UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
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INTRODUCTORY NOTE
On June 13, 2025 (the “Closing Date”), Crescent Biopharma, Inc., a Cayman Islands exempted company (formerly known as GlycoMimetics, Inc., a Delaware corporation) (prior to the Closing Date, unless context otherwise requires, “GlycoMimetics” and, after the Closing Date, the “Company”), consummated the previously announced business combination (the “Closing”) pursuant to that certain Agreement and Plan of Merger and Reorganization, dated as of October 28, 2024, which agreement was subsequently amended on February 14, 2025 and April 28, 2025 (as amended, the “Merger Agreement”), by and among GlycoMimetics, Gemini Merger Sub Corp., a Delaware corporation and wholly owned subsidiary of GlycoMimetics (“First Merger Sub”), Gemini Merger Sub II, LLC, a Delaware limited liability company and wholly owned subsidiary of GlycoMimetics (“Second Merger Sub”), and Crescent Biopharma, Inc., a private Delaware corporation (prior to the Closing Date, unless context otherwise requires, “Crescent”).
Following the Reverse Stock Split (as defined below), which occurred immediately prior to the Closing of the Merger (as defined below), and as a result of and upon the effective time of the First Merger (as defined below) (the “First Effective Time”), (i) each then-outstanding share of common stock, par value $0.001 per share, of Crescent (the “Crescent common stock”) (including shares of Crescent common stock issued in the Crescent Pre-Closing Financing (as defined below) and excluding shares canceled pursuant to the Merger Agreement and excluding dissenting shares) automatically converted solely into the right to receive a number of shares of common stock, par value $0.001 per share, of GlycoMimetics (the “Company common stock,” and prior to the effective time of the Merger, the “GlycoMimetics common stock”) equal to the Exchange Ratio (as defined below); (ii) each then-outstanding share of Preferred Stock, par value $0.001 per share, of Crescent (the “Crescent preferred stock”) automatically converted into the right to receive a number of shares of Series A Non-Voting Convertible Preferred Stock, par value $0.001 per share, of GlycoMimetics (which are each convertible into 1,000 shares of Company common stock) (the “Company Series A Preferred Stock,” and prior to the effective time of the Merger, the “GlycoMimetics Series A Preferred Stock”), equal to the Exchange Ratio divided by 1,000; (iii) each then-outstanding option to purchase Crescent common stock was assumed by GlycoMimetics; (iv) each then-outstanding Crescent restricted stock unit was assumed by GlycoMimetics; (v) each then-outstanding pre-funded warrant to purchase shares of Crescent common stock was converted into a pre-funded warrant to purchase shares of Company common stock; (vi) each in-the-money option to acquire shares of GlycoMimetics common stock that was issued and outstanding (whether vested or unvested) was cancelled and converted into the right to receive a number of shares of Company common stock equal to the number of shares underlying such option; (vii) each GlycoMimetics restricted stock unit was cancelled and converted into the right to receive a number of shares of GlycoMimetics common stock equal to the number of unsettled shares of GlycoMimetics common stock underlying such GlycoMimetics restricted stock unit; and (viii) each share of GlycoMimetics common stock that was issued and outstanding at the First Effective Time remains issued and outstanding in accordance with its terms.
No fractional shares of Company common stock were issued in connection with the Merger, and no certificates or scrip for any such fractional shares were issued. Any fractional shares of Company common stock resulting from the conversion of shares of Crescent common stock (including shares of Crescent common stock issued in the Crescent Pre-Closing Financing) were issued as follows: (i) one share of Company common stock if the aggregate amount of fractional shares of Company common stock of any individual holder of Crescent common stock if upon conversion was equal to or exceeds 0.50 or (ii) no shares of Company common stock if the aggregate amount of fractional shares of Company common stock of any individual holder of Crescent common stock if upon conversion was less than 0.50, with no cash being paid for any fractional share eliminated by such rounding. Any fractional shares of Company Series A Preferred Stock that a holder of Crescent preferred stock would otherwise have been entitled to receive were aggregated with all fractional shares of Company Series A Preferred Stock issuable to such holder and rounded up to the nearest whole share of Company Series A Preferred Stock.
The Exchange Ratio was calculated using a formula intended to allocate existing GlycoMimetics and Crescent security holders a percentage of the Company. Based on GlycoMimetics’ and Crescent’s values as of the date of the Merger Agreement and capitalization as of June 13, 2025, the Exchange Ratio (as adjusted for the Reverse Stock Split) was 0.1445 shares of GlycoMimetics common stock for each share of Crescent common stock.
After giving effect to the Crescent Pre-Closing Financing, immediately following the completion of the Merger, GlycoMimetics securityholders owned approximately 2.7% of the capital stock of the Company post-Merger on a fully diluted basis, and Crescent securityholders, including shares of Crescent common stock and Crescent pre-funded warrants purchased in the Crescent Pre-Closing Financing, owned approximately 97.3% of the capital stock of the Company post-Merger.
On June 13, 2025, First Merger Sub merged with and into Crescent, with Crescent continuing as a wholly owned subsidiary of GlycoMimetics and the surviving corporation of the merger (the “First Merger”), and Crescent merged with and into Second Merger Sub, with Second Merger Sub being the surviving entity of the merger (the “Second Merger,” and together with the First Merger, the “Merger”). After the completion of the Merger, Second Merger Sub changed its corporate name to “Crescent Biopharma Operating Company, LLC” and GlycoMimetics changed its name to “Crescent Biopharma, Inc.” (the “Company Name Change”). The Merger is intended to qualify for federal income tax purposes as a tax-free reorganization under the provisions of Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”).
The material provisions of the Merger Agreement are described in Crescent’s definitive proxy statement/prospectus filed on Form S-4 with the U.S. Securities and Exchange Commission (the “SEC”), most recently amended on May 12, 2025 and declared effective on May 14, 2025 (as amended, the “Proxy Statement/Prospectus”), in the section entitled “The Merger Agreement” beginning on page 157, and are incorporated herein by reference.
The foregoing description of the Merger Agreement is not complete and is subject to and qualified in its entirety by reference to the complete text of the Merger Agreement, a copy of which is attached hereto as Exhibits 2.1, 2.2 and 2.3 and incorporated herein by reference.
Support and Lock-Up Agreements
Concurrently with the execution of the Merger Agreement, (a) certain Crescent stockholders (solely in their respective capacities as Crescent stockholders) holding approximately 98.4% of the outstanding shares of Crescent capital stock as of the Closing Date entered into support agreements with GlycoMimetics and Crescent to vote all of their shares of Crescent capital stock in favor of the adoption and approval of the Merger Agreement and the transactions contemplated thereby and against any alternative acquisition proposals (the “Crescent Support Agreements”) and (b) then-current and certain former directors and officers of GlycoMimetics holding approximately 1.7% of the outstanding shares of GlycoMimetics common stock as of the Closing Date entered into support agreements with GlycoMimetics and Crescent to vote all of their shares of GlycoMimetics common stock in favor of Proposal Nos. 1-3 of the Proxy Statement/Prospectus and against any alternative acquisition proposals (the “GlycoMimetics Support Agreements,” and together with the Crescent Support Agreements, the “Support Agreements”).
Certain of Crescent’s executive officers, directors and stockholders entered into lock-up agreements (the “Lock-Up Agreements”), pursuant to which such parties have agreed not to, except in limited circumstances, offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, or otherwise transfer or dispose of, directly or indirectly, any shares of GlycoMimetics common stock or any securities convertible into or exercisable or exchangeable for GlycoMimetics common stock, currently or thereafter owned, including shares of GlycoMimetics common stock issuable upon conversion of GlycoMimetics Series A Preferred Stock issued in exchange for shares of Crescent preferred stock in the Merger, but excluding, as applicable, shares purchased in the Crescent Pre-Closing Financing (including any shares of GlycoMimetics common stock issuable upon exercise of pre-funded warrants issued in exchange for pre-funded warrants to purchase shares of Crescent common stock sold in the Crescent Pre-Closing Financing), until 180 days after the effective time.
Descriptions of the Support Agreements and the Lock-Up Agreements are included in the Proxy Statement/Prospectus in the sections entitled “Agreements Related to the Merger—Support Agreements” and “Agreements Related to the Merger—Lock-Up Agreements” on page 176 and are incorporated herein by reference.
The foregoing descriptions of the Support Agreements and the Lock-Up Agreements are not complete and are subject to and qualified in their entirety by reference to the complete texts of the Form of Crescent Support Agreement, the Form of GlycoMimetics Support Agreement and the Form of Lock-Up Agreement, copies of which are attached hereto as Exhibits 10.1, 10.2 and 10.3, respectively, and are incorporated herein by reference.
Financing Transaction
In connection with the Merger, Crescent and GlycoMimetics entered into an amended and restated subscription agreement (the “Subscription Agreement”) with certain new and existing investors of Crescent (the “Financing Investors”), pursuant to which such investors purchased, immediately prior to the First Merger, 85,506,824 shares of Crescent common stock and 19,149,690 Crescent pre-funded warrants, for gross proceeds of approximately $200.0 million (which includes $40.5 million (including accrued and unpaid interest and premiums thereon) of proceeds previously received by Crescent from the issuance of convertible notes and accrued interest thereon) (the “Crescent Pre-Closing Financing”). Under the Subscription Agreement, the number of shares of Crescent common stock or Crescent pre-funded warrants, as applicable, was determined at a purchase price per share or warrant equal to (i) a valuation for Crescent equal to approximately $50.0 million, (ii) divided by the number of shares of Crescent common stock outstanding immediately prior to the First Effective Time of the Merger (but excluding the securities being issued under the Subscription Agreement).
The Crescent pre-funded warrants have an exercise price per share equal to $0.001 (as adjusted from time to time as provided in the form of pre-funded warrant) and may be exercised at any time and from time to time after the original issue date. The Crescent pre-funded warrants do not expire.
The shares of Crescent common stock and Crescent pre-funded warrants that are issued in the Crescent Pre-Closing Financing were or have the right to be, respectively, converted into shares of Company common stock in the Merger.
The Subscription Agreement contains customary representations and warranties of Crescent and also contains customary representations and warranties of the purchaser parties thereto.
A description of the Subscription Agreement is included in the Proxy Statement/Prospectus in the section entitled “Agreements Related to the Merger—Subscription Agreement” beginning on page 176 and is incorporated herein by reference.
The foregoing descriptions of the Subscription Agreement and Form of Pre-Funded Warrant are not complete and are subject to and qualified in their entirety by reference to the complete texts of the Form of Subscription Agreement and Form of Pre-Funded Warrant, respectively, copies of which are attached hereto as Exhibits 10.4 and 4.1, respectively, and are incorporated herein by reference.
Item 1.01 Entry into a Material Definitive Agreement.
Indemnification Agreements
The Company entered into indemnification agreements with each of its directors and executive officers (collectively, the “Indemnitees” and, the “Indemnification Agreements”) on June 18, 2025, effective as of the time such individual was duly elected or appointed as a director or executive officer of the Company, which replaced and superseded any previous indemnification agreements between the Company and each such individual. The Indemnification Agreements provide for certain indemnification and advancement of expenses by the Company in connection with actions or proceedings arising out of the Indemnitees’ service as directors or officers of the Company or service to other entities at the Company’s request, on the terms and subject to the conditions set forth therein.
The foregoing description of the Indemnification Agreements is not complete and is subject to and qualified in its entirety by reference to the complete text of the Indemnification Agreements, the form of which is attached hereto as Exhibit 10.5 and incorporated herein by reference.
Lease Agreement
The Company entered into a lease agreement, dated May 28, 2025, with Nano Dimension USA Inc. for approximately 24,750 square feet of office space in Waltham, Massachusetts (the “Lease”). The base rent under the Lease is approximately $569,250 per year and is subject to scheduled annual increases of $24,750 on each annual anniversary during the Lease term. The term of the Lease is until February 27, 2029, unless extended or earlier terminated pursuant to the terms of the Lease.
The foregoing description of the Lease is qualified in its entirety by the full text of the Lease, which is attached hereto as Exhibit 10.20 and incorporated herein by reference.
Item 2.01 Completion of Acquisition or Disposition of Assets.
The disclosure set forth in the “Introductory Note” above, including with respect to the Merger, is incorporated into this Item 2.01 by reference.
All of the proposals included in the Proxy Statement/Prospectus were approved by GlycoMimetics stockholders at a special meeting of stockholders held on June 5, 2025 (the “Special Meeting”) other than the proposal to adjourn the Special Meeting, which was not presented to the stockholders.
In connection with the consummation of the Merger, on the Closing Date:
| · | Crescent issued to the Financing Investors (prior to giving effect to the Exchange Ratio) an aggregate of 85,506,824 shares of Crescent common stock and 19,149,690 Crescent pre-funded warrants for gross proceeds of approximately $200.0 million, inclusive of shares issuable upon the conversion of the previously issued $40.5 million of convertible notes, including accrued and unpaid interest and premiums thereon; and |
| · | all of the then-outstanding (i) 6,169,753 shares of Crescent common stock, (ii) 20,000,000 shares of Crescent preferred stock, (iii) 26,004,515 outstanding options exercisable for shares of Crescent common stock, (iv) 3,033,820 shares of restricted stock units for shares of Crescent common stock, (v) 85,506,824 shares of common stock purchased in the Crescent Pre-Closing Financing and (vi) 19,149,690 pre-funded warrants purchased in the Crescent Pre-Closing Financing were automatically converted into the right to receive the number of Company common stock, Company Series A Preferred Stock or Company pre-funded warrants, in lieu thereof, equal to the exchange ratio calculated in accordance with the Merger Agreement (the “Exchange Ratio”), except for the preferred stock which was converted at a one thousand to one ratio. |
Immediately following the application of the Exchange Ratio (which was adjusted to give effect to the Reverse Stock Split (as defined below)), and following the consummation of the transactions contemplated by the Merger Agreement, the Company had 19,549,684 shares of Company common stock (assuming the exercise in full of all Company pre-funded warrants and including conversion of preferred stock but excluding outstanding employee and director option and restricted stock unit awards), which is comprised of:
| · | 13,892,562 shares of Company common stock (inclusive of issuances pursuant to the Merger Agreement and the Crescent Pre-Closing Financing); |
| · | 2,767,122 Company pre-funded warrants, each exercisable for one share of Company common stock at a price of $0.001 per share; and |
| · | 2,890,000 shares of Company common stock underlying Company Series A Preferred Stock. |
Immediately prior to the consummation of the Merger, GlycoMimetics effected a 1-for-100 reverse stock split of GlycoMimetics common stock, which became legally effective on June 13, 2025 (the “Reverse Stock Split”). The Company common stock commenced trading on a post-Reverse Stock Split, post-Merger basis at the open of trading on June 16, 2025.
FORM 10 INFORMATION
Item 2.01(f) of Form 8-K states that if the predecessor registrant was a “shell company” (as such term is defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), as GlycoMimetics was immediately before the Merger, then the registrant must disclose the information that would be required if the registrant were filing a general form for registration of securities on Form 10. Accordingly, the Company is providing the information below that would be included in a Form 10 if the Company were to file a Form 10. Please note that the information provided below relates to the Company as the combined company after the consummation of the Merger, unless otherwise specifically indicated or the context otherwise requires.
Cautionary Note Regarding Forward-Looking Statements
This Current Report on Form 8-K contains forward-looking statements within the meaning of Section 27A of the Securities Act and 21E of the Exchange Act, including statements regarding the anticipated benefits of the Merger and the financial condition, results of operations, and prospects of the Company. Any express or implied statements that do not relate to historical or current facts or matters are forward-looking statements. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. These forward-looking statements include, but are not limited to, express or implied statements regarding the Company’s expectations, hopes, beliefs, intentions or strategies regarding the future. In some cases, you can identify forward-looking statements by terminology such as “may,” “might,” “will,” “could,” “should,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “projects,” “seeks,” “target,” “endeavor,” “possible,” “potential,” “continue,” “contemplate” or the negative of these terms or other comparable terminology, but the absence of these words does not mean that a statement is not forward-looking. These forward-looking statements are based on current expectations and beliefs concerning future developments and their potential effects. There can be no assurance that future developments affecting the Company will be those that have been anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond the Company’s control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. In addition to other factors and matters contained in or incorporated by reference in this document, the Company believes the following factors could cause actual results to differ materially from those discussed in the forward-looking statements:
| · | expectations regarding the strategies, prospects, plans, expectations and objectives of management of the Company for future operations of the Company; |
| · | the ability of the Company to recognize the benefits that may be derived from the Merger, including the commercial or market opportunity of the product candidates of the Company; |
| · | the accuracy of the Company’s estimates regarding expenses, future revenue, capital requirements and needs for additional financing; |
| · | the outcome of any legal proceedings that may be instituted against the Company or any of its respective directors or officers related to the Merger Agreement or the transactions contemplated thereby; |
| · | the ability of the Company to protect its intellectual property rights; |
| · | competitive responses to the Merger; |
| · | legislative, regulatory, political and economic developments beyond the Company’s control; |
| · | the initiation, timing and success of clinical trials for the Company’s product candidates; |
| · | success in retaining, or changes required in, the Company’s officers, key employees or directors; |
| · | the Company’s public securities’ potential liquidity and trading; |
| · | regulatory actions with respect to the Company’s product candidates or its competitors’ products and product candidates; |
| · | the Company’s ability to manufacture its product candidates in conformity with the FDA’s requirements and to scale up manufacturing of its product candidates to commercial scale, if approved; |
| · | the Company’s reliance on third-party contract development and manufacturer organizations to manufacture and supply product candidates; |
| · | the beneficial characteristics, and the potential safety, efficacy and therapeutic effects of the Company’s product candidates; |
| · | the expected potential benefits of strategic collaboration with third parties and the Company’s ability to attract collaborators with development, regulatory and commercialization expertise; |
| · | the Company’s ability to successfully commercialize product candidates, if approved, and the rate and degree of market acceptance of such product candidates; and |
| · | developments and projections relating to the Company’s competitors or industry. |
The foregoing review of important factors that could cause actual events to differ from expectations should not be construed as exhaustive and should be read in conjunction with statements that are included herein and elsewhere, including the risk factors included in the “Risk Factors” section of this Current Report on Form 8-K and other documents to be filed by the Company from time to time with the SEC, discussions of potential risks, uncertainties, and other important factors in the Company’s subsequent filings with the SEC, and risk factors associated with companies, such as the Company, that operate in the biopharma industry.
If any of these risks or uncertainties materialize or any of these assumptions prove incorrect, the results of the Company could differ materially from the forward-looking statements. Any public statements or disclosures by the Company following this Current Report on Form 8-K that modify or impact any of the forward-looking statements contained in this Current Report on Form 8-K will be deemed to modify or supersede such statements in this Current Report on Form 8-K. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this document and are qualified in their entirety by reference to the cautionary statements herein. The Company does not intend, and undertakes no obligation, to update any forward-looking information to reflect events or circumstances after the date of this document or to reflect the occurrence of unanticipated events, unless required by law to do so.
Business and Facilities
The information set forth in the section of the Proxy Statement/Prospectus entitled “Crescent’s Business” beginning on page 277 is incorporated herein by reference.
Risk Factors
The risks associated with Crescent’s business and operations are described in the Proxy Statement/Prospectus in the section entitled “Risk Factors—Risks Related to Crescent” beginning on page 59 and the risks associated with the business and operations of the Company are described in the Proxy Statement/Prospectus in the section entitled “Risk Factors—Risks Related to the Combined Company” beginning on page 98, each of which are incorporated herein by reference.
Financial Information
Unaudited Financial Statements
The unaudited interim condensed financial statements of Crescent as of and for the three months ended March 31, 2025 and the related notes thereto are attached hereto as Exhibit 99.2 and are incorporated herein by reference.
The unaudited interim condensed financial statements of GlycoMimetics as of and for the three months ended March 31, 2025 and the related notes thereto are included in GlycoMimetics’ Quarterly Report on Form 10-Q for the period ended March 31, 2025, filed with the SEC on May 14, 2025, and are incorporated herein by reference.
Audited Financial Statements
The audited financial statements of Crescent as of December 31, 2024 and for the period from September 19, 2024 (inception) to December 31, 2024 and the related notes thereto are included in the Proxy Statement/Prospectus beginning on page F-22 and are incorporated herein by reference.
The audited financial statements of GlycoMimetics as of and for the years ended December 31, 2024 and 2023 and the related notes thereto are included in the Proxy Statement/Prospectus beginning on page F-3 and are incorporated herein by reference.
Unaudited Pro Forma Condensed Combined Financial Information
The unaudited pro forma condensed combined financial information of GlycoMimetics and Crescent as of and for the three months ended March 31, 2025 and twelve months ended December 31, 2024 and the related notes thereto are attached hereto as Exhibit 99.4 and is incorporated herein by reference.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Crescent’s Management’s Discussion and Analysis of Financial Condition and Results of Operations as of and for the three months ended March 31, 2025 is attached hereto as Exhibit 99.3 and is incorporated herein by reference.
Crescent’s Management’s Discussion and Analysis of Financial Condition and Results of Operations as of and for the period from September 19, 2024 (Inception) to December 31, 2024 are included in the Proxy Statement/Prospectus beginning on page 329 and are incorporated herein by reference.
GlycoMimetics’ Management’s Discussion and Analysis of Financial Condition and Results of Operations as of and for the three months ended March 31, 2025 are included in GlycoMimetics’ Quarterly Report on Form 10-Q for the period ended March 31, 2025, filed with the SEC on May 14, 2025, and are incorporated herein by reference.
Additional information regarding management’s discussion and analysis of the financial condition and results of operations prior to the Merger is included in the Proxy Statement/Prospectus in the section entitled “GlycoMimetics’ Management’s Discussion and Analysis of Financial Condition and Results of Operations” beginning on page 322, which is incorporated herein by reference.
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth information known to the Company regarding beneficial ownership of shares of Company common stock as of June 13, 2025 by:
| · | each person or group of affiliated persons, who is known by the Company to be the beneficial owner of more than 5% of Company common stock; |
| · | each of the Company’s directors; |
| · | each of the Company’s named executive officers; and |
| · | all of the Company’s current directors and executive officers as a group. |
The column entitled “Percentage of Shares Outstanding Beneficially Owned” is based on a total 13,892,562 shares of Company common stock outstanding as of June 13, 2025, after giving effect to the Reverse Stock Split that was effected on June 13, 2025 and the Merger. The total number of outstanding securities did not change as a result of the Redomestication that was effected on June 16, 2025.
Beneficial ownership is determined in accordance with the rules and regulations of the SEC and includes voting or investment power with respect to Company common stock. Shares of Company common stock subject to options that are currently exercisable or exercisable within 60 days of June 13, 2025 are considered outstanding and beneficially owned by the person holding the options for the purpose of calculating the percentage ownership of that person but not for the purpose of calculating the percentage ownership of any other person. Except as otherwise noted, the persons and entities in this table have sole voting and investing power with respect to all of the shares of Company common stock beneficially owned by them, subject to community property laws, where applicable.
| Name of Beneficial Owner | Number of Shares Beneficially Owned | Percentage of Shares Outstanding Beneficially Owned | ||||||
| 5% or Greater Stockholders | ||||||||
| Entities affiliated with Fairmount Funds Management LLC(1) | 3,124,220 | 19.99 | % | |||||
| Entities affiliated with FMR LLC(2) | 1,414,190 | 10.18 | % | |||||
| Entities affiliated with Venrock Healthcare Capital Partners(3) | 1,387,864 | 9.99 | % | |||||
| Entities affiliated with BVF Partners L.P.(4) | 1,387,863 | 9.99 | % | |||||
| Directors and Named Executive Officers | ||||||||
| Joshua Brumm | — | * | ||||||
| Jonathan McNeill | — | * | ||||||
| Ellie Im | — | * | ||||||
| Richard Scalzo | — | * | ||||||
| Christopher Doughty(5) | 64,944 | * | ||||||
| Ryan Lynch | — | * | ||||||
| Barbara Bispham | — | * | ||||||
| Alexandra Balcom(6) | 4,480 | * | ||||||
| Peter Harwin(1) | 3,124,220 | 19.99 | % | |||||
| David Lubner(7) | 2,240 | * | ||||||
| Susan Moran(8) | 4,480 | * | ||||||
| Jonathan Violin(9) | 296,301 | 2.10 | % | |||||
| Harout Semerjian | 250 | * | ||||||
| Brian Hahn | 793 | * | ||||||
| Edwin Rock, M.D. | 6,804 | * | ||||||
| All current executive officers and directors as a group (12 persons)(9) | 3,496,665 | 22.00 | % | |||||
| * | Less than 1%. |
| (1) | Consists of (i) 1,387,866 shares of Company common stock, (ii) 354 shares of Company common stock issuable upon the exercise of the pre-funded warrants, and (iii) 1,736,000 shares of Company common stock issuable upon conversion of 1,736 shares of Company Series A Preferred Stock held by Fairmount Healthcare Fund II L.P. (“Fairmount Fund II”). Excludes (i) 1,636,352 shares of Company common stock issuable upon the exercise of the pre-funded warrants and (ii) 1,154,000 shares of Company common stock issuable upon the conversion of 1,154 shares of Company Series A Preferred Stock. The pre-funded warrants are subject to a beneficial ownership limitation of 9.99% and the shares of Company Series A Preferred Stock are subject to a beneficial ownership limitation of 19.99%, which such limitations restrict Fairmount Funds Management LLC (“Fairmount”) and its affiliates from exercising that portion of the warrants and converting those shares of preferred stock that would result in Fairmount and its affiliates owning, after exercise or conversion, a number of shares of Company common stock in excess of the applicable ownership limitation. At such time as Fairmount and its affiliates beneficially own 9.0% or less of the shares of Company common stock, the beneficial ownership limitation applicable to the shares of Company Series A Preferred Stock will automatically reduce to 9.99%. Fairmount serves as investment manager for Fairmount Fund II. Fairmount Fund II has delegated to Fairmount the sole power to vote and the sole power to dispose of all securities held in Fairmount Fund II’s portfolio. Because Fairmount Fund II has divested itself of voting and investment power over the securities it holds and may not revoke that delegation on less than 61 days’ notice, Fairmount Fund II disclaims beneficial ownership of the securities it holds. As managers of Fairmount, Peter Harwin and Tomas Kiselak may be deemed to have voting and investment power over the shares held by Fairmount Fund II. Fairmount, Mr. Harwin and Mr. Kiselak disclaim beneficial ownership of such shares, except to the extent of any pecuniary interest therein. The address of the entities and individuals listed is 200 Barr Harbor Drive, Suite 400, West Conshohocken, PA 19428. |
| (2) | These shares are owned by funds or accounts managed by direct or indirect subsidiaries of FMR LLC, all of which shares are beneficially owned, or may be deemed to be beneficially owned, by FMR LLC, certain of its subsidiaries and affiliates, and other companies. Abigail P. Johnson is a Director, the Chairman and the Chief Executive Officer of FMR LLC. Members of the Johnson family, including Abigail P. Johnson, are the predominant owners, directly or through trusts, of Series B voting common shares of FMR LLC, representing 49% of the voting power of FMR LLC. The Johnson family group and all other Series B shareholders have entered into a shareholders’ voting agreement under which all Series B voting common shares will be voted in accordance with the majority vote of Series B voting common shares. Accordingly, through their ownership of voting common shares and the execution of the shareholders’ voting agreement, members of the Johnson family may be deemed, under the Investment Company Act of 1940, to form a controlling group with respect to FMR LLC. The address of FMR LLC is 245 Summer Street, Boston, MA 02210. |
| (3) | Consists of (i) 1,080,457 shares of Company common stock held by Venrock Healthcare Capital Partners EG, L.P. (“VHCPEG”), (ii) 279,461 shares of Company common stock held by Venrock Healthcare Capital Partners III, L.P. (“VHCP3”), and (iii) 27,946 shares of Company common stock held by VHCP Co-Investment Holdings III, LLC (“VHCPCo3”). Excludes 414,377, 107,374 and 10,737 shares of Company common stock issuable upon the exercise of the pre-funded warrants held by VHCPEG, VHCP3 and VHCPCo3, respectively. The pre-funded warrants are subject to a beneficial ownership limitation of 9.99%, which such limitations restrict Venrock Healthcare Capital Partners and its affiliates from exercising that portion of the warrants that would result in Venrock Healthcare Capital Partners and its affiliates owning, after exercise, a number of shares of Company common stock in excess of the applicable ownership limitation. VHCP Management III, LLC (“VHCPM3”) is the sole general partner of VHCP3 and the sole manager of VHCPCo3. VHCP Management EG, LLC (“VHCPM EG”) is the sole general partner of VHCPEG. As voting members of VHCPM3 and VHCPM EG, Dr. Bong Koh and Nimish Shah may be deemed beneficial owners of any securities beneficially owned by VHCPM3 and VHCPM EG. The principal business address of each of these persons and entities is 7 Bryant Park, 23rd Floor, New York, NY 10018. |
| (4) | Consists of (i) 707,116 shares of Company common stock held by Biotechnology Value Fund, L.P. (“BVF”), (ii) 593,740 shares of Company common stock held by Biotechnology Value Fund II, L.P. (“BVF2”), (iii) 62,383 shares of Company common stock held by Biotechnology Value Trading Fund OS, L.P. (“Trading Fund OS”) and (iv) 24,624 shares of Company common stock held by MSI BVF SPV, LLC (“MSI”). Excludes 304,098, 257,515, 25,944 and 10,371 shares of Company common stock issuable upon the exercise of the pre-funded warrants held by BVF, BVF2, Trading Fund OS and MSI, respectively. BVF I GP LLC (“BVF GP”), as the general partner of BVF, may be deemed to beneficially own the shares beneficially owned by BVF. BVF II GP LLC (“BVF2 GP”), as the general partner of BVF2, may be deemed to beneficially own the shares beneficially owned by BVF2. BVF Partners OS Ltd. (“Partners OS”), as the general partner of Trading Fund OS, may be deemed to beneficially own the shares beneficially owned by Trading Fund OS. BVF GP Holdings LLC (“BVF GPH”), as the sole member of each of BVF GP and BVF2 GP, may be deemed to beneficially own the shares beneficially owned in the aggregate by BVF and BVF2. BVF Partners L.P. (“Partners”), as the investment manager of each of BVF, BVF2, Trading Fund OS and MSI, and the sole member of Partners OS, may be deemed to beneficially own the shares beneficially owned in the aggregate by BVF, BVF2, Trading Fund OS and MSI. BVF Inc., as the general partner of Partners, may be deemed to beneficially own the shares beneficially owned by Partners. Mark Lampert, as a director and officer of BVF Inc., may be deemed to beneficially own the shares beneficially owned by BVF Inc. Pursuant to a certain agreement entered into between Mr. Loy and Partners, Mr. Loy is obligated to transfer to Partners the economic benefit, if any, received upon the sale of the shares issuable upon the exercise of his options. The business address for each of the entities and Mr. Lambert is 44 Montgomery St., 40th Floor, San Francisco, California 94104. |
| (5) | Consists of (a) 39,480 shares of restricted voting common stock, (b) vested options to acquire 19,098 shares of common stock, and (c) options to acquire 6,366 shares of common stock that will vest within 60 days of the date of this table. |
| (6) | Consists of (a) vested options to acquire 3,360 shares of common stock and (b) options to acquire 1,120 shares of common stock that will vest within 60 days of the date of this table. |
| (7) | Consists of (a) vested options to acquire 1,120 shares of common stock and (b) options to acquire 1,120 shares of common stock that will vest within 60 days of the date of this table. |
| (8) | Consists of (a) vested options to acquire 3,360 shares of common stock and (b) options to acquire 1,120 shares of common stock that will vest within 60 days of the date of this table. |
| (9) | Consists of (a) 69,515 shares of restricted voting common stock and (b) vested options to acquire 226,786 shares of common stock. |
| (10) | See Notes (1), (5), (6), (7), (8) and (9) above. |
Information about Directors and Executive Officers
The information set forth in Item 5.02 of this Current Report on Form 8-K under the heading “Appointment of Directors and Certain Officers” is incorporated herein by reference.
Director Compensation
The compensation of the directors of Crescent prior to the Closing is set forth in the Proxy Statement/Prospectus in the section entitled “Crescent Director Compensation” beginning on page 201 and is incorporated herein by reference.
The compensation of the non-employee directors of GlycoMimetics prior to the Closing is set forth in the Proxy Statement/Prospectus in the section entitled “GlycoMimetics Non-Employee Director Compensation” beginning on page 194 and is incorporated herein by reference.
The information set forth in Item 5.02 of this Current Report on Form 8-K under the heading “Non-Employee Director Compensation Program” is incorporated herein by reference.
Executive Compensation
The compensation of the named executive officers of Crescent prior to the Closing is set forth in the Proxy Statement/Prospectus in the section entitled “Crescent Executive Compensation” beginning on page 197 and is incorporated herein by reference.
The compensation of the named executive officers of GlycoMimetics prior to the Closing is set forth in the Proxy Statement/Prospectus in the section entitled “GlycoMimetics Executive Compensation” beginning on page 184 and is incorporated herein by reference.
The information set forth in Item 5.02 of this Current Report on Form 8-K under the headings “Stock Incentive Plan” and “Departure of Directors and Certain Officers” is incorporated herein by reference.
The information set forth in the section of the Proxy Statement/Prospectus entitled “Management Following the Merger—Board Committees—Compensation Committee” beginning on page 356 is incorporated herein by reference.
Certain Relationships and Related Party Transactions
The information set forth in the section of the Proxy Statement/Prospectus entitled “Certain Relationships and Related Party Transactions of the Combined Company” beginning on page 358 is incorporated herein by reference.
Director Independence
Nasdaq listing rules have objective tests and a subjective test for determining who is an “independent director.” The subjective test states that an independent director must be a person who lacks a relationship that, in the opinion of the board of directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. Subject to specified exceptions, each member of a listed company’s audit, compensation and nominating committees must be independent, and audit and compensation committee members must satisfy additional independence criteria.
The newly constituted board of directors of the Company (the “Board”) has determined that each of the directors other than Joshua Brumm, the Company’s current Chief Executive Officer, and Jonathan Violin, due to his receipt of compensation for the provision of consulting services, including Alexandra Balcom, Peter Harwin, David Lubner and Susan Moran, each of whom is a current member of the Board, qualify as “independent directors” as defined under Nasdaq listing rules. In making these determinations, the Board considered the current and prior relationships that each director has with GlycoMimetics and Crescent and all other facts and circumstances that the Board deemed relevant in determining the independence of each director, including the interests of each director in the Merger, any relevant related party transactions and the beneficial ownership of securities of GlycoMimetics, Crescent or the Company by each director.
The Board has also determined that each member of the Audit Committee of the Board (the “Audit Committee”) and Compensation Committee of the Board (the “Compensation Committee”) is independent and satisfies the relevant independence requirements for such committees under the Nasdaq listing rules and the Exchange Act and that each member of the Compensation Committee is a “non-employee director” as defined in Rule 16b-3 promulgated under the Exchange Act.
Nasdaq Rule 5605(e)(1)(B) typically requires a nominations committee comprised solely of independent directors. However, Nasdaq Rule 5605(e)(3) provides that, if the nominations committee is comprised of at least three members, one director, who is not an independent director and is not currently an executive officer or an employee or a family member of an executive officer of the company, may be appointed to the nominations committee, under exceptional and limited circumstances, if the Board determines that such individual’s membership on the committee is required by the best interests of the company and its stockholders.
The Board has determined that, due to exceptional and limited circumstances, Dr. Violin’s membership on the Nominating and Corporate Governance Committee of the Board (the “Nominating Committee”) is in the best interests of the Company and its stockholders because Dr. Violin will be able to provide substantial insight and guidance to the Company on potential director nominees and corporate governance matters as a result of his experience as Crescent’s former Chief Executive Officer and his experience serving as a chief executive officer or director of other public biotechnology companies.
The information set forth in Item 5.02 of this Current Report on Form 8-K under the heading “Committees of the Board of Directors” is incorporated herein by reference.
Legal Proceedings
The information set forth in the section of the Proxy Statement/Prospectus entitled “Proposal No. 4—The Redomestication Proposal—Additional Information—Legal Proceedings” on page 242 and in the section entitled “Crescent’s Business—Legal Proceedings” on page 321 is incorporated herein by reference.
Market Price of and Dividends on the Registrant’s Common Equity and Related Stockholder Matters
Shares of GlycoMimetics common stock were historically listed on The Nasdaq Capital Market of the Nasdaq Stock Market under the symbol “GLYC.” On June 16, 2025, shares of Company common stock were listed on The Nasdaq Capital Market of the Nasdaq Stock Market under the symbol “CBIO.”
As of the Closing Date and following the completion of the Merger, and after giving effect to the Reverse Stock Split legally effected on June 13, 2025, the Company had approximately 13,892,562 shares of Company common stock issued and outstanding held of record by approximately 74 holders. The number of holders of record does not include a substantially greater number of “street name” holders or beneficial holders whose shares of Company common stock are held of record by banks, brokers and other financial institutions.
The information set forth in the section of the Proxy Statement/Prospectus entitled “Market Price and Dividend Information—Dividends” on page 18 is incorporated herein by reference.
Description of Registrant’s Securities
The information set forth in the Proxy Statement/Prospectus in the section entitled “Description of GlycoMimetics Capital Stock” beginning on page 376 and in the section entitled “Proposal No. 4—The Redomestication—Effects of the Cayman Redomestication—Comparison of Rights of Holders of the Delaware Corporation Capital Stock and the Cayman Company Share Capital” beginning on page 218 is incorporated herein by reference.
Indemnification of Directors and Officers
Provisions in the Company’s Cayman Islands memorandum and articles of association (the “Cayman Articles”) provide for indemnification and advancement of expenses of its directors and officers to the fullest extent authorized by applicable law. The Cayman Articles provide that the Company shall indemnify and advance expenses to its directors and officers and the personal representatives of the same (the “Indemnified Persons”) and may indemnify and advance expenses to the Indemnified Persons, to the fullest extent authorized or permitted by applicable law. The Cayman Articles also provide that the Company may maintain insurance to protect a director or an officer against liability.
The foregoing description of the Cayman Articles does not purport to be complete and is subject to and qualified in its entirety by reference to the full text of the Cayman Articles, a copy of which is attached hereto as Exhibits 3.4, and is incorporated herein by reference.
The Company obtained insurance that covers certain liabilities of its directors and officers, effective as of June 13, 2025.
The information set forth in Item 1.01 of this Current Report on Form 8-K under the heading “Indemnification Agreements” is incorporated herein by reference.
The information set forth in the section of the Proxy Statement/Prospectus entitled “The Merger Agreement—Indemnification and Insurance for Directors and Officers” beginning on page 170 and is incorporated herein by reference.
Financial Information and Supplementary Data
The information set forth under Item 9.01 of this Current Report on Form 8-K is incorporated herein by reference.
Item 2.02 Results of Operations and Financial Condition.
The unaudited interim condensed financial statements of Crescent as of and for the three months ended March 31, 2025 and the related notes thereto are attached hereto as Exhibit 99.2 and are incorporated herein by reference.
Crescent’s Management’s Discussion and Analysis of Financial Condition and Results of Operations as of and for the three months ended March 31, 2025 is attached hereto as Exhibit 99.3 and is incorporated herein by reference.
The unaudited pro forma condensed combined financial information of the GlycoMimetics and Crescent as of and for the three months ended March 31, 2025 and twelve months ended December 31, 2024 and the related notes thereto are attached hereto as Exhibit 99.4 and are incorporated herein by reference.
Item 3.03 Material Modification to Rights of Security Holders.
GlycoMimetics held the Special Meeting on June 5, 2025. At the Special Meeting, GlycoMimetics’ stockholders approved, among other matters, amendments to the amended and restated certificate of incorporation of GlycoMimetics to (i) increase the number of authorized shares of Company common stock from 150,000,000 shares to 175,000,000 (the “Authorized Share Increase”), (ii) effect the Reverse Stock Split and (iii) effect the redomestication of GlycoMimetics from the State of Delaware to the Cayman Islands by conversion and by way of continuation (the “Redomestication”) by means of a plan of conversion (the “Plan of Conversion”), in each case as described in the Proxy Statement/Prospectus. Following the Special Meeting, GlycoMimetics’ board of directors approved the Reverse Stock Split at a ratio of 1-for-100. On June 13, 2025, GlycoMimetics filed a Certificate of Designation with the Secretary of State of the State of Delaware designating the Company Series A Preferred Stock, effective immediately upon filing (the “Delaware Certificate of Designation”). To effect the Reverse Stock Split, GlycoMimetics filed a Certificate of Amendment to the Company’s Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware (the “Reverse Stock Split Certificate of Amendment”), with an effective time of 8:46 a.m., Eastern Daylight Time, on June 13, 2025 (“Reverse Stock Split Certificate of Amendment Effective Time”). To effect the Authorized Share Increase, GlycoMimetics filed a Certificate of Amendment to the Company’s Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware (the “Authorized Share Increase Certificate of Amendment”), with an effective time of 8:47 a.m., Eastern Daylight Time, on June 13, 2025. To effect the Company Name Change, GlycoMimetics filed a Certificate of Amendment to the Company’s Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware (the “Name Change Certificate of Amendment”), with an effective time of 8:50 a.m., Eastern Daylight Time, on June 13, 2025. Pursuant to the Plan of Conversion, to effect the Redomestication, the Company (i) filed a Certificate of Conversion with the Secretary of State of the State of Delaware (the “Certificate of Conversion”), with an effective time of 4:45 p.m., Eastern Daylight Time, on June 16, 2025, and (ii) filed the Cayman Articles, among other things, with the Cayman Islands Registrar of Companies, effective on June 16, 2025. On June 16, 2025, the Company also filed a Certificate of Designation with the Cayman Islands Registrar of Companies designating the Company Series A Preferred Shares (the “Cayman Certificate of Designation”).
As of the Reverse Stock Split Certificate of Amendment Effective Time, every 100 shares of Company common stock issued and outstanding immediately prior to the Reverse Stock Split were automatically and without further action on the part of the Company or any holders of such Company common stock, combined into one share of Company common stock. Immediately following the Reverse Stock Split and Merger, there were approximately 13.9 million shares of Company common stock issued and outstanding.
No fractional shares of Company common stock were issued as a result of the Reverse Stock Split. Instead, any stockholder who would otherwise be entitled to a fractional share of Company common stock as a result of the Reverse Stock Split (after aggregating all fractions of a share to which such stockholder would otherwise be entitled) is, in lieu thereof, entitled to receive a cash payment equal to the product of such resulting fractional interest in one share of Company common stock multiplied by the closing price per share as reported by Nasdaq on June 12, 2025.
Through the adoption of the Plan of Conversion, from the effective time of the Redomestication:
| · | The Company continues its existence as a Cayman Islands exempted company (the “Cayman Company”) and continues to operate its business under the name “Crescent Biopharma, Inc.” |
| · | The internal affairs of the Company ceased to be governed by Delaware law and instead are governed by Cayman Islands law. |
| · | The Company ceased to be governed by GlycoMimetics’ amended and restated certificate of incorporation and GlycoMimetics’ amended and restated bylaws and instead are governed by the provisions of the Cayman Articles. |
| · | The Redomestication did not result in any change in the Company’s business, management, obligations, assets or liabilities (other than as a result of the transaction costs related to the Redomestication). |
| · | The Company continues to be treated as a U.S. corporation for all purposes under the Code. |
| · | Each outstanding share of Company common stock automatically converted into one ordinary share, par value $0.001 per share, of the Cayman Company (the “Company ordinary shares”). |
| · | Each outstanding share of any series of Company preferred stock automatically converted into one outstanding share of the corresponding series of the preferred shares of the Cayman Company. |
| · | Shareholders of the Company are not required to exchange their existing stock certificates (if any) for new share certificates. |
| · | Each outstanding option or right to acquire shares of Company common stock continues in existence in the form of and automatically becomes an option or right to acquire an equal number of Company ordinary shares under the same terms and conditions. |
| · | Each outstanding restricted stock unit of the Company continues in existence in the form of and automatically becomes a restricted stock unit of the Cayman Company under the same terms and conditions. |
| · | The Cayman Company continues to be a publicly held company and will continue to file required periodic reports and other documents with the SEC. The Cayman Company and its shareholders are in the same respective positions under the federal securities laws as before the Redomestication. |
| · | The Company ordinary shares resulting from the Redomestication will continue to be traded on Nasdaq under the symbol “CBIO.” |
| · | The Company’s management, including all directors and officers, remain the same in connection with the Redomestication and have the same positions with the Cayman Company. |
| · | The Redomestication did not affect any of the Company’s material contracts with any third parties, and the Company’s rights and obligations under those material contractual arrangements continue as rights and obligations of the Cayman Company. |
| · | The Redomestication did not have any material accounting implications. |
Certain rights of the Company’s shareholders were changed as a result of the Redomestication. A more detailed description of the Plan of Conversion, Cayman Articles, and the effects of the Redomestication, is set forth in Proposal No. 4 of the Proxy Statement/Prospectus beginning on page 215, and the description contained therein is incorporated herein by reference.
The foregoing descriptions of the Plan of Conversion, Authorized Share Increase Certificate of Amendment, Reverse Stock Split Certificate of Amendment, Name Change Certificate of Amendment, Cayman Articles, Delaware Certificate of Designation, and Cayman Certificate of Designation do not purport to be complete and are subject to and qualified in their entirety by the full text of the Plan of Conversion, Authorized Share Increase Certificate of Amendment, Reverse Stock Split Certificate of Amendment, Name Change Certificate of Amendment, Cayman Articles, Delaware Certificate of Designation, and Cayman Certificate of Designation, copies of which are attached hereto as Exhibits 2.4, 3.1, 3.2, 3.3, 3.4, 3.5 and 3.6, respectively, and are incorporated herein by reference.
Item 4.01 Changes in Registrant’s Certifying Accountant.
| (a) | Dismissal of Independent Registered Public Accounting Firm |
Ernst & Young LLP (“EY”) served as the independent registered public accounting firm of GlycoMimetics prior to the consummation of the Merger. On June 13, 2025, EY was dismissed as the independent registered public accounting firm of the Company. The decision to dismiss EY was approved by the Audit Committee.
Except for an explanatory paragraph stating that substantial doubt exists about GlycoMimetics, Inc.’s ability to continue as a going concern as described in Note 2 to the financial statements, the reports of EY on the financial statements of GlycoMimetics for the fiscal years ended December 31, 2024 and 2023 did not contain an adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principles.
During GlycoMimetics’ two most recent fiscal years ended December 31, 2024 and 2023, and the subsequent interim period from January 1, 2025 to June 13, 2025, there were (i) no disagreements (as defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions thereto) with EY on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreement, if not resolved to the satisfaction of EY, would have caused it to make reference to the subject matter of the disagreement in connection with its report and (ii) no reportable events (as described in Item 304(a)(1)(v) of Regulation S-K).
The Company provided EY with a copy of the disclosures made in this Item 4.01 and requested EY to furnish the Company with a letter addressed to the SEC stating whether it agrees with the statements made by the Company and, if not, stating the respects in which it does not agree. A copy of EY’s letter to the SEC dated June 18, 2025 regarding these statements is filed as Exhibit 16.1 to this Current Report on Form 8-K.
| (b) | Appointment of New Independent Registered Public Accounting Firm |
PricewaterhouseCoopers LLP (“PwC”) served as the independent registered public accounting firm of Crescent prior to the consummation of the Merger. On June 13, 2025, the Audit Committee appointed PwC as the independent registered public accounting firm of the Company.
During GlycoMimetics’ two most recent fiscal years and the subsequent period from January 1, 2025 to June 13, 2025, neither GlycoMimetics nor anyone on its behalf consulted PwC regarding: (i) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on GlycoMimetics’ financial statements, and neither a written report nor oral advice was provided to GlycoMimetics that PwC concluded was an important factor considered by GlycoMimetics in reaching a decision as to any accounting, auditing or financial reporting issue; or (ii) any matter that was the subject of a disagreement (as defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions thereto) or a reportable event (as described in Item 304(a)(1)(v) of Regulation S-K).
Item 5.01 Changes in Control of the Registrant.
The information set forth in Item 1.01 of this Current Report on Form 8-K under the heading “Introductory Note” regarding the Merger, the information set forth in Item 2.01 of this Current Report on Form 8-K in the section entitled “Security Ownership of Certain Beneficial Owners and Management” regarding the Board and executive officers following the Merger and the information set forth in Item 5.02 of this Current Report on Form 8-K regarding the Board and executive officers following the Merger is incorporated herein by reference.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Departure of Directors and Certain Officers
On June 13, 2025, Patricia Andrews, Daniel Janius and Timothy Pearson resigned from the Company’s board of directors and its committees on which they respectively served, which resignations were not the result of any disagreements with the Company relating to the Company’s operations, policies or practices.
In addition, on June 13, 2025, Brian Hahn, GlycoMimetics’ Principal Executive Officer and Principal Financial Officer, resigned as an executive officer at the Closing. As previously disclosed, Mr. Hahn ceased employment with GlycoMimetics on February 21, 2025, and entered into a separation agreement and a consulting agreement with GlycoMimetics on such date. Mr. Hahn’s consulting agreement terminated in accordance with its terms upon the Closing of the Merger.
Stock Incentive Plan
On May 11, 2025, GlycoMimetics’ board of directors approved the Crescent Biopharma, Inc. 2025 Stock Incentive Plan (the “2025 Stock Plan”), subject to stockholder approval and the consummation of the Merger. On June 5, 2025, GlycoMimetics’ stockholders approved the 2025 Stock Plan at the Special Meeting and effective as of the Redomestication, the Board approved an amendment and restatement of the 2025 Stock Plan (the “A&R 2025 Stock Plan”) to reflect the conversion of Company common stock into Company ordinary shares in connection with the Redomestication. The purpose of the A&R 2025 Stock Plan is to promote and closely align the interests of employees, officers, non-employee directors and other individual service providers of the Company and its stockholders by providing stock-based compensation and other performance-based compensation. The initial share pool under the A&R 2025 Stock Plan is 2,345,962 Company ordinary shares. The Company ordinary shares that may be issued under the A&R 2025 Stock Plan will be automatically increased on January 1 of each year beginning in 2026 and ending with a final increase on January 1, 2035, in an amount equal to 5% of the total number of shares of outstanding capital stock (including Company ordinary shares, preferred shares and unexercised pre-funded warrants) on the preceding December 31, unless a lower (or no) increase is determined by the Compensation Committee. Only 25,000,000 Company ordinary shares may be issued under the A&R 2025 Stock Plan as incentive stock options.
The foregoing description of the A&R 2025 Stock Plan is not complete and is subject to and qualified in its entirety by reference to the complete text of the A&R 2025 Stock Plan, a copy of which is attached hereto as Exhibit 10.7 and incorporated herein by reference.
Employee Stock Purchase Plan
On May 11, 2025, GlycoMimetics’ board of directors approved the Crescent Biopharma, Inc. 2025 Employee Stock Purchase Plan (the “2025 ESPP”), subject to stockholder approval and the consummation of the Merger. On June 5, 2025, GlycoMimetics’ stockholders approved the 2025 ESPP at the Special Meeting and effective as of the Redomestication, the Board approved an amendment and restatement of the 2025 ESPP (the “A&R 2025 ESPP”) to reflect the conversion of Company common stock into Company ordinary Shares in connection with the Redomestication. The purpose of the A&R 2025 ESPP is to provide employees of the Company and its designated subsidiaries with an opportunity to purchase Company ordinary shares through accumulated contributions. The A&R 2025 ESPP, and the rights of participants to make purchases thereunder, is intended to qualify under Section 423 of the Code; however, sub-plans that do not meet the requirements of Section 423 of the Code may be established for the benefit of eligible employees of non-U.S. subsidiaries of the Company. The initial share pool under the A&R 2025 ESPP is 195,497 Company ordinary shares. The Company ordinary shares that may be issued under the A&R 2025 ESPP will be automatically increased on January 1 of each year beginning in 2026 and ending with a final increase on January 1, 2035 in an amount equal to the lesser of 1% of the total number of shares of outstanding capital stock (including Company ordinary shares, preferred shares and unexercised pre-funded warrants) on the preceding December 31 or 1,000,000, unless a lower (or no) increase is determined by the Compensation Committee.
The foregoing description of the 2025 ESPP is not complete and is subject to and qualified in its entirety by reference to the complete text of the 2025 ESPP, a copy of which is attached hereto as Exhibit 10.8 and incorporated herein by reference.
Appointment of Directors and Certain Officers
On June 13, 2025, the Board appointed Joshua Brumm as the Company’s Chief Executive Officer, Jonathan McNeill as the Company’s Chief Operating Officer and President, Ellie Im as the Company’s Chief Medical Officer, Richard Scalzo as the Company’s Chief Financial Officer, Christopher Doughty as the Company’s Chief Business Officer, Ryan Lynch as the Company’s Treasurer, Senior Vice President of Finance and Chief Accounting Officer and Barbara Bispham as the Company’s General Counsel and Corporate Secretary, each to serve at the discretion of the Board.
On June 13, 2025, the Board decreased its size from eight to six members and appointed the following six individuals to the Board: Peter Harwin, Alexandra Balcom, Joshua Brumm, David Lubner, Susan Moran and Jonathan Violin. In connection with his appointment to the Board, Peter Harwin was also appointed as Chair of the Board.
Joshua Brumm and Peter Harwin are Class I directors, whose terms will expire at the Company’s 2028 annual meeting of shareholders. Susan Moran and Jonathan Violin are Class II directors, whose terms will expire at the Company’s 2026 annual meeting of shareholders. Alexandra Balcom and David Lubner are Class III directors, whose terms will expire at the Company’s 2027 annual meeting of shareholders.
Other than as disclosed in the section of the Proxy Statement/Prospectus entitled “Certain Relationships and Related Party Transactions of the Combined Company,” beginning on page 358 and incorporated herein by reference, none of the Company’s newly appointed officers or directors has a direct or indirect material interest in any transaction required to be disclosed pursuant to Item 404(a) of Regulation S-K. Other than the Merger Agreement, there are no arrangements or understandings between the Company’s officers or directors and any other person pursuant to which such officers or directors were selected as an officer or a director. There are no family relationships among any of the Company’s directors and officers.
Each of the newly appointed principal officer’s and director’s biographical information is set forth below.
Joshua Brumm. Mr. Brumm, age 47, has served as Crescent’s Chief Executive Officer and as a member of Crescent’s board of directors since March 2025. Prior to joining Crescent, Mr. Brumm was a General Partner at Forbion, a leading life sciences investment firm, from June 2024 to March 2025. From October 2019 to March 2024, Mr. Brumm served as Chief Executive Officer and President and as a director of Dyne Therapeutics, Inc. (Nasdaq: DYN), a biotechnology company. Prior to joining Dyne Therapeutics, Mr. Brumm served as Chief Operating Officer and Chief Financial Officer at Kaleido Biosciences, Inc. (formerly, Nasdaq: KLDO), a healthcare company, from April 2018 to October 2019. Prior to joining Kaleido, Mr. Brumm served as Chief Operating Officer and Chief Financial Officer at Versartis, Inc., a biopharmaceutical company, from November 2013 until December 2017. Mr. Brumm served as Executive Vice President of Finance and Principal Financial Officer at Pharmacyclics, LLC, a biopharmaceutical company, from August 2012 to August 2013. Prior to joining Pharmacyclics, Mr. Brumm served in various roles at ZELTIQ Aesthetics, Inc., a medical technology company, from December 2009 to August 2012, including as Senior Vice President and Chief Financial Officer, Vice President of Corporate Development and Investor Relations, Senior Managing Director of International Sales and Director of Corporate Development and Strategy. Prior to his service at ZELTIQ Aesthetics, Mr. Brumm served as Director of Finance at Proteolix, Inc. and held investment banking roles at Citigroup Global Markets, Inc. and Morgan Stanley. Mr. Brumm currently serves on the board of AIRNA, Corporation, Inc., as Chairman of the Board of Amphista Therapeutics Limited, and as a venture partner at Forbion. Mr. Brumm holds a B.A. in business administration from the University of Notre Dame.
The Company believes that Mr. Brumm is qualified to serve as a member of the Board because of his extensive experience as a senior management executive of healthcare and biotechnology companies, as well as his finance background and experience as an investor in life sciences companies.
Jonathan McNeill, M.D. Dr. McNeill, age 40, has served as Crescent’s Chief Operating Officer and President since March 2025. Prior to joining Crescent, Dr. McNeill was a Partner at Forbion, a leading life sciences investment firm, from January 2025 to March 2025. From February 2019 to September 2024, Dr. McNeill held roles of increasing responsibility at Dyne Therapeutics, Inc. (Nasdaq: DYN), a biotechnology company, where he served as Chief Business Officer from July 2023 to September 2024, Senior Vice President, Business Development from July 2021 to July 2023, and as Vice President, Business Development from February 2019 to June 2021. Prior to joining Dyne Therapeutics, Dr. McNeill served as Associate Director, Business Development at Editas Medicine, Inc. (Nasdaq: EDIT), a biotechnology company, from August 2015 to January 2019. Prior to joining Editas, Dr. McNeill served as a Consultant at Boston Consulting Group from March 2014 to August 2015. Dr. McNeill earned his B.A. in public policy and economics from the University of North Carolina and his M.D. from the University of Pennsylvania.
Ellie Im, M.D. Dr. Im, age 47, has served as Crescent’s Chief Medical Officer since April 2025. Prior to joining Crescent, Dr. Im served as Senior Vice President of Clinical Development, Oncology, at Centessa Pharmaceuticals PLC (Nasdaq: CNTA), a clinical-stage pharmaceutical company, from September 2023 to March 2025. Prior to joining Centessa, Dr. Im held roles of increasing responsibility at Mersana Therapeutics, Inc. (Nasdaq: MRSN), a clinical-stage biopharmaceutical company, where she served as Senior Vice President, Clinical Development and Operations from January 2023 to September 2023, Senior Vice President, Head of Clinical Development from March 2022 to September 2023, and as Vice President, Clinical Development from May 2021 to March 2022. Prior to Mersana Therapeutics, Dr. Im was Clinical Development Lead and Senior Medical Director at Tesaro Inc. (formerly, Nasdaq: TSRO), an oncology-focused company that was later acquired by GlaxoSmithKline plc, where she led the clinical development for Jemperli. She also served as Medical Director for Merck & Co, Oncology Clinical Development, and led clinical development for Keytruda. Dr. Im is a medical oncologist and holds an MD degree from Catholic University College of Medicine, South Korea. She is board certified in internal medicine and medical oncology and a member of the American Society of Clinical Oncology and Hematology.
Richard Scalzo. Mr. Scalzo, age 39, has served as Crescent’s Chief Financial Officer since April 2025. Prior to joining Crescent, Mr. Scalzo served as Senior Vice President, Head of Finance and Administration at Dyne Therapeutics, Inc. (Nasdaq: DYN), a biotechnology company, from July 2022 to March 2025. Mr. Scalzo also previously served as Vice President, Accounting and Administration and Treasurer from January 2020 to June 2022 and Corporate Controller from December 2019 to July 2020 at Dyne Therapeutics. Prior to Dyne Therapeutics, Mr. Scalzo served as Corporate Controller at several biotechnology companies, including Kaleido Biosciences, Inc. from August 2018 to November 2019, X4 Pharmaceuticals, Inc. (Nasdaq: XFOR) from September 2016 to August 2018 and Ocata Therapeutics, Inc. (formerly, Nasdaq: OCAT; acquired by Astellas Pharma Inc. in February 2016) from August 2014 to September 2016. Mr. Scalzo started his career with PricewaterhouseCoopers LLP in its health industries practice. Mr. Scalzo is a certified public accountant in the Commonwealth of Massachusetts and holds a B.S. in accounting from Boston College and an M.B.A. from the University of Massachusetts.
Christopher Doughty. Mr. Doughty, age 38, has served as Crescent’s Chief Business Officer since October 2024. From February 2021 to October 2024, Mr. Doughty served as Chief Business Officer at Prometheus Biosciences, Inc., a Nasdaq-listed biotechnology company that was acquired by Merck & Co., Inc. in June 2023, where he was responsible for business development, corporate development, strategic planning, and competitive intelligence related activities. Prior to joining Prometheus, Mr. Doughty served as Vice President Strategy and Business Development at Strata Oncology, Inc., a biotechnology company, from May 2017 to February 2021, where he was responsible for leading business development. Prior to joining Strata, Mr. Doughty served as an Engagement Manager at McKinsey & Company. Mr. Doughty received an M.B.A. from the University of Michigan Ross School of Business and a B.S. in Industrial and Operations Engineering from the University of Michigan.
Ryan Lynch. Mr. Lynch, age 41, has served as Crescent’s Treasurer, Senior Vice President of Finance and Chief Accounting Officer since December 2024. Prior to joining Crescent, Mr. Lynch served as VP Finance at Kelonia Therapeutics, Inc., a biotechnology company, from November 2021 to December 2024, where he was responsible for overseeing the company’s finance and accounting functions. Prior to Kelonia, from December 2019 to November 2021, Mr. Lynch served as Senior Director, Corporate Controller at Morphic Therapeutic, Inc., a biopharmaceutical company and wholly owned subsidiary of Morphic Holding, Inc, a Nasdaq-listed biopharmaceutical company that was acquired by Eli Lilly and Company in 2024, where he was responsible for overseeing the company’s finance and accounting functions. Prior to joining Morphic, Mr. Lynch held positions of increasing responsibility at Concert Pharmaceuticals, Inc. from May 2014 to November 2019, most recently serving as Senior Director, Corporate Controller. Mr. Lynch received an M.S. in Accounting from the University of Massachusetts Amherst and a B.B.A. in Accounting from the University of Massachusetts Amherst. Mr. Lynch is a licensed certified public accountant in Massachusetts.
Barbara Bispham. Ms. Bispham, age 39, has served as Crescent’s General Counsel and Corporate Secretary since January 2025. Prior to joining Crescent, Ms. Bispham served as Senior Vice President, General Counsel and Corporate Secretary at Sail Biomedicines, a biotechnology company and subsidiary of Flagship Pioneering, Inc., from October 2023 to January 2025, where she was responsible for overseeing the company’s legal and intellectual property operations. Prior to Sail, Ms. Bispham served as Senior Vice President, General Counsel and Corporate Secretary at Senda Biosciences, Inc., a biotechnology company and subsidiary of Flagship Pioneering, Inc., from October 2022 until it merged with LARONDE, Inc., also a subsidiary of Flagship Pioneering, Inc., to form Sail Biomedicines in October 2023, where she was responsible for overseeing the company’s legal and intellectual property operations. Prior to joining Senda, Ms. Bispham held positions of increasing responsibility at BridgeBio Pharma, Inc. (Nasdaq: BBIO), a biopharmaceutical company, from August 2020 to September 2022, most recently serving as Vice President, Head of Legal, where she was responsible for overseeing the company’s legal, transactional, employment, governance, litigation, privacy, compliance, and intellectual property operations. While at BridgeBio Pharma, Ms. Bispham supported key activities in connection with the commercialization of the company’s first two FDA-approved drugs, NULIBRY® (fosdenopterin) and TRUSELTIQ® (infigratinib). Prior to joining BridgeBio, Ms. Bispham was an associate at Goodwin Procter LLP, where she was a member of the firm’s Tech & Life Sciences Group, and, before that, a corporate associate at Cooley LLP, where she was a member of the public companies and emerging companies practice groups. Ms. Bispham received a B.A. from the University of Pennsylvania and a J.D. from Cornell Law School.
Alexandra Balcom. Ms. Balcom, age 41, has served as a member of Crescent’s board of directors since November 2024. Ms. Balcom has served as Chief Financial Officer at Nuvalent, Inc. (Nasdaq: NUVL), a biotechnology company, since January 2021. From April 2017 to March 2021, Ms. Balcom held positions of increasing responsibility at SQZ Biotechnologies Company, formerly a NYSE-listed biotechnology company, most recently serving as Vice President of Finance from January 2019 to March 2021. Prior to joining SQZ Biotechnologies, Ms. Balcom held positions of increasing responsibility at Agios Pharmaceuticals Inc. (Nasdaq: AGIO), a biopharmaceutical company, from January 2011 to April 2017, most recently serving as Corporate Controller. Ms. Balcom received a B.B.A. in Finance from the University of Massachusetts, Amherst, and a M.B.A. from Boston College. Ms. Balcom is a Certified Public Accountant in Massachusetts.
The Company believes Ms. Balcom is qualified to serve as a member of the Board because of her experience as an executive officer of life sciences companies, her expertise in finance and her background in business development and operations.
Peter Harwin. Mr. Harwin, age 39, has served as a member of Crescent’s board of directors since September 2024. Mr. Harwin is a Managing Member at Fairmount, a healthcare investment firm he co-founded in April 2016. Prior to Fairmount, Mr. Harwin served as a member of the investment team at Boxer Capital, LLC, an investment fund that was part of the Tavistock Group, based in San Diego. Mr. Harwin also serves as chairman of the board of directors of Cogent Biosciences, Inc. (Nasdaq: COGT) and as a member of the board of directors of Apogee Therapeutics, Inc. (Nasdaq: APGE), Oruka Therapeutics, Inc. (Nasdaq: ORKA), Spyre Therapeutics, Inc. (Nasdaq: SYRE) and Paragon Therapeutics, Inc. Mr. Harwin received a B.B.A. from Emory University.
