares subject to the provisions of this Agreement shall be endorsed as follows:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT
AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION TO THE REGISTRATION REQUIREMENTS OF SUCH ACT OR SUCH LAWS.
THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A SHAREHOLDERS AGREEMENT DATED AS OF MAY 18, 1998, AS AMENDED AND RESTATED NOVEMBER 16, 1999, AND AS MAY BE AMENDED FURTHER FROM TIME TO TIME, AND SAID SHARES MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT IN ACCORDANCE WITH THE TERMS OF SUCH AGREEMENT. SUCH AGREEMENT MAY BE EXAMINED AT THE PRINCIPAL PLACE OF BUSINESS OF THE COMPANY AND A COPY THEREOF WILL BE FURNISHED WITHOUT CHARGE TO THE HOLDER OF THIS CERTIFICATE UPON RECEIPT BY THE COMPANY AT ITS PRINCIPAL PLACE OF BUSINESS OR REGISTERED OFFICE OF A WRITTEN REQUEST FROM THE SHAREHOLDER."
SECTION 7. MISCELLANEOUS
7.1 Modifications and Waivers. This Agreement may not be amended or modified, nor may the rights of any party be waived, except by a written document that is executed by the Company, and by two-thirds of the Shares held by Founders, Investors, and 51% of the Shares held by Holders, each voting as a class. Notwithstanding the foregoing, additional Holders may become parties to this Agreement with only the consent of the Company by executing, together with the Company, a counterpart signature page hereto.
7.2 Rights and Obligations of Third Parties. Nothing in this Agreement, whether express or implied, is intended to confer any rights or remedies under or by reason of this Agreement on any persons other than the parties to it and their respective successors and permitted assigns, nor is anything in this Agreement intended to relieve or discharge the obligation or liability of any third parties to any party to this Agreement, nor shall any provision give any third party any right of subrogation or action against any party to this Agreement.
7.3 Notices. Any notice, request, consent, or other communication
hereunder shall be in writing, and shall be sent by one of the following means:
(a) by registered or certified first class mail, postage prepaid, return
receipt requested; (b) by facsimile transmission with confirmation of receipt;
(c) by overnight courier service; or (d) by personal delivery, and shall be
properly addressed to the Company at its principal offices and to the
Shareholders at the addresses or facsimile numbers set forth in the shareholder
records of the Company. The Company hereby agrees to provide a list of
Shareholders addresses upon written request by any party executing this
Agreement. Notices sent by mail or by courier shall be effective seven days
after they are sent, and notices delivered personally by facsimile shall be
effective at the time of delivery thereof.
7.4 Entire Agreement. This Agreement constitutes the entire agreement between the parties hereto in relation to the subject matter hereof. Any prior written or oral negotiations, correspondence, or understandings relating to the subject matter hereof, including the Company's Shareholder Agreement dated as of February 6, 1998, shall be superseded by this Agreement and shall have no force or effect.
7.5 Severability. If any provision that is not essential to the effectuation of the basic purpose of this Agreement is determined by a court of competent jurisdiction to be invalid and contrary to any existing or future law, such invalidity shall not impair the operation of the remaining provisions of this Agreement.
7.6 Headings. The headings of the Sections of this Agreement are inserted for convenience of reference only and shall not affect the construction or interpretation of any provisions hereof.
7.7 Counterparts. This Agreement may be executed in any number of counterparts, each of which when executed and delivered shall be an original, but all of which together shall constitute one and the same instrument.
7.8 Governing Law. This Agreement shall be construed in accordance with and governed by the laws of the State of Colorado.
7.9 Delays or Omissions. No delay or omission to exercise any right, power, or remedy accruing to either party, upon any breach or default of the other party under this Agreement, shall impair any such right, power, or remedy, nor shall it be construed to be a waiver of any such breach or default, or an acquiescence therein, or of or in any similar breach of default thereafter occurring; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring. Any waiver, permit, consent, or approval on the part of either party of any breach or default by the other party under this Agreement, or any waiver of any provisions or conditions of this Agreement must be made in writing signed by the parties and shall be effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement or by law or otherwise afforded to either party, shall be cumulative and not alternative.
7.10 Arbitration. Except as set forth in Section 5.1, the parties hereby covenant and agree that any legal suit, dispute, claim, demand, controversy or cause of action of every kind and nature whatsoever, known or unknown, fixed or contingent, that either a Shareholder or the Company may now have or at any time in the future claim to have based in whole or in part, or arising from or out of or that in any way is related to the negotiations, execution, interpretation or enforcement of this Agreement (collectively, the "Disputes") shall be completely and finally settled by submission of any such Disputes to arbitration under the rules of the American Arbitration Association ("AAA") then in effect. There shall be one arbitrator, and such arbitrator shall be chosen by mutual agreement of the parties in accordance with AAA rules. Unless the parties agree otherwise, the arbitration proceedings shall take place in Boulder, Colorado. The arbitrator shall apply Colorado law to all issues in dispute, in accordance with Section 7.8 above.
Notice of demand for arbitration shall be filed in writing with the other party to this Agreement and with the AAA. In no event shall the demand for arbitration be made after the date when institution of legal or equitable proceedings based on such Dispute would be barred by the applicable statute of limitations. The findings of the arbitrator shall be final and binding on the parties. Judgment on such award may be entered in any court of competent jurisdiction, or application may be made to that court for a judicial acceptance of the award and an order or enforcement, as the party seeking to enforce that award may elect. The prevailing party in any such action shall be entitled to receive from the losing party all reasonable costs and expenses, including the reasonable fees of attorneys, accountants, and other experts, incurred by the prevailing party in investigating and prosecuting (or defending) such action, together with any such fees which may be incurred in enforcing any award or judgment.
7.11 Termination. This Agreement shall terminate upon the earlier of the following to occur: (a) a Qualifying IPO; (b) the sale of all or substantially all of the assets of the Company; or (c) the mutual written consent of each party hereto. Upon such termination, all rights and obligations of the parties hereto shall terminate. This Agreement shall terminate also as to any party hereto when such party no longer holds any Shares.
[SIGNATURE PAGES FOLLOW]
IN WITNESS WHEREOF, the parties have executed this Shareholders Agreement as of the date first above written.
COMPANY: INVESTORS:
ARRAY BIOPHARMA, INC., a Delaware FRAZIER HEALTHCARE II, L.P.
Corporation
By: /s/ ROBERT CONWAY By: /s/ ALAN D. FRAZIER
------------------------------------------ ------------------------------------------------
Robert Conway, Chief Executive Officer Name: Alan D. Frazier
----------------------------------------------
Title: Managing Partner
---------------------------------------------
ARCH VENTURE FUND III, L.P.
By: Arch Venture Partners, LLC, its
General Partner
By: /s/ KEITH L. CRADELL
------------------------------------------------
Name: Keith L. Cradell
----------------------------------------------
Title: Managing Director
---------------------------------------------
ROVENT II LIMITED PARTNERSHIP
By: Advent International Limited
Partnership, its General Partner
By: Advent International Corporation,
its General Partner
By: /s/ JASON FISHERMAN
------------------------------------------------
Name: Jason Fisherman
----------------------------------------------
Title: V.P.
---------------------------------------------
MITSUI & CO. (U.S.A.), INC.
By: /s/ YOICHIRO ENDO
------------------------------------------------
Name: Yoichiro Endo
----------------------------------------------
Title: General Manager
---------------------------------------------
FALCON TECHNOLOGY PARTNERS, L.P.,
a Delaware limited partnership
By: /s/ JAMES L. RATHMANN
------------------------------------------------
James L. Rathmann, General Partner
|
BOULDER VENTURES II, L.P.,
A DELAWARE LIMITED PARTNERSHIP
By: /s/ KYLE LEFKOFF
------------------------------------------------
Kyle Lefkoff, General Partner
BOULDER VENTURES II, (ANNEX) L.P.,
A DELAWARE LIMITED PARTNERSHIP
By: /s/ KYLE LEFKOFF
----------------------------------------------
Kyle Lefkoff, General Partner
THE CARUTHERS FAMILY, L.L.C.
By: /s/ MARVIN H. CARUTHERS
-----------------------------------------------
Marvin H. Caruthers, Ph.D., Manager
/s/ FRANK A. BONSAL, JR.
-----------------------------------------------
FRANK A. BONSAL, JR.
/s/ RICHARD J. DALY
-----------------------------------------------
RICHARD J. DALY
/s/ MICHAEL CARUTHERS
-----------------------------------------------
MICHAEL CARUTHERS
/s/ CHRISTOPHER D. OZEROFF
-----------------------------------------------
CHRISTOPHER D. OZEROFF
/s/ THERESA KOCH
-----------------------------------------------
THERESA KOCH
/s/ WILLIAM R. ROBERTS
-----------------------------------------------
WILLIAM R. ROBERTS
FOUNDERS:
/s/ DAVID SNITMAN, PH.D.
-----------------------------------------------
DAVID SNITMAN, PH.D.
/s/ KEVIN KOCH, PH.D.
-----------------------------------------------
KEVIN KOCH, PH.D.
|
/s/ ANTHONY D. PISCOPIO
-----------------------------------------------
ANTHONY D. PISCOPIO, PH.D.
/s/ K.C. NICOLAOU, PH.D.
-----------------------------------------------
K.C. NICOLAOU, PH.D.
HOLDERS:
/s/ FRANCIS J. BULLOCK
-----------------------------------------------
FRANCIS J. BULLOCK
/s/ JOHN JOSEY
-----------------------------------------------
JOHN JOSEY
/s/ LARRY BURGESS
-----------------------------------------------
LARRY BURGESS
/s/ CHAN KOU HWANG
-----------------------------------------------
CHAN KOU HWANG
|
EXHIBIT 10.19
FIRST AMENDMENT TO
AMENDED AND RESTATED SHAREHOLDERS AGREEMENT
THIS FIRST AMENDMENT TO AMENDED AND RESTATED SHAREHOLDERS AGREEMENT (the "Agreement") is made and entered into as of the ___ day of April , 2000, by and among ARRAY BIOPHARMA INC., a Delaware corporation (the "Company"), each of those persons listed on the signature pages hereto as either "Investors" or "Founders" and those certain other holders of the Company's capital stock as may be identified on the signature pages attached hereto (the "Holders") (the Investors, Founders and Holders are sometimes referred to collectively as the "Shareholders").
RECITAL
WHEREAS, the Company and the Shareholders previously entered into that certain Amended and Restated Shareholders Agreement, dated as of November 16, 1999 (the "Shareholders Agreement"), and the Company and the Shareholders desire to amend the Shareholders Agreement as provided herein.
NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
AGREEMENT
1. Amendment. The Shareholders Agreement shall be amended as follows:
The following subsection (h) shall be added to Section 3.6:
(h) any Equity Securities issued in connection with a credit facility approved by the Board of Directors.
2. Interpretation. Except as expressly amended by this Agreement, the Investor Rights Agreement shall remain in full force and effect without change.
3 . Counterparts. This Agreement may be executed in any number of counterparts, each of which when executed and delivered shall be an original, but all of which together shall constitute one and the same instrument.
[SIGNATURE PAGES FOLLOW]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date above first written.
COMPANY: INVESTORS:
ARRAY BIOPHARMA, INC, a Delaware FRAZIER HEALTHCARE II, L.P.
Corporation
By: /s/ ROBERT CONWAY By: /s/ ALAN D. FRAZIER
--------------------------------------- -------------------------------
Robert Conway, Chief Executive Officer Name: Alan D. Frazier
-----------------------------
Title: Managing Partner
----------------------------
ARCH VENTURE FUND III, L.P.
By: Arch Venture Partners, LLC,
its General Partner
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
ROVENT II LIMITED PARTNERSHIP
By: Advent International Limited
Partnership, its General
Partner
By: Advent International
Corporation, its General
Partner
By: /s/ JASON FISHERMAN
-------------------------------
Name: Jason Fisherman
-----------------------------
Title: V.P.
----------------------------
MITSUI & CO. (U.S.A.), INC.
By: /s/ YOICHIRO ENDO
-------------------------------
Name: Yoichiro Endo
-----------------------------
Title: General Manager
----------------------------
FALCON TECHNOLOGY PARTNERS, L.P.,
a Delaware limited partnership
By: /s/ JAMES L. RATHMANN
-------------------------------
James L. Rathmann, General
Partner
|
BOULDER VENTURES II, L.P.,
A DELAWARE LIMITED PARTNERSHIP
By: /s/ KYLE LEFKOFF ------------------------------- Kyle Lefkoff, General Partner |
BOULDER VENTURES II, (ANNEX) L.P.,
A DELAWARE LIMITED PARTNERSHIP
By: /s/ KYLE LEFKOFF ------------------------------- Kyle Lefkoff, General Partner |
THE CARUTHERS FAMILY, L.L.C.
By: /s/ MARVIN H. CARUTHERS
-------------------------------
Marvin H. Caruthers, Ph.D.,
Manager
|
/s/ MICHAEL CARRUTHERS ---------------------------------- MICHAEL CARRUTHERS |
FOUNDERS:
/s/ DAVID SNITMAN ---------------------------------- DAVID SNITMAN, PH.D. /s/ KEVIN KOCH ---------------------------------- KEVIN KOCH, PH.D. /s/ ANTHONY D. PISCOPIO ---------------------------------- ANTHONY D. PISCOPIO, PH.D. |
/s/ K.C. NICOLAOU ---------------------------------- K.C. NICOLAOU, PH.D. |
HOLDERS:
/s/ FRANCIS J. BULLOCK ---------------------------------- FRANCIS J. BULLOCK /s/ JOHN JOSEY ---------------------------------- JOHN JOSEY |
CATHERINE A. TARLETON
EXHIBIT 10.20
AMENDMENT NO. 2 TO
AMENDED AND RESTATED
SHAREHOLDERS AGREEMENT
ARRAY BIOPHARMA INC.
AMENDMENT NO. 2 TO
AMENDED AND RESTATED SHAREHOLDERS AGREEMENT
This Amendment No. 2 to Amended and Restated Shareholders Agreement (this "Amendment") is entered into as of the 31st day of August, 2000, by and among Array BioPharma Inc., a Delaware corporation (the "Company") and each of those persons listed on the signature pages hereto as either "Investors", "Founders" or "Holders".
RECITALS
A. The Company, Founders and certain Investors and Holders previously entered into that certain Amended and Restated Shareholders Agreement, dated as of November 16, 1999 (as amended heretofore, the "Shareholders Agreement").
B. The Company, certain Investors and Founders have entered into that certain Series C Preferred Stock Purchase Agreement, dated of even date herewith (the "Purchase Agreement"), pursuant to which the Company will issue and sell, and the Investors and Founders will purchase, certain shares of the Company's Series C Preferred Stock (the "Stock").
C. As a condition to the closing of the purchase of the Stock under the Purchase Agreement, the Company, Investors, Founders and Holders desire to amend the Shareholders Agreement as provided herein.
D. The Investors and Founders acknowledge that the Company has complied with its obligations under Section 3 of the Shareholders Agreement relating to Rights of First Refusal in connection with the issuance of the Stock under the Purchase Agreement and waive such right solely in connection with the issuance of Stock under the Purchase Agreement.
Now, Therefore, in consideration of the foregoing, the mutual covenants and agreements herein contained and other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the parties hereby agree that the Shareholders Agreement shall be amended as follows:
AMENDMENTS
1. In Section 1 of the Shareholders Agreement, the definition of "Preferred Stock" shall be amended in its entirety to read as follows:
"Preferred Stock" shall mean any series of preferred stock of the Company, including, without limitation, the Series A Preferred Stock, the Series B Preferred Stock and Series C Preferred Stock.
2. In Section 1 of the Shareholders Agreement, the following definition shall be added:
"Series C Preferred Stock" shall mean the Series C Preferred Stock, $0.001 par value per share, of the Company, or any other capital stock of the Company into which such stock is reclassified or reconstituted or any securities convertible into, or exchangeable or exercisable for, any of the foregoing, in each case, at any time outstanding.
3. Section 2.2(a) of the Shareholders Agreement shall be amended in its entirety to read as follows:
2.2 Right of First Offer.
(a) If at any time, other than pursuant to an Exempt Transfer, any Shareholder or their Related Party (each, a "Seller") desires to Transfer any or all of the Shares or any rights to Shares held by such Seller to any person, such Seller shall reduce to writing the terms pursuant to which Seller desires to Transfer such Shares (a "Transfer Offer"). The Transfer Offer shall identify the number of Shares to be transferred, the consideration for the Shares, the identity of any third party offeror, and all the other terms and conditions of such Transfer Offer. The Seller shall deliver the Transfer Offer to the Company, Founders and Investors. Notwithstanding anything to the contrary contained herein, for any Transfer by an Investor or Founder, or their Exempt Transferees, of:
(i) Series A Preferred Stock, the rights set forth in this
Section 2.2 shall be limited to Transfer Offerees holding Series
A Preferred Stock;
(ii) Series B Preferred Stock, the rights set forth in this
Section 2.2 shall be limited to Transfer Offerees holding Series
B Preferred Stock; or
(iii) Series C Preferred Stock, the rights set forth in this
Section 2.2 shall be limited to Transfer Offerees holding Series
C Preferred Stock.
Notwithstanding anything to the contrary contained herein, Section 2.3 shall not apply to any such Transfer of Series B Preferred Stock or Series C Preferred Stock.
MISCELLANEOUS
1. Interpretation. Except as expressly amended by this Amendment, the Shareholders Agreement shall remain in full force and effect without change.
2. Counterparts. This Amendment may be executed in any number of counterparts, each of which when executed and delivered shall be an original, but all of which together shall constitute one and the same instrument.
3. Effective Time. This Amendment shall be effective following its execution by the Founders who hold two-thirds of the Shares (as defined in the Shareholders Agreement) held by
the Founders, the Investors who hold two-thirds of the Shares (as defined in the Shareholders Agreement) held by the Investors and Holders who hold 51% of the Shares (as defined in the Shareholders Agreement) held by Holders, each voting as a class, in accordance with Section 7.1 of the Shareholders Agreement.
4. Additional Investors. Each party who purchases Stock pursuant to the Purchase Agreement agrees to be bound by the terms of the Shareholders Agreement and shall be deemed an additional "Investor" for all purposes thereunder.
[signature pages follow]
IN WITNESS WHEREOF, the parties have executed this Amendment No. 2 to Amended and Restated Shareholders Agreement as of the date first above written.
COMPANY: FOUNDERS:
/s/ DAVID SNITMAN
ARRAY BIOPHARMA INC. -------------------------------
David Snitman, Ph.D.
By: /s/ ROBERT CONWAY
----------------------------------------- /s/ KEVIN KOCH
Robert Conway, Chief Executive Officer -------------------------------
Kevin Koch, Ph.D.
/s/ ANTHONY D. PISCOPIO
-------------------------------
Anthony D. Piscopio, Ph.D.
/s/ K.C. NICOLAOU
-------------------------------
K.C. Nicolaou, Ph.D.
INVESTORS:
FRAZIER HEALTHCARE II, L.P.
By: /s/ ROBERT W. OVERELL
----------------------------
Name: ROBERT W. OVERELL
--------------------------
Title: General Partner
-------------------------
ARCH VENTURE FUND III, L.P.
By: Arch Venture Partners, LLC,
its General Partner
By: /s/ ROBERT NELSON
----------------------------
Name: Robert Nelson
--------------------------
Title: Managing Director
-------------------------
|
ROVENT II LIMITED PARTNERSHIP
By: Advent International Limited Partnership,
its General Partner
By: Advent International Corporation,
its General Partner
By: /s/ JASON FISHERMAN
------------------------------------------
Name: Jason Fisherman
----------------------------------------
Title: V.P.
---------------------------------------
|
MITSUI & CO. (U.S.A.), INC.
By: /s/ YOUICHIRO ENDO
------------------------------------------
Name: Youichiro Endo
----------------------------------------
Title: General Manager
---------------------------------------
|
FALCON TECHNOLOGY PARTNERS, L.P.
By: /s/ JAMES L. RATHMANN ------------------------------------------ James L. Rathmann, General Partner |
BOULDER VENTURES II, L.P.
By: /s/ KYLE LEFKOFF ------------------------------------------ Kyle Lefkoff, General Partner |
BOULDER VENTURES II, ANNEX L.P.
By: /s/ KYLE LEFKOFF ------------------------------------------ Kyle Lefkoff, General Partner |
THE CARUTHERS FAMILY, L.L.C.
By: /s/ MARVIN H. CARUTHERS ------------------------------------------ Marvin H. Caruthers, Ph.D., Manager /s/ Frank A. Bonsal, Jr. --------------------------------------------- FRANK A. BONSAL, JR. /s/ Richard J. Daly --------------------------------------------- RICHARD J. DALY |
/s/ MICHAEL CARRUTHERS --------------------------------------------- MICHAEL CARRUTHERS /s/ CHRISTOPHER D. OZEROFF --------------------------------------------- CHRISTOPHER D. OZEROFF /s/ THERESA A. KOCH --------------------------------------------- THERESA A. KOCH /s/ WILLIAM R. ROBERTS --------------------------------------------- WILLIAM R. ROBERTS /s/ KIRBY L. CRAMER --------------------------------------------- KIRBY L. CRAMER /s/ JOSEPH LEFKOFF --------------------------------------------- JOSEPH LEFKOFF |
VECTOR LATER-STAGE EQUITY FUND II, L.P.
By: Vector Fund Management II, L.L.C., its
General Partner
By: /s/ BARCLAY A. PHILLIPS
------------------------------------------
Print Name: BARCLAY A. PHILLIPS
----------------------------------
Title: Managing Director
---------------------------------------
|
VECTOR LATER-STAGE EQUITY FUND II (Q.P.), L.P.
By: Vector Fund Management II, L.L.C., its
General Partner
By: /s/ BARCLAY A. PHILLIPS
------------------------------------------
Print Name: BARCLAY A. PHILLIPS
----------------------------------
Title: Managing Director
---------------------------------------
|
MOSAIX VENTURES, LP
By: Mosaix Ventures Management, LLC, its
General Partner
By: /s/ RANJAN LAL ------------------------------------------- Ranjan Lal, Managing Partner |
HOLDERS:
/s/ FRANCIS J. BULLOCK --------------------------------------------- FRANCIS J. BULLOCK /s/ CHAN KOU HWANG --------------------------------------------- CHAN KOU HWANG |
/s/ CHANG RAO --------------------------------------------- CHANG RAO /s/ THOMAS J. ZAMBORELLI --------------------------------------------- THOMAS J. ZAMBORELLI /s/ EILEEN P. JOSEY --------------------------------------------- EILEEN P. JOSEY /s/ ADAM COOK --------------------------------------------- ADAM COOK /s/ JOHN GAUDINO --------------------------------------------- JOHN GAUDINO /s/ ZACHARY JONES --------------------------------------------- ZACHARY JONES /s/ CATHERINE A. TARLTON --------------------------------------------- CATHERINE A. TARLTON /s/ EUGENE TARLTON --------------------------------------------- EUGENE TARLTON /s/ YONGXIN HAN --------------------------------------------- YONGXIN HAN /s/ GUY P.A. VIGERS --------------------------------------------- GUY P.A. VIGERS |
/s/ HONGMEI HUANG --------------------------------------------- HONGMEI HUANG /s/ BRADLEY J. NEWHOUSE --------------------------------------------- BRADLEY J. NEWHOUSE /s/ JULIA F. KENDALL --------------------------------------------- JULIA F. KENDALL /s/ ROBERT J. KAUS --------------------------------------------- ROBERT J. KAUS /s/ GREGORY F. MIKNIS --------------------------------------------- GREGORY F. MIKNIS /s/ JEFFERY D. YINGLING --------------------------------------------- JEFFERY D. YINGLING |
/s/ ERIK HEDL --------------------------------------------- ERIK HEDL /s/ JILL K. FARSON --------------------------------------------- JILL K. FARSON /s/ ROBERT E. CONWAY --------------------------------------------- ROBERT E. CONWAY /s/ SUSAN BAKER --------------------------------------------- SUSAN BAKER /s/ ALAN FLORJANCIC --------------------------------------------- ALAN FLORJANCIC |
/s/ GEOFF CARRUTHERS --------------------------------------------- GEOFF CARRUTHERS /s/ RICHARD CARRUTHERS --------------------------------------------- RICHARD CARRUTHERS /s/ KAREN CARRUTHERS --------------------------------------------- KAREN CARRUTHERS /s/ ROBERT CARRUTHERS --------------------------------------------- ROBERT CARRUTHERS /s/ JERI CARRUTHERS --------------------------------------------- JERI CARRUTHERS /s/ LAURENCE E. BURGESS --------------------------------------------- LAURENCE E. BURGESS /s/ GEORGE LEWIS --------------------------------------------- GEORGE LEWIS |
/s/ JOHN A. JOSEY --------------------------------------------- JOHN A. JOSEY /s/ CONRAD W. HUMMEL --------------------------------------------- CONRAD W. HUMMEL |
/s/ MEG HUMMEL --------------------------------------------- MEG HUMMEL /s/ KATHY HALM --------------------------------------------- KATHY HALM /s/ GARY HINGORANI --------------------------------------------- GARY HINGORANI /s/ JOANNA MONEY --------------------------------------------- JOANNA MONEY /s/ JEANIE HENDRIXSON --------------------------------------------- JEANIE HENDRIXSON /s/ APRIL KENNEDY --------------------------------------------- APRIL KENNEDY A.K. |
/s/ RONALD EVANS --------------------------------------------- RONALD EVANS |
/s/ STEPHEN SCHLACHTER --------------------------------------------- STEPHEN SCHLACHTER /s/ KEVIN ASH --------------------------------------------- KEVIN ASH |
EXHIBIT 10.21
ARRAY BIOPHARMA INC.
LOAN AND SECURITY AGREEMENT
WITH
SILICON VALLEY BANK
October 9, 1998
- CLOSING BINDER -
ARRAY BIOPHARMA INC.
Loan and Security Agreement with Silicon Valley Bank
A. THE TRANSACTION
On October 9, 1998, Array BioPharma Inc. (the "Borrower") entered into a Loan and Security Agreement (the "Loan") with Silicon Valley Bank ("SVB") for the purchase of new equipment to be secured by such equipment. In connection with the Loan, the Borrower issued to SVB 40,000 warrants for the purchase of Series A preferred stock and the Investors' Rights Agreement of Borrower was amended to grant SVB certain registration rights with respect to such stock.
B. LIST OF CLOSING DOCUMENTS
(Unless otherwise indicated, all documents are dated October 9, 1998)
1. Loan and Security Agreement with Exhibits and Schedules
2. Warrant to Purchase 40,000 Shares of Series A Preferred Stock
3. Amendment to Investors' Rights Agreement
4. Waiver of Right of First Refusal
5. Landlord Consent dated October 13, 1998
6. Certificate of Secretary Exhibit A: Board Resolutions of Borrower Exhibit B: Certificate of Incorporation of Borrower, as amended Exhibit C: Bylaws of Borrower
7. Good Standing Certificates dated October 1, 1998
8. Borrower's Opinion of Counsel
LOAN AND SECURITY AGREEMENT
Agreement No. Dated as of October 9, 1998
----------
by and between
SILICON VALLEY BANK
as lender
|
and
ARRAY BIOPHARMA INC.
a Delaware corporation
1885 33rd Street, Bldg. AC-1
Boulder, CO 80301-2505
as borrower
TOTAL CREDIT AMOUNT: $1,500,000
Repayment Period: 42 months Treasury Note Maturity: 42 months Final Payment Percentage: 8% Loan Margin: 300 basis points Minimum Funding Amount: $50,000 Maximum Number of Loans: Six (6) Warrants: |
Number of shares: 40,000
Class of stock: Series A Preferred
Initial exercise price: $1.00 per share
Commitment Termination Date: October 9, 1999
The terms and information set forth on this cover page are a part of the attached Loan and Security Agreement, dated as of the date first written above (this "Agreement"), entered into by and among Silicon Valley Bank ("Lender") and the borrower ("Borrower") set forth above. The terms and conditions of the Agreement agreed to between Lender and Borrower are as follows:
TABLE OF CONTENTS
Page
----
1. Definitions and Construction.........................................1
1.1. Definitions.................................................1
1.2. Other Interpretive Provisions...............................5
2. Loan and Terms of Payment............................................5
2.1. Commitment; The Credit Amount...............................5
2.2. Use of Proceeds; The Loans..................................6
2.3. Procedure for Making Loans..................................6
2.4. Amortization of Principal and Interest; Interim Payment;
Final Payment; Loan Fee...................................7
2.5. Prepayments.................................................8
2.6. Other Payment Terms.........................................8
2.7. Minimum Funding Amount; Maximum Number of Fundings..........8
2.8. Crediting Payments..........................................8
2.9. Additional Costs............................................9
2.10. Term........................................................9
3. Conditions of Loans..................................................9
3.1. Conditions Precedent to Initial Loan........................9
3.2. Conditions Precedent to all Loans..........................10
3.3. Covenant to Deliver........................................10
4. Creation of Security Interest.......................................10
4.1. Grant of Security Interest.................................10
4.2. After-Acquired Property....................................11
4.3. Duration of Security Interest..............................11
4.4. Possession of Collateral...................................11
4.5. Markings on the Collateral.................................11
4.6. Delivery of Additional Documentation Required..............11
4.7. Right to Inspect...........................................11
5. Representations and Warranties......................................12
5.1. Due Organization and Qualification.........................12
5.2. Authority..................................................12
5.3. Subsidiaries...............................................12
5.4. Conflict with Other Instruments, etc.......................12
5.5. Authorization; Enforceability..............................12
5.6. No Prior Encumbrances......................................12
5.7. Name; Location of Chief Executive Office, Principal Place
of Business and Collateral...............................12
5.8. Litigation.................................................12
5.9. Financial Statements.......................................12
5.10. Solvency...................................................13
5.11. Environmental Quality......................................13
5.12. Taxes......................................................13
5.13. Consents and Approvals.....................................13
5.14. Trademarks, Patents, Copyrights, Franchises and Licenses...13
5.15. Material Contracts.........................................13
5.16. Full Disclosure............................................13
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TABLE OF CONTENTS
(Continued)
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6. Affirmative Covenants...............................................13
6.1. Good Standing..............................................13
6.2. Government Compliance......................................14
6.3. Financial Statements, Reports, Certificates................14
6.4. Notice of Event of Loss....................................14
6.5. Notice of Defaults.........................................14
6.6. Taxes......................................................14
6.7. Use; Maintenance...........................................14
6.8. Insurance..................................................14
6.9. Loss; Damage; Destruction and Seizure......................15
6.10. Principal Depository.......................................16
6.11. Environmental Laws.........................................16
6.12. Further Assurances.........................................16
7. Negative Covenants..................................................16
7.1. Chief Executive Office; Location of Collateral.............16
7.2. Extraordinary Transactions and Disposal of Assets..........16
7.3. Restructure................................................16
7.4. Liens......................................................16
8. Events of Default...................................................16
8.1. Payment Default............................................16
8.2. Covenant Default...........................................16
8.3. Material Adverse Change....................................16
8.4. Attachment.................................................16
8.5. Other Agreements...........................................17
8.6. Judgments..................................................17
8.7. Redemption or Repurchase...................................17
8.8. Misrepresentations.........................................17
8.9. Breach of Warrant..........................................17
8.10. Involuntary Bankruptcy or Insolvency.......................17
8.11. Voluntary Bankruptcy or Insolvency.........................17
9. Lender's Rights and Remedies........................................17
9.1. Rights and Remedies........................................17
9.2. Effect of Sale.............................................18
9.3. Power of Attorney in Respect of the Collateral.............18
9.4. Lender's Expenses..........................................18
9.5. Remedies Cumulative........................................19
9.6. Application of Collateral Proceeds.........................19
9.7. Reinstatement of Rights....................................19
10. Waivers; Indemnification............................................19
10.1. Demand; Protest............................................19
10.2. Lender's Liability for Collateral..........................19
10.3. Indemnification............................................20
11. Notices.............................................................20
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TABLE OF CONTENTS
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12. General Provisions..................................................21
12.1. Successors and Assigns.....................................21
12.2. Time of Essence............................................21
12.3. Severability of Provisions.................................21
12.4. Entire Agreement; Construction; Amendments and Waivers.....21
12.5. Reliance by Lender.........................................22
12.6. No Set-Offs by Borrower....................................22
12.7. Counterparts...............................................22
12.8. Survival...................................................22
13. Relationship of Parties.............................................22
14. Choice of Law and Venue; Jury Trial Waiver..........................22
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This LOAN AND SECURITY AGREEMENT is entered into as of October 9, 1998, by and among SILICON VALLEY BANK, a California-chartered bank ("Bank") and ARRAY BIOPHARMA INC., a Delaware corporation ("Borrower").
RECITALS
Borrower wishes to borrow money from time to time from Lender, and Lender desires to lend money to Borrower. This Agreement sets forth the terms on which Lender will lend to Borrower, and Borrower will repay the loans to Lender.
AGREEMENT
The parties agree as follows:
1. Definitions and Construction.
1.1. Definitions. As used in this Agreement, the following terms shall have the following definitions:
"Affiliate" means any Person that owns or controls directly or indirectly ten percent or more of the stock of another entity, any Person that controls or is controlled by or is under common control with such Persons or any Affiliate of such Persons or each of such Person's officers, directors, joint venturers or partners.
"Basic Rate" means, as of the relevant Funding Date, the per annum rate of interest (based on a year of 360 days) equal to the sum of (a) the U.S. Treasury note yield to maturity for a term equal to the Treasury Note Maturity as quoted in the Western edition of The Wall Street Journal on the day the applicable Loan Terms Schedule is prepared, plus (b) the applicable Loan Margin for the type of Eligible Equipment being financed.
"Borrower's Books" means all of Borrower's books and records including: ledgers; records concerning Borrower's assets or liabilities, the Collateral, business operations or financial condition; and all computer programs, or tape files, and the equipment, containing such information.
"Business Day" means any day that is not a Saturday, Sunday, or other day on which banks in the State of California are authorized or required to close.
"Code" means the Uniform Commercial Code as adopted and in effect in the State of California, as amended from time to time.
"Collateral" means the Property described on Exhibit A attached hereto, including, without limitation, all Financed Equipment listed in any Loan Agreement Supplement executed from time to time pursuant to Section 4.2.
"Commitment Termination Date" means the date following such term on the cover page of this Agreement.
"Contingent Obligation" means, as applied to any Person, any direct or indirect liability, contingent or otherwise, of that Person with respect to any indebtedness, lease, dividend, letter of credit or other obligation of another, including any such obligation directly or indirectly guaranteed, endorsed (otherwise than for collection or deposit in the ordinary course of business), co-made or discounted or sold with recourse by that Person, or in respect of which that Person is otherwise directly or indirectly liable. The amount of any Contingent Obligation shall be equal to the amount of the obligation so guaranteed or otherwise supported.
"Credit Amount" means the amount set forth following such term on the cover page of this Agreement.
"Default" means any event which with the passing of time or the giving of notice or both would become an Event of Default hereunder.
"Default Rate" means the per annum rate of interest equal to the Basic Rate plus five percent (5%), but such rate shall in no event be more than the highest rate permitted by applicable law to be charged on commercial loans.
"Eligible Equipment" means computer and related equipment, office equipment, test and laboratory equipment, and other equipment related to Borrower's business as conducted or proposed, furnishings, and, subject to the limitations set forth below, Other Equipment that complies with all of Borrower's representations and warranties to Lender and which is and at all times shall continue to be acceptable to Lender in all respects. Unless otherwise agreed to by Lender, not more than twenty percent (20%) of the Financed Equipment financed with the proceeds of each Loan shall consist of Other Equipment.
"Environmental Claims" means all claims, however asserted, by any Governmental Authority or other Person alleging potential liability or responsibility for violation of any Environmental Law or for release or injury to the environment or threat to public health, personal injury (including sickness, disease or death), property damage, natural resources damage, or otherwise alleging liability or responsibility for damages (punitive or otherwise), cleanup, removal, remedial or response costs, restitution, civil or criminal penalties, injunctive relief, or other type of relief, resulting from or based upon (a) the presence, placement, discharge, emission or release (including intentional and unintentional, negligent and non-negligent, sudden or non-sudden, accidental or non-accidental placement, spills, leaks, discharges, emissions or releases) of any Hazardous Material at, in, or from Property, whether or not owned by Borrower, or (b) any other circumstances forming the basis of any violation, or alleged violation, of any Environmental Law.
"Environmental Laws" means all foreign, federal, state or local laws, statutes, common law duties, rules, regulations, ordinances and codes, together with all administrative orders, directed duties, requests, licenses, authorizations and permits of, and agreements with, any Governmental Authorities, in each case relating to environmental, health, safety and land use matters, including the Comprehensive Environmental Response, Compensation and Liability Act of 1980, the Clean Air Act, the Federal Water Pollution Control Act of 1972, the Solid Waste Disposal Act, the Federal Resource Conservation and Recovery Act, the Toxic Substances Control Act and the Emergency Planning and Community Right-to-Know Act.
"Environmental Permit" has the meaning set forth in Section 5.11.
"Event of Default" has the meaning given to such term in
Section 8.
"Event of Loss" has the meaning given to that term in Section 6.9.
"Final Payment" means, with respect to each Loan, a payment (in addition to and not in substitution for the regular monthly payments of principal and accrued interest) due on the Maturity Date for such Loan equal to the Loan Amount for such Loan at such time multiplied by the Final Payment Percentage.
"Final Payment Percentage" means the percentage set forth following such term on the cover page of this Agreement.
"Financed Equipment" has the meaning given to that term in Exhibit A, as amended or supplemented from time to time.
"Funding Date" means any date on which a Loan is made to or on account of Borrower under this Agreement.
"Governmental Authority" means (a) any federal, state, county, municipal or foreign government, or political subdivision thereof, (b) any governmental or quasi-governmental agency, authority, board,
bureau, commission, department, instrumentality or public body, (c) any court or administrative tribunal or (d) with respect to any Person, any arbitration tribunal or other non-governmental authority to whose jurisdiction that Person has consented.
"Hazardous Materials" means all those substances which are regulated by, or which may form the basis of liability under, any Environmental Law, including all substances identified under any Environmental Law as a pollutant, contaminant, hazardous waste, hazardous constituent, special waste, hazardous substance, hazardous material, or toxic substance, or petroleum or petroleum derived substance or waste.
"Indebtedness" means (a) all indebtedness for borrowed money or the deferred purchase price of Property or services, including reimbursement and other obligations with respect to surety bonds and letters of credit, (b) all obligations evidenced by notes, bonds, debentures or similar instruments, (c) all capital lease obligations, and (d) all Contingent Obligations.
"Landlord Consent" means a consent in the form of Exhibit C or such other form as Lender may agree to accept.
"Lender's Expenses" means all reasonable costs or expenses (including reasonable attorneys' fees and expenses) incurred in connection with the preparation, negotiation, administration, and enforcement of the Loan Documents; and Lender's reasonable attorneys' fees and expenses incurred in amending, modifying, enforcing or defending the Loan Documents, including the exercise of any rights or remedies afforded hereunder or under applicable law, whether or not suit is brought.
"Lien" means any pledge, bailment, lease, mortgage, hypothecation, conditional sales and title retention agreement, charge, claim, encumbrance or other lien in favor of any Person.
"Loan" means each advance of credit by Lender to Borrower under this Agreement.
"Loan Agreement Supplement" means a supplement to this Agreement in substantially the form of Exhibit D.
"Loan Amount" means, with respect to each Loan, as of any date, the original principal amount of such Loan less the aggregate of all Stated Costs of Equipment with respect to which prepayments of such Loan have been made.
"Loan Documents" means, collectively, this Agreement, the Warrants, the Landlord Consent(s) and all other documents, instruments and agreements entered into between Borrower and Lender in connection with this Agreement, all as amended or extended from time to time.
"Loan Factor" means, with respect to each Loan, the amount set forth as a percentage in the Loan Terms Schedule with respect to such Loan, calculated using the Basic Rate applicable to such Loan.
"Loan Fee" means the non-refundable fee equal to $5,000 previously paid by Borrower to Bank, in consideration of Bank's written proposal to Borrower dated July 9, 1998, specifying certain terms of the credit facility described in this Agreement, which fee is to be applied as set forth in Section 2.4(d).
"Loan Margin" means the number of basis points set forth following such term on the cover page of this Agreement.
"Loan Terms Schedule" means, with respect to each Loan, the "Loan Terms Schedule" attached to the Loan Agreement Supplement prepared by Lender in connection with such Loan.
"Maturity Date" means, with respect to each Loan, the last day of the Repayment Period for such Loan, or if earlier, the date of acceleration of such Loan by Lender following an Event of Default.
"Minimum Funding Amount" means the amount set forth following such term on the cover page of this Agreement.
"New Equipment" means Financed Equipment delivered to Borrower
by the manufacturer or vendor after, upon or not more than one hundred fifty
(150) days with respect to Financed Equipment financed with the initial Loan,
and not more than ninety (90) days prior to the Funding Date of any other Loan
relating to such Financed Equipment.
"Obligations" means all debt, principal, interest, fees, charges, expenses and attorneys' fees and costs and other amounts (including all amounts charged to any operating or deposit account maintained by Borrower at Bank, pursuant to any agreement authorizing Bank to charge such accounts), obligations, covenants, and duties owing by Borrower to Lender of any kind and description (whether pursuant to or evidenced by the Loan Documents, or by any other agreement between Lender and Borrower, and whether or not for the payment of money), whether direct or indirect, absolute or contingent, due or to become due, now existing or hereafter arising, including the principal, interest and Final Payment due with respect to the Loans, and including any debt, liability, or obligation owing from Borrower to others that Lender may have obtained by assignment or otherwise, and further including all interest not paid when due and all Lender's Expenses that Borrower is required to pay or reimburse by the Loan Documents, by law, or otherwise.
"Obsolete" means that any item of Financed Equipment is no longer needed by Borrower in its operations and that it is not reasonably expected to be needed in the future operations of Borrower.
"Other Equipment" means leasehold improvements, and other soft costs, including sales tax, freight and installation expenses, intangible Property such as computer software and software licenses, equipment specifically designed or manufactured for Borrower, other intangible Property, limited use Property and other similar Property.
"Payment Date" has the meaning given to that term in Section 2.4(a).
"Permitted Liens" means the following:
(a) The Lien created by this Agreement;
(b) Any Liens existing as of the date hereof and disclosed in Schedule 1;
(c) Liens for taxes, fees, assessments or other governmental charges or levies that have no superior priority over Lender's Lien in the Collateral;
(d) Liens (i) upon or in any equipment acquired or held by the Borrower or any of its subsidiaries, other than Financed Equipment, or (ii) existing on such equipment at the time of its acquisition, provided that (A) the equipment is not Financed Equipment and (B) the Lien is confined solely to the Property so acquired and improvements thereon, and the proceeds of such equipment; and
(e) Liens to secure payment of worker's compensation, employment insurance, old age pensions or other social security obligations of Borrower in the ordinary course of business of Borrower.
"Person" means and includes any individual, any partnership, any corporation, any business trust, any joint stock company, any limited liability company, any unincorporated association or any other entity and any domestic or foreign national, state or local government, any political subdivision thereof, and any department, agency, authority or bureau of any of the foregoing.
"Property" means any interest in any kind of property or asset, whether real, personal or mixed, whether tangible or intangible.
"Repayment Period" means the period beginning on the first Payment Date and continuing for the number of calendar months set forth following such term on the cover page of this Agreement.
"Responsible Officer" means any of the President, Chief Operating Officer , or the Chief Financial Officer of Borrower.
"Scheduled Payments" has the meaning given to such term in
Section 2.4(a).
"Stated Cost" means (i) with respect to New Equipment, the original cost to Borrower of the item of New Equipment net of any and all freight, installation, tax and other soft costs or (ii) with respect to Used Equipment, the original cost to Borrower paid in an arm's length transaction, subject in any case to limitations on Other Costs.
"Stipulated Loss Value" means, with respect to each Loan, the percentage set forth with respect to such Loan in the Loan Terms Schedule for such Loan, determined as of the Payment Date on which payment of such amount is to be made, or if such date is not a Payment Date, on the Payment Date immediately succeeding such date multiplied by the Loan Amount.
"Subsidiary" means any corporation of which a majority of the outstanding capital stock entitled to vote for the election of directors (otherwise than as the result of a default) is owned by Borrower directly or indirectly through Subsidiaries.
"Term" means the period from and after the date hereof until the payment in full of all amounts and liabilities payable under this Agreement and the other Loan Documents, including principal and interest on the Loans and the Final Payment with respect to each Loan.
"Treasury Note Maturity" means the period of months set forth following such term on the cover page of this Agreement.
"Used Equipment" means all Financed Equipment which is not New Equipment.
"Warrant" means the warrant in favor of Lender to purchase securities of Borrower substantially in the form of Exhibit B.
1.2. Other Interpretive Provisions. References in this Agreement to "Articles," "Sections," "Exhibits," "Schedules" and "Annexes" are to recitals, articles, sections, exhibits, schedules and annexes herein and hereto unless otherwise indicated. References in this Agreement and each of the other Loan Documents to any document, instrument or agreement shall include (a) all exhibits, schedules, annexes and other attachments thereto, (b) all documents, instruments or agreements issued or executed in replacement thereof, and (c) such document, instrument or agreement, or replacement or predecessor thereto, as amended, modified and supplemented from time to time and in effect at any given time. The words "hereof," "herein" and "hereunder" and words of similar import when used in this Agreement or any other Loan Document shall refer to this Agreement or such other Loan Document, as the case may be, as a whole and not to any particular provision of this Agreement or such other Loan Document, as the case may be. The words "include" and "including" and words or similar import when used in this Agreement or any other Loan Document shall not be construed to be limiting or exclusive. Unless otherwise indicated in this Agreement or any other Loan Document, all accounting terms used in this Agreement or any other Loan Document shall be construed, and all accounting and financial computations hereunder or thereunder shall be computed, in accordance with generally accepted accounting principles as in effect in the United States of America from time to time.
2. Loan and Terms of Payment.
2.1. Commitment; The Credit Amount. Subject to the terms and conditions of this Agreement and relying upon the representations and warranties herein set forth as and when made or deemed to be
made, Lender agrees to lend to Borrower from time to time prior to the Commitment Termination Date, the Loans; provided that the aggregate principal amount of the Loans shall not exceed the Credit Amount at such time; provided, further, that the aggregate principal amount of any Loan shall not exceed the aggregate Stated Cost of the items of Eligible Equipment being financed with such Loan; and provided, further, that the aggregate principal amount of any Loans or portions thereof, allocated or relating to the financing of Other Equipment shall not exceed in the aggregate twenty percent (20%) of the aggregate principal of the Loans. If prepaid, the principal of the Loans may not be re-borrowed.
2.2. Use of Proceeds; The Loans.
(a) Use of Proceeds. The proceeds of the Loans shall be used solely to reimburse Borrower for the purchase of Eligible Equipment, in each case in an amount not to exceed the Stated Cost of such Eligible Equipment. All such Eligible Equipment which is financed or re-financed with the proceeds of Loans shall be deemed without further action to be Financed Equipment.
(b) The Loans. The Loans shall be repayable in consecutive monthly installments in accordance with the terms of Section 2.4. Lender may, and is hereby authorized by Borrower to, endorse in its books and records appropriate notations regarding Lender's interest in the Loans; provided, however, that the failure to make, or an error in making, any such notation shall not limit or otherwise affect the Obligations of Borrower hereunder.
2.3. Procedure for Making Loans.
(a) Notice. Whenever Borrower desires that Lender makes a Loan, Borrower shall so notify Lender in writing (or by telephone with prompt confirmation in writing) at least five (5) Business Days in advance of the desired Funding Date, which notice shall be irrevocable, and shall provide Lender with the following information:
(i) a list of the proposed Financed Equipment;
(ii) the principal amount of the requested Loan; and
(iii) the intended use of proceeds of the Loan.
Lender's obligation to make the initial Loan shall be expressly subject to the satisfaction of the conditions set forth in Sections 3.1 and 3.2. Lender's obligation to make each subsequent Loan shall be expressly subject to the satisfaction of the conditions set forth in Section 3.2. Lender shall have the right, exercisable at any time, to request that Borrower furnish Lender with such additional information with respect to the Loan and the Eligible Equipment to be financed with the Loan proceeds as Lender shall reasonably request.
(b) Loan Interest Rate. Borrower shall pay interest on the unpaid principal amount of each Loan from the first Payment Date after the Funding Date of such Loan until such Loan has been paid in full, at a per annum rate of interest equal to the Basic Rate determined by Bank as of the Funding Date for such Loan in accordance with the definition of Basic Rate. The Basic Rate applicable to each Loan shall not be subject to change in the absence of a manifest error. All computations of interest on Loans shall be based on a year of 360 days comprised of twelve (12) months of thirty (30) days each. Notwithstanding any other provision hereof, the amount of interest payable hereunder shall not in any event exceed the maximum amount permitted by the law applicable to interest charged on commercial loans.
(c) Loan Factor and Stipulated Loss Value Calculation. On each Funding Date, Lenders shall establish the Loan Factor and Stipulated Loss Values with respect to such Loan. The Loan Factor shall be calculated in a manner to fully amortize the Loan over the Repayment Period applicable to such Loan in equal periodic installments of principal and interest. The Loan Factor and Stipulated Loss Values applicable to each
Loan shall be set forth in the Loan Agreement Supplement to be executed by Borrower with respect to each Loan and shall be conclusive in the absence of a manifest error.
(d) Disbursement. Subject to the satisfaction of the conditions set forth in Sections 3.1 and 3.2 with respect to the initial Loan and the satisfaction of the conditions set forth in Section 3.2 with respect to each subsequent Loan, Bank shall disburse such Loan by internal transfer to Borrower's deposit account with Bank.
(e) Termination of Commitment to Lend. Notwithstanding anything in the Loan Documents, Lender's obligation to lend the undisbursed portion of the Credit Amount to Borrower hereunder shall terminate on the earlier of (i) at the Lender's sole election, the occurrence and continuance of any Default or Event of Default hereunder, and (ii) the Commitment Termination Date. Notwithstanding the foregoing, Lender's obligation to lend the undisbursed portion of the Credit Amount to Borrower shall terminate if, in Lender's sole judgment, there has been a material adverse change in the general affairs, management, results of operations, condition (financial or otherwise) or prospects of Borrower, whether or not arising from transactions in the ordinary course of business, or there has been any material adverse deviation by Borrower from the business plan of Borrower presented to and not disapproved by Lender, since the date of this Agreement.
2.4. Amortization of Principal and Interest; Interim Payment; Final Payment; Loan Fee.
(a) Principal and Interest Payments On Payment Dates. Borrower shall make payments monthly in advance of principal and accrued interest for each Loan (collectively, "Scheduled Payments"), commencing on the first Business Day of the first month following the Funding Date with respect to such Loan and continuing thereafter during the Repayment Period on the first Business Day of each calendar month (each a "Payment Date"), in an amount equal to the Loan Factor multiplied by the Loan Amount for such Loan as of such Payment Date. In any event, all unpaid principal and accrued interest shall be due and payable in full on the last Payment Date with respect to such Loan.
(b) Interim Payment. In addition to the Scheduled Payments, on the Funding Date for each Loan (unless the Funding Date is the first Business Day of the month) Borrower shall pay to Bank an amount (the "Interim Payment") equal to the initial Loan Amount multiplied by the product of (i) the quotient derived from dividing the initial Loan Factor with respect to such Loan by 30, and (ii) the number of days from the Funding Date of such Loan until the first Payment Date with respect to such Loan.
(c) Final Payment. Unless a Loan is prepaid in full, on the Maturity Date with respect to such Loan, Borrower shall pay, in addition to the unpaid principal and accrued interest and all other amounts due on such date with respect to such Loan, an amount equal to the Final Payment with respect to such Loan.
(d) Loan Fee. The Loan Fee is non-refundable, but shall be
applied first, to the due diligence expenses of Lender and fees and expenses of
Lender's counsel in connection with the preparation and negotiation of this
Agreement and the other Loan Documents and the balance, if any, shall be applied
(using the ratio of each Loan Amount to the total Credit Amount) toward the
first payment due from Borrower to Lender hereunder on each Funding Date. The
foregoing notwithstanding, if the Loan Fee is insufficient to pay the reasonable
due diligence expenses of Lender and reasonable fees and expenses of Lender's
counsel in connection with such preparation and negotiation, Borrower shall pay
such additional amounts so owing for such fees and expenses to Lender. If
Borrower shall not have borrowed under this Agreement, on or prior to the
Commitment Termination Date or the earlier termination of this Agreement, Loans
aggregating in an original principal amount equal to the Credit Amount, then
Lender shall retain any portion of the Loan Fee not applied as set forth in this
Section 2.4(d).
2.5. Prepayments.
(a) Prepayment Upon an Event of Loss. If any Financed Equipment is subject to an Event of Loss and Borrower is required to or elects to prepay the Loan with respect to such Financed Equipment pursuant to Section 6.9, then such Loan shall be prepaid to the extent and in the manner provided in such section.
(b) Mandatory Prepayment Upon an Acceleration. If the Loans are
accelerated following the occurrence of an Event of Default or otherwise (other
than following an Event of Loss), then Borrower shall immediately pay to Lender
(i) all unpaid Scheduled Payments with respect to each Loan due prior to the
date of prepayment, (ii) the Stipulated Loss Value with respect to each Loan,
and (iii) all other sums, if any, that shall have become due and payable
hereunder with respect to any Loan.
(c) No Other Prepayment. Borrower may not prepay any Loan except upon the occurrence of an event described in Section 2.5(a) or (b) above in which event the prepayment shall be made as described in such sections.
2.6. Other Payment Terms.
(a) Place and Manner. Borrower hereby authorizes Bank, and irrevocably constitutes and appoints Bank (and any officer or agent thereof, with full power of substitution) as its true and lawful attorney-in-fact with full irrevocable power and authority in the place and stead of Borrower and in the name of Borrower or in its own name (which appointment is coupled with an interest), to debit directly from any banking account maintained by Borrower with Lender the full amount (or any portion thereof) of the Obligations of Borrower to Lender hereunder (including all principal, accrued interest, commitment and other fees, and other amounts chargeable to Borrower under this Agreement) when and as the same shall become due and payable. It shall be Borrower's responsibility to ensure that there are sufficient funds in a deposit account with Bank on the dates that payments are due, or to provide for another manner of payment. If amounts in the deposit account are insufficient, amounts due and payable shall be paid in immediately available funds in such alternate manner as Borrower may choose.
(b) Date. Whenever any payment due hereunder shall fall due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day, and such extension of time shall be included in the computation of interest or fees, as the case may be.
(c) Default Rate. If either (i) any amounts required to be paid by Borrower under this Agreement or the other Loan Documents (including principal, interest, the Final Payment payable with respect to any Loan, and any fees or other amounts) remain unpaid after such amounts are due, or (ii) an Event of Default has occurred and is continuing, Borrower shall pay interest on the aggregate, outstanding balance hereunder from the date due or from the date of the Event of Default, as applicable, until such past due amounts are paid in full or until all Events of Default are cured, as applicable, at a per annum rate equal to the Default Rate. All computations of such interest shall be based on a year of 360 days.
2.7. Minimum Funding Amount; Maximum Number of Fundings. Except with the prior consent of Lender, in Lender's sole discretion, (i) the amount of the requested Loan shall not be less than the Minimum Funding Amount; provided, that if this Agreement specifies different Loan Margins for New Equipment and Used Equipment and if Borrower is requesting Loans for both New Equipment and Used Equipment on the same Funding Date, the aggregate of the two requested Loans shall be computed in determining whether the Minimum Funding Amount has been reached; (ii) there shall not be more than one funding of a Loan in any one calendar month; and (iii) the aggregate number of Loans shall not exceed six (6) during the term hereof.
2.8. Crediting Payments. The receipt by Bank of any wire transfer of funds, check, or other item of payment shall be immediately applied conditionally to reduce Obligations, but shall not be considered a payment on account unless such wire transfer is of immediately available federal funds and is made to the appropriate deposit account of Bank or unless and until such check or other item of payment is honored when
presented for payment. Notwithstanding anything to the contrary contained herein, any wire transfer or payment received by Bank after 11:00 a.m. California time shall be deemed to have been received by Bank as of the opening of business on the immediately following Business Day.
2.9. Additional Costs. In case any law, regulation, treaty or official directive or the interpretation or application thereof by any court or any governmental authority charged with the administration thereof or the compliance with any guideline or request of any central bank or other governmental authority (whether or not having the force of law):
(a) subjects Lender to any tax with respect to payments of principal or interest or any other amounts payable hereunder by Borrower or otherwise with respect to the transactions contemplated hereby (except for taxes on the overall net income of Lender imposed by the United States of America or any political subdivision thereof); or
(b) imposes, modifies or deems applicable any deposit insurance, reserve, special deposit or similar requirement against assets held by, or deposits in or for the account of, or loans by Lender; or
(c) imposes upon Lender any other condition with respect to its performance under this Agreement,
and the result of any of the foregoing is to increase the cost to Lender, reduce the income receivable by Lender or impose any expense upon Lender with respect to any loans, Lender shall notify Borrower thereof. Borrower agrees to pay to Lender the amount of such increase in cost, reduction in income or additional expense as and when such cost, reduction or expense is incurred or determined, upon presentation by Lender of a statement in the amount and setting forth Lender's calculation thereof, which statement shall be deemed true and correct absent manifest error.
2.10. Term. This Agreement shall become effective upon acceptance by Lender and shall continue in full force and effect for a term ending on the Maturity Date of the last Loan made hereunder. Notwithstanding the foregoing, Lender shall have the right to terminate this Agreement immediately and without notice upon the occurrence of an Event of Default.
3. Conditions of Loans.
3.1. Conditions Precedent to Initial Loan. The obligation of Lender to make the initial Loan is subject to the condition precedent that Lender shall have received, in form and substance satisfactory to Lender, all of the following:
(a) This Agreement duly executed by Borrower.
(b) The Warrant to be issued to Lender, duly executed by Borrower.
(c) A duly executed amendment to the current investor/registration rights agreement providing Lender with registration rights for the shares issuable upon exercise of the Warrant.
(d) A Landlord Consent from the owner of each building in which Collateral is anticipated to be located as set forth in Schedule 3.
(e) A certificate of the secretary or assistant secretary of Borrower with copies of the following documents attached: (i) the certificate of incorporation and bylaws of Borrower certified by Borrower as being in full force and effect on the Funding Date, (ii) incumbency and representative signatures, and (iii) resolutions authorizing the execution and delivery of this Agreement and each of the other Loan Documents.
(f) A good standing certificate from Borrower's state of incorporation and the state in which Borrower's principal place of business is located, together with certificates of the applicable governmental
authorities stating that Borrower is in compliance with the franchise tax laws of each such state, each dated as of a recent date.
(g) Evidence of the insurance coverage required by Section 6.8 of this Agreement.
(h) A favorable opinion of Borrower's counsel, dated as of the closing date, in the form attached hereto as Exhibit E.
(i) All necessary consents of shareholders and other third parties with respect to the execution, delivery and performance of this Agreement, the Warrant and the other Loan Documents.
(j) Payment of the Loan Fee specified in Section 2.4 hereof and any other unreimbursed Lender's Expenses.
(k) Such other documents, and completion of such other matters, as Lender may deem necessary or appropriate.
3.2. Conditions Precedent to all Loans. The obligation of Lender to make each Loan, including the initial Loan, is further subject to the following conditions:
(a) No Default or Event of Default shall have occurred and be continuing.
(b) Borrower shall have provided to Lender, with respect to the Eligible Equipment which is requested to be financed with the proceeds of the Loan to be made on such Funding Date, such invoices, purchase orders, bills of sale, receipts, agreements, canceled checks, and other documents as Lender shall reasonably request to evidence the ownership by Borrower of, the payment in full of the purchase price of, and the fair market value of, such Eligible Equipment, each in form and substance reasonably satisfactory to Lender.
(c) Borrower and Lender shall have executed a Loan Agreement Supplement, including a Loan Terms Schedule and a list of Financed Equipment with respect to the proposed Loan.
(d) Lender shall have received such documents, instruments and agreements, including UCC financing statements or amendments to UCC financing statements, as Lender shall reasonably request to evidence the perfection and priority of the security interests granted to Lender pursuant to Section 4.
(e) Borrower shall have delivered to Lender, a subordination agreement, release, or estoppel letter, as appropriate, from any Person having an existing Lien superior to the Lien of Lender on any item of Eligible Equipment which is requested to be financed.
(f) Borrower shall have provided Lender with a Landlord Consent from the owner of each new building in which Collateral is anticipated to be located.
(g) Such other documents, and completion of such other matters, as Lender may deem necessary or appropriate.
3.3. Covenant to Deliver. Borrower agrees (not as a condition but as a covenant) to deliver to Lender each item required to be delivered to Lender as a condition to each Loan, if such Loan is advanced. Borrower expressly agrees that the extension of such Loan prior to the receipt by Lender of any such item shall not constitute a waiver by Lender of Borrower's obligation to deliver such item.
4. Creation of Security Interest.
4.1. Grant of Security Interest. Borrower grants to Lender a valid, first priority, continuing security interest in all presently existing and hereafter acquired or arising Collateral in order to secure prompt, full
and complete payment of any and all Obligations and in order to secure prompt, full and complete performance by Borrower of each of its covenants and duties under each of the Loan Documents.
4.2. After-Acquired Property. All Financed Equipment which is financed through Loans and any and all other Property generally described or referred to as Collateral which is hereafter acquired by Borrower shall ipso facto, and without any further conveyance, assignment or act on the part of Borrower or Lender, become and be subject to the security interest herein granted as fully and completely as though specifically described herein. The list of Financed Equipment shall be amended and supplemented on each Funding Date by a Loan Agreement Supplement to incorporate all Financed Equipment financed with the Loan advanced on such Funding Date; provided, however, the failure to so amend and supplement the list of Financed Equipment shall not affect the grant by Borrower to Lender of the security interest in such Financed Equipment pursuant to this Section 4. This Agreement and the other documents in connection herewith may be otherwise supplemented and amended from time to time, as required by Lender, to reflect additional Collateral to be subject to the security interest granted pursuant to this Section 4.
4.3. Duration of Security Interest. Lender's security interest in
the Collateral shall continue until the payment in full and the satisfaction of
all Obligations, whereupon such security interest shall terminate; provided,
however, if any item of Financed Equipment is subject to an Event of Loss, then
following the prepayment of the Loan with respect to such item pursuant to
Section 2.5, Lender shall release its security interest in such item of Financed
Equipment. Lender shall, at Borrower's sole cost and expense, execute such
further documents and take such further actions as may be necessary to effect
the release contemplated by this Section 4.3, including duly executing and
delivering termination statements for filing in all relevant jurisdictions under
the Code.
4.4. Possession of Collateral. So long as no Event of Default has occurred and is continuing, Borrower shall remain in full possession, enjoyment and control of the Collateral (except only as may be otherwise required by Lender for perfection of their security interest therein) and shall be entitled to manage, operate and use the same and each part thereof with the rights and franchises appertaining thereto; provided, however, that the possession, enjoyment, control and use of the Collateral shall at all times be subject to the observance and performance of the terms of this Agreement.
4.5. Markings on the Collateral. At Lender's reasonable request at any time during the Term of the Loan (including any extension thereof), Borrower shall place in a conspicuous location on each item of Financed Equipment a plaque or other marking to be supplied by Lender which reads substantially as follows:
Silicon Valley Bank Lienholder
Such plaque or other marking shall not be removed (or if removed or damaged such plaque or other marking shall be replaced) until the security interest in favor of Lender in such item of Collateral is terminated pursuant to this Agreement.
4.6. Delivery of Additional Documentation Required. Borrower shall from time to time execute and deliver to Bank at the request of Lender, all financing statements and other documents Lender may reasonably request, in form satisfactory to Lender, to perfect and continue Lender's perfected security interests in the Collateral and in order to consummate fully all of the transactions contemplated under the Loan Documents.
4.7. Right to Inspect. Lender (through any of its officers, employees, or agents) shall have the right, upon reasonable prior notice, and subject to agreeing to be bound by Borrower's confidentiality agreement, from time to time during Borrower's usual business hours, to inspect Borrower's Books and to make copies thereof and to check, test, and appraise the Collateral in order to verify Borrower's financial condition or the amount, condition of, or any other matter relating to, the Collateral.
5. Representations and Warranties. Borrower represents, warrants and covenants as follows:
5.1. Due Organization and Qualification. Borrower is a corporation duly existing and in good standing under the laws of its state of incorporation and qualified and licensed to do business in, and is in good standing in, any state in which the conduct of its business or its ownership of Property requires that it be so qualified or in which the Collateral is located, except for such states as to which any failure so to qualify would not have a material adverse effect on Borrower.
5.2. Authority. Borrower has all necessary power and authority to execute, deliver, and perform in accordance with the terms thereof, the Loan Documents to which it is a party. Borrower has all requisite power and authority to own and operate its properties and to carry on its businesses as now conducted.
5.3. Subsidiaries. Borrower has no Subsidiaries, except those listed in Schedule 4 hereto.
5.4. Conflict with Other Instruments, etc. Neither the execution and delivery of any Loan Document to which Borrower is a party nor the consummation of the transactions therein contemplated nor compliance with the terms, conditions and provisions thereof will conflict with or result in a breach of any of the terms, conditions or provisions of the certificate of incorporation and the by-laws, or other organizational documents of Borrower or any law or any regulation, order, writ, injunction or decree of any court or governmental instrumentality or any material agreement or instrument to which Borrower is a party or by which it or any of its properties is bound or to which it or any of its properties is subject, or constitute a default thereunder or result in the creation or imposition of any Lien, other than Permitted Liens.
5.5. Authorization; Enforceability. The execution and delivery of this Agreement, the granting of the security interest in the Collateral, the incurring of the Loans, the execution and delivery of the other Loan Documents to which Borrower is a party and the consummation of the transactions herein and therein contemplated have each been duly authorized by all necessary action on the part of Borrower. The Loan Documents have been duly executed and delivered and constitute legal, valid and binding obligations of Borrower, enforceable in accordance with their respective terms, except as the enforceability thereof may be limited by bankruptcy, insolvency or other similar laws of general application relating to or affecting the enforcement of creditors' rights or by general principles of equity.
5.6. No Prior Encumbrances. Borrower has good and indefeasible title to the Collateral, free and clear of liens, claims, security interests, or encumbrances, except for the first priority lien held by the Lender and except for other Permitted Liens. Except as disclosed in Schedule 1, Borrower has not acquired any part of the Collateral from an assignor outside the ordinary course of such assignor's business.
5.7. Name; Location of Chief Executive Office, Principal Place of Business and Collateral. Except as disclosed in Schedule 2, Borrower has not done business under any name other than that specified on the signature page hereof. The chief executive office, principal place of business, and the place where Borrower maintains its records concerning the Collateral are presently located at the addresses set forth on Schedule 3. The Collateral is presently located at the addresses set forth on Schedule 3.
5.8. Litigation. There are no actions or proceedings pending by or against Borrower before any court or administrative agency in which an adverse decision could have a material adverse effect on Borrower or the aggregate value of the Collateral. Borrower does not have knowledge of any such pending or threatened actions or proceedings. Borrower will promptly notify Lender in writing if any action, proceeding or governmental investigation involving Borrower is commenced that may result in damages or costs to Borrower of Two Hundred Fifty Thousand Dollars ($250,000) or more.
5.9. Financial Statements. All financial statements relating to Borrower or any Affiliate that have been or may hereafter be delivered by Borrower to Bank present fairly in all material respects Borrower's financial condition as of the date thereof and Borrower's results of operations for the period then ended.
5.10. Solvency. The fair salable value of Borrower's assets (including good will minus disposition costs) exceeds the fair value of its liabilities; Borrower is not left with unreasonably small capital after the transactions contemplated by this Agreement; and Borrower is able to pay its debts (including trade debts) as they mature.
5.11. Environmental Quality.
(a) Except as specifically disclosed in writing to Lender, the on-going operations of Borrower comply in all material respects with all Environmental Laws.
(b) Except as specifically disclosed in writing to Lender, Borrower has obtained all licenses, permits, authorizations and registrations required under any Environmental Law ("Environmental Permits") and necessary for its ordinary course operations, all such Environmental Permits are in good standing, and Borrower is in compliance with all material terms and conditions of such Environmental Permits.
(c) Except as specifically disclosed in writing to Lender, neither Borrower nor any of its present Property or operations is subject to any outstanding written order from or agreement with any Governmental Authority nor subject to any judicial or docketed administrative proceeding, respecting any Environmental Law, Environmental Claim or Hazardous Material.
5.12. Taxes. Borrower has filed or caused to be filed all tax returns required to be filed, and has paid, or has made adequate provision for the payment of, all taxes that are due and payable.
5.13. Consents and Approvals. No approval, authorization or consent of any trustee or holder of any indebtedness or obligation of Borrower or of any other Person under any such material agreement, contract, lease or license or similar document or instrument to which Borrower is a party or by which Borrower is bound, is required to be obtained by Borrower in order to make or consummate the transactions contemplated under the Loan Documents. All consents and approvals of, filings and registrations with, and other actions in respect of, all Governmental Authorities required to be obtained by Borrower in order to make or consummate the transactions contemplated under the Loan Documents have been, or prior to the time when required will have been, obtained, given, filed or taken and are or will be in full force and effect.
5.14. Trademarks, Patents, Copyrights, Franchises and Licenses. Borrower possesses and owns all necessary trademarks, trade names, copyrights, patents, patent rights, franchises and licenses which are material to the conduct of its business as now operated.
5.15. Material Contracts. There are no material defaults under any material contract or agreement by Borrower.
5.16. Full Disclosure. No representation, warranty or other statement made by Borrower in any Loan Document, certificate or written statement furnished to Lender contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained in such certificates or statements not misleading.
6. Affirmative Covenants. Borrower covenants and agrees that, until the full and complete payment of the Obligations and the termination of the Commitments, Borrower shall do all of the following:
6.1. Good Standing. Borrower shall maintain its corporate existence and its good standing in its jurisdiction of incorporation and maintain qualification in each jurisdiction in which the failure to so qualify could have a material adverse effect on the financial condition, operations or business of Borrower. Borrower shall maintain in force all licenses, approvals and agreements, the loss of which could have a material adverse effect on its financial condition, operations or business.
6.2. Government Compliance. Borrower shall comply with all statutes, laws, ordinances and government rules and regulations to which it is subject, noncompliance with which could materially adversely affect the financial condition, operations or business of Borrower.
6.3. Financial Statements, Reports, Certificates. Borrower shall
deliver to Lender: (a) as soon as available, but in any event within forty-five
(45) days after the end of each month, a company prepared balance sheet, income
statement and cash flow statement covering Borrower's operations during such
period, certified by a Responsible Officer; (b) as soon as available, but in any
event within ninety (90) days after the end of Borrower's fiscal year, audited
financial statements of Borrower prepared in accordance with generally accepted
accounting principles, consistently applied, together with an unqualified
opinion on such financial statements of a nationally recognized or other
independent public accounting firm reasonably acceptable to Lender; (c) promptly
upon becoming available, copies of all statements, reports and notices sent or
made available generally by Borrower to its security holders; (d) immediately
upon receipt of notice thereof, a report of any material legal actions pending
or threatened against Borrower; and (e) such other financial information as
Lender may reasonably request from time to time.
6.4. Notice of Event of Loss. As soon as possible, and in any event within ten (10) days thereafter, Borrower shall notify Bank in writing in reasonable detail of any Event of Loss.
6.5. Notice of Defaults. As soon as possible, and in any event within five (5) days after the discovery of a Default or an Event of Default provide Bank with an Officer's Certificate of Borrower setting forth the facts relating to or giving rise to such Default or Event of Default and the action which Borrower proposes to take with respect thereto.
6.6. Taxes. Borrower shall make due and timely payment or deposit of all federal, state, and local taxes, assessments, or contributions required of it by law or imposed upon any properties belonging to it, and, upon request, will execute and deliver to Bank, appropriate certificates attesting to the payment or deposit thereof; and Borrower will make timely payment or deposit of all tax payments and withholding taxes required of it by applicable laws, including those laws concerning F.I.C.A., F.U.T.A., state disability, and local, state, and federal income taxes, and will, upon request, furnish Bank with proof satisfactory to Lender indicating that Borrower has made such payments or deposits; provided that Borrower need not make any payment if the amount or validity of such payment is contested in good faith by appropriate proceedings and is adequately reserved against by Borrower.
6.7. Use; Maintenance.
(a) Borrower, at its expense, shall make all necessary site preparations and cause the Collateral to be operated in accordance with any applicable manufacturer's manuals or instructions. So long as no Default or Event of Default has occurred and is continuing, Borrower shall have the right to quietly possess and use the Collateral as provided herein without interference by Lenders.
(b) Borrower, at its expense, shall maintain the Collateral in good condition, reasonable wear and tear excepted, and will comply in all material respects with all laws, rules and regulations to which the use and operation of the Collateral may be or become subject. Such obligation shall extend to repair and replacement of any partial loss or damage to the Collateral, regardless of the cause. If maintenance is mandated by manufacturer, Borrower shall perform such maintenance, or shall obtain and keep in effect, at all times during the Term maintenance service contracts with suppliers. All parts furnished in connection with such maintenance or repair shall immediately become part of the Collateral. All such maintenance, repair and replacement services shall be immediately paid for and discharged by Borrower with the result that no Lien will attach to the Collateral.
6.8. Insurance. Borrower shall obtain and maintain for the Term, at its own expense, (a) "all risk" insurance against loss or damage to the Collateral, and (b) comprehensive general liability insurance, reasonably satisfactory to Lenders and such other insurance against such other risks of loss and with such terms, as shall in each case be reasonably satisfactory to or reasonably required by Lender (as to carriers, amounts, deductibles and otherwise). The amount of the "all risk" insurance shall be the greater of (i) the replacement value
of the Collateral (as new) or (ii) the Stipulated Loss Value of the Loan Amount applicable to each Loan and all other then outstanding amounts payable under the Loan Documents. Such amounts shall be determined to Lender's reasonable satisfaction as of each anniversary date of this Agreement and the appropriate amount of coverage shall be put in effect on the next succeeding renewal or inception date of such insurance.
The amount of such comprehensive general liability insurance shall be
at least Two Million Dollars ($2,000,000), One Million Dollars ($1,000,000) per
occurrence. The "all risk" insurance shall: (a) name Lender as sole loss payee
with respect to the Collateral, (b) provide each insurer's waiver of its right
of subrogation against Lender and Borrower, and (c) provide that such insurance
(i) shall not be invalidated by any action of, or breach of warranty by,
Borrower of a provision of any of its insurance policies. Each liability policy
shall (A) name Lender as an additional insureds and (B) provide that such
insurance shall have cross-liability and severability of interest endorsements
(which shall not increase the aggregate policy limits of Borrower's insurance).
All insurance policies (C) shall provide that Borrower's insurance shall be
primary without a right of contribution of Lender's insurance, if any, or any
obligation on the part of Lender to pay premiums of Borrower, and (D) shall
contain a clause requiring the insurer to give Lender at least thirty (30) days
prior written notice of its cancellation (other than cancellation for
non-payment for which ten (10) days notice shall be sufficient). Borrower shall,
on or prior to the date of and prior to each policy renewal, furnish to Lender
certificates of insurance or other evidence satisfactory to Lender that such
insurance coverage is in effect.
6.9. Loss; Damage; Destruction and Seizure.
(a) Borrower shall bear the risk of the Financed Equipment being lost, stolen, destroyed, damaged beyond repair, rendered permanently unfit for use, or seized by a governmental authority for any reason whatsoever at any time until the expiration or termination of the Term.
(b) If during the Term any item of Financed Equipment becomes
Obsolete or is lost, stolen, destroyed, damaged beyond repair, rendered
permanently unfit for use, or seized by a governmental authority for any reason
whatsoever for a period equal to at least the remainder of the Term (an "Event
of Loss"), then in each case Lender shall receive from the proceeds of insurance
maintained pursuant to Section 6.8, from any award paid by the seizing
governmental authority or, to the extent not received from the proceeds of
insurance or award or both, from Borrower, on or before the Payment Date next
succeeding such Event of Loss for each such item of Financed Equipment subject
to an Event of Loss, an amount equal to the sum of: (i) all accrued and unpaid
Scheduled Payments with respect to such Loan attributable to such item of
Financed Equipment due prior to the next such Payment Date with respect to such
Loan, (ii) a prepayment in an amount equal to the Stipulated Loss Value and
(iii) all other sums, if any, that shall have become due and payable hereunder,
including interest at the Default Rate with respect to any past due amounts. On
the date of receipt by Lender of the amount specified above with respect to each
such item of Financed Equipment subject to an Event of Loss, this Agreement
shall terminate as to such Financed Equipment. Except as provided in Section
6.9(c), any proceeds of insurance maintained by Borrower pursuant to Section 6.8
and received by Borrower shall be paid to Bank promptly upon their receipt by
Borrower up to the amounts due under this Section. If any proceeds of insurance
or awards received from governmental authorities are in excess of the amount
owed under this Section 6.9, Lender shall promptly remit to Borrower the amount
in excess of the amount owed to Lender.
(c) So long as no Event of Default has occurred and is
continuing, any proceeds of insurance maintained pursuant to Section 6.8
received by Lender or Borrower with respect to an item of Financed Equipment,
the repair of which is practicable, shall, at the election of Borrower, be
applied either to the repair or replacement of such Financed Equipment or, upon
Bank's receipt of evidence of the repair or replacement of the Financed
Equipment reasonably satisfactory to Lender, to the reimbursement of Borrower
for the cost of such repair or replacement. All replacement parts and equipment
acquired by Borrower in replacement of Financed Equipment pursuant to this
Section 6.9(c) shall immediately become part of the Financed Equipment upon
acquisition by Borrower. Borrower shall take such actions and provide such
documentation as may be reasonably requested by Lender to protect and preserve
their first priority security interest and otherwise to avoid any impairment of
Lender's rights under the Loan Documents in connection with such repair or
replacement.
6.10. Principal Depository. Borrower shall maintain its principal operating accounts with Bank; provided, there shall be no minimum balance requirements.
6.11. Environmental Laws. Borrower shall conduct its operations and keep and maintain its Property in material compliance with all Environmental Laws.
6.12. Further Assurances. At any time and from time to time Borrower shall execute and deliver such further instruments and take such further action as may reasonably be requested by Lender to effect the purposes of this Agreement.
7. Negative Covenants. Borrower covenants and agrees that until the full and complete payment of the Obligations and termination of the Commitments, Borrower will not do any of the following:
7.1. Chief Executive Office; Location of Collateral. During the continuance of this Agreement, change the chief executive office or principal place of business or remove or cause to be removed, except in the ordinary course of Borrower's business, the Collateral or the records concerning the Collateral from the premises listed in Schedule 3 without thirty (30) days prior written notice to Lender.
7.2. Extraordinary Transactions and Disposal of Assets. Enter into any transaction for the sale, lease, license or other disposition of, moving, relocation, or transfer, whether by sale or otherwise, of Borrower's assets outside of the ordinary course of Borrower's business.
7.3. Restructure. Change Borrower's name; cause, permit, or suffer any material change in Borrower's ownership (provided that raising additional equity in a financing round or the sale of shares by any venture investor other than Boulder Ventures or an affiliate thereof shall not be prohibited by this clause); or suspend operation of Borrower's business.
7.4. Liens. Create, incur, assume or suffer to exist any Lien or any other encumbrance of any kind with respect to any of the Financed Equipment, whether now owned or hereafter acquired, except the Permitted Liens.
8. Events of Default. Any one or more of the following events shall constitute an Event of Default by Borrower under this Agreement:
8.1. Payment Default. If Borrower fails to pay when due and payable or when declared due and payable in accordance with the Loan Documents, any portion of the Obligations.
8.2. Covenant Default. If Borrower fails to perform any obligation
under Sections 6.8, 6.9 or 6.10, or violates any of the covenants contained in
Section 7 of this Agreement, or fails or neglects to perform, keep, or observe
any other material term, provision, condition, covenant, or agreement contained
in this Agreement, in any of the other Loan Documents, or in any other present
or future agreement between Borrower and Lender and as to any default under such
other term, provision, condition, covenant or agreement that can be cured, has
failed to cure such default within fifteen (15) days after the occurrence of
such default.
8.3. Material Adverse Change. If there is a material impairment of the prospect of repayment of any portion of the Obligations owing to Lender or a material impairment of the value or priority of Lender's security interests in the Collateral.
8.4. Attachment. If any material portion of Borrower's assets is attached, seized, subjected to a writ or distress warrant, or is levied upon, or comes into the possession of any trustee, receiver or Person acting in a similar capacity and such attachment, seizure, writ or distress warrant or levy has not been removed, discharged or rescinded within ten (10) days, or if Borrower is enjoined, restrained, or in any way prevented by court order from continuing to conduct all or any material part of its business affairs, or if a judgment or other claim becomes a lien or encumbrance upon any material portion of Borrower's assets, or if a notice of lien, levy, or assessment is filed of
record with respect to any of Borrower's assets by the United States Government, or any department, agency, or instrumentality thereof, or by any state, county, municipal, or governmental agency, and the same is not paid within ten (10) days after Borrower receives notice thereof, provided that none of the foregoing shall constitute an Event of Default where such action or event is stayed or an adequate bond has been posted pending a good faith contesting by Borrower.
8.5. Other Agreements. If there is a default in any agreement to which Borrower is a party with a third party or parties resulting in a right by such third party or parties, whether or not exercised, to accelerate the maturity of any Indebtedness.
8.6. Judgments. If a judgment or judgments for the payment of money in an amount, individually or in the aggregate, of at least Fifty Thousand Dollars ($50,000) shall be rendered against Borrower and shall remain unsatisfied and unstayed for a period of thirty (30) days.
8.7. Redemption or Repurchase. Borrower shall, after the date of this Agreement, redeem or repurchase any shares of its equity securities, other than repurchases of stock from former employees of Borrower.
8.8. Misrepresentations. If any material misrepresentation or material misstatement exists now or hereafter in any warranty, representation, statement, or report made to Lender by Borrower or any officer, employee, agent, or director of Borrower.
8.9. Breach of Warrant. If Borrower shall breach the terms of the Warrant.
8.10. Involuntary Bankruptcy or Insolvency. If a proceeding shall have been instituted in a court having jurisdiction in the premises seeking a decree or order for relief in respect of Borrower in an involuntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or for the appointment of a receiver, liquidator, assignee, custodian, trustee (or similar official) of Borrower or for any substantial part of its property, or for the winding-up or liquidation of its affairs, and such proceeding shall remain undismissed or unstayed and in effect for a period of forty-five (45) consecutive days or such court shall enter a decree or order granting the relief sought in such proceeding.
8.11. Voluntary Bankruptcy or Insolvency. If Borrower shall commence a voluntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, shall consent to the entry of an order for relief in an involuntary case under any such law, or shall consent to the appointment of or taking possession by a receiver, liquidator, assignee, trustee, custodian (or other similar official) of Borrower or for any substantial part of its property, or shall make a general assignment for the benefit of creditors, or shall fail generally to pay its debts as they become due, or shall take any corporate action in furtherance of any of the foregoing.
