-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Hd9O1z9Nu37IK9MHr5rd98qYLQSSDJ/yzZpMCcdcPaFzWfrz6LZjjGDu9g/Izsst tICGEsC89Am/dBR5FnKtVQ== 0000912057-96-017142.txt : 19960813 0000912057-96-017142.hdr.sgml : 19960813 ACCESSION NUMBER: 0000912057-96-017142 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960812 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: CORVAS INTERNATIONAL INC CENTRAL INDEX KEY: 0000882100 STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834] IRS NUMBER: 330238812 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-19732 FILM NUMBER: 96608408 BUSINESS ADDRESS: STREET 1: 3030 SCIENCE PARK RD CITY: SAN DIEGO STATE: CA ZIP: 92121 BUSINESS PHONE: 6194559800 MAIL ADDRESS: STREET 2: 3030 SCIENCE PARK ROAD CITY: SAN DIEGO STATE: CA ZIP: 92121 10-Q 1 FORM 10-Q FORM 1O-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1996 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from___________to__________ Commission file number 0-19732 CORVAS INTERNATIONAL, INC. (Exact name of Registrant as specified in its charter) DELAWARE 33-0238812 (State or other jurisdiction (I .R.S. Employer of incorporation or organization) Identification No.) 3030 SCIENCE PARK ROAD SAN DIEGO, CALIFORNIA 92121 (Address of principal executive offices and zip code) (619) 455-9800 (Registrant's telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: Common Stock, $0.001 par value (Title of class) Indicate by check mark whether the Registrant (l) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ------- ------- At July 31, 1996, there were 13,703,563 shares of Common Stock, $0.001 par value, of the Registrant issued and outstanding. CORVAS INTERNATIONAL, INC. INDEX PAGE ---- PART I FINANCIAL INFORMATION Item 1 Financial Statements Condensed Balance Sheets as of June 30, 1996 and December 31, 1995 1 Condensed Statements of Operations for the Three and Six Months Ended June 30, 1996 and 1995 2 Condensed Statements of Cash Flows for the Three and Six Months Ended June 30, 1996 and 1995 3 Notes to Condensed Financial Statements 4 Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations 5 PART II OTHER INFORMATION Item 1 Legal Proceedings 9 Item 2 Changes in Securities 9 None Item 3 Defaults Upon Senior Securities 9 None Item 4 Submission of Matters to a Vote of Security Holders 9 Item 5 Other Information 10 Item 6 Exhibits and Reports on Form 8-K (a) Exhibits 11 (b) Reports on Form 8-K 11 None SIGNATURES 12 PART I -- FINANCIAL INFORMATION Item 1. FINANCIAL STATEMENTS CORVAS INTERNATIONAL, INC. CONDENSED BALANCE SHEETS (In thousands)
June 30, 1996 December 31, 1995 --------------- ----------------- ASSETS (unaudited) Current assets: Cash and cash equivalents $ 792 $ 1,427 Short-term debt securities held to maturity and time deposits, partially restricted 20,818 11,024 Receivables 457 338 Notes receivable from related parties 260 0 Other current assets 395 250 --------- --------- Total current assets 22,722 13,039 Property and equipment, net 1,227 1,423 Note receivable from related party 180 0 --------- --------- $ 24,129 $ 14,462 --------- --------- --------- --------- LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 201 $ 272 Accrued expenses 1,168 461 Accrued vacation 195 205 Accrued litigation settlement expenses 0 313 Current portion of capital lease obligation 66 77 Deferred rent 11 34 Deferred revenue 2,105 4,305 --------- --------- Total current liabilities 3,746 5,667 --------- --------- Long-term capital lease obligation 0 27 Stockholders' equity: Preferred stock - Series A 1 1 Common stock 14 9 Additional paid-in capital 84,717 69,346 Accumulated deficit (64,349) (60,588) --------- --------- Total stockholders' equity 20,383 8,768 Commitments and contingencies --------- --------- $ 24,129 $ 14,462 --------- --------- --------- ---------
See accompanying notes to condensed financial statements. 1 CORVAS INTERNATIONAL, INC. CONDENSED STATEMENTS OF OPERATIONS In thousands, except per share amounts (unaudited)
Three Months Ended Six Months Ended June 30, June 30, ------------------ ---------------- 1996 1995 1996 1995 ---- ---- ---- ---- REVENUES: Net product sales $ 25 $ 168 $ 46 $ 214 Revenue from collaborative agreements 1,085 1,000 3,170 2,000 Royalties 0 40 81 74 ------- ------- ------- ------- Total revenues 1,110 1,208 3,297 2,288 ------- ------- ------- ------- COSTS AND EXPENSES: Cost of products sold 30 105 54 110 Research and development 3,617 2,334 5,916 4,593 General and administrative 894 563 1,687 1,245 ------- ------- ------- ------- Total costs and expenses 4,541 3,002 7,657 5,948 ------- ------- ------- ------- Loss from operations (3,431) (1,794) (4,360) (3,660) OTHER INCOME: Interest income, net 301 234 569 482 Other income (expense) 0 16 30 (15) ------- ------- ------- ------- 301 250 599 467 ------- ------- ------- ------- Net loss $(3,130) $(1,544) $(3,761) $(3,193) ------- ------- ------- ------- ------- ------- ------- ------- Net loss per share $ (0.25) $ (0.16) $ (0.30) $ (0.34) ------- ------- ------- ------- ------- ------- ------- ------- Shares used in calculation of net loss per share 12,609 9,365 12,350 9,362 ------- ------- ------- ------- ------- ------- ------- -------
See accompanying notes to condensed financial statements. 2 CORVAS INTERNATIONAL, INC. CONDENSED STATEMENTS OF CASH FLOWS IN THOUSANDS (UNAUDITED)
Six Months Ended June 30, 1996 1995 ---------- ---------- Cash flows from operating activities: Net loss $ (3,761) $ (3,193) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 411 409 Amortization of premiums and discounts on investments (7) 55 Amortization of deferred compensation 0 43 Stock compensation expense 1 15 Change in assets and liabilities: Increase in receivables (119) (70) Increase in other current assets (145) (312) Increase (decrease) in accounts payable, accrued expenses, accrued benefits, accrued vacation and accrued litigation settlement expenses 611 (1,492) Decrease in deferred revenue (2,200) (2,000) Decrease in deferred rent (23) (73) ---------- ---------- Net cash used in operating activities (5,232) (6,618) ---------- ---------- Cash flows from investing activities: Purchases of investments held to maturity (15,887) (6,117) Proceeds from maturity of investments held to maturity 6,100 10,400 Purchases of property and equipment (216) (425) Proceeds from the sale of property and equipment 0 285 Loans to related parties (440) 0 ---------- ---------- Net cash provided by (used in) investing activities (10,443) 4,143 ---------- ---------- Cash flows from financing activities: Principal payments under capital lease obligation (38) (35) Net proceeds from issuance of common stock 15,078 7 ---------- ---------- Net cash provided by (used in) financing activities 15,040 (28) Effect of exchange rate changes on cash 0 (157) ---------- ---------- Decrease in cash and cash equivalents (635) (2,660) Cash and cash equivalents at beginning of period 1,427 3,687 ---------- ---------- Cash and cash equivalents at end of period $ 792 $ 1,027 ---------- ---------- ---------- ---------- Supplemental disclosures: Interest paid $ 4 $ 6 ---------- ---------- ---------- ---------- Noncash financing activities -- Common stock issued in exchange for settlement of accrued litigation liability $ 298 $ 0 ---------- ---------- ---------- ----------
See accompanying notes to condensed financial statements. 3 CORVAS INTERNATIONAL, INC. NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED) (1) THE COMPANY Corvas International, Inc. (the "Company") was incorporated on March 27, 1987 under the laws of the State of California. In July 1993, the Company reincorporated in the State of Delaware. The Company is engaged in the design and development of a new generation of therapeutic agents for the prevention and treatment of major cardiovascular and inflammatory diseases. Previous financial statements of the Company were consolidated to include the accounts of Corvas International, Inc. in San Diego and its Belgian subsidiary, Corvas International, N.V. Operating activities at the Belgian subsidiary ceased in December 1994 and the subsidiary was liquidated in December 1995. (2) BASIS OF PRESENTATION The interim financial information contained herein is unaudited but, in management's opinion, includes all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation. The financial statements should be read in conjunction with the Company's audited financial statements and notes thereto for the year ended December 31, 1995. Results for the interim periods are not necessarily indicative of results for other interim periods or for the full year. (3) NOTES RECEIVABLE FROM RELATED PARTIES Notes receivable from related parties as of June 30, 1996 consist of three loans to officers of the Company, and are evidenced by three separate promissory notes. The Company granted a $120,000 short-term loan to an officer of the Company on February 23, 1996. Of such loan, $60,000 was repaid in April 1996. The remaining balance of $60,000 is unsecured, bears no interest, and is due and payable in full on February 23, 1997 but may be forgiven under certain circumstances. The Company also granted a $200,000 short-term loan to a second officer of the Company on June 25, 1996 in connection with his relocation to San Diego. This secured loan bears no interest and is due and payable in full on the earlier of six months from the loan date, the closing of the sale of the secured property or any transfer thereof, or within 90 days of such officer's termination of employment with the Company. On February 23, 1996, the Company granted a $180,000 loan in conjunction with the $120,000 loan discussed above. Such loan bears interest at 6% per annum and is secured by the officer's primary residence. This loan is due and payable in full on February 23, 2001. (4) NET LOSS PER SHARE Net loss per share for the three and six months ended June 30, 1996 and 1995 is computed using the weighted average number of common share equivalents outstanding. Common equivalent shares are not included in the per share calculation since the effect of their inclusion would be anti-dilutive. (5) STOCKHOLDERS' EQUITY On July 3, 1996, the Company completed an offering of registered common stock to an institutional investor, resulting in proceeds of $4,874,000, net of estimated issuance costs. 4 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS EXCEPT FOR THE HISTORICAL INFORMATION CONTAINED HEREIN, THE FOLLOWING DISCUSSION CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND UNCERTAINTIES, INCLUDING STATEMENTS REGARDING THE PERIOD OF TIME DURING WHICH THE COMPANY'S EXISTING CAPITAL RESOURCES AND INTEREST EARNED THEREON WILL BE ADEQUATE TO SATISFY ITS CAPITAL REQUIREMENTS. THE COMPANY'S ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE DISCUSSED HEREIN. FACTORS THAT COULD CAUSE OR CONTRIBUTE TO SUCH DIFFERENCES INCLUDE, BUT ARE NOT LIMITED TO, THOSE DISCUSSED IN THIS SECTION AND THOSE DISCUSSED IN THE COMPANY'S ANNUAL REPORT ON FORM 10-K/A. OVERVIEW Formed in 1987, Corvas International, Inc. (the "Company") is a biopharmaceutical firm engaged in the design and development of a new generation of therapeutic agents for the prevention and treatment of major cardiovascular and inflammatory diseases. To date, the Company has not generated significant revenues from product sales. The Company has not been profitable since inception and expects to incur substantial additional operating losses on an annual basis over the next several years as the Company attempts to sustain, and possibly expand, its research and development and clinical trial efforts. No assurance can be given that the Company will generate sufficient revenues to become profitable on a sustained basis or at all. At June 30, 1996, the Company had an accumulated deficit of $64,349,000. RESULTS OF OPERATIONS THREE MONTHS ENDED JUNE 30, 1996 AND 1995 Operating revenues decreased from $1,208,000 in the quarter ended June 30, 1995 to $1,110,000 in the corresponding quarter of 1996. This $98,000 decrease mainly resulted from delayed shipments under agreements with Ortho Diagnostic Systems, Inc. ("Ortho"), a Johnson & Johnson company, which caused decreases in product sales and royalty income. A portion of this decrease was offset by an $85,000 increase in revenue recognized pursuant to the research and option agreement initiated in October 1995 with Pfizer Inc. ("Pfizer") to collaborate on the development of neutrophil inhibitory factor, an anti-inflammatory agent. Total costs and expenses increased from $3,002,000 in the second quarter of 1995 to $4,541,000 in the same quarter of 1996. Research and development expenditures increased by $1,283,000 comparing these same periods, primarily due to scale-up and manufacturing of a development candidate for preclinical and clinical trials. General and administrative expenses also increased, by $331,000, comparing the second quarters of 1995 and 1996 principally due to recruiting and relocation costs associated with the hiring of a new Chief Executive Officer. Comparing the quarter ended June 30, 1995 to the corresponding quarter of 1996, total other income increased from $250,000 to $301,000. This is due to an increase in interest income earned as a result of the Company's private placement in February 1996 which yielded proceeds of $14,835,000, net of estimated issuance costs. SIX MONTHS ENDED JUNE 30, 1996 AND 1995 In the six month periods ended June 30, operating revenues increased from $2,288,000 in 1995 to $3,297,000 in 1996. This increase is due in part to a $1,000,000 option extension fee received from Schering Corporation ("Schering- Plough") pursuant to a strategic alliance agreement for the prevention and treatment of chronic cardiovascular disorders and to $170,000 attributable to the Company's collaboration with Pfizer. 