The Company believes Mr. Harwin is qualified to serve as a member of the Board because of his experience advising and serving as a director of biotechnology companies and as a manager of funds specializing in the area of life sciences.
David Lubner. Mr. Lubner, age 61, has served as a member of Crescent’s board of directors since April 2025. Mr. Lubner served as Executive Vice President and Chief Financial Officer of Ra Pharmaceuticals, Inc., a biotechnology company acquired by UCB S.A. in April 2020, from January 2016 until June 2020. Before joining Ra Pharmaceuticals, Mr. Lubner served as Chief Financial Officer of Tetraphase Pharmaceuticals, Inc., a biotechnology company, from its inception in 2006 to 2016, as Chief Financial Officer of PharMetrics Inc., a patient-based pharmacy and medical claims data informatics company, from 1999 until it was acquired by IMS Health in 2005 and as Vice President and Chief Financial Officer of ProScript, Inc. from 1996 to 1999. Mr. Lubner serves as a member of the board of directors of Arcellx Inc. (Nasdaq: ACLX), Cargo Therapeutics, Inc. (Nasdaq: CRGX), Dyne Therapeutics, Inc. (Nasdaq: DYN) and Vor Biopharma, Inc. (Nasdaq: VOR) and several other private companies. Mr. Lubner previously served on the board of directors of Nightstar Therapeutics plc from 2017 until it was acquired by Biogen Inc. in June 2019, Therapeutics Acquisition Corporation (d/b/a as Research Alliance Corp. I), a blank check company focused on the healthcare industry from May 2020 to June 2021, Gemini Therapeutics, Inc. from 2020 to 2022 and Point Biopharma, Inc. from 2021 until it was acquired by Eli Lilly and Company in 2023. He received his B.S. in business administration from Northeastern University and an M.S. in taxation from Bentley University.
The Company believes Mr. Lubner is qualified to serve as a member of the Board because of his financial and leadership experience as a senior executive in the biotechnology industry and his experience as a director of a public biotechnology company, including serving as chair of the audit committee.
Susan Moran, M.D., MSCE. Dr. Moran, age 55, has served as a member of Crescent’s board of directors since November 2024. From July 2021 to May 2024, Dr. Moran served as Chief Medical Officer of RayzeBio, Inc., a Nasdaq-listed radiopharmaceutical therapeutics company that was acquired by the Bristol-Myers Squibb Company in 2024. Prior to joining RayzeBio, Dr. Moran served as Chief Medical Officer at QED Therapeutics, Inc., a biotechnology company and subsidiary of BridgeBio Pharma, Inc. (Nasdaq: BBIO), from March 2018 to June 2021. Prior to joining QED, Dr. Moran held positions of increasing responsibility at Puma Biotechnology, Inc. (Nasdaq: PBYI), a biopharmaceutical company, from 2014 to 2018, most recently serving as Vice President and Head of Clinical Development. Prior to joining Puma, Dr. Moran served as Medical Director at Takeda Oncology from 2011 until 2014 and as Senior Medical Director at Sanofi Genzyme from 2007 until 2011. Dr. Moran is a board-certified internist and previously held faculty appointments at the University of Pennsylvania School of Medicine and Harvard Medical School. Dr. Moran currently serves on the board of directors of Tyra Biosciences, Inc. (Nasdaq: TYRA) and BioAtla, Inc. (Nasdaq: BCAB). Dr. Moran received a B.A. from the University of Virginia, a M.D. from Duke University, and a M.S. in Clinical Epidemiology from the University of Pennsylvania School of Medicine.
The Company believes Dr. Moran is qualified to serve as a member of the Board because of her leadership, scientific, medical and academic experience in the biotechnology industry.
Jonathan Violin, Ph.D. Dr. Violin, age 49, has served as a member of Crescent’s board of directors since October 2024. Dr. Violin previously served as Crescent’s Chief Executive Officer and President from October 2024 to March 2025. Dr. Violin has served as a Venture Partner at Fairmount Funds Management LLC, a healthcare investment firm, since June 2023. Prior to joining Fairmount, Dr. Violin served as President, Chief Executive Officer and member of the board of directors of Viridian Therapeutics, Inc. (Nasdaq: VRDN), a biopharmaceutical company, from January 2021 to February 2023, and he previously served as President and Chief Operating Officer of Viridian from October 2020 until January 2021. He was the Co-Founder of Viridian’s predecessor and led its operations from April 2020 to its acquisition. Dr. Violin has served as a member of the board of directors of Dianthus Therapeutics, Inc. (formerly Magenta Therapeutics, Inc.) (Nasdaq: DNTH) since the completion of its business combination in September 2023 with Dianthus Therapeutics, Inc., a biotechnology company he co-founded in 2019. Dr. Violin also co-founded Quellis Biosciences, Inc., a biotechnology company (acquired by Astria Therapeutics, Inc. (Nasdaq: ATXS), formerly Catabasis Pharmaceuticals, Inc.), in 2018 and, since January 2021, has served on the Astria Therapeutics board of directors. Prior to that, he co-founded and helped lead Trevena Inc. (Nasdaq: TRVN), a biotechnology company, in various roles from 2008 until November 2018, including most recently as Senior Vice President, Scientific Affairs and Investor Relations Officer. Dr. Violin received a Ph.D. from the Department of Pharmacology in the Biomedical Sciences Program at the University of California, San Diego, a M.B.A. with a concentration in Health Sector Management from the Fuqua School of Business at Duke University, and a B.S. in Chemical Pharmacology from Duke University.
The Company believes that Dr. Violin is qualified to serve as a member of the Board because of his extensive experience and innovations in the field of biotechnology and his academic expertise and accomplishments.
Committees of the Board of Directors
Audit Committee
On June 13, 2025, Alexandra Balcom, David Lubner and Susan Moran were appointed to the Audit Committee, and Alexandra Balcom, an “audit committee financial expert” within the meaning of the SEC regulations, was appointed the chair of the Audit Committee.
Compensation Committee
On June 13, 2025, Peter Harwin, David Lubner and Susan Moran were appointed to the Compensation Committee, and Susan Moran was appointed the chair of the Compensation Committee.
Nominating Committee
On June 13, 2025, Alexandra Balcom, Peter Harwin and Jonathan Violin were appointed to the Nominating Committee, and Peter Harwin was appointed the chair of the Nominating Committee.
Non-Employee Director Compensation Program
Non-employee members of the Board are eligible to receive cash and equity compensation in accordance with our non-employee director compensation program. This program provides for the following annual cash retainers:
| Annual Retainer | ||||
| Board Retainers | ||||
| Chair | $ | 70,000 | ||
| Non-Chair Member | $ | 40,000 | ||
| Audit Committee Retainers: | ||||
| Chair | $ | 15,000 | ||
| Non-Chair Member | $ | 7,500 | ||
| Compensation Committee Retainers: | ||||
| Chair | $ | 12,000 | ||
| Non-Chair Member | $ | 6,000 | ||
| Nominating Committee Retainers | ||||
| Chair | $ | 10,000 | ||
| Non-Chair Member | $ | 5,000 | ||
In connection with the Company’s annual meeting of shareholders, each non-employee member of the Board will receive an annual grant of options to purchase Company ordinary shares equal to 0.038% of the Company, which will vest on the earlier of the next annual shareholder meeting or the first anniversary of the date of grant. In addition, in connection with a non-employee director’s initial appointment to the Board, they will receive an initial grant of options to purchase Company ordinary shares equal to 0.077% of the Company, in connection with a director’s appointment to the Board, subject to vesting in equal monthly installments through the third anniversary of the date of grant.
All members of the Board are also reimbursed for reasonable and documented out-of-pocket travel and lodging expenses incurred in connection with attending meetings and activities of the Board and its committees.
Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.
Amendments to Certificate of Incorporation
The information set forth in Item 3.03 of this Current Report on Form 8-K is incorporated herein by reference.
Cayman Islands Memorandum and Articles of Association
The information set forth in Item 3.03 of this Current Report on Form 8-K is incorporated herein by reference.
Item 5.05 Amendments to the Registrant’s Code of Ethics, or Waiver of a Provision of the Code of Ethics.
On June 13, 2025, in connection with the Closing, the Board adopted a new Code of Business Conduct and Ethics of the Company (the “Code of Conduct”), effective as of such date. The Code of Conduct supersedes the existing Code of Business Conduct and Ethics, as previously adopted by GlycoMimetics’ board of directors (the “Existing Code of Conduct”). The Code of Conduct applies to all directors, officers and employees of the Company and is intended to enhance understanding of the Company’s standards of ethical business practices and promote awareness of ethical issues that may be encountered in carrying out a director’s, officer’s or employee’s responsibilities. Among other things, the Code of Conduct:
| · | establishes the Company’s policies and standards with respect to (i) conflicts of interest, gifts and corporate opportunities, (ii) fair dealing, confidential information, privacy and use of Company assets and systems, (iii) legal and regulatory compliance, insider trading and anti-corruption standards, including pursuant to the Foreign Corrupt Practices Act, (iv) the Company’s disclosure obligations and recordkeeping procedures, (v) anti-discrimination, equal employment opportunity and health and safety and (vi) international trade compliance; |
| · | establishes the Company’s whistleblower hotline and procedures for reporting potential violations; and |
| · | establishes the Company’s policies and procedures with respect to an amendment or waiver of the Code of Conduct. |
The adoption of the Code of Conduct did not result in any explicit or implicit waiver of any provision of the Existing Code of Conduct. The foregoing description of the Code of Conduct does not purport to be complete and is subject to and qualified in its entirety by reference to the full text of the Code of Conduct, a copy of which is attached hereto as Exhibit 14.1 and is incorporated herein by reference.
Item 5.06. Change in Shell Company Status.
As a result of the Merger, the Company ceased to be a shell company (as defined in Rule 12b-2 of the Exchange Act) as of the Closing Date. The material provisions of the Merger Agreement are described in the Proxy Statement/Prospectus in the section entitled “The Merger Agreement” beginning on page 157 and are incorporated herein by reference.
Item 7.01. Regulation FD Disclosure.
On June 16, 2025, the Company issued a press release announcing the consummation of the Merger, which is included in this Current Report on Form 8-K as Exhibit 99.1.
The exhibit furnished under Item 7.01 of this Current Report on Form 8-K shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Exchange Act or the Securities Act regardless of any general incorporation language in such filing.
Item 9.01 Financial Statements and Exhibits.
(a) Financial Statements of Business Acquired
The unaudited interim condensed financial statements of Crescent as of and for the three months ended March 31, 2025 and the related notes thereto are attached hereto as Exhibit 99.2 and are incorporated herein by reference.
The audited financial statements of Crescent as of December 31, 2024 and for the period from September 19, 2024 (inception) to December 31, 2024 and the related notes thereto are included in the Proxy Statement/Prospectus beginning on page F-22 and are incorporated herein by reference.
(b) Pro Forma Financial Information
The unaudited pro forma condensed combined financial information of the GlycoMimetics and Crescent as of and for the three months ended March 31, 2025 and twelve months ended December 31, 2024 and the related notes thereto are attached hereto as Exhibit 99.4 and are incorporated herein by reference.
(d) Exhibits
| * | Filed herewith. |
| # | Indicates management contract or compensatory plan. |
| † | Exhibits and/or schedules have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The registrant hereby undertakes to furnish supplementally copies of any of the omitted exhibits and schedules upon request by the SEC; provided, however, that the registrant may request confidential treatment pursuant to Rule 24b-2 under the Exchange Act for any exhibits or schedules so furnished. |
| †† | Portions of this exhibit (indicated by “[***]”) have been omitted in accordance with the rules of the Securities and Exchange Commission. |
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 hereunto duly authorized.
| Crescent Biopharma, Inc. | |||
| (Registrant) | |||
| Date: June 18, 2025 | By: | /s/ Joshua Brumm | |
| Name: | Joshua Brumm | ||
| Title: | Chief Executive Officer | ||
Exhibit 2.4
PLAN OF CONVERSION
This Plan of Conversion (this “Plan”) is adopted as of June 16, 2025 and sets forth certain terms of the conversion of Crescent Biopharma, Inc. (formerly known as GlycoMimetics, Inc.), a Delaware corporation (the “Delaware Corporation”), to a Cayman Islands exempted company (the “Cayman Company”), pursuant to the terms of the General Corporation Law of the State of Delaware (as amended, the “DGCL”) and Part XII of the Companies Act of the Cayman Islands (as amended, the “Companies Act”).
RECITALS:
A. The Delaware Corporation was incorporated on April 4, 2003.
B. Upon the terms and subject to the conditions set forth in this Plan, and in accordance with Section 266 of the DGCL and Part XII of the Companies Act, the Delaware Corporation will be converted to a Cayman Company.
C. The Board of Directors of the Delaware Corporation (the “Board”) has unanimously (i) determined that the Conversion (as defined below) is advisable and in the best interests of the Delaware Corporation and its stockholders and recommended the approval of the Conversion by the stockholders of the Delaware Corporation and (ii) approved and adopted this Plan, the Conversion and the other documents and transactions contemplated by this Plan, including the Cayman Articles, the Cayman Certificate of Designation and the Delaware Certificate of Conversion (as each is defined below).
D. The stockholders of the Delaware Corporation have approved and adopted this Plan, the Conversion and the other documents and transactions contemplated by this Plan, including the Cayman Articles, the Cayman Certificate of Designation and the Delaware Certificate of Conversion.
E. In connection with the Conversion, on the Effective Date (as defined below), each share of Common Stock, par value $0.001 per share (the “Delaware Common Stock”), and each share of Series A Preferred Stock, par value $0.001 per share (the “Delaware Preferred Stock”), of the Delaware Corporation issued and outstanding (or held in treasury) immediately prior to the Effective Date shall be converted into one Ordinary Share, par value $0.001 per share (the “Cayman Ordinary Shares”), and one Series A Preference Share, par value $0.001 per share (the “Cayman Preferred Shares”), respectively, of the Cayman Company.
F. The mode of carrying out the Conversion into effect shall be as described in this Plan.
ARTICLE I
THE CONVERSION
1.1 Conversion. On the Effective Date, the Delaware Corporation will be converted to the Cayman Company by way of continuation of the Company from a corporation organized under the laws of the State of Delaware to an exempted company incorporated under the laws of the Cayman Islands, pursuant to, and in accordance with, Section 266 of the DGCL and Part XII of the Companies Act (the “Conversion”). The Board and the stockholders of the Delaware Corporation have approved and adopted this Plan, the Conversion and the other documents and transactions contemplated by this Plan, including the Cayman Articles, the Cayman Certificate of Designation and the Delaware Certificate of Conversion.
1.2 Certificate of Conversion. The Delaware Corporation shall file a certificate of conversion in the form attached hereto as Exhibit A (the “Delaware Certificate of Conversion”) with the Secretary of State of the State of Delaware (the “Delaware Secretary of State”) and shall file the memorandum and articles of association in the form attached hereto as Exhibit B (the “Cayman Articles”) and any and all documents required to be filed with the Cayman Islands Registrar of Companies in connection with the Conversion and the Delaware Corporation or the Cayman Company, as applicable, shall make all other filings or recordings required by the DGCL or the Companies Act in connection with the Conversion.
1.3 Effective Date. The Conversion will become effective upon the filing of the Delaware Certificate of Conversion with the Delaware Secretary of State and the issuance of a certificate of continuation by the Cayman Islands Registrar of Companies (the “Cayman Certificate of Continuation”) or at such later date and/or time as specified in the Delaware Certificate of Conversion and the Cayman Certificate of Continuation (the “Effective Date”).
ARTICLE II
ORGANIZATION
2.1 Cayman Governing Documents. On the Effective Date, the Cayman Articles, including the Certificate of Designation attached hereto as Exhibit C (the “Cayman Certificate of Designation” and together with the Cayman Articles, the “Cayman Governing Documents”), shall govern the Cayman Company until amended and/or restated in accordance with the Cayman Governing Documents and applicable law.
2.2 Directors and Officers. From and after the Effective Date, by virtue of the Conversion and without any further action on the part of the Delaware Corporation or its stockholders, the members of the Board and the officers of the Delaware Corporation holding their respective offices in the Delaware Corporation existing immediately prior to the Effective Date shall continue in their respective offices as members of the Board and officers of the Cayman Company.
ARTICLE III
EFFECT OF THE CONVERSION
3.1 Effect of Conversion. On the Effective Date, the effect of the Conversion will be as provided by this Plan and by the applicable provisions of the DGCL and the Companies Act. Without limitation of the foregoing, for all purposes of the laws of the State of Delaware and the Cayman Islands, the Cayman Company will continue as a body corporate for all purposes, as if incorporated and registered as an exempted company under and subject to the Companies Act and all of the rights, privileges, and powers of the Delaware Corporation, and all property, real, personal, and mixed, and all debts due to the Delaware Corporation, as well as all other things and causes of action belonging to the Delaware Corporation, shall remain vested in the Cayman Company and shall be the property of the Cayman Company, and all debts, liabilities, and duties of the Delaware Corporation shall remain attached to the Cayman Company, and may be enforced against the Cayman Company to the same extent as if said debts, liabilities, and duties had originally been incurred or contracted by the Cayman Company.
3.2 Conversion of Shares. On the Effective Date, by virtue of the Conversion and without any further action by the Delaware Corporation or the stockholders, (i) each share of Delaware Common Stock issued and outstanding immediately before the Effective Date shall be converted into one Cayman Ordinary Share, and all options, warrants or other entitlement to receive a share of Delaware Common Stock shall automatically be converted into an option, warrant or other entitlement to receive a Cayman Ordinary Share and (ii) each share of Delaware Preferred Stock issued and outstanding immediately before the Effective Date shall be converted into one Cayman Preferred Share, and all options, warrants or other entitlement to receive a share of Delaware Preferred Stock shall automatically be converted into an option, warrant or other entitlement to receive a Cayman Preferred Share.
ARTICLE IV
MISCELLANEOUS
4.1 Abandonment or Amendment. At any time prior to the filing of the Delaware Certificate of Conversion with the Delaware Secretary of State, the Delaware Corporation may abandon the proposed Conversion and terminate this Plan to the extent permitted by law or may amend this Plan.
4.2 Captions. The captions in this Plan are for convenience only and shall not be considered a part, or to affect the construction or interpretation, of any provision of this Plan.
4.3 Tax Reporting. The Conversion is intended to be a “reorganization” for purposes of Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”), and this Plan of Conversion is hereby adopted as a “plan of reorganization” for purposes of the Section 368(a)(1)(F) of the Code.
4.4 Governing Law. This Plan shall be governed by, and construed and interpreted in accordance with, the laws of the State of Delaware.
IN WITNESS WHEREOF, this Plan has been executed on behalf of the Delaware Corporation by its officers thereunto duly authorized, all as of the date set forth above.
| CRESCENT BIOPHARMA, INC. | ||
| By: | /s/ Joshua Brumm | |
| Name: | Joshua Brumm | |
| Title: | Chief Executive Officer | |
EXHIBIT A
DELAWARE CERTIFICATE OF CONVERSION
EXHIBIT B
CAYMAN ISLANDS MEMORANDUM AND ARTICLES OF ASSOCIATION
EXHIBIT C
CAYMAN ISLANDS CERTIFICATE OF DESIGNATION
Exhibit 3.1
CERTIFICATE OF AMENDMENT
TO THE AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF
GLYCOMIMETICS, INC.
GlycoMimetics, Inc., a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware (the “Company”), hereby certifies that:
FIRST: The name of this Company is GlycoMimetics, Inc.
SECOND: The Company’s Amended and Restated Certificate of Incorporation was filed on January 15, 2014.
THIRD: The Board of Directors of the Company, acting in accordance with the provisions of Sections 141 and 242 of the General Corporation Law of the State of Delaware, adopted resolutions amending the Amended and Restated Certificate of Incorporation, as currently in effect (the “Certificate of Incorporation”), to amend and restate Paragraph A of Article IV of the Certificate of Incorporation in its entirety as follows:
“A. The Company is authorized to issue two classes of stock to be designated, respectively, “Common Stock” and “Preferred Stock.” The total number of shares of all classes of capital stock which the Company shall have authority to issue is One Hundred Eighty Million (180,000,000) shares, of which One Hundred Seventy-Five Million (175,000,000) shares shall be Common Stock (the “Common Stock”), each having a par value of one-tenth of one cent ($0.001), and Five Million (5,000,000) shares shall be Preferred Stock (the “Preferred Stock”), each having a par value of one-tenth of one cent ($0.001).”
FOURTH: This Certificate of Amendment was submitted to the stockholders of the Company and was duly adopted and approved in accordance with the provisions of Sections 228 and 242 of the General Corporate Law of the State of Delaware.
FIFTH: This Certificate of Amendment shall be effective at 8:47 am (Eastern Daylight Time) as of June 13, 2025.
IN WITNESS WHEREOF, the Company has caused this Certificate of Amendment to be signed by its Principal Executive Officer this 13th day of June, 2025.
| GLYCOMIMETICS, INC. | ||
| By: | /s/ Brian Hahn | |
| Brian Hahn | ||
| Principal Executive Officer | ||
Exhibit 3.2
CERTIFICATE OF AMENDMENT
TO THE AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF
GLYCOMIMETICS, INC.
GlycoMimetics, Inc., a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware (the “Company”), hereby certifies that:
FIRST: The name of this Company is GlycoMimetics, Inc.
SECOND: The Company’s Amended and Restated Certificate of Incorporation was filed on January 15, 2014.
THIRD: The Board of Directors of the Company, acting in accordance with the provisions of Sections 141 and 242 of the General Corporation Law of the State of Delaware, adopted resolutions amending the Amended and Restated Certificate of Incorporation, as currently in effect (the “Certificate of Incorporation”), to add the following new Paragraph D and Paragraph E immediately following the existing Paragraph C of Article IV:
“D. Effective as of 8:46 am (Eastern Time) on June 13, 2025 (such time, the “Effective Time”), a one-for-one-hundred reverse stock split of the shares of Common Stock, pursuant to which every one-hundred shares of the Common Stock issued and held of record by each stockholder of the Company (including treasury shares) immediately prior to the Effective Time shall be reclassified and combined into one validly issued, fully paid and non-assessable share of Common Stock from and after the Effective Time, without any action on the part of the Company or the respective stockholders thereof (such reclassification and combination of shares, the “Reverse Stock Split”). The par value of the Common Stock following the Reverse Stock Split shall remain at $0.001 per share. No fractional shares of Common Stock shall be issued as a result of the Reverse Stock Split. In lieu of any fractional shares, if upon aggregating all of the shares of Common Stock held by a record holder immediately following the Reverse Stock Split such holder would otherwise be entitled to a fractional share of Common Stock as a result of the Reverse Stock Split, the Company shall pay in cash (without interest) to each such holder an amount equal to the product of such resulting fractional interest in one share of Common Stock multiplied by the closing trading price on The Nasdaq Stock Market LLC of a share of Common Stock on the last trading day immediately prior to the date on which the Effective Time occurs (with such price proportionately adjusted to give effect to the Reverse Stock Split).
E. Each stock certificate or book entry share that, immediately prior to the Effective Time, represented shares of Common Stock that were issued and outstanding immediately prior to the Effective Time shall, from and after the Effective Time, automatically and without the necessity of presenting the same for exchange, represent that number of whole shares of Common Stock after the Effective Time into which the shares formerly represented by such certificate or book entry share have been combined (as well as the right to receive cash in lieu of fractional shares of Common Stock after the Effective Time); provided, however, that each stockholder of record holding a certificate that represented shares of Common Stock that were issued and outstanding immediately prior to the Effective Time shall receive, upon surrender of such certificate, a new certificate evidencing and representing the number of whole shares of Common Stock after the Effective Time into which the shares of Common Stock formerly represented by such certificate shall have been combined.”
FOURTH: This Certificate of Amendment was submitted to the stockholders of the Company and was duly adopted and approved in accordance with the provisions of Sections 228 and 242 of the General Corporate Law of the State of Delaware.
FIFTH. This Certificate of Amendment shall be effective at 8:46 am (Eastern Daylight Time) as of June 13, 2025.
IN WITNESS WHEREOF, the Company has caused this Certificate of Amendment to be signed by its Principal Executive Officer this 13th day of June, 2025.
| GLYCOMIMETICS, INC. | ||
| By: | /s/ Brian Hahn | |
| Brian Hahn | ||
| Principal Executive Officer | ||
Exhibit 3.3
CERTIFICATE OF AMENDMENT
TO THE AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF
GLYCOMIMETICS, INC.
GlycoMimetics, Inc., a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware (the “Company”), hereby certifies that:
FIRST: The name of this Company is GlycoMimetics, Inc.
SECOND: The Company’s Amended and Restated Certificate of Incorporation was filed on January 15, 2014.
THIRD: The Board of Directors of the Company, acting in accordance with the provisions of Sections 141 and 242 of the General Corporation Law of the State of Delaware, adopted resolutions amending the Amended and Restated Certificate of Incorporation, as currently in effect (the “Certificate of Incorporation”), to amend and restate Article I of the Certificate of Incorporation in its entirety as follows:
“The name of this corporation is Crescent Biopharma, Inc. (the “Company”).”
FOURTH: This Certificate of Amendment shall be effective at 8:50 am (Eastern Daylight Time) as of June 13, 2025.
IN WITNESS WHEREOF, the Company has caused this Certificate of Amendment to be signed by its Principal Executive Officer this 13th day of June, 2025.
| GLYCOMIMETICS, INC. | ||
| By: | /s/ Brian Hahn | |
| Brian Hahn | ||
| Principal Executive Officer | ||
Exhibit 3.4
THE COMPANIES ACT (AS AMENDED)
COMPANY LIMITED BY SHARES
Memorandum OF association
of
CRESCENT BIOPHARMA, INC.
REF: ME/KG/C9608-195644
THE COMPANIES ACT (AS AMENDED)
COMPANY LIMITED BY SHARES
MEMORANDUM OF ASSOCIATION
OF
CRESCENT BIOPHARMA, INC.
(ADOPTED BY SPECIAL RESOLUTION PASSED ON 5 JUNE 2025 AND EFFECTIVE AS OF 16 JUNE 2025)
| 1. | The name of the Company is Crescent Biopharma, Inc. (the “Company”). |
| 2. | The registered office of the Company will be situated at the offices of Walkers Corporate Limited, 190 Elgin Avenue, George Town, Grand Cayman KY1-9008, Cayman Islands or at such other location as the Directors may from time to time determine. |
| 3. | The objects for which the Company is established are unrestricted and the Company shall have full power and authority to carry out any object not prohibited by any law as provided by Section 7(4) of the Companies Act (as amended) of the Cayman Islands (the “Companies Act”). |
| 4. | The Company shall have and be capable of exercising all the functions of a natural person of full capacity irrespective of any question of corporate benefit as provided by Section 27(2) of the Companies Act. |
| 5. | The Company will not trade in the Cayman Islands with any person, firm or corporation except in furtherance of the business of the Company carried on outside the Cayman Islands; provided that nothing in this section shall be construed as to prevent the Company effecting and concluding contracts in the Cayman Islands, and exercising in the Cayman Islands all of its powers necessary for the carrying on of its business outside the Cayman Islands. |
| 6. | The liability of the shareholders of the Company is limited to the amount, if any, unpaid on the shares respectively held by them. |
| 7. | The authorised share capital of the Company is US$180,000 divided into 175,000,000 ordinary shares with a nominal or par value of US$0.001, and 5,000,000 preferred shares with a nominal or par value of US$0.001 provided that subject to the Companies Act and the Articles of Association the Company shall have power to redeem or purchase any of its shares and to sub-divide or consolidate the said shares or any of them and to issue all or any part of its capital whether original, redeemed, increased or reduced with or without any preference, priority, special privilege or other rights or subject to any postponement of rights or to any conditions or restrictions whatsoever and so that unless the conditions of issue shall otherwise expressly provide every issue of shares whether stated to be ordinary, preference or otherwise shall be subject to the powers on the part of the Company hereinbefore provided. |
| 8. | The Company may exercise the power contained in Section 206 of the Companies Act to deregister in the Cayman Islands and be registered by way of continuation in any jurisdiction outside the Cayman Islands. |
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THE COMPANIES ACT (AS AMENDED)
COMPANY LIMITED BY SHARES
ARTICLES OF ASSOCIATION
OF
CRESCENT BIOPHARMA, INC.
(ADOPTED BY SPECIAL RESOLUTION PASSED ON 5 JUNE 2025 AND EFFECTIVE AS OF 16 JUNE 2025)
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THE COMPANIES ACT (AS AMENDED)
COMPANY LIMITED BY SHARES
ARTICLES OF ASSOCIATION
OF
CRESCENT BIOPHARMA, INC.
(ADOPTED BY SPECIAL RESOLUTION PASSED ON 5 JUNE 2025 AND EFFECTIVE AS OF 16 JUNE 2025)
TABLE A
The Regulations contained or incorporated in Table ‘A’ in the First Schedule of the Companies Act shall not apply to Crescent Biopharma, Inc. (the “Company”) and the following Articles shall comprise the Articles of Association of the Company.
Interpretation
1. In these Articles the following defined terms will have the meanings ascribed to them, if not inconsistent with the subject or context:
“Articles” means these articles of association of the Company, as amended or substituted from time to time.
“Audit Committee” means the audit committee of the Company formed pursuant to Article 134 hereof, or any successor audit committee.
“Branch Register” means any branch Register of such category or categories of Shareholders as the Company may from time to time determine.
“business day” means any day other than a Saturday, a Sunday or a U.S. Federal Holiday or a day on which banking institutions or trust companies are authorised or obligated by law to close in the United States.
“Certificate of Designation” means a certificate of designation of preferences, rights and limitations with respect to any Class of Preferred Shares (as may be amended from time to time).
“Class” or “Classes” means any class or classes of Shares as may from time to time be issued by the Company.
“Companies Act” means the Companies Act (as amended) of the Cayman Islands.
“Designated Stock Exchange” means any national securities exchange or automated quotation system on which the Company’s securities are listed for trading, including but not limited to The Nasdaq Stock Market LLC, The NYSE MKT LLC, The New York Stock Exchange LLC or any OTC market.
“Directors” means the directors of the Company for the time being, or as the case may be, the directors assembled as a board or as a committee thereof.
“Electronic Facility” means without limitation, website addresses and conference call systems, and any device, system, procedure, method or other facility whatsoever providing an electronic means of venue for a general meeting of the Company.
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“Electronic Transactions Act” means the Electronic Transactions Act (as amended) of the Cayman Islands.
“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended, or any similar U.S. federal statute and the rules and regulations of the SEC thereunder, all as the same shall be in effect at the time.
“Initial Public Offering” means the Company’s initial public offering of securities.
“Memorandum of Association” means the memorandum of association of the Company, as amended or substituted from time to time.
“Office” means the registered office of the Company as required by the Companies Act.
“Officers” means the officers for the time being and from time to time of the Company.
“Ordinary Resolution” means a resolution:
| (a) | passed by a simple majority of the votes cast by such Shareholders as, being entitled to do so, vote in person or, where proxies are allowed, by proxy at a general meeting of the Company and where a poll is taken regard shall be had in computing a majority to the number of votes to which each Shareholder is entitled; or |
| (b) | approved in writing by all of the Shareholders entitled to vote at a general meeting of the Company in one or more instruments each signed by one or more of the Shareholders and the effective date of the resolution so adopted shall be the date on which the instrument, or the last of such instruments, if more than one, is executed. |
“Ordinary Shares” means the ordinary Shares in the capital of the Company of $0.001 nominal or par value designated as Ordinary Shares, and having the rights provided for in these Articles.
“paid up” means paid up as to the par value in respect of the issue of any Shares and includes credited as paid up.
“Person” means any natural person, firm, company, joint venture, partnership, company, association or other entity (whether or not having a separate legal personality) or any of them as the context so requires, other than in respect of a Director or Officer in which circumstances Person shall mean any person or entity permitted to act as such in accordance with the laws of the Cayman Islands.
“Preferred Shares” means the Preferred Shares in the capital of the Company of $0.001 nominal or par value designated as Preferred Shares or such other Series of Preferred Shares, and having the rights provided for in these Articles.
“Proponent” and “Proponents” have the meanings given to them in Article 13(d) hereof.
“Principal Register” means where the Company has established one or more Branch Registers pursuant to the Companies Act and these Articles, means the Register maintained by the Company pursuant to the Companies Act and these Articles that is not designated by the Directors as a Branch Register.
“Register” means the register of members of the Company required to be kept pursuant to the Companies Act and includes any Branch Register(s) established by the Company in accordance with the Companies Act.
“Seal” means the common seal of the Company (if adopted) including any facsimile thereof.
“SEC” means the U.S. Securities and Exchange Commission.
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“Secretary” means any Person appointed by the Directors to perform any of the duties of the secretary of the Company.
“Securities Act” means the U.S. Securities Act of 1933, as amended, or any similar U.S. federal statute and the rules and regulations of the SEC thereunder, all as the same shall be in effect at the time.
“Series” means a series of a Class as may from time to time be issued by the Company.
“Share” means a share in the capital of the Company. All references to “Shares” herein shall be deemed to be Shares of any or all Classes as the context may require. For the avoidance of doubt in these Articles the expression “Share” shall include a fraction of a Share.
“Shareholder” means a Person who is registered as the holder of Shares in the Register and includes each subscriber to the Memorandum of Association pending entry in the Register of such subscriber.
“Share Premium Account” means the share premium account established in accordance with these Articles and the Companies Act.
“signed” or “executed” means bearing a signature or representation of a signature affixed by mechanical means.
“Special Resolution” means a special resolution of the Company passed in accordance with the Companies Act, being a resolution:
| (a) | passed by a majority of not less than two-thirds of such Shareholders as, being entitled to do so, vote in person or, where proxies are allowed, by proxy at a general meeting of the Company of which notice specifying the intention to propose the resolution as a special resolution has been duly given and where a poll is taken regard shall be had in computing a majority to the number of votes to which each Shareholder is entitled; or |
| (b) | approved in writing by all of the Shareholders entitled to vote at a general meeting of the Company in one or more instruments each signed by one or more of the Shareholders and the effective date of the special resolution so adopted shall be the date on which the instrument or the last of such instruments, if more than one, is executed. |
“Treasury Shares” means Shares that were previously issued but were purchased, redeemed, surrendered or otherwise acquired by the Company and not cancelled.
| 2. | In these Articles, save where the context requires otherwise: |
| (a) | words importing the singular number shall include the plural number and vice versa; |
| (b) | words importing the masculine gender only shall include the feminine gender and any Person as the context may require; |
| (c) | the word “may” shall be construed as permissive and the word “shall” shall be construed as imperative; |
| (d) | references to provisions of any law or regulation shall be construed as references to those provisions as amended, modified, re-enacted or replaced; |
| (e) | any phrase introduced by the terms “including”, “include”, “in particular” or any similar expression shall be construed as illustrative and shall not limit the sense of the words preceding those terms; |
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| (f) | reference to a dollar or dollars or US$ (or $) and to a cent or cents is reference to dollars and cents of the United States of America; |
| (g) | reference to a statutory enactment shall include reference to any amendment or re-enactment thereof for the time being in force; |
| (h) | reference to any determination by the Directors shall be construed as a determination by the Directors in their sole and absolute discretion and shall be applicable either generally or in any particular case; and |
| (i) | reference to “in writing” shall be construed as written or represented by any means reproducible in writing, including any form of print, lithograph, email, facsimile, photograph or telex or represented by any other substitute or format for storage or transmission for writing or partly one and partly another; and |
| (j) | any requirements as to execution or signature under the Articles including the execution of the Articles themselves can be satisfied in the form of an electronic signature as defined in the Electronic Transactions Act. |
| 3. | Subject to the preceding Articles, any words defined in the Companies Act shall, if not inconsistent with the subject or context, bear the same meaning in these Articles. |
Preliminary
| 4. | The business of the Company may be commenced at any time after incorporation. |
| 5. | The Office shall be at such address in the Cayman Islands as the Directors may from time to time determine. |
| 6. | The Company shall also have and maintain an office or principal place of business at such place as may be fixed by the Directors, and may also have offices at such other places, as the Directors may from time to time determine or the business of the Company may require. |
| 7. | The Directors shall keep, or cause to be kept, the Register at such place or (subject to compliance with the Companies Act and these Articles) places as the Directors may from time to time determine. In the absence of any such determination, the Register shall be kept at the Office. The Directors may keep, or cause to be kept, one or more Branch Registers as well as the Principal Register in accordance with the Companies Act; provided that a duplicate of such Branch Register(s) shall be maintained with the Principal Register in accordance with the Companies Act and the rules or requirements of any Designated Stock Exchange. |
THE SEAL
| 8. | The Directors may adopt a Seal. The Seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise, as may be determined from time to time by the Directors. |
SHAREHOLDER MEETINGS
| 9. | Meetings of the Shareholders of the Company may be held at such place (including any Electronic Facility) as may be determined from time to time by the Directors and in accordance with these Articles. |
| 10. | The Directors may cancel or postpone any duly convened annual or general meeting for any reason or for no reason at any time prior to the time for holding such meeting or, if the meeting is adjourned, the time for holding such adjourned meeting. The Directors shall make a public announcement of any cancellation or postponement or otherwise provide notice to Shareholders of any cancellation or postponement. A postponement may be for a stated period of any length or indefinitely as the Directors may determine. |
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Annual General Meetings
| 11. | For so long as the Company’s Shares are traded on a Designated Stock Exchange, the Company shall in each year hold a general meeting as its annual general meeting at such time and place (including any Electronic Facility) as may be determined by the Directors in accordance with the rules of the Designated Stock Exchange, unless such Designated Stock Exchange does not require the holding of an annual general meeting. |
| 12. | The annual general meeting of the Shareholders of the Company, for the purpose of election of Directors and for such other business as may properly come before it, shall be held at such place (including any Electronic Facility), on such date and at such time each year as may be designated from time to time by the Directors. Nominations of persons for election to the board of Directors of the Company and the proposal of business to be considered by the Shareholders may be made at an annual general meeting of Shareholders: (i) pursuant to the Company’s notice of meeting of Shareholders (with respect to business other than nominations); (ii) brought specifically by or at the direction of the Directors; or (iii) by any Shareholder of the Company who was a Shareholder of record at the time of giving the Shareholders’ notice provided for in Article 13 below, who is entitled to vote at the meeting and who complied with the notice procedures set forth in Articles 11-16. For the avoidance of doubt, clause (iii) of this Article 12 shall be the exclusive means for a Shareholder to make nominations and submit other business (other than matters properly included in the Company’s notice of meeting of Shareholders) before an annual general meeting of Shareholders. |
| 13. | At an annual general meeting of the Shareholders, only such business shall be conducted as is a proper matter for shareholder action under Cayman Islands law and these Articles and as shall have been properly brought before the meeting. |
| (a) | For nominations for the election of Directors to be properly brought before an annual general meeting by a Shareholder pursuant to clause (iii) of Article 12 of these Articles, the Shareholder must deliver written notice to the Directors or Secretary at the principal executive offices of the Company on a timely basis as set forth in Article 13(c) and must update and supplement such written notice on a timely basis as set forth in Article 14. Such Shareholder’s notice shall set forth: (A) as to each nominee such Shareholder proposes to nominate at the meeting: (1) the name, age, business address and residence address of such nominee, (2) the principal occupation or employment of such nominee, (3) the class and number of Shares of the Company which are legally and beneficially owned by such nominee, (4) the date or dates on which such Shares were acquired and the investment intent of such acquisition and (5) such other information concerning such nominee as would be required to be disclosed in a proxy statement soliciting proxies for the election of such nominee as a director in an election contest (even if an election contest is not involved), or that is otherwise required to be disclosed pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder (including such person’s written consent to being named as a nominee and to serving as a director if elected); and (B) the information required by Article 13(d). The Company may require any proposed nominee to furnish such other information as it may reasonably require to determine the eligibility of such proposed nominee to serve as an independent director of the Company or that could be material to a reasonable Shareholder’s understanding of the independence, or lack thereof, of such proposed nominee. |
| (b) | For business other than nominations for the election to the Directors to be properly brought before an annual general meeting by a Shareholder pursuant to clause (iii) of Article 12 of these Articles, the Shareholder must deliver written notice to the Directors or Secretary at the principal executive offices of the Company on a timely basis as set forth in Article 13(c), and must update and supplement such written notice on a timely basis as set forth in Article 14. Such Shareholder’s notice shall set forth: (A) as to each matter such Shareholder proposes to bring before the meeting, a brief description of the business desired to be brought before the meeting, the reasons for conducting such business at the meeting, and any material interest (including any anticipated benefit of such business to any Proponent (as defined below) other than solely as a result of its ownership of Shares, that is material to any Proponent individually, or to the Proponents in the aggregate) in such business of any Proponent; and (B) the information required by Article 13(d). |
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| (c) | To be timely, the written notice required by Articles 13(a) and 13(b) must be received by the Directors or Secretary at the principal executive offices of the Company not later than the close of business on the ninetieth (90th) day nor earlier than the close of business on the one hundred twentieth (120th) day prior to the first anniversary of the preceding year’s annual general meeting; provided, however, that, subject to the last sentence of this Article 13(c), in the event that the date of the annual general meeting is advanced more than thirty (30) days prior to or delayed by more than sixty (60) days after the anniversary of the preceding year’s annual general meeting, notice by the Shareholder to be timely must be so received not earlier than the close of business on the one hundred twentieth (120th) day prior to such annual general meeting and not later than the close of business on the later of the ninetieth (90th) day prior to such annual general meeting or the tenth (10th) day following the day on which public announcement of the date of such meeting is first made. In no event shall an adjournment or a postponement of an annual general meeting for which notice has been given, or the public announcement thereof has been made, commence a new time period for the giving of a Shareholder’s notice as described above. |
| (d) | The written notice required by Articles 13(a) and 13(b) shall also set forth, as of the date of the notice and as to the Shareholder giving the notice and the beneficial owner, if any, on whose behalf the nomination or proposal is made (each, a “Proponent” and collectively, the “Proponents”): (A) the name and address of each Proponent, as they appear on the Register; (B) the class, series and number of Shares of the Company that are owned beneficially and of record by each Proponent; (C) a description of any agreement, arrangement or understanding (whether oral or in writing) with respect to such nomination or proposal between or among any Proponent and any of its affiliates or associates, and any others (including their names) acting in concert, or otherwise under the agreement, arrangement or understanding, with any of the foregoing; (D) a representation that the Proponents are holders of record or beneficial owners, as the case may be, of Shares of the Company entitled to vote at the meeting and intend to appear in person or by proxy at the meeting to nominate the person or persons specified in the notice (with respect to a notice under Article 13(a)) or to propose the business that is specified in the notice (with respect to a notice under Article 13(b)); (E) a representation as to whether the Proponents intend to deliver a proxy statement and form of proxy to holders of a sufficient number of holders of the Company’s voting Shares to elect such nominee or nominees (with respect to a notice under Article 13(a)) or to carry such proposal (with respect to a notice under Article 13(b)); (F) to the extent known by any Proponent, the name and address of any other Shareholder supporting the proposal on the date of such Shareholder’s notice; and (G) a description of all Derivative Transactions (as defined below) by each Proponent during the previous twelve (12) month period, including the date of the transactions and the class, series and number of securities involved in, and the material economic terms of, such Derivative Transactions. |
| For purposes of Articles 11-16 (Annual General Meetings) and Articles 17-20 (General Meetings), a “Derivative Transaction” means any agreement, arrangement, interest or understanding entered into by, or on behalf or for the benefit of, any Proponent or any of its affiliates or associates, whether record or beneficial: |
| (w) the value of which is derived in whole or in part from the value of any class or series of Shares or other securities of the Company, |
| (x) which otherwise provides any direct or indirect opportunity to gain or share in any gain derived from a change in the value of securities of the Company, |
| (y) the effect or intent of which is to mitigate loss, manage risk or benefit of security value or price changes, or |
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| (z) which provides the right to vote or increase or decrease the voting power of, such Proponent, or any of its affiliates or associates, with respect to any securities of the Company, |
| which agreement, arrangement, interest or understanding may include, without limitation, any option, warrant, debt position, note, bond, convertible security, swap, share appreciation right, short position, profit interest, hedge, right to dividends, voting agreement, performance-related fee or arrangement to borrow or lend shares (whether or not subject to payment, settlement, exercise or conversion in any such class or series), and any proportionate interest of such Proponent in the securities of the Company held by any general or limited partnership, or any limited liability company, of which such Proponent is, directly or indirectly, a general partner or managing member. |
| 14. | A Shareholder providing written notice required by Articles 13(a) and 13(b) shall update and supplement such notice in writing, if necessary, so that the information provided or required to be provided in such notice is true and correct in all material respects as of (i) the record date for the meeting and (ii) the date that is five (5) business days prior to the meeting and, in the event of any adjournment or postponement thereof, five (5) business days prior to such adjourned or postponed meeting. In the case of an update and supplement pursuant to clause (i) above of this Article 14, such update and supplement shall be received by the Directors or Secretary at the principal executive offices of the Company not later than five (5) business days after the record date for the meeting. In the case of an update and supplement pursuant to clause (ii) of this Article 14, such update and supplement shall be received by the Directors or Secretary at the principal executive offices of the Company not later than two (2) business days prior to the date for the meeting, and, in the event of any adjournment or postponement thereof, two (2) business days prior to such adjourned or postponed meeting. |
| 15. | Notwithstanding anything in Article 13(c) to the contrary, in the event that the number of Directors in an Expiring Class is increased and there is no public announcement of the appointment of a Director to such class, or, if no appointment was made, of the vacancy in such class, made by the Company at least ten (10) days before the last day a Shareholder may deliver a notice of nomination in accordance with Article 13(c), a Shareholder’s notice required by Articles 11-16 and which complies with the requirements in Article 13(a), other than the timing requirements in Article 13(c), shall also be considered timely, but only with respect to nominees for any new positions in such Expiring Class created by such increase, if it shall be received by the Secretary at the principal executive offices of the Company not later than the close of business on the tenth (10th) day following the day on which such public announcement is first made by the Company. For purposes of this section, an “Expiring Class” shall mean a class of Directors whose term shall expire at the next annual general meeting of Shareholders. |
| 16. | A person shall not be eligible for election or re-election as a director unless the person is nominated either in accordance with clause (ii) of Article 12, or in accordance with clause (iii) of Article 12. Except as otherwise required by law, the chairman of the meeting shall have the power and duty to determine whether a nomination or any business proposed to be brought before the meeting was made, or proposed, as the case may be, in accordance with the procedures set forth in these Articles and, if any proposed nomination or business is not in compliance with these Articles, or the Proponent does not act in accordance with the representations in Article 13(d)(D) and Article 13(d)(E), to declare that such proposal or nomination shall not be presented for Shareholder action at the meeting and shall be disregarded, notwithstanding that proxies in respect of such nominations or such business may have been solicited or received. |
For purposes of Articles 11-16 (Annual General Meetings) and Articles 17-20 (General Meetings):
(1) “public announcement” shall mean disclosure in a press release reported by the Dow Jones News Service, Associated Press or comparable national news service or in a document publicly filed by the Company with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act; and
(2) “affiliates” and “associates” shall have the meanings set forth in Rule 405 under the Securities Act.
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General Meetings
| 17. | General meetings of the Shareholders of the Company may be called only by (i) the Chairman of the Directors, (ii) the Chief Executive Officer, or (iii) the Directors pursuant to a resolution adopted by a simple majority of the voting power of the Directors present at a meeting of the directors, or in accordance with terms set out in Article 51 of these Articles. Shareholders shall not be entitled to requisition or convene annual general meetings or general meetings. |
| 18. | The Directors shall determine the date, time and place (including any Electronic Facility), if any, of such general meeting. Upon determination of the date, time and place (including any Electronic Facility), if any, of the meeting, the Directors or Secretary shall cause a notice of general meeting to be given to the Shareholders entitled to vote, in accordance with Article 21. No business may be transacted at such general meeting otherwise than specified in the notice of general meeting. |
| 19. | If the Directors wish to make this facility available for a specific general meeting or all general meetings of the Company, participation in any general meeting of the Company may be by means of any Electronic Facility, a telephone or similar communication equipment by way of which all Persons participating in such meeting can communicate with each other and such participation shall be deemed to constitute presence in person at the meeting. |
| 20. | Nominations of persons for election to the Directors may be made at a general meeting of Shareholders at which Directors are to be elected (i) by or at the direction of the Directors or (ii) by any Shareholder of the Company who is a Shareholder of record at the time of giving notice provided for in this Article, who shall be entitled to vote at the meeting and who delivers written notice to the Directors or Secretary of the Company setting forth the information required by Article 13(a). In the event the Company calls a general meeting of Shareholders for the purpose of electing one or more directors to the board of Directors, any such Shareholder of record may nominate a person or persons (as the case may be), for election to such position(s) as specified in the Company’s notice of meeting, if written notice setting forth the information required by Article 13(a) of these Articles shall be received by the Directors or Secretary at the principal executive offices of the Company not later than the close of business on the later of the ninetieth (90th) day prior to such meeting or the tenth (10th) day following the day on which public announcement is first made of the date of the general meeting and of the nominees proposed by the Directors to be elected at such meeting. The Shareholder shall also update and supplement such information as required under Article 14. In no event shall an adjournment or a postponement of a general meeting for which notice has been given, or the public announcement thereof has been made, commence a new time period for the giving of a Shareholder’s notice as described above. |
Notice of Meetings
| 21. | Except as otherwise provided by law, notice, given in writing or by electronic transmission, of each meeting of Shareholders shall be given not less than ten (10) nor more than sixty (60) days before the date of the meeting to each Shareholder entitled to vote at such meeting, such notice to specify the place (including any Electronic Facility), date and hour, in the case of general meetings, the purpose or purposes of the meeting, and the means of remote communications, if any, by which Shareholders and proxy holders may be deemed to be present in person and vote at any such meeting. Written notice to Shareholders of Shareholder meetings shall be given in accordance with Articles 123-127. To the maximum extent permitted by applicable law, notice of the time, place (including any Electronic Facility), if any, and purpose of any meeting of Shareholders may be waived in writing, signed by the person entitled to notice thereof, or by electronic transmission by such person, either before or after such meeting, and will be waived by any Shareholder by his, her or its attendance thereat in person, by remote communication, if applicable, or by proxy, except when the Shareholder attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Any Shareholder so waiving notice of such meeting shall be bound by the proceedings of any such meeting in all respects as if due notice thereof had been given. |
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| 22. | The accidental omission to give notice of a meeting to or the non-receipt of a notice of a meeting by any Shareholder shall not invalidate the proceedings at any meeting. |
Quorum
| 23. | At all meetings of Shareholders, whether annual or general, except where otherwise provided by these Articles or any Certificate of Designation, the presence, in person, by remote communication, if applicable, or by proxy duly authorized, of the holders of a simple majority of the issued and outstanding Shares of the Company and entitled to vote shall constitute a quorum for the transaction of business. In the absence of a quorum, any meeting of Shareholders may be adjourned, from time to time, either by the chairman of the meeting or by vote of the holders of a simple majority of the Shares represented thereat, but no other business shall be transacted at such meeting. The Shareholders present at a duly called or convened meeting, at which a quorum is present, may continue to transact business until adjournment, notwithstanding the withdrawal of enough Shareholders to leave less than a quorum. Except as otherwise provided by statute or by applicable stock exchange rules, or by these Articles, matters before a meeting shall be resolved by Ordinary Resolution. Except as otherwise provided by statute, or these Articles, Directors shall be elected by a plurality of the votes of the Shares present in person, by remote communication, if applicable, or represented by proxy at the meeting and entitled to vote generally on the election of directors. Where a separate vote by a class or classes or series is required, except where otherwise provided by the statute or by these Articles, a simple majority of the issued and outstanding Shares of such class or classes or series, present in person, by remote communication, if applicable, or represented by proxy duly authorized, shall constitute a quorum entitled to take action with respect to that vote on that matter. Except where otherwise provided by statute, by these Articles or any Certificate of Designation, the affirmative vote of the holders of a simple majority (plurality, in the case of the election of directors) of Shares of such class or classes or series present in person, by remote communication, if applicable, or represented by proxy at the meeting shall be the act of such class or classes or series. |
Adjournment and Notice of Adjourned Meetings
| 24. | Any meeting of Shareholders, whether annual or general, may be adjourned from time to time and from place to place (including any Electronic Facility) either by the chairman of the meeting or by the vote of the holders of a simple majority of the Shares entitled to vote present in person, by remote communication, if applicable, or represented by proxy at the meeting. When a meeting is adjourned to another time or place (including any Electronic Facility), notice need not be given of the adjourned meeting if the time and place (including any Electronic Facility) thereof are announced at the meeting at which the adjournment is taken. At the adjourned meeting, the Company may transact any business which might have been transacted at the original meeting. If the adjournment is for more than thirty (30) days or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each Shareholder of record entitled to vote at the meeting. |
Voting Rights and Proxy
| 25. | Except as: |
(a) otherwise provided in these Articles and subject to any rights and restrictions for the time being attached to any Share, every holder of an Ordinary Share present in person and every Person representing a Shareholder by proxy shall, at a general meeting of the Company, have one vote for each Ordinary Share of which he or she or the Person represented by proxy is the holder; and
(b) otherwise provided for in a Certificate of Designation or as otherwise provided in these Articles and subject to any rights and restrictions for the time being attached to any Share, a holder of a Preferred Share shall have no voting rights.
| 26. | For the purpose of determining those Shareholders entitled to vote at any meeting of the Shareholders, except as otherwise provided by law, only persons in whose names are recorded on the Register on the record date, as provided in Article 32, shall be entitled to vote at any meeting of Shareholders. Every person entitled to vote shall have the right to do so either in person, by remote communication, if applicable, or by an agent or agents authorized by a duly appointed proxy. An agent so appointed need not be a Shareholder. |
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| 27. | On a poll, votes may be given either personally or by proxy. |
| 28. | The instrument appointing a proxy shall be either: (i) in writing under the hand of the appointor or of his or her duly authorized attorney or, if the appointor is a corporation, either under Seal or under the hand of an Officer or attorney duly authorized; or (ii) given in such other manner as described in any form of proxy provided by the Company. A proxy need not be a Shareholder. |
| 29. | An instrument appointing a proxy may be in any usual or common form or such other form as the Directors may approve. |
| 30. | The instrument appointing a proxy shall be deposited at the Office or at such other place as is specified for that purpose in the notice convening the meeting no later than the time specified in the notice convening the general meeting or, if no such time is specified, no later than the time for holding the meeting or, if the meeting is adjourned, the time for holding such adjourned meeting. |
Joint Owners of Shares
| 31. | If Shares are recorded in the Register in the names of two (2) or more persons, whether fiduciaries, members of a partnership, joint tenants, tenants in common, tenants by the entirety, or otherwise, or if two (2) or more persons have the same fiduciary relationship respecting the same Shares, unless the Secretary is given written notice to the contrary and is furnished with a copy of the instrument or order appointing them or creating the relationship wherein it is so provided, their acts with respect to voting shall have the following effect: (a) if only one (1) votes, his or her act binds all; (b) if more than one (1) votes, the act of the majority so voting binds all; (c) if more than one (1) votes, but the vote is evenly split on any particular matter, each faction may vote the securities in question proportionally, or may apply to a court of a competent jurisdiction, as required. If the instrument filed with the Secretary shows that any such tenancy is held in unequal interests, a majority or even-split for the purpose of subsection (c) shall be a majority or even-split in interest. |
Fixing Record Dates
| 32. | For the purpose of determining those Shareholders entitled to receive notice of, attend or to vote at any meeting of Shareholders or any adjournment thereof, the Directors may fix in advance or arrears, a date as the record date pursuant to resolutions adopted by the Directors. If no record date is fixed by the Directors, the record date for determining Shareholders entitled to notice of or to vote at a meeting of Shareholders shall be at the close of business on the day next preceding the day on which notice is given, or if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. A determination of Shareholders of record entitled to notice of or to vote at a meeting of Shareholders shall apply to any adjournment of the meeting; provided, however, that the Directors may fix a new record date for the adjourned meeting. |
| 33. | In order that the Company may determine the Shareholders entitled to receive payment of any dividend or other distribution or allotment of any rights or the Shareholders entitled to exercise any rights in respect of any change, conversion or exchange of shares, or for the purpose of any other lawful action, the Directors may fix, in advance or arrears, a date as a record date pursuant to resolutions adopted by the Directors. If no record date is fixed, the record date for determining Shareholders for any such purpose shall be at the close of business on the day on which the Directors adopts the resolution relating thereto. |
Organization
| 34. | At every meeting of Shareholders, the Chairman of the Directors, or, if a Chairman has not been appointed or is absent, the President, or, if the President is absent, a chairman of the meeting chosen by a simple majority of the voting power of the Directors present, shall act as chairman. The Secretary, or, in his or her absence, an Assistant Secretary directed to do so by the President, shall act as secretary of the meeting. |
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| 35. | The Directors of the Company shall be entitled to make such rules or regulations for the conduct of meetings of Shareholders as it shall deem necessary, appropriate or convenient. Subject to such rules and regulations of the Directors, if any, the chairman of the meeting shall have the right and authority to prescribe such rules, regulations and procedures and to do all such acts as, in the judgment of such chairman, are necessary, appropriate or convenient for the proper conduct of the meeting, including, without limitation, establishing an agenda or order of business for the meeting, rules and procedures for maintaining order at the meeting and the safety of those present, limitations on participation in such meeting to Shareholders of record of the Company and their duly authorized and constituted proxies and such other persons as the chairman shall permit, restrictions on entry to the meeting after the time fixed for the commencement thereof, limitations on the time allotted to questions or comments by participants and regulation of the opening and closing of the polls for balloting on matters which are to be voted on by ballot. The date and time of the opening and closing of the polls for each matter upon which the Shareholders will vote at the meeting shall be announced at the meeting. Unless and to the extent determined by the Directors or the chairman of the meeting, meetings of Shareholders shall not be required to be held in accordance with rules of parliamentary procedure. |
| 36. | A resolution put to the vote of the meeting shall be decided on a poll in such manner as the chairman directs and the result of the poll shall be deemed to be the resolution of the meeting. |
Corporations Acting by Representatives at Meetings
| 37. | Any corporation which is a Shareholder or a Director may by resolution of its directors or other governing body authorize such Person as it thinks fit to act as its representative at any meeting of the Company or of any meeting of holders of any Class of Shareholder or of the Directors or of a committee of Directors, and the Person so authorized shall be entitled to exercise the same powers on behalf of the corporation which he or she represents as that corporation could exercise if it were an individual Shareholder or Director. |
Clearing Houses
| 38. | If a clearing house (or its nominee) is a Shareholder of the Company it may authorize (including through an omnibus proxy form) such person or persons as it thinks fit to act as its representative or representatives at any meeting of the Company or at any meeting of any Class of Shareholder of the Company. A person so authorized pursuant to this Article 38 shall be entitled to exercise the same powers on behalf of the clearing house (or its nominee) which he or she represents as that clearing house (or its nominee) could exercise if it were an individual Shareholder holding the number and Class of Shares specified in such authorization. |
DIRECTORS
Powers
| 39. | The powers of the Company shall be exercised, its business conducted, and its property controlled, by the board of Directors. |
Number of Directors
| 40. | Subject to the rights of the holders of any series of Preferred Shares specified by these Articles or any Certificate of Designation, the number of directors that shall constitute the board of Directors shall be fixed exclusively by resolutions adopted by a simple majority of the voting power of the authorized number of Directors then in office or in accordance with terms set out in Article 51 of these Articles. Directors need not be Shareholders. If for any reason, the Directors shall not have been elected at an annual general meeting in accordance with these Articles, they may be elected as soon thereafter as convenient at a general meeting of the Shareholders called for that purpose in the manner provided in these Articles. |
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Classes and Terms of Directors
| 41. | Subject to the rights of the holders of any series of Preferred Shares to elect additional directors specified by these Articles or any Certificate of Designation, for so long as the Company’s Shares are traded on a Designated Stock Exchange, the Directors shall be divided into three classes designated as Class I, Class II and Class III, respectively. The Directors are authorized to assign Directors already in office to such classes in accordance with a resolution or resolutions adopted by the board of Directors. At the first annual general meeting of Shareholders following the closing of the Initial Public Offering, the term of office of the Class I directors shall expire and Class I directors shall be elected for a full term of three years. At the second annual general meeting of Shareholders following the closing of the Initial Public Offering, the term of office of the Class II directors shall expire and Class II directors shall be elected for a full term of three years. At the third annual general meeting of Shareholders following the closing of the Initial Public Offering, the term of office of the Class III directors shall expire and Class III directors shall be elected for a full term of three years. At each succeeding annual general meeting of Shareholders, directors shall be elected for a full term of three years to succeed the directors of the class whose terms expire at such annual general meeting. Notwithstanding the foregoing provisions of this Article 41, each Director shall serve until his or her successor is duly elected and qualified or until his or her earlier death, resignation or removal. No decrease in the number of directors constituting the board of Directors shall shorten the term of any incumbent director. |
Vacancies
| 42. | Subject to the rights of the holders of any series of Preferred Shares specified by these Articles or any Certificate of Designation, any vacancies on the board of Directors resulting from death, resignation, disqualification, removal or other causes and any newly created directorships resulting from any increase in the number of directors shall, unless the Directors determine by resolution that any such vacancies or newly created directorships shall be filled by Shareholders as permitted in accordance with these Articles and any Certificate of Designation, be filled only by the affirmative vote of a simple majority of the voting power of the directors then in office, or in accordance with the terms set out in Article 51 of these Articles, or by a sole remaining director, and not by the Shareholders. Any director elected in accordance with the preceding sentence shall hold office for the remainder of the full term of the director for which the vacancy was created or occurred and until such director’s successor shall have been elected and qualified. A vacancy in the board of Directors shall be deemed to exist under Article in the case of the death, removal or resignation of any director. |
Resignation
| 43. | Any director may resign at any time by delivering his or her notice in writing or by electronic transmission to the Secretary, such resignation to specify whether it will be effective at a particular time. If no such specification is made, it shall be deemed effective at the time of delivery to the Secretary. When one or more directors shall resign from the board of Directors, effective at a future date, except as otherwise provided in these Articles or any Certificate of Designation, a simple majority of the voting power of the directors then in office or in accordance with the terms set out in Article 51 of these Articles, shall have power to fill such vacancy or vacancies, the vote thereon to take effect when such resignation or resignations shall become effective, and each Director so chosen shall hold office for the unexpired portion of the term of the Director whose place shall be vacated and until his or her successor shall have been duly elected and qualified. |
Removal
| 44. | Subject to the rights and restrictions of holders of any series of Preferred Shares to remove Directors specified by these Articles or any Certificate of Designation, neither the board of Directors nor any individual Director may be removed without cause. |
| 45. | Subject to the rights and restrictions of holders of any series of Preferred Shares to remove Directors specified by these Articles or any Certificate of Designation, any individual Director or board of Directors may be removed with cause by Special Resolution (the “Requisite Removal with Cause Threshold”). |
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For the purposes of Articles 44 and 45 and any Certificate of Designation, “cause” for the removal of a Director shall be deemed to exist only if such Director has been found by the affirmative vote of the Requisite Removal with Cause Threshold (provided that written advice of external legal counsel has been provided to the Company in support of such finding), or by a court of competent jurisdiction, to have been guilty of (a) wilful misconduct or fraud in the performance of such director’s duties to the Company or (b) any fraud or dishonesty or having acted in any manner which brings, or is likely to bring, such director or the Company into disrepute or is materially adverse to the Company’s interests.
