EXHIBIT 10.3
COLLATERAL THERAPEUTICS, INC.
PREFERRED STOCK PURCHASE AGREEMENT
_________________
May 7, 1996
TABLE OF CONTENTS
PAGE
1. Purchase and Sale of Stock..................................... 1
1.1 Sale and Issuance of Preferred Stock..................... 1
1.2 First Closing............................................ 1
1.3 Second Closing........................................... 1
1.4 Delivery................................................. 1
2. Representations and Warranties of the Company.................. 2
2.1 Organization; Good Standing; Qualification............... 2
2.2 Authorization............................................ 2
2.3 Valid Issuance of Preferred and Common Stock............. 2
2.4 Governmental Consents.................................... 3
2.5 Capitalization and Voting Rights......................... 3
2.6 Subsidiaries............................................. 4
2.7 Contracts and Other Commitments.......................... 4
2.8 Related-Party Transactions............................... 4
2.9 Registration Rights...................................... 4
2.10 Permits.................................................. 4
2.11 Compliance with Other Instruments........................ 5
2.12 Litigation............................................... 5
2.13 Disclosure............................................... 5
2.14 Offering................................................. 6
2.15 Title to Property and Assets; Leases..................... 6
2.16 Financial Statements..................................... 6
2.17 Changes.................................................. 6
2.18 Patents and Trademarks................................... 7
2.19 Proprietary Information and Inventions Agreements........ 7
2.20 Tax Returns, Payments, and Elections..................... 7
2.21 Section 83(b) Elections.................................. 7
2.22 Minute Books............................................. 7
2.23 Real Property Holding Corporation........................ 7
3. Representations and Warranties of Investor..................... 7
3.1 Authorization............................................ 7
3.2 Purchase Entirely for Own Account........................ 8
3.3 Reliance Upon Investors' Representations................. 8
3.4 Receipt of Information................................... 8
3.5 Investment Experience.................................... 8
3.6 Accredited Investor...................................... 9
3.7 Restricted Securities.................................... 10
3.8 Legends.................................................. 10
3.9 Public Sale.............................................. 10
3.10 Non U.S. Persons......................................... 11
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4. Conditions of Investor's Obligations at Each Closing........... 11
4.1 Representations and Warranties........................... 11
4.2 Performance.............................................. 11
4.3 Compliance Certificate................................... 11
4.4 Qualifications........................................... 11
4.5 Proceedings and Documents................................ 11
4.6 Due Diligence............................................ 12
4.7 Bylaws................................................... 12
4.8 Board of Directors....................................... 12
4.9 Opinion of Company Counsel............................... 12
4.10 Rights Agreement......................................... 12
4.11 Co-Sale Agreement........................................ 12
4.12 Collaboration Agreement.................................. 12
5. Conditions of the Company's Obligations at Closing............. 12
5.1 Representations and Warranties........................... 12
5.2 Qualifications........................................... 12
5.3 Co-Sale Agreements....................................... 12
5.4 Collaboration Agreement.................................. 13
6. Miscellaneous.................................................. 13
6.1 Entire Agreement......................................... 13
6.2 Survival of Warranties................................... 13
6.3 Successors and Assigns................................... 13
6.4 Governing Law............................................ 13
6.5 Counterparts............................................. 13
6.6 Titles and Subtitles..................................... 13
6.7 Notices.................................................. 13
6.8 Finder's Fees............................................ 14
6.9 Expenses................................................. 14
6.10 Attorneys Fees........................................... 14
6.11 Amendments and Waivers................................... 14
6.12 Severability............................................. 14
6.13 Corporate Securities Law................................. 14
Exhibit A -- Amended and Restated Articles of Incorporation
Exhibit B -- Holders of Common Stock
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COLLATERAL THERAPEUTICS, INC.
PREFERRED STOCK PURCHASE AGREEMENT
THIS PREFERRED STOCK PURCHASE AGREEMENT (this "Agreement") is made as of
the 7th day of May, 1996, by and between Collateral Therapeutics, Inc., a
California corporation (the "Company"), and Schering Berlin Venture Corp., a
Delaware corporation (the "Investor").
THE PARTIES HEREBY AGREE AS FOLLOWS:
1. PURCHASE AND SALE OF STOCK.
1.1 SALE AND ISSUANCE OF PREFERRED STOCK.
(a) The Company shall adopt and file with the Secretary of
State of California on or before the First Closing (as defined below) an Amended
and Restated Articles of Incorporation in the form attached hereto as EXHIBIT A
(the "Restated Articles").
(b) Subject to the terms and conditions of this Agreement, the
Investor agrees to purchase and the Company agrees to sell and issue to the
Investor: (i) 374,532 shares of the Company's Series A Preferred Stock at a
price of $6.675 per share at the First Closing (as defined below); (ii) and
374,532 shares of the Company's Series B Preferred Stock at a price of $6.675
per share at the Second Closing (as defined below). (The Series A Preferred and
Series B Preferred Stock shall hereinafter be referred to as "Preferred Stock.")
1.2 FIRST CLOSING. The purchase and sale of the Series A Preferred
Stock shall take place at the offices of ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, ▇▇▇
▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, at 10:00 a.m., on May 7, 1996,
or at such other time and place as the Company and the Investor shall mutually
agree, either orally or in writing (which time and place are designated as the
"First Closing").
1.3 SECOND CLOSING. The purchase and sale of the Series B Preferred
Stock shall take place within five (5) business days after there has been an
Acceptance of a Qualified Gene by Schering AG, an Affiliate of Investor (as
defined in that certain Collaboration, License and Royalty Agreement dated the
date hereof by and between Schering AG and the Company, the "Collaboration
Agreement") or such condition is waived by the Investor, at such place as the
Company and the Investor shall mutually agree, either orally or in writing
(which time shall be designated as the Second Closing"). (The First Closing and
Second Closing may each be referred to as a "Closing.")
1.4 DELIVERY. At each Closing, the Company shall deliver to the
Investor a certificate representing the shares of Preferred Stock that the
Investor is purchasing at such Closing against payment of the purchase price
therefor by check or wire transfer.
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2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to Investor that, except as set forth on a Schedule of
Exceptions furnished Investor and special counsel for Investor, which exceptions
shall be deemed to be representations and warranties as if made hereunder:
2.1 ORGANIZATION; GOOD STANDING; QUALIFICATION. The Company is a
corporation duly organized, validly existing, and in good standing under the
laws of the State of California, has all requisite corporate power and authority
to own and operate its properties and assets and to carry on its business as now
conducted and as proposed to be conducted, to execute and deliver this
Agreement, that certain Investor Rights Agreement dated the date hereof in a
form mutually agreed upon by the Company and the Investor (the "Rights
Agreement") and that certain Co-Sale Agreement dated the date hereof in a form
mutually agreed upon by the Company, the Investor and the shareholders listed
under the heading "Founders" (the "Founders") on EXHIBIT B hereto (the "Co-Sale
Agreement"), to issue and sell the Preferred Stock and the Common Stock issuable
upon conversion thereof, and to carry out the provisions of this Agreement, the
Rights Agreement, the Co-Sale Agreement and the Restated Articles. The Company
is not qualified to do business as a foreign corporation in any jurisdiction and
such qualification is not now required.
2.2 AUTHORIZATION. All corporate action on the part of the Company,
its officers, directors and shareholders necessary for the authorization,
execution and delivery of this Agreement, the Rights Agreement and the Co-Sale
Agreement, the performance of all obligations of the Company hereunder and
thereunder at the Closing and the authorization, issuance (or reservation for
issuance), sale, and delivery of the Preferred Stock being sold hereunder and
the Common Stock issuable upon conversion thereof has been taken or will be
taken prior to the First Closing, and this Agreement, the Rights Agreement and
the Co-Sale Agreement constitute valid and legally binding obligations of the
Company, enforceable in accordance with their respective terms except (i) as
limited by applicable bankruptcy, insolvency, reorganization, moratorium, and
other laws of general application affecting enforcement of creditors' rights
generally (ii) as limited by laws relating to the availability of specific
performance, injunctive relief, or other equitable remedies, and (iii) to the
extent the indemnification provisions contained in the Rights Agreement may be
limited by applicable federal or state securities law.
2.3 VALID ISSUANCE OF PREFERRED AND COMMON STOCK. The Preferred
Stock that is being purchased by the Investor hereunder, when issued, sold and
delivered in accordance with the terms of this Agreement for the consideration
expressed herein, will be duly and validly issued, fully paid, and
nonassessable, and will be free of restrictions on transfer other than
restrictions on transfer under this Agreement, the Rights Agreement, the Co-Sale
Agreement and the Company's Bylaws and under applicable state and federal
securities laws. The Common Stock issuable upon conversion of the Preferred
Stock purchased under this Agreement has been duly and validly reserved for
issuance and, upon issuance in accordance with the terms of the Restated
Articles, will be duly and validly issued, fully paid, and nonassessable and
will be free of restrictions on transfer other than restrictions on transfer
under this Agreement, the Rights Agreement, the Co-Sale Agreement and the
Company's Bylaws and under applicable state and federal securities laws.
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2.4 GOVERNMENTAL CONSENTS. No consent, approval, qualification,
order or authorization of, or filing with, any local, state or federal
governmental authority is required on the part of the Company in connection with
the Company's valid execution, delivery or performance of this Agreement, the
offer, sale or issuance of the Preferred Stock by the Company or the issuance of
Common Stock upon conversion of the Preferred Stock, except (i) the filing of
the Restated Articles with the Secretary of State of the State of California and
(ii) such filings as have been made prior to the First Closing, except that such
post-closing filings as may be required under applicable state securities laws
which will be timely filed within the applicable periods therefor.
2.5 CAPITALIZATION AND VOTING RIGHTS. The authorized capital
of the Company consists, or will consist prior to the First Closing, of:
(a) PREFERRED STOCK. 749,064 shares of Preferred Stock, no par
value, of which 374,532 shares have been designated Series A Preferred Stock and
374,532 shares have been designated Series B Preferred Stock, up to all of which
will be sold pursuant to this Agreement. The rights, privileges and preferences
of the Preferred Stock will be as stated in the Restated Articles.
(b) COMMON STOCK. 10,000,000 shares of common stock ("Common
Stock"), no par value, of which 2,853,500 shares are issued and outstanding.
(c) The outstanding shares of Common Stock are owned by the
shareholders and in the numbers specified in EXHIBIT B hereto.
(d) The outstanding shares of Common Stock have been issued in
accordance with the registration or qualification provisions of the Securities
Act of 1933, as amended (the "Securities Act") and any relevant state securities
laws or pursuant to valid exemptions therefrom.
(e) Except for (i) the conversion privileges of the Preferred Stock,
(ii) the rights provided in Sections 2.3 and 3.2 of the Rights Agreement, and
(iii) the rights provided in the Co-Sale Agreement and (iv) currently
outstanding options to purchase 146,500 shares of Common Stock, there are not
outstanding any options, warrants, rights (including conversion or preemptive
rights and rights of first refusal) or agreements for the purchase or
acquisition from the Company of any shares of its capital stock. In addition to
the previously mentioned options, the Company has reserved an additional 562,359
shares of its Common Stock for restricted stock purchases or for purchases upon
exercise of options to be granted in the future. The Company is not a party or
subject to any agreement or understanding, and, to the best of the Company's
knowledge, there is no agreement or understanding between any persons that
affects or relates to the voting or giving of written consents with respect to
any security or the voting by a director of the Company.
2.6 SUBSIDIARIES. The Company does not own or control, directly or
indirectly, any interest in any other corporation, association or other business
entity. The Company is not a participant in any joint venture, partnership or
similar arrangement.
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2.7 CONTRACTS AND OTHER COMMITMENTS. The Company does not have any
contract, agreement, lease, commitment or proposed transaction, 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 $50,000, and do not extend for more than one (1) 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 thirty (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 acquisition or disposition
of the Company's technology, shall not be considered to be contracts entered
into in the ordinary course of business.
2.8 RELATED-PARTY TRANSACTIONS. No employee, officer or director of
the Company or member of his or her immediate family thereof is indebted to the
Company, nor is the Company indebted (or committed to make loans or extend or
guarantee credit) to any of them. To the best of the Company's knowledge, none
of such persons has 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 that competes with the
Company, except that employees, officers or directors of the Company and members
of their immediate families may own stock in publicly traded companies that may
compete with the Company. To the best of the Company's knowledge, no officer or
director or any member of their immediate families is, directly or indirectly,
interested in any material contract with the Company.