5 The Company's total costs and expenses increased from $5,948,000 in the first half of 1995 to $7,657,000 in the corresponding period one year later. Research and development expenditures increased by $1,323,000 comparing these same periods, mainly due to costs incurred in support of a product development candidate. A $442,000 increase in general and administrative expenses in these corresponding periods is primarily attributable to the placement of a new Chief Executive Officer. An increase from $467,000 in the first half of 1995 to $599,000 in the first half of 1996 in total other income primarily resulted from increased interest income attributable to the increased cash balances available for investment. Subject to the availability of additional capital, the Company expects that expenses will increase over the next several years as the Company's research and development programs progress. The Company also expects that losses will fluctuate from quarter to quarter and that such fluctuations may, at times, be substantial. LIQUIDITY AND CAPITAL RESOURCES Since inception, the Company's operations have been funded primarily through public offerings and private placements of equity securities, interest income earned on cash and investment balances, and revenues from collaborative agreements, research grants and license agreements. On July 3, 1996, the Company completed an offering of registered common stock to an institutional investor which resulted in proceeds of $4,874,000, net of estimated issuance costs. The Company's principal sources of liquidity are its cash and cash equivalents, time deposits and debt securities which, net of a restricted time deposit, totaled $21,550,000 as of June 30, 1996. Working capital at June 30, 1996 was $18,976,000. Available cash is invested in accordance with an investment policy set by the Board of Directors, which has the objective to maximize income with preservation of principal and maintenance of adequate liquidity. The policy provides guidelines concerning the quality, term and liquidity of investments. The Company presently invests its excess cash in U.S. government securities. Options held by collaborative partners which are scheduled to expire within the next nine months may favorably impact the capital resources of the Company. The research and option agreement initiated with Pfizer in October 1995 provides for the option period to conclude in October 1996, although this may be extended by Pfizer until April 1997. Schering-Plough also has an exclusive option, expiring in December 1996, to expand the existing collaboration to include a second blood clotting enzyme. Exercise of these options would result in license payments, research funding and, in one instance, purchase of additional equity. However, there can be no assurance that either of these options will be exercised. The Company expects to incur substantial additional costs in the foreseeable future, including costs related to sustaining and possibly expanding research and development activities and preclinical and clinical testing, and that such costs will continue to increase. As a result, the Company expects it will experience substantial additional operating losses over the next several years. Including the two equity offerings completed by the Company in 1996, the Company believes its existing capital resources and interest earned thereon will be adequate to satisfy its capital requirements into mid-1998. In addition, the Company may also receive milestone payments and royalties on sales of products resulting from its alliances. However, there can be no assurance that products will be successfully developed and commercialized or that the Company will receive any such amounts under these alliances. 6 The Company's future capital requirements will depend on many factors, including, but not limited to, the following factors: continued scientific progress in its drug discovery programs; the magnitude of these programs; progress of preclinical testing and clinical trials; the time and costs involved in obtaining regulatory approvals; the costs involved in filing, prosecuting, maintaining and enforcing patent claims; competing technological and market developments; changes in its existing research relationships; the ability of the Company to establish and to maintain collaborative or licensing arrangements; the cost of manufacturing scale-up; and effective commercialization activities and arrangements. The Company leases its laboratory and office facilities and certain equipment under operating and capital leases. The Company may need to acquire additional property and equipment as research and development activities progress. In addition, the Company may need to expand its laboratory and office facilities over the next several years. The Company's business is subject to significant risks, including but not limited to the risks associated with its research and development efforts, obtaining and enforcing patents, the lengthy and expensive regulatory approval process, product reimbursement levels, competition from other products, dependence on collaborative partners and other third parties, and the availability of capital. Even if the Company's products appear promising at an early stage of development, they may not reach the market for a number of reasons. Such reasons include the possibilities that the potential products: will be ineffective or found to be unsafe during clinical trials, will fail to receive necessary regulatory approvals, will be difficult to manufacture on a large scale, will be uneconomical to market or will be precluded from commercialization by proprietary rights of third parties. Uncertainties associated with the duration and expense of preclinical and clinical testing of any of the Company's products make it difficult to predict the Company's capital requirements, and unexpected developments and/or regulatory requirements could greatly increase the cost of development of such products and affect the timing of anticipated revenues from such products. Failure by the Company to obtain regulatory approval for any product will preclude the sale of such products. In addition, failure by the Company to obtain patent protection may make certain of its products commercially unattractive. To continue its product development efforts, the Company will be required to raise substantial additional funds through public or private sales of its securities and through collaborative arrangements. The Company's ability to raise additional funds through such sales of securities depends in part on investors' perceptions of the biotechnology industry in general and of the Company in particular. The market for biotechnology company stocks has historically been highly volatile and, accordingly, there can be no assurance that additional funding will be available, or, if available, that it will be available on acceptable terms. The Company is seeking to enter into additional collaborative relationships to support development and commercialization under which rights to certain of its technologies or products will be granted. There can be no assurance that the Company will be able to establish such relationships on satisfactory terms, if at all, or that agreements with its collaborators will successfully reduce its funding requirements. In addition, the Company has no established bank financing arrangements, and there can be no assurance that it will be able to establish such arrangements on satisfactory terms, if at all. If adequate funds are not available, the Company may be required to significantly delay, scale back or eliminate one or more of its drug discovery programs or obtain funds through arrangements with collaborative partners or others that may require the Company to relinquish rights to certain of its technologies, product candidates or products that the Company would not otherwise relinquish. 7 The Company has distributed all amounts due under a settlement agreement in connection with a legal proceeding filed in 1993 against several of the Company's current and former directors and Centocor, Inc. In 1993, the U.S. Patent and Trademark Office declared an interference and is currently in the process of determining the priority of invention between a patent for which some rights are licensed to the Company and a patent application for which rights are licensed to another party. The subject matter of these licenses is recombinant tissue factor which is used by Ortho to determine the blood clotting abilities of patients. The Company believes that its licensed patent should be upheld and is contesting the other party's claims of prior invention. However, there can be no assurance that such patent will be upheld. 8 PART II -- OTHER INFORMATION Item 1. LEGAL PROCEEDINGS The Company has distributed all amounts due under a settlement agreement in connection with a legal proceeding filed in 1993 against several of the Company's current and former directors and Centocor, Inc. In 1993, the U.S. Patent and Trademark Office declared an interference and is currently in the process of determining the priority of invention between a patent for which some rights are licensed to the Company and a patent application for which rights are licensed to another party. The subject matter of these licenses is recombinant tissue factor which is used by Ortho to determine the blood clotting abilities of patients. The Company believes that its licensed patent should be upheld and is contesting the other party's claims of prior invention. However, there can be no assurance that such patent will be upheld. Item 2. CHANGES IN SECURITIES None Item 3. DEFAULTS UPON SENIOR SECURITIES None Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS The annual meeting of stockholders of the Company was held on June 7, 1996. The matters described below were submitted to a vote of stockholders. The Company had 12,519,852 shares of common stock and 1,000,000 shares of Series A preferred stock outstanding as of April 12, 1996, the record date for the annual meeting. At the annual meeting, holders of a total of 11,408,521 shares of common stock were present in person or represented by proxy. 