Director Meetings
| 46. | Meetings of Directors may be held at any time or date and at any place within or without the Cayman Islands which has been designated by the Directors and publicized among all directors, either orally or in writing, by telephone, including a voice-messaging system or other system designed to record and communicate messages, facsimile, telegraph or telex, or by electronic mail or other electronic means. No further notice shall be required for meetings of the Directors. |
Meetings by Electronic Communications Equipment
| 47. | Any member of the Directors, or of any committee thereof, may participate in a meeting by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting by such means shall constitute presence in person at such meeting. |
Waiver of Notice
| 48. | The transaction of all business at any meeting of the Directors, or any committee thereof, however called or noticed, or wherever held, shall be as valid as though it had been transacted at a meeting duly held after regular call and notice, if a quorum be present and if, either before or after the meeting, each of the Directors not present who did not receive notice shall sign a written waiver of notice or shall waive notice by electronic transmission. All such waivers shall be filed with the corporate records or made a part of the minutes of the meeting. |
Quorum And Voting
| 49. | Except with respect to questions related to indemnification arising under Articles 118-122 (Indemnification) herein for which a quorum shall be one-third of the exact number of Directors fixed from time to time, a quorum of the Directors shall consist of a simple majority of the exact number of directors fixed from time to time; provided, however, at any meeting whether a quorum be present or otherwise, a simple majority of the voting power of the directors present may adjourn from time to time until the time fixed for the next meeting of the Directors, without notice other than by announcement at the meeting. |
| 50. | Subject to the rights and restrictions of holders of any series of Preferred Shares specified by these Articles or any Certificate of Designation, at each meeting of the Directors at which a quorum is present, all questions and business shall be determined by the affirmative vote of a simple majority of the voting power of the Directors present, unless a different vote be required by these Articles or any Certificate of Designation. In computing any majority in respect of a determination to be made by Directors required under these Articles regard shall be had to the voting power that a Director is entitled under any Certificate of Designation. |
Action Without Meeting
| 51. | A resolution in writing signed by all the Directors or all the members of a committee of Directors entitled to receive notice of a meeting of Directors or committee of Directors, as the case may be (an alternate Director, subject as provided otherwise in the terms of appointment of the alternate Director, being entitled to sign such a resolution on behalf of his or her appointer), shall be as valid and effectual as if it had been passed at a duly called and constituted meeting of Directors or committee of Directors, as the case may be. When signed a resolution may consist of several documents each signed by one or more of the Directors or his or her duly appointed alternate. |
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Fees And Compensation
| 52. | Directors shall be entitled to such compensation for their services as may be approved by the Directors, including, if so approved, by resolution of the Directors, a fixed sum and expenses of attendance, if any, for attendance at each meeting of the Directors and at any meeting of a committee of the Directors. Nothing herein contained shall be construed to preclude any director from serving the Company in any other capacity as an officer, agent, employee, or otherwise and receiving compensation therefor. |
Interested Directors
| 53. | A Director who is in any way, whether directly or indirectly, interested in a contract or proposed contract with the Company shall declare the nature of his or her interest at a meeting of the Directors. A general notice given to the Directors by any Director to the effect that he or she is to be regarded as interested in any contract or other arrangement which may thereafter be made with that company or firm shall be deemed a sufficient declaration of interest in regard to any contract so made. A Director may vote in respect of any contract or proposed contract or arrangement notwithstanding that he or she may be interested therein and if he or she does so his or her vote shall be counted and he or she may be counted in the quorum at any meeting of the Directors at which any such contract or proposed contract or arrangement shall come before the meeting for consideration. |
| 54. | A Director may hold any other office or place of profit under the Company (other than the office of auditor) in conjunction with his or her office of Director for such period and on such terms (as to remuneration and otherwise) as the Directors may determine and no Director or intending Director shall be disqualified by his or her office from contracting with the Company either with regard to his or her tenure of any such other office or place of profit or as vendor, purchaser or otherwise, nor shall any such contract or arrangement entered into by or on behalf of the Company in which any Director is in any way interested, be liable to be avoided, nor shall any Director so contracting or being so interested be liable to account to the Company for any profit realised by any such contract or arrangement by reason of such Director holding that office or of the fiduciary relation thereby established. A Director, notwithstanding his or her interest, may be counted in the quorum present at any meeting of the Directors whereat he or she or any other Director is appointed to hold any such office or place of profit under the Company or whereat the terms of any such appointment are arranged and he or she may vote on any such appointment or arrangement. |
Director Records
| 55. | The Directors shall cause minutes to be made provided for the purpose of recording: |
| (a) | all appointments of Officers made by the Directors; |
| (b) | the names of the Directors present at each meeting of the Directors and of any committee of the Directors; and |
| (c) | all resolutions and proceedings at all meetings of the Company, and of the Directors and of committees of Directors. |
Authority to Wind Up the Company
| 56. | The Directors shall have the authority to present a winding up petition on behalf of the Company without the sanction of a resolution passed by the Company in general meeting. |
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Committees
| 57. | The Directors may appoint and delegate any of their powers to an executive committee (an “Executive Committee”) to consist of one (1) or more members of the Directors. The Executive Committee, to the extent permitted by law and provided in the resolution of the Directors shall have and may exercise all the powers and authority of the Directors in the management of the business and affairs of the Company, and may authorize the Seal of the Company to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to (i) approving or adopting, or recommending to the Shareholders any action or matter (other than the election or removal of Directors) that is to be submitted to Shareholders for approval or (ii) adopting, amending or repealing the Articles. |
| 58. | The Directors may, from time to time, appoint and delegate any of their powers to other committees. Such other committees appointed by the Directors shall consist of one (1) or more members of the Directors and shall have such powers and perform such duties as may be prescribed by the resolution or resolutions creating such committees, but in no event shall any such committee have the powers denied to the Executive Committee in these Articles. |
Term of Committees
| 59. | The Directors, subject to the rights and restrictions of holders of any series of Preferred Shares specified by these Articles or any Certificate of Designation and the terms in Articles 57 and 58, may at any time increase or decrease the number of members of a committee or terminate the existence of a committee. The membership of a committee member shall terminate on the date of his or her death or voluntary resignation from the committee or from the Directors. The Directors may at any time for any reason remove any individual committee member and the Directors may fill any committee vacancy created by death, resignation, removal or increase in the number of members of the committee. The Directors may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee, and, in addition, in the absence or disqualification of any member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Directors to act at the meeting in the place of any such absent or disqualified member. |
Meetings of Committees
| 60. | Unless the Directors shall otherwise provide, meetings of the Executive Committee or any other committee appointed pursuant to Articles 57 and 58 shall be held at such times and places and on such dates as are determined by the Directors, or by any such committee, and when notice thereof has been given to each member of such committee, no further notice of such meetings need be given thereafter. Unless otherwise provided by the Directors in the resolutions authorizing the creation of the committee, a simple majority of the authorized number of members of any such committee shall constitute a quorum for the transaction of business, and the act of a majority of those present at any meeting at which a quorum is present shall be the act of such committee. |
Organization
| 61. | Except as otherwise provided in these Articles, at every meeting of the Directors and Shareholders, the Chairman of the Directors, or, if a Chairman has not been appointed or is absent, the Chief Executive Officer (if a Director), or, if a Chief Executive Officer is absent, the President (if a Director), or if the President is absent, the most senior Vice President (if a Director), or, in the absence of any such person, a chairman of the meeting chosen by a simple majority of the voting power of the directors present, shall preside over the meeting. The Secretary, or in his or her absence, any assistant Secretary or other officer or director directed to do so by the President, shall act as secretary of the meeting. The Chairman of the Directors shall also perform such other duties and have such other powers, as the Directors shall designate from time to time. |
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Alternate Director
| 62. | Any Director may in writing appoint another Person to be his or her alternate and, save to the extent provided otherwise in the form of appointment, such alternate shall have authority to sign written resolutions on behalf of the appointing Director, but shall not be authorized to sign such written resolutions where they have been signed by the appointing Director, and to act in such Director’s place at any meeting of the Directors. Every such alternate shall be entitled to attend and vote at meetings of the Directors as the alternate of the Director appointing him or her and where he or she is a Director to have a separate vote in addition to his or her own vote. A Director may at any time in writing revoke the appointment of an alternate appointed by him or her. Such alternate shall not be an Officer solely as a result of his or her appointment as an alternate other than in respect of such times as the alternate acts as a Director. The remuneration of such alternate shall be payable out of the remuneration of the Director appointing him or her and the proportion thereof shall be agreed between them. |
| 63. | The Directors may from time to time appoint any Person, whether or not a Director to hold such office in the Company as the Directors may think necessary for the administration of the Company (including, for the avoidance of doubt and without limitation, any chairperson (or co-chairperson) of the board of Directors, one or more chief executive officers, presidents, a chief financial officer, a secretary, assistant secretary, vice-presidents, a treasurer or any other Officers as may be determined by the Directors), and for such term and at such remuneration (whether by way of salary or commission or participation in profits or partly in one way and partly in another), and with such powers and duties as the Directors may think fit. Any Person so appointed by the Directors may be removed by the Directors. |
| 64. | The Directors may from time to time and at any time by power of attorney (whether under Seal or under hand) or otherwise appoint any company, firm or Person or body of Persons, whether nominated directly or indirectly by the Directors, to be the attorney or attorneys or authorised signatory (any such person being an “Attorney” or “Authorised Signatory”, respectively) of the Company for such purposes and with such powers, authorities and discretion (not exceeding those vested in or exercisable by the Directors under these Articles) and for such period and subject to such conditions as they may think fit, and any such power of attorney or other appointment may contain such provisions for the protection and convenience of Persons dealing with any such Attorney or Authorised Signatory as the Directors may think fit, and may also authorise any such Attorney or Authorised Signatory to delegate all or any of the powers, authorities and discretion vested in him or her. |
VOTING OF SECURITIES
OWNED BY THE COMPANY
Voting of Securities Owned by The Company
65. All shares and other securities of other companies or corporations owned or held by the Company for itself, or for other parties in any capacity, shall be voted, and all proxies with respect thereto shall be executed, by the person authorized so to do by resolution of the Directors, or, by the Chairman of the Directors, the Chief Executive Officer, the President, or any Vice President.
SHARES
Shares
| 66. | Subject to these Articles and to the rights and restrictions of holders of any series of Preferred Shares specified by these Articles or any Certificate of Designation and, where applicable, the rules of the Designated Stock Exchange and/or any competent regulatory authority, all Shares for the time being unissued shall be under the control of the Directors who may: |
| (a) | issue, allot and dispose of the same to such Persons, in such manner, on such terms and having such rights and being subject to such restrictions as they may from time to time determine; and |
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| (b) | grant options with respect to such Shares and issue warrants or similar instruments with respect thereto; |
and, for such purposes, the Directors may reserve an appropriate number of Shares for the time being unissued.
| 67. | Subject to the rights and restrictions of holders of any series of Preferred Shares specified by these Articles or any Certificate of Designation, the Directors, or the Shareholders by Ordinary Resolution, may authorize the division of Shares into any number of Classes and sub-classes and Series and sub-series and the different Classes and sub-classes and Series and sub-series shall be authorized, established and designated (or re-designated as the case may be) and the variations in the relative rights (including, without limitation, voting, dividend and redemption rights), restrictions, preferences, privileges and payment obligations as between the different Classes and Series (if any) may be fixed and determined by the Directors or the Shareholders by Ordinary Resolution. |
| 68. | Any conversion of Shares may be effected in any manner available under applicable law, including redeeming or repurchasing the relevant Shares and applying the proceeds thereof towards payment for the new Shares. For the purposes of the repurchase or redemption, the Directors may, subject to the Company being able to pay its debts in the ordinary course of business, make payments out of amounts standing to the credit of the Company’s share premium account or out of its capital. |
69. The Directors may refuse to accept any application for Shares, and may accept any application in whole or in part, for any reason or for no reason. The Company may, insofar as may be permitted by law, pay a commission to any Person in consideration of their subscribing or agreeing to subscribe whether absolutely or conditionally for any Shares. Such commissions may be satisfied by the payment of cash or the lodgement of fully or partly paid-up Shares or partly in one way and partly in the other. The Company may also pay such brokerage as may be lawful on any issue of Shares.
Fractional Shares
| 70. | The Directors may issue fractions of a Share and, if so issued, a fraction of a Share shall be subject to and carry the corresponding fraction of liabilities (whether with respect to nominal or par value, premium, contributions, calls or otherwise), limitations, preferences, privileges, qualifications, restrictions, rights (including, without prejudice to the generality of the foregoing, voting and participation rights) and other attributes of a whole Share. If more than one fraction of a Share of the same Class is issued to or acquired by the same Shareholder such fractions shall be accumulated. |
Calls on Shares
| 71. | Subject to the terms of the allotment and issue of any Shares, the Directors may from time to time make calls upon the Shareholders in respect of Shares that are not fully paid, and each Shareholder shall (subject to receiving at least 14 days’ notice specifying the time or times of payment) pay to the Company at the time or times so specified the amount unpaid on such Shares. The Directors may at any time declare any Share to be wholly or in part exempt from the provisions of this Article |
| 72. | The joint holders of a Share shall be jointly and severally liable to pay calls in respect thereof. |
| 73. | If a sum called in respect of a Share is not paid before or on the day appointed for payment thereof, the Person from whom the sum is due shall pay interest upon the sum at the rate of eight percent per annum from the day appointed for the payment thereof to the time of the actual payment, but the Directors shall be at liberty to waive payment of that interest wholly or in part. |
| 74. | The Directors may make arrangements on the issue of partly paid Shares for a difference between the Shareholders, or the particular Shares, in the amount of calls to be paid and in the times of payment. |
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| 75. | The Directors may, if they think fit, receive from any Shareholder willing to advance the same all or any part of the moneys uncalled and unpaid upon any partly paid Shares held by him or her, and upon all or any of the moneys so advanced may (until the same would, but for such advance, become presently payable) pay interest at such rate (not exceeding without the sanction of an Ordinary Resolution, eight percent per annum) as may be agreed upon between the Shareholder paying the sum in advance and the Directors. |
Forfeiture of Shares
| 76. | If a Shareholder fails to pay any call or instalment of a call in respect of any Shares on the day appointed for payment, the Directors may, at any time thereafter during such time as any part of such call or instalment remains unpaid, serve a notice on him or her requiring payment of so much of the call or instalment as is unpaid, together with any interest which may have accrued. |
| 77. | The notice shall name a further day (not earlier than the expiration of 14 days from the date of the notice) on or before which the payment required by the notice is to be made, and shall state that in the event of non-payment at or before the time appointed the Shares in respect of which the call was made will be liable to be forfeited. |
| 78. | If the requirements of any such notice as aforesaid are not complied with, any Share in respect of which the notice has been given may at any time thereafter, before the payment required by notice has been made, be forfeited by a resolution of the Directors to that effect. |
| 79. | A forfeited Share may be sold or otherwise disposed of on such terms and in such manner as the Directors think fit, and at any time before a sale or disposition the forfeiture may be cancelled on such terms as the Directors think fit. |
| 80. | A Person whose Shares have been forfeited shall cease to be a Shareholder in respect of the forfeited Shares, but shall, notwithstanding, remain liable to pay to the Company all moneys which at the date of forfeiture were payable by him or her to the Company in respect of the Shares forfeited, but his or her liability shall cease if and when the Company receives payment in full of the amount unpaid on the Shares forfeited. |
| 81. | A statutory declaration in writing that the declarant is a Director, and that a Share has been duly forfeited on a date stated in the declaration, shall be conclusive evidence of the facts in the declaration as against all Persons claiming to be entitled to the Share. |
| 82. | The Company may receive the consideration, if any, given for a Share on any sale or disposition thereof pursuant to the provisions of these Articles as to forfeiture and may execute a transfer of the Share in favour of the Person to whom the Share is sold or disposed of and that Person shall be registered as the holder of the Share, and shall not be bound to see to the application of the purchase money, if any, nor shall his or her title to the Shares be affected by any irregularity or invalidity in the proceedings in reference to the disposition or sale. |
Transfer of Shares
| 83. | Subject to these Articles and the rules or regulations of the Designated Stock Exchange or any relevant rules of the SEC or securities laws (including, but not limited to the Exchange Act), a Shareholder may transfer all or any of his or her Shares. |
| 84. | The instrument of transfer of any Share shall be in (i) any usual or common form; (ii) such form as is prescribed by the Designated Stock Exchange; or (iii) in any other form the Directors may determine and shall be executed by or on behalf of the transferor (or otherwise as prescribed by the rules and regulations of the Designated Stock Exchange) and if in respect of a nil or partly paid up Share, or if so required by the Directors, shall also be executed on behalf of the transferee and shall be accompanied by the certificate (if any) of the Shares to which it relates and such other evidence as the Directors may reasonably require to show the right of the transferor to make the transfer. The transferor shall be deemed to remain a Shareholder until the name of the transferee is entered in the Register in respect of the relevant Shares. |
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| 85. | Subject to the terms of issue thereof and the rules or regulations of the Designated Stock Exchange or any relevant rules of the SEC or securities laws (including, but not limited to the Exchange Act), the Directors may determine to decline to register any transfer of Shares without assigning any reason therefor. |
| 86. | The registration of transfers may be suspended at such times and for such periods as the Directors may from time to time determine. |
| 87. | All instruments of transfer that are registered shall be retained by the Company, but any instrument of transfer that the Directors decline to register shall (except in any case of fraud) be returned to the Person depositing the same. |
Transmission of Shares
88. The legal personal representative of a deceased sole holder of a Share shall be the only Person recognised by the Company as having any title to the Share. In the case of a Share registered in the name of two or more holders, the survivors or survivor, or the legal personal representatives of the deceased holder of the Share, shall be the only Person recognised by the Company as having any title to the Share.
| 89. | Any Person becoming entitled to a Share in consequence of the death or bankruptcy of a Shareholder shall upon such evidence being produced as may from time to time be required by the Directors, have the right either to be registered as a Shareholder in respect of the Share or, instead of being registered himself or herself, to make such transfer of the Share as the deceased or bankrupt Person could have made; but the Directors shall, in either case, have the same right to decline or suspend registration as they would have had in the case of a transfer of the Share by the deceased or bankrupt Person before the death or bankruptcy. |
| 90. | A Person becoming entitled to a Share by reason of the death or bankruptcy of a Shareholder shall be entitled to the same dividends and other advantages to which he or she would be entitled if he or she were the registered Shareholder, except that he or she shall not, before being registered as a Shareholder in respect of the Share, be entitled in respect of it to exercise any right conferred by membership in relation to meetings of the Company. |
Alteration of Share Capital
| 91. | Subject to the rights and restrictions of holders of any series of Preferred Shares specified by these Articles or any Certificate of Designation, the Company may from time to time by Ordinary Resolution increase the share capital by such sum, to be divided into Shares of such Classes and amount, as the resolution shall prescribe. |
| 92. | Subject to the rights and restrictions of holders of any series of Preferred Shares specified by these Articles or any Certificate of Designation, the Company may by Ordinary Resolution: |
| (a) | consolidate and divide all or any of its share capital into Shares of a larger amount than its existing Shares; |
| (b) | convert all or any of its paid up Shares into stock and reconvert that stock into paid up Shares of any denomination; |
| (c) | subdivide its existing Shares, or any of them into Shares of a smaller amount; provided that in the subdivision the proportion between the amount paid and the amount, if any, unpaid on each reduced Share shall be the same as it was in case of the Share from which the reduced Share is derived; and |
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| (d) | cancel any Shares that, at the date of the passing of the resolution, have not been taken or agreed to be taken by any Person and diminish the amount of its share capital by the amount of the Shares so cancelled. |
| 93. | The Company may by Special Resolution reduce its share capital and any capital redemption reserve in any manner authorized by law. |
Redemption, Purchase and Surrender of Shares
| 94. | Subject to the Companies Act and the rules of the Designated Stock Exchange, the Company may: |
| (a) | issue Shares on terms that they are to be redeemed or are liable to be redeemed at the option of the Company or the Shareholder on such terms and in such manner as the Directors may determine; |
| (b) | purchase its own Shares (including any redeemable Shares) on such terms and in such manner as the Directors may determine and agree with the Shareholder; |
| (c) | make a payment in respect of the redemption or purchase of its own Shares in any manner authorized by the Companies Act, including out of its capital; and |
| (d) | accept the surrender for no consideration of any paid up Share (including any redeemable Share) on such terms and in such manner as the Directors may determine. |
| 95. | Any Share in respect of which notice of redemption has been given shall not be entitled to participate in the profits of the Company in respect of the period after the date specified as the date of redemption in the notice of redemption. |
| 96. | The redemption, purchase or surrender of any Share shall not be deemed to give rise to the redemption, purchase or surrender of any other Share. |
| 97. | The Directors may when making payments in respect of redemption or purchase of Shares, if authorized by the terms of issue of the Shares being redeemed or purchased or with the agreement of the holder of such Shares, make such payment either in cash or in specie including, without limitation, interests in a special purpose vehicle holding assets of the Company or holding entitlement to the proceeds of assets held by the Company or in a liquidating structure. |
Treasury Shares
| 98. | Shares that the Company purchases, redeems or acquires (by way of surrender or otherwise) may, at the option of the Company, be cancelled immediately or held as Treasury Shares in accordance with the Companies Act. In the event that the Directors do not specify that the relevant Shares are to be held as Treasury Shares, such Shares shall be cancelled. |
| 99. | No dividend may be declared or paid, and no other distribution (whether in cash or otherwise) of the Company’s assets (including any distribution of assets to Shareholders on a winding up) may be declared or paid in respect of a Treasury Share. |
| 100. | The Company shall be entered in the Register as the holder of the Treasury Shares; provided that: |
| (a) | the Company shall not be treated as a member for any purpose and shall not exercise any right in respect of the Treasury Shares, and any purported exercise of such a right shall be void; |
| (b) | a Treasury Share shall not be voted, directly or indirectly, at any meeting of the Company and shall not be counted in determining the total number of issued shares at any given time, whether for the purposes of these Articles or the Companies Act, save that an allotment of Shares as fully paid bonus shares in respect of a Treasury Share is permitted and Shares allotted as fully paid bonus shares in respect of a treasury share shall be treated as Treasury Shares. |
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| 101. | Treasury Shares may be disposed of by the Company on such terms and conditions as determined by the Directors. |
Capitalization of Reserves
| 102. | Subject to the Companies Act and these Articles, the Directors may: |
| (a) | resolve to capitalize an amount standing to the credit of reserves (including a Share Premium Account, capital redemption reserve and profit and loss account), whether or not available for distribution; |
| (b) | appropriate the sum resolved to be capitalized to the Shareholders in proportion to the nominal amount of Shares (whether or not fully paid) held by them respectively and apply that sum on their behalf in or towards: |
| (i) | paying up the amounts (if any) for the time being unpaid on Shares held by them respectively, or |
| (ii) | paying up in full unissued Shares or debentures of a nominal amount equal to that sum, |
and allot the Shares or debentures, credited as fully paid, to the Shareholders (or as they may direct) in those proportions, or partly in one way and partly in the other, but the Share Premium Account, the capital redemption reserve and profits which are not available for distribution may, for the purposes of this Article 102, only be applied in paying up unissued Shares to be allotted to Shareholders credited as fully paid;
| (c) | make any arrangements they think fit to resolve a difficulty arising in the distribution of a capitalized reserve and in particular, without limitation, where Shares or debentures become distributable in fractions the Directors may deal with the fractions as they think fit; |
| (d) | authorize a Person to enter (on behalf of all the Shareholders concerned) into an agreement with the Company providing for either: |
| (i) | the allotment to the Shareholders respectively, credited as fully paid, of Shares or debentures to which they may be entitled on the capitalization, or |
| (ii) | the payment by the Company on behalf of the Shareholders (by the application of their respective proportions of the reserves resolved to be capitalized) of the amounts or part of the amounts remaining unpaid on their existing Shares, |
and any such agreement made under this authority being effective and binding on all those Shareholders; and
| (e) | generally do all acts and things required to give effect to any of the actions contemplated by this Article 102. |
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Share Premium Account
| 103. | The Directors shall in accordance with the Companies Act establish a Share Premium Account and shall carry to the credit of such account from time to time a sum equal to the amount or value of the premium paid on the issue of any Share. |
| 104. | There shall be debited to any Share Premium Account on the redemption or purchase of a Share the difference between the nominal value of such Share and the redemption or purchase price; provided that at the determination of the Directors such sum may be paid out of the profits of the Company or, if permitted by the Companies Act, out of capital. |
Certificates
| 105. | If so determined by the Directors, any Person whose name is entered as a member in the Register may receive a certificate in the form determined by the Directors. All certificates shall specify the Share or Shares held by that person and the amount paid up thereon; provided that in respect of a Share or Shares held jointly by several persons the Company shall not be bound to issue more than one certificate, and delivery of a certificate for a Share to one of several joint holders shall be sufficient delivery to all. All certificates for Shares shall be delivered personally or sent through the post addressed to the member entitled thereto at the Shareholder’s registered address as appearing in the Register. |
| 106. | Every share certificate of the Company shall bear legends required under the applicable laws, including the Exchange Act. |
| 107. | Any two or more certificates representing Shares of any one Class held by any Shareholder may at the Shareholder’s request be cancelled and a single new certificate for such Shares issued in lieu on payment (if the Directors shall so require) of US$1.00 or such smaller sum as the Directors shall determine. |
| 108. | If a share certificate shall be damaged or defaced or alleged to have been lost, stolen or destroyed, a new certificate representing the same Shares may be issued to the relevant Shareholder upon request subject to delivery of the old certificate or (if alleged to have been lost, stolen or destroyed) compliance with such conditions as to evidence and indemnity and the payment of out-of-pocket expenses of the Company in connection with the request as the Directors may think fit. |
| 109. | In the event that Shares are held jointly by several persons, any request may be made by any one of the joint holders and if so made shall be binding on all of the joint holders. |
Modification of Rights
| 110. | Whenever the capital of the Company is divided into different Classes (and as otherwise determined by the Directors) the rights attached to any such Class may, subject to any rights or restrictions for the time being attached to any Class, only be materially adversely varied or abrogated with the consent required under the terms of any Certificate of Designation (if applicable) or, where there is no Certificate of Designation or the Certificate of Designation does not provide for a consent threshold, the consent in writing of the holders of a simple majority of the issued Shares of the relevant Class, or with the sanction of a resolution passed at a separate meeting of the holders of the Shares of such Class by a simple majority of the votes cast at such a meeting. To every such separate meeting all the provisions of these Articles relating to general meetings of the Company or to the proceedings thereat shall, mutatis mutandis, apply. For the purposes of this Article the Directors may treat all the Classes or any two or more Classes as forming one Class if they consider that all such Classes would be affected in the same way by the proposals under consideration, but in any other case shall treat them as separate Classes. The Directors may vary the rights attaching to any Class without the consent or approval of Shareholders provided that the rights will not, in the determination of the Directors, be materially adversely varied or abrogated by such action. |
| 111. | The rights conferred upon the holders of the Shares of any Class shall not, unless otherwise expressly provided by the terms of issue of the Shares of that Class, be deemed to be materially adversely varied or abrogated by, inter alia, the creation, allotment or issue of Shares ranking pari passu with them, subsequent to them, with preferred rights (including enhanced voting rights) or the redemption or purchase of any Shares of any Class by the Company. |
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DIVIDENDS
Declaration of Dividends
| 112. | Subject to any rights and restrictions for the time being attached to any Shares, or as otherwise provided for in the Companies Act, these Articles and any Certificate of Designation, the Directors may from time to time declare dividends (including interim dividends) and other distributions on Shares in issue and authorize payment of the same out of the funds of the Company lawfully available therefor. Dividends may be paid in cash, in property, or in shares. |
| 113. | Subject to any rights and restrictions for the time being attached to any Shares, all dividends shall be declared and paid according to the amounts paid up on the Shares, but if and for so long as nothing is paid up on any of the Shares dividends may be declared and paid according to the par value of the Shares. |
| 114. | Any dividend may be paid in any manner as the Directors may determine. If paid by cheque it will be sent through the post to the registered address of the Shareholder or Person entitled thereto, or in the case of joint holders, to any one of such joint holders at his or her registered address or to such Person and such address as the Shareholder or Person entitled, or such joint holders as the case may be, may direct. Every such cheque shall be made payable to the order of the Person to whom it is sent or to the order of such other Person as the Shareholder or Person entitled, or such joint holders as the case may be, may direct. |
| 115. | If several Persons are registered as joint holders of any Share, any of them may give effectual receipts for any dividend or other moneys payable on or in respect of the Share. |
Dividend Reserve
| 116. | Before payment of any dividend, there may be set aside out of any funds of the Company available for dividends such sum or sums as the Directors from time to time, in their absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the Company, or for such other purpose as the Directors shall think conducive to the interests of the Company, and the Directors may modify or abolish any such reserve in the manner in which it was created. |
FISCAL YEAR
| 117. | The fiscal year of the Company shall end on 31 December of each year or such other date as the Directors may determine. |
INDEMNIFICATION
Indemnification Of Directors, Officers, Employees and Other Agents
| 118. | To the fullest extent permitted by law, every Director (including, for the purposes of this Article 118, any alternate Director appointed pursuant to the provisions of these Articles), Secretary, assistant Secretary, or other Officer (but not including the Company’s auditors) and the personal representatives of the same (each an “Indemnified Person”) shall be indemnified and secured harmless out of the assets and funds of the Company against all actions or proceedings whether threatened, pending or completed, costs, charges, expenses, losses, damages or liabilities incurred or sustained by such Indemnified Person, other than by reason of such Indemnified Person’s own actual fraud, wilful default or wilful neglect as determined by a court of competent jurisdiction, (i) in or about the conduct of the Company’s business or affairs (including as a result of any mistake of judgment), (ii) in the execution or discharge of his or her duties, powers, authorities or discretions, or (iii) in respect of any actions or activities undertaken by an Indemnified Person provided for and in accordance with the provisions set out above (inclusive) including without prejudice to the generality of the foregoing, any costs, expenses, losses or liabilities incurred by such Indemnified Person in defending or otherwise being involved in, (whether successfully or otherwise) any civil proceedings concerning the Company or its affairs in any court whether in the Cayman Islands or elsewhere. Each Shareholder agrees to waive any claim or right of action he or she might have, whether individually or by or in the right of the Company, against any Director or Officer on account of any action taken by such Director or Officer, or the failure of such Director or Officer to take any action in the performance of his or her duties with or for the Company; provided that such waiver shall not extend to any matter in respect of any actual fraud, wilful default or wilful neglect which may attach to such Director or Officer. |
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| 119. | No Indemnified Person shall be liable: |
| (a) | for the acts, receipts, neglects, defaults or omissions of any other Director or Officer or agent of the Company; or |
| (b) | for any loss on account of defect of title to any property of the Company; or |
| (c) | on account of the insufficiency of any security in or upon which any money of the Company shall be invested; or |
| (d) | for any loss incurred through any bank, broker or other similar Person; or |
| (e) | for any loss occasioned by any negligence, default, breach of duty, breach of trust, error of judgement or oversight on such Indemnified Person’s part; or |
| (f) | for any loss, damage or misfortune whatsoever which may happen in or arise from the execution or discharge of the duties, powers, authorities, or discretions of such Indemnified Person’s office or in relation thereto; |
unless the same shall happen through such Indemnified Person’s own actual fraud, wilful default or wilful neglect as determined by a court of competent jurisdiction.
| 120. | The Company will pay the expenses (including attorneys’ fees) incurred by an Indemnified Person in defending any proceeding in advance of its final disposition; provided, however, that, to the extent required by applicable law, such payment of expenses in advance of the final disposition of the proceeding shall be made only upon receipt of an undertaking by the Indemnified Person to repay all amounts advanced if it should be ultimately determined that the Indemnified Person is not entitled to be indemnified under these Articles or otherwise. |
| 121. | The Directors, on behalf of the Company, may purchase and maintain insurance for the benefit of any Director or Officer of the Company against any liability which, by virtue of any rule of law, would otherwise attach to such person in respect of any negligence, default, breach of duty or breach of trust of which such person may be guilty in relation to the Company. |
| 122. | The rights to indemnification and advancement of expenses conferred on any Indemnified Person as set out above will not be exclusive of any other rights that any Indemnified Person may have or hereafter acquire pursuant to an agreement with the Company or otherwise. |
NOTICES
| 123. | Any notice or document may be served by the Company or by the Person entitled to give notice to any Shareholder either personally, or by sending it by post or courier service in a prepaid letter addressed to such Shareholder at his or her address as appearing in the Register, or by electronic mail, or by facsimile should the Directors deem it appropriate. Notice may also be served by electronic communication in accordance with the rules and regulations of the Designated Stock Exchange, the SEC and/or any other competent regulatory authority or by placing it on the Company’s website. In the case of joint holders of a Share, all notices shall be given to that one of the joint holders whose name stands first in the Register in respect of the joint holding, and notice so given shall be sufficient notice to all the joint holders. |
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| 124. | Any Shareholder present, either personally or by proxy, at any meeting of the Company shall for all purposes be deemed to have received due notice of such meeting and, where requisite, of the purposes for which such meeting was convened. |
| 125. | Any notice or other document, if served by: |
| (a) | post, shall be deemed to have been served five clear days after the time when the letter containing the same is posted; |
| (b) | facsimile, shall be deemed to have been served upon production by the transmitting facsimile machine of a report confirming transmission of the facsimile in full to the facsimile number of the recipient; |
| (c) | courier service, shall be deemed to have been served 48 hours after the time when the letter containing the same is delivered to the courier service; |
| (d) | electronic mail or other electronic communication (such as transmission to any number, address or internet website (including the website of the SEC) or other electronic delivery methods as otherwise decided and approved by the Directors), shall be deemed to have been served immediately upon the time of the transmission by electronic mail or approved electronic communication, and it shall not be necessary for the receipt of the e-mail to be acknowledged by the recipient; or |
| (e) | placing it on the Company’s website; service of the notice shall be deemed to have been effected one hour after the notice or document was placed on the Company’s website. |
In proving service by post or courier service it shall be sufficient to prove that the letter containing the notice or documents was properly addressed and duly posted or delivered to the courier service.
| 126. | Any notice or document delivered or sent in accordance with the terms of these Articles shall notwithstanding that such Shareholder be then dead or bankrupt, and whether or not the Company has notice of his or her death or bankruptcy, be deemed to have been duly served in respect of any Share registered in the name of such Shareholder as sole or joint holder, unless his or her name shall at the time of the service of the notice or document, have been removed from the Register as the holder of the Share, and such service shall for all purposes be deemed a sufficient service of such notice or document on all Persons interested (whether jointly with or as claiming through or under him or her) in the Share. |
| 127. | Notice of every general meeting of the Company shall be given to: |
| (a) | all Shareholders holding Shares with the right to receive notice and who have supplied to the Company an address for the giving of notices to them; and |
| (b) | every Person entitled to a Share in consequence of the death or bankruptcy of a Shareholder, who but for his or her death or bankruptcy would be entitled to receive notice of the meeting. |
No other Person shall be entitled to receive notices of general meetings.
AMENDMENT OF THE ARTICLES OF ASSOCIATION
| 128. | Subject to the Companies Act and the rights attaching to the various Classes, including pursuant to any Certificate of Designation, the Company may at any time and from time to time by Special Resolution alter or amend these Articles in whole or in part. |
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LOANS TO OFFICERS OR EMPLOYEES
| 129. | Except as otherwise prohibited by applicable law, the Company may lend money to, or guarantee any obligation of, or otherwise assist any officer or other employee of the Company or of its subsidiaries, including any officer or employee who is a director of the Company or its subsidiaries, whenever, in the judgment of the Directors, such loan, guarantee or assistance may reasonably be expected to benefit the Company. The loan, guarantee or other assistance may be with or without interest and may be unsecured, or secured in such manner as the Directors shall approve, including, without limitation, legal mortgage and charge of Shares. Nothing in these Articles shall be deemed to deny, limit or restrict the powers of guaranty or warranty of the Company at common law or under any statute. |
ACCOUNTS, AUDIT AND ANNUAL RETURN AND DECLARATION
| 130. | The books of account relating to the Company’s affairs shall be kept in such manner as may be determined from time to time by the Directors. |
| 131. | The books of account shall be kept at the Office, or at such other place or places as the Directors think fit, and shall always be open to the inspection of the Directors. |
| 132. | The Directors may from time to time determine whether and to what extent and at what times and places and under what conditions or regulations the accounts and books of the Company or any of them shall be open to the inspection of Shareholders not being Directors, and no Shareholder (not being a Director) shall have any right of inspecting any account or book or document of the Company except as conferred by law or authorized by the Directors or by Ordinary Resolution. |
| 133. | The accounts relating to the Company’s affairs shall only be audited if the Directors so determine, in which case the financial year end and the accounting principles will be determined by the Directors. The financial year of the Company shall end on 31 December of each year or such other date as the Directors may determine. |
| 134. | Without prejudice to the freedom of the Directors to establish any other committee, if the Shares are listed or quoted on the Designated Stock Exchange, and if required by the Designated Stock Exchange, the Directors shall establish and maintain an audit committee (the “Audit Committee”) as a committee of the board of Directors and shall adopt a formal written Audit Committee charter and review and assess the adequacy of the formal written charter on an annual basis. The composition and responsibilities of the Audit Committee shall comply with the rules and regulations of the SEC and the Designated Stock Exchange. |
| 135. | The Directors in each year shall prepare, or cause to be prepared, an annual return and declaration setting forth the particulars required by the Companies Act and deliver a copy thereof to the Registrar of Companies in the Cayman Islands. |
Winding Up
| 136. | If the Company shall be wound up the liquidator shall apply the assets of the Company in such manner and order as he or she thinks fit in satisfaction of creditors’ claims. |
| 137. | If the Company shall be wound up, the liquidator may, with the sanction of an Ordinary Resolution divide amongst the Shareholders in specie or kind the whole or any part of the assets of the Company (whether they shall consist of property of the same kind or not) and may, for such purpose set such value as he or she deems fair upon any property to be divided as aforesaid and may determine how such division shall be carried out as between the Shareholders or different Classes, including, by reference to the rights and restrictions attached to such Shares under these Articles or any Certificate of Designation. The liquidator may, with the like sanction, vest the whole or any part of such assets in trustees upon such trusts for the benefit of the Shareholders as the liquidator, with the like sanction shall think fit, but so that no Shareholder shall be compelled to accept any assets whereon there is any liability. |
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Registration By Way Of Continuation
| 138. | The Company may by Special Resolution resolve to be registered by way of continuation in a jurisdiction outside the Cayman Islands or such other jurisdiction in which it is for the time being incorporated, registered or existing. In furtherance of a resolution adopted pursuant to this Article 138, the Directors may cause an application to be made to the Registrar of Companies to deregister the Company in the Cayman Islands or such other jurisdiction in which it is for the time being incorporated, registered or existing and may cause all such further steps as they consider appropriate to be taken to effect the transfer by way of continuation of the Company. |
Mergers and Consolidation
| 139. | The Company may merge or consolidate in accordance with the Companies Act. |
| 140. | To the extent required by the Companies Act, the Company may by Special Resolution resolve to merge or consolidate the Company. |
Exclusive Jurisdiction and Forum
| 141. | Unless the Company consents in writing to the selection of an alternative forum, the courts of the Cayman Islands shall have exclusive jurisdiction over any claim or dispute arising out of or in connection with the Memorandum of Association, the Articles or otherwise related in any way to each Shareholder’s shareholding in the Company, including but not limited to: |
| (a) | any derivative action or proceeding brought on behalf of the Company; |
| (b) | any action asserting a claim of breach of any fiduciary or other duty owed by any current or former Director, Officer or other employee of the Company to the Company or the Shareholders; |
| (c) | any action asserting a claim arising pursuant to any provision of the Companies Act, the Memorandum of Association or the Articles; or |
| (d) | any action asserting a claim against the Company concerning its internal affairs. |
| 142. | Subject to Article 144 below, each Shareholder irrevocably submits to the exclusive jurisdiction of the courts of the Cayman Islands over all such claims or disputes. |
| 143. | Without prejudice to any other rights or remedies that the Company may have, each Shareholder acknowledges that damages alone would not be an adequate remedy for any breach of the exclusive jurisdiction and forum provisions set out above and that accordingly the Company shall be entitled, without proof of special damages, to the remedies of injunction, specific performance or other equitable relief for any threatened or actual breach of those provisions. |
| 144. | Articles 141, 142 and 143 shall not apply to any action or suits brought to enforce any liability or duty created by the Securities Act, the Exchange Act, or any claim for which the federal district courts of the United States of America are, as a matter of the laws of the United States, the sole and exclusive forum for determination of such a claim. |
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Exhibit 3.5
Glycomimetics, inc.
CERTIFICATE OF DESIGNATION OF PREFERENCES,
RIGHTS AND LIMITATIONS
OF
SERIES A NON-VOTING CONVERTIBLE PREFERRED STOCK
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
THE UNDERSIGNED DOES HEREBY CERTIFY, on behalf of GlycoMimetics, Inc., a Delaware corporation (the “Corporation”), that the following resolution was duly adopted by the Board of Directors of the Corporation (the “Board of Directors”), in accordance with the provisions of Section 151 of the General Corporation Law of the State of Delaware (the “DGCL”), at a meeting duly called and held on October 28, 2024, which resolution provides for the creation of a series of the Corporation’s Preferred Stock, par value $0.001 per share, which is designated as “Series A Non-Voting Convertible Preferred Stock,” with the preferences, rights and limitations set forth therein relating to dividends, conversion, redemption, dissolution and distribution of assets of the Corporation.
WHEREAS: the Amended and Restated Certificate of Incorporation of the Corporation (as amended from time to time, the “Certificate of Incorporation”), provides for a class of its authorized stock known as Preferred Stock, consisting of 5,000,000 shares, $0.001 par value per share (the “Preferred Stock”), issuable from time to time in one or more series.
RESOLVED: that, pursuant to authority conferred upon the Board of Directors by the Certificate of Incorporation, (i) a series of Preferred Stock of the Corporation be, and hereby is, authorized by the Board of Directors, (ii) the Board of Directors hereby authorizes the issuance of 2,890 shares of “Series A Non-Voting Convertible Preferred Stock” pursuant to the terms of the Agreement and Plan of Merger and Reorganization, dated October 28, 2024, by and among the Corporation, Gemini Merger Sub Corp., a Delaware corporation and wholly owned subsidiary of the Corporation, Gemini Merger Sub II, LLC, a Delaware limited liability company and wholly owned subsidiary of the Corporation, and Crescent Biopharma, Inc. (the “Merger Agreement”), and (iii) the Board of Directors hereby fixes the designations, powers, preferences and relative, participating, optional or other special rights, and the qualifications, limitations or restrictions thereof, of such shares of Preferred Stock, in addition to any provisions set forth in the Certificate of Incorporation that are applicable to the Preferred Stock of all classes and series, as follows:
TERMS OF SERIES A NON-VOTING CONVERTIBLE PREFERRED STOCK
1. Definitions. For the purposes hereof, the following terms shall have the following meanings:
“Buy-In” shall have the meaning set forth in Section 6.4.3.
“Closing Sale Price” means, for any security as of any date, the last closing trade price for such security immediately prior to 4:00 p.m., New York City time, on the principal Trading Market where such security is listed or traded, as reported by Bloomberg, L.P. (or an equivalent, reliable reporting service), or if the foregoing do not apply, the last trade price of such security in the over-the-counter market on the electronic bulletin board for such security as reported by Bloomberg, L.P., or, if no last trade price is reported for such security by Bloomberg, L.P., the average of the bid prices of any market makers for such security as reported on the OTC Pink Market by OTC Markets Group, Inc. If the Closing Sale Price cannot be calculated for a security on a particular date on any of the foregoing bases, the Closing Sale Price of such security on such date shall be the fair market value as determined in good faith by the Board of Directors of the Corporation.
“Commission” means the United States Securities and Exchange Commission.
“Common Stock” means the Corporation’s common stock, par value $0.001 per share, and stock of any other class of securities into which such securities may hereafter be reclassified or changed.
“Conversion Shares” means, collectively, the shares of Common Stock issuable upon conversion of the shares of Series A Non-Voting Preferred Stock in accordance with the terms hereof.
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“Holder” means a holder of shares of Series A Non-Voting Preferred Stock.
“Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.
“Trading Day” means a day on which the principal Trading Market is open for business.
“Trading Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, or the New York Stock Exchange (or any successors to any of the foregoing).
2. Designation, Amount and Par Value. The series of Preferred Stock shall be designated as the Corporation’s Series A Non-Voting Convertible Preferred Stock (the “Series A Non-Voting Preferred Stock”) and the number of shares so designated shall be 2,890. Each share of Series A Non-Voting Preferred Stock shall have a par value of $0.001 per share.
3. Dividends. Holders shall be entitled to receive, and the Corporation shall pay, dividends on shares of the Series A Non-Voting Preferred Stock (on an as-if-converted-to-Common-Stock basis, without regard to the Beneficial Ownership Limitation (as defined below)) equal to and in the same form, and in the same manner, as dividends (other than dividends on shares of the Common Stock payable in the form of Common Stock) actually paid on shares of the Common Stock when, as and if such dividends (other than dividends payable in the form of Common Stock) are paid on shares of the Common Stock. Other than as set forth in the previous sentence, no other dividends shall be paid on shares of Series A Non-Voting Preferred Stock, and the Corporation shall pay no dividends (other than dividends payable in the form of Common Stock) on shares of the Common Stock unless it simultaneously complies with the previous sentence.
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4. Voting Rights.
4.1 Except as otherwise provided herein or as otherwise required by the DGCL, the Series A Non-Voting Preferred Stock shall have no voting rights. However, as long as any shares of Series A Non-Voting Preferred Stock are outstanding, the Corporation shall not, without the affirmative vote of (x) the holders of a majority of the then outstanding shares of the Series A Non-Voting Preferred Stock or (y) the Preferred Directors, acting together: (i) alter or change adversely the powers, preferences or rights given to the Series A Non-Voting Preferred Stock or alter or amend this Certificate of Designation of Preferences, Rights and Limitations of Series A Non-Voting Convertible Preferred Stock (the “Certificate of Designation”), amend or repeal any provision of, or add any provision to, the Certificate of Incorporation or Amended and Restated Bylaws of the Corporation, as amended, or file any articles of amendment, certificate of designations, preferences, limitations and relative rights of any series of Preferred Stock, if such action would adversely alter or change the preferences, rights, privileges or powers of, or restrictions provided for the benefit of the Series A Non-Voting Preferred Stock, regardless of whether any of the foregoing actions shall be by means of amendment to the Certificate of Incorporation or by merger, consolidation, recapitalization, reclassification, conversion or otherwise, (ii) issue further shares of Series A Non-Voting Preferred Stock or increase or decrease (other than by conversion) the number of authorized shares of Series A Non-Voting Preferred Stock, (iii) at any time while at least 30% of the originally issued Series A Non-Voting Preferred Stock remains issued and outstanding, consummate either: (A) any Fundamental Transaction (as defined below) or (B) any merger or consolidation of the Corporation with or into another entity or any stock sale to, or other business combination in which the stockholders of the Corporation immediately before such transaction do not hold at least a majority of the capital stock of the Corporation immediately after such transaction, (iv) increase the authorized number of directors constituting the Board of Directors or change the number of votes entitled to be cast by any director or directors on any matter or (v) enter into any agreement with respect to any of the foregoing. Holders of shares of Common Stock acquired upon the conversion of shares of Series A Non-Voting Preferred Stock shall be entitled to the same voting rights as each other holder of Common Stock.
4.2 Any vote required or permitted under Section 4.1 may be taken at a meeting of the Holders or the Board of Directors, or through the execution of an action by written consent in lieu of such meeting, provided that the consent is executed by Holders representing a majority of the outstanding shares of Series A Non-Voting Preferred Stock or the Preferred Directors, acting together.
4.3 Election of Directors.
4.3.1 At all times when at least 30% of the originally issued Series A Non-Voting Preferred Stock remains issued and outstanding, (i) the holders of record of the shares of Series A Non-Voting Preferred Stock, exclusively and voting together as a separate class on an as-converted to Common Stock basis, shall be entitled to elect 2 directors of the Corporation (the “Preferred Directors”); and (iii) the holders of record of the shares of Common Stock and of any other class or series of voting stock (including the Series A Non-Voting Preferred Stock), exclusively and voting together as a single class on an as-converted to Common Stock basis, shall be entitled to elect the balance of the total number of directors of the Corporation (the “At-Large Directors”); provided, however, for administrative convenience, the initial Preferred Directors may also be appointed by the Board of Directors in connection with the approval of the initial issuance of Series A Non-Voting Preferred Stock without a separate action by the holders of Series A Non-Voting Preferred Stock.
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4.3.2 Any Preferred Director elected as provided in Section 4.3.1 may be removed without cause by, and only by, the affirmative vote of the holders of a majority of the shares of the Series A Non-Voting Preferred Stock, given either at a special meeting of such stockholders duly called for that purpose or pursuant to a written consent of stockholders.
4.3.3 If the holders of shares of the Series A Non-Voting Preferred Stock fail to elect a sufficient number of directors to fill all directorships for which they are entitled to elect directors pursuant to Section 4.3.1 (and to the extent any of such directorships is not otherwise filled by a director appointed in accordance with the proviso in Section 4.3.1), then any directorship not so filled shall remain vacant until such time as the holders of the Series A Non-Voting Preferred Stock fill such directorship in accordance with Section 4.3.1.
4.3.4 At any meeting held for the purpose of electing a Preferred Director, the presence in person or by proxy of the holders of a majority of the outstanding shares of the Series A Non-Voting Preferred Stock shall constitute a quorum for the purpose of electing such Preferred Director.
4.3.5 Each Preferred Director shall be entitled to three votes on each matter presented to the Board of Directors.
5. Rank; Liquidation.
5.1 The Series A Non-Voting Preferred Stock shall rank on parity with the Common Stock as to distributions of assets upon liquidation, dissolution or winding up of the Corporation, whether voluntarily or involuntarily.
5.2 Upon any liquidation, dissolution or winding-up of the Corporation, whether voluntary or involuntary (a “Liquidation”), each Holder shall be entitled to receive out of the assets, whether capital or surplus, of the Corporation the same amount that a holder of Common Stock would receive if the Series A Non-Voting Preferred Stock were fully converted (disregarding for such purpose any Beneficial Ownership Limitations) to Common Stock which amounts shall be paid pari passu with all holders of Common Stock, plus an additional amount equal to any dividends declared on but unpaid to such shares. If, upon any such Liquidation, the assets of the Corporation shall be insufficient to pay the Holders of shares of the Series A Non-Voting Preferred Stock the amount required under the preceding sentence, then all remaining assets of the Corporation shall be distributed ratably to the Holders and the holders of Common Stock in accordance with the respective amounts that would be payable on all such securities if all amounts payable thereon were paid in full. For the avoidance of any doubt, a Fundamental Transaction shall not be deemed a Liquidation unless the Corporation expressly declares that such Fundamental Transaction shall be treated as if it were a Liquidation.
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6. Conversion.
6.1 Conversion at Option of Holder. Subject to Section 6.3, each share of Series A Non-Voting Preferred Stock then outstanding shall be convertible, at any time and from time to time, at the option of the Holder thereof, into a number of shares of Common Stock equal to the Conversion Ratio, subject to the Beneficial Ownership Limitation (as defined below) (each, an “Optional Conversion”). Holders shall effect conversions by providing the Corporation with the form of conversion notice attached hereto as Annex A (a “Notice of Conversion”), duly completed and executed. Provided the Corporation’s transfer agent is participating in the Depository Trust Company (“DTC”) Fast Automated Securities Transfer program, the Notice of Conversion may specify, at the Holder’s election, whether the applicable Conversion Shares shall be credited to the account of the Holder’s prime broker with DTC through its Deposit Withdrawal Agent Commission system (a “DWAC Delivery”). The date on which an Optional Conversion shall be deemed effective (the “Conversion Date”) shall be the Trading Day that the Notice of Conversion, completed and executed, is sent via email to, and received during regular business hours by, the Corporation; provided, that the original certificate(s) (if any) representing such shares of Series A Non-Voting Preferred Stock being converted, duly endorsed, and the accompanying Notice of Conversion, are received by the Corporation within two (2) Trading Days thereafter. In all other cases, the Conversion Date shall be defined as the Trading Day on which the original certificate(s) (if any) representing such shares of Series A Non-Voting Preferred Stock being converted, duly endorsed, and the accompanying Notice of Conversion, are received by the Corporation. The calculations set forth in the Notice of Conversion shall control in the absence of manifest or mathematical error.
6.2 Conversion Ratio. The “Conversion Ratio” for each share of Series A Non-Voting Preferred Stock shall be 1,000 shares of Common Stock issuable upon the conversion (the “Conversion”) of each share of Series A Non-Voting Preferred Stock (corresponding to a ratio of 1,000:1), subject to adjustment as provided herein.
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6.3 Beneficial Ownership Limitation. Notwithstanding anything herein to the contrary, the Corporation shall not effect any conversion of any share of Series A Non-Voting Preferred Stock, and a Holder shall not have the right to convert any portion of the Series A Non-Voting Preferred Stock pursuant to Section 6.1, to the extent that, after giving effect to such attempted conversion set forth on an applicable Notice of Conversion (as defined in the Certificate of Designation) with respect to the Series A Non-Voting Preferred Stock, such Holder (or any of such Holder’s affiliates or any other Person who would be a beneficial owner of Common Stock beneficially owned by the Holder for purposes of Section 13(d) or Section 16 of the Exchange Act and the applicable rules and regulations of the Commission, including any “group” of which the Holder is a member (the foregoing, “Attribution Parties”)) would beneficially own a number of shares of Common Stock in excess of the Beneficial Ownership Limitation. For purposes of the foregoing sentence, the aggregate number of shares of Common Stock beneficially owned by such Holder and its Attribution Parties shall include the number of shares of Common Stock issuable upon conversion of the Series A Non-Voting Preferred Stock subject to the Notice of Conversion with respect to which such determination is being made, but shall exclude the number of shares of Common Stock which are issuable upon (A) conversion of the remaining, unconverted Series A Non-Voting Preferred Stock beneficially owned by such Holder or any of its Attribution Parties, and (B) exercise or conversion of the unexercised or unconverted portion of any other securities of the Corporation (including any warrants) beneficially owned by such Holder or any of its Attribution Parties that are subject to and would exceed a limitation on conversion or exercise similar to the limitation contained herein. Except as set forth in the preceding sentence, for purposes of this Section 6.3, beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the applicable rules and regulations of the Commission, and the terms “beneficial ownership” and “beneficially own” have the meanings ascribed to such terms therein. In addition, for purposes hereof, “group” has the meaning set forth in Section 13(d) of the Exchange Act and the applicable rules and regulations of the Commission. For purposes of this Section 6.3, in determining the number of outstanding shares of Common Stock, a Holder may rely on the number of outstanding shares of Common Stock as stated in the most recent of the following: (A) the Corporation’s most recent periodic or annual filing with the Commission, as the case may be, (B) a more recent public announcement by the Corporation that is filed with the Commission, or (C) a more recent notice by the Corporation or the Corporation’s transfer agent to the Holder setting forth the number of shares of Common Stock then outstanding. Upon the written request of a Holder (which may be by email), the Corporation shall, within two (2) Trading Days thereof, confirm in writing to such Holder (which may be via email) the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to any actual conversion or exercise of securities of the Corporation, including shares of Series A Non-Voting Preferred Stock, by such Holder or its Attribution Parties since the date as of which such number of outstanding shares of Common Stock was last publicly reported or confirmed to the Holder. The “Beneficial Ownership Limitation” shall initially be 19.99% of the number of shares of Common Stock outstanding or deemed to be outstanding as of the applicable measurement date. The Corporation shall be entitled to rely on representations made to it by the Holder in any Notice of Conversion regarding its Beneficial Ownership Limitation. Notwithstanding the foregoing, by written notice to the Corporation, (i) the Holder may reset the Beneficial Ownership Limitation percentage to a higher percentage, not to exceed 19.99%, which increase will not be effective until the sixty-first (61st) day after such written notice is delivered to the Corporation, and (ii) the Holder may reset the Beneficial Ownership Limitation percentage to a lower percentage effective immediately after the delivery of such notice to the Corporation. Upon such an increase by a Holder of the Beneficial Ownership Limitation pursuant to clause (i), not to exceed 19.99%, the Beneficial Ownership Limitation may not be further amended by such Holder without first providing the minimum notice required by this Section 6.3. Notwithstanding the foregoing, (x) at any time following notice of a Fundamental Transaction, the Holder may waive and/or change the Beneficial Ownership Limitation effective immediately upon written notice to the Corporation and may reinstitute a Beneficial Ownership Limitation at any time thereafter effective immediately upon written notice to the Corporation (y) at any time that the beneficial ownership of shares of Common Stock of a Holder (together with any of such Holder’s Attribution Parties) is equal to or less than 9.00% of the number of shares of Common Stock outstanding as of any given date, then such Holder’s Beneficial Ownership Limitation shall automatically be set to 9.99%. The provisions of this Section 6.3 shall be construed, corrected and implemented in a manner so as to effectuate the intended Beneficial Ownership Limitation herein contained and the shares of Common Stock underlying the Series A Non-Voting Preferred Stock in excess of the Beneficial Ownership Limitation shall not be deemed to be beneficially owned by the Holder for any purpose including for purposes of Section 13(d) or Rule 16a-1(a)(1) of the Exchange Act.
6.4 Mechanics of Conversion.
6.4.1 Delivery of Certificate or Electronic Issuance. Upon Conversion not later than two (2) Trading Days after the applicable Conversion Date, or if the Holder requests the issuance of physical certificate(s), two (2) Trading Days after receipt by the Corporation of the original certificate(s) representing such shares of Series A Non-Voting Preferred Stock being converted, duly endorsed, and the accompanying Notice of Conversion (the “Share Delivery Date”), the Corporation shall either: (a) deliver, or cause to be delivered, to the converting Holder a physical certificate or certificates representing the number of Conversion Shares being acquired upon the conversion of shares of Series A Non-Voting Preferred Stock, or (b) in the case of a DWAC Delivery (if so requested by the Holder), electronically transfer such Conversion Shares by crediting the account of the Holder’s prime broker with DTC through its DWAC system. If in the case of any Notice of Conversion such certificate or certificates for the Conversion Shares are not delivered to or as directed by or, in the case of a DWAC Delivery, such shares are not electronically delivered to or as directed by, the applicable Holder by the Share Delivery Date, the applicable Holder shall be entitled to elect to rescind such Notice of Conversion by written notice to the Corporation at any time on or before its receipt of such certificate or certificates for Conversion Shares or electronic receipt of such shares, as applicable, in which event the Corporation shall promptly return to such Holder any original Series A Non-Voting Preferred Stock certificate delivered to the Corporation and such Holder shall promptly return to the Corporation any Common Stock certificates or otherwise direct the return of any shares of Common Stock delivered to the Holder through the DWAC system, representing the shares of Series A Non-Voting Preferred Stock unsuccessfully tendered for conversion to the Corporation.
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6.4.2 Obligation Absolute. Subject to Section 6.3 and subject to Holder’s right to rescind a Notice of Conversion pursuant to Section 6.4.1, the Corporation’s obligation to issue and deliver the Conversion Shares upon conversion of Series A Non-Voting Preferred Stock in accordance with the terms hereof are absolute and unconditional, irrespective of any action or inaction by a Holder to enforce the same, any waiver or consent with respect to any provision hereof, the recovery of any judgment against any Person or any action to enforce the same, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by such Holder or any other Person of any obligation to the Corporation or any violation or alleged violation of law by such Holder or any other Person, and irrespective of any other circumstance which might otherwise limit such obligation of the Corporation to such Holder in connection with the issuance of such Conversion Shares. Subject to Section 6.3 and subject to Holder’s right to rescind a Notice of Conversion pursuant to Section 6.4.1, in the event a Holder shall elect to convert any or all of its Series A Non-Voting Preferred Stock, the Corporation may not refuse conversion based on any claim that such Holder or anyone associated or affiliated with such Holder has been engaged in any violation of law, agreement or for any other reason, unless an injunction from a court, on notice to Holder, restraining and/or enjoining conversion of all or part of the Series A Non-Voting Preferred Stock of such Holder shall have been sought and obtained by the Corporation, and the Corporation posts a surety bond for the benefit of such Holder in the amount of 150% of the value of the Conversion Shares into which would be converted the Series A Non-Voting Preferred Stock which is subject to such injunction, which bond shall remain in effect until the completion of arbitration/litigation of the underlying dispute and the proceeds of which shall be payable to such Holder to the extent it obtains judgment. In the absence of such injunction, the Corporation shall, subject to Section 6.3 and subject to Holder’s right to rescind a Notice of Conversion pursuant to Section 6.4.1, issue Conversion Shares upon a properly noticed conversion.
6.4.3 Buy-In on Failure to Timely Deliver Certificates. If the Corporation fails to deliver to a Holder the applicable certificate or certificates or to effect a DWAC Delivery, as applicable, by the Share Delivery Date pursuant to Section 6.4.1 (other than a failure caused by materially incorrect or incomplete information provided by Holder to the Corporation or the application of the Beneficial Ownership Limitation), and if after such Share Delivery Date such Holder is required by its brokerage firm to purchase (in an open market transaction or otherwise), or the Holder’s brokerage firm otherwise purchases, shares of Common Stock to deliver in satisfaction of a sale by such Holder of the Conversion Shares which such Holder was entitled to receive upon the conversion relating to such Share Delivery Date (a “Buy-In”), then the Corporation shall (A) pay in cash to such Holder (in addition to any other remedies available to or elected by such Holder) the amount by which (x) such Holder’s total purchase price (including any brokerage commissions) for the shares of Common Stock so purchased exceeds (y) the product of (1) the aggregate number of shares of Common Stock that such Holder was entitled to receive from the conversion at issue multiplied by (2) the actual sale price at which the sell order giving rise to such purchase obligation was executed (including any brokerage commissions) and (B) at the option of such Holder, either reissue (if surrendered) the shares of Series A Non-Voting Preferred Stock equal to the number of shares of Series A Non-Voting Preferred Stock submitted for conversion or deliver to such Holder the number of shares of Common Stock that would have been issued if the Corporation had timely complied with its delivery requirements under Section 6.4.1. For example, if a Holder purchases shares of Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted conversion of shares of Series A Non-Voting Preferred Stock with respect to which the actual sale price (including any brokerage commissions) giving rise to such purchase obligation was a total of $10,000 under clause (A) of the immediately preceding sentence, the Corporation shall be required to pay such Holder $1,000. The Holder shall provide the Corporation written notice, within three (3) Trading Days after the occurrence of a Buy-In, indicating the amounts payable to such Holder in respect of such Buy-In together with applicable confirmations and other evidence reasonably requested by the Corporation. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Corporation’s failure to timely deliver certificates representing shares of Common Stock upon conversion of the shares of Series A Non-Voting Preferred Stock as required pursuant to the terms hereof; provided, however, that the Holder shall not be entitled to both (i) require the reissuance of the shares of Series A Non-Voting Preferred Stock submitted for conversion for which such conversion was not timely honored and (ii) receive the number of shares of Common Stock that would have been issued if the Corporation had timely complied with its delivery requirements under Section 6.4.1.
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6.4.4 Reservation of Shares Issuable Upon Conversion. The Corporation covenants that at all times it will reserve and keep available out of its authorized and unissued shares of Common Stock for the sole purpose of issuance upon conversion of the Series A Non-Voting Preferred Stock, free from preemptive rights or any other actual contingent purchase rights of Persons other than the Holders of the Series A Non-Voting Preferred Stock, not less than such aggregate number of shares of the Common Stock as shall be issuable (taking into account the adjustments of Section 7) upon the conversion of all outstanding shares of Series A Non-Voting Preferred Stock. The Corporation covenants that all shares of Common Stock that shall be so issuable shall, upon issue, be duly authorized, validly issued, fully paid and non-assessable.
6.4.5 Fractional Shares. No fractional shares of Common Stock shall be issued upon conversion of the Series A Non-Voting Preferred Stock, no certificates or scrip for any such fractional shares shall be issued and no cash shall be paid for any such fractional shares. Any fractional shares of Common Stock that a Holder of Series A Non-Voting Preferred Stock would otherwise be entitled to receive shall be aggregated with all fractional shares of Common Stock issuable to such Holder and any remaining fractional shares shall be rounded up to the nearest whole share. Whether or not fractional shares would be issuable upon such conversion shall be determined on the basis of the total number of shares of Series A Non-Voting Preferred Stock the Holder is at the time converting into Common Stock and the aggregate number of shares of Common Stock issuable upon such conversion.
6.4.6 Transfer Taxes. The issuance of certificates for shares of the Common Stock upon conversion of the Series A Non-Voting Preferred Stock shall be made without charge to any Holder for any documentary stamp or similar taxes that may be payable in respect of the issue or delivery of such certificates, provided that the Corporation shall not be required to pay any tax that may be payable in respect of any transfer involved in the issuance and delivery of any such certificate upon conversion in a name other than that of the registered Holder(s) of such shares of Series A Non-Voting Preferred Stock and the Corporation shall not be required to issue or deliver such certificates unless or until the Person or Persons requesting the issuance thereof shall have paid to the Corporation the amount of such tax or shall have established to the satisfaction of the Corporation that such tax has been paid.
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6.5 Status as Stockholder. Upon each Conversion Date, (i) the shares of Series A Non-Voting Preferred Stock being converted shall be deemed converted into shares of Common Stock and (ii) the Holder’s rights as a holder of such converted shares of Series A Non-Voting Preferred Stock shall cease and terminate, excepting only the right to receive certificates for such shares of Common Stock and to any remedies provided herein or otherwise available at law or in equity to such Holder because of a failure by the Corporation to comply with the terms of this Certificate of Designation. In all cases, the Holder shall retain all of its rights and remedies for the Corporation’s failure to convert Series A Non-Voting Preferred Stock.
7. Certain Adjustments.
7.1 Stock Dividends and Stock Splits. If the Corporation, at any time while this Series A Non-Voting Preferred Stock is outstanding: (A) pays a stock dividend or otherwise makes a distribution or distributions payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Corporation upon conversion of this Series A Non-Voting Preferred Stock) with respect to the then outstanding shares of Common Stock; (B) subdivides outstanding shares of Common Stock into a larger number of shares; or (C) combines (including by way of a reverse stock split) outstanding shares of Common Stock into a smaller number of shares, then the Conversion Ratio shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding any treasury shares of the Corporation) outstanding immediately after such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately before such event (excluding any treasury shares of the Corporation). Any adjustment made pursuant to this Section 7.1 shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision or combination.
