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Exhibit 10.12
STANDSTILL AGREEMENT
This STANDSTILL AGREEMENT (this "Agreement") is made as of April 28,
2000 (the "Effective Date") by and between Discovery Partners International,
Inc., a California corporation ("DPII"), and Axys Pharmaceuticals, Inc., a
Delaware corporation ("Axys").
RECITALS
WHEREAS, DPII, DPII Newco, LLC, a Delaware limited liability company
("Merger Sub"), Axys and Axys Advanced Technologies, Inc., a Delaware
corporation ("AAT") have entered into that certain Agreement and Plan of Merger,
dated as of April 11, 2000 (the "Merger Agreement"), pursuant to which Merger
Sub is being merged with and into AAT (the "Merger") with the consequence that
AAT will become a wholly-owned subsidiary of DPII (capitalized terms used herein
and not otherwise defined herein shall have the meanings given such terms in the
Merger Agreement);
WHEREAS, the Merger Agreement requires that Axys and DPII enter into
this Agreement as a condition to consummate the Merger and to consummate the
other transactions contemplated by the Merger Agreement;
NOW, THEREFORE, in consideration of the mutual covenants set forth in
this Agreement, and in connection with the Closing under the Merger Agreement,
the parties hereto agree as follows:
1. Restricted Period. For a period ("Restricted Period") commencing with
the date of this Agreement and ending on the later of the date Axys, together
with all members of any "group" of which it is a member, first holds less than
5% of the then-outstanding Common Stock of the Company or the 10th anniversary
of the date of this Agreement, neither Axys nor any of its Representatives (as
defined below) on behalf of or as part of a "group" with Axys shall, without the
prior written consent of DPII upon express authorization by DPII's Board of
Directors:
(a) acquire, offer to acquire, or agree to acquire, directly or
indirectly, by purchase or otherwise, any voting securities or direct or
indirect rights to acquire any voting securities of DPII or any subsidiary of
DPII, or of any successor to or person in control of DPII;
(b) make, or in any way participate, directly or indirectly, in any
"solicitation" of shareholder written consents or of "proxies" to vote (as such
terms are used in the rules of the Securities and Exchange Commission ("SEC")),
or seek to advise or influence any person or entity with respect to the voting
of any voting securities of DPII;
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(c) make any public announcement with respect to, or submit a
proposal for, or offer of (with or without conditions) any extraordinary
transaction involving DPII or any of its securities or assets (other than a
disposition of its DPII shares);
(d) form, join or in any way participate in a "group" as defined in
Section 13(d)(3) of the Securities Exchange Act of 1934, as amended ("Exchange
Act"), in connection with any of the foregoing or the holding or voting of DPII
voting securities;
(e) otherwise act or seek to control or influence the management,
Board of Directors or policies of DPII, except solely through the nomination of
the DPII Directors which this Agreement entitles it to;
(f) take any action that could reasonably be expected to require DPII
to make a public announcement regarding the possibility of any of the events
described in clauses (a) through (e) above; or
(g) publicly request DPII or any of its Representatives, directly or
indirectly, to amend or waive any provision of this Section 1.
During the Restricted Period, Axys shall promptly advise DPII of any inquiry or
proposal made to it with respect to any of the foregoing.
Notwithstanding anything in this Agreement to the contrary, nothing in this
Agreement shall prevent Axys from exercising, during any time before the first
day any DPII stock is registered under the Exchange Act, any of Axys' express
rights under DPII's Amended and Restated Shareholders' Agreement dated as of
April 7, 2000 and/or DPII's Amended and Restated Investors' Rights Agreement
dated as of April 7, 2000, in each case as amended through the exercise of such
rights.
2. Definitions. For purposes of this Agreement, (i) "Representative"
shall mean, as to any person, its affiliated (within the meaning of SEC Rule
405) companies and its and their directors, officers, employees, agents and
advisors (including, without limitation, financial advisors, attorneys and
accountants); (ii) "person" shall be broadly interpreted to include, without
limitation, any corporation, company, partnership, other entity or individual;
(iii) "voting securities" shall mean, with respect to DPII, at any time shares
of any class of capital stock of DPII which are then entitled to vote generally
in the election of directors.
3. Securities Laws. Axys is aware, and will advise its Representatives
who are informed of the matters that are the subject of this Agreement, of the
restrictions imposed by the United States securities laws on the purchase or
sale of securities by any person who has received material, non-public
information from the issuer of such securities and on the communication of such
information to any other person when it is reasonably foreseeable that such
other person may purchase or sell such securities in reliance upon such
information.