9 a. Election of Class I Directors for a three-year term expiring at the 1999 annual meeting: NAME SHARES VOTING FOR SHARES WITHHELD ---- ----------------- --------------- David S. Kabakoff, Ph.D. 11,213,725 339,531 Gerard Van Acker 11,213,725 339,531 W. Leigh Thompson, M.D., Ph.D. 11,212,717 340,539 Class II Directors continuing in office until the 1997 annual meeting: John H. Fried, Ph.D. Michael Sorell, M.D. Nicole Vitullo Class III Directors continuing in office until the 1998 annual meeting: Thomas S. Edgington, M.D. Theodor H. Heinrichs M. Blake Ingle, Ph.D. b. A proposal to approve an amendment to the Company's 1991 Incentive and Compensation Plan. For 8,833,259 Against 414,622 Abstain 19,574 c. A proposal to ratify the appointment of KPMG Peat Marwick LLP as independent auditors for the Company for the fiscal year ending December 31, 1996. For 11,525,794 Against 8,658 Abstain 18,804 Item 5. OTHER INFORMATION Effective July 8, 1996, Donald H. Picker, Executive Vice President and Chief Operating Officer of the Company, has resigned. 10 Item 6. EXHIBITS AND REPORTS ON FORM 8-K a. Exhibits EXHIBIT NUMBER DESCRIPTION -------------- ----------- 10.10 1991 Incentive and Compensation Plan, as amended. 10.53 Deed of Trust related to Loan Agreement between the Company and Donald H. Picker, dated as of February 23, 1996. Reference is made to Exhibit 10.47. 10.54 Promissory Note between the Company and Randall E. Woods, dated as of June 25, 1996, and Deeds of Trust related thereto. 10.55 Separation Agreement between the Company and Donald H. Picker, dated as of July 18, 1996. 27.1 Financial Data Schedule. b. Reports on Form 8-K There were no reports on Form 8-K filed for the quarter ended June 30, 1996. 11 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized. CORVAS INTERNATIONAL, INC. Date: August 12, 1996 By: /S/RANDALL E. WOODS ------------------------- Randall E. Woods President and Chief Executive Officer Date: August 12, 1996 By: /S/JOHN E. CRAWFORD ------------------------- John E. Crawford Executive Vice President and Chief Financial Officer 12 EX-10.10 2 EXHIBIT 10.10-1991 INCENTIVE & COMPENSATION PLAN AMENDMENT 1991 INCENTIVE AND COMPENSATION PLAN Approved by Board January 10 and April 3, 1996 Ratified by Stockholders June 7, 1996 WHEREAS, Corvas International, Inc. previously adopted the 1991 Incentive Compensation Plan (the "Plan) and WHEREAS, Section 11.2 of the Plan provides that the Plan may be amended by the Board contingent upon stockholder approval within twelve (12 months), such approval having been received on the date noted above; NOW, THEREFORE, the Plan is amended as follows: 1. Section 2.1(a) is deleted and replaced with the following: "The shares of stock subject to Options, Stock Appreciation Rights, Restricted Stock Awards, Performance Awards, Dividend Equivalents or Stock Payments shall be Common Stock, initially shares of the Company's Common Stock as presently constituted, and the aggregate number of such shares which may be issued upon exercise of such options or rights or upon any such awards shall by adjusted upon the last day of each fiscal quarter of the Company following the date the amendment is adopted by the Board, shall be increased, if necessary, to equal 18% of the number of shares of Company's Common Stock issued and outstanding, less the number of shares issued pursuant to the Plan or subject to outstanding options or other awards under the Plan (other than under Section 3.3 of the Plan). Notwithstanding the foregoing, the number of shares issuable upon exercise of Incentive Stock Options shall not exceed 2,225,000 shares, nor shall any employee be granted options and/or stock appreciation rights under the Plan during a calendar year to purchase in excess of 750,000 shares of Common Stock." 2. Section 10.1 is deleted and replaced with the following: Subject to Section 10.2, the Committee shall consist of at least two Directors, appointed by and holding office at the pleasure of the Board, each one of whom is a "disinterested person" in accordance with Rule 16b-3 or its successors and who is in the discretion of the Board, an "outside director" as defined in Section 162(m) of the Internal Revenue Code of 1986, as amended." This amendment is effective as of January 10, 1996. EX-10.53 3 DEED OF TRUST EXHIBIT 10.53 WHEN RECORDED MAIL TO: Cooley Godward Castro Huddleson & Tatum 5 Palo Alto Square 4th Floor Palo Alto, CA 94306-2155 ATTN: Michele Granaada - -------------------------------------------------------------------------------- SPACE ABOVE THIS LINE FOR RECORDER'S USE DEED OF TRUST WITH ASSIGNMENT OF RENTS (This Deed of Trust contains an acceleration clause) This DEED OF TRUST, made this 23RD day of February, 1996, between ------------ DONALD H. PICKER, A MARRIED MAN, AS HIS SOLE AND SEPARATE PROPERTY, herein called TRUSTOR, whose address is 15828 HIGHLAND COURT ---------------------------------------- (Number and Street) SOLANA BEACH , CALIFORNIA , 92075 , - -------------------------------------------------------------------------------- (City) (State) (Zip) AMERICAN TITLE INSURANCE COMPANY, A CORPORATION, herein called TRUSTEE, AND CORVAS INTERNATIONAL, INC., A DELAWARE CORPORATION, herein called BENEFICIARY, WITNESSETH: That Trustor grants to Trustee in Trust, with Power of Sale, that property in the City of Solana Beach, County of San Diego, State of California, described as: SEE EXHIBIT A ATTACHED HERETO AND MADE A PART HEREOF. This is a Second Deed of Trust, subject and junior lien to a First Deed of Trust in favor of ___________________________________________ in the amount of $450,000. If the trustor shall sell, convey or alienate said property, or any part thereof, or any interest therein, or shall be divested of his title or any interest therein in any manner of way, whether voluntarily or involuntarily, without the written consent of the beneficiary being first had and obtained, or Trustor shall be in default of its obligations under any mortgage, deed of trust or lien encumbering the property which is the subject hereof, or any part thereof, described in Exhibit A hereto, which is recorded prior to the recordation of this instrument, whether now existing or hereafter created, beneficiary shall have the right, at its option, to declare any indebtedness or obligations secured hereby, irrespective of the maturity date specified in any note evidencing the same, immediately due and payable, excluding however, any transfer of any interest by Trustor to Donald H. Picker and Cheryl Picker, as trustee under Declaration of Trust dated July 16, 1993, provided that Trustor is not then in default under the Note or Loan Agreement and is employed by beneficiary. Together with the rents, issues and profits thereof, subject, however, to the right, power and authority hereinafter given to and conferred upon Beneficiary to collect and apply such rents, issues and profits. For the Purpose of Securing (1) payment of the principal sum of $180,000.00 with interest thereon according to the terms of a promissory note (the "Note") of even date made by Trustor, payable to order of Beneficiary, and extensions or renewals thereof, (2) the performance of each agreement of Trustor incorporated by reference or contained herein, (3) payment of additional sums and interest thereon which may hereafter be loaned to Trustor, or his successors or assigns, when evidenced by a promissory note or notes reciting that they are secured by this Deed of Trust, and (4) the performance of the terms and conditions of the Note and that certain Loan Agreement (the "Loan Agreement") of even date between Donald H. Picker and Beneficiary. To protect the security of this Deed of Trust, and with respect to the property above described, Trustor expressly makes each and all of the agreements, and adopts and agrees to perform and be bound by each and all of the terms and provisions set forth in subdivision A, and it is mutually agreed that each and all of the terms and provisions set forth in subdivision B of the fictitious deed of trust recorded in Orange County August 17, 1964, and in all other counties August 18, 1964, in the book and at the page of Official Records in the office of the county recorder of the county where said property is located, noted below opposite the name of such county, namely:
COUNTY BOOK PAGE COUNTY BOOK PAGE COUNTY BOOK PAGE COUNTY BOOK PAGE Alameda 1288 556 Kings 858 713 Placer 1028 379 Sierra 38 187 Alpine 3 130-31 Lake 437 110 Plumas 166 1307 Siskiyou 506 762 Amador 133 438 Lassen 192 367 Riverside 3788 347 Solano 1287 621 Butte 1330 513 Los Angeles T-3878 874 Sacramento 5039 124 Sonoma 2067 427 Calaveras 185 338 Madera 911 136 San Benito 300 405 Stanislaus 1970 56 Colusa 323 391 Marin 1849 122 San Bernardino 6213 768 Sutter 655 585 Contra Costa 4684 1 Mariposa 90 453 San Francisco A-804 596 Tehama 457 183 Del Norte 101 549 Mendocino 667 99 San Joaquin 2855 283 Trinity 108 595 El Dorado 704 635 Merced 1660 753 San Luis Obispo 1311 137 Tulare 2530 108 Fresno 5052 623 Modoc 191 93 San Mateo 4788 175 Tuolumne 177 160 Glenn 469 76 Mono 69 302 Santa Barbara 2065 881 Ventura 2607 237 Humboldt 801 83 Monterey 357 239 Santa Clara 6626 664 Yolo 769 16 Imperial 1189 701 Napa 704 742 Santa Cruz 1638 607 Yuba 398 693 Inyo 165 672 Nevada 363 94 Shasta 800 633 Kern 3756 690 Orange 7182 18 San Diego SERIES 5 Book 1964, Page 149774
shall inure to and bind the parties hereto, with respect to the property above described. Said agreements, terms and provisions contained in said subdivision A and B, (identical in all counties, and printed on the reverse side hereof) are by the within reference thereto, incorporated herein and made a part of this Deed of Trust for all purposes as fully as if set forth at length herein, and Beneficiary may charge for a statement regarding the obligation secured hereby, provided the charge therefor does not exceed the maximum allowed by law. The undersigned Trustor, requests that a copy of any notice of default and any notice of sale hereunder be mailed to him at this address hereinbefore set forth. STATE OF California ) Signature of Trustor - ------------------------------ /s/DONALD H. PICKER, )ss. ------------------------------- COUNTY OF San Diego ) Donald H. Picker - ------------------------------ On 2/23 , 1996, before me, ------------------ Helen M. Henton , - ------------------------------ the undersigned Notary Public, personally appeared DONALD H. PICKER , - ------------------------------ /x/ personally known to me -OR- / / proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s) or the entity upon behalf of which the person(s) acted, executed the instrument. Witness my hand and official seal. /S/ HELEN M. HENTON ------------------- Notary's Signature HELEN M. HENTON ------------------- Name (Typed or Printed) [NOTARY SEAL] D O N O T R E C O R D The following is a copy of Subdivisions A and B of the fictitious Deed of Trust recorded in each county in California as stated in the foregoing Deed of Trust and incorporated by reference is said Deed of Trust as being a part thereof as if set forth at length therein. A. To protect the security of this Deed of Trust, Trustor agrees: (1) To keep said property in good condition and repair; not to remove or demolish any building thereon; to complete or restore promptly and in good and workmanlike manner any building which may be constructed, damaged or destroyed thereon and to pay when due all claims for labor performed and materials furnished therefor; to comply with all laws affecting said property or requiring any alterations or improvements to be made thereon; not to commit or permit waste thereof; not to commit, suffer or permit any act upon said property in violation of law; to cultivate, irrigate, fertilize, fumigate, prune and do all other acts which from the character or use of said property may be reasonably necessary, the specific enumerations herein not excluding the general. (2) To provide, maintain and deliver to Beneficiary fire insurance satisfactory to and with loss payable to Beneficiary. The amount collected under any fire or other insurance policy may be applied by Beneficiary upon any indebtedness secured hereby and in such order as Beneficiary may determine, or at option of Beneficiary the entire amount so collected or any part thereof may be