9. Lender's Rights and Remedies.
9.1. Rights and Remedies. Upon the occurrence and continuance of any Default or Event of Default, Lender shall have no further obligation to advance money or extend credit to or for the benefit of Borrower. In addition, upon the occurrence and during the continuance of an Event Of Default, Lender shall have the rights, options, duties and remedies of a secured party as permitted by law and, in addition to and without limitation of the foregoing, Lender may, at its election, without notice of election and without demand, do any one or more of the following, all of which are authorized by Borrower:
(a) Declare all Obligations, whether evidenced by this
Agreement, by any of the other Loan Documents, or otherwise, including the
Stipulated Loss Value of the Loan Amount of each Loan, immediately due and
payable (provided that upon the occurrence of an Event of Default described in
Section 8.11 or 8.12 all Obligations shall become immediately due and payable
without any action by Lender);
(b) Without notice to or demand upon Borrower, make such payments and do such acts as Lender consider necessary or reasonable to protect their security interest in the Collateral. Borrower agrees to assemble the Collateral if Lender so requires, and to make the Collateral available to Lender as Lender may designate. Borrower authorizes Lender to enter the premises where the Collateral is located, to take and maintain possession of the Collateral, or any part of it, and to pay, purchase, contest, or compromise any encumbrance, charge, or lien which in Lender's determination appears to be prior or superior to their security interest and to pay all expenses incurred in connection therewith. With respect to any of Borrower's owned premises, Borrower hereby grants Lender a license to enter into possession of such premises and to occupy the same, without charge, for up to one hundred twenty (120) days in order to exercise any of Lender's rights or remedies provided herein, at law, in equity, or otherwise;
(c) Without notice to Borrower, set off and apply to the
Obligations any and all (i) balances and deposits of Borrower held by Bank, or
(ii) indebtedness at any time owing to or for the credit or the account of
Borrower;
(d) Ship, reclaim, recover, store, finish, maintain, repair, prepare for sale, advertise for sale, and sell (in the manner provided for herein) the Collateral. Lender is hereby granted a license or other right, solely pursuant to the provisions of this Section 9.1, to use, without charge, Borrower's labels, patents, copyrights, rights of use of any name, trade secrets, trade names, trademarks, service marks, and advertising matter, or any Property of a similar nature, as it pertains to the Collateral, in completing production of, advertising for sale, and selling any Collateral and, in connection with Lender's exercise of their rights under this Section 9.1, Borrower's rights under all licenses and all franchise agreements shall inure to Lender's benefit;
(e) Sell the Collateral at either a public or private sale, or both, by way of one or more contracts or transactions, for cash or on terms, in such manner and at such places (including Borrower's premises) as Lender determines is commercially reasonable;
(f) Lender may credit bid and purchase at any public sale; and
(g) Any deficiency that exists after disposition of the Collateral as provided above will be paid immediately by Borrower.
9.2. Effect of Sale. Any sale, whether under any power of sale hereby given or by virtue of judicial proceedings, shall operate to divest all right, title, interest, claim and demand whatsoever, either at law or in equity, of Borrower in and to the Property sold, and shall be a perpetual bar, both at law and in equity, against Borrower, its successors and assigns, and against any and all Persons claiming the Property sold or any part thereof under, by or through Borrower, its successors or assigns.
9.3. Power of Attorney in Respect of the Collateral. Borrower does hereby irrevocably appoint Lender (which appointment is coupled with an interest) on the occurrence and continuance of a Default or an Event of Default, the true and lawful attorney in fact of Borrower with full power of substitution, for it and in its name: (a) to ask, demand, collect, receive, receipt for, sue for, compound and give acquittance for any and all rents, issues, profits, avails, distributions, income, payment draws and other sums in which a security interest is granted under Section 4 with full power to settle, adjust or compromise any claim thereunder as fully as if Lender was a Borrower itself, (b) to receive payment of and to endorse the name of Borrower to any items of Collateral (including checks, drafts and other orders for the payment of money) that come into Lender's possession or under Lender's control, (c) to make all demands, consents and waivers, or take any other action with respect to, the Collateral, (d) in Lender's discretion to file any claim or take any other action or proceedings, either in their own names or in the name of Borrower or otherwise, which Lender may reasonably deem necessary or appropriate to protect and preserve the right, title and interest of Lender in and to the Collateral, or (e) to otherwise act with respect thereto as though Lender were the outright owner of the Collateral.
9.4. Lender's Expenses. If Borrower fails to pay any amounts or furnish any required proof of payment due to third persons or entities, as required under the terms of this Agreement, then Lender may do any
or all of the following: (a) make payment of the same or any part thereof; (b) set up such reserves in Borrower's loan account as Lender deems necessary to protect Lender from the exposure created by such failure; or (c) obtain and maintain insurance policies of the type discussed in Section 6.8 of this Agreement, and take any action with respect to such policies as Lender deems prudent. Any amounts paid or deposited by Lender shall constitute Lender's Expenses, shall be immediately due and payable, and shall bear interest at the then applicable rate hereinabove provided, and shall be secured by the Collateral. Any payments made by Lender shall not constitute an agreement by Lender to make similar payments in the future or a waiver by Lender of any Event of Default under this Agreement.
9.5. Remedies Cumulative. Lender's rights and remedies under this Agreement, the Loan Documents, and all other agreements shall be cumulative. Lender shall have all other rights and remedies not inconsistent herewith as provided under the Code, by law, or in equity. No exercise by Lender of one right or remedy shall be deemed an election, and no waiver by Lender of any Event of Default on Borrower's part shall be deemed a continuing waiver. No delay by Lender shall constitute a waiver, election, or acquiescence by it.
9.6. Application of Collateral Proceeds. The proceeds and/or avails of the Collateral, or any part thereof, and the proceeds and the avails of any remedy hereunder (as well as any other amounts of any kind held by Lender at the time of or received by Lender after, the occurrence of an Event of Default hereunder) shall be paid to and applied as follows:
(a) First, to the payment of out-of-pocket costs and expenses, including all amounts expended to preserve the value of the Collateral, of foreclosure or suit, if any, and of such sale and the exercise of any other rights or remedies, and of all proper fees, expenses, liability and advances, including reasonable legal expenses and attorneys' fees, incurred or made hereunder by Lender;
(b) Second, to the payment to Lender of the amount then owing or unpaid on the Loans for Scheduled Payments, the Stipulated Loss Value of the Loan Amount, and all other Obligations with respect to all Loans, and in case such proceeds shall be insufficient to pay in full the whole amount so due, owing or unpaid upon the Loans, then to the unpaid interest thereon, then to unpaid principal thereof, then to the Stipulated Loss Value of the Loan Amount with respect to all Loans, and then to the payment of other amounts then payable to Lender under any of the Loan Documents; and
(c) Third, to the payment of the surplus, if any, to Borrower, its successors and assigns, or to whomsoever may be lawfully entitled to receive the same.
9.7. Reinstatement of Rights. If Lender shall have proceeded to enforce any right under this Agreement or any other Loan Document by foreclosure, sale, entry or otherwise, and such proceedings shall have been discontinued or abandoned for any reason or shall have been determined adversely, then and in every such case (unless otherwise ordered by a court of competent jurisdiction), Lender shall be restored to its former position and rights hereunder with respect to the Property subject to the security interest created under this Agreement.
10. Waivers; Indemnification.
10.1. Demand; Protest. Borrower waives demand, protest, notice of protest, notice of default or dishonor, notice of payment and nonpayment. notice of any default, nonpayment at maturity, release, compromise, settlement, extension, or renewal of accounts, documents, instruments, chattel paper, and guarantees at any time held by Lender on which Borrower may in any way be liable.
10.2. Lender's Liability for Collateral. So long as Lender complies with its obligations, if any, under Section 9207 of the Code, Lender shall not in any way or manner be liable or responsible for: (a) the safekeeping of the Collateral; (b) any loss or damage thereto occurring or arising in any manner or fashion from any cause; (c) any diminution in the value thereof; or (d) any act or default of any carrier, warehouseman, bailee, forwarding agency, or other Person whomsoever. All risk of loss, damage or destruction of the Collateral shall be borne by Borrower.
10.3. Indemnification. Whether or not the transactions contemplated hereby shall be consummated:
(a) General Indemnity. Borrower shall pay, indemnify, and hold Lender and its officers, directors, employees, counsel, partners, agents and attorneys-in-fact (each, an "Indemnified Person") harmless from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, charges, expenses or disbursements (including Lender's Expenses and reasonable attorney's fees and the allocated cost of in-house counsel) of any kind or nature whatsoever with respect to the execution, delivery, enforcement, performance and administration of this Agreement and any other Loan Documents, or the transactions contemplated hereby and thereby, and with respect to any investigation, litigation or proceeding (including any case, action or proceeding before any court or other Governmental Authority relating to bankruptcy, reorganization, insolvency, liquidation, dissolution or relief of debtors or any appellate proceeding) related to this Agreement or the Loans or the use of the proceeds thereof, whether or not any Indemnified Person is a party thereto (all the foregoing, collectively, the "Indemnified Liabilities"); provided, that Borrower shall have no obligation hereunder to any Indemnified Person with respect to Indemnified Liabilities arising from the gross negligence or willful misconduct of such Indemnified Person.
(b) Environmental Indemnity.
(i) Borrower hereby agrees to indemnify, defend and hold harmless each Indemnified Person, from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, charges, expenses or disbursements (including reasonable attorneys' fees and the allocated cost of in-house counsel and internal environmental audit or review services), which may be incurred by or asserted against such Indemnified Person in connection with or arising out of any pending or threatened investigation, litigation or proceeding, or any action taken by any Person, with respect to any Environmental Claim arising out of or related to any Property owned, leased or operated by Borrower. No action taken by legal counsel chosen by Lender in defending against any such investigation, litigation or proceeding or requested remedial, removal or response action (except for actions which constitute fraud, willful misconduct, gross negligence or material violations of law) shall vitiate or in any way impair Borrower's obligation and duty hereunder to indemnify and hold Lender harmless. Lender agrees to use reasonable efforts to cooperate with Borrower respecting the defense of any matter indemnified hereunder, except insofar as and to the extent that their respective interests may be adverse to Borrower's, in Lender's sole discretion.
(ii) In no event shall any site visit, observation, or testing by Lender be deemed a representation or warranty that Hazardous Materials are or are not present in, on, or under the site, or that there has been or shall be compliance with any Environmental Law. Neither Borrower nor any other Person is entitled to rely on any site visit, observation, or testing by any Lender. Except as otherwise provided by law, Lender owes no duty of care to protect Borrower or any other Person against, or to inform Borrower or any other party of, any Hazardous Materials or any other adverse condition affecting any site or Property. Lender shall not be obligated to disclose to Borrower or any other Person any report or findings made as a result of, or in connection with, any site visit, observation, or testing by Lender.
(c) Survival; Defense. The obligations in this Section 10.3 shall survive payment of all other Obligations. At the election of any Indemnified Person, Borrower shall defend such Indemnified Person using legal counsel satisfactory to such Indemnified Person in such Person's sole discretion, at the sole cost and expense of Borrower. All amounts owing under this Section 10.3 shall be paid within thirty (30) days after written demand.
11. Notices. Unless otherwise provided in this Agreement, all notices or demands by any party relating to this Agreement or any other agreement entered into in connection herewith shall be in writing and (except for financial statements and other informational documents which may be sent by first-class mail, postage prepaid) shall be personally delivered or sent by certified mail, postage prepaid, return receipt requested, or by prepaid facsimile to Borrower or to Lender, as the case may be, at their respective addresses set forth below:
If to Borrower: Array Biopharma Inc.
1885 33rd Street, Bldg. AC-1
Boulder, CO 80301-2505
Attn: David Snitman, COO
Fax: (303) 449-5376
If to Bank: Silicon Valley Bank
4430 Arapahoe Avenue, Suite 225
Boulder, CO 80303
Attn: Greg Becker
Fax: (303) 938-0486
with a copy to:
Silicon Valley Bank
3003 Tasman Drive
Santa Clara, CA 95054
Attn: Loan Services
FAX: (408) 496-2429
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The parties hereto may change the address at which they are to receive notices hereunder, by notice in writing in the foregoing manner given to the other.
12. General Provisions.
12.1. Successors and Assigns. This Agreement shall bind and inure to the benefit of the respective successors and permitted assigns of each of the parties; provided, however, that neither this Agreement nor any rights hereunder may be assigned by Borrower without Lender's prior written consent, which consent may be granted or withheld in Lender's sole discretion. Lender shall have the right without the consent of or notice to Borrower to sell, transfer, negotiate, or grant participations in all or any part of, or any interest in Lender's rights and benefits hereunder.
12.2. Time of Essence. Time is of the essence for the performance of all obligations set forth in this Agreement.
12.3. Severability of Provisions. Each provision of this Agreement shall be severable from every other provision of this Agreement for the purpose of determining the legal enforceability of any specific provision.
12.4. Entire Agreement; Construction; Amendments and Waivers.
(a) This Agreement and each of the other Loan Documents dated as of the date hereof, taken together, constitute and contain the entire agreement among Borrower and Lender and supersede any and all prior agreements, negotiations, correspondence, understandings and communications between the parties, whether written or oral, respecting the subject matter hereof.
(b) Any and all amendments, modifications, discharges or waivers of, or consents to any departures from any provision of this Agreement or of any of the other Loan Documents shall not be effective without the written agreement of the party against whom such enforcement is sought and shall not be effective without the written consent of Lender. Any waiver or consent with respect to any provision of the Loan Documents shall be effective only in the specific instance and for the specific purpose for which it was given. No notice to or demand on Borrower in any case shall entitle Borrower to any other or further notice or demand in similar or other circumstances. Any amendment, modification, waiver or consent effected in accordance with this Section 12.4 shall be binding upon Lender and on Borrower.
12.5. Reliance by Lender. All covenants, agreements, representations and warranties made herein by Borrower shall, notwithstanding any investigation by Lenders, be deemed to be material to and to have been relied upon by Lender.
12.6. No Set-Offs by Borrower. All sums payable by Borrower pursuant to this Agreement or any of the other Loan Documents shall be payable without notice or demand and shall be payable in United States Dollars without set-off or reduction of any manner whatsoever.
12.7. Counterparts. This Agreement may be executed in any number of counterparts and by different parties on separate counterparts, each of which, when executed and delivered, shall be deemed to be an original, and all of which, when taken together, shall constitute but one and the same Agreement.
12.8. Survival. All covenants, representations and warranties made in this Agreement shall continue in full force and effect so long as any Obligations remain outstanding. The obligations of Borrower to indemnify Lender with respect to the expenses, damages, losses, costs and liabilities described in Section 10.3 shall survive until all applicable statute of limitations periods with respect to actions that may be brought against Lender have run.
13. Relationship of Parties. Borrower and Lender acknowledge, understand and agree that the relationship between the Borrower, on the one hand, and Lender, on the other, is, and at all time shall remain solely that of a borrower and lender. Lender shall not under any circumstances be construed to be partners or joint venturers of Borrower or any of its Affiliates; nor shall Lender under any circumstances be deemed to be in a relationship of confidence or trust or a fiduciary relationship with Borrower or any of its Affiliates, or to owe any fiduciary duty to Borrower or any of its Affiliates. Lender does not undertake or assume any responsibility or duty to Borrower or any of its Affiliates to select, review, inspect, supervise, pass judgment upon or otherwise inform the Borrower or any of its Affiliates of any matter in connection with its or their Property, any Collateral held by Lender or the operations of Borrower or any of its Affiliates. Borrower and each of its Affiliates shall rely entirely on their own judgment with respect to such matters, and any review, inspection, supervision, exercise of judgment or supply of information undertaken or assumed by Lender in connection with such matters is solely for the protection of Lender and neither Borrower nor any Affiliate is entitled to rely thereon.
14. Choice of Law and Venue; Jury Trial Waiver. THIS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
CALIFORNIA, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. EACH OF BORROWER
AND LENDER HEREBY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL
COURTS LOCATED IN THE COUNTY OF SANTA CLARA, STATE OF CALIFORNIA. BORROWER AND
LENDER HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF
THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS,
BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first above written.
ARRAY BIOPHARMA INC.
By: /s/ DAVID SNITMAN
---------------------------------
David Snitman
Title: Chief Operating Officer
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SILICON VALLEY BANK
By: /s/
---------------------------------
Title:
Vice President
-------------------------------
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LIST OF EXHIBITS AND SCHEDULES
Exhibit A - Collateral
Exhibit B - Form of Warrant
Exhibit C - Form of Landlord Consent
Exhibit D - Form of Loan Agreement Supplement
Exhibit E - Form of Borrower's Opinion
Schedule 1 - Existing Liens
Schedule 2 - Borrower's Trade Names
Schedule 3 - Location of Collateral
Schedule 4 - Subsidiaries
EXHIBIT A
DEBTOR/BORROWER: ARRAY BIOPHARMA INC.
SECURED PARTY/LENDER: SILICON VALLEY BANK
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COLLATERAL
The Collateral shall consist of all right, title and interest of Debtor in and to all the following:
Financed Equipment. All right, title, interest, claims and demands of Debtor in and to each and every item of equipment, fixtures or personal property which is financed with a "Loan" pursuant to that certain Loan and Security Agreement, dated as of October 9, 1998 (the "Loan Agreement"), by and among Debtor and Secured Party, including, without limitation, the equipment, fixtures and personal property described in Annex A hereto (which such equipment, fixtures and personal property shall remain subject to the lien of the Loan Agreement until specifically released pursuant to Section 4.3 of the Loan Agreement), whether now owned or hereafter acquired, together with all substitutions, renewals or replacements of and additions, improvements, and accessions to any and all of such equipment, fixtures or personal property (all such equipment, fixtures, personal property, accessories, parts, appurtenances, substitutions, renewals, replacements, additions, improvements, and accessions are herein called, collectively, the "Financed Equipment"), together with all the rents, issues, income, profits and avails therefrom and the proceeds thereof, including, without limitation, insurance, condemnation, requisition or similar payments, and all proceeds from sales, renewals, releases or other dispositions thereof.
ANNEX A
to
Exhibit A
The following represent further specific descriptions of the Financed Equipment:
FINANCED EQUIPMENT
EXHIBIT B
WARRANT
Exhibit C
FORM OF LANDLORD'S CONSENT
RECORDING REQUESTED BY
AND WHEN RECORDED RETURN TO:
SILICON VALLEY BANK
3003 Tasman Drive
Santa Clara, CA 95054
Attn: Loan Services
CONSENT TO REMOVAL OF PERSONAL PROPERTY
KNOW ALL PERSONS BY THESE PRESENTS:
(a) The undersigned has an interest as owner and landlord in the following described real property (the "Real Property"):
That certain real property in the County of ______________, State of Colorado, described as:
SEE ATTACHMENT 1 ATTACHED HERETO FOR FULL LEGAL DESCRIPTION, commonly
known as
(b) Array Biopharma Inc., a Delaware corporation ("Borrower"), has entered into or will enter into a Loan and Security Agreement with Silicon Valley Bank ("Lender"), dated as of October 9, 1998 (as amended and supplemented from time to time, the "Loan Agreement").
(c) Lender, as a condition to entering into the Loan Agreement, requires that the undersigned consent to the removal by Lender of the equipment and other assets that Borrower has financed with the proceeds of the Loan Agreement (hereinafter called "Equipment") from the Real Property, no matter how it is affixed thereto, and to the other matters set forth below.
NOW, THEREFORE, for good and sufficient consideration, receipt of which is hereby acknowledged, the undersigned consents to the placing of the Equipment on the Real Property, and agrees with Lender as follows:
1. The undersigned waives and releases each and every right which undersigned now has, under laws of the State of Colorado or by virtue of the lease for the Real Property now in effect, to levy or distrain upon for rent, in arrears, in advance or both, or to claim or assert title to the Equipment that is already on said Real Property, or may hereafter be delivered or installed thereon.
2. The Equipment shall be considered to be personal property and shall not be considered part of the Real Property regardless of whether or by what means it is or may become attached or affixed to the Real Property.
3. The undersigned will permit Lender, or their agent or representative, to enter upon the Real Property for the purpose of exercising any right they may have under the terms of the Loan Agreement or otherwise, including, without limitation, the right to remove the Equipment; provided, however, that if Lender, in removing the Equipment damage any improvements of the undersigned on the Real Property, Lender will, at its expense, cause same to be repaired.
4. This agreement shall be binding upon the heirs, successors and assigns of the undersigned and shall inure to the benefit of Lender and its successors and assigns.
IN WITNESS WHEREOF, the undersigned has executed this instrument at __________________, this ______________ day of __________________,199____.
The foregoing Consent must be acknowledged before a Notary Public.
[ATTACH NOTARY JURAT]
ATTACHMENT 1
LEGAL DESCRIPTION OF PREMISES
[To Be Provided By Borrower]
EXHIBIT D
FORM OF LOAN AGREEMENT SUPPLEMENT
LOAN AGREEMENT SUPPLEMENT No. [ ]
LOAN AGREEMENT SUPPLEMENT No. [ ], dated ______________, 199____
("Supplement"), to the Loan and Security Agreement dated as of October 9, 1998
(the "Loan Agreement) by and among Array Biopharma Inc., a ______________
corporation ("Borrower"), and Silicon Valley Bank ("Lender").
Capitalized terms used herein but not otherwise defined herein are used with the respective meanings given to such terms in the Loan Agreement.
1. To secure the prompt payment by Borrower of the principal of and interest on, and all other amounts from time to time outstanding under the Loan Agreement, and the performance and observance by Borrower of all the agreements, covenants and provisions contained in the Loan Agreement, Borrower does hereby grant unto Lender, its successors and assigns, a first priority security interest in all of Borrower's right, title and interest in each item of equipment and other property described in Annex A hereto, which equipment and other property shall be deemed to be additional "Financed Equipment." The list of Financed Equipment in Annex A hereto shall be construed as a supplement to ANNEX A TO EXHIBIT A to the Loan Agreement and shall form a part thereof, and the Loan Agreement is hereby incorporated by reference herein and is hereby ratified, approved and confirmed.
2. Attached as Annex B hereto is the Loan Terms Schedule with respect to the Loan the proceeds of which will be used to finance the Financed Equipment listed in Annex A hereto.
3. The proceeds of the Loan should be transferred to Borrower's account with Bank set forth below:
4. Borrower hereby certifies that (a) the foregoing information is true and correct and authorizes Lender to endorse in its books and records, the Basic Rate applicable to the Funding Date of the Loan contemplated in this Loan Agreement Supplement and the principal amount set forth in the Loan Terms Schedule; (b) the representations and warranties made by Borrower in Section 5 of the Loan Agreement and in the other Loan Documents are true and correct on the date hereof and will be true and correct on such Funding Date; (c) Borrower has met or will by such Funding Date meet all conditions set forth in Section 3 of the Loan Agreement; (d) Borrower is now, and on such Funding Date will be, in compliance with the covenants and the requirements contained in Sections 6 and 7 of the Loan Agreement; and (e) no Default or Event of Default has occurred and is continuing under the Loan Agreement.
5. This Supplement is being delivered in the State of California.
6. This Supplement may be executed by Borrower and Lender in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, Borrower and Lender have caused this Supplement to be duly executed and delivered as of this day and year first above written.
ARRAY BIOPHARMA INC.
SILICON VALLEY BANK
Annex A - Description of Financed Equipment
Annex B - Loan Terms Schedule
ANNEX A
to
EXHIBIT D
The Financed Equipment being financed with the Loan for which this Loan Agreement Supplement is being executed is listed below. Upon the funding of such Loan, this schedule automatically shall be deemed to be a part of Annex A to Exhibit A to the Loan Agreement.
FINANCED EQUIPMENT
See Attached Pages.
ANNEX B
LOAN TERMS SCHEDULE
Loan Funding Date: ______________, 199__
Original Loan Amount: $______________
Loan Factor: ______________%
Original Scheduled Payment Amount: $______________
Final Payment: An additional amount equal to the Final Payment Percentage multiplied by the original Loan Amount then in effect, shall be paid on the Maturity Date with respect to such Loan.
Stipulated Loss Value:
Payment No. Payment Date Stipulated Loss Value* 1 2 3 4 . . . 35 [[36/42]] . . . |
*/ Each Stipulated Loss Value amount assumes payment of all Scheduled Payments due on or before the indicated Payment Date.
EXHIBIT E
ITEMS TO BE COVERED BY OPINION OF BORROWER'S COUNSEL
The opinions hereafter expressed are subject to the following qualifications:
(a) We assume the genuineness of all signatures on original documents, the authenticity and completeness of all documents submitted to us as originals, the conformity to original documents of all copies submitted to us and the due execution and delivery of all documents (except as to due execution and delivery by the Company) where due execution and delivery are a prerequisite to the effectiveness thereof;
(b) We express no opinion as to the effect of applicable bankruptcy, insolvency, reorganization, moratorium or other similar federal or state laws affecting the rights of creditors;
(c) We express no opinion as to the effect of rules of law governing specific performance, injunctive relief or other equitable remedies (regardless of whether any such remedy is considered in a proceeding at law or in equity).
Based on and subject to the foregoing, we are of the opinion that:
1. Borrower is a corporation, duly organized, validly existing and in good standing under the laws of the State of Delaware and is duly qualified and authorized to do business in the state of Colorado [[and ___________________]].
2. Borrower has the full corporate power, authority and legal right, and has obtained all necessary approvals, consents and given all notices to execute and deliver the Loan Documents and perform the terms thereof.
3. The Loan Documents have been duly authorized, executed and delivered by Borrower and constitute valid, legal and binding agreements.
4. To our knowledge, there is no action, suit, audit, investigation, proceeding or patent claim pending or threatened against Borrower in any court or before any governmental commission, agency, board or authority which might have a material adverse effect on the business, condition or operations of Borrower or the ability of Borrower to perform its obligations under the Loan Documents.
5. The Shares issuable pursuant to exercise or conversion of the Warrant have been duly authorized and reserved for issuance by Borrower and, when issued in accordance with the terms thereof, will be validly issued, fully paid and nonassessable.
6. The shares of Common Stock issuable upon conversion of the Shares have been duly authorized and reserved and, when issued in accordance with the terms of Borrower's Certificate of Incorporation, as amended, will be validly issued, fully paid and nonassessable.
7. The rights, preferences, privileges and restrictions granted to or imposed upon Borrower's Series [ ] Preferred Stock and the holders thereof are as set forth in Borrower's Certificate of Incorporation, as amended to the Date of Grant, a true and complete copy of which has been delivered to Lenders.
8. The execution and delivery of the Warrant are not, and the issuance of the Shares upon exercise of the Warrant in accordance with the terms thereof will not be, inconsistent with Borrower's Certificate of Incorporation, as amended, or Bylaws, do not and will not contravene any law, governmental rule or regulation, judgment or order applicable to Borrower, and do not and will not conflict with or contravene any provision of, or constitute a default under, any indenture, mortgage, contract or other agreement or instrument of which Borrower is a party or by which it is bound or require the consent or approval of, the giving of notice to, the registration or filing with or the taking of any action in respect of or by, any federal, state or local government authority or agency or
other person, except for the filing of notices pursuant to federal and state securities laws, which filings will be effected by the time required thereby.
SCHEDULE 1
EXISTING LIENS
SCHEDULE 2
BORROWER'S TRADE NAMES
SCHEDULE 3
LOCATION OF CHIEF EXECUTIVE OFFICE; PRINCIPAL
PLACE OF BUSINESS; COLLATERAL
SCHEDULE 4
SUBSIDIARIES
EXHIBIT 10.22
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED OR UNLESS SOLD PURSUANT TO AN EXEMPTION TO SUCH ACT.
ARRAY BIOPHARMA, INC.
WARRANT TO PURCHASE 40,000
SHARES OF SERIES A PREFERRED STOCK
Void after October 9, 2005
THIS CERTIFIES THAT, for value received, Silicon Valley Bank (the "Holder") is entitled to purchase, on the terms and subject to the conditions hereof, up to 40,000 shares of Series A Preferred Stock, par value $0.001 per share (the "Series A Preferred Stock"), of Array BioPharma, Inc., a Delaware corporation (the "Company"), at a per share purchase price of $1.00 (the "Exercise Price"), subject to adjustment as provided herein.
The following terms shall apply to this Warrant:
1. Exercise of Warrant. The terms and conditions upon which this Warrant may be exercised, and the Series A Preferred Stock covered hereby (the "Warrant Shares"), may be purchased, are as follows:
1.1 Number of Shares. This Warrant is being delivered to Holder as additional consideration for Holder's extension of a credit facility to the Company, pursuant to that certain Loan and Security Agreement dated of even date herewith. The number of Warrant Shares for which this Warrant is initially exercisable is 40,000 shares, which number is subject to adjustment pursuant to Section 2 of this Warrant.
1.2 Exercise. This Warrant may be exercised in whole or in part at any time or from time to time up until 5:00 p.m. Mountain Standard Time, October 9, 2005, and shall be void thereafter; provided that the Company shall give Holder written notice of Holder's right to exercise this Warrant not more than 90 days and not less than 30 days before such date. If the notice is not so given, the expiration date shall automatically be extended until 30 days after the date the Company delivers the notice to Holder. The exercise of the purchase rights hereunder, in whole or in part shall be effected by (a) the surrender of this Warrant, together with a duly executed copy of the form of the subscription attached as EXHIBIT A hereto, to the Company at its principal offices, and (b) the delivery of the Exercise Price by (i) check or bank draft payable to the Company's order,
or (ii) by wire transfer to the Company's account for the number of Warrant Shares for which the purchase rights hereunder are being exercised.
1.3 Automatic Exercise.
(a) Notwithstanding the provisions of Section 1.1 above, this Warrant shall automatically be deemed to be exercised in full in the manner set forth in Section 1.4 hereof, without any further action on behalf of the Holder on the earliest of a date: (a) ten (10) days prior to a "Sale of the Company" (as defined), or (b) immediately prior to the closing of an underwritten initial public offering by the Company in which the Series A Preferred Stock converts automatically into Common Stock (an "IPO"). A "Sale of the Company" shall mean either of the following (i) the acquisition of all or substantially all of the capital stock of the Company by another entity by means of any transaction or series of related transactions (including, without limitation, any reorganization, merger or consolidation but, excluding any merger effected exclusively for the purpose of changing the domicile of the Company); or (ii) a sale of all or substantially all of the assets of the Company; unless the Company's shareholders of record as constituted immediately prior to such acquisition or sale will, immediately after such acquisition ro sale (by virtue of securities issued as consideration for the corporation's acquisition or sale or otherwise) hold at least 50% of the voting power of the surviving or acquiring entity. In connection with the exercise of this Warrant pursuant to clause (a) and clause (b) of this Section 1.3, such exercise shall be conditioned upon the closing of such Sale of the Company or IPO and the Warrant shall not be deemed to have been exercised until the closing of such Sale of the Company or IPO.
(b) Public Offering. For purposes of this Warrant, IPO means the sale of the Company's Common Stock pursuant to a registration statement under the Securities Act of 1933, as amended, for an underwritten public offering (other than a registration on Form S-8, Form S-4 or comparable forms), which results in aggregate cash proceeds (prior to underwriters' commissions and expenses) to the Company of more than $7,500,000. Immediately prior to the closing of any Public Offering prior to the Expiration Date, any portion of this Warrant then not exercised or exercisable will be exercisable for the number of shares of the Company's Common Stock that would have resulted from the conversion, pursuant to the Company's Articles of Incorporation then in effect of the maximum number of shares of Preferred Stock that could have been acquired by the Holder upon the exercise of the unexpired portion of this Warrant immediately prior to such Public Offering.
1.4 Net Issue Election.
(a) Upon automatic exercise of this Warrant as provided in Section 1.3 above or at any time or from time to time as the Holder may elect, the Holder shall be entitled to receive, without the payment by the Holder of any additional consideration, shares of Series A Preferred Stock equal to the value of this Warrant or any portion hereof by the surrender of this Warrant or such portion to the Company, with the net issue election notice attached hereto as EXHIBIT B duly executed, at the principal office of the Company. Thereupon, the Company shall issue to the Holder such number of fully paid and nonassessable shares of Series A Preferred Stock as is computed using the following formula:
where: X= the number of shares of Series A
Preferred Stock to be issued to the
Holder.
Y= the number of shares of Series A
Preferred Stock covered by this
Warrant in respect of which the net
issue election is made.
A= the fair market value of one share
of Series A Preferred Stock, as
determined pursuant to subsection
(b) below, as at the time the net
issue election is made.
B= the Exercise Price in effect under
this Warrant at the time the net
issue election is made.
(b) Determination of Fair Market Value. For purposes
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of this Section, fair market value of one share of Series A Preferred Stock as of a particular date (the "Determination Date") shall mean:
(i) In the case of an initial public offering of the Common Stock, the initial "Price to Public" of one share of Common Stock specified in the final prospectus with respect to such offering, multiplied by the number of shares of Common Stock into which each share of Series A Preferred Stock converts as of that date;
(ii) In the case of a Sale of the Company, the effective per share consideration to be received in a Sale of the Company by holders of the Series A Preferred Stock, or if no such price is set forth in the agreement concerning the Sale of the Company, then as determined in good faith by the Company's Board of Directors;
(iii) If the Company's Common Stock is listed on a security exchange or the Nasdaq National Market, the closing price of the Company's Common Stock on such exchange or the Nasdaq National Market on the day notice of exercise is provided to the Company under Section 1.4(b) hereof, multiplied by the number of shares of Common Stock into which each share of Series A Preferred Stock converts as of that date; or
(iv) If Sections 1.4(b)(i), (ii), or (iii) do not apply, then as determined by the Board of Directors in good faith, which determination shall be conclusive and binding on the holder hereof.
1.5 Issuance of Shares. Upon the exercise of the purchase rights, in whole or in part, evidenced by this Warrant, a certificate or certificates for the purchased Warrant Shares shall be issued by the Company to the Holder as soon as practicable. Upon the partial exercise of this Warrant, the Company shall, as soon as practicable, deliver to the Holder a warrant in like tenor as this Warrant to purchase the number of shares in respect of which this Warrant shall not have been exercised.
2. Certain Adjustments.
2.1 Series A Preferred Stock Dividends. If the Company at any time prior to the expiration of this Warrant shall pay a dividend with respect to the Company's Series A Preferred Stock payable in shares of Series A Preferred Stock, or make any distribution with respect to the Company's Series A Preferred Stock, then the purchase price per share shall be appropriately decreased, and the number of Warrant Shares shall be appropriately increased in proportion to such dividend.
2.2 Splits and Subdivisions. In the event the Company should at any time or from time to time fix a record date for a split or subdivision of the outstanding shares of Series A Preferred Stock of the Company, or the determination of the holders of Series A Preferred Stock of the Company entitled to receive a dividend or other distribution payable in additional shares of Series A Preferred Stock of the Company or other securities or rights convertible into, or entitling the holder thereof to receive directly or indirectly, additional shares of the Company's Series A Preferred Stock (hereinafter referred to as the "Series A Preferred Stock Equivalents") without payment of any consideration by such holder for the additional shares of Series A Preferred Stock or Series A Preferred Stock Equivalents (including the additional shares of Series A Preferred Stock issuable upon conversion or exercise thereof), then, and as of such record date (or the date of such distribution, split or subdivision if no record date is fixed), the per share purchase price shall be appropriately decreased, and the number of Warrant Shares shall be appropriately increased in proportion to such increase of outstanding shares.
2.3 Combination of Shares. If the number of shares of Series A Preferred Stock outstanding at any time after the date hereof is decreased by a combination of the outstanding shares of Series A Preferred Stock of the Company, the per share purchase price shall be appropriately increased and the number of Warrant Shares shall be appropriately decreased in proportion to such decrease in outstanding shares.
2.4 Adjustments for Other Distributions. In the event the Company shall declare a distribution with respect to the Series A Preferred Stock payable in securities of other persons, evidences of indebtedness issued by the Company or other persons, assets, or options, or rights not referred to above, then, in each such case for the purpose of this Section 2, upon exercise of this Warrant the holder hereof shall be entitled to a proportionate share of any such distribution as though such holder was the holder of the number of shares of Series A Preferred Stock of the Company into which this Warrant may be exercised as of the record date fixed for the determination of the holders of Series A Preferred Stock of the Company entitled to receive such distribution.
2.5 Certificate as to Adjustments. In the case of each adjustment or readjustment of the purchase price pursuant to this Section 2, the Company will promptly compute such adjustment or readjustment in accordance with the terms hereof and cause a certificate setting forth such adjustment or readjustment, and showing in detail the fact upon which such adjustment or readjustment is based to be delivered to the holder of this Warrant. The Company will, upon the written request at any time of the holder of this Warrant, furnish or cause to be furnished to such holder a certificate setting forth:
(a) such adjustments and readjustments;
(b) the purchase price at the time in effect; and
(c) the number of Warrant Shares receivable upon the exercise of the Warrant.
2.6 Notice of Record Date, etc. In the event of any taking by the Company of a record of the holders of any class of securities of the Company for the purpose of determining the holders thereof who are entitled to receive any dividend (other than a cash dividend), or other distribution, or any right to subscribe for, purchase or otherwise acquire any shares of stock of any class or any other securities or property, or to receive any other right, or any capital reorganization of the Company, any reclassification or recapitalization of the capital stock of the Company, the Company will mail to the holder of this Warrant at least twenty (20) days prior to the earliest date specified therein, a notice specifying:
(a) The date on which such record is to be taken for the purpose of such dividend, distribution, or right, and the amount and character of such dividend, distribution, or right; or (b) The date on which any such reorganization, or reclassification is expected to become effective, and the record date for determining shareholders entitled to vote thereon.
3. Representations of Holder.
3.1 Investment Intent. Holder hereby warrants and represents that Holder is acquiring this Warrant, and any Warrant Shares issued upon exercise of this Warrant, for Holder's own account and not with a view to their resale or distribution.
3.2 Exempt from Registration. Holder acknowledges that this Warrant has not been registered under the Securities Act of 1933, as amended (the "1933 Act"), on the ground that the issuance of this Warrant is exempt from registration pursuant to Section 4(2) of the 1933 Act, and that the Company's reliance on such exemption is predicated on the representations of Holder set forth herein.
3.3 Investment Experience. In connection with the investment representations made herein, Holder represents that it is able to fend for itself in the transactions contemplated by this Warrant, has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of his investment, has the ability to bear the economic risks of its investment and has been furnished with and has had access to such information as it has requested and deemed appropriate to its investment decision.
3.4 Restricted Securities. Holder hereby confirms that Holder has been informed that this Warrant, and the Warrant Shares issued upon exercise of this Warrant, are restricted securities under the 1933 Act and may not be resold or transferred unless this Warrant, and the
Warrant Shares issued upon exercise of this Warrant, are first registered under the federal securities laws or unless an exemption from such registration is available. Accordingly, Holder hereby acknowledges that Holder is prepared to hold this Warrant, and the Warrant Shares issued upon exercise of this Warrant, for an indefinite period and that Holder is aware that Rule 144 of the Securities and Exchange Commission issued under the 1933 Act is not presently available to exempt the issuance of this Warrant from the registration requirements of the 1933 Act.
(a) Disposition of Shares. Holder hereby agrees that Holder shall make no disposition of this Warrant, and the Warrant Shares issued upon exercise of this Warrant, unless and until Holder shall have (i) provided the Company with assurances that (A) the proposed disposition does not require registration of the Warrant Shares under the 1933 Act, or (B) all appropriate action necessary for compliance with the registration requirements of the 1933 Act or of any exemption from registration available under the 1933 Act (including Rule 144) has been taken; and (ii) complied with the terms of the Shareholders Agreement dated as of December 27, 1995 by and between the Company and the holders of its capital stock (the "Shareholders Agreement").
3.5 Restrictive Legend. In order to reflect the restrictions on disposition of the Warrant Shares, the stock certificates for the Warrant Shares will be endorsed with the following restrictive legends to the following effect:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION TO THE REGISTRATION REQUIREMENTS OF SUCH ACT OR SUCH LAWS.
THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A SHAREHOLDERS AGREEMENT DATED AS OF MAY 18, 1998, AND AS MAY BE AMENDED FROM TIME TO TIME, AND SAID SHARES MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT IN ACCORDANCE WITH THE TERMS OF SUCH AGREEMENT. SUCH AGREEMENT MAY BE EXAMINED AT THE PRINCIPAL PLACE OF BUSINESS OF THE COMPANY AND A COPY THEREOF WILL BE FURNISHED WITHOUT CHARGE TO THE HOLDER OF THIS CERTIFICATE UPON RECEIPT BY THE COMPANY AT ITS PRINCIPAL PLACE OF BUSINESS OR REGISTERED OFFICE OF A WRITTEN REQUEST FROM THE SHAREHOLDER.
4. Representations, Warranties and Covenants. This Warrant is issued and delivered by the Company and accepted by each Holder on the basis of the following representations, warranties and covenants made by the Company:
4.1 The Company covenants that it will at all times from and after the date hereof reserve and keep available such number of its authorized shares of Series A Preferred Stock and Common Stock, $.001 par value, of the Company (the "Common Stock"), as will be sufficient to permit, respectively, the exercise of this Warrant in full and the conversion into shares of Common
Stock of all shares of Series A Preferred Stock receivable upon such exercise. The Company covenants further that such shares as may be issued pursuant to such exercise and/or conversion will, upon issuance, be duly and validly issued, fully paid and nonassessable and free from all taxes, liens and charges with respect to the issuance thereof.
4.2 The Company has all necessary authority to issue, execute and deliver this Warrant and to perform its obligations hereunder. This Warrant has been duly authorized issued, executed and delivered by the Company and is the valid and binding obligation of the Company, enforceable in accordance with its terms.
4.3 The shares of Series A Preferred Stock issuable upon the exercise of this Warrant have been duly authorized and reserved for issuance by the Company and, when issued in accordance with the terms hereof, will be validly issued, fully paid and nonassessable.
4.4 The issuance, execution and delivery of this Warrant do not, and the issuance of the shares of Series A Preferred Stock upon the exercise of this Warrant in accordance with the terms hereof will not, (i) violate or contravene the Company's Articles or bylaws, or any law, statute, regulation, rule, judgment or order applicable to the Company, (ii) violate, contravene or result in a breach or default under any contract, agreement or instrument to which the Company is a party or by which the Company or any of its assets are bound or (iii) require the consent or approval of or the filing of any notice or registration with any person or entity.
5. Fractional Shares. No fractional shares shall be issued in connection with any exercise of this Warrant. In lieu of the issuance of such fractional shares, the Company shall make a cash payment equal to the then fair market value of such fractional share as determined in good faith by the Company's Board of Directors pursuant to Section 1.4(b) above.
6. No Privilege of Stock Ownership. Prior to the exercise of this
Warrant, the Holder shall not be entitled, by virtue of holding this Warrant,
to any rights of a stockholder of the Company, including (without limitation)
the right to vote, receive dividends or other distributions, or exercise
preemptive rights, and such holder shall not be entitled to any notice or other
communication concerning the business or affairs of the Company. Nothing in
this Section 6, however, shall limit the right of the Holder to be provided the
notices required herein, or to participate in distributions described in
Section 2 hereof if the Holder ultimately exercises this Warrant.
Notwithstanding the foregoing, upon exercise of this Warrant, Holder shall be
deemed to be a "Holder" and "Holder of Registrable Securities" pursuant to
Section 2.2 and 2.3 of the Investor Rights Agreement dated as of May 18,. 1998,
as amended, by and among the Company and certain of its shareholders; provided,
that as a condition of receiving such registration rights, Holder agrees to
execute such Investor Rights Agreement as requested by the Company.
7. Transfers or Exchanges.
7.1 Subject to compliance with the Shareholders Agreement and applicable federal and state securities laws, this Warrant and all rights hereunder are transferable in whole or in part by the Holder to any person or entity reasonably acceptable to the Company. The Holder will
provide written notice of such transfer to the Company, and if no written objection from the Company is received by the Holder within five business days after the date of notice, then such transfer shall be deemed accepted. The transfer shall be recorded on the books of the Company upon the surrender of this Warrant, properly endorsed, to the Company at its principal offices, and the payment to the Company of all transfer taxes and other governmental charges imposed on such transfer. In the event of a partial transfer, the Company shall issue to the holders one or more appropriate new warrants.
7.2 All new warrants issued in connection with transfers, exchanges or partial exercises shall be identified in form and provision to this Warrant, except as to the number of shares.
7.3 Holder hereby agrees that, during the period of duration (not to exceed 180 days) specified by the Company and an underwriter of Series A Preferred Stock or other securities of the Company, following the effective date of an IPO, it shall not, to the extent requested by the Company and such underwriter, directly or indirectly sell, offer to sell, contract to sell (including, without limitation, any short sale), grant any option to purchase or otherwise transfer or dispose of (other than to donees who agree to be similarly bound) any securities of the Company held by it at any time during such period except Common Stock included in such registration; provided, however, that all officers and directors of the Company enter into similar agreements.
8. Successors and Assigns. The terms and provisions of this Warrant shall be binding upon the Company, the Holder, and their respective successors and assigns, subject at all times to the restrictions set forth in the Agreement and in this Warrant.
9. Loss, Theft, Destruction or Mutilation of Warrant. Upon receipt of notice by the Company of the loss, theft, destruction, or mutilation of this Warrant, and upon reimbursement to the Company of all reasonable expenses incidental thereto, and, if mutilated upon surrender and cancellation of this Warrant, the Company will make and deliver a new warrant, in identical form, and dated as of such cancellation, in lieu of this Warrant.
10. Saturdays, Sundays, Holidays, etc. 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 Sunday, or shall be a legal holiday, then such action may be taken or such right may be exercised, except as to the purchase price, on the next succeeding day not a legal holiday.
11. Amendments and Waivers. Any term of this Warrant may be amended, and the observance of any term of this Warrant may be waived (either generally or in a particular instance, and either retroactively or prospectively), with the written consent of the Company and the Holder, such consent not to be unreasonably withheld. Any such amendment or waiver shall be binding on the Holder.
12. Governing Law. This Warrant shall be governed by and construed in accordance with the laws of the State of Colorado.
13. Notices. Any notice, demand or delivery pursuant to the provisions hereof shall be sufficiently delivered or made if sent by first class mail, postage prepaid, addressed to any holder of a Warrant at its last known address appearing on the books of the Company, or, except as herein otherwise expressly provided, to the Company at its principal executive office at 1722 14th Street, Suite 230, Boulder, Colorado, 80302, or such other address as shall have been furnished to the party giving or making such notice, demand or delivery.
DATED: October 9, 1998
ARRAY BIOPHARMA, INC., a Delaware corporation
By: /s/ KEVIN KOCH ------------------------------------------ Name: Kevin Koch Title: President and Chief Scientific Officer |
EXHIBIT A
Subscription
Array BioPharma, Inc.
Ladies and Gentlemen:
The undersigned hereby elects to purchase, pursuant to the provisions of the Warrant dated October 9, 1998, __________ shares of the Series A Preferred Stock of Array BioPharma, Inc., a Delaware corporation.
Dated: _______________, ______
Silicon Valley Bank
EXHIBIT B
Net Issue Election
Array BioPharma, Inc.
Ladies and Gentlemen:
The undersigned hereby elects under Section 1.4 of the Warrant dated October 9, 1998 (the "Warrant"), to exercise its right to receive __________ shares of Series A Preferred Stock pursuant to the Warrant. The certificate(s) for such shares issuable upon such net issue election shall be issued in the name of the undersigned or as otherwise indicated below:
Silicon Valley Bank
EXHIBIT 10.23
LOAN AND SECURITY AGREEMENT
Agreement No. Dated as of March 26, 1999
-------------
by and between
SILICON VALLEY BANK
as lender
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and
ARRAY BIOPHARMA INC.
a Delaware corporation
1885 33rd Street, Bldg. AC-1
Boulder, CO 80301-2505
as borrower
TOTAL CREDIT AMOUNT: $500,000
Repayment Period: 42 months Treasury Note Maturity: 42 months Final Payment Percentage: 8% Loan Margin: 300 basis points Minimum Funding Amount: $50,000 Maximum Number of Loans: Six (6) Warrants: See Warrant for Terms Commitment Termination Date: March 26, 2000 |
The terms and information set forth on this cover page are a part of the
attached Loan and Security Agreement, dated as of the date first written above
(this "Agreement"), entered into by and among Silicon Valley Bank ("Lender")
and the borrower ("Borrower") set forth above. The terms and conditions of the
Agreement agreed to between Lender and Borrower are as follows:
TABLE OF CONTENTS
Page
1. Definitions and Construction...........................................................................1
1.1. Definitions...................................................................................1
1.2. Other Interpretive Provisions.................................................................5
2. Loan and Terms of Payment..............................................................................5
2.1. Commitment; The Credit Amount.................................................................5
2.2. Use of Proceeds; The Loans....................................................................6
2.3. Procedure for Making Loans....................................................................6
2.4. Amortization of Principal and Interest; Interim Payment; Final Payment; Loan Fee..............7
2.5. Prepayments...................................................................................8
2.6. Other Payment Terms...........................................................................8
2.7. Minimum Funding Amount; Maximum Number of Fundings............................................8
2.8. Crediting Payments............................................................................8
2.9. Additional Costs..............................................................................9
2.10. Term..........................................................................................9
3. Conditions of Loans....................................................................................9
3.1. Conditions Precedent to Initial Loan..........................................................9
3.2. Conditions Precedent to all Loans............................................................10
3.3. Covenant to Deliver..........................................................................10
4. Creation of Security Interest.........................................................................10
4.1. Grant of Security Interest...................................................................10
4.2. After Acquired Property......................................................................10
4.3. Duration of Security Interest................................................................11
4.4. Possession of Collateral.....................................................................11
4.5. Markings on the Collateral...................................................................11
4.6. Delivery of Additional Documentation Required................................................11
4.7. Right to Inspect.............................................................................11
5. Representations and Warranties........................................................................11
5.1. Due Organization and Qualification...........................................................11
5.2. Authority....................................................................................11
5.3. Subsidiaries.................................................................................12
5.4. Conflict with Other Instruments, etc.........................................................12
5.5. Authorization; Enforceability................................................................12
5.6. No Prior Encumbrances........................................................................12
5.7. Name; Location of Chief Executive Office, Principal Place of Business and Collateral.........12
5.8. Litigation...................................................................................12
5.9. Financial Statements.........................................................................12
5.10. Solvency.....................................................................................12
5.11. Environmental Quality........................................................................12
5.12. Taxes........................................................................................13
5.13. Consents and Approvals.......................................................................13
5.14. Trademarks, Patents, Copyrights, Franchises and Licenses.....................................13
5.15. Material Contracts...........................................................................13
5.16. Full Disclosure..............................................................................13
6. Affirmative Covenants.................................................................................13
6.1. Good Standing................................................................................13
6.2. Government Compliance........................................................................13
6.3. Financial Statements, Reports, Certificates..................................................13
6.4. Notice of Event of Loss......................................................................14
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6.5. Notice of Defaults...........................................................................14
6.6. Taxes........................................................................................14
6.7. Use; Maintenance.............................................................................14
6.8. Insurance....................................................................................14
6.9. Loss; Damage; Destruction and Seizure........................................................15
6.10. Principal Depository.........................................................................15
6.11. Environmental Laws...........................................................................15
6.12. Further Assurances...........................................................................15
7. Negative Covenants....................................................................................15
7.1. Chief Executive Office; Location of Collateral...............................................16
7.2. Extraordinary Transactions and Disposal of Assets............................................16
7.3. Restructure..................................................................................16
7.4. Liens........................................................................................16
8. Events of Default.....................................................................................16
8.1. Payment Default..............................................................................16
8.2. Covenant Default.............................................................................16
8.3. Material Adverse Change......................................................................16
8.4. Attachment...................................................................................16
8.5. Other Agreements.............................................................................16
8.6. Judgments....................................................................................16
8.7. Redemption or Repurchase.....................................................................17
8.8. Misrepresentations...........................................................................17
8.9. Breach of Warrant............................................................................17
8.10. Involuntary Bankruptcy or Insolvency.........................................................17
8.11. Voluntary Bankruptcy or Insolvency...........................................................17
9. Lender's Rights and Remedies..........................................................................17
9.1. Rights and Remedies..........................................................................17
9.2. Effect of Sale...............................................................................18
9.3. Power of Attorney in Respect of the Collateral...............................................18
9.4. Lender's Expenses............................................................................18
9.5. Remedies Cumulative..........................................................................18
9.6. Application of Collateral Proceeds...........................................................19
9.7. Reinstatement of Rights......................................................................19
10. Waivers; Indemnification..............................................................................19
10.1. Demand; Protest..............................................................................19
10.2. Lender's Liability for Collateral............................................................19
10.3. Indemnification..............................................................................19
11. Notices...............................................................................................20
12. General Provisions....................................................................................21
12.1. Successors and Assigns.......................................................................21
12.2. Time of Essence..............................................................................21
12.3. Severability of Provisions...................................................................21
12.4. Entire Agreement; Construction; Amendments and Waivers.......................................21
12.5. Reliance by Lender...........................................................................21
12.6. No Set-Offs by Borrower......................................................................21
12.7. Counterparts.................................................................................21
12.8. Survival.....................................................................................22
13. Relationship of Parties...............................................................................22
14. Choice of Law and Venue; Jury Trial Waiver............................................................22
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This LOAN AND SECURITY AGREEMENT is entered into as of March 26, 1999, by and among SILICON VALLEY BANK, a California-chartered bank ("Bank") and ARRAY BIOPHARMA INC., a Delaware corporation ("Borrower").
RECITALS
Borrower wishes to borrow money from time to time from Lender, and Lender desires to lend money to Borrower. This Agreement sets forth the terms on which Lender will lend to Borrower, and Borrower will repay the loans to Lender.
AGREEMENT
The parties agree as follows:
1. Definitions and Construction.
1.1. Definitions. As used in this Agreement, the following terms shall have the following definitions:
"Affiliate" means any Person that owns or controls directly or indirectly ten percent or more of the stock of another entity, any Person that controls or is controlled by or is under common control with such Persons or any Affiliate of such Persons or each of such Person's officers, directors, joint venturers or partners.
"Basic Rate" means, as of the relevant Funding Date, the per annum rate of interest (based on a year of 360 days) equal to the sum of (a) the U.S. Treasury note yield to maturity for a term equal to the Treasury Note Maturity as quoted in the Western edition of The Wall Street Journal on the day the applicable Loan Terms Schedule is prepared, plus (b) the applicable Loan Margin for the type of Eligible Equipment being financed.
"Borrower's Books" means all of Borrower's books and records including: ledgers; records concerning Borrower's assets or liabilities, the Collateral, business operations or financial condition; and all computer programs, or tape files, and the equipment, containing such information.
"Business Day" means any day that is not a Saturday, Sunday, or other day on which banks in the State of California are authorized or required to close.
"Code" means the Uniform Commercial Code as adopted and in effect in the State of California, as amended from time to time.
"Collateral" means the Property described on Exhibit A attached hereto, including, without limitation, all Financed Equipment listed in any Loan Agreement Supplement executed from time to time pursuant to Section 4.2.
"Commitment Termination Date" means the date following such term on the cover page of this Agreement.
"Contingent Obligation" means, as applied to any Person, any direct or indirect liability, contingent or otherwise, of that Person with respect to any indebtedness, lease, dividend, letter of credit or other obligation of another, including any such obligation directly or indirectly guaranteed, endorsed (otherwise than for collection or deposit in the ordinary course of business), co-made or discounted or sold with recourse by that Person, or in respect of which that Person is otherwise directly or indirectly liable. The amount of any Contingent Obligation shall be equal to the amount of the obligation so guaranteed or otherwise supported.
"Credit Amount" means the amount set forth following such term on the cover page of this Agreement.
"Default" means any event which with the passing of time or the giving of notice or both would become an Event of Default hereunder.
"Default Rate" means the per annum rate of interest equal to the Basic Rate plus five percent (5%), but such rate shall in no event be more than the highest rate permitted by applicable law to be charged on commercial loans.
"Eligible Equipment" means computer and related equipment, office equipment, test and laboratory equipment, and other equipment related to Borrower's business as conducted or proposed, furnishings, and, subject to the limitations set forth below, Other Equipment that complies with all of Borrower's representations and warranties to Lender and which is and at all times shall continue to be acceptable to Lender in all respects. Unless otherwise agreed to by Lender, not more than twenty percent (20%) of the Financed Equipment financed with the proceeds of each Loan shall consist of Other Equipment.
"Environmental Claims" means all claims, however asserted, by any Governmental Authority or other Person alleging potential liability or responsibility for violation of any Environmental Law or for release or injury to the environment or threat to public health, personal injury (including sickness, disease or death), property damage, natural resources damage, or otherwise alleging liability or responsibility for damages (punitive or otherwise), cleanup, removal, remedial or response costs, restitution, civil or criminal penalties, injunctive relief, or other type of relief, resulting from or based upon (a) the presence, placement, discharge, emission or release (including intentional and unintentional, negligent and non-negligent, sudden or non-sudden, accidental or non-accidental placement, spills, leaks, discharges, emissions or releases) of any Hazardous Material at, in, or from Property, whether or not owned by Borrower, or (b) any other circumstances forming the basis of any violation, or alleged violation, of any Environmental Law.
"Environmental Laws" means all foreign, federal, state or local laws, statutes, common law duties, rules, regulations, ordinances and codes, together with all administrative orders, directed duties, requests, licenses, authorizations and permits of, and agreements with, any Governmental Authorities, in each case relating to environmental, health, safety and land use matters, including the Comprehensive Environmental Response, Compensation and Liability Act of 1980, the Clean Air Act, the Federal Water Pollution Control Act of 1972, the Solid Waste Disposal Act, the Federal Resource Conservation and Recovery Act, the Toxic Substances Control Act and the Emergency Planning and Community Right-to-Know Act.
"Environmental Permit" has the meaning set forth in
Section 5.11.
"Event of Default" has the meaning given to such term in Section 8.
"Event of Loss" has the meaning given to that term in Section 6.9.
"Final Payment" means, with respect to each Loan, a payment (in addition to and not in substitution for the regular monthly payments of principal and accrued interest) due on the Maturity Date for such Loan equal to the Loan Amount for such Loan at such time multiplied by the Final Payment Percentage.
"Final Payment Percentage" means the percentage set forth following such term on the cover page of this Agreement.
"Financed Equipment" has the meaning given to that term in Exhibit A, as amended or supplemented from time to time.
"Funding Date" means any date on which a Loan is made to or on account of Borrower under this Agreement.
"Governmental Authority" means (a) any federal, state, county, municipal or foreign government, or political subdivision thereof, (b) any governmental or quasi-governmental agency, authority, board,
bureau, commission, department, instrumentality or public body, (c) any court or administrative tribunal or (d) with respect to any Person, any arbitration tribunal or other non-governmental authority to whose jurisdiction that Person has consented.
"Hazardous Materials" means all those substances which are regulated by, or which may form the basis of liability under, any Environmental Law, including all substances identified under any Environmental Law as a pollutant, contaminant, hazardous waste, hazardous constituent, special waste, hazardous substance, hazardous material, or toxic substance, or petroleum or petroleum derived substance or waste.
"Indebtedness" means (a) all indebtedness for borrowed money or the deferred purchase price of Property or services, including reimbursement and other obligations with respect to surety bonds and letters of credit, (b) all obligations evidenced by notes, bonds, debentures or similar instruments, (c) all capital lease obligations, and (d) all Contingent Obligations.
"Lender's Expenses" means all reasonable costs or expenses (including reasonable attorneys' fees and expenses) incurred in connection with the preparation, negotiation, administration, and enforcement of the Loan Documents; and Lender's reasonable attorneys' fees and expenses incurred in amending, modifying, enforcing or defending the Loan Documents, including the exercise of any rights or remedies afforded hereunder or under applicable law, whether or not suit is brought.
"Lien" means any pledge, bailment, lease, mortgage, hypothecation, conditional sales and title retention agreement, charge, claim, encumbrance or other lien in favor of any Person.
"Loan" means each advance of credit by Lender to Borrower under this Agreement.
"Loan Agreement Supplement" means a supplement to this Agreement in substantially the form of Exhibit D.
"Loan Amount" means, with respect to each Loan, as of any date, the original principal amount of such Loan less the aggregate of all Stated Costs of Equipment with respect to which prepayments of such Loan have been made.
"Loan Documents" means, collectively, this Agreement, the Warrants, the Landlord Consent(s) and all other documents, instruments and agreements entered into between Borrower and Lender in connection with this Agreement, all as amended or extended from time to time.
"Loan Factor" means, with respect to each Loan, the amount set forth as a percentage in the Loan Terms Schedule with respect to such Loan, calculated using the Basic Rate applicable to such Loan.
"Loan Margin" means the number of basis points set forth following such term on the cover page of this Agreement.
"Loan Terms Schedule" means, with respect to each Loan, the "Loan Terms Schedule" attached to the Loan Agreement Supplement prepared by Lender in connection with such Loan.
"Maturity Date" means, with respect to each Loan, the last day of the Repayment Period for such Loan, or if earlier, the date of acceleration of such Loan by Lender following an Event of Default.
"Minimum Funding Amount" means the amount set forth following such term on the cover page of this Agreement.
"New Equipment" means Financed Equipment delivered to Borrower by the manufacturer or vendor not more than two hundred (200) days prior to the Funding Date of the initial Loan with respect to Financed Equipment, including but not limited to an x-ray generator manufactured by Molecular
Structure Corporation, model number __________, that is acceptable to and has been approved by Bank, and not more than ninety (90) days prior to the Funding Date of any other Loan relating to such Financed Equipment.
"Obligations" means all debt, principal, interest, fees, charges, expenses and attorneys' fees and costs and other amounts (including all amounts charged to any operating or deposit account maintained by Borrower at Bank, pursuant to any agreement authorizing Bank to charge such accounts), obligations, covenants, and duties owing by Borrower to Lender of any kind and description (whether pursuant to or evidenced by the Loan Documents, or by any other agreement between Lender and Borrower, and whether or not for the payment of money), whether direct or indirect, absolute or contingent, due or to become due, now existing or hereafter arising, including the principal, interest and Final Payment due with respect to the Loans, and including any debt, liability, or obligation owing from Borrower to others that Lender may have obtained by assignment or otherwise, and further including all interest not paid when due and all Lender's Expenses that Borrower is required to pay or reimburse by the Loan Documents, by law, or otherwise.
"Obsolete" means that any item of Financed Equipment is no longer needed by Borrower in its operations and that it is not reasonably expected to be needed in the future operations of Borrower.
"Other Equipment" means leasehold improvements, and other soft costs, including sales tax, freight and installation expenses, intangible Property such as computer software and software licenses, equipment specifically designed or manufactured for Borrower, other intangible Property, limited use Property and other similar Property.
"Payment Date" has the meaning given to that term in
Section 2.4(a).
"Permitted Liens" means the following:
(a) The Lien created by this Agreement;
(b) Any Liens existing as of the date hereof and disclosed in Schedule 1;
(c) Liens for taxes, fees, assessments or other governmental charges or levies that have no superior priority over Lender's Lien in the Collateral;
(d) Liens (i) upon or in any equipment acquired or held by the Borrower or any of its subsidiaries, other than Financed Equipment, or (ii) existing on such equipment at the time of its acquisition, provided that (A) the equipment is not Financed Equipment and (B) the Lien is confined solely to the Property so acquired and improvements thereon, and the proceeds of such equipment; and
(e) Liens to secure payment of worker's compensation, employment insurance, old age pensions or other social security obligations of Borrower in the ordinary course of business of Borrower.
"Person" means and includes any individual, any partnership, any corporation, any business trust, any joint stock company, any limited liability company, any unincorporated association or any other entity and any domestic or foreign national, state or local government, any political subdivision thereof, and any department, agency, authority or bureau of any of the foregoing.
"Property" means any interest in any kind of property or asset, whether real, personal or mixed, whether tangible or intangible.
"Repayment Period" means the period beginning on the first Payment Date and continuing for the number of calendar months set forth following such term on the cover page of this Agreement.
"Responsible Officer" means any of the President, Chief Operating Officer , or the Chief Financial Officer of Borrower.
"Scheduled Payments" has the meaning given to such term in Section 2.4(a).
"Stated Cost" means (i) with respect to New Equipment, the original cost to Borrower of the item of New Equipment net of any and all freight, installation, tax and other soft costs or (ii) with respect to Used Equipment, the original cost to Borrower paid in an arm's length transaction, subject in any case to limitations on Other Costs.
"Stipulated Loss Value" means, with respect to each Loan, the percentage set forth with respect to such Loan in the Loan Terms Schedule for such Loan, determined as of the Payment Date on which payment of such amount is to be made, or if such date is not a Payment Date, on the Payment Date immediately succeeding such date multiplied by the Loan Amount.
"Subsidiary" means any corporation of which a majority of the outstanding capital stock entitled to vote for the election of directors (otherwise than as the result of a default) is owned by Borrower directly or indirectly through Subsidiaries.
"Term" means the period from and after the date hereof until the payment in full of all amounts and liabilities payable under this Agreement and the other Loan Documents, including principal and interest on the Loans and the Final Payment with respect to each Loan.
"Treasury Note Maturity" means the period of months set forth following such term on the cover page of this Agreement.
"Used Equipment" means all Financed Equipment which is not New Equipment.
"Warrant" means the warrant in favor of Lender to purchase securities of Borrower substantially in the form of Exhibit B.
1.2. Other Interpretive Provisions. References in this Agreement to "Articles," "Sections," "Exhibits," "Schedules" and "Annexes" are to recitals, articles, sections, exhibits, schedules and annexes herein and hereto unless otherwise indicated. References in this Agreement and each of the other Loan Documents to any document, instrument or agreement shall include (a) all exhibits, schedules, annexes and other attachments thereto, (b) all documents, instruments or agreements issued or executed in replacement thereof, and (c) such document, instrument or agreement, or replacement or predecessor thereto, as amended, modified and supplemented from time to time and in effect at any given time. The words "hereof," "herein" and "hereunder" and words of similar import when used in this Agreement or any other Loan Document shall refer to this Agreement or such other Loan Document, as the case may be, as a whole and not to any particular provision of this Agreement or such other Loan Document, as the case may be. The words "include" and "including" and words or similar import when used in this Agreement or any other Loan Document shall not be construed to be limiting or exclusive. Unless otherwise indicated in this Agreement or any other Loan Document, all accounting terms used in this Agreement or any other Loan Document shall be construed, and all accounting and financial computations hereunder or thereunder shall be computed, in accordance with generally accepted accounting principles as in effect in the United States of America from time to time.
2. Loan and Terms of Payment.
2.1. Commitment; The Credit Amount. Subject to the terms and conditions of this Agreement and relying upon the representations and warranties herein set forth as and when made or deemed to be made, Lender agrees to lend to Borrower from time to time prior to the Commitment Termination Date, the Loans; provided that the aggregate principal amount of the Loans shall not exceed the Credit Amount at such time; provided, further, that the aggregate principal amount of any Loan shall not exceed the aggregate Stated Cost of the
items of Eligible Equipment being financed with such Loan; and provided, further, that the aggregate principal amount of any Loans or portions thereof, allocated or relating to the financing of Other Equipment shall not exceed in the aggregate twenty percent (20%) of the aggregate principal of the Loans. If prepaid, the principal of the Loans may not be re-borrowed.
2.2. Use of Proceeds; The Loans.
(a) Use of Proceeds. The proceeds of the Loans shall be used solely to reimburse Borrower for the purchase of Eligible Equipment, in each case in an amount not to exceed the Stated Cost of such Eligible Equipment. All such Eligible Equipment which is financed or re-financed with the proceeds of Loans shall be deemed without further action to be Financed Equipment.
(b) The Loans. The Loans shall be repayable in consecutive monthly installments in accordance with the terms of Section 2.4. Lender may, and is hereby authorized by Borrower to, endorse in its books and records appropriate notations regarding Lender's interest in the Loans; provided, however, that the failure to make, or an error in making, any such notation shall not limit or otherwise affect the Obligations of Borrower hereunder.
2.3. Procedure for Making Loans.
(a) Notice. Whenever Borrower desires that Lender makes a Loan, Borrower shall so notify Lender in writing (or by telephone with prompt confirmation in writing) at least five (5) Business Days in advance of the desired Funding Date, which notice shall be irrevocable, and shall provide Lender with the following information:
(i) a list of the proposed Financed Equipment;
(ii) the principal amount of the requested Loan; and
(iii) the intended use of proceeds of the Loan.
Lender's obligation to make the initial Loan shall be expressly subject to the satisfaction of the conditions set forth in Sections 3.1 and 3.2. Lender's obligation to make each subsequent Loan shall be expressly subject to the satisfaction of the conditions set forth in Section 3.2. Lender shall have the right, exercisable at any time, to request that Borrower furnish Lender with such additional information with respect to the Loan and the Eligible Equipment to be financed with the Loan proceeds as Lender shall reasonably request.
(b) Loan Interest Rate. Borrower shall pay interest on the unpaid principal amount of each Loan from the first Payment Date after the Funding Date of such Loan until such Loan has been paid in full, at a per annum rate of interest equal to the Basic Rate determined by Bank as of the Funding Date for such Loan in accordance with the definition of Basic Rate. The Basic Rate applicable to each Loan shall not be subject to change in the absence of a manifest error. All computations of interest on Loans shall be based on a year of 360 days comprised of twelve (12) months of thirty (30) days each. Notwithstanding any other provision hereof, the amount of interest payable hereunder shall not in any event exceed the maximum amount permitted by the law applicable to interest charged on commercial loans.
(c) Loan Factor and Stipulated Loss Value Calculation. On each Funding Date, Lenders shall establish the Loan Factor and Stipulated Loss Values with respect to such Loan. The Loan Factor shall be calculated in a manner to fully amortize the Loan over the Repayment Period applicable to such Loan in equal periodic installments of principal and interest. The Loan Factor and Stipulated Loss Values applicable to each Loan shall be set forth in the Loan Agreement Supplement to be executed by Borrower with respect to each Loan and shall be conclusive in the absence of a manifest error.
(d) Disbursement. Subject to the satisfaction of the conditions set forth in Sections 3.1 and 3.2 with respect to the initial Loan and the satisfaction of the conditions set forth in Section 3.2 with respect to each subsequent Loan, Bank shall disburse such Loan by internal transfer to Borrower's deposit account with Bank.
(e) Termination of Commitment to Lend. Notwithstanding anything in the Loan Documents, Lender's obligation to lend the undisbursed portion of the Credit Amount to Borrower hereunder shall terminate on the earlier of (i) at the Lender's sole election, the occurrence and continuance of any Default or Event of Default hereunder, and (ii) the Commitment Termination Date. Notwithstanding the foregoing, Lender's obligation to lend the undisbursed portion of the Credit Amount to Borrower shall terminate if, in Lender's sole judgment, there has been a material adverse change in the general affairs, management, results of operations, condition (financial or otherwise) or prospects of Borrower, whether or not arising from transactions in the ordinary course of business, or there has been any material adverse deviation by Borrower from the business plan of Borrower presented to and not disapproved by Lender, since the date of this Agreement.
2.4. Amortization of Principal and Interest; Interim Payment; Final Payment; Loan Fee.
(a) Principal and Interest Payments On Payment Dates. Borrower shall make payments monthly in advance of principal and accrued interest for each Loan (collectively, "Scheduled Payments"), commencing on the first Business Day of the first month following the Funding Date with respect to such Loan and continuing thereafter during the Repayment Period on the first Business Day of each calendar month (each a "Payment Date"), in an amount equal to the Loan Factor multiplied by the Loan Amount for such Loan as of such Payment Date. In any event, all unpaid principal and accrued interest shall be due and payable in full on the last Payment Date with respect to such Loan.
(b) Interim Payment. In addition to the Scheduled Payments, on the Funding Date for each Loan (unless the Funding Date is the first Business Day of the month) Borrower shall pay to Bank an amount (the "Interim Payment") equal to the initial Loan Amount multiplied by the product of (i) the quotient derived from dividing the initial Loan Factor with respect to such Loan by 30, and (ii) the number of days from the Funding Date of such Loan until the first Payment Date with respect to such Loan.
(c) Final Payment. On the Maturity Date with respect to such Loan, Borrower shall pay, in addition to the unpaid principal and accrued interest and all other amounts due on such date with respect to such Loan, an amount equal to the Final Payment with respect to such Loan.
(d) Loan Fee. The Loan Fee is non-refundable, but shall be applied first, to the due diligence expenses of Lender and fees and expenses of Lender's counsel in connection with the preparation and negotiation of this Agreement and the other Loan Documents and the balance, if any, shall be applied (using the ratio of each Loan Amount to the total Credit Amount) toward the first payment due from Borrower to Lender hereunder on each Funding Date. The foregoing notwithstanding, if the Loan Fee is insufficient to pay the reasonable due diligence expenses of Lender and reasonable fees and expenses of Lender's counsel in connection with such preparation and negotiation, Borrower shall pay such additional amounts so owing for such fees and expenses to Lender. If Borrower shall not have borrowed under this Agreement, on or prior to the Commitment Termination Date or the earlier termination of this Agreement, Loans aggregating in an original principal amount equal to the Credit Amount, then Lender shall retain any portion of the Loan Fee not applied as set forth in this Section 2.4(d).
2.5. Prepayments.
(a) Prepayment Upon an Event of Loss. If any Financed Equipment is subject to an Event of Loss and Borrower is required to or elects to prepay the Loan with respect to such Financed Equipment pursuant to Section 6.9, then such Loan shall be prepaid to the extent and in the manner provided in such section.
(b) Mandatory Prepayment Upon an Acceleration. If the Loans are accelerated following the occurrence of an Event of Default or otherwise (other than following an Event of Loss), then Borrower shall immediately pay to Lender (i) all unpaid Scheduled Payments with respect to each Loan due prior to the date of prepayment, (ii) the Stipulated Loss Value with respect to each Loan, and (iii) all other sums, if any, that shall have become due and payable hereunder with respect to any Loan.
(c) No Other Prepayment. Borrower may not prepay any Loan except upon the occurrence of an event described in Section 2.5(a) or (b) above in which event the prepayment shall be made as described in such sections.
2.6. Other Payment Terms.
(a) Place and Manner. Borrower hereby authorizes Bank, and irrevocably constitutes and appoints Bank (and any officer or agent thereof, with full power of substitution) as its true and lawful attorney-in-fact with full irrevocable power and authority in the place and stead of Borrower and in the name of Borrower or in its own name (which appointment is coupled with an interest), to debit directly from any banking account maintained by Borrower with Lender the full amount (or any portion thereof) of the Obligations of Borrower to Lender hereunder (including all principal, accrued interest, commitment and other fees, and other amounts chargeable to Borrower under this Agreement) when and as the same shall become due and payable. It shall be Borrower's responsibility to ensure that there are sufficient funds in a deposit account with Bank on the dates that payments are due, or to provide for another manner of payment. If amounts in the deposit account are insufficient, amounts due and payable shall be paid in immediately available funds in such alternate manner as Borrower may choose.
(b) Date. Whenever any payment due hereunder shall fall due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day, and such extension of time shall be included in the computation of interest or fees, as the case may be.
(c) Default Rate. If either (i) any amounts required to be paid by Borrower under this Agreement or the other Loan Documents (including principal, interest, the Final Payment payable with respect to any Loan, and any fees or other amounts) remain unpaid after such amounts are due, or (ii) an Event of Default has occurred and is continuing, Borrower shall pay interest on the aggregate, outstanding balance hereunder from the date due or from the date of the Event of Default, as applicable, until such past due amounts are paid in full or until all Events of Default are cured, as applicable, at a per annum rate equal to the Default Rate. All computations of such interest shall be based on a year of 360 days.
2.7. Minimum Funding Amount; Maximum Number of Fundings. Except with the prior consent of Lender, in Lender's sole discretion, (i) the amount of the requested Loan shall not be less than the Minimum Funding Amount; provided, that if this Agreement specifies different Loan Margins for New Equipment and Used Equipment and if Borrower is requesting Loans for both New Equipment and Used Equipment on the same Funding Date, the aggregate of the two requested Loans shall be computed in determining whether the Minimum Funding Amount has been reached; (ii) there shall not be more than one funding of a Loan in any one calendar month; and (iii) the aggregate number of Loans shall not exceed six (6) during the term hereof.
2.8. Crediting Payments. The receipt by Bank of any wire transfer of funds, check, or other item of payment shall be immediately applied conditionally to reduce Obligations, but shall not be considered a payment on account unless such wire transfer is of immediately available federal funds and is made to the appropriate deposit account of Bank or unless and until such check or other item of payment is honored when
presented for payment. Notwithstanding anything to the contrary contained herein, any wire transfer or payment received by Bank after 11:00 a.m. California time shall be deemed to have been received by Bank as of the opening of business on the immediately following Business Day.
2.9. Additional Costs. In case any law, regulation, treaty or official directive or the interpretation or application thereof by any court or any governmental authority charged with the administration thereof or the compliance with any guideline or request of any central bank or other governmental authority (whether or not having the force of law):
(a) subjects Lender to any tax with respect to payments of principal or interest or any other amounts payable hereunder by Borrower or otherwise with respect to the transactions contemplated hereby (except for taxes on the overall net income of Lender imposed by the United States of America or any political subdivision thereof); or
(b) imposes, modifies or deems applicable any deposit insurance, reserve, special deposit or similar requirement against assets held by, or deposits in or for the account of, or loans by Lender; or
(c) imposes upon Lender any other condition with respect to its performance under this Agreement,
and the result of any of the foregoing is to increase the cost to Lender, reduce the income receivable by Lender or impose any expense upon Lender with respect to any loans, Lender shall notify Borrower thereof. Borrower agrees to pay to Lender the amount of such increase in cost, reduction in income or additional expense as and when such cost, reduction or expense is incurred or determined, upon presentation by Lender of a statement in the amount and setting forth Lender's calculation thereof, which statement shall be deemed true and correct absent manifest error.
2.10. Term. This Agreement shall become effective upon acceptance by Lender and shall continue in full force and effect for a term ending on the Maturity Date of the last Loan made hereunder. Notwithstanding the foregoing, Lender shall have the right to terminate this Agreement immediately and without notice upon the occurrence of an Event of Default.
3. Conditions of Loans.
3.1. Conditions Precedent to Initial Loan. The obligation of Lender to make the initial Loan is subject to the condition precedent that Lender shall have received, in form and substance satisfactory to Lender, all of the following:
(a) This Agreement duly executed by Borrower.
(b) The Warrant to be issued to Lender, duly executed by Borrower.
(c) A duly executed amendment to the current investor/registration rights agreement providing Lender with registration rights for the shares issuable upon exercise of the Warrant.
(d) A certificate of the secretary or assistant secretary of Borrower with copies of the following documents attached: (i) the certificate of incorporation and bylaws of Borrower certified by Borrower as being in full force and effect on the Funding Date, (ii) incumbency and representative signatures, and (iii) resolutions authorizing the execution and delivery of this Agreement and each of the other Loan Documents.
(e) A good standing certificate from Borrower's state of incorporation and the state in which Borrower's principal place of business is located, together with certificates of the applicable governmental authorities stating that Borrower is in compliance with the franchise tax laws of each such state, each dated as of a recent date.
(f) Evidence of the insurance coverage required by Section 6.8 of this Agreement.
(g) All necessary consents of shareholders and other third parties with respect to the execution, delivery and performance of this Agreement, the Warrant and the other Loan Documents.
(h) Such other documents, and completion of such other matters, as Lender may deem necessary or appropriate.
3.2. Conditions Precedent to all Loans. The obligation of Lender to make each Loan, including the initial Loan, is further subject to the following conditions:
(a) No Default or Event of Default shall have occurred and be continuing.
(b) Borrower shall have provided to Lender, with respect to the Eligible Equipment which is requested to be financed with the proceeds of the Loan to be made on such Funding Date, such invoices, purchase orders, bills of sale, receipts, agreements, canceled checks, and other documents as Lender shall reasonably request to evidence the ownership by Borrower of, the payment in full of the purchase price of, and the fair market value of, such Eligible Equipment, each in form and substance reasonably satisfactory to Lender.
(c) Borrower and Lender shall have executed a Loan Agreement Supplement, including a Loan Terms Schedule and a list of Financed Equipment with respect to the proposed Loan.
(d) Lender shall have received such documents,
instruments and agreements, including UCC financing statements or amendments to
UCC financing statements, as Lender shall reasonably request to evidence the
perfection and priority of the security interests granted to Lender pursuant to
Section 4.
(e) Borrower shall have delivered to Lender, a subordination agreement, release, or estoppel letter, as appropriate, from any Person having an existing Lien superior to the Lien of Lender on any item of Eligible Equipment which is requested to be financed.
(f) Borrower shall have provided Lender with a Landlord Consent from the owner of each new building in which Collateral is anticipated to be located.
(g) Such other documents, and completion of such other matters, as Lender may deem necessary or appropriate.
3.3. Covenant to Deliver. Borrower agrees (not as a condition but as a covenant) to deliver to Lender each item required to be delivered to Lender as a condition to each Loan, if such Loan is advanced. Borrower expressly agrees that the extension of such Loan prior to the receipt by Lender of any such item shall not constitute a waiver by Lender of Borrower's obligation to deliver such item.
4. Creation of Security Interest.
4.1. Grant of Security Interest. Borrower grants to Lender a valid, first priority, continuing security interest in all presently existing and hereafter acquired or arising Collateral in order to secure prompt, full and complete payment of any and all Obligations and in order to secure prompt, full and complete performance by Borrower of each of its covenants and duties under each of the Loan Documents.
4.2. After-Acquired Property. All Financed Equipment which is financed through Loans and any and all other Property generally described or referred to as Collateral which is hereafter acquired by Borrower shall ipso facto, and without any further conveyance, assignment or act on the part of Borrower or Lender, become and be subject to the security interest herein granted as fully and completely as though specifically described herein. The list of Financed Equipment shall be amended and supplemented on each Funding Date by a Loan Agreement Supplement to incorporate all Financed Equipment financed with the Loan advanced on such Funding Date;
provided, however, the failure to so amend and supplement the list of Financed
Equipment shall not affect the grant by Borrower to Lender of the security
interest in such Financed Equipment pursuant to this Section 4. This Agreement
and the other documents in connection herewith may be otherwise supplemented
and amended from time to time, as required by Lender, to reflect additional
Collateral to be subject to the security interest granted pursuant to this
Section 4.
4.3. Duration of Security Interest. Lender's security interest in the Collateral shall continue until the payment in full and the satisfaction of all Obligations, whereupon such security interest shall terminate; provided, however, if any item of Financed Equipment is subject to an Event of Loss, then following the prepayment of the Loan with respect to such item pursuant to Section 2.5, Lender shall release its security interest in such item of Financed Equipment. Lender shall, at Borrower's sole cost and expense, execute such further documents and take such further actions as may be necessary to effect the release contemplated by this Section 4.3, including duly executing and delivering termination statements for filing in all relevant jurisdictions under the Code.
4.4. Possession of Collateral. So long as no Event of Default has occurred and is continuing, Borrower shall remain in full possession, enjoyment and control of the Collateral (except only as may be otherwise required by Lender for perfection of their security interest therein) and shall be entitled to manage, operate and use the same and each part thereof with the rights and franchises appertaining thereto; provided, however, that the possession, enjoyment, control and use of the Collateral shall at all times be subject to the observance and performance of the terms of this Agreement.