2.9 REGISTRATION RIGHTS. Except as provided in the Rights
Agreement, the Company is not obligated to register under the Securities Act
any of its presently outstanding securities or any of its securities that may
subsequently be issued.
2.10 PERMITS. The Company has all governmental franchises,
governmental permits, governmental licenses and any similar governmental
authority necessary for the conduct of its business as now being conducted by
it, the lack of which could materially and adversely affect the business,
properties, prospects or financial condition of the Company and believes it can
obtain, without undue burden or expense, any similar authority for the conduct
of its business as planned to be conducted. The Company is not in default in any
material respect under any of such governmental franchises, governmental
permits, governmental licenses or other similar governmental authority.
2.11 COMPLIANCE WITH OTHER INSTRUMENTS. The Company is not in
violation or default in any material respect of any provision of its Restated
Articles or Bylaws or in any material respect of any provision of any mortgage,
indenture, agreement, instrument or contract to which it is a party or by which
it is bound or, to the best of its knowledge, of any federal or state judgment,
order, writ, decree, statute, rule or regulation applicable to the Company. The
execution, delivery and performance by the Company of this Agreement, the Rights
Agreement and the Co-Sale Agreement, and the consummation of the transactions
contemplated hereby and thereby will not result in any such violation or be in
material
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conflict with or constitute, with or without the passage of time or giving of
notice, either a material default under any such provision or an event that
results in the creation of any material lien, charge or encumbrance upon any
assets of the Company or the suspension, revocation, impairment, forfeiture or
nonrenewal of any material permit, license, authorization or approval applicable
to the Company, its business or operations, or any of its assets or properties.
2.12 LITIGATION. There is no action, suit, proceeding or
investigation pending or currently threatened against the Company that questions
the validity of this Agreement, the Rights Agreement or the Co-Sale Agreement or
the right of the Company to enter into such agreements, or to consummate the
transactions contemplated hereby or thereby, or that might result, either
individually or in the aggregate, in any material adverse change in the assets,
business properties, prospects or financial condition of the Company, or in any
material change in the current equity ownership of the Company. The foregoing
includes, without limitation, any action, suit, proceeding or investigation
pending or currently threatened involving the prior employment of any of the
Company's employees, their use in connection with the Company's business of any
information or techniques allegedly proprietary to any of their former
employers, their obligations under any agreements with prior employers, or
negotiations by the Company with potential backers of, or investors in, the
Company or its proposed business. The Company is not a party to, or to the best
of its knowledge, named in any order, writ, injunction, judgment or decree of
any court or government agency or instrumentality. There is no action, suit or
proceeding by the Company currently pending or that the Company currently
intends to initiate.
2.13 DISCLOSURE. The Company has provided Investor with all the
information reasonably available to it without undue expense that Investor has
requested for deciding whether to purchase the Preferred Stock and all
information which the Company believes is reasonably necessary to enable
Investor to make such decision. To the best of the Company's knowledge after
reasonable investigation, neither this Agreement nor any other written
statements or certificates made or delivered in connection herewith contains any
untrue statement of a material fact or omits to state a material fact necessary
to make the statements herein or therein not misleading.
2.14 OFFERING. Subject in part to the truth and accuracy of each
Investor's representations set forth in this Agreement, the offer, sale and
issuance of the Preferred Stock as contemplated by this Agreement are exempt
from the registration requirements of the Securities Act, and neither the
Company nor any authorized agent acting on its behalf will take any action
hereafter that would cause the loss of such exemption.
2.15 TITLE TO PROPERTY AND ASSETS; LEASES. Except (i) for liens for
current taxes not yet delinquent, (ii) for liens imposed by law and incurred in
the ordinary course of business for obligations not past due to carriers,
warehousemen, laborers, materialmen and the like, (iii) for liens in respect of
pledges or deposits under workers' compensation laws or similar legislation, or
(iv) for minor defects in title, none of which, individually or in the aggregate
materially interferes with the use of such property, the Company owns its
tangible property and tangible assets free and clear of all mortgages, liens,
claims and encumbrances.
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With respect to the property and assets it leases, the Company is in compliance
with such leases and, to the best of its knowledge, holds a valid leasehold
interest free of any liens, claims or encumbrances, subject to clauses (a)-(d)
above.
2.16 FINANCIAL STATEMENTS. The Company has delivered to the Investor
its audited financial statements (balance sheet and profit and loss statement,
statement of shareholders' equity and statement of changes in financial position
including notes thereto) at December 31, 1995 and for the fiscal year then ended
and its unaudited financial statements (balance sheet and profit and loss
statement including notes thereto) as at and for the two-month period ended
February 29, 1996 (the "Financial Statements"). The Financial Statements have
been prepared in accordance with general accepted accounting principles applied
on a consistent basis throughout the periods indicated and with each other,
except that unaudited Financial Statements may not contain all footnotes
required by generally accepted accounting principles. The Financial Statements
fairly present the financial condition and operating results of the Company as
of the dates, and for the periods, indicated therein, subject in the case of
unaudited Financial Statements to normal year-end audit adjustments. Except as
set forth in the Financial Statements, the Company has no material liabilities,
contingent or otherwise, other than (i) liabilities incurred in the ordinary
course of business subsequent to February 29, 1996 and (ii) obligations under
contracts and commitments incurred in the ordinary course of business and not
required under generally accepted accounting principles to be reflected in the
Financial Statements, which, in both cases, individually or in the aggregate,
are not material to the financial condition or operating results of the Company.
Except as disclosed in the Financial Statements, the Company is not a guarantor
or indemnitor on any indebtedness of any other person, firm or corporation. The
Company maintains and will continue to maintain a standard system of accounting
established and administered in accordance with generally accepted accounting
principles.
2.17 CHANGES. To the best of the Company's knowledge, since February
29, 1996, there has not been any event or condition of any type that has
materially and adversely affected the business, properties, prospects or
financial condition of the Company.
2.18 PATENTS AND TRADEMARKS. The Company hereby confirms the
representations and warranties made to Schering AG in Sections 12.1(f), (g) and
(h) of the Collaboration Agreement.
2.19 PROPRIETARY INFORMATION AND INVENTIONS AGREEMENTS. Each
employee and officer of the Company has executed a Proprietary Information and
Inventions Agreement substantially in the form or forms that have been delivered
to special counsel for the Investors.
2.20 TAX RETURNS, PAYMENTS, AND ELECTIONS. The Company has filed all
tax returns and reports as required by law. These returns and reports are true
and correct in all material respects. The Company has paid all taxes and other
assessments due, except those contested by it in good faith. The Company has not
elected pursuant to the Internal Revenue Code of 1986, as amended ("Code"), to
be treated as an S corporation or a collapsible corporation pursuant to Section
341(f) of Section 1362(a) of the Code, nor has it made any
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other elections pursuant to the Code (other than elections which relate solely
to methods of accounting, depreciation or amortization) which would have a
material effect on the business, properties, prospects or financial condition of
the Company.
2.21 SECTION 83(B) ELECTIONS. To the best of the Company's
knowledge, all individuals who have purchased shares of the Company's Common
Stock have timely filed elections under Section 83(b) of the Internal Revenue
Code and any analogous provisions of applicable state tax laws.
2.22 MINUTE BOOKS. The copy of the minute books of the Company
provided to Investor's special counsel contain minutes of all meetings of
directors and shareholders and all actions by written consent without a meeting
by the directors and shareholders since the time of incorporation and reflect
all actions by the directors (and any committee of directors) and shareholders
with respect to all transactions referred to in such minutes accurately in all
material respects.
2.23 REAL PROPERTY HOLDING CORPORATION. The Company is not a
real property holding corporation within the meaning of Internal Revenue Code
Section 897(c)(2) and any regulations promulgated thereunder.
3. REPRESENTATIONS AND WARRANTIES OF INVESTOR. Investor hereby
represents and warrants that:
3.1 AUTHORIZATION. Investor represents that it has full power and
authority to enter into this Agreement and that this Agreement constitutes a
valid and legally binding obligation of Investor.
3.2 PURCHASE ENTIRELY FOR OWN ACCOUNT. This Agreement is made with
Investor in reliance upon Investor's representation to the Company, which by
Investor's execution of this Agreement Investor hereby confirms, that the
Preferred Stock to be purchased by Investor and the Common Stock issuable upon
conversion thereof (collectively, the "Securities") will be acquired for
investment for Investor's own account, not as a nominee or agent, and not with a
view to the resale or distribution of any part thereof,
and that Investor has no present intention of selling, granting any
participation in or otherwise distributing the same. By executing this
Agreement, Investor further represents that Investor does not have any contract,
undertaking, agreement or arrangement with any person to sell, transfer or grant
participations to such person or to any third person, with respect to any of the
Securities.
3.3 RELIANCE UPON INVESTORS' REPRESENTATIONS. Investor understands
that the Preferred Stock is not, and any Common Stock acquired on conversion
thereof at the time of issuance may not be, registered under the Securities Act
on the ground that the sale provided for in this Agreement and the issuance of
securities hereunder is exempt from registration under the Securities Act
pursuant to Section 4(2) thereof, and that the Company's reliance on such
exemption is predicated on Investor's representations set forth herein. Investor
realizes that the basis for the exemption may not be present if, notwithstanding
such representations,
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Investor has in mind merely acquiring the Securities for a fixed or determinable
period in the future, or for a market rise, or for sale if the market does not
rise. Investor has no such intention.
3.4 RECEIPT OF INFORMATION. Investor believes it has received all
the information it considers necessary or appropriate for deciding whether to
purchase the Preferred Stock. Investor further represents that it has had an
opportunity to ask questions and receive answers from the Company regarding the
terms and conditions of the offering of the Preferred Stock and the business,
properties, prospects and financial condition of the Company and to obtain
additional information (to the extent the Company possessed such information or
could acquire it without unreasonable effort or expense) necessary to verify the
accuracy of any information furnished to it or to which it had access. The
foregoing, however, does not limit or modify the representations and warranties
of the Company in Section 2 of this Agreement or the right of Investor to rely
thereon.
3.5 INVESTMENT EXPERIENCE. Investor represents that it is
experienced in evaluating and investing in securities of companies in the
development stage and acknowledges that it is able to fend for itself, can bear
the economic risk of its investment, and has such knowledge and experience in
financial or business matters that it is capable of evaluating the merits and
risks of the investment in the Preferred Stock. Investor also represents it has
not been organized for the purpose of acquiring the Preferred Stock.
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3.6 ACCREDITED INVESTOR.
(a) The term "Accredited Investor" as used herein refers to a
person or entity who:
(1) is a director or executive officer of the
Company; or
(2) Any bank as defined in section 3(a)(2) of the Act,
or any savings and loan association or other institution as defined in
section 3(a)(5)(A) of the Act whether acting in its individual or
fiduciary capacity; any broker or dealer registered pursuant to section 15
of the Securities Exchange Act of 1934; insurance company as defined in
section 2(13) of the Act; investment company registered under the
Investment Company Act of 1940 or a business development company as
defined in section 2(a)(48) of that Act; Small Business Investment Company
licensed by the U.S. Small Business Administration under section 301(c) or
(d) of the Small Business Investment Act of 1958; employee benefit
Retirement Income Security Act of 1974, if the investment decision is made
by a plan fiduciary, as defined in section 3(21) of such Act, which is
either a bank, savings and loan association, insurance company, or
registered investment adviser, or if the employee benefit plan has total
assets in excess of $5,000,000 or, if a self-directed plan, with
investment decisions made solely by persons that are accredited investors;
(3) Any private business development company as
defined in section 202(a)(22) of the Investment Advisers Act of 1940;
(4) Any organization described in section 501(c)(3) of
the Internal Revenue Code, corporation, Massachusetts or similar business
trust, or partnership, not formed for the specific purpose of acquiring
the securities offered, with total assets in excess of $5,000,000;
(5) Any natural person whose individual net worth, or
joint net worth with that person's spouse, at the time of his purchase
exceeds $1,000,000;
(6) Any natural person who had an individual income in
excess of $200,000 in each of the two most recent years or joint income
with that person's spouse in excess of $300,000 in each of those years and
has a reasonable expectation of reaching the same income level in the
current year;
(7) Any trust, with total assets in excess of
$5,000,000, not formed for the specific purpose of acquiring the
securities offered, whose purchase is directed by a person who has such
knowledge and experience in financial and business matters that he is
capable of evaluating the merits and risks of the prospective investment;
or
(8) Any entity in which all of the equity owners
are accredited investors.