released to Trustor. Such application or release shall not cure or waive any default or notice of default hereunder or invalidate any act done pursuant to such notice. (3) To appear in and defend any action or proceeding purporting to affect the security hereof or the rights or powers of Beneficiary or Trustee; and to pay all costs and expenses, including cost of evidence of title and attorney's fees in a reasonable sum, in any such action or proceeding in which Beneficiary or Trustee may appear, and in any suit brought by Beneficiary to foreclose this Deed. (4) To pay: at least ten days before delinquency all taxes and assessments affecting said property, including assessments on appurtenant water stock; when due, all incumbrances, charges and liens, with interest, on said property or any part thereof, which appear to be prior or superior hereto; all costs, fees and expenses of this Trust. Should Trustor fail to make any payment or to do any act as herein provided, then Beneficiary or Trustee, but without obligation so to do and without notice to or demand upon Trustor and without releasing Trustor from any obligation hereof, may: make or do the same in such manner and to such extent as either may deem necessary to protect the security hereof, Beneficiary or Trustee being authorized to enter upon said property for such purposes; appear in an defend any action or proceeding purporting to affect the security hereof or the rights or powers of Beneficiary or Trustee; pay, purchase, contest or compromise any incumbrance, charge or lien which in the judgment of either appears to be prior or superior hereto; and, in exercising any such powers, pay necessary expenses, employ counsel and pay his reasonable fees. (5) To pay immediately and without demand all sums so expended by Beneficiary or Trustee, with interest from date of expenditure at the amount allowed by law in effect at the date hereof, and to pay for any statement provided for by law in effect at the date hereof regarding the obligation secured hereby any amount demanded by the Beneficiary not to exceed the maximum allowed by law at the time when said statement is demanded. B. It is mutually agreed: (1) That any award of damages in connection with any condemnation for public use of or injury to said property or any part thereof is hereby assigned and shall be paid to Beneficiary who may apply or release such moneys received by him in the same manner and with the same effect as above provided for disposition of proceeds of fire or other insurance. (2) That by accepting payment of any sum secured hereby after its due date, Beneficiary does not waive his right either to require prompt payment when due of all other sums so secured or to declare default for failure so to pay. (3) That at any time or from time to time, without liability therefor and without notice, upon written request of Beneficiary and presentation of this Deed and said note for endorsement, and without affecting the personal liability of any person for payment of the indebtedness secured hereby, Trustee may: reconvey any part of said property; consent to the making of any map or plat thereof; join in granting any easement thereon; or join in any extension agreement or any agreement subordinating the lien or charge hereof. (4) That upon written request of beneficiary stating that all sums secured hereby have been paid, and upon surrender of this Deed and said note to Trustee for cancellation and retention or other disposition as Trustee in its sole discretion may choose and upon payment of its fees, Trustee shall reconvey, without warranty, the property then held hereunder. The recitals in such reconveyance of any matter or facts shall be conclusive proof of the truthfulness thereof. The Grantee in such reconveyance may be described as "the person or persons legally entitled thereto." (5) That as additional security, Trustor hereby gives to and confers upon Beneficiary the right, power and authority, during the continuances of these Trusts, to collect the rents, issues and profits of said property, reserving unto Trustor the right, prior to any default by Trustor in payment of any indebtedness secured hereby or in performance of any agreement hereunder, to collect and retain such rents, issues and profits as they become due and payable. Upon any such default, Beneficiary may at any time without notice, either in person, by agent, or by a receiver to be appointed by a court, and without regard to the adequacy of any security for the indebtedness hereby secured, enter upon and take possession of said property or any part thereof, in his own name sue for or otherwise collect such rents, issues, and profits, including those past due and unpaid, and apply the same, less costs and expenses of operation and collection, including reasonable attorney's fees, upon any indebtedness secured hereby, and in such order as Beneficiary may determine. The entering upon and taking possession of said property, the collection of such rents, issues and profits and the application thereof as aforesaid, shall not cure or waive any default or notice of default hereunder or invalidate any act done pursuant to such notice. (6) That upon default by Trustor in payment of any indebtedness secured hereby or in performance of any agreement hereunder, Beneficiary may declare all sums secured hereby immediately due and payable by delivery to Trustee of written declaration of default and demand for sale and of written notice of default and of election to cause to be sold said property, which notice Trustee shall cause to be filed for record, Beneficiary also shall deposit with Trustee this Deed, said note and all documents evidencing expenditures secured hereby. After the lapse of such time as may then be required by law following the recordation of said notice of default, and notice of sale having been given as then required by law, Trustee, without demand on Trustor, shall sell said property at the time and place fixed by it in said notice of sale, either as a whole or in separate parcels, and in such order as it may determine, at public auction to the highest bidder for cash in lawful money of the United States, payable at time of sale. Trustee may postpone sale of all or any portion of said property by public announcement at such time and place of sale, and from time to time thereafter may postpone such sale by public announcement at the time fixed by the preceding postponement. Trustee shall deliver to such purchaser its deed conveying the property so sold, but without any covenant or warranty, express or implied. The recitals in such deed of any matters or facts shall be conclusive proof of the truthfulness thereof. Any person, including Trustor, Trustee, or Beneficiary as hereinafter defined, may purchase at such sale. After deducting all costs, fees and expenses of Trustee and of this Trust, including cost of evidence of title in connection with sale, Trustee shall apply the proceeds of sale to payment of: all sums expended under the terms hereof, not then repaid, with accrued interest at the amount allowed by law in effect at the date hereof; all other sums then secured hereby; and the remainder, if any, to the person or persons legally entitled thereto. (7) Beneficiary, or any successor in ownership of any indebtedness secured hereby, may from time to time, by instrument in writing, substitute a successor or successors to any Trustee named herein or acting hereunder, which instrument, executed by the Beneficiary and duly acknowledged and recorded in the office of the recorder of the county or counties where said property is situated, shall be conclusive proof of proper substitution of such successor Trustee or Trustees, who shall, without conveyance from the Trustee predecessor, succeed to all its title, estate, rights, powers and duties. Said instrument must contain the name of the original Trustor, Trustee and Beneficiary hereunder, the book and page where this Deed is recorded and the name and address of the new Trustee. (8) That this Deed applies to, inures to the benefit of, and binds all parties hereto, their heirs, legatees, devisees, administrators, executors, successors and assigns. The term Beneficiary shall mean the owner and holder, including pledgees, of the note secured hereby, whether or not named as Beneficiary herein. In this Deed, whenever the context so requires, the masculine gender includes the feminine and/or neuter, and the singular number includes the plural. (9) That Trustee accepts this Trust when this Deed, duly executed and acknowledged, is made a public record as provided by law. Trustee is not obligated to notify any party hereto of pending sale under any other Deed of Trust or of any action or proceeding in which Trustor, Beneficiary or Trustee shall be a party unless brought by Trustee. DO NOT RECORD REQUEST FOR FULL RECONVEYANCE TO TRUSTEE: The undersigned is the legal owner and holder of the note or notes, and of all other indebtedness secured by the foregoing Deed of Trust. Said note or notes, together with all other indebtedness secured by said Deed of Trust, have been fully paid and satisfied; and you are hereby requested and directed, on payment to you of any sums owing to you under the terms of said Deed of Trust, to cancel said note or notes above mentioned, and all other evidences of indebtedness secured by said Deed of Trust delivered to you herewith, together with the said Deed of Trust, and to reconvey, without warranty, to the parties designated by the terms of said Deed of Trust, all the estate now held by you under the same. Dated ______________________ ___________________________________________ ___________________________________________ Please mail Deed of Trust, Note and Reconveyance to ________________________________________________________ DO NOT LOSE OR DESTROY THIS DEED OF TRUST OR THE NOTE WHICH IT SECURES. BOTH MUST BE DELIVERED TO THE TRUSTEE FOR CANCELLATION BEFORE RECONVEYANCE WILL BE MADE. DEED OF TRUST WITH POWER OF SALE EX-10.54 4 PROMISSORY NOTE EXHIBIT 10.54 DO NOT DESTROY THIS NOTE: WHEN PAID, THIS NOTE AND DEED OF TRUST SECURING IT MUST BE SURRENDERED TO TRUSTEE FOR CANCELLATION BEFORE RECONVEYANCE WILL BE MADE PROMISSORY NOTE $200,000 June 25, 1996 San Diego, California FOR VALUE RECEIVED, Randall E. Woods, an individual residing in the State of California ("Borrower"), hereby unconditionally promises to pay to the order of Corvas International, Inc., a California corporation ("Lender"), in lawful money of the United States of America and in immediately available funds, the principal sum of Two Hundred Thousand Dollars ($200,000.00) (the "Loan"), and any amounts due thereon, payable on the date and in the manner set forth below. This Loan is made in connection with the relocation of Borrower to San Diego, California. This Promissory Note is the note referred to in and is executed and delivered in connection with that certain Deed of Trust of even date herewith, by and between Borrower and Lender encumbering that certain real property in Potomac, Maryland (the "Property") (as the same may from time to time be amended, modified or supplemented, the "Deed of Trust"). All terms defined in the Deed of Trust shall have the same definitions when used herein, unless otherwise defined herein. 1. REPAYMENT. The outstanding principal amount of the Loan shall be due and payable on the earlier of (i) the six-month anniversary of the date of this note or (ii) the closing of the sale of the Property or any transfer by Borrower of the interest therein; provided that, in the event of the termination of employment of Borrower with Lender for any reason or no reason (with or without cause), the outstanding principal amount of the Loan, shall be due and payable within ninety (90) days of such termination, if earlier than the dates set forth in (i) and (ii). The Loan may be prepaid at any time without penalty. 