4.5. Markings on the Collateral. At Lender's reasonable request at any time during the Term of the Loan (including any extension thereof), Borrower shall place in a conspicuous location on each item of Financed Equipment a plaque or other marking to be supplied by Lender which reads substantially as follows:
Silicon Valley Bank Lienholder
Such plaque or other marking shall not be removed (or if removed or damaged such plaque or other marking shall be replaced) until the security interest in favor of Lender in such item of Collateral is terminated pursuant to this Agreement.
4.6. Delivery of Additional Documentation Required. Borrower shall from time to time execute and deliver to Bank at the request of Lender, all financing statements and other documents Lender may reasonably request, in form satisfactory to Lender, to perfect and continue Lender's perfected security interests in the Collateral and in order to consummate fully all of the transactions contemplated under the Loan Documents.
4.7. Right to Inspect. Lender (through any of its officers, employees, or agents) shall have the right, upon reasonable prior notice, and subject to agreeing to be bound by Borrower's confidentiality agreement, from time to time during Borrower's usual business hours, to inspect Borrower's Books and to make copies thereof and to check, test, and appraise the Collateral in order to verify Borrower's financial condition or the amount, condition of, or any other matter relating to, the Collateral.
5. Representations and Warranties. Borrower represents, warrants and covenants as follows:
5.1. Due Organization and Qualification. Borrower is a corporation duly existing and in good standing under the laws of its state of incorporation and qualified and licensed to do business in, and is in good standing in, any state in which the conduct of its business or its ownership of Property requires that it be so qualified or in which the Collateral is located, except for such states as to which any failure so to qualify would not have a material adverse effect on Borrower.
5.2. Authority. Borrower has all necessary power and authority to execute, deliver, and perform in accordance with the terms thereof, the Loan Documents to which it is a party. Borrower has all requisite power and authority to own and operate its properties and to carry on its businesses as now conducted.
5.3. Subsidiaries. Borrower has no Subsidiaries, except those listed in Schedule 4 hereto.
5.4. Conflict with Other Instruments, etc. Neither the execution and delivery of any Loan Document to which Borrower is a party nor the consummation of the transactions therein contemplated nor compliance with the terms, conditions and provisions thereof will conflict with or result in a breach of any of the terms, conditions or provisions of the certificate of incorporation and the by-laws, or other organizational documents of Borrower or any law or any regulation, order, writ, injunction or decree of any court or governmental instrumentality or any material agreement or instrument to which Borrower is a party or by which it or any of its properties is bound or to which it or any of its properties is subject, or constitute a default thereunder or result in the creation or imposition of any Lien, other than Permitted Liens.
5.5. Authorization; Enforceability. The execution and delivery of this Agreement, the granting of the security interest in the Collateral, the incurring of the Loans, the execution and delivery of the other Loan Documents to which Borrower is a party and the consummation of the transactions herein and therein contemplated have each been duly authorized by all necessary action on the part of Borrower. The Loan Documents have been duly executed and delivered and constitute legal, valid and binding obligations of Borrower, enforceable in accordance with their respective terms, except as the enforceability thereof may be limited by bankruptcy, insolvency or other similar laws of general application relating to or affecting the enforcement of creditors' rights or by general principles of equity.
5.6. No Prior Encumbrances. Borrower has good and indefeasible title to the Collateral, free and clear of liens, claims, security interests, or encumbrances, except for the first priority lien held by the Lender and except for other Permitted Liens. Except as disclosed in Schedule 1, Borrower has not acquired any part of the Collateral from an assignor outside the ordinary course of such assignor's business.
5.7. Name; Location of Chief Executive Office, Principal Place of Business and Collateral. Except as disclosed in Schedule 2, Borrower has not done business under any name other than that specified on the signature page hereof. The chief executive office, principal place of business, and the place where Borrower maintains its records concerning the Collateral are presently located at the addresses set forth on Schedule 3. The Collateral is presently located at the addresses set forth on Schedule 3.
5.8. Litigation. There are no actions or proceedings pending by or against Borrower before any court or administrative agency in which an adverse decision could have a material adverse effect on Borrower or the aggregate value of the Collateral. Borrower does not have knowledge of any such pending or threatened actions or proceedings. Borrower will promptly notify Lender in writing if any action, proceeding or governmental investigation involving Borrower is commenced that may result in damages or costs to Borrower of Two Hundred Fifty Thousand Dollars ($250,000) or more.
5.9. Financial Statements. All financial statements relating to Borrower or any Affiliate that have been or may hereafter be delivered by Borrower to Bank present fairly in all material respects Borrower's financial condition as of the date thereof and Borrower's results of operations for the period then ended.
5.10. Solvency. The fair salable value of Borrower's assets (including good will minus disposition costs) exceeds the fair value of its liabilities; Borrower is not left with unreasonably small capital after the transactions contemplated by this Agreement; and Borrower is able to pay its debts (including trade debts) as they mature.
5.11. Environmental Quality.
(a) Except as specifically disclosed in writing to Lender, the on-going operations of Borrower comply in all material respects with all Environmental Laws.
(b) Except as specifically disclosed in writing to Lender, Borrower has obtained all licenses, permits, authorizations and registrations required under any Environmental Law ("Environmental
Permits") and necessary for its ordinary course operations, all such Environmental Permits are in good standing, and Borrower is in compliance with all material terms and conditions of such Environmental Permits.
(c) Except as specifically disclosed in writing to Lender, neither Borrower nor any of its present Property or operations is subject to any outstanding written order from or agreement with any Governmental Authority nor subject to any judicial or docketed administrative proceeding, respecting any Environmental Law, Environmental Claim or Hazardous Material.
5.12. Taxes. Borrower has filed or caused to be filed all tax returns required to be filed, and has paid, or has made adequate provision for the payment of, all taxes that are due and payable.
5.13. Consents and Approvals. No approval, authorization or consent of any trustee or holder of any indebtedness or obligation of Borrower or of any other Person under any such material agreement, contract, lease or license or similar document or instrument to which Borrower is a party or by which Borrower is bound, is required to be obtained by Borrower in order to make or consummate the transactions contemplated under the Loan Documents. All consents and approvals of, filings and registrations with, and other actions in respect of, all Governmental Authorities required to be obtained by Borrower in order to make or consummate the transactions contemplated under the Loan Documents have been, or prior to the time when required will have been, obtained, given, filed or taken and are or will be in full force and effect.
5.14. Trademarks, Patents, Copyrights, Franchises and Licenses. Borrower possesses and owns all necessary trademarks, trade names, copyrights, patents, patent rights, franchises and licenses which are material to the conduct of its business as now operated.
5.15. Material Contracts. There are no material defaults under any material contract or agreement by Borrower.
5.16. Full Disclosure. No representation, warranty or other statement made by Borrower in any Loan Document, certificate or written statement furnished to Lender contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained in such certificates or statements not misleading.
6. Affirmative Covenants. Borrower covenants and agrees that, until the full and complete payment of the Obligations and the termination of the Commitments, Borrower shall do all of the following:
6.1. Good Standing. Borrower shall maintain its corporate existence and its good standing in its jurisdiction of incorporation and maintain qualification in each jurisdiction in which the failure to so qualify could have a material adverse effect on the financial condition, operations or business of Borrower. Borrower shall maintain in force all licenses, approvals and agreements, the loss of which could have a material adverse effect on its financial condition, operations or business.
6.2. Government Compliance. Borrower shall comply with all statutes, laws, ordinances and government rules and regulations to which it is subject, noncompliance with which could materially adversely affect the financial condition, operations or business of Borrower.
6.3. Financial Statements, Reports, Certificates. Borrower shall deliver to Lender: (a) as soon as available, but in any event within forty-five (45) days after the end of each month, a company prepared balance sheet, income statement and cash flow statement covering Borrower's operations during such period, certified by a Responsible Officer; (b) as soon as available, but in any event within ninety (90) days after the end of Borrower's fiscal year, audited financial statements of Borrower prepared in accordance with generally accepted accounting principles, consistently applied, together with an unqualified opinion on such financial statements of a nationally recognized or other independent public accounting firm reasonably acceptable to Lender; (c) promptly upon becoming available, copies of all statements, reports and notices sent or made available generally by Borrower to its security holders; (d) immediately upon receipt of notice thereof, a report of any material legal actions pending
or threatened against Borrower; and (e) such other financial information as Lender may reasonably request from time to time.
6.4. Notice of Event of Loss. As soon as possible, and in any event within ten (10) days thereafter, Borrower shall notify Bank in writing in reasonable detail of any Event of Loss.
6.5. Notice of Defaults. As soon as possible, and in any event within five (5) days after the discovery of a Default or an Event of Default provide Bank with an Officer's Certificate of Borrower setting forth the facts relating to or giving rise to such Default or Event of Default and the action which Borrower proposes to take with respect thereto.
6.6. Taxes. Borrower shall make due and timely payment or deposit of all federal, state, and local taxes, assessments, or contributions required of it by law or imposed upon any properties belonging to it, and, upon request, will execute and deliver to Bank, appropriate certificates attesting to the payment or deposit thereof; and Borrower will make timely payment or deposit of all tax payments and withholding taxes required of it by applicable laws, including those laws concerning F.I.C.A., F.U.T.A., state disability, and local, state, and federal income taxes, and will, upon request, furnish Bank with proof satisfactory to Lender indicating that Borrower has made such payments or deposits; provided that Borrower need not make any payment if the amount or validity of such payment is contested in good faith by appropriate proceedings and is adequately reserved against by Borrower.
6.7. Use; Maintenance.
(a) Borrower, at its expense, shall make all necessary site preparations and cause the Collateral to be operated in accordance with any applicable manufacturer's manuals or instructions. So long as no Default or Event of Default has occurred and is continuing, Borrower shall have the right to quietly possess and use the Collateral as provided herein without interference by Lenders.
(b) Borrower, at its expense, shall maintain the Collateral in good condition, reasonable wear and tear excepted, and will comply in all material respects with all laws, rules and regulations to which the use and operation of the Collateral may be or become subject. Such obligation shall extend to repair and replacement of any partial loss or damage to the Collateral, regardless of the cause. If maintenance is mandated by manufacturer, Borrower shall perform such maintenance, or shall obtain and keep in effect, at all times during the Term maintenance service contracts with suppliers. All parts furnished in connection with such maintenance or repair shall immediately become part of the Collateral. All such maintenance, repair and replacement services shall be immediately paid for and discharged by Borrower with the result that no Lien will attach to the Collateral.
6.8. Insurance. Borrower shall obtain and maintain for the Term, at its own expense, (a) "all risk" insurance against loss or damage to the Collateral, and (b) comprehensive general liability insurance, reasonably satisfactory to Lenders and such other insurance against such other risks of loss and with such terms, as shall in each case be reasonably satisfactory to or reasonably required by Lender (as to carriers, amounts, deductibles and otherwise). The amount of the "all risk" insurance shall be the greater of (i) the replacement value of the Collateral (as new) or (ii) the Stipulated Loss Value of the Loan Amount applicable to each Loan and all other then outstanding amounts payable under the Loan Documents. Such amounts shall be determined to Lender's reasonable satisfaction as of each anniversary date of this Agreement and the appropriate amount of coverage shall be put in effect on the next succeeding renewal or inception date of such insurance.
The amount of such comprehensive general liability insurance shall be
at least Two Million Dollars ($2,000,000), One Million Dollars ($1,000,000) per
occurrence. The "all risk" insurance shall: (a) name Lender as sole loss payee
with respect to the Collateral, (b) provide each insurer's waiver of its right
of subrogation against Lender and Borrower, and (c) provide that such insurance
(i) shall not be invalidated by any action of, or breach of warranty by,
Borrower of a provision of any of its insurance policies, and (ii) shall waive
set-off, counterclaim or offset against Lender. Each liability policy shall (A)
name Lender as an additional insureds and (B) provide that such insurance shall
have cross-liability and severability of interest endorsements (which shall not
increase the aggregate policy limits of Borrower's insurance). All insurance
policies (C) shall provide that Borrower's insurance
shall be primary without a right of contribution of Lender's insurance, if any,
or any obligation on the part of Lender to pay premiums of Borrower, and (D)
shall contain a clause requiring the insurer to give Lender at least thirty
(30) days prior written notice of its cancellation (other than cancellation for
non-payment for which ten (10) days notice shall be sufficient). Borrower
shall, on or prior to the date of and prior to each policy renewal, furnish to
Lender certificates of insurance or other evidence satisfactory to Lender that
such insurance coverage is in effect.
6.9. Loss; Damage; Destruction and Seizure.
(a) Borrower shall bear the risk of the Financed Equipment being lost, stolen, destroyed, damaged beyond repair, rendered permanently unfit for use, or seized by a governmental authority for any reason whatsoever at any time until the expiration or termination of the Term.
(b) If during the Term any item of Financed Equipment becomes Obsolete or is lost, stolen, destroyed, damaged beyond repair, rendered permanently unfit for use, or seized by a governmental authority for any reason whatsoever for a period equal to at least the remainder of the Term (an "Event of Loss"), then in each case Lender shall receive from the proceeds of insurance maintained pursuant to Section 6.8, from any award paid by the seizing governmental authority or, to the extent not received from the proceeds of insurance or award or both, from Borrower, on or before the Payment Date next succeeding such Event of Loss for each such item of Financed Equipment subject to an Event of Loss, an amount equal to the sum of: (i) all accrued and unpaid Scheduled Payments with respect to such Loan attributable to such item of Financed Equipment due prior to the next such Payment Date with respect to such Loan, (ii) a prepayment in an amount equal to the Stipulated Loss Value and (iii) all other sums, if any, that shall have become due and payable hereunder, including interest at the Default Rate with respect to any past due amounts. On the date of receipt by Lender of the amount specified above with respect to each such item of Financed Equipment subject to an Event of Loss, this Agreement shall terminate as to such Financed Equipment. Except as provided in Section 6.9(c), any proceeds of insurance maintained by Borrower pursuant to Section 6.8 and received by Borrower shall be paid to Bank promptly upon their receipt by Borrower up to the amounts due under this Section. If any proceeds of insurance or awards received from governmental authorities are in excess of the amount owed under this Section 6.9, Lender shall promptly remit to Borrower the amount in excess of the amount owed to Lender.
(c) So long as no Event of Default has occurred
and is continuing, any proceeds of insurance maintained pursuant to Section 6.8
received by Lender or Borrower with respect to an item of Financed Equipment,
the repair of which is practicable, shall, at the election of Borrower, be
applied either to the repair or replacement of such Financed Equipment or, upon
Bank's receipt of evidence of the repair or replacement of the Financed
Equipment reasonably satisfactory to Lender, to the reimbursement of Borrower
for the cost of such repair or replacement. All replacement parts and equipment
acquired by Borrower in replacement of Financed Equipment pursuant to this
Section 6.9(c) shall immediately become part of the Financed Equipment upon
acquisition by Borrower. Borrower shall take such actions and provide such
documentation as may be reasonably requested by Lender to protect and preserve
their first priority security interest and otherwise to avoid any impairment of
Lender's rights under the Loan Documents in connection with such repair or
replacement.
6.10. Principal Depository. Borrower shall maintain its principal operating accounts with Bank; provided, there shall be no minimum balance requirements.
6.11. Environmental Laws. Borrower shall conduct its operations and keep and maintain its Property in material compliance with all Environmental Laws.
6.12. Further Assurances. At any time and from time to time Borrower shall execute and deliver such further instruments and take such further action as may reasonably be requested by Lender to effect the purposes of this Agreement.
7. Negative Covenants. Borrower covenants and agrees that until the full and complete payment of the Obligations and termination of the Commitments, Borrower will not do any of the following:
7.1. Chief Executive Office; Location of Collateral.
During the continuance of this Agreement, change the chief executive office or
principal place of business or remove or cause to be removed, except in the
ordinary course of Borrower's business, the Collateral or the records
concerning the Collateral from the premises listed in Schedule 3 without thirty
(30) days prior written notice to Lender.
7.2. Extraordinary Transactions and Disposal of Assets. Enter into any transaction for the sale, lease, license or other disposition of, moving, relocation, or transfer, whether by sale or otherwise, of Borrower's assets outside of the ordinary course of Borrower's business.
7.3. Restructure. Change Borrower's name; cause, permit, or suffer any material change in Borrower's ownership (provided that raising additional equity in a financing round or the sale of shares by any venture investor other than Boulder Ventures or an affiliate thereof shall not be prohibited by this clause); or suspend operation of Borrower's business.
7.4. Liens. Create, incur, assume or suffer to exist any Lien or any other encumbrance of any kind with respect to any of the Financed Equipment, whether now owned or hereafter acquired, except the Permitted Liens.
8. Events of Default. Any one or more of the following events shall constitute an Event of Default by Borrower under this Agreement:
8.1. Payment Default. If Borrower fails to pay when due and payable or when declared due and payable in accordance with the Loan Documents, any portion of the Obligations.
8.2. Covenant Default. If Borrower fails to perform any obligation under Sections 6.8, 6.9 or 6.10, or violates any of the covenants contained in Section 7 of this Agreement, or fails or neglects to perform, keep, or observe any other material term, provision, condition, covenant, or agreement contained in this Agreement, in any of the other Loan Documents, or in any other present or future agreement between Borrower and Lender and as to any default under such other term, provision, condition, covenant or agreement that can be cured, has failed to cure such default within fifteen (15) days after the occurrence of such default.
8.3. Material Adverse Change. If there is a material impairment of the prospect of repayment of any portion of the Obligations owing to Lender or a material impairment of the value or priority of Lender's security interests in the Collateral.
8.4. Attachment. If any material portion of Borrower's assets is attached, seized, subjected to a writ or distress warrant, or is levied upon, or comes into the possession of any trustee, receiver or Person acting in a similar capacity and such attachment, seizure, writ or distress warrant or levy has not been removed, discharged or rescinded within ten (10) days, or if Borrower is enjoined, restrained, or in any way prevented by court order from continuing to conduct all or any material part of its business affairs, or if a judgment or other claim becomes a lien or encumbrance upon any material portion of Borrower's assets, or if a notice of lien, levy, or assessment is filed of record with respect to any of Borrower's assets by the United States Government, or any department, agency, or instrumentality thereof, or by any state, county, municipal, or governmental agency, and the same is not paid within ten (10) days after Borrower receives notice thereof, provided that none of the foregoing shall constitute an Event of Default where such action or event is stayed or an adequate bond has been posted pending a good faith contesting by Borrower.
8.5. Other Agreements. If there is a default in any agreement to which Borrower is a party with a third party or parties resulting in a right by such third party or parties, whether or not exercised, to accelerate the maturity of any Indebtedness.
8.6. Judgments. If a judgment or judgments for the payment of money in an amount, individually or in the aggregate, of at least Fifty Thousand Dollars ($50,000) shall be rendered against Borrower and shall remain unsatisfied and unstayed for a period of thirty (30) days.
8.7. Redemption or Repurchase. Borrower shall, after the date of this Agreement, redeem or repurchase any shares of its equity securities, other than repurchases of stock from former employees of Borrower.
8.8. Misrepresentations. If any material misrepresentation or material misstatement exists now or hereafter in any warranty, representation, statement, or report made to Lender by Borrower or any officer, employee, agent, or director of Borrower.
8.9. Breach of Warrant. If Borrower shall breach the terms of the Warrant.
8.10. Involuntary Bankruptcy or Insolvency. If a proceeding shall have been instituted in a court having jurisdiction in the premises seeking a decree or order for relief in respect of Borrower in an involuntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or for the appointment of a receiver, liquidator, assignee, custodian, trustee (or similar official) of Borrower or for any substantial part of its property, or for the winding-up or liquidation of its affairs, and such proceeding shall remain undismissed or unstayed and in effect for a period of forty-five (45) consecutive days or such court shall enter a decree or order granting the relief sought in such proceeding.
8.11. Voluntary Bankruptcy or Insolvency. If Borrower shall commence a voluntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, shall consent to the entry of an order for relief in an involuntary case under any such law, or shall consent to the appointment of or taking possession by a receiver, liquidator, assignee, trustee, custodian (or other similar official) of Borrower or for any substantial part of its property, or shall make a general assignment for the benefit of creditors, or shall fail generally to pay its debts as they become due, or shall take any corporate action in furtherance of any of the foregoing.
9. Lender's Rights and Remedies.
9.1. Rights and Remedies. Upon the occurrence and continuance of any Default or Event of Default, Lender shall have no further obligation to advance money or extend credit to or for the benefit of Borrower. In addition, upon the occurrence and during the continuance of an Event Of Default, Lender shall have the rights, options, duties and remedies of a secured party as permitted by law and, in addition to and without limitation of the foregoing, Lender may, at its election, without notice of election and without demand, do any one or more of the following, all of which are authorized by Borrower:
(a) Declare all Obligations, whether evidenced
by this Agreement, by any of the other Loan Documents, or otherwise, including
the Stipulated Loss Value of the Loan Amount of each Loan, immediately due and
payable (provided that upon the occurrence of an Event of Default described in
Section 8.11 or 8.12 all Obligations shall become immediately due and payable
without any action by Lender);
(b) Without notice to or demand upon Borrower, make such payments and do such acts as Lender consider necessary or reasonable to protect their security interest in the Collateral. Borrower agrees to assemble the Collateral if Lender so requires, and to make the Collateral available to Lender as Lender may designate. Borrower authorizes Lender to enter the premises where the Collateral is located, to take and maintain possession of the Collateral, or any part of it, and to pay, purchase, contest, or compromise any encumbrance, charge, or lien which in Lender's determination appears to be prior or superior to their security interest and to pay all expenses incurred in connection therewith. With respect to any of Borrower's owned premises, Borrower hereby grants Lender a license to enter into possession of such premises and to occupy the same, without charge, for up to one hundred twenty (120) days in order to exercise any of Lender's rights or remedies provided herein, at law, in equity, or otherwise;
(c) Without notice to Borrower, set off and apply to the Obligations any and all (i) balances and deposits of Borrower held by Bank, or (ii) indebtedness at any time owing to or for the credit or the account of Borrower;
(d) Ship, reclaim, recover, store, finish, maintain, repair, prepare for sale, advertise for sale, and sell (in the manner provided for herein) the Collateral. Lender is hereby granted a license or other right, solely pursuant to the provisions of this Section 9.1, to use, without charge, Borrower's labels, patents, copyrights, rights of use of any name, trade secrets, trade names, trademarks, service marks, and advertising matter, or any Property of a similar nature, as it pertains to the Collateral, in completing production of, advertising for sale, and selling any Collateral and, in connection with Lender's exercise of their rights under this Section 9.1, Borrower's rights under all licenses and all franchise agreements shall inure to Lender's benefit;
(e) Sell the Collateral at either a public or private sale, or both, by way of one or more contracts or transactions, for cash or on terms, in such manner and at such places (including Borrower's premises) as Lender determines is commercially reasonable;
(f) Lender may credit bid and purchase at any public sale; and
(g) Any deficiency that exists after disposition of the Collateral as provided above will be paid immediately by Borrower.
9.2. Effect of Sale. Any sale, whether under any power of sale hereby given or by virtue of judicial proceedings, shall operate to divest all right, title, interest, claim and demand whatsoever, either at law or in equity, of Borrower in and to the Property sold, and shall be a perpetual bar, both at law and in equity, against Borrower, its successors and assigns, and against any and all Persons claiming the Property sold or any part thereof under, by or through Borrower, its successors or assigns.
9.3. Power of Attorney in Respect of the Collateral. Borrower does hereby irrevocably appoint Lender (which appointment is coupled with an interest) on the occurrence and continuance of a Default or an Event of Default, the true and lawful attorney in fact of Borrower with full power of substitution, for it and in its name: (a) to ask, demand, collect, receive, receipt for, sue for, compound and give acquittance for any and all rents, issues, profits, avails, distributions, income, payment draws and other sums in which a security interest is granted under Section 4 with full power to settle, adjust or compromise any claim thereunder as fully as if Lender was a Borrower itself, (b) to receive payment of and to endorse the name of Borrower to any items of Collateral (including checks, drafts and other orders for the payment of money) that come into Lender's possession or under Lender's control, (c) to make all demands, consents and waivers, or take any other action with respect to, the Collateral, (d) in Lender's discretion to file any claim or take any other action or proceedings, either in their own names or in the name of Borrower or otherwise, which Lender may reasonably deem necessary or appropriate to protect and preserve the right, title and interest of Lender in and to the Collateral, or (e) to otherwise act with respect thereto as though Lender were the outright owner of the Collateral.
9.4. Lender's Expenses. If Borrower fails to pay any amounts or furnish any required proof of payment due to third persons or entities, as required under the terms of this Agreement, then Lender may do any or all of the following: (a) make payment of the same or any part thereof; (b) set up such reserves in Borrower's loan account as Lender deems necessary to protect Lender from the exposure created by such failure; or (c) obtain and maintain insurance policies of the type discussed in Section 6.8 of this Agreement, and take any action with respect to such policies as Lender deems prudent. Any amounts paid or deposited by Lender shall constitute Lender's Expenses, shall be immediately due and payable, and shall bear interest at the then applicable rate hereinabove provided, and shall be secured by the Collateral. Any payments made by Lender shall not constitute an agreement by Lender to make similar payments in the future or a waiver by Lender of any Event of Default under this Agreement.
9.5. Remedies Cumulative. Lender's rights and remedies under this Agreement, the Loan Documents, and all other agreements shall be cumulative. Lender shall have all other rights and remedies not inconsistent herewith as provided under the Code, by law, or in equity. No exercise by Lender of one right or remedy shall be deemed an election, and no waiver by Lender of any Event of Default on Borrower's part shall be deemed a continuing waiver. No delay by Lender shall constitute a waiver, election, or acquiescence by it.
9.6. Application of Collateral Proceeds. The proceeds and/or avails of the Collateral, or any part thereof, and the proceeds and the avails of any remedy hereunder (as well as any other amounts of any kind held by Lender at the time of or received by Lender after, the occurrence of an Event of Default hereunder) shall be paid to and applied as follows:
(a) First, to the payment of out-of-pocket costs and expenses, including all amounts expended to preserve the value of the Collateral, of foreclosure or suit, if any, and of such sale and the exercise of any other rights or remedies, and of all proper fees, expenses, liability and advances, including reasonable legal expenses and attorneys' fees, incurred or made hereunder by Lender;
(b) Second, to the payment to Lender of the amount then owing or unpaid on the Loans for Scheduled Payments, the Stipulated Loss Value of the Loan Amount, and all other Obligations with respect to all Loans, and in case such proceeds shall be insufficient to pay in full the whole amount so due, owing or unpaid upon the Loans, then to the unpaid interest thereon, then to unpaid principal thereof, then to the Stipulated Loss Value of the Loan Amount with respect to all Loans, and then to the payment of other amounts then payable to Lender under any of the Loan Documents; and
(c) Third, to the payment of the surplus, if any, to Borrower, its successors and assigns, or to whomsoever may be lawfully entitled to receive the same.
9.7. Reinstatement of Rights. If Lender shall have proceeded to enforce any right under this Agreement or any other Loan Document by foreclosure, sale, entry or otherwise, and such proceedings shall have been discontinued or abandoned for any reason or shall have been determined adversely, then and in every such case (unless otherwise ordered by a court of competent jurisdiction), Lender shall be restored to its former position and rights hereunder with respect to the Property subject to the security interest created under this Agreement.
10. Waivers; Indemnification.
10.1. Demand; Protest. Borrower waives demand, protest, notice of protest, notice of default or dishonor, notice of payment and nonpayment. notice of any default, nonpayment at maturity, release, compromise, settlement, extension, or renewal of accounts, documents, instruments, chattel paper, and guarantees at any time held by Lender on which Borrower may in any way be liable.
10.2. Lender's Liability for Collateral. So long as Lender complies with its obligations, if any, under Section 9207 of the Code, Lender shall not in any way or manner be liable or responsible for: (a) the safekeeping of the Collateral; (b) any loss or damage thereto occurring or arising in any manner or fashion from any cause; (c) any diminution in the value thereof; or (d) any act or default of any carrier, warehouseman, bailee, forwarding agency, or other Person whomsoever. All risk of loss, damage or destruction of the Collateral shall be borne by Borrower.
10.3. Indemnification. Whether or not the transactions contemplated hereby shall be consummated:
(a) General Indemnity. Borrower shall pay, indemnify, and hold Lender and its officers, directors, employees, counsel, partners, agents and attorneys-in-fact (each, an "Indemnified Person") harmless from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, charges, expenses or disbursements (including Lender's Expenses and reasonable attorney's fees and the allocated cost of in-house counsel) of any kind or nature whatsoever with respect to the execution, delivery, enforcement, performance and administration of this Agreement and any other Loan Documents, or the transactions contemplated hereby and thereby, and with respect to any investigation, litigation or proceeding (including any case, action or proceeding before any court or other Governmental Authority relating to bankruptcy, reorganization, insolvency, liquidation, dissolution or relief of debtors or any appellate proceeding) related to this Agreement or the Loans or the use of the proceeds thereof, whether or not any Indemnified Person is a party thereto (all the foregoing, collectively, the "Indemnified Liabilities"); provided, that Borrower shall have no obligation hereunder to any
Indemnified Person with respect to Indemnified Liabilities arising from the gross negligence or willful misconduct of such Indemnified Person.
(b) Environmental Indemnity.
(i) Borrower hereby agrees to indemnify, defend and hold harmless each Indemnified Person, from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, charges, expenses or disbursements (including reasonable attorneys' fees and the allocated cost of in-house counsel and internal environmental audit or review services), which may be incurred by or asserted against such Indemnified Person in connection with or arising out of any pending or threatened investigation, litigation or proceeding, or any action taken by any Person, with respect to any Environmental Claim arising out of or related to any Property owned, leased or operated by Borrower. No action taken by legal counsel chosen by Lender in defending against any such investigation, litigation or proceeding or requested remedial, removal or response action (except for actions which constitute fraud, willful misconduct, gross negligence or material violations of law) shall vitiate or in any way impair Borrower's obligation and duty hereunder to indemnify and hold Lender harmless. Lender agrees to use reasonable efforts to cooperate with Borrower respecting the defense of any matter indemnified hereunder, except insofar as and to the extent that their respective interests may be adverse to Borrower's, in Lender's sole discretion.
(ii) In no event shall any site visit, observation, or testing by Lender be deemed a representation or warranty that Hazardous Materials are or are not present in, on, or under the site, or that there has been or shall be compliance with any Environmental Law. Neither Borrower nor any other Person is entitled to rely on any site visit, observation, or testing by any Lender. Except as otherwise provided by law, Lender owes no duty of care to protect Borrower or any other Person against, or to inform Borrower or any other party of, any Hazardous Materials or any other adverse condition affecting any site or Property. Lender shall not be obligated to disclose to Borrower or any other Person any report or findings made as a result of, or in connection with, any site visit, observation, or testing by Lender.
(c) Survival; Defense. The obligations in this
Section 10.3 shall survive payment of all other Obligations. At the election of
any Indemnified Person, Borrower shall defend such Indemnified Person using
legal counsel satisfactory to such Indemnified Person in such Person's sole
discretion, at the sole cost and expense of Borrower. All amounts owing under
this Section 10.3 shall be paid within thirty (30) days after written demand.
11. Notices. Unless otherwise provided in this Agreement, all notices or demands by any party relating to this Agreement or any other agreement entered into in connection herewith shall be in writing and (except for financial statements and other informational documents which may be sent by first-class mail, postage prepaid) shall be personally delivered or sent by certified mail, postage prepaid, return receipt requested, or by prepaid facsimile to Borrower or to Lender, as the case may be, at their respective addresses set forth below:
If to Borrower: Array Biopharma Inc.
1885 33rd Street, Bldg. AC-1
Boulder, CO 80301-2505
Attn: Mike Carruthers, CFO
Fax: (303) 449-5376
If to Bank: Silicon Valley Bank
4430 Arapahoe Avenue, Suite 225
Boulder, CO 80303
Attn: Andy Enroth
Fax: (303) 938-0486
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with a copy to:
Silicon Valley Bank 3003 Tasman Drive Santa Clara, CA 95054 Attn: Loan Services FAX: (408) 496-2429
The parties hereto may change the address at which they are to receive notices hereunder, by notice in writing in the foregoing manner given to the other.
12. General Provisions.
12.1. Successors and Assigns. This Agreement shall bind and inure to the benefit of the respective successors and permitted assigns of each of the parties; provided, however, that neither this Agreement nor any rights hereunder may be assigned by Borrower without Lender's prior written consent, which consent may be granted or withheld in Lender's sole discretion. Lender shall have the right without the consent of or notice to Borrower to sell, transfer, negotiate, or grant participations in all or any part of, or any interest in Lender's rights and benefits hereunder.
12.2. Time of Essence. Time is of the essence for the performance of all obligations set forth in this Agreement.
12.3. Severability of Provisions. Each provision of this Agreement shall be severable from every other provision of this Agreement for the purpose of determining the legal enforceability of any specific provision.
12.4. Entire Agreement; Construction; Amendments and Waivers.
(a) This Agreement and each of the other Loan Documents dated as of the date hereof, taken together, constitute and contain the entire agreement among Borrower and Lender and supersede any and all prior agreements, negotiations, correspondence, understandings and communications between the parties, whether written or oral, respecting the subject matter hereof.
(b) Any and all amendments, modifications, discharges or waivers of, or consents to any departures from any provision of this Agreement or of any of the other Loan Documents shall not be effective without the written agreement of the party against whom such enforcement is sought and shall not be effective without the written consent of Lender. Any waiver or consent with respect to any provision of the Loan Documents shall be effective only in the specific instance and for the specific purpose for which it was given. No notice to or demand on Borrower in any case shall entitle Borrower to any other or further notice or demand in similar or other circumstances. Any amendment, modification, waiver or consent effected in accordance with this Section 12.4 shall be binding upon Lender and on Borrower.
12.5. Reliance by Lender. All covenants, agreements, representations and warranties made herein by Borrower shall, notwithstanding any investigation by Lenders, be deemed to be material to and to have been relied upon by Lender.
12.6. No Set-Offs by Borrower. All sums payable by Borrower pursuant to this Agreement or any of the other Loan Documents shall be payable without notice or demand and shall be payable in United States Dollars without set-off or reduction of any manner whatsoever.
12.7. Counterparts. This Agreement may be executed in any number of counterparts and by different parties on separate counterparts, each of which, when executed and delivered, shall be deemed to be an original, and all of which, when taken together, shall constitute but one and the same Agreement.
12.8. Survival. All covenants, representations and warranties made in this Agreement shall continue in full force and effect so long as any Obligations remain outstanding. The obligations of Borrower to indemnify Lender with respect to the expenses, damages, losses, costs and liabilities described in Section 10.3 shall survive until all applicable statute of limitations periods with respect to actions that may be brought against Lender have run.
13. Relationship of Parties. Borrower and Lender acknowledge, understand and agree that the relationship between the Borrower, on the one hand, and Lender, on the other, is, and at all time shall remain solely that of a borrower and lender. Lender shall not under any circumstances be construed to be partners or joint venturers of Borrower or any of its Affiliates; nor shall Lender under any circumstances be deemed to be in a relationship of confidence or trust or a fiduciary relationship with Borrower or any of its Affiliates, or to owe any fiduciary duty to Borrower or any of its Affiliates. Lender does not undertake or assume any responsibility or duty to Borrower or any of its Affiliates to select, review, inspect, supervise, pass judgment upon or otherwise inform the Borrower or any of its Affiliates of any matter in connection with its or their Property, any Collateral held by Lender or the operations of Borrower or any of its Affiliates. Borrower and each of its Affiliates shall rely entirely on their own judgment with respect to such matters, and any review, inspection, supervision, exercise of judgment or supply of information undertaken or assumed by Lender in connection with such matters is solely for the protection of Lender and neither Borrower nor any Affiliate is entitled to rely thereon.
14. Choice of Law and Venue; Jury Trial Waiver. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF CALIFORNIA, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. EACH OF BORROWER AND LENDER HEREBY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS LOCATED IN THE COUNTY OF SANTA CLARA, STATE OF CALIFORNIA. BORROWER AND LENDER HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first above written.
ARRAY BIOPHARMA INC.
By: /s/ MIKE CARRIERS
-------------------------------------
Title: CFO
----------------------------------
By: /s/ DAVID SNITMAN
-------------------------------------
Title: COD
----------------------------------
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SILICON VALLEY BANK
By: /s/
-------------------------------------
Title: VP
----------------------------------
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LIST OF EXHIBITS AND SCHEDULES
Exhibit A - Collateral
Exhibit B - Form of Warrant
Exhibit C - [Intentionally Omitted]
Exhibit D - Form of Loan Agreement Supplement
Schedule 1 - Existing Liens
Schedule 2 - Borrower's Trade Names
Schedule 3 - Location of Collateral
Schedule 4 - Subsidiaries
EXHIBIT A
DEBTOR/BORROWER: ARRAY BIOPHARMA INC.
SECURED PARTY/LENDER: SILICON VALLEY BANK
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COLLATERAL
The Collateral shall consist of all right, title and interest of Debtor in and to all the following:
Financed Equipment. All right, title, interest, claims and demands of Debtor in and to each and every item of equipment, fixtures or personal property which is financed with a "Loan" pursuant to that certain Loan and Security Agreement, dated as of March 26, 1999 (the "Loan Agreement"), by and among Debtor and Secured Party, including, without limitation, the equipment, fixtures and personal property described in Annex A hereto (which such equipment, fixtures and personal property shall remain subject to the lien of the Loan Agreement until specifically released pursuant to Section 4.3 of the Loan Agreement), whether now owned or hereafter acquired, together with all substitutions, renewals or replacements of and additions, improvements, and accessions to any and all of such equipment, fixtures or personal property (all such equipment, fixtures, personal property, accessories, parts, appurtenances, substitutions, renewals, replacements, additions, improvements, and accessions are herein called, collectively, the "Financed Equipment"), together with all the rents, issues, income, profits and avails therefrom and the proceeds thereof, including, without limitation, insurance, condemnation, requisition or similar payments, and all proceeds from sales, renewals, releases or other dispositions thereof.
ANNEX A
to
Exhibit A
The following represent further specific descriptions of the Financed Equipment:
FINANCED EQUIPMENT
EXHIBIT B
WARRANT
Exhibit C
[INTENTIONALLY OMITTED]
EXHIBIT D
FORM OF LOAN AGREEMENT SUPPLEMENT
LOAN AGREEMENT SUPPLEMENT No. [ ]
LOAN AGREEMENT SUPPLEMENT No. [ ], dated ______________, 199____
("Supplement"), to the Loan and Security Agreement dated as of March 26, 1999
(the "Loan Agreement) by and among Array Biopharma Inc., a ______________
corporation ("Borrower"), and Silicon Valley Bank ("Lender").
Capitalized terms used herein but not otherwise defined herein are used with the respective meanings given to such terms in the Loan Agreement.
1. To secure the prompt payment by Borrower of the principal of and interest on, and all other amounts from time to time outstanding under the Loan Agreement, and the performance and observance by Borrower of all the agreements, covenants and provisions contained in the Loan Agreement, Borrower does hereby grant unto Lender, its successors and assigns, a first priority security interest in all of Borrower's right, title and interest in each item of equipment and other property described in Annex A hereto, which equipment and other property shall be deemed to be additional "Financed Equipment." The list of Financed Equipment in Annex A hereto shall be construed as a supplement to ANNEX A TO EXHIBIT A to the Loan Agreement and shall form a part thereof, and the Loan Agreement is hereby incorporated by reference herein and is hereby ratified, approved and confirmed.
2. Attached as Annex B hereto is the Loan Terms Schedule with respect to the Loan the proceeds of which will be used to finance the Financed Equipment listed in Annex A hereto.
3. The proceeds of the Loan should be transferred to Borrower's account with Bank set forth below:
4. Borrower hereby certifies that (a) the foregoing information is true and correct and authorizes Lender to endorse in its books and records, the Basic Rate applicable to the Funding Date of the Loan contemplated in this Loan Agreement Supplement and the principal amount set forth in the Loan Terms Schedule; (b) the representations and warranties made by Borrower in Section 5 of the Loan Agreement and in the other Loan Documents are true and correct on the date hereof and will be true and correct on such Funding Date; (c) Borrower has met or will by such Funding Date meet all conditions set forth in Section 3 of the Loan Agreement; (d) Borrower is now, and on such Funding Date will be, in compliance with the covenants and the requirements contained in Sections 6 and 7 of the Loan Agreement; and (e) no Default or Event of Default has occurred and is continuing under the Loan Agreement.
5. This Supplement is being delivered in the State of California.
6. This Supplement may be executed by Borrower and Lender in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, Borrower and Lender have caused this Supplement to be duly executed and delivered as of this day and year first above written.
ARRAY BIOPHARMA INC.
SILICON VALLEY BANK
Annex A - Description of Financed Equipment
Annex B - Loan Terms Schedule
ANNEX A
to
EXHIBIT D
The Financed Equipment being financed with the Loan for which this Loan Agreement Supplement is being executed is listed below. Upon the funding of such Loan, this schedule automatically shall be deemed to be a part of Annex A to Exhibit A to the Loan Agreement.
FINANCED EQUIPMENT
See Attached Pages.
ANNEX B
LOAN TERMS SCHEDULE
Loan Funding Date: ______________, 199__
Original Loan Amount: $______________
Loan Factor: ______________%
Original Scheduled Payment Amount: $______________
Final Payment: An additional amount equal to the Final Payment Percentage multiplied by the original Loan Amount then in effect, shall be paid on the Maturity Date with respect to such Loan.
Stipulated Loss Value:
Payment No. Payment Date Stipulated Loss Value *
1
2
3
4
. . .
35
[[36/42]]
. . .
*/ Each Stipulated Loss Value amount assumes payment of all Scheduled Payments due on or before the indicated Payment Date.
SCHEDULE 1
EXISTING LIENS
SCHEDULE 2
BORROWER'S TRADE NAMES
SCHEDULE 3
LOCATION OF CHIEF EXECUTIVE OFFICE; PRINCIPAL
PLACE OF BUSINESS; COLLATERAL
SCHEDULE 4
SUBSIDIARIES
EXHIBIT 10.24
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED OR UNLESS SOLD PURSUANT TO AN EXEMPTION TO SUCH ACT.
ARRAY BIOPHARMA, INC.
WARRANT TO PURCHASE
SHARES OF SERIES PREFERRED STOCK
Void after March 9, 2006
THIS CERTIFIES THAT, for value received, Silicon Valley Bank (the "Holder") is entitled to purchase, on the terms and subject to the conditions hereof, shares of Series Preferred Stock (as defined below), (the "Series Preferred Stock"), of Array BioPharma, Inc., a Delaware corporation (the "Company"), at the price per share as set forth herein (such price and such other price as shall result, from time to time, from the adjustments specified herein referred to as the "Exercise Price"), subject to the provisions and upon the terms and conditions hereinafter set forth. The Exercise Price shall be equal to the price per share at which the Company first sells its Preferred Stock in the one year period following the Date of Grant (as defined herein) (the "Equity Event"); provided, that if the Equity Event does not occur, the Exercise Price shall be $3.00. As used herein, the term "Series Preferred" shall mean the Company's presently authorized Series A Preferred or, upon the occurrence of the Equity Event, the Series B Preferred Stock, and any stock into or for which such Series B Preferred Stock may hereafter be converted or exchanged, and the term "Date of Grant" shall mean March 31, 1999.
The following terms shall apply to this Warrant:
1. Exercise of Warrant. The terms and conditions upon which this Warrant may be exercised, and the Series A Preferred Stock covered hereby (the "Warrant Shares"), may be purchased, are as follows:
1.1 Number of Shares. This Warrant is being delivered to Holder as additional consideration for Holder's extension of a credit facility to the Company, pursuant to that certain Loan and Security Agreement dated of even date herewith. The Holder may purchase a number of Shares under this Warrant equal to $17,500 divided by the Exercise Price. If the Equity Event does not occur, the holder will be entitled to purchase 4,600 Shares of Series A Preferred Stock at a price of $3.00 per share.
1.2 Exercise. This Warrant may be exercised in whole or in part at any time or from time to time up until 5:00 p.m. Mountain Standard Time,March ____, 2006, and shall be void thereafter; provided that the Company shall give Holder written notice of Holder's right to exercise this Warrant not more than 90 days and not less than 30 days before such date. If the notice is not so given, the expiration date shall automatically be extended until 30 days after the date the Company delivers the notice to Holder. The exercise of the purchase rights hereunder, in whole or in part shall be effected by (a) the surrender of this Warrant, together with a duly executed copy of the form of the subscription attached as EXHIBIT A hereto, to the Company at its principal offices, and (b) the delivery of the Exercise Price by (i) check or bank draft payable to the Company's order, or (ii) by wire transfer to the Company's account for the number of Warrant Shares for which the purchase rights hereunder are being exercised.
1.3 Automatic Exercise.
(a) Notwithstanding the provisions of Section 1.1 above, this Warrant shall automatically be deemed to be exercised in full in the manner set forth in Section 1.4 hereof, without any further action on behalf of the Holder on the earliest of a date: (a) ten (10) days prior to a "Sale of the Company" (as defined), or (b) immediately prior to the closing of an underwritten initial public offering by the Company in which the Series A Preferred Stock converts automatically into Common Stock (an "IPO"). A "Sale of the Company" shall mean either of the following (i) the acquisition of all or substantially all of the capital stock of the Company by another entity by means of any transaction or series of related transactions (including, without limitation, any reorganization, merger or consolidation but, excluding any merger effected exclusively for the purpose of changing the domicile of the Company); or (ii) a sale of all or substantially all of the assets of the Company; unless the Company's shareholders of record as constituted immediately prior to such acquisition or sale will, immediately after such acquisition ro sale (by virtue of securities issued as consideration for the corporation's acquisition or sale or otherwise) hold at least 50% of the voting power of the surviving or acquiring entity. In connection with the exercise of this Warrant pursuant to clause (a) and clause (b) of this Section 1.3, such exercise shall be conditioned upon the closing of such Sale of the Company or IPO and the Warrant shall not be deemed to have been exercised until the closing of such Sale of the Company or IPO.
(b) Public Offering. For purposes of this Warrant, IPO means the sale of the Company's Common Stock pursuant to a registration statement under the Securities Act of 1933, as amended, for an underwritten public offering (other than a registration on Form S-8, Form S-4 or comparable forms), which results in aggregate cash proceeds (prior to underwriters' commissions and expenses) to the Company of more than $7,500,000. Immediately prior to the closing of any Public Offering prior to the Expiration Date, any portion of this Warrant then not exercised or exercisable will be exercisable for the number of shares of the Company's Common Stock that would have resulted from the conversion, pursuant to the Company's Articles of Incorporation then in effect of the maximum number of shares of Preferred Stock that could have been acquired by the Holder upon the exercise of the unexpired portion of this Warrant immediately prior to such Public Offering.
1.4 Net Issue Election.
(a) Upon automatic exercise of this Warrant as provided in
Section 1.3 above or at any time or from time to time as the Holder may elect,
the Holder shall be entitled to receive, without the payment by the Holder of
any additional consideration, shares of Series A Preferred Stock equal to the
value of this Warrant or any portion hereof by the surrender of this Warrant or
such portion to the Company, with the net issue election notice attached hereto
as EXHIBIT B duly executed, at the principal office of the Company. Thereupon,
the Company shall issue to the Holder such number of fully paid and
nonassessable shares of Series A Preferred Stock as is computed using the
following formula:
A
where: X= the number of shares of Series A Preferred Stock to
be issued to the Holder.
Y= the number of shares of Series A Preferred Stock
covered by this Warrant in respect of which the net
issue election is made.
A= the fair market value of one share of Series A
Preferred Stock, as determined pursuant to
subsection (b) below, as at the time the net issue
election is made.
B= the Exercise Price in effect under this Warrant at
the time the net issue election is made.
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(b) Determination of Fair Market Value. For purposes of this Section, fair market value of one share of Series A Preferred Stock as of a particular date (the "Determination Date") shall mean:
(i) In the case of an initial public offering of the Common Stock, the initial "Price to Public" of one share of Common Stock specified in the final prospectus with respect to such offering, multiplied by the number of shares of Common Stock into which each share of Series A Preferred Stock converts as of that date;
(ii) In the case of a Sale of the Company, the effective per share consideration to be received in a Sale of the Company by holders of the Series A Preferred Stock, or if no such price is set forth in the agreement concerning the Sale of the Company, then as determined in good faith by the Company's Board of Directors;
(iii) If the Company's Common Stock is listed on a security exchange or the Nasdaq National Market, the closing price of the Company's Common Stock on such exchange or the Nasdaq National Market on the day notice of exercise is provided to the Company under Section 1.4(b) hereof, multiplied by the number of shares of Common Stock into which each share of Series A Preferred Stock converts as of that date; or
(iv) If Sections 1.4(b)(i), (ii), or (iii) do not apply, then as determined by the Board of Directors in good faith, which determination shall be conclusive and binding on the holder hereof.
1.5 Issuance of Shares. Upon the exercise of the purchase rights, in whole or in part, evidenced by this Warrant, a certificate or certificates for the purchased Warrant Shares shall be issued by the Company to the Holder as soon as practicable. Upon the partial exercise of this Warrant, the Company shall, as soon as practicable, deliver to the Holder a warrant in like tenor as this Warrant to purchase the number of shares in respect of which this Warrant shall not have been exercised.
2. Certain Adjustments.
2.1 Series A Preferred Stock Dividends. If the Company at any time prior to the expiration of this Warrant shall pay a dividend with respect to the Company's Series A Preferred Stock payable in shares of Series A Preferred Stock, or make any distribution with respect to the Company's Series A Preferred Stock, then the purchase price per share shall be appropriately decreased, and the number of Warrant Shares shall be appropriately increased in proportion to such dividend.
2.2 Splits and Subdivisions. In the event the Company should at any time or from time to time fix a record date for a split or subdivision of the outstanding shares of Series A Preferred Stock of the Company, or the determination of the holders of Series A Preferred Stock of the Company entitled to receive a dividend or other distribution payable in additional shares of Series A Preferred Stock of the Company or other securities or rights convertible into, or entitling the holder thereof to receive directly or indirectly, additional shares of the Company's Series A Preferred Stock (hereinafter referred to as the "Series A Preferred Stock Equivalents") without payment of any consideration by such holder for the additional shares of Series A Preferred Stock or Series A Preferred Stock Equivalents (including the additional shares of Series A Preferred Stock issuable upon conversion or exercise thereof), then, and as of such record date (or the date of such distribution, split or subdivision if no record date is fixed), the per share purchase price shall be appropriately decreased, and the number of Warrant Shares shall be appropriately increased in proportion to such increase of outstanding shares.
2.3 Combination of Shares. If the number of shares of Series A Preferred Stock outstanding at any time after the date hereof is decreased by a combination of the outstanding shares of Series A Preferred Stock of the Company, the per share purchase price shall be appropriately increased and the number of Warrant Shares shall be appropriately decreased in proportion to such decrease in outstanding shares.
2.4 Adjustments for Other Distributions. In the event the Company shall declare a distribution with respect to the Series A Preferred Stock payable in securities of other persons, evidences of indebtedness issued by the Company or other persons, assets, or options, or rights not referred to above, then, in each such case for the purpose of this Section 2, upon exercise of this Warrant the holder hereof shall be entitled to a proportionate share of any such distribution as though
such holder was the holder of the number of shares of Series A Preferred Stock of the Company into which this Warrant may be exercised as of the record date fixed for the determination of the holders of Series A Preferred Stock of the Company entitled to receive such distribution.
2.5 Certificate as to Adjustments. In the case of each adjustment or readjustment of the purchase price pursuant to this Section 2, the Company will promptly compute such adjustment or readjustment in accordance with the terms hereof and cause a certificate setting forth such adjustment or readjustment, and showing in detail the fact upon which such adjustment or readjustment is based to be delivered to the holder of this Warrant. The Company will, upon the written request at any time of the holder of this Warrant, furnish or cause to be furnished to such holder a certificate setting forth:
(a) such adjustments and readjustments;
(b) the purchase price at the time in effect; and
(c) the number of Warrant Shares receivable upon the exercise of the Warrant.
2.6 Notice of Record Date, etc. In the event of any taking by the Company of a record of the holders of any class of securities of the Company for the purpose of determining the holders thereof who are entitled to receive any dividend (other than a cash dividend), or other distribution, or any right to subscribe for, purchase or otherwise acquire any shares of stock of any class or any other securities or property, or to receive any other right, or any capital reorganization of the Company, any reclassification or recapitalization of the capital stock of the Company, the Company will mail to the holder of this Warrant at least twenty (20) days prior to the earliest date specified therein, a notice specifying:
(a) The date on which such record is to be taken for the purpose of such dividend, distribution, or right, and the amount and character of such dividend, distribution, or right; or
(b) The date on which any such reorganization, or reclassification is expected to become effective, and the record date for determining shareholders entitled to vote thereon.
3. Representations of Holder.
3.1 Investment Intent. Holder hereby warrants and represents that Holder is acquiring this Warrant, and any Warrant Shares issued upon exercise of this Warrant, for Holder's own account and not with a view to their resale or distribution.
3.2 Exempt from Registration. Holder acknowledges that this Warrant has not been registered under the Securities Act of 1933, as amended (the "1933 Act"), on the ground that the issuance of this Warrant is exempt from registration pursuant to Section 4(2) of the 1933 Act,
and that the Company's reliance on such exemption is predicated on the representations of Holder set forth herein.
3.3 Investment Experience. In connection with the investment representations made herein, Holder represents that it is able to fend for itself in the transactions contemplated by this Warrant, has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of his investment, has the ability to bear the economic risks of its investment and has been furnished with and has had access to such information as it has requested and deemed appropriate to its investment decision.
3.4 Restricted Securities. Holder hereby confirms that Holder has been informed that this Warrant, and the Warrant Shares issued upon exercise of this Warrant, are restricted securities under the 1933 Act and may not be resold or transferred unless this Warrant, and the Warrant Shares issued upon exercise of this Warrant, are first registered under the federal securities laws or unless an exemption from such registration is available. Accordingly, Holder hereby acknowledges that Holder is prepared to hold this Warrant, and the Warrant Shares issued upon exercise of this Warrant, for an indefinite period and that Holder is aware that Rule 144 of the Securities and Exchange Commission issued under the 1933 Act is not presently available to exempt the issuance of this Warrant from the registration requirements of the 1933 Act.
(a) Disposition of Shares. Holder hereby agrees that Holder shall make no disposition of this Warrant, and the Warrant Shares issued upon exercise of this Warrant, unless and until Holder shall have (i) provided the Company with assurances that (A) the proposed disposition does not require registration of the Warrant Shares under the 1933 Act, or (B) all appropriate action necessary for compliance with the registration requirements of the 1933 Act or of any exemption from registration available under the 1933 Act (including Rule 144) has been taken; and (ii) complied with the terms of the Shareholders Agreement dated as of December 27, 1995 by and between the Company and the holders of its capital stock (the "Shareholders Agreement").
3.5 Restrictive Legend. In order to reflect the restrictions on disposition of the Warrant Shares, the stock certificates for the Warrant Shares will be endorsed with the following restrictive legends to the following effect:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION TO THE REGISTRATION REQUIREMENTS OF SUCH ACT OR SUCH LAWS.
THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A SHAREHOLDERS AGREEMENT DATED AS OF MAY 18, 1998, AND AS MAY BE AMENDED FROM TIME TO TIME, AND SAID SHARES MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT IN ACCORDANCE WITH THE TERMS OF SUCH AGREEMENT. SUCH AGREEMENT MAY
BE EXAMINED AT THE PRINCIPAL PLACE OF BUSINESS OF THE COMPANY AND A COPY THEREOF WILL BE FURNISHED WITHOUT CHARGE TO THE HOLDER OF THIS CERTIFICATE UPON RECEIPT BY THE COMPANY AT ITS PRINCIPAL PLACE OF BUSINESS OR REGISTERED OFFICE OF A WRITTEN REQUEST FROM THE SHAREHOLDER.
4. Representations, Warranties and Covenants. This Warrant is issued and delivered by the Company and accepted by each Holder on the basis of the following representations, warranties and covenants made by the Company:
4.1 The Company covenants that it will at all times from and after the date hereof reserve and keep available such number of its authorized shares of Series A Preferred Stock and Common Stock, $.001 par value, of the Company (the "Common Stock"), as will be sufficient to permit, respectively, the exercise of this Warrant in full and the conversion into shares of Common Stock of all shares of Series A Preferred Stock receivable upon such exercise. The Company covenants further that such shares as may be issued pursuant to such exercise and/or conversion will, upon issuance, be duly and validly issued, fully paid and nonassessable and free from all taxes, liens and charges with respect to the issuance thereof.
4.2 The Company has all necessary authority to issue, execute and deliver this Warrant and to perform its obligations hereunder. This Warrant has been duly authorized issued, executed and delivered by the Company and is the valid and binding obligation of the Company, enforceable in accordance with its terms.
4.3 The shares of Series A Preferred Stock issuable upon the exercise of this Warrant have been duly authorized and reserved for issuance by the Company and, when issued in accordance with the terms hereof, will be validly issued, fully paid and nonassessable.
4.4 The issuance, execution and delivery of this Warrant do not, and
the issuance of the shares of Series A Preferred Stock upon the exercise of this
Warrant in accordance with the terms hereof will not, (i) violate or contravene
the Company's Articles or bylaws, or any law, statute, regulation, rule,
judgment or order applicable to the Company, (ii) violate, contravene or result
in a breach or default under any contract, agreement or instrument to which the
Company is a party or by which the Company or any of its assets are bound or
(iii) require the consent or approval of or the filing of any notice or
registration with any person or entity.
5. Fractional Shares. No fractional shares shall be issued in connection with any exercise of this Warrant. In lieu of the issuance of such fractional shares, the Company shall make a cash payment equal to the then fair market value of such fractional share as determined in good faith by the Company's Board of Directors pursuant to Section 1.4(b) above.
6. No Privilege of Stock Ownership. Prior to the exercise of this Warrant, the Holder shall not be entitled, by virtue of holding this Warrant, to any rights of a stockholder of the Company, including (without limitation) the right to vote, receive dividends or other distributions, or exercise preemptive rights, and such holder shall not be entitled to any notice or other
communication concerning the business or affairs of the Company. Nothing in this
Section 6, however, shall limit the right of the Holder to be provided the
notices required herein, or to participate in distributions described in Section
2 hereof if the Holder ultimately exercises this Warrant. Notwithstanding the
foregoing, upon exercise of this Warrant, Holder shall be deemed to be a
"Holder" and "Holder of Registrable Securities" pursuant to Section 2.2 and 2.3
of the Investor Rights Agreement dated as of May 18,. 1998, as amended, by and
among the Company and certain of its shareholders; provided, that as a condition
of receiving such registration rights, Holder agrees to execute such Investor
Rights Agreement as requested by the Company.
7. Transfers or Exchanges.
7.1 Subject to compliance with the Shareholders Agreement and applicable federal and state securities laws, this Warrant and all rights hereunder are transferable in whole or in part by the Holder to any person or entity reasonably acceptable to the Company. The Holder will provide written notice of such transfer to the Company, and if no written objection from the Company is received by the Holder within five business days after the date of notice, then such transfer shall be deemed accepted. The transfer shall be recorded on the books of the Company upon the surrender of this Warrant, properly endorsed, to the Company at its principal offices, and the payment to the Company of all transfer taxes and other governmental charges imposed on such transfer. In the event of a partial transfer, the Company shall issue to the holders one or more appropriate new warrants.
7.2 All new warrants issued in connection with transfers, exchanges or partial exercises shall be identified in form and provision to this Warrant, except as to the number of shares.
7.3 Holder hereby agrees that, during the period of duration (not to exceed 180 days) specified by the Company and an underwriter of Series A Preferred Stock or other securities of the Company, following the effective date of an IPO, it shall not, to the extent requested by the Company and such underwriter, directly or indirectly sell, offer to sell, contract to sell (including, without limitation, any short sale), grant any option to purchase or otherwise transfer or dispose of (other than to donees who agree to be similarly bound) any securities of the Company held by it at any time during such period except Common Stock included in such registration; provided, however, that all officers and directors of the Company enter into similar agreements.
8. Successors and Assigns. The terms and provisions of this Warrant shall be binding upon the Company, the Holder, and their respective successors and assigns, subject at all times to the restrictions set forth in the Agreement and in this Warrant.
9. Loss, Theft, Destruction or Mutilation of Warrant. Upon receipt of notice by the Company of the loss, theft, destruction, or mutilation of this Warrant, and upon reimbursement to the Company of all reasonable expenses incidental thereto, and, if mutilated upon surrender and cancellation of this Warrant, the Company will make and deliver a new warrant, in identical form, and dated as of such cancellation, in lieu of this Warrant.
10. Saturdays, Sundays, Holidays, etc. 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 Sunday, or shall be a legal holiday, then such action may be taken or such right may be exercised, except as to the purchase price, on the next succeeding day not a legal holiday.
11. Amendments and Waivers. Any term of this Warrant may be amended, and the observance of any term of this Warrant may be waived (either generally or in a particular instance, and either retroactively or prospectively), with the written consent of the Company and the Holder, such consent not to be unreasonably withheld. Any such amendment or waiver shall be binding on the Holder.
12. Governing Law. This Warrant shall be governed by and construed in accordance with the laws of the State of Colorado.
13. Notices. Any notice, demand or delivery pursuant to the provisions hereof shall be sufficiently delivered or made if sent by first class mail, postage prepaid, addressed to any holder of a Warrant at its last known address appearing on the books of the Company, or, except as herein otherwise expressly provided, to the Company at its principal executive office at 1885 33rd Street, Boulder, Colorado, 80301, or such other address as shall have been furnished to the party giving or making such notice, demand or delivery.
DATED: March 31, 1999
ARRAY BIOPHARMA, INC., a Delaware corporation
By: /s/ MIKE CARRUTHERS
-----------------------------
Name: Mike Carruthers
Title: Chief Financial Officer
|
EXHIBIT A
Subscription
Array BioPharma, Inc.
Ladies and Gentlemen:
The undersigned hereby elects to purchase, pursuant to the provisions of the Warrant dated March ____, 1999, __________ shares of the Series ____ Preferred Stock of Array BioPharma, Inc., a Delaware corporation.
Dated: _______________, ______
Silicon Valley Bank
EXHIBIT B
Net Issue Election
Array BioPharma, Inc.
Ladies and Gentlemen:
The undersigned hereby elects under Section 1.4 of the Warrant dated March ____, 1999 (the "Warrant"), to exercise its right to receive shares of Series ____ Preferred Stock pursuant to the Warrant. The certificate(s) for such shares issuable upon such net issue election shall be issued in the name of the undersigned or as otherwise indicated below:
Silicon Valley Bank
EXHIBIT 10.25
LOAN AND SECURITY AGREEMENT
by and between
SILICON VALLEY BANK
4430 Arapahoe Avenue, Suite 225
Boulder, CO 80303
Attn: Andy Enroth
Fax: (303) 938-0486
and
ARRAY BIOPHARMA INC.
1885 33rd Street, Bldg. AC-1
Boulder, CO 80301
Attn: Mike Carruthers
(303) 381-6652
TOTAL CREDIT AMOUNT: $4,000,000
Date: May 17, 2000 Repayment Period: 36 months Treasury Note Maturity: n/a Final Payment Percentage: n/a Loan Margin: n/a Minimum Funding Amount: $50,000 Loan Fee: $20,000 Maximum Number of Loans: 6 Commitment Termination Date: May 17, 2001 |
The terms and information set forth on this cover page are a part of the attached Loan and Security Agreement, dated as of the date first written above (this "Agreement"), entered into by and between Silicon Valley Bank ("Bank") and the borrower ("Borrower") set forth above. The terms and conditions of this Agreement agreed to between Bank and Borrower are as follows:
THIS LOAN AND SECURITY AGREEMENT (this "Agreement") dated May 17, 2000, between SILICON VALLEY BANK ("Bank") and ARRAY BIOPHARMA INC. ("Borrower"), provides the terms on which Bank will lend to Borrower and Borrower will repay Bank. The parties agree as follows:
1. ACCOUNTING AND OTHER TERMS
Accounting terms not defined in this Agreement will be construed following GAAP. Calculations and determinations must be made following GAAP. The term "financial statements" includes the notes and schedules. The terms "including" and "includes" always mean "including (or includes) without limitation" in this or any Loan Document. Capitalized terms in this Agreement shall have the meanings set forth in Section 13. This Agreement shall be construed to impart upon Bank a duty to act reasonably at all times.
2. LOAN AND TERMS OF PAYMENT
2.1 CREDIT EXTENSIONS. Borrower will pay Bank the unpaid principal amount of all Credit Extensions and interest on the unpaid principal amount of the Credit Extensions.
2.1.1 EQUIPMENT FACILITY.
(a) Subject to the terms and conditions of this Agreement, Bank agrees to lend to Borrower, from time to time prior to the Commitment Termination Date, equipment advances (each an "Equipment Advance" and collectively the "Equipment Advances") in an aggregate amount not to exceed the Committed Equipment Line. When repaid, the Equipment Advances may not be re-borrowed. The proceeds of the Equipment Advances will be used solely to reimburse Borrower for the purchase of Eligible Equipment purchased within 120 days of the Equipment Advance. Each Equipment Advance shall be considered a promissory note evidencing the amounts due hereunder for all purposes. Bank's obligation to lend hereunder shall terminate on the earlier of (i) the occurrence and continuance of an Event of Default, or (ii) the Commitment Termination Date. For purposes of this Section, the minimum amount of each Equipment Advance is $50,000 and the maximum number of Equipment Advances that will be made is 6. The aggregate amount of the Equipment Advances lent by Bank to Borrower in any given calendar quarter shall not exceed $2,000,000.
(b) To obtain an Equipment Advance, Borrower will deliver to Bank a completed supplement in substantially the form attached as Exhibit D ("Loan Supplement"), copies of invoices for the Financed Equipment, together with a UCC Financing Statement covering the Equipment described on the Loan Supplement, and such additional information as Bank may request at least five (5) Business Days before the proposed funding date (the "Funding Date"). If Borrower satisfies the conditions of each Equipment Advance specified herein, Bank will disburse such Equipment Advance by internal transfer to Borrower's deposit account with Bank. Each Equipment Advance may not exceed 100% of the Original Stated Cost and the Soft Costs (as defined below) of Eligible Equipment, provided that in no event may more than thirty percent (30%) of any Equipment Advance be for leasehold improvements and Soft Costs. As used herein, "Soft Costs" means software licenses, invoiced taxes, shipping, warranty charges, freight discounts and installation expenses incurred by Borrower as a direct result of the purchase of Eligible Equipment that comply with all of Borrower's representations and warranties to Bank and which are acceptable to Bank in all respects.
(c) Bank's obligation to lend the undisbursed portion of the Committed Equipment Line will terminate if, in Bank's sole discretion, there has been a material adverse change in the general affairs, management, results of operation, condition (financial or otherwise) or the prospects of Borrower, whether or not arising from transactions in the ordinary course of business, or there has been any material adverse deviation by Borrower from the most recent business plan of Borrower presented to and accepted by Bank prior to the execution of this Agreement.
2.2 INTEREST RATE, PAYMENTS.
2.2.1 EQUIPMENT LINE.
(a) Principal and Interest Payments On Payment Dates. Borrower will
repay the Equipment Advances on the terms provided in the Loan Supplement.
Borrower will make monthly payments for each Equipment Advance (collectively,
"Scheduled Payments"), on the first Business Day of each calendar month,
beginning with the month following the Funding Date with respect to such
Equipment Advance and continuing thereafter during the Repayment Period on the
first Business Day of each calendar month (each a "Payment Date"), in thirty-six
(36) equal monthly payments of principal, plus all accrued interest. All unpaid
principal and accrued interest is due and payable in full on the last Payment
Date with respect to such Equipment Advance. Payments received after 12:00 noon
Pacific time are considered received at the opening of business on the next
Business Day. An Equipment Advance may only be prepaid in accordance with
Sections 2.2.1(c) and (d).
(b) Interest Rate. Borrower will pay interest on the outstanding principal balance on the Payment Dates (as described above) at the per annum rate of interest equal to the Prime Rate plus one and one quarter percent (1.25%), provided that from and after such times as Borrower achieves EBITDA of at least One Dollar ($1.00) for two consecutive quarters, Borrower will pay interest on the outstanding principal balance on the Payment Dates at the per annum rate of interest equal to the Prime Rate plus one half percent (0.50%). After an Event of Default, Obligations accrue interest at five (5) percent above the rate effective immediately before the Event of Default. The interest rate increases or decreases when the Prime Rate changes. Interest is computed on a 360 day year for the actual number of days elapsed. If any change in the law increases Bank's expenses or decreases its return from the Equipment Advances, Borrower will pay Bank upon request the amount of such increase or decrease.
(c) Prepayment Upon an Event of Loss. If any Financed Equipment is subject to an Event of Loss and Borrower is required to or elects to prepay the Equipment Advance with respect to such Financed Equipment pursuant to Section 6.8, then such Equipment Advance shall be prepaid to the extent and in the manner provided in such section.
(d) Permitted Prepayment of Loans. Borrower shall have the option to prepay all, but not less than all, of the Equipment Advances advanced by Bank under this Agreement, provided Borrower (i) provides written notice to Bank of its election to prepay the Equipment Advances at least thirty (30) days prior to such prepayment, and (ii) pays, on the date of the prepayment, in addition to all other amounts due under this Agreement, a premium equal to the Make-Whole Premium.
(e) Mandatory Prepayment Upon an Acceleration. If the Equipment Advances are accelerated following the occurrence of an Event of Default, Borrower will immediately pay to Bank all outstanding Obligations as well as a premium equal to the Make-Whole Premium.
2.2.2 REQUEST TO DEBIT ACCOUNTS.
Bank may debit any of Borrower's deposit accounts including Account Number 3300128506 for principal and interest payments or any amounts Borrower owes Bank when due. Bank will notify Borrower when it debits Borrower's accounts. These debits are not a set-off.
2.3 FEES. Borrower will pay to Bank:
(a) Facility Fee. A fully earned, non-refundable facility fee of $20,000 due on the Closing Date; and
(b) Bank Expenses. All Bank Expenses (including reasonable attorneys' fees and expenses not exceeding $3,500 for documentation and negotiation of this Agreement, provided that any such fees and expenses in excess of $3,500 will be shared equally between Bank and Borrower) incurred through and after the Closing Date when due.
3. CONDITIONS OF LOANS
3.1 CONDITIONS PRECEDENT TO INITIAL CREDIT EXTENSION. Bank's obligation to make the initial Credit Extension is subject to the condition precedent that it receive the agreements, documents and fees it requires including without limitation this Agreement, a UCC-1 financing statement, and a warrant to purchase stock.
3.2 CONDITIONS PRECEDENT TO ALL CREDIT EXTENSIONS. Bank's obligations to make each Credit Extension, including the initial Credit Extension, is subject to the following:
(a) timely receipt of any Payment/Advance Form; and
(b) the representations and warranties in Section 5 must be materially true on the date of the Payment/Advance Form and on the effective date of each Credit Extension and no Event of Default may have occurred and be continuing, or result from the Credit Extension. Each Credit Extension is Borrower's representation and warranty on that date that the representations and warranties in Section 5 remain true.
4. CREATION OF SECURITY INTEREST
4.1 GRANT OF SECURITY INTEREST. Borrower grants Bank a continuing security interest in all presently existing and later acquired Collateral to secure all Obligations and performance of each of Borrower's duties under the Loan Documents. Except for Permitted Liens, any security interest will be a first priority security interest in the Collateral. After the occurrence of an Event of Default, Bank may place a "hold" on any deposit account pledged as Collateral. If the Agreement is terminated, Bank's lien and security interest in the Collateral will continue until Borrower fully satisfies its Obligations.
5. REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants as follows:
5.1 DUE ORGANIZATION AND AUTHORIZATION. Borrower and each Subsidiary, if any, is duly existing and in good standing in its state of formation and qualified and licensed to do business in, and in good standing in, any state in which the conduct of its business or its ownership of property requires that it be qualified.
The execution, delivery and performance of the Loan Documents have been duly authorized, and do not conflict with Borrower's formation documents, nor constitute an event of default under any material agreement by which Borrower is bound. Borrower is not in default under any agreement to which or by which it is bound in which the default could cause a Material Adverse Change.
5.2 COLLATERAL. Borrower has good title to the Collateral, free of Liens except Permitted Liens. The Accounts are bona fide, existing obligations, and the service or property has been performed or delivered to the account debtor or its agent for immediate shipment to and unconditional acceptance by the account debtor. All Inventory is in all material respects of good and marketable quality, free from material defects.
5.3 LITIGATION. Except as shown in the Schedule, there are no actions or proceedings pending or, to Borrower's knowledge, threatened by or against Borrower or any Subsidiary, if any, in which an adverse decision could cause a Material Adverse Change.
5.4 NO MATERIAL ADVERSE CHANGE IN FINANCIAL STATEMENTS. All consolidated financial statements for Borrower and any Subsidiary, if any, delivered to Bank fairly present in all material respects Borrower's consolidated financial condition and Borrower's consolidated results of operations. There has not been any material deterioration in Borrower's consolidated financial condition since the date of the most recent financial statements submitted to Bank.
5.5 SOLVENCY. The fair salable value of Borrower's assets (including goodwill minus disposition costs) exceeds the fair value of its liabilities; the Borrower is not left with unreasonably small capital after the transactions in this Agreement; and Borrower is able to pay its debts (including trade debts) as they mature.
5.6 REGULATORY COMPLIANCE. Borrower is not an "investment company" or a company "controlled" by an "investment company" under the Investment Company Act. Borrower is not engaged as one of its important activities in extending credit for margin stock (under Regulations T and U of the Federal Reserve Board of Governors). Borrower has complied with the Federal Fair Labor Standards Act. Borrower has not violated any
laws, ordinances or rules, the violation of which could cause a Material Adverse Change. None of Borrower's or any Subsidiary's, if any, properties or assets has been used by Borrower or any Subsidiary, if any, or, to the best of Borrower's knowledge, by previous Persons, in disposing, producing, storing, treating, or transporting any hazardous substance other than legally. Borrower and each Subsidiary, if any, has timely filed all required tax returns and paid, or made adequate provision to pay, all material taxes. Borrower and each Subsidiary, if any, has obtained all consents, approvals and authorizations of, made all declarations or filings with, and given all notices to, all government authorities that are necessary to continue its business as currently conducted.
5.7 SUBSIDIARIES. Borrower does not own any stock, partnership interest or other equity securities except for Permitted Investments.
5.8 FULL DISCLOSURE. No representation, warranty or other statement of Borrower in any certificate or written statement given to Bank contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements contained in the certificates or statements not misleading.
6. AFFIRMATIVE COVENANTS
Borrower will do all of the following:
6.1 GOVERNMENT COMPLIANCE. Borrower will maintain its and all Subsidiaries' corporate existence and good standing in its jurisdiction of incorporation and maintain qualification in each jurisdiction in which the failure to so qualify could have a material adverse effect on Borrower's business or operations. Borrower will comply, and have each Subsidiary, if any, comply, with all laws, ordinances and regulations to which it is subject, noncompliance with which could have a material adverse effect on Borrower's business or operations or cause a Material Adverse Change.
6.2 FINANCIAL STATEMENTS, REPORTS, CERTIFICATES.
(a) Borrower will deliver to Bank: (i) as soon as available, but no later than 30 days after the last day of each month, a company prepared consolidated balance sheet and income statement covering Borrower's consolidated operations during the period, in a form acceptable to Bank and certified by a Responsible Officer; (ii) as soon as available, but no later than 90 days after the end of Borrower's fiscal year, audited consolidated financial statements prepared under GAAP, consistently applied, together with an unqualified opinion on the financial statements from an independent certified public accounting firm acceptable to Bank; (iii) within 5 days of filing, copies of all statements, reports and notices made available to Borrower's security holders or to any holders of Subordinated Debt and all reports on Form 10-K, 10-Q and 8-K filed with the Securities and Exchange Commission; (iv) a prompt report of any legal actions pending or threatened against Borrower or any Subsidiary, if any, that could result in damages or costs to Borrower or any Subsidiary, if any, of $100,000 or more; and (v) budgets, sales projections, operating plans or other financial information Bank requests.
(b) Within 30 days after the last day of each month, Borrower will deliver to Bank with the monthly financial statements a Compliance Certificate signed by a Responsible Officer in the form of Exhibit C.
6.3 INVENTORY; RETURNS. Borrower will keep all Inventory in good and marketable condition, free from material defects. Returns and allowances between Borrower and its account debtors will follow Borrower's customary practices as they exist at the Closing Date. Borrower must promptly notify Bank of all returns, recoveries, disputes and claims that involve more than $50,000.
6.4 TAXES. Borrower will make, and cause each Subsidiary, if any, to make, timely payment of all material federal, state, and local taxes or assessments and will deliver to Bank, on demand, appropriate certificates attesting to the payment.
6.5 INSURANCE. Borrower will keep its business and the Collateral insured for risks and in amounts, as Bank requests. Insurance policies will be in a form, with companies, and in amounts that are reasonably satisfactory to Bank. All property policies will have a lender's loss payable endorsement showing Bank as an additional loss payee
and all liability policies will show the Bank as an additional insured and all
policies will provide that the insurer must give Bank at least 20 days notice
before canceling its policy. At Bank's request, Borrower will deliver certified
copies of policies and evidence of all premium payments. Subject to Section 6.8
(a) below, so long as no Event of Default has occurred and is continuing,
Borrower shall have the option of applying the proceeds of any casualty policy
to the replacement or repair of destroyed or damaged property; provided that,
after the occurrence and during the continuance of an Event of Default, all
proceeds payable under any such casualty policy shall, at the option of Bank, be
payable to Bank on account of the Obligations.
6.6 PRIMARY ACCOUNTS. Borrower will maintain its primary depository and operating accounts with Bank.
6.7 FINANCIAL COVENANTS.
Borrower will maintain as of the last day of each month, unless otherwise noted:
(a) QUICK RATIO ADJUSTED. A ratio of Quick Assets to Current Liabilities minus Deferred Revenue of at least 1.50 to 1.0. As used herein, "Deferred Revenue" means customer deposits received in advance of performance under customer contracts and not yet recognized as revenue.
(b) REVENUE. As of the last day of each calendar quarter, Borrower will show revenue, measured on a backward rolling four quarter basis (but looking back no further than the quarter ending June 30, 2000) of at least eighty-five percent (85%) of the revenue projected by Borrower for such quarters in its plan, as disclosed to the Bank prior to the Closing Date and attached hereto as Exhibit E (the "Plan"), provided that any revenue in a given quarter in excess of one hundred twenty percent (120%) of the amount projected in the Plan for such quarter will be disregarded in calculating this covenant.
Borrower shall deliver to Bank, as of June 30 of each calendar year, revenue projections for the following fiscal year which projections have been approved by Borrower's Board of Directors.
(c) LIQUIDITY COVERAGE; DEBT SERVICE COVERAGE. A ratio of (i) unrestricted cash (and equivalents) plus net billed accounts receivable satisfactory to Bank to (ii) the aggregate amount of the outstanding Equipment Advances which is at least (A) 1.25 to 1.0 before the Equity Event and (B) 1.75 to 1.0 after the Equity Event. Notwithstanding the foregoing, after Borrower has maintained a ratio of earnings after tax plus depreciation and amortization for the previous quarter on an annualized basis to current maturities of long term debt and capitalized leases annualized ("Debt Service Coverage") of at least 2.0 to 1.0, for two consecutive quarters, Borrower thereafter shall maintain such Debt Service Coverage of at least 2.00 to 1.00 as of the last day of each quarter in lieu of the liquidity covenant. As used herein, "Equity Event" means the receipt by Borrower after the Closing Date of cash proceeds from the sale or issuance of its equity securities in an amount of not less than $5,000,000.
6.8 LOSS, DESTRUCTION, OR DAMAGE. Borrower will bear the risk of the Financed Equipment being lost, stolen, destroyed, or damaged. If during the term of this Agreement any item of Financed Equipment is lost, stolen, destroyed, damaged beyond repair, rendered permanently unfit for use, or seized by a governmental authority for any reason for a period equal to at least the remainder of the term of this Agreement (an "Event of Loss"), then in each case, Borrower:
(a) prior to the occurrence of an Event of Default, at Borrower's option, will (i) pay to Bank on account of the Obligations all accrued interest to the date of the prepayment, plus all outstanding principal; or (ii) repair or replace any Financed Equipment subject to an Event of Loss provided the repaired or replaced Financed Equipment is of equal or like value to the Financed Equipment subject to an Event of Loss and provided further that Bank has a first priority perfected security interest in such repaired or replaced Financed Equipment.
(b) during the continuance of an Event of Default, on or before the Payment Date after such Event of Loss for each such item of Financed Equipment subject to such Event of Loss, Borrower will, at Bank's option, pay to Bank an amount equal to all outstanding principal and accrued interest (with respect to such Equipment Advance related to the Event of Loss).
(c) On the date of receipt by Bank of the amount specified above with respect to each such item of Financed Equipment subject to an Event of Loss, this Agreement shall terminate as to such Financed Equipment. If any proceeds of insurance or awards received from governmental authorities are in excess of the amount owed under this Section, Bank shall promptly remit to Borrower the amount in excess of the amount owed to Bank.
6.9 FURTHER ASSURANCES. Borrower will execute any further instruments and take further action as Bank requests to perfect or continue Bank's security interest in the Collateral or to effect the purposes of this Agreement.
7. NEGATIVE COVENANTS
Borrower will not do any of the following without the Bank's written consent, which will not be unreasonably withheld:
7.1 EXTRAORDINARY TRANSACTIONS AND DISPOSAL OF ASSETS. Enter into any transaction for the sale, lease, license or other disposition of, moving, relocation, or transfer, whether by sale or otherwise, of Borrower's assets outside of the ordinary course of Borrower's business.
7.2 RESTRUCTURE. Change Borrower's name; cause, permit, or suffer any material change in Borrower's ownership (provided that raising additional equity in a financing round or the sale of shares by any venture investor other than Boulder Ventures or an affiliate thereof shall not be prohibited by this clause); or suspend operation of Borrower's business.
7.3 CHIEF EXECUTIVE OFFICE; LOCATION OF COLLATERAL. During the continuance of this Agreement, change the chief executive office or principal place of business or remove or cause to be removed, except in the ordinary course of Borrower's business, the Collateral or the records concerning the Collateral from the premises listed on the first page of this Agreement or add any new offices or business locations without thirty (30) days prior written notice to Bank.
7.4 ENCUMBRANCE. Create, incur, or allow any Lien on any of the Collateral, or assign or convey any right to receive income, including the sale of any Accounts, or permit any of its Subsidiaries to do so, except for Permitted Liens, or permit any Collateral not to be subject to Bank's first priority security interest in the Collateral. Sell, transfer, assign, mortgage, pledge, lease, grant a security interest in, or encumber any of its intellectual property, except for licenses granted in the ordinary course of business.
7.5 COMPLIANCE. Undertake as one of its important activities extending credit to purchase or carry margin stock, or use the proceeds of any Advance for that purpose; fail to meet the minimum funding requirements of ERISA, permit a Reportable Event or Prohibited Transaction, as defined in ERISA, to occur; fail to comply with the Federal Fair Labor Standards Act or violate any other law or regulation, if the violation could have a material adverse effect on Borrower's business or operations or cause a Material Adverse Change, or permit any of its Subsidiaries to do so.