7.2 Fundamental Transaction. If, at any time while this Series A Non-Voting Preferred Stock is outstanding, (A) the Corporation effects any merger or consolidation of the Corporation with or into another Person or any stock sale to, or other business combination (including, without limitation, a reorganization, recapitalization, spin-off, share exchange or scheme of arrangement) with or into another Person (other than such a transaction in which the Corporation is the surviving or continuing entity and its Common Stock is not exchanged for or converted into other securities, cash or property), (B) the Corporation effects any sale, lease, transfer or exclusive license of all or substantially all of its assets in one transaction or a series of related transactions, (C) any tender offer or exchange offer (whether by the Corporation or another Person) is completed pursuant to which more than 50% of the Common Stock not held by the Corporation or such Person is exchanged for or converted into other securities, cash or property, or (D) the Corporation effects any reclassification of the Common Stock or any compulsory share exchange pursuant (other than as a result of a dividend, subdivision or combination covered by Section 7.1) to which the Common Stock is effectively converted into or exchanged for other securities, cash or property (in any such case, a “Fundamental Transaction”), then, upon any subsequent conversion of this Series A Non-Voting Preferred Stock the Holders shall have the right to receive, in lieu of the right to receive Conversion Shares, for each Conversion Share that would have been issuable upon such conversion immediately prior to the occurrence of such Fundamental Transaction, the same kind and amount of securities, cash or property as it would have been entitled to receive upon the occurrence of such Fundamental Transaction if it had been, immediately prior to such Fundamental Transaction, the holder of one share of Common Stock (the “Alternate Consideration”). For purposes of any such subsequent conversion, the determination of the Conversion Ratio shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Corporation shall adjust the Conversion Ratio in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holders shall be given the same choice as to the Alternate Consideration it receives upon any conversion of this Series A Non-Voting Preferred Stock following such Fundamental Transaction. To the extent necessary to effectuate the foregoing provisions, any successor to the Corporation or surviving entity in such Fundamental Transaction shall file a new certificate of designations with the same terms and conditions and issue to the Holders new preferred stock consistent with the foregoing provisions and evidencing the Holders’ right to convert such preferred stock into Alternate Consideration. The terms of any agreement to which the Corporation is a party and pursuant to which a Fundamental Transaction is effected shall include terms requiring any such successor or surviving entity to comply with the provisions of this Section 7.2 and insuring that this Series A Non-Voting Preferred Stock (or any such replacement security) will be similarly adjusted upon any subsequent transaction analogous to a Fundamental Transaction. The Corporation shall cause to be delivered to each Holder, at its last address as it shall appear upon the stock books of the Corporation, written notice of any Fundamental Transaction at least 20 calendar days prior to the date on which such Fundamental Transaction is expected to become effective or close.
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7.3 Calculations. All calculations under this Section 7 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 7, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding any treasury shares of the Corporation) issued and outstanding.
8. Redemption. The shares of Series A Non-Voting Preferred Stock shall not be redeemable; provided, however, that the foregoing shall not limit the ability of the Corporation to purchase or otherwise deal in such shares to the extent otherwise permitted hereby and by law.
9. Transfer. A Holder may transfer any shares of Series A Non-Voting Preferred Stock together with the accompanying rights set forth herein, held by such holder without the consent of the Corporation; provided that such transfer is in compliance with applicable securities laws. The Corporation shall in good faith (i) do and perform, or cause to be done and performed, all such further acts and things, and (ii) execute and deliver all such other agreements, certificates, instruments and documents, in each case, as any holder of Series A Non-Voting Preferred Stock may reasonably request in order to carry out the intent and accomplish the purposes of this Section 9. The transferee of any shares of Series A Non-Voting Preferred Stock shall be subject to the Beneficial Ownership Limitation applicable to the transferor as of the time of such transfer.
10. Series A Non-Voting Preferred Stock Register. The Corporation shall maintain at its principal executive offices (or such other office or agency of the Corporation as it may designate by notice to the Holders in accordance with Section 11), a register for the Series A Non-Voting Preferred Stock, in which the Corporation shall record (i) the name, address, and electronic mail address of each holder in whose name the shares of Series A Non-Voting Preferred Stock have been issued and (ii) the name, address, and electronic mail address of each transferee of any shares of Series A Non-Voting Preferred Stock. The Corporation may deem and treat the registered Holder of shares of Series A Non-Voting Preferred Stock as the absolute owner thereof for the purpose of any conversion thereof and for all other purposes. The Corporation shall keep the register open and available at all times during business hours for inspection by any holder of Series A Non-Voting Preferred Stock or his, her or its legal representatives.
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11. Notices. Any notice required or permitted by the provisions of this Certificate of Designation to be given to a Holder of shares of Series A Non-Voting Preferred Stock shall be mailed, postage prepaid, to the post office address last shown on the records of the Corporation, or given by electronic communication in compliance with the provisions of the Delaware General Corporation Law, and shall be deemed sent upon such mailing or electronic transmission.
12. Book-Entry; Certificates. The Series A Non-Voting Preferred Stock will be issued in book-entry form; provided that, if a Holder requests that such Holder’s shares of Series A Non-Voting Preferred Stock be issued in certificated form, the Corporation will instead issue a stock certificate to such Holder representing such Holder’s shares of Series A Non-Voting Preferred Stock. To the extent that any shares of Series A Non-Voting Preferred Stock are issued in book-entry form, references herein to “certificates” shall instead refer to the book-entry notation relating to such shares.
13. Lost or Mutilated Series A Non-Voting Preferred Stock Certificate. If a Holder’s Series A Non-Voting Convertible Preferred Stock certificate shall be mutilated, lost, stolen or destroyed, the Corporation shall execute and deliver, in exchange and substitution for and upon cancellation of a mutilated certificate, or in lieu of or in substitution for a lost, stolen or destroyed certificate, a new certificate for the shares of Series A Non-Voting Convertible Preferred Stock so mutilated, lost, stolen or destroyed, but only upon receipt of evidence of such loss, theft or destruction of such certificate, and of the ownership hereof reasonably satisfactory to the Corporation.
14. Waiver. Any waiver by the Corporation or a Holder of a breach of any provision of this Certificate of Designation shall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Certificate of Designation or a waiver by any other Holders. The failure of the Corporation or a Holder to insist upon strict adherence to any term of this Certificate of Designation on one or more occasions shall not be considered a waiver or deprive that party (or any other Holder) of the right thereafter to insist upon strict adherence to that term or any other term of this Certificate of Designation. Any waiver by the Corporation or a Holder must be in writing. Notwithstanding any provision in this Certificate of Designation to the contrary, any provision contained herein and any right of the Holders of Series A Non-Voting Preferred Stock granted hereunder may be waived as to all shares of Series A Non-Voting Preferred Stock (and the Holders thereof) upon the written consent of the Holders of not less than a majority of the shares of Series A Non-Voting Preferred Stock then outstanding, provided, however, that the Beneficial Ownership Limitation applicable to a Holder, and any provisions contained herein that are related to such Beneficial Ownership Limitation, cannot be modified, waived or terminated without the consent of such Holder, provided further, that any proposed waiver that would, by its terms, have a disproportionate and materially adverse effect on any Holder shall require the consent of such Holder(s).
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15. Severability. Whenever possible, each provision hereof shall be interpreted in a manner as to be effective and valid under applicable law, but if any provision hereof is held to be prohibited by or invalid under applicable law, then such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating or otherwise adversely affecting the remaining provisions hereof.
16. Status of Converted Series A Non-Voting Preferred Stock. If any shares of Series A Non-Voting Preferred Stock shall be converted or redeemed by the Corporation, such shares shall, to the fullest extent permitted by applicable law, be retired and cancelled upon such acquisition, and shall not be reissued as a share of Series A Non-Voting Preferred Stock. Any share of Series A Non-Voting Preferred Stock so acquired shall, upon its retirement and cancellation, and upon the taking of any action required by applicable law, resume the status of authorized but unissued shares of preferred stock and shall no longer be designated as Series A Non-Voting Preferred Stock.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, GlycoMimetics, Inc. has caused this Certificate of Designation of Preferences, Rights and Limitations of Series A Non-Voting Convertible Preferred Stock to be duly executed by its Principal Executive Officer on June 13, 2025.
| GLYLCOMIMETICS, Inc. | ||
| By: | /s/ Brian Hahn | |
| Name: | Brian Hahn | |
| Title: | Principal Executive Officer | |
ANNEX A
NOTICE OF CONVERSION
(TO BE EXECUTED BY THE REGISTERED HOLDER IN ORDER TO CONVERT SHARES OF SERIES A NON-VOTING CONVERTIBLE PREFERRED STOCK)
The undersigned Holder hereby irrevocably elects to convert the number of shares of Series A Non-Voting Preferred Stock indicated below, represented in book-entry form, into shares of common stock, par value $0.001 per share (the “Common Stock”), of GlycoMimetics, Inc., a Delaware corporation (the “Corporation”), as of the date written below. If securities are to be issued in the name of a Person other than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto. Capitalized terms utilized but not defined herein shall have the meaning ascribed to such terms in that certain Certificate of Designation of Preferences, Rights and Limitations of Series A Non-Voting Convertible Preferred Stock (the “Certificate of Designation”) filed by the Corporation with the Secretary of State of the State of Delaware on June 13, 2025.
As of the date hereof, the number of shares of Common Stock beneficially owned by the undersigned Holder (together with such Holder’s Attribution Parties), including the number of shares of Common Stock issuable upon conversion of the Series A Non-Voting Preferred Stock subject to this Notice of Conversion, but excluding the number of shares of Common Stock which are issuable upon (A) conversion of the remaining, unconverted Series A Non-Voting Preferred Stock beneficially owned by such Holder or any of its Attribution Parties, and (B) exercise or conversion of the unexercised or unconverted portion of any other securities of the Corporation (including any warrants) beneficially owned by such Holder or any of its Attribution Parties that are subject to a limitation on conversion or exercise similar to the limitation contained in Section 6.3 of the Certificate of Designation, is _____. For purposes hereof, beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the applicable regulations of the Commission. In addition, for purposes hereof, “group” has the meaning set forth in Section 13(d) of the Exchange Act and the applicable regulations of the Commission.
CONVERSION CALCULATIONS:
| Date to Effect Conversion: | ||
| Number of shares of Series A Non-Voting Preferred Stock owned prior to Conversion: | ||
| Number of shares of Series A Non-Voting Preferred Stock to be Converted: | ||
| Number of shares of Common Stock to be Issued: | ||
| Address for delivery of physical certificates: |
For DWAC Delivery, please provide the following:
Broker No.:_____________________
Account No.:___________________
| [Holder] | ||
| By: | ||
| Name: | ||
| Title: | ||
Exhibit 3.6
CRESCENT BIOPHARMA, inc.
CERTIFICATE OF DESIGNATION OF PREFERENCES,
RIGHTS AND LIMITATIONS
OF
SERIES A NON-VOTING CONVERTIBLE PREFERRED SHARES
Pursuant to the memorandum and articles of association of the Company, adopted by special resolution passed on 5 June 2025 and effective as of 16 June 2025 (as amended from time to time, the “Articles”). Capitalised terms not otherwise defined herein shall have the meanings assigned thereto in the Articles.
Crescent Biopharma, Inc. (the “Company”), an exempted company incorporated in the Cayman Islands with limited liability, DOES HEREBY CERTIFY:
That, pursuant to the authority conferred by the Articles, at a duly convened meeting of the board of directors of the Company (the “Board of Directors”) on 11 May 2025, the Board of Directors adopted the following resolutions, which such resolutions provides for the creation of a series of the Company's Preferred Shares with a par value of US$0.001 per share, which is designated as “Series A Non-Voting Convertible Preferred Shares,” with the preferences, rights and limitations set forth therein relating to dividends, conversion, redemption, dissolution and distribution of assets of the Company.
WHEREAS: the Articles provide for a class of shares known as Preferred Shares, consisting of 5,000,000 shares with par value of US$0.001 per share (the “Preferred Shares”), issuable from time to time in one or more series.
RESOLVED: that, pursuant to authority conferred upon the Board of Directors by the Articles, the Board of Directors (i) does hereby create and authorize and provide for the issuance and allotment of a series of Preferred Shares of the Company with a par value of US$0.001 per share, designated as “Series A Non-Voting Convertible Preferred Shares”, and (ii) hereby fixes the designations, powers, preferences and relative, participating, optional or other special rights, and the qualifications, limitations or restrictions thereof, of such Preferred Shares, in addition to any provisions set forth in the Articles that are applicable to the Preferred Shares of all classes and series, as follows:
TERMS OF SERIES A NON-VOTING CONVERTIBLE PREFERRED SHARES
1. Definitions. For the purposes hereof, the following terms shall have the following meanings:
“Buy-In” shall have the meaning set forth in Section 6.4.3.
“Closing Sale Price” means, for any security as of any date, the last closing trade price for such security immediately prior to 4:00 p.m., New York City time, on the principal Trading Market where such security is listed or traded, as reported by Bloomberg, L.P. (or an equivalent, reliable reporting service), or if the foregoing do not apply, the last trade price of such security in the over-the-counter market on the electronic bulletin board for such security as reported by Bloomberg, L.P., or, if no last trade price is reported for such security by Bloomberg, L.P., the average of the bid prices of any market makers for such security as reported on the OTC Pink Market by OTC Markets Group, Inc. If the Closing Sale Price cannot be calculated for a security on a particular date on any of the foregoing bases, the Closing Sale Price of such security on such date shall be the fair market value as determined in good faith by the Board of Directors of the Company.
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“Commission” means the United States Securities and Exchange Commission.
“Ordinary Shares” means the Company's ordinary shares, par value $0.001 per share, and shares of any other class of securities into which such securities may hereafter be reclassified or changed.
“Conversion Shares” means, collectively, the Ordinary Shares issuable upon conversion of the shares of Series A Non-Voting Preferred Shares in accordance with the terms hereof.
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“Holder” means a holder of Series A Non-Voting Preferred Shares.
“Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.
“Trading Day” means a day on which the principal Trading Market is open for business.
“Trading Market” means any of the following markets or exchanges on which the Ordinary Shares is listed or quoted for trading on the date in question: the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, or the New York Stock Exchange (or any successors to any of the foregoing).
2. Designation, Amount and Par Value. The series of Preferred Shares shall be designated as the Company's Series A Non-Voting Convertible Preferred Shares (the “Series A Non-Voting Preferred Shares”) and the number of shares so designated shall be 2,890. Each share of Series A Non-Voting Preferred Shares shall have a par value of $0.001 per share.
3. Dividends. Holders shall be entitled to receive, and the Company shall pay, dividends on shares of the Series A Non-Voting Preferred Shares (on an as-if-converted-to-Ordinary Shares basis, without regard to the Beneficial Ownership Limitation (as defined below)) equal to and in the same form, and in the same manner, as dividends (other than dividends on Ordinary Shares payable in the form of Ordinary Shares) actually paid on shares of the Ordinary Shares when, as and if such dividends (other than dividends payable in the form of Ordinary Shares) are paid on Ordinary Shares. Other than as set forth in the previous sentence, no other dividends shall be paid on shares of Series A Non-Voting Preferred Shares, and the Company shall pay no dividends (other than dividends payable in the form of Ordinary Shares) on Ordinary Shares unless it simultaneously complies with the previous sentence.
4. Voting Rights.
4.1 Except as otherwise provided herein or as otherwise required by the Articles, the Series A Non-Voting Preferred Shares shall have no voting rights. However, as long as any Series A Non-Voting Preferred Shares are issued and outstanding, the Company shall not, without the affirmative vote of (x) the holders of a simple majority of the then issued and outstanding Series A Non-Voting Preferred Shares or (y) the Preferred Directors, acting together: (i) alter or change adversely the powers, preferences or rights given to the Series A Non-Voting Preferred Shares or alter or amend this Certificate of Designation of Preferences, Rights and Limitations of Series A Non-Voting Convertible Preferred Shares (the “Certificate of Designation”), amend or repeal any provision of, or add any provision to, the Articles, as amended, or file any articles of amendment, certificate of designations, preferences, limitations and relative rights of any series of Preferred Shares, if such action would adversely alter or change the preferences, rights, privileges or powers of, or restrictions provided for the benefit of the Series A Non-Voting Preferred Shares, regardless of whether any of the foregoing actions shall be by means of amendment to the Articles or by merger, consolidation, recapitalization, reclassification, conversion or otherwise, (ii) issue further Series A Non-Voting Preferred Shares or increase or decrease (other than by conversion) the number of authorized shares of Series A Non-Voting Preferred Shares, (iii) at any time while at least 30% of the originally issued Series A Non-Voting Preferred Shares remains issued and outstanding, consummate either: (A) any Fundamental Transaction (as defined below) or (B) any merger or consolidation of the Company with or into another entity or any share sale to, or other business combination in which the shareholders of the Company immediately before such transaction do not hold at least a simple majority of the share capital of the Company immediately after such transaction, (iv) increase the authorized number of directors constituting the Board of Directors or change the number of votes entitled to be cast by any director or directors on any matter or (v) enter into any agreement with respect to any of the foregoing. Holders of shares of Ordinary Shares acquired upon the conversion of shares of Series A Non-Voting Preferred Shares shall be entitled to the same voting rights as each other holder of Ordinary Shares.
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4.2 Any vote required or permitted under Section 4.1 may be taken at a meeting of the Holders or the Board of Directors, or through the execution of an action by written consent or resolution in lieu of such meeting, provided that the consent is executed by Holders representing a simple majority of the then issued and outstanding Series A Non-Voting Preferred shares or the Preferred Directors, acting together.
4.3 Election of Directors.
4.3.1 At all times when at least 30% of the originally issued Series A Non-Voting Preferred Shares remains issued and outstanding, (i) the holders of record of the Series A Non-Voting Preferred Shares, exclusively and voting together as a separate class on an as-converted to Ordinary Shares basis, shall be entitled to elect two (2) directors of the Company (the “Preferred Directors”); and (ii) the holders of record of the Ordinary Shares and of any other class or series of voting shares (including the Series A Non-Voting Preferred Shares), exclusively and voting together as a single class on an as-converted to Ordinary Shares basis, shall be entitled to elect the balance of the total number of directors of the Company (the “At-Large Directors”).
4.3.2 Any Preferred Director elected as provided in Section 4.3.1 may be removed without cause by, and only by, the affirmative vote of the holders of a simple majority of the Series A Non-Voting Preferred Shares, given either at a general meeting of such shareholders duly called for that purpose or pursuant to a written consent or resolution of shareholders.
4.3.3 If the holders of the Series A Non-Voting Preferred Shares fail to elect a sufficient number of directors to fill all directorships for which they are entitled to elect directors pursuant to Section 4.3.1 (and to the extent any of such directorships is not otherwise filled by a director appointed in accordance with the proviso in Section 4.3.1), then any directorship not so filled shall remain vacant until such time as the holders of the Series A Non-Voting Preferred Shares fill such directorship in accordance with Section 4.3.1.
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4.3.4 At any meeting held for the purpose of electing a Preferred Director, the presence in person or by proxy of the holders of a simple majority of the then issued and outstanding Series A Non-Voting Preferred Shares shall constitute a quorum for the purpose of electing such Preferred Director.
4.3.5 Each Preferred Director shall be entitled to three votes on each matter presented to the Board of Directors.
5. Rank; Liquidation.
5.1 The Series A Non-Voting Preferred Shares shall rank pari passu with the Ordinary Shares as to distributions of assets upon liquidation, dissolution or winding up of the Company, whether voluntarily or involuntarily.
5.2 Upon any liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary (a “Liquidation”), each Holder shall be entitled to receive out of the assets or distributable reserves of the Company the same amount that a holder of Ordinary Shares would receive if the Series A Non-Voting Preferred Shares were fully converted (disregarding for such purpose any Beneficial Ownership Limitations) to Ordinary Shares which amounts shall be paid pari passu with all holders of Ordinary Shares, plus an additional amount equal to any dividends declared on but unpaid to such shares. If, upon any such Liquidation, the assets of the Company shall be insufficient to pay the Holders of the Series A Non-Voting Preferred Shares the amount required under the preceding sentence, then all remaining assets of the Company shall be distributed ratably to the Holders and the holders of Ordinary Shares in accordance with the respective amounts that would be payable on all such securities if all amounts payable thereon were paid in full. For the avoidance of any doubt, a Fundamental Transaction shall not be deemed a Liquidation unless the Company expressly declares that such Fundamental Transaction shall be treated as if it were a Liquidation.
6. Conversion.
6.1 Conversion at Option of Holder. Subject to Section 6.3, each Series A Non-Voting Preferred Share then issued and outstanding shall be convertible, at any time and from time to time, at the option of the Holder thereof, into a number of shares of Ordinary Shares equal to the Conversion Ratio, subject to the Beneficial Ownership Limitation (as defined below) (each, an “Optional Conversion”). Holders shall effect conversions by providing the Company with the form of conversion notice attached hereto as Annex A (a “Notice of Conversion”), duly completed and executed. Provided the Company's transfer agent is participating in the Depository Trust Company (“DTC”) Fast Automated Securities Transfer program, the Notice of Conversion may specify, at the Holder’s election, whether the applicable Conversion Shares shall be credited to the account of the Holder’s prime broker with DTC through its Deposit Withdrawal Agent Commission system (a “DWAC Delivery”). The date on which an Optional Conversion shall be deemed effective (the “Conversion Date”) shall be the Trading Day that the Notice of Conversion, completed and executed, is sent via email to, and received during regular business hours by, the Company; provided, that the original certificate(s) (if any) representing such Series A Non-Voting Preferred Shares being converted, duly endorsed, and the accompanying Notice of Conversion, are received by the Company within two (2) Trading Days thereafter. In all other cases, the Conversion Date shall be defined as the Trading Day on which the original certificate(s) (if any) representing such Series A Non-Voting Preferred Shares being converted, duly endorsed, and the accompanying Notice of Conversion, are received by the Company. The calculations set forth in the Notice of Conversion shall control in the absence of manifest or mathematical error.
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6.2 Conversion Ratio. The “Conversion Ratio” for each Series A Non-Voting Preferred Share shall be 1,000 shares of Ordinary Shares issuable upon the conversion (the “Conversion”) of each Series A Non-Voting Preferred Share (corresponding to a ratio of 1,000:1), subject to adjustment as provided herein.
6.3 Beneficial Ownership Limitation. Notwithstanding anything herein to the contrary, the Company shall not effect any conversion of any Series A Non-Voting Preferred Share, and a Holder shall not have the right to convert any portion of the Series A Non-Voting Preferred Share pursuant to Section 6.1, to the extent that, after giving effect to such attempted conversion set forth on an applicable Notice of Conversion (as defined in the Certificate of Designation) with respect to the Series A Non-Voting Preferred Share, such Holder (or any of such Holder’s affiliates or any other Person who would be a beneficial owner of Ordinary Shares beneficially owned by the Holder for purposes of Section 13(d) or Section 16 of the Exchange Act and the applicable rules and regulations of the Commission, including any “group” of which the Holder is a member (the foregoing, “Attribution Parties”)) would beneficially own a number of Ordinary Shares in excess of the Beneficial Ownership Limitation. For purposes of the foregoing sentence, the aggregate number of Ordinary Shares beneficially owned by such Holder and its Attribution Parties shall include the number of Ordinary Shares issuable upon conversion of the Series A Non-Voting Preferred Shares subject to the Notice of Conversion with respect to which such determination is being made, but shall exclude the number of Ordinary Shares which are issuable upon (A) conversion of the remaining, unconverted Series A Non-Voting Preferred Shares beneficially owned by such Holder or any of its Attribution Parties, and (B) exercise or conversion of the unexercised or unconverted portion of any other securities of the Company (including any warrants) beneficially owned by such Holder or any of its Attribution Parties that are subject to and would exceed a limitation on conversion or exercise similar to the limitation contained herein. Except as set forth in the preceding sentence, for purposes of this Section 6.3, beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the applicable rules and regulations of the Commission, and the terms “beneficial ownership” and “beneficially own” have the meanings ascribed to such terms therein. In addition, for purposes hereof, “group” has the meaning set forth in Section 13(d) of the Exchange Act and the applicable rules and regulations of the Commission. For purposes of this Section 6.3, in determining the number of issued and outstanding Ordinary Shares, a Holder may rely on the number of issued and outstanding Ordinary Shares as stated in the most recent of the following: (A) the Company's most recent periodic or annual filing with the Commission, as the case may be, (B) a more recent public announcement by the Company that is filed with the Commission, or (C) a more recent notice by the Company or the Company’s transfer agent to the Holder setting forth the number of Ordinary Shares then outstanding. Upon the written request of a Holder (which may be by email), the Company shall, within two (2) Trading Days thereof, confirm in writing to such Holder (which may be via email) the number of Ordinary Shares then issued and outstanding. In any case, the number of issued and outstanding Ordinary Shares shall be determined after giving effect to any actual conversion or exercise of securities of the Company, including of Series A Non-Voting Preferred Shares, by such Holder or its Attribution Parties since the date as of which such number of issued and outstanding Ordinary Shares was last publicly reported or confirmed to the Holder. The “Beneficial Ownership Limitation” shall initially be 19.99% of the number of shares of Ordinary Shares issued and outstanding or deemed to be issued and outstanding as of the applicable measurement date. The Company shall be entitled to rely on representations made to it by the Holder in any Notice of Conversion regarding its Beneficial Ownership Limitation. Notwithstanding the foregoing, by written notice to the Company, (i) the Holder may reset the Beneficial Ownership Limitation percentage to a higher percentage, not to exceed 19.99%, which increase will not be effective until the sixty-first (61st) day after such written notice is delivered to the Company, and (ii) the Holder may reset the Beneficial Ownership Limitation percentage to a lower percentage effective immediately after the delivery of such notice to the Company. Upon such an increase by a Holder of the Beneficial Ownership Limitation pursuant to clause (i), not to exceed 19.99%, the Beneficial Ownership Limitation may not be further amended by such Holder without first providing the minimum notice required by this Section 6.3. Notwithstanding the foregoing, (x) at any time following notice of a Fundamental Transaction, the Holder may waive and/or change the Beneficial Ownership Limitation effective immediately upon written notice to the Company and may reinstitute a Beneficial Ownership Limitation at any time thereafter effective immediately upon written notice to the Company (y) at any time that the beneficial ownership of Ordinary Shares of a Holder (together with any of such Holder’s Attribution Parties) is equal to or less than 9.00% of the number of Ordinary Shares issued and outstanding as of any given date, then such Holder’s Beneficial Ownership Limitation shall automatically be set to 9.99%. The provisions of this Section 6.3 shall be construed, corrected and implemented in a manner so as to effectuate the intended Beneficial Ownership Limitation herein contained and the Ordinary Shares underlying the Series A Non-Voting Preferred Shares in excess of the Beneficial Ownership Limitation shall not be deemed to be beneficially owned by the Holder for any purpose including for purposes of Section 13(d) or Rule 16a-1(a)(1) of the Exchange Act.
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6.4 Mechanics of Conversion.
6.4.1 Delivery of Certificate or Electronic Issuance. Upon Conversion not later than two (2) Trading Days after the applicable Conversion Date, or if the Holder requests the issuance of physical certificate(s), two (2) Trading Days after receipt by the Company of the original certificate(s) representing such Series A Non-Voting Preferred Shares being converted, duly endorsed, and the accompanying Notice of Conversion (the “Share Delivery Date”), the Company shall either: (a) deliver, or cause to be delivered, to the converting Holder a physical certificate or certificates representing the number of Conversion Shares being acquired upon the conversion of Series A Non-Voting Preferred Shares, or (b) in the case of a DWAC Delivery (if so requested by the Holder), electronically transfer such Conversion Shares by crediting the account of the Holder’s prime broker with DTC through its DWAC system. If in the case of any Notice of Conversion such certificate or certificates for the Conversion Shares are not delivered to or as directed by or, in the case of a DWAC Delivery, such shares are not electronically delivered to or as directed by, the applicable Holder by the Share Delivery Date, the applicable Holder shall be entitled to elect to rescind such Notice of Conversion by written notice to the Company at any time on or before its receipt of such certificate or certificates for Conversion Shares or electronic receipt of such shares, as applicable, in which event the Company shall promptly return to such Holder any original Series A Non-Voting Preferred Share certificate delivered to the Company and such Holder shall promptly return to the Company any Ordinary Share certificates or otherwise direct the return of any Ordinary Shares delivered to the Holder through the DWAC system, representing the Series A Non-Voting Preferred Shares unsuccessfully tendered for conversion to the Company.
6.4.2 Obligation Absolute. Subject to Section 6.3 and subject to Holder’s right to rescind a Notice of Conversion pursuant to Section 6.4.1, the Company’s obligation to issue and deliver the Conversion Shares upon conversion of Series A Non-Voting Preferred Shares in accordance with the terms hereof are absolute and unconditional, irrespective of any action or inaction by a Holder to enforce the same, any waiver or consent with respect to any provision hereof, the recovery of any judgment against any Person or any action to enforce the same, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by such Holder or any other Person of any obligation to the Company or any violation or alleged violation of law by such Holder or any other Person, and irrespective of any other circumstance which might otherwise limit such obligation of the Company to such Holder in connection with the issuance of such Conversion Shares. Subject to Section 6.3 and subject to Holder’s right to rescind a Notice of Conversion pursuant to Section 6.4.1, in the event a Holder shall elect to convert any or all of its Series A Non-Voting Preferred Shares, the Company may not refuse conversion based on any claim that such Holder or anyone associated or affiliated with such Holder has been engaged in any violation of law, agreement or for any other reason, unless an injunction from a court, on notice to Holder, restraining and/or enjoining conversion of all or part of the Series A Non-Voting Preferred Shares of such Holder shall have been sought and obtained by the Company, and the Company posts a surety bond for the benefit of such Holder in the amount of 150% of the value of the Conversion Shares into which would be converted Series A Non-Voting Preferred Shares which is subject to such injunction, which bond shall remain in effect until the completion of arbitration/litigation of the underlying dispute and the proceeds of which shall be payable to such Holder to the extent it obtains judgment. In the absence of such injunction, the Company shall, subject to Section 6.3 and subject to Holder’s right to rescind a Notice of Conversion pursuant to Section 6.4.1, issue Conversion Shares upon a properly noticed conversion.
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6.4.3 Buy-In on Failure to Timely Deliver Certificates. If the Company fails to deliver to a Holder the applicable certificate or certificates or to effect a DWAC Delivery, as applicable, by the Share Delivery Date pursuant to Section 6.4.1 (other than a failure caused by materially incorrect or incomplete information provided by Holder to the Company or the application of the Beneficial Ownership Limitation), and if after such Share Delivery Date such Holder is required by its brokerage firm to purchase (in an open market transaction or otherwise), or the Holder’s brokerage firm otherwise purchases, Ordinary Shares to deliver in satisfaction of a sale by such Holder of the Conversion Shares which such Holder was entitled to receive upon the conversion relating to such Share Delivery Date (a “Buy-In”), then the Company shall (A) pay in cash to such Holder (in addition to any other remedies available to or elected by such Holder) the amount by which (x) such Holder’s total purchase price (including any brokerage commissions) for the Ordinary Shares so purchased exceeds (y) the product of (1) the aggregate number of Ordinary Shares that such Holder was entitled to receive from the conversion at issue multiplied by (2) the actual sale price at which the sell order giving rise to such purchase obligation was executed (including any brokerage commissions) and (B) at the option of such Holder, either reissue (if surrendered) the Series A Non-Voting Preferred Shares equal to the number of Series A Non-Voting Preferred Shares submitted for conversion or deliver to such Holder the number of Ordinary Shares that would have been issued if the Company had timely complied with its delivery requirements under Section 6.4.1. For example, if a Holder purchases Ordinary Shares having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted conversion of Series A Non-Voting Preferred Shares with respect to which the actual sale price (including any brokerage commissions) giving rise to such purchase obligation was a total of $10,000 under clause (A) of the immediately preceding sentence, the Company shall be required to pay such Holder $1,000. The Holder shall provide the Company written notice, within three (3) Trading Days after the occurrence of a Buy-In, indicating the amounts payable to such Holder in respect of such Buy-In together with applicable confirmations and other evidence reasonably requested by the Company. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver certificates representing Ordinary Shares upon conversion of the Series A Non-Voting Preferred Shares as required pursuant to the terms hereof; provided, however, that the Holder shall not be entitled to both (i) require the reissuance of the Series A Non-Voting Preferred Shares submitted for conversion for which such conversion was not timely honored and (ii) receive the number of Ordinary Shares that would have been issued if the Company had timely complied with its delivery requirements under Section 6.4.1.
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6.4.4 Reservation of Shares Issuable Upon Conversion. The Company covenants that at all times it will reserve and keep available out of its authorized and unissued Ordinary Shares for the sole purpose of issuance upon conversion of the Series A Non-Voting Preferred Shares, free from preemptive rights or any other actual contingent purchase rights of Persons other than the Holders of the Series A Non-Voting Preferred Shares, not less than such aggregate number of Ordinary Shares as shall be issuable (taking into account the adjustments of Section 7) upon the conversion of all outstanding Series A Non-Voting Preferred Shares. The Company covenants that all Ordinary Shares that shall be so issuable shall, upon issue, be duly authorized, validly issued, fully paid and non-assessable.
6.4.5 Fractional Shares. No fractional Ordinary Shares shall be issued upon conversion of the Series A Non-Voting Preferred Shares, no certificates or scrip for any such fractional shares shall be issued and no cash shall be paid for any such fractional shares. Any fractional Ordinary Shares that a Holder of Series A Non-Voting Preferred Shares would otherwise be entitled to receive shall be aggregated with all fractional Ordinary Shares issuable to such Holder and any remaining fractional shares shall be rounded up to the nearest whole share. Whether or not fractional shares would be issuable upon such conversion shall be determined on the basis of the total number of Series A Non-Voting Preferred Shares the Holder is at the time converting into Ordinary Shares and the aggregate number of Ordinary Shares issuable upon such conversion.
6.4.6 Transfer Taxes. The issuance of certificates for Ordinary Shares upon conversion of the Series A Non-Voting Preferred Shares shall be made without charge to any Holder for any documentary stamp or similar taxes that may be payable in respect of the issue or delivery of such certificates, provided that the Company shall not be required to pay any tax that may be payable in respect of any transfer involved in the issuance and delivery of any such certificate upon conversion in a name other than that of the registered Holder(s) of such Series A Non-Voting Preferred Shares and the Company shall not be required to issue or deliver such certificates unless or until the Person or Persons requesting the issuance thereof shall have paid to the Company the amount of such tax or shall have established to the satisfaction of the Company that such tax has been paid.
6.5 Status as Shareholder. Upon each Conversion Date, (i) the Series A Non-Voting Preferred Shares being converted shall be deemed converted into Ordinary Shares and (ii) the Holder’s rights as a holder of such converted Series A Non-Voting Preferred Shares shall cease and terminate, excepting only the right to receive certificates for such Ordinary Shares and to any remedies provided herein or otherwise available at law or in equity to such Holder because of a failure by the Company to comply with the terms of this Certificate of Designation. In all cases, the Holder shall retain all of its rights and remedies for the Company’s failure to convert Series A Non-Voting Preferred Shares.
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7. Certain Adjustments.
7.1 Share Dividends and Share Splits. If the Company, at any time while a Series A Non-Voting Preferred Share is issued and outstanding: (A) pays a share dividend or otherwise makes a distribution or distributions payable in Ordinary Shares (which, for avoidance of doubt, shall not include any Ordinary Shares issued by the Company upon conversion of a Series A Non-Voting Preferred Share) with respect to the then issued and outstanding Ordinary Shares; (B) subdivides outstanding Ordinary Shares into a larger number of shares; or (C) combines (including by way of a share consolidation) issued and outstanding Ordinary Shares into a smaller number of shares, then the Conversion Ratio shall be multiplied by a fraction of which the numerator shall be the number of Ordinary Shares (excluding any treasury shares of the Company) issued and outstanding immediately after such event and of which the denominator shall be the number of Ordinary Shares issued and outstanding immediately before such event (excluding any treasury shares of the Company). Any adjustment made pursuant to this Section 7.1 shall become effective immediately after the record date for the determination of shareholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision or combination.
7.2 Fundamental Transaction. If, at any time while a Series A Non-Voting Preferred Share is issued and outstanding, (A) the Company effects any merger or consolidation of the Company with or into another Person or any share sale to, or other business combination (including, without limitation, a reorganization, recapitalization, spin-off, share exchange or scheme of arrangement) with or into another Person (other than such a transaction in which the Company is the surviving or continuing entity and its Ordinary Shares are not exchanged for or converted into other securities, cash or property), (B) the Company effects any sale, lease, transfer or exclusive license of all or substantially all of its assets in one transaction or a series of related transactions, (C) any tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which more than 50% of the Ordinary Shares not held by the Company or such Person is exchanged for or converted into other securities, cash or property, or (D) the Company effects any reclassification of the Ordinary Shares or any compulsory share exchange pursuant (other than as a result of a dividend, subdivision or combination covered by Section 7.1) to which the Ordinary Shares are effectively converted into or exchanged for other securities, cash or property (in any such case, a “Fundamental Transaction”), then, upon any subsequent conversion of a Series A Non-Voting Preferred Share the Holders shall have the right to receive, in lieu of the right to receive Conversion Shares, for each Conversion Share that would have been issuable upon such conversion immediately prior to the occurrence of such Fundamental Transaction, the same kind and amount of securities, cash or property as it would have been entitled to receive upon the occurrence of such Fundamental Transaction if it had been, immediately prior to such Fundamental Transaction, the holder of one Ordinary Share (the “Alternate Consideration”). For purposes of any such subsequent conversion, the determination of the Conversion Ratio shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one Ordinary Share in such Fundamental Transaction, and the Company shall adjust the Conversion Ratio in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Ordinary Shares are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holders shall be given the same choice as to the Alternate Consideration it receives upon any conversion of a Series A Non-Voting Preferred Share following such Fundamental Transaction. To the extent necessary to effectuate the foregoing provisions, any successor to the Company or surviving entity in such Fundamental Transaction shall file a new certificate of designation with the same terms and conditions and issue to the Holders new preferred shares consistent with the foregoing provisions and evidencing the Holders’ right to convert such preferred shares into Alternate Consideration. The terms of any agreement to which the Company is a party and pursuant to which a Fundamental Transaction is effected shall include terms requiring any such successor or surviving entity to comply with the provisions of this Section 7.2 and insuring that this Series A Non-Voting Preferred Shares (or any such replacement security) will be similarly adjusted upon any subsequent transaction analogous to a Fundamental Transaction. The Company shall cause to be delivered to each Holder, at its last address as it shall appear upon the register of members of the Company (the “Register of Members”), written notice of any Fundamental Transaction at least 20 calendar days prior to the date on which such Fundamental Transaction is expected to become effective or close.
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7.3 Calculations. All calculations under this Section 7 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 7, the number of Ordinary Shares deemed to be issued and outstanding as of a given date shall be the sum of the number of Ordinary Shares (excluding any treasury shares of the Company) issued and outstanding.
8. Redemption. The Series A Non-Voting Preferred Shares shall not be redeemable; provided, however, that the foregoing shall not limit the ability of the Company to purchase or otherwise deal in such shares to the extent otherwise permitted hereby and under the Articles.
9. Transfer. Subject to the Articles, a Holder may transfer any Series A Non-Voting Preferred Shares together with the accompanying rights set forth herein, held by such holder without the consent of the Company; provided that such transfer is in compliance with applicable securities laws. The Company shall in good faith (i) do and perform, or cause to be done and performed, all such further acts and things, and (ii) execute and deliver all such other agreements, certificates, instruments and documents, in each case, as any holder of Series A Non-Voting Preferred Shares may reasonably request in order to carry out the intent and accomplish the purposes of this Section 9. The transferee of any Series A Non-Voting Preferred Shares shall be subject to the Beneficial Ownership Limitation applicable to the transferor as of the time of such transfer.
10. Series A Non-Voting Preferred Shares Register. The Company shall maintain at its principal executive offices (or such other office or agency of the Company as it may designate by notice to the Holders in accordance with Section 11), a register for the Series A Non-Voting Preferred Shares, in which the Company shall record (i) the name, address, and electronic mail address of each holder in whose name the Series A Non-Voting Preferred Shares have been issued and (ii) the name, address, and electronic mail address of each transferee of any Series A Non-Voting Preferred Shares. The Company may deem and treat the registered Holder of Series A Non-Voting Preferred Shares as the absolute owner thereof for the purpose of any conversion thereof and for all other purposes. The Company shall keep the register open and available at all times during business hours for inspection by any holder of Series A Non-Voting Preferred Shares or his, her or its legal representatives.
11. Notices. Any notice required or permitted by the provisions of this Certificate of Designation to be given to a Holder of Series A Non-Voting Preferred Shares shall be mailed, postage prepaid, to the post office address last shown on the records of the Company, or given by electronic communication in compliance with the provisions of the Articles, and shall be deemed sent upon such mailing or electronic transmission.
12. Book-Entry; Certificates. The Series A Non-Voting Preferred Shares will be issued in book-entry form; provided that, if a Holder requests that such Holder’s Series A Non-Voting Preferred Shares be issued in certificated form, the Company will instead issue a share certificate to such Holder representing such Holder’s Series A Non-Voting Preferred Shares. To the extent that any Series A Non-Voting Preferred Shares are issued in book-entry form, references herein to “certificates” shall instead refer to the book-entry notation relating to such shares.
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13. Lost or Mutilated Series A Non-Voting Preferred Shares Certificate. If a Holder’s Series A Non-Voting Convertible Preferred Share certificate shall be mutilated, lost, stolen or destroyed, the Company shall execute and deliver, in exchange and substitution for and upon cancellation of a mutilated certificate, or in lieu of or in substitution for a lost, stolen or destroyed certificate, a new certificate for the Series A Non-Voting Convertible Preferred Shares so mutilated, lost, stolen or destroyed, but only upon receipt of evidence of such loss, theft or destruction of such certificate, and of the ownership hereof reasonably satisfactory to the Company.
14. Waiver. Any waiver by the Company or a Holder of a breach of any provision of this Certificate of Designation shall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Certificate of Designation or a waiver by any other Holders. The failure of the Company or a Holder to insist upon strict adherence to any term of this Certificate of Designation on one or more occasions shall not be considered a waiver or deprive that party (or any other Holder) of the right thereafter to insist upon strict adherence to that term or any other term of this Certificate of Designation. Any waiver by the Company or a Holder must be in writing. Notwithstanding any provision in this Certificate of Designation to the contrary, any provision contained herein and any right of the Holders of Series A Non-Voting Preferred Shares granted hereunder may be waived as to all Series A Non-Voting Preferred Shares (and the Holders thereof) upon the written consent or resolution of the Holders of not less than a simple majority of the Series A Non-Voting Preferred Shares then issued and outstanding, provided, however, that the Beneficial Ownership Limitation applicable to a Holder, and any provisions contained herein that are related to such Beneficial Ownership Limitation, cannot be modified, waived or terminated without the consent of such Holder, provided further, that any proposed waiver that would, by its terms, have a disproportionate and materially adverse effect on any Holder shall require the consent of such Holder(s).
15. Severability. Whenever possible, each provision hereof shall be interpreted in a manner as to be effective and valid under applicable law, but if any provision hereof is held to be prohibited by or invalid under applicable law, then such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating or otherwise adversely affecting the remaining provisions hereof.
16. Status of Converted Series A Non-Voting Preferred Shares. If any Series A Non-Voting Preferred Shares shall be converted, repurchased, surrendered or redeemed by the Company, such shares shall, to the fullest extent permitted by applicable law and in accordance with the Articles, be repurchased, surrendered or redeemed (as applicable) and automatically cancelled, and shall not be reissued as a Series A Non-Voting Preferred Share. Immediately upon its cancellation, any such Series A Non-Voting Preferred Share shall no longer be designated as a Series A Non-Voting Preferred Share and shall form part of the authorized but unissued share capital of the Company.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, Crescent Biopharma, Inc. has caused this Certificate of Designation of Preferences, Rights and Limitations of Series A Non-Voting Convertible Preferred Shares to be duly executed on its behalf by its director on 16 June 2025.
| CRESCENT BIOPHARMA, INC. | ||
| By: | /s/ Joshua Brumm | |
| Name: | Joshua Brumm | |
| Title: | Chief Executive Officer | |
ANNEX A
NOTICE OF CONVERSION
(TO BE EXECUTED BY THE REGISTERED HOLDER IN ORDER TO CONVERT SERIES A NON-VOTING CONVERTIBLE PREFERRED SHARES)
The undersigned Holder hereby irrevocably elects to convert the number of Series A Non-Voting Preferred Shares indicated below, represented in book-entry form, into Ordinary Shares, par value $0.001 per share (the “Ordinary Shares”), of Crescent Biopharma, Inc., an exempted company incorporated in the Cayman Islands with limited liability (the “Company”), on the date written below. If securities are to be issued in the name of a Person other than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto. Capitalized terms utilized but not defined herein shall have the meaning ascribed to such terms in that certain Certificate of Designation of Preferences, Rights and Limitations of Series A Non-Voting Convertible Preferred Shares (the “Certificate of Designation”) or the memorandum and articles of association of the Company, adopted by special resolution passed on 5 June 2025 and effective as of 16 June 2025 (as amended from time to time, the “Articles”).
On the date hereof, the number of Ordinary Shares beneficially owned by the undersigned Holder (together with such Holder’s Attribution Parties), including the number of Ordinary Shares issuable upon conversion of the Series A Non-Voting Preferred Shares subject to this Notice of Conversion, but excluding the number of Ordinary Shares which are issuable upon (A) conversion of the remaining, unconverted Series A Non-Voting Preferred Shares beneficially owned by such Holder or any of its Attribution Parties, and (B) exercise or conversion of the unexercised or unconverted portion of any other securities of the Company (including any warrants) beneficially owned by such Holder or any of its Attribution Parties that are subject to a limitation on conversion or exercise similar to the limitation contained in Section 6.3 of the Certificate of Designation, is _____. For purposes hereof, beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the applicable regulations of the Commission. In addition, for purposes hereof, “group” has the meaning set forth in Section 13(d) of the Exchange Act and the applicable regulations of the Commission.
CONVERSION CALCULATIONS:
| Date to Effect Conversion: | |
| Number of Series A Non-Voting Preferred Shares owned prior to Conversion: | |
| Number of Series A Non-Voting Preferred Shares to be Converted: | |
| Number of Ordinary Shares to be Issued: | |
| Address for delivery of physical certificates: |
For DWAC Delivery, please provide the following:
| Broker No.: | |||
| Account No.: | |||
| [HOLDER] | ||
| By: | ||
| Name: | ||
| Title: | ||
Exhibit 10.5
INDEMNIFICATION AGREEMENT
This Indemnification Agreement (this “Agreement”) is entered into on June __, 2025 by and between Crescent Biopharma, Inc. a Cayman Islands exempted company (the “Company”) and __________ (the “Indemnitee”). Notwithstanding the date of execution of this Agreement, each of the parties hereto agrees that their respective rights, duties and obligations pursuant to this Agreement shall come into effect upon the earliest date that the Indemnitee is duly elected or appointed as a director or officer of the Company.
RECITALS
WHEREAS, the Board of Directors of the Company (the “Board”) has determined that the inability to attract and retain qualified persons as directors and officers is detrimental to the best interests of the Company and that the Company should act to assure such persons that there shall be adequate certainty of protection through insurance and indemnification against risks of claims and actions against them arising out of their service to and activities on behalf of the Company;
WHEREAS, provisions in the Company’s memorandum and articles of association (as may be amended or restated from time to time, the “Articles”) provide for indemnification and advancement of expenses of its directors and officers to the fullest extent authorized by applicable law, and the Company wishes to clarify and enhance the rights and obligations of the Company and the Indemnitee with respect to indemnification and advancement of expenses;
WHEREAS, in order to induce and encourage highly experienced and capable persons such as the Indemnitee to serve and continue to serve as directors and officers of the Company and in any other capacity with respect to the Company as the Company may request, and to otherwise promote the desirable end that such persons shall resist what they consider unjustified lawsuits and claims made against them in connection with the good faith performance of their duties to the Company, with the knowledge that certain costs, judgments, penalties, fines, liabilities and expenses incurred by them in their defense of such litigation are to be borne by the Company and they shall receive appropriate protection against such risks and liabilities, the Board has determined that the following Agreement is reasonable and prudent to promote and ensure the best interests of the Company; and
WHEREAS, the Company desires to have the Indemnitee serve or continue to serve as a director or officer of the Company and in any other capacity with respect to the Company as the Company may request, as the case may be, free from undue concern for unpredictable, inappropriate, or unreasonable legal risks and personal liabilities by reason of the Indemnitee acting in good faith in the performance of the Indemnitee’s duty to the Company; and the Indemnitee desires to continue so to serve the Company, provided, and on the express condition, that he or she is furnished with the protections set forth hereinafter.
AGREEMENT
NOW, THEREFORE, in consideration of the Indemnitee’s service or continued service as a director or officer of the Company, the parties hereto agree as follows:
1. Definitions. For purposes of this Agreement:
(a) A “Change in Control” will be deemed to have occurred if, with respect to any particular 24-month period, the individuals who, at the beginning of such 24-month period, constituted the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the beginning of such 24-month period whose election, or nomination for election by the shareholders of the Company, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a person other than the Board.
(b) “Disinterested Director” means a director of the Company who is not or was not a party to the Proceeding in respect of which indemnification is being sought by the Indemnitee.
(c) “Expenses” includes, without limitation, expenses incurred in connection with the defense or settlement of any action, suit, arbitration, alternative dispute resolution mechanism, inquiry, judicial, administrative, or legislative hearing, investigation, or any other threatened, pending, or completed proceeding, whether brought by or in the right of the Company or otherwise, including any and all appeals, whether of a civil, criminal, administrative, legislative, investigative, or other nature, attorneys’ fees, witness fees and expenses, fees and expenses of accountants and other advisors, retainers and disbursements and advances thereon, the premium, security for, and other costs relating to any bond (including cost bonds, appraisal bonds, or their equivalents), and any expenses of establishing a right to indemnification or advancement under this Agreement, but shall not include the amount of judgments, fines, ERISA excise taxes, or penalties actually levied against the Indemnitee, or any amounts paid in settlement by or on behalf of the Indemnitee.
(d) “Independent Counsel” means a law firm or a member of a law firm that neither is presently nor in the past five years has been retained to represent (i) the Company or the Indemnitee in any matter material to either such party or (ii) any other party to the Proceeding giving rise to a request for indemnification hereunder. Notwithstanding the foregoing, the term “Independent Counsel” shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or the Indemnitee in an action to determine the Indemnitee’s right to indemnification under this Agreement.
(e) “Proceeding” means any action, suit, arbitration, alternative dispute resolution mechanism, inquiry, judicial, administrative, or legislative hearing, investigation, or any other threatened, pending, or completed proceeding, whether brought by or in the right of the Company or otherwise, including any and all appeals, whether of a civil, criminal, administrative, legislative, investigative, or other nature, to which the Indemnitee was or is a party or is threatened to be made a party or is otherwise involved in by reason of the fact that the Indemnitee is or was a director, officer, employee, agent, or trustee of the Company or while a director, officer, employee, agent, or trustee of the Company is or was serving at the request of the Company as a director, officer, employee, agent, or trustee of another corporation or of a partnership, joint venture, trust, or other enterprise, including service with respect to an employee benefit plan (such status, the Indemnitee’s “Corporate Status”), or by reason of anything done or not done by the Indemnitee in any such capacity, whether or not the Indemnitee is serving in such capacity at the time any expense, liability, or loss is incurred for which indemnification or advancement can be provided under this Agreement.
2. Service by the Indemnitee. The Indemnitee shall serve and/or continue to serve as a director or officer of the Company faithfully and to the best of the Indemnitee’s ability so long as the Indemnitee is duly elected or appointed in accordance with the Articles.
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3. Indemnification and Advancement of Expenses. The Company shall indemnify and hold harmless the Indemnitee, and shall pay to the Indemnitee in advance of the final disposition of any Proceeding all Expenses incurred by the Indemnitee in defending any such Proceeding, to the fullest extent permitted by the Articles and applicable law, as the same exists or may hereafter be amended, all on the terms and conditions set forth in this Agreement. Without diminishing the scope of the rights provided by this Section, the rights of the Indemnitee to indemnification and advancement of Expenses provided hereunder shall include but shall not be limited to those rights hereinafter set forth, except that no indemnification or advancement of Expenses shall be paid to the Indemnitee:
(a) to the extent expressly prohibited by applicable law or the Articles;
(b) for and to the extent that payment is actually made to the Indemnitee under a valid and collectible insurance policy or under a valid and enforceable indemnity clause or provision in the Articles, or agreement of the Company or any other company or other enterprise (and the Indemnitee shall reimburse the Company for any amounts paid by the Company and subsequently so recovered by the Indemnitee); or
(c) in connection with an action, suit, or proceeding, or part thereof voluntarily initiated by the Indemnitee (including claims and counterclaims, whether such counterclaims are asserted by (i) the Indemnitee, or (ii) the Company in an action, suit, or proceeding initiated by the Indemnitee), except a judicial proceeding to enforce rights under this Agreement, unless (A) the action, suit, or proceeding, or part thereof, was authorized or ratified by the Board or the Board otherwise determines that indemnification or advancement of Expenses is appropriate or (B) the Company provides the indemnification, in its sole discretion, pursuant to the powers vested in the Company under applicable law.
4. Action or Proceedings Other than an Action by or in the Right of the Company. To the fullest extent permitted by applicable law and the Articles, and except as limited by Section 3 above, the Indemnitee shall be entitled to the indemnification rights provided in this Section if the Indemnitee was or is a party or is threatened to be made a party to, or was or is otherwise involved in, any Proceeding (other than an action by or in the right of the Company) by reason of the Indemnitee’s Corporate Status, or by reason of anything done or not done by the Indemnitee in any such capacity. To the fullest extent permitted by applicable law and the Articles, pursuant to this Section, the Indemnitee shall be indemnified against all expense, liability, and loss (including judgments, fines, ERISA excise taxes or penalties, amounts paid in settlement by or on behalf of the Indemnitee, and Expenses) actually and reasonably incurred by the Indemnitee, or on behalf of the Indemnitee, in connection with such Proceeding, if the Indemnitee acted in good faith and in a manner the Indemnitee reasonably believed to be in or not opposed to the best interests of the Company, and with respect to any criminal Proceeding, had no reasonable cause to believe his or her conduct was unlawful.
5. Indemnity in Proceedings by or in the Right of the Company. To the fullest extent permitted by applicable law and the Articles, except as limited by Section 3 above, the Indemnitee shall be entitled to the indemnification rights provided in this Section if the Indemnitee was or is a party or is threatened to be made a party to, or was or is otherwise involved in, any Proceeding brought by or in the right of the Company to procure a judgment in its favor by reason of the Indemnitee’s Corporate Status, or by reason of anything done or not done by the Indemnitee in any such capacity. To the fullest extent permitted by applicable law and the Articles, pursuant to this Section, the Indemnitee shall be indemnified against all Expenses actually and reasonably incurred by the Indemnitee, or on behalf of the Indemnitee, in connection with such Proceeding if the Indemnitee acted in good faith and in a manner the Indemnitee reasonably believed to be in or not opposed to the best interests of the Company; provided, however, that no such indemnification shall be made in respect of any claim, issue, or matter as to which a court expressly prohibits such indemnification by reason of any adjudication of liability of the Indemnitee to the Company, unless and only to the extent that a court in which such Proceeding shall be finally adjudged shall have determined upon application that, despite an adjudication of liability but in view of all the circumstances of the case, the Indemnitee is entitled to indemnification for such expense, liability, and loss as such court shall deem proper.
6. Indemnification for Costs, Charges, and Expenses of Successful Party. Notwithstanding any limitations of Sections 3(c), 4, and 5 above, to the extent that the Indemnitee has been successful, on the merits or otherwise, in whole or in part, in defense of any Proceeding, or in defense of any claim, issue, or matter therein, including, without limitation, the dismissal of any action without prejudice, or if it is ultimately determined, by final judicial decision of a court of competent jurisdiction from which there is no further right to appeal, that the Indemnitee is otherwise entitled to be indemnified against Expenses, to the fullest extent permitted by applicable law or the Articles, the Indemnitee shall be indemnified against all Expenses actually and reasonably incurred by the Indemnitee in connection therewith.
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7. Partial Indemnification. If the Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for some or a portion of the expense, liability, and loss (including judgments, fines, ERISA excise taxes or penalties, amounts paid in settlement by or on behalf of the Indemnitee, and Expenses) actually and reasonably incurred in connection with any Proceeding, or in connection with any judicial proceeding to enforce rights under this Agreement, but not, however, for all of the total amount thereof, the Company shall nevertheless indemnify the Indemnitee for the portion of such expense, liability, and loss actually and reasonably incurred to which the Indemnitee is entitled.
8. Indemnification for Expenses of a Witness. Notwithstanding any other provision of this Agreement, to the maximum extent permitted by applicable law or the Articles, the Indemnitee shall be entitled to indemnification against all Expenses actually and reasonably incurred by the Indemnitee or on the Indemnitee’s behalf if the Indemnitee appears as a witness or otherwise incurs legal expenses as a result of or related to the Indemnitee’s service as a director or officer of the Company, in any threatened, pending, or completed action, suit, arbitration, alternative dispute resolution mechanism, inquiry, judicial, administrative, or legislative hearing, investigation, or any other threatened, pending, or completed proceeding, whether of a civil, criminal, administrative, legislative, investigative, or other nature, to which the Indemnitee neither is, nor is threatened to be made, a party.
9. Determination of Entitlement to Indemnification. To receive indemnification under this Agreement, the Indemnitee shall submit a written request to the Secretary of the Company. Such request shall include documentation or information that is necessary for such determination and is reasonably available to the Indemnitee. Upon receipt by the Secretary of the Company of a written request by the Indemnitee for indemnification pursuant to this Agreement, the entitlement of the Indemnitee to indemnification, to the extent not provided pursuant to the terms of this Agreement and permitted by the Articles, shall be determined by the following person or persons who shall be empowered to make such determination (as selected by the Board, except with respect to Section 9(e) below): (a) the Board by a majority vote of Disinterested Directors, whether or not such majority constitutes a quorum; (b) a committee of Disinterested Directors designated by a majority vote of such directors, whether or not such majority constitutes a quorum; (c) if there are no Disinterested Directors, or if the Disinterested Directors so direct, by Independent Counsel in a written opinion to the Board, a copy of which shall be delivered to the Indemnitee; (d) the shareholders of the Company; or (e) in the event that a Change in Control has occurred, by Independent Counsel in a written opinion to the Board, a copy of which shall be delivered to the Indemnitee. Such Independent Counsel shall be selected by the Board and approved by the Indemnitee, except that in the event that a Change in Control has occurred, Independent Counsel shall be selected by the Indemnitee. Upon failure of the Board so to select such Independent Counsel or upon failure of the Indemnitee so to approve (or so to select, in the event a Change in Control has occurred), such Independent Counsel shall be selected upon application to a court of competent jurisdiction. The determination of entitlement to indemnification shall be made and, unless a contrary determination is made, such indemnification shall be paid in full by the Company not later than 60 calendar days after receipt by the Secretary of the Company of a written request for indemnification. If the person making such determination shall determine that the Indemnitee is entitled to indemnification as to part (but not all) of the application for indemnification, such person shall reasonably prorate such partial indemnification among the claims, issues, or matters at issue at the time of the determination.
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10. Presumptions and Effect of Certain Proceedings. The Secretary of the Company shall, promptly upon receipt of the Indemnitee’s written request for indemnification, advise in writing, the Board or such other person or persons empowered to make the determination as provided in Section 9 that the Indemnitee has made such request for indemnification. Upon making such request for indemnification, the Indemnitee shall be presumed to be entitled to indemnification hereunder. If the Company wishes to overcome this presumption it must do so by clear and convincing evidence. If the person or persons so empowered to make such determination shall have failed to make the requested determination with respect to indemnification within 60 calendar days after receipt by the Secretary of the Company of such request, a requisite determination of entitlement to indemnification shall be deemed to have been made and the Indemnitee shall be absolutely entitled to such indemnification, absent actual fraud in the request for indemnification. The termination of any Proceeding described in Sections 4 or 5 by judgment, order, settlement, or conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself (a) create a presumption that the Indemnitee did not act in good faith and in a manner the Indemnitee reasonably believed to be in or not opposed to the best interests of the Company, or with respect to any criminal Proceeding, had reasonable cause to believe his or her conduct was unlawful or (b) otherwise adversely affect the rights of the Indemnitee to indemnification except as may be provided herein.
11. Non-Exclusivity of Rights; Survival of Rights; Insurance; Subrogation.
(a) The rights provided by this Agreement shall not be deemed exclusive of any other rights to which the Indemnitee may at any time be entitled under applicable law, the Articles, any agreement, a vote of shareholders, a resolution of the Board, or otherwise. No amendment, alteration or repeal of this Agreement or of any provision of this Agreement shall limit or restrict any right of the Indemnitee under this Agreement in respect of any action taken or omitted by the Indemnitee in his or her Corporate Status prior to such amendment, alteration or repeal. To the extent that a change in applicable law, whether by statute or judicial decision, permits greater indemnification than would be afforded under the current Articles and this Agreement, it is the intent of the parties hereto that the Indemnitee shall enjoy by this Agreement the greater benefits so afforded by such change. No right or remedy herein conferred is intended to be exclusive of any other right or remedy, and every other right and remedy shall be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other right or remedy.
(b) To the extent that the Company maintains an insurance policy or policies providing liability insurance for directors, officers, employees, or agents or fiduciaries of the Company or of any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise that such person serves at the request of the Company, the Company shall obtain coverage for the Indemnitee under such policy or policies in accordance with its or their terms to the maximum extent of the coverage available for any other director (if the Indemnitee is a director) or officer (if the Indemnitee is not a director but is an officer) of the Company under such policy or policies. If, at the time of the receipt of a notice of a claim pursuant to the terms of this Agreement, the Company has director and officer liability insurance in effect, the Company shall give notice of the commencement of such proceeding to the insurers in accordance with the procedures set forth in the respective policies. The Company shall thereafter take all commercially reasonable steps to cause such insurers to pay, on behalf of the Indemnitee, all amounts payable as a result of such proceeding in accordance with the terms of such policies.
(c) In the event of any payment under this Agreement, [subject to the exceptions contained in Section 11(d) below,]1 the Company shall be subrogated to the extent of such payment to all of the rights of recovery of the Indemnitee, who shall execute all papers required and take all action necessary to secure such rights, including execution of such documents as are necessary to enable the Company effectively to bring suit to enforce such rights.
1 Note to Draft: This clause will only apply to directors who are separately indemnified by an entity in connection with their appointment to the Board.
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(d) [The Company hereby acknowledges that Indemnitee has certain rights to indemnification, advancement of expenses and/or insurance provided by ____________ and/or [their] affiliates (collectively, the “Designee Indemnitors”). The Company hereby agrees (i) that it is the indemnitor of first resort vis-à-vis the Designee Indemnitors (i.e., its obligations to Indemnitee are primary and any obligation of the Designee Indemnitors to advance expenses or to provide indemnification for the same expenses or liabilities incurred by Indemnitee are secondary), (ii) that it shall be required to advance the full amount of Expenses incurred by Indemnitee and shall be liable for the full amount of all indemnity amounts to the extent required by the terms of this Agreement and the Articles, without regard to any rights Indemnitee may have against the Designee Indemnitors, and (iii) notwithstanding any other provision in this Agreement or the Articles, that it irrevocably waives, relinquishes and releases the Designee Indemnitors from any and all claims against the Designee Indemnitors for contribution, subrogation or any other recovery of any kind in respect thereof. The Company further agrees that no advancement or payment by the Designee Indemnitors on behalf of Indemnitee with respect to any claim for which Indemnitee has sought indemnification from the Company shall affect the foregoing and the Designee Indemnitors shall have a right of contribution and/or be subrogated to the extent of such advancement or payment to all of the rights of recovery of Indemnitee against the Company. The Designee Indemnitors are express third-party beneficiaries of this Section 11(d).]2
(e) The Company shall not be liable under this Agreement to make any payment of amounts otherwise indemnifiable hereunder if and to the extent that the Indemnitee has otherwise actually received such payment under any insurance policy, contract, agreement or otherwise.
(f) The Company’s obligation to indemnify or advance Expenses hereunder to the Indemnitee who is or was serving at the request of the Company as a director, officer, employee or agent of any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise shall be reduced by any amount the Indemnitee has actually received as indemnification or advancement of expenses from such other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise.
12. Expenses to Enforce Agreement. In the event that the Indemnitee is subject to or intervenes in any action, suit, or proceeding in which the validity or enforceability of this Agreement is at issue, or to recover damages for breach of, this Agreement, the Indemnitee, if the Indemnitee prevails in whole or in part in such action, suit, or proceeding, shall be entitled to recover from the Company and shall be indemnified by the Company against any Expenses actually and reasonably incurred by the Indemnitee in connection therewith.
13. Continuation of Indemnity. All agreements and obligations of the Company contained herein shall continue during the period the Indemnitee is a director, officer, employee, agent, or trustee of the Company or while a director, officer, employee, agent, or trustee is serving at the request of the Company as a director, officer, employee, agent, or trustee of another corporation or of a partnership, joint venture, trust, or other enterprise, including service with respect to an employee benefit plan, and shall continue thereafter with respect to any possible claims based on the fact that the Indemnitee was a director, officer, employee, agent, or trustee of the Company or was serving at the request of the Company as a director, officer, employee, agent, or trustee of another corporation or of a partnership, joint venture, trust, or other enterprise, including service with respect to an employee benefit plan. This Agreement shall be binding upon all successors and assigns of the Company (including any transferee of all or substantially all of its assets and any successor by merger or operation of law) and shall inure to the benefit of the Indemnitee’s heirs, executors, and administrators.