4. Legends. All DPII share certificates owned by Axys shall be imprinted
with a legend stating that the shares are subject to this Agreement. Such shares
shall also, if transferred to anyone other than to a Permitted Transferee,
remain subject to this Agreement, and this Agreement shall be binding upon such
transferee and such transferee's share certificate
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representing such shares shall be imprinted with the same legend. Such legend
shall be removed as to shares which are sold to a Permitted Transferee. A
"Permitted Transferee" is one who (a) acquires such shares in a Rule 144
Transaction or (b) is not a person affiliated with Axys or a member of a "group"
which includes Axys and who acquires such shares in a Rule 144(k) or Rule 144A
transaction or pursuant to an effective resale registration statement, or (c) is
not a person affiliated with Axys or a member of a "group" which includes Axys,
and who acquires such shares in a Section 4(1) or Section 4(1 1/2) transaction
which does not Exceed the 5% Level, and is not the subject of a Schedule 13D or
13G report showing at the date of the transfer of shares by Axys to such
transferee current beneficial ownership of at least 5% of DPII's Common Stock by
such acquirer or any "group" of which such acquirer is a member. A transaction
"Exceeds the 5% Level" if immediately after the transaction the acquirer,
together with all other members of any "group" of which it is a member, will
have acquired from Axys (including such transaction and also all previous
transactions involving such acquirer and/or any member of the "group") more than
5% of the outstanding Common Stock of DPII (calculated as of the date of the
transaction which is being tested).
5. Director Elections. DPII agrees to include on its management slate of
Director nominees, at each annual meeting of shareholders held while any DPII
stock is registered under the Exchange Act, a number of persons designated by
Axys as shall equal the number of Directors, if any, on DPII's Board of
Directors which Axys could have elected solely on its own with the DPII shares
originally owned by Axys as of April 28, 2000 and still then owned of record by
it if cumulative voting were in effect; provided, that if such calculation would
enable Axys to designate a number of nominees equal to one less than the number
which would constitute a majority of the Board of Directors, Axys shall be
entitled to designate one nominee fewer than what the calculation would have so
indicated. Also, if DPII has a staggered Board of Directors, this Section shall
not be applied literally, but instead shall be applied in a reasonable manner to
reflect the parties' intentions with respect to the Board as a whole even though
not all the Board seats are up for election each year. Axys agrees always to
vote for, and to use its reasonable efforts to cause its Representatives to vote
for, the entire management slate of Director nominees and not for any other
persons.
6. Miscellaneous.
(a) Notices. All notices, requests and other communications hereunder
must be in writing and will be deemed to have been duly given only if delivered
personally or by facsimile transmission with answer back confirmation or mailed
(first class, postage prepaid) or by overnight courier to the parties at the
following addresses or facsimile numbers:
If to Axys, to:
Axys Pharmaceuticals, Inc.
000 Xxxxxxx Xxx
Xxxxx Xxx Xxxxxxxxx, XX 00000
Facsimile No.: (000) 000-0000
Attention: Xxxx Xxxxxx, Chairman and Chief Executive Officer
with copy to:
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Cooley Godward LLP
Five Palo Alto Square
0000 Xx Xxxxxx Xxxx
Xxxx Xxxx, XX 00000-0000
Facsimile No.: (000) 000-0000
Attention: Xxxx X. Xxxxxxxxx, Esq.
If to DPII, to:
Discovery Partners International, Inc.
0000 Xxxxx Xxxxxx Xxxxx
Xxx Xxxxx, XX 00000
Facsimile No.: (000) 000-0000
Attention: Xxxxxxxx Xxxxxxxxx,
Chief Executive Officer and President
with copy to:
Xxxxxxx, Phleger & Xxxxxxxx LLP
00000 Xx Xxxxxx Xxxx
Xxx Xxxxx, XX 00000
Facsimile No.: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxx, Esq.
All such notices, requests and other communications will (i) if delivered
personally or by overnight courier to the address as provided in this Section
4(a), be deemed given upon delivery, (ii) if delivered by facsimile transmission
to the facsimile number as provided in this Section 4(a), be deemed given upon
sending, and (iii) if delivered by mail in the manner described above to the
address as provided in this Section 4(a), be deemed given two business days
after mailing (in each case regardless of whether such notice, request or other
communication is received by any other person to whom a copy of such notice,
request or other communication is to be delivered pursuant to this Section). Any
party from time to time may change its address, facsimile number or other
information for the purpose of notices to that party by giving notice specifying
such change to the other parties hereto.
(b) Entire Agreement. This Agreement, the Merger Agreement (and all
exhibits and schedules attached thereto) and all other documents delivered in
connection herewith supersede all prior discussions and agreements among the
parties with respect to the subject matter hereof and thereof and contain the
sole and entire agreement among the parties hereto with respect thereto.
(c) Waiver. Any term or condition of this Agreement may be waived at
any time by the party that is entitled to the benefit thereof, but no such
waiver shall be effective unless set forth in a written instrument duly executed
by or on behalf of the party waiving such term or condition. No waiver by any
party hereto of any term or condition of this Agreement, in any one or more
instances, shall be deemed to be or construed as a waiver of the same or any
other term or condition of this Agreement on any future occasion. All remedies,
either under this Agreement or by law or otherwise afforded, will be cumulative
and not alternative.
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(d) Amendment. This Agreement may be amended, supplemented or
modified only by a written instrument duly executed by or on behalf of each
party hereto.
(e) Third Parties. Axys Pharmaceuticals, Inc. shall be responsible
for any violation of the provisions of this Agreement by any present or future
affiliate (as defined in SEC Rule 405) of Axys Pharmaceuticals, Inc., excluding
AAT.