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(b) Investor further represents to the Company that except as
otherwise disclosed to the Company, in writing, prior to its execution hereof,
Investor is an Accredited Investor and that the capital contribution of the
Investor does not exceed 10% of the Investor's net worth.
3.7 RESTRICTED SECURITIES. Investor understands that the Securities
may not be sold, transferred, or otherwise disposed of without registration
under the Securities Act or an exemption therefrom, and that in the absence of
an effective registration statement covering the Securities or an available
exemption from registration under the Securities Act, the Securities must be
held indefinitely. In particular, Investor is aware that the Securities may not
be sold pursuant to Rule 144 promulgated under the Securities Act unless all of
the conditions of that Rule are met. Among the conditions for use of Rule 144 is
the availability of current information to the public about the Company. Such
information is not now available and the Company has no present plans to make
such information available.
3.8 LEGENDS. To the extent applicable, each certificate or other
document evidencing any of the Securities shall be endorsed with the legends set
forth below, and Investor covenants that, except to the extent such restrictions
are waived by the Company, Investor shall not transfer the shares represented by
any such certificate without complying with the restrictions on transfer
described in the legends endorsed on such certificate:
(a) "THE SHARES REPRESENTED HEREBY HAVE NOT
BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT
OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED,
ASSIGNED, PLEDGED, OR HYPOTHECATED ABSENT AN EFFECTIVE
REGISTRATION THEREOF UNDER SUCH ACT OR COMPLIANCE WITH
RULE 144 PROMULGATED UNDER SUCH ACT, OR UNLESS THE
COMPANY HAS RECEIVED AN OPINION OF COUNSEL, SATISFACTORY
TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION
IS NOT REQUIRED."
(b) Any legend required by the laws of the State of
California, including any legend required by the California Department of
Corporations and Sections 417 and 418 of the California Corporations Code.
3.9 PUBLIC SALE. Investor agrees not to make, without the prior
written consent of the Company, any public offering or sale of the Securities,
or any Common Stock issued upon the conversion thereof, although permitted to do
so pursuant to Rule 144(k) promulgated under the Securities Act, until the
earlier of (i) the date on which the Company effects its initial registered
public offering pursuant to the Securities Act or (ii) the date on which it
becomes a registered company pursuant to Section 12(g) of the Securities
Exchange Act of 1934, as amended, or (iii) five years after the Closing of the
sale of such Stock to Investor by the Company.
10
3.10 NON U.S. PERSONS. If Investor is not a U.S. Person, Investor
hereby represents that it has satisfied itself as to the full observance of the
laws of its jurisdiction in connection with any invitation to subscribe for the
Securities or any use of this Agreement, including (i) the legal requirements
within its jurisdiction for the purchase of the shares of Preferred Stock, (ii)
any foreign exchange restrictions applicable to such purchase, (iii) any
governmental or other consents which may need to be obtained, and (iv) the
income tax and other tax consequences, if any, which may be relevant to the
purchase, holding, redemption, sale or transfer of the Securities. Investor's
subscription and payment for, and its continued beneficial ownership of the
Securities will not violate any applicable securities or other laws of its
jurisdiction.
4. CONDITIONS OF INVESTOR'S OBLIGATIONS AT EACH CLOSING. The
obligations of Investor under subparagraph 1.1(b) of this Agreement are
subject to the fulfillment on or before the applicable Closing of each of the
following conditions:
4.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company contained in Section 2 shall be true on and as of the
applicable Closing with the same effect as though such representations and
warranties had been made on and as of the date of such Closing, except, with
respect to the Second Closing, as otherwise set forth on an updated Schedule of
Exceptions.
4.2 PERFORMANCE. The Company shall have performed and complied with
all agreements, obligations and conditions contained in this Agreement that are
required to be performed or complied with by it on or before each Closing.
4.3 COMPLIANCE CERTIFICATE. The President of the Company shall
deliver to Investor at each Closing a certificate certifying that the conditions
specified in paragraphs 4.1, 4.2, 4.4, 4.7, 4.8, 4.10 and 4.11 have been
fulfilled.
4.4 QUALIFICATIONS. All authorizations, approvals or permits, if
any, of any governmental authority or regulatory body of the United States or of
any state that are required in connection with the lawful issuance and sale of
the Securities pursuant to this Agreement shall be duly obtained and effective
as of each Closing.
4.5 PROCEEDINGS AND DOCUMENTS. All corporate and other proceedings
in connection with the transactions contemplated at each Closing and all
documents incident thereto shall be reasonably satisfactory in form and
substance to the Investor's special counsel, which shall have received all such
counterpart original and certified or other copies of such documents as it may
reasonably request.
4.6 DUE DILIGENCE. Investor shall have completed its due
diligence of the Company, to its reasonable satisfaction.
4.7 BYLAWS. Article III, Section 2 of the Bylaws of the Company
shall be amended to provide that the exact number of directors of the Company
presently authorized shall be eight (8).
11
4.8 BOARD OF DIRECTORS. Upon the request of the Investor, the
Company shall cause one person chosen by the Investor to be elected to the Board
of Directors of the Company.
4.9 OPINION OF COMPANY COUNSEL. Investor shall have received from
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, counsel for the Company, an opinion, dated the
date of each Closing, in form and substance satisfactory to special counsel to
the Investor.
4.10 RIGHTS AGREEMENT. The Company and Investor shall have
entered into the Rights Agreement.
4.11 CO-SALE AGREEMENT. The Company, Investor and each Founder shall
each have entered into a Co-Sale Agreement in a form mutually agreed upon by
those parties.
4.12 COLLABORATION AGREEMENT. The Company and Schering AG shall
have entered into a Collaboration Agreement a form mutually agreed upon by
those parties.
5. CONDITIONS OF THE COMPANY'S OBLIGATIONS AT CLOSING. The
obligations of the Company to Investor under this Agreement are subject to
the fulfillment on or before the applicable Closing of each of the following
conditions by Investor:
5.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Investor contained in Section 3 shall be true on and as of the
applicable Closing with the same effect as though such representations and
warranties had been made on and as of such Closing.
5.2 QUALIFICATIONS. All authorizations, approvals or permits, if
any, of any governmental authority or regulatory body of the United States or of
any state that are required in connection with the lawful issuance and sale of
the Stock pursuant to this Agreement shall be duly obtained and effective as of
each Closing.
5.3 CO-SALE AGREEMENTS. The Company, Investor and each Founder shall
each have entered into a Co-Sale Agreement in a form mutually agreed upon by
those parties.
5.4 COLLABORATION AGREEMENT. The Company and Schering AG shall
have entered into a Collaboration Agreement in a form mutually agreed upon by
those parties.
6. MISCELLANEOUS.
6.1 ENTIRE AGREEMENT. This Agreement and the documents referred to
herein constitute the entire agreement among the parties and no party shall be
liable or bound to any other party in any manner by any warranties,
representations or covenants except as specifically set forth herein or therein.
12
6.2 SURVIVAL OF WARRANTIES. The warranties, representations and
covenants of the Company and Investor contained in or made pursuant to this
Agreement shall survive the execution and delivery of this Agreement, the First
Closing and the Second Closing.
6.3 SUCCESSORS AND ASSIGNS. Except as otherwise provided herein, the
terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and assigns of the parties (including
permitted transferees of any Securities. Nothing in this Agreement, express or
implied, is intended to confer upon any party other than the parties hereto or
their respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
6.4 GOVERNING LAW. This Agreement shall be governed by and construed
under the laws of the State of California as applied to agreements among
California residents entered into and to be performed entirely within
California.
6.5 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
6.6 TITLES AND SUBTITLES. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
6.7 NOTICES. Unless otherwise provided, any notice required or
permitted under this Agreement shall be given in writing and shall be deemed
effectively given upon personal delivery to the party to be notified by hand or
professional courier service or five days after deposit with the United States
Post Office, by registered or certified mail, postage prepaid and addressed to
the party to be notified at the address indicated for such party on the
signature page hereof, or at such other address as such party may designate by
ten (10) days' advance written notice to the other parties.
6.8 FINDER'S FEES. Each party represents that it neither is
nor will be obligated for any finder's fee or commission in connection with
this transaction.
Investor agrees to indemnify and to hold harmless the Company
from any liability for any commission or compensation in the nature of a
finders' fee (and the costs and expenses of defending against such liability or
asserted liability) for which Investor or any of its officers, partners,
employees, or representatives is responsible.
The Company agrees to indemnify and hold harmless Investor
from any liability for any commission or compensation in the nature of a
finder's fee (and the costs and expenses of defending against such liability or
asserted liability) for which the Company or any of its officers, employees or
representatives is responsible.
13
6.9 EXPENSES. Irrespective of whether the Closings are effected,
each party shall pay all costs and expenses that it incurs with respect to the
negotiation, execution, delivery and performance of this Agreement.
6.10 ATTORNEYS FEES. If any action at law or in equity is necessary
to enforce or interpret the terms of this Agreement, the Rights Agreement, the
Co-Sale Agreement or the Restated Articles, the prevailing party shall be
entitled to reasonable attorney's fees, costs and necessary disbursements in
addition to any other relief to which such party may be entitled.
6.11 AMENDMENTS AND WAIVERS. Any term of this Agreement may be
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the holders of
more than 50% of the Common Stock (that has not been sold to the public) issued
or issuable upon conversion of the Preferred Stock. Any amendment or waiver
effected in accordance with this paragraph shall be binding upon each holder of
any securities purchased under this Agreement at the time outstanding (including
securities into which such securities have been converted), each future holder
of all such securities, and the Company.
6.12 SEVERABILITY. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, such provision shall be excluded
from this Agreement and the balance of the Agreement shall be interpreted as if
such provision were so excluded and shall be enforceable in accordance with its
terms.
6.13 CORPORATE SECURITIES LAW. THE SALE OF THE SECURITIES WHICH ARE
THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE COMMISSIONER OF
CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF SUCH SECURITIES OR
THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION FOR SUCH SECURITIES
PRIOR TO SUCH QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF SECURITIES IS EXEMPT
FROM QUALIFICATION BY SECTION 25100, 25102 OR 25105 OF THE CALIFORNIA
CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY
CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED, UNLESS THE SALE IS SO
EXEMPT.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
14
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
COLLATERAL THERAPEUTICS, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇
----------------------------------
▇▇▇▇ ▇▇▇▇▇, President
Address: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
SCHERING BERLIN VENTURE CORP.
By: /s/ Illegible
----------------------------------
Its: TREASURER
Address: ▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇
CEDAR KNOLLS, N.J. 07927
[SIGNATURE PAGE TO PREFERRED STOCK PURCHASE AGREEMENT]
EXHIBIT A
AMENDED AND RESTATED ARTICLES OF INCORPORATION
A-1
AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF COLLATERAL THERAPEUTICS, INC.,
a California Corporation
The undersigned ▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ hereby certify
that:
ONE: They are the duly elected and acting President and Secretary,
respectively, of said corporation.
TWO: The Articles of Incorporation of said corporation shall be
amended and restated to read in full as follows:
ARTICLE I
The name of this corporation is Collateral Therapeutics, Inc.
ARTICLE II
The purpose of this corporation is to engage in any lawful act or activity
for which a corporation may be organized under the General Corporation Law of
California other than the banking business, the trust company business or the
practice of a profession permitted to be incorporated by the California
Corporations Code.
ARTICLE III
A. CLASSES OF STOCK. This corporation is authorized to issue two classes
of stock to be designated, respectively, "Common Stock" and "Preferred Stock."