2 Note to Draft: This clause will only apply to directors who are separately indemnified by an entity in connection with their appointment to the Board.
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14. Notification and Defense of Proceeding. Promptly after receipt by the Indemnitee of notice of any Proceeding, the Indemnitee shall, if a request for indemnification or an advancement of Expenses in respect thereof is to be made against the Company under this Agreement, notify the Company in writing of the commencement thereof; but the omission so to notify the Company shall not relieve it from any liability that it may have to the Indemnitee unless, and to the extent that, such failure actually and materially prejudices the interests of the Company. Notwithstanding any other provision of this Agreement, with respect to any such Proceeding of which the Indemnitee notifies the Company:
(a) The Company shall be entitled to participate therein at its own expense;
(b) Except as otherwise provided in this Section 14(b), to the extent that it may wish, the Company, jointly with any other indemnifying party similarly notified, shall be entitled to assume the defense thereof, with counsel satisfactory to the Indemnitee. After notice from the Company to the Indemnitee of its election so to assume the defense thereof, the Company shall not be liable to the Indemnitee under this Agreement for any expenses of counsel subsequently incurred by the Indemnitee in connection with the defense thereof except as otherwise provided below. The Indemnitee shall have the right to employ the Indemnitee’s own counsel in such Proceeding, but the fees and expenses of such counsel incurred after notice from the Company of its assumption of the defense thereof shall be at the expense of the Indemnitee unless (i) the employment of counsel by the Indemnitee has been authorized by the Company, (ii) the Indemnitee shall have reasonably concluded that there may be a conflict of interest between the Company and the Indemnitee in the conduct of the defense of such Proceeding, or (iii) the Company shall not within 60 calendar days of receipt of notice from the Indemnitee in fact have employed counsel to assume the defense of the Proceeding, in each of which cases the fees and expenses of the Indemnitee’s counsel shall be at the expense of the Company. The Company shall not be entitled to assume the defense of any Proceeding brought by or on behalf of the Company or as to which the Indemnitee shall have made the conclusion provided for in (ii) above; and
(c) Notwithstanding any other provision of this Agreement, the Company shall not be liable to indemnify the Indemnitee under this Agreement for any amounts paid in settlement of any Proceeding effected without the Company’s written consent, or for any judicial or other award, if the Company was not given an opportunity, in accordance with this Section 14, to participate in the defense of such Proceeding. The Company shall not settle any Proceeding in any manner that would impose any penalty or limitation on or disclosure obligation with respect to the Indemnitee, or that would directly or indirectly constitute or impose any admission or acknowledgment of fault or culpability with respect to the Indemnitee, without the Indemnitee’s written consent. Neither the Company nor the Indemnitee shall unreasonably withhold its consent to any proposed settlement.
15. Advancement of Expenses. All Expenses incurred by the Indemnitee in defending any Proceeding described in Sections 4 or 5 shall be paid by the Company in advance of the final disposition of such Proceeding at the request of the Indemnitee. Notwithstanding the foregoing, the Company shall not advance or continue to advance Expenses to the Indemnitee if a determination is reasonably made that the facts known at the time such determination is made demonstrate clearly and convincingly that the Indemnitee acted in bad faith or in a manner that the Indemnitee did not reasonably believe to be in or not opposed to the best interests of the Company, or, with respect to any criminal Proceeding, that the Indemnitee had reasonable cause to believe his or her conduct was unlawful. Such determination shall be made: (i) by the Board by a majority vote of directors who are not parties to such proceeding, whether or not such majority constitutes a quorum; (ii) by a committee of such directors designated by a majority vote of such directors, whether or not such majority constitutes a quorum; or (iii) if there are no such directors, or if such directors so direct, by independent legal counsel in a written opinion to the Board, a copy of which shall be delivered to the Indemnitee. To receive an advancement of Expenses under this Agreement, the Indemnitee shall submit a written request to the Secretary of the Company. Such request shall reasonably evidence the Expenses incurred by the Indemnitee and shall include or be accompanied by an undertaking, by or on behalf of the Indemnitee, to repay all amounts so advanced if it shall ultimately be determined, by final judicial decision of a court of competent jurisdiction from which there is no further right to appeal, that the Indemnitee is not entitled to be indemnified for such Expenses by the Company as provided by this Agreement or otherwise. The Indemnitee’s undertaking to repay any such amounts is not required to be secured. Each such advancement of Expenses shall be made within 20 calendar days after the receipt by the Secretary of the Company of such written request. The Indemnitee’s entitlement to Expenses under this Agreement shall include those incurred in connection with any action, suit, or proceeding by the Indemnitee pursuant to this Agreement (including the enforcement of this provision) to the extent the court shall determine that the Indemnitee is entitled to an advancement of Expenses hereunder.
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16. Severability; Prior Indemnification Agreements. If any provision or provisions of this Agreement shall be held to be invalid, illegal, or unenforceable as applied to any person or entity or circumstance for any reason whatsoever, then, to the fullest extent permitted by law (a) the validity, legality, and enforceability of such provision in any other circumstance and of the remaining provisions of this Agreement (including, without limitation, all portions of any paragraphs of this Agreement containing any such provision held to be invalid, illegal, or unenforceable, that are not by themselves invalid, illegal, or unenforceable) and the application of such provision to other persons or entities or circumstances shall not in any way be affected or impaired thereby, and (b) to the fullest extent possible, the provisions of this Agreement (including, without limitation, all portions of any paragraph of this Agreement containing any such provision held to be invalid, illegal, or unenforceable, that are not themselves invalid, illegal, or unenforceable) shall be construed so as to give effect to the intent of the parties that the Company provide protection to the Indemnitee to the fullest enforceable extent set forth in this Agreement. This Agreement shall supersede and replace any prior indemnification agreements entered into by and between the Company and the Indemnitee and any such prior agreements shall be terminated upon execution of this Agreement.
17. Headings; References; Pronouns. The headings of the sections of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction thereof. References herein to section numbers are to sections of this Agreement. All pronouns and any variations thereof shall be deemed to refer to the singular or plural as appropriate.
18. Other Provisions.
(a) This Agreement and all disputes or controversies arising out of or related to this Agreement shall be governed by, and construed in accordance with, the laws of the Cayman Islands, without regard to the laws of any other jurisdiction that might be applied because of conflicts of laws rules , unless, if the Indemnitee is an employee of the Company, otherwise required by the law of the state in which the Indemnitee primarily resides and works. The Company and Indemnitee hereby irrevocably and unconditionally (i) agree that any action or proceeding arising out of or in connection with this Agreement shall be brought only in the courts of the Cayman Islands, and not in any other court in any other country, (ii) generally and unconditionally consent to submit to the exclusive jurisdiction of the courts of the Cayman Islands for purposes of any action or proceeding arising out of or in connection with this Agreement, (iii) waive any objection to the laying of venue of any such action or proceeding in the courts of the Cayman Islands, and (iv) waive, and agree not to plead or to make, any claim that any such action or proceeding brought in the courts of the Cayman Islands has been brought in an improper or inconvenient forum. The foregoing consent to the exclusive jurisdiction of the courts of the Cayman Islands shall not constitute general consent to service of process for any purpose except as provided above, and shall not be deemed to confer rights on any person other than the parties to this Agreement.
(b) This Agreement may be executed in two or more counterparts, all of which shall be considered one and the same instrument and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other party.
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(c) This Agreement shall not be deemed an employment contract between the Company and any Indemnitee who is an officer of the Company, and, if the Indemnitee is an officer of the Company, the Indemnitee specifically acknowledges that the Indemnitee may be discharged at any time for any reason, with or without cause, and with or without severance compensation, except as may be otherwise provided in a separate written contract between the Indemnitee and the Company.
(d) This Agreement may not be amended, modified, or supplemented in any manner, whether by course of conduct or otherwise, except by an instrument in writing specifically designated as an amendment hereto, signed on behalf of each party. No failure or delay of either party in exercising any right or remedy hereunder shall operate as a waiver thereof, and no single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such right or power, or any course of conduct, shall preclude any other or further exercise thereof or the exercise of any other right or power.
[(e) A person who is not a party to this Agreement has no right under the Cayman Islands’ Contracts (Rights of Third Parties) Act (as amended) (the “Third Party Rights Act”), to enforce directly any term of this Agreement save that, each Designee Indemnitor may enforce directly its rights pursuant to this Agreement subject to and in accordance with the provisions of the Third Party Rights Act. Notwithstanding any other term of this Agreement, the consent of any person who is not a party to this Agreement (including, without limitation, any Designee Indemnitors) shall not be required for any variation, waiver, assignment, novation, release, rescission, termination or settlement under this Agreement at any time.]3
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3 Note to Draft: This clause will only apply to directors who are separately indemnified by an entity in connection with their appointment to the Board.
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IN WITNESS WHEREOF, the Company and the Indemnitee have caused this Agreement to be executed on the date first written above.
| CRESCENT BIOPHARMA, INC. | ||
| By: | ||
| Name: | ||
| Title: | ||
| Indemnitee: | ||
[Signature Page To Indemnification Agreement]
Exhibit 10.7
CRESCENT BIOPHARMA, INC.
2025 STOCK INCENTIVE PLAN
| 1. | Purpose |
The purpose of this Crescent Biopharma, Inc. 2025 Stock Incentive Plan (the “Plan”) is to promote and closely align the interests of employees, officers, non-employee directors and other individual service providers of Crescent Biopharma, Inc. and its shareholders by providing share-based compensation and other performance-based compensation. The objectives of the Plan are to attract and retain the best available employees, officers, non-employee directors and other individual service providers for positions of substantial responsibility and to motivate Participants to optimize the profitability and growth of the Company through incentives that are consistent with the Company’s goals and that link the personal interests of Participants to those of the Company’s shareholders. The Plan provides for the grant of Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units and Other Stock-Based Awards and for Incentive Bonuses, which may be paid in cash, Ordinary Shares or a combination thereof, as determined by the Committee.
| 2. | Definitions |
As used in the Plan, the following terms shall have the meanings set forth below:
(a) “Act” means the Securities Exchange Act of 1934, as amended.
(b) “Affiliate” means any entity in which the Company has a substantial direct or indirect equity interest, as determined by the Committee from time to time.
(c) “Award” means an Option, Stock Appreciation Right, Restricted Stock, Restricted Stock Unit, Other Stock-Based Award or Incentive Bonus, or any combination of these, granted to a Participant pursuant to the provisions of the Plan, any of which may be subject to performance conditions.
(d) “Award Agreement” means a written or electronic agreement or other instrument as may be approved from time to time by the Committee and designated as such implementing the grant of each Award. An Award Agreement may be in the form of an agreement to be executed by both the Participant and the Company (or an authorized representative of the Company) or certificates, notices or similar instruments as approved by the Committee and designated as such.
(e) “Beneficial Owner” shall have the meaning set forth in Rule 13d-3 under the Act.
(f) “Board” means the Board of Directors of the Company.
(g) “Cause” has the meaning set forth in the written employment, offer, services or severance agreement or letter between the Participant and the Company or an Affiliate, or in any severance plan in which the Participant participates, or if there is no such agreement or plan or no such term is defined in such agreement or plan, means a Participant’s (i) dishonest statements or acts with respect to the Company or any Affiliate, or any current or prospective customers, suppliers, vendors or other third parties with which such entity does business that results in or is reasonably anticipated to result in material harm to the Company; (ii) conviction or plea of guilty or no contest to: (A) a felony or (B) any misdemeanor involving moral turpitude, deceit, dishonesty or fraud; (iii) failure to perform in all material respects the Participant’s assigned duties and responsibilities; (iv) gross negligence, willful misconduct that results in or is reasonably anticipated to result in material harm to the Company; (v) violation of any material provision of any agreement(s) between the Participant and the Company; or (vi) material violation of any written Company policies.
(h) “Change in Control” means, except as otherwise provided in an Award Agreement, the occurrence of any one of the following events following the Effective Date (and for the avoidance of doubt shall exclude the transactions contemplated by the Merger Agreement):
(i) any Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company (not including the securities beneficially owned by such Person or any securities acquired directly from the Company or its Affiliates) representing 50% or more of the combined voting power of the Company’s then outstanding securities, excluding any Person who becomes such a Beneficial Owner in connection with a transaction described in Section 2(h)(iii)(A) below;
(ii) the following individuals cease for any reason to constitute a majority of the number of directors then serving: (A) individuals who, on the Effective Date (as defined below), constitute the Board and (B) any new director (other than a director whose initial assumption of office is in connection with an actual or threatened election contest, including a consent solicitation, relating to the election of directors of the Company) whose appointment or election by the Board or nomination for election by the Company’s shareholders was approved or recommended by a vote of at least a majority of the directors then still in office who were either directors on the Effective Date or whose appointment, election or nomination for election was previously so approved or recommended;
(iii) there is consummated a merger or consolidation of the Company or any direct or indirect subsidiary of the Company with any other entity, other than (A) a merger or consolidation which would result in the holders of the voting securities of the Company outstanding immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof) at least 50% of the combined voting power of the securities of the Company or such surviving entity or any parent thereof outstanding immediately after such merger or consolidation;
(iv) the implementation of a plan of complete liquidation or dissolution of the Company; or
(v) there is consummated a sale or disposition by the Company of all or substantially all of the Company’s assets, other than a sale or disposition by the Company of all or substantially all of the Company’s assets to an entity, at least 50% of the combined voting power of the voting securities of which is owned by shareholders of the Company in substantially the same proportions as their ownership of the Company immediately prior to such sale.
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(i) “Code” means the Internal Revenue Code of 1986, as amended from time to time, and the rulings and regulations issued thereunder.
(j) “Committee” means the Compensation Committee of the Board (or any successor committee) or such other committee as designated by the Board to administer the Plan under Section 6.
(k) “Company” means Crescent Biopharma, Inc., a Cayman Islands exempted company, and except as utilized in the definition of Change in Control, any successor corporation.
(l) “Disability” has the meaning set forth in a written employment, offer, services or severance agreement or letter between the Participant and the Company or an Affiliate, or in any severance plan in which the Participant participates, or if there is no such agreement or plan or no such term is defined in such agreement or plan, means the inability of the Participant to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment. A determination of Disability shall be made by the Committee on the basis of such medical evidence as the Committee deems warranted under the circumstances, and in this respect, Participants shall submit to an examination by a physician upon request by the Committee.
(m) “Dividend Equivalent” means an amount payable in cash or Ordinary Shares, as determined by the Committee, equal to the dividends that would have been paid to the Participant if the Ordinary Share with respect to which the Dividend Equivalent relates had been owned by the Participant.
(n) “Effective Date” means the date on which the Plan takes effect, as defined pursuant to Section 4.
(o) “Eligible Person” any current or prospective employee, officer, non-employee director or other individual service provider of the Company or any Subsidiary; provided, however, that Incentive Stock Options may only be granted to employees of the Company or any of its “subsidiary corporations” within the meaning of Section 424 of the Code.
(p) “Fair Market Value” means as of any date, the value of the Ordinary Shares determined as follows: (i) if the Ordinary Shares are listed on any established stock exchange, system or market, their Fair Market Value shall be the closing price of an Ordinary Share as quoted on such exchange, system or market as reported in the Wall Street Journal or such other source as the Committee deems reliable (or, if no sale of Ordinary Shares is reported for such date, on the next preceding date on which any sale shall have been reported); and (ii) in the absence of an established market for the Ordinary Shares, the Fair Market Value thereof shall be determined in good faith by the Committee by the reasonable application of a reasonable valuation method, taking into account factors consistent with Treas. Reg. § 409A-1(b)(5)(iv)(B) as the Committee deems appropriate.
(q) “Incentive Bonus” means a bonus opportunity awarded under Section 12 pursuant to which a Participant may become entitled to receive an amount based on satisfaction of such performance criteria established for a specified performance period as specified in the Award Agreement.
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(r) “Incentive Stock Option” means an Option that is intended to qualify as an “incentive stock option” within the meaning of Section 422 of the Code.
(s) “Merger Agreement” means that certain Agreement and Plan of Merger and Reorganization dated as of October 28, 2024 by and among the Company, Gemini Merger Sub Corp., Gemini Merger Sub II, LLC, and Crescent Biopharma, Inc.
(t) “Nonqualified Stock Option” means an Option that is not intended to qualify as an “incentive stock option” within the meaning of Section 422 of the Code.
(u) “Option” means a right to purchase a number of Ordinary Shares at such exercise price, at such times and on such other terms and conditions as are specified in or determined pursuant to an Award Agreement. Options granted pursuant to the Plan may be Incentive Stock Options or Nonqualified Stock Options.
(v) “Ordinary Shares” means the ordinary shares of the Company, $0.001 par value per share, or such other class or kind of shares or other securities as may be applicable under Section 16.
(w) “Other Stock-Based Award” means an Award granted to an Eligible Person under Section 11.
(x) “Outstanding Ordinary Shares” means the sum of (i) the Ordinary Shares outstanding, (ii) the Ordinary Shares underlying unexercised pre-funded warrants, and (iii) the Ordinary Shares underlying the Company’s preferred shares, par value $0.001 (determined on an as-converted basis without regard to any limitations on such conversion).
(y) “Participant” means any Eligible Person to whom Awards have been granted from time to time by the Committee and any authorized transferee of such individual.
(z) “Person” shall have the meaning given in Section 3(a)(9) of the Act, as modified and used in Sections 14(d) and 15(d) thereof, except that such term shall not include (i) the Company or any of its Affiliates, (ii) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any of its Subsidiaries, (iii) an underwriter temporarily holding securities pursuant to an offering of such securities or (iv) a corporation owned, directly or indirectly, by the shareholders of the Company in substantially the same proportions as their ownership of shares of the Company.
(aa) “Restricted Stock” means an Award or issuance of Ordinary Shares the grant, issuance, vesting and/or transferability of which is subject during specified periods of time to such conditions (including continued employment or engagement or performance conditions) and terms as the Committee deems appropriate.
(bb) “Restricted Stock Unit” means an Award denominated in units of Ordinary Shares under which the issuance of such Ordinary Shares (or cash payment in lieu thereof) is subject to such conditions (including continued employment or engagement or performance conditions) and terms as the Committee deems appropriate.
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(cc) “Separation from Service” or “Separates from Service” means a Termination of Employment that constitutes a “separation from service” within the meaning of Section 409A of the Code.
(dd) “Stock Appreciation Right” or “SAR” means a right granted that entitles the Participant to receive, in cash or Ordinary Shares or a combination thereof, as determined by the Committee, value equal to the excess of (i) the Fair Market Value of a specified number of Ordinary Shares at the time of exercise over (ii) the exercise price of the right, as established by the Committee on the date of grant.
(ee) “Subsidiary” means any business association (including a corporation or a partnership, other than the Company) in an unbroken chain of such associations beginning with the Company if each of the associations other than the last association in the unbroken chain owns equity interests (including stock or partnership interests) possessing 50% or more of the total combined voting power of all classes of equity interests in one of the other associations in such chain.
(ff) “Substitute Awards” means Awards granted or Ordinary Shares issued by the Company in assumption of, or in substitution or exchange for, awards previously granted, or the right or obligation to make future awards, by a company acquired by the Company or any Subsidiary or with which the Company or any Subsidiary combines.
(gg) “Termination of Employment” means ceasing to serve as an employee of the Company and its Subsidiaries or, with respect to a non-employee director or other service provider, ceasing to serve as such for the Company and its Subsidiaries, except that with respect to all or any Awards held by a Participant (i) the Committee may determine that a leave of absence (including as a result of a Participant’s short-term or long-term disability or other medical leave) or employment on a less than full-time basis is considered a “Termination of Employment,” (ii) the Committee may determine that a transition from employment to service with a partnership, joint venture or corporation not meeting the requirements of a Subsidiary in which the Company or a Subsidiary is a party is not considered a “Termination of Employment,” (iii) service as a member of the Board shall constitute continued service with respect to Awards granted to a Participant while he or she served as an employee, (iv) service as an employee of the Company or a Subsidiary shall constitute continued employment with respect to Awards granted to a Participant while he or she served as a member of the Board or other service provider, and (v) the Committee may determine that a transition from employment with the Company or a Subsidiary to service to the Company or a Subsidiary other than as an employee shall constitute a “Termination of Employment”. The Committee shall determine whether any corporate transaction, such as a sale or spin-off of a division or Subsidiary that employs or engages a Participant, shall be deemed to result in a Termination of Employment with the Company and its Subsidiaries for purposes of any affected Participant’s Awards, and the Committee’s decision shall be final and binding.
| 3. | Eligibility |
Any Eligible Person is eligible for selection by the Committee to receive an Award.
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| 4. | Effective Date and Termination of Plan |
This Plan became effective on the Closing Date (as defined in the Merger Agreement) (the “Effective Date”). The Plan shall remain available for the grant of Awards until May 11, 2035. Notwithstanding the foregoing, the Plan may be terminated at such earlier time as the Board may determine. Termination of the Plan will not affect the rights and obligations of the Participants and the Company arising under Awards theretofore granted.
| 5. | Shares Subject to the Plan and to Awards |
(a) Aggregate Limits. The aggregate number of Ordinary Shares issuable under the Plan shall be equal to (i) 12% of the total number of Outstanding Ordinary Shares immediately following the closing of the transactions set forth in the Merger Agreement plus (ii) any Ordinary Shares added as a result of the following sentence (collectively, the “Share Pool”). The Share Pool will automatically increase on January 1 of each year beginning in 2026 and ending with a final increase on January 1, 2035 in an amount equal to 5% of the Outstanding Ordinary Shares on the preceding December 31; provided, however, that the Committee may provide that there will be no January 1 increase in the Share Pool for any such year or that the increase in the Share Pool for any such year will be a smaller number of Ordinary Shares than would otherwise occur pursuant to this sentence. The aggregate number of Ordinary Shares available for grant under this Plan and the number of Ordinary Shares subject to Awards outstanding at the time of any event described in Section 16 shall be subject to adjustment as provided in Section 16. The Ordinary Shares issued under this Plan may be shares that are authorized and unissued or shares that were reacquired by the Company, including shares purchased in the open market or in private transactions.
(b) Issuance of Shares. For purposes of Section 5(a), the aggregate number of Ordinary Shares issued under this Plan at any time shall equal only the number of Ordinary Shares actually issued upon exercise or settlement of an Award. Ordinary Shares subject to Awards that have been canceled, expired, forfeited or otherwise not issued under an Award and Ordinary Shares subject to Awards settled in cash shall not count as Ordinary Shares issued under this Plan. The aggregate number of shares available for issuance under this Plan at any time shall not be reduced by (i) shares subject to Awards that have been terminated, expired unexercised, forfeited or settled in cash, (ii) shares subject to Awards that have been retained or withheld by the Company in payment or satisfaction of the exercise price, purchase price or tax withholding obligation of an Award, or (iii) shares subject to Awards that otherwise do not result in the issuance of shares in connection with payment or settlement thereof. In addition, shares that have been delivered (either actually or by attestation) to the Company in payment or satisfaction of the exercise price, purchase price or tax withholding obligation of an Award shall be available for issuance under this Plan.
(c) Substitute Awards. Substitute Awards shall not reduce the Ordinary Shares authorized for issuance under the Plan or authorized for grant to a Participant in any calendar year. Additionally, in the event that a company acquired by the Company or any Subsidiary, or with which the Company or any Subsidiary combines, has shares available under a pre-existing plan approved by stockholders and not adopted in contemplation of such acquisition or combination, the shares available for grant pursuant to the terms of such pre-existing plan (as adjusted, to the extent appropriate, using the exchange ratio or other adjustment or valuation ratio or formula used in such acquisition or combination to determine the consideration payable to the holders of common stock of the entities party to such acquisition or combination) may be used for Awards under the Plan and shall not reduce the Ordinary Shares authorized for issuance under the Plan; provided, however, that Awards using such available shares (i) shall not be made after the date awards or grants could have been made under the terms of the pre-existing plan, absent the acquisition or combination, (ii) shall only be made to individuals who were not employees or service providers of the Company or its Affiliates at the time of such acquisition or combination, and (iii) shall comply with the requirements of any stock exchange or market or quotation system on which the Ordinary Shares are traded, listed or quoted.
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(d) Tax Code Limits. The aggregate number of Ordinary Shares that may be issued pursuant to the exercise of Incentive Stock Options granted under this Plan shall be equal to 25,000,000, which number shall be calculated and adjusted pursuant to Section 16 only to the extent that such calculation or adjustment will not affect the status of any Option intended to qualify as an Incentive Stock Option under Section 422 of the Code.
(e) Limits on Non-Employee Director Compensation. The aggregate dollar value of equity-based (based on the grant date Fair Market Value of equity-based Awards) and cash compensation granted under this Plan or otherwise to any non-employee director for service on the Board shall not exceed $1,000,000 during any calendar year.
| 6. | Administration of the Plan |
(a) Administrator of the Plan. The Plan shall be administered by the Committee. The Board shall fill vacancies on, and from time to time may remove or add members to, the Committee. The Committee shall act pursuant to a majority vote or unanimous written consent. Any power of the Committee may also be exercised by the Board, except to the extent that the grant or exercise of such authority would cause any Award or transaction to become subject to (or lose an exemption under) the short-swing profit recovery provisions of Section 16 of the Act. To the extent that any permitted action taken by the Board conflicts with action taken by the Committee, the Board action shall control. To the maximum extent permissible under applicable law, the Committee (or any successor) may by resolution delegate any or all of its authority to one or more subcommittees composed of one or more directors and/or officers of the Company, and any such subcommittee shall be treated as the Committee for all purposes under this Plan. Notwithstanding the foregoing, if the Board or the Committee (or any successor) delegates to a subcommittee comprised of one or more officers of the Company the authority to grant Awards, no such subcommittee shall designate any officer serving thereon or any officer (within the meaning of Section 16 of the Act) or non-employee director of the Company as a recipient of any Awards granted under such delegated authority. The Committee hereby delegates to and designates the most senior officer in the Finance Department of the Company of the Company (or such other officer with similar authority), and to his or her delegates or designees, the authority to assist the Committee in the day-to-day administration of the Plan and of Awards granted under the Plan, including those powers set forth in Section 6(b)(v) through (xi) and to execute Award Agreements or other documents entered into under this Plan on behalf of the Committee or the Company. The Committee may further designate and delegate to one or more additional officers or employees of the Company or any Subsidiary, and/or one or more agents, authority to assist the Committee in any or all aspects of the day-to-day administration of the Plan and/or of Awards granted under the Plan.
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(b) Powers of Committee. Subject to the express provisions of this Plan, the Committee shall be authorized and empowered to do all things that it determines to be necessary or appropriate in connection with the administration of this Plan, including:
(i) to prescribe, amend and rescind rules and regulations relating to this Plan and to define terms not otherwise defined herein;
(ii) to determine which Persons are Eligible Persons, to which of such Eligible Persons, if any, Awards shall be granted hereunder and the timing of any such Awards;
(iii) to prescribe and amend the terms of the Award Agreements, to grant Awards and determine the terms and conditions thereof;
(iv) to reduce the exercise price of a previously awarded Option or Stock Appreciation Right or cancel and re-grant or exchange such Option or Stock Appreciation Right for cash or a new Award with a lower (or no) exercise price, with any such determination made by the Committee in its sole discretion, in each case, without shareholder approval;
(v) to adopt such procedures and sub-plans as are necessary or appropriate (A) to permit or facilitate participation in this Plan by Eligible Persons who are not citizens of, or subject to taxation by, the United States or who are employed outside the United States or (B) to allow Awards to qualify for special tax treatment in a jurisdiction other than the United States; provided, however, that Board approval will not be necessary for immaterial modifications to this Plan or any Award Agreement that are required for compliance with the laws of the relevant jurisdiction;
(vi) to establish and verify the extent of satisfaction of any performance goals or other conditions applicable to the grant, issuance, retention, vesting, exercisability or settlement of any Award;
(vii) to prescribe and amend the terms of or form of any document or notice required to be delivered to the Company by Participants under this Plan;
(viii) to determine the extent to which adjustments are required pursuant to Section 16;
(ix) to interpret and construe this Plan, any rules and regulations under this Plan and the terms and conditions of any Award granted hereunder, and to make exceptions to any such provisions if the Committee, in good faith, determines that it is appropriate to do so;
(x) to approve corrections in the documentation or administration of any Award; and
(xi) to make all other determinations deemed necessary or advisable for the administration of this Plan.
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Notwithstanding anything in this Plan to the contrary, with respect to any Award that is “deferred compensation” under Section 409A of the Code, the Committee shall exercise its discretion in a manner that causes such Awards to be compliant with or exempt from the requirements of Section 409A of the Code. Without limiting the foregoing, unless expressly agreed to in writing by the Participant holding such Award, the Committee shall not take any action with respect to any Award which constitutes (x) a modification of a stock right within the meaning of Treas. Reg. § 1.409A-1(b)(5)(v)(B) so as to constitute the grant of a new stock right, (y) an extension of a stock right, including the addition of a feature for the deferral of compensation within the meaning of Treas. Reg. § 1.409A-1 (b)(5)(v)(C), or (z) an impermissible acceleration of a payment date or a subsequent deferral of a stock right subject to Section 409A of the Code within the meaning of Treas. Reg. § 1.409A-1(b)(5)(v)(E).
The Committee may, in its sole and absolute discretion, without amendment to the Plan but subject to the limitations otherwise set forth in Section 20, waive or amend the operation of Plan provisions respecting exercise after Termination of Employment. The Committee or any member thereof may, in its sole and absolute discretion, except as otherwise provided in Section 20, waive, settle or adjust any of the terms of any Award so as to avoid unanticipated consequences or address unanticipated events (including any temporary closure of an applicable stock exchange, disruption of communications or natural catastrophe).
(c) Determinations by the Committee. All decisions, determinations and interpretations by the Committee regarding the Plan, any rules and regulations under the Plan, and the terms and conditions of, or operation of, any Award granted hereunder, shall be final and binding on all Participants, beneficiaries, heirs, assigns or other persons holding or claiming rights under the Plan or any Award. The Committee shall consider such factors as it deems relevant, in its sole and absolute discretion, to making such decisions, determinations and interpretations, including the recommendations or advice of any officer or other employee of the Company and such attorneys, consultants and accountants as it may select. Members of the Board and members of the Committee acting under the Plan shall be fully protected in relying in good faith upon the advice of counsel and shall incur no liability except for as a result of gross negligence or willful misconduct in the performance of their duties.
(d) Subsidiary Awards. In the case of a grant of an Award to any Participant employed by a Subsidiary, such grant may, if the Committee so directs, be implemented by the Company issuing any subject Ordinary Shares to the Subsidiary, for such lawful consideration as the Committee may determine, upon the condition or understanding that the Subsidiary will transfer the Ordinary Shares to the Participant in accordance with the terms of the Award specified by the Committee pursuant to the provisions of the Plan. Notwithstanding any other provision hereof, such Award may be issued by and in the name of the Subsidiary and shall be deemed granted on such date as the Committee shall determine.
| 7. | Plan Awards |
(a) Terms Set Forth in Award Agreement. Awards may be granted to Eligible Persons as determined by the Committee at any time and from time to time prior to the termination of the Plan. The terms and conditions of each Award shall be set forth in an Award Agreement in a form approved by the Committee for such Award, subject to and incorporating by reference or otherwise the applicable terms and conditions of the Plan, which Award Agreement may contain such terms and conditions as specified from time to time by the Committee, provided such other terms and conditions do not conflict with the Plan. The Award Agreement for any Award (other than Restricted Stock Awards) shall include the time or times at or within which and the consideration, if any, for which any Ordinary Shares or cash, as applicable, may be acquired from the Company. The terms of Awards may vary among Participants, and the Plan does not impose upon the Committee any requirement to make Awards subject to uniform terms. Accordingly, the terms of individual Award Agreements may vary.
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(b) Termination of Employment. Subject to the express provisions of the Plan, the Committee shall specify before, at, or after the time of grant of an Award the provisions governing the effect(s) upon an Award of a Participant’s Termination of Employment.
(c) Rights of a Shareholder. A Participant shall have no rights as a shareholder with respect to Ordinary Shares covered by an Award (including voting rights) until the date the Participant becomes the holder of record of such Ordinary Shares. No adjustment shall be made for dividends or other rights for which the record date is prior to such date, except as provided in Sections 10(b), 11(b) or 16 of this Plan or as otherwise provided by the Committee.
(d) No Fractional Shares. No fractional Ordinary Shares shall be issued pursuant to an Award or in settlement thereof.
| 8. | Options |
(a) Grant, Term and Price. The grant, issuance, retention, vesting and/or settlement of any Option shall occur at such time and be subject to such terms and conditions as determined by the Committee or under criteria established by the Committee, which may include conditions based on continued employment or engagement, passage of time, attainment of age and/or service requirements, and/or satisfaction of performance conditions. The term of an Option shall in no event be greater than 10 years; provided, however, the term of an Option (other than an Incentive Stock Option) shall be automatically extended if, at the time of its scheduled expiration, the Participant holding such Option is prohibited by law or the Company’s insider trading policy from exercising the Option, which extension shall expire on the 30th day following the date such prohibition no longer applies. The Committee will establish the price at which Ordinary Shares may be purchased upon exercise of an Option, which in no event will be less than the Fair Market Value of such shares on the date of grant; provided, however, that the exercise price per Ordinary Share with respect to an Option that is granted as a Substitute Award may be less than the Fair Market Value of the Ordinary Shares on the date such Option is granted if such exercise price is based on a formula set forth in the terms of the options held by such optionees or in the terms of the agreement providing for such merger or other acquisition that satisfies the requirements of (i) Section 409A of the Code, if such options held by such optionees are not intended to qualify as “incentive stock options” within the meaning of Section 422 of the Code, and (ii) Section 424(a) of the Code, if such options held by such optionees are intended to qualify as “incentive stock options” within the meaning of Section 422 of the Code. The exercise price of any Option may be paid in cash to the Company or such other method as determined by the Committee, including an irrevocable commitment by a broker to pay over such amount from a sale of the Ordinary Shares issuable under an Option, the delivery of previously owned Ordinary Shares or withholding of Ordinary Shares otherwise deliverable upon exercise.
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(b) No Reload Grants. Options shall not be granted under the Plan in consideration for, and shall not be conditioned upon the delivery of, Ordinary Shares to the Company in payment of the exercise price and/or tax withholding obligation under any other employee stock option.
(c) Incentive Stock Options. Notwithstanding anything to the contrary in this Section 8, in the case of the grant of an Incentive Stock Option, if the Participant owns shares possessing more than 10% of the combined voting power of all classes of shares of the Company, the exercise price of such Option must be at least 110% of the Fair Market Value of the Ordinary Shares on the date of grant and the Option must expire within a period of not more than five years from the date of grant. Notwithstanding anything in this Section 8 to the contrary, Options designated as Incentive Stock Options shall not be eligible for treatment under the Code as Incentive Stock Options (and will be deemed to be Nonqualified Stock Options) to the extent that either (i) the aggregate Fair Market Value of Ordinary Shares (determined as of the time of grant) with respect to which such Options are exercisable for the first time by the Participant during any calendar year (under all plans of the Company and any Subsidiary) exceeds $100,000, taking Options into account in the order in which they were granted, or (ii) such Options otherwise remain exercisable but are not exercised within three months (or such other period of time provided in Section 422 of the Code) of separation of service (as determined in accordance with Section 3401(c) of the Code and the regulations promulgated thereunder).
(d) No Shareholder Rights. Participants shall have no voting rights and will have no rights to receive dividends or Dividend Equivalents in respect of an Option or any Ordinary Shares subject to an Option until the Participant has become the holder of record of such shares.
| 9. | Stock Appreciation Rights |
(a) General Terms. The grant, issuance, retention, vesting and/or settlement of any Stock Appreciation Right shall occur at such time and be subject to such terms and conditions as determined by the Committee or under criteria established by the Committee, which may include conditions based on continued employment or engagement, passage of time, attainment of age and/or service requirements, and/or satisfaction of performance conditions. The term of a Stock Appreciation Right shall in no event be greater than 10 years; provided, however, the term of a Stock Appreciation Right shall be automatically extended if, at the time of its scheduled expiration, the Participant holding such Stock Appreciation Right is prohibited by law or the Company’s insider trading policy from exercising the Stock Appreciation Right which extension shall expire on the 30th day following the date such prohibition no longer applies. Stock Appreciation Rights may be granted to Participants from time to time either in tandem with or as a component of Options granted under the Plan (“tandem SARs”) or not in conjunction with other Awards (“freestanding SARs”). Upon exercise of a tandem SAR as to some or all of the shares covered by the grant, the related Option shall be canceled automatically to the extent of the number of shares covered by such exercise. Conversely, if the related Option is exercised as to some or all of the shares covered by the grant, the related tandem SAR, if any, shall be canceled automatically to the extent of the number of shares covered by the Option exercise. Any Stock Appreciation Right granted in tandem with an Option may be granted at the same time such Option is granted or at any time thereafter before exercise or expiration of such Option, provided that the Fair Market Value of Ordinary Shares on the date of the SAR’s grant is not greater than the exercise price of the related Option. All freestanding SARs shall be granted subject to the same terms and conditions applicable to Options as set forth in Section 8 and all tandem SARs shall have the same exercise price as the Option to which they relate. Subject to the provisions of Section 8 and the immediately preceding sentence, the Committee may impose such other conditions or restrictions on any Stock Appreciation Right as it shall deem appropriate. Stock Appreciation Rights may be settled in Ordinary Shares, cash, Restricted Stock or a combination thereof, as determined by the Committee and set forth in the applicable Award Agreement.
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(b) No Shareholder Rights. Participants shall have no voting rights and will have no rights to receive dividends or Dividend Equivalents in respect of an Award of Stock Appreciation Rights or any Ordinary Shares subject to an Award of Stock Appreciation Rights until the Participant has become the holder of record of such shares.
| 10. | Restricted Stock and Restricted Stock Units |
(a) Vesting and Performance Criteria. The grant, issuance, vesting and/or settlement of any Award of Restricted Stock or Restricted Stock Units shall occur at such time and be subject to such terms and conditions as determined by the Committee or under criteria established by the Committee, which may include conditions based on continued employment or engagement, passage of time, attainment of age and/or service requirements, and/or satisfaction of performance conditions. In addition, the Committee shall have the right to grant Restricted Stock or Restricted Stock Unit Awards as the form of payment for grants or rights earned or due under other shareholder-approved compensation plans or arrangements of the Company.
(b) Dividends and Distributions. Participants in whose name Restricted Stock is granted shall be entitled to receive all dividends and other distributions paid with respect to those Ordinary Shares, unless determined otherwise by the Committee. The Committee will determine whether any such dividends or distributions will be automatically reinvested in additional shares of Restricted Stock and/or subject to the same restrictions on transferability as the Restricted Stock with respect to which they were distributed or whether such dividends or distributions will be paid in cash. Shares underlying Restricted Stock Units shall be entitled to dividends or distributions only to the extent provided by the Committee.
| 11. | Other Stock-Based Awards |
(a) General Terms. The Committee is authorized, subject to limitations under applicable law, to grant to Eligible Persons such other Awards that may be denominated or payable in, valued in whole or in part by reference to, or otherwise based on, or related to, Ordinary Shares, as deemed by the Committee to be consistent with the purposes of the Plan. The Committee shall determine the terms and conditions of such Other Stock-Based Awards. Ordinary Shares delivered pursuant to an Other Stock-Based Award in the nature of a purchase right granted under this Section 11 shall be purchased for such consideration, paid for at such times, by such methods, and in such forms, including cash, Ordinary Shares, other Awards, or other property, as the Committee shall determine.
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(b) Dividends and Distributions. Shares underlying Other Stock-Based Awards shall be entitled to dividends or distributions only to the extent provided by the Committee.
| 12. | Incentive Bonuses |
(a) Vesting Criteria. The Committee shall establish the vesting conditions applicable to an Incentive Bonus, including any performance criteria and level of achievement versus such criteria that may determine the amount payable under an Incentive Bonus, which may include a target, threshold and/or maximum amount payable and any formula for determining such achievement.
(b) Timing and Form of Payment. The Committee shall determine the timing of payment of any Incentive Bonus. Payment of the amount due under an Incentive Bonus may be made in cash or in Ordinary Shares, as determined by the Committee.
(c) Discretionary Adjustments. Notwithstanding satisfaction of any performance goals, the amount paid under an Incentive Bonus on may be adjusted by the Committee on the basis of such further considerations as the Committee shall determine.
| 13. | Performance Awards |
The Committee may establish performance criteria and level of achievement versus such criteria that shall determine the number of Ordinary Shares, Restricted Stock Units, Other Stock-Based Awards or cash to be granted, retained, vested, issued or issuable under or in settlement of or the amount payable pursuant to an Award (any such Award, a “Performance Award”). A Performance Award may be identified as “Performance Share,” “Performance Equity,” “Performance Unit” or other such term as chosen by the Committee.
| 14. | Deferral of Payment |
The Committee may, in an Award Agreement or otherwise, provide for the deferred delivery of Ordinary Shares or cash upon settlement, vesting or other events with respect to Restricted Stock Units, Other Stock-Based Awards or in payment or satisfaction of an Incentive Bonus. Notwithstanding anything herein to the contrary, in no event will any election to defer the delivery of Ordinary Shares or any other payment with respect to any Award be allowed if the Committee determines, in its sole discretion, that the deferral would result in the imposition of the additional tax under Section 409A(a)(1)(B) of the Code. No Award shall provide for deferral of compensation that does not comply with Section 409A of the Code. The Company, any Subsidiary or Affiliate which is in existence or hereafter comes into existence, the Board and the Committee shall have no liability to a Participant, or any other party, if an Award that is intended to be exempt from, or compliant with, Section 409A of the Code is not so exempt or compliant or for any action taken by the Board or the Committee in respect thereof.
| 15. | Conditions and Restrictions Upon Securities Subject to Awards |
The Committee may provide that the Ordinary Shares issued upon exercise of an Option or Stock Appreciation Right or otherwise subject to or issued under an Award shall be subject to such further agreements, restrictions, conditions or limitations as the Committee in its discretion may specify prior to the exercise of such Option or Stock Appreciation Right or the grant, vesting or settlement of such Award, including conditions on vesting or transferability, forfeiture or repurchase provisions and method of payment for the Ordinary Shares issued upon exercise, vesting or settlement of such Award (including the actual or constructive surrender of Ordinary Shares already owned by the Participant) or payment of taxes arising in connection with an Award. Without limiting the foregoing, such restrictions may address the timing and manner of any resales by the Participant or other subsequent transfers by the Participant of any Ordinary Shares issued under an Award, including (a) restrictions under an insider trading policy or pursuant to applicable law, (b) restrictions designed to delay and/or coordinate the timing and manner of sales by the Participant and holders of other Company equity compensation arrangements, (c) restrictions as to the use of a specified brokerage firm for such resales or other transfers and (d) provisions requiring Ordinary Shares be sold on the open market or to the Company in order to satisfy tax withholding or other obligations.
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| 16. | Adjustment of and Changes in the Shares |
(a) The number and kind of Ordinary Shares available for issuance under this Plan (including under any Awards then outstanding), and the number and kind of Ordinary Shares subject to the limits set forth in Section 5, shall be equitably adjusted by the Committee to reflect any reorganization, reclassification, combination of shares, stock split, reverse stock split, spin-off, dividend or distribution of securities, property or cash (other than regular, quarterly cash dividends), or any other event or transaction that affects the number or kind of Outstanding Ordinary Shares. Such adjustment may be designed to comply with Section 424 of the Code or may be designed to treat the Ordinary Shares available under the Plan and subject to Awards as if they were all outstanding on the record date for such event or transaction or to increase the number of such Ordinary Shares to reflect a deemed reinvestment in Ordinary Shares of the amount distributed to the Company’s securityholders. The terms of any outstanding Award shall also be equitably adjusted by the Committee as to price, number or kind of Ordinary Shares subject to such Award, vesting, performance criteria, and other terms to reflect the foregoing events, which adjustments need not be uniform as between different Awards or different types of Awards. No fractional Ordinary Shares shall be issued or issuable pursuant to such an adjustment.
(b) In the event there shall be any other change in the number or kind of outstanding Ordinary Shares, or any shares or other securities into which such Ordinary Shares shall have been changed, or for which they shall have been exchanged, by reason of a Change in Control, other merger, consolidation or otherwise, then the Committee shall determine the appropriate and equitable adjustment to be effected, which adjustments need not be uniform between different Awards or different types of Awards. In addition, in the event of such change described in this paragraph, the Committee may accelerate the time or times at which any Award may be exercised, consistent with and as otherwise permitted under Section 409A of the Code, and may provide for cancellation of such accelerated Awards that are not exercised within a time prescribed by the Committee in its sole discretion.
(c) In the event of a Change in Control, the Committee, acting in its sole discretion without the consent or approval of any Participant, may take one or more of the following actions, which may vary among individual Participants and/or among Awards held by any individual Participant: (i) arrange for the assumption of an outstanding Award by the successor or acquiring entity (if any) of such Change in Control (or by its parents, if any), which assumption will be binding on all selected Participants; provided that the exercise price and the number and nature of shares issuable upon exercise of any such Option or Stock Appreciation Right, or any Award that is subject to Section 409A of the Code, will be adjusted appropriately pursuant to Section 424(a) of the Code; (ii) provide for the issuance of substitute awards by the successor or acquiring entity (if any) of such Change in Control (or by its parents, if any) that will substantially preserve the otherwise applicable terms of the outstanding Award as determined by the Committee in its sole discretion; (iii) accelerate vesting or waive any forfeiture conditions; (iv) accelerate the time of exercisability of an Award so that such Award may be exercised in full or in part for a limited period of time on or before a date specified by the Committee, after which specified date all unexercised Awards and all rights of Participants thereunder shall terminate; or (v) make such other adjustments to Awards then outstanding as the Committee deems appropriate to reflect such Change in Control. Notwithstanding anything herein to the contrary, in the event of a Change in Control in which the acquiring or surviving company in the transaction does not assume or continue outstanding Awards or issue substitute awards upon the Change in Control, unless determined otherwise by the Committee, immediately prior to the Change in Control, all Awards that are not assumed, continued or substituted for shall be treated as follows effective immediately prior to the Change in Control: (A) in the case of an Option or Stock Appreciation Right, the Participant shall have the ability to exercise such Option or Stock Appreciation Right, including any portion of the Option or Stock Appreciation Right not previously exercisable, (B) in the case of any Award the vesting of which is in whole or in part subject to performance criteria or an Incentive Bonus, all conditions to the grant, issuance, retention, vesting or transferability of, or any other restrictions applicable to, such Award shall immediately lapse and the Participant shall have the right to receive a payment based on target level achievement or actual performance through a date determined by the Committee, and (C) in the case of outstanding Restricted Stock, Restricted Stock Units or Other Stock-Based Awards (other than those referenced in subsection (B)), all conditions to the grant, issuance, retention, vesting or transferability of, or any other restrictions applicable to, such Award shall immediately lapse. In no event shall any action be taken pursuant to this Section 16(c) that would change the payment or settlement date of an Award in a manner that would result in the imposition of any additional taxes or penalties pursuant to Section 409A of the Code.
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(d) Notwithstanding anything in this Section 16 to the contrary, in the event of a Change in Control, the Committee may provide for the cancellation and cash settlement of all outstanding Awards upon such Change in Control (including the cancellation for no consideration of any Option or Stock Appreciation Right with an exercise price that equals or exceeds the per share consideration in such transaction).
(e) Notwithstanding anything in this Section 16 to the contrary, an adjustment to an Option or Stock Appreciation Right under this Section 16 shall be made in a manner that will not result in the grant of a new Option or Stock Appreciation Right under Section 409A of the Code.
| 17. | Transferability |
Each Award may not be sold, transferred for value, pledged, assigned, or otherwise alienated or hypothecated by a Participant other than by will or the laws of descent and distribution, and each Option or Stock Appreciation Right shall be exercisable only by the Participant during his or her lifetime. Notwithstanding the foregoing, (a) outstanding Options may be exercised following the Participant’s death by the Participant’s beneficiaries or as permitted by the Committee and (b) as permitted by the Committee, a Participant may transfer or assign an Award as a gift to any “family member” (as such term is defined in the Registration Statement on Form S-8) (an “Assignee Entity”), provided that such Assignee Entity shall be entitled to exercise assigned Options and Stock Appreciation Rights only during the lifetime of the assigning Participant (or following the assigning Participant’s death, by the Participant’s beneficiaries or as otherwise permitted by the Committee) and provided further that such Assignee Entity shall not further sell, pledge, transfer, assign or otherwise alienate or hypothecate such Award.
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| 18. | Compliance with Laws and Regulations |
(a) This Plan, the grant, issuance, vesting, exercise and settlement of Awards hereunder, and the obligation of the Company to sell, issue or deliver Ordinary Shares under such Awards, shall be subject to all applicable foreign, federal, state and local laws, rules and regulations, stock exchange rules and regulations, and to such approvals by any governmental or regulatory agency as may be required. The Company shall not be required to register in a Participant’s name or deliver Ordinary Shares prior to the completion of any registration or qualification of such shares under any foreign, federal, state or local law or any ruling or regulation of any government body which the Committee shall determine to be necessary or advisable. To the extent the Company is unable to or the Committee deems it infeasible to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company’s counsel to be necessary to the lawful issuance and sale of any Ordinary Shares hereunder, the Company and its Subsidiaries shall be relieved of any liability with respect to the failure to issue or sell such Ordinary Shares as to which such requisite authority shall not have been obtained. No Option shall be exercisable and no Ordinary Shares shall be issued and/or transferable under any other Award unless a registration statement with respect to the Ordinary Shares underlying such Option is effective and current or the Company has determined, in its sole and absolute discretion, that such registration is unnecessary.
(b) In the event an Award is granted to or held by a Participant who is employed or providing services outside the United States, the Committee may, in its sole discretion, modify the provisions of the Plan or of such Award as they pertain to such individual to comply with applicable foreign law or to recognize differences in local law, currency or tax policy. The Committee may also impose conditions on the grant, issuance, exercise, vesting, settlement or retention of Awards in order to comply with such foreign law and/or to minimize the Company’s obligations with respect to tax equalization for Participants employed outside their home country.
| 19. | Withholding |
To the extent required by applicable federal, state, local or foreign law, the Committee may, and/or a Participant shall, make arrangements satisfactory to the Company for the satisfaction of any withholding tax obligations that arise with respect to any Award or the issuance or sale of any Ordinary Shares. The Company shall not be required to recognize any Participant rights under an Award, to issue Ordinary Shares or to recognize the disposition of such Ordinary Shares until such obligations are satisfied. To the extent permitted or required by the Committee, these obligations may or shall be satisfied by the Company withholding cash from any compensation otherwise payable to or for the benefit of a Participant, the Company withholding a portion of the Ordinary Shares that otherwise would be issued to a Participant under such Award or any other Award held by the Participant, or by the Participant tendering to the Company cash or, if allowed by the Committee, Ordinary Shares.
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| 20. | Amendment of the Plan or Awards |
The Board may amend, alter, suspend or terminate this Plan, and the Committee may amend or alter any Award Agreement or other document evidencing an Award made under this Plan; however, except as provided pursuant to the provisions of Section 16, no such amendment shall, without the approval of the shareholders of the Company:
(a) increase the maximum number of Ordinary Shares for which Awards may be granted under this Plan;
(b) extend the term of this Plan;
(c) change the class of Persons eligible to be Participants; or
(d) otherwise amend the Plan in any manner requiring shareholder approval by law or the rules of any stock exchange or market or quotation system on which the Ordinary Shares are traded, listed or quoted.
No amendment or alteration to the Plan or an Award or Award Agreement shall be made which would materially impair the rights of the holder of an Award without such holder’s consent; provided, however, that no such consent shall be required if the Committee determines in its sole discretion and prior to the date of any Change in Control that such amendment or alteration either (i) is required or advisable in order for the Company, the Plan or the Award to satisfy any law or regulation or to meet the requirements of, or avoid adverse financial accounting consequences under, any accounting standard, or (ii) is not reasonably likely to significantly diminish the benefits provided under such Award, or that any such diminishment has been adequately compensated.
| 21. | No Liability of Company |
The Company, any Subsidiary or Affiliate which is in existence or hereafter comes into existence, the Board, the Committee and any delegate thereof shall not be liable to a Participant or any other person as to: (a) the non-issuance or sale of Ordinary Shares as to which the Company has been unable to obtain from any regulatory body having jurisdiction the authority deemed by the Company’s counsel to be necessary to the lawful issuance and sale of any Ordinary Shares hereunder; and (b) any tax consequence expected, but not realized, by any Participant or other person due to the receipt, vesting, exercise or settlement of any Award granted hereunder.
| 22. | Non-Exclusivity of Plan |
Neither the adoption of this Plan by the Board nor the submission of this Plan to the shareholders of the Company for approval shall be construed as creating any limitations on the power of the Board or the Committee to adopt such other incentive arrangements as either may deem desirable, including the granting of equity awards otherwise than under this Plan, and such arrangements may be either generally applicable or applicable only in specific cases.
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| 23. | Governing Law |
This Plan and any agreements or other documents hereunder shall be interpreted and construed in accordance with the laws of the Cayman Islands (without regard to its choice of law provisions) and applicable Federal law. Any reference in this Plan or in the agreement or other document evidencing any Awards to a provision of law or to a rule or regulation shall be deemed to include any successor law, rule or regulation of similar effect or applicability.
| 24. | No Right to Employment, Reelection or Continued Service |
Nothing in this Plan or an Award Agreement shall interfere with or limit in any way the right of the Company, its Subsidiaries and/or its Affiliates to terminate any Participant’s employment, service on the Board or service at any time or for any reason not prohibited by law, nor shall this Plan or an Award itself confer upon any Participant any right to continue his or her employment or service for any specified period of time. Neither an Award nor any benefits arising under this Plan shall constitute an employment contract with the Company, any Subsidiary and/or its Affiliates. Subject to Sections 4 and 20, this Plan and the benefits hereunder may be terminated at any time in the sole and exclusive discretion of the Board without giving rise to any liability on the part of the Company, its Subsidiaries and/or its Affiliates.
| 25. | Specified Employee Delay |
To the extent any payment under this Plan is considered deferred compensation subject to the restrictions contained in Section 409A of the Code, such payment may not be made to a specified employee (as determined in accordance with a uniform policy adopted by the Company with respect to all arrangements subject to Section 409A of the Code) upon Separation from Service before the date that is six months after the specified employee’s Separation from Service (or, if earlier, the specified employee’s death). Any payment that would otherwise be made during this period of delay shall be accumulated and paid on the sixth month plus one day following the specified employee’s Separation from Service (or, if earlier, as soon as administratively practicable after the specified employee’s death).
| 26. | No Liability of Committee Members |
No member of the Committee shall be personally liable by reason of any contract or other instrument executed by such member or on his or her behalf in his or her capacity as a member of the Committee nor for any mistake of judgment made in good faith, and the Company shall indemnify and hold harmless each member of the Committee and each other employee, officer or director of the Company to whom any duty or power relating to the administration or interpretation of the Plan may be allocated or delegated, against any cost or expense (including counsel fees) or liability (including any sum paid in settlement of a claim) arising out of any act or omission to act in connection with the Plan, unless arising out of such Person’s own fraud or willful bad faith; provided, however, that approval of the Board shall be required for the payment of any amount in settlement of a claim against any such Person. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such Persons may be entitled under the Company’s Certificate of Incorporation and Bylaws (as each may be amended from time to time), as a matter of law, pursuant to any individual agreement or otherwise, or any power that the Company may have to indemnify them or hold them harmless.
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| 27. | Severability |
If any provision of the Plan or any Award is or becomes or is deemed to be invalid, illegal, or unenforceable in any jurisdiction or as to any Person or Award, or would disqualify the Plan or any Award under any law deemed applicable by the Committee, such provision shall be construed or deemed amended to conform to the applicable laws, or if it cannot be construed or deemed amended without, in the determination of the Committee, materially altering the intent of the Plan or the Award, such provision shall be stricken as to such jurisdiction, Person or Award, and the remainder of the Plan and any such Award shall remain in full force and effect.
| 28. | Unfunded Plan |
The Plan is intended to be an unfunded plan. Participants are and shall at all times be general creditors of the Company with respect to their Awards. If the Committee or the Company chooses to set aside funds in a trust or otherwise for the payment of Awards under the Plan, such funds shall at all times be subject to the claims of the creditors of the Company in the event of its bankruptcy or insolvency.
| 29. | Clawback/Recoupment |
Awards granted under this Plan will be subject to recoupment in accordance with any clawback policy that the Company adopts or is required to adopt pursuant to the listing standards of any national securities exchange or association on which the Company’s securities are listed or as is otherwise required by the Rule 10D-1 under the Exchange Act or other applicable law. In addition, the Committee may impose such other clawback, recovery or recoupment provisions in an Award Agreement as the Committee determines necessary or appropriate, including a reacquisition right in respect of previously acquired Ordinary Shares or other cash or property upon the occurrence of misconduct. No recovery of compensation under such a clawback policy will be an event giving rise to a right to resign for “good reason” or be deemed a “constructive termination” (or any similar term) as such terms are used in any agreement between any Participant and the Company.
| 30. | Beneficiary Designation |
Participants may designate beneficiaries with respect to Awards under the Plan in accordance with the procedures determined by the Committee. In the absence of a beneficiary designation, a Participant’s estate will be the deemed beneficiary.
| 31. | Interpretation |
Headings are given to the Sections and subsections of the Plan solely as a convenience to facilitate reference and shall not be deemed in any way material or relevant to the construction or interpretation of the Plan or any provision thereof. Words in the masculine gender shall include the feminine gender, and where appropriate, the plural shall include the singular and the singular shall include the plural. The use herein of the word “including” following any general statement, term or matter shall not be construed to limit such statement, term or matter to the specific items or matters set forth immediately following such word or to similar items or matters, whether or not non-limiting language (such as “without limitation”, “but not limited to”, or words of similar import) is used with reference thereto, but rather shall be deemed to refer to all other items or matters that could reasonably fall within the broadest possible scope of such general statement, term or matter. References herein to any agreement, instrument or other document means such agreement, instrument or other document as amended, supplemented and modified from time to time to the extent permitted by the provisions thereof and not prohibited by the Plan.
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Exhibit 10.8
CRESCENT BIOPHARMA, INC.
2025 EMPLOYEE STOCK PURCHASE PLAN
| 1. | Purpose |
The purpose of this Crescent Biopharma, Inc. 2025 Employee Stock Purchase Plan (the “Plan”) is to provide employees of the Company and its Designated Subsidiaries with an opportunity to purchase Ordinary Shares through accumulated Contributions. The Company’s intention is to have the Plan qualify as an “employee stock purchase plan” under Section 423 of the Code. The provisions of the Plan, accordingly, will be construed to extend and limit Plan participation in a uniform and nondiscriminatory basis consistent with the requirements of Section 423 of the Code.
| 2. | Definitions. |
As used in the Plan, the following terms shall have the meanings set forth below:
(a) “Administrator” means the Compensation Committee of the Board (or any successor committee), or such other committee as designated by the Board to administer the Plan under Section 14.
(b) “Applicable Laws” means the requirements relating to the administration of equity-based awards under U.S. state corporate laws, U.S. federal and state securities laws, the Code, any stock exchange or quotation system on which the Ordinary Shares are listed or quoted, and the applicable laws of any foreign country or jurisdiction where options are, or will be, granted under the Plan.
(c) “Board” means the Board of Directors of the Company.
(d) “Code” means the Internal Revenue Code of 1986, as amended from time to time, and the rulings and regulations issued thereunder.
(e) “Company” means Crescent Biopharma, Inc., a Cayman Islands exempted company, and any successor corporation.
(f) “Compensation” means an Eligible Employee’s base salary or base hourly rate of pay before deduction for any salary deferral contributions made by the Eligible Employee to any tax-qualified or nonqualified deferred compensation plan, but excluding commissions, overtime, incentive compensation, bonuses and other forms of compensation. The Administrator, in its discretion, may, on a uniform and nondiscriminatory basis, establish a different definition of Compensation for an Offering Period.
(g) “Contributions” means the payroll deductions and any other additional payments that the Administrator may permit to be made by a Participant to fund the exercise of options granted pursuant to the Plan, subject to Section 423 of the Code.
(h) “Designated Subsidiary” means any Subsidiary that has been designated by the Administrator from time to time in its sole discretion as eligible to participate in the Plan. As of the date of adoption of the Plan, the Designated Subsidiaries consist exclusively of: Crescent Biopharma Operating Company, LLC.
(i) “Effective Date” means the Closing Date (as defined in the Merger Agreement).
(j) “Eligible Employee” means any person, including an officer, who is customarily employed by the Company or a Designated Subsidiary (i) for more than 20 hours per week and (ii) for more than five months in any calendar year. For purposes of the Plan, the employment relationship shall be treated as continuing intact while the individual is on sick leave or other leave of absence approved by the Company. Where the period of leave exceeds 90 days and the individual’s right to reemployment is not guaranteed either by statute or by contract, the employment relationship shall be deemed to have terminated on the 91st day of such leave. “Eligible Employee” shall not include any person who is a citizen or resident of a foreign jurisdiction if granting them an option under the Plan would violate the law of such jurisdiction, or if compliance with the laws of the jurisdiction would cause the Plan to violate Section 423 of the Code.
(k) “Employer” means the Company and each Designated Subsidiary.
(l) “Enrollment Date” means the first Trading Day of each Offering Period.
(m) “Exchange Act” means the Securities Exchange Act of 1934, as amended, including the rules and regulations promulgated thereunder.
(n) “Exercise Date” means the last Trading Day of each Purchase Period.
(o) “Fair Market Value” means as of any date, the value of the Ordinary Shares determined as follows: (i) if the Ordinary Shares are listed on any established stock exchange, system or market, their Fair Market Value shall be the closing price for an Ordinary Share as quoted on such exchange, system or market as reported in the Wall Street Journal or such other source as the Administrator deems reliable (or, if no sale of Ordinary Shares is reported for such date, on the next preceding date on which any sale shall have been reported); and (ii) in the absence of an established market for the Ordinary Shares, the Fair Market Value thereof shall be determined in good faith by the Administrator.
(p) “Merger Agreement” means that certain Agreement and Plan of Merger and Reorganization dated as of October 28, 2024 by and among the Company, Gemini Merger Sub Corp., Gemini Merger Sub II, LLC, and Crescent Biopharma, Inc.
(q) “New Exercise Date” means a new Exercise Date if the Administrator shortens any Offering Period then in progress.
(r) “Offering” means an offer under the Plan of an option that may be exercised during an Offering Period as further described in Section 4. For purposes of the Plan, the Administrator may designate separate Offerings under the Plan (the terms of which need not be identical) in which Eligible Employees of one or more Employers will participate, even if the dates of the applicable Offering Periods of each such Offering are identical and the provisions of the Plan will separately apply to each Offering. To the extent permitted by Treasury Regulation Section 1.423-2(a)(1), the terms of each Offering need not be identical; provided, however, that the terms of the Plan and an Offering together satisfy Treasury Regulation Sections 1.423-2(a)(2) and (a)(3).
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(s) “Offering Periods” means the periods established by the Administrator (not to exceed 27 months) during which an option granted pursuant to the Plan may be exercised. The duration and timing of Offering Periods may be changed pursuant to Sections 4, 18, and 19.
(t) “Ordinary Shares” means the ordinary shares of the Company, $0.001 par value per share.
(u) “Outstanding Ordinary Shares” means the sum of (i) the Ordinary Shares outstanding, (ii) the Ordinary Shares underlying unexercised pre-funded warrants, and (iii) the Ordinary Shares underlying the Company’s preferred shares, par value $0.001 per share.
(v) “Parent” means a “parent corporation,” whether now or hereafter existing, as defined in Section 424(e) of the Code.
(w) “Participant” means an Eligible Employee who elects to participate in the Plan.
(x) “Purchase Period” means the period during an Offering Period during which Ordinary Shares may be purchased on a Participant’s behalf in accordance with the terms of the Plan, as established by the Administrator.
(y) “Purchase Price” means an amount equal to 85% of the Fair Market Value of an Ordinary Share on the Enrollment Date or on the Exercise Date, whichever is lower; provided, however, that the Purchase Price may be determined for subsequent Offering Periods by the Administrator subject to compliance with Section 423 of the Code (or any other Applicable Law) or pursuant to Section 18.
(z) “Subsidiary” means a “subsidiary corporation,” whether now or hereafter existing, as defined in Section 424(f) of the Code.
(aa) “Trading Day” means a day on which the national stock exchange upon which the Ordinary Shares are listed is open for trading or, if the Ordinary Shares are not listed on a national stock exchange, a business day as determined by the Administrator in good faith.