2. APPLICATION OF PAYMENTS/PLACE OF PAYMENT. All payments received by Lender shall be applied first to any charges due with respect to this Note or any other document executed by Maker in connection herewith, and then to the unpaid principal balance. All amounts payable hereunder shall be payable at the office of Lender, 3030 Science Park Road, San Diego, CA 92121, unless another place of payment shall be specified in writing by Lender. Any amounts payable hereunder will be due and payable without set-off, deduction, or counter-claim, except as otherwise provided herein. 3. SECURED NOTE. This Note is secured by the Deed of Trust on the Property. Borrower shall not, directly or indirectly, suffer or permit to be created or to remain, and shall promptly discharge, any lien on the Property, or in any portion thereof, except as permitted pursuant to the Deed of Trust. In addition, Borrower shall not suffer any other matter whereby 1. an interest of Lender under the Deed of Trust or in any lien pursuant to the Deed of Trust or any part of the foregoing might be impaired, except as permitted pursuant to such Deed of Trust. 4. DEFAULT/REMEDIES. Borrower wil be in default under this Note upon the occurrence of any one or more of the following events: (1) Borrower's failure to pay timely any of the principal amount due under this Note on the date the same becomes due and payable or other amounts due under this Note on the date the same becomes due and payable or within five (5) calendar days thereafter shall constitute a default under this Note, or (2) the death (in the case of individuals) or dissolution or termination (in the case of business entities) of any maker, endorser, guarantor, or of a general partner of any of the foregoing. Upon the occurrence of a default hereunder, all unpaid principal and any other amounts owing hereunder shall, at the option of Lender, be immediately collectible by Lender pursuant to applicable law, and Lender may exercise any and all remedies provided under Deed of Trust. 5. WAIVERS. Maker, and any endorsers or guarantors hereof, severally waive diligence, presentment, protest and demand and also notice of protest, demand, dishonor, acceleration, intent to accelerate, and nonpayment of this Note, and expressly agree that this Note, or any payment hereunder, may be extended from time to time without notice, and consent to the acceptance of further security or the release of any security for this Note, all without in any way affecting the liability of Maker or any endorsers or guarantors hereof. No extension of time for the payment of this Note, or any installment hereof, agreed to by Holder with any person now or hereafter liable for the payment of this Note, shall affect the original liability of Maker under this Note, even if Maker is not a party to such agreement. Borrower waives presentment and demand for payment, notice of dishonor, protest and notice of protest of this Note, and shall pay all costs of collection when incurred, including, without limitation, reasonable attorneys' fees, costs and other expenses. The right to plead any and all statutes of limitations as a defense to any demands hereunder is hereby waived to the full extent permitted by law. 6. GOVERNING LAW. This Note shall be governed by, and construed and enforced in accordance with, the laws of the State of California, excluding conflict of laws principles that would cause the application of laws of any other jurisdiction. 7. SUCCESSORS AND ASSIGNS. The provisions of this Note shall inure to the benefit of and be binding on any successor to Borrower and shall extend to any holder hereof. 8. MISCELLANEOUS. a. Maker shall pay all costs, including, without limitation, reasonable attorneys' fees incurred by Holder in collecting the sums due hereunder or in connection with the release of any security for this Note. b. This Note may be modified only by a written agreement executed by Maker and Holder. 2. c. Time is of the essence with respect to all matters set forth in this Note. d. If this Note is destroyed, lost or stolen, Maker will deliver a new note to Holder on the same terms and conditions s this Note with a notation of the unpaid principal in substitution of the prior Note. Holder shall furnish to Maker reasonable evidence that the Note was destroyed, lost or stolen and any security or indemnity that may be reasonably required by Maker in connection with the replacement of this Note. e. If any provision of this Note shall be held to be invalid or unenforceable, such determination shall not affect the remaining provisions of this Note. f. In the event an action is commenced to interpret or enforce this Note or to collect any sums due hereunder, the prevailing party shall be entitled to receive from the other party, attorneys' fees and costs as determined by the court in which such action is pending. /S/ RANDALL E. WOODS -------------------- Randall E. Woods 3. DEED OF TRUST THIS DEED OF TRUST ("Security Instrument") is dated as of June 25, 1996. The grantors, jointly as husband and wife, are Randall E. Woods and Nancy Saint-Woods ("Borrowers"). The trustee is Stewart Title ("Trustee"). The beneficiary is Corvas International, Inc., which is organized and existing under the laws of California and whose address is 3030 Science Park Road, San Diego, California 92121 ("Lender"). Borrowers owe Lender the principal sum of Two Hundred Thousand Dollars (U.S. $200,000.00). This debt is evidenced by Borrowers' note dated the same date as this Security Instrument ("Note"), which provides that the full debt, if not paid earlier, shall be due and payable no later than six (6) months after the date of execution. This Security Instrument secures to Lender: (a) the repayment of the debt evidenced by the Note, and all renewals, extensions and modifications of the Note; (b) the payment of all other sums, advanced under paragraph 6 to protect the security of this Security Instrument; and (c) the performance of Borrowers' covenants and agreements. For this purpose, Borrowers irrevocably grant and convey to Trustee, in trust, with power of sale, the following described property located in Montgomery County, Maryland: SEE EXHIBIT A ATTACHED HERETO AND INCORPORATED HEREIN BY REFERENCE, which has the address of 10314 Cutters Lane, Potomac, Maryland 20854; TOGETHER WITH all the improvements now or hereafter erected on the property, and all easements, appurtenances, and fixtures now or hereafter a part of the property. All replacements and additions shall also be covered by this Security Instrument. All of the foregoing is referred to in this Security Instrument as the "Property." BORROWERS COVENANT that Borrowers are lawfully seised of the estate hereby conveyed and has the right to grant and convey the Property and that the Property is unencumbered, except for encumbrances of record. Borrowers warrant and will defend generally the title to the Property against all claims and demands, subject to any encumbrances of record. THIS SECURITY INSTRUMENT combines uniform covenants for national use and non-uniform covenants with limited variations by jurisdiction to constitute a uniform security instrument covering real property. 1. UNIFORM COVENANTS. Borrow and Lender covenant and agree as follows: 1. PAYMENT OF PRINCIPAL AND INTEREST; PREPAYMENT AND LATE CHARGES. Borrowers shall promptly pay when due the principal of the debt evidenced by the Note and any prepayment and late charges due under the Note. 2. APPLICATION OF PAYMENTS. Unless applicable law provides otherwise, all payments received by Lender under paragraph 1 shall be applied; first, to any prepayment charges due under the Note; second, to interest due, if any; to principal due; and last, to any late charges due under the Note. 3. CHARGES; LIENS. Borrowers shall pay all taxes, assessments, charges, fines and impositions attributable to the Property which may attain priority over this Security Instrument, and leasehold payments, senior mortgages and encumbrances, or ground rents, if any. Borrowers shall pay them on time directly to the person owed payments. Upon request, Borrowers shall promptly furnish to Lender all notices of amounts to be paid under this paragraph. If Borrowers make these payments directly, Borrowers shall promptly furnish to Lender receipts evidencing the payments. Borrowers shall promptly discharge any lien which has priority over this Security Instrument unless Borrowers: (a) agree in writing to the payment of the obligation secured by the lien in a manner acceptable to Lender; (b) contest in good faith the lien by, or defends against enforcement of the lien in, legal proceedings which in the Lender's opinion operate to prevent the enforcement of the lien; or (c) secure from the holder of the lien an agreement satisfactory to Lender subordinating the lien to this Security Instrument. If Lender determines that any part of the Property is subject to a lien which may attain priority over this Security Instrument, Lender may give Borrowers a notice identifying the lien. Borrowers shall satisfy the lien or take one or more of the actions set forth above within 10 days of the giving of notice. 4. HAZARD OR PROPERTY INSURANCE. Borrowers shall keep the improvements now existing or hereafter erected on the Property insured against loss by fire, hazards included within the term "extended coverage" and any other hazards, including floods or flooding, for which Lender requires insurance. This insurance shall be maintained in the amounts and for the periods that Lender requires. The insurance carrier providing the insurance shall be chosen by Borrowers subject to Lender's approval which shall not be unreasonably withheld. If Borrowers fail to maintain coverage described above, Lender may, at Lender's option, obtain coverage to protect Lender's rights in the Property in accordance with paragraph 6. All insurance policies and renewals shall be acceptable to Lender and shall include a standard mortgage clause. Lender shall have the right to hold the policies and renewals. If Lender requires, Borrowers shall promptly give to Lender all receipts of paid premiums and renewal notices. In the event of loss, Borrowers shall give prompt notice to the insurance carrier and Lender. Lender may make proof of loss if not made promptly by Borrowers. 2. Unless Lender and Borrowers otherwise agree in writing, insurance proceeds shall be applied to restoration or repair of the Property damaged. If the restoration or repair is not economically feasible or Lender's security would be lessened, the insurance proceeds shall be applied to the sums secured by this Security Instrument, whether or not then due, with any excess paid to Borrowers. If Borrowers abandon the Property, or does not answer within 30 days a notice from Lender that the insurance carrier has offered to settle a claim, then Lender may collect the insurance proceeds. Lender may use the proceeds to repair or restore the Property or to pay sums secured by this Security Instrument, whether or not then due. The 30-day period will begin when the notice is given. If under paragraph 19 the Property is acquired by Lender, Borrowers' right to any insurance policies and proceeds resulting from damage to the Property prior to the acquisition shall pass to Lender to the extent of the sums secured by this Security Instrument immediately prior to the acquisition. 5. OCCUPANCY, PRESERVATION, MAINTENANCE AND PROTECTION OF THE PROPERTY; BORROWERS' LOAN APPLICATION; LEASEHOLDS. Borrowers shall not destroy, damage or impair the Property, allow the Property to deteriorate, or commit waste on the Property. Borrowers shall be in default if any forfeiture action or proceeding, whether civil or criminal, is begun that in Lender's good faith judgment could result in forfeiture of the Property or otherwise materially impair the lien created by this Security Instrument or Lender's security interest. Borrowers may cure such a default and reinstate, as provided in paragraph 16, by causing the action or proceeding to be dismissed with a ruling that, in Lender's good faith determination, precludes forfeiture of the Borrowers' interest in the Property or other material impairment of the lien created by this Security Instrument or Lender's security interest. Borrowers shall also be in default if Borrowers, during the loan application process, gave materially false or inaccurate information or statements to Lender (or failed to provide Lender with any material information) in connection with the loan evidenced by the Note, including, but not limited to, representations concerning Borrowers' occupancy of the Property as a principal residence. 