The total number of shares which the corporation is authorized to issue is Ten
Million Seven Hundred Forty-Nine Thousand Sixty-Four (10,749,064) shares. Ten
Million (10,000,000) shares shall be Common Stock and Seven Hundred Forty-Nine
Thousand Sixty-Four (749,064) shares shall be Preferred Stock. The Preferred
Stock authorized by these Restated Articles of Incorporation shall be issued by
series as set forth herein. The first series of Preferred Stock shall be
designated "Series A Preferred Stock" and shall consist of Three Hundred
Seventy-Four Thousand Five Hundred Thirty-Two (374,532) shares. The second
series of Preferred Stock shall be designated "Series B Preferred Stock" and
shall consist of Three Hundred Seventy- Four Thousand Five Hundred Thirty-Two
(374,532) shares.
B. RIGHTS, PREFERENCES AND RESTRICTIONS OF PREFERRED STOCK. The
rights, preferences, privileges and restrictions granted to and imposed on
the Preferred Stock are as set forth below in this Article III(B).
1. DIVIDEND PROVISIONS. Subject to the rights of series of Preferred
Stock which may from time to time come into existence, the holders of shares of
Series A Preferred Stock and Series B Preferred Stock shall be entitled to
receive dividends, out of any assets legally available therefor, pro-rata and
prior and in preference to any declaration or payment of any dividend (payable
other than in Common Stock or other securities and rights convertible into or
entitling the holder thereof to receive, directly or indirectly, additional
shares of Common Stock of this corporation) on the Common Stock of this
corporation, at the rate of $0.334 per share per annum when, as and if declared
by the Board of Directors. Such dividends shall not be cumulative.
2. LIQUIDATION PREFERENCE.
(a) In the event of any liquidation, dissolution or winding up
of this corporation, either voluntary or involuntary, subject to the rights of
series of Preferred Stock that may from time to time come into existence, the
holders of Series A Preferred Stock and Series B Preferred Stock shall be
entitled to receive, pro-rata and prior and in preference to any distribution of
any of the assets of this corporation to the holders of Common Stock by reason
of their ownership thereof, (i) with respect to the Series A Preferred Stock, an
amount per share equal to the sum of (A) $6.675 for each outstanding share of
Series A Preferred Stock (the "Original Series A Issue Price") and (B) an amount
equal to the sum of (I) five percent (5%) return on the Original Series A Issue
Price, compounded annually from the Series A Purchase Date (as defined herein)
through the date of liquidation, dissolution or winding up of this corporation
and (II) declared but unpaid dividends on each share and (ii) with respect to
the Series B Preferred Stock, an amount per share equal to the sum of (A) $6.675
for each outstanding share of Series B Preferred Stock (the "Original Series B
Issue Price") and (B) an amount equal to the sum of (I) five percent (5%) return
on the Original Series B Issue Price, compounded annually from the Series B
Purchase Date (as defined herein) through the date of liquidation, dissolution
or winding up of this corporation and (II) declared but unpaid dividends on each
share. If upon the occurrence of such event, the assets and funds thus
distributed among the holders of the Series A Preferred Stock and Series B
Preferred Stock shall be insufficient to permit the payment to such holders of
the full aforesaid preferential amounts, then, subject to the rights of series
of Preferred Stock that may from time to time come into existence, the entire
assets and funds of the corporation legally available for distribution shall be
distributed ratably among the holders of the Series A Pre- ferred Stock and
Series B Preferred Stock in proportion to the amount of such stock owned by each
such holder.
(b) After the distributions described in subsection (a) above
have been paid, subject to the rights of series of Preferred Stock which may
from time to time come into existence, the remaining funds and assets of the
corporation available for distribution to shareholders shall be distributed
among the holders of Common Stock pro rata based on the number of shares of
Common Stock held by each.
(c) (i) For purposes of this Section 2, a liquidation,
dissolution or winding up of this corporation shall be deemed to be occasioned
by, or to include, (A) the acquisition of the corporation by another entity by
means of any transaction or series of
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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 corporation); or (B) a sale of all or
substantially all of the assets of the corporation; UNLESS the corporation's
shareholders of record as constituted immediately prior to such acquisition or
sale will, immediately after such acquisition or 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.
(ii) In any of such events, if the consideration received by
the corporation is other than cash, its value will be deemed its fair market
value. Any securities shall be valued as follows:
(A) Securities not subject to investment letter or
other similar restrictions on free marketability covered by (B) below:
(1) If traded on a securities exchange or
through Nasdaq National Market, the value shall be deemed to be the average of
the closing prices of the securities on such exchange over the thirty-day period
ending three (3) days prior to the closing;
(2) If actively traded over-the-counter, the
value shall be deemed to be the average of the closing bid or sale prices
(whichever is applicable) over the thirty-day period ending three (3) days prior
to the closing; and
(3) If there is no active public market, the
value shall be the fair market value thereof, as mutually determined by the
corporation and the holders of at least a majority of the voting power of all
then outstanding shares of Preferred Stock.
(B) The method of valuation of securities subject
to investment letter or other restrictions on free marketability (other than
restrictions arising solely by virtue of a shareholder's status as an affiliate
or former affiliate) shall be to make an appropriate discount from the market
value determined as above in (A) (1), (2) or (3) to reflect the approximate fair
market value thereof, as mutually determined by the corporation and the holders
of at least a majority of the voting power of all then outstanding shares of
such Preferred Stock.
(iii) In the event the requirements of this subsection 2(c)
are not complied with, this corporation shall forthwith either:
(A) cause such closing to be postponed until such
time as the requirements of this Section 2 have been complied with; or
(B) cancel such transaction, in which event the
rights, preferences and privileges of the holders of the Preferred Stock shall
revert to and be the same as such rights, preferences and privileges existing
immediately prior to the date of the first notice referred to in subsection
2(c)(iv) hereof.
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(iv) The corporation shall give each holder of record of
Preferred Stock written notice of such impending transaction not later than
twenty (20) days prior to the shareholders' meeting called to approve such
transaction, or twenty (20) days prior to the closing of such transaction,
whichever is earlier, and shall also notify such holders in writing of the final
approval of such transaction. The first of such notices shall describe the
material terms and conditions of the impending transaction and the provisions of
this Section 2, and the corporation shall thereafter give such holders prompt
notice of any material changes. The transaction shall in no event take place
sooner than twenty (20) days after the corporation has given the first notice
provided for herein or sooner than ten (10) days after the corporation has given
notice of any material changes provided for herein; provided, however, that such
periods may be shortened upon the written consent of the holders of Preferred
Stock that are entitled to such notice rights or similar notice rights and that
represent at least a majority of the voting power of all then outstanding shares
of such Preferred Stock.
3. CONVERSION. The holders of the Preferred Stock shall have
conversion rights as follows (the "Conversion Rights"):
(a) RIGHT TO CONVERT. Each share of Preferred Stock shall be
convertible, at the option of the holder thereof, at any time after the date of
issuance of such share, at the office of this corporation or any transfer agent
for such stock, into such number of fully paid and nonassessable shares of
Common Stock as is determined, with respect to the Series A Preferred Stock, by
dividing the Original Series A Issue Price by the Conversion Price applicable to
such share, determined as hereafter provided, in effect on the date the
certificate is surrendered for conversion and, with respect to the Series B
Preferred Stock, by dividing the Original Series B Issue Price by the Conversion
Price applicable to such share, determined as hereafter provided, in effect on
the date the certificate is surrendered for conversion. The initial Conversion
Price per share for shares of Series A Preferred Stock shall be the Original
Series A Issue Price; provided, however, that the Conversion Price for the
Series A Preferred Stock shall be subject to adjustment as set forth in
subsection 3(d). The initial Conversion Price per share for shares of Series B
Preferred Stock shall be the Original Series B Issue Price as adjusted prior to
issuance as set forth in subsection 3(d)(i)(B); provided, however, that the
Conversion Price for the Series B Preferred Stock shall be subject to further
adjustment as set forth in subsequent subsections of subsection 3(d).
(b) AUTOMATIC CONVERSION. Each share of Preferred Stock shall
automatically be converted into shares of Common Stock at the Conversion Price
at the time in effect for such series of Preferred Stock immediately upon the
earlier of (i) except as provided below in subsection 3(c), the corporation's
sale of its Common Stock in a firm commitment underwritten public offering
pursuant to a registration statement under the Securities Act of 1933, as
amended, the aggregate net proceeds to the corporation of which were not less
than $10,000,000 (provided the corporation has a fully-diluted valuation prior
to such offering of at least $25,000,000) or (ii) the date specified by written
consent or agreement of the holders of a majority of the then-outstanding shares
of Preferred Stock.
(c) MECHANICS OF CONVERSION. Before any holder of Preferred
Stock shall be entitled to convert the same into shares of Common Stock, he
shall surrender the
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certificate or certificates therefor, duly endorsed, at the office of this
corporation or of any transfer agent for the Preferred Stock, and shall give
written notice to this corporation at its principal corporate office, of the
election to convert the same and shall state therein the name or names in which
the certificate or certificates for shares of Common Stock are to be issued.
This corporation shall, as soon as practicable thereafter, issue and deliver at
such office to such holder of Preferred Stock, or to the nominee or nominees of
such holder, a certificate or certificates for the number of shares of Common
Stock to which such holder shall be entitled as aforesaid. Such conversion shall
be deemed to have been made immediately prior to the close of business on the
date of such surrender of the shares of Preferred Stock to be converted, and the
person or persons entitled to receive the shares of Common Stock issuable upon
such conversion shall be treated for all purposes as the record holder or
holders of such shares of Common Stock as of such date. If the conversion is in
connection with an underwritten offering of securities registered pursuant to
the Securities Act of 1933, the conversion may, at the option of any holder
tendering Preferred Stock for conversion, be conditioned upon the closing with
the underwriters of the sale of securities pursuant to such offering, in which
event the person(s) entitled to receive the Common Stock upon conversion of the
Preferred Stock shall not be deemed to have converted such Preferred Stock until
immediately prior to the closing of such sale of securities.
(d) CONVERSION PRICE ADJUSTMENTS OF PREFERRED STOCK FOR
CERTAIN DILUTIVE ISSUANCES, SPLITS AND COMBINATIONS. The Conversion Price of the
Series A Preferred Stock and Series B Preferred Stock shall be subject to
adjustment from time to time as follows:
(i) (A) If the corporation shall issue, after the
date upon which any shares of Series A Preferred Stock were first issued (the
"Series A Purchase Date") and prior to the date four (4) months following the
Series A Purchase Date (the "Series A Ratchet Date"), any Additional Stock (as
defined below) without consideration or for a consideration per share less than
the Conversion Price for such series in effect immediately prior to the issuance
of such Additional Stock, the Conversion Price for such Series A Preferred Stock
in effect immediately prior to each such issuance shall forthwith (except as
otherwise provided in this clause (i)) be adjusted to a price equal to the price
paid per share for such Additional Stock. The period of time from the Series A
Purchase Date through the Series A Ratchet Date shall be known as the "Series A
Ratchet Period."
(B) If the corporation shall issue, after the
Series A Purchase Date and prior to the date upon which any shares of Series B
Preferred Stock were first issued (the "Series B Purchase Date"), any Additional
Stock (as defined below) without consideration or for a consideration per share
less than the initial Conversion Price for Series B Preferred Stock, the initial
Conversion Price for such Series B Preferred Stock shall forthwith (except as
otherwise provided in this clause (i)) be adjusted to a price equal to the price
paid per share for such Additional Stock.
(C) If the corporation shall issue, after the
Series A Ratchet Date (with respect to the Series A Preferred Stock) or after
the Series B Purchase Date (with respect to the Series B Preferred Stock), any
Additional Stock (as defined below)
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without consideration or for a consideration per share less than the Conversion
Price for such series in effect immediately prior to the issuance of such
Additional Stock, the Conversion Price for such series in effect immediately
prior to each such issuance shall forthwith (except as otherwise provided in
this clause (i)) be adjusted to a price determined by multiplying such
Conversion Price by a fraction, the numerator of which shall be the number of
shares of Common Stock outstanding immediately prior to such issuance plus the
number of shares of Common Stock that the aggregate consideration received by
the corporation for such issuance would purchase at such Conversion Price; and
the denominator of which shall be the number of shares of Common Stock
outstanding immediately prior to such issuance plus the number of shares of such
Additional Stock.