(bb) “Treasury Regulations” means the Treasury regulations of the Code. Reference to a specific Treasury Regulation or Section of the Code shall include such Treasury Regulation or Section, any valid regulation promulgated under such Section, and any comparable provision of any future legislation or regulation amending, supplementing or superseding such Section or regulation.
| 3. | Eligibility. |
(a) Offering Periods. Any Eligible Employee on a given Enrollment Date will be eligible to participate in the Plan if he or she was employed by the Company for at least 30 calendar days (unless otherwise determined by the Administrator) immediately preceding the Enrollment Date, subject to the requirements of Section 5; provided, however, that an Eligible Employee who commences employment with the Company or a Designated Subsidiary following such 30-day period (or such other period as determined by the Administrator) will be eligible to participate in the Plan at the beginning of the next Purchase Period to occur that is at least 30 calendar days (or such other period as determined by the Administrator) following the commencement of his or her employment with the Company or a Designated Subsidiary. Eligible Employees who do not elect to participate in the Plan on a given Enrollment Date may elect to participate in the Plan at the beginning of any subsequent Purchase Period, as determined by the Administrator.
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(b) Non-U.S. Employees. Employees who are citizens or residents of a non-U.S. jurisdiction (without regard to whether they also are citizens or residents of the United States or resident aliens (within the meaning of Section 7701(b)(1)(A) of the Code)) may be excluded from participation in the Plan or an Offering if the participation of such employees is prohibited under the laws of the applicable jurisdiction or if complying with the laws of the applicable jurisdiction would cause the Plan or an Offering to violate Section 423 of the Code. In addition, as provided in Section 14, the Administrator may establish one or more sub-plans of the Plan (which may, but are not required to, comply with the requirements of Section 423 of the Code) to provide benefits to employees of Designated Subsidiaries located outside the United States in a manner that complies with local law. Any such sub-plan will be a component of the Plan and will not be a separate plan.
(c) Limitations. Any provisions of the Plan to the contrary notwithstanding, no Eligible Employee will be granted an option under the Plan (i) to the extent that, immediately after the grant, such Eligible Employee (or any other person whose stock would be attributed to such Eligible Employee pursuant to Section 424(d) of the Code) would own capital stock of the Company or any Parent or Subsidiary of the Company and/or hold outstanding options to purchase such stock possessing 5% or more of the total combined voting power or value of all classes of the capital stock of the Company or of any Parent or Subsidiary of the Company, or (ii) to the extent that his or her rights to purchase stock under all employee stock purchase plans (as defined in Section 423 of the Code) of the Company or any Parent or Subsidiary of the Company accrues at a rate that exceeds $25,000 worth of stock (determined at the Fair Market Value of the stock at the time such option is granted) for each calendar year in which such option is outstanding at any time, as determined in accordance with Section 423 of the Code and the regulations thereunder.
| 4. | Offering Periods |
The Plan will be implemented by consecutive Offering Periods with new Offering Periods commencing at such times as determined by the Administrator. The Administrator will have the power to change the duration of Offering Periods (including the commencement dates thereof) without shareholder approval.
| 5. | Participation |
An Eligible Employee may participate in the Plan by (i) submitting to the Company’s Finance department (or its delegate), on or before a date determined by the Administrator prior to an applicable Enrollment Date, a properly completed subscription agreement authorizing Contributions in the form provided by the Administrator for such purpose, or (ii) following an electronic or other enrollment procedure determined by the Administrator.
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| 6. | Contributions |
(a) At the time a Participant enrolls in the Plan pursuant to Section 5, such Participant will elect to have payroll deductions made on each pay day or other Contributions (to the extent permitted by the Administrator) made during the Offering Period (or portion thereof) in an amount equal to at least 1% but not exceeding 15% of the Compensation (or such other percentage of Compensation as determined by the Administrator in its sole discretion, prior to the commencement of an applicable Offering Period), that the Participant receives on each pay day during the Offering Period; provided, however, that should a pay day occur on an Exercise Date, a Participant will have any payroll deductions made on such day applied to his or her notional account under the subsequent Purchase Period or Offering Period. The maximum permissible Contribution by any Participant for all Offering Periods during any calendar year shall be $25,000. The Administrator, in its sole discretion and to the extent permitted by Section 423 of the Code, may permit all Participants in a specified Offering to contribute amounts to the Plan through payment by cash, check, or other means set forth in the subscription agreement prior to each Exercise Date of each Purchase Period. A Participant’s subscription agreement will remain in effect for successive Offering Periods unless terminated as provided in Section 10.
(b) Payroll deductions for a Participant will commence on the first pay day following the Enrollment Date (or such later date on which a Participant enrolls in the Plan pursuant to Section 5) and will end on the last pay day prior to the Exercise Date of such Purchase Period to which such authorization is applicable, unless sooner terminated by the Participant as provided in Section 10; provided, however, that with respect to the first Offering Period, payroll deduction for a Participant will not commence until such time as determined by the Administrator.
(c) All Contributions made for a Participant will be credited to his or her notional account under the Plan and payroll deductions will be made in whole percentages only. Except to the extent permitted by the Administrator pursuant to Section 6(a), a Participant may not make any additional payments into such notional account.
(d) A Participant may discontinue his or her participation in the Plan as provided in Section 10. Participants shall not be permitted to increase or to otherwise decrease their rates of Contributions during a Purchase Period unless otherwise determined by the Administrator in its sole discretion; provided, however, that Participants shall be permitted to increase or decrease their rates of Contributions effective as of the beginning of each Purchase Period.
(e) Notwithstanding the foregoing, to the extent necessary to comply with Section 423(b)(8) of the Code, a Participant’s Contributions may be decreased to 0% at any time during a Purchase Period. Subject to Section 423(b)(8) of the Code, Contributions will recommence at the rate originally elected by the Participant effective as of the beginning of the first Purchase Period scheduled to end in the following calendar year, unless terminated by the Participant as provided in Section 10.
(f) At the time the option under the Plan is exercised, in whole or in part, or at the time some or all of the Ordinary Shares issued under the Plan is disposed of (or any other time that a taxable event related to the Plan occurs), the Participant must make adequate provision for the Company’s or Employer’s federal, state, local, or any other tax liability payable to any authority including taxes imposed by jurisdictions outside of the United States, national insurance, social security, or other tax withholding obligations, if any, that arise upon the exercise of the option or the disposition of the Ordinary Shares (or any other time that a taxable event related to the Plan occurs). At any time, the Company or the Employer may, but will not be obligated to, withhold from the Participant’s compensation the amount necessary for the Company or the Employer to meet applicable withholding obligations, including any withholding required to make available to the Company or the Employer any tax deductions or benefits attributable to sale or early disposition of Ordinary Shares by the Eligible Employee. In addition, the Company or the Employer may, but will not be obligated to, withhold from the proceeds of the sale of Ordinary Shares or any other method of withholding the Company or the Employer deems appropriate to the extent permitted by Treasury Regulation Section 1.423-2(f).
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| 7. | Grant of Option |
On the Enrollment Date of each Offering Period, each Eligible Employee participating in such Offering Period (or any Purchase Period within such Offering Period) will be granted an option to purchase on each Exercise Date during such Offering Period (at the applicable Purchase Price) up to a number of Ordinary Shares determined by dividing (i) such Eligible Employee’s Contributions accumulated prior to such Exercise Date and retained in the Eligible Employee’s notional account as of the Exercise Date by (ii) the applicable Purchase Price; provided, however, that in no event will an Eligible Employee be permitted to purchase during each Purchase Period more than 2,500 Ordinary Shares (subject to any adjustment pursuant to Section 18); provided, further, that such purchase will be subject to the limitations set forth in Sections 3(c) and 13. The Eligible Employee may accept the grant of such option by electing to participate in the Plan in accordance with the requirements of Section 5. The Administrator may, for future Offering Periods, increase or decrease, in its absolute discretion, the maximum number of Ordinary Shares that an Eligible Employee may purchase during each Purchase Period of an Offering Period. Exercise of the option will occur as provided in Section 8, unless the Participant has withdrawn pursuant to Section 10. The option will expire on the last day of the Offering Period.
| 8. | Exercise of Option |
(a) Unless a Participant withdraws from the Plan as provided in Section 10, such Participant’s option for the purchase of Ordinary Shares will be exercised automatically on the Exercise Date, and the maximum number of full shares subject to the option will be purchased for such Participant at the applicable Purchase Price with the accumulated Contributions from his or her notional account. No fractional Ordinary Shares will be purchased; unless determined by the Administrator, any Contributions accumulated in a Participant’s notional account that are not sufficient to purchase a full share will be retained in the Participant’s notional account for the subsequent Purchase Period or Offering Period, subject to earlier withdrawal by the Participant as provided in Section 10. Any other funds left over in a Participant’s notional account after the Exercise Date will be returned to the Participant (without interest thereon, except as otherwise required under local laws, as further set forth in Section 12). During a Participant’s lifetime, a Participant’s option to purchase shares hereunder is exercisable only by him or her.
(b) If the Administrator determines that, on a given Exercise Date, the number of Ordinary Shares with respect to which options are to be exercised may exceed (i) the number of Ordinary Shares that were available for sale under the Plan on the Enrollment Date of the applicable Offering Period, or (ii) the number of Ordinary Shares available for sale under the Plan on such Exercise Date, the Administrator may in its sole discretion (x) provide that the Company will make a pro rata allocation of the Ordinary Shares available for purchase on such Enrollment Date or Exercise Date, as applicable, in as uniform a manner as will be practicable and as it will determine in its sole discretion to be equitable among all Participants exercising options to purchase Ordinary Shares on such Exercise Date, and continue all Offering Periods then in effect, or (y) provide that the Company will make a pro rata allocation of the shares available for purchase on such Enrollment Date or Exercise Date, as applicable, in as uniform a manner as will be practicable and as it will determine in its sole discretion to be equitable among all Participants exercising options to purchase Ordinary Shares on such Exercise Date, and terminate any or all Offering Periods then in effect pursuant to Section 19. The Company may make a pro rata allocation of the shares available on the Enrollment Date of any applicable Offering Period pursuant to the preceding sentence, notwithstanding any authorization of additional shares for issuance under the Plan by the Company’s shareholders subsequent to such Enrollment Date.
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| 9. | Delivery |
As soon as reasonably practicable after each Exercise Date on which a purchase of Ordinary Shares occurs, the Company will arrange the delivery to each Participant of the shares purchased upon exercise of his or her option in a form determined by the Administrator (in its sole discretion) and pursuant to rules established by the Administrator. The Company may permit or require that shares be deposited directly with a broker designated by the Company or to a designated agent of the Company, and the Company may utilize electronic or automated methods of share transfer. The Company may require that shares be retained with such broker or agent for a designated period of time and/or may establish other procedures to permit tracking of disqualifying dispositions of such shares. No Participant will have any voting, dividend, or other shareholder rights with respect to Ordinary Shares subject to any option granted under the Plan until such shares have been purchased and delivered to the Participant as provided in this Section 9.
| 10. | Withdrawal |
A Participant may withdraw all, but not less than all, the Contributions credited to his or her notional account and not yet used to exercise his or her option under the Plan at any time by (a) submitting to the Company’s Finance department (or its delegate) a written notice of withdrawal in the form determined by the Administrator for such purpose, or (b) following an electronic or other withdrawal procedure determined by the Administrator. All the Participant’s Contributions credited to his or her notional account will be paid to such Participant as soon as reasonably practicable after receipt of notice of withdrawal and such Participant’s option for the Offering Period will be automatically terminated, and no further Contributions for the purchase of shares will be made for such Offering Period. If a Participant withdraws from an Offering Period, Contributions will not resume at the beginning of the succeeding Offering Period, unless the Participant re-enrolls in the Plan in accordance with the provisions of Section 5.
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| 11. | Termination of Employment |
Upon a Participant’s ceasing to be an Eligible Employee, for any reason, he or she will be deemed to have elected to withdraw from the Plan and the Contributions credited to such Participant’s notional account during the Offering Period but not yet used to purchase Ordinary Shares under the Plan will be returned to such Participant or, in the case of his or her death, to the person or persons entitled thereto under Section 15, and such Participant’s option will be automatically terminated. In no event may a Participant be granted an option under the Plan following his or her termination of employment unless such Participant subsequently becomes an Eligible Employee again.
| 12. | Interest |
No interest will accrue on the Contributions of a Participant in the Plan, except as may be required by Applicable Law, as determined by the Company, and if so required by the laws of a particular jurisdiction, shall apply to all Participants in the relevant Offering except to the extent otherwise permitted by Treasury Regulation Section 1.423-2(f).
| 13. | Shares |
(a) Subject to adjustment upon changes in capitalization of the Company as provided in Section 18 hereof, the maximum number of Ordinary Shares that will be made available for sale under the Plan shall be equal to (i) a number equal to the lesser of (x) 1,000,000 or (y) 1% of the total number of Outstanding Ordinary Shares immediately following the closing of the transactions set forth in the Merger Agreement, plus (ii) any Ordinary Shares added as a result of the following sentence (collectively, the “Share Pool”). The Share Pool will automatically increase on January 1 of each year beginning in 2026 and ending with a final increase on January 1, 2035 in an amount equal to the lesser of (x) 1,000,000 or (y) 1% of the Outstanding Ordinary Shares on the preceding December 31; provided, however, that the Administrator may provide that there will be no January 1 increase in the Share Pool for any such year or that the increase in the Share Pool for any such year will be a smaller number of Ordinary Shares than would otherwise occur pursuant to this sentence.
(b) Until the shares are issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), a Participant will only have the rights of an unsecured creditor with respect to such shares, and no right to vote or receive dividends or any other rights as a shareholder will exist with respect to such shares.
(c) Ordinary Shares to be delivered to a Participant under the Plan will be registered in the name of the Participant or in the name of the Participant and his or her spouse.
| 14. | Administration |
The Plan shall be administered by the Administrator. The Board shall fill vacancies on, and from time to time may remove or add members to, the Administrator. Any power of the Administrator may also be exercised by the Board. The Administrator will have full and exclusive discretionary authority to construe, interpret, and apply the terms of the Plan, to designate separate Offerings under the Plan, to determine eligibility, to adjudicate all disputed claims filed under the Plan, and to establish such procedures that it deems necessary for the administration of the Plan (including, without limitation, to adopt such procedures and sub-plans as are necessary or appropriate to permit the participation in the Plan by employees who are foreign nationals or employed outside the United States, the terms of which sub-plans may take precedence over other provisions of this Plan, with the exception of Section 13(a), but unless otherwise superseded by the terms of such sub-plan, the provisions of this Plan shall govern the operation of such sub-plan). Unless otherwise determined by the Administrator, the employees eligible to participate in each sub-plan will participate in a separate Offering. Without limiting the generality of the foregoing, the Administrator is specifically authorized to adopt rules and procedures regarding eligibility to participate, the definition of Compensation, handling of Contributions, making of Contributions to the Plan (including, without limitation, in forms other than payroll deductions), establishment of bank or trust accounts to hold Contributions, payment of interest, conversion of local currency, obligations to pay payroll tax, determination of beneficiary designation requirements, withholding procedures, and handling of share certificates that vary with applicable local requirements. The Administrator also is authorized to determine that, to the extent permitted by Treasury Regulation Section 1.423-2(f), the terms of an option granted under the Plan or an Offering to citizens or residents of a non-U.S. jurisdiction will be less favorable than the terms of options granted under the Plan or the same Offering to employees resident solely in the United States. The Administrator hereby delegates to and designates the most senior officer in the Finance Department of the Company (or such other officer with similar authority), and to his or her delegates or designates, the authority to assist the Administrator in the day-to-day administration of the Plan. The Administrator may also delegate some or all of its responsibilities to one or more other persons (which may include Company personnel) and, to the extent there has been any such delegation, any reference in the Plan to the Administrator shall include the delegate of the Administrator. Every finding, decision, and determination made by the Administrator will, to the full extent permitted by Applicable Laws, be final and binding upon all parties.
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| 15. | Designation of Beneficiary |
(a) If permitted by the Administrator, a Participant may file a designation of a beneficiary who is to receive any Ordinary Shares and cash, if any, from the Participant’s notional account under the Plan in the event of such Participant’s death subsequent to an Exercise Date on which the option is exercised but prior to delivery to such Participant of such shares and cash. In addition, if permitted by the Administrator, a Participant may file a designation of a beneficiary who is to receive any cash from the Participant’s notional account under the Plan in the event of such Participant’s death prior to exercise of the option. If a Participant is married and the designated beneficiary is not the spouse, spousal consent will be required for such designation to be effective.
(b) Such designation of beneficiary may be changed by the Participant at any time by notice in a form determined by the Administrator. In the event of the death of a Participant and in the absence of a beneficiary validly designated under the Plan who is living at the time of such Participant’s death, the Company will deliver such shares and/or cash to the executor or administrator of the estate of the Participant, or if no such executor or administrator has been appointed (to the knowledge of the Company), the Company, in its discretion, may deliver such shares and/or cash to the spouse or to any one or more dependents or relatives of the Participant, or if no spouse, dependent, or relative is known to the Company, then to such other person as the Company may designate.
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(c) All beneficiary designations will be in such form and manner as the Administrator may designate from time to time. Notwithstanding Sections 15(a) and 15(b), the Company and/or the Administrator may decide not to permit such designations by Participants in non-U.S. jurisdictions to the extent permitted by Treasury Regulation Section 1.423-2(f).
| 16. | Transferability |
Neither Contributions credited to a Participant’s notional account nor any rights with regard to the exercise of an option or to receive Ordinary Shares under the Plan may be assigned, transferred, pledged, or otherwise disposed of in any way (other than by will, the laws of descent and distribution or as provided in Section 15) by the Participant. Any such attempt at assignment, transfer, pledge, or other disposition will be without effect, except that the Company may treat such act as an election to withdraw funds from an Offering Period in accordance with Section 10 hereof.
| 17. | Use of Funds |
The Company may use all Contributions received or held by it under the Plan for any corporate purpose, and the Company will not be obligated to segregate such Contributions except under Offerings in which applicable local law requires that Contributions to the Plan by Participants be segregated from the Company’s general corporate funds and/or deposited with an independent third party for Participants in non-U.S. jurisdictions. Until Ordinary Shares are issued, Participants will only have the rights of an unsecured creditor with respect to such shares.
| 18. | Adjustments, Dissolution, Liquidation, Merger or Other Corporate Transaction |
(a) Adjustments. In the event that any dividend or other distribution (whether in the form of cash, Ordinary Shares, other securities, or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, or exchange of Ordinary Shares or other securities of the Company, or other change in the corporate structure of the Company affecting the Ordinary Shares occurs, the Administrator, in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan, will, in such manner as it may deem equitable, adjust the number and class of Ordinary Shares that may be delivered under the Plan, the Purchase Price per share and the number of Ordinary Shares covered by each option under the Plan that has not yet been exercised, and the numerical limits of Sections 7 and 13.
(b) Dissolution or Liquidation. In the event of the proposed dissolution or liquidation of the Company, any Offering Period then in progress will be shortened by setting a New Exercise Date, and will terminate immediately prior to the consummation of such proposed dissolution or liquidation, unless provided otherwise by the Administrator. The New Exercise Date will be before the date of the Company’s proposed dissolution or liquidation. The Administrator will notify each Participant in writing or electronically, prior to the New Exercise Date, that the Exercise Date for the Participant’s option has been changed to the New Exercise Date and that the Participant’s option will be exercised automatically on the New Exercise Date, unless prior to such date the Participant has withdrawn from the Offering Period as provided in Section 10.
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(c) Merger or Other Corporate Transaction. In the event of a merger, sale, or other similar corporate transaction involving the Company, each outstanding option will be assumed or an equivalent option substituted by the successor corporation or a Parent or Subsidiary of the successor corporation. If the successor corporation refuses to assume or substitute for the option, the Offering Period with respect to which such option relates will be shortened by setting a New Exercise Date on which such Offering Period shall end. The New Exercise Date will occur before the date of the Company’s proposed merger, sale, or other similar corporate transaction. The Administrator will notify each Participant in writing or electronically prior to the New Exercise Date, that the Exercise Date for the Participant’s option has been changed to the New Exercise Date and that the Participant’s option will be exercised automatically on the New Exercise Date, unless prior to such date the Participant has withdrawn from the Offering Period as provided in Section 10.
| 19. | Amendment or Termination |
(a) The Administrator, in its sole discretion, may amend, suspend, or terminate the Plan, or any part thereof, at any time and for any reason. If the Plan is terminated, the Administrator, in its discretion, may elect to terminate all outstanding Offering Periods either immediately or upon completion of the purchase of Ordinary Shares on the next Exercise Date (which may be sooner than originally scheduled, if determined by the Administrator in its discretion), or may elect to permit Offering Periods to expire in accordance with their terms (and subject to any adjustment pursuant to Section 18). If the Offering Periods are terminated prior to expiration, all amounts then credited to Participants’ notional accounts that have not been used to purchase Ordinary Shares will be returned to the Participants (without interest thereon, except as otherwise required under local laws, as further set forth in Section 12) as soon as administratively practicable.
(b) Without shareholder consent and without limiting Section 19(a), the Administrator will be entitled to change the Offering Periods or Purchase Periods, designate separate Offerings, limit the frequency and/or number of changes in the amount withheld during an Offering Period, establish the exchange ratio applicable to amounts withheld in a currency other than U.S. dollars, permit payroll withholding in excess of the amount designated by a Participant in order to adjust for delays or mistakes in the Company’s processing of properly completed withholding elections, establish reasonable waiting and adjustment periods and/or accounting and crediting procedures to ensure that amounts applied toward the purchase of Ordinary Shares for each Participant properly correspond with Contribution amounts, and establish such other limitations or procedures as the Administrator determines in its sole discretion advisable that are consistent with the Plan.
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(c) In the event the Administrator determines that the ongoing operation of the Plan may result in unfavorable financial accounting consequences, the Administrator may, in its discretion and, to the extent necessary or desirable, modify, amend, or terminate the Plan to reduce or eliminate such accounting consequence including, but not limited to:
(i) amending the Plan to conform with the safe harbor definition under the Financial Accounting Standards Board Accounting Standards Codification Topic 718 (or any successor thereto), including with respect to an Offering Period underway at the time;
(ii) altering the Purchase Price for any Offering Period or Purchase Period including an Offering Period or Purchase Period underway at the time of the change in Purchase Price;
(iii) shortening any Offering Period or Purchase Period by setting a New Exercise Date, including an Offering Period or Purchase Period underway at the time of the Administrator action;
(iv) reducing the maximum percentage of Compensation a Participant may elect to set aside as Contributions; and
(v) reducing the maximum number of Ordinary Shares a Participant may purchase during any Offering Period or Purchase Period.
Such modifications or amendments will not require shareholder approval or the consent of any Participants.
| 20. | Notices |
All notices or other communications by a Participant to the Company under or in connection with the Plan will be deemed to have been duly given when received in the form and manner specified by the Company at the location, or by the person, designated by the Company for the receipt thereof.
| 21. | Conditions Upon Issuance of Shares |
(a) Ordinary Shares will not be issued with respect to an option unless the exercise of such option and the issuance and delivery of such shares pursuant thereto will comply with all applicable provisions of law, domestic or foreign, including the Securities Act of 1933, as amended, the Exchange Act, the rules and regulations promulgated thereunder, and the requirements of any stock exchange upon which the shares may then be listed, and will be further subject to the approval of counsel for the Company with respect to such compliance.
(b) As a condition to the exercise of an option, the Company may require the person exercising such option to represent and warrant at the time of any such exercise that the shares are being purchased only for investment and without any present intention to sell or distribute such shares if, in the opinion of counsel for the Company, such a representation is required by any of the aforementioned applicable provisions of Applicable Law.
| 22. | Term of Plan |
The Plan will become effective upon the Effective Date. It will continue in effect until terminated pursuant to Section 19.
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| 23. | Shareholder Approval |
The Plan will be subject to approval by the shareholders of the Company within 12 months after the date the Plan is adopted by the Board. Such shareholder approval will be obtained in the manner and to the degree required under Applicable Laws.
| 24. | Governing Law |
This Plan and any agreements or other documents hereunder shall be interpreted and construed in accordance with the laws of the Cayman Islands (without regard to its choice of law provisions). Any reference in this Plan or in any agreements or other documents hereunder to a provision of law or to a rule or regulation shall be deemed to include any successor law, rule, or regulation of similar effect or applicability.
| 25. | Severability |
If any provision of the Plan is or becomes or is deemed to be invalid, illegal, or unenforceable for any reason in any jurisdiction or as to any Participant, such invalidity, illegality, or unenforceability shall not affect the remaining parts of the Plan, and the Plan shall be construed and enforced as to such jurisdiction or Participant as if the invalid, illegal, or unenforceable provision had not been included.
| 26. | Interpretation |
Headings are given to the Sections and subsections of the Plan solely as a convenience to facilitate reference and shall not be deemed in any way material or relevant to the construction or interpretation of the Plan or any provision thereof. Words in the masculine gender shall include the feminine gender, and where appropriate, the plural shall include the singular and the singular shall include the plural. The use herein of the word “including” following any general statement, term, or matter shall not be construed to limit such statement, term, or matter to the specific items or matters set forth immediately following such word or to similar items or matters, whether or not non-limiting language (such as “without limitation”, “but not limited to”, or words of similar import) is used with reference thereto, but rather shall be deemed to refer to all other items or matters that could reasonably fall within the broadest possible scope of such general statement, term, or matter. References herein to any agreement, instrument, or other document means such agreement, instrument, or other document as amended, supplemented, and modified from time to time to the extent permitted by the provisions thereof and not prohibited by the Plan.
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EXHIBIT A
CRESCENT BIOPHARMA, INC.
2025 EMPLOYEE STOCK PURCHASE PLAN
SUBSCRIPTION AGREEMENT
| _ Original Application | Offering Date: | |
| Change in Payroll Deduction Rate | ||
1. hereby elects to participate in the Crescent Biopharma, Inc. 2025 Employee Stock Purchase Plan (the “Plan”) and subscribes to purchase the Company’s Ordinary Shares in accordance with this Subscription Agreement and the Plan. Capitalized terms used but not defined in this Subscription Agreement have the meanings provided under the Plan.
2. I hereby authorize payroll deductions from each paycheck in the amount of ____% of my Compensation on each payday (from 1% to 15%) during the Offering Period in accordance with the Plan, commencing with the next Offering Period; provided, however, that, in no event may more than $25,000 of Ordinary Shares be purchased under the Plan in any calendar year. (Please note that no fractional percentages are permitted.)
3. I understand that the payroll deductions will be accumulated for the purchase of Ordinary Shares at the applicable Purchase Price determined in accordance with the Plan. I understand that if I do not withdraw from an Offering Period, any accumulated payroll deductions will be used to automatically exercise my option and purchase Ordinary Shares under the Plan.
4. I have received a copy of the complete Plan and its accompanying prospectus. I understand that my participation in the Plan is in all respects subject to the terms of the Plan.
5. Ordinary Shares purchased for me under the Plan should be issued in the name(s) of (Eligible Employee or Eligible Employee and Spouse only).
6. I understand that if I dispose of any shares received by me pursuant to the Plan within two years after the Offering Date (the first day of the Offering Period during which I purchased such shares) or one year after the Exercise Date, I will be treated for federal income tax purposes as having received ordinary income at the time of such disposition in an amount equal to the excess of the fair market value of the shares at the time such shares were purchased by me over the price that I paid for the shares. The Company may, but will not be obligated to, withhold from my compensation the amount necessary to meet any applicable withholding obligation including any withholding necessary to make available to the Company any tax deductions or benefits attributable to sale or early disposition of Ordinary Shares by me. If I dispose of such shares at any time after the expiration of the holding period, I understand that I will be treated for federal income tax purposes as having received income only at the time of such disposition, and that such income will be taxed as ordinary income only to the extent of an amount equal to the lesser of (a) the excess of the fair market value of the shares at the time of such disposition over the Purchase Price which I paid for the shares, or (b) 15% of the fair market value of the shares on the first day of the Offering Period. The remainder of the gain, if any, recognized on such disposition will be taxed as capital gain.
7. I hereby agree to be bound by the terms of the Plan. The effectiveness of this Subscription Agreement is dependent upon my eligibility to participate in the Plan.
| Employee’s Social Security #: | |
| Employee’s Address: | |
I UNDERSTAND THAT THIS SUBSCRIPTION AGREEMENT WILL REMAIN IN EFFECT THROUGHOUT SUCCESSIVE OFFERING PERIODS UNLESS TERMINATED BY ME.
| Date: | |||
| Signature | |||
A-2
EXHIBIT B
CRESCENT BIOPHARMA, INC.
2025 EMPLOYEE STOCK PURCHASE PLAN
NOTICE OF WITHDRAWAL
The undersigned Participant in the Offering Period of the Crescent Biopharma, Inc. 2025 Employee Stock Purchase Plan that began on ______________, ______ (the “Offering Date”) hereby notifies the Company that he or she hereby withdraws from the Offering Period. He or she hereby directs the Company to pay to the undersigned as soon as reasonably practicable all the payroll deductions credited to his or her notional account with respect to such Offering Period. The undersigned understands and agrees that his or her option for such Offering Period will be automatically terminated. The undersigned understands further that no further payroll deductions will be made for the purchase of shares in the current Offering Period and the undersigned will be eligible to participate in succeeding Offering Periods only by delivering to the Company a new Subscription Agreement.
| Participant’s Name: | |
| Participant’s Address: | |
| Date: | |||
| Signature | |||
Exhibit 10.20
SUBLEASE
This Sublease (the “Sublease”) is made as of the 28th day of May, 2025 (the “Effective Date”), by and between NANO DIMENSION USA INC., a Delaware corporation (“Sublandlord”), and CRESCENT BIOPHARMA, INC., a Delaware corporation (“Subtenant”).
WITNESSETH
WHEREAS, by Lease dated as of March 1, 2022, by and between NWALP PHOP PROPERY OWNER, LLC, a Delaware limited liability company (“Overlandlord”), as lessor thereunder, and Sublandlord, as lessee thereunder (the “Overlease”) (a copy of which is attached as Exhibit A hereto), Overlandlord leased to Sublandlord approximately 25,383 rentable square feet of space (the “Premises”) in that certain building (the “Building”) containing approximately 158,699 rentable square feet located at and known as 300 Fifth Avenue, Waltham, Massachusetts (described in the Overlease as the Building), and its appurtenances, all as more particularly described in the Overlease; and
WHEREAS, Subtenant desires to sublease from Sublandlord and Sublandlord desires to sublease to Subtenant, a portion of the Premises, containing approximately 24,750 rentable square feet (the “Subleased Premises”), a plan of which Subleased Premises is attached hereto as Exhibit B.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants herein contained and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:
1. CAPITALIZED TERMS. Capitalized terms that are used herein and not otherwise defined shall have the meaning given in the Overlease.
2. DEMISE OF SUBLEASED PREMISES; DELIVERY CONDITION
(a) Sublandlord hereby demises and subleases to Subtenant, and Subtenant hereby hires and takes from Sublandlord, exclusive possession of the Subleased Premises for the term and upon the conditions hereinafter set forth.
(b) Subtenant shall have, as appurtenant to the Subleased Premises, the non-exclusive right to use, in common with Sublandlord and others from time to time entitled thereto, the areas and facilities of the Building referred to in the Overlease as “Common Facilities” that do not serve only the Subleased Premises (such as the main lobby of the Building, fire vestibules, common restrooms, mechanical areas, ground floor corridors, elevator foyers, electrical and janitorial closets, telephone and equipment rooms and other similar facilities maintained for the benefit of tenants and invitees) and necessary for the reasonable use and enjoyment of the Subleased Premises. Subtenant shall also have the non-exclusive right to use, in common with Sublandlord and others from time to time entitled thereto, the freight elevator and loading docks serving the Subleased Premises. If required by Overlandlord, such use by Subtenant will be scheduled in advance with Overlandlord to avoid any conflicts. Any actual costs incurred by Sublandlord and associated with such use will be reimbursed by Subtenant to Sublandlord as a Subtenant Surcharge.
(c) This Sublease is expressly conditioned upon the written consent of the Overlandlord in accordance with the terms and conditions of the Overlease and with Section 10 below.
(d) Sublandlord shall deliver the Subleased Premises to Subtenant in their current “AS IS, WHERE IS” condition, without any representation or warranty by Sublandlord whatsoever; provided, however, Sublandlord shall be obligated to deliver the Premises (i) in broom clean condition, (ii) free and clear of all tenants and occupants, and (iii) free of all of Sublandlord’s personal property (other than the Furniture). Sublandlord will have no obligation to perform or pay for any alteration, addition or improvement in or to the Premises or the Building in order to prepare the same for Subtenant’s occupancy.
(e)
(f) For purposes of this Sublease, the term “Force Majeure” shall mean any cause or circumstance beyond the reasonable control of Sublandlord, such as acts of God, war, civil insurrection or public disorder, strikes, delays in obtaining permits or inspections, unavailability of (or delay in obtaining) construction materials, shortages within the labor market, pandemic or other similar circumstance, or acts of governmental authorities or other third parties.
(g) Subtenant represents and warrants that it has made a thorough examination of the Subleased Premises, and it is familiar with the condition thereof. Subtenant acknowledges that it enters into this Sublease without any other representation or warranties by Sublandlord or anyone acting or purporting to act on behalf of Sublandlord, as to present or future condition of the Subleased Premises or the appurtenances thereto or any improvements therein or of the Building, except as otherwise expressly set forth herein.
3. TERM.
(a) Subject to the provisions of Section 10 herein, the term of this Sublease (the “Term”) shall commence on the later to occur of (i) June 1, 2025, or (ii) the date on which Sublandlord delivers a fully executed copy of this Sublease and Overlandlord’s written Consent to this Sublease (the “Commencement Date”). Promptly upon the occurrence of the Commencement Date, Sublandlord and Subtenant will enter into a memorandum reflecting the same, substantially in the form attached hereto as Exhibit C, provided that the failure by either party to enter into any such memorandum will have no effect on the Commencement Date.
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(b) The “Term of this Sublease” commences on the Commencement Date and ends at 11:59 p.m., Boston time, on February 27, 2029 (the “Expiration Date”) or on such earlier date upon which such term may be terminated pursuant to the provisions hereof. Subtenant acknowledges that the term of the Overlease expires on February 28, 2029, and that no right or option to extend or renew the term of this Sublease is granted hereunder. Sublandlord shall have continuous access to the Subleased Premises during the final sixty (60) days of the Term of this Sublease in order to perform any repair or restoration obligations required of Sublandlord under the Overlease, provided that, Sublandlord provides Subtenant with prior written notice of Sublandlord’s restoration schedule and Sublandlord’s repair or restoration obligations shall not injure or inconvenience or interfere with Tenant’s business, occupancy, or access of the Subleased Premises.
(c) Provided there is no then uncured default hereunder, upon execution and delivery of this Sublease and receipt of Overlandlord’s written Consent (the “Early Access Date”), Subtenant shall have access to the Subleased Premises up to thirty (30) days (or such shorter period as may remain between Early Access Date and the Commencement Date) prior to the Commencement Date, for the purpose of constructing any Subtenant Improvements as may be approved in accordance with the terms of the Overlease and this Sublease, and the installation of voice and data wiring, fixtures and equipment, provided that such early access shall be subject to all of the terms and conditions of this Sublease and the Overlease except that Subtenant shall not be obligated to pay Basic Rent until the Commencement Date. Subtenant’s early access shall be subject to reasonable scheduling and other requirements of Sublandlord and Overlandlord and their respective contractors, and Subtenant shall deliver to Sublandlord certificates of liability, casualty and workmen’s compensation insurance (all in accordance with the terms and provisions of the Overlease) prior to having any such early access. Subtenant’s early access is also conditioned upon Subtenant and Subtenant’s contractors working in harmony and not interfering with or delaying Overlandlord’s or Sublandlord’s contractors’ work in the Building; and if at any time Subtenant’s early access shall in the reasonable judgment of Overlandlord or Sublandlord cause or threaten to cause such disharmony, interference or delay, Overlandlord or Sublandlord, as the case may be, shall have the right to deliver written notice to Subtenant temporarily suspending Subtenant’s right to such early access until such disharmony, interference or delay can be reasonably avoided (but in no event beyond the Commencement Date).
4. OVERLEASE; PERMITTED USE
(a) This Sublease is in all respects subject and subordinate to all of the terms and conditions of the Overlease and to the matters to which the Overlease, including any amendments thereto, is or shall be subordinate. Subtenant agrees that Subtenant has reviewed and is familiar with the redacted version of the Overlease, and will not do or suffer or permit anything to be done which would result in a default or breach (whether or not subject to notice or grace periods) on the part of Sublandlord under the Overlease or cause the Overlease to be terminated.
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(b) Except as otherwise expressly provided in this Sublease, the terms, covenants, conditions, rights, obligations, remedies and agreements of the Overlease are incorporated into this Sublease by reference and made a part hereof as if fully set forth herein and shall constitute the terms of this Sublease, mutatis mutandis, Sublandlord being substituted for “Sublandlord” thereunder, Subtenant being substituted for “Subtenant” thereunder, and “Subleased Premises” being substituted for “Premises” thereunder, except to the extent that such terms do not relate to the Subleased Premises or are inapplicable to, or specifically inconsistent with the terms of this Sublease. If there is any inconsistency between the provisions of this Sublease and the provisions of the Overlease, the provisions of this Sublease shall prevail solely as between Subtenant and Sublandlord. Notwithstanding the foregoing, any representations or warranties made by Overlandlord, and any indemnification, reimbursement or hold harmless agreement by Overlandlord under the Overlease will not be deemed to have been made by (or in any way enforced against) Sublandlord under this Sublease, and Subtenant shall not be entitled to rely upon the same. Further, in any case where any provision of the Overlease provides for an indemnification of Overlandlord by Sublandlord, that obligation will be deemed hereunder to be incorporated as an indemnification by Subtenant of both Sublandlord and Overlandlord.
(c) The following provisions of the attached Overlease shall not be incorporated herein by reference and are expressly excluded from the terms of this Sublease: The following definitions in Article 1: Premises, Premises Rentable Area, Basic Rent, Tenant’s Proportionate Share, Security Deposit, Letter of Credit, Term Commencement Date, Rent Commencement Date, Expiration Date, Term, and Brokers; Section 4.1; Article 5 (including any references in the Overlease to “Initial Work”); Section 6.2; Section 8.2 (second paragraph); Article 11 (and any reference to the Tenant’s obligation to pay Taxes); Article 12 (and any reference to the Tenant’s obligations to pay Operating Expenses); Section 15.1(b); Section 16.1, Article 18, Section 20.1, 20.4; Exhibit A-2; Exhibit B; Exhibit D, and Exhibit E; provided; however, that notwithstanding such non-incorporation, this Sublease remains subject and subordinate to all of the foregoing provisions as provided in Section 3(a) above. This Sublease shall specifically incorporate, without limitation of the foregoing, the provisions of Section 8.4 of the Overlease. To the extent the terms of this Sublease conflict with the terms of the Overlease, then as between Sublandlord and Subtenant, the terms of this Sublease shall control, but as between Overlandlord and Sublandlord or Subtenant, the terms of the Overlease shall control. Notwithstanding anything to the contrary in this Sublease, Subtenant shall not be bound to perform any obligation under the Overlease that has been redacted in Exhibit A.
(d) Subtenant shall neither do or permit anything to be done that could, after notice and failure to timely cure, if applicable, cause the Overlease to be terminated or forfeited by reason of any right of termination or forfeiture reserved or vested in Overlandlord under the Overlease as a result of a “Tenant” default under the Overlease, and without limitation of any other indemnification or hold harmless obligation, Subtenant shall defend, indemnify and hold Sublandlord and its agents, employees, officers and contractors harmless from and against any and all liabilities, claims, suits, demands, judgments, costs, losses, interest and expenses (including, without being limited to, reasonable attorneys’ fees and expenses) of any kind whatsoever by reason of any breach or default on the part of Subtenant hereunder or under the Overlease, or by any other act, omission, condition or circumstance caused by Subtenant by reason of which the Overlease is or could be so terminated or forfeited. Subtenant covenants that Subtenant will not do anything that constitutes a breach or default under the provisions of the Overlease or omit to do anything that Subtenant is obligated to do under the terms of this Sublease that constitutes a breach or default under the Overlease.
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(e) Subtenant shall use the Subleased Premises only for the uses set forth in Section 6.1 of the Overlease. Subtenant shall not do, suffer or permit anything to be done in or upon the Subleased Premises except in compliance with and as permitted by the Overlease and applicable law. Subtenant shall not cause or permit the Subleased Premises, the Premises or the Property to be used in any way that violates any applicable laws or constitutes a nuisance or waste. Subtenant shall comply with the certificate of occupancy relating to the Building and the Subleased Premises and with all laws, statutes, ordinances, orders, rules, regulations and requirements of all federal, state and municipal governments and the appropriate agencies, officers, departments, boards and commissions thereof, and the board of fire underwriters and/or the fire insurance rating organization or similar organization performing the same or similar functions, whether now or hereafter in force, applicable to the Subleased Premises.
5. BASIC RENT; ADDITIONAL RENT; SUBTENANT SURCHARGES
(a) Commencing on the Commencement Date, Subtenant shall pay to Sublandlord annual Basic Rent (the “Basic Rent”) in the amount of $569,250.00 ($23.00 per rentable square foot in the Subleased Premises) per annum, payable in monthly installments of $47,437.50 each. Notwithstanding the foregoing, so long as there exists no uncured Event of Default by Subtenant under this Sublease beyond any applicable notice and cure period, Sublandlord will waive the Subtenant’s obligation to pay Basic Rent (the “Rent Abatement”) hereunder for the first one hundred twenty (120) days after the Commencement Date (the “Rent Abatement Period”) (such one hundred twenty-first (121st) day being referred to herein as the “Rent Commencement Date”). If at any time during the Rent Abatement Period there occurs any Event of Default under this Sublease, beyond any applicable notice and cure period Subtenant’s right to abate the monthly installments of Basic Rent shall toll (and Subtenant shall be required to pay the Basic Rent during any such period) until Subtenant has cured, to Sublandlord’s reasonable satisfaction, such Event of Default. If this Sublease is terminated as a result of any Event of Default by Subtenant, Sublandlord will have the right to recover the then-unamortized portion (calculated as of the date of the Event of Default in question) of the Rent Abatement so waived in addition to Sublandlord’s other damages. The foregoing Rent Abatement applies only to Basic Rent hereunder, and not to any Additional Rent or other charge or amount.
(b) Commencing on the first anniversary of the Commencement Date, and on each anniversary of the Commencement Date thereafter, the amount of Basic Rent will be increased by Twenty-four Thousand Seven Hundred Fifty Dollars ($24,750.00) (one dollar ($1.00) per rentable square foot) per annum.
(c) Commencing on the Commencement Date (subject to the Rent Abatement Period) and thereafter monthly, in advance, on the first day of each and every calendar month during the Sublease Term, Subtenant shall pay to Sublandlord an amount equal to one-twelfth (1/12) of the annual Basic Rent specified above. Basic Rent shall be payable in advance in the monthly installments forth above, pro-rated on a per diem basis in the case of any partial months during the Term, without notice or demand and without any abatement, set-off or deduction, other than as may be expressly set forth in this Sublease. Subtenant agrees to pay the Basic Rent to Sublandlord, or as directed by Sublandlord, at Sublandlord’s address specified above, or at such other place as Sublandlord shall from time to time designate by notice. Basic Rent for any partial month shall be paid by Subtenant to Sublandlord at such rate on a pro rata basis, and, if the Rent Commencement Date shall be other than the first day of a calendar month, the first payment of Basic Rent which Subtenant shall make to Sublandlord shall be a payment equal to a proportionate part of such monthly Basic Rent for the partial month from the Rent Commencement Date to the last day of the said partial month. Subject to the provisions of this Sublease, Additional Rent payable by Subtenant on a monthly basis, as elsewhere provided in this Sublease, likewise shall be prorated, provided that the first payment on account thereof shall be determined in similar fashion and shall commence on the Commencement Date and other provisions of this Sublease calling for monthly payments shall be read as incorporating this undertaking by Subtenant.
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(d) For clarity, Sublandlord and Subtenant agree that Subtenant shall have no obligation to pay any portion of payments due from Sublandlord to Overlandlord on account of Taxes (under Article 11 of the Overlease) or Operating Expenses (under Article 12 of the Overlease).
(e) In addition to the Basic Rent, Subtenant agrees to pay to Sublandlord all Subtenant Surcharges (as hereinafter defined) as Additional Rent hereunder as hereinafter provided. As used herein, the term “Subtenant Surcharges” shall mean any and all amounts which would not have become due and payable but for the acts and/or failures to act (whether or not wrongful) of Subtenant under this Sublease, or which are otherwise attributable to the Subleased Premises, including, but not limited to: (i) any increases in the Sublandlord’s and/or Overlandlord’s fire, rent or other insurance premiums resulting from any act or omission of Subtenant or from Subtenant’s particular use of or activities at the Project, and (ii) the cost of or charge for any service or amenity that is furnished or provided by Overlandlord or Sublandlord, or by any third-party vendor (where such cost is not paid directly to such vendor), at the request of Subtenant, and (iii) any Additional Rent or charges under the Overlease payable by Sublandlord on account of any other additional service as may be provided to or for Subtenant under the Overlease, or with the consent of the Overlandlord, and (iv) the reasonable charges for services provided by Sublandlord for Subtenant or the Subleased Premises hereunder where such a charge is provided for. Subtenant shall pay any Subtenant Surcharge within thirty (30) days after the presentation of a statement therefor by the Sublandlord to Subtenant.
(f) Any failure or delay by Sublandlord in billing any sum set forth in this Section 5 shall not constitute a waiver of Subtenant’s obligation to pay the same in accordance with the terms of this Sublease. Subtenant’s obligation to pay all such amounts shall survive the expiration or termination of this Sublease. Sublandlord will furnish to Subtenant a copy of each notice or statement actually received from the Overlandlord affecting the Subleased Premises with respect to Subtenant's obligations hereunder.
(g) The Basic Rent, Subtenant Surcharges and any other amounts payable pursuant to this Sublease shall be paid by Subtenant to Sublandlord by a good unendorsed check, subject to collection, as and when the same become due and payable, without demand therefor and without any deduction, set-off or abatement whatsoever. If Sublandlord so requests, Subtenant will establish a scheduled ACH/electric funds transfer arrangement for such payments. Any other amounts of additional rents and other charges herein reserved and payable shall be paid by Subtenant in the manner and to the persons set forth in the statement from Sublandlord describing the amounts due as applicable. All Subtenant Surcharges and all other costs, charges and expenses which Subtenant assumes, agrees or is obligated to pay to Sublandlord pursuant to this Sublease shall be Additional Rent and in the event of nonpayment thereof Sublandlord shall have all the rights and remedies with respect thereto as are herein provided for in case of nonpayment of the Basic Rent reserved hereunder. Any amount not received by Sublandlord within five (5) days of the date when due hereunder shall bear interest at the rate of ten percent (10%) per annum, and Sublandlord may impose a late charge thereon equal to five percent (5%) of the overdue amount, provided, however, that on the first occasion during any calendar year, Sublandlord shall furnish Tenant with written notice of such failure and permit Tenant five (5) days from delivery of said notice to cure such failure prior to the application of the late charge and interest.
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6. UTILITIES. Overlandlord is required under the Overlease to provide certain levels of heating, cooling, water and other services to the Subleased Premises, as more particularly set forth therein, and Sublandlord shall have no obligation (whether by incorporation or otherwise) or responsibility therefor. Subtenant acknowledges that Basic Rent does not include the cost of furnishing electricity, telephone, internet, or other utilities as set forth in the Overlease. Sublandlord will deliver to Subtenant copies of any invoice or statement received from Overlandlord (together with any back-up information so received) for electricity consumed in the Subleased Premises, and Subtenant will pay, as a Subtenant Surcharge, the costs and charges to Sublandlord indicated on such statements, as Additional Rent hereunder, within twenty (20) days after issuance of each such statement. Subtenant shall not be entitled to request or receive any service or utility that Sublandlord is not entitled to receive under the express terms of the Overlease. If Sublandlord actually receives any credit or refund on account of such charges paid by Subtenant, and provided there exists no Event of Default by Subtenant hereunder continuing beyond any applicable notice and cure period, Sublandlord will provide to Subtenant a reasonably pro-rated credit or refund. Sublandlord will in no event be liable for any interruption in or failure of utility services in or serving the Subleased Premises from whatever cause. However, if Sublandlord is granted an abatement of Rent as provided in Section 10.4 of the Overlease in respect of the Subleased Premises, and provided there exists no Event of Default by Subtenant hereunder continuing beyond any applicable notice and cure period, then Tenant shall be entitled to a reasonably pro-rated allocation of such abatement.
7. FURNITURE. Upon the Commencement Date, Subtenant will have the right to use any furniture, fixtures and equipment belonging to Sublandlord and located in the Subleased Premises (the “Furniture”), as further specified on the inventory attached to this Sublease as Exhibit D. Without limitation, the Furniture shall not include computers, servers, computer equipment or Sublandlord’s telecommunication or computer network equipment, or other systems or equipment that are used for Sublandlord’s proprietary or confidential business purposes, all of which shall be removed by Sublandlord prior to the Commencement Date. Subtenant shall keep and maintain the Furniture in good condition and repair, ordinary wear and tear excepted. Sublandlord makes no representation or warranty with respect to the Furniture or the condition or utility thereof. At the expiration or earlier termination of the Term, Subtenant shall return the Furniture to Sublandlord in the condition required hereunder, provided that if Subtenant and Overlandlord come to any agreement pursuant to which Subtenant is allowed to occupy the Subleased Premises after the expiration or termination hereof, then at the request of Subtenant, Sublandlord will convey any of its right, title and interest in the Furniture to Subtenant in consideration of One Dollar ($1.00).
8. OVERLANDLORD’S SERVICES AND OBLIGATIONS. Notwithstanding any incorporation of any provision of the Overlease by reference, Sublandlord and Subtenant acknowledge and agree that, under the Overlease, the services, repairs, restorations, equipment and access to and for the Premises and insurance coverage of the Building are in fact to be provided by Overlandlord. Subtenant acknowledges and agrees that Sublandlord shall have no obligation to provide any services to the Building or the Subleased Premises, or to perform the terms, covenants, conditions or obligations contained in the Overlease on the part of Overlandlord to be performed, and Sublandlord will have no liability to Subtenant for any loss or damage arising from or suffered by Subtenant as a result or consequence of any failure by Overlandlord to perform such obligations. Subtenant agrees to look solely to Overlandlord for the furnishing of such services and the performance of such terms, covenants, conditions or obligations. In the event that Overlandlord shall fail to furnish such services or to perform any of the terms, covenants, conditions or obligations contained in the Overlease on its part to be performed, Sublandlord shall, upon the request of Subtenant and at the sole cost and expense of Subtenant, use commercially reasonable efforts (to the extent provided under the Overlease and permitted by applicable law) to cause Overlandlord’s performance and otherwise reasonably cooperate with Subtenant to enforce Overlandlord’s obligations, but Sublandlord shall in no event ever be obligated to commence litigation or other formal proceedings against Overlandlord or any other party or to obtain Overlandlord’s consent or approval wherever required by the Overlease. Sublandlord agrees that if under the Overlease any right or remedy of Sublandlord or any duty or obligation of Overlandlord is subject to or conditioned upon Sublandlord making any demand upon Overlandlord or giving any notice or request to Overlandlord then, if Subtenant shall so request, Sublandlord, shall make such demand or give such notice or request on Subtenant’s behalf. Sublandlord shall not be liable to Subtenant, and the obligations of Subtenant under this Sublease shall not be impaired or the performance of Subtenant be excused, because of any failure or delay on Overlandlord’s part in furnishing such services, repairs, restorations, equipment, access or insurance coverage. In any event, Subtenant shall not be allowed any abatement or diminution of rent under this Sublease because of Overlandlord’s failure to perform any of its obligations under the Overlease unless (and then only to the extent that) a like abatement is actually provided for and/or granted to Sublandlord under the Overlease, as provided elsewhere in this Sublease.
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9. CASUALTY AND CONDEMNATION. Notwithstanding anything to the contrary contained in this Sublease or in the Overlease, Subtenant shall not have the right to terminate this Sublease as to all or any part of the Subleased Premises, or be entitled to an abatement of Basic Rent or any other item of rental, by reason of a casualty or condemnation affecting the Subleased Premises unless Sublandlord is entitled to terminate the Overlease or actually receives a corresponding abatement with respect to its corresponding obligation under the Overlease. In no event will Sublandlord ever be obligated to perform Overlandlord’s repair or restoration obligations under the Overlease. If Sublandlord is entitled to terminate the Overlease for all or any portion of the Subleased Premises by reason of casualty or condemnation, Subtenant may terminate this Sublease as to any corresponding part of the Subleased Premises by written notice to Sublandlord given at least ten (10) business days prior to the date(s) Sublandlord is required to give notice to Overlandlord of such termination under the terms of the Overlease (provided Subtenant has received reasonable advance notice of such date(s)). Nothing herein shall be construed to restrict or limit Sublandlord’s right to terminate the Overlease following any casualty or condemnation. If the Overlease is terminated by Sublandlord or Overlandlord pursuant to the terms of the Overlease following any casualty or condemnation, then this Sublease shall similarly be terminated without the need for further action by Sublandlord. If the Overlease is not terminated, then this Sublease shall remain in effect and, if so requested by Subtenant, Sublandlord will use commercially reasonable efforts to enforce the Overlandlord’s obligation to repair and restore the Building and the Subleased Premises, to the extent of Sublandlord’s rights under the Overlease. Subtenant hereby grants and assigns to Sublandlord, and covenants with Sublandlord to further grant and assign to Sublandlord, all rights to any damages, awards or compensation as may be paid in the case of any condemnation or exercise of the power of eminent domain affecting the Subleased Premises or this Sublease (except as may be specifically applicable to Subtenant’s equipment or personal property and to Subtenant’s right to make a claim against the taking authority for relocation expenses), and covenants to deliver such further assignments and assurances thereof as Sublandlord or Overlandlord may from time to time reasonably request. In the case of any such casualty or condemnation, the Basic Rent due hereunder will abate if, and only to the extent that, Sublandlord actually receives a corresponding abatement of Basic Rent under the Overlease.
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10. CONSENTS GENERALLY. In all provisions of the Overlease requiring the approval or consent of the “Landlord,” Subtenant shall be required to obtain the approval or consent of both Overlandlord and Sublandlord. In the event Overlandlord has given such consent or approval (if required), Sublandlord’s consent shall not be unreasonably withheld, conditioned or delayed. In no event shall Sublandlord be liable for failure to give its consent or approval in any situation where consent or approval has been withheld or refused by Overlandlord, whether or not such withholding or refusal was proper, or where the consent or approval of any third party (such as, but not limited to, a mortgagee) is required and has not been obtained for any reason. Notwithstanding the foregoing, Sublandlord and Subtenant shall cooperate in good faith to obtain any such consent of Overlandlord or any third party. If Subtenant desires to do any act for which Overlandlord’s consent or approval (or that of any third party or parties) is required, then Subtenant shall deliver all necessary or appropriate materials, applications, plans, specifications and the like to Sublandlord no later than fifteen (15) days prior to the date on which Sublandlord must deliver the same to Overlandlord. Subtenant shall reimburse Sublandlord as a Subtenant Surcharge for any reasonable costs and expenses actually incurred by Sublandlord in connection with any consent or approval under this Sublease (except that Subtenant shall not be required to reimburse any costs or expenses of Sublandlord in connection with obtaining the Consent). Nothing contained in this Sublease is deemed to require Sublandlord to give any consent or approval simply because Overlandlord has given such consent or approval.
11. CONDITIONS PRECEDENT; CONSENT OF OVERLANDLORD TO THIS SUBLEASE. Sublandlord and Subtenant agree that this Sublease is subject to the following conditions precedent (the “Conditions Precedent”): (i) the execution and delivery of this Sublease by Sublandlord and Subtenant and (ii) Sublandlord obtaining the written consent (the “Consent”) of Overlandlord as provided in the Overlease and otherwise in a form reasonably acceptable to Sublandlord and Subtenant. It is expressly understood and agreed that notwithstanding anything to the contrary contained herein, the Term shall not commence, nor shall Subtenant take possession of the Subleased Premises or any part thereof, until the Consent has been obtained. Subtenant hereby agrees that it shall reasonably cooperate in good faith with Sublandlord and shall comply with any reasonable requests made of Subtenant by Sublandlord or Overlandlord in the procurement of the Consent. Notwithstanding anything to the contrary in this Sublease, if the Consent is not obtained within thirty (30) days after submission thereof to Overlandlord by Sublandlord, then each of Sublandlord and Subtenant shall have the right to terminate this Sublease effective upon written notice to the other, and neither party shall have any further liability to the other on account thereof, except that Sublandlord shall return any unapplied portion of the Security Deposit to Subtenant upon such termination.
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12. DEFAULT; REMEDIES.
(a) This Lease and the term of this Sublease are subject to the limitation that Subtenant shall be in default if, at any time during the Sublease Term, any one or more of the following events shall occur and not be cured prior to the expiration of the grace period (if any) herein provided (such uncured event being hereinafter referred to as an “Event of Default”), as follows:
(i) Subtenant shall fail to pay any installment of the Basic Rent or any Additional Rent or any other monetary amount due under this Sublease on or before the date on which the same becomes due and payable, and such failure continues for five (5) days (“Monetary Default Cure Period”) after notice thereof from Sublandlord to Subtenant; provided however, that if Sublandlord has given Subtenant two prior notices of default under this Section 11(a)(i) during any twelve month period, then with respect to the next default under this Section 11(a)(i), the Monetary Default Cure Period shall thereafter, for the remainder of such twelve month period, be three (3) days after notice from Sublandlord to Subtenant; or
(ii) Subtenant shall sublease any or all of the Subleased Premises or enter into an assignment of this Sublease in violation of the requirements of this Sublease or the Overlease; or
(iii) Subtenant shall fail to maintain general liability insurance, or any other insurance required to be carried under this Sublease or the Overlease; or
(iv) Subtenant shall fail to perform or observe any other requirement, term, covenant or condition of this Sublease (including without limitation any provision of the Overlease incorporated herein) on the part of Subtenant to be performed or observed and such failure shall continue for thirty (30) days after notice thereof from Sublandlord to Subtenant, or if said default shall reasonably require longer than thirty (30) days to cure, if Subtenant shall fail to commence to cure said default within such thirty (30) day period and/or fail to continuously prosecute the curing of the same to completion with due diligence; or
(v) The estate hereby created shall be taken on execution or by other process of law; or
(vi) Subtenant shall make an assignment or trust mortgage arrangement, so-called, of all or a substantial part of its property for the benefit of its creditors; or
(vii) Subtenant shall judicially be declared bankrupt or insolvent according to law; or
(viii) an Event of Bankruptcy (as defined in the Overlease) occurs, or a receiver, guardian, conservator, trustee in involuntary bankruptcy or other similar officer is appointed to take charge of all or any substantial part of Subtenant’s property by a court of competent jurisdiction and such appointment shall not be vacated within sixty (60) days; or
(ix) any petition shall be filed against Subtenant in any court, whether or not pursuant to any statute of the United States or of any State, in any bankruptcy, reorganization, composition, extension, arrangement or insolvency proceeding; or
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(x) Subtenant shall file any petition in any court, whether or not pursuant to any statute of the United States or any State, in any bankruptcy, reorganization, composition, extension, arrangement or insolvency proceeding; or
(xi) Subtenant (or its agents, employees, contractors or invitees) shall engage in any act or omission that (with or without the giving of notice or the passage of time) would constitute grounds for an Event of Default by Sublandlord under the Overlease, and such act or omission is not cured by Subtenant within the grace period (if any is provided) given to Sublandlord under the Overlease, less ten (10) days.
(b) Upon the happening of any one or more of the aforementioned Events of Default, and without limiting any other right or remedy that may be available at law or in equity, Sublandlord shall have, and may exercise, any or all of the rights provided under the Overlease, including without limitation Article 19 thereof. All of Subtenant’s obligations to pay any sum of money due and owing to Sublandlord (including without limitation Basic Rent, Additional Rent and Subtenant Surcharges) under this Sublease will survive the expiration or sooner termination of this Sublease.
(c) If Subtenant fails to make any payment or perform any other obligation of Subtenant under this Sublease, then Sublandlord has the right, but not the obligation, and without waiving or releasing Subtenant from any obligations of Subtenant under this Sublease, to make such payment or perform such other obligation of Subtenant in such manner and to such extent as Sublandlord deems necessary, and in exercising any such right, to pay any commercially reasonable incidental costs and expenses, employ attorneys, and incur and pay reasonable attorneys’ fees. Subtenant shall pay to Sublandlord upon demand as additional rent all sums so paid by Sublandlord and all incidental costs and expenses of Sublandlord in connection therewith, together with interest thereon at an annual rate equal to the rate two percent (2%) above the base rate or prime rate then published as such in the Wall Street Journal, or, if less, the maximum rate permitted by law. Such interest is payable with respect to the period commencing on the date such expenditures are made by Sublandlord and ending on the date such amounts are repaid by Subtenant. The provisions of this Section 12 shall survive the expiration or the sooner termination of this Sublease.
(d) If Sublandlord is in default under this Sublease and, as a consequence, Subtenant recovers a monetary judgment against Sublandlord, the judgment shall be satisfied only out of Sublandlord’s then equity interest as lessee under the Overlease. No individual partner, director, officer, shareholder, employee, advisor or agent of Sublandlord or Subtenant shall be personally liable in any manner or to any extent under or in connection with such party’s obligation or liability under this Sublease. In no event shall Sublandlord, or any of the directors, officers, shareholders, employees, advisors or agents of Sublandlord, ever be responsible for (i) any indirect, punitive or consequential/special damages, or (ii) any damages in the nature of interruption or loss of business.
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13. NOTICE. Whenever, by the terms of this Sublease, any notice, demand, request, approval, consent or other communication (each of which shall be referred to as a “notice”) shall or may be given either to Sublandlord or to Subtenant, such notice shall be in writing and shall be sent by hand delivery, reputable overnight courier, or by express mail, addressed as follows (or to such other address or addresses as may from time to time hereafter be designated by Sublandlord or Subtenant, as the case may be, by like notice):
| If intended for Sublandlord | Nano Dimension USA, Inc. | ||
| 63 3rd Ave | |||
| Burlington, MA 01803 | |||
| Attn:Facility Deprtment | |||
| with a copy to: | Pearl Cohen Zedek Latzer Baratz LLP | ||
| 131 Dartmouth Street | |||
| Boston, MA 02116 | |||
| Attention: Oded Kadosh, Esq. (okadosh@pearlcohen.com) | |||
| Francine Alfandary, Esq. (falfandary@pearlcohen.com) | |||
| If intended for Subtenant: | (prior to the Commencement Date) | ||
| Crescent Biopharma, Inc. | |||
| 221 Crescent Street | |||
| Waltham MA 02453 | |||
| Attn: | |||
| (after the Commencement Date) | |||
| Crescent Biopharma, Inc. | |||
| 300 Fifth Avenue, | |||
| Waltham, MA 02451 | |||
| Attn: | |||
All such notices shall be deemed to have been served on the date of actual receipt or rejection thereof (in the case of hand delivery), or one (1) business day after the business day of deposit of such notice with a reputable overnight courier or by express mail as aforesaid. Any notice claiming the existence of a breach or default by the recipient thereof, shall be sent only by nationally recognized, reputable overnight delivery or courier service (such as Federal Express or UPS) and shall state: “THIS IS A NOTICE OF DEFAULT UNDER A LEASE – IMMEDIATE RESPONSE REQUIRED.”
14. BROKER. Each of Sublandlord and Subtenant represents and warrants to the other that it has not dealt, either directly or indirectly, with any broker in connection with this Sublease other than Cushman and Wakefield and 128 CRE (collectively, the “Broker”) and Sublandlord shall be solely responsible for all fees of the Broker for this Sublease pursuant to a separate written agreement. Each of Sublandlord and Subtenant shall indemnify the other from and against any and all loss, costs and expenses, including reasonable attorney's fees, incurred as a result of a breach of such representation and warranty.
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15. SECURITY DEPOSIT; LETTER OF CREDIT.
(a) Simultaneously with the execution and delivery of this Sublease by Subtenant, Subtenant shall deliver to Sublandlord, by bank check or electronic bank transfer, the sum of One Hundred One Thousand Sixty-two and 50/100 Dollars ($101,062.50) as a “Security Deposit,” which shall be held by Sublandlord as provided herein. Within sixty (60) days after the execution and delivery of this Sublease by Subtenant, Subtenant shall deliver to Sublandlord a clean irrevocable standby letter of credit in favor of Sublandlord in the same amount to be held by Sublandlord as security for Subtenant’s faithful and timely performance of its obligations hereunder. Upon receipt of the letter of credit, Sublandlord will return to Subtenant the cash amount initially paid (or any unapplied balance thereof), and the letter of credit will satisfy the Security Deposit obligation, subject to the terms hereof. Any such letter of credit shall be drawn on a bank reasonably approved by Sublandlord from time to time, and shall be in form and substance reasonably acceptable to Sublandlord. In the event of a material adverse change in the financial position of any bank which has issued a letter of credit hereunder, Sublandlord reserves the right, on any scheduled expiration or renewal date of any such letter (or, in the event that Sublandlord reasonably determines that the condition of the issuing bank is in imminent danger of insolvency or receivership, upon 5 days’ notice), to request that Subtenant change the issuing bank to another bank reasonably approved by Sublandlord. Regardless of whether Sublandlord shall have previously requested that Subtenant change issuing banks, if the bank on which the original letter of credit or any replacement letter is drawn is declared insolvent or placed into conservatorship or receivership, Subtenant shall, within ten (10) days thereafter, replace the then-outstanding letter of credit with a like letter of credit from another bank reasonably acceptable to Sublandlord. The letter of credit shall be assignable by Sublandlord at any time and from time to time to any successor or successors, without cost or charge to Sublandlord.