6. PROTECTION OF LENDER'S RIGHTS IN THE PROPERTY. If Borrowers fail to perform the covenants and agreements contained in this Security Instrument, or there is a legal proceeding that may significantly affect Lender's rights in the Property (such as a proceeding in bankruptcy, probate, for condemnation or forfeiture or to enforce laws or regulations), then Lender may do and pay for whatever is necessary to protect the value of the Property and Lender's rights in the Property. Lender's actions may include paying any sums secured by a lien which has priority over this Security Instrument, appearing in court, paying reasonable attorneys' fees and entering on the Property to make repairs. Although Lender may take action under this paragraph 6, Lender does not have to do so. Any amounts disbursed by Lender under this paragraph 6 shall become additional debt of Borrowers secured by this Security Instrument. Unless borrower and Lender agree to other terms of payment, these amounts shall bear interest from the date if disbursement at the Note rate and shall be payable, with interest, upon notice from Lender to Borrowers requesting payment. 3. 7. INSPECTION. Lender or its agent may make reasonable entries upon and inspections of the Property. Lender shall give Borrowers notice at the time of or prior to an inspection specifying reasonable cause for the inspection. 8. CONDEMNATION. The proceeds of any award or claim for damages, direct or consequential, in connection with any condemnation or other taking of any part of the Property, or for conveyance in lieu of condemnation, are hereby assigned and shall be paid to Lender. In the event of a total taking of the Property, the proceeds shall be applied to the sums secured by this Security Instrument, whether or not then due, with any excess paid to Borrowers. In the event of a partial taking of the Property in which the fair market value of the Property immediately before the taking is equal to or greater than the amount of the sums secured by this Security Instrument shall be reduced by the amount of the proceeds multiplied by the following fraction: (a) the total amount of the sums secured immediately before the taking, divided by (b) the fair market value of the Property immediately before the taking. Any balance shall be paid to Borrowers. In the event of a partial taking of the Property in which the fair market value of the Property immediately before the taking is less than the amount of the sums secured immediately before the taking, unless Borrowers and Lender otherwise agree in writing or unless applicable law otherwise provides, the proceeds shall be applied to the sums secured by this Security Instrument whether or not the sums are then due. If the Property is abandoned by Borrowers, of if, after notice by Lender to Borrowers that the condemnor offers to make an award or settle a claim for damages, Borrowers fail to respond to Lender within 30 days after the date the notice is given, Lender is authorized to collect and apply the proceeds, at its option, either to restoration or repair of the Property or to the sums secured by this Security Instrument, whether or not then due. 9. BORROWERS NOT LEASED; FORBEARANCE BY LENDER NOT A WAIVER. Extension of the time for payment or modification of amortization of the sums secured by this Security Instrument granted by Lender to any successor in interest of Borrowers shall not operate to release the liability of the original Borrowers or Borrowers' successors to interest. Lender shall be not required to commence proceedings against any successor in interest or refuse to extend time for payment or otherwise modify amortization of the sums secured by this Security Instrument by reason of any demand made by the original Borrowers or Borrowers' successors in interest. Any forbearance by Lender in exercising any right or remedy shall not be a waiver of or preclude the exercise of any right or remedy. 10. SUCCESSORS AND ASSIGNS BOUND; JOINT AND SEVERAL LIABILITY; CO-SIGNERS. The covenants and agreements of this Security Instrument shall bind and benefit the successors and assigns of Lender and Borrowers, subject to the provisions of paragraph 15. Borrowers' covenants and agreements shall be joint and several. Any Borrowers who co-sign this Security Instrument but does not execute the Note: (a) is co-signing this Security Instrument only to mortgage, grant and convey that Borrowers' interest in the Property under the terms of this Security Instrument; (b) is not personally obligated to pay the sums secured by this Security 4. Instrument; and (c) agrees that Lender and any other Borrowers may agree to extend, modify, forbear or make any accommodations with regard to the terms of this Security Instrument or the Note without that Borrowers' consent. 11. LOAN CHARGES. If the loan secured by this Security Instrument is subject to a law which sets maximum loan charges, and that law is finally interpreted so that the interest or other loan charges collected or to be collected in connection with the loan exceed the permitted limits, then: (a) any such loan charge shall be reduced by the amount necessary to reduce the charge to the permitted limit; and (b) any sums already collected from Borrowers which exceeded permitted limits will be refunded to Borrowers. Lender may choose to make this refund by reducing the principal owed under the Note or by making a direct payment to Borrowers. If a refund reduces principal, the reduction will be treated as a partial prepayment without any prepayment charge under the Note. 12. NOTICES. Any notice to Borrowers provided for in this Security Instrument shall be given by delivering it or by mailing it by first class mail unless applicable law requires use of another method. The notice shall be directed to 6694 Calle Pequena, Rancho Sante Fe, California 92067, or any other address Borrowers designated by notice to Lender. Any notice to Lender shall be given by first class mail to Lender's address stated herein or any other address Lender designates by notice to Borrowers. Any notice provided for in this Security Instrument shall be deemed to have been given to Borrowers or Lender when given as provided in this paragraph. 13. GOVERNING LAW; SEVERABILITY. This Security Instrument shall be governed by federal law and the law of the jurisdiction in which the Property is located. In the event that any provision or clause of this Security Instrument or the Note conflicts with applicable law, such conflict shall not affect other provisions of this Security Instrument or the Note which can be given effect without the conflicting provision. To this end, the provisions of this Security Instrument and the Note are declared to be severable. 14. BORROWERS'S COPY. Borrowers shall be given one conformed copy of the Note and of this Security Instrument. 15. TRANSFER OF THE PROPERTY OR A BENEFICIAL INTEREST IN BORROWERS. If all or any part of the Property or any interest in it is sold or transferred (or if a beneficial interest in Borrowers is sold or transferred and Borrowers are not natural persons) without Lender's prior written consent, Lender may, at its option, require immediate payment in full of all sums secured by this Security Instrument. However, this option shall not be exercised by Lender if exercise is prohibited by federal law as of the date of this Security Instrument. If Lender exercises this option, Lender shall give Borrowers notice of acceleration. The notice shall provide a period of not less than 30 days from the date the notice is delivered or mailed within which Borrowers must pay all sums secured by this Security Instrument. If Borrowers fail to pay these sums prior to the expiration of this period, Lender may invoke any remedies permitted by this Security Instrument without further notice or demand on Borrowers. 5. 16. BORROWERS' RIGHT TO REINSTATE. If Borrowers meet certain conditions, Borrowers shall have the right to have enforcement of this Security Instrument discontinued at any time prior to the earlier of: (a) 5 days (or such other period as applicable may specify for reinstatement) before sale of the Property pursuant to any power of sale contained in this Security Instrument; or (b) entry of a judgment enforcing this Security Instrument. Those conditions are that Borrowers: (a) pays Lender all sums which then would be due under this Security Instrument and the Note as if no acceleration had occurred; (b) cures any default of any other covenants or agreements; (c) pays all expenses incurred in enforcing this Security Instrument, including, but not limited to, reasonable attorneys' fees; and (d) takes no action as Lender may reasonably require to assure that the lien of this Security Instrument, Lender's rights in the Property and Borrowers' obligation to pay the sums secured by this Security Instrument shall continue unchanged. Upon reinstatement by Borrowers, this Security Instrument and the obligations secured hereby shall remain fully effective as if no acceleration had occurred. However, this right to reinstate shall not apply in the case of acceleration under paragraph 19. 17. SALE OF NOTE; CHANGE OF LOAN SERVICER. The note or a partial interest in the Note (together with this Security Instrument) may be sold one or more times without prior notice to Borrowers. A sale may result in a change in the entity (known as the "Loan Servicer") that collects monthly payments due under the Note and this Security Instrument. There also may be one or more changes of the Loan Servicer unrelated to a sale of the Note. If there is a change of the Loan Servicer, Borrowers will be given written notice of the change in accordance with paragraph 12 above and applicable law. The notice will state the name and address of the new Loan Servicer and the address to which payments should be made. The notice will also contain any other information required by applicable law. 18. HAZARDOUS SUBSTANCES. Borrowers shall not cause or permit the presence, use, disposal, storage, or release of any Hazardous Substances on or in the Property. Borrowers shall not do, nor allow anyone else to do, anything affecting the Property that is in violation of any Environmental Law. The preceding two sentences shall not apply to the presence, use, or storage on the property of small quantities of Hazardous Substances that are generally recognized to be appropriate to normal residential uses and to maintenance of the Property. Borrowers shall promptly give Lender written notice of any investigation, claim, demand, lawsuit or other action by any governmental or regulatory agency or private party involving the Property and any Hazardous Substance or Environmental Law of which Borrowers have actual knowledge. If Borrowers learn, or is notified by any governmental or regulatory authority, that any removal or other remediation of any Hazardous Substance affecting the Property is necessary, Borrowers shall promptly take all necessary remedial actions in accordance with Environmental Law. As used in this paragraph 18, "Hazardous Substances" are those substances defined as toxic or hazardous substances by Environmental Law and the following substances: gasoline, kerosene, other flammable or toxic petroleum products, toxic pesticides and herbicides, volatile solvents, materials containing asbestos or formaldehyde, and radioactive materials. As used in 6. this paragraph 18, "Environmental Law" means federal laws and laws of the jurisdiction where the Property is located that relate to health, safety or environmental protection. NON-UNIFORM COVENANTS. Borrowers and Lender further covenant and agree as follows: 19. ACCELERATION; REMEDIES. Lender shall give notice to Borrowers prior to acceleration following Borrowers' breach of any