(f) Headings. The headings used in this Agreement have been inserted
for convenience of reference only and do not define or limit the provisions
hereof.
(g) Severability. All provisions contained herein are severable and
in the event that any of them shall be held to be to any extent invalid or
otherwise unenforceable by any court of competent jurisdiction, such provision
shall be excised from this Agreement; provided, however, that if the reason for
such invalidity or unenforceability is that the affected provision calls for an
excessive amount of time or money or area or an excessive breadth or scope of
coverage or otherwise requires an excessive degree of any thing or imposes any
excessively onerous restriction or requirement, the affected provision shall not
be excised but instead shall be construed as if it were written so as to call
only for the amount of money, time, area, breadth, scope and/or other thing,
restriction or requirement (but nonetheless for the maximum possible amount of
money, time, area, breadth, scope and/or other thing, restriction or
requirement) which would render such provision valid and enforceable, all so as
to effectuate to the greatest possible extent the parties' expressed intent; and
in every case the remainder of this Agreement shall not be affected thereby and
shall remain valid and enforceable, as if such excised or affected provision
were not contained herein.
(h) Governing Law, Consent to Jurisdiction and Forum Selection. This
Agreement shall be governed by and construed in accordance with the laws of the
State of California applicable to contracts executed and performed in such
State, without giving effect to conflicts of laws principles. The parties hereto
agree that all actions or proceedings arising in connection with this Agreement
(as to proceedings initiated by Axys) shall be initiated and tried exclusively
in the State and Federal courts located in the County of San Diego, State of
California. The parties hereto agree that all actions or proceedings arising in
connection with this Agreement (as to proceedings initiated by DPII) shall be
initiated and tried exclusively in the State and Federal courts located in the
County of San Francisco, State of California. The aforementioned choice of venue
is intended by the parties to be mandatory and not permissive in nature, thereby
precluding the possibility of litigation between the parties with respect to or
arising out of this Agreement in any jurisdiction other than that specified in
this Section 4(h). Each party hereby waives any right it may have to assert the
doctrine of forum non conveniens or similar doctrine or to object to venue with
respect to any proceeding brought in accordance with this paragraph, and
stipulates that the State and Federal courts located in the County of San Diego,
State of California (as to proceedings initiated by Axys) or in the County of
San Francisco, State of California (as to proceedings initiated by DPII) shall
have in personam jurisdiction and venue over each of them for the purposes of
litigating any dispute, controversy or proceeding arising out of or related to
this Agreement. Each party hereby authorizes and accepts service of process
sufficient for personal jurisdiction in any action against it as contemplated by
this Section 4(h) by registered or certified mail, return receipt requested,
postage prepaid, to its address for the giving of notices as set forth in this
Agreement, or in the
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manner set forth in Section 4(a) of this Agreement for the giving of notice. Any
final judgment rendered against a party in any action or proceeding shall be
conclusive as to the subject of such final judgment and may be enforced in other
jurisdictions in any manner provided by law
(i) Attorneys Fees. In the event suit or action is brought by any
party under this Agreement to enforce or construe any of its terms, the
prevailing party shall be entitled to recover, in addition to all other amounts
and relief, its reasonable costs and attorneys fees incurred at and in
preparation for arbitration, trial, appeal and review, such sum to be set by the
arbitrator or court before which the matter is heard.
(j) Construction. No provision of this Agreement shall be construed
in favor of or against any party on the ground that such party or its counsel
drafted the provision. This Agreement shall at all times be construed so as to
carry out the purposes stated herein.
(k) Counterparts. This Agreement may be executed in counterparts and
by facsimile, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
(l) Reincorporation. Without limitation on any other rights of
assignment, the parties acknowledge that (A) if DPII reincorporates in Delaware
this Agreement shall be assigned to the new Delaware corporation and the rights
and obligations of the parties shall persist as if all references herein to
"DPII" were references to such Delaware corporation; and (B) Axys shall be
allowed to make a bona fide pledge of its DPII Common Stock and Axys' rights
under this Agreement may be assigned, on an indivisible basis, to any person if
both the following conditions apply: (i) the assignment to such person is part
of the enforcement against Axys' shares of DPII Common Stock of a security
interest which Axys had, via a bona fide pledge, granted to a lender, and (ii)
the assignee shall have executed a written agreement, reasonably satisfactory in
form and substance to DPII, pursuant to which such person becomes a party to
this Agreement (as then amended to date) and agrees to be bound by all the
burdens thereof as if such assignee was "Axys" thereunder.
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IN WITNESS WHEREOF, each of the parties hereto has duly executed this
Agreement as of the date first above written.
DISCOVERY PARTNERS INTERNATIONAL, INC.,
a California corporation
By: /s/ Xxxxxxxx Xxxxxxxxx
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Name: Xxxxxxxx Xxxxxxxxx
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Title: Chairman and CEO
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AXYS PHARMACEUTICALS, INC.,
a Delaware corporation
By: /s/ Xxxxxxx X. Xxxxxx
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Name: Xxxxxxx X. Xxxxxx
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Title: Senior Vice President
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[SIGNATURE PAGE TO STANDSTILL AGREEMENT]