(b) The letter of credit shall contain a so-called "Evergreen" clause, whereby the issuing bank agrees to automatically extend the term of the letter of credit from year to year throughout the Term of this Sublease, with a final expiry date no sooner than thirty (30) days beyond the Expiration Date unless, not less than sixty (60) days prior to the date on which the letter would expire absent such extension, the issuing bank gives notice to Sublandlord, by commercial overnight delivery, of non-extension. In the event of notice from the issuing bank of non-extension, Subtenant shall, not later than fifteen (15) days prior to the date on which the outstanding letter shall expire without extension, obtain a replacement letter of credit from bank reasonably acceptable to Sublandlord, under all of the terms and conditions set forth above. Upon the occurrence of any default on the part of Subtenant hereunder, Sublandlord may at its election draw all or a portion of the letter of credit, and within ten (10) days Subtenant shall cause the issuing bank to replenish the letter of credit to the original full amount. Upon the failure of Subtenant to replace any such letter within fifteen (15) days prior to its expiration, and written certification thereof by Sublandlord to the issuing bank, Sublandlord may at its election draw the full amount or any part thereof, and either (x) hold, use and apply the proceeds thereof as if such proceeds were originally deposited with Sublandlord in cash under this Section, or (y) use such proceeds (or any excess proceeds after application) to obtain from another bank a replacement letter of credit, and the cost of such replacement shall be deducted from the available balance and reimbursed by Subtenant. Subtenant hereby agrees, if so requested by Sublandlord, to enter into a letter of credit agreement with the bank so designated by Sublandlord, failing which Sublandlord may do so in Subtenant’s name and behalf. The order in which Sublandlord applies the proceeds of the cash Security Deposit and the proceeds of the letter of credit shall be determined by Sublandlord from time to time in its sole and unfettered discretion.
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(c) From and after the time at which Sublandlord shall have drawn all or any portion of the proceeds of such a letter of credit, Sublandlord shall have the right from time to time without prejudice to any other remedy Sublandlord may have on account thereof, to apply such proceeds, or any part thereof, to Sublandlord’s damages arising from any then-existing or subsequently occurring default by Subtenant hereunder. While Sublandlord holds any unapplied proceeds, Sublandlord may commingle the same as hereinabove provided, and shall not be required to pay interest thereon. There then existing no Event of Default hereunder (nor any event or circumstance of which Subtenant has been given written notice and which, with the passage of time, would constitute an Event of Default), within thirty (30) days after the expiration of the Term of this Sublease and delivery of the Subleased Premises to Sublandlord in accordance herewith and payment of all amounts then due and coming due, Sublandlord shall return to Subtenant the proceeds thereof (or, if not drawn upon, any letter of credit), or so much thereof as shall not have theretofore been applied or returned in accordance with the terms of this Section. Sublandlord may retain an amount reasonably calculated by Sublandlord (taking into account information then available for prior years) to be sufficient to pay any final amount of Additional Rent or Subtenant Surcharges for the year in which the Term ends. While Sublandlord holds any such Security Deposit, Sublandlord shall have no obligation to pay interest on the same and shall have the right to commingle the same with Sublandlord’s other funds.
16. QUIET ENJOYMENT. Sublandlord agrees that, upon Subtenant’s paying the Basic Rent, Subtenant Surcharges, and other charges herein reserved, and provided there exists no Event of Default hereunder, Subtenant shall and may lawfully and peaceably hold and enjoy the Subleased Premises during the term of this Sublease, without interruption or disturbance from Sublandlord or persons lawfully claiming through or under Sublandlord, subject, however, to the terms of this Sublease and to the terms and conditions of the Overlease and all matters to which the Overlease is or may be subject, and the foregoing covenant of quiet enjoyment is in lieu of any similar covenant in the Overlease, or any other covenant, express or implied.
17. PARKING. Pursuant to Section 2.2(a) of the Overlease, Subtenant shall have the right to use up to seventy-four (74) parking spaces on an unreserved, non-exclusive basis throughout the Term of this Sublease.
18. SIGNAGE. Sublandlord will request Overlandlord’s consent to entry door signs and lettering to which Sublandlord (as Tenant) is entitled under Section 6.2 of the Overlease, and at Subtenant’s sole cost and expense. Sublandlord shall request that Overlandlord include the name of Subtenant in any building directories. In connection with such request, Subtenant shall prepare and submit to Sublandlord any required plans, specifications or other information reasonably required by Sublandlord and Overlandlord in connection with the installation of such entry door signage. Upon the expiration or sooner termination of this Sublease, Subtenant will remove all signage installed by or for it and will repair any damage caused by such removal.
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19. COVENANTS, REPRESENTATIONS AND WARRANTIES OF SUBLANDLORD.
(a) Sublandlord covenants and agrees that Sublandlord: (i) shall cause all rent to be paid under the Overlease as and when due and payable under the Overlease; (ii) shall observe and perform the other terms, provisions, covenants and conditions of the Overlease to be observed and performed by Sublandlord, except and to the extent that such terms, provisions, covenants and conditions are assumed by Subtenant hereunder; (iii) shall not voluntarily terminate the Overlease except as otherwise provided in this Sublease, and shall not amend the Overlease in a manner materially adverse to the rights of Subtenant hereunder; and (iv) shall not take any action or fail to perform any act that results in a breach or default under the Overlease to the extent any such failure to perform such act adversely affects the rights of Subtenant under this Sublease, including, without limitation, the right of Subtenant to receive all services, utilities, repairs and restorations to be provided by Overlandlord to Sublandlord under the Overlease with respect to the Subleased Premises or the ability of Subtenant to seek or obtain the approval or consent of Overlandlord or the right of Subtenant to use and occupy the Subleased Premises for the purposes set forth in this Sublease.
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(b) Notwithstanding anything to the contrary contained in this Sublease (including, without limitation, the provisions of the Overlease incorporated in this Sublease by reference), Sublandlord makes no representations or warranties whatsoever with respect to the Subleased Premises, this Sublease, the Overlease or any other matter, either express or implied, except as expressly set forth in this Sublease, except that Sublandlord represents and warrants that as of the date of this Sublease: (i) the copy of the Overlease attached hereto as Exhibit A is a true and complete (subject to the redacted provisions) copy of the Overlease, (ii) the Overlease is in full force and effect, (iii) Sublandlord has not actually received written notice from Overlandlord that Sublandlord is in default of the Lease, except for any default which has heretofore been cured, (iv) to the best of Sublandlord’s actual knowledge, there are no defaults on the part of the Overlandlord under the Overlease, and Sublandlord has not sent to Overlandlord any written notice stating that Overlandlord is in default of any of Overlandlord’s obligations under the Overlease, (v) Sublandlord has not actually received any written notice that any work is required under the Overlease or by applicable law to be done in the Subleased Premises, (vi) Sublandlord has not actually received any written notice of violation of any laws, ordinances, codes, rules, regulations or requirements affecting the Subleased Premises that is the Sublandlord’s obligation to cure under the Overlease, (vii) Sublandlord is in possession of the Subleased Premises and has not previously sublet any portion of the Subleased Premises, and (viii) Sublandlord has not previously transferred or assigned the Sublandlord’s interest in the Subleased Premises.
20. MAINTENANCE AND REPAIR BY SUBTENANT. Subtenant shall perform all maintenance, repair and replacement obligations imposed on Sublandlord under the Overlease (including without limitation Section 9.2) with respect to the Subleased Premises, and, without limitation, shall maintain and repair the interior of the Subleased Premises and keep the same in good condition and repair at all times during the Term. Subtenant’s obligation shall include, without limitation, the obligation to maintain, repair and replace all utility equipment, supplemental HVAC units, interior walls, floors, ceilings and fixtures within the Subleased Premises, and to repair all damage caused by Subtenant, its agents, employees, invitees and licensees to the utility outlets and other improvements within the Subleased Premises (reasonable wear and tear excepted). Subtenant shall repair all damage caused by removal of Subtenant’s movable equipment or furniture or the removal of any Alterations permitted or required by Sublandlord, all as provided in this Sublease. Notwithstanding anything to the contrary in this Sublease or the Overlease, as incorporated herein, in no event shall Subtenant have any obligation to remove at the expiration or termination hereof any alterations, additions or improvements existing in the Premises at the Commencement Date that were not made or constructed by or for Subtenant.
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21. ALTERATIONS.
(a) The terms and conditions of Article 7 of the Overlease shall be applicable to any alteration, addition or improvement that Subtenant may desire to make with respect to the Subleased Premises. In addition to obtaining the consent of Overlandlord, Subtenant shall obtain the prior written approval of the Sublandlord prior to making any such alteration, addition or improvement. Unless otherwise provided in the Overlease, Subtenant shall have the right to perform its own construction work, with contractors and subcontractors who are reputable, qualified and properly licensed or accredited and adequately insured (to the reasonable satisfaction of Sublandlord), and who are first reasonably approved by Sublandlord. Subtenant agrees to carry, and will cause Subtenant’s contractors and subcontractors to carry, such worker’s compensation insurance, general liability insurance, property damage insurance, non-owned automobile insurance and such other insurance as Sublandlord or Overlandlord may require. Overlandlord and Sublandlord will be named as additional insureds on any such policies. Subtenant will be responsible for obtaining any and all permits, approval and licenses required under any applicable law, ordinance, code or regulation, and for arranging for all inspections and permits “close-outs.” Copies of such permits and the like will be delivered to Sublandlord upon request. Sublandlord may elect (for its own benefit and not that of Subtenant) to review and inspect any such work by Subtenant, provided that Sublandlord will not charge any inspection or supervision fee.
(b) Without limiting the foregoing, Sublandlord acknowledges that Subtenant desires to perform certain alterations in and to the Subleased Premises to make the same more for Subtenant’s occupancy (collectively, the “Subtenant Improvements”). All Subtenant Improvements shall be undertaken by Subtenant in strict accordance with this Sublease and the Overlease, including without limitation this Section 21, and in accordance with plans and specifications reasonably approved in advance by Sublandlord and (if required by the Overlease) Overlandlord. Sublandlord will not unreasonably withhold its approval of any such plans or specifications provided that Overlandlord has approved of the same. Subtenant shall reimburse Sublandlord, as a Subtenant Surcharge, for any actual costs and expenses reasonably incurred by Sublandlord in connection with such review and approval. All Subtenant Improvements shall be at the sole cost and expense of Subtenant, including without limitation, all costs of construction document preparation, design, plans and specifications, general conditions, labor, materials, and other construction costs, the fees of contractor’s project manager and site superintendent for the Subtenant Improvements, and all costs incurred in connection with obtaining permits for the Subtenant Improvements. Subtenant will perform such work in a good and workmanlike manner using new and good quality materials, and in accordance with all applicable laws, codes, regulations and by-laws. Subtenant’s contractors and subcontractors shall be reputable and properly licensed and qualified, and shall be subject to Sublandlord’s prior approval, which shall not be unreasonably withheld. At the time of submission of plans for the Subtenant Improvements to Overlandlord, Subtenant and Sublandlord will request that Overlandlord specify which (if any) of the Subtenant Improvements Subtenant will be required to remove for the purposes of Section 7.2(iii) of the Overlease. If and to the extent that Overlandlord does specify that any or all of the Subtenant Improvements must be removed, Subtenant will be solely responsible for removing the same and returning the Subleased Premises (or the affected portions) to substantially similar condition in which Sublandlord delivered the Subleased Premises to Subtenant, at the sole cost and expense of Subtenant. Depending on the extent of any required removal and restoration of Subtenant Improvements, Sublandlord may require that Subtenant provide (for Sublandlord’s approval) a written schedule of removal and restoration actions that afford reasonably sufficient time (prior to the expiration or termination hereof) for such work to be completed. Upon approval of the same by Sublandlord, Subtenant will follow such schedule, failing which Sublandlord may perform the same at Subtenant’s cost and expense. Sublandlord’s approval of any such schedule will not relieve Subtenant of any liability in the event of any holding over caused by Subtenant’s failure to complete any removal and restoration prior to the expiration or termination hereof.
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22. SUBLEASING AND ASSIGNMENT.
(a) Except as expressly provided herein, Subtenant covenants and agrees that, without first obtaining the written consent of Sublandlord (and, if required under the Overlease, that of Overlandlord), whether voluntarily, involuntarily, by operation of law or otherwise, neither this Sublease nor the term and estate hereby granted, nor any interest herein or therein, will be assigned, mortgaged, pledged, encumbered or otherwise transferred and that neither the Subleased Premises nor any part thereof will be encumbered in any manner by reason of any act or omission on the part of Subtenant, or used or occupied or permitted to be used or occupied, or for any use or purpose other than the use described above, or be sub-sublet (which term, without limitation, shall include granting of concessions, licenses and the like) in whole or in part, or be offered or advertised for assignment or sub-subletting, without the prior written consent of Overlandlord and Sublandlord, provided, however, Sublandlord’s consent shall not be unreasonably withheld, conditioned or delayed provided Overlandlord consents to the same. The provisions of this Section 22 shall be in addition to any other or additional material or information that may be required under the Overlease (which material and information Sublandlord may also consider in granting or withholding consent). Subtenant shall give Sublandlord notice of any proposed assignment or sub-sublease, and said notice shall specify the provisions of the proposed assignment or sub-sublease as follows: (i) the name and address of the proposed assignee or sub-subtenant, (ii) such information as to the proposed assignee's or sub-Subtenant’s financial capability as may reasonably be required by Sublandlord, (iii) all of the material terms and provisions upon which the proposed assignment or sub-sublease is to be made, and (iv) all other information reasonably necessary for Sublandlord to approve or disapprove the request.
(b) Without limitation of any applicable provision in the Overlease, unless the stock of Subtenant shall be publicly traded on a national exchange regulated by the United States Securities and Exchange Commission, the provisions of paragraph (a) of this Section 22 shall apply to a transfer (by one or more transfers) transfer (by one or more transfers) of a controlling portion of or interest in (meaning more than fifty percent (50%)) of the voting rights or stock or partnership or membership interests or other evidences of equity interests of Tenant. Notwithstanding the foregoing, upon thirty (30) days’ prior written notice to Sublandlord, Subtenant shall have the right during the Term hereof to assign the Sublease or further sublet all or any part of the Subleased Premises, without Sublandlord’s prior written consent, to (i) any entity which controls or is controlled by Subtenant or is under common control with Subtenant, or (ii) any successor entity into which or with Subtenant is merged or which acquires substantially all of Tenant’s assets or stock (each a “Permitted Transfer”), provided that (i) in the case of merger, consolidation or sale of Subtenant, the successor to Subtenant has a tangible net worth and financial condition (computed in accordance with generally accepted accounting principles) equal to the net worth at least equal to the greater of the net worth of Subtenant herein named on the date of this Sublease; (ii) Sublandlord shall have obtained the written consent of the Overlandlord under the Overlease, if and to the extent required thereunder; and (iii) in any of such events, prior to the effective date of any such transaction, the assignee, successor or Subtenant agrees directly with Sublandlord (and, if required, Overlandlord), by written instrument in form reasonably satisfactory to Sublandlord, to be bound by all the obligations of Subtenant hereunder including, without limitation, the covenant against further assignment or subletting.
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(c) No assignment or sub-subletting hereunder shall relieve Subtenant from any of its obligations hereunder and Subtenant shall remain fully and primarily liable therefor. No Permitted Transfer, sub-subletting, or occupancy hereunder shall affect or alter the Permitted Uses. Any sub-subletting or assignment of any portion of Subtenant’s right, title or interest in and to this Sublease which is in violation of this Section 22 shall be null and void and of no force or effect, and shall constitute default hereunder. If any sub-sublease or assignment or other transfer hereunder results in the imposition of any costs or charges (including without limitation any “Profits,” as defined in the Overlease) on Sublandlord under the Overlease, Subtenant shall be solely responsible therefor.
(d) If, in violation of this Section 22, this Sublease be assigned, or if the Subleased Premises or any part thereof be sub-sublet or occupied by anyone other than Subtenant, Sublandlord may, at any time and from time to time, collect rent and other charges from the assignee, subtenant or occupant, and apply the net amount collected to the rent and other charges herein reserved, but no such assignment, subletting, occupancy, collection or modification of any provisions of this Sublease shall be deemed a waiver of this covenant, or the acceptance of the assignee, sub-subtenant or occupant as a tenant or a release of Subtenant from the further performance of covenants on the part of Subtenant to be performed hereunder.
(e) Any consent by Sublandlord to a particular subletting or occupancy shall not in any way diminish the prohibition stated in paragraph (a) of this Section 22 or the continuing liability of the original named Subtenant. No assignment or sub-subletting hereunder shall relieve Subtenant from its obligations hereunder and Subtenant shall remain fully and primarily liable therefor. No such assignment, sub-subletting, or occupancy shall affect or be contrary to the uses permitted under the Overlease and/or this Sublease. Any consent by Sublandlord to a particular assignment, subletting or occupancy shall be revocable, and any assignment, subletting or occupancy shall be void ab initio, if the same shall fail to require that such assignee, sub-subtenant or occupant agree therein to be independently bound by and upon all of the covenants, agreements, terms, provisions and conditions set forth in this Sublease on the part of Subtenant to be kept and performed. Any sub-sublease under any sublease, or any assignment of any sublease, for which Subtenant has already obtained consent hereunder shall again require Sublandlord’s consent. Subtenant shall reimburse Sublandlord, as a Subtenant Surcharge, for all costs and expenses (including without limitation reasonable legal fees) incurred by Sublandlord in reviewing and evaluating any request for consent hereunder, and shall be responsible for any costs of Overlandlord for which Sublandlord is responsible under the Overlease, provided that the total amount due from Subtenant pursuant to this Section 22(e) shall not exceed $,1,500.00.
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23. INDEMNITY AND INSURANCE. From and after the Commencement Date, Subtenant shall be responsible for obtaining and maintaining at all times any and all insurance coverage from time to time required to be provided by the Sublandlord under the Overlease, including property damage insurance covering the Subtenant Improvements and all of Subtenant’s personal property, furniture, fixtures and equipment, as well as any other alterations, additions or improvements to the Subleased Premises made by or for Subtenant. Sublandlord shall be named as an additional insured on all liability policies, and as a loss payee (as its interest may appear) on any casualty or property insurance policies. Sublandlord shall continue to provide property damage insurance on the Furniture and any leasehold improvements in the Subleased Premises made by Sublandlord and existing as of the Effective Date, as may be required under the Overlease. All such policies and any endorsements to be provided by Subtenant shall be delivered to Sublandlord no later than ten (10) days prior to the scheduled Commencement Date. For the avoidance of confusion, Sublandlord shall in no event be required to carry or provide any insurance that is the obligation of Overlandlord to provide under the Overlease. Except to the extent arising from the negligence or willful misconduct of Subtenant, Sublandlord agrees to indemnify and save harmless Subtenant from and against all claims, losses, cost, damages, liabilities or expenses of whatever nature arising: (i) from any accident, injury or damage whatsoever to any person, or to property of any person, occurring on or about the Subleased Premises, where such accident, damage or injury results or is claimed to have resulted from negligence or willful misconduct on the part of Sublandlord, invitees or independent contractors; or (ii) from any default or breach by Sublandlord under the terms or covenants of this Sublease. This indemnity and hold harmless agreement shall include indemnity against all losses, costs, damages, expenses and liabilities incurred in or in connection with any such claim or any proceeding brought thereon, and the defense thereof, including, without limitation, reasonable attorneys’ fees and costs at both the trial and appellate levels.
24. FINANCIAL REPORTS. Subtenant represents and warrants that any financial statements provided by it to Sublandlord are true, correct and complete in all material respects when provided, and that no material adverse change has occurred since that date that would render them materially inaccurate or misleading. Subject to restrictions on disclosure under applicable law, Subtenant shall, within fifteen (15) days after request, provide Sublandlord and (if requested) Overlandlord (but in no event more than once during any twelve-month period during the Term, unless such financial statements are required in connection with an actual or potential sale or financing of the Property) with Subtenant’s then most-recent annual and quarterly financial statements, such financial statements shall be audited or certified to be true and correct by the chief executive officer, chief financial officer or senior finance executive of the Subtenant. Sublandlord agrees to keep such information confidential except to the extent required by applicable law.
25. TERMINATION OF OVERLEASE. This Sublease automatically terminates if the Overlease expires or is terminated for any reason (by negotiation or otherwise) before the Expiration Date and Sublandlord will not be liable to Subtenant by reason of any termination of the Overlease or this Sublease before the Expiration Date for any reason. Sublandlord agrees, however, that (without limiting Sublandlord’s rights in the event of a casualty or condemnation) Sublandlord shall not voluntarily surrender the Overlease before the Expiration Date by negotiation with Overlandlord. Without limitation of the foregoing, if the Overlease gives Sublandlord any right to terminate the Overlease in the event of the partial or total damage, destruction, or condemnation of the Premises or the Building, the exercise of such right by Sublandlord does not constitute a default or breach under this Sublease, and Sublandlord will not liable to Subtenant by reason thereof. Nothing in this Sublease prevents an assignment by Sublandlord of the Overlease to any third party or parties (subject, however, to the terms of this Sublease) and in no event does Sublandlord have any liability to Subtenant for any defaults under or termination of the Overlease by any such assignee.
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26. HOLDING OVER. Without limitation of any penalty imposed under the Overlease for holding over, if Subtenant fails to surrender and deliver the Subleased Premises as and when required under this Sublease, Subtenant shall pay, protect, defend (with counsel reasonably approved by Sublandlord), indemnify and hold harmless Sublandlord and its officers, directors, agents and employees from and against any and all liability, claims, suits, demands, judgments, costs, losses, interest and expenses (including, without being limited to, reasonable attorneys’ fees and expenses), whether direct, indirect, consequential or otherwise, that Sublandlord may suffer, under the Overlease or otherwise, by reason of any holdover by Subtenant under this Sublease, Subtenant acknowledging that any holding over by Subtenant in any of the Subleased Premises may be deemed to be a holding over by Sublandlord in all of the Premises. The terms and provisions of this Paragraph 24 shall survive the expiration or earlier termination of this Sublease.
27. HAZARDOUS MATERIALS. Subtenant will provide to Sublandlord and Overlandlord a list of hazardous materials or substances that Subtenant intends to use in the Subleased Premises, and Tenant’s operations and business shall be subject to Section 6.5 of the Overlease. Sublandlord shall have no obligation to remove any hazardous materials or substances (including without limitation asbestos) from the Subleased Premises.
28. COUNTERPARTS; GOVERNING LAW. This Sublease may be executed in any number of counterparts, each of which shall constitute an original and together a single instrument, with the same effect as if the signatures thereto and hereto were upon the same instrument. Delivery of an executed counterpart of a signature page to this Sublease by facsimile or by electronic mail in portable document format (.pdf) shall be effective as delivery of a manually executed original counterpart of this Sublease. This Sublease shall be construed under the laws of the Commonwealth of Massachusetts, without regard to any presumption or other rule suggesting construction or interpretation against the party causing this Sublease to be drafted. All terms and words used in this Sublease, regardless of the number or gender in which they are used, shall be deemed to include any other number and any other gender as the context may require. The word “person” as used in this Sublease means a natural person or persons, a partnership, a corporation or any other form of business or legal association or entity.
29. WAIVER OF JURY TRIAL AND RIGHT TO COUNTERCLAIM. Sublandlord and Subtenant each waives any rights that it may have to trial by jury in any summary action or other action, proceeding or counterclaim arising out of or in any way connected with this Sublease, the relationship of Sublandlord and Subtenant, the Subleased Premises and the use and occupancy of the Subleased Premises, and any claim for injury or damages. Subtenant also waives all right to assert or interpose a counterclaim (other than mandatory or compulsory counterclaims) in any summary proceeding or other action or proceeding to recover or obtain possession of the Subleased Premises.
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30. ENTIRE AGREEMENT. This Sublease constitutes the entire agreement of the parties and may not be amended except by written instrument signed by all parties. This Sublease shall have the effect of an agreement under seal and shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.
31. TIME OF ESSENCE. Time is of the essence with respect to the performance of every provision of this Sublease in which time of performance is a factor, including, without limitation, the giving of any notice required to be given under this Sublease or by law, the time periods for giving any such notice and for taking of any action with respect to any such notice.
[TEXT ENDS HERE – SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, Sublandlord and Subtenant herein have duly executed this instrument on the day and year first above written.
| SUBLANDLORD: | NANO DIMENSION USA INC. | ||
| By: | /s/ Ofir Baharav | ||
| Name: | CEO | ||
| Its: | Chief Business Officer | ||
| By: | /s/ Julien Lederman | ||
| Name: | Julien Lederman | ||
| Its: | Chief Business Officer | ||
| SUBTENANT: | CRESCENT BIOPHARMA, INC. | ||
| By: | /s/ Joshua T Brumm | ||
| Name: | Joshua T Brumm | ||
| Its: | CEO | ||
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EXHIBIT A
OVERLEASE
EXHIBIT B
PLANS OF SUBLEASED PREMISES
EXHIBIT C
COMMENCEMENT DATE MEMORANDUM
EXHIBIT D
FURNITURE INVENTORY
Exhibit 14.1
Code of Business Conduct and Ethics
June 13, 2025
| I. | INTRODUCTION |
This Code of Business Conduct and Ethics (this “Code”) provides a general statement of the expectations of Crescent Biopharma, Inc. (the “Company”) regarding the ethical standards to which each director, officer and employee should adhere while acting on behalf of the Company. You are expected to read and become familiar with the ethical standards described in this Code and will be required, from time to time, to affirm your agreement to adhere to such standards by signing the Compliance Certificate that appears at the end of this Code.
We are proud of what the Company has accomplished to date, and your commitment to continued excellence is crucial as the Company changes and grows. We expect all individuals associated with the Company to conduct themselves with the highest degree of honesty and integrity at all times.
This Code should be read in conjunction with our Employee Handbook and other policies and procedures, copies of which are available from Human Resources. This Code is not a substitute for those other documents. Instead, this Code should be viewed as a general statement of the guiding principles that should help you keep our core values in mind as you conduct business on behalf of the Company.
We consider any violation of this Code to be a serious breach of our trust, and any violation may result in disciplinary action up to and including termination, as well as potential civil or criminal penalties, depending on the nature of the violation and applicable law. Similarly, if you are aware of someone’s violation of this Code, you have a duty to report the violation in accordance with the procedures detailed below. We depend on your commitment to protect our culture and values and will view your reporting of violations in that context.
While this Code covers multiple scenarios and activities, it does not address every situation that could arise. Therefore, if you are faced with an issue that you feel may not be covered specifically by this Code and are making a decision to act, please keep the following in mind:
| · | Consider whether your actions would conform to the intent of the Code. |
| · | Consider whether your actions could create even a perception of impropriety. |
| · | Make sure you have all of the relevant facts. |
| · | Consider discussing the matter with your supervisor, as applicable, or reporting the matter anonymously as described below. |
| · | Consider seeking help. It is always better to seek assistance before you act, rather than making a preventable mistake. |
If you encounter a situation where you have a question about the law, the Code or any Company policy or are unsure of the best course of action, you should always seek guidance. Except as otherwise specifically noted in the Code, when you have a specific question, please contact your supervisor, Human Resources or the General Counsel (the “GC”).
| II. | REPORTING VIOLATIONS |
| A. | Internal Reporting |
If you know or reasonably believe that there has been a violation of this Code or any illegal behavior, you must report such violation or illegal behavior to your supervisor, Human Resources or the GC. Additionally, employees, consultants and others may report any violations of this Code or any other illegal behavior anonymously through the Company’s whistleblower hotline. There are two methods of logging complaints anonymously:
Website: https://www.whistleblowerservices.com/CBIO
Phone: 1-833-354-3080
Such complaints will be directed to the GC. However, if the complaint involves the GC, or otherwise gives rise to a conflict of interest, such complaints will be directed to the Company’s Audit Committee and/or outside counsel.
Failure to report a known or suspected violation of this Code is itself a violation and may result in disciplinary action up to and including termination, except as otherwise provided in Section II.B.
Any director, officer or employee who obtains information about a Code violation or illegal act has the responsibility to report the matter immediately to one of the above individuals. The Company will not discharge, demote, suspend, threaten, harass or in any manner discriminate or tolerate discrimination or retaliation against any director, officer or employee for reporting, in good faith, a potential violation, and any supervisor intimidating or imposing sanctions on any such person for reporting a matter in good faith will be disciplined.
| B. | Protected Activity |
Nothing in this this Code shall prevent an employee from (i) communicating directly with, cooperating with, or providing information to, or receiving financial awards from, any federal, state or local government agency, including without limitation the U.S. Securities and Exchange Commission, the U.S. Commodity Futures Trading Commission, the U.S. Department of Justice, the U.S. Equal Employment Opportunity Commission, or the U.S. National Labor Relations Board, without notifying or seeking permission from the Company, (ii) exercising any rights they may have under Section 7 of the U.S. National Labor Relations Act, such as the right to engage in concerted activity, including collective action or discussion concerning wages or working conditions , or (iii) discussing or disclosing information about unlawful acts in the workplace, such as harassment or discrimination based on a protected characteristic or any other conduct that the employee has reason to believe is unlawful. In addition, employees are advised of the following notice of immunity rights under the U.S. Defend Trade Secrets Act , which states: “(1) An individual shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that (A) is made (i) in confidence to a Federal, State, or local government official, either directly or indirectly, or to an attorney; and (ii) solely for the purpose of reporting or investigating a suspected violation of law; or (B) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal; and (2) an individual who files a lawsuit for retaliation by an employer for reporting a suspected violation of law may disclose a trade secret to the attorney of the individual and use the trade secret information in the court proceeding, if the individual (A) files any document containing the trade secret under seal, and (B) does not disclose a trade secret, except pursuant to court order.”
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| III. | PERSONAL RESPONSIBILITY AND INTEGRITY |
A. Fair Dealing
You are expected to be ethical and should deal fairly with customers, vendors, suppliers, business partners, service providers, competitors and employees. You should not take unfair advantage of anyone through manipulation, concealment, abuse of privileged information, misrepresentation of material facts or any other unfair-dealing practice.
B. Confidential Information and Privacy
The Company holds many types of confidential information that must be carefully safeguarded. Protecting this information is essential to maintaining our relationships and protecting our intellectual property. In addition, Company information, which includes confidential information and third-party information the Company has a duty to keep confidential (such as patient and employee health information), should not be used other than for its intended use, and documents that include such information should be disposed of properly and should not be copied or removed from the work area, except as required for job performance. Confidential information should not be disclosed to outsiders without specific approval by the Company.
Confidential information includes:
| · | information marked “Confidential,” “Private,” “For Internal Use Only” or with a similar legend; |
| · | technical or scientific information relating to current and future product candidates, services or research; |
| · | business or marketing plans, strategies, forecasts or projections; |
| · | budgets, earnings and other internal financial data; |
| · | personnel information; |
| · | business contracts; |
| · | training materials and methods; |
| · | other non-public information that, if disclosed, might be of use to the Company’s competitors or harmful to the Company or its business partners; and |
| · | other non-public information that, if disclosed, would violate federal or state securities laws. |
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Regardless of whether information is specifically marked as confidential, it is each employee’s responsibility to keep confidential information in confidence (except as otherwise required, if at all, by applicable law). You must not use, reveal or divulge any such information unless it is necessary for you to do so in the performance of your duties (or except as otherwise required, if at all, by applicable law). Generally, access to confidential information should be granted, provided or given on a “need-to-know” basis.
C. Use of Company Systems
The data and other information you use, send, receive and store on the Company’s telecommunications equipment (including email, voicemail and the internet) are business records owned by the Company. Therefore, subject to applicable laws and regulations, the Company has the right to access, read, monitor, inspect, review and disclose the contents of, postings to and downloads from all of the Company’s information systems. In addition, your use of the Company’s systems and equipment reflects on the Company as a whole, and at no time may you use the Company systems or equipment to view, access, store, share or send illegal, derogatory, harassing or inappropriate information, including obscene, racist or sexually explicit information, or engage in any activity that violates the intellectual property rights of others. We strongly encourage all directors, officers and employees to avoid references to the Company on social networking sites or other Internet based communications sites, except that you are encouraged to share, like or re-post content shared on official Company channels and may also utilize Company-provided content that has been approved by the Company for personal social media use; provided that any use of social media and other Internet based communications sites must comply with our Guidelines for Public Disclosures and Communications with the Investment Community (“Investment Community Disclosure Policy”).
D. Conflicts of Interest
Directors, officers and employees should avoid activities that create or give the appearance of a conflict of interest between their personal interests and the Company’s interests. A conflict of interest exists when a personal interest or activity of a director, officer or employee could influence or interfere with that person’s performance of duties, responsibilities or commitments to the Company. A conflict of interest also exists when a director, officer or employee (or member of his or her family) receives an improper personal benefit as a result of his or her position at the Company. Below are some examples of situations that could result in a conflict of interest:
| · | be a consultant to, or a director, officer or employee of, or otherwise operate, an outside business that is a significant competitor, supplier or customer of the Company; |
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| · | be a consultant to, or a director, officer or employee of, or otherwise operate, an outside business if the demands of the outside business would materially interfere with the director’s, officer’s or employee’s responsibilities to the Company; |
| · | take personal advantage or obtain personal gain from an opportunity learned of or discovered during the course and scope of your employment when that opportunity or discovery could be of benefit or interest to the Company; |
| · | have significant financial interest, including direct stock ownership, in any outside business that does or seeks to do a material amount of business with the Company; |
| · | seek or accept any personal loan or services from any such outside business, except from financial institutions or service providers offering similar loans or services to third parties under similar terms in the ordinary course of their respective businesses; |
| · | accept any personal loan or guarantee of obligations from the Company, except to the extent such arrangements are legally permissible; or |
| · | conduct business on behalf of the Company with immediate family members, which include spouses, children, parents, siblings and persons sharing the same home whether or not legal relatives. |
Whether or not a conflict of interest exists or will exist can be unclear. Persons other than directors and executive officers who have questions about a potential conflict of interest or who become aware of an actual or potential conflict should discuss the matter with their supervisor, as applicable, or the GC. Directors and executive officers must consult and seek prior approval of potential conflicts of interest exclusively from the Audit Committee.
For avoidance of doubt, a director affiliated with an investment firm shall not be presumed to have a conflict of interest due to such investment firm or the director acting on its behalf conducting activities in the ordinary course of its business.
E. Proper Use of Company Assets
Directors, officers and employees are entrusted with numerous Company assets and have a responsibility to protect them. The Company’s assets shall be used for their intended business purposes. Personal use of the Company’s funds or property, including charging personal expenses as business expenses, inappropriate reporting or overstatement of business or travel expenses and inappropriate usage of Company equipment or the personal use of supplies or facilities without advance approval from an appropriate officer of the Company shall be considered a breach of the Code.
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F. Corporate Opportunities
You owe a duty to the Company to advance its interests when the opportunity to do so arises and are prohibited from taking for yourself opportunities that are discovered through the use of Company property, information or position. You may not use Company property, information or position for personal gain. In addition, you may not compete with the Company. If you become aware of any actual or potential business opportunity that relates to the Company, you may not take advantage of the opportunity or share the opportunity with anyone outside the Company without first receiving the approval of the GC’s office or the Board of Directors, as applicable. Notwithstanding the foregoing, the duties of directors and officers with respect to corporate opportunities are subject to the terms of the Company’s certificate of incorporation.
| IV. | LEGAL REQUIREMENTS |
| A. | Regulatory Compliance |
As a biotechnology company seeking to develop therapies to transform solid tumor treatment, Crescent is in one of the most heavily regulated industries in the world. Crescent recognizes this and accordingly supports, acknowledges and is committed to compliance with all applicable laws, rules and regulations governing the pharmaceutical and biotechnology industries, including federal and state anti- kickback and fraud and abuse laws.
This means, among other things, that Crescent’s:
| · | research and development procedures must abide by applicable regulatory requirements and be conducted with respect for the research participants involved; |
| · | advertising and promotional efforts, if any, must comply with regulations, including, without limitation, those governing pre-approval promotion and any discussion of off-label uses of our products. Statements and/or claims that we make about our investigational or approved products will be grounded in scientific data and evidence, accepted medical practice, and government-approved labeling rules in all countries where we operate; and |
| · | other activities and functions including without limitation financial, environmental health and safety, and product manufacturing, must comply with applicable regulations. |
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| B. | Gifts |
It is against Company policy for a director, officer or employee of the Company to offer anything of value to an existing or potential clinical investigator, Institutional Review Board, patient or other party that would inappropriately influence the design, conduct, enrollment or outcome of clinical studies. Similarly, it is against Company policy for a director, officer or employee to offer anything of value to an existing or potential customer that would inappropriately influence that consumer to select a Company product.
There are similar concerns involving potential conflicts of interest in other external business relationships. Generally, giving or receiving gifts, meals or entertainment involving our external business relationships should meet all of the following criteria:
| · | they do not violate applicable law or fail to comply with Company policy; |
| · | they do not constitute a bribe, kickback or other improper payment; |
| · | they have a valid business purpose; |
| · | they are appropriate as to time, place and value (modest; not lavish or extravagant); |
| · | they are infrequent; and |
| · | they do not influence or appear to influence the behavior of the recipient. |
Gifts of cash or marketable securities may not be given or accepted regardless of amount.
| C. | Dealing with Government Officials |
All dealings with government officials, including, but not limited to, lobbying, political contributions to candidates and meeting with government agencies, shall be in accordance with all applicable national, state and local laws and regulations in each country in which the Company conducts business.
No director, officer or employee shall offer or promise a payment or reward of any kind, directly or indirectly, to any federal, state, local or foreign government official (i) for or because of an official act performed or to be performed by that official; or (ii) in order to secure preferential treatment for the Company or its employees. No director, officer or employee shall offer or promise any federal, state, local or foreign government official gifts, entertainment, gratuities, meals, lodging, travel or similar items that are designed to influence such officials. Further, because of the potential for misunderstanding, no director, officer or employee of the Company may confer gifts, special favors, gratuities or benefits to such an official even if there is no matter pending before that official. The Company also strictly prohibits any director, officer or employee from making any payment or providing a thing of value if the person knows, or reasonably believes or suspects that any portion of the payment or thing of value will be offered, given or promised, directly or indirectly, to any government official.
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It is our policy to cooperate fully with all legal and reasonable government investigations. Accordingly, the Company directors, officers and employees shall comply with any and all lawful requests from government investigators and, consistent with preserving the Company’s legal rights, shall cooperate in lawful government inquiries. No director, officer or employee shall make a false or misleading written or oral statement to a government official with regard to any matter involving a government inquiry into the Company matters.
Employees shall contact the GC when presented with any such government request or inquiry prior to responding to such inquiry. Employees with questions about contacts with government officials should seek guidance from senior management. Officers and directors should contact the GC prior to responding to any such inquiries.
| D. | Inside Information |
Inside information is material, non-public information about the Company or another company that, if made public, would be reasonably expected to affect the price of a company’s securities or investment decisions regarding the purchase or sale of such securities. Directors, officers and employees must never use inside information about the Company, another company with which the Company has a preexisting or prospective business relationship, or such company’s securities to obtain any type of personal advantage and should not disclose any such inside information to any third parties without the prior approval of senior management. For further information about the Company’s policy with respect to inside information, please review our Insider Trading Policy and Investment Community Disclosure Policy.
| E. | Company Disclosure Obligations |
The Company’s business affairs are also subject to certain internal and external disclosure obligations and recordkeeping procedures. As a public company, we are committed to abiding by our disclosure obligations in a full, fair, accurate, timely and understandable manner. Only with reliable records and clear disclosure procedures can we make informed and responsible business decisions. When disclosing information to the public, it is Company policy to provide consistent and accurate information. To maintain consistency and accuracy, specific Company spokespersons are designated to respond to questions from the public. Only these individuals are authorized to release information to the public at appropriate times. All inquiries from the media or investors should be forwarded immediately to the GC, CFO or Chief Executive Officer (“CEO”). All press releases, speeches, publications or other official Company disclosures must be approved in advance in accordance with our Investment Community Disclosure Policy.
We take seriously the reliance our investors place on us to provide accurate and timely information about our business. In support of our disclosure obligations, it is Company policy to always:
| · | comply with generally accepted accounting principles; |
| · | maintain a system of internal accounting and disclosure controls and procedures designed to provide management with reasonable assurances that transactions are properly recorded and that material information is made known to management; |
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| · | maintain books and records that accurately and fairly reflect transactions; and |
| · | prohibit establishment of material undisclosed or unrecorded funds or assets. |
| F. | Prohibition Against Discrimination; Equal Opportunity Employment |
The Company is committed to maintaining the highest integrity in our work environment. Our employees must comply with all applicable employment laws and our policies addressing workplace conduct. We base hiring, promotions and performance management decisions on qualifications and job performance. The Company’s policy is to treat each employee and job applicant without regard to gender, sex, race, color, age, religion, national origin, sexual orientation, ancestry, veteran status or any other category protected by law. Employees must refrain from acts that are intended to cause, or that do cause, unlawful employment discrimination. The Company also accommodates qualified disabled employees and applicants consistent with applicable laws.
The Company prohibits harassment in the workplace, including, but not limited to, sexual harassment. Consistent with this policy, we will not tolerate harassment by any of our employees, customers or other third parties. Harassment includes verbal or physical conduct that threatens, offends or belittles any individual because of his or her gender, sex, race, color, age, religion, national origin, sexual orientation, ancestry, veteran status or any other category protected by law. Retaliation against an employee for alleging a complaint of harassment or discrimination or for participating in an investigation relating to such a complaint will also not be tolerated.
| G. | Health and Safety |
The Company is committed to providing a safe and healthy work environment for its employees and all other individuals working on behalf of the Company. The Company also recognizes that the responsibilities for a safe and healthy work environment are shared with you. The Company will continue to establish and implement appropriate health and safety policies that managers and their employees are expected to uphold. Employees are expected to conduct their work in a safe manner in compliance with all the Company policies and to report all safety or health concerns to your manager or Human Resources.
| H. | Foreign Corrupt Practices Act |
All employees must comply with the Foreign Corrupt Practices Act (the “FCPA”), which sets forth requirements for the Company’s relationships with non-U.S. government representatives, which in many countries include individuals who would not be deemed government representatives in the United States (e.g., medical professionals and employees of educational institutions). It is important to note that these limitations apply with respect to a government representative at any level and not only with respect to senior or policy-making roles. As a U.S.-based company, the Company is required to adhere to all standards set forth in the FCPA regardless of the nationality or overseas location of the individual acting on behalf of the Company, whether an employee, officer or third party.
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The FCPA requires that relations between U.S. businesses and foreign government representatives conform to the standards that exist in the United States, even if a different business ethic is prevalent in the other country. Accordingly, no employee or third-party person or enterprise acting on behalf of the Company, directly or indirectly, may offer a gift, payment or bribe, or anything else of value, whether directly or indirectly, to any foreign official, foreign political party or party official, or candidate for foreign political office, for the purpose of influencing an official act or decision or seeking influence with a foreign government in order to obtain, retain or direct business to the Company or to any person or to otherwise secure an improper advantage. In short, such activity cannot be used to improve the business environment for the Company in any way. Thus, even if such payment is customary and generally thought to be legal in the host country, it is forbidden by the FCPA and violates U.S. law, unless it is a reasonable and bona fide expenditure, such as entertainment or travel and lodging expenses, that is directly related to (a) the promotion, demonstration or explanation of products or services or (b) the execution or performance of a contract with a foreign government or government agency, and the payment was not made for an improper purpose.
As is the case under U.S. law, even inexpensive gifts to government or political party officials, such as tickets to sporting events, may constitute a violation of the FCPA. If questions arise with respect to expenses to be incurred on behalf of foreign officials, consult with the GC before the Company pays or agrees to pay such expenses.
Some “expediting” payments are authorized under the FCPA. Such payments must be directly related to non-discretionary conduct by lower level bureaucrats and unrelated to efforts by a company to obtain significant concessions, permits or approvals. Examples include processing of visas and work orders, mail delivery or loading and unloading of cargo. Such payments do not include payments of any kind relating to terms of continuing or new business agreements. Consult with the GC prior to making or authorizing any proposed expediting payment.
A violation of the FCPA can result in criminal and civil charges against the Company, its officers, its managers and the individuals involved in the violation, regardless of the person’s nationality or location.
| I. | International Trade Policy |
The Company is committed to maintaining the highest possible ethical standards and complying with all applicable laws in all countries in which it does business. The Company strictly prohibits doing business with countries and persons prohibited by applicable U.S. laws governing international trade, including economic sanctions, export control and anti-boycott laws and regulations (collectively, “International Trade Laws”), as described below:
| · | The United States, through the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”), has imposed robust sanctions measures to cut off funding for terrorists, illegitimate regimes, and others who seek to violate basic human rights. The OFAC sanctions prohibit U.S. persons and businesses from engaging in transactions, directly or indirectly, with certain specified targets, which may include business networks, entities, individuals, geographic regions, or entire nations. OFAC broadly prohibits most transactions between U.S. persons and persons or entities in (or ordinarily resident in) countries and regions that are subject to comprehensive sanctions. |
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| · | U.S. export controls are a means by which the United States implements international treaty obligations, such as in the areas of nuclear, chemical and biological weapons proliferation, multilateral sanctions, such as UN arms embargoes and sanctions on companies and individuals, and its own national security and foreign policy interests. In some cases, U.S. export controls prohibit U.S. persons from engaging in activities that support sensitive industries in countries that pose U.S. national security concerns. |
| · | Anti-boycott laws were adopted to encourage and, in specified cases, require U.S. firms to refuse to participate in foreign boycotts that the United States does not sanction. Under the Commerce Department anti-boycott regulations, U.S. persons and their controlled foreign affiliates must report the receipt of boycott requests and are prohibited from agreeing to certain requests. |
To promote compliance with applicable sanctions, the Company is expected to screen proposed counterparties against the restricted party lists set forth by OFAC and other regulators and to avoid doing business with prohibited countries and regions. International Trade Laws are complex restrictions that change from time to time as the result of new legislation, regulations or executive orders. If you have questions about whether International Trade Laws may apply to a particular transaction, please contact the GC.
| V. | AMENDMENTS AND WAIVERS OF THIS CODE |
This Code applies to all Company employees, officers and directors. Please contact the GC if you believe that a waiver under a provision of this Code is warranted. There shall be no substantive amendment or waiver of any provision of this Code except by a vote of the Board of Directors or the Audit Committee of the Board of Directors, which will ascertain whether an amendment or waiver is appropriate and ensure that any amendment or waiver is accompanied by appropriate controls designed to protect the Company. In the case of non-officer employees or consultants of the Company, waivers may also be approved by the CEO. Any such waiver of a provision of this Code shall be evaluated to determine whether timely public disclosure of such waiver is required under the rules and regulations of the Securities and Exchange Commission or applicable exchange listing standards.
The Company reserves the right to amend any provision of this Code at any time, subject to the requirements for approval set forth above.
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| VI. | NO RIGHTS CREATED |
This Code is a statement of certain fundamental principles, policies and procedures that govern the Company’s employees, officers and directors in the conduct of the Company’s business. It is not intended to and does not create any rights in any employee, customer, client, visitor, supplier, competitor, shareholder or any other person or entity.
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Exhibit 16.1
June 18, 2025
Securities and Exchange Commission
100 F Street, N.E.
Washington, DC 20549
Commissioners:
We have read Item 4.01(a) of Form 8-K dated June 18, 2025, of Crescent Biopharma, Inc. (formerly known as GlycoMimetics, Inc.) and are in agreement with the statements contained in the first and second sentences of the first paragraph and the second, third, and fourth paragraphs therein. We have no basis to agree or disagree with other statements of the registrant contained therein.
/s/ Ernst & Young LLP
Exhibit 21.1
| Subsidiary | Country of Origin | |
| Crescent Biopharma Operating Company, LLC | United States |
Exhibit 99.1
Crescent Biopharma Completes Closing of Merger
with GlycoMimetics and Previously
Announced Private Placement of $200 Million
Advancing Lead Program, CR-001, a PD-1 x VEGF
Bispecific Antibody, and Developing
Pipeline of Novel ADCs as Single Agents and in Combination with CR-001
On Track to Submit IND Application for CR-001
in Fourth Quarter of 2025 with Proof-of-Concept
Clinical Data Expected in Second Half of 2026
Shares to Begin Trading on Nasdaq Under Ticker Symbol “CBIO” Today, June 16
Waltham, Mass., June 16, 2025 – Crescent Biopharma, Inc. (“Crescent” or the “Company”), a biotechnology company dedicated to rapidly advancing the next wave of therapies for cancer patients, today announced the completion of its previously announced merger with GlycoMimetics, Inc. (“GlycoMimetics”). The combined company will operate under the name Crescent Biopharma, Inc., and its shares are expected to begin trading on the Nasdaq Capital Market today, June 16, 2025, under the ticker symbol “CBIO.”
Immediately prior to the closing of the merger, Crescent completed a previously announced private financing of $200 million in gross proceeds led by Fairmount, Venrock Healthcare Capital Partners, BVF Partners, and a large institutional investor, with participation from a broad syndicate of healthcare-focused investors. Notable participants include Paradigm BioCapital, RTW Investments, Blackstone Multi-Asset Investing, Frazier Life Sciences, Commodore Capital, Perceptive Advisors, Deep Track Capital, Boxer Capital Management, Soleus, Logos Capital, Driehaus Capital Management, Braidwell LP, and Wellington Management. The proceeds include the conversion of $37.5 million in previously issued convertible notes, plus accrued interest thereon. This financing, together with existing cash, is expected to support the Company’s operations through 2027, including multiple anticipated pipeline milestones.
Pursuant to the terms of the previously disclosed merger agreement, each outstanding share of Crescent common stock was converted into 0.1445 shares of common stock of the combined company, as adjusted for the reverse stock split of GlycoMimetics common stock at a ratio of 1-for-100 shares, effected immediately prior to the merger. The new CUSIP number for the combined company following the reverse stock split and merger is 38000Q201. Following the completion of the merger, there are approximately 19.5 million shares of the combined company's common stock and common stock equivalents outstanding, including shares of common stock underlying pre-funded warrants and Series A convertible preferred stock, and excluding shares underlying equity awards.
“With our seasoned team, promising pipeline, and solid financial foundation supported by leading biotechnology investors, Crescent is well-positioned to lead the next wave of therapeutic innovation for people living with cancer,” said Joshua Brumm, chief executive officer of Crescent. “We anticipate dosing patients in early 2026 in our global Phase 1 trial for CR-001, a PD-1 x VEGF bispecific antibody. Based on the intentional design of CR-001 to replicate a clinically validated approach, we expect the data we generate in patients with solid tumors to be meaningful. We are also advancing two novel ADCs, starting with our CR-002 program which we anticipate entering the clinic in the middle of next year. Our hope is to rapidly bring new treatment options for cancer patients that could truly make a difference in their lives.”
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Crescent remains on track to submit an Investigational New Drug (IND) application in the fourth quarter of 2025 for its lead program, CR-001, a tetravalent PD-1 x VEGF bispecific antibody intentionally designed to replicate the cooperative pharmacology of ivonescimab, which demonstrated superior efficacy compared to the current market leader, pembrolizumab, in a large third party Phase 3 trial in non-small cell lung cancer.1 Crescent expects to report proof-of-concept clinical data from a Phase 1 trial of CR-001 in patients with solid tumors in the second half of 2026. CR-002 and CR-003, novel antibody-drug conjugates (ADCs) with topoisomerase inhibitor payloads, are being developed as single agents and in combination with CR-001, with an IND submission for CR-002 anticipated in mid-2026.
About Crescent Biopharma
Crescent Biopharma’s vision is to build a world leading oncology company bringing the next wave of therapies for cancer patients. The Company’s pipeline includes its lead program, a PD-1 x VEGF bispecific antibody, as well as novel antibody-drug conjugates. By leveraging multiple modalities and established targets, Crescent aims to rapidly advance potentially transformative therapies either as single agents or as part of combination regimens to treat a range of solid tumors. For more information, visit www.crescentbiopharma.com and follow the Company on LinkedIn and X.
Forward-Looking Statements
Certain statements in this press release, other than purely historical information, may constitute "forward-looking statements" within the meaning of the federal securities laws, including for purposes of the "safe harbor" provisions under the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, express or implied statements relating to Crescent’s expectations, hopes, beliefs, intentions or strategies regarding the future of its pipeline and business including, without limitation, Crescent’s ability to achieve the expected benefits or opportunities with respect to CR-001, CR-002 and CR-003, including the expected timelines of regulatory filings and initial clinical data for CR-001, the potential of CR-001, CR-002 and CR-003 to become best-in-class drugs, and the timing of the combined company’s trading on The Nasdaq Capital Market. The words "opportunity," "potential," "milestones," "pipeline," "can," "goal," "strategy," "target," "anticipate," "achieve," "believe," "contemplate," "continue," "could," "estimate," "expect," "intends," "may," "plan," "possible," "project," "should," "will," "would" and similar expressions (including the negatives of these terms or variations of them) may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. These forward-looking statements are based on current expectations and beliefs concerning future developments and their potential effects. There can be no assurance that future developments affecting Crescent will be those that have been anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond Crescent’s control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, risks related to those uncertainties and factors more fully described in Crescent’s most recent filings with the Securities and Exchange Commission (including its registration statement on Form S-4, most recently amended on May 12, 2025 and declared effective by the SEC on May 14, 2025), as well as risk factors associated with companies, such as Crescent, that operate in the biopharma industry. Should one or more of these risks or uncertainties materialize, or should any of Crescent’s assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. Nothing in this press release should be regarded as a representation by any person that the forward-looking statements set forth herein will be achieved or that any of the contemplated results of such forward-looking statements will be achieved. You should not place undue reliance on forward-looking statements in this press release, which speak only as of the date they are made and are qualified in their entirety by reference to the cautionary statements herein. Crescent does not undertake or accept any duty to release publicly any updates or revisions to any forward-looking statements. This press release does not purport to summarize all of the conditions, risks and other attributes of an investment in Crescent.
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Reference:
| 1. | Xiong, Anwen et al. Ivonescimab versus pembrolizumab for PD-L1-positive non-small cell lung cancer (HARMONi-2): a randomised, double-blind, phase 3 study in China. The Lancet, 2025; 405 (10481); 839-849. |
Contact
Amy Reilly
Chief Communications Officer
amy.reilly@crescentbiopharma.com
617-465-0586
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Exhibit 99.2
CRESCENT BIOPHARMA, INC.
CONDENSED BALANCE SHEETS
(UNAUDITED)
(in thousands except share and per share amounts)
| March 31, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash | $ | 22,429 | $ | 34,766 | ||||
| Prepaid expenses and other current assets | 409 | 38 | ||||||
| Total current assets | 22,838 | 34,804 | ||||||
| Other assets | 2,767 | 813 | ||||||
| Total assets | $ | 25,605 | $ | 35,617 | ||||
| Liabilities, Convertible Preferred Stock and Stockholders’ Deficit | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | 634 | $ | 107 | ||||
| Accrued expenses and other current liabilities (1) | 4,445 | 2,225 | ||||||
| Related party accounts payable and other current liabilities | 8,381 | 7,221 | ||||||
| Warrant liability, related party | 824 | 61 | ||||||
| Total current liabilities | 14,284 | 9,614 | ||||||
| Long term liabilities | ||||||||
| Notes payable, noncurrent(2) | 37,482 | 37,482 | ||||||
| Total liabilities | 51,766 | 47,096 | ||||||
| Commitments and contingencies (Note 10) | ||||||||
| Convertible preferred stock: | ||||||||
| Series Seed convertible preferred stock, $0.0001 par value; 20,000,000 shares authorized as of March 31, 2025 and December 31, 2024; 20,000,000 shares issued and outstanding as of March 31, 2025 and December 31, 2024; liquidation preference of $4,000 as of March 31, 2025 and December 31, 2024 | 4,000 | 4,000 | ||||||
| Stockholders’ deficit: | ||||||||
| Common stock, $0.0001 par value; 40,000,000 shares authorized, 7,054,798 and 7,049,180 shares issued and outstanding as of March 31, 2025 and December 31, 2024, respectively | 1 | 1 | ||||||
| Additional paid-in capital | 2,853 | 2,387 | ||||||
| Accumulated deficit | (33,015 | ) | (17,867 | ) | ||||
| Total stockholders’ deficit | (30,161 | ) | (15,479 | ) | ||||
| Total liabilities, convertible preferred stock and stockholders’ deficit | $ | 25,605 | $ | 35,617 | ||||
(1) Includes related party amounts of $784 and $341 as of March 31, 2025 and December 31, 2024, respectively.
(2) Includes related party amount of $14,993 as of March 31, 2025 and December 31, 2024.
The accompanying notes are an integral part of these financial statements.
F-1
CRESCENT BIOPHARMA, INC.
CONDENSED STATEMENT OF OPERATIONS AND COMPREHENSIVE LOSS
(UNAUDITED)
(in thousands, except share and per share amounts)
| Three Months Ended | ||||
| March 31, 2025 | ||||
| Operating expenses | ||||
| Research and development(1) | $ | 10,627 | ||
| General and administrative(2) | 3,597 | |||
| Total operating expenses | (14,224 | |||
| Loss from operations | (14,224 | ) | ||
| Other income (expense): | ||||
| Interest income | 188 | |||
| Interest expense(3) | (1,112 | ) | ||
| Total other expense, net | (924 | ) | ||
| Net loss and comprehensive loss | $ | (15,148 | ) | |
| Net loss per share attributable to common stockholders, basic and diluted | $ | (18.39 | ) | |
| Weighted-average common shares outstanding, basic and diluted | 823,664 | |||
| (1) | Includes related party amount of $8,777 for the three months ended March 31, 2025. |
| (2) | Includes related party amount of $466 for the three months ended March 31, 2025. |
| (3) | Includes related party amount of $445 for the three months ended March 31, 2025. |
The accompanying notes are an integral part of these financial statements.
F-2
CRESCENT BIOPHARMA, INC.
CONDENSED STATEMENTS OF CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY
(UNAUDITED)
(In thousands, except share amounts)
| Convertible
Preferred Stock | Common Stock(1) | Additional Paid-in | Accumulated | Total Stockholders’ | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Deficit | ||||||||||||||||||||||
| Balances as of December 31, 2024 | 20,000,000 | $ | 4,000 | 7,049,180 | $ | 1 | $ | 2,387 | $ | (17,867 | ) | $ | (15,479 | ) | ||||||||||||||
| Stock-based compensation expense | - | - | - | - | 466 | - | 466 | |||||||||||||||||||||
| Early exercise of stock options | - | - | 5,618 | - | - | - | - | |||||||||||||||||||||
| Net loss | - | - | - | - | - | (15,148 | ) | (15,148 | ) | |||||||||||||||||||
| Balances as of March 31, 2025 | 20,000,000 | $ | 4,000 | 7,054,798 | $ | 1 | $ | 2,853 | $ | (33,015 | ) | $ | (30,161 | ) | ||||||||||||||
| (1) | Includes issuance of 2,049,180 restricted stock awards (see Note 7) |
The accompanying notes are an integral part of these financial statements.
F-3
CRESCENT BIOPHARMA, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in thousands)
| Three Months Ended | ||||
| March 31, 2025 | ||||
| Cash flows from operating activities: | ||||
| Net loss | $ | (15,148 | ) | |
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||
| Stock-based compensation expense(1) | 1,229 | |||
| Non-cash interest expense | 2 | |||
| Changes in operating assets and liabilities: | ||||
| Accounts payable | 518 | |||
| Accrued expenses and other current liabilities(2) | 1,759 | |||
| Related party accounts payable and other current liabilities | 1,160 | |||
| Prepaid expenses and other current assets | (371 | ) | ||
| Net cash used in operating activities | (10,851 | ) | ||
| Cash flows from financing activities: | ||||
| Proceeds from early exercise of options | 5 | |||
| Payment of debt issuance costs | (2 | ) | ||
| Payment of deferred offering costs | (1,489 | ) | ||
| Net cash used in financing activities | (1,486 | ) | ||
| Net decrease in cash | (12,337 | ) | ||
| Cash at beginning of period | 34,766 | |||
| Cash at end of period | $ | 22,429 | ||
| Supplemental disclosure of non-cash financing activities: | ||||
| Deferred offering costs in accounts payable and accrued expenses and other current liabilities | $ | 518 | ||
| (1) | Includes related party amount of $763 for the three months ended March 31, 2025. |
| (2) | Includes related party amount of $784 for the three months ended March 31, 2025. |
The accompanying notes are an integral part of these financial statements.
F-4
CRESCENT BIOPHARMA, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
1. Nature of the Business and Basis of Presentation
Background and Basis of Presentation
Crescent Biopharma, Inc. (“Crescent” or the “Company”) was established and incorporated under the laws of the state of Delaware on September 19, 2024. The Company was founded to research and develop cancer therapy candidates licensed from Paragon Therapeutics, Inc. (“Paragon”), an antibody discovery engine founded by Fairmount Funds Management LLC (“Fairmount”). The Company is based in Waltham, Massachusetts and was formed to develop novel therapies for the treatment of solid tumors.
The Company is subject to risks and uncertainties common to early-stage companies in the biopharmaceutical industry, including, but not limited to, the ability to complete preclinical and clinical trials, the ability to obtain regulatory approval for product candidates, development by competitors of new technological innovations, dependence on key personnel, the ability to attract and retain qualified employees, reliance on third-party organizations, protection of proprietary technology, compliance with government regulations, product liability, uncertainty of market acceptance of products and the ability to raise additional capital to fund operations.
The Company’s potential product candidates will require approval from the U.S. Federal Food and Drug Administration or comparable foreign authorities prior to the commencement of commercial sales. There can be no assurance that the Company’s potential product candidates will receive all the required approvals. In addition, there can be no assurance that the Company’s potential product candidates, if approved, will be accepted in the marketplace, that any future product candidates can be developed or manufactured at an acceptable cost and with appropriate performance characteristics, or that such product candidates will be successfully marketed, if at all.
GlycoMimetics, Inc., a Delaware corporation (“GlycoMimetics”), and the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) on October 28, 2024, which agreement was subsequently amended on February 14, 2025 and April 28, 2025, pursuant to which, among other matters, and subject to the satisfaction or waiver of the conditions set forth in the Merger Agreement, Gemini Merger Sub Corp., a Delaware corporation, will merge with and into Crescent, with Crescent continuing as a wholly owned subsidiary of GlycoMimetics and the surviving corporation of the merger (the “First Merger”), and Crescent will merge with and into Gemini Merger Sub II, LLC, a Delaware limited liability company (“Second Merger Sub”), with Second Merger Sub being the surviving entity of the merger (the “Second Merger” and, together with the First Merger, the “Merger”). In connection with the Merger, Second Merger Sub will change its corporate name to “Crescent Biopharma Operating Company, LLC” and GlycoMimetics will change its name to “Crescent Biopharma, Inc.” GlycoMimetics following the Merger is referred to herein as the “combined company.” The combined company will be led by Crescent’s management team and will focus on developing cancer therapies for the treatment of solid tumors. Refer to Note 14 for subsequent events related to the closing of the transaction on June 13, 2025.
In connection with the Merger, on February 14, 2025, Crescent and GlycoMimetics entered into an amended and restated subscription agreement (the “Subscription Agreement”) with certain investors, including certain investors of the Company, pursuant to which the Company agreed to issue and sell to such investors in a financing transaction (the “Crescent Pre-Closing Financing”) shares of the Company’s common stock and pre-funded warrants to purchase shares of the Company’s common stock at an estimated purchase price of $1.9110 per share of common stock and $1.9109 per pre-funded warrant, for gross proceeds of approximately $200.0 million (which includes $37.5 million of gross proceeds previously received by Crescent from the issuance of its convertible notes (the “Convertible Notes”) and accrued interest on such notes), which will precede the closing of the Merger. Shares of the Company’s common stock and pre-funded warrants to purchase shares of the Company’s common stock issued pursuant to the Crescent Pre-Closing Financing will be converted into shares of GlycoMimetics common stock and pre-funded warrants to purchase share of GlycoMimetics common stock in accordance with the exchange ratio at the effective time of the close of the transaction. Refer to Note 14 for subsequent events related to the closing of the transaction on June 13, 2025.
F-5
Immediately prior to the consummation of the Merger on June 13, 2025, GlycoMimetics effected a 1-for-100 reverse stock split of its common stock (the “Reverse Stock Split”). The Combined Company was re-domesticated and incorporated under the laws of the Cayman Islands on June 13, 2025.
These condensed financial statements reflect, in the opinion of management, all adjustments of a normal and recurring nature that are necessary for a fair statement of the Company’s financial position as of March 31, 2025, and its results of operations and cash flows for the three months ended March 31, 2025. The condensed balance sheet as of December 31, 2024, included in the condensed balance sheets was derived from the Company’s audited financial statements. The condensed financial statements and accompanying notes are prepared in accordance with United States (“U.S.”) generally accepted accounting principles (“GAAP”) for interim financial reporting and the rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”) and therefore do not include all information and disclosures normally included in the annual financial statements.