covenant or agreement in this Security Instrument (but not prior to acceleration under paragraph 15 unless applicable law provides otherwise). The notice shall specify: (a) the default; (b) the action required to cure the default; (c) a date, not less than 30 days from the date the notice is given to Borrowers, by which the default must be cured; and (d) that failure to cure the default on or before the date specified in the notice may result in acceleration of the sums secured by this Security Instrument and sale of the Property. The notice shall further inform Borrowers of the right to reinstate after acceleration and the right to assert in the foreclosure proceeding the non-existence of a default or any other defense of Borrowers to acceleration and sale. If the default is not cured on or before the date specified in the notice, Lender, at its option, may require immediate payment in full of all sums secured by this Security Instrument without further demand and may invoke the power of sale and any other remedies permitted by applicable law. Lender shall be entitled to collect all expenses incurred in pursuing the remedies permitted by applicable law. Lender shall be entitled to collect all expenses incurred in pursuing the remedies provided in this paragraph 19, including, but not limited to, reasonable attorneys' fees and costs of title evidence. If Lender invokes the power of sale, Lender shall mail or cause Trustee to mail a notice of sale to Borrowers in the manner prescribed by applicable law. Trustee shall give notice of sale by public advertisement for the time and in the manner prescribed by applicable law. Trustee, without demand on Borrowers, shall sell the Property at public auction to the highest bidder at the time and place and under the terms designated in the notice of sale in one or more parcels and in any order Trustee determines. Trustee may postpone sale of all or any parcel of the Property by public announcement at the time and place of any previously scheduled sale. Lender or its designee may purchase the Property at any sale. Trustee shall deliver to the purchaser Trustee's deed conveying the Property without any covenant or warranty, expressed or implied. The recitals in the Trustee's deed shall be prima facie evidence of the truth of the statements made therein. Trustee shall apply the proceeds of the sale in the following order: (a) to all expenses of the sale, including, but not limited to, reasonable Trustee's fees and reasonable attorneys' fees; (b) first mortgage or deed of trust in favor of Crestar Bank, Potomac, MD., (c) to all sums secured by this Security Instrument; and (d) any excess to the person or persons legally entitled to it. Borrowers, in accordance with Subtitle W of the Maryland Rules of Procedure, does hereby declare and assent to the passage of a decree to sell the Property in one or more parcels by the equity court having jurisdiction for the sale of the Property, and consents to the granting to any trustee appointed by the assent to decree of all rights, powers and remedies granted to the Trustee in this Security Instrument together with any and all rights, powers and remedies 7. granted by the decree. Neither the assent to decree nor the power of sale granted in this paragraph 19 shall be exhausted in the event the proceeding is dismissed before the payment in full of all sums secured by this Security Instrument. 20. RELEASE. Upon payment of all sums secured by this Security Instrument, Lender or Trustee, shall release this Security Instrument without charge to Borrowers and mark the Note "paid" and return the Note to Borrowers. Borrowers shall pay any recordation costs. 21. SUBSTITUTE TRUSTEE. Lender, at its option, may from time to time remove Trustee and appoint a successor trustee to any Trustee appointed hereunder by an instrument recorded in the city or county in which this Security Instrument is recorded. Without conveyance of the Property, the successor trustee shall succeed to all the title, power and duties conferred upon Trustee herein and by applicable law. 22. POSSESSION OF THE PROPERTY. Borrowers shall have possession of the Property until Lender has given Borrowers notice of default pursuant to paragraph 19 of this Security Instrument. 23. RIDERS TO THIS SECURITY INSTRUMENT. If one or more riders are executed by Borrowers and recorded together with this Security Instrument, the covenants and agreements of each such rider shall be incorporated into and shall amend and supplement the covenants and agreements of this Security Instrument as if the rider(s) were a part of this Security Instrument. [Check applicable box(es)] / / Adjustable Rate Rider / / Condominium Rider / / 1-4 Family Rider / / Graduated Payment Rider / / Planned Unit Development Rider / / Biweekly Payment Rider / / Balloon Rider / / Rate Improvement Rider / / Second Home Rider / / V.A. Rider / / Other(s) (specify) 8. BY SIGNING BELOW, Borrowers accept and agree to the terms and covenants contained in this Security Instrument and in any rider(s) executed by Borrowers and recorded with it. WITNESSES: /S/ RANDALL E. WOODS -------------------- /S/ ANGELA L. HARTLEY Borrower - --------------------- /S/ NANCY SAINT WOODS --------------------- /S/ DEBRA BAUM Borrower - -------------- STATE OF CALIFORNIA ) ) SS. COUNTY OF SAN DIEGO ) On JUNE 27, 1996 before me, the undersigned, a Notary Public in and for -------------------- said State, personally appeared, RANDALL E. WOODS - -------------------------------------------------------------------------------- NANCY SAINT WOODS - -------------------------------------------------------------------------------- personally known to me (or proved to me on the basis of satisfactory evidence) to be the persons whose names subscribed to the within instrument and acknowledged that they executed the same in their authorized capacity(ies), and that by their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. Witness my hand and official seal. Signature /S/ LINDA K. KNIGHT ---------------------------------------------------------------------- LINDA K. KNIGHT - -------------------------------------------------------------------------------- Name (Typed or Printed) [NOTARY SEAL] 9. THIS DEED, made this 24th day of January, 1994, by and between WILLIAM J. KANE and NOREEN S. KANE, parties of the first part, and RANDALL E. WOODS and NANCY S. WOODS, parties of the second part. WITNESSETH, that in consideration of the sum of $699,900.00, the said parties of the first part do grant and convey to the said parties of the second part, as tenants by the entirety, their heirs, personal representatives/successors and assigns, in fee simple, all that piece or parcel of land situate, in MONTGOMERY COUNTY, Maryland and described as follows, to wit: LOT 8 IN THE SUBDIVISION OF GLEN HAMLET AS PER PLAT THEREOF RECORDED IN PLAT BOOK 140 AT PLAT 16149 AMONG THE LAND RECORDS OF MONTGOMERY COUNTY, MARYLAND. BEING all of the same land conveyed to the grantors herein by Deed recorded in LIBER 8471, FOLIO 339. BY THE EXECUTION of this Deed, the parties of the first part hereby warrant under the penalties of perjury that the actual consideration paid or to be paid, including the amount of any mortgage or deed of trust assumed by the parties of the second part, is in the sum total of $699,900.00. TO HAVE AND TO HOLD the property hereby conveyed unto the parties of the second part, as tenants by the entirety, their personal representatives, heirs and assigns, in fee simple, forever. TOGETHER WITH all and singular the ways, easements, right, and privileges and appurtenances to the same belonging or in anywise appertaining, and all the estate, right, title, interest, and claim, either at law or in equity or otherwise however, of the said parties of the first part, of, in, to, or out of the said land and premises; subject to all easements, convenants and restrictions of record. AND the parties of the first part herein warrant specially the property hereby conveyed; and convenant to execute such further assurances of said land as may be requisite. WITNESS the hands and seals the day and year first hereinbefore written. Witness: /S/ MARC SANDSTROM /S/ WILLIAM J. KANE (SEAL) - ------------------ --------------------- WILLIAM J. KANE /S/ MARC SANDSTROM /S/ NOREEN S. KANE (SEAL) - ------------------ --------------------- NOREEN S. KANE STATE OF CALIFORNIA COUNTY OF SAN DIEGO, TO WIT: I hereby Certify, That on this 24th day of January, 1994, before me, the subscriber, a Notary Public of the state and county aforesaid, personally appeared WILLIAM J. KANE and NOREEN S. KANE, known to me (or satisfactorily proven) to be the persons whose names before subscribed to the within instrument and acknowledged that they executed the same for the purposes therein contained, and signed the same in my presence. IN WITNESS WHEREOF, I hereunto set my hand and official seal. My Commission Expires: 2-5-96 /S/ GAIL M. LOVEJOY ------------------- NOTARY PUBLIC [NOTARY SEAL] EX-10.55 5 SEPARATION AGREEMENT July 18, 1996 Donald H. Picker, Ph.D. 15828 Highland Court Solana Beach, California 92075 Dear Don: This letter sets forth the terms and conditions of our agreement ("Agreement") regarding the termination of your employment with Corvas International, Inc. (the "Company"). You and the Company hereby agree as follows: 1. The Company shall accept your resignation as Chief Operating Officer as of July 8, 1996 ( the "Separation Date"). 2. Within five (5) business days of the Separation Date, the Company will pay you all accrued salary, and all accrued and unused vacation earned through the Separation Date, subject to standard payroll deductions, withholding taxes and other obligations. You are entitled to this payment regardless of whether or not you sign this Agreement. 3. You shall be entitled to continuation of your base salary for a period of one hundred eighty (180) days from your Separation Date (the "severance payment"). In exchange for the promises and covenants set forth herein, the Company agrees to accelerate the severance payments such that you shall receive such payments in a single lump sum payment, payable within ten (10) business days of the execution of this Agreement. You understand that you are responsible for the payment of any and all applicable state and federal taxes with respect to such payments, and that the Company shall withhold from such payment any and all applicable payroll deductions, withholding taxes and other obligations. You also understand and agree that the Company shall be entitled to deduct the following other obligations from your lump sum severance payment: (1) your pro-rata share of payment for health benefits for a period of one hundred eighty (180) days; (2) $5,400, which comprises the interest due on the loan granted to you pursuant to the Promissory Note Secured by Second Deed of Trust dated February 23, 1996 (the "Secured Note") for a period of one hundred eighty (180) days; and (3) certain personal expenses paid by the Company on your behalf. Donald H. Picker, Ph.D. July 18, 1996 Page Two 4. Paragraph 2 of the Secured Note provides for acceleration of the payment of the entire outstanding principal balance of the Secured Note if you resign your employment with the Company or your employment with the Company is terminated for cause as defined therein. In exchange for the promises and covenants set forth herein, the Company agrees that it will not pursue any rights it may have under that particular portion of the Secured Note. Except as so limited in this paragraph, all other rights and remedies provided to the Company under the Secured Note shall remain in full force and effect. Attached hereto as Exhibit "A", and incorporated herein as if set forth in full, is a copy of the Secured Note. 5. If upon January 1, 1997, you have not yet obtained full-time employment, the Company agrees in exchange for the promises and covenants set forth herein, to provide you with up to a three month grace period in which to pay the interest payments on the loan granted to you pursuant to the Secured Note. Any and all accrued interest during this period of time must be paid to the Company no later than April 1, 1997 or earlier if you obtain full-time employment before April 1, 1997. Except as so limited in this paragraph, all other rights and remedies provided to the Company under the Secured Note shall remain in full force and effect. You agree that you will notify the Company in writing within five (5) business days of receipt of an offer of employment with another Company. 