(D) No adjustment of the Conversion Price for
the Preferred Stock shall be made in an amount less than one cent per share,
provided that any adjustments which are not required to be made by reason of
this sentence shall be carried forward and shall be either taken into account in
any subsequent adjustment made prior to three (3) years from the date of the
event giving rise to the adjustment being carried forward, or shall be made at
the end of three (3) years from the date of the event giving rise to the
adjustment being carried forward. Except to the limited extent provided for in
subsections (G)(3) and (G)(4), no adjustment of such Conversion Price pursuant
to this subsection 3(d)(i) shall have the effect of increasing the Conversion
Price above the Conversion Price in effect immediately prior to such adjustment.
(E) In the case of the issuance of Common
Stock for cash, the consideration shall be deemed to be the amount of cash paid
therefor before deducting any reasonable discounts, commissions or other
expenses allowed, paid or incurred by this corporation for any underwriting or
otherwise in connection with the issuance and sale thereof.
(F) In the case of the issuance of the 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 value thereof as determined by
the Board of Directors irrespective of any accounting treatment.
(G) In the case of the issuance (whether
before, on or after the applicable Purchase Date) of options to purchase or
rights to subscribe for Common Stock, securities by their terms convertible into
or exchangeable for Common Stock or options to purchase or rights to subscribe
for such convertible or exchangeable securities, the following provisions shall
apply for all purposes of this subsection 3(d)(i) and subsection 3(d)(ii):
(1) The aggregate maximum number of
shares of Common Stock deliverable upon exercise of such options to
purchase or rights to subscribe for Common Stock shall be deemed to
have been issued at the time such options or rights were issued and
for a consideration equal to the consideration (determined in the
manner provided in subsections 3(d)(i)(E) and (d)(i)(F)), if any,
received by the corporation upon the issuance of such options
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or rights plus the minimum exercise price provided in such options
or rights (without taking into account potential antidilution
adjustments) for the Common Stock covered thereby.
(2) The aggregate maximum number of
shares of Common Stock deliverable upon conversion of or in exchange
for any such convertible or exchangeable securities or upon the
exercise of options to purchase or rights to subscribe for such
convertible or exchangeable securities and subsequent conversion or
exchange thereof shall be deemed to have been issued at the time
such securities were issued or such options or rights were issued
and for a consideration equal to the consideration, if any, received
by the corporation for any such securities and related options or
rights (excluding any cash received on account of accrued interest
or accrued dividends), plus the minimum additional consideration, if
any, to be received by the corporation upon the conversion or
exchange of such securities or the exercise of any related options
or rights (the consideration in each case to be determined in the
manner provided in subsections 3(d)(i)(E) and (d)(i)(F)).
(3) In the event of any change in the
number of shares of Common Stock deliverable or in the consideration
payable to this corporation upon exercise of such options or rights
or upon conversion of or in exchange for such convertible or
exchangeable securities, including, but not limited to, a change
resulting from the antidilution provisions thereof, the Conversion
Price of the Series A Preferred Stock or Series B Preferred Stock,
to the extent in any way affected by or computed using such options,
rights or securities, shall be recomputed to reflect such change,
but no further adjustment shall be made for the actual issuance of
Common Stock or any payment of such consideration upon the exercise
of any such options or rights or the conversion or exchange of such
securities.
(4) Upon the expiration of any such
options or rights, the termination of any such rights to convert or
exchange or the expiration of any options or rights related to such
convertible or exchangeable securities, the Conversion Price of the
Series A Preferred Stock or Series B Preferred Stock, to the extent
in any way affected by or computed using such options, rights or
securities or options or rights related to such securities, shall be
recomputed to reflect the issuance of only the number of shares of
Common Stock (and convertible or exchangeable securities which
remain in effect) actually issued upon the exercise of such options
or rights, upon the conversion or exchange of such securities or
upon the exercise of the options or rights related to such
securities.
(5) The number of shares of Common
Stock deemed issued and the consideration deemed paid therefor
pursuant to subsections 3(d)(i)(G)(1) and (2) shall be appropriately
adjusted to reflect any
-8-
change, termination or expiration of the type described in either
subsection 3(d)(i)(G)(3) or (4).
(ii) "Additional Stock" shall mean any shares of
Common Stock issued (or deemed to have been issued pursuant to subsection
3(d)(i)(G)) by this corporation after the Purchase Date other than:
(A) Common Stock issued pursuant to a
transaction described in subsection 3(d)(iii) hereof: or
(B) shares of Common Stock issuable or issued to
employees, consultants, directors or vendors (if in transactions
with primarily non-financing purposes) of this corporation directly
or pursuant to a stock option plan or restricted stock plan approved
by the Board of Directors of this corporation at any time when the
total number of shares of Common Stock so issuable or issued (and
not repurchased at cost by the corporation in connection with the
termination of employment) does not exceed 562,359 or
(C) shares of Common Stock issued or issuable (I)
in a public offering before or in connection with which all
outstanding shares of Preferred Stock will be converted to Common
Stock or (II) upon exercise of warrants or rights granted to
underwriters in connection with such a public offering; or
(D) securities issued pursuant to the acquisition
of another business entity or business segment of any such entity by
this corporation by merger, purchase of substantially all the assets
or organization whereby the corporation will own not less than
fifty-one (51%) percent of the voting power of such a business
entity or business segment of any such entity; or
(E) securities issued (I) to vendors or customers
or to other persons in similar commercial situations with the
corporation or (II) in connection with obtaining lease financing,
whether issued to a lessor, guarantor or other person.
(iii) In the event the corporation should at any time
or from time to time after the Purchase Date fix a record date for the
effectuation of a split or subdivision of the outstanding shares of Common Stock
or the determination of holders of Common Stock entitled to receive a dividend
or other distribution payable in additional shares of Common Stock or other
securities or rights convertible into, or entitling the holder thereof to
receive directly or indirectly, additional shares of Common Stock (hereinafter
referred to as "Common Stock Equivalents") without payment of any consideration
by such holder for the additional shares of Common Stock or the Common Stock
Equivalents (including the additional shares of Common Stock issuable upon
conversion or exercise thereof), then, as of such record date (or the date of
such dividend distribution, split or subdivision if no record
-9-
date is fixed), the Conversion Price of the Series A Preferred Stock or Series B
Preferred Stock shall be appropriately decreased so that the number of shares of
Common Stock issuable on conversion of each share of such series shall be
increased in proportion to such increase of the aggregate of shares of Common
Stock outstanding and those issuable with respect to such Common Stock
Equivalents with the number of shares issuable with respect to Common Stock
Equivalents determined from time to time in the manner provided for deemed
issuances in subsection 3(d)(i)(G).
(iv) If the number of shares of Common Stock
outstanding at any time after the Purchase Date is decreased by a combination of
the outstanding shares of Common Stock, then, following the record date of such
combination, the Conversion Price for the Series A Preferred Stock or Series B
Preferred Stock shall be appropriately increased so that the number of shares of
Common Stock issuable on conversion of each share of such series shall be
decreased in proportion to such decrease in outstanding shares.
(e) OTHER DISTRIBUTIONS. In the event this corporation shall
declare a distribution payable in securities of other persons, evidences of
indebtedness issued by this corporation or other persons, assets (excluding cash
dividends) or options or rights not referred to in subsection 3(d)(iii), then,
in each such case for the purpose of this subsection 3(e), the holders of the
Preferred Stock shall be entitled to a proportionate share of any such
distribution as though they were the holders of the number of shares of Common
Stock of the corporation into which their shares of Preferred Stock are
convertible as of the record date fixed for the determination of the holders of
Common Stock of the corporation entitled to receive such distribution.
(f) RECAPITALIZATIONS. If at any time or from time to time
there shall be a recapitalization of the Common Stock (other than a subdivision,
combination or merger or sale of assets transaction provided for elsewhere in
this Section 3 or Section 2) provision shall be made so that the holders of the
Preferred Stock shall thereafter be entitled to receive upon conversion of the
Preferred Stock the number of shares of stock or other securities or property of
the Company or otherwise, to which a holder of Common Stock deliverable upon
conversion would have been entitled on such recapitalization. In any such case,
appropriate adjustment shall be made in the application of the provisions of
this Section 3 with respect to the rights of the holders of the Preferred Stock
after the recapitalization to the end that the provisions of this Section 3
(including adjustment of the Conversion Price then in effect and the number of
shares purchasable upon conversion of the Preferred Stock) shall be applicable
after that event as nearly equivalent as may be practicable.
(g) NO IMPAIRMENT. This corporation will not, by amendment of
its Articles of Incorporation or through any reorganization, recapitalization,
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 hereunder by this
corporation, but will at all times in good faith assist in the carrying out of
all the provisions of this Section 3 and in the taking of all such action as may
be necessary or appropriate in order to protect the Conversion Rights of the
holders of the Preferred Stock against impairment.
-10-
(h) NO FRACTIONAL SHARES AND CERTIFICATE AS TO
ADJUSTMENTS.
(i) No fractional shares shall be issued upon
the conversion of any share or shares of the Preferred Stock, and the number of
shares of Common Stock to be issued shall be rounded to the nearest whole share.
Whether or not fractional shares are issuable upon such conversion shall be
determined on the basis of the total number of shares of Preferred Stock the
holder is at the time converting into Common Stock and the number of shares of
Common Stock issuable upon such aggregate conversion.
(ii) Upon the occurrence of each adjustment or
readjustment of the Conversion Price of Series A Preferred Stock or Series B
Preferred Stock pursuant to this Section 3, this corporation, at its expense,
shall promptly compute such adjustment or readjustment in accordance with the
terms hereof and prepare and furnish to each holder of such series of Preferred
Stock a certificate setting forth such adjustment or readjustment and showing in
detail the facts upon which such adjustment or readjustment is based. This
corporation shall, upon the written request at any time of any holder of such
series of Preferred Stock, furnish or cause to be furnished to such holder a
like certificate setting forth (A) such adjustment and readjustment, (B) the
Conversion Price for such series of Preferred Stock at the time in effect, and
(C) the number of shares of Common Stock and the amount, if any, of other
property which at the time would be received upon the conversion of a share of
such series of Preferred Stock.
(i) NOTICES OF RECORD DATE. In the event of any taking by this
corporation of a record of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any
dividend (other than a cash dividend) or other distribution, 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, this
corporation shall mail to each holder of Preferred Stock, at least 20 days prior
to the date specified therein, a notice specifying the date on which any 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.
(j) RESERVATION OF STOCK ISSUABLE UPON CONVERSION. This
corporation shall at all times reserve and keep available out of its authorized
but unissued shares of Common Stock, solely for the purpose of effecting the
conversion of the shares of the Preferred Stock, such number of its shares of
Common Stock as shall from time to time be sufficient to effect the conversion
of all outstanding shares of the Preferred Stock; and if at any time the number
of authorized but unissued shares of Common Stock shall not be sufficient to
effect the conversion of all then outstanding shares of the Preferred Stock, in
addition to such other remedies as shall be available to the holder of such
Preferred Stock, this corporation will take such corporate action as may, in the
opinion of its counsel, be necessary to increase its authorized but unissued
shares of Common Stock to such number of shares as shall be sufficient for such
purposes, including, without limitation, engaging in best efforts to obtain the
requisite shareholder approval of any necessary amendment to these articles.
-11-
(k) NOTICES. Any notice required by the provisions of this
Section 3 to be given to the holders of shares of Preferred Stock shall be
deemed given if deposited in the United States mail, postage prepaid, and
addressed to each holder of record at his address appearing on the books of this
corporation.
4. VOTING RIGHTS.
(a) GENERAL VOTING RIGHTS. In addition to the voting rights
described in Sections 5 and 6 of this Article III, the holder of each share of
Preferred Stock shall have the right to one vote for each share of Common Stock
into which such Preferred Stock could then be converted, and with respect to
such vote, such holder shall have full voting rights and powers equal to the
voting rights and powers of the holders of Common Stock, and shall be entitled,
notwithstanding any provision hereof, to notice of any shareholders' meeting in
accordance with the bylaws of this corporation, and shall be entitled to vote,
together with holders of Common Stock, with respect to any question upon which
holders of Common Stock have the right to vote. Fractional votes shall not,
however, be permitted and any fractional voting rights available on an
as-converted basis (after aggregating all shares into which shares of Preferred
Stock held by each holder could be converted) shall be rounded to the nearest
whole number (with one-half being rounded upward).