8. EVENTS OF DEFAULT
Any one of the following is an Event of Default:
8.1 PAYMENT DEFAULT. Borrower fails to pay any of the Obligations within 3 days after their due date. During the additional period the failure to cure the default is not an Event of Default (but no Credit Extensions will be made during the cure period);
8.2 COVENANT DEFAULT. Borrower does not perform any obligation in Section 6 or violates any covenant in Article 7 or does not perform or observe any other material term, condition or covenant in this Agreement, any Loan Documents, or in any agreement between Borrower and Bank and as to any default under a term, condition or covenant that can be cured, has not cured the default within 10 days after it occurs, or if the default cannot be cured within 10 days or cannot be cured after Borrower's attempts in the 10 day period, and the default may be cured within a reasonable time, then Borrower has an additional time, (of not more than 30 days) to attempt to cure the
default. During the additional period the failure to cure the default is not an Event of Default (but no Credit Extensions will be made during the cure period);
8.3 MATERIAL ADVERSE CHANGE. (i) A material impairment in the perfection or priority of the Bank's security interest in the Collateral or in the value of such Collateral which is not covered by adequate insurance occurs; (ii) a material adverse change in the business, operations, or condition (financial or otherwise) of the Borrower occurs; or (iii) a material impairment of the prospect of repayment of any portion of the Obligations occurs;
8.4 ATTACHMENT. (i) Any material portion of Borrower's assets is attached, seized, levied on, or comes into possession of a trustee or receiver and the attachment, seizure or levy is not removed in 10 days; (ii) Borrower is enjoined, restrained, or prevented by court order from conducting a material part of its business; (iii) a judgment or other claim becomes a Lien on a material portion of Borrower's assets; or (iv) a notice of lien, levy, or assessment is filed against any of Borrower's assets by any government agency and not paid within 10 days after Borrower receives notice. These are not Events of Default if stayed or if a bond is posted pending contest by Borrower (but no Credit Extensions will be made during the cure period);
8.5 INSOLVENCY. (i) Borrower becomes insolvent; (ii) Borrower begins an Insolvency Proceeding; or (iii) an Insolvency Proceeding is begun against Borrower and not dismissed or stayed within 30 days (but no Credit Extensions will be made before any Insolvency Proceeding is dismissed);
8.6 OTHER AGREEMENTS. If there is a default in any agreement to which Borrower is a party with a third party or parties resulting in a right by such third party or parties, whether or not exercised, to accelerate the maturity of any Indebtedness in an amount in excess of Fifty Thousand Dollars ($50,000) or that could have a Material Adverse Effect;
8.7 MISREPRESENTATIONS. If Borrower or any Person acting for Borrower makes any material misrepresentation or material misstatement now or later in any warranty or representation in this Agreement or in any communication delivered to Bank or to induce Bank to enter this Agreement or any Loan Document.
8.8 JUDGMENTS. If a judgment or judgments for the payment of money in an amount, individually or in the aggregate, of at least Fifty Thousand Dollars ($50,000) shall be rendered against Borrower and shall remain unsatisfied and unstayed for a period of ten (10) days (provided that no Credit Extensions will be made prior to the satisfaction or stay of such judgment).
9. BANK'S RIGHTS AND REMEDIES
9.1 RIGHTS AND REMEDIES. When an Event of Default occurs and continues Bank may, without notice or demand, do any or all of the following:
(a) Declare all Obligations immediately due and payable (but if an Event of Default described in Section 8.5 occurs all Obligations are immediately due and payable without any action by Bank);
(b) Stop advancing money or extending credit for Borrower's benefit under this Agreement or under any other agreement between Borrower and Bank;
(c) Settle or adjust disputes and claims directly with account debtors for amounts, on terms and in any order that Bank considers advisable;
(d) Make any payments and do any acts it considers necessary or reasonable to protect its security interest in the Collateral. Borrower will assemble the Collateral if Bank requests and make it available as Bank designates. Bank may enter premises where the Collateral is located, take and maintain possession of any part of the Collateral, and pay, purchase, contest, or compromise any Lien which appears to be prior or superior to its security interest and pay all expenses incurred. Borrower grants Bank a license to enter and occupy any of its premises, without charge, to exercise any of Bank's rights or remedies;
(e) Apply to the Obligations any (i) balances and deposits of Borrower it holds, or (ii) any amount held by Bank owing to or for the credit or the account of Borrower;
(f) Ship, reclaim, recover, store, finish, maintain, repair, prepare for sale, advertise for sale, and sell the Collateral; and
(g) Dispose of the Collateral according to the Code.
9.2 POWER OF ATTORNEY. When an Event of Default occurs and continues, Borrower
irrevocably appoints Bank as its lawful attorney to: (i) endorse Borrower's name
on any checks or other forms of payment or security; (ii) sign Borrower's name
on any invoice or bill of lading for any Account or drafts against account
debtors, (iii) make, settle, and adjust all claims under Borrower's insurance
policies; (iv) settle and adjust disputes and claims about the Accounts directly
with account debtors, for amounts and on terms Bank determines reasonable; and
(v) transfer the Collateral into the name of Bank or a third party as the Code
permits. Bank may exercise the power of attorney to sign Borrower's name on any
documents necessary to perfect or continue the perfection of any security
interest regardless of whether an Event of Default has occurred. Bank's
appointment as Borrower's attorney in fact, and all of Bank's rights and powers,
coupled with an interest, are irrevocable until all Obligations have been fully
repaid and performed and Bank's obligation to provide Credit Extensions
terminates.
9.3 ACCOUNTS COLLECTION. When an Event of Default occurs and continues, Bank may notify any Person owing Borrower money of Bank's security interest in the funds and verify the amount of the Account. Borrower must collect all payments in trust for Bank and, if requested by Bank, immediately deliver the payments to Bank in the form received from the account debtor, with proper endorsements for deposit.
9.4 BANK EXPENSES. If Borrower fails to pay any amount or furnish any required proof of payment to third persons Bank may make all or part of the payment or obtain insurance policies required in Section 6.5, and take any action under the policies Bank deems prudent. Any amounts paid by Bank are Bank Expenses and immediately due and payable, bearing interest at the then applicable rate and secured by the Collateral. No payments by Bank are deemed an agreement to make similar payments in the future or Bank's waiver of any Event of Default.
9.5 BANK'S LIABILITY FOR COLLATERAL. If Bank complies with reasonable banking practices, it is not liable or responsible for: (a) the safekeeping of the Collateral; (b) any loss or damage to the Collateral; (c) any diminution in the value of the Collateral; or (d) any act or default of any carrier, warehouseman, bailee, or other person. If Bank complies with reasonable banking practices, Borrower bears all risk of loss, damage or destruction of the Collateral.
9.6 REMEDIES CUMULATIVE. Bank's rights and remedies under this Agreement, the Loan Documents, and all other agreements are cumulative. Bank has all rights and remedies provided under the Code, by law, or in equity. Bank's exercise of one right or remedy is not an election, and Bank's waiver of any Event of Default is not a continuing waiver. Bank's delay is not a waiver, election, or acquiescence. No waiver is effective unless signed by Bank and then is only effective for the specific instance and purpose for which it was given.
9.7 DEMAND WAIVER. Borrower waives demand, notice of default or dishonor, notice of payment and nonpayment, notice of any default, nonpayment at maturity, release, compromise, settlement, extension, or renewal of accounts, documents, instruments, chattel paper, and guaranties held by Bank on which Borrower is liable.
10. NOTICES
All notices or demands by any party to this Agreement or any other related agreement must be in writing and be personally delivered or sent by an overnight delivery service, by certified mail, postage prepaid, return receipt requested, or by telefacsimile at the addresses listed at the beginning of this Agreement. A Party may change its notice address by giving the other Party written notice.
11. CHOICE OF LAW, VENUE AND JURY TRIAL WAIVER
California law governs the Loan Documents without regard to principles of conflicts of law. Borrower and Bank each submit to the exclusive jurisdiction of the State and Federal courts in Santa Clara County, California.
BORROWER AND BANK EACH WAIVE THEIR RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION ARISING OUT OF OR BASED UPON THIS AGREEMENT, THE LOAN DOCUMENTS OR ANY CONTEMPLATED TRANSACTION, INCLUDING CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER CLAIMS. THIS WAIVER IS A MATERIAL INDUCEMENT FOR BOTH PARTIES TO ENTER INTO THIS AGREEMENT. EACH PARTY HAS REVIEWED THIS WAIVER WITH ITS COUNSEL.
12. GENERAL PROVISIONS
12.1 SUCCESSORS AND ASSIGNS. This Agreement binds and is for the benefit of the successors and permitted assigns of each party. Borrower may not assign this Agreement or any rights or Obligations under it without Bank's prior written consent which may be granted or withheld in Bank's discretion. Bank has the right, without the consent of or notice to Borrower, to sell, transfer, negotiate, or grant participation in all or any part of, or any interest in, Bank's obligations, rights and benefits under this Agreement, the Loan Documents or any related agreement.
12.2 INDEMNIFICATION. Borrower will indemnify, defend and hold harmless Bank and its officers, employees and agents against: (a) all obligations, demands, claims, and liabilities asserted by any other party in connection with the transactions contemplated by the Loan Documents; and (b) all losses or Bank Expenses incurred, or paid by Bank from, following, or consequential to transactions between Bank and Borrower (including reasonable attorneys' fees and expenses), except for losses caused by Bank's gross negligence or willful misconduct.
12.3 TIME OF ESSENCE. Time is of the essence for the performance of all Obligations in this Agreement.
12.4 SEVERABILITY OF PROVISION. Each provision of this Agreement is severable from every other provision in determining the enforceability of any provision.
12.5 AMENDMENTS IN WRITING, INTEGRATION. All amendments to this Agreement must be in writing signed by both Bank and Borrower. This Agreement and the Loan Documents represent the entire agreement about this subject matter, and supersedes prior or contemporaneous negotiations or agreements. All prior or contemporaneous agreements, understandings, representations, warranties, and negotiations between the parties about the subject matter of this Agreement and the Loan Documents merge into this Agreement and the Loan Documents.
12.6 COUNTERPARTS. This Agreement may be executed in any number of counterparts and by different parties on separate counterparts, each of which, when executed and delivered, are an original, and all taken together, are one Agreement.
12.7 SURVIVAL. All covenants, representations and warranties made in this Agreement continue in full force while any Obligations remain outstanding. The obligations of Borrower in Section 12.2 to indemnify Bank will survive until all statutes of limitations for actions that may be brought against Bank have run.
12.8 CONFIDENTIALITY. In handling any confidential information, Bank will
exercise the same degree of care that it exercises for its own proprietary
information, but disclosure of information may be made: (i) to Bank's
subsidiaries or affiliates in connection with their present or prospective
business relations with Borrower; (ii) to prospective transferees or purchasers
of any interest in the Loans; (iii) as required by law, regulation, subpoena, or
other order, (iv) as required in connection with Bank's examination or audit;
and (v) as Bank considers appropriate in exercising remedies under this
Agreement. Confidential information does not include information that either:
(a) is in the public domain or in Bank's possession when disclosed to Bank, or
becomes part of the public domain after disclosure to Bank; or (b) is disclosed
to Bank by a third party, if Bank does not know that the third party is
prohibited from disclosing the information.
12.9 ATTORNEYS' FEES, COSTS AND EXPENSES. In any action or proceeding between Borrower and Bank arising out of the Loan Documents, the prevailing party will be entitled to recover its reasonable attorneys' fees and other costs and expenses incurred, in addition to any other relief to which it may be entitled, whether or not a lawsuit is filed.
13. DEFINITIONS
13.1 DEFINITIONS.
"ACCOUNTS" are all existing and later arising accounts, contract rights, and other obligations owed Borrower in connection with its sale or lease of goods (including licensing software and other technology) or provision of services, all credit insurance, guaranties, other security and all merchandise returned or reclaimed by Borrower and Borrower's Books relating to any of the foregoing.
"AFFILIATE" of a Person is a Person that owns or controls directly or indirectly the Person, any Person that controls or is controlled by or is under common control with the Person, and each of that Person's senior executive officers, directors, partners and, for any Person that is a limited liability company, that Person's managers and members.
"BANK EXPENSES" are all audit fees and expenses and reasonable costs or expenses (including reasonable attorneys' fees and expenses) for preparing, negotiating, administering, defending and enforcing the Loan Documents (including appeals or Insolvency Proceedings).
"BORROWER'S BOOKS" are all Borrower's books and records including ledgers, records regarding Borrower's assets or liabilities, the Collateral, business operations or financial condition and all computer programs or discs or any equipment containing the information.
"BUSINESS DAY" is any day that is not a Saturday, Sunday or a day on which the Bank is closed.
"CLOSING DATE" is the date of this Agreement.
"CODE" is the California Uniform Commercial Code.
"COLLATERAL" is the property described on Exhibit A.
"COMMITTED EQUIPMENT LINE" is a Credit Extension of up to $4,000,000.
"COMMITMENT TERMINATION DATE" is May 17, 2001.
"CONTINGENT OBLIGATION" is, for any Person, any direct or indirect liability, contingent or not, of that Person for (i) any indebtedness, lease, dividend, letter of credit or other obligation of another such as an obligation directly or indirectly guaranteed, endorsed, co-made, discounted or sold with recourse by that Person, or for which that Person is directly or indirectly liable; (ii) any obligations for undrawn letters of credit for the account of that Person; and (iii) all obligations from any interest rate, currency or commodity swap agreement, interest rate cap or collar agreement, or other agreement or arrangement designated to protect a Person against fluctuation in interest rates, currency exchange rates or commodity prices; but "Contingent Obligation" does not include endorsements in the ordinary course of business. The amount of a Contingent Obligation is the stated or determined amount of the primary obligation for which the Contingent Obligation is made or, if not determinable, the maximum reasonably anticipated liability for it determined by the Person in good faith; but the amount may not exceed the maximum of the obligations under the guarantee or other support arrangement.
"CREDIT EXTENSION" is each Equipment Advance or any other extension of credit by Bank for Borrower's benefit.
"CURRENT LIABILITIES" means the aggregate amount of Borrower's Total Liabilities which mature within one (1) year.
"EBITDA" means, for any period of determination, the net income (or net loss, expressed as a negative number) of Borrower for such period, plus each of the following items, without duplication: (i) all federal and state income taxes (but not ad valorem property taxes, sales taxes or taxes in the nature of an excise tax) paid by Borrower with respect to such period, and (ii) all depreciation, amortization, or interest on any Indebtedness paid or accrued during such period and actually deducted on the books of the Borrower for the purposes of computation of such net income (or net loss) for the period involved.
"ELIGIBLE EQUIPMENT" is general purpose computer equipment, office equipment, test and laboratory equipment, leasehold improvements, and furnishings, all of which must comply with all of Borrower's representations and warranties to Bank and be acceptable to Bank in all respects. All Equipment financed with the proceeds of Equipment Advances shall be new, provided that Bank, in its sole discretion, may finance used equipment upon request by Borrower.
"EQUIPMENT" is all present and future machinery, equipment, tenant improvements, furniture, fixtures, vehicles, tools, parts and attachments in which Borrower has any interest.
"EQUIPMENT ADVANCE" is defined in Section 2.1.1.
"ERISA" is the Employment Retirement Income Security Act of 1974, and its regulations.
"FINANCED EQUIPMENT" is defined in the Loan Supplement.
"FUNDING DATE" is any date on which an Equipment Advance is made to or on account of Borrower.
"GAAP" is generally accepted accounting principles.
"INDEBTEDNESS" is (a) indebtedness for borrowed money or the deferred price of property or services, such as reimbursement and other obligations for surety bonds and letters of credit, (b) obligations evidenced by notes, bonds, debentures or similar instruments, (c) capital lease obligations and (d) Contingent Obligations.
"INSOLVENCY PROCEEDING" is any proceeding by or against any Person under the United States Bankruptcy Code, or any other bankruptcy or insolvency law, including assignments for the benefit of creditors, compositions, extensions generally with its creditors, or proceedings seeking reorganization, arrangement, or other relief.
"INVENTORY" is present and future inventory in which Borrower has any interest, including merchandise, raw materials, parts, supplies, packing and shipping materials, work in process and finished products intended for sale or lease or to be furnished under a contract of service, of every kind and description now or later owned by or in the custody or possession, actual or constructive, of Borrower, including inventory temporarily out of its custody or possession or in transit and including returns on any accounts or other proceeds (including insurance proceeds) from the sale or disposition of any of the foregoing and any documents of title.
"INVESTMENT" is any beneficial ownership of (including stock, partnership interest or other securities) any Person, or any loan, advance or capital contribution to any Person.
"LIEN" is a mortgage, lien, deed of trust, charge, pledge, security interest or other encumbrance.
"LOAN AMOUNT" is the aggregate amount of the Equipment Advance.
"LOAN DOCUMENTS" are, collectively, this Agreement, any note, or notes or guaranties executed by Borrower or Guarantor, and any other present or future agreement between Borrower and/or for the benefit of Bank in connection with this Agreement, all as amended, extended or restated.
"LOAN SUPPLEMENT" is attached as Exhibit D.
"MAKE-WHOLE PREMIUM" is an amount equal to (i) 2% of the outstanding Equipment Advances if the prepayment is made on or before the first anniversary of the date hereof, or (ii) 1% of the outstanding Equipment Advances if the prepayment is made after the first anniversary of the date hereof but on or before the second anniversary of the date hereof, or (iii) zero (0) if the prepayment is made after the second anniversary of the date hereof.
"MATERIAL ADVERSE CHANGE" is defined in Section 8.3.
"MATURITY DATE" is, with respect to each Equipment Advance, the last day of the Repayment Period for such Equipment Advance, or if earlier, the date of acceleration of such Equipment Advance by Bank following an Event of Default.
"OBLIGATIONS" are debts, principal, interest, Bank Expenses and other amounts Borrower owes Bank now or later, including letters of credit and foreign exchange contracts, if any, and including interest accruing after Insolvency Proceedings begin and debts, liabilities, or obligations of Borrower assigned to Bank.
"ORIGINAL STATED COST" is (i), the original cost to the Borrower of the item of new Equipment net of any and all freight, installation, tax or (ii) the fair market value assigned to such item of used Equipment by mutual agreement of Borrower and Bank at the time of making of the Equipment Advance.
"PERMITTED INDEBTEDNESS" is:
(a) Borrower's indebtedness to Bank under this Agreement or the Loan Documents;
(b) Indebtedness existing on the Closing Date and shown on the Schedule;
(c) Subordinated Debt;
(d) Indebtedness to trade creditors incurred in the ordinary course of business; and
(e) Indebtedness secured by Permitted Liens.
"PERMITTED INVESTMENTS" are:
(a) Investments shown on the Schedule and existing on the Closing Date; and
(b) (i) marketable direct obligations issued or unconditionally guaranteed by the United States or its agency or any State maturing within 1 year from its acquisition, (ii) commercial paper maturing no more than 1 year after its creation and having the highest rating from either Standard & Poor's Corporation or Moody's Investors Service, Inc., and (iii) Bank's certificates of deposit issued maturing no more than 1 year after issue.
"PERMITTED LIENS" are:
(a) Liens existing on the Closing Date and shown on the Schedule or arising under this Agreement or other Loan Documents;
(b) Liens for taxes, fees, assessments or other government charges or levies, either not delinquent or being contested in good faith and for which Borrower maintains adequate reserves on its Books, if they have no priority over any of Bank's security interests;
(c) Purchase money Liens (i) on Equipment acquired or held by Borrower
or its Subsidiaries incurred for financing the acquisition of the Equipment, or
(ii) existing on equipment when acquired, if the Lien is confined to the
property and improvements and the proceeds of the equipment;
(d) Leases or subleases and licenses or sublicenses granted in the ordinary course of Borrower's business, if the leases, subleases, licenses and sublicenses permit granting Bank a security interest; and
(e) Liens incurred in the extension, renewal or refinancing of the indebtedness secured by Liens described in (a) through (c), but any extension, renewal or replacement Lien must be limited to the property encumbered by the existing Lien and the principal amount of the indebtedness may not increase.
"PERSON" is any individual, sole proprietorship, partnership, limited liability company, joint venture, company, trust, unincorporated organization, association, corporation, institution, public benefit corporation, firm, joint stock company, estate, entity or government agency.
"PRIME RATE" is Bank's most recently announced "prime rate," even if it is not Bank's lowest rate.
"QUICK ASSETS" is, on any date, the Borrower's consolidated, unrestricted cash, cash equivalents, net billed accounts receivable and investments with maturities of less than 12 months determined according to GAAP.
"REPAYMENT PERIOD" as to the Equipment Advances, is 36 months.
"RESPONSIBLE OFFICER" is each of the Chief Executive Officer, the President, the Chief Financial Officer and the Controller of Borrower.
"SCHEDULE" is any attached schedule of exceptions.
"SUBORDINATED DEBT" is debt incurred by Borrower subordinated to Borrower's debt to Bank (and identified as subordinated by Borrower and Bank).
"SUBSIDIARY" is for any Person, joint venture, or any other business entity of which more than 50% of the voting stock or other equity interests is owned or controlled, directly or indirectly, by the Person or one or more Affiliates of the Person.
"TOTAL LIABILITIES" is on any day, obligations that should, under GAAP, be classified as liabilities on Borrower's consolidated balance sheet, including all Indebtedness, and current portion Subordinated Debt allowed to be paid, but excluding all other Subordinated Debt.
BORROWER:
ARRAY BIOPHARMA INC.
By: /s/ R. M. CARRUTHERS
---------------------
Title: CFO
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SILICON VALLEY BANK
By: /s/
---------------------
Title: VP
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EXHIBIT A
The Collateral consists of all of Borrower's right, title and interest in and to the following:
All goods and equipment now owned or hereafter acquired, including, without limitation, all machinery, fixtures, vehicles (including motor vehicles and trailers), and any interest in any of the foregoing, and all attachments, accessories, accessions, replacements, substitutions, additions, and improvements to any of the foregoing, wherever located.
All inventory, now owned or hereafter acquired, including, without limitation, all merchandise, raw materials, parts, supplies, packing and shipping materials, work in process and finished products including such inventory as is temporarily out of Borrower's custody or possession or in transit and including any returns upon any accounts or other proceeds, including insurance proceeds, resulting from the sale or disposition of any of the foregoing and any documents of title representing any of the above;
All contract rights and general intangibles now owned or hereafter acquired, including, without limitation, goodwill, leases, license agreements, franchise agreements, blueprints, drawings, purchase orders, customer lists, route lists, infringements, claims, computer programs, computer discs, computer tapes, literature, reports, catalogs, design rights, income tax refunds, payments of insurance and rights to payment of any kind;
All now existing and hereafter arising accounts, contract rights, royalties, license rights and all other forms of obligations owing to Borrower arising out of the sale or lease of goods, the licensing of technology or the rendering of services by Borrower, whether or not earned by performance, and any and all credit insurance, guaranties, and other security therefor, as well as all merchandise returned to or reclaimed by Borrower;
All documents, cash, deposit accounts, securities, securities entitlements, securities accounts, investment property, financial assets, letters of credit, certificates of deposit, instruments and chattel paper now owned or hereafter acquired and Borrower's Books relating to the foregoing; and
All Borrower's Books relating to the foregoing and any and all claims, rights and interests in any of the above and all substitutions for, additions and accessions to and proceeds thereof.
Notwithstanding the foregoing, the Collateral shall not be deemed to include any copyrights, copyright applications, copyright registration and like protection in each work of authorship and derivative work thereof, whether published or unpublished, now owned or hereafter acquired; any patents, patent applications and like protections including without limitation improvements, divisions, continuations, renewals, reissues, extensions and continuations-in-part of the same, trademarks, servicemarks and applications therefor, whether registered or not, and the goodwill of the business of Borrower connected with and symbolized by such trademarks, any trade secret rights, including any rights to unpatented inventions, know-how, operating manuals, license rights and agreements and confidential information, now owned or hereafter acquired; or any claims for damage by way of any past, present and future infringement of any of the foregoing (collectively, the "Intellectual Property"), except that the Collateral shall include the proceeds of all the Intellectual Property that are accounts, (i.e. accounts receivable) of Borrower, or general intangibles consisting of rights to payment, if a judicial authority (including a U.S. Bankruptcy Court) holds that a security interest in the underlying Intellectual Property is necessary to have a security interest in such accounts and general intangibles of Borrower that are proceeds of the Intellectual Property, then the Collateral shall automatically, and effective as of the Closing Date, include the Intellectual Property to the extent necessary to permit perfection of Bank's security interest in such accounts and general intangibles of Borrower that are proceeds of the Intellectual Property.
EXHIBIT B
LOAN PAYMENT/ADVANCE TELEPHONE REQUEST FORM
DEADLINE FOR SAME DAY PROCESSING IS 3:00 P.M., P.S.T.
TO: CENTRAL CLIENT DIVISION DATE:
--------
FAX #: (408) 496-2426 TIME:
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--------------------------------------------------------------------------------
FROM: Array BioPharma Inc.
--------------------------------------------------------------------------
CLIENT NAME (BORROWER)
REQUESTED BY:
------------------------------------------------------------------
AUTHORIZED SIGNER'S NAME
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PHONE NUMBER:
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FROM ACCOUNT # TO ACCOUNT #
------------------------- -------------------------
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REQUESTED TRANSACTION TYPE REQUEST DOLLAR AMOUNT
-------------------------- ---------------------
$
---------------------------------------------
PRINCIPAL INCREASE (ADVANCE) $
---------------------------------------------
PRINCIPAL PAYMENT (ONLY) $
---------------------------------------------
INTEREST PAYMENT (ONLY) $
---------------------------------------------
PRINCIPAL AND INTEREST (PAYMENT) $
---------------------------------------------
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All representations and warranties of Borrower stated in the Loan and Security Agreement are true, correct and complete in all material respects as of the date of the telephone request for an Advance confirmed by this Borrowing Certificate; provided, however, that those representations and warranties expressly referring to another date shall be true, correct and complete in all material respects as of such date.
BANK USE ONLY
The following person is authorized to request the loan payment transfer/loan advance on the advance designated account and is known to me.
------------------------------------------------- -----------------------------
Authorized Requester Phone #
------------------------------------------------- -----------------------------
Received By (Bank) Phone #
------------------------------------
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Authorized Signature (Bank)
EXHIBIT C
COMPLIANCE CERTIFICATE
TO: SILICON VALLEY BANK
FROM: ARRAY BIOPHARMA INC.
The undersigned authorized officer of Array BioPharma Inc. certifies
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that under the terms and conditions of the Loan and Security Agreement between Borrower and Bank (the "Agreement"), (i) Borrower is in complete compliance for the period ending _______________ with all required covenants except as noted below and (ii) all representations and warranties in the Agreement are true and correct in all material respects on this date. Attached are the required documents supporting the certification. The Officer certifies that these are prepared in accordance with Generally Accepted Accounting Principles (GAAP) consistently applied from one period to the next except as explained in an accompanying letter or footnotes. The Officer acknowledges that no borrowings may be requested at any time or date of determination that Borrower is not in compliance with any of the terms of the Agreement, and that compliance is determined not just at the date this certificate is delivered.
PLEASE INDICATE COMPLIANCE STATUS BY CIRCLING YES/NO UNDER "COMPLIES" COLUMN.
REPORTING COVENANT REQUIRED COMPLIES Monthly financial statements Monthly within 30 days Yes No Annual (CPA Audited) FYE within 90 days Yes No 10-Q, 10K and 8-K Within 5 days after filing with SEC Yes No |
FINANCIAL COVENANT REQUIRED ACTUAL COMPLIES
Maintain on a Monthly Basis:
Minimum Adjusted Quick Ratio 1.5:1.0 _____:1.0 Yes No
Minimum Debt Service* 2.0:1.0 _____:1.0 Yes No
Liquidity **
Quarterly Revenue 85% of Plan*** $________ Yes No
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*Debt Service Coverage replaces Liquidity after 2 consecutive quarters of DSC>.00:1.00
**1.25 before $5MM new equity. 1.75 thereafter.
***As of the last day of each quarter, Borrower will show revenue, measured on a backward rolling four quarter basis (but looking back no further than the quarter ending June 30, 2000) of at least eighty-five percent (85%) of the revenue projected by Borrower for such quarters in its plan, as disclosed to the Bank prior to the Closing Date and attached hereto as Exhibit E (the "Plan"), provided that any revenue in a given quarter in excess of one hundred twenty percent (120%) of the amount projected in the Plan for such quarter will be disregarded in calculating this covenant.
COMMENTS REGARDING EXCEPTIONS: See Attached.
Sincerely,
Compliance Status Yes No
EXHIBIT D
FORM OF LOAN AGREEMENT SUPPLEMENT
LOAN AGREEMENT SUPPLEMENT No. [__]
LOAN AGREEMENT SUPPLEMENT No. [ ], dated ______________, 200___
("Supplement"), to the Loan and Security Agreement dated as of May 17, 2000 (the
"Loan Agreement) by and between the undersigned ("Borrower"), and Silicon Valley
Bank ("Bank").
Capitalized terms used herein but not otherwise defined herein are used with the respective meanings given to such terms in the Loan Agreement.
To secure the prompt payment by Borrower of all amounts from time to time outstanding under the Loan Agreement, and the performance by Borrower of all the terms contained in the Loan Agreement, Borrower grants Bank, a first priority security interest in each item of equipment and other property described in Annex A hereto, which equipment and other property shall be deemed to be additional Financed Equipment and Collateral. The Loan Agreement is hereby incorporated by reference herein and is hereby ratified, approved and confirmed.
Annex A (Equipment Schedule) and Annex B (Loan Terms Schedule) are attached hereto.
The proceeds of the Loan should be transferred to Borrower's account with Bank set forth below:
Borrower hereby certifies that (a) the foregoing information is true
and correct and authorizes Bank to endorse in its respective books and records;
(b) the representations and warranties made by Borrower in the Loan Agreement
are true and correct on the date hereof and will be true and correct on such
Funding Date. No Event of Default has occurred and is continuing under the Loan
Agreement. This Supplement may be executed by Borrower and Bank in separate
counterparts, each of which when so executed and delivered shall be an original,
but all such counterparts shall together constitute but one and the same
instrument.
This Supplement is delivered as of this day and year first above written.
SILICON VALLEY BANK ARRAY BIOPHARMA INC.
By: By:
-------------------------------- ---------------------------------
Name: Name:
------------------------------ -------------------------------
Title: Title:
----------------------------- ------------------------------
Annex A - Description of Financed Equipment
Annex B - Loan Terms Schedule
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Annex A to Exhibit D
The Financed Equipment being financed with the Equipment Advance which this Loan Agreement Supplement is being executed is listed below. Upon the funding of such Equipment Advance, this schedule automatically shall be deemed to be a part of the Collateral.
Description of Equipment Make Model Serial # Invoice # |
Annex B to Exhibit D
Scheduled Principal Payment Dates and Amounts*:
One (1) payment of $ due
------- --------------
payment of $ due monthly in advance from through .
----- ------ ----- -----
One (1) payment of $ due
------- --------------
Maturity Date:
------------
Payment No. Payment Date
1
2
3
4
. . .
35
[36]
. . .
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*/ The amount of each Scheduled Principal Payment will change as the Loan Amount changes.
Please note that this Loan has a floating interest rate.
EXHIBIT E
BORROWER'S PLAN
EXHIBIT 10.26
THIS WARRANT AND THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED, OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR PURSUANT TO RULE 144 OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE CORPORATION AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED.
WARRANT TO PURCHASE STOCK
Corporation: Array BioPharma Inc.
Number of Shares: 50,000
Class of Stock: Series B Preferred
Initial Exercise Price: $5.00
Issue Date: May 17, 2000
Expiration Date: May 17, 2007
THIS WARRANT CERTIFIES THAT, for the agreed upon value of $1.00 and for other good and valuable consideration, SILICON VALLEY BANK ("Holder") is entitled to purchase the number of fully paid and nonassessable shares of the class of securities (the "Shares") of the corporation (the "Company") at the initial exercise price per Share (the "Warrant Price") all as set forth above and as adjusted pursuant to Article 2 of this Warrant, subject to the provisions and upon the terms and conditions set forth in this Warrant.
ARTICLE 1: EXERCISE.
1.1 Method of Exercise. Holder may exercise this Warrant by delivering a duly executed Notice of Exercise in substantially the form attached as Appendix 1 to the principal office of the Company. Unless Holder is exercising the conversion right set forth in Section 1.2, Holder shall also deliver to the Company a check for the aggregate Warrant Price for the Shares being purchased.
1.2 Conversion Right. In lieu of exercising this Warrant as specified in Section 1.1, Holder may from time to time convert this Warrant, in whole or in part, into a number of Shares determined by dividing (a) the aggregate fair market value of the Shares or other securities otherwise issuable upon exercise of this Warrant minus the aggregate Warrant Price of such Shares by (b) the fair market value of one Share. The fair market value of the Shares shall be determined pursuant to Section 1.3.
1.3 Fair Market Value. If the Shares are traded in a public market, the fair market value of the Shares shall be the closing price of the Shares (or the closing price of the Company's stock into which the Shares are convertible) reported for the business day immediately before Holder delivers its Notice of Exercise to the Company. If the Shares are not traded in a public market, the Board of Directors of the Company shall determine fair market value in its reasonable good faith judgment. The foregoing notwithstanding, if Holder advises the Board of Directors in writing that Holder disagrees with such determination, then the Company and Holder shall promptly agree upon a reputable investment banking firm to undertake such valuation. If the valuation of such investment banking firm is greater than that determined by the Board of Directors, then all fees and expenses of such investment banking firm shall be paid by the Company. In all other circumstances, such fees and expenses shall be paid by Holder.
1.4 Delivery of Certificate and New Warrant. Promptly after Holder exercises or converts this Warrant, the Company shall deliver to Holder certificates for the Shares acquired and, if this Warrant has not been fully exercised or converted and has not expired, a new Warrant representing the Shares not so acquired.
1.5 Replacement of Warrants. On receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant and, in the case of loss, theft or destruction, on delivery of an indemnity agreement reasonably satisfactory in form and amount to the Company or, in the case of mutilation, on surrender and cancellation of this Warrant, the Company at its expense shall execute and deliver, in lieu of this Warrant, a new warrant of like tenor.
1.6 Assumption Upon Sale, Merger, or Consolidation of the Company.
1.6.1 "Acquisition." For the purpose of this Warrant, "Acquisition" means any sale, license, or other disposition of all or substantially all of the assets of the Company, or any reorganization, consolidation, or merger of the Company where the holders of the Company's securities before the transaction beneficially own less than 50% of the outstanding voting securities of the surviving entity after the transaction.
1.6.2 Assumption of Warrant. Upon the closing of any Acquisition the successor entity shall assume the obligations of this Warrant, and this Warrant shall be exercisable for the same securities, cash, and property as would be payable for the Shares issuable upon exercise of the unexercised portion of this Warrant as if such Shares were outstanding on the record date for the Acquisition and subsequent closing. The Warrant Price shall be adjusted accordingly.
ARTICLE 2: ADJUSTMENTS TO THE SHARES.
2.1 Stock Dividends, Splits, Etc. If the Company declares or pays a dividend on its common stock (or the Shares if the Shares are securities other than common stock) payable in common stock, or other securities, subdivides the outstanding common stock into a greater amount of common stock, or, if the Shares are securities other than common stock, subdivides the Shares in a transaction that increases the amount of common stock into which the Shares are convertible, then upon exercise of this Warrant, for each Share acquired, Holder shall receive, without cost to Holder, the total number and kind of securities to which Holder would have been entitled had Holder owned the Shares of record as of the date the dividend or subdivision occurred.
2.2 Reclassification, Exchange or Substitution. Upon any reclassification, exchange, substitution, or other event that results in a change of the number and/or class of the securities issuable upon exercise or conversion of this Warrant, Holder shall be entitled to receive, upon exercise or conversion of this Warrant, the number and kind of securities and property that Holder would have received for the Shares if this Warrant had been exercised immediately before such reclassification, exchange, substitution, or other event. Such an event shall include any automatic conversion of the outstanding or issuable securities of the Company of the same class or series as the Shares to common stock pursuant to the terms of the Company's Certificate of Incorporation upon the closing of a registered public offering of the Company's common stock. The Company or its successor shall promptly issue to Holder a new Warrant for such new securities or other property. The new Warrant shall provide for adjustments which shall be as nearly equivalent as may be practicable to the adjustments provided for in this Article 2 including, without limitation, adjustments to the Warrant Price and to the number of securities or property issuable upon exercise of the new Warrant. The provisions of this Section 2.2 shall similarly apply to successive reclassifications, exchanges, substitutions, or other events.
2.3 Adjustments for Combinations, Etc. If the outstanding shares are combined or consolidated, by reclassification or otherwise, into a lesser number of shares, the Warrant Price shall be proportionately increased.
2.4 Adjustments for Diluting Issuances. The Warrant Price and the number of Shares issuable upon exercise of this Warrant or, if the Shares are Preferred Stock, the number of shares of common stock issuable upon conversion of the Shares, shall be subject to adjustment, from time to time in the manner set forth in the Company's Certificate of Incorporation. The provisions set forth for the Shares in the Company's Certificate of Incorporation relating to the above in effect as of the Issue Date may not be amended, modified or waived, without the prior written consent of Holder unless such amendment, modification or waiver effects Holder in the same manner as they effect all other shareholders of the Shares.
2.5 No Impairment. The Company shall not, by amendment of its Certificate of Incorporation or through a reorganization, transfer of assets, consolidation, merger, dissolution, issue, or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed under this Warrant by the Company, but shall at all times in good faith assist in carrying out of all the provisions of this Article 2 and in taking all such action as may be necessary or appropriate to protect Holder's rights under this Article against impairment. If the Company takes any action affecting the Shares or its common stock other than as described above that adversely affects Holder's rights under this Warrant, the Warrant Price shall
be adjusted downward and the number of Shares issuable upon exercise of this Warrant shall be adjusted upward in such a manner that the aggregate Warrant Price of this Warrant is unchanged.
2.6 Fractional Shares. No fractional Shares shall be issuable upon exercise or conversion of the Warrant and the number of Shares to be issued shall be rounded down to the nearest whole Share. If a fractional share interest arises upon any exercise or conversion of the Warrant, the Company shall eliminate such fractional share interest by paying Holder an amount computed by multiplying the fractional interest by the fair market value of a full Share.
2.7 Certificate as to Adjustments. Upon each adjustment of the Warrant Price, the Company at its expense shall promptly compute such adjustment, and furnish Holder with a certificate of its Chief Financial Officer setting forth such adjustment and the facts upon which such adjustment is based. The Company shall, upon written request, furnish Holder a certificate setting forth the Warrant Price in effect upon the date thereof and the series of adjustments leading to such Warrant Price.
ARTICLE 3: REPRESENTATIONS AND COVENANTS OF THE COMPANY.
3.1 Representations and Warranties. The Company hereby represents and warrants to the Holder as follows:
(a) All Shares which may be issued upon the exercise of the purchase right represented by this Warrant, and all securities, if any, issuable upon conversion of the Shares, shall, upon issuance, be duly authorized, validly issued, fully paid and nonassessable, and free of any liens and encumbrances except for restrictions on transfer provided for herein or under applicable federal and state securities laws.
(b) The Capitalization Table attached to this Warrant is true and complete as of the Issue Date.
3.2 Notice of Certain Events. If the Company proposes at any time (a)
to declare any dividend or distribution upon its common stock, whether in cash,
property, stock, or other securities and whether or not a regular cash dividend;
(b) to offer for subscription pro rata to the holders of any class or series of
its stock any additional shares of stock of any class or series or other rights;
(c) to effect any reclassification or recapitalization of common stock; (d) to
merge or consolidate with or into any other corporation, or sell, lease,
license, or convey all or substantially all of its assets, or to liquidate,
dissolve or wind up; or (e) offer holders of registration rights the opportunity
to participate in an underwritten public offering of the company's securities
for cash, then, in connection with each such event, the Company shall give
Holder (1) at least 20 days prior written notice of the date on which a record
will be taken for such dividend, distribution, or subscription rights (and
specifying the date on which the holders of common stock will be entitled
thereto) or for determining rights to vote, if any, in respect of the matters
referred to in (c) and (d) above; (2) in the case of the matters referred to in
(c) and (d) above at least 20 days prior written notice of the date when the
same will take place (and specifying the date on which the holders of common
stock will be entitled to exchange their common stock for securities or other
property deliverable upon the occurrence of such event); and (3) in the case of
the matter referred to in (e) above, the same notice as is given to the holders
of such registration rights.
3.3 Information Rights. So long as the Holder holds this Warrant and/or
any of the Shares, the Company shall deliver to the Holder (a) promptly after
mailing, copies of all notices or other written communications to the
shareholders of the Company, (b) within ninety (90) days after the end of each
fiscal year of the Company, the annual audited financial statements of the
Company certified by independent public accountants of recognized standing and
(c) such other financial statements required under and in accordance with any
loan documents between Holder and the Company (or if there are no such
requirements or if the subject loan(s) no longer are outstanding), then within
forty-five (45) days after the end of each of the first three quarters of each
fiscal year, the Company's quarterly, unaudited financial statements.
3.4 Registration Under Securities Act of 1933, as amended. The Company agrees that the Shares or, if the Shares are convertible into common stock of the Company, such common stock, shall be subject to the
registration rights set forth in the Company's Shareholders' Agreement as in effect on the Issue Date. By acceptance of this Warrant, Holder agrees that, if it exercises this Warrant before the Company's initial public offering, it will become a party to the Company's Investors' Rights Agreement as in effect as of the Issue Date.
ARTICLE 4: MISCELLANEOUS.
4.1 Term. This Warrant is exercisable, in whole or in part, at any time and from time to time on or before the Expiration Date set forth above.
4.2 Legends. This Warrant and the Shares (and the securities issuable, directly or indirectly, upon conversion of the Shares, if any) shall be imprinted with a legend in substantially the following form:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR PURSUANT TO RULE 144 OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE CORPORATION AND ITS COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED.
4.3 Compliance with Securities Laws on Transfer. This Warrant and the Shares issuable upon exercise this Warrant (and the securities issuable, directly or indirectly, upon conversion of the Shares, if any) may not be transferred or assigned in whole or in part without compliance with applicable federal and state securities laws by the transferor and the transferee (including, without limitation, the delivery of investment representation letters and legal opinions reasonably satisfactory to the Company, as reasonably requested by the Company). The Company shall not require Holder to provide an opinion of counsel if the transfer is to an affiliate of Holder or if there is no material question as to the availability of current information as referenced in Rule 144(c), Holder represents that it has complied with Rule 144(d) and (e) in reasonable detail, the selling broker represents that it has complied with Rule 144(f), and the Company is provided with a copy of Holder s notice of proposed sale.
4.4 Transfer Procedure. Subject to the provisions of Section 4.3, Holder may transfer all or part of this Warrant or the Shares issuable upon exercise of this Warrant (or the securities issuable, directly or indirectly, upon conversion of the Shares, if any) at any time to Silicon Valley Bancshares or The Silicon Valley Bank Foundation, or to any affiliate of Holder, or, to any other transferee by giving the Company notice of the portion of the Warrant being transferred setting forth the name, address and taxpayer identification number of the transferee and surrendering this Warrant to the Company for reissuance to the transferee(s) (and Holder if applicable). Unless the Company is filing financial information with the SEC pursuant to the Securities Exchange Act of 1934, the Company shall have the right to refuse to transfer any portion of this Warrant to any person who directly competes with the Company.
4.5 Notices. All notices and other communications from the Company to the Holder, or vice versa, shall be deemed delivered and effective when given personally or mailed by first-class registered or certified mail at such address as may have been furnished to the Company or the Holder, as the case may be, in writing by the Company or such holder from time to time. All notices to be provided under this Warrant shall be sent to the following address:
Silicon Valley Bank Attn: Treasury Department 3003 Tasman Drive Santa Clara, CA 95054
4.6 Waiver. This Warrant and any term hereof may be changed, waived, discharged or terminated only by an instrument in writing signed by the party against which enforcement of such change, waiver, discharge or termination is sought.
4.7 Attorneys Fees. In the event of any dispute between the parties concerning the terms and provisions of this Warrant, the party prevailing in such dispute shall be entitled to collect from the other party all costs incurred in such dispute, including reasonable attorneys' fees.
4.8 Governing Law. This Warrant shall be governed by and construed in accordance with the laws of the State of California, without giving effect to its principles regarding conflicts of law.
"COMPANY"
ARRAY BIOPHARMA INC.
By: /s/ R.M. CARRUTHERS
-----------------------------------------------
Name: R.M. Carruthers
---------------------------------------------
(Print)
Title: Chief Financial Officer, Secretary Assistant
Treasurer or Assistant Secretary
|
APPENDIX 1
NOTICE OF EXERCISE
1. The undersigned hereby elects to purchase ____________ shares of the Common/Preferred Series ___ [Strike one] Stock of ______________. pursuant to the terms of the attached Warrant, and tenders herewith payment of the purchase price of such shares in full.
1. The undersigned hereby elects to convert the attached Warrant into Shares/cash [strike one] in the manner specified in the Warrant. This conversion is exercised with respect to _____________________ of the Shares covered by the Warrant.
[Strike paragraph that does not apply.]
2. Please issue a certificate or certificates representing said shares in the name of the undersigned or in such other name as is specified below:
3. The undersigned represents it is acquiring the shares solely for its own account and not as a nominee for any other party and not with a view toward the resale or distribution thereof except in compliance with applicable securities laws.
EXHIBIT 10.27
MASTER NOTE AND SECURITY AGREEMENT
Wilton, Connecticut
Date: February 26, 1999
1. MASTER AGREEMENT.
(a) This Agreement sets forth the basic terms and conditions upon which LEASING TECHNOLOGIES INTERNATIONAL, INC. (together with its successors and assigns, collectively, the "Lender"), shall, lend to Array BioPharma Inc., a Corporation organized under the laws of the State of Delaware (the "Borrower"), and the Borrower shall borrow from the Lender, funds to purchase (or refinance the purchase of) the items of "Equipment " specified (and as defined in) one or more loan schedules hereto to be entered into from time to time (each, a "Loan Schedule"). Each Loan Schedule shall reference this Master Note and Security Agreement (this "Agreement") and shall be deemed to incorporate therein all of the terms and conditions hereof, unless and to the extent any provisions hereof are expressly excluded or modified therein, and shall contain such additional terms as the Lender and the Borrower shall, in their sole discretion, agree upon. Each Loan Schedule, together with the terms and conditions of this Agreement so incorporated therein, shall constitute a separate promissory note that evidences a separate loan with respect to the Equipment specified in such Loan Schedule. Each Loan Schedule may be assigned by the Lender and/or reassigned by any assignee(s) thereof separate and apart from any other Loan Schedule(s) hereunder. With respect to each Loan Schedule, the Lender or its respective assignee(s) shall have all of the rights of the "Lender" thereunder and with respect to the Equipment and other Collateral covered thereby, and such rights shall be separately exercisable by the Lender or such assignee(s), as the case may be, collectively-with all of the other Loan Schedules then held by the Lender or such assignee(s), but exclusively and independently of the rights of the Lender or such assignee(s) with respect to any other Loan Schedule(s) not then held by the Lender or such assignee(s).
(b) The term "Loan" as used in this Agreement shall mean any and all of the liabilities and obligations of the Borrower under a loan evidenced by a particular Loan Schedule, which is entered into by the Lender and the Borrower under this Agreement with respect to the Equipment specified in such Loan Schedule. Capitalized terms used in this Agreement and not otherwise defined shall have the meanings ascribed to them in the relevant Loan Schedule.
2. TERMS OF PAYMENT.
(a) FOR VALUE RECEIVED, the Borrower hereby promises to pay to the order of the Lender, the "Principal Sum" set forth in each Loan Schedule, in the "Total Number of Monthly Installments" set forth in such Loan Schedule, consisting of the "Number of Consecutive Monthly Installments" of principal and interest set forth in such Loan Schedule, each payable in advance, and the "Final Payment" of principal and interest set forth in such Loan Schedule, together with all other sums then owing thereunder, payable on the "Final Payment Date" set forth in such Loan Schedule; the first such consecutive monthly installment shall be in the "First Monthly Installment Amount" set forth in such Loan Schedule and shall be due and payable on the "First Monthly Installment Date" set forth in such Loan Schedule; the remaining consecutive monthly installments shall each be in the "Remaining Consecutive Monthly Installment Amount" set forth in such Loan Schedule and shall thereafter be due and payable on the same day of each month in each year as such First Monthly Installment Date and ending on the "Last Consecutive Monthly Installment Date" set forth in such Loan Schedule; and the
Final Payment and shall be due and payable on the Final Payment Date, except as otherwise expressly provided in Sections 17(b), 17(c), 17(d) or 18(b) hereof.
(b) The installments described in Sections 2(a) and 17(a) hereof include interest on the unpaid principal amount of the relevant Loan from time to time outstanding, computed on the basis of a 360-day year at the "Annual Interest Rate" set forth in the relevant Loan Schedule.
(c) The proceeds of the Loan evidenced by each Loan Schedule shall be used solely to purchase (or refinance the purchase of) the Equipment described in such Loan Schedule.
(d) The Borrower shall have the right to prepay any Loan upon payment of the present value of all Monthly Installments, and the Final Payment, calculated by discounting at the rate of six percent (6%) per annum, compounded monthly, or upon the payment of such other amount as may be set forth in the applicable Loan Schedule.
(e) Whenever any installment or other amount payable to the Lender by the Borrower hereunder is not paid when due, the Borrower agrees to pay to the Lender, on demand, as liquidated damages and not as a penalty: (i) a late charge on such overdue amounts calculated at the rate of one and a half (1 1/2) percent a month, or the maximum amount permitted under applicable law, whichever is less, from the date such payment is due until the date such payment is made in full to the Lender; and (ii) in addition, with respect to overdue installment payments only, an administrative fee equal to five cents ($.05) for each one dollar ($ 1.00) of such delayed installment payment overdue for more than twenty (20) days, or the maximum amount permitted under applicable law, whichever is less. The Borrower agrees to also reimburse the Lender on demand for any and all reasonable costs and expenses (including the Lender's reasonable attorneys' fees and disbursements) arising out of or caused by this Agreement or any breach by the Borrower hereunder, including (without limitation) any enforcement by the Lender of its rights and remedies hereunder.
(f) All payments by the Borrower on account of principal, interest or fees hereunder shall be made in lawful money of the United States of America, in immediately available funds.
3. GRANT OF SECURITY INTEREST. The Borrower hereby pledges, assigns and
grants to the Lender a continuing first priority security interest in and lien
on the following properties, assets and rights (collectively, the "Collateral"):
(a) the Equipment as set forth (and defined) in each Loan Schedule hereunder,
together with all warranties thereon and all additions, improvements,
accessions, replacements and substitutions thereto and therefor, whether now
owned or hereafter acquired, and all proceeds thereof, (b) the proceeds of any
insurance payable to the Borrower with respect to the Equipment; and (c) all of
the "Other Personal Property," if any, described in any Loan Schedule hereunder
and all proceeds thereof. In addition, any other property of the Borrower that,
by agreement of the parties, is now or hereafter pledged to or held by the
Lender to secure any Obligations (as hereinafter defined), whether under this
Agreement, any Loan Schedule or any other agreement of the parties, and all
property now or hereafter leased by the Lender to the Borrower, shall also serve
as collateral security for the full payment and performance of the Obligations.
4. OBLIGATIONS SECURED. The Collateral hereunder constitutes and will constitute continuing security for the fall payment, performance and observance by the Borrower of the following obligations (collectively, the "Obligations"):
(a) "Liabilities " which shall mean all of the indebtedness
evidenced by this Agreement and each Loan Schedule hereunder together with any
Lease Agreement(s) between Lender and Borrower (and any Schedules thereunder),
and all liabilities and obligations of any kind of the Borrower to the Lender
arising out of or relating thereto, whether (i) for the Lender's own account,
(ii) acquired directly or indirectly by the Lender from the Borrower, (iii)
absolute or contingent, joint or several, secured or unsecured, liquidated or
unliquidated, due or not due, contractual or tortious, now existing or hereafter
arising, or (iv) incurred by the Borrower as principal, surety, endorser,
guarantor, borrower, lessee or otherwise, and including (without limitation) all
reasonable expenses and attorneys' fees incurred by the Lender in connection
with any such indebtedness, liabilities or obligations or any of the Collateral
(including any sale or other disposition of the Collateral);
(b) the prompt payment, when due, of all present and future obligations and indebtedness of the Borrower to the Lender under this Agreement and/or any Loan Schedule, as the same may hereafter be amended or modified, and under any other agreement or instrument executed by the Borrower in favor of the Lender, whether direct or indirect, absolute or contingent; and
(c) the strict performance and observance by the Borrower of all warranties, covenants and agreements contained in this Agreement or any Loan Schedule and any instrument or other agreement delivered by the Borrower to the Lender.
5. BORROWER SELECTED EQUIPMENT; WARRANTY DISCLAIMER. THE BORROWER REPRESENTS AND ACKNOWLEDGES THAT IT HAS SELECTED BOTH THE EQUIPMENT AND THE VENDOR OF THE EQUIPMENT (THE "VENDOR") AND THAT THE EQUIPMENT SUITS THE BORROWER'S PARTICULAR NEEDS. THE LENDER MAKES NO REPRESENTATIONS OR WARRANTIES OF ANY KIND OR NATURE DIRECTLY OR INDIRECTLY, EXPRESS OR IMPLIED, AS TO THE EQUIPMENT OR ANY OTHER MATTER WHATSOEVER, INCLUDING WITHOUT LIMITATION, TITLE TO THE EQUIPMENT OR THE EQUIPMENT'S CONDITION, THE SUITABILITY OF THE EQUIPMENT, ITS DURABILITY, CAPACITY, OPERATION, PERFORMANCE, DESIGN, MATERIALS, WORKMANSHIP AND/OR QUALITY, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE. THE BORROWER AGREES TO LOOK SOLELY TO THE MANUFACTURER, VENDOR OR CARRIER 'OF THE EQUIPMENT FOR ANY CLAIM ARISING FROM ANY DEFECT, BREACH OF WARRANTY, FAILURE OR DELAY IN DELIVERY, MISDELIVERY OR INABILITY TO USE THE EQUIPMENT FOR ANY REASON WHATSOEVER, AND THE BORROWER'S OBLIGATIONS TO THE LENDER HEREUNDER SHALL NOT IN ANY MANNER BE AFFECTED THEREBY. THE LENDER SHALL NOT BE LIABLE FOR ANY LOSS, DAMAGE, INJURY OR EXPENSE CAUSED DIRECTLY OR INDIRECTLY BY ANY ITEM OF EQUIPMENT, THE USE, MAINTENANCE, REPAIR, DEFECT OR SERVICING THEREOF, BY ANY DELAY OR FAILURE TO PROVIDE SAME, BY ANY INTERRUPTION OF SERVICE OR LOSS OF SERVICE OR LOSS OF USE, OR FAILURE TO PROVIDE SAME, OR FOR ANY LOSS OF BUSINESS HOWEVER CAUSED. NO REPRESENTATION OR WARRANTY AS TO THE
EQUIPMENT OR ANY OTHER MATTER BY THE VENDOR OF THE EQUIPMENT SHALL BE BINDING ON THE LENDER, NOR SHALL THE BREACH OF SUCH RELIEVE THE BORROWER OF, OR IN ANY WAY AFFECT, ANY OF THE BORROWER'S OBLIGATIONS TO THE LENDER AS SET FORTH HEREIN.
6. REPRESENTATIONS AND WARRANTIES. The Borrower represents, warrants, covenants and agrees that:
(a) If the Borrower is a corporation or a partnership, it is duly organized, existing and in good standing under the laws of its state of incorporation, is duly qualified and in good standing under the laws of each jurisdiction where the character of its properties or the transaction of its business makes such qualification necessary and has full power to own its properties and assets and to carry on its business as now being conducted.
(b) The Borrower has full power and authority to execute, deliver and perform this Agreement and each Loan Schedule, which has been duly authorized by all necessary and proper corporate or partnership action. No consent of stockholders, if any, or of any public authority is required as a condition to the validity of this Agreement and each Loan Schedule. The making and performance by the Borrower of this Agreement and each Loan Schedule will not violate any provision of law and will not conflict with or result in a breach of any order, writ, injunction or decree of any court or government instrumentality, or its charter or by-laws or partnership agreement, if any, or create a default under any agreement, note or indenture to which it is a party or by which it is bound or to which any of its property is subject, or result in the imposition of any lien, charge or encumbrance of any nature whatsoever upon any of its properties or assets, except for the liens created under this Agreement or any Loan Schedule.
(c) This Agreement and each Loan Schedule have been duly executed and delivered, and constitutes the valid and legally binding obligation of the Borrower, enforceable in accordance with its terms.
(d) The Borrower has good title to and is the lawful owner of the Collateral free from all claims, liens, encumbrances, charges or security interests whatsoever, except for the liens granted by this Note. For purposes of this Agreement, Permitted Liens shall mean the liens granted by this Agreement or any Loan Schedule.
(e) The Collateral is and will be kept at the location(s) set forth in the relevant Loan Schedule hereto.
(f) The provisions of this Agreement and each Loan Schedule create a valid and perfected first priority security interest in the Collateral, enforceable in accordance with their respective terms, subject to no prior or equal lien, charge, encumbrance or security interest, upon the filing of appropriate Uniform Commercial Code financing statements or equivalent instruments, and notation and issuance of appropriate certificates of title, with respect to the Collateral. Uniform Commercial Code financing statements or equivalent instruments and certificates of title with the Lender's security interest duly noted thereon, with respect to the Collateral in a form provided by Lender, have been or will be
executed by the Borrower and have been or will be delivered to the Lender for filing at the appropriate offices.
(g) There are no judgments outstanding against the Borrower and there are no actions or proceedings before any court or administrative agency pending or, to the knowledge of the Borrower, threatened against the Borrower which, if determined adversely to the Borrower, would affect the Collateral.
(h) The Borrower's principal office and place of business where it maintains its records concerning the Collateral is at its address stated on the relevant Loan Schedule. The Borrower has no other office or place of business, except as indicated on the relevant Loan Schedule.
7. INSURANCE. The Borrower shall keep and maintain the Equipment and
other Collateral insured with all risk insurance, for not less than the
replacement cost thereof. The Borrower shall also provide, for the benefit of
the Lender, public liability insurance (both personal injury and property
damage) covering the Equipment and other Collateral. The amount of any such
insurance shall be sufficient so that neither the Borrower nor the Lender will
be considered a co-insurer. Such insurance shall be in form, issued by insurance
companies and in amounts reasonably satisfactory to the Lender. Each insurer
shall agree, by endorsement upon the policy or policies issued by it or by
independent instrument furnished to the Lender, that such insurer give at least
ten (10) days' prior written notice of the effective date of any alteration or
cancellation of such policy and that coverage under such policy shall not be
affected by any default, misrepresentation or other breach by the Borrower or
the Lender under this Agreement or any Loan Schedule or such policy. The Lender
shall have the option but not the obligation, to pay the premiums to continue
any such canceled insurance policy in effect or to obtain like coverage. The
Borrower agrees that any payment made by the Lender pursuant to the foregoing
authorization (and interest thereon at the rate of one and a half (1 1/2)
percent a month, or if such rate shall exceed the maximum rate allowed by law,
then, at such maximum rate from the date of such payment) shall become part of
the Obligations and be secured by the Collateral. The proceeds of all insurance
payable as a result of loss or damage to any item of the Equipment, up to the
amount of the Obligations pertaining to such Equipment may be applied by Lender
to satisfy such Obligations. The Borrower hereby irrevocably appoints the Lender
as the Borrower's attorney-in-fact to make claim for, receive payments of and
execute and endorse all documents, checks or drafts received in payment for loss
or damage under any such insurance policy. In the event that the amount of such
payments exceeds the amount of the Obligations pertaining to such Equipment or
this Agreement, Lender shall remit such excess amount to Borrower within ten
(10) business days after receipt thereof. In all events, the Borrower shall be
liable for any loss, damage, reasonable expense or reasonable costs suffered or
incurred by the Lender relating to or -in any manner pertaining to this
Agreement or any Loan Schedule, the Collateral or the use or operation of the
Collateral, provided that Borrower shall not be liable for any loss, damage,
expense or cost solely caused by Lender's gross negligence or willful
misconduct.
8. MAINTENANCE; LOSS OF COLLATERAL. The Borrower acknowledges that, in making its decision to extend the credit evidenced by this Agreement and each Loan Schedule to the Borrower, the Lender is depending heavily upon the realizable value of the Collateral at all times during the term of this Agreement and each Loan Schedule, and the Borrower hereby represents and warrants to the Lender that
to the best of Borrower's knowledge the purchase price paid by the Borrower for the Collateral represents the retail fair market value thereof Accordingly, the Borrower agrees at all times to maintain the Collateral in good operating condition, repair and appearance, and protect the same from deterioration, other than normal wear and tear, keep the Collateral in its exclusive possession and control at the location specified in the relevant Loan Schedule and use the Collateral only in the regular course of its business within its normal capacity, without abuse and in a manner contemplated by the Vendor, shall comply with all laws, ordinances, regulations, requirements and rules with respect to the use, maintenance and operation of the Collateral, shall not make any modification, alteration or addition to the Collateral (other than normal operating accessories or controls which, when added to the Collateral, shall not impair the operation or reduce the value of the Collateral) without the prior written consent of the Lender, and all modifications, alterations, accessories, parts, replacements and additions to the Collateral which affect the value or operation of the Collateral shall become part of the Collateral and be included within the term "Collateral" as used herein. For the purpose of assuring the Lender that the Collateral will be properly serviced, the Borrower agrees, in the event that the Lender so requests, to cause the Collateral to be maintained by the Vendor (or another maintenance organization approved by the Lender in writing) pursuant to Vendor's standard preventive maintenance contract or comparable maintenance contract, in each case covering at least prime shift maintenance of each item of Collateral. The Borrower hereby assumes the entire risk of loss, damage or destruction of the Collateral from any and every cause whatsoever. The Borrower agrees that any such loss, damage or destruction of the Collateral shall not relieve the Borrower of its obligations hereunder, which obligations shall remain absolute, unconditional and not subject to any claim, defense, set-off, counterclaim, reduction or abatement of any kind whatsoever; provided, however, that the foregoing shall not limit the right of the Borrower to bring a separate claim against Lender for breach of this Agreement or any other reason. In the event of any loss, damage or destruction of any item of Collateral, the Borrower shall give the Lender immediate written notice thereof and shall, at the Borrower's sole expense (except to the extent of any proceeds of insurance maintained by the Borrower which shall have been received by the Borrower as a result of such loss, damage or destruction) and at the Lender's sole option, either (a) repair such item, returning it to its previous condition, unless damaged beyond repair, or (b) replace such item with a like item acceptable to the Lender, in good condition and of equivalent value, which shall be included within the term "Collateral" as used herein.
9. BOOKS AND RECORDS. The Borrower shall give the Lender full and free access to the Collateral at reasonable times and with reasonable notice and to all books, correspondence and records of the Borrower with respect thereto, permit the Lender and its representatives to examine the same and to make copies and extracts therefrom, all at the Borrower's expense. Notice shall not be required at such time Borrower is in default under this Agreement.
10. TAXES AND ENCUMBRANCES. The Borrower shall promptly pay and discharge or cause to be paid and discharged all its obligations and liabilities, including (without limitation) all taxes, assessments and governmental charges upon it and its income or properties, when due unless and to the extent only that the same shall be contested in good faith and by appropriate proceedings and then only to the extent that a bond is filed in cases where the filing of a bond is necessary to avoid the creation of a lien against any of the Collateral or any of its other assets. Other than Permitted Liens, the Borrower covenants and agrees to keep the Collateral free and clear of all levies, liens, claims, security interests and encumbrances (including, without limitation, any lease or sublease thereof) and to promptly pay all charges, taxes and fees which may now or hereafter be imposed upon the ownership, sale, purchase,
possession or use of the Collateral. In addition, the Borrower shall timely file all tax returns required in connection with the use, operation or possession of the Collateral, and shall, after written request therefore, promptly furnish copies thereof to the Lender.
11. CORPORATE EXISTENCE. If the Borrower is a corporation or partnership, the borrower shall do, or cause to be done, all things necessary to preserve and keep in full force and effect its corporate or partnership existence and all franchises, rights and privileges necessary for the proper conduct of its business, and continue to engage in the business of the same type as now conducted by it.
12. NOTICE OF EVENTS OF DEFAULT. The Borrower shall give notice in writing promptly to the Lender of the occurrence of any event which constitutes, or which with notice or lapse of time or both would constitute, an Event of Default (as hereinafter defined).
13. DELIVERY OF FINANCIAL DATA.
(a) So long as any obligations remain unsatisfied under this Agreement, Borrower agrees to deliver to Lender or any assignee and any successor assignee a copy of Borrower's monthly unaudited financial statements, and the annual financial budget for the upcoming year as soon as available and as it may be adjusted during the year. Borrower shall also furnish, as soon as available and in any event within ninety (90) days after the last day of Borrower's fiscal year, a copy of Borrower's annual audited statements and consolidating and consolidated balance sheet, if any, as of the end of such fiscal year, accompanied by the opinion of an independent certified public accounting firm of recognized standing. The Borrower shall furnish such other financial information as may be reasonably requested by Lender, including but not limited to any material changes in budgets or financial reports furnished to the Borrower's Board of Directors or Shareholders.
(b) The Borrower acknowledges and agrees that all credit applications, statements, financial reports and other information prepared by (including any information prepared by the Borrower's CPA's, as hereafter defined) and submitted by it to the Lender are material inducements to the execution by the Lender of this Agreement and each Loan Schedule and the financing provided hereunder. The Borrower warrants that all such credit applications, statements, reports and other information are and all information hereafter prepared by (including any information prepared by the Borrower's CPA's, as hereafter defined) and furnished by the Borrower to the Lender will be, true and correct in all material respects as of the date submitted, that no such credit application, statement, report or other information contains any material untrue or misleading information or omits any material fact necessary to make such application, statement, report or other information not misleading and that the Borrower is in no way affiliated with any Vendor of any of the Equipment. The Borrower agrees, upon request by Lender, to obtain for the Lender such estoppel certificates, landlord's waivers or other similar documents as the Lender may reasonably request.
14. PRINCIPAL OFFICE. The Borrower shall not change its principal office or the place where it maintains its records pertaining to the Collateral, as specified in Sections 6(d) and 6(g) hereof, without giving the Lender at least thirty (30) days prior written notice thereof.
15. LOCATION OF COLLATERAL; INSPECTION; LABELS. The Borrower shall not remove or permit the removal of the Collateral from its present location as set forth on the relevant Loan Schedule, without the prior written consent of the Lender which consent shall not be unreasonably withheld or delayed. Upon reasonable notice, and subject to Borrower's confidentiality and security requirements, the Lender and its representatives shall have the right to enter the Borrower's premises from time to time during business hours to inspect, observe or, after the occurrence and during the continuance of an Event of Default, remove the Collateral, and to confirm its existence, condition and proper maintenance or otherwise protect the Lender's interest therein. The Borrower shall comply with all laws, ordinances, regulations or requirements of any governmental authority, official, board or department relating to the Collateral's installation, possession, use or maintenance. The Collateral shall remain personal property regardless of its affixation to any realty. Upon the Lender's request, the Borrower shall affix and keep in a prominent place on each item of Collateral labels, plates or other markings indicating the Lender's security interest in the Collateral.
16. OPTION TO PERFORM OBLIGATIONS OF THE BORROWER IN RESPECT OF THE COLLATERAL. If the Borrower fails or refuses, after any applicable grace period and notice to the Borrower, to make any payment, perform any covenant or obligation, or take any other action which the Borrower is obligated hereunder to perform, observe, take or do hereunder, then the Lender may, at its option, without releasing the Borrower from any obligation or covenant hereof, perform, observe, take or do the same in such manner and to such extent as the Lender may deem necessary or appropriate to protect any of the Collateral and its rights hereunder, including (without limitation) obtaining insurance and the payment of any taxes and the payment of any sums necessary to discharge liens or security interests at any time levied or placed on the Collateral. The Borrower agrees that any payment or expense incurred by the Lender pursuant to the foregoing authorization (and interest thereon at the rate of one and a half (1 1/2) percent a month, or if such rate shall exceed the maximum rate allowed by law, then, at such maximum rate from the date of incurring of any such expense is incurred) shall become part of the Obligations and be secured by the Collateral set forth in this Agreement and each Loan Schedule.
17. FINAL PAYMENT ALTERNATIVES (a) Notwithstanding anything to the contrary set forth in Section 2(a) of this Agreement, if at least 120 days prior to the Final Payment Date under a Loan Schedule, the Borrower gives the Lender written notice requesting that the Lender extend and finance the repayment of the relevant Final Payment over an additional 12-month term commencing on such Final Payment Date (the "Refinancing Request"),and provided that no Event of Default (as hereinafter defined) and no event or circumstance that, with the giving of notice or the passage of time, or both, would constitute an Event of Default, including (without limitation) the nonpayment or nonperformance of any outstanding liability or obligation under this Agreement (each, a "Default"), shall have occurred and be continuing as of (i) the date such Refinancing Request is given, or (ii) the relevant Final Payment Date, then such Final Payment shall not be due and payable on such Final Payment Date but instead shall be payable in 12 equal monthly installments of principal and interest, each in the "Refinanced Monthly Installment Amount" set forth in the relevant Loan Schedule and due and payable on the same day of each month as such Final Payment Date, commencing on such Final Payment Date.
(b) Notwithstanding anything to the contrary set forth in
Section 2(a) of this Agreement, so long as no Default or Event of Default has
occurred and is continuing on the Final Payment Date under a Loan Schedule and
if, at least 120 days prior to the relevant Final Payment Date, the Borrower
notifies
the Lender in writing (the "Return Option Exercise Notice") of the Borrower's
desire to transfer title to the related Equipment to the Lender in partial
satisfaction of the Borrower's obligation to pay the relevant Final Payment (the
"Return Option"), the Borrower shall receive a credit in an amount equal to the
"Return Option Credit" set forth in such Loan Schedule against such Final
Payment by unconditionally and irrevocably transferring and assigning to the
Lender or its designee on such Final Payment Date all of the Borrower's right,
title and interest in and to the related Equipment; provide , however, that the
Borrower pays the entire remaining "Return Option Balance Amount" set forth in
such Loan Schedule to the Lender on the relevant Final Payment Date. If a Return
Option Exercise Notice is duly given as provided above, the relevant Return
Option shall be exercised by the Borrower delivering each of the following to
the Lender, at the Borrower's sole cost and expense, on or before the relevant
Final Payment Date: (i) a duly executed bill of sale in favor of the Lender with
respect to all of the Equipment covered by the relevant Loan Schedule, in form
and substance satisfactory to the Lender and its counsel; (ii) payment in full
of the relevant Return Option Balance Amount; and (iii) the relevant Equipment,
at a location within the continental Untied States designated by the Lender, in
the same operating order, repair, condition and appearance as on the date
hereof, reasonable wear and tear only excepted, and with all engineering and
safety changes prescribed by the manufacturer or approved maintenance
organization to accept such Equipment under contract maintenance at its then
standard rates. The Borrower shall promptly pay any and all costs of repair,
replacement, deinstallation, packing, shipping and delivery of the relevant
Equipment to the Lender upon the Borrower's exercise of such Return Option. If
the Borrower duly satisfies all of the terms and conditions of this Section
17(b), the Borrower shall have fully satisfied all of its obligations under the
related Loan Schedule.
(c) Notwithstanding anything to the contrary set forth in
Section 2(a) of this Agreement, if the Borrower believes that the "Fair Market
Value" (as hereinafter defined) of the Equipment covered by a Loan Schedule as
of the relevant Final Payment Date will be less than the amount of the Final
Payment under such Loan Schedule, the Borrower may notify the Lender in writing
at least 120 days prior to such Final Payment Date of the Borrower's election to
have the amount of such Final Payment adjusted (the "Final Payment Adjustment
Option Notice") to an amount equal to the greater of (i) Fair Market Value of
the relevant Equipment as of such Final Payment Date, or (ii) the "Adjusted
Final Payment" set forth in the such Loan Schedule. If such Final Payment
Adjustment Option Notice is so given, and so long as no Default or Event of
Default has occurred and is continuing as of (A) the date such Final Payment
Adjustment Option Notice is given, or (B) the relevant Final Payment Date, then
unless the amount of such Adjusted Final Payment is greater than the amount of
such Final Payment, such Final Payment shall automatically be deemed changed to
such Adjusted Final Payment and the Borrower irrevocably and unconditionally
agrees to pay such Adjusted Final Payment on the relevant Final Payment Date in
lieu of such Final Payment. "Fair Market Value" of any Equipment shall mean the
amount as of the relevant Final Payment Date that would obtain for such
Equipment in a retail arms'-length transaction between an informed and willing
buyer in possession under no compulsion to buy and an informed and willing
seller under no compulsion to sell. The Lender shall initially determine the
Fair Market Value of any Equipment by notifying the Borrower thereof in writing
at least 75 days prior to the relevant Final Payment Date. If the Borrower does
not accept such determination of Fair Market Value by the Lender, the Borrower
shall notify the Lender of such non-acceptance in writing not less than 60 days
prior to such Final Payment Date. If the Borrower does not so notify the Lender
of its non-acceptance of the Lender's determination within such period, then the
Fair Market Value of such Equipment as initially determined by the Lender shall
be conclusive. If the Borrower does so notify the Lender of such non-acceptance
within such period, then the Fair Market Value of such Equipment shall conclusively be established not less than 30 days prior to the relevant Final Payment Date by an independent appraiser selected by the Lender and reasonably acceptable to the Borrower. All costs for such appraiser shall be paid by the Borrower within 10 days after its receipt of an invoice therefor.
18. EVENTS OF DEFAULT; REMEDIES. (a) If any one of the following events
(each, an "Event of Default") shall occur, then to the extent permitted by
applicable law, the Lender shall have the right to exercise any one or more of
the remedies set forth in Section 18(b) hereof: (i) the Borrower fails to make
any payment when due hereunder and such failure continues for a period of ten
days; or (ii) Borrower fails to observe or perform (A) any other agreement or
obligation to be observed or performed hereunder or under any Loan Schedule or
other agreement, document or instrument delivered to the Lender by or on behalf
of an Obligor or otherwise relating to any of the Obligations (collectively, the
"Other Documents")and unless expressly set forth in this Agreement or any Loan
Schedule, such failure continues uncured for a period of thirty (30) days
following notice by Lender, or (B) any other obligation of Borrower to the
Lender and the failure to observe or perform shall continue uncured for thirty
(30) days following notice by Lender; or (iii) any representation or warranty
made by or on behalf of Borrower in this Agreement or any Loan Schedule or in
any of the Other Documents shall at any time prove to have been incorrect or
untrue in any material respect when made; or (iv) the Borrower's failure to
obtain or maintain any insurance required by the Lender hereunder and such
failure continues uncured for a period of ten (10) days following notice by
Lender; or (v) a default occurs in the payment of any indebtedness in an amount
in excess of $25,000 owed by Borrower to any individual or entity other than the
Lender and such default continues beyond any applicable cure period; or (vi) a
default occurs in the performance or observance of the terms of any agreement,
document or instrument pursuant to which such indebtedness was created, secured
or guaranteed, the effect of which default is to cause or permit the holder of
any such indebtedness to cause the same to be due prior to its stated maturity
(whether or not such default is waived by the holder thereof); or (vii) Borrower
fails (after ten (10) days prior notice thereof) to pay, withhold, collect or
remit when asserted or due any tax, assessment or other sum payable with respect
to the Collateral or any security for any of the Obligations (including, without
limitation, any premium on any insurance policy with respect to any of the
Collateral or any security for any of the Obligations, or any insurance policy
assigned to the Lender as security for any of the Obligations), or (viii) a
judgment is entered against the Borrower in an amount in excess of $25,000 and
such judgment is not satisfied, dismissed or stayed with 30 days, or any
attachment, levy or execution is made against any Collateral; or (ix) Borrower
enters into any transaction which adversely affects a significant portion of the
business value of Borrower and which affects the ability of the Borrower to
repay the Borrower's obligations under the Agreement; or (x) Borrower fails (or
Borrower admits in writing its inability) to generally pay its debts as they
become due or the insolvency or business failure of Borrower; or (xi) the filing
of an application for appointment of a trustee, custodian or receiver for
Borrower or of any part of Borrower's property (and in the case of an
involuntary filing against the Borrower, such filing is not dismissed within 60
days); or (xii) the filing of a petition in bankruptcy by or against Borrower,
or the commencement by or against Borrower of any proceeding under any
bankruptcy or insolvency law or statute, or any law or statute relating to the
relief of debtors or arrangement of debt, readjustment of indebtedness,
reorganization, receivership or composition, or the extension of indebtedness
(and in the case of an involuntary filing against the Borrower, such filing is
not dismissed within 60 days); or (xiii) a material adverse change in the
condition or affairs (financial or otherwise) of Borrower such that the
likelihood of Borrower to meet the obligations hereunder is materially impaired;
or (xiv) Borrower attempts to remove,
sell, transfer, encumber, sublet or part with possession of the Equipment or any item thereof, except as expressly permitted herein; no cure period shall apply to this Section 18 (xiv).
(b) Upon the occurrence of an Event of Default, which default has not been cured within the applicable cure period at the Lender's sole option, all or any part of the entire unpaid total amount of the Obligations then owed to the Lender for the balance of the term thereof shall be at once due and payable and the Lender may, enter upon the premises where any or all of the Collateral securing such Obligations is located, take possession of and remove same, and exercise any one or more of the following rights and remedies, without liability to the Borrower therefor and without affecting the Borrower's obligations hereunder: (i) sell, lease or otherwise dispose of any or all of such Collateral or any part thereof at one or more public or private sales, leases or other dispositions, at wholesale or retail, for such consideration, on such terms, for cash or on credit, as the Lender may deem advisable, and the Lender may immediately conduct such sale, lease or other disposition, without demand of performance and without intention of notice to sell or of the time or place of sale or of redemption or of advertisement or other notice or demand whatsoever to the Borrower, all of which are hereby expressly waived (if notice of any sale or other disposition is required by law to be given, the Borrower hereby agrees that a notice sent at least five (5) days before the time of any intended public sale or of the time after which any private sale or other disposition of such Collateral is to be made, shall be reasonable notice of such sale or other disposition); or (ii) to the extent permitted by law, retain such Collateral or any part thereof, crediting the Borrower with the reasonable fair market or rental value thereof for the balance of the term of the related Loan Schedule; and/or (iii) require the Borrower to assemble such Collateral at the Borrower's sole expense, for the Lender's benefit, at a place designated by the Lender; and/or (iv) pursue any other remedy granted by any existing or future document executed by the Borrower or by law, including, without limitation, the rights and remedies of a secured party under the Uniform Commercial Code as enacted in any jurisdiction in which any of such Collateral maybe located. At any public sale, the Lender may be the purchaser of all or any part of such Collateral, free from any right of redemption on the part of the Borrower, which right is hereby waived and released. The Borrower agrees to pay all of the Lender's reasonable expenses, including but not limited to the costs of repossessing, storing, repairing and preparing such Collateral for sale or lease, any commissions payable in connection with any such sale or lease, and reasonable attorney's fees and disbursements, if an attorney shall be consulted. The net proceeds realized from any such sale, lease or other disposition or the exercise of any other remedy, after deducting therefrom all related expenses, shall be applied toward payment of the unpaid Obligations due and to become due to the Lender hereunder, the Borrower to remain personally liable for any deficiency. The Lender's recovery shall in no event exceed the maximum amount permitted by law. If any of such Collateral is leased by the Lender to a bona fide third party, the present value of such lease receivable discounted at an interest rate of 12% per annum shall be credited to the Borrower's liability to the Lender after deducting all expenses associated with the lease of such Collateral and the Borrower shall remain liable for any deficiency thereof. It is understood that facility of repossession in an Event of Default is a basis for the financial accommodation reflected by this Agreement and each Loan Schedule. Any late charges payable to the Lender under Section 2(e) hereof shall be payable in addition to all amounts payable by the Lender as a result of exercise of any of the remedies herein provided. The Borrower agrees to also reimburse the Lender for any expenses (including the Lender's reasonable attorneys' fees and expenses) arising out of or caused by Borrower's breach of this Agreement or any Loan Schedule. Notwithstanding anything to the contrary contained herein, if any one or more Loan Schedules are assigned by the Lender to one or more assignees, the Collateral securing the Obligations under each Loan
Schedule shall be limited to the Collateral securing the Obligations under each Loan Schedule then held by the Lender or such assignee, as the case may be.
19. POWER OF ATTORNEY. The Borrower authorizes the Lender and does
hereby make, constitute and appoint the Lender and any officer, employee or
agent of the Lender with full power of substitution, as the Borrower's true and
lawful attorney-in-fact with power, in its own name or in the name of the
Borrower: upon the occurrence and during the continuance of an Event of Default,
(i) to endorse any notes, checks, drafts, money orders, or other instruments of
payment (including payments under or in respect of any policy of insurance) in
respect of the Collateral that may come into possession of the Lender, (ii) to
sign and endorse any documents relating to the Collateral, (iii) to pay or
discharge taxes, liens, security interests or other encumbrances at any time
levied or placed on or threatened against the Collateral, and/or (iv) to grant,
collect, receipt for, compromise, settle and sue for monies due in respect of
the Collateral; and (v) generally to do, at the Lender's option, all acts and
things that the Lender reasonably deems necessary or desirable to protect,
preserve and realize Lender's security interests in the Collateral, or (vi) in
order to otherwise effectuate the intents of this Agreement and each Loan
Schedule, in each case as fully and effectually as the Borrower might or could
itself do; and the Borrower hereby ratifies all that such attorney-in-fact shall
lawfully do or cause to be done by virtue hereof. THIS POWER OF ATTORNEY IS
COUPLED WITH AN INTEREST AND SHALL BE IRREVOCABLE FOR AS LONG AS ANY OF THE
OBLIGATIONS SHALL BE OUTSTANDING. The Borrower agrees that any expense incurred
by the Lender pursuant to the foregoing authorization, and interest thereon at
the rate of one and a half (1 1/2) percent a month, or if such rate shall exceed
the maximum rate allowed by law, then, at such maximum rate from the date of
incurring any such expense, shall become part of the Obligations and be secured
by the Collateral.