6. The Promissory Note made by you in favor of the Company in the amount of $120,000 on February 23, 1996 ("Promissory Note") specifies that under certain circumstances you are entitled to a forgiveness of indebtedness of $60,000 on the date one year from the date thereof. In exchange for the promises and covenants set forth herein, and subject to your substantial compliance with this Agreement, the Company agrees to forgive such $60,000 on February 21, 1997. 7. The Company agrees to pay you an amount equal to that which you would receive, at your prior level of salary on the Separation Date, from the Employment Development Department ("EDD") under the Unemployment Insurance plan. Such payments shall be paid bi-weekly until the earlier of the following events: (1) you obtain other employment; or (2) twenty-six (26) weeks from the Separation Date have elapsed. You agree and understand that you will not be entitled to receive any unemployment benefits from the EDD. You also agree that you will not appeal any decision of the EDD rejecting your claim for unemployment benefits. Donald H. Picker, Ph.D. July 18, 1996 Page Three 8. To the extent permitted by the federal COBRA law and by the Company's current group health insurance policies, you will be eligible to continue your health insurance benefits. Corvas will agree to pay the same portion of the insurance premium it has previously paid for health insurance benefits on your behalf through December 31, 1996, plus any additional costs resulting from COBRA. You will be responsible for a sixty dollar ($60.00) monthly contribution which will be deducted from your severance payment as specified in paragraph 3 herein. As of January 1, 1997 you will be solely responsible for payment of your health insurance benefits in accordance with COBRA requirements. Attached hereto for your review as Exhibit "B" is a notice of your COBRA rights. 9. You hereby acknowledge and agree that except as expressly provided herein, you will not receive (nor are you entitled to) any additional compensation, severance, benefits or stock options, notwithstanding any prior agreement to the contrary, after the Separation Date. 10. You agree that, within ten (10) days of the Separation Date, you will submit your final documented expense reimbursement statement reflecting all business expenses you incurred through the Separation Date, if any, for which you seek reimbursement. The Company will reimburse you for these expenses pursuant to its regular business practice. 11. You agree that for one year after the Separation Date, you will not, either directly or through others, solicit or attempt to solicit any employee, consultant, or independent contractor of the Company to terminate his or her relationship with the Company in order to become an employee, consultant or independent contractor to or for any other person or entity. 12. Within five (5) days of the Separation Date, you agree to return to the Company all Company documents (and all copies thereof) and other Company property in your possession or your control, including, but not limited to, Company files, notes, laboratory notebooks, drawings, specifications, calculations, sequences, data, computer-recorded information, tangible property, including, but not limited to, computers, credit cards, entry cards, keys and any other materials of any nature pertaining to your work with the Company, and any documents or data of any description (or any reproduction of any documents or data) containing or pertaining to any proprietary or confidential material of the Company. Donald H. Picker, Ph.D. July 18, 1996 Page Four 13. You acknowledge and agree that you will continue to be bound by the terms of your Employment Agreement dated February 2, 1996 (which, in part, regards non-disclosure and assignment of invention), a copy of which is attached hereto as Exhibit "C". 14. You and the Company agree that neither party will at any time disparage the other party, and the other party's officers, directors, employees, shareholders and agents, in any manner likely to be harmful to them or their business, business reputation or personal reputation; provided that each party shall respond accurately and fully to any questions, inquiry or request for information when required by legal process. 15. The provisions of this Agreement shall be held in strictest confidence by you and the Company and shall not be publicized or disclosed in any manner whatsoever; provided, however, that: (a) you may disclose this Agreement, in confidence, to your immediate family; (b) the parties may disclose this Agreement in confidence to their respective attorneys, accountants, auditors, tax preparers, and financial advisors; (c) the Company may disclose this Agreement as necessary to fulfill standard or legally required corporate reporting or disclosure requirements; and (d) the parties may disclose this Agreement insofar as such disclosure may be necessary to enforce its terms or as otherwise required by law. 16. You hereby release, acquit, and forever discharge the Company, its parents and subsidiaries, and their officers, directors, agents, servants, employees, attorneys, shareholders, partners, successors, assigns, affiliates, customers, and clients of and from any and all claims liabilities, demands, causes of action, costs, expenses, attorneys' fees, damages, indemnities and obligations of every kind and nature, in law, equity, or otherwise, known and unknown, suspected and unsuspected, disclosed and undisclosed, arising out of or in any way related to agreements, acts or conduct at any time prior to the Separation Date, including, but not limited to: all such claims and demands directly or indirectly arising out of or in any way connected with the Company's employment of you, the termination of that employment, and the Company's performance of its obligations as your former employer; claims or demands related to salary, bonuses, commissions, stock, stock options, or any other ownership interests in the Company, vacation pay, fringe benefits, expense reimbursements, severance pay, or any form of compensation; claims pursuant to any federal, state or local law or cause of action including, but not limited to, the California Fair Employment and Housing Act, the Donald H. Picker, Ph.D. July 18, 1996 Page Five federal Civil Rights Act of 1964, as amended; the federal Age Discrimination in Employment Act of 1967, as amended; the federal Americans With Disabilities Act; tort law; contract law; wrongful discharge; discrimination; harassment; fraud; defamation; emotional distress; and breach of the implied covenant of good faith and fair dealing. You further acknowledge that you are knowingly and voluntarily waiving and releasing any rights you may have under the Age Discrimination in Employment Act of 1967 ("ADEA"). You also acknowledge that the consideration (which includes, without limitation, the acceleration of severance payments specified in Paragraph 3, the election not to accelerate loan payments under the Secured Note as specified in Paragraph 4 and the forgiveness of indebtedness of $60,000 as specified in Paragraph 6) given for the waiver and release in the preceding paragraphs hereof is in addition to anything of value to which you were already entitled. If you are more than forty (40) years of age or older when this release is signed, you hereby provide the further acknowledgment that you are advised by this writing, as required by the Older Workers Benefit Protection Act, that: (a) your waiver and release do not apply to any rights or claims that may arise after the Effective Date of this release; (b) you have the right to consult with an attorney prior to executing this release (although you may voluntarily choose not to do so); (c) you may have at least twenty-one (21) days to consider this Agreement (although you may by your own choice execute this release earlier); (d) you have seven (7) days following the execution of this release to revoke this release; and (e) this Agreement shall not be effective until the date upon which the revocation period has expired, therefore making the effective date the eighth day after this release is signed by you. 17. In giving this release, which includes claims which may be unknown to you at present, you hereby acknowledge that you have read and understand Section 1542 of the Civil Code of the State of California which reads as follows: A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor. You hereby expressly waive and relinquish all rights and benefits under this section and any law or legal principle of similar effect in any jurisdiction with respect to claims released hereby. Donald H. Picker, Ph.D. July 18, 1996 Page Six 18. The parties hereto hereby acknowledge that this is a compromise settlement of various matters, and that the promised payments in consideration of this Agreement shall not be construed to be an admission of any liability or obligation by either party to the other party or to any other person whomsoever. 19. This Agreement, including Exhibits A, B and C, constitutes the complete, final and exclusive embodiment of the entire Agreement between you and the Company with regard to the subject matter hereof. It is entered into without reliance on any promise or representation, written or oral, other than those expressly contained herein. It may not be modified except in a writing signed by you and a duly authorized officer of the Company. Each party has carefully read this Agreement, has been afforded the opportunity to be advised of its meaning and consequences by his or its respective attorneys, and signed the same of his or its free will. 20. This Agreement shall bind the heirs, personal representatives, successors, assigns, executors, and administrators of each party, and inure to the benefit of each party, its agents, directors, officers, employees, servants, heirs, successors and assigns. 21. This Agreement shall be deemed to have been entered into and shall be construed and enforced in accordance with the laws of the State of California as applied to contracts made and to be performed entirely within California. 22. If a court of competent jurisdiction determines that any term or provision of this Agreement is invalid or unenforceable, in whole or in part, then the remaining terms and provisions hereof shall be unimpaired. Such court will have the authority to modify or replace the invalid or unenforceable term or provision with a valid and enforceable term or provision that most accurately represents the parties' intention with respect to the invalid or unenforceable term or provision. 23. This Agreement may be executed in two counterparts, each of which shall be deemed an original, all of which together shall constitute one and the same instrument. Donald H. Picker, Ph.D. July 18, 1996 Page Seven Please confirm your assent to the foregoing terms and conditions of our Agreement by signing and returning to me the two copies of this letter which are enclosed herewith. Upon my receipt thereof, I will forward to you a fully executed duplicate original hereof. Sincerely, /S/ RANDALL E. WOODS Randall E. Woods President & Chief Executive Officer HAVING READ AND REVIEWED THE FOREGOING, I HEREBY AGREE TO AND ACCEPT THE TERMS AND CONDITIONS AS STATE ABOVE. Dated: 7/17/96 ----------- /S/ DONALD H. PICKER - ------------------------ Donald H. Picker, Ph.D. EX-27.1 6 FDS
5 1,000 6-MOS DEC-31-1996 JUN-30-1996 792 20,818 457 0 121 22,722 3,988 2,761 24,129 3,746 0 0 1 14 20,368 24,129 46 3,297 54 7,657 0 0 4 (3,761) 0 (3,761) 0 0 0 (3,761) (.30) (.30)
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