(b) ELECTION OF DIRECTORS. With respect to the election of
directors, the holders of Series A Preferred Stock and Series B Preferred Stock,
voting separately as a class, shall have the right to elect one (1) director,
and the holders of Common Stock and Preferred Stock, voting together as a single
class, shall have the right to elect all other directors.
5. PROTECTIVE PROVISIONS. Subject to the rights of series of
Preferred Stock which may from time to time come into existence, so long as any
shares of Series A Preferred Stock and Series B Preferred Stock are outstanding,
this corporation shall not without first obtaining the approval (by vote or
written consent, as provided by law) of the holders of at least a majority of
the then outstanding shares of Series A Preferred Stock and Series B Preferred
Stock:
(a) authorize, create or issue, or obligate itself to issue
(including by reclassification of any outstanding shares), any other equity
security, including any other security convertible into or exercisable for any
equity security having a preference superior to any series of
currently-outstanding Preferred Stock with respect to dividends or upon
liquidation; or
(b) alter or change the rights, preferences, privileges or
powers of, or the restrictions provided for the benefit of, the shares of Series
A Preferred Stock or Series B Preferred Stock so as to affect adversely such
shares.
6. ADDITIONAL PROTECTIVE PROVISION. Subject to the rights of
series of Preferred Stock which may from time to time come into existence,
this corporation shall not:
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(a) sell, convey or otherwise dispose of or encumber all or
substantially all of its property or business or merge into or consolidate with
any other corporation (other than a wholly-owned subsidiary corporation) or
effect any transaction or series of related transactions in which more than
fifty percent (50%) of the voting power of the corporation is disposed of
without first obtaining the approval (by vote or written consent, as provided by
law) (a) for a period of two years following the Purchase Date (the "Protective
Period"), by the holders of at least a majority of the then outstanding shares
of Series A Preferred Stock and Series B Preferred Stock and (b) following the
Protective Period, by the holders of at least a majority of the then outstanding
shares of Preferred Stock.
(b) issue during the Series A Ratchet Period any security (I)
to vendors or customers or to other persons in similar commercial situations
with the corporation or (II) in connection with obtaining lease financing,
whether issued to a lessor, guarantor or other person without first obtaining
the approval (by vote or written consent, as provided by law) of the holders of
at least a majority of the then outstanding shares of Series A Preferred Stock.
7. STATUS OF CONVERTED STOCK. In the event any shares of Preferred
Stock shall be converted pursuant to Section 3 hereof, the shares so converted
shall be cancelled and shall not be issuable by the corporation. The Articles of
Incorporation of this corporation shall be appropriately amended to effect the
corresponding reduction in the corporation's authorized capital stock.
8. REPURCHASE OF SHARES. In connection with repurchases by this
Corporation of its Common Stock pursuant to its agreements with certain of the
holders thereof, Sections 502 and 503 of the California General Corporation Law
shall not apply in whole or in part with respect to such repurchases.
C. COMMON STOCK.
1. DIVIDEND RIGHTS. Subject to the prior rights of holders of all
classes of stock at the time outstanding having prior rights as to dividends,
the holders of the Common Stock shall be entitled to receive, when and as
declared by the Board of Directors, out of any assets of the corporation legally
available therefor, such dividends as may be declared from time to time by the
Board of Directors.
2. LIQUIDATION RIGHTS. Upon the liquidation, dissolution or
winding up of the corporation, the assets of the corporation shall be
distributed as provided in Section 2 of Division (B) of this Article III
hereof.
3. REDEMPTION. The Common Stock is not redeemable.
4. VOTING RIGHTS. The holder of each share of Common Stock shall
have the right to one vote, and shall be entitled to notice of any shareholders'
meeting in accordance with the bylaws of this corporation, and shall be entitled
to vote upon such matters and in such manner as may be provided by law.
-13-
ARTICLE IV
A. The liability of the directors of this corporation for monetary
damages shall be eliminated to the fullest extent permissible under
California law.
B. This corporation is authorized to provide indemnification of agents (as
defined in Section 317 of the California Corporations Code) through bylaw
provisions, agreements with the agents, vote of shareholders or disinterested
directors, or otherwise in excess of the indemnification otherwise permitted by
Section 317 of the California Corporations Code, subject only to applicable
limits set forth in Section 204 of the California Corporations Code with respect
to actions for breach of duty to the corporation and its shareholders.
* * *
THREE: The foregoing amendment has been approved by the Board of
Directors of said corporation.
FOUR: The foregoing amendment was approved by the holders of the requisite
number of shares of said corporation in accordance with Sections 902 and 903 of
the California General Corporation Law; the total number of outstanding shares
of each class entitled to vote with respect to the foregoing amendment was
2,851,500 shares of Common Stock. The number of shares voting in favor of the
foregoing amendment equaled or exceeded the vote required, such required vote
being a majority of the outstanding shares of Common Stock.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
-14-
IN WITNESS WHEREOF, the undersigned have executed this certificate on
October March 10, 1996.
/s/ ▇▇▇▇ ▇▇▇▇▇, Ph.d.
-------------------------------------------
▇▇▇▇ ▇▇▇▇▇, President
/s/ ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------------------
▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Secretary
The undersigned certify under penalty of perjury that they have read
the foregoing Restated Articles of Incorporation and know the contents thereof,
and that the statements therein are true.
Executed at San Diego, California, on March 10, 1996.
/s/ ▇▇▇▇ ▇▇▇▇▇, Ph.D.
-------------------------------------------
▇▇▇▇ ▇▇▇▇▇, President
/s/ ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------------------
▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Secretary
CERTIFICATE OF CORRECTION
OF
AMENDED AND RESTATED ARTICLES OF INCORPORATION
▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ certify that:
1. They are the president and the secretary, respectively, of
COLLATERAL THERAPEUTICS, INC., a California corporation.
2. The name of the corporation is COLLATERAL THERAPEUTICS, INC.
3. The instrument being corrected is entitled "Amended and Restated
Articles of Incorporation of COLLATERAL THERAPEUTICS, INC., a California
corporation," and said instrument was filed with the Secretary of State of
California on March 18, 1996.
4. Section B(3)(d)(i)(A) of Article III of the Amended and Restated
Articles of Incorporation, as corrected, shall read as follows:
"(i) (a) If the corporation shall issue, after the date upon which
any shares of Series A Preferred Stock were first issued (the "Series A
Purchase Date") and prior to the date which is the earlier of (I) the
Series B Purchase Date (as defined below) or (II) eighteen (18) months
following the Series A Purchase Date (collectively, the "Series A Ratchet
Date"), or (III) the effective date of any termination pursuant to Section
15.2(f) of the Collaboration, License and Royalty Agreement dated as of
March 29, 1996 by Schering AG, any Additional Stock (as defined below)
without consideration or for a consideration per share less than the
Conversion Price for such series in effect immediately prior to the
issuance of such Additional Stock, the Conversion Price for such Series A
Preferred Stock in effect immediately prior to each such issuance shall
forthwith (except as otherwise provided in this clause (i)) be adjusted to
a price equal to the price paid per share for such Additional Stock. The
period of time from the Series A Purchase Date through the Series A
Ratchet Date shall be known as the "Series A Ratchet Period." "
5. That said Section B(3)(d)(i)(A) of Article III, as corrected, conforms
the wording of the amended article to that adopted by the board of directors and
shareholders.
-1-
We further declare under penalty of perjury under the laws of the State of
California that the matters set forth in this certificate are true and correct
of my own knowledge.
DATE: March 18, 1996
/s/ ▇▇▇▇ ▇▇▇▇▇, Ph.D.
-----------------------------------
▇▇▇▇ ▇▇▇▇▇, President
/s/ ▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Secretary
-2-
EXHIBIT B
HOLDERS OF COMMON STOCK
NAME NUMBER OF SHARES OF COMMON STOCK
FOUNDERS
▇▇▇▇▇ ▇▇▇▇▇▇▇ 142,687
▇▇▇▇ ▇▇▇▇ 110,887
▇▇▇▇▇▇ ▇▇▇▇▇▇(1)(2) 506,688
▇▇▇▇▇ ▇▇▇▇ 139,887
H. ▇▇▇▇ ▇▇▇▇▇▇▇ 941,688
▇▇▇▇ ▇▇▇▇▇ 706,688
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 192,688
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 110,887
OTHER SHAREHOLDERS
▇▇▇▇ ▇▇▇▇▇▇ 1,400
---------
Total 2,853,500
=========
--------
(1) ▇▇▇▇▇▇ ▇▇▇▇▇▇'▇ shares are held by the ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Separate
Property Trust.
(2) ▇▇▇▇▇▇ ▇▇▇▇▇▇ has indicated that 25,000 of his shares have been
transferred to his son ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and 25,000 of his shares
have been transferred to his son ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇.
B-1
SCHEDULE OF EXCEPTIONS
TO STOCK PURCHASE AGREEMENT
THE FOLLOWING MATTERS ARE EXCEPTIONS TO THE REPRESENTATIONS AND WARRANTIES
OF COLLATERAL THERAPEUTICS, INC., A CALIFORNIA CORPORATION (THE "COMPANY"), AS
SET FORTH IN THE PREFERRED STOCK PURCHASE AGREEMENT (THE "AGREEMENT"). THE
SECTION NUMBERS IN THIS SCHEDULE OF EXCEPTIONS CORRESPOND TO THE SECTION NUMBERS
IN THE AGREEMENT; HOWEVER, ANY INFORMATION DISCLOSED HEREIN UNDER ANY SECTION
NUMBER SHALL BE DEEMED TO BE DISCLOSED AND INCORPORATED INTO ANY OTHER SECTION
NUMBER UNDER THE AGREEMENT WHERE SUCH DISCLOSURE WOULD OTHERWISE BE APPROPRIATE.
WHERE THE TERMS OF A CONTRACT OR OTHER DISCLOSURE ITEM HAVE BEEN SUMMARIZED OR
DESCRIBED IN THIS SCHEDULE OF EXCEPTIONS, SUCH SUMMARY OR DESCRIPTION DOES NOT
PURPORT TO BE A COMPLETE STATEMENT OF THE MATERIAL TERMS OF SUCH CONTRACT OR
OTHER ITEM. ANY TERMS DEFINED IN THE AGREEMENT SHALL HAVE THE SAME MEANING WHEN
USED IN THIS SCHEDULE OF EXCEPTIONS AS WHEN USED IN THE AGREEMENT UNLESS THE
CONTEXT OTHERWISE REQUIRES.
NOTHING HEREIN CONSTITUTES AN ADMISSION OF ANY LIABILITY OR OBLIGATION ON
THE PART OF THE COMPANY NOR AN ADMISSION AGAINST THE COMPANY'S INTEREST. THE
INCLUSION OF ANY SCHEDULE HEREIN OR ANY EXHIBIT HERETO SHOULD NOT BE INTERPRETED
AS INDICATING THAT THE COMPANY HAS DETERMINED THAT SUCH AN AGREEMENT OR OTHER
MATTER IS NECESSARILY MATERIAL TO THE COMPANY. THE INVESTORS ACKNOWLEDGE THAT
CERTAIN INFORMATION CONTAINED IN THESE SCHEDULES MAY CONSTITUTE MATERIAL
CONFIDENTIAL INFORMATION RELATING TO THE COMPANY WHICH MAY NOT BE USED FOR ANY
PURPOSE OTHER THAN THAT CONTEMPLATED IN THE AGREEMENT.
2.5 CAPITALIZATION AND VOTING RIGHTS.
Reference is made to Sections 2.7(c) and (d) below.
2.7 CONTRACTS AND OTHER COMMITMENTS.
(a) Reference is made to Section 2.16 below.
(b) The Company is a party to that certain Security Agreement between
the Company and the Investor dated August 16, 1995.
(c) The Company has issued and sold 2,744,800 shares of Common Stock
to certain officers, directors and employees of the Company
pursuant to certain Restricted Stock Purchase Agreements, under
which the Company has a right of first refusal to purchase such
shares. Pursuant to such Restricted Stock Purchase Agreements,
1,372,400 shares have a vesting start date of August 9, 1995 and
vest monthly in equal installments for thirty-six (36) months
thereafter, with immediate vesting upon death or disability.