20. ASSIGNMENT, ETC. The Borrower shall not assign, pledge, mortgage, lease, transfer, encumber or otherwise dispose of any of its rights in the Collateral or any part thereof, nor permit its use by anyone other than its regular employees without the Lender's prior written consent. Any such purported transfer, assignment or other action without the Lender's prior written consent shall be void. The Lender may, upon notice to (but without the consent of) the Borrower, transfer or assign this Agreement and each Loan Schedule or any interest herein and may mortgage, pledge, encumber or transfer any of its rights or interest in and to the Collateral or any part thereof and, without limitation, each assignee, transferee, pledgee and mortgagee (which may include any affiliate of the Lender) shall have the right to further transfer or assign its interest. Each such assignee, transferee, pledgee and mortgagee shall have all of the rights (but none of the obligations) of the Lender under this Agreement and each Loan Schedule. The Borrower hereby acknowledges notice of the Lender's intended assignment of this Agreement and each Loan Schedule and, upon such assignment, the Borrower agrees not to assert against any such assignees, transferees, pledgees and mortgagees any defense, claim, counterclaim, recoupment or set-off that the Borrower may have against the Lender, whether arising under this Agreement or any Loan Schedule or otherwise. Any assignee, transferee, pledgee or mortgagee of the Lender's rights under this Agreement or any Loan Schedule shall be considered a third party beneficiary of all of the Borrower's representations, warranties and obligations hereunder to the Lender. The Borrower agrees (a) in connection with any such transfer or assignment, to provide such instruments, documents, acknowledgments and further assurances as the Lender or any assignee, transferee, mortgagee or pledgee may deem necessary or advisable to effectuate the intents of this Agreement or any Loan Schedule or any such transfer or assignment, with respect to such matters as the Agreement, any Loan
Schedule, the Collateral, the Borrower's obligations to such assignee, transferee, mortgagee or pledgee and such other matters as may be reasonably requested, and (b) that after receipt by the Borrower of written notice of assignment from the Lender or from the Lender's assignee, transferee, pledgee or mortgagee, all principal, interest and other amounts which are then and thereafter become due under this Agreement or any Loan Schedule shall be paid to such assignee, transferee, pledgee or mortgagee, at the place of payment designated in such notice. This Agreement and each Loan Schedule shall be binding upon the Borrower and its successors and shall inure to the benefit of the Lender and its successors and assigns.
21. NO WAIVER. No failure on the part of the Lender to exercise, and no delay in exercising any right, remedy or power hereunder shall operate as a waiver thereof, nor shall any single or partial exercise by the Lender of any right, remedy or power hereunder preclude any other or future exercise of any other right, remedy or power. No course of dealing between the Borrower and the Lender nor any delay or omission on the part of the Lender shall operate as a waiver of any rights of the Lender. Each and every right, remedy or power hereby granted to the Lender or allowed it by law or other agreement shall be cumulative and not exclusive of any other, and may be exercised by the Lender from time to time. Waiver of any particular Event of Default shall not be deemed to be a waiver of any other or subsequent Event of Default.
22. FURTHER ASSURANCES; FILING. The Borrower from time to time, at its sole expense, will promptly execute and deliver all further instruments, documents and assurances, and take all further action, that may be necessary or desirable, or that the Lender may reasonably request, and hereby authorizes the Lender to take all action (including the filing of any financing statements, continuation statements or amendments thereto without the signature of the Borrower) as the Lender may deem reasonably necessary, proper or desirable in order to perfect and protect any security interest granted or purported to be granted hereby or to enable the Lender to exercise and enforce its rights and remedies hereunder with respect to any of the Collateral. The Borrower hereby authorizes the Lender to file one or more financing or continuation statements, and amendments thereto, relative to all or any part of the Collateral without the signature of the Borrower where permitted by law. A carbon, photographic or other reproduction of this Agreement or any Loan Schedule or any financing statement covering the Collateral or any part thereof shall be sufficient as a financing statement where permitted by law. The Borrower agrees to pay the Lender the actual fees for such filing, recording or stamp fees or taxes arising from the filing or recording of any such instrument or statement. Upon request, Lender shall provide Borrower with copies of each filing which has been made hereunder.
23. INDEMNITY AND EXPENSES. The Borrower shall and does hereby indemnify and save the Lender, its directors, officers, employees, agents, attorneys, servants, successors and assigns, harmless from any and all liabilities (including, without limitation, negligence, tort and strict liability but excluding gross negligence and intentional torts), damages, expenses, claims, actions, proceedings, judgments, settlements, losses, liens and obligations (each, an "Indemnified Claim"), including (without limitation) attorneys' fees and expenses, arising out of the ordering, purchase, delivery, rejection, non-delivery, ownership, selection, possession, leasing, renting, financing, operation (regardless of where, how and by whom operated), control, use, condition (including but not limited to latent and other defects, whether or not discoverable by the Borrower), maintenance, delivery, transportation, storage, repair, furnishing of specifications with respect to, and the return or other disposition of, the Equipment or any other
Collateral, or, in the event that the Borrower shall be in default hereunder, arising out of the condition of any item of Equipment or any other Collateral sold or disposed of after use by the Borrower, including (without limitation) claims for injury to or death of persons and for damage to property. The indemnities and obligations herein provided shall continue in full force and effect notwithstanding the expiration, termination or cancellation of this Agreement or any Loan Schedule for any reason whatsoever and irrespective of whether the Borrower ever accepts the Equipment or any other Collateral. The Lender shall give the Borrower prompt written notice of any Indemnified Claim and, at the Lender's sole option, Borrower shall defend the Lender against any Indemnified Claim at the Borrower's sole expense with attorney(s) selected by the Borrower and reasonably acceptable to Lender. The Borrower is an independent contractor and nothing contained herein shall authorize the Borrower or any other person to operate any item of Equipment or any other Collateral so as to incur any liability or obligation for or on behalf of the Lender. The Borrower will upon demand pay to the Lender the amount of any and all reasonable expenses, including the fees and disbursements of its counsel and of any experts and agents, which the Lender may incur in connection with (a) the exercise, enforcement or protection of any of the rights of the Lender hereunder after the occurrence and during the continuance of an Event of Default, or (b) the breach by Borrower of any of the provisions of this Agreement or any Loan Schedule. The foregoing amounts shall become part of the Obligations and secured by the Collateral as set forth in this Agreement or any Loan Schedule and the Lender may at any time apply to the payment of all such costs and expenses all proceeds arising from the possession or disposition of all or any portion of the Collateral.
24. MODIFICATIONS, ETC. Neither this Agreement nor any Loan Schedule, nor any provision hereof or thereof, may be changed, waived, discharged, or terminated orally, but only by an instrument in writing signed by a duly authorized representative of the party against whom enforcement of the change, waiver, discharge or termination is sought.
25. TERMINATION. Upon the payment in full of all Obligations, the Lender shall execute and deliver to the Borrower all such documents and instruments as shall be necessary to evidence termination of this Agreement or any Loan Schedule and the security interests created hereunder.
26. ENTIRE AGREEMENT: PARTIAL INVALIDITY. This Agreement and each Loan Schedule constitutes the entire agreement of the Lender and the Borrower with respect to the transactions covered hereby, and supersedes any and all prior agreements, understandings and negotiations with respect thereto. If any provision of this Agreement or any Loan Schedule is held to be invalid or unenforceable, such invalidity or unenforceability shall not invalidate this Agreement or any Loan Schedule as a whole, but this Agreement or such Loan Schedule shall be construed as though it did not contain the particular provision or provisions held to be invalid or unenforceable and the rights and obligations of the parties shall be construed and enforced to such extent as shall be permitted by law.
27. MISCELLANEOUS. (a) Any notice or other communication to a party hereunder shall be sufficiently given if in writing and personally delivered or mailed to said party by certified mail, return receipt requested, at its address set forth herein or such other address as either may designate for itself in such a notice to the other and such notice shall be deemed to have been given when received if personally delivered or served by overnight delivery or by mail. Whenever the sense of this Agreement or any Loan Schedule requires, words in the singular shall be deemed to include the plural and words in the plural shall be deemed to include the singular. If more than one Borrower is named herein, the liability of each
shall be joint and several. The headings set forth in this Agreement or any Loan Schedule are for convenience of reference only, and shall not be given substantive effect.
(b) To the extent that any Loan Schedule evidencing a Loan hereunder would constitute "chattel paper," as such term is defined under the Connecticut Uniform Commercial Code, a security interest therein may be created only through the transfer or possession of the original of Counterpart No. 1 of such Loan Schedule executed pursuant to this Agreement. Transfer or possession of an original counterpart of this Agreement shall not be necessary to perfect such security interest and no security interest in any such Loan Schedule may be created by the transfer or possession of any other counterpart of such Loan Schedule or by the transfer or possession of any counterpart of this Agreement.
28. CHOICE OF LAW AND VENUE; WAIVER OF JURY TRIAL. THIS AGREEMENT AND EACH LOAN SCHEDULE SHALL BE CONSTRUED UNDER THE LAWS OF THE STATE OF CONNECTICUT, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW OR CHOICE OF LAW. THE BORROWER HEREBY AGREES THAT ALL ACTIONS OR PROCEEDINGS ARISING DIRECTLY OR INDIRECTLY FROM OR IN CONNECTION WITH THIS AGREEMENT OR ANY LOAN SCHEDULE OR ANY OF THE COLLATERAL SHALL, AT THE LENDER'S SOLE OPTION, BE LITIGATED ONLY IN THE CONNECTICUT STATE COURTS OR THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF CONNECTICUT SITTING IN FAIRFIELD COUNTY, CONNECTICUT. The Borrower consents to the jurisdiction and venue of the foregoing courts and consents that any process or notice of motion or other application to either of such courts or a judge thereof may be served inside or outside the State of Connecticut or the District of Connecticut by registered mail, return receipt requested, directed to the Borrower at its address set forth in this Agreement or any Loan Schedule (and service so made shall be deemed complete upon receipt or by personal service, or in such other manner as may be permissible under the rules of said courts. THE LENDER AND THE BORROWER EACH WAIVE THE RIGHT TO TRIAL BY JURY IN ANY COURT WITH RESPECT TO, IN CONNECTION WITH, OR ARISING OUT OF THIS AGREEMENT OR ANY LOAN SCHEDULE, OR THE VALIDITY, PROTECTION, INTERPRETATION, COLLECTION OR ENFORCEMENT THEREOF, OR ANY OTHER CLAIM OR DISPUTE HOWSOEVER ARISING, BETWEEN THE BORROWER AND THE LENDER. The Borrower hereby waives the right to interpose any set-off or counterclaim or cross-claim in any such litigation; provided, however that nothing in this Section 28 shall prevent the Borrower from asserting, in a separate and independent proceeding, any claim it may have against the Lender.
IN WITNESS WHEREOF, the parties hereby have caused these presents to be duly executed by their authorized representatives on the date first above written.
ARRAY BIOPHARMA INC. LEASING TECHNOLOGIES
INTERNATIONAL, INC.
By: /s/ R.M. CARRUTHERS CFO By: /s/
-------------------------------- -------------------------------
(Title) (Title)
Attest: /s/ DAVID SNITMAN COO
----------------------------
(Title)
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EXHIBIT 10.28
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED OR UNLESS SOLD PURSUANT TO AN EXEMPTION TO SUCH ACT.
LEASING TECHNOLOGIES INTERNATIONAL, INC.
WARRANT TO PURCHASE 13,750
SHARES OF SERIES A PREFERRED STOCK
Void after March 31, 2006
THIS CERTIFIES THAT, for value received, Leasing Technologies International, Inc. (the "Holder") is entitled to purchase, on the terms and subject to the conditions hereof, up to 13,750 shares of Series A Preferred Stock, par value $0.001 per share (the "Series A Preferred Stock"), of Array BioPharma Inc., a Delaware corporation (the "Company"), at a per share purchase price of $3.00 (the "Exercise Price"), subject to adjustment as provided herein.
The following terms shall apply to this Warrant:
1. Exercise of Warrant. The terms and conditions upon which this Warrant may be exercised, and the Series A Preferred Stock covered hereby (the "Warrant Shares"), may be purchased, are as follows:
1.1 Number of Shares. This Warrant is being delivered to Holder as additional consideration for Holder's extension of a credit facility to the Company, pursuant to that certain Loan and Security Agreement dated of even date herewith. The number of Warrant Shares for which this Warrant is initially exercisable is 13,750 shares, which number is subject to adjustment pursuant to Section 2 of this Warrant.
1.2 Exercise. This Warrant may be exercised in whole or in part at any time or from time to time up until 5:00 p.m. Mountain Standard Time, March 31, 2006, and shall be void thereafter; provided that the Company shall give Holder written notice of Holder's right to exercise this Warrant not more than 90 days and not less than 30 days before such date. If the notice is not so given, the expiration date shall automatically be extended until 30 days after the date the Company delivers the notice to Holder. The exercise of the purchase rights hereunder, in whole or in part shall be effected by (a) the surrender of this Warrant, together with a duly executed copy of the form of the subscription attached as EXHIBIT A hereto, to the Company at its principal offices, and (b) the delivery of the Exercise Price by (i) check or bank draft payable to the Company's order,
or (ii) by wire transfer to the Company's account for the number of Warrant Shares for which the purchase rights hereunder are being exercised.
1.3 Automatic Exercise.
(a) Notwithstanding the provisions of Section 1.1 above, this Warrant shall automatically be deemed to be exercised in full in the manner set forth in Section 1.4 hereof, without any further action on behalf of the Holder on the earliest of a date: (a) ten (10) days prior to a "Sale of the Company" (as defined), or (b) immediately prior to the closing of an underwritten initial public offering by the Company in which the Series A Preferred Stock converts automatically into Common Stock (an "IPO"). A "Sale of the Company" shall mean either of the following (i) the acquisition of all or substantially all of the capital stock of the Company by another entity by means of any transaction or series of related transactions (including, without limitation, any reorganization, merger or consolidation but, excluding any merger effected exclusively for the purpose of changing the domicile of the Company); or (ii) a sale of all or substantially all of the assets of the Company; unless the Company's shareholders of record as constituted immediately prior to such acquisition or sale will, immediately after such acquisition ro sale (by virtue of securities issued as consideration for the corporation's acquisition or sale or otherwise) hold at least 50% of the voting power of the surviving or acquiring entity. In connection with the exercise of this Warrant pursuant to clause (a) and clause (b) of this Section 1.3, such exercise shall be conditioned upon the closing of such Sale of the Company or IPO and the Warrant shall not be deemed to have been exercised until the closing of such Sale of the Company or IPO.
(b) Public Offering. For purposes of this Warrant, IPO means the sale of the Company's Common Stock pursuant to a registration statement under the Securities Act of 1933, as amended, for an underwritten public offering (other than a registration on Form S-8, Form S-4 or comparable forms), which results in aggregate cash proceeds (prior to underwriters' commissions and expenses) to the Company of more than $7,500,000. Immediately prior to the closing of any Public Offering prior to the Expiration Date, any portion of this Warrant then not exercised or exercisable will be exercisable for the number of shares of the Company's Common Stock that would have resulted from the conversion, pursuant to the Company's Articles of Incorporation then in effect of the maximum number of shares of Preferred Stock that could have been acquired by the Holder upon the exercise of the unexpired portion of this Warrant immediately prior to such Public Offering.
1.4 Net Issue Election.
(a) Upon automatic exercise of this Warrant as provided in Section 1.3 above or at any time or from time to time as the Holder may elect, the Holder shall be entitled to receive, without the payment by the Holder of any additional consideration, shares of Series A Preferred Stock equal to the value of this Warrant or any portion hereof by the surrender of this Warrant or such portion to the Company, with the net issue election notice attached hereto as EXHIBIT B duly executed, at the principal office of the Company. Thereupon, the Company shall issue to the Holder such number of fully paid and nonassessable shares of Series A Preferred Stock as is computed using the following formula:
A
where: X= the number of shares of Series A
Preferred Stock to be issued to the
Holder.
Y= the number of shares of Series A
Preferred Stock covered by this
Warrant in respect of which the net
issue election is made.
A= the fair market value of one share
of Series A Preferred Stock, as
determined pursuant to subsection
(b) below, as at the time the net
issue election is made.
B= the Exercise Price in effect under
this Warrant at the time the net
issue election is made.
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(b) Determination of Fair Market Value. For purposes of this Section, fair market value of one share of Series A Preferred Stock as of a particular date (the "Determination Date") shall mean:
(i) In the case of an initial public offering of the Common Stock, the initial "Price to Public" of one share of Common Stock specified in the final prospectus with respect to such offering, multiplied by the number of shares of Common Stock into which each share of Series A Preferred Stock converts as of that date;
(ii) In the case of a Sale of the Company, the effective per share consideration to be received in a Sale of the Company by holders of the Series A Preferred Stock, or if no such price is set forth in the agreement concerning the Sale of the Company, then as determined in good faith by the Company's Board of Directors;
(iii) If the Company's Common Stock is listed on a security exchange or the Nasdaq National Market, the closing price of the Company's Common Stock on such exchange or the Nasdaq National Market on the day notice of exercise is provided to the Company under Section 1.4(b) hereof, multiplied by the number of shares of Common Stock into which each share of Series A Preferred Stock converts as of that date; or
(iv) If Sections 1.4(b)(i), (ii), or (iii) do not apply, then as determined by the Board of Directors in good faith, which determination shall be conclusive and binding on the holder hereof.
1.5 Issuance of Shares. Upon the exercise of the purchase rights, in whole or in part, evidenced by this Warrant, a certificate or certificates for the purchased Warrant Shares shall be issued by the Company to the Holder as soon as practicable. Upon the partial exercise of this Warrant, the Company shall, as soon as practicable, deliver to the Holder a warrant in like tenor as this Warrant to purchase the number of shares in respect of which this Warrant shall not have been exercised.
2. Certain Adjustments.
2.1 Series A Preferred Stock Dividends. If the Company at any time prior to the expiration of this Warrant shall pay a dividend with respect to the Company's Series A Preferred Stock payable in shares of Series A Preferred Stock, or make any distribution with respect to the Company's Series A Preferred Stock, then the purchase price per share shall be appropriately decreased, and the number of Warrant Shares shall be appropriately increased in proportion to such dividend.
2.2 Splits and Subdivisions. In the event the Company should at any time or from time to time fix a record date for a split or subdivision of the outstanding shares of Series A Preferred Stock of the Company, or the determination of the holders of Series A Preferred Stock of the Company entitled to receive a dividend or other distribution payable in additional shares of Series A Preferred Stock of the Company or other securities or rights convertible into, or entitling the holder thereof to receive directly or indirectly, additional shares of the Company's Series A Preferred Stock (hereinafter referred to as the "Series A Preferred Stock Equivalents") without payment of any consideration by such holder for the additional shares of Series A Preferred Stock or Series A Preferred Stock Equivalents (including the additional shares of Series A Preferred Stock issuable upon conversion or exercise thereof), then, and as of such record date (or the date of such distribution, split or subdivision if no record date is fixed), the per share purchase price shall be appropriately decreased, and the number of Warrant Shares shall be appropriately increased in proportion to such increase of outstanding shares.
2.3 Combination of Shares. If the number of shares of Series A Preferred Stock outstanding at any time after the date hereof is decreased by a combination of the outstanding shares of Series A Preferred Stock of the Company, the per share purchase price shall be appropriately increased and the number of Warrant Shares shall be appropriately decreased in proportion to such decrease in outstanding shares.
2.4 Adjustments for Other Distributions. In the event the Company shall declare a distribution with respect to the Series A Preferred Stock payable in securities of other persons, evidences of indebtedness issued by the Company or other persons, assets, or options, or rights not referred to above, then, in each such case for the purpose of this Section 2, upon exercise of this Warrant the holder hereof shall be entitled to a proportionate share of any such distribution as though such holder was the holder of the number of shares of Series A Preferred Stock of the Company into which this Warrant may be exercised as of the record date fixed for the determination of the holders of Series A Preferred Stock of the Company entitled to receive such distribution.
2.5 Sale or Issuance Below Purchase Price. If the Company shall at any time or from time to time issue or sell any of its Preferred Stock, or any other securities convertible into Preferred Stock, for a consideration per share of at least $1.00 per share, but less than the Exercise Price in effect immediately prior to the time of such issue or sale, the Exercise Price then in effect and then applicable for any subsequent period or periods shall be adjusted to a price determined by dividing (i) an amount equal to the sum of (x) the number of shares of Common Stock outstanding immediately prior to such issue or sale multiplied by the Exercise Price then in effect and (y) the
consideration, if any, received by the Company upon such issue or sale, by (ii) the total number of shares of Common Stock outstanding immediately after such issue or sale. For purposes of this Section 2.5, all shares of Common Stock issuable upon the exercise and/or conversion of all outstanding warrants (including this Warrant), options and convertible securities shall be deemed to be outstanding. The foregoing notwithstanding, no adjustment shall be made pursuant to this Section 2.5 on account of a given issue or sale to the extent that the Exercise Price is adjusted pursuant to any other Section of this Warrant.
2.6 Certificate as to Adjustments. In the case of each adjustment or readjustment of the purchase price pursuant to this Section 2, the Company will promptly compute such adjustment or readjustment in accordance with the terms hereof and cause a certificate setting forth such adjustment or readjustment, and showing in detail the fact upon which such adjustment or readjustment is based to be delivered to the holder of this Warrant. The Company will, upon the written request at any time of the holder of this Warrant, furnish or cause to be furnished to such holder a certificate setting forth:
(a) such adjustments and readjustments;
(b) the purchase price at the time in effect; and
(c) the number of Warrant Shares receivable upon the exercise of the Warrant.
2.7 Notice of Record Date, etc. In the event of any taking by the Company of a record of the holders of any class of securities of the Company for the purpose of determining the holders thereof who are entitled to receive any dividend (other than a cash dividend), or other distribution, or any right to subscribe for, purchase or otherwise acquire any shares of stock of any class or any other securities or property, or to receive any other right, or any capital reorganization of the Company, any reclassification or recapitalization of the capital stock of the Company, the Company will mail to the holder of this Warrant at least twenty (20) days prior to the earliest date specified therein, a notice specifying:
(a) The date on which such record is to be taken for the purpose of such dividend, distribution, or right, and the amount and character of such dividend, distribution, or right; or
(b) The date on which any such reorganization, or reclassification is expected to become effective, and the record date for determining shareholders entitled to vote thereon.
3. Representations of Holder.
3.1 Investment Intent. Holder hereby warrants and represents that Holder is acquiring this Warrant, and any Warrant Shares issued upon exercise of this Warrant, for Holder's own account and not with a view to their resale or distribution.
3.2 Exempt from Registration. Holder acknowledges that this Warrant has not been registered under the Securities Act of 1933, as amended (the "1933 Act"), on the ground that the issuance of this Warrant is exempt from registration pursuant to Section 4(2) of the 1933 Act, and that the Company's reliance on such exemption is predicated on the representations of Holder set forth herein.
3.3 Investment Experience. In connection with the investment representations made herein, Holder represents that it is able to fend for itself in the transactions contemplated by this Warrant, has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of his investment, has the ability to bear the economic risks of its investment and has been furnished with and has had access to such information as it has requested and deemed appropriate to its investment decision.
3.4 Restricted Securities. Holder hereby confirms that Holder has been informed that this Warrant, and the Warrant Shares issued upon exercise of this Warrant, are restricted securities under the 1933 Act and may not be resold or transferred unless this Warrant, and the Warrant Shares issued upon exercise of this Warrant, are first registered under the federal securities laws or unless an exemption from such registration is available. Accordingly, Holder hereby acknowledges that Holder is prepared to hold this Warrant, and the Warrant Shares issued upon exercise of this Warrant, for an indefinite period and that Holder is aware that Rule 144 of the Securities and Exchange Commission issued under the 1933 Act is not presently available to exempt the issuance of this Warrant from the registration requirements of the 1933 Act.
(a) Disposition of Shares. Holder hereby agrees that Holder shall make no disposition of this Warrant, and the Warrant Shares issued upon exercise of this Warrant, unless and until Holder shall have (i) provided the Company with assurances that (A) the proposed disposition does not require registration of the Warrant Shares under the 1933 Act, or (B) all appropriate action necessary for compliance with the registration requirements of the 1933 Act or of any exemption from registration available under the 1933 Act (including Rule 144) has been taken; and (ii) complied with the terms of the Shareholders Agreement dated as of December 27, 1995 by and between the Company and the holders of its capital stock (the "Shareholders Agreement").
3.5 Restrictive Legend. In order to reflect the restrictions on disposition of the Warrant Shares, the stock certificates for the Warrant Shares will be endorsed with the following restrictive legends to the following effect:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION TO THE REGISTRATION REQUIREMENTS OF SUCH ACT OR SUCH LAWS.
THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A SHAREHOLDERS AGREEMENT DATED AS OF MAY 18, 1998, AND AS MAY BE AMENDED FROM TIME TO TIME, AND SAID SHARES MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT IN ACCORDANCE WITH THE TERMS OF SUCH AGREEMENT. SUCH AGREEMENT MAY BE EXAMINED AT THE PRINCIPAL PLACE OF BUSINESS OF THE COMPANY AND A COPY THEREOF WILL BE FURNISHED WITHOUT CHARGE TO THE HOLDER OF THIS CERTIFICATE UPON RECEIPT BY THE COMPANY AT ITS PRINCIPAL PLACE OF BUSINESS OR REGISTERED OFFICE OF A WRITTEN REQUEST FROM THE SHAREHOLDER.
4. Representations, Warranties and Covenants. This Warrant is issued and delivered by the Company and accepted by each Holder on the basis of the following representations, warranties and covenants made by the Company:
4.1 The Company covenants that it will at all times from and after the date hereof reserve and keep available such number of its authorized shares of Series A Preferred Stock and Common Stock, $.001 par value, of the Company (the "Common Stock"), as will be sufficient to permit, respectively, the exercise of this Warrant in full and the conversion into shares of Common Stock of all shares of Series A Preferred Stock receivable upon such exercise. The Company covenants further that such shares as may be issued pursuant to such exercise and/or conversion will, upon issuance, be duly and validly issued, fully paid and nonassessable and free from all taxes, liens and charges with respect to the issuance thereof.
4.2 The Company has all necessary authority to issue, execute and deliver this Warrant and to perform its obligations hereunder. This Warrant has been duly authorized issued, executed and delivered by the Company and is the valid and binding obligation of the Company, enforceable in accordance with its terms.
4.3 The shares of Series A Preferred Stock issuable upon the exercise of this Warrant have been duly authorized and reserved for issuance by the Company and, when issued in accordance with the terms hereof, will be validly issued, fully paid and nonassessable.
4.4 The issuance, execution and delivery of this Warrant do not, and the issuance of the shares of Series A Preferred Stock upon the exercise of this Warrant in accordance with the terms hereof will not, (i) violate or contravene the Company's Articles or bylaws, or any law, statute, regulation, rule, judgment or order applicable to the Company, (ii) violate, contravene or result in a breach or default under any contract, agreement or instrument to which the Company is a party or by which the Company or any of its assets are bound or (iii) require the consent or approval of or the filing of any notice or registration with any person or entity.
5. Fractional Shares. No fractional shares shall be issued in connection with any exercise of this Warrant. In lieu of the issuance of such fractional shares, the Company shall make a cash payment equal to the then fair market value of such fractional share as determined in good faith by the Company's Board of Directors pursuant to Section 1.4(b) above.
6. No Privilege of Stock Ownership. Prior to the exercise of this
Warrant, the Holder shall not be entitled, by virtue of holding this Warrant, to
any rights of a stockholder of the Company, including (without limitation) the
right to vote, receive dividends or other distributions, or exercise preemptive
rights, and such holder shall not be entitled to any notice or other
communication concerning the business or affairs of the Company. Nothing in this
Section 6, however, shall limit the right of the Holder to be provided the
notices required herein, or to participate in distributions described in Section
2 hereof if the Holder ultimately exercises this Warrant. Notwithstanding the
foregoing, upon exercise of this Warrant, Holder shall be deemed to be a
"Holder" and "Holder of Registrable Securities" pursuant to Section 2.2 and 2.3
of the Investor Rights Agreement dated as of May 18,. 1998, as amended, by and
among the Company and certain of its shareholders; provided, that as a condition
of receiving such registration rights, Holder agrees to execute such Investor
Rights Agreement as requested by the Company.
7. Transfers or Exchanges.
7.1 Subject to compliance with the Shareholders Agreement and applicable federal and state securities laws, this Warrant and all rights hereunder are transferable in whole or in part by the Holder to any person or entity reasonably acceptable to the Company. The Holder will provide written notice of such transfer to the Company, and if no written objection from the Company is received by the Holder within five business days after the date of notice, then such transfer shall be deemed accepted. The transfer shall be recorded on the books of the Company upon the surrender of this Warrant, properly endorsed, to the Company at its principal offices, and the payment to the Company of all transfer taxes and other governmental charges imposed on such transfer. In the event of a partial transfer, the Company shall issue to the holders one or more appropriate new warrants.
7.2 All new warrants issued in connection with transfers, exchanges or partial exercises shall be identified in form and provision to this Warrant, except as to the number of shares.
7.3 Holder hereby agrees that, during the period of duration (not to exceed 180 days) specified by the Company and an underwriter of Series A Preferred Stock or other securities of the Company, following the effective date of an IPO, it shall not, to the extent requested by the Company and such underwriter, directly or indirectly sell, offer to sell, contract to sell (including, without limitation, any short sale), grant any option to purchase or otherwise transfer or dispose of (other than to donees who agree to be similarly bound) any securities of the Company held by it at any time during such period except Common Stock included in such registration; provided, however, that all officers and directors of the Company enter into similar agreements.
8. Successors and Assigns. The terms and provisions of this Warrant shall be binding upon the Company, the Holder, and their respective successors and assigns, subject at all times to the restrictions set forth in the Agreement and in this Warrant.
9. Loss, Theft, Destruction or Mutilation of Warrant. Upon receipt of notice by the Company of the loss, theft, destruction, or mutilation of this Warrant, and upon reimbursement to the Company of all reasonable expenses incidental thereto, and, if mutilated upon surrender and
cancellation of this Warrant, the Company will make and deliver a new warrant, in identical form, and dated as of such cancellation, in lieu of this Warrant.
10. Saturdays, Sundays, Holidays, etc. 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 Sunday, or shall be a legal holiday, then such action may be taken or such right may be exercised, except as to the purchase price, on the next succeeding day not a legal holiday.
11. Amendments and Waivers. Any term of this Warrant may be amended, and the observance of any term of this Warrant may be waived (either generally or in a particular instance, and either retroactively or prospectively), with the written consent of the Company and the Holder, such consent not to be unreasonably withheld. Any such amendment or waiver shall be binding on the Holder.
12. Governing Law. This Warrant shall be governed by and construed in accordance with the laws of the State of Colorado.
13. Notices. Any notice, demand or delivery pursuant to the provisions hereof shall be sufficiently delivered or made if sent by first class mail, postage prepaid, addressed to any holder of a Warrant at its last known address appearing on the books of the Company, or, except as herein otherwise expressly provided, to the Company at its principal executive office at 1885 33rd Street, Boulder, Colorado, 80301, or such other address as shall have been furnished to the party giving or making such notice, demand or delivery.
DATED: March 30, 1999
Array BioPharma Inc., a Delaware corporation
By: /s/ MIKE CARRUTHERS
---------------------------
Print Name: Mike Carruthers
Title: Chief Financial Officer
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EXHIBIT A
Subscription
Array BioPharma Inc.
Ladies and Gentlemen:
The undersigned hereby elects to purchase, pursuant to the provisions of the Warrant dated March 31, 1999, __________ shares of the Series A Preferred Stock of Array BioPharma Inc., a Delaware corporation.
Dated: _______________, ______
Leasing Technologies International, Inc.
EXHIBIT B
Net Issue Election
Array BioPharma Inc.
Ladies and Gentlemen:
The undersigned hereby elects under Section 1.4 of the Warrant dated March 31, 1999 (the "Warrant"), to exercise its right to receive ______________ shares of Series A Preferred Stock pursuant to the Warrant. The certificate(s) for such shares issuable upon such net issue election shall be issued in the name of the undersigned or as otherwise indicated below:
Leasing Technologies International, Inc.
By: /s/
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
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EXHIBIT 10.29
[ * ] Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
CUSTOM SYNTHESIS
FEE-FOR-SERVICE AGREEMENT
by and between
MERCK & CO., INC.
and
ARRAY BIOPHARMA
This Agreement (the "Agreement") confirms the mutual understanding by and between Merck & Co., Inc., a New Jersey corporation with a place of business at 126 E. Lincoln Avenue, Rahway, New Jersey 07065-0900 ("MERCK") and Array BioPharma, a Delaware corporation with a place of business at 1885 33rd Street, Boulder, Colorado 80301 ("ARRAY BIOPHARMA").
1. Purpose and Scope. ARRAY BIOPHARMA agrees to diligently perform services ("Services") required to synthetically prepare the desired proprietary organic compounds ("Products") requested by MERCK (or by one or more Affiliates designated by MERCK) under this Agreement. For the purposes of this Agreement, Affiliates shall mean any entities controlling, controlled by, or under common control with, MERCK and ARRAY BIOPHARMA, respectively. Control shall mean the ownership of at least 50% of the equity interests in or voting control of the identified entity.
(a) For each proposed Service to be initiated under this Agreement, MERCK shall submit to ARRAY BIOPHARMA, at no cost, a written request ("Requisition") stating the chemical structure(s) and gram quantity (or molar equivalent) amount(s) of the desired Product(s), including any synthetic routes to such chemical structure(s) and other specifications (the foregoing together with Purchase Orders and other non-public information generated by MERCK, hereinafter shall be referred to as "MERCK Know-How") and/or chemical material ("MERCK Material"). ARRAY BIOPHARMA shall be permitted to use such Requisition for the sole purpose of evaluating its interest to synthetically prepare Product(s) described therein for MERCK. Within thirty (30) days of receipt of said Requisition, ARRAY BIOPHARMA shall advise MERCK of its interest to synthetically prepare the Product(s) embodied in the Requisition by submitting to MERCK a written bid stating the proposed start and delivery dates, total costs of preparing and gram quantity amount of the Product(s) that ARRAY BIOPHARMA agrees to provide ("Quote"). Within thirty (30) days of MERCK's receipt of a Quote, MERCK shall advise ARRAY BIOPHARMA in writing of the acceptance of each submitted Quote, and upon such acceptance, shall initiate an Authorized Purchase Order.
(b) The MERCK Material is not to be used in humans. It is understood that the MERCK Know-How and MERCK Material are provided only for the proposed Service to be carried out hereunder and shall not be used for any other purpose nor shall the MERCK Know-How or MERCK Material or any derivatives, analogs, modifications or components thereof or information about said MERCK Know-How or MERCK Material be transferred, delivered or disclosed to any third party without the prior written consent of MERCK. [ * ]. Any and all unused MERCK Material shall, at MERCK's expense and election, be returned to MERCK promptly upon completion of such Service or otherwise disposed of in accordance with instructions from MERCK.
(c) For each Service initiated under this Agreement, ARRAY BIOPHARMA
shall deliver to MERCK the agreed upon amount [ * ] of each synthetically
prepared Product, accompanied by a writing in English, in electronic or
hard-copy format, which describes the step-wise synthetic procedure carried out
to prepare each Product ("Product Report") and liquid chromatography-mass
spectral (LC-MS) analysis to prove chemical identity and confirm overall purity
[ * ]. [ * ]
[ * ] Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
(D) [ * ]. ARRAY BIOPHARMA shall advise MERCK of all quantities of the Product(s) generated in excess of the Authorized Purchase Order. [ * ]. MERCK may agree to purchase additional quantities of Product(s) at a discounted price mutually agreed upon by the parties in writing, and ARRAY BIOPHARMA agrees to dispose of any additional remaining quantities of Product(s) in accordance with instructions from MERCK.
2. Term and Termination. The term of this Agreement shall be for a period of
[ * ] years, effective upon execution of this Agreement by both parties. MERCK
may terminate this Agreement [ * ] upon written notice to ARRAY BIOPHARMA. Upon
termination of this Agreement, or at any other time that MERCK might request,
ARRAY BIOPHARMA promptly shall return all papers, records and other documents
embodying MERCK confidential information, including all MERCK Material supplied
by MERCK, and all embodiments of MERCK Know-How, including all documents,
materials and Products generated by ARRAY BIOPHARMA in connection with the
Services provided under this Agreement, except that ARRAY BIOPHARMA may retain
one copy of such papers, records and other documents for record keeping
purposes. Termination of this Agreement for any reason shall not release either
party hereto from any liability which, at the time of such termination, has
already accrued to the other party or which is attributable to a period prior to
or as a result of such termination.
3. Amount. MERCK shall pay ARRAY BIOPHARMA the negotiated amount set forth in
the Authorized Purchase Order to cover total costs and expenses for each Service
initiated under this Agreement, with payment in full to be made within sixty
(60) days of delivery of the Product(s) to MERCK in accordance with the
conditions set forth in Section 1 of this Agreement. Such costs shall include
the preparation and shipment, per custom packaging instructions provided by
MERCK with the Authorized Purchase Order, of stated gram quantity amount (or
molar equivalent of salt forms) of the Product to MERCK. MERCK shall have no
obligation to make any payments whatsoever to ARRAY BIOPHARMA or bear any costs
or expenses for any Product which is not in compliance with the purity and
structural characterization criteria or other specifications set forth herein,
in the Requisition, or otherwise provided by MERCK to ARRAY BIOPHARMA. Under no
circumstances shall MERCK have any obligations to ARRAY BIOPHARMA beyond those
set forth hereunder. MERCK shall not be obligated to make any payments
whatsoever to ARRAY BIOPHARMA or bear any costs or expenses for any Services
beyond those set forth in the Authorized Purchase Order or requested in
connection with a subsequent mutual written agreement.
4. Confidentiality. ARRAY BIOPHARMA agrees to keep confidential and not to use, except to perform for MERCK the Services under this Agreement, all information, MERCK Know-How and MERCK Material supplied by MERCK and all information and Products generated by ARRAY BIOPHARMA as a result of the Services performed pursuant to this Agreement. ARRAY BIOPHARMA agrees not to disclose to any third party any information, MERCK Know-How, MERCK Material or Products concerning Services being conducted hereunder without MERCK's prior written consent. These obligations of confidentiality and non-use shall continue at all times beyond the term of this Agreement. ARRAY BIOPHARMA shall not use any third party trade secrets, processes, methodologies or reagents in generating any Product(s) for MERCK hereunder. This Agreement shall not restrict ARRAY BIOPHARMA's use or disclosure of certain expected information which (i) is in the public domain by use and/or publication before its receipt from MERCK, (ii) was already in ARRAY BIOPHARMA'S possession prior to receipt from MERCK; (iii) is properly obtained by ARRAY BIOPHARMA from a third party which has a valid legal right to disclose such information to ARRAY BIOPHARMA and is not under a confidentiality obligation to MERCK; or (iv) ARRAY BIOPHARMA is required by law or a court of competent jurisdiction to make provided, however, to the extent it may legally do so, ARRAY BIOPHARMA will give reasonable advance notice to MERCK of
[ * ] Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
such disclosure and reasonably assist MERCK to secure confidential treatment of MERCK confidential information prior to its disclosure (whether through protective orders or otherwise) (collectively, the "Exceptions"). ARRAY BIOPHARMA agrees to advise MERCK of the applicability of any of the foregoing Exceptions for any Product(s) or the synthetic preparation thereof that Array BIOPHARMA is aware of in connection with any Services hereunder, and shall advise MERCK of same in connection with the provision of the Quote; provided, however, failure to do so shall not prevent ARRAY BIOPHARMA from relying on such Exception.
5. Reports: Use of Information. ARRAY BIOPHARMA shall keep MERCK informed of the status and progress of Services through written reports on a monthly basis which shall continue through completion of each Service and delivery of the Product(s), at which time ARRAY BIOPHARMA shall submit the Product Report as outlined in Section 1 of this Agreement. ARRAY BIOPHARMA agrees to keep confidential and not to use, except in connection with the Services provided under this Agreement, all MERCK Know-How included in any and all written and electronic copies of the aforementioned reports. [ * ]. At MERCK's request, ARRAY BIOPHARMA shall provide to MERCK copies of all documentation relating to the Services performed hereunder or shall permit MERCK to inspect and copy such documentation.
6. Inventions. [ * ]
7. Compliance with Law. ARRAY BIOPHARMA shall conduct the research in accordance
with the applicable laws, rules and regulations, including, without limitation,
all current governmental regulatory requirements concerning Good Laboratory
Practices. ARRAY BIOPHARMA hereby certifies that it will not or has not employed
or otherwise used in any capacity the services of any person debarred under
Section 306 (a) or (b) of the Federal Food, Drug, and Cosmetic Act in performing
any Services hereunder.
8. Authorized Purchase Orders. The terms of any Authorized Purchase Order and any Requisition are in addition to the terms of this Agreement, and this Agreement shall control over any terms in any Quote.
[ * ] Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
9. Liability. MERCK assumes no responsibility and shall have no liability for the nature, conduct or results of any research, testing or other work performed pursuant to the Services hereunder.
10. Indemnity. ARRAY BIOPHARMA hereby agrees to indemnify and hold harmless MERCK, its subsidiaries and affiliates and their respective officers, employees and directors against any and all liability, loss, damages, cost or expense (including attorney's fees and expenses and costs of investigation) which any of them may hereafter incur, suffer, or be required to pay as the result of any damage suffered or alleged to be suffered, including, without limitation, death or personal injury and any direct, consequential, special and punitive damages, as the result of the Services being performed by ARRAY BIOPHARMA hereunder; provided, however, that such loss, liability or damage is not attributable to the fraud, gross negligence, malfeasance or willful misconduct of MERCK. Notwithstanding the foregoing, ARRAY BIOPHARMA assumes no responsibility and shall have no liability for MERCK's use of any of the results of the Services or Product(s) provided to MERCK hereunder.
MERCK hereby agrees to indemnify and hold harmless ARRAY BIOPHARMA, its subsidiaries and affiliates and their respective officers, employees and directors against any and all liability, loss, damages, cost or expense (including attorney's fees and expenses and costs of investigation) which any of them may hereafter incur, suffer or be required to pay as the result of any damage suffered or alleged to be suffered, including without limitation, death or personal injury and any direct, consequential, special and punitive damages, as the result of MERCK's use of any of the Products provided to MERCK hereunder; provided, however, that such loss, liability or damage is not attributable to the fraud, gross negligence, malfeasance or willful misconduct of ARRAY BIOPHARMA.
11. Public Announcements. ARRAY BIOPHARMA shall hold in confidence all information concerning this Agreement and the terms hereof and shall not make any public statement or announcement about it, nor issue new releases or advertising relating to the existence or implementation of this Agreement or the subject matter thereof without the prior written consent of MERCK. ARRAY BIOPHARMA shall not use the name "Merck", Merck & Co., Inc., or any trademarks, trade names or logos of MERCK without MERCK's prior written consent.
12. Independent Contractors. It is not the intent of ARRAY BIOPHARMA and MERCK to form any partnership or joint venture, and nothing contained herein shall be construed to empower either party to act as an agent for the other. The parties agree that each of them shall, in relation to its obligations hereunder, be acting as an independent contractor.
13. Assignment. [ * ]
14. Force Majeure. Neither ARRAY BIOPHARMA nor MERCK shall be liable to the other in damages for, nor shall this Agreement be terminable or cancelable by reason of, any delay or default in such party's performance hereunder if such default or delay is caused by events beyond such party's reasonable control including, but not limited to, acts of God; acts or omissions of any government; any rule, regulation or order issued by any governmental authority or by any officer, department, agency or instrumentality thereof; fire; storm; flood; earthquake; accident; war; rebellion; insurrection; riot; invasion; or strike, lockout or other work stoppage provided that such failure or omission is cured as is practicable after the occurrence of the force majeure.
[ * ] Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
15. Contacts. All correspondence, Requisitions, Quotes and Authorized Purchase Orders pertaining to this Agreement should be directed to [ * ], Merck Research Laboratories, in the case of MERCK, and [ * ] in the case of ARRAY BIOPHARMA.
16. No Obligation. It is understood and agreed that the entering into of this Agreement and receipt of Quotes by MERCK shall not impose any obligation upon MERCK to submit any Requisitions to ARRAY BIOPHARMA or to accept any Quote submitted by ARRAY BIOPHARMA. MERCK retains the sole discretion to select vendors for submission of Requisitions and acceptance of Quotes.
MERCK & CO., INC.
BY /s/ Thomas N. Salzman, Ph.D. DATE 5/14/99
-------------------------------------- ----------------
Thomas N. Salzmann, Ph.D.
TITLE Senior Vice President, Basic Chemistry
--------------------------------------
ARRAY BIOPHARMA
BY /s/ David Snitman DATE 5/25/99
-------------------------------------- ----------------
David Snitman
TITLE Chief Operating Officer
--------------------------------------
|
[ * ] Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
EXHIBIT 10.30
[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
ARRAY LIBRARY SCREENING AGREEMENT
This LIBRARY SCREENING AGREEMENT (the "Agreement"), effective as of August 1st, 2000 (the "Effective Date"), is made by and between Array BioPharma Inc., a Delaware corporation having its principal offices located at 1885 33rd Street, Boulder, CO 80301 ("Array"), and E. I. du Pont de Nemours and Company, a Delaware corporation having its principal offices located at 1007 Market Street, Wilmington, DE 19898 ("DuPont").
BACKGROUND
A. Array has developed novel proprietary methods for the generation of compound libraries.
B. Pursuant to that certain Confidentiality Agreement dated February 1st, 2000 (the "Confidentiality Agreement," attached hereto as Exhibit D), Array has disclosed to DuPont the structures of certain compounds.
C. DuPont desires to obtain certain of such compound libraries for screening to identify candidate compounds for further evaluation and at DuPont's option to further optimize such compounds, all on the terms and conditions set forth below.
NOW, THEREFORE, for and in consideration of the covenants, conditions, and undertakings hereinafter set forth, it is agreed by and between the parties as follows:
1 DEFINITIONS
1.1 "Activation Fee" shall have the meaning as set forth in
Section 3.3 below.
1.2 "Activation Period" shall mean the period commencing upon delivery of the Compound to DuPont and ending on the date three (3) years thereafter.
1.3 "Active Compound" shall mean a Compound designated and activated pursuant to Section 3.2 and for which the Activation Fee has been paid in accordance with Section 3.3 below. It is understood that each designation of Active Compound shall include all non-covalent derivatives of such chemically distinct compound, including but not limited to acid addition salts and cationic salts, and shall include all diastereomeric and enantiomeric forms thereof.
1.4 "Active Derivative" shall have the meaning as set forth in
Section 3.4. It is understood that each designation of Active Derivative shall
include all non-covalent derivatives of such chemically distinct compound,
including but not limited to acid addition salts and cationic salts, and shall
include all diastereomeric and enantiomeric forms thereof.
1.5 "Analog" shall mean that:
[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
[ * ]
It is further understood that the term Analog shall be deemed to include all non-covalent derivatives of such compound, including but not limited to acid addition salts and cationic salts, and shall include all diastereomeric and enantiomeric forms thereof.
Moreover, for purposes of this Agreement, it is understood and agreed that any compound subject to the confidentiality provisions of this Agreement or the Confidentiality Agreement shall not be deemed an Analog.
1.6 "Compound" shall mean each chemically distinct compound which is contained in the Library provided to DuPont by Array under this Agreement.
1.7 "Core Chemistry" shall mean the core chemical structures of the Compounds within the First Year Library, the Second Year Library or the Third Year Library.
1.8 "Derivative" shall mean any compound which is chemically
related to a Core Chemistry but shall exclude specific compounds disclosed by
Array to DuPont pursuant to the Confidentiality Agreement or the provisions of
Section 4.1 of this Agreement.
1.9 "DuPont Field" shall mean [ * ].
1.10 "Library" shall have the meaning as set forth in Sections 2.1, 2.2, and 2.3 below.
1.11 "Licensed Technology" shall mean Array Patent Rights and confidential Compound Information. Notwithstanding the foregoing, it is understood that Licensed Technology shall not include any patent or other rights to high-speed synthesis technology, methods or compound libraries (except Libraries).
[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
(a) "Array Patent Rights" shall mean (i) all patents and patent applications that claim a Compound, or method of use or process for the synthesis thereof or composition-of-matter containing such Compound, for which the earliest effective filing date is prior to the end of the Activation Period for the Compound, and (ii) any divisions, continuations, continuations-in-part, reissues, reexaminations, or extensions to the extent the same have an earliest effective filing date prior to the date described in (i) above, and any substitutions, confirmations, or registrations of any of the foregoing, in each case, which is owned by Array (solely or jointly), to the extent Array has the right to license or sublicense the same.
(b) "Compound Information" shall have the meaning as set forth in Section 2.5 below.
1.12 "Re-Supply Compound" shall have the meaning as set forth in Section 2.4 below.
1.13 "Scaffold" shall mean a group of Compounds with a [ * ] of the following functionality: [ * ].
2 LIBRARY
2.1 The First Year Library. Subject to the terms and
conditions of this Agreement, in the calendar year [ * ], Array shall deliver
to DuPont the combinatorial compound library described in this Section 2.1 (the
"First Year Library") on a non-exclusive basis. The First Year Library shall
consist of a minimum of [ * ] Compounds, selected on a plate by plate basis by
DuPont from up to [ * ] Core Chemistries, as set forth in Exhibit A. The First
Year Library shall contain a minimum of [ * ] micromoles of each Compound and
shall conform to the specifications and meet the quality control criteria set
forth in Exhibit B. The Compounds will be supplied to DuPont at approximately
[ * ] Compounds per month from [ * ].
2.2 The Second Year Library. Subject to the terms and conditions of this Agreement, in the calendar year [ * ], Array shall deliver to DuPont the combinatorial compound library described in this Section 2.2 (the "Second Year Library") on a non-exclusive basis. The Second Year Library shall consist of a minimum of [ * ] Compounds, selected on a plate by plate basis by DuPont from up to [ * ] Core Chemistries, from those described in Exhibit A and Exhibit C. The Second Year Library shall contain a minimum of [ * ] micromoles of each Compound and shall conform to the specifications and meet the quality control criteria set forth in Exhibit B. The Compounds will be supplied to DuPont at approximately [ * ] Compounds per month from [ * ]
2.3 The Third Year Library Option. The Third Year Library is an option that can be cancelled by either party with [ * ] days written notice prior to [ * ]. Assuming the parties agree to proceed with this option, subject to the terms and conditions of this Agreement, in the calendar year [ * ], Array shall deliver to DuPont the combinatorial compound library described in this Section 2.3 (the "Third Year Library") on a non-exclusive basis. The
[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
Third Year Library shall consist of a minimum of [ * ] Compounds, selected on a plate by plate basis by DuPont from up to [ * ] Core Chemistries selected from those described in Exhibit C and from additional Core Chemistries that will be shown to DuPont by Array prior to [ * ]. The Third Year Library shall contain a minimum of [ * ] micromoles of each Compound and shall conform to the specifications and meet the quality control criteria set forth in Exhibit B. The Compounds will be supplied to DuPont at approximately [ * ] Compounds per month from [ * ].
2.4 Resupply of Compounds. DuPont shall have the option to obtain additional quantities of any Compound already delivered hereunder (collectively, "Re-Supply Compounds"), by written order to Array specifying the Compound(s) desired, together with a complete description of the chemical structure. Upon receipt of the request for Re-Supply Compounds, Array will provide DuPont within [ * ] business days with a quote for the length of time and the cost to provide such Re-Supply Compounds. Array will base such DuPont quotations [ * ] of Re-Supply Compounds. Such Re-Supply Compounds shall be supplied in [ * ] per Re-Supply Compound and shall comply with the applicable specifications of Exhibit B. Array's obligation to re-supply Compounds shall continue for a period of [ * ] following the expiration or earlier termination (other than by Array for breach by DuPont) of this Agreement.
2.5 Compound Information. Array shall make available to DuPont the following information for the Compounds delivered hereunder: (i) structural data for each Compound; (ii) plate location coordinates and an identification number for each Compound; and [ * ] In addition, Array shall make available to DuPont a copy of the quality control data and methods used for Compounds delivered hereunder.
2.6 Delivery. Array shall use good faith efforts to deliver Compounds in accordance with a schedule mutually agreed upon by the parties. Compounds shall be delivered F.O.B. Array's facility to DuPont's facility at the address set forth above (or such other address as DuPont may specify in writing prior to the shipping date). The carrier shall be paid by DuPont, and shall be selected by agreement between Array and DuPont, provided that in the event no such agreement is reached Array shall select the carrier.
2.7 Payments on Delivery. Except as set forth in Section 2.4 with respect to Re-Supply Compounds, the price to be paid by DuPont for Compounds delivered in accordance with this Agreement shall be [ * ] per Compound. Together with each shipment of Compounds hereunder, Array shall submit an invoice to DuPont therefor. Each invoice shall state the total invoiced amount and the number of Compounds included in a particular shipment, plus any insurance, taxes or other costs incident to the shipment or delivery of Compounds hereunder initially paid by Array but to be borne by DuPont. All payments hereunder shall be made in U.S. Dollars, by direct bank transfer to an account designated in Array's invoice, within thirty (30) days after DuPont's receipt of the particular shipment meeting all sample and electronic data formats specified by DuPont pursuant to this Agreement. If DuPont fails to notify Array within one week that a shipment does not meet the applicable
[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
specifications, then the shipment shall be deemed accepted. Any payments hereunder that are not paid on the date such payments are due under this Agreement shall bear interest to the extent permitted by applicable law at the prime rate reported by Norwest Bank, Denver, Colorado, on the date such payment is due, calculated on the number of days such payment is delinquent.
2.8 Taxes. Any sales, use or other taxes or other governmental charges incident to the transfer of Compounds to DuPont pursuant to this Agreement shall be the sole responsibility of DuPont.
2.9 Title. Without limiting DuPont's rights under Article 3 below, it is understood and agreed that Array retains title to the Compounds subject to the confidentiality provisions of Section 4.1 that are delivered to DuPont under this Agreement.
3 LICENSES; ACTIVE COMPOUNDS; INTELLECTUAL PROPERTY
3.1 Licenses.
(a) License Grant. Subject to the terms and conditions of this Agreement, Array hereby grants to DuPont the following licenses under the applicable Licensed Technology: (i) a non-exclusive right and license to make, have made and use the Compounds and Compound Information for its own internal research and development purposes including the right to make derivatives, and (ii) subject to Section 3.6, an exclusive, fully-paid, perpetual license to make, have made, use, sell, offer for sale and export and import Active Compounds and Active Derivatives.
(b) Sublicenses. The license granted under Section 3.1(a)(ii) above shall include the right to grant sublicenses, but the license granted under Section 3.1(a)(i) shall be without the right to grant sublicenses.
(c) Reservation. Notwithstanding Section 3.1(a) above, Array hereby reserves the right, including the right to authorize others, under the Licensed Technology to make, have made, and use all Compounds for research and/or other purposes. Notwithstanding the foregoing, once DuPont has designated a Compound as an Active Compound, Array will not provide such Active Compound to third parties as part of a compound library or otherwise.
3.2 Active Compounds. At any time prior to the expiration of
the Activation Period applicable to a particular Compound, DuPont shall have the
right to designate such compound as an Active Compound, as set forth in this
Section 3.2 below.
(a) Designation. To designate a Compound as an Active Compound, DuPont shall so notify Array in writing, with a description of the Compound (including a complete description of its chemical structure), and pay Array the applicable Activation Fee for such Active Compound pursuant to Section 3.3 below. It is understood, however, that any such designation shall be subject to Sections 3.2(b) and 3.6 below; and to the extent that such designation is precluded as described in Section 3.6 below, such Compound shall not be an Active Compound hereunder. Likewise, if [ * ]
[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
designation of a Compound as an Active Compound it is understood that the designation shall include as Active Compounds all non-covalent derivatives of such chemically distinct compound, including but not limited to acid addition salts and cationic salts, and shall include as Active Compounds all diastereomeric and enantiomeric forms thereof. A Compound designated as Active Compound together with its non-covalent derivatives and its diastereomeric and enantiomeric forms shall be considered a single designation.
(b) Restriction. DuPont agrees that for so long as such Compounds are subject to the provisions of Section 4.1, it will not, and will not authorize any third party to, commercialize any Compound for any purpose unless such Compound has been designated and activated as an Active Compound hereunder.
3.3 Activation Fee. For DuPont to designate up to [ * ] (together with their non-covalent derivatives and disastereomers and enantiomers as provided in Section 3.2(a)) based on [ * ] as Active Compounds hereunder and to initiate DuPont's exclusive rights with respect thereto under Section 3.1(a)(ii) above, DuPont shall pay to Array an activation fee of [ * ] as an Active Compound. Separate Activation Fees shall be due for [ * ]. Should DuPont wish to activate more [ * ] based on a single Scaffold, then the parties will negotiate a suitable fee for activation. [ * ].
3.4 [ * ]
[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
[ * ]
3.5 Intellectual Property.
(a) [ * ].
(i) [ * ]. Matters of inventorship shall be determined in accordance with U.S. patent law. For so long as a Compound remains subject to the confidentiality obligations under Section 4.1 of this Agreement, DuPont will not file, prosecute or maintain patent applications or patents claiming a Compound (and/or a composition of matter containing a Compound, and/or a method of use employing a Compound, and/or the Compound's non-covalent derivatives and disastereomers and enantiomers) unless DuPont first designates the Compound as an Active Compound under Section 3.2 of this Agreement. It is understood that DuPont may nevertheless file, prosecute, and/or maintain patent applications and patents which [ * ]
(ii) For inventions other than those vested in DuPont pursuant to 3.5(a)(i), all right, title and interest in and to such inventions arising from or made in the performance of this Agreement are retained by the party that is the employer of the inventor (i.e., inventions made solely by Array personnel and all intellectual property rights therein shall be owned by Array, inventions made solely by DuPont personnel and all intellectual property rights therein shall be owned by DuPont, and inventions made jointly by DuPont personnel and Array personnel and all intellectual property rights therein shall be owned jointly by DuPont and Array). Except as provided in this Article 3 (including Section 3.2(b)), neither party shall have an obligation to account to the other, or obtain the consent of the other, with respect to the exploitation (directly or through licensees of third parties) of any jointly owned invention or intellectual property right, and each party hereby waives any right it may have under the laws of any jurisdiction to require such an accounting or consent.
(b) Patent Prosecution For inventions owned by DuPont pursuant to Section 3.5(a)(i) Array will cooperate with and assist DuPont, at DuPont's expense, in filing for and obtaining such patents or such other protection of DuPont's intellectual property rights in the Active Compounds, Active Derivatives and Analogs as is reasonably necessary or appropriate. For inventions co-owned according to 3.5(a)(ii) the parties will discuss at the request of either party any steps desirable and/or necessary to secure patent protection and their respective responsibilities.
[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
(c) Infringement. In the event a third party is infringing any Array Patent Right by reason of the manufacture, sale, use or importation of an Active Compound, provided that such infringement is substantial and continuing, DuPont shall have the right to bring a lawsuit or other appropriate legal proceeding to enforce such Array Patent Rights with respect to such infringement. Otherwise, the parties agree that Array shall have and retain the exclusive right to enforce the Array Patent Rights (itself or through third parties). Array agrees to cooperate with DuPont with respect to the enforcement of the Array Patent Rights pursuant to this Section 3.5(c), including upon request of DuPont by joining as a nominal party at DuPont's expense, where so joining is required for the Initiating Party to bring such suit. Any action brought in accordance with this Section 3.5(c) shall be at the expense of the Initiating Party, and as between the parties hereto, any recoveries shall be retained by the Initiating Party.
(d) [ * ]
3.6 Third Party Rights. It is understood that Array is in the
business of providing combinatorial compound libraries to third parties, and
except as expressly provided herein, nothing herein shall prevent or restrict
Array from providing Compounds (together with their non-covalent derivatives and
disastereomers and enantiomers) and/or Derivatives to third parties, or from
using the Compounds (together with their non-covalent derivatives and
disastereomers and enantiomers) and/or Derivatives for any purposes. It is
further understood that Array may grant to third parties rights to acquire
licenses in the Compounds (together with their non-covalent derivatives and
disastereomers and enantiomers) similar to those granted to DuPont hereunder;
accordingly, DuPont's right to designate any particular Compound as an Active
Compound and/or any particular Derivative as an Active Derivative, and Array's
grant of rights to DuPont under this Article 3, are limited to the extent that
Array has prior to designation of an Active Compound or Active Derivative
granted a third party a license or other right with respect to such a Compound
(together with its non-covalent derivatives and disastereomers and enantiomers)
or Derivative. It is understood and agreed that so long as Array complies with
this Article 3, Array shall have no liability with respect to any conflict of
DuPont's rights and those rights granted to third parties by Array.
3.7 No Liability. It is understood and agreed that, even if Array complies with its obligations under this Agreement, compounds provided to Third Parties in the course of Array's other business activities may result in Third Party patent applications and patents, including patent applications and patents owned by such Third Parties, or jointly owned by Array and such Third Parties, which could conflict with patent applications and patents owned by DuPont, or jointly owned by Array and DuPont hereunder. Array shall use its reasonable efforts to avoid such conflict; provided, however, that unless DuPont is damaged as a proximate result of a material breach by Array of Section 3.1(c), that Array shall have no liability under this Agreement with respect to any such conflict.
[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
4 CONFIDENTIALITY
4.1 Confidential Information. Except as expressly provided herein, the receiving party (hereinafter, the "Receiving Party") shall not disclose to any third party or use for any purpose any Confidential Information furnished to it by the other party (hereinafter the "Disclosing Party") pursuant to this Agreement for a period ending [ * ] after the term of this Agreement provided in Section 7.1. For purposes of this Article 4, "Confidential Information" shall mean any information disclosed by the Disclosing Party to the Receiving Party which if disclosed in tangible form is marked "confidential" or with other similar designation to indicate its confidential or proprietary nature or if disclosed orally is indicated orally to be confidential or proprietary by the Disclosing Party at the time of such disclosure and is confirmed in writing as confidential or proprietary by the Disclosing Party within [ * ] days after such disclosure; provided, however, the Compounds (together with their non-covalent derivatives and disastereomers and enantiomers) and Compound Information provided hereunder shall be deemed Confidential Information of Array whether or not so marked. Notwithstanding the foregoing, Confidential Information shall not include any information that, in each case as demonstrated by written documentation (i) was already known to the Receiving Party, other than under an obligation of confidentiality to the Disclosing Party, at the time of disclosure; (ii) was generally available to the public or otherwise part of the public domain at the time of its disclosure to the Receiving Party; (iii) became generally available to the public or otherwise part of the public domain after its disclosure and other than through any act or omission of the Receiving Party in breach of this Agreement; (iv) was subsequently lawfully disclosed to the Receiving Party by a third party who did not acquire it directly or indirectly from the Disclosing Party; or (v) was developed by the Receiving Party without use of or reference to any Confidential Information of the Disclosing Party.
4.2 Disclosure to Array. Notwithstanding Section 4.1 above, if DuPont desires to disclose to Array Confidential Information related to (i) the activity of a compound in biological or other screens or targets, (ii) the targets against which a compound is or will be screened, (iii) a request for re-supply of a Compound, (iv) DuPont's election to activate a Compound or (v) other development or screening efforts with respect to a compound, DuPont agrees to first provide Array with a non-confidential summary of such information, and shall not disclose such Confidential Information to Array, if Array notifies DuPont that Array does not desire to receive such Confidential Information.
4.3 Permitted Use and Disclosures. The Receiving Party may use and disclose the Confidential Information of the Disclosing Party to the extent necessary to exercise its rights or perform its obligations under this Agreement. Examples of permitted uses and disclosures include DuPont's rights to file and prosecute patent applications and patents (including without limitation DuPont's rights to disclose methods of synthesis of Active Compounds covered under Licensed Technology), a Receiving Party's rights to prosecute or defend litigation, a Receiving Party's obligation to comply with applicable governmental regulations or court order or to otherwise submit information to tax or other governmental authorities, or a Receiving Party's right to sublicense or otherwise exercise license rights expressly granted by the other party to it pursuant to the terms of this Agreement. However, except for any DuPont disclosure to any government agency for the purpose of obtaining approval to test or market a product or for the
[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
purpose of obtaining patent protection, if the Receiving Party is required (e.g., by court order) to make any disclosure of the Disclosing Party's Confidential Information without a confidentiality agreement in place it shall give reasonable advance notice to the Disclosing Party of such disclosure to enable the Disclosing Party to seek confidential treatment of such Confidential Information, whether by protective order or otherwise. Moreover for the avoidance of doubt and in recognition of DuPont's various research interests, DuPont may disclose (a) any compound other than a compound (together with its non-covalent derivatives and disastereomers and enantiomers) specifically disclosed by Array to DuPont pursuant to either the Confidentiality Agreement or the provisions of Section 4.1. In addition the Receiving Party may disclose Confidential Information of the Disclosing Party to an Affiliate of the Receiving Party which agrees to protect the Disclosing Party's Confidential Information as provided by the Confidentiality Agreement or by this Agreement as the case may be. For purposes of this Agreement "Affiliate" shall mean companies under control of, controlled by or under common control with either of the Parties and "control" shall mean ownership of at least 50% of the stock or other interest of such company.
4.4 Nondisclosure of Terms. Each of the parties hereto agrees not to disclose to any third party other than an Affiliate the terms of this Agreement without the prior written consent of the other party hereto, except to such party's attorneys, advisors, investors and others on a need to know basis under circumstances that reasonably ensure the confidentiality thereof, or to the extent required by law. Notwithstanding the foregoing, the parties shall agree upon a press release to announce the execution of this Agreement
5 REPRESENTATIONS AND WARRANTIES
5.1 DuPont. DuPont represents and warrants that it has the legal power, authority and right to enter into this Agreement, and to perform all its obligations hereunder.
5.2 Array. Array represents and warrants that: (i) it has the legal power, authority and right to enter into this Agreement, and to perform all its obligations hereunder; (ii) it has the legal right and power to extend the rights granted in this Agreement; (iii) it has not previously granted, and during the term of this Agreement will not knowingly make any commitment or grant any rights which are inconsistent in any material manner with the rights and licenses granted to DuPont herein; (iv) to the best of its knowledge, as of the Effective Date, there are no existing or threatened actions, suits or claims pending against it with respect to the Licensed Technology; and (v) as of the Effective Date, the Licensed Technology does not include intellectual property licensed from third parties that would require DuPont to pay to such third parties a royalty or other amounts to make, have made, use or import Active Compounds.
5.3 Disclaimer. EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS ARTICLE 5, NEITHER ARRAY NOR DUPONT MAKES ANY REPRESENTATION OR WARRANTIES OR CONDITIONS OF ANY KIND, EITHER EXPRESS OR IMPLIED, WITH RESPECT TO COMPOUNDS OR PRODUCTS BASED THEREON, OR INFORMATION DISCLOSED HEREUNDER, INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, VALIDITY OF ANY LICENSED TECHNOLOGY, PATENTED OR
UNPATENTED, OR NONINFRINGEMENT OF THE INTELLECTUAL PROPERTY RIGHTS OF THIRD PARTIES.
6 INDEMNIFICATION
6.1 DuPont. DuPont agrees to indemnify, defend and hold Array, and its directors, officers, employees and agents harmless from and against any losses, costs, claims, damages, liabilities or expense (including reasonable attorneys" and professional fees and court and other expenses of litigation) (collectively, "Liabilities") arising out of or in connection with third party claims relating to (i) any Compounds (together with their non-covalent derivatives and disastereomers and enantiomers) or product based thereon developed, manufactured, used, sold or otherwise distributed by or under authority of DuPont or its designees (including, without limitation, product liability claims), or (ii) any breach by DuPont of the representations and warranties made in this Agreement, except in each case, to the extent such Liabilities resulted from the gross negligence or intentional misconduct of Array.
6.2 Array. Array agrees to indemnify, defend and hold DuPont, and its directors, officers, employees and agents harmless from and against any losses, costs, claims, damages, liabilities or expense (including reasonable attorneys' and professional fees and court and other expenses of litigation) (collectively, "Liabilities") arising out of or in connection with third party claims relating to any breach by Array of the representations and warranties made in this Agreement, except in each case, to the extent such Liabilities resulted from the gross negligence or intentional misconduct of DuPont.
6.3 Procedure. A party that intends to claim indemnification (the "Indemnitee") under this Article 6 shall promptly notify the indemnifying party (the "Indemnitor") in writing of any third party claim, suit or proceeding included within the indemnification described in this Article 6 above (each a "Claim") with respect to which the Indemnitee intends to claim such indemnification, and the Indemnitor shall have sole control of the defense and/or settlement thereof; provided that the Indemnitee shall have the right to participate, at its own expense, with counsel of its own choosing in the defense and/or settlement of such Claim. The indemnification under this Article 6 shall not apply to amounts paid in settlement of any Claim if such settlement is effected without the consent of the Indemnitor, which consent shall not be unreasonably withheld or delayed. The Indemnitee under this Article 6, and its employees, at the Indemnitor's request and expense, shall provide full information and reasonable assistance to Indemnitor and its legal representatives with respect to such Claims.
7 TERM AND TERMINATION
7.1 Term. This Agreement shall become effective on the Effective Date and shall remain in full force and effect until expiration of the Activation Period for the last Compound delivered hereunder, unless earlier terminated in accordance with this Article 7 below, or December 31, 2005, whichever is earlier.
7.2 Termination.
(a) For Cause. Either party to this Agreement shall have the right to terminate this Agreement in the event the other party materially breaches or defaults in the performance of any of its material obligations hereunder, and such default continues for sixty (60) days after written notice thereof is provided to the breaching party by the non-breaching party. Any such termination shall become effective at the end of such sixty (60) day period unless the breaching party (or any other party on its behalf) has cured any such breach or default prior to the expiration of the sixty (60) day period.
(b) [ * ].
7.3 Termination for Insolvency. If voluntary or involuntary
proceedings by or against a party are instituted in bankruptcy under any
insolvency law, or a receiver or custodian is appointed for such party, or
proceedings are instituted by or against such party for corporate reorganization
or the dissolution of such party, which proceedings, if involuntary, shall not
have been dismissed within sixty (60) days after the date of filing, or if such
party makes an assignment for the benefit of creditors, or substantially all of
the assets of such party are seized or attached and not released within sixty
(60) days thereafter, the other party may immediately terminate this Agreement
effective upon notice of such termination.
7.4 Effects. It is understood that termination of this Agreement shall not relieve a party from any right or obligation which, at the time of such termination, has already accrued to the other party. The provisions of Articles 1, 4, , 6 and 8 and Sections 3.1, 3.5, 3.6, 3.7 and 7.4 shall survive the expiration or termination of this Agreement for any reason. In addition, the provisions of Sections 2.5, 2.6, 3.2, 3.3, and 3.4 shall survive the expiration or termination of this Agreement for breach by Array but not breach by DuPont. The provisions of Sections 3.2, 3.3, and 3.4 also shall survive termination of this Agreement under Section 7.2(b). All other rights and obligations of the parties shall cease upon expiration or termination of this Agreement. For purposes of the foregoing, if a Section that so survives is expressly stated to continue for a period of time specified in such surviving Section, the same shall survive only for the remainder of the period specified in such Section. Except as otherwise expressly provided in this Article 7, all other rights and obligations of the parties shall terminate.
8 MISCELLANEOUS
8.1 Governing Laws. This Agreement and any dispute arising from the construction, performance or breach hereof shall be governed by and construed and enforced in accordance with the laws of the state of Colorado, without reference to conflicts of laws principles.
8.2 No Implied Licenses. Nothing herein shall be construed as granting either party, by implication, estoppel or otherwise, any license or other right to any intellectual property, except for the licenses expressly granted herein.
8.3 Waiver. Any waiver of the terms and conditions hereof must be explicitly in writing. The waiver by either party of any breach of any provision hereof by the other party shall
[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
not be construed to be a waiver of any succeeding breach of such provision or a waiver of the provision itself.
8.4 Assignment. The parties agree that their rights and obligations under this Agreement may not be assigned or otherwise transferred to a third party without the prior written consent of the other party hereto except as follows: either party may transfer or assign its rights and obligations under this Agreement to a successor to all or substantially all of its business or assets relating to this Agreement whether by sale, merger, operation of law or otherwise; provided that such assignee or transferee has agreed in writing to be bound by the terms and conditions of this Agreement. Any attempted transfer or assignment in violation of this Section 8.4 shall be void. Subject to the foregoing, this Agreement shall be binding upon and inure to the benefit of the parties hereto, their successors and assigns.
8.5 Independent Contractors. The relationship of the parties hereto is that of independent contractors. The parties hereto shall not be deemed to be agents, partners or joint ventures for any purpose as a result of this Agreement or the transactions contemplated thereby.
8.6 Compliance with Laws. In exercising their rights under this Agreement, each party shall fully comply in all material respects with the requirements of any and all applicable laws, regulations, rules and orders of any governmental body having jurisdiction over the exercise of rights hereunder including, without limitation, those applicable to the discovery, development, manufacture, distribution, import and export and sale of products pursuant to this Agreement.
8.7 Notices. Any notice required or permitted to be given or made under this Agreement by either party shall be in writing and delivered to the other party at its address indicated below (or to such other address as a party may specify by notice hereunder by courier or by registered or certified airmail, postage prepaid, or by facsimile; provided, however, that all facsimile notices shall be promptly confirmed, in writing, by registered or certified airmail, postage prepaid. All notices shall be effective as of the date received by the addressee.
if to Array, to: Array BioPharma Inc.
1885 33rd Street
Boulder, Colorado 80301
Attn: David L. Snitman
Fax number: (303) 449-5376
if to DuPont, to: [ * ]
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8.8 Severability. In the event that any provision of this Agreement becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable or void, this Agreement
[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
shall continue in full force and effect without said provision, and the parties shall amend the Agreement to the extent feasible to lawfully include the substance of the excluded provision to as fully as possible realize the intent of the parties and their commercial bargain, unless the invalid provision(s) are of such essential importance to this Agreement that it is to be reasonably assumed that the parties would not have entered into this Agreement without the invalid provision(s).
8.9 Force Majeure. Nonperformance of either party (except for payment obligations) shall be excused to the extent that performance is rendered impossible by acts of God, strike, fire, earthquake, flood, governmental acts or orders or restrictions, failure of suppliers, or any other reason where failure to perform is beyond the reasonable control and not caused by the negligence, intentional conduct or misconduct of the non-performing party, provided such party uses its best efforts to resume performance as promptly as possible.
8.10 No Consequential Damages. EXCEPT PURSUANT TO ARTICLE 6,
NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY FOR ANY SPECIAL, CONSEQUENTIAL,
EXEMPLARY OR INCIDENTAL DAMAGES (INCLUDING LOST OR ANTICIPATED REVENUES OR
PROFITS RELATING TO THE SAME), ARISING FROM ANY CLAIM RELATING TO THIS
AGREEMENT, WHETHER SUCH CLAIM IS BASED ON CONTRACT, TORT (INCLUDING NEGLIGENCE)
OR OTHERWISE, EVEN IF AN AUTHORIZED REPRESENTATIVE OF SUCH PARTY IS ADVISED OF
THE POSSIBILITY OR LIKELIHOOD OF SAME. THESE LIMITATIONS SHALL APPLY
NOTWITHSTANDING THE FAILURE OF THE ESSENTIAL PURPOSE OF ANY LIMITED REMEDY, AND
THE PARTIES ACKNOWLEDGE THAT THIS SECTION 8.10 REPRESENTS A REASONABLE
ALLOCATION OF RISK.
8.11 Further Assurances. At any time and from time to time after the Effective Date, each party hereby agrees to execute, acknowledge and deliver, and cause to be done, executed, acknowledged or delivered, and take or cause to be taken all such further acts, transfers, conveyances, or assignments as may be reasonably required to carry out the transactions contemplated by this Agreement.
8.12 Headings. Headings included herein are for convenience only, do not form a part of this Agreement and shall not be used in any way to construe or interpret this Agreement.
8.13 Entire Agreement. The terms and provisions contained in the Agreement, including the Exhibits hereto, constitute the entire agreement between the parties and shall supersede all previous communications, representations, agreements or understandings, either oral or written, between the parties with respect to the subject matter hereof. No agreement or understanding varying or extending this Agreement shall be binding upon either party hereto, unless set forth in a writing which specifically refers to the Agreement signed by duly authorized officers or representatives of the respective parties, and the provisions hereof not specifically amended thereby shall remain in full force and effect. Notwithstanding the foregoing, it is understood and agreed that the provisions of the Confidentiality Agreement shall remain in full force and effect; except that, for that any chemical compound disclosed by Array to DuPont pursuant to the Confidentiality Agreement that DuPont selects to be delivered by Array as a
Compound under this Agreement, the provisions of this Agreement shall apply. ANY ADDITIONAL OR INCONSISTENT TERMS OR CONDITIONS OF ANY PURCHASE ORDER, ACKNOWLEDGMENT OR SIMILAR STANDARDIZED FORM GIVEN OR RECEIVED PURSUANT TO THIS AGREEMENT SHALL HAVE NO EFFECT AND SUCH TERMS AND CONDITIONS ARE HEREBY EXCLUDED.
8.14 Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed to be an original and all of which together shall be deemed to be one and the same agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their authorized representatives and delivered in duplicate originals as of the Effective Date.
ARRAY BIOPHARMA INC. E. I. DU PONT DE NEMOURS AND COMPANY
By: /s/ DAVID SNITMANN By: [ * ]
----------------------- -----------------------
Name: David Snitmann Name: [ * ]
--------------------- ---------------------
Title: COO Title: [ * ]
-------------------- --------------------
Date: 7/31/00 Date: [ * ]
--------------------- ---------------------
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[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
EXHIBIT 10.31
[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
LEAD OPTIMIZATION AGREEMENT
BETWEEN
ARRAY BIOPHARMA CORPORATION
AND
ICOS CORPORATION
DECEMBER 22, 1998
LEAD OPTIMIZATION AGREEMENT
THIS LEAD OPTIMIZATION AGREEMENT (the "Agreement") is entered into and made effective as of December 22, 1998 (the "Effective Date"), by and between ARRAY BIOPHARMA INC, a Delaware corporation having its principal offices located at 1885 33rd Street, Boulder, CO 80301 ("Array") and ICOS CORPORATION, a Delaware corporation having its principal offices located at 22021 20th Avenue S.E., Bothell, Washington 98021 ("ICOS").
WHEREAS, Array has skills, expertise and experience in multi-parallel synthesis and purification methods, developing and preparing chemical libraries suitable for high throughput biological screening assays and medicinal chemistry;
WHEREAS, as of the Effective Date, ICOS and its Affiliates have developed and own, among other things, certain know how and intellectual property rights, assays, methods and lead compounds that may be potential drug candidates directed to the Optimization Targets, (collectively "ICOS Technology");
WHEREAS, ICOS desires to utilize Array skills, expertise and experience to assist ICOS in optimizing such lead compounds for the Optimization Targets;
WHEREAS, the parties wish to collaborate in an optimization program in this regard against Optimization Targets;
WHEREAS, the Optimization Program will focus on an initial Optimization Target as set forth below, and the Parties intend to work on multiple Optimization targets in a serial and parallel manner as set forth herein below;
NOW, THEREFORE, the Parties agree as follows:
1. DEFINITIONS
1.1 "Active Target" means an Optimization Target for which ICOS has provided reasonable written notice to Array as described in Section 3.1 of this Agreement, that such Optimization Target shall be included in the Optimization Program and for which an Optimization Plan shall be produced. For the purpose of this definition reasonable notice shall be thirty (30) days unless the party's have agreed to a shorter period of notice either by written agreement or by the Parties performance.
1.2 "Affiliate" of a Party means any corporation or other business entity controlled by, controlling or under common control with, such Party. For this purpose "control" shall mean direct or indirect beneficial ownership of more than fifty percent (50%) of the voting securities or income interest in such corporation or other business, or if not meeting the preceding requirements, any company owned or controlled by or owning or controlling such Party at the maximum control or ownership right permitted in the country where such company exists.
requirements, any company owned or controlled by or owning or controlling such Party at the maximum control or ownership right permitted in the country where such company exists.
1.3 "Array Compound" means a chemical compound that is proprietary to Array, or whose use or manufacture is proprietary to Array.
1.4 "Array Patents" means all Patents which claim any Array Technology and that are Controlled by Array during the Exclusivity Period, but shall exclude any claims of an Optimization Patent. For purposes of this definition, "controlled" shall mean the ability to grant a license or sublicense as provided for in Section 7.1 below.
1.5 "Array Technology" means certain know-how, intellectual property or patents (i) developed, licensed and/or owned by Array, prior to the Effective Date or (ii) developed licensed and/or owned by Array outside of the Optimization Program and used by Array in the Optimization Program, or (iii) developed during the Optimization Program and not having solely specific or novel application to the Optimization Program (i.e. such know-how, intellectual property, or patents having application outside of the development, manufacture, use, sale, or importation of Optimization Compounds or Products). Array Technology shall not include [ * ] or [ * ].
1.6 "Confidential Information" shall mean:
(a) all information and materials received by either Party from the other Party pursuant to this Agreement which is confidential under Section 9;
(b) all information and materials received by
either Party from the other Party in
connection with the Optimization Program
during the Optimization Period, including,
without limitation, structures of lead
compounds provided by ICOS to Array, to the
extent the same is confidential under
Section 9; and
(c) the financial terms of this Agreement and
the identity of the Optimization Targets, to
the extent the same are confidential under
Section 9.
1.7 "Daughter Libraries" shall mean the compound libraries which are designed and synthesized as a part of the Optimization Program by Array.
1.8 "Derivative" shall [ * ].
1.9 "Exclusivity Period" means [ * ].
[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
1.10 "Field" means all indications for any Optimization Target against which an Optimization Compound or Products may be directed.
1.11 "FTE" shall mean a full-time equivalent employee of Array having the skills, support, services and resources to fulfill Array's obligations under this Agreement. For purposes of this Agreement, the FTEs shall include [ * ].
1.12 "Optimization Compound(s)" means a compound (or compounds) which is synthesized by Array following the Effective Date in the course of performing the Optimization Program for the purpose of screening against an Active Target.
1.13 "Optimization Patent" means a Patent claiming and disclosing the composition of an Optimization Compound or the manufacture thereof, for which Array has made an inventive contribution to the subject invention in the course of performing the Optimization Program, as determined under U.S. Patent law. Notwithstanding the foregoing, Optimization Patents shall only include Patents to the extent the same (i) is entitled to a first effective filing date for priority purposes (i.e., for priority purposes under 35 USC, or the corresponding laws of the country in which such Patent is filed) after the Effective Date and (ii) claims subject matter reduced to practice (either actual or constructive) prior to the date six (6) months after the end of the Optimization Period.
1.14 "Optimization Period" means the term of the Optimization Program as provided in Section 8 of this Agreement.
1.15 "Optimization Plan" means the Optimization Plan to be prepared by Array approved and accepted by ICOS, which describes in agreed detail the research activities to be performed by Array for each Active Target.
1.16 "Optimization Program" means the research and activities to be conducted under this Agreement as described in the Optimization Plan and as set forth in Sections 2.1 and 2.2 of this Agreement.
1.17 "Optimization Target" means any one of the [ * ] described in Appendix B, at execution of this Agreement, or as substituted by mutual written agreement of the Parties, and unless otherwise specified may include Active Targets, and shall in each case be selected from Appendix B.
1.18 "Party" means Array or ICOS, as the case may be, including their respective permitted assigns of this Agreement under Section 12 below.
1.19 "Patent" means (a) valid and enforceable U.S. or non U.S. Patent, and any non-U.S. equivalent, including any extension (including Supplemental Protection Certificates), registration, confirmation, reissue, continuation, divisionals, continuation-in-part, reexamination or renewal thereof, or (b) pending applications for any of the foregoing.
[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
1.20 "Product(s)" means any product containing an Optimization Compound or Derivative with such compound as the active ingredient or one of the active ingredients, which is the subject of one or more claims under an Optimization Patent and which is granted regulatory approval by the governing health regulatory authority of the applicable country for marketing in the Field.
1.21 "Project Team" shall have the meaning set forth in
Section 2.1(c).