With respect to the unvested shares, the Company has, in addition
to its right of first refusal, a repurchase right under certain
circumstances. The remainder of the shares were fully vested
upon issuance.
(d) The Company has issued and sold 108,700 shares of Common Stock to
certain employees, consultants and outside advisors of the Company
pursuant to certain Stock Purchase Agreements, under which the
Company has a right of first refusal with respect to such shares.
(e) The Company entered into consulting agreements with Drs. ▇▇▇▇▇▇
▇▇▇▇▇▇ and H. ▇▇▇▇ ▇▇▇▇▇▇▇ on October 1, 1995. Such agreements
are to be effective only upon the Company's completion of an
initial capital funding of at least $2,000,000 within 220 days of
October 1, 1995. Drs. ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ each received
restricted shares of Common Stock in connection with their
consulting agreements. See Section 2.7(d) above. ▇▇. ▇▇▇▇▇▇▇
currently has an employment contract with The Regents of the
University of California (the "University") and his primary
responsibility is to the University. University employees are
restricted as the amount of time they may devote to providing
consulting services to outside companies.
(f) The Company is a party to that certain Exclusive License Agreement
between the Company and the University dated September 27, 1995 (the
"UC Agreement"), a copy of which was previously provided to the
Investor.
(g) Effective November 27, 1995, the Company entered into a certain
agreement (the "Veterans Agreement") with the Veterans Medical
Research Foundation (the "Foundation"), under which the
Foundation provides certain research services for up to
twenty-four (24) months. Amounts payable under the Veterans
Agreement aggregate $224,000 per year. Due to financial
constraints and based on subsequent negotiations with the
Foundation, the Company has suspended payments payable thereunder
pending the First Closing.
(h) On June 15, 1995, the Company entered into a certain Sublease
Agreement with Gensia, Inc. ("Gensia") for up to 4431 square feet
located at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇. The
term of the sublease expires on December 31, 1996. Due to
financial constraints, the Company has suspended monthly lease
payments to Gensia and, based on negotiations with Gensia, the
Company has deferred the payment of rent pending the First
Closing. Rent payable to Gensia totalled approximately $28,000
as of March 31, 1996.
(i) The Company has outstanding obligations consisting of legal expenses
deferred and unpaid salaries payable to certain employees,
consultants and advisors for services provided through March 31,
1996.
(j) The Company intends to enter into the Collaboration Agreement in
connection with the First Closing.
2.8 RELATED PARTY TRANSACTIONS.
-2-
(a) ▇▇. ▇▇▇▇▇▇▇, a member of ▇▇▇▇▇▇▇, Phleger & ▇▇▇▇▇▇▇▇ LLP, is a
member of the Company's Board of Directors and a holder of 142,687
shares of the Company's Common Stock.
(b) ▇▇▇▇▇ ▇▇▇▇, a member of the Company's Board of Directors and a
holder of 139,887 shares of the Company's Common Stock, is Chief
Executive Officer of Gensia, which is the landlord for the Company's
executive offices. Reference is made to Section 2.7(h) above.
2.10 PERMITS.
The Company was incorporated April 3, 1995 and has conducted no business
to date other than the execution of the UC Agreement, the Veterans
Agreement, consulting agreements and other start-up and initial financing
activities. The Company has obtained no franchises, permits, licenses and
similar authority necessary for the conduct of its business as planned to
be conducted.
2.11 COMPLIANCE WITH OTHER INSTRUMENTS.
Reference is made to Sections 2.7(g), (h) and (i) above.
2.16 FINANCIAL STATEMENTS.
(a) The Company has borrowed money from the Investor in the aggregate
amount of $500,000, evidenced by those certain Secured Promissory
Notes dated as of August 16, 1995 and October 12, 1995 (the
"Notes"). The Notes are due and payable on demand by the Investor on
or after December 31, 1996. The amounts owing under the Notes shall
be forgiven for a reduction in a milestone payment outlined in the
Collaboration Agreement.
(b) Reference is made to Section 2.7(b) above.
(c) The Financial Statements provided to Investor are unaudited and
subject to to review by Ernst & Young LLP, the Company's independent
auditors.
2.19 PROPRIETARY INFORMATION AND INVENTIONS AGREEMENTS.
The Company will use its best efforts to ensure that each employee and
officer of the Company has executed a Proprietary Information and
Inventions Agreement immediately following the First Closing.
2.20 TAX RETURNS, PAYMENTS AND ELECTIONS.
The Company has filed a Form 7004 application with the Internal Revenue
Service to receive an automatic extension of the time to file its 1995
income tax return.
-3-
2.21 SECTION 83(B) ELECTIONS.
Each of the holders of Common Stock has filed elections under Section
83(b) of the Code and any analogous provisions of applicable state tax
law.
-4-
COLLATERAL THERAPEUTICS, INC.
SCHEDULE OF EXCEPTIONS, DATED JUNE 10, 1997
STOCK PURCHASE AGREEMENT, DATED AS OF
MAY 7.1996 IN CONNECTION WITH SECOND CLOSING
THE FOLLOWING MATTERS ARE EXCEPTIONS TO THE REPRESENTATIONS AND WARRANTIES
OF COLLATERAL THERAPEUTICS, INC., A CALIFORNIA CORPORATION (THE "COMPANY"), AS
SET FORTH IN THE PREFERRED STOCK PURCHASE AGREEMENT, DATED AS OF MAY 7, 1996
(THE "AGREEMENT"), AS OF JUNE 10, 1997. THE SECTION NUMBERS IN THIS SCHEDULE OF
EXCEPTIONS CORRESPOND TO THE SECTION NUMBERS IN THE AGREEMENT; HOWEVER, ANY
INFORMATION DISCLOSED HEREIN UNDER ANY SECTION NUMBER SHALL BE DEEMED TO BE
DISCLOSED AND INCORPORATED INTO ANY OTHER SECTION NUMBER UNDER THE AGREEMENT
WHERE SUCH DISCLOSURE WOULD OTHERWISE BE APPROPRIATE. WHERE THE TERMS OF A
CONTRACT OR OTHER DISCLOSURE ITEM HAVE BEEN SUMMARIZED OR DESCRIBED IN THIS
SCHEDULE OF EXCEPTFONS, SUCH SUMMARY OR DESCRIPTION DOES NOT PURPORT TO BE A
COMPLETE STATEMENT OF THE MATERIAL TERMS OF SUCH CONTRACT OR OTHER ITEM. ANY
TERMS DEFINED IN THE AGREEMENT SHALL HAVE THE SAME MEANING WHEN USED IN THIS
SCHEDULE OF EXCEPTIONS AS WHEN USED IN THE AGREEMENT UNLESS THE CONTEXT
OTHERWISE REQUIRES.
NOTHING HEREIN CONSTITUTES AN ADMISSION OF ANY LIABILITY OR OBLIGATION ON
THE PART OF THE COMPANY NOR AN ADMISSION AGAINST THE COMPANY'S INTEREST. THE
INCLUSION OF ANY SCHEDULE HEREIN OR ANY EXHIBIT HERETO SHOULD NOT BE INTERPRETED
AS INDICATING THAT THE COMPANY HAS DETERMINED THAT SUCH AN AGREEMENT OR OTHER
MATTER IS NECESSARILY MATERIAL TO THE COMPANY. THE INVESTORS ACKNOWLEDGE THAT
CERTAIN INFORMATION CONTAINED IN THESE SCHEDULES MAY CONSTITUTE MATERIAL
CONFIDENTIAL INFORMATION RELATING TO THE COMPANY WHICH MAY NOT BE USED FOR ANY
PURPOSE OTHER THAN THAT CONTEMPLATED IN THE AGREEMENT.
SECTION 2.5. CAPITALIZATION AND VOTING RIGHTS. As of June 10, 1997 there were
3,103,500 shares of Common Stock issued and outstanding and 374,532 shares of
Series A Preferred Stock issued and outstanding. In addition, as of June 10,
1997 stock options to purchase up to 312,500 shares of Common Stock were
outstanding, and the weighted average purchase price of such stock options was
$0.3407 per share. Since the inception of the Company, stock options covering
the purchase of up to 562,500 shares of Common Stock have been issued, of which
stock options to purchase up to 497,500 shares of Common Stock have been issued
pursuant to the Company's 1995 Stock Option/Stock Issuance Plan (hereafter the
"Stock Plan"). As of June 10, 1997, the Company's Board of Directors has
authorized the issuance of up to 708,859 shares of Common Stock pursuant to the
Stock Plan. As of June 10, 1997, 211,359 shares of Common Stock were available
for future award under the Stock Plan.
COLLATERAL THERAPEUTICS, INC.
SCHEDULE OF EXCEPTIONS
PAGE 2 OF 8
SECTION 2.7. CONTRACTS AND OTHER COMMITMENTS. Set forth below is a summary
of all contracts and commitments of the Company as of the date hereof greater
than $50,000:
PRIVATE PLACEMENT EQUITY OFFERING. The Company has entered into
negotiations with the Welcome Trust Limited and ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ with
respect to the sale of up to 387,500 shares of Common Stock to raise
$3,100,000 to support the Company's research programs and corporate
development activities.
COLLABORATION, LICENSE AND ROYALTY AGREEMENT WITH SCHERING ▇▇ - ▇▇▇▇
THERAPY TO PROMOTE ANGIOGENESIS. On May 6, 1996, the Company entered into
a strategic alliance with Schering AG pursuant to the Collaboration,
License and Royalty Agreement covering the development and
commercialization of gene therapy products to promote anglogenesis.
UNIVERSITY OF CALIFORNIA LICENSE AGREEMENT - ANAIOAENESIS GENE Therapy. On
September 27, 1995, the Company entered into a worldwide exclusive license
agreement with the Regents of the University of California for certain
technology relating to a patent application filed by the University of
California relating to angiogenesis gene therapy, based on scientific
discovery research conducted at the laboratory of *** at the *** and the
Department of Medicine of the University of California, San Diego. This
agreement provides the Company with exclusive rights to develop and
commercialize technology covered by patent applications that have been
filed in the United States and in foreign countries. Pursuant to such
agreement, the Company has, agreed to pay the University of California a
license fee totalling *** payable in *** installments over a *** and to
pay the University of California an annual royalty fee of *** based on
net sales of products covered by such patents. Under the terms of this
agreement, the Company is required to satisfy certain due diligence
provisions with respect to the timely development and commercialization
of products covered by the patent application thereunder, and pay certain
minimum annual royalty payments following successful commercial
development of a product. As of June 10, 1997, the Company has paid a
total of $75,000 pursuant to the terms of this agreement.
UNIVERSITY OF CALIFORNIA LICENSE AGREEMENT - GENE THERAPY FOR CONGESTIVE
HEART FAILURE. On January 22, 1997, the Company entered into an exclusive
worldwide license agreement with the Regents of the University of
California for certain technology relating to a patent application filed
by the University of California relating to a gene therapy approach for
congestive heart failure based on myocardial adrenergic responsiveness,
which resulted from scientific discovery research conducted at the
laboratory of ***
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
COLLATERAL THERAPEUTICS, INC.
SCHEDULE OF EXCEPTIONS
PAGE 3 OF 8
*** at the *** and the Department of Medicine of the University of
California, San Diego. This agreement provides the Company with exclusive
rights to develop and commercialize technology covered by patent
applications that have been filed in the United States and in foreign
countries. Pursuant to such agreement, the Company has agreed to pay the
University of California a license fee totalling *** payable in ***
installments over a *** and to pay the University of California an annual
royalty fee of *** based on net sales of products covered by such
patents. Under the terms of this agreement, the Company is required to
satisfy certain due diligence provisions with respect to the timely
development and commercialization of products covered by patent
applications thereunder, and pay certain minimum annual royalty payments
following successful commercial development of a product.
As of June 10, 1997, the Company has paid a total of $100,000 pursuant to
the terms of this agreement.
UNIVERSITY OF CALIFORNIA LICENSE AGREEMENT - ANGIOGENIC GENE THERAPY for
CONGESTIVE HEART FAILURE. The Company entered into a letter agreement with
The Regents of the University of California to exclusively negotiate an
exclusive worldwide license to develop and commercialize certain
technology relating to gene angiogenic gene therapy for heart failure,
based on scientific discovery research conducted at the laboratory of ***
at the *** *** and the Department of Medicine of the University of
California, San Diego. Based on the terms and conditions of the proposed
agreement, the Company will have exclusive rights to develop and
commercialize technology covered by patent applications that have been
filed in the United States and in foreign countries. Pursuant to such
proposed agreement, the Company has agreed to pay the University of
California a license fee totalling *** payable in *** installments over a
*** and to pay the University of California an annual royalty fee of ***
based on net sales of products covered by such patents. Under the terms
of this agreement, the Company is required to satisfy certain due
diligence provisions with respect to the timely development and
commercialization of products covered by patent applications thereunder,
and pay certain minimum annual royalty payments following successful
commercial development of a product. Final draft agreements have been
circulated between the parties and the Company believes that this
agreement will be finalized within the next sixty (60) days.
NEW YORK UNIVERSITY LICENSE AGREEMENT - USE OF FIBROBLAST GROWTH FACTOR 4
FOR GENE THERAPY FOR CORONARY ARTERY DISEASE, CONGESTIVE HEART FAILURE AND
PERIPHERAL VASCULAR DISEASE. On March 24, 1997, the Company has entered
into an exclusive worldwide license agreement with New York University for
the use of certain technology relating to issued patents and
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
COLLATERAL THERAPEUTICS, INC.
SCHEDULE OF EXCEPTIONS
PAGE 4 OF 8
patent applications owned by New York University covering the Company's
use of Fibroblast Growth Factor 4 (hereafter "FGF-4") for gene therapy
products developed and commercialized by the Company, or its licensees,
for the treatment of coronary artery disease, congestive heart failure and
peripheral vascular disease. This agreement provides the Company with
exclusive rights to develop and commercialize technology covered by
patents that have been filed in the United States and in foreign
countries. Pursuant to such agreement, the Company has agreed to pay New
York University (i) an initial license fee of *** ; (ii) an annual license
fee of *** until first commercial sale of a product pursuant to the
Agreement; (iii) milestone payments of *** payable in *** installments
based on the Company's successful achievement of certain *** benchmarks,
for each product developed thereunder; (iv) *** research funding totalling
*** payable in *** installments to support Company directed research
activities focused on the development of the Company's core technology;
and (v) an annual royalty fee of *** based on net sales of products
covered by such patents. Under the terms of this agreement, the Company
is required to satisfy certain due diligence provisions with respect to
the timely development and commercialization of products covered by
patents thereunder, and pay certain minimum annual royalty payments
following successful commercial development of a product. As of
June 10, 1997, the Company has paid license fees totaling $100,000
and research funding totalling $100,000 pursuant to the terms of this
agreement.
AMRAD OPERATIONS PTY LTD. AND ▇▇▇▇▇▇ INSTITUTE FOR CANCER RESEARCH LICENSE
AGREEMENT - USE OF VASCULAR ENDOTHELIAL GROWTH FACTOR B GENES FOR GENE
THERAPY FOR CORONARY ARTERY DISEASE, CONGESTIVE HEART FAILURE AND
PERIPHERAL VASCULAR DISEASE. On March 25, 1997, the Company has entered
into an exclusive worldwide license agreement with AMRAD Operations Pty
Ltd and the ▇▇▇▇▇▇ Institute for Cancer Research (hereafter
"AMRAD/▇▇▇▇▇▇") covering the use of certain technology relating to patent
applications filed by AMRAD/▇▇▇▇▇▇ covering the Company's use of Vascular
Endothelial Growth Factor B (hereafter "VEGF-B") for gene therapy products
developed and commercialized by the Company, or its licensees, for the
treatment of coronary artery disease, congestive heart failure and
peripheral vascular disease. This agreement provides the Company with
exclusive rights to develop and commercialize technology covered by
patents that have been filed in the United States and in foreign
countries. Pursuant to such agreement, the Company has agreed to pay
AMRAD/▇▇▇▇▇▇ (i) license fees totalling *** payable in *** installments
during the period from *** ; (ii) a *** license fee upon the ***
*** ; (III)
milestone
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
COLLATERAL THERAPEUTICS, INC.
SCHEDULE OF EXCEPTIONS
PAGE 5 OF 8
payments totalling up to *** based on the Company's successful achievement
of certain product development benchmarks; (iv) an additional *** payment
for each product developed beyond the initial product for a medical
indication; and (v) an annual royalty fee *** on net sales of products
covered by such patents issued thereunder. Pursuant to the
terms of this agreement, the Company is required to satisfy certain due
diligence provisions with respect to the timely development and
commercialization of products covered by patents thereunder, and pay
certain minimum annual royalty payments following successful commercial
development of a product. As of June 10, 1997, the Company has paid a
total of $250,000 pursuant to the terms of this agreement.
DIMOTECH LTD. AND TECHNION RESEARCH & DEVELOPMENT FOUNDATION LICENSE
AGREEMENT - USE OF VASCULAR ENDOTHELIAL GROWTH FACTOR GENE FOR GENE
THERAPY CARDIOVASCULAR DISEASE. On October 17, 1996, the Company entered
into an exclusive worldwide license agreement with Dimotech Ltd. and the
Technion Research and Development Foundation located at the Gurtwith
Science Based Industrial Center in Haifa, Israel (hereafter "Technion")
relating to a patent application filed by Technion covering the Company's
use of a novel vascular endothelial growth factor (hereafter "VEGF/CTIO1")
for gene therapy products developed and commercialized by the Company, or
its licensees, for the treatment of cardiovascular disease. This agreement
provides the Company with exclusive rights to develop and commercialize
technology covered by patents that have been filed in the United States
and in foreign countries. Pursuant to such agreement, the Company has
agreed to pay Technion (i) license fees totalling *** payable in ***
installments based on the Company's successful achievement of certain ***
benchmarks; and (ii) an annual royalty fee of *** based on net sales of
products covered by patents. Under the terms of this agreement, the
Company is required to satisfy certain due diligence provisions with
respect to the timely development and commercialization of products
covered by patents thereunder, and pay certain minimum annual royalty
payments following successful commercial development of a product. As of
June 10, 1997, the Company has paid a total of $16,000 pursuant to the
terms of this agreement.
VETERANS' MEDICAL RESEARCH FOUNDATION. On November 13, 1996, the Company
entered into an agreement with the Veterans' Medical Research Foundation
(the "Medical Research Foundation') which operates at the Veterans'
Affairs Medical Center covering certain research studies directed at the
Company's core technology. Under the terms and conditions of this
agreement, Dr. H. ▇▇▇▇ ▇▇▇▇▇▇▇, a shareholder and executive officer of the
Company, serves as the investigator for such studies. The agreement
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
COLLATERAL THERAPEUTICS, INC.
SCHEDULE OF EXCEPTIONS
PAGE 6 OF 8
covers a one year term; however, this term may be extended by mutual
consent of both parties. In consideration for such services, the Company
has agreed to pay the Medical Research Foundation a primary monthly fee of
$20,000, payable in monthly installments (including certain administrative
overhead charges), plus a supplemental payment, payable monthly, for
additional amounts expended by the Medical Research Foundation for
Company-directed research activities (including certain administrative
overhead charges).
UNIVERSITY OF WASHINGTON DISCOVERY RESEARCH AGREEMENT - MUSCLE
DIFFERENTIATION DURING REPAIR OF MYOCARDIAL NECROSIS THROUGH GENE THERAPY
WITH THE MYOD GENE. *** , the Company has entered into an agreement with
the University of Washington, Seattle, School of Medicine, Department of
Pathology, for the University of Washington to conduct Company-directed
discovery research into the study of muscle differentiation during repair
of myocardial necrosis, resulting from a myocardial infarction, through
gene therapy using the MyoD gene, under the direction of ▇▇. ▇▇▇▇▇▇▇
▇▇▇▇▇, M.D., Ph.D. Pursuant to the terms of this agreement, the Company
has agreed to provide the University of Washington with research funding
totalling up to *** . Under this agreement, the Company has a right of
first negotiation for the Company to enter an agreement with the
University of Washington to exclusively license all technology that may
result from such research. As of June 10, 1997, the Company has paid *** .
***
***
***
***
***
***
***
***
***
CORPORATE OFFICE REAL ESTATE LEASE. On July 17, 1995, the Company entered
into a real estate sublease agreement with Gensia, Inc. covering office
space located at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, which
currently serves as the Company's corporate office. The sublease covered
by this agreement will expire on December 31, 1997. The Company has an
option to extend the term of such sublease for an additional year to
expire as of December 31, 1998. Rent payable to Gensia, Inc. for the
remainder of the
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
COLLATERAL THERAPEUTICS, INC.
SCHEDULE OF EXCEPTIONS
PAGE 7 OF 8
lease covering the current lease period (June 1, 1997 to December 31,
1997) totals $52,836.
RESEARCH LABORATORY REAL ESTATE LEASE. On June 9, 1997, the Company
submitted a term sheet covering a proposal to lease an 11,200 square foot
research facility located at ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇.
The major terms and conditions of such lease as proposed by the Company to
the landlord are as follows: (i) annual base rent: $207,000, with a 3.5%
annual rent escalation; (ii) annual operating charges: $30,360; (iii)
tenant improvement allowance: $240,000; (iv) lease term three (3) years.
There can be no assurance that the Company will agree on final terms and
enter into a lease agreement covering such research facility. The Company
awaits approval of such proposal or counter-proposal covering such lease.
If this facility is leased, the Company estimates that it will invest up
to $1,500,000 for leasehold improvements, equipment and other related
start-up expenses to develop this lease space as a fully-operational
research facility.
CONTRACT RESEARCH SERVICES. On March 17, 1997, the Company entered into an
agreement with HTI Bio-Services, Inc. (hereafter "HTI") for HTI to conduct
certain contract research services. For such services the Company agreed
to pay HTI $99,400. As of June 10, 1997, the unpaid balance payable to HTI
by the Company for such services totalled $19,880.
CONSULTING AGREEMENTS. The Company has entered into consulting agreements
with five (5) individuals who have been appointed as members of the
Company's Scientific Advisory Board and with twelve (12) other
individuals, as set forth in the schedule attached hereto.
NOTES PAYABLE AND SECURITY AGREEMENT. In 1995, the Company entered into
two Promissory Notes with Schering Berlin Venture Corporation ("Payor")
totalling $500,000 to fund operations. The Notes were each amended and
restated as of May 16, 1996. Since there has been an Acceptance of a
Qualified Gene, the Notes are due on Payor's demand on or after June 30,
1999 and bear interest at 1% below the prime rate. These Notes are secured
by all of the assets of the Company pursuant to a Security Agreement dated
August 16, 1995.
SECTION 2.8 RELATED PARTY TRANSACTIONS. Mr. ▇▇▇▇▇ ▇▇▇▇▇▇▇, a member of ▇▇▇▇▇▇▇,
Phleger & ▇▇▇▇▇▇▇▇ LLP (hereinafter "▇▇▇▇▇▇▇") is a member of the Company's
Board of Directors and a holder of 142,687 shares of Common Stock. During 1996,
the Company paid ▇▇▇▇▇▇▇ $148,974 and $19,272 for legal services for 1996 and
1997, respectively. In addition, Mr. ▇▇▇▇▇ ▇▇▇▇, a member of the Company's Board
Directors and a holder of 139,887 shares of Common Stock is Chief Executive
Officer of Gensia, Inc., which is the landlord of the Company's executive
office. During 1996, the Company paid Gensia, Inc. rent of $98,496 and $46,586
for 1996 and 1997, respectively.
COLLATERAL THERAPEUTICS, INC.
SCHEDULE OF EXCEPTIONS
PAGE 8 OF 8
SECTION 2.16 FINANCIAL STATEMENTS. The Company has delivered to the Investor
audited financial statements (balance sheet, profit and loss statement,
statement of shareholders' equity and statement of changes of financial
position, including notes thereto) at December 31, 1997, as prepared by Ernst &
Young, the Company's independent public accountants. In addition, the Company
has provided the Investor with unaudited financial statements, (balance sheet,
profit and loss statement, statement of shareholders' equity and statement of
changes of financial position) for the period from January 1, 1997 to May 30,
1997. Reference is made to Section 2.7 disclosure under the caption "Notes
Payable and Security" above.
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