1.22 "Restored Active Target" means an Active Target which has ceased to be an Active Target either by agreement of the Parties or by operation of the Optimization Program, and which, by reasonable written notice has been again designated as an Active Target. For the purposes of this definition reasonable notice shall be thirty (30) days unless the Party's have agreed to a shorter period of notice either by written agreement or by parties performance.
1.23 "Territory" means the entire world.
1.24 "Third Party" means an entity other than Array or ICOS or their respective Affiliates.
2. OPTIMIZATION PROGRAM
2.1 Array Responsibilities. Array shall with due diligence provide the following services and resources to ICOS and conduct the following activities in accordance with the Optimization Plan:
(a) During the Optimization Period, Array shall
(i) review data and information regarding
the Active Target and lead compounds
provided by ICOS; (ii) based on such data
and information design Daughter Libraries
and optimize the lead compounds supplied by
ICOS; and (iii) synthesize compounds as
provided in Section 5.3 below.
(b) During the Optimization Period, Array shall keep ICOS regularly informed of its activities performed in connection with the Optimization Program, including, without limitation, providing ICOS with data and information (and, upon ICOS's written request, reasonable quantities of samples pursuant to Section 5.3) regarding the status of Array's work on Optimization Compounds under the Optimization Plan.
(c) Subject to Sections 2.3, 3 and 6, and at all times during the Optimization Period, Array shall [ * ].
[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
2.2 ICOS Responsibilities. ICOS shall provide the following resources to Array and conduct the following activities under the Optimization Program as more fully described in the Optimization Plan:
(a) ICOS shall make payment to Array under the Optimization Program as set forth in Section 6, provide screening, biological and structural data and information including leads and/or screening hits and assay methods relating to Optimization Compounds to Array necessary for Array to perform its duties under this Agreement, and will assume scientific, financial and administrative responsibility for screening and biological support activities, drug development and regulatory filings during and after the term of the Optimization Program on the terms set forth below.
(b) During the Optimization Period, ICOS shall provide Array with: (i) lead compounds and/or structures of such lead compounds for the Active Target, and (ii) data and information regarding Optimization Compounds and the Active Target assays developed by ICOS under the Optimization Program.
2.3 Conduct of Optimization Program. The Parties hereby agree that the Optimization Program shall be carried out in accordance with the Optimization Plan and this Agreement, as amended from time to time. ICOS shall review the Optimization Plan on a regular and an ongoing basis and may make written changes to the Optimization Plan so long as such changes are mutually agreed to in writing by Array.
2.4 Third Party Licenses. Each Party shall be solely responsible for any Third Party license fees required to perform its obligations under this Agreement.
3. TARGETS
3.1 Active Target. The initial Active Target shall be as specified in Appendix B or as specified by reasonable written notice from ICOS to Array. There shall be only [ * ] designated as the Active Target unless Array and ICOS have mutually agreed in writing to there being specific additional Optimization Targets simultaneously designated as Active Targets together with additional terms and conditions, if any.
3.2 Restored Active Target. Any Optimization Target which has ceased to be an Active Target due to the later designation of another Optimization Target as an Active Target, may always be restored to the status of an additional Active Target provided that negotiation has taken place between the Parties regarding reasonable scheduling and consideration.
3.3 Disclosure of Active Target Information. ICOS agrees not to disclose to Array any Confidential Information relating to an Optimization Target, or lead compounds
[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
therefor until such Optimization Target is designated as the Active Target in accordance with Section 3.1 above.
4. EXCLUSIVITY
4.1 Active Target Exclusivity. During the Optimization Period,
Array shall not knowingly work on or provide information regarding any
Optimization Target with or to any Third Parties, thereafter during the
Exclusivity Period, Array shall not knowingly work on or provide information
regarding any Optimization Target which has been designated as an Active Target
during the Optimization Period with or to any Third Parties, in each case except
(a) as provided for in Section 10.2 with regard to any Public Statements, and
(b) with respect to any Third Parties who are collaborators or proposed
collaborators of Array, Array shall have the right, consistent with its
corporate policy (but without identifying any Optimization Target), to notify
any such Third Party of its decision and/or inability to work on such
Optimization Target with that Third Party. For the purposes of this Section 4.1,
"knowingly" shall mean actual knowledge or imputed knowledge that the corporate
entity or its directors and officers knew or should have known.
4.2 Optimization Compounds. Optimization Compounds, their structures and best methods of synthesis and manufacture developed during the Optimization Program shall be made available only to ICOS for research or application to any Optimization Target, within or outside the Collaboration, during the Optimization Period, and Array shall not work on or provide information regarding such Optimization Compound to any Third Party, except to take any steps necessary to protect ICOS's exclusivity hereunder.
4.3 Duration of Exclusivity for Optimization Targets. Notwithstanding any other provision of this Agreement, it is understood and agreed that once an Optimization Program has been initiated for any Active target Array's obligations under Section 4.1 shall continue until ICOS has released Array from the effect of this Section 4.3 by written notice or the end of the Exclusivity Period, whichever occurs first.
5. OPTIMIZATION COMPOUNDS
5.1 Intellectual Property Rights: [ * ]. Subject to Section 7.2 and except as set forth in this Section 5.1, ICOS shall have exclusive rights in all Optimization Patents and the subject matter contained therein and all intellectual property and know-how (whether or not patentable) embodied in Optimization Compounds and Products and methods specifically directed to the manufacture of Optimization Compounds and methods of use of Products, in each case resulting from the Optimization Program; to the extent possible such exclusive rights shall be achieved by Array assigning its interest, if any, in such Patents and intellectual property and know-how to ICOS and where such assignment is not legally possible ICOS shall receive an exclusive license or sublicense to the maximum extent of Array's rights. ICOS shall file, maintain and prosecute all Patents arising out of, or comprising, the rights and interests granted in this Section 5.1 and Array shall do everything reasonably necessary to assist ICOS in filing such Patents. Prior to the filing of any such Patent applications or during the pendency of such applications, Array shall assign to ICOS or its designee all intellectual property
[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
rights it may have, to the extent granted in this Section 5.1, in the Optimization Patents and the subject matter disclosed and claimed therein which are necessary for the development and commercialization of such Optimization Compounds by ICOS or its designee. Notwithstanding anything in this Section 5.1 to the contrary, nothing in this Section 5.1, or the operation thereof, shall be deemed to grant to ICOS any rights in or to any Array Technology.
5.2 Structural Information. Array shall not disclose the structure of any Optimization Compound, Derivative or Product (to the extent such structure is not publicly available) to any Third Party nor identify such structure, if publicly available, with its collaboration with ICOS without ICOS's written permission, unless required to do so by law, in which case Array shall promptly notify ICOS of such required disclosure and will use its reasonable efforts to assist ICOS to secure confidential treatment of such structure prior to any disclosure.
5.3 Supply of Optimization Compounds. Aliquots of at [ * ] of any Optimization Compound that has been synthesized will be prepared and given to ICOS together with their structures and all known and developed best methods of synthesis and manufacture. Array shall replenish once during the Exclusivity Period that amount upon ICOS's reasonable request, and ICOS shall reimburse Array for any cost thereof not otherwise reimbursed under Section 6 below for any reasonably requested replenishment in excess of a total of [ * ] milligrams. To the extent that Optimization Compounds are not available in a timely and sufficient quantify to allow the earliest start of necessary large scale preclinical or other studies such unavailability of Optimization Compounds shall not be cited as a lack of due diligence provided that the Parties have made commercially reasonable attempts, and continue such attempts, during the Exclusivity Period to provide such unavailable Optimization Compounds in required quantities in an expedient manner.
6. CONSIDERATION
6.1 Optimization Program Funding.
(a) Research Support for Project Team. At all
times during the Optimization Period, ICOS
shall make payments to Array for direct
research support for its Project Team, which
shall initially consist of [ * ] of Array,
unless determined otherwise under Section
6.1(b). The total amount payable per FTE
shall be U.S. [ * ] per FTE per annum. All
payments for direct research support shall
be paid by ICOS to Array, quarterly in
advance, and adjusted as necessary in
subsequent quarters, of such amounts as are
equal to the product of (i) the number of
FTEs ([ * ] FTEs unless determined otherwise
under Section 6.1(b)) allocated to the
Optimization Program for the calendar
quarter to which each such payment applies,
multiplied by (ii) U.S. [ * ] (i.e., the
quarterly amount per FTE on the basis of
U.S. [ * ] per annum).
[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
(b) Expansion or Contraction of Project Team.
ICOS may request that Array expand or
contract its Project Team during the
Optimization Period in order to match the
work on Active Targets; provided that the
Project Team shall not be less than [ * ]
except by agreement of Array. In such event,
the Parties shall promptly confer as the
appropriate number of FTEs to constitute the
Project Team, as mutually agreed, at cost to
ICOS [ * ], to be paid as specified in
Section 6.1(a).
6.2 Milestone Payments. Within [ * ] days of the occurrence of
a development milestone triggered by the activities of ICOS or its Affiliates,
or Third Parties acting under authority from ICOS or its Affiliates, ICOS shall
pay Array the related milestone payment in U.S. dollars as set forth in Appendix
A. Such payments shall apply once only to each milestone reached by any
Optimization Compound or Derivative for each Optimization Target. Such milestone
payments shall be due with respect to each Optimization Compound or Derivative
to meet such milestone (each a "Milestone Compound"); [ * ].
6.3 Taxes. All income and other taxes levied or accruing to Array under this Agreement shall be paid by Array, including taxes levied thereon as income to Array. If provision is made in law or regulation for withholding, such tax shall be deducted from the payment made by ICOS to the proper taxing authority and a receipt of payment of the tax secured and promptly delivered to Array. Each Party agrees to assist the other Party reasonably in claiming exemption from such deductions or withholdings under any double taxation or similar agreement or treaty from time to time in force.
6.4 Title to, and ownership of tangible property. Without limiting ICOS' rights under Sections 5.1 and 7 of this Agreement, it is understood and agreed that each Party retains title to any tangible property delivered to the other Party under this Agreement.
7. LICENSE GRANTS; OUTLICENSE
7.1 Array License Grant to ICOS. Subject to the terms and
conditions of this Agreement, Array hereby grants to ICOS a non-exclusive,
royalty-free, fully paid up except as to payment of respective milestones under
Section 6.2, worldwide license, with the right to sublicense to use Array
Technology and under the Array Patents, in each case solely to make, have made,
use, have used, sell, have sold, import and export Optimization Compounds or
Products in the Field.
[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
7.2 ICOS Sublicense. ICOS shall have the right to transfer, assign or sublicense to a Third Party ICOS's rights under Sections 5.1 and 7.1 above or Optimization Patents covering the Products.
7.3 No Other Licenses. No right or license is granted to ICOS hereunder under technology or intellectual property of Array, by implication, estoppel or otherwise, except as specifically and expressly granted under Sections 5.1, 5.2 and 7.1 of this Agreement. No right or license is granted to ARRAY hereunder in any Optimization Compound or Derivative, including compounds in Daughter Libraries.
8. TERM AND TERMINATION OF THE AGREEMENT
8.1 Term, Renewals and Extensions. The term of this Agreement and Optimization Program shall commence upon the Effective Date of this Agreement, and unless earlier terminated as provided in this Agreement, shall expire on the second anniversary thereafter provided, however, that the term shall be automatically extended for a further one (1) year unless either party provides written notice sixty (60) days or more prior to such second anniversary canceling such extension. Unless terminated early pursuant to Section 8.2 below, the Optimization Period may be renewed for additional periods upon mutual agreement of the Parties; provided that neither Party shall be obligated to approve any such renewal.
8.2 Termination by ICOS. ICOS may terminate this Agreement effective at any time after the first anniversary of the Effective Date, in its sole discretion, upon [ * ] prior written notice.
8.3 Termination by ICOS or Array. If either Party materially breaches this Agreement and fails to remedy that breach within [ * ] days of receiving written notice thereof from the other Party, or makes an assignment of substantially all of its assets for the benefit of its creditors or goes into liquidation, insolvency, bankruptcy, receivership or reorganization proceedings, whether voluntarily or compulsorily which is not dismissed by a court of competent jurisdiction within [ * ] days, then the other Party may at any time, by notice in writing or by telefax, terminate this Agreement and the Optimization Program. Within [ * ] days following termination for the Optimization Program and/or research related to any Optimization Target under this Agreement, Array shall prepare a detailed, final written report to ICOS, and provide any remaining supply of Optimization Compounds in synthesis to date, for each Target or part of the Optimization Program being terminated.
8.4 Effect of Termination on Licensees. In the event of any termination of this Agreement pursuant to Section 8.3 where such termination shall not have been caused by the action or inaction on the part of any respective licensee of ICOS or Array, or by any breach by such licensee of its obligations under its license from ICOS or Array, as appropriate, such termination of this Agreement shall be without prejudice to the rights of each non-breaching licensee and such licensee shall be deemed to be a direct licensee hereunder; provided that such licensee agrees in writing to be bound by the applicable provisions of this Agreement, including, without limitation, the payment of milestone payments pursuant to Section 6.2.
[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
9. CONFIDENTIAL INFORMATION
9.1 Nondisclosure. During the term of this Agreement and for a period of [ * ] years after termination or expiration thereof, each Party (the "Receiving Party") will maintain all Confidential Information received from the other Party (the "Disclosing Party") in trust and confidence and will not disclose any such Confidential Information to any Third Party or use any such Confidential Information for any purpose except (i) as expressly authorized by this Agreement, (ii) as required by law or court order, after as much advance notice as is practical to the Disclosing Party, (iii) to its consultants, subcontractors, agents or financing sources who need to know and who are bound by equivalent written confidentiality obligations. The Receiving Party will use at least the same standard of care as it uses to protect proprietary or confidential information of its own to ensure that its Affiliates, employees, agents, consultants and other representatives do not disclose or make any unauthorized use of the Confidential Information of the Disclosing Party. The Receiving Party will promptly notify the Disclosing Party upon discovery of any unauthorized use or disclosure of the Disclosing Party's Confidential Information.
9.2 Exceptions. Confidential Information shall not include any information which the Receiving Party can prove by competent evidence: (a) is now, or hereafter becomes, through no act or failure to act on the part of the Receiving Party, generally known or available; (b) is known by the Receiving Party at the time of receiving such information, as evidenced by its written records; (c) is hereafter disclosed to the Receiving Party by a Third Party, as a matter of right and without restriction on disclosure; (d) is independently developed by the Receiving Party without the aid, application or use of Confidential Information of the Disclosing Party; or (e) is the subject of a written permission to disclose provided by the Disclosing Party.
10. PUBLICATIONS AND PUBLIC STATEMENTS
10.1 Publications. ICOS and Array will treat matters of authorship of scientific abstracts, manuscripts or publications in a proper collaborative spirit, giving credit where it is due. Without affecting obligations under Section 9 above, Array shall not publish any information with respect to Optimization Compounds or Derivatives during the Exclusivity Period without the prior written permission of ICOS. ICOS agrees to provide to Array, on a Confidential Basis, any publication, except patent prosecution documents with respect to Optimization Compounds at least two (2) weeks prior to submission for publication during the Exclusivity Period.
10.2 Public Statements. Neither Party shall use the name of the other Party in any public statement, prospectus, annual report or press release or other public communication (collectively "Public Statements") (except to the extent that use of the name is required for disclosure by the SEC rules or other government rules or regulations) without the prior written approval of the other Party, which may not be unreasonably withheld or delayed; provided, however, that both Parties shall endeavor in good faith to give the other Party a minimum of two (2) business days to review such Public Statements; provided, further, that, upon approval of any such Public Statement, both Parties may disclose to Third Parties the information contained in such Public Statement without the further approval of the other; and provided, further, that if a Party
does not approve such Public Statement, either Party may still use the name of the other Party in any Public Statement without the prior written approval of the other Party, if such Party is advised by counsel that such disclosure is required to comply with applicable law.
11. INDEMNIFICATION
11.1 Product Liability. ICOS hereby agrees to save, defend and hold Array and its officers, directors, employees, consultants, and agents harmless from and against any and all suits, claims, actions, demands, liabilities, expenses and losses, including reasonable legal expenses and attorneys' fees ("Losses") resulting directly or indirectly from any claim alleging physical injury or death or otherwise arising out of the administration, utilization and/or ingestion of Optimization Compounds or Products manufactured, used or sold by or under the authority of ICOS, its Affiliates or licensees except to the extent such Losses result from the negligence (whether active, passive or imputed), breach of this Agreement or willful misconduct of Array.
11.2 Procedures. If Array (the "Indemnified Party") seeks indemnification under this Section 11, it shall inform ICOS (the "Indemnifying Party") of a claim as soon as reasonably practicable after it receives notice of the claim, shall permit the Indemnifying Party to assume direction and control of the defense of the claim (including the right to settle any claim brought against the Indemnified Party upon prior written consent, which shall not be unreasonably withheld), and shall give reasonable cooperation (at the expense of the Indemnifying Party) in the defense of such claim.
12. ASSIGNABILITY
12.1 Generally. This Agreement may not be assigned by either Party without the prior written consent of the other Party, and which shall not to be unreasonably withheld; provided, however, that either Party may assign this Agreement, in whole or in part, to an Affiliate or to a successor of a Party in connection with the merger, consolidation or sale of all or substantially all of such Party's assets or that portion of its business pertaining to the subject matter of this Agreement (and upon doing so will promptly notify the other Party in writing) (each such transaction being referred to as an "Acquisition"); provided that the assigning Party remains fully liable as obligated hereunder.
12.2 Technology of Acquirer. In the event of an Acquisition, it is understood and agreed that no intellectual property rights or technology of the acquirer shall be included within the subject matter licensed hereunder, to the extent that such intellectual property or technology was owned or controlled by the acquirer as of the date of the Acquisition, or was created or obtained after the date of the Acquisition other than by employees of Array in the course of performing the Optimization Program.
13. DISPUTE RESOLUTION PROCEDURES
13.1 Senior Executives Discussions. If a dispute arises between Array and ICOS or with respect to matters other than the management of the Optimization Program, either during or after the Optimization Period, such dispute will be referred to the appropriate senior management in the area of the dispute. If such senior management are unable to resolve such dispute, such dispute will be referred to the Executive Vice President of Operations of ICOS and the Chief Operating Officer of Array
13.2 Injunctive Relief. Nothing contained in this Section 13 or any other provisions of this Agreement shall be construed to limit or preclude a Party from bringing any action in any court of competent jurisdiction for injunctive or other relief or to compel the other Party to comply with its obligations hereunder.
14. NOTICES
Any notice required or permitted to be given hereunder shall be deemed sufficient if sent by facsimile letter or overnight courier, or delivered by hand to ICOS or Array at the respective addresses and facsimile numbers as set forth below or at such other address and facsimile number as either Party hereto may designate. If sent by facsimile letter, notice shall be deemed given when the transmission is completed if the sender has a confirmed transmission report. If a confirmed transmission report does not exist, then the notice will be deemed given when the notice is actually received by the person to whom it is sent. If delivered by overnight courier, notice shall be deemed given when it has been signed for. If delivered by hand, notice shall be deemed given when received.
if to Array, to: Array BioPharma Corporation
1885 33rd Street
Boulder, Colorado 80301
if to ICOS, to: ICOS Corporation
22021 20th Avenue, S.E.
Bothell, Washington 98021
Attention: Legal Department
Fax number: (425) 398-8950
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15 SURVIVAL
The provisions of Sections 4.1, 4.3, 5.1, 5.2, 5.3, 6.2, 6.4, 7.1, 7.2, 7.3, 8.4, 9, 10, 11, 12, and 15 shall survive the expiration and any termination of this Agreement. In addition, Section l shall survive the expiration or any termination of this Agreement to the extent necessary to define terms in any other surviving Section. Notwithstanding the foregoing if Array terminates this Agreement under Section 8.3 then Section 7.1 shall not survive such termination by Array.
16. ADDITIONAL TERMS
16.1 Entire Agreement. This Agreement constitutes the entire understanding between the Parties with respect to the subject matter hereto and supersedes and replaces all previous negotiations, understandings, representations, writings and contract provisions and rights relating hereof.
16.2 Amendment; No Waiver. No provision of this Agreement may be amended except to the extent expressly allowed herein, revoked or waived except by a writing signed and delivered by an authorized officer of each Party. Any waiver on the part of either Party of any breach or any right or interest hereunder shall not imply the waiver of any subsequent breach or waiver of any other right or interest.
16.3 Validity. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, each of which shall remain in full force and effect.
16.4 Headings. The descriptive headings and numberings are inserted for convenience of reference only and are not intended to be part of or to affect the meaning of or interpretation of this Agreement.
16.5 Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, and all of which together shall be deemed to be one and the same instrument.
16.6 Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Washington, without regard to conflicts of laws and principles.
16.7 Further Assurances. At any time and from time to time after the Effective Date, the Parties shall each do, execute, acknowledge and deliver, and cause to be done, executed, acknowledged or delivered, all such further acts, transfers, conveyances, or assignments as may be reasonably required to carry out the transactions contemplated by this Agreement.
17. REPRESENTATIONS AND WARRANTIES
17.1 Authorization. All action on the part of each of Array, ICOS and their respective officers, and directors necessary for the authorization, execution and delivery of this Agreement and the performance of all obligations of Array and ICOS, respectively, hereunder has been taken.
17.2 Rights to Intellectual Property. Each Party warrants that it has the power to grant all of the rights granted and make such required assignments, and to assume all of the obligations required, under this Agreement.
17.3 Disclaimer of Warranties. EXCEPT AS OTHERWISE EXPLICITLY PROVIDED
IN THIS SECTION 17, ARRAY AND ICOS EXPRESSLY DISCLAIM ANY WARRANTIES OR
CONDITIONS, EXPRESS, IMPLIED, STATUTORY OR OTHERWISE, WITH RESPECT TO THE
OPTIMIZATION PROGRAM, OPTIMIZATION COMPOUNDS, DERIVATIVES, PRODUCTS, ARRAY
TECHNOLOGY, ARRAY PATENTS OR OPTIMIZATION PATENTS, INCLUDING, WITHOUT
LIMITATION, ANY WARRANTY OF MERCHANTABILITY, NON-INFRINGEMENT, OR FITNESS FOR A
PARTICULAR PURPOSE.
IN WITNESS WHEREOF, the parties have executed this Agreement to be effective as of the Effective Date.
ARRAY BIOPHARMA, INC. ICOS CORPORATION
By: /s/ David Snitman, Ph. D. By: /s/ W. Michael Gallatin, Ph. D.
------------------------------------ -------------------------------
David Snitman, Ph.D. W. Michael Gallatin, Ph.D.
V. P. of Business Development Vice President, Scientific
Director and Chief Operating Officer Director
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APPENDIX A
Milestones and Payments
(in U.S. Dollars)
[ * ]
APPENDIX B
Optimization Targets
[ * ]
[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
EXHIBIT 10.32
[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
CELL CYCLE CHECKPOINT OPTIMIZATION AGREEMENT
BETWEEN
ARRAY BIOPHARMA CORPORATION
AND
ICOS CORPORATION
APRIL 6, 1999
CELL CYCLE CHECKPOINT OPTIMIZATION AGREEMENT
THIS CELL CYCLE CHECKPOINT OPTIMIZATION AGREEMENT (the "C3 Agreement") is entered into and made effective as of April ____, 1999 (the "Effective Date"), by and between ARRAY BIOPHARMA INC, a Delaware corporation having its principal offices located at 1885 33rd Street, Boulder, CO 80301 ("Array") and ICOS CORPORATION, a Delaware corporation having its principal offices located at 22021 20th Avenue S.E., Bothell, Washington 98021 ("ICOS").
WHEREAS, Array has skills, expertise and experience in multi-parallel synthesis and purification methods, developing and preparing chemical libraries suitable for high throughput biological screening assays and medicinal chemistry;
WHEREAS, as of the Effective Date, ICOS and its Affiliates have developed and own, among other things, certain know how and intellectual property rights, assays, methods and lead compounds that may be potential drug candidates directed to the C3 Optimization Targets, (collectively "ICOS Technology");
WHEREAS, ICOS desires to utilize Array skills, expertise and experience to assist ICOS in optimizing such lead compounds for the C3 Optimization Targets;
WHEREAS, the parties wish to collaborate in an optimization program in this regard against C3 Optimization Targets;
WHEREAS, the C3 Optimization Program will focus on an initial C3 Optimization Target as set forth below, and the Parties intend to work on multiple C3 Optimization targets in a serial and parallel manner as set forth herein below;
NOW, THEREFORE, the Parties agree as follows:
1. DEFINITIONS
1.1 "Active Target" means a C3 Optimization Target for which ICOS has provided reasonable written notice to Array as described in Section 3.1 of this C3 Agreement, that such C3 Optimization Target shall be included in the C3 Optimization Program and for which a C3 Optimization Plan shall be produced. For the purpose of this definition reasonable notice shall be thirty (30) days unless the party's have agreed to a shorter period of notice either by written C3 Agreement or by the Parties performance.
1.2 "Affiliate" of a Party means any corporation or other business entity controlled by, controlling or under common control with, such Party. For this purpose "control" shall mean direct or indirect beneficial ownership of more than fifty percent (50%) of the voting
securities or income interest in such corporation or other business, or if not meeting the preceding requirements, any company owned or controlled by or owning or controlling such Party at the maximum control or ownership right permitted in the country where such company exists.
1.3 "Array Compound" means a chemical compound that is proprietary to Array, or whose use or manufacture is proprietary to Array.
1.4 "Array Patents" means all Patents which claim any Array Technology and that are Controlled by Array during the Exclusivity Period, but shall exclude any claims of a C3 Optimization Patent. For purposes of this definition, "controlled" shall mean the ability to grant a license or sublicense as provided for in Section 7.1 below.
1.5 "Array Technology" means certain know-how, intellectual
property or patents (i) developed, licensed and/or owned by Array, prior to the
Effective Date or (ii) developed licensed and/or owned by Array outside of the
C3 Optimization Program and used by Array in the C3 Optimization Program, or
(iii) developed during the C3 Optimization Program and not having solely
specific or novel application to the C3 Optimization Program (i.e. such
know-how, intellectual property, or patents having application outside of the
development, manufacture, use, sale, or importation of C3 Optimization Compounds
or Products). Array Technology shall not include [ * ] or [ * ].
1.6 "C3 Optimization Compound(s)" means a compound (or compounds) which is synthesized by Array following the Effective Date in the course of performing the C3 Optimization Program for the purpose of screening against an Active Target.
1.7 "C3 Optimization Patent" means a Patent claiming and disclosing the composition of a C3 Optimization Compound or the manufacture thereof, for which Array has made an inventive contribution to the subject invention in the course of performing the C3 Optimization Program, as determined under U.S. Patent law. Notwithstanding the foregoing, C3 Optimization Patents shall only include Patents to the extent the same (i) is entitled to a first effective filing date for priority purposes (i.e., for priority purposes under 35 USC, or the corresponding laws of the country in which such Patent is filed) after the Effective Date and (ii) claims subject matter reduced to practice (either actual or constructive) prior to the date six (6) months after the end of the C3 Optimization Period.
1.8 "C3 Optimization Period" means the term of the C3 Optimization Program as provided in Section 8 of this C3 Agreement.
1.9 "C3 Optimization Plan" means the C3 Optimization Plan to be prepared by Array approved and accepted by ICOS , which describes in agreed detail the research activities to be performed by Array for each Active Target.
1.10 "C3 Optimization Program" means the research and activities to be conducted under this C3 Agreement as described in the C3 Optimization Plan and as set forth in Sections 2.1 and 2.2 of this C3 Agreement.
[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
1.11 "C3 Optimization Target" means any one of the [ * ] described in Appendix B, at execution of this C3 Agreement, or as substituted by mutual written C3 Agreement of the Parties, and unless otherwise specified may include Active Targets, and shall in each case be selected from Appendix B.
1.12 "C3 Project Team" shall have the meaning set forth in
Section 2.1(c).
1.13 "Confidential Information" shall mean:
(a) all information and materials received by either Party from the other Party pursuant to this C3 Agreement which is confidential under Section 9;
(b) all information and materials received by
either Party from the other Party in
connection with the C3 Optimization Program
during the C3 Optimization Period,
including, without limitation, structures of
lead compounds provided by ICOS to Array, to
the extent the same is confidential under
Section 9; and
(c) the financial terms of this C3 Agreement and the identity of the C3 Optimization Targets, to the extent the same are confidential under Section 9.
1.14 "Daughter Libraries" shall mean the compound libraries which are designed and synthesized as a part of the C3 Optimization Program by Array.
1.15 "Derivative" shall mean a compound (or compounds) which has resulted from [ * ].
1.16 "Exclusivity Period" means [ * ].
1.17 "Field" means [ * ] for any C3 Optimization Target against which a C3 Optimization Compound or Products may be directed.
1.18 "FTE" shall mean a full-time equivalent employee of Array having the skills, support, services and resources to fulfill Array's obligations under this C3 Agreement. For purposes of this C3 Agreement, the FTEs shall include [ * ].
1.19 "Milestone Compound" shall have the meaning set forth in
Section 6.2.
[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
1.20 "Party" means Array or ICOS, as the case may be, including their respective permitted assigns of this C3 Agreement under Section 12 below.
1.21 "Patent" means (a) valid and enforceable U.S. or non U.S. Patent, and any non-U.S. equivalent, including any extension (including Supplemental Protection Certificates), registration, confirmation, reissue, continuation, divisionals, continuation-in-part, reexamination or renewal thereof, or (b) pending applications for any of the foregoing .
1.22 "Product(s)" means any product containing a C3 Optimization Compound or Derivative with such compound as the active ingredient or one of the active ingredients, which is the subject of one or more claims under a C3 Optimization Patent and which is granted regulatory approval by the governing health regulatory authority of the applicable country for marketing in the Field.
1.23 "Restored Active Target" means an Active Target which has ceased to be an Active Target either by C3 Agreement of the Parties or by operation of the C3 Optimization Program, and which, by reasonable written notice has been again designated as an Active Target. For the purposes of this definition reasonable notice shall be [ * ] unless the Party's have agreed to a shorter period of notice either by written C3 Agreement or by parties performance.
1.24 "Territory" means the entire world.
1.25 "Third Party" means an entity other than Array or ICOS or their respective Affiliates.
2. C3 OPTIMIZATION PROGRAM
2.1 Array Responsibilities. Array shall with due diligence provide the following services and resources to ICOS and conduct the following activities in accordance with the C3 Optimization Plan:
(a) During the C3 Optimization Period, Array shall (i) review data and information regarding the Active Target and lead compounds provided by ICOS; (ii) based on such data and information design Daughter Libraries and optimize the lead compounds supplied by ICOS; (iii) synthesize compounds as provided in Section 5.3 below; (iv) develop and optimize high throughput primary and secondary (selectivity) kinase screens and (v) and initiate pre-clinical predictive metabolism and toxicology profiling of C3 Optimization Compounds and Optimization Compounds (as per the Lead Optimization Agreement between Array and ICOS, dated December 22, 1999).
(b) During the C3 Optimization Period, Array shall keep ICOS regularly informed of its activities performed in connection with the C3 Optimization Program, including, without limitation, providing ICOS with data and information (and, upon ICOS's written request, reasonable quantities of samples pursuant to Section 5.3) regarding the status of Array's work on C3 Optimization Compounds under the C3 Optimization Plan.
(c) Subject to Sections 2.3, 3 and 6, and at all times during the C3 Optimization Period, Array shall [ * ].
2.2 ICOS Responsibilities. ICOS shall provide the following resources to Array and conduct the following activities under the C3 Optimization Program as more fully described in the C3 Optimization Plan:
(a) ICOS shall make payment to Array under the
C3 Optimization Program as set forth in
Section 6, provide screening, biological and
structural data and information including
leads and/or screening hits and assay
methods relating to C3 Optimization
Compounds to Array necessary for Array to
perform its duties under this C3 Agreement,
and will assume scientific, financial and
administrative responsibility for screening
and biological support activities, drug
development and regulatory filings during
and after the term of the C3 Optimization
Program on the terms set forth below.
(b) During the C3 Optimization Period, ICOS shall provide Array with: (i) lead compounds and/or structures of such lead compounds for the Active Target, and (ii) data and information regarding C3 Optimization Compounds and the Active Target assays developed by ICOS under the C3 Optimization Program.
2.3 Conduct of C3 Optimization Program. The Parties hereby agree that the C3 Optimization Program shall be carried out in accordance with the C3 Optimization Plan and this C3 Agreement, as amended from time to time. ICOS shall review the C3 Optimization Plan on a regular and an ongoing basis and may make written changes to the C3 Optimization Plan so long as such changes are mutually agreed to in writing by Array.
2.4 Third Party Licenses. Each Party shall be solely responsible for any Third Party license fees required to perform its obligations under this C3 Agreement.
2.5 Further, the Parties wish to establish that upon express written agreement between the Parties, an identified FTE (or all expressly identified FTEs) may be allocated to perform work arising out of another agreement between the Parties while remaining an FTE under this C3 Optimization Agreement and consideration being continued under Section 6 herein.
[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
3. TARGETS
3.1 Active Target. The initial Active Targets shall be as specified in Appendix B or as specified by reasonable written notice from ICOS to Array. There shall be no more than [ * ] at any one time unless Array and ICOS mutually agree in writing to having more than [ * ] simultaneously designated as Active Targets together with additional terms and conditions, if any.
3.2 Restored Active Target. Any C3 Optimization Target which has ceased to be an Active Target due to the later designation of another C3 Optimization Target as an Active Target, may always be restored to the status of an additional Active Target at ICOS's request provided that no more than [ * ] may be designated as active targets at any one time, as described in 3.1 above.
3.3 Disclosure of Active Target Information. ICOS agrees not to disclose to Array any Confidential Information relating to any C3 Optimization Targets, or lead compounds therefor until such C3 Optimization Targets are designated as the Active Targets in accordance with Section 3.1 above.
4. EXCLUSIVITY
4.1 Active Target Exclusivity. During the C3 Optimization Period, Array shall not knowingly work on or provide information regarding any C3 Optimization Target with or to any Third Parties, thereafter during the Exclusivity Period, Array shall not knowingly work on or provide information regarding any C3 Optimization Target which has been designated as an Active Target during the C3 Optimization Period with or to any Third Parties, in each case except (a) as provided for in Section 10.2 with regard to any Public Statements, and (b) with respect to any Third Parties who are collaborators or proposed collaborators of Array, Array shall have the right, consistent with its corporate policy (but without identifying any C3 Optimization Target), to notify any such Third Party of its decision and/or inability to work on such C3 Optimization Target with that Third Party. For the purposes of this Section 4.1, "knowingly" shall mean actual knowledge or imputed knowledge that the corporate entity or its directors and officers knew or should have known.
4.2 C3 Optimization Compounds. C3 Optimization Compounds, their structures and best methods of synthesis and manufacture developed during the C3 Optimization Program shall be made available only to ICOS for research or application to any C3 Optimization Target, within or outside the Collaboration, during the C3 Optimization Period, and Array shall not work on or provide information regarding such C3 Optimization Compound to any Third Party, except to take any steps necessary to protect ICOS's exclusivity hereunder.
4.3 Duration of Exclusivity for C3 Optimization Targets. Notwithstanding any other provision of this C3 Agreement, it is understood and agreed that once a C3 Optimization Program has been initiated for any Active target Array's obligations under Section 4.1 shall
[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
continue until ICOS has released Array from the effect of this Section 4.3 by written notice or the end of the Exclusivity Period, whichever occurs first.
5. C3 OPTIMIZATION COMPOUNDS
5.1 Intellectual Property Rights; Vesting and Transfer to
ICOS. Subject to Section 7.2, and except as set forth in this Section 5.1, ICOS
shall have exclusive rights in all C3 Optimization Patents and the subject
matter contained therein and all intellectual property and know-how (whether or
not patentable) embodied in C3 Optimization Compounds and Products and methods
specifically directed to the manufacture of C3 Optimization Compounds and
methods of use of Products, in each case resulting from the C3 Optimization
Program; to the extent possible such exclusive rights shall be achieved by Array
assigning its interest, if any, in such Patents and intellectual property and
know-how to ICOS and where such assignment is not legally possible ICOS shall
receive an exclusive license or sublicense to the maximum extent of Array's
rights. ICOS shall file, maintain and prosecute all Patents arising out of, or
comprising, the rights and interests granted in this Section 5.1 and Array shall
do everything reasonably necessary to assist ICOS in filing such Patents. Prior
to the filing of any such Patent applications or during the pendency of such
applications, Array shall assign to ICOS or its designee all intellectual
property rights it may have, to the extent granted in this Section 5.1, in the
C3 Optimization Patents and the subject matter disclosed and claimed therein
which are necessary for the development and commercialization of such C3
Optimization Compounds by ICOS or its designee. Notwithstanding anything in this
Section 5.1 to the contrary, nothing in this Section 5.1, or the operation
thereof, shall be deemed to grant to ICOS any rights in or to any Array
Technology.
5.2 Structural Information. Array shall not disclose the structure of any C3 Optimization Compound, Derivative or Product ( to the extent such structure is not publicly available) to any Third Party nor identify such structure, if publicly available, with its collaboration with ICOS without ICOS's written permission, unless required to do so by law, in which case Array shall promptly notify ICOS of such required disclosure and will use its reasonable efforts to assist ICOS to secure confidential treatment of such structure prior to any disclosure.
5.3 Supply of C3 Optimization Compounds. Aliquots of at [ * ] of any C3 Optimization Compound that has been synthesized will be prepared and given to ICOS together with their structures and all known and developed best methods of synthesis and manufacture. Array shall replenish once during the Exclusivity Period that amount upon ICOS's reasonable request, and ICOS shall reimburse Array for any cost thereof not otherwise reimbursed under Section 6 below for any reasonably requested replenishment in excess of a total [ * ]. To the extent that C3 Optimization Compounds are not available in a timely and sufficient quantity to allow the earliest start of necessary large scale preclinical or other studies such unavailability of C3 Optimization Compounds shall not be cited as a lack of due diligence provided that the Parties have made commercially reasonable attempts, and continue such attempts, during the Exclusivity Period to provide such unavailable C3 Optimization Compounds in required quantities in an expedient manner.
[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
6. CONSIDERATION
6.1 C3 Optimization Program Funding.
(a) Research Support for C3 Project Team. At all
times during the C3 Optimization Period,
ICOS shall make payments to Array for direct
research support for its C3 Project Team,
which shall initially consist of [ * ] of
Array, unless determined otherwise under
Section 6.1(b). The total amount payable per
FTE shall be [ * ] per FTE per annum. All
payments for direct research support shall
be paid by ICOS to Array, quarterly in
advance, and adjusted as necessary in
subsequent quarters, of such amounts as are
equal to the product of (i) the number of
[ * ] unless determined otherwise under
Section 6.1(b)) allocated to the C3
Optimization Program for the calendar
quarter to which each such payment applies,
multiplied by (ii) [ * ] (i.e., the
quarterly amount per FTE on the basis of
[ * ]).
(b) Expansion or Contraction of C3 Project Team. ICOS may request that Array expand or contract its C3 Project Team during the C3 Optimization Period in order to match the work on Active Targets; provided that the C3 Project Team shall not be less than [ * ] FTEs except by agreement of Array. In such event, the Parties shall promptly confer as to the appropriate number of FTEs to constitute the C3 Project Team, as mutually agreed, at a cost to ICOS of [ * ], to be paid as specified in Section 6.1(a). Initially, the C3 Project Team will consist of [ * ]. Notwithstanding the foregoing, the Project Team may be expanded or contracted in any quarter by the addition or subtraction of a [ * ] is given by ICOS prior to the start of such quarter in which the addition or subtraction of the [ * ] will occur.
6.2 Milestone Payments. Within [ * ] of the occurrence of a development milestone triggered by the activities of ICOS or its Affiliates, or Third Parties acting under authority from ICOS or its Affiliates, ICOS shall pay Array the related milestone payment in U.S. dollars as set forth in Appendix A. Such payments shall apply once only to each milestone reached by any C3 Optimization Compound or Derivative for each C3 Optimization Target. Such milestone payments shall be due with respect to each C3 Optimization Compound or Derivative to meet such milestone (each a "Milestone Compound"); [ * ].
[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
6.3 Taxes. All income and other taxes levied or accruing to Array under this C3 Agreement shall be paid by Array, including taxes levied thereon as income to Array. If provision is made in law or regulation for withholding, such tax shall be deducted from the payment made by ICOS to the proper taxing authority and a receipt of payment of the tax secured and promptly delivered to Array. Each Party agrees to assist the other Party reasonably in claiming exemption from such deductions or withholdings under any double taxation or similar agreement or treaty from time to time in force.
6.4 Title to, and ownership of, tangible property. Without limiting ICOS' rights under Sections 5.1 and 7 of this C3 Agreement, it is understood and agreed that each Party retains title to any tangible property delivered to the other Party under this C3 Agreement.
7. LICENSE GRANTS; OUTLICENSE
7.1 Array License Grant to ICOS. Subject to the terms and
conditions of this C3 Agreement, Array hereby grants to ICOS a non-exclusive,
royalty-free, fully paid up except as to payment of respective milestones under
Section 6.2, worldwide license, with the right to sublicense to use Array
Technology and under the Array Patents, in each case solely to make, have made,
use, have used, sell, have sold, import and export C3 Optimization Compounds or
Products in the Field.
7.2 ICOS Sublicense. ICOS shall have the right to transfer, assign or sublicense to a Third Party ICOS's rights under Sections 5.1 and 7.1 above or C3 Optimization Patents covering the Products.
7.3 No Other Licenses. No right or license is granted to ICOS hereunder under technology or intellectual property of Array, by implication, estoppel or otherwise, except as specifically and expressly granted under Sections 5.1, 5.2 and 7.1 of this C3 Agreement. No right or license is granted to ARRAY hereunder in any C3 Optimization Compound or Derivative, including compounds in Daughter Libraries.
8. TERM AND TERMINATION OF THE C3 AGREEMENT
8.1 Term, Renewals and Extensions. The term of this C3
Agreement and C3 Optimization Program shall commence upon the Effective Date of
this C3 Agreement, and unless earlier terminated as provided in this C3
Agreement, shall expire on the second anniversary thereafter provided, however,
that the term shall be automatically extended for a further one (1) year unless
either party provides written notice sixty (60) days or more prior to such
second anniversary canceling such extension. Unless terminated early pursuant to
Section 8.2 below, the
C3 Optimization Period may be renewed for additional periods upon mutual agreement of the Parties; provided that neither Party shall be obligated to approve any such renewal.
8.2 Termination by ICOS. ICOS may terminate this C3 Agreement effective at any time after the first anniversary of the Effective Date, in its sole discretion, upon [ * ] days prior written notice.
8.3 Termination by ICOS or Array. If either Party materially breaches this C3 Agreement and fails to remedy that breach within [ * ] of receiving written notice thereof from the other Party, or makes an assignment of substantially all of its assets for the benefit of its creditors or goes into liquidation, insolvency, bankruptcy, receivership or reorganization proceedings, whether voluntarily or compulsorily which is not dismissed by a court of competent jurisdiction within [ * ], then the other Party may at any time, by notice in writing or by telefax, terminate this C3 Agreement and the C3 Optimization Program. Within [ * ] following termination for the C3 Optimization Program and/or research related to any C3 Optimization Target under this C3 Agreement, Array shall prepare a detailed, final written report to ICOS, and provide any remaining supply of C3 Optimization Compounds in synthesis to date, for each Target or part of the C3 Optimization Program being terminated.
8.4 Effect of Termination on Licensees. In the event of any termination of this C3 Agreement pursuant to Section 8.3 where such termination shall not have been caused by the action or inaction on the part of any respective licensee of ICOS or Array, or by any breach by such licensee of its obligations under its license from ICOS or Array, as appropriate, such termination of this C3 Agreement shall be without prejudice to the rights of each non-breaching licensee and such licensee shall be deemed to be a direct licensee hereunder; provided that such licensee agrees in writing to be bound by the applicable provisions of this C3 Agreement, including, without limitation, the payment of milestone payments pursuant to Section 6.2.
9. CONFIDENTIAL INFORMATION
9.1 Nondisclosure. During the term of this C3 Agreement and for a period of [ * ] after termination or expiration thereof, each Party (the "Receiving Party") will maintain all Confidential Information received from the other Party (the "Disclosing Party") in trust and confidence and will not disclose any such Confidential Information to any Third Party or use any such Confidential Information for any purpose except (i) as expressly authorized by this C3 Agreement, (ii) as required by law or court order, after as much advance notice as is practical to the Disclosing Party, (iii) to its consultants, subcontractors, agents or financing sources who need to know and who are bound by equivalent written confidentiality obligations. The Receiving Party will use at least the same standard of care as it uses to protect proprietary or confidential information of its own to ensure that its Affiliates, employees, agents, consultants and other representatives do not disclose or make any unauthorized use of the Confidential Information of the Disclosing Party. The Receiving Party will promptly notify the Disclosing Party upon discovery of any unauthorized use or disclosure of the Disclosing Party's Confidential Information.
[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
9.2 Exceptions. Confidential Information shall not include any information which the Receiving Party can prove by competent evidence: (a) is now, or hereafter becomes, through no act or failure to act on the part of the Receiving Party, generally known or available; (b) is known by the Receiving Party at the time of receiving such information, as evidenced by its written records; (c) is hereafter disclosed to the Receiving Party by a Third Party, as a matter of right and without restriction on disclosure; (d) is independently developed by the Receiving Party without the aid, application or use of Confidential Information of the Disclosing Party; or (e) is the subject of a written permission to disclose provided by the Disclosing Party.
10. PUBLICATIONS AND PUBLIC STATEMENTS
10.1 Publications. ICOS and Array will treat matters of authorship of scientific abstracts, manuscripts or publications in a proper collaborative spirit, giving credit where it is due. Without affecting obligations under Section 9 above, Array shall not publish any information with respect to C3 Optimization Compounds or Derivatives during the Exclusivity Period without the prior written permission of ICOS. ICOS agrees to provide to Array, on a Confidential Basis, any publication, except patent prosecution documents with respect to C3 Optimization Compounds at least two (2) weeks prior to submission for publication during the Exclusivity Period.
10.2 Public Statements. Neither Party shall use the name of the other Party in any public statement, prospectus, annual report or press release or other public communication (collectively "Public Statements") (except to the extent that use of the name is required for disclosure by the SEC rules or other government rules or regulations) without the prior written approval of the other Party, which may not be unreasonably withheld or delayed; provided, however, that both Parties shall endeavor in good faith to give the other Party a minimum of two (2) business days to review such Public Statements; provided, further, that, upon approval of any such Public Statement, both Parties may disclose to Third Parties the information contained in such Public Statement without the further approval of the other; and provided, further, that if a Party does not approve such Public Statement, either Party may still use the name of the other Party in any Public Statement without the prior written approval of the other Party, if such Party is advised by counsel that such disclosure is required to comply with applicable law.
11. INDEMNIFICATION
11.1 Product Liability. ICOS hereby agrees to save, defend and hold Array and its officers, directors, employees, consultants, and agents harmless from and against any and all suits, claims, actions, demands, liabilities, expenses and losses, including reasonable legal expenses and attorneys' fees ("Losses") resulting directly or indirectly from any claim alleging physical injury or death or otherwise arising out of the administration, utilization and/or ingestion of C3 Optimization Compounds or Products manufactured, used or sold by or under the authority of ICOS, its Affiliates or licensees except to the extent such Losses result from the negligence (whether active, passive or imputed), breach of this C3 Agreement or willful misconduct of Array.
11.2 Procedures. If Array (the "Indemnified Party") seeks indemnification under this Section 11, it shall inform ICOS (the "Indemnifying Party") of a claim as soon as reasonably
practicable after it receives notice of the claim, shall permit the Indemnifying Party to assume direction and control of the defense of the claim (including the right to settle any claim brought against the Indemnified Party upon prior written consent, which shall not be unreasonably withheld), and shall give reasonable cooperation (at the expense of the Indemnifying Party) in the defense of such claim.
12. ASSIGNABILITY
12.1 Generally. This C3 Agreement may not be assigned by either Party without the prior written consent of the other Party, and which shall not to be unreasonably withheld; provided, however, that either Party may assign this C3 Agreement, in whole or in part, to an Affiliate or to a successor of a Party in connection with the merger, consolidation or sale of all or substantially all of such Party's assets or that portion of its business pertaining to the subject matter of this C3 Agreement (and upon doing so will promptly notify the other Party in writing) (each such transaction being referred to as an "Acquisition"); provided that the assigning Party remains fully liable as obligated hereunder.
12.2 Technology of Acquirer. In the event of an Acquisition, it is understood and agreed that no intellectual property rights or technology of the acquirer shall be included within the subject matter licensed hereunder, to the extent that such intellectual property or technology was owned or controlled by the acquirer as of the date of the Acquisition, or was created or obtained after the date of the Acquisition other than by employees of Array in the course of performing the C3 Optimization Program.
13. DISPUTE RESOLUTION PROCEDURES
13.1 Senior Executives Discussions. If a dispute arises between Array and ICOS or with respect to matters other than the management of the C3 Optimization Program, either during or after the C3 Optimization Period, such dispute will be referred to the appropriate senior management in the area of the dispute. If such senior management are unable to resolve such dispute, such dispute will be referred to the Executive Vice President of Operations of ICOS and the Chief Operating Officer of Array
13.2 Injunctive Relief. Nothing contained in this Section 13 or any other provisions of this C3 Agreement shall be construed to limit or preclude a Party from bringing any action in any court of competent jurisdiction for injunctive or other relief or to compel the other Party to comply with its obligations hereunder.
14. NOTICES
Any notice required or permitted to be given hereunder shall be deemed sufficient if sent by facsimile letter or overnight courier, or delivered by hand to ICOS or Array at the respective addresses and facsimile numbers as set forth below or at such other address and facsimile number as either Party hereto may designate. If sent by facsimile letter, notice shall be deemed given when the transmission is completed if the sender has a confirmed transmission report. If a confirmed transmission report does not exist, then the notice will be deemed given when the notice is actually received by the person to whom it is sent. If delivered by overnight courier, notice shall be deemed given when it has been signed for. If delivered by hand, notice shall be deemed given when received.
if to Array, to: Array BioPharma Corporation
1885 33rd Street
Boulder, Colorado 80301
if to ICOS, to: ICOS Corporation
22021 20th Avenue, S.E.
Bothell, Washington 98021
Attention: Legal Department
Fax number: (425) 398-8950
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15. SURVIVAL
The provisions of Sections 4.1, 4.3, 5.1, 5.2, 5.3, 6.2, 6.4, 7.1, 7.2, 7.3 8.4 9, 10, 11, 12, and 15 shall survive the expiration and any termination of this C3 Agreement. In addition, Section1 shall survive the expiration or any termination of this C3 Agreement to the extent necessary to define terms in any other surviving Section. Notwithstanding the foregoing if Array terminates this C3 Agreement under Section 8.3 then Section 7.1 shall not survive such termination by Array.
16. ADDITIONAL TERMS
16.1 Entire Agreement. This C3 Agreement constitutes the entire understanding between the Parties with respect to the subject matter hereto and supersedes and replaces all previous negotiations, understandings, representations, writings and contract provisions and rights relating hereof.
16.2 Amendment; No Waiver. No provision of this C3 Agreement may be amended except to the extent expressly allowed herein, revoked or waived except by a writing signed and delivered by an authorized officer of each Party. Any waiver on the part of either Party of any breach or any right or interest hereunder shall not imply the waiver of any subsequent breach or waiver of any other right or interest.
16.3 Validity. The invalidity or unenforceability of any provision of this C3 Agreement shall not affect the validity or enforceability of any other provision of this C3 Agreement, each of which shall remain in full force and effect.
16.4 Headings. The descriptive headings and numberings are inserted for convenience of reference only and are not intended to be part of or to affect the meaning of or interpretation of this C3 Agreement.
16.5 Counterparts. This C3 Agreement may be executed in one or more counterparts, each of which shall be deemed an original, and all of which together shall be deemed to be one and the same instrument.
16.6 Governing Law. This C3 Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Washington, without regard to conflicts of laws and principles.
16.7 Further Assurances. At any time and from time to time after the Effective Date, the Parties shall each do, execute, acknowledge and deliver, and cause to be done, executed, acknowledged or delivered, all such further acts, transfers, conveyances, or assignments as may be reasonably required to carry out the transactions contemplated by this C3 Agreement.
17. REPRESENTATIONS AND WARRANTIES
17.1 Authorization. All action on the part of each of Array, ICOS and their respective officers, and directors necessary for the authorization, execution and delivery of this C3 Agreement and the performance of all obligations of Array and ICOS, respectively, hereunder has been taken.
17.2 Rights to Intellectual Property. Each Party warrants that it has the power to grant all of the rights granted and make such required assignments, and to assume all of the obligations required, under this C3 Agreement.
17.3 Disclaimer of Warranties. EXCEPT AS OTHERWISE EXPLICITLY
PROVIDED IN THIS SECTION 17, ARRAY AND ICOS EXPRESSLY DISCLAIM ANY WARRANTIES OR
CONDITIONS, EXPRESS, IMPLIED, STATUTORY OR OTHERWISE, WITH RESPECT TO THE C3
OPTIMIZATION PROGRAM, C3 OPTIMIZATION COMPOUNDS, DERIVATIVES, PRODUCTS, ARRAY
TECHNOLOGY, ARRAY PATENTS OR C3 OPTIMIZATION PATENTS, INCLUDING, WITHOUT
LIMITATION, ANY WARRANTY OF MERCHANTABILITY, NON-INFRINGEMENT, OR FITNESS FOR A
PARTICULAR PURPOSE.
IN WITNESS WHEREOF, the parties have executed this C3 Agreement to be effective as of the Effective Date.
ARRAY BIOPHARMA, INC. ICOS CORPORATION
By: /s/ David Snitman, Ph.D. By: /s/ W. Michael Gallatin, Ph.D.
--------------------------- --------------------------------
David Snitman, Ph.D. W. Michael Gallatin, Ph.D.
V. P. of Business Development Vice President, Scientific Director
and Chief Operating Officer
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APPENDIX A
Milestones and Payments
(in U.S. Dollars)
[ * ]
[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
APPENDIX B
C3 Optimization Targets
[ * ]
[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
EXHIBIT 10.33
[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
DRUG DISCOVERY COLLABORATION AGREEMENT
BETWEEN
ARRAY BIOPHARMA CORPORATION
AND
ICOS CORPORATION
JULY 31, 2000
THIS DRUG DISCOVERY COLLABORATION AGREEMENT (the "Agreement") is entered into and made effective as of July 31, 2000 (the "Effective Date"), by and between ARRAY BIOPHARMA INC, a Delaware corporation having its principal offices located at 1885 33rd Street, Boulder, CO 80301 ("Array") and ICOS CORPORATION, a Delaware corporation having its principal offices located at 22021 20th Avenue S.E., Bothell, Washington 98021 ("ICOS").
WHEREAS, Array has skills, expertise and experience in multi-parallel synthesis and purification methods, developing and preparing chemical libraries suitable for high throughput biological screening assays and medicinal chemistry;
WHEREAS, as of the Effective Date, ICOS and its Affiliates have developed and own, among other things, certain know how and intellectual property rights, assays, methods and lead compounds that may be potential drug candidates directed to [ * ] and the Optimization Targets, (as defined below) (collectively "ICOS Technology");
WHEREAS, ARRAY and ICOS have entered that certain Lead Optimization Agreement ("LO Agreement") dated December 22, 1998, for the optimization of, among other things, such lead compounds directed against [ * ];
WHEREAS, ARRAY and ICOS have entered into that certain Cell
Cycle Checkpoint Optimization Agreement ("C3 Agreement) dated April 6, 1999, for
the optimization of, among other things, such lead compounds directed against
[ * ];
WHEREAS, ARRAY and ICOS desire to consolidate the optimization programs initiated pursuant to the LO and C3 Agreements with an optimization program against the Optimization Targets;
WHEREAS, ARRAY and ICOS have mutually agreed to cancel and terminate the LO Agreement and the C3 Agreement in their entirety and to release each other from all obligations, accrued or outstanding, under the LO Agreement and the C3 Agreement, all under the terms and conditions as set forth herein below;
NOW, THEREFORE, the Parties agree as follows:
1. DEFINITIONS
1.1 "Active Target" means an Optimization Target for which ICOS has provided reasonable written notice to Array as described in Section 3.1 of this Agreement, that such Optimization Target shall be included in the Optimization Program and for which an Optimization Plan shall be produced. For the purpose of this definition reasonable notice shall be [ * ]
[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
days unless the parties have agreed to a shorter period of notice either by written agreement or by the Parties' performance.
1.2 "Affiliate" of a Party means any corporation or other business entity controlled by, controlling or under common control with, such Party. For this purpose "control" shall mean direct or indirect beneficial ownership of more than fifty percent (50%) of the voting securities or income interest in such corporation or other business, or if not meeting the preceding requirements, any company owned or controlled by or owning or controlling such Party at the maximum control or ownership right permitted in the country where such company exists.
1.3 "Array Compound" means a chemical compound that is proprietary to Array, or whose use or manufacture is proprietary to Array.
1.4 "Array Patents" means all Patents which claim any Array Technology and that are Controlled by Array during the Exclusivity Period, but shall exclude any claims of an Optimization Patent. For purposes of this definition, "controlled" shall mean the ability to grant a license or sublicense as provided for in Section 8.1 below.
1.5 "Array Technology" means certain know-how, intellectual property or patents (i) developed, licensed and/or owned by Array, prior to the Effective Date or (ii) developed licensed and/or owned by Array outside of the Optimization Program and used by Array in the Optimization Program, or (iii) developed during the Optimization Program and not having solely specific or novel application to the Optimization Program (i.e. such know-how, intellectual property, or patents having application outside of the development, manufacture, use, sale, or importation of Optimization Compounds or Products). Array Technology shall not include [ * ].
1.6 "Confidential Information" shall mean:
(a) all information and materials received by either Party from the other Party pursuant to this Agreement which is confidential under Section 10;
(b) all information and materials received by
either Party from the other Party in
connection with the Optimization Program
during the Optimization Period, including,
without limitation, structures of lead
compounds provided by ICOS to Array, to the
extent the same is confidential under
Section 10; and
(c) the financial terms of this Agreement and the identity of the Optimization Targets, to the extent the same are confidential under Section 10.
[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
1.7 "Daughter Libraries" shall mean the compound libraries which are designed and synthesized as a part of the Optimization Program by Array.
1.8 "Derivative" shall mean a compound (or compounds) which has resulted from [ * ].
1.9 "Exclusivity Period" means the [ * ].
1.10 "Field" means [ * ] for any Optimization Target against which an Optimization Compound or Products may be directed.
1.11 "FTE" shall mean a full-time equivalent employee of Array having the skills, support, services and resources to fulfill Array's obligations under this Agreement. For purposes of this Agreement, the FTEs shall include [ * ] and upon approval by ICOS may also include Array employees with the skills required to [ * ].
1.12 "Milestone Compound" shall have the meaning set forth in
Section 7.2.
1.13 "Optimization Compound(s)" means a compound (or compounds) which is (i) synthesized by Array following the Effective Date in the course of performing the Optimization Program for the purpose of screening against an Active Target, (ii) was synthesized by Array, for the purpose of screening against an Active Target, in the course of performing lead compound optimization under the LO agreement, or (iii) was synthesized by Array, for the purpose of screening against an Active Target, in the course of performing lead compound optimization under the C3 Agreement.
1.14 "Optimization Patent" means a Patent claiming and disclosing the composition of an Optimization Compound or the manufacture thereof, for which Array has made an inventive contribution to the subject invention in the course of performing the Optimization Program, as determined under U.S. Patent law. Notwithstanding the foregoing, Optimization Patents shall only include Patents to the extent the same (i) is entitled to a first effective filing date for priority purposes (i.e., for priority purposes under 35 USC, or the corresponding laws of the country in which such Patent is filed) after the Effective Date and (ii) claims subject matter reduced to practice (either actual or constructive) prior to the [ * ] after the end of the Optimization Period.
1.15 "Optimization Period" means the term of the Optimization Program as provided in Section 9 of this Agreement.
[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
1.16 "Optimization Plan" means the Optimization Plan for each Optimization Target to be prepared by Array approved and accepted by ICOS, which describes in agreed detail the research activities to be performed by Array for each Active Target.
1.17 "Optimization Program" means the research and activities for each Optimization Target to be conducted under this Agreement as described in the Optimization Plan and as set forth in Sections 3.1 and 3.2 of this Agreement.
1.18 "Optimization Target" means any [ * ] biomolecular entities described in Appendix B, at execution of this Agreement, or as substituted by mutual written agreement of the Parties, and unless otherwise specified may include Active Targets, and shall in each case be selected from Appendix B.
1.19 "Project Team" shall have the meaning set forth in
Section 3.1(c).
1.20 "Party" means Array or ICOS, as the case may be, including their respective permitted assigns of this Agreement under Section 13 below.
1.21 "Patent" means (a) valid and enforceable U.S. or non U.S. Patent, and any non-U.S. equivalent, including any extension (including Supplemental Protection Certificates), registration, confirmation, reissue, continuation, divisionals, continuation-in-part, reexamination or renewal thereof, or (b) pending applications for any of the foregoing.
1.22 "Product(s)" means any product containing an Optimization Compound or Derivative with such compound as the active ingredient or one of the active ingredients, which is the subject of one or more claims under an Optimization Patent and which is granted regulatory approval by the governing health regulatory authority of the applicable country for marketing in the Field.
1.23 "Restored Active Target" means an Active Target which has ceased to be an Active Target either by Agreement of the Parties or by operation of the Optimization Program, and which, by reasonable written notice has been again designated as an Active Target. For the purposes of this definition reasonable notice shall be [ * ] unless the Parties have agreed to a shorter period of notice either by written Agreement or by parties performance.
1.24 "Territory" means the entire world.
1.25 "Third Party" means an entity other than Array or ICOS or their respective Affiliates.
[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
2. CANCELLATION AND TERMINATION
2.1 Cancellation and Termination. As of the Effective Date of this Agreement, Array and ICOS hereby irrevocably cancel and terminate the LO Agreement in its entirety. Array and ICOS also hereby irrevocably cancel and terminate the C3 Agreement in its entirety Except as expressly set forth herein, (i) all rights and obligations of Array and ICOS under the LO Agreement and under the C3 Agreement are hereby canceled and terminated, (ii) all rights and licenses granted under the LO Agreement or the C3 Agreement shall revert to the party granting such right or license, and (iii) no terms and conditions of the LO Agreement or the C3 Agreement shall survive. For the avoidance of doubt, it is however intended by the parties that this consolidated Agreement shall give the same rights, obligations and duties to the parties for [ * ] and [ * ] as under the Lead Optimization Agreement and C3 Agreement respectively.
2.2 Settlement and Release. Each party hereto agrees that this Agreement represents settlement in full of all outstanding obligations owed to the other party under the LO Agreement and the C3 Agreement. Array and ICOS, on behalf of themselves, and their respective heirs, executors, officers, directors, employees, investors, shareholders, administrators, predecessor and successor corporations, and assigns, hereby fully and forever release each other and their respective heirs, executors, officers, directors, employees, investors, shareholders, administrators, predecessor and successor corporations, and assigns, of and from any claim, duty, obligation or cause of action relating to any matters of any kind, whether presently known or unknown, suspected or unsuspected, that any of them may possess arising from any omissions, acts or facts that have occurred up until and including the Effective Date of this Agreement.
3. OPTIMIZATION PROGRAM
3.1 Array Responsibilities. Array shall with due diligence provide the following services and resources to ICOS and conduct the following activities in accordance with the Optimization Plan:
(a) During the Optimization Period, Array shall
(i) review data and information regarding
Active Targets and lead compounds provided
by ICOS; (ii) based on such data and
information design Daughter Libraries and
optimize the lead compounds supplied by
ICOS and (iii) synthesize compounds as
provided in Section 6.3 below;
(b) During the Optimization Period, Array shall keep ICOS regularly informed of its activities performed in connection with the Optimization Program, including, without limitation, providing ICOS with data and information (and, upon ICOS's written request, reasonable quantities of samples pursuant to Section 6.3) regarding the status of Array's work on Optimization Compounds under the Optimization Plan;
[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
(c) Subject to Sections 3.3, 4 and 7, and at all times during the Optimization Period, Array shall [ * ].
3.2 ICOS Responsibilities. ICOS shall provide the following resources to Array and conduct the following activities under the Optimization Program as more fully described in the Optimization Plan:
(a) ICOS shall make payment to Array under the
Optimization Program as set forth in
Section 7, provide screening, biological
and structural data and information
including leads and/or screening hits and
assay methods relating to Optimization
Compounds to Array necessary for Array to
perform its duties under this Agreement,
and will assume scientific, financial and
administrative responsibility for screening
and biological support activities, drug
development and regulatory filings during
and after the term of the Optimization
Program on the terms set forth below.
(b) During the Optimization Period, ICOS shall provide Array with: (i) lead compounds and/or structures of such lead compounds for Active Targets, and (ii) data and information regarding Optimization Compounds and Active Target assays developed by ICOS under the Optimization Program.
3.3 Conduct of Optimization Program. The Parties hereby agree that the Optimization Program shall be carried out in accordance with the Optimization Plan and this Agreement, as amended from time to time. ICOS shall review the Optimization Plan on a regular and an ongoing basis and may make written changes to the Optimization Plan so long as such changes are mutually agreed to in writing by Array.
3.4 Third Party Licenses. Each Party shall be solely responsible for any Third Party license fees required to perform its obligations under this Agreement.
4. TARGETS
4.1 Active Target. The initial Active Targets shall be as specified in Appendix B or as specified by reasonable written notice from ICOS to Array. There shall be no more than [ * ] Active Targets at any one time unless Array and ICOS mutually agree in writing to having more than [ * ] Optimization Targets simultaneously designated as Active Targets together with additional terms and conditions, if any.
[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
4.2 Restored Active Target. Any Optimization Target which has
ceased to be an Active Target due to the later designation of another
Optimization Target as an Active Target, may always be restored to the status
of an additional Active Target at ICOS's request provided that no more than
[ * ] targets may be designated as active targets at any one time, as described
in 4.1 above.
4.3 Disclosure of Active Target Information. ICOS agrees not to disclose to Array any Confidential Information relating to any Optimization Targets, or lead compounds therefor until such Optimization Targets are designated as the Active Targets in accordance with Section 4.1 above.
5. EXCLUSIVITY
5.1 Active Target Exclusivity. During the Optimization Period, Array shall not knowingly work on or provide information regarding any Optimization Target with or to any Third Parties; thereafter during the Exclusivity Period, Array shall not knowingly work on or provide information regarding any Optimization Target which has been designated as an Active Target during the Optimization Period with or to any Third Parties, in each case except (a) as provided for in Section 11.2 with regard to any Public Statements, and (b) with respect to any Third Parties who are collaborators or proposed collaborators of Array, Array shall have the right, consistent with its corporate policy (but without identifying any Optimization Target), to notify any such Third Party of its decision and/or inability to work on such Optimization Target with that Third Party. For the purposes of this Section 5.1, "knowingly" shall mean actual knowledge or imputed knowledge that the corporate entity or its directors and officers knew or should have known.
5.2 Optimization Compounds. Optimization Compounds, their structures and best methods of synthesis and manufacture developed during the Optimization Program shall be made available only to ICOS for research or application to any Optimization Target, within or outside the Collaboration, during the Optimization Period, and Array shall not work on or provide information regarding such Optimization Compound to any Third Party, except to take any steps necessary to protect ICOS's exclusivity hereunder.
5.3 Duration of Exclusivity for Optimization Targets. Notwithstanding any other provision of this Agreement, it is understood and agreed that once an Optimization Program has been initiated for any Active Target Array's obligations under Section 5.1 shall continue until ICOS has released Array from the effect of this Section 5.3 by written notice or the end of the Exclusivity Period, whichever occurs first.
6. OPTIMIZATION COMPOUNDS
6.1 Intellectual Property Rights; Vesting and Transfer to ICOS. Subject to Section 6.2, and except as set forth in this Section 6.1, ICOS shall have exclusive rights in all
[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
Optimization Patents and the subject matter contained therein and all intellectual property and know-how (whether or not patentable) embodied in Optimization Compounds and Products and methods specifically directed to the manufacture of Optimization Compounds and methods of use of Products, in each case resulting from the Optimization Program; to the extent possible such exclusive rights shall be achieved by Array assigning its interest, if any, in such Patents and intellectual property and know-how to ICOS and where such assignment is not legally possible ICOS shall receive an exclusive license or sublicense to the maximum extent of Array's rights. ICOS shall file, maintain and prosecute all Patents arising out of, or comprising, the rights and interests granted in this Section 6.1 and Array shall do everything reasonably necessary to assist ICOS in filing such Patents. Prior to the filing of any such Patent applications or during the pendency of such applications, Array shall assign to ICOS or its designee all intellectual property rights it may have, to the extent granted in this Section 6.1, in the Optimization Patents and the subject matter disclosed and claimed therein which are necessary for the development and commercialization of such Optimization Compounds by ICOS or its designee. Notwithstanding anything in this Section 6.1 to the contrary, nothing in this Section 6.1, or the operation thereof, shall be deemed to grant to ICOS any rights in or to any Array Technology.
6.2 Structural Information. Array shall not disclose the structure of any Optimization Compound, Derivative or Product (to the extent such structure is not publicly available) to any Third Party nor identify such structure, if publicly available, with its collaboration with ICOS without ICOS's written permission, unless required to do so by law, in which case Array shall promptly notify ICOS of such required disclosure and will use its reasonable efforts to assist ICOS to secure confidential treatment of such structure prior to any disclosure.
6.3 Supply of Optimization Compounds. Aliquots of at least
[ * ] of any Optimization Compound that has been synthesized will be prepared
and given to ICOS together with their structures and all known and developed
best methods of synthesis and manufacture. Array shall replenish once during the
Exclusivity Period that amount upon ICOS's reasonable request, and ICOS shall
reimburse Array for any cost thereof not otherwise reimbursed under Section 6
below for any reasonably requested replenishment in excess of a total of [ * ]
milligrams. To the extent that Optimization Compounds are not available in a
timely and sufficient quantity to allow the earliest start of necessary large
scale preclinical or other studies such unavailability of Optimization Compounds
shall not be cited as a lack of due diligence provided that the Parties have
made commercially reasonable attempts, and continue such attempts, during the
Exclusivity Period to provide such unavailable Optimization Compounds in
required quantities in an expedient manner.
7. CONSIDERATION
7.1 Optimization Program Funding.
(a) Research Support for Project Team. At all times during the Optimization Period, ICOS shall make payments to Array for direct
[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
research support for its Project Team,
which shall initially consist of [ * ] of
Array, unless determined otherwise under
Section 7.1(b). The total amount payable
per FTE shall be U.S. [ * ] per FTE per
annum ("FTE Rate"). The FTE Rate for any
Calendar Year after [ * ] shall be adjusted
annually at each anniversary of this
Agreement by ICOS in accordance with the
annual percentage change in Consumer Price
Index for all Urban Consumers as published
by the United States Department of Labor,
Bureau of Labor Statistics. All payments
for direct research support shall be paid
by ICOS to Array, quarterly in advance, and
adjusted as necessary in subsequent
quarters, of such amounts as are equal to
the product of (i) the number of FTEs [ * ]
FTEs unless determined otherwise under
Section 7.1(b)) allocated to the
Optimization Program for the calendar
quarter to which each such payment applies,
multiplied by (ii) U.S. [ * ] (i.e., the
quarterly amount per FTE on the basis of
U.S. [ * ] per annum).
(b) Expansion of Project Team. ICOS may request that Array expand its Project Team during the Optimization Period in order to match the work on Active Targets. In such event, the Parties shall promptly confer as to the appropriate number of FTEs to constitute the Project Team, as mutually agreed, to be paid as specified in Section 7.1(a).
7.2 Milestone Payments. Within [ * ] of the occurrence of a development milestone triggered by the activities of ICOS or its Affiliates, or Third Parties acting under authority from ICOS or its Affiliates, ICOS shall pay Array the related milestone payment in U.S. dollars as set forth in Appendix A. Such payments shall apply once only to each milestone reached by any Optimization Compound or Derivative for each Optimization Target. Such milestone payments shall be due with respect to each Optimization Compound or Derivative to meet such milestone (each a "Milestone Compound"); [ * ].
7.3 Taxes. All income and other taxes levied or accruing to Array under this Agreement shall be paid by Array, including taxes levied thereon as income to Array. If provision is made in law or regulation for withholding, such tax shall be deducted from the payment made by
[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
ICOS to the proper taxing authority and a receipt of payment of the tax secured and promptly delivered to Array. Each Party agrees to assist the other Party reasonably in claiming exemption from such deductions or withholdings under any double taxation or similar agreement or treaty from time to time in force.
7.4 Title to, and ownership of, tangible property. Without limiting ICOS' rights under Sections 6.1 and 8 of this Agreement, it is understood and agreed that each Party retains title to any tangible property delivered to the other Party under this Agreement.
8. LICENSE GRANTS; OUTLICENSE
8.1 Array License Grant to ICOS. Subject to the terms and
conditions of this Agreement, Array hereby grants to ICOS a non-exclusive,
royalty-free, fully paid up except as to payment of respective milestones under
Section 7.2, worldwide license, with the right to sublicense to use Array
Technology and under the Array Patents, in each case solely to make, have made,
use, have used, sell, have sold, import and export Optimization Compounds or
Products in the Field.
8.2 ICOS Sublicense. ICOS shall have the right to transfer, assign or sublicense to a Third Party ICOS's rights under Sections 6.1 and 8.1 above or Optimization Patents covering the Products.
8.3 No Other Licenses. No right or license is granted to ICOS hereunder under technology or intellectual property of Array, by implication, estoppel or otherwise, except as specifically and expressly granted under Sections 6.1, 6.2 and 8.1 of this Agreement. No right or license is granted to ARRAY hereunder in any Optimization Compound or Derivative, including compounds in Daughter Libraries.
9. TERM AND TERMINATION OF THE AGREEMENT
9.1 Term, Renewals and Extensions. The term of this Agreement and Optimization Program shall commence upon the Effective Date of this Agreement, and unless earlier terminated as provided in this Agreement, shall expire on the second anniversary thereafter provided, however, that the term shall be automatically extended for a further [ * ] unless either party provides written notice [ * ] or more prior to such second anniversary canceling such extension. Unless terminated early pursuant to Section 9.2 below, the Optimization Periods may be individually renewed for additional periods upon mutual agreement of the Parties; provided that neither Party shall be obligated to approve any such renewal.
9.2 Termination by ICOS. ICOS may terminate this Agreement effective at any time after the first anniversary of the Effective Date, in its sole discretion, upon [ * ] days prior written notice.
[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
9.3 Termination by ICOS or Array. If either Party materially breaches this Agreement and fails to remedy that breach within [ * ] of receiving written notice thereof from the other Party, or makes an assignment of substantially all of its assets for the benefit of its creditors or goes into liquidation, insolvency, bankruptcy, receivership or reorganization proceedings, whether voluntarily or compulsorily which is not dismissed by a court of competent jurisdiction within [ * ], then the other Party may at any time, by notice in writing or by telefax, terminate this Agreement and/or any and/or all of the Optimization Programs. Within [ * ] following termination for the Optimization Program and/or research related to any Optimization Target under this Agreement, Array shall prepare a detailed, final written report to ICOS, and provide any remaining supply of Optimization Compounds in synthesis to date, for each Target or part of the Optimization Program being terminated.
9.4 Effect of Termination on Licensees. In the event of any termination of this Agreement pursuant to Section 9.2 where such termination shall not have been caused by the action or inaction on the part of any respective licensee of ICOS or Array, or by any breach by such licensee of its obligations under its license from ICOS or Array, as appropriate, such termination of this Agreement shall be without prejudice to the rights of each non-breaching licensee and such licensee shall be deemed to be a direct licensee hereunder; provided that such licensee agrees in writing to be bound by the applicable provisions of this Agreement, including, without limitation, the payment of milestone payments pursuant to Section 7.2.
10. CONFIDENTIAL INFORMATION
10.1 Nondisclosure. During the term of this Agreement and for a period of [ * ] after termination or expiration thereof, each Party (the "Receiving Party") will maintain all Confidential Information received from the other Party (the "Disclosing Party") in trust and confidence and will not disclose any such Confidential Information to any Third Party or use any such Confidential Information for any purpose except (i) as expressly authorized by this Agreement, (ii) as required by law or court order, after as much advance notice as is practical to the Disclosing Party, (iii) to its consultants, subcontractors, agents or financing sources who need to know and who are bound by equivalent written confidentiality obligations. The Receiving Party will use at least the same standard of care as it uses to protect proprietary or confidential information of its own to ensure that its Affiliates, employees, agents, consultants and other representatives do not disclose or make any unauthorized use of the Confidential Information of the Disclosing Party. The Receiving Party will promptly notify the Disclosing Party upon discovery of any unauthorized use or disclosure of the Disclosing Party's Confidential Information
10.2 Exceptions. Confidential Information shall not include any information which the Receiving Party can prove by competent evidence: (a) is now, or hereafter becomes, through no act or failure to act on the part of the Receiving Party, generally known or available; (b) is known by the Receiving Party at the time of receiving such information, as evidenced by its written records; (c) is hereafter disclosed to the Receiving Party by a Third Party, as a matter of right and without restriction on disclosure; (d) is independently developed by the Receiving Party
[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
without the aid, application or use of Confidential Information of the Disclosing Party; or (e) is the subject of a written permission to disclose provided by the Disclosing Party.
11. PUBLICATIONS AND PUBLIC STATEMENTS
11.1 Publications. ICOS and Array will treat matters of authorship of scientific abstracts, manuscripts or publications in a proper collaborative spirit, giving credit where it is due. Without affecting obligations under Section 10 above, Array shall not publish any information with respect to Optimization Compounds or Derivatives during the Exclusivity Period without the prior written permission of ICOS. ICOS agrees to provide to Array, on a Confidential Basis, any publication, except patent prosecution documents with respect to Optimization Compounds at least [ * ] prior to submission for publication during the Exclusivity Period.
11.2 Public Statements. Except as the Parties otherwise agree in writing, neither Array nor ICOS shall release any information to any Third Party with respect to the existence of this Agreement. Once the Parties issue a press release, which has been agreed to in writing before release by both Parties, each Party may use the substance of such press release without prior notice.
12. INDEMNIFICATION
12.1 Product Liability. ICOS hereby agrees to save, defend and hold Array and its officers, directors, employees, consultants, and agents harmless from and against any and all suits, claims, actions, demands, liabilities, expenses and losses, including reasonable legal expenses and attorneys' fees ("Losses") resulting directly or indirectly from any claim alleging physical injury or death or otherwise arising out of the administration, utilization and/or ingestion of Optimization Compounds or Products manufactured, used or sold by or under the authority of ICOS, its Affiliates or licensees except to the extent such Losses result from the negligence (whether active, passive or imputed), breach of this Agreement or willful misconduct of Array.
12.2 Procedures. If Array (the "Indemnified Party") seeks indemnification under this Section 12, it shall inform ICOS (the "Indemnifying Party") of a claim as soon as reasonably practicable after it receives notice of the claim, shall permit the Indemnifying Party to assume direction and control of the defense of the claim (including the right to settle any claim brought against the Indemnified Party upon prior written consent, which shall not be unreasonably withheld), and shall give reasonable cooperation (at the expense of the Indemnifying Party) in the defense of such claim.
13. ASSIGNABILITY
13.1 Generally. This Agreement may not be assigned by either Party without the prior written consent of the other Party, and which shall not to be unreasonably withheld; provided, however, that either Party may assign this Agreement, in whole or in part, to an Affiliate or to a
[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
successor of a Party in connection with the merger, consolidation or sale of all or substantially all of such Party's assets or that portion of its business pertaining to the subject matter of this Agreement (and upon doing so will promptly notify the other Party in writing) (each such transaction being referred to as an "Acquisition"); provided that the assigning Party remains fully liable as obligated hereunder.
13.2 Technology of Acquirer. In the event of an Acquisition, it is understood and agreed that no intellectual property rights or technology of the acquirer shall be included within the subject matter licensed hereunder, to the extent that such intellectual property or technology was owned or controlled by the acquirer as of the date of the Acquisition, or was created or obtained after the date of the Acquisition other than by employees of Array in the course of performing the Optimization Program.
14. DISPUTE RESOLUTION PROCEDURES
14.1 Senior Executives Discussions. If a dispute arises between Array and ICOS or with respect to matters other than the management of the Optimization Program, either during or after the Optimization Period, such dispute will be referred to the appropriate senior management in the area of the dispute. If such senior management are unable to resolve such dispute, such dispute will be referred to the Executive Vice President of Operations of ICOS and the Chief Operating Officer of Array.
14.2 Injunctive Relief. Nothing contained in this Section 14 or any other provisions of this Agreement shall be construed to limit or preclude a Party from bringing any action in any court of competent jurisdiction for injunctive or other relief or to compel the other Party to comply with its obligations hereunder.
15. NOTICES
Any notice required or permitted to be given hereunder shall be deemed sufficient if sent by facsimile letter or overnight courier, or delivered by hand to ICOS or Array at the respective addresses and facsimile numbers as set forth below or at such other address and facsimile number as either Party hereto may designate. If sent by facsimile letter, notice shall be deemed given when the transmission is completed if the sender has a confirmed transmission report. If a confirmed transmission report does not exist, then the notice will be deemed given when the notice is actually received by the person to whom it is sent. If delivered by overnight courier, notice shall be deemed given when it has been signed for. If delivered by hand, notice shall be deemed given when received.
if to Array, to: Array BioPharma Corporation
1885 33rd Street
Boulder, Colorado 80301
Fax number: (303) 381-6697
|
if to ICOS, to: ICOS Corporation
22021 20th Avenue, S.E.
Bothell, Washington 98021
Attention: Legal Department
Fax number: (425) 398-8950
|
16. SURVIVAL
The provisions of Sections 5.1, 5.3, 6.1, 6.2, 6.3, 7.2, 7.4, 8.1, 8.2, 8.3, 9.4, 10, 11, 12, 13, and 16 shall survive the expiration and any termination of this Agreement. In addition, Section 1 shall survive the expiration or any termination of this Agreement to the extent necessary to define terms in any other surviving Section. Notwithstanding the foregoing if Array terminates this Agreement under Section 9.3 then Section 8.1 shall not survive such termination by Array.
17. ADDITIONAL TERMS
17.1 Entire Agreement. This Agreement constitutes the entire understanding between the Parties with respect to the subject matter hereto and supersedes and replaces all previous negotiations, understandings, representations, writings and contract provisions and rights relating hereof.
17.2 Amendment; No Waiver. No provision of this Agreement may be amended except to the extent expressly allowed herein, revoked or waived except by a writing signed and delivered by an authorized officer of each Party. Any waiver on the part of either Party of any breach or any right or interest hereunder shall not imply the waiver of any subsequent breach or waiver of any other right or interest.
17.3 Validity. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, each of which shall remain in full force and effect.
17.4 Headings. The descriptive headings and numberings are inserted for convenience of reference only and are not intended to be part of or to affect the meaning of or interpretation of this Agreement.
17.5 Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, and all of which together shall be deemed to be one and the same instrument.
17.6 Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Washington, without regard to conflicts of laws and principles.
17.7 Further Assurances. At any time and from time to time after the Effective Date, the Parties shall each do, execute, acknowledge and deliver, and cause to be done, executed, acknowledged or delivered, all such further acts, transfers, conveyances, or assignments as may be reasonably required to carry out the transactions contemplated by this Agreement.
18. REPRESENTATIONS AND WARRANTIES
18.1 Authorization. All action on the part of each of Array, ICOS and their respective officers, and directors necessary for the authorization, execution and delivery of this Agreement and the performance of all obligations of Array and ICOS, respectively, hereunder has been taken.
18.2 Rights to Intellectual Property. Each Party warrants that it has the power to grant all of the rights granted and make such required assignments, and to assume all of the obligations required, under this Agreement.
18.3 Disclaimer of Warranties. EXCEPT AS OTHERWISE EXPLICITLY
PROVIDED IN THIS SECTION 18, ARRAY AND ICOS EXPRESSLY DISCLAIM ANY WARRANTIES
OR CONDITIONS, EXPRESS, IMPLIED, STATUTORY OR OTHERWISE, WITH RESPECT TO THE
OPTIMIZATION PROGRAM, OPTIMIZATION COMPOUNDS, DERIVATIVES, PRODUCTS, ARRAY
TECHNOLOGY, ARRAY PATENTS OR OPTIMIZATION PATENTS, INCLUDING, WITHOUT
LIMITATION, ANY WARRANTY OF MERCHANTABILITY, NON-INFRINGEMENT, OR FITNESS FOR A
PARTICULAR PURPOSE.
IN WITNESS WHEREOF, the parties have executed this Agreement to be effective as of the Effective Date.
By: /s/ David Snitman By: /s/ W. Michael Gallatin, Ph.D.
------------------ ------------------------------
David Snitman, Ph.D. W. Michael Gallatin, Ph.D.
V. P. of Business Development Vice President and Scientific Director
and Chief Operating Officer
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EXHIBIT 10.34
[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 506 of the Securities Act of 1933, as amended.
COMPOUND LIBRARY AGREEMENT
This COMPOUND LIBRARY AGREEMENT (the "Agreement"), effective as of the date appearing on the signature page hereof (the "Effective Date"), is made by and between Array BioPharma Inc., a Delaware corporation, having a principal place of business at 1885 33rd Street Building AC-1 Boulder, CO 80301-2505 ("Array"), and Darwin Discovery Limited (Registration Number 3515202), a company organized and existing under the laws of England through certain of its affiliates Chiroscience R&D Ltd. (Registration Number 3503756), a company organized and existing under the laws of England located at No. 283 Cambridge Science Park, Milton Road, Cambridge, England CB4 0WE, and Chiroscience R&D, Inc., a Delaware corporation located at 1631 220th Street, Bothell, WA 98021 (collectively, "Chiroscience"). Any other affiliate or subsidiary of Chiroscience (including without limitation ChiroTech) shall be deemed a third party for all purposes of this Agreement and the Exhibits hereto.
RECITALS
A. Array desires to provide to Chiroscience, and Chiroscience desires to obtain from Array, collections of "Diversity Library(ies)" (as defined below).
B. Chiroscience desires to have the opportunity to have one or more of its scientists trained in high speed synthesis techniques by Array scientists.
C. Array is willing to provide "Diversity Library(ies)" (as defined below) to Chiroscience and provide it the opportunity for training and access to Chiroscience of certain Array Synthesis Methodologies (as defined below), and Chiroscience is willing to obtain the Diversity Libraries from Array and acquire access to such Array Synthesis Methodologies, on the terms and conditions set forth herein.
NOW, THEREFORE, for and in consideration of the covenants, conditions, and undertakings hereinafter set forth, it is agreed by and between the parties as follows:
SECTION 1. DEFINITIONS.
1.1 "ACTIVE COMPOUND" shall mean a Library Compound to the extent the same has been designated and maintained as an Active Compound under Section 6.3 below.
1.2 "ARRAY HSS INFORMATION" shall mean any confidential information directly relating to Array's high-speed synthesis.
1.3 "ARRAY SYNTHESIS METHODOLOGIES" shall mean, collectively, [ * ]
[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 506 of the Securities Act of 1933, as amended.
1.4 "COLLABORATION" shall mean an arrangement or a contract with a third party or a person other than a party to this Agreement focused on the discovery, screening, testing, manufacture or development of products for specified diseases or targets, under which Chiroscience either retains rights to commercialize the resulting products or will receive a portion of the sales of the resulting products from the other party (by way of royalty, profit participation or similar mechanism, including reasonable advance, paid-up or lump-sum royalties).
1.5 "COLLABORATIVE MANAGEMENT TEAM" OR "CMT" shall have the meaning as set forth in Section 4.1 below.
1.6 "COMPOUNDS" shall mean the related but distinct chemical compounds derived from a defined Scaffold.
1.7 "DESIGNATION PERIOD" shall mean, for a particular Library Compound, the period commencing upon the [ * ] and ending on the date [ * ] thereafter.
1.8 "DIVERSITY LIBRARY(IES)" shall mean a collection of TA Libraries.
1.9 "EXCLUSIVE LIBRARY" shall have the meaning as set forth in Section 2.6 below.
1.10 "FIRST YEAR DIVERSITY LIBRARY" shall mean the Diversity Library consisting of approximately [ * ] delivered by Array to Chiroscience prior to the first anniversary of this Agreement as set forth in more detail in Section 2.1 below.
1.11 "FIRST YEAR SCAFFOLDS" shall mean the Scaffolds listed on Exhibit A attached hereto.
1.12 "FIRST YEAR TA LIBRARY" shall have the meaning as set forth in
Section 2.1 below.
1.13 "FTE" shall have the meaning as set forth in Section 5.1 below.
1.14 "HSS EQUIPMENT" shall mean, collectively and individually, Array's proprietary high-speed synthesis equipment.
1.15 "INTELLECTUAL PROPERTY PROTECTION" shall mean the application, prosecution (including, without limitation, all interference actions, term extensions and disclaimers, reexaminations, reissues, and divisions), maintenance, defense and enforcement of U.S. and foreign patent applications and patents arising therefrom, and establishment and protection of trade secrets and other forms of intellectual property rights.
1.16 "LIBRARY COMPOUND" shall mean a Compound included in the First Year Diversity Library or the Second Year Diversity Library delivered to Chiroscience under this Agreement, together with all non-covalent derivatives of such Compound, including but limited to acid addition salts, cationic salts, and diasteromers and enantiomers thereof.
1.17 "NON-LIBRARY COMPOUND" shall mean any composition of matter discovered, developed or invented by Chiroscience, or that is claimed or disclosed under patent
[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 506 of the Securities Act of 1933, as amended.
application (including a provisional disclosure) filed by Chiroscience or on its behalf which has a chemical structure distinct from the Library Compounds.
1.18 "PUBLIC DOMAIN COMPOUND" shall mean a Library Compound that cannot be claimed as a composition of matter in a patent application because of failure to meet the requirements for patentability under U.S. patent law (i.e., 35 U.S.C. et seq.).
1.19 "LICENSED TECHNOLOGY" shall mean, collectively, Array patent rights and the Array Synthesis Methodologies.
1.20 "MAINTENANCE FEE" shall have the meaning as set forth in Section 6.3.2 below.
1.21 "NEW FIRST YEAR TA LIBRARIES" shall mean those TA Libraries based on Scaffolds distinct from the First Year Scaffolds, provided that New First Year TA Libraries shall not include TA Libraries (i) that Array is prohibited or otherwise restricted from providing Chiroscience; or (ii) that Array reasonably believes cannot be delivered in a timely fashion to Chiroscience.
1.22 "NEW SECOND YEAR TA LIBRARIES" shall mean the TA Libraries based
on Scaffolds distinct from the First Year Scaffolds and Second Year Scaffolds,
provided that New Second Year TA Libraries shall not include TA Libraries (i)
that Array is prohibited or otherwise restricted from providing Chiroscience; or
(ii) that Array reasonably believes cannot be delivered in a timely fashion to
Chiroscience.
1.23 "NEW TA LIBRARIES" shall mean, collectively, the New First Year TA Libraries and/or Second Year TA Libraries.
1.24 "PROCESS DEVELOPMENT" shall be deemed to be initiated, with respect to a particular TA Library, at such time as synthetic feasibility studies used to define an efficient synthetic process for production of such TA Library have been commenced.
1.25 "RE-SUPPLY COMPOUNDS" shall have the meaning as set forth in
Section 2.5 below.
1.26 "SCAFFOLD" shall mean the core chemical structure of the Compounds of a TA Library.
1.27 "SECOND YEAR DIVERSITY LIBRARY" shall mean the Diversity Library consisting of approximately [ * ] delivered by Array to Chiroscience prior to the second anniversary of this Agreement as set forth in more detail in Section 2.3 below.
1.28 "SECOND YEAR SCAFFOLDS" shall mean the Scaffolds for the Second Year TA Libraries.
1.29 "SECOND YEAR TA LIBRARIES" shall have the meaning as set forth in
Section 2.3 below.
1.30 "TEMPLATE ARRAY LIBRARY" OR "TA LIBRARY" shall mean a library of related Compounds delivered to Chiroscience by Array under this Agreement.
[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 506 of the Securities Act of 1933, as amended.
1.31 [ * ].
SECTION 2. DIVERSITY LIBRARIES.
2.1 THE FIRST YEAR DIVERSITY LIBRARY. Subject to the terms and
conditions of this Agreement, prior to the first anniversary of this Agreement,
Array shall deliver to Chiroscience the First Year Diversity Library as set
forth in this Section 2.1. The First Year Diversity Library shall consist of
[ * ] (each, a "First Year TA Library") and shall contain a total of [ * ]
Compounds; provided that Chiroscience shall not be obligated to accept or pay
for more than [ * ] Compounds. Each First Year TA Library shall contain an
[ * ]. The First Year TA Libraries shall be based on, and identified by the
[ * ], and shall be characterized in conformance with the parameters set forth
on Exhibit A, and shall meet the quality control criteria set forth on Exhibit
C hereto.
2.2 [ * ]
2.3 THE SECOND YEAR DIVERSITY LIBRARY. Subject to the terms and
conditions of this Agreement, prior to the second anniversary of this Agreement,
Array shall deliver to Chiroscience the Second Year Diversity Library as set
forth in this Section 2.3. The Second Year Diversity Library shall consist of
[ * ] (each, a "Second Year TA Library"), and shall contain a total of [ * ]
Compounds; provided that Chiroscience shall not be obligated to accept or pay
for more than [ * ] Compounds. Each Second Year TA Library shall contain an
average of [ * ] Compounds, all of which shall have the same Scaffold, and shall
be characterized in conformance with the parameters set forth on Exhibit B
hereto, and shall comply with the quality control criteria set forth on Exhibit
C hereto. [ * ]. If the parties cannot agree on [ * ] additional Second Year
Scaffolds within [ * ] from the Effective Date (i.e., for a total of Scaffolds),
likewise if the parties cannot agree on a total of [ * ] within of the Effective
Date; then Chiroscience shall have the right to terminate this Agreement on
[ * ]. Exhibit B shall be amended by the parties to list the Second Year TA
Libraries as they are determined. [ * ]
[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 506 of the Securities Act of 1933, as amended.
[ * ]
2.4 [ * ]
2.5 RE-SUPPLY COMPOUNDS. Chiroscience may obtain additional quantities
of Compounds already delivered ("Re-supply Compounds"), by written order to
Array specifying the Compounds desired; provided that the cumulative number of
Re-supply Compounds that Chiroscience has ordered at any given time shall in no
event [ * ] of the total number of Compounds delivered and accepted by
Chiroscience, in the aggregate, as of the date of the order, and no more than
[ * ] Re-supply order may be made in any [ * ] period. Re-supply Compounds shall
be delivered in [ * ] from receipt of the order, and shall be supplied in
quantities of approximately [ * ], and shall comply with the other parameters
of Exhibit A or B, as applicable, at a charge of [ * ] provided to Chiroscience,
or [ * ] if a complete duplicate plate of [ * ] Compounds is to be provided to
Chiroscience. Unless otherwise agreed, the same Compound shall not be
re-supplied to Chiroscience more than [ * ] under this Section 2.5. In the event
that Chiroscience desires larger quantities, or higher purities of Re-supply
Compounds, the parties agree to negotiate terms for such synthesis in good
faith. Array's re-supply obligation shall continue for [ * ]
2.6 THE EXCLUSIVE LIBRARY. Upon the written request of Chiroscience
given to Array prior to the first anniversary of this Agreement, the parties
agree to negotiate in good faith a separate agreement under which Chiroscience
would obtain up to [ * ] Compounds on an exclusive basis (the "Exclusive
Library") on reasonable commercial terms. The terms for the Exclusive Library
shall include: (i) Compounds for the Exclusive Library based upon Scaffolds
proposed by Chiroscience and agreed upon by Array, and the Second Year TA
Libraries for which such Scaffolds and Compounds shall be substituted; (ii) a
fully exclusive license or assignment with respect to the Exclusive Library
Compounds that [ * ] (iii) Array will maintain the structure of such Scaffolds
as confidential until such time as the same become generally available in the
public domain, other than by breach of such provision by Array; (iv) Array will
provide Array Synthesis Methodologies for the Exclusive Library Compounds; and
(v) Array will agree not to provide Compounds within the Exclusive Library or
derivatives thereof to third parties; provided, that Array shall have no
obligation to provide any particular Scaffold to Chiroscience on an exclusive
basis and makes no representation that any particular Scaffold will be
available on such basis. The Exclusive Library shall be for a
[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 506 of the Securities Act of 1933, as amended.
[ * ] Compounds, and shall not include Compounds or Scaffolds contained in the
First Year Diversity Library or the Second Year Diversity Library. Without
limiting the foregoing, it is understood and agreed that the provisions of
Section 6 would not apply to Exclusive Library Compounds.
2.7 REPORTING. During the term of this Agreement, Array will report to Chiroscience, on a [ * ], on its progress in creating New First Year TA Libraries and New Second Year TA Libraries to be disclosed to Chiroscience hereunder, and will notify Chiroscience in writing of Array's initiation of Process Development of any TA Libraries to be delivered to Chiroscience under this Agreement, not less than [ * ] prior to such initiation. Furthermore, in connection with the obligations under Section [ * ] Array shall [ * ].
SECTION 3. DELIVERY; PAYMENT.
3.1 DELIVERY. The First Year Diversity Library shall be delivered to
Chiroscience as soon as reasonably practicable and in no event later than the
first anniversary of this Agreement, or such other time as the parties may
agree. The parties contemplate that the First Year Diversity Library will be
delivered in stages, consisting of one or more TA Libraries in each delivery.
Array will undertake its best efforts to deliver the First Year Diversity
Library in accordance with the delivery schedule set forth on Exhibit A, and
will update this schedule each quarter to advise Chiroscience of any changes to
the delivery schedule. The parties shall undertake best efforts to agree, within
[ * ] of the Effective Date, on a delivery schedule for the first [ * ] Second
Year TA Libraries, and shall undertake to agree, within [ * ] of the Effective
Date, on a delivery schedule for the remaining [ * ] Second Year TA Libraries.
Array will use its best efforts to deliver the Second Year Diversity Library
within [ * ] of the Effective Date.
[ * ]
Delivery of the First Year and Second Year Libraries shall be accompanied by the Array Synthesis Methodologies used to generate the TA Libraries contained therein and the quality control methods employed as defined in Exhibits A and B. Array shall promptly deliver to Chiroscience each First Year TA Library and Second Year TA Library as such TA Libraries become available, and shall make such delivery an Array priority.
3.2 PRICE; ADVANCE PAYMENTS. Chiroscience agrees to pay Array [ * ] per
Compound for each Compound delivered to Chiroscience as part of the First Year
or Second Year Libraries, in the manner set forth in this Section 3.2 and
Section 3.3 below.
(i) Upon execution of the Agreement, Chiroscience shall pay Array [ * ] which is [ * ] of the estimated total price for the First Year Diversity Library, as an advance payment for the First Year Diversity Library; and
[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 506 of the Securities Act of 1933, as amended.
(ii) Upon the first anniversary of this Agreement, or within [ * ] of the parties' agreement on [ * ] Second Year Scaffolds, whichever is later, Chiroscience shall pay Array [ * ], which is [ * ] of the estimated total price for the Second Year Diversity Library as an advance payment for the Second Year Diversity Library. Notwithstanding the foregoing, if the parties agree upon a Second Year Diversity Library of [ * ] TA Libraries prior to the first anniversary of the Effective Date, the advance pay due under this Section 3.2(ii) shall be reduced to [ * ] of the price for such Second Year Diversity Library, assuming an average [ * ] Compounds per Second Year TA Library.
The payments made under this Section 3.2 shall be proportionately refunded to Chiroscience, or at Chiroscience's election credited against any outstanding Chiroscience balance, in the event that this Agreement is terminated, as expressly permitted hereunder, before the full TA Libraries have been delivered. The amounts to be refunded, or credited if so elected, shall be in an amount that results in Chiroscience paying an amount equal to [ * ] per Compound that was delivered and which conformed with its applicable requirements under Exhibits A, B and C.
3.3 PAYMENTS ON DELIVERY.
3.3.1 Within [ * ] of receipt of each TA Library from the
First Year Diversity Library or Second Year Diversity Library, Chiroscience
shall notify Array in writing of its acceptance or rejection of such TA Library,
and, if accepted, shall pay Array the balance due for the TA Library within
[ * ] of such acceptance, until the payments made by Chiroscience under Sections
3.2 and 3.3 equal [ * ] per Compound delivered; provided, that the advance
payments made by Chiroscience under Section 3.2 shall be deemed allocated among
the projected total number of First Year TA Libraries or Second Year TA
Libraries for the purpose of determining the balance due for any particular TA
Library, and further provided that nothing in this paragraph shall change the
transfer price of [ * ] per Compound. For purposes of example, Chiroscience
would pay Array [ * ] within [ * ] of receipt of a TA Library consisting of
[ * ] made under Section 3.2 therefor). Under no circumstances shall
Chiroscience be obligated to pay Array for more than [ * ] Compounds or [ * ]
Compounds for the TA Libraries provided for each of the First Year Diversity
Library or for the Second Year Diversity Library, respectively, (i.e., [ * ]
for the First Year Diversity Library and [ * ] for the Second Year Diversity
Library, and a total of [ * ] for both Diversity Libraries), unless
Chiroscience has expressly, specifically and in writing requested such
additional Compounds.
3.3.2 In addition, payment for accepted Re-supply Compounds in accordance with Section 2.5 above shall be within thirty (30) days of delivery thereof.
3.4 REJECTION FOR NON-CONFORMANCE. Chiroscience may reject the delivery of any TA Library that fails to materially conform to the requirements of Exhibit A, B or C, as applicable, by written notice to Array within thirty (30) days of delivery of such TA Library, accompanied by documentation of the non-conformance and any original
[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 506 of the Securities Act of 1933, as amended.
experimental data related thereto. If a delivery fails to conform to Exhibit C,
then Array shall have the option of re-purifying or resynthesizing the
nonconforming TA Library (or portion thereof), or reaching an agreement with
Chiroscience on alternative compounds to be synthesized. It being understood
that if a particular Compound fails to meet the requirements of Exhibit C, then
[ * ]. If a delivery fails to conform to Exhibit A or B, as applicable, then
Chiroscience shall reach a reasonable agreement with Array on resynthesizing the
nonconforming TA Library (or portion thereof), [ * ]. In the event of any
nonconformance under this paragraph, Array shall have [ * ] to cure; provided,
that Array's failure to deliver the First Year Diversity Library within [ * ] of
the Effective Date (subject to any extensions due to cure periods) shall be
deemed a material breach of this Agreement, and must be cured within [ * ] of
notice from Chiroscience. TA Libraries that are not rejected by Chiroscience in
accordance with Section 3.3 above within [ * ] after delivery shall be deemed
accepted. It is understood that Chiroscience may rely on applicable certificates
of analysis provided by Array for a particular TA Library in determining whether
to accept such TA Library.
3.5 PAYMENT PROCEDURE. All payments due under this Agreement shall be made by bank wire transfer in immediately available funds to an account designated by Array. All payments hereunder shall be made in U.S. Dollars. Any undisputed payments that are not paid on the date such payments are due under this Agreement shall bear interest to the extent permitted by applicable law at the prime rate as reported by Norwest Bank, Denver, Colorado, on the date such payment is due, calculated on the number of days such payment is delinquent past the due date for such payment.
SECTION 4. THE COLLABORATIVE MANAGEMENT TEAM.
4.1 THE CMT. The parties hereby establish a Collaborative Management Team (the "CMT") comprised of four (4) members, with two (2) representatives appointed by each party, whose names shall be provided in writing. A party may change one or more of its representatives to the CMT at any time upon notice to the other party. Each party will designate one of its representatives as its team leader.
4.2 DUTIES OF THE CMT. The CMT shall administer this Agreement,
including: (i) reporting of initiation of the synthesis of TA Libraries; (ii)
reporting of the creation of New TA Libraries; (iii) monitoring and reporting of
the synthesis of the Exclusive Library; (iv) agreement on the [ * ]; (v) [ * ];
(vi) modifying the composition of compounds, changing the number of compounds or
[ * ] (vii) informal adjudication of any dispute concerning rejection of
delivery of a TA Library; (viii) administration and implementation of the [ * ]
and the transfer of the Array Synthesis Methodologies to Chiroscience under
Section 5.6; and (ix) the initial, informal mediation of any other dispute that
arises under this Agreement. Any decision of the CMT regarding (iv), (v), (vi)
or (vii) shall be by written agreement of the CMT and shall be treated as an
amendment to this Agreement.
4.3 MEETINGS OF THE CMT. The CMT shall conduct monthly telephone conferences and shall prepare and deliver a brief written report describing the significant
[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 506 of the Securities Act of 1933, as amended.
issues and discussions that take place during such telephone conferences. The chairman of the CMT shall be jointly appointed by its members and shall rotate between Array and Chiroscience every six (6) months. The chairman shall provide each member with five (5) business days' notice of the time of any such telephone conferences and the proposed agenda with respect thereto, unless waived by all members. Array will prepare and deliver to the members of the CMT a brief progress report in advance of the telephone conference, which report may include: the status of synthesis of TA Libraries, creation of New TA Libraries, the administration of the Training Program, or any other pertinent matters. The CMT shall meet at least once each quarter, alternating at locations of the facilities of Array and Chiroscience, or at such other times and locations as the CMT determines, with each party to bear all travel and related expenses for its members. The chairman of the CMT shall provide each member with five (5) business days' notice of the time and location of meetings, unless such notice is waived by all members. If a designated representative of a party cannot attend any meeting of the CMT, such party may designate a different representative for that meeting without notice to the other party. Except as otherwise provided in this Section 4, all actions and decisions of the CMT will require the unanimous consent of all of its members. Subsequent to each quarterly meeting, the chairman shall prepare and deliver, to both parties, a written report describing the decisions made, conclusions and actions agreed upon.
4.4 COOPERATION. Each party agrees to provide the CMT with information and documentation as reasonably required for the CMT to fulfill its duties under this Agreement. In addition, each party agrees to make available its employees and consultants as reasonably requested by the CMT. The parties anticipate that members of the CMT will communicate informally with each other and with employees and consultants of the parties on matters relating to this Agreement.
SECTION 5. [ * ]; ARRAY SYNTHESIS METHODOLOGIES TRANSFER
5.1 [ * ].
5.2 SELECTION. [ * ]
[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 506 of the Securities Act of 1933, as amended.
5.3 [ * ]
5.4 [ * ]
5.5 NON-SOLICITATION. The Parties agree that during the term of this Agreement and for [ * ] thereafter, neither party shall encourage any employee to leave the employ of the other Party. In addition, during the term of this Agreement and for [ * ] thereafter the Parties agree not to employ or offer to employ (as an employee, contractor, consultant or otherwise), any person who was or is an employee or officer of the other Party during that same period.
5.6 TECHNOLOGY TRANSFER. Array agrees to disclose to Chiroscience, for use in accordance with Section 6, the Array Synthesis Methodologies. Notwithstanding the foregoing, it is understood and agreed that Array's disclosure obligations and the Array Synthesis Methodologies shall not include information pertaining to Array's high speed synthesis equipment or to methods of producing monomers. Disclosure of the information in (i) shall occur at the time the particular TA Library is delivered to Chiroscience hereunder, and the disclosure of the information described in (ii) shall occur within six (6) months after the Effective Date. [ * ]. In the event that Chiroscience purchases from Array the HSS Equipment described in Section 5.7 below, Array personnel will travel to the Chiroscience facility at which such equipment is to be installed, as reasonably necessary to
[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 506 of the Securities Act of 1933, as amended.
supervise the installation of such equipment. Otherwise, Array personnel shall travel to Chiroscience's facilities for purposes of the disclosure and assistance described in this Agreement only as mutually agreed by Chiroscience and Array.
5.7 OPTION TO PURCHASE EQUIPMENT. In addition to the disclosure of information under Section 5.6 above, Array agrees to sell to Chiroscience one or more duplicates of any or all of the HSS Equipment, at a price to be reasonably agreed by the parties. Such sale shall be made pursuant to a confidential sales agreement to be agreed upon, which will include (among other provisions) a commitment by Chiroscience not to reverse engineer such HSS Equipment and not to provide or disclose the HSS Equipment to any third party. Chiroscience shall have the right to exercise this option at any time during the term of this Agreement or within six (6) months thereafter; it being understood that Chiroscience has no obligation to purchase such equipment. Without limiting the foregoing, in the event that Array is restricted from selling any particular piece of HSS Equipment to Chiroscience, Array agrees to assist Chiroscience in acquiring any/or integrating such HSS Equipment on reasonable terms and conditions to be agreed. Notwithstanding anything to the contrary in this Agreement, its Exhibits or otherwise, Chiroscience may without any obligation to Array or restriction obtain and use laboratory equipment, reagents, consumables, software, know-how, and other articles available from persons other than Array, in conjunction with Chiroscience's use of the HSS Equipment or otherwise, provided however, for purposes of this Paragraph 5.7, Chiroscience shall not disclose to any third party the Array Confidential Information as defined in paragraph 2 of Exhibit G unless prior written approval is obtained from Array.
5.8 COSTS OF TECHNOLOGY TRANSFER. Chiroscience shall bear all its own costs associated with implementing the Array Synthesis Methodologies and HSS Equipment and practicing the same, and shall reimburse Array for its direct costs and expenses incurred by Array under Section 5.6 on either [ * ].
5.9 INVENTIONS. Notwithstanding anything herein to the contrary, including Section 6 below, Array shall own inventions [ * ] and to the extent such inventions directly relate to the subject matter of the [ * ]. Except as otherwise expressly provided herein, Array hereby acknowledges that inventions made by Chiroscience personnel [ * ] shall be solely owned by Chiroscience.
5.10 ARRAY SYNTHESIS METHODOLOGIES. In addition to the licenses granted under Section 6, Array hereby grants to Chiroscience a non-exclusive, worldwide, license, without the right to sublicense, to use the Array Synthesis Methodologies solely for Chiroscience's internal research and development purposes. Notwithstanding the foregoing, Chiroscience shall not disclose or otherwise transfer any Array Synthesis Methodologies to any third party except to the extent necessary to exercise its right under Section 6.2 and only under reasonable conditions of confidentiality; provided, however, in no event shall Chiroscience
[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 506 of the Securities Act of 1933, as amended.
disclose or otherwise transfer any Array Synthesis Methodologies to ChiroTech or authorize any third party to do so.
SECTION 6. INTELLECTUAL PROPERTY
6.1 OWNERSHIP OF RIGHTS--GENERALLY. Subject to the terms of this Agreement, title to patents and other rights in inventions made solely by Array personnel shall be owned by Array, title to patents and other rights in inventions made solely by Chiroscience personnel shall be owned by Chiroscience, and title to patents and other rights in inventions made jointly by Chiroscience personnel and Array personnel shall be owned jointly by Chiroscience and Array. Except as provided in this Section 6, neither party will have any obligation to account to the other, or obtain the consent of the other, with respect to the exploitation (directly or through licensees or third parties) of any jointly owned patent, and each party hereby waives any right it may have under the laws of any jurisdiction to require such an accounting or consent.
6.1.1 LIBRARY COMPOUNDS DESIGNATED AS ACTIVE COMPOUNDS. [ * ].
6.1.2 NON-LIBRARY COMPOUNDS. As between the parties hereto, Chiroscience shall exclusively own all title to patent and other proprietary rights for inventions, whether patentable or not, related to the Non-Library Compounds, including, without limitation, all inventions for compositions of matter, and methods of using or making such Non-Library Compounds.
6.2 LICENSE OF RIGHTS.
6.2.1 LIBRARY COMPOUNDS. Array hereby grants to Chiroscience a non-exclusive, worldwide, paid-up right and license, without the right to sublicense, to make, have made and use the Library Compounds under all U.S. and foreign patents or other proprietary rights owned by Array to carry out Chiroscience's own internal research [ * ] under this Agreement (e.g., screening and identifying lead candidates for drug discovery and development). If Chiroscience establishes a Collaboration (including contracts for screening, production, testing and development services) with a third party, Chiroscience may disclose a Library Compound to such third party and authorize such third party to use the Library Compound as reasonably necessary for the purposes of the Collaboration (whether or not such Library Compound has been designated as an Active Compound); provided, the Collaboration must be evidenced by a written agreement that provides, among other things, the third party agrees not to provide the Library Compound to others (excepting those contractors that actually perform screening, testing, production and development services under such Collaboration and in each such event only under reasonable terms of confidentiality and restricted use) and shall use such Library Compound for the limited purpose of the Collaboration unless and until such Library Compound has been
[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 506 of the Securities Act of 1933, as amended.
designated and maintained as an Active Compound hereunder. Chiroscience may disclose the composition of Compounds and transfer Compounds to potential Collaboration partners, in each case subject to reasonable conditions of confidentiality, without notifying Array. Notwithstanding the foregoing or any other provision of this Agreement, in no event shall Chiroscience disclose any Library Compound to ChiroTech for any reason.
6.2.2 ACTIVE COMPOUNDS
(a) License to Chiroscience. Array hereby grants to
Chiroscience an exclusive, worldwide sublicenseable right and license to make,
have made, use, sell, and import, and to authorize others to make, have made,
use, sell and import any Active Compounds designated and maintained in
accordance with Section 6.3 below under any U.S. or foreign patents owned by
Array. The exclusive license granted Chiroscience under this Section 6.2.2(a)
with respect to any Compound shall not take effect until and unless Chiroscience
has designated that Compound as an Active Compound. The right and license
granted Chiroscience under this Section 6.2.2(a) shall become paid-up and
irrevocable with respect to a particular Active Compound at such time as
Chiroscience has paid all of the Maintenance Fees with respect to such Active
Compound as required under Section 6.3.2 below. Except as provided in this
Section 6, Chiroscience shall have no obligation to account to Array, or obtain
its consent, with respect to the exploitation (directly or through licensees or
third parties) of any Chiroscience owned rights, and Array hereby waives any
right it may have under the laws of any jurisdiction to require such an
accounting or consent.
(b) Restriction on Supply of Active Compounds. Upon
designation of a Library Compound as an Active Compound by Chiroscience as
provided in Section 6.3, Array shall not thereafter for so long as such Library
Compound remains an Active Compound hereunder [ * ]. If another person or
entity, that is a party to an Array compound library agreement, requests to
obtain exclusive rights from Array with respect to a Library Compound, which
Chiroscience had previously designated as an Active Compound hereunder, then
[ * ].
6.3 DESIGNATION AND MAINTENANCE OF COMPOUNDS AS ACTIVE COMPOUNDS
6.3.1 DESIGNATION OF ACTIVE COMPOUNDS.
(a) Designation. At any time during the Designation Period for a Library Compound, Chiroscience shall have the right to designate the same as an Active Compound. It is understood, however, that any such designation shall be subject to Section 6.3.5 below; and to the extent that such designation is precluded as described in Section 6.3.5 below, such Library Compound shall not be an Active Compound hereunder. Subject to the foregoing, Chiroscience may designate [ * ] Library Compounds as Active Compounds. To designate a Library Compound as an Active Compound, Chiroscience must so notify Array in writing, with a description of the Compound (including a complete description of its chemical structure), together with payment of the applicable Maintenance Fee for such Active Compound (the "Active Compound Notice").
[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 506 of the Securities Act of 1933, as amended.
(b) Restriction. Chiroscience agrees that it will not, and will not authorize any third party to, sell or otherwise commercialize any Library Compound for any purpose unless such Library Compound has been (i) designated and maintained as an Active Compound hereunder [ * ].
6.3.2 MAINTENANCE FEES FOR ACTIVE COMPOUNDS. To maintain a Library Compound as an Active Compound hereunder and Chiroscience's rights with respect thereto, Chiroscience agrees to pay to Array an annual maintenance fee for each such Active Compound ("Maintenance Fee"). The amount of the Maintenance Fee for each Active Compound will be based upon the aggregate number of Active Compounds, according to the following schedule:
NO. OF ACTIVE COMPOUNDS ANNUAL MAINTENANCE FEE PER COMPOUND ----------------------- ----------------------------------- First [ * ] [ * ]/Compound for these Compounds Next [ * ] [ * ]/Compound for these Compounds Next [ * ] [ * ]/Compound for these Compounds Over [ * ] [ * ]/Compound for these Compounds |
6.3.3 CALCULATION OF MAINTENANCE COMPOUNDS. The annual Maintenance Fees will be calculated for each Active Compound on a calendar year basis. The first annual Maintenance Fee for an Active Compound would be due upon the designation of such Active Compound pursuant to Section 6.3.1 above; provided that such first annual Maintenance Fee would be prorated based upon the number of days remaining in the calendar year from the date of such designation. Thereafter, the annual Maintenance Fees shall be due for all Active Compounds no later than January 15 of the particular calendar year. Once paid, the Maintenance Fee shall be nonrefundable.
6.3.4 TERMINATION OF ACTIVE COMPOUND DESIGNATION. Chiroscience may terminate its designation of any particular Active Compound at any time, by so notifying Array in writing (specifying the Active Compound for which such designation is being terminated) (the "Termination Notice"), provided that [ * ] Library Compounds designated as Active Compound under Section 6.3.1 above may be terminated under this Section 6.3.4. From and after the date Array receives such Termination Notice, the specified Library Compound shall cease to be an Active Compound for all purposes of this Agreement and shall thereafter be subject to the provisions for Library Compounds that are not designated as Active Compounds, and the Maintenance Fees for the remaining Active Compounds shall be appropriately adjusted. Without limiting the foregoing, in the event Chiroscience terminates its designation of any Active Compound, Chiroscience hereby grants to Array an exclusive, worldwide, fully paid-up, irrevocable license, with the right to grant and authorize sublicenses, under all patent rights held by Chiroscience claiming composition of matter of any such Active Compound. [ * ]. For purposes of determining the amount of the Maintenance Fee due for a particular Active Compound, such amount shall be based upon the total number of Active Compounds that have been designated and not so terminated at the time the
[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 506 of the Securities Act of 1933, as amended.
Maintenance Fee is due. For purposes of determining the initial annual
Maintenance Fee, the Active Compounds being designated shall be included in such
total. The annual Maintenance Fee for any particular Active Compound shall be
due for a period of [ * ] calculated from the date that Compound was designated
as an Active Compound, after which time it shall be fully paid-up and no further
Maintenance Fee shall be due for such Active Compound. In the event that the
first year was less than a full calendar year, the Maintenance Fee for the [ * ]
calendar year beginning after the date such Active Compound was initially
designated pursuant to Section 6.3 would be prorated from January 1 of such year
until the date that is the [ * ] of the date of such designation. If an Active
Compound is terminated, and later re-designated, as an Active Compound, such
[ * ] period would begin as of the date the subsequent re-designation.
6.3.5 THIRD PARTY RIGHTS. The First Year Diversity Library and
Second Year Diversity Library are being provided to Chiroscience on a
non-exclusive basis, and nothing herein shall prevent or restrict Array from
providing some or all of the Library Compounds within the First Year Diversity
Library or Second Year Diversity Library to third parties. It is further
understood that Array may grant to third parties rights to acquire licenses in
the Library Compounds similar to those granted to Chiroscience hereunder;
accordingly, Chiroscience's right to designate any particular Library Compound
as an Active Compound, and Array's grant of rights to Chiroscience under this
Section 6, are limited to the extent that prior to Chiroscience's designation of
a Library Compound as an Active Compound, a third party has similarly designated
such Library Compound. It is understood and agreed that so long as Array
complies with this Section 6, Array shall have no liability with respect to any
conflict of Chiroscience's rights and those rights granted to third parties by
Array. For avoidance of doubt, it is understood and acknowledged that Array
shall not have the right to grant to any third party, who is an Affiliate of
Array at the time of such grant, any right that might conflict with the rights
granted to Chiroscience under Section 6.2. For purposes of the foregoing, an
"Affiliate" shall mean any entity which controls, is controlled by or is under
common control with Array and an entity shall be regarded as in "control" of
another entity for purposes of this definition if it owns or controls more than
fifty percent (50%) of the shares of the subject entity entitled to vote in the
election of directors (or, in the case of an entity that is not a corporation,
for the election of the corresponding managing authority).
6.4 INTELLECTUAL PROPERTY PROTECTION. Chiroscience shall have the right, at its expense and discretion and without obligation to Array, to fully direct and control the Intellectual Property Protection for any and all Active Compounds, [ * ] and to abstain or withdraw from such Intellectual Property Protection; provided, however prior to filing or otherwise initiation of the prosecution of any Intellectual Property Protection for any Library Compound hereunder (whether covering composition-of-matter, method of use, synthesis process, pharmaceutical composition or otherwise), Chiroscience shall (i) designate such Library Compound as an Active Compound as set forth in Section 6.3 above [ * ] and maintain documentation to support such determination. In the event Chiroscience designates [ * ] under this Section 6.4(ii), then Chiroscience shall retain all rights to fully direct and control the Intellectual Property Protection for such [ * ]. In the event Chiroscience files a patent application covering the Intellectual Property Protection of the designated [ * ] Chiroscience shall provide all
[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 506 of the Securities Act of 1933, as amended.
written documentation to Array supporting Chiroscience's designation as a [ * ].
Array shall reasonably cooperate with Chiroscience, at Chiroscience's expense,
in its carrying out the Intellectual Property Protection set forth under this
Section 6.4, and shall provide such records and shall cause its employees,
officers and directors to execute such documents and provide such testimony as
reasonably necessary for Chiroscience to perfect and enforce its rights and to
carry out Intellectual Property Protection, and shall not object to being joined
by Chiroscience as a party to any action brought or defended by Chiroscience to
the extent necessary for Chiroscience to maintain such action or defense.
6.5 CONGRUENCE OF ARRAY LIBRARY AGREEMENTS. Array represents and warrants that it shall ensure that each agreement under which it is or may become obligated to provide access or rights to any of the Library Compounds that are or might be provided to Chiroscience shall: (i) contain the provisions not inconsistent with those set forth in this Section 6; and (ii) shall not contain any provisions that would impair Array's ability to grant Chiroscience the rights to which it would be entitled to under this Agreement, or that would impair Chiroscience's free exercise of such rights, subject to Section 6.3.5. Array shall be responsible for using reasonable efforts to ensure that the parties to those other contracts shall fulfill their obligations to Array and cause them to do so.
SECTION 7. CONFIDENTIALITY.
7.1 CONFIDENTIAL INFORMATION. As a condition of this Agreement, the Parties shall enter into the Nondisclosure Agreement attached at Exhibit G hereto, and any confidential information exchanged hereunder, including the Scaffolds proposed by Array for any of the Libraries to be provided hereunder, shall be governed by such Agreement, except as otherwise expressly provided in this Agreement and its Exhibits. The Nondisclosure Agreement supercedes all prior agreements between the parties relating to confidentiality, and all such prior disclosures are deemed to be bound by the terms of the Nondisclosure Agreement. For avoidance of doubt, Array shall have the right to indicate to third parties that a particular Library Compound is not available for commercialization. If after the Effective Date Chiroscience wishes to disclose to Array information that Chiroscience considers confidential or proprietary related to (i) the activity of Compounds in biological screens or targets, (ii) the targets against which Compounds are screened, or (iii) other development or screening efforts with respect to Compounds, Chiroscience agrees to provide Array with a nonconfidential summary of such information and will not disclose such information to Array if Array notifies Chiroscience that Array does not wish to receive such information.
7.2 NONDISCLOSURE OF TERMS; PUBLICITY. The parties shall cooperate in the preparation of a mutually-agreeable press release and other publicity disclosing the existence of this Agreement in the form as set forth in Exhibit H attached hereto. Except for the information disclosed in such press release or publicity, neither party shall disclose the existence of this Agreement or any terms of this Agreement without the prior, written consent of the other party (which consent shall not be unreasonably withheld), except for such disclosure as may be reasonably necessary to either party's bankers, investors, attorneys or other professional advisors, or in connection with a merger or acquisition, or as may be required by law in the offering of securities or in securities or regulatory filings or otherwise. Either party may make public announcements concerning this Agreement or the subject matter hereof with the prior written consent of the other party, which consent shall not be unreasonably delayed or withheld, and provided that the party proposing to make a public
[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 506 of the Securities Act of 1933, as amended.
announcement shall submit the proposed statement to the other party for review and reasonable comment no less than [ * ] prior to such public announcement.
7.3 PUBLICATION. Subject to Section 6, any manuscript, abstract or presentation (including information to be presented verbally) by Chiroscience specifically identifying the chemical structure or composition of non-exclusive First Year Diversity Library or Second Year Diversity Library, or the Library Compounds, [ * ] shall be subject to the reasonable prior review and reasonable agreement of Array at least forty-five (45) days prior to any non-confidential public submission or disclosure. The parties will treat matters of authorship of scientific abstracts, manuscripts or other publications in a proper collaborative spirit, giving credit where credit is due. Prior review and agreement shall not apply to confidential disclosures made by Chiroscience nor to patent applications (and related Intellectual Property Protection actions) submitted by or on behalf of Chiroscience or its Collaboration partners.
SECTION 8. REPRESENTATIONS AND WARRANTIES.
8.1 CHIROSCIENCE. Chiroscience warrants and represents that: (i) it has the legal power, authority and right to enter into this Agreement, and to perform all its obligations hereunder, and (ii) this Agreement is a legal and valid obligation binding upon it and enforceable in accordance with its terms.
8.2 ARRAY. Array represents and warrants that: (i) it has the legal right and power to extend the rights granted in this Agreement; (ii) this Agreement is a legal and valid obligation binding upon it and enforceable in accordance with its terms; and (iii) it has the legal power, authority and right to enter into this Agreement, and to perform all its obligations hereunder. Array covenants to Chiroscience that it will inform Chiroscience of any claim brought or threatened by a third party against Array alleging that the manufacture, use or sale of a Compound provided to Chiroscience hereunder infringes a patent or other intellectual property right of a third party.
8.3 DISCLAIMER. EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS AGREEMENT, ARRAY AND CHIROSCIENCE AND THEIR RESPECTIVE AFFILIATES MAKE NO REPRESENTATIONS AND EXTEND NO WARRANTIES OR CONDITIONS OF ANY KIND, EITHER EXPRESS OR IMPLIED, WITH RESPECT TO THE TA LIBRARIES, THE COMPOUNDS, OR PRODUCTS CONTAINING THEM, OR INFORMATION DISCLOSED PURSUANT HERETO INCLUDING, BUT NOT LIMITED TO, WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, VALIDITY OF ANY LICENSED TECHNOLOGY, PATENTED OR UNPATENTED, OR NONINFRINGEMENT OF THE PATENT RIGHTS OF THIRD PARTIES.
SECTION 9. MISCELLANEOUS
9.1 GOVERNING LAW. Any controversy or claim of whatsoever nature arising out of or relating in any manner whatsoever in this Agreement or any breach of any terms of this Agreement shall be governed by and construed in all respects in accordance with, the laws of the state of New York.
[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 506 of the Securities Act of 1933, as amended.
9.2 NO IMPLIED LICENSE. Only the licenses granted pursuant to the express terms of this Agreement shall be of any legal force or effect. No other license rights shall be created by implication, estoppel or otherwise. No license on other rights granted herein shall be expanded by a change in Chiroscience's ownership, merger, acquisition or otherwise.
9.3 INDEPENDENT CONTRACTORS; AFFILIATES. The relationship of the parties hereto is that of independent contractors. The parties hereto are not deemed to be agents, partners or joint venturers of the others for any purpose as a result of this Agreement or the transactions contemplated thereby.
9.4 NOTICES. All notices, requests and other communications hereunder shall be in writing and shall be personally delivered or by registered or certified mail, return receipt requested, postage prepaid, in each case to the respective address specified below, or such other address as may be specified in writing to the other parties hereto and shall be deemed to have been given upon receipt:
Array: Array BioPharma Inc.
1885 30th Street - Bldg. AC-1
Boulder, CO 80301-2505
Attn: David Snitman
with a copy to: Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, CA 94304-1050
Attn: Kenneth A. Clark
Chiroscience: Darwin Discovery Limited
283 Cambridge Science Park
Milton Road
Cambridge CB4 0WE
United Kingdom
Attn: Company Secretary
FAX: 1223 420-440
Chiroscience R&D Limited
283 Cambridge Science Park
Milton Road
Cambridge CB4 0WE
United Kingdom
Attn: Company Secretary
FAX: 1223 420-440
Chiroscience R&D, Inc.
1631 220th Street SE
Bothell, WA 98021
Attn: Director of Legal Affairs
FAX: 425-489-8018
|
9.5 SEVERABILITY. In the event that any provision of this Agreement becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable or void, this
[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 506 of the Securities Act of 1933, as amended.
Agreement shall continue in full force and effect to the fullest extent permitted by law without said provision, and the parties shall amend the Agreement to the extent feasible to lawfully include the substance of the excluded term to as fully as possible realize the intent of the parties and their commercial bargain.
9.6 NO CONSEQUENTIAL DAMAGES. In no event shall any party to this Agreement have any liability to the other for any special, consequential or incidental damages arising under this Agreement or any dispute as to the enforcement or construction of this Agreement under any theory of liability (including tort, contract and breach of warranty). The remedy for material breach of this Agreement, including the failure to deliver Compounds shall be limited to termination of the contract, return of any amounts paid for Compounds not delivered, and interest on such funds at the legal rate.
9.7 SALES TAXES. Chiroscience has represented that the Compounds to be delivered according to this Agreement are to used solely for internal research and development by Chiroscience. Based on this representation, Array believes that no sales taxes, use taxes, transfer taxes or similar governmental charges will be required to be paid in connection with the transfer of the TA Libraries hereunder. Notwithstanding the foregoing, any such taxes or charges shall be the sole responsibility of Chiroscience, and in the event that Array is required to pay any such amounts, Chiroscience shall promptly remit payment to Array of such amounts.
9.8 COMPLETE AGREEMENT. This Agreement with its Exhibits, together with the Nondisclosure Agreement, constitutes the entire agreement, both written and oral, between the parties with respect to the subject matter hereof, and all prior agreements respecting the subject matter hereof, either written or oral, expressed or implied, shall be abrogated, canceled, and are null and void and of no effect. There are no covenants, promises, agreements, warranties, representations, conditions or understandings, either oral or written, between the parties other than as set forth herein and therein. No amendment or change hereof or addition hereto shall be effective or binding on either of the parties hereto unless reduced to writing and executed by the respective duly authorized representatives of Array and Chiroscience.
9.9 DEFAULT. In the event that either party shall fail to comply with a material term of this Agreement (for purposes of this Section 9.9, the "Defaulting Party"), the other party shall provide the Defaulting Party with written notice through the CMT, specifying the nature of the non-compliance. The Defaulting Party shall have thirty (30) days from receipt of notice to cure the non-compliance, except as otherwise provided for in the Agreement. If the Defaulting Party disputes the allegations of the notice, then the parties shall attempt in good faith to resolve the matter informally through the CMT. [ * ].
9.10 INDEMNIFICATION AND INSURANCE.
9.10.1 INDEMNIFICATION. Each party (for purposes of this
Section 9.10, the "Indemnitor") shall indemnify, defend, and hold harmless
(collectively "Indemnification Obligations") the other party and its affiliates
and their directors, officers, employees, and agents and their respective
successors, heirs and assigns (for purposes of this Section 9.10, the
"Indemnitees"), against any liability, damage, loss, or expense (including
[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 506 of the Securities Act of 1933, as amended.
reasonable attorneys fees and expenses of litigation) incurred by or imposed upon the Indemnitees or any one of them in connection with any claims, suits, actions, demands, or judgments arising out of any theory of product liability (including, but not limited to, actions in the form of tort, warranty, or strict liability) concerning any product (or any process or service) that is made, used, or sold by or under authority of the Indemnitor pursuant to any right or license granted under this Agreement or to any breach of the parties respective warranties; provided, however, that such Indemnification Obligations shall not apply to any liability, damage, loss, or expense to the extent directly attributable to the negligent activities, reckless misconduct, or intentional misconduct of the Indemnitees.
9.10.2 PROCEDURES. Any Indemnitee that intends to claim Indemnification Obligations under Section 9.10.1 shall promptly notify the appropriate Indemnitor of any claim in respect of which the Indemnitee intends to claim such indemnification, and the Indemnitor shall assume the defense thereof with competent and qualified counsel; provided, however, that an Indemnitee shall have the right to retain its own counsel, with the fees and expenses to be paid by the Indemnitor, if representation of such Indemnitee by the counsel retained by the Indemnitor would be inappropriate due to actual material conflict of interests between such Indemnitee and any other party represented by such counsel in such proceedings. The failure to deliver notice to the Indemnitor within a reasonable time after the commencement of any such action shall not relieve the Indemnitor of any liability to the Indemnitee under this Section, except to the extent that one or more legal defenses or rights may have been forfeited or impaired by such delay. Each party and its affiliates and their employees and agents shall cooperate fully with the other party and its legal representatives in the investigation of any action, claim or liability covered by this indemnification.
9.10.3 INSURANCE. Each party shall maintain reasonably adequate insurance or self-insurance coverage for its own potential liabilities to the Indemnitees as set forth in this Section 9.10.
9.11 ARBITRATION. Any dispute or controversy pertaining to this Agreement or the enforcement or construction of this Agreement shall initially be referred to the CMT. The parties agree to attempt to resolve any such dispute in good faith through the CMT. In the event the dispute is not resolved within thirty (30) days by the CMT, the dispute shall be referred to senior management of the parties, who shall attempt in good faith to resolve it. Any dispute which cannot be resolved within thirty (30) days after referral to the respective Chief Executive Officers of the parties shall be finally settled by binding arbitration, conducted in accordance with the Commercial Arbitration Rules of the American Arbitration Association by one arbitrator appointed by agreement of the parties. The arbitration shall be held in New York City, New York. New York law shall be applied to all matters in dispute between the parties with respect to this Agreement. Each party shall bear its own costs and attorneys' and witness' fees. The costs of the administration of the arbitration, including arbitrator's fees and administrative fees and expenses, shall be shared equally by the parties.
9.12 RENEWAL OPTION. Chiroscience may request a one-time renewal of this Agreement for an additional [ * ], by written notice at least ninety (90) days prior to the [ * ]. Such renewal would provide for the delivery of a [ * ] Diversity Library of up to [ * ] Compounds on a non-exclusive basis. The parties agree to negotiate the terms of any such
[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 506 of the Securities Act of 1933, as amended.
renewal in good faith, but agree that such renewal terms would not include royalty provisions or milestones, or provide for more than a [ * ] increase in the cost per Compound and would reflect terms substantially similar to Sections 1, 2.1, 2.2, 2.5, 2.7, 3, 4, 6, 7, 8 and 9 (other than this Section 9.12), and Exhibits A, C, G of this Agreement. It being understood that Sections 3.2 and 3.3 will be modified to reflect the agreed upon cost per Compound and number of Compounds to be included in the third year Diversity Library.
9.13 TERM AND TERMINATION. The term of this Agreement shall be two (2)
years from the Effective Date, unless terminated earlier for material breach or
as provided in 2.3 above, or extended pursuant to Section 9.12 or other
agreement of the parties. Either party may terminate this Agreement on thirty
(30) days' notice for material breach that is not cured within such thirty (30)
day period, except as provided otherwise in the Agreement. Termination of this
Agreement shall not relieve the parties of any obligation accruing prior to such
termination. In addition, Sections 1, 5.4, 5.5, 5.9, 6.1, 7, 8, and 9 (other
than Section 9.12) and Exhibit G, shall survive the expiration or any
termination hereof. Furthermore, Sections 2.5, 5.6, 5.10, 6.2, 6.3, 6.4 and 6.5
shall survive the expiration of this Agreement or a termination under (i)
Section 2.3 or (ii) under this Section 9.13 by reason of material breach by
Array, but shall not survive termination under this Section 9.13 by reason of
material breach by Chiroscience. For purposes of the foregoing, if a Section
that so survives is expressly stated to continue for a period of time specified
in such surviving Section, the same shall survive only for the remainder of the
period specified in such Section.
9.14 CHANGE OF CONTROL. This Agreement shall not be assignable by either party without the written consent of the other party hereto; except that either party may assign this Agreement without the other party's consent to an entity that succeeds to substantially all of the business or assets of the assigning party, by way of merger, transfer of assets, or otherwise.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their authorized representatives and delivered in duplicate originals.
DARWIN DISCOVERY LIMITED ARRAY BIOPHARMA INC.
By: [ * ] /s/ David Snitman
--------------------------
Name: [ * ] Dr. David Snitman
-------------------------- Chief Operating Officer
Its: [ * ] Dated: April 22, 1999
--------------------------
Dated: [ * ]
--------------------------
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[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 506 of the Securities Act of 1933, as amended.
EXHIBIT 10.35
[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 506 of the Securities Act of 1933, as amended.
DIVERSITY LIBRARY SCREENING AGREEMENT
This DIVERSITY LIBRARY SCREENING AGREEMENT (the "Agreement"), effective as of June 8, 1999 (the "Effective Date"), is made by and between Array BioPharma Inc., a Delaware corporation having its principal offices located at 1885 33rd Street, Boulder, CO 80301 ("Array"), and Tularik Inc., a Delaware corporation, having a principal place of business at Two Corporate Drive, South San Francisco, CA 94080 ("Tularik").
BACKGROUND
A. Array has developed novel proprietary methods for the generation of compound libraries.
B. Array and Tularik have entered into a Preview Library Agreement effective as of February 22, 1999 (the "Preview Library Agreement") pursuant to which Array transferred to Tularik a certain library of compounds for screening and evaluation, all as set forth therein.
C. Tularik now desires to obtain certain additional compound libraries for screening to identify candidate compounds for further evaluation and at Tularik's option to further optimize such compounds, all on the terms and conditions set forth below.
NOW, THEREFORE, for and in consideration of the covenants, conditions, and undertakings hereinafter set forth, it is agreed by and between the parties as follows:
DEFINITIONS
1.1 "Active Compound" shall mean a Compound that Tularik shall
have the exclusive right to develop and commercialize pursuant to the exclusive
license granted in Section 3.1(a)(ii) below, provided that Tularik has
designated the same as an Active Compound pursuant to Section 3.2 below and is
paying, or has paid, each Annual Maintenance Fee for the same pursuant to
Section 3.3 below.
1.2 "Annual Maintenance Fee" shall have the meaning as set forth in Section 3.3(a) below.
1.3 "Array Invention" shall have the meaning as set forth in
Section 3.4(a) below.
1.4 "Collaboration" shall mean an arrangement between Tularik and a third party that is focused on the discovery or development of drugs for specified diseases or targets, under which Tularik either retains rights to commercialize the resulting products or will receive a portion of the sales of the resulting products from the other party (by way of royalty, profit participation or similar mechanism).
1.5 "Compound" shall mean each chemically distinct compound which is contained in the Diversity Library or the Second Diversity Library provided to Tularik by Array under this Agreement.
1.6 "Diversity Library" shall have the meaning set forth in
Section 2.1.
1.7 "[ * ]" shall have the meaning set forth in Section 2.3.
1.8 "Field" shall mean any and all therapeutic applications.
1.9 "FTE" shall mean a full-time scientific/technical employee or the equivalent thereof.
1.10 "FTE Week" shall mean the amount of time one FTE would spend working during one work week, i.e., five (5) calendar days.
1.11 "Licensed Technology" shall mean Array Patent Rights and Know-How. Notwithstanding the foregoing, it is understood that Licensed Technology shall not include any patent or other rights to high-speed synthesis technology, methods or compound libraries (except the Diversity Library or Second Diversity Library delivered hereunder).
(a) "Array Patent Rights" shall mean Array's rights in (i) any patent or patent application filed by Array covering an Array Invention that claims an Active Compound, the method of use or process for the synthesis of an Active Compound or composition-of-matter containing an Active Compound, for which the earliest effective filing date is prior to the end of the Selection Period for such Active Compound and (ii) any divisions, continuations, continuations-in-part, reissues, reexaminations, or extensions to the extent the same have an earliest effective filing date prior to the date described in clause (i) above, and any substitutions, confirmations or registrations of any of the foregoing that are owned by Array, to the extent Array has the right to license or sublicense the same.
(b) "Know-How" shall mean synthetic protocols used for the synthesis of the Compounds, any technical information, know how, process, procedure, composition, device, method, formula, technique, software, design, drawing or data directly relating to the Compounds.
1.12 "Public Domain Compound" shall mean a Compound that cannot be claimed as a composition of matter in a patent application because of failure to meet the requirements for patentability under U.S. patent law (i.e., 35 U.S.C. et seq.).
1.13 "Re-Supply Compound" shall have the meaning as set forth in Section 2.2 below.
1.14 "Scaffold" shall mean the core chemical structure of the Compounds within a TA Library.
[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
1.15 "Second Diversity Library" shall have the meaning set forth in section 2.10.
1.16 "Selection Period" shall mean, for a particular Compound, the period commencing upon the first delivery of such Compound to Tularik and ending on the date [ * ] years thereafter.
1.17 "Template Array Library" or "TA Library" shall mean a library of related yet distinct Compounds delivered to Tularik by Array under this Agreement.
1.18 "Termination Notice" shall mean a writing that identifies an Active Compound for which Tularik is terminating its designation as an Active Compound in accordance with Section 3.7 below.
2. DIVERSITY LIBRARY
2.1 Diversity Library. Subject to the terms and conditions of this Agreement, Array shall deliver to Tularik the small molecule compound library described in this Section 2.1 (the "Diversity Library") on a nonexclusive basis. The Diversity Library shall consist of [ * ] TA Libraries and shall contain a total of [ * ] Compounds. Each TA Library shall contain on average [ * ] of each Compound, and each Compound within a TA Library shall be based on the same Scaffold. The TA Libraries shall be based on the Scaffolds set forth on Exhibit A, or such other Scaffolds as the parties may mutually agree in writing. Each of the Compounds shall conform to the specifications and meet the quality control criteria set forth on Exhibit B.
2.2 Additional Quantities. Subject to the terms of this
Section 2.2 below, Tularik shall have the option to obtain additional quantities
of any Compound already delivered hereunder as part of a TA Library
(collectively, "Re-Supply Compounds"), by written order to Array specifying the
Compound(s) desired, together with a complete description of the chemical
structure and the amount desired (i.e., [ * ]
(a) [ * ]. With respect to [ * ] quantities of
Re-Supply Compounds, the cumulative number of such Re-Supply Compounds that
Tularik has ordered at any given time shall in no event exceed [ * ] of the
total number of Compounds delivered hereunder, in the aggregate, as of the date
of such order, and no more than one (1) such re-supply order may be made in any
[ * ] . Tularik shall pay [ * ] for each such Re-Supply Compound (i.e., [ * ]
quantities) delivered hereunder. Unless otherwise agreed, the same compound
shall not be re-supplied to Tularik more than once under this Section 2.2(a).
(b) [ * ]. With respect to [ * ] quantities of Re-Supply Compounds, the cumulative number of such Re-Supply Compounds that Tularik ordered at any given time shall in no event exceed [ * ] compounds in any given, [ * ] day period -. Tularik shall pay [ * ]
[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
FTE Week for re-synthesis of Re-Supply Compounds, but in no event shall Tularik pay more than [ * ] for each such Re-Supply Compound (i.e., [ * ] quantity) delivered hereunder.
Array shall deliver [ * ] quantities of a Re-Supply Compound (if in stock) within [ * ] business days of Array's receipt of Tularik's order. If Array has to re-synthesize a Re-Supply Compound then Array shall use good faith efforts to deliver Re-Supply Compounds to Tularik within [ * ] of Array's receipt of Tularik's order therefor, and each Re-Supply Compound supplied hereunder shall comply with the applicable specifications of Exhibit B. Array's obligation to deliver Re-Supply Compounds shall continue for a period of [ * ] following the delivery of the Diversity Library or the Second Diversity Library, as the case may be, unless this Agreement is earlier terminated by Array for breach by Tularik.
2.3 [ * ]. Upon Tularik's written request, the parties shall
negotiate the term and conditions of an - agreement based on the term sheet
attached hereto as Exhibit C [ * ] with respect to a particular Compound for
which Tularik desires to obtain access to an [ * ] all as to be set forth in the
[ * ]; provided that, unless Array otherwise agrees in writing Array shall have
no obligation to enter into an [ * ] with respect to more than [ * ] at the same
time. Such a request shall: (i) be given prior to the expiration of the
Selection Period for the particular Compound that is to be the subject of the
[ * ], (ii) reference this Section 2.3 and (iii) designate the Compound
(including a complete description of its chemical structure) that is to the be
subject of the [ * ]. In such case the parties shall negotiate for a period of
[ * ] and, if for any reason the parties are unable to execute a definitive
[ * ] with respect to a particular Compound within such [ * ] period, neither
party shall have any further obligation under this Section 2.3 with respect to
such Compound thereafter.
2.4 Compound Information. Together with each TA Library delivered hereunder, Array shall provide to Tularik the following Compound Information for the Compounds in such TA Library: (i) structural data for each Compound; (ii) plate location coordinates and an identification number for each Compound; and (iii) [ * ] (collectively, the "Compound Information"). In addition, Array shall make available a copy of the quality control data and methods used for each TA Library delivered hereunder.
2.5 Delivery. Array shall use good faith efforts to deliver each TA Library in accordance with a schedule mutually agreed upon by the parties. Each TA Library shall be delivered [ * ] to Tularik's address set forth above (or such other address as Tularik may specify in writing prior to the shipping date therefor). The carrier shall be selected by agreement between Array and Tularik, provided that in the event no such agreement is reached Tularik shall select the carrier.
2.6 Price. Except as set forth in Section 2.2 with respect to Re-Supply Compounds, the price to be paid by Tularik for Compounds actually delivered in accordance
[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
with this Agreement shall be [ * ], payable as follows: (i) within thirty (30)
days of the Effective Date, Tularik shall pay to Array [ * ] (i.e., [ * ] of the
estimated total price of the Diversity Library) and (ii) the balance (i.e.,
[ * ]) upon Tularik's receipt of such Compound. In the event that Tularik
-reasonably demonstrates to Array that any Compound does not conform to the
specifications and meet the quality control criteria set forth on Exhibit B,
Array shall either: (A) offset future payments due under Section 2.6(ii) by the
amount previously paid by Tularik relating to every such non-conforming
Compound; or (B) refund to Tularik the amount previously paid by Tularik
relating to every such non-conforming Compound.
2.7 Payment. Together with each shipment of Compounds hereunder, Array shall submit an invoice to Tularik therefor. Each invoice shall state the total invoiced amount and the number of Compounds included in a particular shipment, plus any insurance, taxes or other costs incident to the shipment or delivery of Compounds hereunder [ * ]. All payments hereunder shall be made in U.S. Dollars, by direct bank transfer to an account designated in Array's invoice, within [ * ] days after Tularik's receipt of the particular shipment. Any payments hereunder that are not paid on the date such payments are due under this Agreement shall bear interest to the extent permitted by applicable law at the prime rate reported by Norwest Bank, Denver, Colorado, on the date such payment is due, calculated on the number of days such payment is delinquent.
2.8 Taxes. Any sales, use or other taxes or other governmental charges (excluding taxes on Array's income) incident to the transfer of Compounds to Tularik pursuant to this Agreement shall be the [ * ].
2.9 Title. Without limiting Tularik's rights under Article 3 below, it is understood and agreed that Array retains title to the TA Libraries and Compounds delivered to Tularik under this Agreement.
2.10 Second Diversity Library. Upon receipt of a written
notice from Tularik, Array shall deliver to Tularik the small molecule compound
library described in this Section 2.10 (the "Second Diversity Library"). The
Second Diversity Library shall consist of [ * ] TA Libraries and shall contain a
total of [ * ] Compounds. Each TA Library shall contain on average [ * ] of each
Compound, and each Compound within a TA Library shall be based on the same
Scaffold. The TA Libraries within the Second Diversity Library shall be based on
such Scaffolds as the parties mutually agree upon in writing. If Tularik
provides the written notice described in the first sentence of this Section 2.10
on or prior to the [ * ] anniversary of the Effective Date, Tularik will pay
[ * ] per Compound for Compounds within the Second Diversity Library. If Tularik
provides the written notice set forth in the first sentence of this Section 2.10
more than [ * ] after the Effective Date, Tularik will pay [ * ] per Compound
for Compounds within the Second Diversity Library. In the event that Tularik
reasonably demonstrates to Array that any Compound within the Second Diversity
Library does not conform to the specifications and meet the quality control
criteria set forth on Exhibit B, Array shall refund to Tularik the price paid
pursuant to this Section 2.10 for every such non-conforming Compound. For
avoidance of doubt, the parties understand and agree that Sections 2.5, 2.7, 2.8
and 2.9 shall apply to Compounds and TA Libraries within the Second Diversity
Library.
[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
3. LICENSES; ACTIVE COMPOUNDS
3.1 Licenses.
(a) License Grant. Subject to the terms and conditions of this Agreement, Array hereby grants to Tularik the following licenses under the applicable Licensed Technology, (i) a non-exclusive, worldwide royalty-free license (without the right to sublicense) to make, have made and use the Compounds for developmental purposes and (ii) an exclusive, worldwide royalty-free license (with the right to sublicense) to make, have made, use, sell and import Active Compounds for applications in the Field.
(b) Sublicenses.
(i) Generally. The license granted under
Section 3.1(a)(ii) above shall include the right to grant sublicenses, but the
license granted under Section 3.1(a)(i) shall be without the right to
sublicense. Accordingly, Tularik shall not disclose or transfer any Compounds or
Compound Information to any third party except to the extent necessary to
manufacture Active Compounds or as provided in Section 3.2(b)(ii) below.
(ii) Collaboration. In the event that Tularik establishes a Collaboration with a third party, Tularik may provide Compounds and/or Active Compounds to such third party for use by such third party as reasonably necessary for the purposes of such Collaboration. The Collaboration must be evidenced by a written agreement that provides, among other things, that the third party agrees not to provide any Compound to others unless the same is an Active Compound hereunder.
(c) Reservation. Notwithstanding Section 3.1(a) above, Array hereby reserves the right, including the right to authorize others, under the Licensed Technology to make, have made, and use all Compounds for research and/or other purposes. Notwithstanding the foregoing, for so long as a Compound is an Active Compound, Array agrees not to provide such Active Compound to third parties as part of a compound library or otherwise.
3.2 Designation of Active Compounds. At any time prior to the expiration of the Selection Period applicable to a particular Compound, Tularik shall have the right to designate the same as an Active Compound as set forth in this Section 3.2 below. [ * ].
(a) Designation. To designate a Compound as an
Active Compound, Tularik shall so notify Array in writing, with a description of
the Compound (including a complete description of its chemical structure), and
pay the first Annual Maintenance Fee for such Active Compound pursuant to
Section 3.3 below. It is understood, however, that any such designation shall be
subject to Sections 3.2(b) and 3.5 below. To the extent such designation is
precluded as described in Section 3.5 below, such Compound shall not be an
Active Compound hereunder.
[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
(b) Restriction. Tularik agrees that it shall not, and shall not authorize any third party to, sell or otherwise commercialize any Compound unless such Compound is an Active Compound hereunder.
3.3 Annual Maintenance Fees for Active Compounds.
(a) Maintenance Fee. To maintain Tularik's exclusive rights to Active Compounds under Section 3.1(a)(ii) above, Tularik shall pay to Array an annual maintenance fee for each Active Compound ("Annual Maintenance Fee") [ * ] . The amount of the Annual Maintenance Fee will be based upon the aggregate number of Active Compounds at any particular time, according to the following schedule:
NUMBER OF ACTIVE COMPOUNDS ANNUAL MAINTENANCE FEE PER COMPOUND
-------------------------- -----------------------------------
First [ * ] [ * ] /Compound
Next [ * ] [ * ] /Compound
Above [ * ] [ * ]) [ * ] /Compound
|
(b) Calculation. The Annual Maintenance Fees shall be calculated on a calendar year basis. The first Annual Maintenance Fee for an Active Compound shall be prorated based upon the number of days remaining in the calendar year from the date of such designation. Thereafter, the Annual Maintenance Fee for such Active Compound shall be due no later than January 15 of the particular calendar year. Once paid, an Annual Maintenance Fee shall be nonrefundable.
(c) Proration; Redesignation. In the event that the first Annual Maintenance Fee was prorated on the basis of less than a full calendar year, such Annual Maintenance Fee for the [ * ] calendar year shall be prorated from January 1 of such year until the date that is the [ * ] anniversary of the date of designation of the particular Active Compound. If an Active Compound is terminated, and later re-designated as an Active Compound under Section 3.2 above, such [ * ] period shall begin as of the date of the subsequent re-designation.
3.4 Intellectual Property.
(a) Ownership. Title to patent rights in an invention made solely by Array personnel ("Array Invention") shall be owned by Array. Title to patent rights in an invention made solely by Tularik personnel ("Tularik Invention") shall be owned by Tularik. Title to patent rights in an invention made jointly by Tularik personnel and Array personnel ("Joint Invention") shall be owned jointly by Tularik and Array. [ * ] however, in no event shall such
[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
patent or patent application include claims to Array's high-speed synthesis technology or methods.
(b) Patent Prosecution. Tularik shall not include any Compound or Active Compound in any compound claim in any patent or patent application covering a Tularik Invention. [ * ] Tularik shall (i) designate such Compound as an Active Compound and pay an Annual Maintenance Fee on such Active Compound pursuant to Sections 3.2 and 3.3, respectively [ * ]. Tularik shall be solely responsible for filing, prosecuting and maintaining any such patent or patent application at its expense and shall keep Array reasonably informed as to the same.
(c) Infringement. In the event a third party is infringing Array Patent Rights by reason of the manufacture, sale or use of an Active Compound, provided that such infringement is substantial and continuing, Tularik shall have the right to bring a lawsuit or other appropriate legal proceeding to enforce such Array Patent Rights with respect to such infringement. Otherwise, the parties agree that Array shall have and retain the exclusive right to enforce Array Patent Rights (itself or through third parties). The parties agree to cooperate with respect to the enforcement of Array Patent Rights pursuant to this Section 3.4(c), including, upon request of the party initiating such action (the "Initiating Party"), by joining as a nominal party at the Initiating Party's expense, where so joining is required for the Initiating Party to bring such suit. Any action brought in accordance with this Section 3.4(c) shall be at the expense of the [ * ], and as between the parties hereto, any recoveries shall be [ * ].
3.5 Third Party Rights. The Diversity Library (and the
Secondary Diversity Library, if applicable) is being provided to Tularik on a
non-exclusive basis. Provided that any particular Compound has not been
previously designated as an Active Compound by Tularik hereunder, nothing herein
shall prevent or restrict Array from (i) providing such Compound to third
parties under licenses similar to those granted to Tularik hereunder or (ii)
using such Compound for any purpose. Accordingly, Tularik's right to designate
any particular Compound as an Active Compound, and Array's grant of rights to
Tularik under this Article 3, is limited to the extent that, prior to Tularik
designating such Compound as an Active Compound hereunder, (i) a third party
(either alone or jointly with Array) has filed a patent application with respect
to such Compound or (ii) Array has granted such third party an exclusive license
with respect to such Compound. It is understood that, so long as Array complies
with the terms of this Agreement, Array shall have no liability with respect to
any conflict between Tularik's rights and rights of the nature described in this
Section 3.5 granted to a third party by Array.
3.6 Termination of Licenses. The licenses granted to Tularik herein shall continue in perpetuity unless Tularik materially breaches this Agreement, in which case the licenses shall terminate, provided that Tularik does not cure any such material breach within sixty (60) days of notification of the same by Array.
[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
3.7 [ * ].
4. CONFIDENTIALITY
4.1 Confidential Information. Except as expressly provided herein, the receiving party (hereinafter, the "Receiving Party") shall not disclose to any third party or use for any purpose any Confidential Information furnished to it by the other party (hereinafter the "Disclosing Party") pursuant to this Agreement. For purposes of this Article 4, "Confidential Information" shall mean any information disclosed by the Disclosing Party to the Receiving Party pursuant to this Agreement. Notwithstanding the foregoing, Confidential Information shall not include any information that, in each case as demonstrated by written documentation: (i) was already known to the Receiving Party, other than under an obligation of confidentiality, at the time of disclosure; (ii) was generally available to the public or otherwise part of the public domain at the time of its disclosure to the Receiving Party; (iii) became generally available to the public or otherwise part of the public domain after its disclosure and other than through any act or omission of the Receiving Party in breach of this Agreement; (iv) was subsequently lawfully disclosed to the Receiving Party by a third party who did not acquire it directly or indirectly from the Disclosing Party; or (v) was developed by the Receiving Party without use of or reference to any Confidential Information of the Disclosing Party.
4.2 Disclosure to Array. Notwithstanding Section 4.1 above, if
Tularik desires to disclose to Array Confidential Information related to (i) the
activity of a Compound in biological or other screens or targets, (ii) the
targets against which a Compound is or will be screened, or (iii) other
development or screening efforts with respect to a Compound, Array shall not
review such Confidential Information if Array does not desire to receive such
Confidential Information. Notwithstanding the foregoing provisions of this
Section 4.2, if Tularik provides to Array information within clauses (i) - (iii)
above and Array does not notify Tularik within fifteen (15) days that it does
not desire to receive such information and return all such information to
Tularik, the same shall be treated as Confidential Information of Tularik under
Section 4.1 above (subject to the exclusion of clauses (i) - (v) thereof).
4.3 Permitted Use and Disclosures. The Receiving Party may use and disclose the Confidential Information of the Disclosing Party to the extent necessary to exercise its rights or perform its obligations under this Agreement, in filing or prosecuting patent applications and patents, prosecuting or defending litigation, complying with applicable governmental regulations
[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
or court orders or otherwise submitting information to tax or other governmental authorities, conducting trials, or making a permitted sublicense or otherwise exercising license rights expressly granted to the other party to it pursuant to the terms of this Agreement, provided that if the Receiving Party is required to make any such disclosure of the Disclosing Party's Confidential Information, other than pursuant to a confidentiality agreement, it shall give reasonable advance notice to the Disclosing Party of such disclosure and, save to the extent inappropriate in the case of patent applications, shall use its reasonable efforts to secure confidential treatment of such Confidential Information in consultation with the Disclosing Party prior to its disclosure (whether through protective orders or otherwise) and disclose only that portion of the Confidential Information necessary to comply with such requirements.
4.4 Nondisclosure of Terms. Each of the parties hereto agrees not to disclose to any third party the terms of this Agreement without the prior written consent of the other party hereto, except to such party's attorneys, advisors, investors and others on a need to know basis under circumstances that reasonably ensure the confidentiality thereof, or to the extent required by law. Notwithstanding the foregoing, the parties shall agree upon a press release to announce the execution of this Agreement. -
4.5 Publication. Any non-confidential publication, abstract or presentation (including information to be presented orally) by or authorized by Tularik relating to a Compound, or derivatives thereof or products based thereon shall be subject to the prior review and reasonable agreement of Array at least thirty (30) days prior to submission. Without limiting the foregoing, at Array's request, Tularik shall remove any and all Array Confidential Information therefrom prior to publication or disclosure. The parties shall treat matters of authorship of scientific abstracts, manuscripts or other publications in a proper collaborative spirit, giving credit where credit is due.
5. REPRESENTATIONS AND WARRANTIES
5.1 Tularik. Tularik warrants and represents that: (i) it has the legal power, authority and right to enter into this Agreement, and to perform all its obligations hereunder; and (ii) this Agreement is a legal and valid obligation binding upon it and enforceable in accordance with its terms.
5.2 Array. Array represents and warrants that: (i) it has the legal right and power to extend the rights granted in this Agreement; (ii) it has the legal power, authority and right to enter into this Agreement, and to perform all its obligations hereunder; and (iii) this Agreement is a legal and valid obligation binding upon it and enforceable in accordance with its terms.
5.3 Disclaimer. EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS ARTICLE 5, NEITHER ARRAY NOR TULARIK MAKES ANY REPRESENTATION OR WARRANTIES OR CONDITIONS OF ANY KIND, EITHER EXPRESS OR IMPLIED, WITH RESPECT TO THE DIVERSITY LIBRARY, TA LIBRARIES, COMPOUNDS OR PRODUCTS BASED THEREON, OR INFORMATION DISCLOSED HEREUNDER, INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, VALIDITY OF ANY LICENSED TECHNOLOGY, PATENTED OR UNPATENTED, OR NONINFRINGEMENT OF THE INTELLECTUAL PROPERTY RIGHTS OF THIRD PARTIES.
6. INDEMNIFICATION
6.1 Tularik. Tularik agrees to indemnify, defend and hold Array, and its directors, officers, employees and agents harmless from and against any losses, costs, claims, damages, liabilities or expense (including reasonable attorneys' and professional fees and court and other expenses of litigation) (collectively, "Liabilities") arising out of or in connection with third party claims relating to (i) any Compounds or product based thereon developed, manufactured, used, sold or otherwise distributed by or under authority of Tularik or its designees (including, without limitation, product liability claims), or (ii) any breach by Tularik of the representations and warranties made in this Agreement, except in each case, to the extent such Liabilities resulted from the gross- negligence or intentional misconduct of Array.
6.2 Array. Array agrees to indemnify, defend and hold Tularik, and its directors, officers, employees and agents harmless from and against any losses, costs, claims, damages, liabilities or expense (including reasonable attorneys' and professional fees and court and other expenses of litigation) (collectively, "Liabilities") arising out of or in connection with third party claims relating to (i) the preparation and supply of Compounds in connection with Array's performance under this Agreement; and (ii) any breach by Array of the representations and warranties made in this Agreement, except in each case, to the extent such Liabilities resulted from the gross negligence or intentional misconduct of Tularik.
6.3 Procedure. A party that intends to claim indemnification (the "Indemnitee") under this Article 6 shall promptly notify the indemnifying party (the "Indemnitor") in writing of any third party claim, suit or proceeding included within the indemnification described in this Article 6 above (each a "Claim") with respect to which the Indemnitee intends to claim such indemnification, and the Indemnitor shall have sole control of the defense and/or settlement thereof; provided that the Indemnitee shall have the right to participate, at its own expense, with counsel of its own choosing in the defense and/or settlement of such Claim. The indemnification under this Article 6 shall not apply to amounts paid in settlement of any Claim if such settlement is effected without the consent of the Indemnitor, which consent shall not be unreasonably withheld or delayed. The Indemnitee under this Article 6, and its employees, at the Indemnitor's request and expense, shall provide full information and reasonable assistance to Indemnitor and its legal representatives with respect to such Claims.
7. TERM AND TERMINATION
7.1 Term. This Agreement shall become effective on the Effective Date and shall remain in full force and effect until expiration of the Selection Period for the last Compound delivered hereunder, unless earlier terminated in accordance with this Article 7 below.
7.2 Termination for Cause. Either party to this Agreement shall have the right to terminate this Agreement in the event the other party materially breaches or defaults in the performance of any of its material obligations hereunder, and such default continues for sixty (60) days after written notice thereof is provided to the breaching party by the non-breaching party. Any such termination shall become effective at the end of such sixty (60) day period unless the breaching party (or any other party on its behalf) has cured any such breach or default prior to the expiration of the sixty (60) day period; provided in the case of a failure to pay any amount due hereunder, such default may be the basis of termination thirty (30) days following the date that notice of such default was provided to the breaching party.
7.3 Termination for Insolvency. If voluntary or involuntary
proceedings by or against a party are instituted in bankruptcy under any
insolvency law, or a receiver or custodian is appointed for such party, or
proceedings are instituted by or against such party for corporate reorganization
or the dissolution of such party, which proceedings, if involuntary, shall not
have been dismissed within sixty (60) days after the date of filing, or if such
party makes an assignment for the benefit of creditors, or substantially all of
the assets of such party are seized or attached and not released within sixty
(60) days thereafter, the other party may immediately terminate this Agreement
effective upon notice of such termination.
7.4 Effects.
(a) Accrued Liability. It is understood that termination of this Agreement shall not relieve a party from any liability which, at the time of such termination, has already accrued to the other party.
(b) Survival. The provisions of Articles 1, 4, 6 and 8 and Sections 3.4, 3.5, 3.6, 3.7 and 7.4 shall survive the expiration or termination of this Agreement for any reason. In addition, the provisions of Sections 2.1, 3.1 and 3.3 shall survive the expiration or termination of this Agreement for cause by Tularik following breach by Array but not termination for cause by Array following breach by Tularik. All other rights and obligations of the parties shall cease upon expiration or termination of this Agreement. For purposes of the foregoing, if a Section that so survives is expressly stated to continue for a period of time specified in such surviving Section, the same shall survive only for the remainder of the period specified in such Section. Except as otherwise expressly provided in this Article 7, all other rights and obligations of the parties shall terminate.
8. MISCELLANEOUS
8.1 Governing Laws. This Agreement and any dispute arising from the construction, performance or breach hereof shall be governed by and construed and enforced in accordance with the laws of the state of Colorado, without reference to conflicts of laws principles.
8.2 No Implied Licenses. Nothing herein shall be construed as granting either party, by implication, estoppel or otherwise, any license or other right to any intellectual property, except for the licenses expressly granted herein.
8.3 Waiver. Any waiver of the terms and conditions hereof must be explicitly in writing. The waiver by either party of any breach of any provision hereof by the other party shall not be construed to be a waiver of any succeeding breach of such provision or a waiver of the provision itself.
8.4 Assignment. The parties agree that their rights and obligations under this Agreement may not be assigned or otherwise transferred to a third party without the prior written consent of the other party hereto. Notwithstanding the foregoing, either party may transfer or assign its rights and obligations under this Agreement to a successor to all or substantially all of its business or assets relating to this Agreement whether by sale, merger, operation of law or otherwise; provided that such assignee or transferee has agreed in writing to be bound by the terms and conditions of this Agreement. Any attempted transfer or assignment in violation of this Section 8.4 shall be void. Subject to the foregoing, this Agreement shall be binding upon and inure to the benefit of the parties hereto, their successors and assigns.
8.5 Independent Contractors. The relationship of the parties hereto is that of independent contractors. The parties hereto shall not be deemed to be agents, partners or joint venturers for any purpose as a result of this Agreement or the transactions contemplated thereby.
8.6 Compliance with Laws. In exercising their rights under this Agreement, each party shall fully comply in all material respects with the requirements of any and all applicable laws, regulations, rules and orders of any governmental body having jurisdiction over the exercise of rights hereunder including, without limitation, those applicable to the discovery, development, manufacture, distribution, import and export and sale of products pursuant to this Agreement.
8.7 Notices. Any notice required or permitted to be given or made under this Agreement by either party shall be in writing and delivered to the other party at its address indicated below (or to such other address as a party may specify by notice hereunder by courier or by registered or certified airmail, postage prepaid, or by facsimile; provided, however, that all facsimile notices shall be promptly confirmed, in writing, by registered or certified airmail, postage prepaid. All notices shall be effective as of the date received by the addressee.
if to Array, to: Array BioPharma Corporation
1885 33rd Street
Boulder, Colorado 80301
Fax number: (303) 449-5376
with a copy to: Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, California 94304-1050
Attn: Kenneth A. Clark, Esq.
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Fax number: (650) 493-6811
if to Tularik, to: Tularik Inc.
Two Corporate Drive
South San Francisco, CA 94080
Attn: General Counsel
Fax number: (650) 829-4303
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8.8 Severability. In the event that any provision of this Agreement becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable or void, this Agreement shall continue in full force and effect without said provision, and the parties shall amend the Agreement to the extent feasible to lawfully include the substance of the excluded provision to as fully as possible realize the intent of the parties and their commercial bargain, unless the invalid provision(s) are of such essential importance to this Agreement that it is to be reasonably assumed that the parties would not have entered into this Agreement without the invalid provision(s).
8.9 Force Majeure. Nonperformance of either party (except for payment obligations) shall be excused to the extent that performance is rendered impossible by acts of God, strike, fire, earthquake, flood, governmental acts or orders or restrictions, failure of suppliers, or any other reason where failure to perform is beyond the reasonable control and not caused by the negligence, intentional conduct or misconduct of the non-performing party, provided such party uses its best efforts to resume performance as promptly as possible.
8.10 No Consequential Damages. EXCEPT PURSUANT TO ARTICLE 6,
NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY FOR ANY SPECIAL, CONSEQUENTIAL,
EXEMPLARY OR INCIDENTAL DAMAGES (INCLUDING LOST OR ANTICIPATED REVENUES OR
PROFITS RELATING TO THE SAME), ARISING FROM ANY CLAIM RELATING TO THIS
AGREEMENT, WHETHER SUCH CLAIM IS BASED ON CONTRACT, TORT (INCLUDING NEGLIGENCE)
OR OTHERWISE, EVEN IF AN AUTHORIZED REPRESENTATIVE OF SUCH PARTY IS ADVISED OF
THE POSSIBILITY OR LIKELIHOOD OF SAME. THESE LIMITATIONS SHALL APPLY
NOTWITHSTANDING THE FAILURE OF THE ESSENTIAL PURPOSE OF ANY LIMITED REMEDY, AND
THE PARTIES ACKNOWLEDGE THAT THIS SECTION 8.10 REPRESENTS A REASONABLE
ALLOCATION OF RISK.
8.11 Further Assurances. At any time and from time to time after the Effective Date, each party hereby agrees to execute, acknowledge and deliver, and cause to be done, executed, acknowledged or delivered, and take or cause to be taken all such further acts, transfers, conveyances, or assignments as may be reasonably required to carry out the transactions contemplated by this Agreement.
8.12 Headings. Headings included herein are for convenience only, do not form a part of this Agreement and shall not be used in any way to construe or interpret this Agreement.
8.13 Entire Agreement. The terms and provisions contained in the Agreement, including the Exhibits hereto, constitute the entire agreement between the parties and shall supersede all previous communications, representations, agreements or understandings, either oral or written, between the parties with respect to the subject matter hereof. No agreement or understanding varying or extending this Agreement shall be binding upon either party hereto, unless set forth in a writing which specifically refers to the Agreement signed by duly authorized officers or representatives of the respective parties, and the provisions hereof not specifically amended thereby shall remain in full force and effect. ANY ADDITIONAL OR INCONSISTENT TERMS OR CONDITIONS OF ANY PURCHASE ORDER, ACKNOWLEDGMENT OR SIMILAR STANDARDIZED FORM GIVEN OR RECEIVED PURSUANT TO THIS AGREEMENT SHALL HAVE NO EFFECT AND SUCH TERMS AND CONDITIONS ARE HEREBY EXCLUDED.
8.14 Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed to be an original and all of which together shall be deemed to be one and the same agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their authorized representatives and delivered in duplicate originals as of the Effective Date.
ARRAY BIOPHARMA INC. TULARIK INC.
By: /s/ David Snitmann By: /s/ John P. McLaughlin
-------------------------------- --------------------------------
Name: David Snitmann Name: John P. McLaughlin
------------------------------ ------------------------------
Title: COO Title: President
----------------------------- ----------------------------
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EXHIBIT 10.36
[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 506 of the Securities Act of 1933, as amended.
RESEARCH SERVICES AGREEMENT
ELI LILLY AND COMPANY
AND
ARRAY BIOPHARMA, INC.
MARCH 22, 2000
TABLE OF CONTENTS
ARTICLE I DEFINITIONS ...........................................................................................1
1.1 Array Alliance Manager ...............................................................................1
1.2 Array Confidential Information .......................................................................1
1.3 Array FTE ............................................................................................2
1.4 Array Process ........................................................................................2
1.5 Array Project Leader .................................................................................2
1.6 Array Technology .....................................................................................2
1.7 Associate Chemist ....................................................................................2
1.8 Calendar Quarter .....................................................................................2
1.9 Calendar Year ........................................................................................3
1.10 cGCP .................................................................................................3
1.11 cGLP .................................................................................................3
1.12 cGMP .................................................................. ..............................3
1.13 Chemistry Invention ..................................................................................3
1.14 FTE Rate .............................................................................................3
1.15 Lilly Chemistry Research Services Director ...........................................................3
1.16 Lilly Confidential Information .......................................................................3
1.17 Lilly Project Leader .................................................................................4
1.18 Project ..............................................................................................4
1.19 Project Rights .......................................................................................4
1.20 Project Services .....................................................................................4
1.21 Project Team .........................................................................................4
1.22 Senior Chemist .......................................................................................4
1.23 Target Family ........................................................................................4
1.24 Third Party ..........................................................................................4
1.25 Work Plan ............................................................................................5
ARTICLE 2 PROJECT SERVICES .....................................................................................5
2.1 Project Services and Other Services ..................................................................5
2.2 Conflicts of Interest ................................................................................5
2.3 Project Management; Meetings .........................................................................6
2.4 Commitment to Project Staffing .......................................................................6
2.5 Array Employees Assigned to Each Project .............................................................6
2.6 [ * ]................................................................................................8
2.7 Communication and Access to Array Employees ..........................................................8
2.8 Reports, Records and Project Rights Transfer .........................................................8
2.9 Project Diligence ....................................................................................9
2.10 Governing Authority of Projects .....................................................................10
2.11 Array's Alliance Management .........................................................................10
ARTICLE 3 CONSULTING SERVICES ..................................................................................10
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ARTICLE 4 PROJECT RESOURCES AND COSTS ..........................................................................11
4.1 Project Resources and Costs .........................................................................11
4.2 Subcontracting Project Services or Other Services ...................................................12
4.3 Training ............................................................................................13
ARTICLE 5 PROJECT OWNERSHIP, PROCEDURAL SAFEGUARDS AND SECURITY ................................................12
5.1 [ * ]...............................................................................................13
5.2 Safeguards to Protect Confidentiality and Project Rights Ownership ..................................15
5.3 Security ............................................................................................15
ARTICLE 6 RECORD-KEEPING AND AUDIT .............................................................................15
6.1 Records Retention; Maintenance of Project Records ...................................................15
6.2 Financial Audit .....................................................................................16
6.3 Scientific and Legal Audit ..........................................................................16
6.4 Quality Assurance and Security Audits; On-Site Lilly Personnel ......................................17
ARTICLE 7 CONFIDENTIALITY AND NON-USE ..........................................................................17
7.1 Disclosure of Agreement .............................................................................17
7.2 Array's Confidentiality Obligations .................................................................18
7.3 Lilly's Confidentiality Obligations .................................................................18
ARTICLE 8 TERM AND TERMINATION .................................................................................19
8.1 Term ................................................................................................19
8.2 Lilly Voluntary Termination .........................................................................19
8.3 Termination for Default .............................................................................21
8.4 Termination Due to Array Ownership Change ...........................................................21
8.5 Termination Due to Insolvency or Liquidation ........................................................21
8.6 Surviving Rights and Obligations ....................................................................21
ARTICLE 9 REPRESENTATIONS AND WARRANTIES .......................................................................22
9.1 Lilly's Authority to Perform Agreement ..............................................................22
9.2 Array's Authority to Perform Agreement ..............................................................22
9.3 No Debarment ........................................................................................22
9.4 Year 2000 ...........................................................................................23
ARTICLE 10 MUTUAL INDEMNIFICATION ..............................................................................23
10.1 Array's Right to Indemnification ....................................................................23
10.2 Lilly's Right to Indemnification ....................................................................23
10.3 Indemnification Notice and Defense Procedures .......................................................24
ARTICLE 11 MISCELLANEOUS .......................................................................................25
11.1 Further Assurances ..................................................................................25
11.2 No Agency; Independent Contractor ...................................................................25
11.3 Compliance with Laws " ..............................................................................25
11.4 Compliance with Work Plan and Lilly Protocols and Specifications ...................................25
11.5 Insurance ...........................................................................................26
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11.6 Amendment ........................................................................................26 11.7 Notices and Reports ..............................................................................26 11.8 Governing Law ....................................................................................26 11.9 Assignment .......................................................................................26 11.10 Headings .........................................................................................26 11.11 Severance of Clauses .............................................................................26 11.12 No Waiver ........................................................................................26 11.13 Entire Agreement .................................................................................27 11.14 Force Majeure ....................................................................................27 11.15 Counterparts .....................................................................................27 11.16 No Licenses ......................................................................................27 11.17 Jointly Prepared .................................................................................27 |
Schedule 1.25 Work Plan(s)
Exhibit A: Initial Press Release
RESEARCH SERVICES AGREEMENT
THIS RESEARCH SERVICES AGREEMENT (the "Agreement") is made and entered into effective as of March 22, 2000 (the "Effective Date"), by and between Eli Lilly and Company, Lilly Corporate Center, Indianapolis, IN, 46285 ("Lilly"), and Array BioPharma, Inc., 188533 d Street, Boulder, CO, 80301 ("Array") (together Lilly and Array, the "Parties").
RECITALS
WHEREAS, Lilly is engaged in the discovery, development, manufacturing and marketing of pharmaceutical products; and
WHEREAS, Array provides research services in all aspects of chemistry, high through-put screening, structural biology, and information management; and
WHEREAS, Lilly proposes to retain Array for the specific purpose of providing chemical research, analysis, manufacturing of specialty chemical products or related services that Array may offer.
NOW, THEREFORE, it is agreed as follows:
ARTICLE I
DEFINITIONS
Terms defined in this Article I and parenthetically elsewhere shall have the same meaning throughout this Agreement, including the recitals. Defined terms may be used in the singular or plural.
1.1 "ARRAY ALLIANCE MANAGER" shall have the meaning set forth in Section 2.11.
1.2 "ARRAY CONFIDENTIAL INFORMATION" means (1) any and all Array Technology and (2) any and all information, items, material or know-how (whether or not patentable), except Project Rights and Array Processes, that is disclosed to and/or received by Lilly from Array (whether orally, in writing, through observation, or otherwise) during the term of this Agreement or prior to the Effective Date, including, without limitation, any and all suggestions, descriptions, ideas, inventions (whether or not patentable) discoveries, know-how, trade secrets, techniques, data, strategies, methods, syntheses, processes, practices, documents, apparatus, devices, chemical formulations, chemical synthesis, compounds, composition of matter, chemical samples, assays, cell lines, vectors, screens, databases, database structures, and data analysis methods.
Array Confidential Information shall not include any information that Lilly can prove by competent evidence: (a) is now, or hereafter becomes, through no act or failure to act on the part of Lilly, generally known or available; (b) is known by Lilly at the time of receiving such information; (c) is hereafter disclosed to Lilly by a Third Party, as a matter of right and without restriction on disclosure; (d) is independently developed by Lilly without the aid, application, or use of Array Confidential Information; (e) is the subject of a written permission to disclose provided by Array; or (f) is required to be disclosed by law, government agency, court order or valid discovery request in connection with a legal proceeding
1.3 "ARRAY FTE" means a full time equivalent scientific person year consisting of no less than a total of [ * ] of Project Services carried out by a Lilly approved, Array employee who is either (except as the Parties may otherwise agree in writing) (i) the Array Alliance Manager or (ii) an Array Project Leader, Senior Chemist, or Associate Chemist exclusively assigned and fully dedicated to Projects. Time spent by Array FTEs will qualify for reimbursement under Subsection (a) of Section 4.1 only if it involves Project Services on or directly related to a Project.
1.4 "ARRAY PROCESS" means a chemical method or process that Array owns or has a right to license and that Array used, by its choice, in at least one Project, but the term expressly excludes all high-speed synthesis technology and methods of Array.
1.5 "ARRAY PROJECT LEADER" means an Array employee assigned to lead other Array employees working on a particular Project who, unless otherwise agreed to by the Parties in writing, has a Ph.D. in organic chemistry, at least [ * ] of professional medicinal chemistry experience, and previous project leadership experience. Each Array Project Leader shall be responsible for managing the day-to-day activities of Array FTEs assigned to his/her particular Project to achieve the Project's goals in accordance with the Work Plan. An Array Project Leader is subordinate to a Project's Lilly Project Leader regarding all aspects of such Project, and therefore, any disagreements between them regarding the direction, priorities, goals or other aspects of the Project shall be resolved ultimately by the Lilly Project Leader.
1.6 "ARRAY TECHNOLOGY" means Array inventions (whether or not patentable) and Array know-how. Array Technology expressly excludes all Project Rights regardless of Array's contribution to such Rights and, for purposes of this Agreement, also expressly excludes Array Processes.
1.7 "ASSOCIATE CHEMIST" means an Array employee who has at least a Masters Degree in organic chemistry or its equivalent (i.e., a Bachelor Degree in organic chemistry with several years of chemistry experience), but who is neither an Array Project Leader, nor a Senior Chemist, nor the Array Alliance Manager.
1.8 "CALENDAR QUARTER" means a three-month period ending on March 3 1, June 30, September 30, or December 31.
[*] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
1.9 "CALENDAR YEAR" means the twelve-month period ending on December 31.
1.10 "cGCP" means the then-current Good Clinical Practice Standards promulgated or endorsed by the FDA (or in the case of foreign jurisdictions, comparable regulatory standards), including those regulations or guidelines expressed or implied in the regulatory filings made with respect to a particular compound or product at issue with the FDA or foreign regulatory agents.
1.11 "cGLP" means the then-current Good Laboratory Practices promulgated or endorsed by the FDA (or in the case of foreign jurisdictions, comparable regulatory standards), including those procedures expressed or implied in the regulatory filings made with respect to a particular compound or product at issue with the FDA or foreign regulatory agents.
1.12 "cGNIP" means current Good Manufacturing Practices as defined in the U.S. regulations 21 CFR Section 210 et seq., and the EEC Guide to Good Manufacturing Practices for Medicinal Products (Vol. IV Rules Governing Medicinal Products in the European Community 1992).
1.13 "CHEMISTRY INVENTION" means a [ * ] that is conceived and invented by Array (by itself or jointly with Lilly) as a direct or indirect result of performing Project Services or Other Services.
1.14 "FTE RATE" means [ * ] (12) month period ending December 31, 2000. The FTE Rate for any Calendar Year after December 31, 2000 shall be adjusted annually by Lilly in accordance with the annual percentage change in the Consumer Price Index for all Urban Consumers as published by the United States Department of Labor, Bureau of Labor Statistics.
1.15 "LILLY CHEMISTRY RESEARCH SERVICES DIRECTOR" means [ * ] (or his
successor as appointed by Lilly). As the Lilly Chemistry Research Services
Director, [ * ] (or his successor) will be responsible for, among other things,
(i) issuing Projects to Array, (ii) discontinuing Projects, (iii) reviewing
Array FTE rosters, (iv) informing Array of each Project's initial staffing
needs, (v) communicating changes in staffing levels, (vi) coordinating Lilly's
communications with Array, and (vii) facilitating the smooth operations of all
Projects.
1.16 "LILLY CONFIDENTIAL INFORMATION" means (1) any and all Project Rights and (2) any and all other information, items, material or know-how (whether or not patentable) that is disclosed to and/or received by Array from Lilly (whether orally, in writing, through observation, or otherwise) during the term of this Agreement or prior to the Effective Date, including, without limitation, any and all suggestions, descriptions, ideas, inventions (whether or not patentable) discoveries, know-how, trade secrets, techniques, data, strategies, methods, syntheses, processes, practices, documents, apparatus, devices, chemical formulations, chemical synthesis, compounds, composition of matter, chemical samples, assays, cell lines, vectors, screens, databases, database structures, and data analysis methods.
[*] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
Lilly Confidential Information shall not include any information that Array can prove by competent evidence: (a) is now, or hereafter becomes, through no act or failure to act on the part of Array, generally known or available; (b) is known by Array at the time of receiving such information; (c) is hereafter disclosed to Array by a Third Party, as a matter of right and without restriction on disclosure; (d) is independently developed by Array without the aid, application, or use of Lilly Confidential Information; (e) is the subject of a written permission to disclose provided by Lilly; or (f) is required to be disclosed by law, government agency, court order or valid discovery request in connection with a legal proceeding.
1.17 "LILLY PROJECT LEADER" means a Lilly employee assigned by Lilly to lead a particular Project. Each Lilly Project Leader shall, with appropriate input from Array, establish the direction, priorities, and goals of the Project assigned to such Lilly Project Leader. However, the Lilly Project Leader shall be the ultimate authority with respect to all issues and decisions pertaining to such Project and as such, may at any time accept, reject, or modify any portion of such Project or its Work Plan, except as specified in Section 2.10, to the extent he or she deems appropriate.
1.18 "PROJECT" means a chemistry project for a specific biological target submitted by Lilly and accepted by Array under the terms of this Agreement and which is fully described in a Work Plan. "PROJECTS" means each and every Project under the terms of this Agreement.
1.19 "PROJECT RIGHTS" shall have the meaning set forth in Subsection (a) of
Section 5.1.
1.20 "PROJECT SERVICES" shall have the meaning set forth in Section 2.1.
1.21 "PROJECT TEAM" means the Array FTEs who are assigned to and Lilly's employees, independent contractors, and research collaboration partners who are working on a particular Project.
1.22 "SENIOR CHEMIST" means an Array employee who has a Ph.D. in organic chemistry and at least [ * ] of organic synthesis chemistry experience subsequent to obtaining such Ph.D.
1.23 "TARGET FAMILY" means a group of targets related to each other by, for example, [ * ]. Although the term is broader than a single target such as "[ * ]" or "[ * ]", it is not as broad as "all [ * ]" or "all [ * ]". The following non-comprehensive list contains examples of Target Families; [ * ], and [ * ], [ * ] and [ * ].
1.24 "THIRD PARTY" means any person or organization, incorporated or unincorporated, other than Array, Lilly, or an employee of Array or Lilly.
[*] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
1.25 "WORK PLAN" means the detailed plan established and submitted by Lilly to Array for each Project that defines the parameters, scope, and deliverables of such Project. Each Work Plan shall include, without limitation: (i) a detailed plan for the Project at issue including specific milestones to be accomplished throughout the Project; (ii) a determination of the Array FTEs (including the composition thereof) reasonably necessary to carry out the Project; and (iii) a designation by Lilly of whether the Project is a "[ * ]," "[ * ]," or "[ * ]". It is anticipated that before finalizing a Work Plan the Parties shall attempt to fully discuss and reach consensus regarding the parameters, scope, deliverables, and other details of the Project described in that Work Plan, but in the absence of such consensus, Lilly shall make the final determination with respect to all issues and decisions related to a Project and its Work Plan. All Work Plans shall be subsequently appended hereto as part of SCHEDULE 1.25.
ARTICLE 2
PROJECT SERVICES
2.1 PROJECT SERVICES AND OTHER SERVICES. Lilly hereby retains Array to perform, and Array hereby agrees to perform, for Projects usual and customary chemistry services and related services in the areas of compound design, synthesis, isolation, and purification, structure, confirmation, and composition and purity determination, in accordance with the applicable Work Plans ("Project Services"). Depending on the Project, Project Services may include, without limitation, consulting and technical assistance, chemical synthesis (including, without limitation, design and synthesis of organic compounds), routine computational analysis customary to compound design, synthetic chemical research, medicinal chemistry, compound identification and quantification, compound physical chemical characterization, and compound purification.
From time to time, Lilly may request Array to provide for Projects chemistry and other services that are not Project Services ("Other Services"), but Lilly recognizes that Array has the option to provide Other Services on a case-by-case basis. Other Services may include, without limitation, synthesis of general use chemical libraries, process research & development, and large scale compound preparation, but expressly excludes the consulting services described in Article 3. [ * ]
2.2 CONFLICTS OF INTEREST. Lilly recognizes that Array provides research services to Third Parties: therefore, at the time the Lilly Chemistry Research Services Director proposes a Project, he or she will identify the Project's target and Target Family. If a Project that Lilly desires to issue to Array deals with the same target or Target Family as that of a project,
[*] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
assignment, or task on which Array is working or has agreed to work for a Third Party, Array shall immediately, but no later than five (5) business days after Lilly's proposed issuance of the Project, notify Lilly in writing of this potential conflict of interest. In such cases, the Project will be issued to Array only by mutual consent of the Parties.
2.3 PROJECT MANAGEMENT; MEETINGS. Each project shall be conducted in accordance with its Work Plan and under the overall direction and guidance of the Array Project Leader and Lilly Project Leader assigned to it (the "Project Steering Committee"), but subject to the Lilly Project Leader's ultimate authority. Each Project Steering Committee shall hold meetings regularly, and except as the Lilly Project Leader may reasonably determine otherwise, shall hold such meetings weekly. Such meetings may be held in-person, via video conference and/or teleconference, provided that at least quarterly the Project Steering Committee shall meet in-person, unless they otherwise agree. The Lilly Project Leader, after consultation with the Array Project Leader, will determine in good faith whether individual members of the Project Team or other persons should also be in attendance at a Project Steering Committee meeting; however, for in-person Project Steering Committee meetings, the in-person attendance of individuals other than the Project Steering Committee members will be required only upon the mutual consent of the Parties. In-person, Project Steering Committee meetings will alternate between Lilly's Indianapolis, Indiana facilities and Array's Boulder, Colorado facilities, unless the Parties otherwise agree. Each [ * ] with the attendance of its employees and consultants at such meetings.
2.4 COMMITMENT TO PROJECT STAFFING. During the term of this Agreement, Array hereby agrees to have at least the following number of Array FTEs available for Projects:
[ * ]
If Lilly desires to increase the number of Array FTEs beyond [ * ], all such increases must be mutually agreed upon by the Parties in writing. Array, however, will notify Lilly in writing each Calendar Quarter as to: (i) how many Array employees are then-currently available to serve as Array FTEs for Projects; and (ii) its forecast of how many such persons will be available during the next three Calendar Quarters.
2.5 ARRAY EMPLOYEES ASSIGNED TO EACH PROJECT. Critical to the ultimate success of each Project is the quality, make-up, and continuity of Array employees assigned thereto. To that end, the Parties hereby agree as follows:
(a) Qualifications and Make-Up. Array hereby agrees that Array employees assigned to perform Project Services or Other Services shall have the skills necessary to efficiently perform such services in a form and of a quality suitable to Lilly.
[*] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
Moreover, except as the Parties may otherwise agree in writing, Array hereby agrees that each Array FTE shall consist only of Array employees that are either: (i) the Array Alliance Manager or (ii) Array Project Leaders, Senior Chemists, or Associate Chemists exclusively assigned and fully dedicated to Projects. Moreover, except as the Parties may otherwise agree in writing, each Project shall have at least one Array Project Leader and a ratio of Senior Chemists to Associate Chemists no lower than as follows (the "Experience Ratio"):
Type of Project Ratio - Senior/Associate
--------------- ------------------------
[ * ]
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For purposes of calculating the Experience Ratio, an Array Project Leader, to the extent he is actually conducting work on a particular Project, shall count as a Senior Chemist.
[ * ]
(b) Continuity to Projects. Array hereby agrees that: (1) [ * ]. An Array employee assigned to a Project as an Array FTE, however, will not be required to continue work on Projects under the following circumstances:
(i) [ * ];
[*] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
(ii) [ * ]
(iii) [ * ]
(iv) [ * ]
2.6 [ * ]
(c) Subsequent Increases in Array FTEs. If, after a reduction of Array FTEs under this Section, Lilly requests additional Array FTEs, Array agrees to use reasonable efforts to satisfy Lilly's requests up to the [ * ] FTEs threshold in Section 2.4. Any increase in the number of Array FTEs beyond such threshold must be mutually agreed upon by the Parties in writing.
2.7 COMMUNICATION AND ACCESS TO ARRAY EMPLOYEES. In addition to the meetings described in Section 2.3, during the term of the Agreement, Lilly shall have reasonable and informal access to and communication and interaction with Array employees assigned to each Project. It is anticipated that such access, communication and interaction shall be similar to the access, communication, and interaction that would occur between scientists in a fully integrated, drug discovery project team effort. Furthermore, upon Lilly's request, Array shall interact and communicate with Lilly regarding any issue raised by Lilly about a Project as soon as reasonably practical.
2.8 REPORTS, RECORDS AND PROJECT RIGHTS TRANSFER. Array will provide to Lilly the following reports and records:
(a) Quarterly Status Reports. For each Project, Array shall provide the applicable Lilly Project Leader with a quarterly status report that summarizes Array's efforts on such Project during the Calendar Quarter at issue and that includes, without limitation, a general summary of important events and/or milestones achieved, personnel changes (if any), learning points and other matters that Lilly may reasonably deem appropriate, and a general description of Project Rights (if any) discovered, invented, developed and/or conceived. The Lilly Project Leader of each Project, with appropriate consultation from the Array Project Leader assigned thereto, shall determine the appropriate format of the quarterly status report for his or her Project. In addition to the foregoing, each quarterly status report shall include for each compound discovered or made
[*] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
during the Calendar Quarter at issue: (i) the structure of such compound; (ii) the name of the discover/maker of such compound; (iii) the date such compound was discovered or made; (iv) the list of analytical methods for which data was obtained on such compound [ * ] and (v) the quantity of such compound made.
(b) Project Reports. For each Project, Array will provide the applicable
Lilly Project Leader a report fully summarizing the results and
experimental procedures of the Project and include, without
limitation, a description of all Project Rights, compound structures,
analytical data, physical chemical characterization data, compound
numbers, lot numbers, names of compound (including the name of the
person who prepared such compound), dates when compounds were
prepared, full details of synthesis methods (especially new methods or
modifications and new applications of existing methods), compound
purification conditions and protocols, chemical reaction schemes,
conditions, protocols, yields, certificate of analysis, other items
relevant to such Project, and such other matters as Lilly may
reasonably request. Array shall provide such a report within thirty
(30) days after the earlier of: (i) Lilly's written request, (11) the
completion or termination of a Project, or (iii) the termination or
expiration of this Agreement.
(c) Records. Array will provide the applicable Lilly Project Leader copies of all experimental and other Project records and laboratory notebooks containing experimental descriptions and data generated from work conducted under a Project within thirty (30) days after the earlier of: (i) Lilly's written request, (ii) the completion or termination of a Project, or (iii) the termination or expiration of this Agreement.
(d) Project Rights & Other Lilly Confidential Information. To the extent
not already transferred to Lilly in accordance with Subsection (b) of
Section 5.1 or otherwise under this Agreement, Array shall disclose
and transfer ownership to Lilly [ * ], within thirty (30) days of the
earlier of: (i) Lilly's written request, (ii) the completion or
termination of a particular Project, or (iii) the termination or
expiration of this Agreement.
2.9 PROJECT DILIGENCE. Array shall diligently use its best efforts to render Project Services and Other Services hereunder in accordance with prevailing high professional standards and will make all reasonable efforts to produce consistently high levels of accuracy and expertise
[*] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
and to meet timetables set forth under this Agreement for completion of Project Services and Other Services.
2.10 GOVERNING AUTHORITY OF PROJECTS. Each Project shall be conducted by its Project Team in accordance with its Work Plan and under the overall directions and guidance of its Project Steering Committee, [ * ].
2.11 ARRAY'S ALLIANCE MANAGEMENT. Array hereby designates Kevin Koch, Ph.D. (and any successor President/Chief Science Officer) as the Array officer who is ultimately responsible for ensuring its performance under this Agreement. Array also agrees to designate, with Lilly's prior written approval, an Array employee to oversee Array's day-to-day activities on all Projects, to coordinate Array's communications with Lilly, and to otherwise facilitate the smooth operations of all Projects (the "Array Alliance Manager"). Along with his other responsibilities for this Agreement, the Parties agree that Dr. Koch will serve as the interim Array Alliance Manager until a successor Array Alliance Manager is appointed in accordance with this Section. However, notwithstanding Section 1.2 and Subsection (a) of Section 2.5, Array is not entitled to any compensation from Lilly for Dr. Koch's work as the interim Array Alliance Manager.
ARTICLE 3
CONSULTING SERVICES
Array employees who, as reasonably determined by a Lilly Project Leader
after consultation with the Array Project Leader, possess useful technical
expertise to a Project but who are not assigned to that Project shall be made
available at such times as Lilly reasonably requests for technical consultations
with Lilly personnel via telephone or in-person. Such Array employees may
include, without limitation, senior management of Array. In the event that such
consultation is in the form of an in-person consultation, the time and location
of such consultation shall be mutually agreed upon by the Parties in good faith
[ * ].
[*] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
ARTICLE 4
PROJECT RESOURCES AND COSTS
4.1 PROJECT RESOURCES AND COSTS.
(a) FTE Funding and Reimbursement of Other Costs. [ * ] In addition, in
the event that (i) Other Services are used by Array in accordance with
Section 2. 1, (ii) Third Parties are used by Array in accordance with
Section 4.2, or (iii) Array incurs reimbursable expenses under
Subsection (e) of this Section 4. 1, Lilly shall reimburse Array for
only the incremental actual costs incurred by Array for such services
or items (i.e., no mark-up) and not according to the FTE Rate.
(b) Invoice. Within thirty (30) days [ * ], Array shall provide the Lilly
Chemistry Research Services Director with an invoice detailing: (i)
the name, number, and title of each Array FTE performing Project
Services during the preceding [ * ]; (ii) the total Project Service
hours worked by each Array FTE during the preceding [ * ]; (iii) the
Project Service hours worked on each Project during the preceding
[ * ]; (iv) the number of Project Services hours that were United
States-based; (v) the Other Services performed by Array during the
preceding [ * ] (if any); (vi) the permitted Third Parties' services
used by Array during the preceding [ * ] (if any); and (vii) the
actual costs incurred by Array during the preceding [ * ] for items
reimbursable under Subsection (e) of this Section 4.1 (if any).
Array's invoice for the last [ * ] in a Calendar Year will also
contain sufficient information and documentation to calculate the year
end Array FTE true-up, if any, under Subsection (d) of this Section.
Lilly, or its representatives, shall have the right to audit Array
records with respect to any invoice in accordance with Section 6.2.
(c) Project Payments. [ * ]
(d) Year End Array FTE True-Up. If:
(i) an Array FTE [ * ];
(ii) Lilly, under Subsection (a) of this Section, paid a pro-rated FTE Rate for that Array FTE's reduced work hours during that [ * ]; and
[*] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
(iii) that Array FTE worked [ * ] on Project Services in another month during the Calendar Year,
Lilly, to the extent of such excess hours, will pay Array the difference between the pro-rated amount it paid Array for the Array FTE's reduced hours month and [ * ] of the FTE Rate. Lilly's payment of such amount, if any, will accompany Lilly's payment made under Subsection (c) of this Section for the last month in a Calendar Year. An Array FTE's excess hours do not carry over to the next Calendar Year nor are they applicable to another Array FTE.
(e) Equipment, Supplies, and Reasonable Capital Expenditures. Except for non-commodity chemicals or except as the Parties otherwise agree in writing, the Parties acknowledge and agree that Array is solely responsible for the cost of all equipment, supplies, commodity chemicals (e.g., chemicals that are readily available in bulk quantities and obtainable from multiple suppliers and whose cost is generally considered relatively low, fairly well-defined, and consistent across the chemical supply industry), solvents, reagents, materials, and reasonable capital items that Array uses (or is required to use) in connection with the Projects. Lilly agrees to reimburse Array for its purchases of non-commodity chemicals that are necessary for a Project, but only if Lilly pre-approved such purchase in writing.
When Lilly reimburses Array for necessary and pre-approved non-commodity chemicals or in the event, Lilly, in its sole discretion, supplies, leases, or purchases (or reimburses Array for) any equipment, supplies, commodity chemicals, non-commodity chemicals, solvents, reagents, materials, or other capital items in connection with Array's efforts on a Project, Lilly shall be the sole owner of such item, and, Array shall, to the extent not already done so, transfer sole ownership in such item to Lilly and deliver possession of such item to Lilly at the earlier of: (i) the completion or termination of the Project at issue, (ii) Lilly's request, or (iii) the termination or expiration of this Agreement. In certain cases (e.g., Lilly determines that the item might be useful in another Project), Lilly may reasonably delay transfer of ownership and/or possession of such item by notifying Array of the same.
(f) Research Tax Credits. To the extent permitted by law, Lilly shall be entitled to any tax credits due on account of research and development expenses it pays to Array under this Agreement.
4.2 SUBCONTRACTING PROJECT SERVICES OR OTHER SERVICES. The Parties acknowledge and agree that subcontracting (including, without limitation, any consultation by Third Parties) of Project Services or Other Services by Array is generally prohibited under this Agreement. However, Array may subcontract Project Services or Other Services if, prior to such subcontract:
[*] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
(i) The Lilly Chemistry Research Services Director approves, in writing, that such subcontract would be useful or beneficial to a Project and that the selected Third Party is an appropriate subcontractor for the particular Project Services or Other Services at issue;
(ii) The Lilly Chemistry Research Services Director approves, in writing, the cost associated therewith;
(iii) Array and/or Lilly, as appropriate, obtain written confidentiality and nonuse agreements from the Third Party;
(iv) Array and/or Lilly, as appropriate, obtain written assignments from the Third Party of all patent rights and know-how that such Third Party may develop by reason of work performed under this Agreement (which, in turn, shall ultimately be assigned to Lilly in accordance with Section 5.1); and
(v) Array and/or Lilly, as appropriate, obtain a certification from the Third Party that such work will be performed according to cGLPs, cGCPs and/or cGMPs, as applicable.
To be reimbursed for the incremental actual costs incurred from such approved Third Parties' services, Array shall provide Lilly with all documentation of such costs as Lilly may reasonably require. The foregoing prohibition is intended to apply only to Array's ability to subcontract Project Services or Other Services and is not intended to limit Lilly's ability to subcontract in any respect.
4.3 TRAINING. Except as the Parties otherwise agree in writing, the Parties acknowledge and agree that Array is solely responsible for providing and paying for training, including attendance at scientific meetings, as may be necessary for its employees and permitted subcontractors to perform their duties under this Agreement.
ARTICLE 5
PROJECT OWNERSHIP, PROCEDURAL SAFEGUARDS AND SECURITY
5.1 [ * ]
(a) [ * ]. Lilly shall be [ * ] information, items, material, and know-how that is either (i) [ * ] Project Services or Other Services, including, without limitation, any and all
[*] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
suggestions, descriptions, ideas, inventions (whether or not patentable) discoveries, know-how, trade secrets, techniques, data, strategies, methods, syntheses, processes, practices, documents, apparatus, devices, chemical formulations, chemical synthesis, compounds, composition of matter, chemical samples, assays, cell lines, vectors, screens, databases, database structures, and data analysis methods (collectively, "[ * ]").
(b) [ * ], after the conception, discovery, invention and/or development
of Project Rights, shall (and shall cause its employees, permitted
subcontractors, and other agents providing Project Services or Other
Services hereunder to) [ * ] in completing any patent applications
relating to such [ * ], as well as executing and delivering any
instrument that may be reasonably required to assign, convey and
[ * ] interest, if any, that Array or its employees, permitted
subcontractors, and other agents providing Project Services or Other
Services hereunder may have in such [ * ].
Moreover, after the [ * ] (and shall cause its employees, permitted
subcontractors, and other agents providing Project Services or Other
Services to) [ * ], items, material, and know-how encompassed in
[ * ] together with any other information, items, material, and
know-how [ * ]. Finally, [ * ] with reasonable technical assistance
in connection with such disclosure and transfer of [ * ].
(c) [ * ]. Pursuant to Subsection (a) above, Lilly has exclusive rights to [ * ]. Array shall have the right to practice a [ * ] for purposes other than a Project [ * ].
(d) Non-Exclusive License to [ * ]. Array hereby grants to Lilly [ * ] to practice [ * ]. [ * ] only to Third Parties that are involved with Lilly in research and development collaborations, and such sublicenses shall be only for the purpose of carrying out such collaborations. Lilly shall not have any other sublicense rights.
[*] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
5.2 SAFEGUARDS TO PROTECT CONFIDENTIALITY AND PROJECT RIGHTS OWNERSHIP.
(a) As a means reasonably designed to protect Lilly's sole ownership
rights in [ * ] and otherwise to ensure Array's compliance with its
obligations set forth in Section 5.1 and Section 7.2, Array agrees
[ * ]. In addition, Array agrees that [ * ]. Array's obligations
under this Subsection shall survive until [ * ] after the expiration
or termination date of this Agreement.
(b) Array hereby agrees that, each of its employees and permitted
subcontractors will, prior to commencing work on any Project,
execute an instrument agreeing to: (i) assign to Array all [ * ]
arising during the course of and as a result of their association
with Array (which shall ultimately be assigned by Array to Lilly in
accordance with the assignment provisions of Subsection (b) of
Section 5.1); and (ii) to abide by confidentiality and non-use
restrictions regarding the terms of the Agreement and Lilly
Confidential Information in a manner consistent with Array's
obligations under Section 7.1 and Section 7.2.
5.3 SECURITY. As a means reasonably designed to protect Lilly's sole
ownership rights in [ * ], to protect the secrecy and confidentiality of all
[ * ] and other Lilly Confidential Information, and to otherwise ensure Array's
compliance with its obligations set forth in Section 5.1 and Section 7.2, Array
agrees to maintain appropriate security measures no less stringent than measures
that are customary in the industry. In addition to customary security measures,
Array shall: (i) conduct all [ * ] and Other Services in a facility or
facilities solely dedicated and exclusively used for Projects; and (ii) maintain
informational technology systems that are compatible with Lilly's informational
technology systems and that ensure confidential communications and data
transfers between Array and Lilly.
ARTICLE 6
RECORD-KEEPING AND AUDIT
6.1 RECORDS RETENTION; MAINTENANCE OF PROJECT RECORDS. In addition to providing copies of records and other Project Rights in accordance with Section 2.8, during the term of this Agreement and consistent with Array's security obligations set forth in Section 5.3, Array shall retain and maintain all written materials and all other data and information obtained or generated by Array in the course of providing Project Services and Other Services in a secure area
[*] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
reasonably protected from fire, theft and destruction for up to ten (10) years after the expiration or termination of this Agreement. Upon the expiration or termination of this Agreement, such items, at Lilly's option, may be (i) delivered to Lilly or its designee in such form as is then currently in the possession of Array, (ii) retained by Array for Lilly for a period of time mutually agreed upon by the Parties, or (iii) disposed of, at the direction and written request of Lilly, unless such materials are otherwise required to be stored or maintained by Array as a matter of law or regulation. In no event shall Array dispose of any materials, data, or other information obtained or generated by Array in the course of providing Project Services and Other Services without first giving, Lilly sixty (60) days prior written notice of Array's intent to do so.
For those records pertaining to the accuracy and correctness of an Array invoice, such records shall be maintained for a three (3) year period following the year in which such invoice was paid by Lilly.
Array shall keep complete and accurate records pertaining to each Project that are reasonably useful to confirm the efforts. Array shall record all information relating to Projects in written or electronic form. Such records shall be kept separately from written records documenting other research and development that may be conducted by Array. All such written records shall be maintained in a form sufficient to satisfy regulatory authorities. Moreover, from time to time, upon Lilly's request Array will promptly provide copies of any of the records that it maintains for Lilly.
6.2 FINANCIAL AUDIT. Upon written notice from Lilly, Array shall permit Lilly or Lilly's representative to have access during normal business hours to audit the books and records of Array and its permitted subcontractors as may be reasonably necessary to verify the accuracy of any payments made under this Agreement. The audit shall be limited to books and records for any Calendar Year ending not more than twenty-four (24) months prior to the date of such notice. All reports, invoices and payments not disputed as to correctness by Lilly within three (3) years after receipt thereof shall thereafter conclusively be deemed correct for all purposes. Such audit shall be at Lilly's expense unless the audit establishes that Lilly's payments for the period examined exceeded the amount that should have been paid by five percent (5%) or more, in which case Array shall be responsible for the reasonable expenses of such audit. Within thirty (30) days after both Parties have received an audit report, Lilly or Array, as appropriate, will compensate the other Party for any errors or omissions revealed by an audit. This audit night shall survive for a period of two (2) years from the date this Agreement terminates or expires.
6.3 SCIENTIFIC AND LEGAL AUDIT. Upon written notice from Lilly, Array shall permit Lilly or Lilly's representative to have access during normal business hours to audit the books and records of Array and its permitted subcontractors as may be reasonably necessary to confirm that Project Services and Other Services have been performed accurately and in compliance with (i) prevailing professional standards of quality, (ii) applicable Lilly protocols and/or specifications of which Array was reasonably advised, (iii) applicable laws and regulations, and (iv) applicable Work Plans. Such an audit shall be at Lilly's expense unless the audit establishes a material error by Array. In such case, in addition to other remedies Lilly may have against Array for such material error, Array shall be responsible for the reasonable expenses of the audit. This audit
right shall survive for a period of ten (10) years from the date this Agreement terminates or expires.
6.4 QUALITY ASSURANCE AND SECURITY AUDITS; ON-SITE LILLY PERSONNEL. During the term of this Agreement, Lilly retains the right at reasonable times and upon reasonable prior written notice to conduct quality assurance and security audits of Array's research and development facilities, as well as of the facilities of Array's permitted subcontractors (if any), where work on a Project is conducted. Furthermore, from time to time, upon Lilly's reasonable written request, Array will allow Lilly personnel to be located at Array facilities where Projects are conducted to further a particular Project as well as to ensure that such facilities meet Lilly and regulatory authority standards and the security standards set forth in Section 5.3. Array hereby agrees to cooperate with Lilly and take such other acts as may be reasonably necessary or appropriate to carry out the purpose and intent of this Section.
ARTICLE 7
CONFIDENTIALITY AND NON-USE
7.1 DISCLOSURE OF AGREEMENT.
(a) Existence of the Agreement. Except as the Parties otherwise agree, neither Array nor Lilly shall release any information to any Third Party with respect to the existence of this Agreement (including, without limitation, either Party's name) until the Parties issue the press release, which has been agreed to by both Parties and a copy of which is attached as Exhibit A. Afterwards, each Party may use the substance of such press release and the substance of other public announcements of the other Party without prior notice.
(b) Terms of the Agreement. Except as required by law or except for a request from an authorized representative of a U.S. and/or foreign tax authority for a copy of the Agreement, neither Array nor Lilly shall release any information to any Third Party with respect to the terms of this Agreement without the prior written consent of the other. This prohibition includes, but is not limited to, any press releases, educational and scientific conferences, publications, promotional materials, governmental filings, and discussions with public officials and the media.
If a Party determines a release of information regarding the terms of this Agreement is required by law, that Party will notify the other Party as soon as practical and give as much detail as possible in relation to the disclosure required. The Parties will then cooperate with respect to determining what information will actually be released.
If a Party receives a request from an authorized representative of a U.S. and/or foreign tax authority for a copy of the Agreement, that Party may provide a copy of the Agreement to such tax authority representative without advance notice to or the consent or cooperation of the other Party, but the disclosing Party must notify the other Party of the disclosure as soon as practical. The release of any additional information to a tax authority is subject to the notice and cooperation requirements for other disclosures required by law as set forth in this Section.
7.2 ARRAY'S CONFIDENTIALITY OBLIGATIONS. Except upon obtaining Lilly's prior written consent to the contrary, Array agrees that while this Agreement is in effect and for [ * ] after the date this Agreement terminates or expires:
(i) it will not, nor will it permit any of its employees or Permitted Third Parties to, use Lilly Confidential Information other than for the purposes of this Agreement;
(ii) it will not, nor will it permit any of its employees or Permitted Third Parties to, disclose any Lilly Confidential Information to a Third Party (including Third Party consultants, representatives, or agents of Array);
(iii) it will not, nor will it permit any of its employees or Permitted Third Parties to, disclose any Lilly Confidential Information. to any Array employee or Permitted Third Party who does not need to know such Lilly Confidential Information to further a Project; and
(iv) it will not, nor will it permit any of its employees or Permitted Third Parties to, publish or submit for publication Lilly Confidential Information.
A "Permitted Third Party" is a Third Party for whom Lilly has given written consent to Array for Array's disclosure of specified Lilly Confidential Information. For the sole purpose of monitoring its obligations hereunder, Array may retain in its legal files one copy of all Lilly Confidential Information that it receives.
7.3 LILLY'S CONFIDENTIALITY OBLIGATIONS.
(a) Array Confidential Information. Except upon obtaining Array's prior written consent to the contrary, Lilly agrees that while this Agreement is in effect and for [ * ] after the date this Agreement terminates or expires:
(i) it will not, nor will it permit any of its employees or Excepted Third Parties to, use Array Confidential Information other than for the purposes of this Agreement;
[*] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
(ii) it will not, nor will it permit any of its employees or Excepted Third Parties to, disclose any Array Confidential Information to a Third Party;
(iii) it will not, nor will it permit any of its employees or Excepted Third Parties to, disclose any Array Confidential Information to any Lilly employee or Excepted Third Party who does not need to know such Array Confidential Information to further a Project; and
(iv) it will not, nor will it permit any of its employees or Excepted Third Parties to, publish or submit for publication Array Confidential Information.
An "Excepted Third Party" is a Third Party for whom Array has given written consent to Lilly for Lilly's disclosure of specified Array Confidential Information. Lilly agrees that its Excepted Third Parties shall be bound by confidentiality and non-use obligations regarding the terms of this Agreement and Array Confidential Information consistent with Lilly's under Section 7.1 and this Subsection. For the sole purpose of monitoring its obligations hereunder, Lilly may retain in its legal files one copy of all Array Confidential Information that it receives.
(b) Array Processes. Lilly agrees that, while this Agreement is in effect and for [ * ] after the date this Agreement terminates or expires, it may disclose Array Processes to a Third Party only with Array's prior written consent, except that Lilly may, without Array's consent, disclose Array Processes to a Third Party (i) working on behalf of Lilly or (ii) involved with Lilly in a research and development collaboration. Lilly agrees that Third Parties to whom Array Processes are disclosed under this Subsection shall be bound by confidentiality obligations regarding Array Processes consistent with Lilly's under this Subsection.
ARTICLE 8
TERM AND TERMINATION
8.1 TERM. This Agreement shall commence on the Effective Date and shall continue in effect until [ * ] thereafter, unless earlier terminated as provided in this Agreement or extended by mutual written agreement of the Parties.
8.2 LILLY VOLUNTARY TERMINATION. At any time after the Effective Date, with or without cause, Lilly may terminate this Agreement upon providing Array with thirty (30) days advance written notice of the same. Such termination shall be effective upon the expiration of such thirty (30) day period. In the event that Lilly terminates the Agreement under this Section (and only under this Section), Lilly shall pay Array the applicable, one-time lump sum termination payment below:
[*] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
(i) [ * ] Array FTEs. If [ * ] Array FTEs were charged to Projects
during the Calendar Quarter immediately preceding Lilly's notice of
termination, then Lilly shall pay Array an amount equal to [ * ] of the
Array FTE funding obligation incurred by Lilly under Subsection (a) of
Section 4.1 with respect to such [ * ] (i.e., only the amount of such
obligation incurred with respect to Array FTEs, specifically excluding any
other reimbursable items described in Subsection (a) of Section 4.1).
(ii) [ * ] Array FTEs. If [ * ] Array FTEs were charged to Projects
during the Calendar Quarter immediately preceding Lilly's notice of
termination, then Lilly shall pay Array an amount equal to [ * ] of the
Array FTE funding obligation incurred by Lilly under Subsection (a) of
Section 4.1 with respect to such [ * ] (i.e., only the amount of such
obligation incurred with respect to Array FTEs, specifically excluding any
other reimbursable items described in Subsection (a) of Section 4.1).
(iii) [ * ] Array FTEs. If [ * ] Array FTEs were charged to Projects
during the Calendar Quarter immediately preceding Lilly's notice of
termination, then Lilly shall pay Array an amount equal to [ * ] of the
Array FTE funding obligation incurred by Lilly under Subsection (a) of
Section 4.1 with respect to such [ * ] (i.e., only the amount of such
obligation incurred with respect to Array FTEs, specifically excluding any
other reimbursable items described in Subsection (a) of Section 4.1).
(iv) [ * ] Array FTEs. If [ * ] Array FTEs were charged to Projects
during the Calendar Quarter immediately preceding Lilly's notice of
termination, then Lilly shall pay Array an amount equal to [ * ] of the
Array FTE funding obligation incurred by Lilly under Subsection (a) of
Section 4.1 with respect to such [ * ] (i.e., only the amount of such
obligation incurred with respect to Array FTEs, specifically excluding any
other reimbursable items described in Subsection (a) of Section 4.1).
(v) [ * ] Array FTEs. If greater then [ * ] Array FTEs were charged to Projects during the Calendar Quarter immediately preceding Lilly's notice of termination, then Lilly shall pay Array an amount equal to [ * ] of the Array FrE funding obligation incurred by Lilly under Subsection (a) of Section 4.1 with respect to such [ * ] (i.e., only the amount of such obligation incurred with respect to Array FTEs, specifically excluding any other reimbursable items described in Subsection (a) of Section 4.1).
The lump sum termination payment due under this Section shall be paid by Lilly within thirty (30) days of the later of: (i) Lilly's receipt of all reports, records, and other items due to Lilly under Section 2.8; (ii) the completed transfer and assignment of all Project Rights by Array to Lilly in accordance with Section 5. 1; (iii) the completed transfer to Lilly of any and all Lilly
[*] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
Confidential Information that Array possesses; and (iv) the transfer of possession and ownership to Lilly of any equipment, supplies, commodity chemicals, non-commodity chemicals, solvents, reagents, materials, and other capital items that Lilly supplied, leased, or purchased (or reimbursed Array for) as described in Subsection (e) of Section 4.1.
In addition, the lump sum payment due under this Section shall be in lieu of Lilly's payment obligations under Subsection (a) of Section 4.1 during the thirty (30) day notice period. Therefore, Lilly shall neither be required nor obligated to fund Array FTEs under Subsection (a) of Section 4.1 during such thirty (30) day notice period. Similarly, Array FTEs need not work on Projects during such thirty (30) day notice period, except to the extent necessary to wind-down the Projects in an orderly and efficient fashion including, without limitation, (i) furnishing Lilly with all required reports, records, and other items as described in and in accordance with Section 2.8; (ii) transferring and assigning all Project Rights to Lilly in accordance with Section 5. 1; (ill) transferring to Lilly of any and all Lilly Confidential Information that Array possesses; and (iv) transferring ownership and possession to Lilly of any equipment, supplies, commodity chemicals, non-commodity chemicals, solvents, reagents, materials, and other capital items that Lilly either supplied, leased, or purchased (or reimbursed Array for) as described in Subsection (e) of Section 4.1.
8.3 TERMINATION FOR DEFAULT. If a Party believes the other Party is in default of any material obligation under this Agreement, it may give notice of such default to the other Party. Upon receipt of such notice, the defaulting Party shall have thirty (30) days to remedy such default. If such default is not remedied within those thirty (30) days, the Party claiming default may give notice of termination, and termination of this Agreement shall be effective immediately upon the defaulting Party's receipt of such notice.
8.4 TERMINATION DUE TO ARRAY OWNERSHIP CHANGE. In the event that Array is reorganized, acquired by or merged with a Third Party, or substantially all of its assets to which this Agreement relates are acquired by a Third Party (collectively and individually, an "Ownership Change Event"), Lilly may, in its sole discretion, terminate this Agreement upon thirty (30) days written notice to Array (or, if applicable, Array's successor). Lilly may provide Array (or, if applicable, Array's successor) with such notice at any time within twelve (12) months of the occurrence of an Ownership Change Event.
8.5 TERMINATION DUE TO INSOLVENCY OR LIQUIDATION. Upon written notice to the other Party, a Party may terminate this Agreement immediately if: (1) the other Party goes into liquidation, other than for the purpose of a bona fide reorganization, (ii) a receiver or trustee is appointed for the other Party's property or estate, or (iii) the other Party makes an assignment for the benefit of its creditors (whether or not any of the aforesaid acts are the outcome of a voluntary act of the non-terminating Party). Termination of the Agreement under this Section shall be effective as the occurrence of the applicable event.
8.6 SURVIVING RIGHTS AND OBLIGATIONS. The obligations of the Parties under
Section 5.1 (Ownership of Project Rights), Section 5.2 (Procedural Safeguard
Restrictions to Protect Confidentiality and Project Right Ownership), Article 6
(Record Keeping and Audit), Article 7
(Confidentiality), the applicable termination provisions of Article 8 (Termination), Article 9 (Representations & Warranties), Article 10 (Indemnification), and Article 11 (Miscellaneous) will survive the termination or expiration of this Agreement. Also, termination or expiration of this Agreement shall not relieve either Party from obligations that are expressly indicated to survive termination or expiration of the Agreement. Finally, except as specifically provided to the contrary in this Agreement, termination or expiration of the Agreement for any reason shall be without prejudice to any rights that shall have accrued to the benefit of either Party prior to such termination or expiration and shall not relieve the Parties of any obligations accrued hereunder prior to such termination or expiration.
Moreover, to the extent not already done so under this Agreement, Array shall promptly (but in no event later than thirty (30) days after the effective date of the termination of expiration of the Agreement): (i) submit to Lilly all required reports, records, and other items as described in and in accordance with Section 2.8; (ii) transfer ownership and possession to Lilly of all Project Rights and Lilly Confidential Information as described further in Sections 2.8 and 5. 1; and (iii) transfer ownership and possession to Lilly of any equipment, supplies, commodity chemicals, non-commodity chemicals, solvents, reagents, materials, and other capital items that Lilly either supplied, leased, or purchased (or reimbursed Array for) as described in Subsection (e) of Section 4.1.
ARTICLE 9
REPRESENTATIONS AND WARRANTIES
9.1 LILLY'S AUTHORITY TO PERFORM AGREEMENT. Lilly represents and warrants to Array that (i) it is free to enter into and perform this Agreement; (ii) it has no agreement, policy, or other understanding with any other person, firm, or entity exists that would interfere or conflict with its obligations hereunder; and (iii) it has and will maintain all regulatory or governmental permits, licenses, and approvals necessary for it to perform its obligations legally in accordance with this Agreement. Moreover, Lilly represents and warrants to Array that this Agreement is a legal, valid, and binding obligation of it, enforceable against it in accordance with the terms of this Agreement.
9.2 ARRAY'S AUTHORITY TO PERFORM AGREEMENT. Array represents and warrants to Lilly that (i) it is free to enter into and perform this Agreement; (ii) it has no agreement, policy, or other understanding with any other person, firm or entity exists that would interfere or conflict with its obligations hereunder; and (iii) it has and will maintain all regulatory or governmental permits, licenses, and approvals necessary for it to perform its obligations legally in accordance with this Agreement. Moreover, Array represents and warrants to Lilly that this Agreement is a legal, valid, and binding obligation of it, enforceable against it in accordance with the terms of this Agreement.
9.3 NO DEBARMENT. Array hereby represents and warrants that it is in compliance with the provisions of the Generic Drug Enforcement Act of 1992 and covenants that at all times
during this Agreement, it, its employees, and its permitted subcontractors will comply with such Act. Array agrees, upon Lilly's request, to certify in writing that neither it nor its employees or permitted subcontractors have been debarred under the provisions of such Act.
9.4 YEAR 2000. Array hereby represents and warrants that its business systems and/or computer systems and the business systems and/or computer systems of any Third Party on which it is dependent are Year 2000 compliant. Array also covenants to Lilly that it shall use commercially reasonable efforts to ensure its obligations under this Agreement are not materially delayed, interrupted, or otherwise hindered to the detriment of Lilly due to: (i) the business systems and/or computer systems of Array ceasing to function or otherwise malfunctioning because of date-based problems related to the Year 2000; or (ii) the business systems and/or computer systems of any Third Party on which Array is dependent ceasing to function or otherwise malfunctioning because of date-based problems related to the Year 2000.
ARTICLE 10
MUTUAL INDEMNIFICATION
10.1 ARRAY'S RIGHT TO INDEMNIFICATION. Lilly shall indemnify and hold harmless Array, its successors and assigns, and the directors, officers, employees, agents and counsel thereof (the "Array Indemnitees") from and against any and all liabilities, damages, losses, penalties, fines, costs, interest, or expenses, including, without limitation reasonable attorneys, fees, ("Damages") arising from or occurring as a result of a Third Party's, Lilly employee's, or governmental agency's claim, action, suit, judgment, or settlement against an Array Indemnitee that is due to or based upon: (i) the failure of Lilly to disclose to Array any chemical handling and exposure hazards information related to a Project known by Lilly; (ii) any breach of this Agreement by Lilly; (iii) a clinical trial conducted or authorized by Lilly or its designee that is based upon a compound transferred to Lilly by Array; or (iv) a product developed, manufactured, used, sold, or otherwise distributed by or under authority of Lilly or its designees that is based upon a compound transferred to Lilly by Array (a "Third Party Claim"). However, Lilly shall not indemnify or hold harmless Array Indemnitees from a Third Party Claim to the extent that Damages from such Third Party Claim are finally determined to have resulted from the acts or omissions of an Array Indemnitee, including the failure of Array to disclose to Lilly any chemical handling and exposure hazards information known by Array that was related to a compound that it transferred to Lilly.
10.2 LILLY'S RIGHT TO INDEMNIFICATION. Array shall indemnify and hold harmless Lilly, its successors and assigns, and the directors, officers, employees, agents and counsel thereof (the "Lilly Indemnitees") from and against any and all Damages, payroll taxes, employment taxes, and employee benefits arising from or occurring as a result of a Third Party's, Array employee's, or governmental agency's claim, action, suit, judgment, or settlement against a Lilly Indemnitee that is due to or based upon: (i) the failure of Array to disclose to Lilly any chemical handling and exposure hazards information related to a Project
known by Array; (ii) any breach of this Agreement by Array; or (iii) the Parties' classification or characterization of an Array employee or independent contractor as a non-Lilly employee or the denial to an Array employee or independent contractor of benefits extended to Lilly employees (a "Lilly Third Party Claim"). However, Array shall not indemnify or hold harmless Lilly Indemnitees from a Lilly Third Party Claim to the extent that Damages from such Lilly Third Party Claim are finally determined to have resulted from the acts or omissions of a Lilly Indemnitee.
10.3 INDEMNIFICATION NOTICE AND DEFENSE PROCEDURES.
(a) Notice. Promptly after a Lilly Indemnitee or an Array Indemnitee (each, an "Indemnitee") receive notice of a pending or threatened Third Party Claim or Lilly Third Party Claim, as the case may be (an "Action"), such Indemnitee shall give written notice of the Action to the Party to whom the Indemnitee is entitled to look for indemnification pursuant to this Article 10 (the "Indemnifying Party"). However, an Indemnitee's delay in providing or failure to provide such notice shall not relieve the Indemnifying Party of its indemnification obligations, except to the extent it can demonstrate prejudice due to the delay or lack of notice.
(b) Defense. The Indemnifying Party shall be entitled to participate in and, if it so desires, to assume the defense of an Action with counsel reasonably satisfactory to the Indemnitee. Once the Indemnifying Party notifies the Indemnitee of its election to assume the defense of an Action, the Indemnifying Party is not liable to the Indemnitee for the fees of other counsel or any other expenses subsequently incurred by the Indemnitee in connection with such defense, other than reasonable costs of investigation. However, the Indemnitee shall have the right to employ separate counsel and to participate in the defense of an Action (and the Indemnifying Party shall bear the reasonable fees, costs, and expenses of such separate counsel) if:
(i) the use of the counsel chosen by the Indemnifying Party would present such counsel with a conflict of interest;
(ii) the actual or potential defendants in, or targets of, such Action include both the Indemnifying Party and the Indemnitee, and the Indemnitee reasonably concludes that there may be legal defenses available to it that are different from or additional to those available to the Indemnifying Party (in which case the Indemnifying Party shall not have the right to assume the defense of such Action on the Indemnitee's behalf);
(iii) the Indemnifying Party does not employ counsel satisfactory to the Indemnitee to represent the Indemnitee within a reasonable time after the Indemnitee's notice of such Action; or
(iv) the Indemnifying Party authorizes the Indemnitee to employ separate counsel at the Indemnifying Party's expense.
(c) Settlement. If an Indemnifying Party assumes the defense of an Action, no compromise or settlement of such Action may be effected by the Indemnifying Party without the Indemnitee's written consent (which consent shall not be unreasonably withheld or delayed), unless (i) there is no finding or admission of any violation of law or any violation of the rights of any person and no effect on any other claims that may be made against the Indemnitee and (ii) the sole relief provided is monetary damages that are paid in full by the Indemnifying Party.
ARTICLE 11
MISCELLANEOUS
11.1 FURTHER ASSURANCES. Each Party agrees to execute, acknowledge and deliver such further instruments, and to do all such other acts, as may be necessary or appropriate in order to carry out the purposes and intent of this Agreement.
11.2 NO AGENCY; INDEPENDENT CONTRACTOR. It is understood and agreed that nothing in this Agreement shall be construed as authorization for either Array or Lilly to act as agent for the other. Lilly shall not incur any liability for any act or failure to act by employees of Array, and Array shall not incur any liability for any act or failure to act by employees of Lilly. Array shall perform all of its services under this Agreement as an independent contractor, and nothing herein shall be construed as creating any other relationship between the Parties, including, without limitation, a joint venture, partnership, agency relationship or employment relationship. Neither Array nor its employees or agents shall be deemed for any purpose to be employees of Lilly nor participants in any programs, insurance, or other benefits extended to Lilly's employees. Array has sole authority and responsibility to hire, fire, supervise, and otherwise control its employees and is solely responsible for all employee benefits, wages, and employment taxes of its employees.
11.3 COMPLIANCE WITH LAWS. Array hereby covenants that its Project Services and Other Services shall be carried out in compliance with all applicable laws including, without limitation, federal, state, or local laws, regulations, or guidelines governing the work at the site where such work is being conducted. Array further covenants that its Project Services and Other Services will be performed in accordance with current cGLP, cGCP, and cGMP, as applicable.
11.4 COMPLIANCE WITH WORK PLAN AND LILLY PROTOCOLS AND SPECIFICATIONS. Except as otherwise required by law, Array covenants that Project Services and Other Services shall be conducted in compliance with the applicable Work Plan, as well as with applicable Lilly protocols and/or specifications of which Array is reasonably advised.
11.5 INSURANCE. Array has obtained and shall maintain insurance coverage covering risks associated with its business in such amounts as are customary in the industry including, without limitation, covering liabilities that may arise due to injuries to its employees or the negligent performance of Project Services and Other Services hereunder.
11.6 AMENDMENT. This Agreement may not be amended, supplemented, or otherwise modified except by an instrument signed by the Parties.
11.7 NOTICES AND REPORTS. All notices required by this Agreement shall be in writing. All notices and reports shall be deemed given if delivered personally or by registered or certified mail, return receipt requested and postage prepaid or sent by express courier service, to the Parties at the following addresses or such other addresses as may be designated in writing by the respective Parties:
To Lilly: Eli Lilly and Company
Lilly Corporate Center
Indianapolis, Indiana 46285
Attn: General Counsel
To Array: Array BioPharma, Inc.
1885 33rd Street
Boulder, Colorado 80301
Attn: President
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11.8 GOVERNING LAW. This Agreement shall be governed by, and construed in accordance with, the internal laws of the State of Indiana, excluding any choice of law rules which may direct the application of the law of any other jurisdiction.
11.9 ASSIGNMENT. Array may not assign its rights and obligations under this Agreement without Lilly's prior written consent. This Agreement shall be binding upon and shall inure to the benefit of the successors and permitted assigns of the Parties.
11.10 HEADINGS. The captions or headings of the articles, sections, and other subdivisions hereof are inserted only as a matter of convenience or for reference and shall have no effect on the meaning of the provisions.
11.11 SEVERANCE OF CLAUSES. Should any provision of this Agreement be determined by a court of competent jurisdiction to violate or contravene any applicable law or policy, such provision will be severed or modified by the court to the extent necessary to comply with the applicable law or policy, and such modified provision and the remainder of the provisions hereof will continue in full force and effect.
11.12 NO WAIVER. The waiver of a breach hereunder may be effected only by a writing signed by the waiving Party and shall not constitute a waiver of any other breach.
11.13 ENTIRE AGREEMENT. The Agreement constitutes the entire Agreement of the Parties relating to the subject matter.
11.14 FORCE MAJEURE. Neither Party shall be liable to the other for loss or damages or shall have any right to terminate this Agreement for any default or delay attributable to any force majeure event, including but not limited to acts of God, acts of government, war, fire, flood, earthquake, strike, labor dispute and the like, if the Party affected shall give prompt notice of any such cause to the other Party. The Party giving such notice shall thereupon be excused from such of its obligations hereunder as it is thereby disabled from performing for so long as it is so disabled and for sixty (60) days thereafter; provided, however, that such affected Party commences and continues to take reasonable and diligent actions to cure such cause.
11.15 COUNTERPARTS. This Agreement may be executed in one or more counterparts; each of which shall constitute an original, but which together shall constitute the same instrument.
11.16 NO LICENSES. Except as specifically provided for in this Agreement, neither Party grants, expressed or implied, any license to the other Party under this Agreement.
11.17 JOINTLY PREPARED. This Agreement has been prepared jointly and shall not be strictly construed against either Party.
IN WITNESS WHEREOF, each Party, through its duly-authorized representative, has executed this Agreement as of the Effective Date.
ELI LILLY AND COMPANY ARRAY BIOPHARMA, INC. /s/ August M. Watanabe 3/22/2000 /s/ Robert E. Conway 3/20/2000 --------------------------------- ------------------------------ August M. Watanabe, M.D. Robert E. Conway Executive Vice President Chief Executive Officer |
CONFIDENTIAL
AMENDMENT NO. 1
TO
RESEARCH SERVICES AGREEMENT
THIS AMENDMENT NO. 1 TO RESEARCH SERVICES AGREEMENT (the "Amendment") amends the Research Services Agreement, dated March 22, 2000 (the "Agreement"), by and between Eli Lilly and Company, Lilly Corporate Center, Indianapolis, IN 46285 ("Lilly") and Array BioPharma, Inc., 1885 33rd Street, Boulder, CO 80301 ("Array") (together with Lilly and Array, the "Parties") and is made and entered into by and between the Parties, pursuant to Section 11.6 of the Agreement, effective as of July 19, 2000 (the "Amendment Effective Date").
Terms defined in the Agreement will have the same meaning in this Amendment, unless specifically noted otherwise.
1. The following new sections are added to Article 5 of the Agreement:
"5.4 NON-SOLICITATION OF LILLY EMPLOYEES.
(a) Prohibition. Except as provided in Subsection (b) below, while the [ * ] after the termination or expiration of the Agreement, Array agrees that it will not, directly or indirectly, (i) solicit or recruit for employment, (ii) offer to employ, or (iii) employ any Lilly employee.
(b) Exceptions. Array may offer to employ a Lilly employee who approaches Array for the purpose of employment: (i) on his or her own initiative; or (ii) as a result of Array's use of a general solicitation (such as an advertisement) not specifically directed to Lilly employees.
5.5 NON-SOLICITATION OF ARRAY EMPLOYEES.
(a) Prohibition. Except as provided in Subsection (b) below, while the [ * ] after the termination or expiration of the Agreement, Lilly agrees that it will not, directly or indirectly, (i) solicit or recruit for employment, (ii) offer to employ, or (iii) employ any Array employee.
(b) Exceptions. Lilly may offer to employ an Array employee who approaches Lilly for the purpose of employment: (i) on his or her own initiative; or (ii) as a result of Lilly's use of a general solicitation (such as an advertisement) not specifically directed to Array employees.
2. Except as specifically amended herein, all other provisions of the Agreement remain in full force and effect.
IN WITNESS WHEREOF, each Party, through its duly-authorized representative, has executed this Amendment as of the Amendment Effective Date.
ELI LILLY AND COMPANY ARRAY BIOPHARMA, INC.
By: /s/ Robert W. Armstrong, Ph.D. /s/ Robert E. Conway
------------------------------ ------------------------------
Robert W. Armstrong, Ph.D. Robert E. Conway
Vice President, LRL Chief Executive Officer
Discovery Chemistry Research
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EXHIBIT 10.37
[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 506 of the Securities Act of 1933, as amended.
CUSTOM SYNTHESIS
DEVELOPMENT AND SUPPLY AGREEMENT
By and Between
MERCK & CO., INC.
and
ARRAY BIOPHARMA INC.
This Agreement (the "Agreement") confirms the mutual understanding by and between Merck & Co., Inc., a corporation organized and existing under the laws of the State of New Jersey with its principal place of business at One Merck Drive, Whitehouse Station, NJ 08889 ("MERCK"), and Array BioPharma Inc., a corporation organized and existing under the laws of the State of Delaware with a place of business at 1885 33rd Street, Boulder, Colorado 80301 ("ARRAY").
WHEREAS, ARRAY has the ability and expertise to prepare collections of drug-like small molecule compounds which are amenable to high-speed synthesis ("Custom Libraries"); and
WHEREAS, MERCK desires for ARRAY to annually synthesize a certain number of Custom Libraries solely for MERCK on an exclusive basis.
NOW THEREFORE, MERCK AND ARRAY agree as follows:
1. Purpose: Following execution of this Agreement, MERCK shall identify Custom Libraries it would like ARRAY to synthesize. ARRAY agrees to diligently perform services for the purpose of synthetically preparing such Custom Libraries for MERCK (the "Services").
2. Library Design Committee: Within thirty days of the Effective Date of this Agreement, the parties shall form a Library Design Committee ("LDC") comprised of two representatives from each party.
(a) MERCK shall submit all requests for the development of Custom Libraries to the LDC. The LDC shall review all MERCK requests, advise regarding the feasibility of such requests, and approve and/or modify such requests where reasonable.
[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 506 of the Securities Act of 1933, as amended.
(b) The LDC shall meet every other month, at ARRAY's offices in Boulder, Colorado, to review the ongoing status and any scientific issues raised by the Services performed hereunder.
(c) The parties agree that they will cooperate to reasonably resolve any scientific disputes related to the development of Custom Libraries. In the event that the parties cannot reasonable resolve any such disputes, the LDC shall meet to try to reach a final resolution.
3. Materials: MERCK shall provide to ARRAY such non-commercially available materials in MERCK's internal collection necessary for Array to perform the Services. Additionally, Merck shall be responsible for providing or reimbursing (if approved by MERCK prior to purchase) Array for all other reagents which are necessary for the synthesis of any requested Custom Libraries (the aforementioned "non-commercially available materials and the reagents provided or paid for by MERCK shall hereinafter be "Materials"). These Materials are not to be used in humans. It is understood that such materials are provided solely for the Services being performed hereunder and shall not be used for any other purpose nor shall such samples or any derivatives, analogs, modifications or components thereof be transferred, delivered or disclosed to any third party without the advance written consent of MERCK. Any unused Materials shall be returned to MERCK promptly upon completion of such Services or otherwise disposed of in accordance with instructions from MERCK.
4. Custom Library Supply:
(a) ARRAY shall develop and provide approximately [ * ] Custom Libraries for MERCK each year. Each compound provided within a Custom Library shall be provided in [ * ] mg amounts and in two sets of vials provided by MERCK. The number of compounds per Custom Library will vary; but ARRAY hereby agrees to synthesize approximately [ * ] compounds per year with approximately [ * ] compounds per Custom Library.
(b) The Custom Libraries generated hereunder and all compounds included therein shall be the sole and exclusive property of MERCK. ARRAY shall deliver to MERCK, each Custom Library [ * ] of the requested amount for each compound within a Custom Library, accompanied by a writing, in English, describing the step-wise synthetic procedure to prepare each compound within the Custom Libraries ("Product Report"), HPLC analysis (detection technique to be determined by the LDC on a Custom Library by Custom Library basis) and mass spectral (MS) analyses to prove chemical identity and confirm minimum purity of [ * ] and an average purity of at least [ * ]. MERCK shall have no obligation to accept or pay for any Custom Libraries for which any of this data is not provided.
(c) [ * ]
[ * ] Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
5. Term: The Term of this Agreement shall be [ * ] years with the Services commencing on [ * ] (the "Effective Date") and ending on [ * ], unless sooner terminated pursuant to Article 15 herein.
6. Amount: Each time MERCK requests the development of a Custom Library, MERCK shall pay a non-refundable except as provided under Article 15(b)(2), process development fee, of [ * ] per compound, for such Custom Library. ARRAY shall have no obligation to develop or provide Custom Libraries which are not approved by the LDC pursuant to Article 2(a). MERCK shall have no obligation to make any payment hereunder until its Custom Library Request is approved by the LDC pursuant to Article 2(a). Within thirty days after receipt of any Custom Library compound(s), MERCK shall pay ARRAY an additional and final amount of [ * ] per compound meeting the specifications set forth herein. If MERCK fails to notify ARRAY within thirty days of its receipt of compound(s) that such compounds do not meet the applicable specifications, then such compound(s) shall be deemed accepted. Within thirty days after receiving the remaining compound(s) for each Custom Library and the Product Report, MERCK shall pay ARRAY an additional and final amount of [ * ] per compound meeting the specifications set forth herein in such final Custom Library delivery. If MERCK fails to notify ARRAY within thirty days of its receipt of a final Custom Library delivery and Product Report , that such Custom Library compound(s) do not meet the applicable specifications or that the Product Report is incomplete, then such Custom Library compounds and Product Report shall be deemed accepted. MERCK shall have no obligation to make any payments whatsoever or bear any costs or expenses for any Custom Libraries other than those set forth hereunder. Additionally, MERCK shall pay ARRAY for [ * ], quarterly in advance, starting on the Effective Date at an annual rate per FTE of [ * ]. All fees and schedule payments to Array shall be adjusted on an annual basis to reflect the aggregate increase in the Producer Price Index for Pharmaceutical Manufacturers (Table 3 - Producer Price Indexes for Selected Commodity Groupings Unadjusted Index Commodity Code 06-3) during the preceding year.
7. Confidentiality: ARRAY agrees to keep confidential and not to use, except for the purpose described in Article 1 above, all information supplied by MERCK and all information, reports and Custom Libraries generated by ARRAY as a result of the Services performed hereunder. These obligations of confidentiality and non-use shall continue at all times beyond the term of this Agreement. This Agreement shall not restrict ARRAY's use or disclosure of information which (i) is in the public domain by use and/or publication before its receipt from MERCK; (ii) was already in ARRAY's possession prior to receipt from MERCK, except if such information was received or developed under a prior agreement with MERCK; (iii) is properly obtained by ARRAY from a third party which has a valid legal right to disclose such information to ARRAY and is not under a confidentiality obligation to MERCK; or (iv) is required to be disclosed by a Court of competent jurisdiction provided ARRAY gives MERCK prompt notice of such disclosure requirement.
[ * ] Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
8. Reports/ Use of Information: ARRAY shall provide MERCK with written reports on a monthly basis for each of the Custom Libraries, and the Product Report upon delivery of each Custom Library as outlined in Articles 4 and 6 of this Agreement.
[ * ]
9. [ * ]
10. Compliance with Law: ARRAY shall conduct the Services in accordance with
all applicable laws, rules and regulations, including without limitation,
all current governmental regulatory requirements concerning Good Laboratory
Practices. ARRAY hereby certifies that it will not or has not employed or
otherwise used, in performing the Services, any person debarred under
Section 306 (a) or (b) of the Federal Food, Drug and Cosmetic Act.
[ * ] Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
11. Limitation of Liability: MERCK assumes no responsibility and shall have no liability for the conduct of the Services, testing or other work performed by ARRAY under this Agreement. Notwithstanding the foregoing, ARRAY assumes no responsibility and shall have no liability for any use or other disposition of the compound(s) by MERCK or its Affiliates.
12. Indemnification
(a) ARRAY hereby agrees to indemnify, defend and hold harmless, MERCK, its subsidiaries and Affiliates and their respective officers, employees and directors against any and all claims for liability, loss, damages, costs or expenses (including attorneys' fees and expenses and costs of investigation) brought by a third party, which any of them may incur, suffer or be required to pay as the result of any damage suffered or alleged to be suffered, including, without limitation, death or personal injury and any direct, consequential, special and/or punitive damages, which result from the gross negligence or willful misconduct of ARRAY in the course of performing the Services performed by ARRAY, hereunder, provided, however, that such loss, liability or damage is not attributable to the fraud, gross negligence, or willful misconduct of MERCK.
(b) MERCK hereby agrees to indemnify, defend and hold harmless, ARRAY, its subsidiaries and Affiliates and their respective officers, employees and directors against any and all liability, loss, damages, costs or expenses (including attorneys' fees and expenses and costs of investigation) which any of them may incur, suffer or be required to pay as the result of any damage suffered or alleged to be suffered, including, without limitation, death or personal injury and any direct, consequential, special and/or punitive damages, for claims that result from the commercialization (including Product Liability) by MERCK of any compound(s) delivered by ARRAY, hereunder, provided, however, that such loss, liability or damage is not attributable to the fraud, gross negligence, or willful misconduct of ARRAY.
13. Use of Name: Neither party shall use the name, trade name, trademark or logo of the other party in any publicity, news releases or advertising related to this Agreement or the subject matter hereof without the prior written consent of the other party. Subject to the foregoing, ARRAY may issue a one-time press-release, (a copy of which is attached hereto as Exhibit A) regarding this Agreement and the Services provided to MERCK, hereunder. Such press-release shall be subject to MERCK's prior review and approval. Thereafter, ARRAY may discuss the specific content of the original press-release with third parties without advance written consent from MERCK, but ARRAY may not issue any other press-release(s) or issue any publicity or advertising using Merck's name, trade name, trademarks or logo, except as expressly stated herein, without the prior written consent of MERCK.
[ * ] Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
14. Governing Law: This Agreement shall be governed by the laws of the State of New Jersey and the United States as applicable herein.
15. Termination:
(a) Following the [ * ] anniversary of this Agreement, MERCK may terminate this Agreement at any time, upon [ * ] written notice. [ * ] following the date that the termination notice is sent shall be considered the "Termination Date." MERCK will have no further financial obligations to ARRAY following the Termination Date.
(b) Either party may terminate this Agreement, at any time, for cause, upon [ * ] written notice if such non-conforming performance is not cured within such [ * ] period. In such event:
(1) [ * ]; and
(2) [ * ]
(c) [ * ]
16. Assignment: [ * ]
17. Force Majeure: Neither party shall be held liable or responsible to the other party nor be deemed to have defaulted under or breached the Agreement for failure or delay in fulfilling or performing any term of the Agreement when such failure or delay is caused beyond the reasonable control of the affected party such as fire, floods, embargoes, war, acts of war, insurrections, riots, civil commotions, strikes, lockouts or other labor disturbances, acts of God or acts, omissions or delays in
[ * ] Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
acting by any governmental authority or the other party. The affected party shall notify the other party of such force majeure circumstances as soon as reasonably practical.
18. Contacts: All notices which are required or permitted hereunder shall be in writing and sufficient if sent by e-mail, telecopier or nationally-recognized overnight courier or sent by registered or certified-mail, postage prepaid, and addressed as follows:
If to MERCK: Merck & Co., Inc.
Attn: Office of the Secretary
One Merck Drive
Whitehouse Station, NJ 08889
With a copy to: [ * ]
If to ARRAY: Array BioPharma, Inc.
Attn: Chief Operating Officer
1885 33rd Street
Boulder, CO 80301
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19. Entire Agreement: This Agreement constitutes the entire agreement between the parties with regard to the Custom Library Services provided by ARRAY hereunder. All express or implied agreements and understandings, either oral or written, heretofore made are expressly merged in and made a part of the Agreement. The Agreement may be amended, or any term hereof modified, only by a written instrument duly executed by both parties hereto.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their duly authorized representatives, effective as of the later date set forth below.
MERCK & CO., INC. ARRAY BIOPHARMA, INC.
By: /s/ Edward M. Scolnick, M.D. /s/ David Snitman
---------------------------- ----------------------------
Title: President Chief Operating Officer
---------------------------- ----------------------------
Date: 9/6/00 8/22/00
---------------------------- ----------------------------
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[ * ] Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
Exhibit A
[ * ]
[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 506 of the Securities Act of 1933, as amended.
EXHIBIT 16.1
SUBSIDIARIES OF THE COMPANY
None
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Selected Financial Data" and "Experts" and to the use of our report dated July 28, 2000 (except for the fourth paragraph of Note 9, as to which the date is September 1, 2000), in the Registration Statement on Form S-1 and related prospectus of Array BioPharma Inc. dated September 15, 2000.
/s/ Ernst & Young LLP
Denver, Colorado
September 15, 2000
|
| ARTICLE 5 |
| THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS OF ARRAY BIOPHARMA INC., AS AND FOR THE YEAR ENDED JUNE 30, 2000 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. |
| PERIOD TYPE | YEAR |
| FISCAL YEAR END | JUN 30 2000 |
| PERIOD START | JUL 01 1999 |
| PERIOD END | JUN 30 2000 |
| CASH | 3,846,407 |
| SECURITIES | 1,937,099 |
| RECEIVABLES | 885,522 |
| ALLOWANCES | 0 |
| INVENTORY | 1,557,376 |
| CURRENT ASSETS | 8,548,093 |
| PP&E | 8,406,154 |
| DEPRECIATION | 1,495,397 |
| TOTAL ASSETS | 15,823,192 |
| CURRENT LIABILITIES | 6,338,200 |
| BONDS | 0 |
| PREFERRED MANDATORY | 0 |
| PREFERRED | 9,835 |
| COMMON | 3,370 |
| OTHER SE | 6,639,364 |
| TOTAL LIABILITY AND EQUITY | 15,823,192 |
| SALES | 0 |
| TOTAL REVENUES | 6,773,634 |
| CGS | 4,402,269 |
| TOTAL COSTS | 4,402,269 |
| OTHER EXPENSES | 4,643,852 |
| LOSS PROVISION | 0 |
| INTEREST EXPENSE | 384,378 |
| INCOME PRETAX | (4,730,418) |
| INCOME TAX | 0 |
| INCOME CONTINUING | (4,730,418) |
| DISCONTINUED | 0 |
| EXTRAORDINARY | 0 |
| CHANGES | 0 |
| NET INCOME | (4,730,418) |
| EPS BASIC | (1.54) |
| EPS DILUTED | (1.54) |