The results for the three months ended March 31, 2025 are not necessarily indicative of results expected for the full fiscal year or any subsequent interim period.
Going Concern
Since inception, the Company has devoted substantially all of its resources to advancing the development of its programs, organizing and staffing the Company, business planning, raising capital, and providing general and administrative support for these operations. Current and future programs will require significant research and development efforts, including preclinical and clinical trials, and regulatory approvals to commercialization. These efforts require significant amounts of additional capital, adequate personnel, and infrastructure. Even if the Company’s development efforts are successful, it is uncertain when, if ever, the Company will realize significant revenue from product sales. If the Company obtains regulatory approval for any of its potential product candidates and starts to generate revenue, it expects to incur significant expenses related to developing its internal commercialization capability to support product sales, marketing, and distribution. As a result, the Company will need substantial additional funding to support its operating activities as it advances its potential product candidates through development, seeks regulatory approval and prepares for and, if any of its potential product candidates are approved, proceeds to commercialization. Until such time as the Company can generate significant revenue from product sales, if ever, the Company expects to finance its operating activities through a combination of equity offerings and debt financings. Adequate funding may not be available to the Company on acceptable terms, or at all.
If the Company is unable to obtain additional funding, the Company will assess its capital resources and may be required to delay, reduce the scope of or eliminate some or all of its planned operations, which may have a material adverse effect on the Company’s business, financial condition, results of operations and ability to operate as a going concern. The financial statements do not include any adjustments that may result if the Company is not able to continue as a going concern.
The Company has not generated any revenue from product sales or other sources and has incurred significant operating losses and negative cash flows from operations since inception. The Company has incurred a net loss of $15.1 million and used net cash of $10.9 million for operating activities during the three months ended March 31, 2025. As of March 31, 2025, the Company had an accumulated deficit of $33.0 million.
The Company expects that its research and development and general and administrative costs will continue to increase significantly, including in connection with conducting future pre-clinical activities and clinical trials and manufacturing for its existing product candidates and any future product candidates to support commercialization and providing general and administrative support for its operations, including the costs associated with operating as a public company. The Company expects that its existing cash of $22.4 million as of March 31, 2025, together with the proceeds of $159.5 million, which is net of $37.5 million of gross proceeds previously received by Crescent from the issuance of its convertible notes and approximately $3.0 million of accrued interest on such notes, received from the closing of the Merger and Crescent Pre-Closing Financing on June 13, 2025, will be sufficient to fund its operating expenses and capital expenditure requirements for at least 12 months from the date these condensed financial statements were available to be issued.
F-6
2. Summary of Significant Accounting Policies
Use of Estimates
The preparation of the Company’s financial statements in conformity with U.S. GAAP requires management to make estimates, assumptions, and judgements that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting periods. Significant estimates and assumptions reflected within these financial statements include but are not limited to research and development expenses and any applicable prepaid or accrued costs and the valuation of stock-based compensation awards and related expenses. The Company bases its estimates on known trends and other market-specific or other relevant factors that it believes to be reasonable under the circumstances. On an ongoing basis, management evaluates its estimates, as there are changes in circumstances, facts, and experience. Actual results may differ materially from those estimates or assumptions.
Segment Information
The Company operates and manages its business as a single segment for the purposes of assessing performance and making operating decisions. The Company’s chief executive officer, who is the chief operating decision maker (the “CODM”), reviews the Company’s financial information for purposes of evaluating financial performance and allocating resources (see Note 13).
Concentrations of Credit Risk
Financial instruments that potentially expose the Company to concentrations of credit risk primarily consist of cash. The Company maintains its cash balances at an accredited financial institution in amounts that, at times, may exceed federally insured limits. However, the Company has not experienced any losses on its deposits of cash.
The Company is dependent on third-party organizations to research, develop, manufacture, and process its potential product candidates for its development programs. The Company expects to continue to be dependent on a small number of manufacturers to supply it with its requirements for all products. The Company’s research and development programs could be adversely affected by a significant interruption in the supply of the necessary materials. A significant amount of the Company’s research and development activities are performed under its agreements with Paragon (see Note 9).
Deferred Offering Costs
The Company capitalizes certain legal, professional, accounting, and other third-party fees that are directly associated with in-process equity financings as deferred offering costs until such financings are consummated. After the consummation of an equity financing, these costs are recorded as a reduction of the proceeds from the offering, either as a reduction of the carrying value of the common or preferred stock or in stockholders’ deficit as a reduction of additional paid-in capital generated as a result of the offering. Should the in-process equity financing be abandoned, the deferred offering costs would be expensed immediately as a charge to operating expenses in the statement of operations and comprehensive loss. As of March 31, 2025, deferred offering costs of $2.8 million were recorded as Other assets in the condensed balance sheet.
Fair Value Measurements
Certain assets and liabilities are carried at fair value under U.S. GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. Financial assets and liabilities carried at fair value are to be classified and disclosed in one of the following three levels of the fair value hierarchy, of which the first two are considered observable and the last is considered unobservable:
| ● | Level 1 — Quoted prices in active markets that are identical assets or liabilities. |
| ● | Level 2 — Observable inputs (other than Level 1 quoted prices), such as quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data. |
| ● | Level 3 — Unobservable inputs that are supported by little or no market activity that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies, and similar techniques. |
F-7
The carrying values of the Company’s prepaid expenses and other current assets, accounts payable and accrued expenses and other current liabilities approximate their fair values due to their relatively short maturity periods. The Company accounts for its Convertible Notes at amortized cost, which approximates fair value utilizing Level 2 inputs.
Classification of Convertible Preferred Stock
The Company has classified the Series Seed convertible preferred stock (the “Convertible Preferred Stock”) outside of stockholders’ deficit on the Company’s condensed balance sheet because the holders of such stock have certain liquidation rights in the event of a deemed liquidation event that, in certain situations, is not solely within the control of the Company and would require the redemption of the then-outstanding Convertible Preferred Stock.
The Convertible Preferred Stock is not redeemable, except in the event of deemed liquidation (see Note 5). Because the occurrence of a deemed liquidation event is not currently probable, the carrying values of the Convertible Preferred Stock are not being accreted to their redemption values. Subsequent adjustments to the carrying values of the Convertible Preferred Stock would be made only when a deemed liquidation event becomes probable.
Convertible Notes Payable
The Company accounts for the Convertible Note (as defined in Note 4) at amortized cost. The Company considered if optional conversion features are required to be bifurcated and separately accounted for as a derivative. Costs related to the issuance of the Convertible Note were recorded as a debt discount, amortized over the term of the Convertible Note (see Note 4) and were accounted for as interest expense in other income (expense), net within the condensed statement of operations and comprehensive loss using the effective interest method.
Research and Development Contract Costs Accruals
The Company records the costs associated with research studies and manufacturing development as incurred. These costs are a significant component of the Company’s research and development expenses, with a substantial portion of the Company’s ongoing research and development activities conducted to date by vendors, including the Company’s related party Paragon (see Note 9), and contract manufacturing organizations (“CMOs”), and in future periods may involve contract research organizations (“CROs”).
The Company accrues for expenses resulting from obligations under its discovery and option agreements (the “Option Agreements”) by and among the Company, Paragon and Parascent Holding LLC (“Parascent”), and agreements with CROs, CMOs and other vendors for which payment flows may not match the periods over which materials or services are provided to the Company. Accruals are recorded based on estimates of services received and efforts expended pursuant to agreements established with Paragon, CROs, CMOs and other outside service providers. These estimates are typically based on contracted amounts applied to the proportion of work performed and determined through analysis with internal personnel and external service providers as to the progress or stage of completion of the services. The Company makes significant judgments and estimates in determining the accrual balance in each reporting period. In the event advance payments are made to Paragon, a CRO, CMO or other outside service provider, the payments will be recorded as a prepaid asset which will be expensed as the contracted services are performed. Changes in these estimates that result in material changes to the Company’s accruals could materially affect the Company’s results of operations. As of March 31, 2025, the Company has not experienced any material deviations between accrued and actual research and development expenses.
Research and Development Costs
Research and development costs are expensed as incurred. Research and development costs include salaries and bonuses, stock-based compensation, employee benefits and external costs of vendors and consultants engaged to conduct research and development activities, which include amounts reimbursed to Paragon under the Paragon Option Agreements (as defined in Note 9).
F-8
Nonrefundable advance payments for goods or services to be received in the future for use in research and development activities are recorded as prepaid expenses on the accompanying balance sheet. The prepaid amounts are expensed as the related goods are delivered or the services are performed, or when it is no longer expected that the goods will be delivered, or the services rendered.
General and Administrative Expenses
General and administrative expenses consist primarily of salaries and bonuses, stock-based compensation, employee benefits, finance and administration costs and professional fees.
Commitments and Contingencies
The Company may be subject to contingent liabilities, such as legal proceedings and claims, that arise in the ordinary course of business activities. The Company accrues for loss contingencies when losses become probable and are reasonably estimable. If the reasonable estimate of the loss is a range and no amount within the range is a better estimate, the minimum amount of the range is recorded as a liability on the balance sheet. The Company does not accrue for contingent losses that, in its judgment, are considered to be reasonably possible, but not probable; however, it discloses the range of reasonably possible losses. As of March 31, 2025, no liabilities were recorded for loss contingencies (see Note 10).
Stock-Based Compensation
The Company classifies stock-based compensation expense in its condensed statement of operations and comprehensive loss in the same manner in which the award recipient’s payroll costs are classified or in which the award recipient’s service payments are classified.
The Company grants stock options, restricted stock awards and restricted stock units that are subject to service-based vesting conditions. Compensation expense for awards to employees and directors with service-based vesting conditions is recognized using the straight-line method over the requisite service period, which is generally the vesting period of the respective award. Compensation expense for awards to non-employees with service-based vesting conditions is recognized in the same manner as if the Company had paid cash in exchange for the goods or services, which is generally over the vesting period of the award. Forfeitures are accounted for as they occur. The Company has issued stock options, restricted common stock awards (“RSAs”) and restricted stock units (“RSUs”) with service-based vesting conditions only.
The Company measures all stock-based awards granted to employees, directors and non-employees in the form of stock options to purchase shares of its common stock, based on the fair value of the awards on the date of grant using the Black-Scholes option-pricing model. The Company measures the fair value of RSAs and RSUs using the difference, if any, between the purchase price per share of the award and the fair value of the Company’s common stock at the date of grant.
The Company’s common stock valuations were prepared using a hybrid method, including an option pricing method (“OPM”). The OPM treats common stock and preferred stock as call options on the total equity value of a company, with exercise prices based on the value thresholds at which the allocation among the various holders of a company’s securities changes. Under this method, the common stock has value only if the funds available for distribution to stockholders exceed the value of the preferred stock liquidation preferences at the time of the liquidity event, such as a strategic sale or a merger. The hybrid method is a probability-weighted expected return method (“PWERM”), where the equity value in one or more of the scenarios is calculated using an OPM. The PWERM is a scenario-based methodology that estimates the fair value of common stock based upon an analysis of future values for the company, assuming various outcomes. The common stock value is based on the probability-weighted present value of expected future investment returns considering each of the possible outcomes available as well as the rights of each class of stock. The future value of the common stock under each outcome is discounted back to the valuation date at an appropriate risk-adjusted discount rate and probability weighted to arrive at an indication of value for the common stock. A discount for lack of marketability of the common stock is then applied to arrive at an indication of value for the common stock.
The assumptions underlying these valuations represented management’s best estimate, which involved inherent uncertainties and the application of management’s judgment. As a result, if the Company had used significantly different assumptions or estimates, the fair value of incentive shares and stock-based compensation expense could have been materially different.
F-9
Early Exercise of Stock Options
The terms of the 2024 Equity Incentive Plan (the “2024 Plan”) permit option holders to exercise options before their options are vested, subject to certain limitations. The early exercised options are subject to the same vesting provisions in the original stock option awards. Shares issued as a result of early exercise that have not vested are subject to repurchase by the Company upon termination of the purchaser’s employment, at the price paid by the purchaser. While such shares are considered legally outstanding, they are not deemed to be outstanding for accounting purposes until they vest and are therefore excluded from basic and diluted net loss per share until the repurchase right lapses and the shares are no longer subject to the repurchase feature. A liability is recognized related to the cash proceeds of the unvested options and is reclassified into common stock and additional paid-in capital as the shares vest and the repurchase right lapses. All early exercised options were unvested and accrued on the condensed balance sheet as of March 31, 2025.
Net Loss per Share Attributable to Common Stockholders
The Company applies the two-class method when computing net loss per share attributable to the Company’s common stockholders as the Company has issued shares that meet the definition of participating securities. The two-class method determines net loss per share for each class of common and participating securities according to dividends declared or accumulated and participation rights in undistributed earnings.
The two-class method requires loss available to common stockholders for the period to be allocated between common and participating securities based upon their respective rights to share in the undistributed earnings as if all loss for the period had been distributed. The Company considers its Convertible Preferred Stock to be participating securities as, in the event a dividend is paid on common stock, the holders of Convertible Preferred Stock would be entitled to receive dividends on a basis consistent with the Company’s common stockholders. There is no allocation required under the two-class method during periods of loss since the participating securities do not have a contractual obligation to share in the losses of the Company.
Basic net loss per share attributable to common stockholders is computed by dividing the net loss attributable to the Company’s common stockholders by the weighted average number of common shares outstanding for the period, excluding potentially dilutive common shares. Diluted net loss per share attributable to common stockholders is computed by adjusting net loss attributable to common stockholders to reallocate undistributed earnings based on the potential impact of dilutive securities. Diluted net loss per share attributable to common stockholders is computed by dividing the diluted net loss by the weighted average number of common shares outstanding for the period, including potentially dilutive securities.
For purposes of this calculation, the Company’s outstanding Convertible Preferred Stock, stock options to purchase common stock, unvested RSUs and unvested RSAs are considered potentially dilutive common shares.
The Company generated a net loss for the period presented. In periods in which the Company reports a net loss attributable to common stockholders, diluted net loss per share attributable to common stockholders is the same as basic net loss per share attributable to common stockholders since dilutive common shares are not assumed to have been issued if their effect is anti-dilutive.
Income Taxes
The Company accounts for income taxes using the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the financial statements or in the Company’s tax returns. Deferred tax assets and liabilities are determined based on the differences between the financial statement basis and tax basis of assets and liabilities using enacted tax rates in effect for the years in which the differences are expected to reverse. Changes in deferred tax assets and liabilities are recorded in the provision for income taxes. The Company assesses the likelihood that its deferred tax assets will be recovered from future taxable income and, to the extent it believes, based upon the weight of available evidence, that it is more likely than not that all or a portion of the deferred tax assets will not be realized, a valuation allowance is established through a charge to income tax expense. The potential for recovery of deferred tax assets is evaluated by estimating the future taxable profits expected and considering prudent and feasible tax planning strategies.
F-10
The Company accounts for uncertainty in income taxes recognized in the financial statements by applying a two-step process to determine the amount of tax benefit to be recognized. First, the tax position must be evaluated to determine the likelihood that it will be sustained upon external examination by the taxing authorities. If the tax position is deemed more likely than not to be sustained, the tax position is then assessed to determine the amount of benefit to recognize in the financial statements. The amount of the benefit that may be recognized is the largest amount that has a greater than 50% likelihood of being realized upon ultimate settlement. The provision for income taxes includes the effects of any resulting tax reserves, or unrecognized tax benefits, that are considered appropriate as well as the related net interest and penalties.
The Company had accrued no amounts for interest or penalties related to uncertain tax positions as of March 31, 2025. The Company did not have any uncertain tax positions as of March 31, 2025.
Recently Issued Accounting Pronouncement Not Yet Adopted
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. This ASU expands disclosures in an entity’s income tax rate reconciliation table and disclosures regarding taxes paid both in the U.S. and foreign jurisdictions. This update is effective beginning with the Company’s 2025 fiscal year annual reporting period. The Company is currently evaluating the impact of this standard on its financial statements.
In November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”). The amendments in ASU 2024-03 require public entities to disclose specified information about certain costs and expenses. ASU 2024-03 is effective for the Company’s annual reporting period beginning after December 15, 2026 and interim reporting periods beginning after December 27, 2027, with early adoption permitted. The Company is currently evaluating the impact of this standard on its financial statements.
3. Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities consisted of the following (in thousands):
| March 31, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Accrued interest (1) | $ | 1,960 | $ | 852 | ||||
| Accrued research and development | 1,180 | 713 | ||||||
| Accrued professional and consulting | 887 | 645 | ||||||
| Accrued employee compensation and benefits | 418 | 15 | ||||||
| Total accrued expenses and other current liabilities | $ | 4,445 | $ | 2,225 | ||||
| (1) | Includes related party amounts of $784 and $341 as of March 31, 2025 and December 31, 2024, respectively. |
4. Convertible Notes Payable
In October 2024, the Company entered into a Convertible Note Purchase Agreement (the “Note Purchase Agreement”) with a series of investors, pursuant to which the Company issued Convertible Notes with an initial principal amount of $37.5 million (of which $15.0 million is from a related party). The principal amount and all accrued interest of the Convertible Notes will automatically convert into the Company’s common stock or preferred stock in connection with the closing of a Next Equity Financing or other events (e.g., a sale of substantially all Company assets, a merger, etc.). The Convertible Notes accrue interest at a rate of 12.0% per annum, compounded annually. All unpaid interest and principal are scheduled to mature on December 31, 2026 (the “Maturity Date”). Prepayment is not permitted without the prior written consent of the majority of the holders of the Convertible Notes. The principal payment along with the accrued interest on each Convertible Note is due in full on the Maturity Date. Pursuant to the Note Purchase Agreement, the Company has the right to sell and issue additional Convertible Notes up to an aggregate principal amount equal to $37.5 million, in addition to the $37.5 million of initial principal amount of the Convertible Note for a total aggregate principal amount of up to $75.0 million. As of March 31, 2025, the Company had outstanding borrowings of $37.5 million under its Convertible Notes.
Pursuant to the Subscription Agreement, the holders of the Convertible Notes have agreed to contribute such notes as consideration in exchange for shares of the Company’s common stock and pre-funded warrants to purchase shares of the Company’s common stock in the Crescent Pre-Closing Financing.
F-11
The Company assessed all terms and features of the Convertible Note in order to identify any potential embedded features that would require bifurcation. As part of this analysis, the Company assessed the economic characteristics and risks of the embedded features. The Company determined that the share settled redemption feature was clearly and closely related to the debt host and did not require separate accounting. The Company determined that the conversion options of the Convertible Note, including the conversion features related to a defaulting purchaser and highest interest rate, were not clearly and closely associated with a debt host. However, these features did not meet the definition of a derivative under ASC 815, Derivatives and Hedging, and as a result, did not require separate accounting as a derivative liability.
The Company paid debt issuance costs of less than $0.1 million in relation to the Convertible Note. The debt issuance costs are reflected as a reduction of the carrying value of Convertible Note on the Company’s balance sheet and are being amortized as interest expense over the term of the Convertible Note using the effective interest method. As of March 31, 2025, the Company recognized interest expense related to the Convertible Note of $1.1 million, which includes non-cash interest expense related to the amortization of debt issuance costs of less than $0.1 million. As of March 31, 2025, the weighted average effective interest rate of the Convertible Note was approximately 12.0%.
5. Convertible Preferred Stock
On September 19, 2024, the Company issued 20,000,000 shares of the Series Seed Convertible Preferred Stock to a related party, Fairmount Healthcare Fund II L.P., an affiliate fund of Fairmount, at a purchase price of $0.20 per share for gross proceeds of $4.0 million.
Upon the issuance of the Convertible Preferred Stock, the Company assessed the embedded conversion and liquidation features of the securities as described below and determined that such features did not require the Company to separately account for these features as embedded derivatives.
As of March 31, 2025 and December 31, 2024, Convertible Preferred Stock consisted of the following (in thousands, except share amounts):
| March 31, 2025 | ||||||||||||||||||||
| Preferred | ||||||||||||||||||||
| Preferred | Stock Issued | Common Stock | ||||||||||||||||||
| Stock | and | Carrying | Liquidation | Issuable Upon | ||||||||||||||||
| Authorized | Outstanding | Value | Preference | Conversion | ||||||||||||||||
| Series Seed Preferred Stock | 20,000,000 | 20,000,000 | $ | 4,000 | $ | 4,000 | 20,000,000 | |||||||||||||
| 20,000,000 | 20,000,000 | $ | 4,000 | $ | 4,000 | 20,000,000 | ||||||||||||||
| December 31, 2024 | ||||||||||||||||||||
| Preferred | ||||||||||||||||||||
| Preferred | Stock Issued | Common Stock | ||||||||||||||||||
| Stock | and | Carrying | Liquidation | Issuable Upon | ||||||||||||||||
| Authorized | Outstanding | Value | Preference | Conversion | ||||||||||||||||
| Series Seed Preferred Stock | 20,000,000 | 20,000,000 | $ | 4,000 | $ | 4,000 | 20,000,000 | |||||||||||||
| 20,000,000 | 20,000,000 | $ | 4,000 | $ | 4,000 | 20,000,000 | ||||||||||||||
The holders of the Convertible Preferred Stock have the following rights and preferences:
F-12
Voting
The holders of Convertible Preferred Stock are entitled to vote, together with the holders of the Company’s common stock, on all matters submitted to stockholders for a vote. Each holder of outstanding shares of Convertible Preferred Stock is entitled to the number of votes equal to the number of shares of common stock into which the shares of preferred stock held by such holder are convertible as of the record date for determining stockholders entitled to vote on such matter. A majority vote of the holders of Convertible Preferred Stock is required to liquidate or dissolve the Company, amend the certificate of incorporation or bylaws in a manner that adversely affects the rights of the Convertible Preferred Stock, reclassify common stock or establish another class of capital stock (unless the same ranks junior to the Convertible Preferred Stock with respect to its rights), create shares that would rank senior to or authorize additional shares of Convertible Preferred Stock, declare a dividend or make a distribution.
In addition, the holders of shares of Convertible Preferred Stock are entitled to elect one director of the Company. The holders of shares of common stock and any other class or series of voting stock (including Convertible Preferred Stock), exclusively and voting together as a single class, are entitled to elect the balance of the total number of directors of the Company.
Conversion
Each share of Convertible Preferred Stock is convertible into common shares at the option of the holder, at any time, and without the payment of additional consideration by the holder. Additionally, in the event of a Mandatory Conversion, such as the Merger, each share of Convertible Preferred Stock will be automatically converted into shares of newly created non-voting preferred stock at the applicable conversion ratio then in effect upon (i) the closing of a firm-commitment underwritten public offering of the Company’s common stock at a price of at least $1.00 per share resulting in at least $50.0 million of gross proceeds to the Company, net of the underwriting discount and commissions, and (ii) the vote or written consent of the holders of a majority of the outstanding shares of preferred stock, voting as a single class. The rights, privileges, duties and obligations relating to the non-voting preferred stock are to be determined at the time of a Mandatory Conversion.
The conversion ratio of Convertible Preferred Stock is determined by dividing the original issue price by the conversion price in effect at the time of conversion. The original issue price is $0.20 per share for Convertible Preferred Stock (in each case subject to appropriate adjustment in the event of any stock split, stock dividend, combination or other similar recapitalization and other adjustments as set forth in the Company’s certificate of incorporation, as amended and restated). The conversion price is $0.20 per share for Series Seed Convertible Preferred Stock. As of March 31, 2025, each outstanding share of Convertible Preferred Stock was convertible into common stock on a one-for-one basis.
Dividends
The Company may not declare, pay or set aside any dividends on shares of any other class or series of capital stock of the Company (other than dividends on shares of common stock payable in shares of common stock) unless the holders of the Convertible Preferred Stock then outstanding first receive, or simultaneously receive, a dividend on each outstanding share of Convertible Preferred Stock in an amount at least equal to (i) in the case of a dividend being distributed to common stock or any class or series that is convertible into common stock, the equivalent dividend on an as-converted basis or (ii) in the case of a dividend on any class or series that is not convertible into common stock, a dividend equal to a dividend rate on Convertible Preferred Stock calculated based on the respective original issue price of Series Seed Convertible Preferred Stock. Dividends are non-cumulative. For the period September 19, 2024 (inception) through March 31, 2025, no cash dividends had been declared or paid by the Company.
Liquidation
In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company, or upon the occurrence of a Deemed Liquidation Event (as defined below), the holders of shares of Convertible Preferred Stock then outstanding are entitled to be paid out of the assets or funds of the Company available for distribution to stockholders before any payment is made to the holders of common stock. The holders of Convertible Preferred Stock are entitled to an amount equal to the greater of (i) the applicable original issue price per share of the Convertible Preferred Stock, plus any declared but unpaid dividends thereon, or (ii) the amount per share that would have been payable had all shares of Convertible Preferred Stock been converted into common stock immediately prior to such liquidation, dissolution, winding up or Deemed Liquidation Event. If upon any such liquidation event, the assets or funds of the Company available for distribution to stockholders are insufficient to pay the full amount to which they are entitled, then the holders of shares of Convertible Preferred Stock in preference to any distributions to common stock will share ratably in any distribution of the assets or funds available for distribution in proportion to the respective amounts which would otherwise be payable if it were paid in full.
F-13
Unless the holders of a majority in voting power of the then outstanding shares of Convertible Preferred Stock elect otherwise, a Deemed Liquidation Event shall include a merger or consolidation (other than one in which stockholders of the Company own a majority by voting power of the outstanding shares of the surviving or acquiring corporation) or sale, lease, transfer, exclusive license or other disposition of all or substantially all of the Company’s assets.
Redemption
The Convertible Preferred Stock does not have redemption rights, except for the contingent redemption upon the occurrence of a Deemed Liquidation Event.
6. Common Stock
As of March 31, 2025, the Company has the authority to issue a total of 40,000,000 shares of common stock at a par value of $0.0001 per share. As of March 31, 2025, 5,000,000 shares of common stock were issued and outstanding, 2,049,180 shares of common stock in connection with RSAs were issued and outstanding and 5,618 shares in connection with early exercised stock options were issued and outstanding. Each share of common stock entitles the holder to one vote, together with the holders of Convertible Preferred Stock, on all matters submitted to the stockholders for a vote. The holders of common stock are entitled to receive dividends, if any, as declared by the Company’s board of directors (the “Board of Directors”), subject to the preferential dividend rights of the holders of Convertible Preferred Stock.
As of March 31, 2025, there were 42,658,881 shares of common stock reserved for issuance for the potential conversion of shares of Convertible Preferred Stock into common stock, the exercise of outstanding stock options for common stock and the release of outstanding RSUs for common stock.
7. Stock-Based Compensation
2024 Equity Incentive Plan
On September 19, 2024, the Board of Directors approved the 2024 Equity Incentive Plan, under which the Company may grant stock options, restricted stock awards, restricted stock units, or other stock-based awards to employees, officers, directors, consultants, and advisors. The 2024 Plan is administered by the Board of Directors, or, at the discretion of the Board of Directors, by a committee of the Board of Directors. The exercise prices, vesting and other restrictions are determined at the discretion of the Board of Directors, or its committee, if so delegated. Stock options granted under the 2024 Plan generally vest over four years, subject to the participant’s continued service, and expire after ten years. Upon adoption, the 2024 Plan authorized 2,049,180 shares of common stock reserved for issuance under the plan. On December 11, 2024, the 2024 Plan was amended to increase the number of shares of common stock reserved for issuance by 6,623,010 shares. On December 27, 2024, the 2024 Plan was amended to increase the number of shares of common stock reserved for issuance by 731,535 shares. On January 13, 2025, the 2024 Plan was amended to increase the number of shares of common stock reserved for issuance by 1,690,944. On March 15, 2025, the 2024 Plan was amended to increase the number of shares of common stock reserved for issuance by 13,473,847. As of March 31, 2025, the total number of shares of common stock reserved for issuance under the 2024 Plan was 24,568,516, with 273,224 shares of common stock available for future grants. On December 11, 2024, the Board of Directors approved an award of stock options to an affiliate of a consultant outside of the 2024 Plan.
Stock Option Valuation
The fair value of each stock option grant is estimated on the grant date using the Black-Scholes option- pricing model. The Company is a private company and lacks company-specific historical and implied volatility information. Therefore, it estimates its expected stock volatility based on the historical volatility of a publicly traded set of peer companies and expects to continue to do so until such time as it has adequate historical data regarding the volatility of its own traded stock price. For stock options with service-based vesting conditions, the expected term of the Company’s stock options has been determined utilizing the “simplified” method for awards that qualify as “plain-vanilla” stock options. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to the expected term of the award. The expected dividend yield is based on the fact that the Company has never paid cash dividends on common stock and does not expect to pay any cash dividends in the foreseeable future.
F-14
The following table summarizes the weighted-average assumptions used in calculating the fair value of the awards during the three months ended March 31, 2025:
| Three Months Ended | ||||
| March 31, 2025 | ||||
| Expected term (in years) | 6.1 | |||
| Expected volatility | 97.1 | % | ||
| Risk-free interest rate | 4.2 | % | ||
| Dividend yield | 0.0 | % | ||
Stock Options
The following table summarizes the stock option activity during the three months ended March 31, 2025:
| Number of Options | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term (Years) | Aggregate Intrinsic Value (thousands) | |||||||||||||
| Outstanding balance as of January 1, 2025 | 7,494,090 | $ | 0.89 | 9.9 | $ | - | ||||||||||
| Granted | 12,130,971 | $ | 0.89 | |||||||||||||
| Exercised | (5,618 | ) | $ | 0.89 | ||||||||||||
| Forfeited or expired | - | $ | - | |||||||||||||
| Outstanding balance as of March 31, 2025 | 19,619,443 | $ | 0.89 | 9.8 | $ | 9,614 | ||||||||||
| Vested and expected to vest as of March 31, 2025 | 19,619,443 | $ | 0.89 | 9.8 | $ | 9,614 | ||||||||||
| Exercisable as of March 31, 2025 | 1,658,799 | $ | 0.89 | 9.7 | $ | 813 | ||||||||||
The weighted average grant-date fair value of stock options granted during the three months ended March 31, 2025 was $0.71. During the three months ended March 31, 2025, the aggregate intrinsic value of exercised options and outstanding options was less than $0.1 million and $9.6 million, respectively. The aggregate intrinsic value of stock options is calculated as the difference between the exercise price of the stock options and the fair value of the Company’s common stock for those stock options that had an exercise price lower than the fair value of the Company’s common stock.
Restricted Stock Units
In March 2025, the Company issued a total of 3,033,820 RSUs to certain officers and employees at a price of $0.89 per share. The Company’s RSUs have service-based vesting conditions and vest over a four-year period with one quarter of the RSUs vesting on the anniversary of the grant date and the remainder vesting quarterly thereafter, during which time all unvested shares are subject to forfeiture by the Company in the event the holder’s service with the Company voluntarily or involuntarily terminates.
F-15
The following table summarizes the RSU activity during the three months ended March 31, 2025:
| Number
of RSUs | Weighted
Average Grant Date Fair Value | ||||||||
| Unvested balance as of December 31, 2024 | - | $ | - | ||||||
| Granted | 3,033,820 | 0.89 | |||||||
| Vested | - | - | |||||||
| Forfeited | - | - | |||||||
| Unvested balance as of March 31, 2025 | 3,033,820 | $ | 0.89 | ||||||
Restricted Stock Awards
In September 2024 and October 2024, the Company issued a total of 2,049,180 RSAs to certain directors and consultants at a price of $0.20 per share, the fair value of the common stock. Of the 2,049,180 RSAs issued, 136,612 RSAs were issued to a consultant in exchange for regulatory and strategic services provided to the Company and 1,366,120 RSAs were issued to a consultant in exchange for executive services, and such issuances were determined to be related party transactions (see Note 12). The Company’s RSAs have service-based vesting conditions only and vest over a four-year period or vest upon grant, during which time all unvested shares are subject to forfeiture by the Company in the event the holder’s service with the Company voluntarily or involuntarily terminates.
The following table summarizes the RSA activity during the three months ended March 31, 2025:
| Number
of RSAs | Weighted
Average Grant Date Fair Value | ||||||||
| Unvested balance as of December 31, 2024 | 1,707,650 | $ | 0.20 | ||||||
| Granted | - | - | |||||||
| Vested | - | - | |||||||
| Forfeited | - | - | |||||||
| Unvested balance as of March 31, 2025 | 1,707,650 | $ | 0.20 | ||||||
Parascent Warrant Obligation
Under the terms of the Paragon Option Agreements, Parascent will be entitled to grants of warrants to purchase in the aggregate a number of shares equal to 1.00% of the then outstanding shares of the Company’s stock, on a fully diluted basis, on December 31, 2025 and December 31, 2026, at the fair market value determined by the Board of Directors (the “Parascent Warrant Obligation”). Parascent is an entity formed by Paragon as a vehicle to hold equity in the Company in order to share profits with certain employees of Paragon. The grant dates for the issuance of warrants are expected to be December 31, 2025 and December 31, 2026 as all terms of the award, including number of shares and exercise price, will be known by all parties. Parascent’s warrant has a service inception period for the grant preceding the grant date, with the full award being vested as of the grant date with no post-grant date service requirement. As of March 31, 2025, the estimated fair value of warrants to be granted on December 31, 2025 was $2.0 million. For the three-month period ended March 31, 2025, $0.8 million was recognized as stock-based compensation expense related to the Parascent Warrant Obligation. The warrants expected to be granted to Parascent are liability-classified and after the initial recognition, the liability is adjusted to fair value using an option-pricing model at the end of each reporting period, with changes in fair value recorded in the condensed statement of operations and comprehensive loss.
F-16
The following table summarizes the assumptions used in calculating the fair value of the awards:
| As of | ||||
| March 31, 2025 | ||||
| Expected term (in years) | 10.0 | |||
| Expected volatility | 96.4 | % | ||
| Risk-free interest rate | 4.2 | % | ||
| Dividend yield | 0.0 | % | ||
Stock-Based Compensation Expense
The following table summarizes the classification of the Company’s stock-based compensation expense in the condensed statement of operations and comprehensive loss (in thousands):
| Three
Months Ended March 31, 2025 | ||||
| General and administrative | $ | 439 | ||
| Research and development | 790 | |||
| $ | 1,229 | |||
As of March 31, 2025, total unrecognized compensation cost related to the unvested stock options was $12.5 million, which is expected to be recognized over a weighted average period of approximately 3.8 years. As of March 31, 2025, total unrecognized compensation cost related to the unvested RSAs was $0.3 million, which is expected to be recognized over a weighted average period of 2.9 years. As of March 31, 2025, total unrecognized compensation cost related to the unvested RSUs was $2.7 million, which is expected to be recognized over a weighted average period of 4.0 years. As of March 31, 2025, the unrecognized compensation cost related to the Parascent Warrant Obligation was $1.2 million, which is expected to be recognized over a weighted average period of 0.8 years.
The following table summarizes the award types of the Company’s stock-based compensation expense in the condensed statement of operations and comprehensive loss (in thousands):
| Three
Months Ended March 31, 2025 | ||||
| Stock options | $ | 414 | ||
| RSAs | 21 | |||
| RSUs | 31 | |||
| Parascent warrant obligation | 763 | |||
| $ | 1,229 | |||
F-17
8. Income Taxes
There was no income tax provision recorded for the three months ended March 31, 2025. The effective income tax rate for the three months ended March 31, 2025 differed from the 21% federal statutory rate primarily due to the valuation allowance maintained against the Company’s net deferred tax assets.
9. Paragon Option Agreements
In September 2024, the Company entered into the Antibody Paragon Option Agreement with Paragon and Parascent for CR-001, with the selected targets PD-1 and VEGF. In October 2024, the Company entered into the ADC Paragon Option Agreement with Paragon and Parascent for CR-002, with an undisclosed target (collectively the “Paragon Option Agreements”). Parascent is an entity formed by Paragon as a vehicle to hold equity in the Company in order to share profits with certain employees of Paragon and will not perform any substantive role under the Paragon Option Agreements other than to receive such warrants. Under the Paragon Option Agreements, the Company has the exclusive option (an “Option”), on a Research Program-by-Research Program basis, to enter into a separate agreement with Paragon consistent with a set of pre-negotiated terms (a “License Agreement”). On March 18, 2025, the Company exercised its option for CR-001 under the Antibody Paragon Option Agreement. Upon the Company’s exercise of its Options and finalization of the related license agreements, it will be required to make non-refundable milestone payments to Paragon of up to $22.0 million for CR-001 and up to $46.0 million for CR-002 upon the achievement of certain clinical development and regulatory milestones, as well as tiered royalty payments in the low-to-mid single-digits beginning on the first commercial sale of each developed product. From time to time, the Company can choose to add additional targets by mutual agreement with Paragon.
Under the terms of the Paragon Option Agreements, Paragon agreed to perform certain research activities to discover, generate, identify, and characterize one or more antibody candidates, in the case of the Antibody Paragon Option Agreement, and one or more antibody drug conjugates, in the case of the ADC Paragon Option Agreement, directed to certain mutually agreed therapeutic targets of interest to the Company (each, a “Research Program”). The Paragon Option Agreements require the Company, Paragon, and Parascent to develop a research plan for each target that includes design, modeling, synthesis, evaluation, and other mutually agreed activities (each, a “Research Plan”), which activities primarily include performing preclinical studies. Paragon will perform the activities set forth in each Research Plan on the timelines set forth in such Research Plan and in compliance with a mutually agreed budget. Each Research Program will be overseen and coordinated by a joint development committee consisting of two employees from the Company and two employees from Paragon, with the Company and Paragon each having one vote with respect to decisions of the committee. When Paragon and Parascent have produced an antibody or ADC, as applicable, against a selected target, and upon the completion of each Research Program, Paragon and Parascent will deliver to the Company a data package that includes sequence information for all then-existing antibodies or ADCs, as applicable, and information directed to such target.
Unless terminated earlier, the Paragon Option Agreements shall continue in force on a Research Program- by-Research Program basis until the later of: (i) the end of the option period for such Research Program, as applicable, if such Option is not exercised by the Company; (ii) if the Company exercises its Option with respect to a Research Program, but the parties are unable to finalize and execute a License Agreement within 30 days, the expiration of such 30-day period (subject to any mutually agreed extension of such period); and (iii) the expiration of the applicable Research Term (as defined under the Paragon Option Agreements).The Company may terminate the Paragon Option Agreements or any Research Program at any time for any or no reason upon 30 days’ prior written notice to Paragon, provided that the Company must pay certain unpaid fees due to Paragon upon such termination, as well as any non-cancellable obligations reasonably incurred by Paragon in connection with its activities under any terminated Research Program. Paragon may terminate the Paragon Option Agreements or a Research Program immediately upon written notice to the Company if, as a result of any action or failure to act by the Company or its affiliates, such Research Program or all material activities under the applicable Research Plan are suspended, discontinued or otherwise delayed for a certain consecutive number of months. Each party has the right to terminate the Paragon Option Agreements or any Research Program upon (i) 30 days’ prior written notice of the other party’s material breach that remains uncured for the 30-day period and (ii)the other party’s bankruptcy.
F-18
Under the Antibody Paragon Option Agreement, the Company was required to reimburse Paragon $1.5 million for upfront research and development costs related to CR-001 and other general and administrative costs incurred by Paragon prior to September 19, 2024. Contemporaneously, the Company also issued an aggregate of 5,000,000 shares of common stock to Paragon for an aggregate non-cash upfront consideration of Paragon’s entry into the Antibody Paragon Option Agreement, valued at $0.20 per share for a total of $1.0 million. Paragon subsequently contributed 2,500,000 of such shares to Parascent. The $1.5 million of research and development costs related to CR-001 reflects the actual historical direct costs incurred by Paragon as well as a 20% mark-up on the direct costs to approximate the indirect costs incurred by Paragon from the inception of the CR-001 program to the entry into the Paragon Option Agreement. All of the costs reflected in the upfront amount were incurred by Paragon between January 1, 2024 and the parties’ entry into the Paragon Option Agreement. Such direct costs were related to development activities. Of these upfront development costs related to CR-001 incurred by Paragon prior to September 19, 2024, a total of $1.5 million was recognized as research and development expense and less than $0.1 million was recognized as general and administrative expense during the period from September 19, 2024 (inception) to December 31, 2024. The Company paid $1.5 million to Paragon in November 2024. The non-cash upfront consideration was recorded as research and development expense in the statement of operations and comprehensive loss during the period from September 19, 2024 (inception) to December 31, 2024 as related IP license fees associated with entering into the Option Agreement. The Company is also required to pay Paragon for certain development fees and costs on a Research Program-by-Research Program basis. No pre-development costs were incurred for CR-002 or CR-003 for periods prior to September 19, 2024 (inception).
Under the Paragon Option Agreements, the Company is also responsible for certain additional development costs incurred by Paragon. During the three months ended March 31, 2025, the Company incurred $8.3 million due to Paragon, of which $8.0 million was recognized as research and development expense and $0.3 million was recognized as general and administrative expense in the condensed statements of operations and comprehensive loss. An amount of $8.3 million related to Paragon is included in related party accounts payable and other current liabilities within the condensed balance sheet as of March 31, 2025. During the three months ended March 31, 2025, the Company paid $7.2 million to Paragon for services performed in 2024.
Through the three months ended March 31, 2025, the Company incurred a total of $6.7 million of research and development expenses for CR-001, of which $5.5 million related to development costs incurred by Paragon under the Antibody Paragon Option Agreement. As of March 31 2025, $5.5 million related to CR-001 development costs incurred by Paragon was unpaid and accrued on the condensed balance sheet.
Through the three months ended March 31, 2025, the Company incurred a total of $1.4 million and $1.1 million in research and development expenses related to CR-002 and CR-003, respectively. Of the total CR-002 research and development expenses incurred in the three months ended March 31, 2025, $1.4 million was related to development costs incurred by Paragon under the ADC Paragon Option Agreement for CR-002 and was unpaid as of the balance sheet date. Upon the execution of the Amended and Restated ADC Paragon Option Agreement, the Company was required to reimburse Paragon $1.1 million for upfront research and development costs related to CR-003. The full $1.1 million was unpaid as of the March 31, 2025.
Any License Agreement entered into with respect to a given Research Program shall contain the same milestone payment obligations as the Paragon Option Agreements, provided that any milestone set in the Paragon Option Agreements that has not yet been achieved and is duplicated in such License Agreement shall no longer be achievable and payable under the terms of the Paragon Option Agreements and shall only be achievable under the terms of the License Agreement. For the avoidance of doubt, if a milestone is achieved and paid by the Company pursuant to the Paragon Option Agreements for a certain Research Program, then there shall be no milestone payment due for the achievement of such milestone under a subsequently executed License Agreement for such Research Program. Further, under a License Agreement, the Company would also be required to make royalty payments to Paragon in the low single-digit percentage range based on net sales of products, subject to certain reductions. The royalty term will terminate on a product-by-product and country-by-country basis upon the later of the expiration of the last-to-expire valid claim within the relevant patent rights or the twelfth anniversary of the first commercial sale of such product in such country.
Additionally, as part of the Paragon Option Agreements, on each of December 31, 2025 and December 31, 2026, the Company will grant Parascent warrants to purchase an aggregate number of shares equal to 1.00% of its outstanding capital stock as of the date of the grant on a fully-diluted basis, with an exercise price equal to the fair market value of the underlying shares of common stock on each respective grant date. The warrants are liability-classified and after the initial recognition, the liability is adjusted to fair value at the end of each reporting period, with changes in fair value recorded in the condensed statement of operations and comprehensive loss (see Note 7).
F-19
The Company expenses the fees incurred under the Paragon Option Agreements as the associated costs are incurred when the underlying services are rendered. Such amounts are classified within research and development expenses and general and administrative expenses in the accompanying condensed statement of operations and comprehensive loss.
The Company concluded that the rights obtained under the Paragon Option Agreements represent an asset acquisition whereby the underlying assets comprise in-process research and development assets with no alternative future use. The Paragon Option Agreements did not qualify as a business combination because substantially all of the fair value of the assets acquired was concentrated in the exclusive license options, which represent a group of similar identifiable assets. The research initiation fees represent a one-time cost on a research program-by-research program basis for accessing research services or resources with benefits that are expected to be consumed in the near term, therefore the amounts paid are expensed as part of research and development costs immediately. Amounts paid as reimbursements of on-going development cost, monthly development cost fee and additional development expenses incurred by Paragon due to work completed for selected targets prior to the effective date of the Paragon Option Agreements that associated with services being rendered under the related Research Programs is recognized as research and development expense when incurred.
10. Commitments and Contingencies
401(k) Plan
The Company maintains a defined-contribution plan under Section 401(k) of the Internal Revenue Code of 1986 (the “401(k) Plan”). The 401(k) Plan covers all employees who meet defined minimum age and service requirements and allows participants to defer a portion of their annual compensation on a pre- tax basis. Matching contributions to the 401(k) Plan may be made at the discretion of management. For the three months ended March 31, 2025, the Company has not recorded any expense related to 401(k) Plan match contributions.
Indemnification Agreements
In the ordinary course of business, the Company may provide indemnification of varying scope and terms to vendors, lessors, business partners and other parties with respect to certain matters including, but not limited to, losses arising out of breach of such agreements or from intellectual property infringement claims made by third parties. In addition, the Company has entered into indemnification agreements with each of its directors and executive officers that will require the Company, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors or executive officers. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is, in many cases, unlimited. To date, the Company has not incurred any material costs as a result of such indemnifications. The Company is not aware of any indemnification arrangements that could have a material effect on its financial position, results of operations or cash flows, and it has not accrued any liabilities related to such obligations in its condensed financial statements as of March 31, 2025.
Legal Proceedings
From time to time, the Company may become involved in legal proceedings or other litigation relating to claims arising in the ordinary course of business. The Company accrues a liability for such matters when it is probable that future expenditures will be made and that such expenditures can be reasonably estimated. Significant judgment is required to determine both probability and estimated exposure amount. Legal fees and other costs associated with such proceedings are expensed as incurred. As of March 31, 2025, the Company was not a party to any material legal proceedings or claims.
F-20
11. Net Loss per Share
Basic and diluted net loss per share attributable to common stockholders was calculated as follows (in thousands, except share and per share amounts):
| Three Months Ended | ||||
| March 31, 2025 | ||||
| Numerator: | ||||
| Net loss | $ | (15,148 | ) | |
| Denominator: | ||||
| Weighted-average common shares outstanding, basic and diluted | 823,664 | |||
| Net loss attributable to common stockholders, basic and diluted | $ | (18.39 | ) | |
In accordance with ASC 260, Earnings Per Share, the Company recast its basic and diluted earnings per share computations for the effect of the exchange ratio of 0.1542 on its outstanding common stock during the three months ended March 31, 2025 resulting from the close of the Merger which occurred on June 13, 2025.
For the computation of basic net loss per share attributable to common stockholders, the amount of weighted-average common shares outstanding excludes all shares of unvested restricted common stock and early-exercised stock options as such shares are not considered outstanding for accounting purposes until vested.
The Company’s potential dilutive securities have been excluded from the computation of diluted net loss per share as the effect would be to reduce the net loss per share. Therefore, the weighted-average number of common shares outstanding used to calculate both basic and diluted net loss per share attributable to common stockholders is the same. The Company excluded potential common shares from the computation of diluted net loss per share attributable to common stockholders for the period presented because including them would have had an anti-dilutive effect:
| Three Months Ended | ||||
| March 31, 2025 | ||||
| Convertible preferred stock (as converted to common stock) | 20,000,000 | |||
| Unvested restricted stock awards | 1,707,650 | |||
| Stock options to purchase common stock | 19,625,061 | |||
| Unvested restricted stock units | 3,033,820 | |||
| 44,366,531 | ||||
12. Related Party Transactions
Fairmount, Paragon, and Parascent have been identified as related parties of the Company and have engaged in material transactions with the Company. As of March 31, 2025, Fairmount, Paragon, and Parascent owned approximately 74%, 9%, and 9%, respectively, of the outstanding shares of the Company’s stock, assuming the conversion of preferred stock into common stock. Fairmount currently has two representatives appointed to the Company’s Board of Directors. Fairmount appointed Paragon’s board of directors and has the contractual right to approve the appointment of any executive officers of Paragon. Parascent is an entity formed by Paragon as a vehicle to hold equity in the Company in order to share profits with certain employees of Paragon and will not perform any substantive role under the Paragon Option Agreements other than to receive warrants granted to Parascent under the Paragon Option Agreements.
In September 2024, the Company issued and sold an aggregate of 20,000,000 shares of Series Seed Preferred Stock to Fairmount, at a purchase price of $0.20 per share, for gross proceeds of $4.0 million (see Note 5). Paragon subsequently contributed 2,500,000 of such shares to Parascent. In October 2024, Fairmount entered into the Note Purchase Agreement with the Company and holds a Convertible Note with an initial principal amount of $15.0 million (see Note 4).
F-21
On October 11, 2024, the Board of Directors issued 136,612 RSAs to a consultant in exchange for regulatory and strategic services provided to the Company. The consultant is an employee of Fairmount. On October 11, 2024, the Board of Directors issued the Company’s interim Chief Executive Officer 1,366,120 RSAs and options to purchase 5,286,600 shares of the Company’s common stock, and the Chief Executive Officer paid $0.2 million for 1,024,590 of such RSAs. The Chief Executive Officer is also a Fairmount employee.
In connection with services provided by Paragon and Parascent under the Paragon Option Agreements, the Company recognized $8.0 million of expenses as research and development expense and recognized $0.3 million of expenses as general and administrative expense in the Company’s condensed statement of operations and comprehensive loss during the three months ended March 31, 2025. As of March 31, 2025, the Company had $8.3 million in related party accrued expenses pertaining to services provided by Paragon and Parascent under the Paragon Option Agreements and reimbursements of recruiting and general and administrative fees included in other current liabilities on the condensed balance sheet. In addition, under the terms of the Paragon Option Agreements, Parascent will be entitled to grants of warrants to purchase an aggregate number of shares equal to 1.00% of outstanding shares of the Company’s common stock, on a fully diluted basis, as of the date of the grants (see Note 7). If the Company exercises its options under the Paragon Option Agreements, it will be required to make non-refundable milestone payments to Paragon of up to $12.0 million for CR-001 and $26.0 million for CR-002 upon the achievement of certain clinical development milestones, up to $10.0 million for CR-001 and $20.0 million for CR-002 upon the achievement of certain regulatory milestones, as well as tiered royalty payments in the low-to-mid single-digits beginning on the first commercial sale of each product developed.
The following is a summary of related party accounts payable and other current liabilities (in thousands):
| As
of March 31, 2025 | ||||
| Paragon accrued research and development | $ | 8,097 | ||
| Paragon accrued general and administrative | 234 | |||
| Other | 50 | |||
| $ | 8,381 | |||
13. Segment Reporting
The Company has one reportable segment relating to the research and development of its research programs, CR-001, CR-002 and CR-003. The Company’s CODM, its Chief Executive Officer, manages the Company’s operations on a company-wide basis for the allocation of resources and the assessment of performance. The Company’s measure of segment profit or loss used to assess performance and allocate resources is net loss and comprehensive loss. Although the Company’s financial reporting package that is reviewed and approved by the CODM disaggregates significant expenses such as program-level external research and development costs, personnel costs including stock-based compensation expense, and professional and consulting fees, all decisions made by the CODM are based upon reviewing operating metrics and performance indications at the Company-wide level. The CODM uses net loss to evaluate loss generated from the Company’s business activities in deciding how to allocate company resources and monitoring budget versus actual results. Assets are also managed on a Company-wide basis.
F-22
The table below is a summary of the segment loss, including significant segment expenses (in thousands):
| Three Months
Ended March 31, 2025 | ||||
| CR-001 external research and development costs | $ | 6,740 | ||
| CR-002 external research and development costs | 1,370 | |||
| CR-003 external research and development costs | 1,063 | |||
| General and administrative personnel costs | 1,660 | |||
| Research and development personnel costs | 1,431 | |||
| Professional and consulting fees | 1,736 | |||
| Other segment items (1) | 1,148 | |||
| Net loss and comprehensive loss | $ | 15,148 | ||
| (1) | Other expense including interest expense and miscellaneous other expense offset by interest income |
14. Subsequent Events
The Company has evaluated events and transactions occurring subsequent to March 31, 2025 through June 18, 2025, the date at which the financial statements are available to be issued.
Option and License Agreements
On April 28, 2025, the Company entered into a license agreement for CR-001 consistent with those terms under the Antibody Paragon Option Agreement, as further described in Note 9, including the requirement to make non-refundable milestone payments to Paragon of up to $22.0 million upon the achievement of certain clinical development and regulatory milestones, as well as tiered royalty payments in the low-to-mid single-digits beginning on the first commercial sale of each developed product.
On April 28, 2025, the Company entered into an Amended and Restated Paragon ADC Option Agreement to add CR-003 and its three undisclosed targets as well as to engage Paragon to execute a mutually agreed research plan for CR-003, in addition to CR-002 which was included in the original agreement, aimed at producing a potential product candidate to be licensed for further development, manufacture and commercialization by the Company. In addition, if the Company exercises its option and finalizes the related license agreement, it will be required to make non-refundable milestone payments to Paragon up to $46.0 million for CR-003 upon the achievement of certain clinical development and regulatory milestones, as well as tiered royalty payments in the low-to-mid single digits beginning on the first commercial sale of each developed product.
As of June 18, 2025, the Company has not exercised the options for CR-002 or CR-003.
Equity Awards
In April 2025, the Company authorized an increase in the number of common shares covered by the 2024 Equity Incentive Plan by 6,434,741 shares to 31,003,257 shares and granted options for the purchase of an aggregate of 6,434,741 shares of common stock to employees at an exercise price of $1.38 per share.
On May 2, 2025, the Company granted options for the purchase of an aggregate of 1,179,426 shares of common stock to employees and a consultant at an exercise price of $1.46 per share. On May 30, 2025, the Company granted options for the purchase of an aggregate of 3,298,450 shares of common stock to employees at an exercise price of $1.67 per share.
On April 14, 2025, as a result of Dr. Violin no longer serving as Chief Executive Officer and President, the Company repurchased 885,045 shares of unvested restricted stock at the price Dr. Violin originally purchased such shares, and Dr. Violin agreed to forfeit 3,717,141 unvested stock options.
On April 28, 2025, the Company entered into an amendment to the Merger Agreement whereby the Company may issue RSUs from time to time pursuant to the terms of the amended Merger Agreement.
F-23
Sublease Agreement
On May 28, 2025, the Company entered into a sublease agreement with Nano Dimension USA Inc. (“Sublandlord”) whereby the Company would sublet approximately 25,000 square feet of office space located in Waltham, Massachusetts (“Waltham Sublease”). The sublease commencement date is June 1, 2025 with an initial term of 45 months. The total lease payment is expected to be $2.0 million over the initial lease term.
Reverse Recapitalization and Pre-Closing Financing
On June 13, 2025, the Company completed the Merger with GlycoMimetics in accordance with terms of the Merger Agreement pursuant to which, among other matters, First Merger Sub merged with and into the Company, with the Company surviving as a wholly owned subsidiary of GlycoMimetics and the surviving corporation of the First Merger, and, immediately following the First Merger and as part of the same overall transaction, the Company merged with and into Second Merger Sub, with Second Merger Sub being the surviving entity of the Second Merger. Second Merger Sub changed its corporate name to “Crescent Biopharma Operating Company, LLC” and GlycoMimetics changed its name to “Crescent Biopharma, Inc.” The Combined Company is led by pre-Merger Crescent’s management team and remains focused on developing novel biologics designed to set a new standard for treatment of solid tumors.
In accordance with an exchange ratio determined in accordance with the terms of the Merger Agreement (the “Exchange Ratio”), at the effective time of the First Merger (the “First Effective Time”), (i) each then-outstanding share of Pre-Merger Crescent common stock (including shares of Pre-Merger Crescent common stock issued in connection with the Crescent Pre-Closing Financing) was converted into the right to receive a number of shares of GlycoMimetics common stock equal to the Exchange Ratio, (ii) each then-outstanding share of Pre-Merger Crescent Preferred Stock was converted into the right to receive a number of shares of GlycoMimetics Series A non-voting convertible preferred stock, par value $0.0001 per share (the “Series A Preferred Stock”), equal to the Exchange Ratio divided by 1,000, (iii) each then-outstanding option to purchase Pre-Merger Crescent common stock was assumed by GlycoMimetics and was converted into an option to purchase shares of GlycoMimetics common stock, and (iv) each then-outstanding Pre-Merger Crescent restricted stock unit was assumed by GlycoMimetics; (v) each then-outstanding pre-funded warrant to purchase shares of Pre-Merger Crescent common stock was converted into a pre-funded warrant to purchase shares of GlycoMimetics common stock.
The Exchange Ratio is calculated as 0.1445 shares of GlycoMimetics common stock for each share of Pre-Merger Crescent common stock (and 0.0001445 shares of Series A Preferred Stock for each share of Convertible Preferred Stock) on the Closing Date, which gives effect to a 1-for-100 reverse stock split of GlycoMimetics common shares immediately prior to the Merger.
Immediately prior to the completion of the Merger, and in order to provide Crescent with additional capital for its development programs, Pre-Merger Crescent issued and sold, and certain new and current investors purchased, 85,506,824 shares of common stock of Pre-Merger Crescent and 19,149,690 Pre-Merger Crescent pre-funded warrants, exercisable for 19,149,690 shares of Pre-Merger Crescent common stock, at an estimated purchase price of $1.9110 per share or an estimated purchase price of $1.9109 per warrant, for the aggregate amount of $200.0 million, which includes $37.5 million of proceeds previously received from the issuance of the Convertible Notes (as defined herein) and accrued interest of $3.0 million on such Convertible Notes and the related conversion into 21,200,564 shares of Crescent common stock in connection with the Crescent Pre-Closing Financing. At the Closing of the Merger based on the Exchange Ratio, the Pre-Merger Crescent common stock and pre-funded warrants subscribed for were converted into the right to receive 12,355,716 shares of common stock and 2,767,122 pre-funded warrants. Shares of Pre-Merger Crescent common stock and pre-funded warrants to purchase shares of Crescent common stock issued pursuant to the Subscription Agreement were converted into shares of GlycoMimetics common stock and pre-funded warrants to purchase shares of GlycoMimetics common stock at Closing per the Merger Agreement.
F-24
Exhibit 99.3
CRESCENT’S MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
On June 13, 2025, Gemini Merger Sub Corp. (“First Merger Sub”) merged with and into Crescent Biopharma, Inc. (“Pre-Merger Crescent”), with Pre-Merger Crescent continuing as a wholly owned subsidiary of GlycoMimetics, Inc. (“GlycoMimetics”) and the surviving corporation of the merger (the “First Merger”), and Pre-Merger Crescent merged with and into Gemini Merger Sub II, LLC (“Second Merger Sub”), with Second Merger Sub being the surviving entity of the merger (the “Second Merger” and, together with the First Merger, the “Merger”). In connection with the completion of the Merger, Second Merger Sub changed its corporate name to “Crescent Biopharma Operating Company, LLC” and GlycoMimetics changed its name to “Crescent Biopharma, Inc.” (the “Company”).
You should read the following discussion and analysis of our financial condition and results of operations together with the condensed financial statements and the related notes thereto included as Exhibit 99.2 to the Current Report on Form 8-K filed with the U.S. Securities and Exchange Commission (the “SEC”) on June 18, 2025 (the “Current Report on Form 8-K”) of which this Exhibit 99.3 is a part, as well as our audited financial statements and the related notes thereto beginning on page F-22 of GlycoMimetics’s Registration Statement on Form S-4 most recently amended on May 12, 2025 and declared effective on May 14, 2025 (the “Registration Statement”). The following discussion contains forward-looking statements that reflect our current plans, forecasts, estimates and beliefs and involve risks and uncertainties. Our historical results are not necessarily indicative of the results that may be expected for any period in the future. Our actual results, outcomes and the timing of events could differ materially from those discussed in the forward-looking statements. Forward-looking statements are not historical facts, reflect our current views with respect to future events, and apply only as of the date made. We do not intend, and undertake no obligation, to update these forward-looking statements, except as required by law. References to “we,” “us,” “our,” “Crescent” or “the Company” refer to Crescent Biopharma, Inc. and its consolidated subsidiaries after the Merger, unless context otherwise requires.
Overview
Crescent is a biotechnology company developing novel therapeutics to treat solid tumors, led by its initial program CR-001, a proprietary anti-PD-1/anti-VEGF bispecific antibody. Crescent believes CR-001 has the potential to deliver improved clinical efficacy and safety over pembrolizumab, marketed by Merck as Keytruda®, the best-selling drug in the world and approved for the treatment of numerous cancers. CR-001, for which Crescent exercised its option in March 2025 and entered into a license agreement with Paragon in April 2025 for exclusive worldwide development and commercialization rights pursuant to the Antibody Paragon Option Agreement, is a new molecular entity designed to replicate the functional properties of ivonescimab, a cooperative bispecific anti-PD-1/anti-VEGF antibody in development by Akeso Biopharma and Summit Therapeutics Inc. that delivered significantly improved progression-free survival in a head-to-head Phase 3 clinical trial versus Keytruda in non-small cell lung cancer. Crescent believes the emerging data from the clinical development of ivonescimab supports the rationale for developing CR-001 in light of CR-001 and ivonescimab sharing the same mechanism of action. Neither Crescent nor Paragon has any clinical data regarding cancer patients that have been treated with CR-001 and there can be no assurance that Crescent’s clinical trials, which have not yet commenced and are expected to cover a broader set of indications than in HARMONi-2, will have similar or comparable results, or that Crescent’s clinical trials, which will take several years, will be completed successfully and/or produce results necessary to support the requisite regulatory approvals in order for Crescent to be able to commercialize CR-001. See “Risk Factors — Risks Related to Crescent — Risks Related to Discovery, Development and Commercialization Risks — Crescent’s approach to the discovery and development of its programs is unproven, and Crescent may not be successful in its efforts to build a pipeline of programs with commercial value”. Following the precedents set by traditional PD-1 inhibitors, such as Keytruda and Opdivo®, Crescent plans to seek regulatory approvals for CR-001 to treat multiple solid tumor indications, both as a monotherapy and in combination with other mechanisms of action. Crescent intends to submit an Investigational New Drug application to the FDA for CR-001 in the fourth quarter of 2025, with initial clinical data anticipated in the second half of 2026. Crescent plans to complement CR-001 with a portfolio of product candidates that have potential activity against solid tumors both as a monotherapy as well as in combination with CR-001. Crescent’s expected second and third programs, CR-002 and CR-003, are antibody drug conjugates against validated oncology targets. Pursuant to the ADC Paragon Option Agreements, Crescent has engaged Paragon to execute a mutually agreed research plan for CR-002 and CR-003 aimed at producing a potential product candidate to be licensed for further development, manufacture and commercialization by Crescent. The research plan activities performed by Paragon for Crescent primarily include preclinical studies and are overseen by a joint development committee comprised of employees from Crescent and Paragon. Crescent has not yet exercised the option or entered into a license agreement with Paragon for CR-002 or CR-003 pursuant to the ADC Paragon Option Agreement.
Since its inception in September 2024, Crescent has devoted substantially all of its resources to raising capital, organizing and staffing Crescent, business and scientific planning, conducting discovery and research activities, establishing arrangements with third parties, and providing general and administrative support for these operations. Crescent does not have any programs approved for sale and has not generated any revenue from product sales. To date, Crescent has funded its operations primarily with proceeds from the issuance of Convertible Notes (as defined below) and convertible preferred stock. In September 2024, Crescent received $4.0 million in gross proceeds from the issuance of Series Seed Preferred Stock. Additionally, in October 2024, Crescent received gross proceeds of $37.5 million, with a total commitment up to $75.0 million, from the issuance of the convertible notes (“Convertible Notes”).
Crescent has incurred operating losses since inception. Crescent’s ability to generate product revenue sufficient to achieve profitability will depend heavily on the successful development and eventual commercialization of any programs Crescent may develop. Crescent incurred net losses of $15.1 million for the three months ended March 31, 2025. As of March 31, 2025, Crescent had an accumulated deficit of $33.0 million. Crescent expects to continue to incur significantly increased expenses for the foreseeable future if and as it:
| · | advances its existing and future research and development and discovery-related development of its CR-001, CR-002 and CR-003 programs, including potential expansion into additional indications; |
| · | seeks and identifies additional research programs and product candidates and initiates discovery- related activities and preclinical studies for those programs; |
| · | completes future preclinical studies for Crescent’s pipeline; |
| · | pursues investigational new drug applications or comparable foreign applications that allow commencement of Crescent’s planned clinical trials or future clinical trials for any programs Crescent may develop; |
| · | initiates enrollment and successfully completes clinical trials; |
| · | pursues positive results from Crescent’s future clinical trials that support a finding of safety and effectiveness, an acceptable risk-benefit profile in the intended populations and a competitive efficacy, safety and half-life profile; |
| · | hires research and development, clinical, manufacturing and commercial personnel; |
| · | adds operational, financial and management information systems and personnel; |
| · | experiences any delays, challenges, or other issues associated with the preclinical and clinical development of Crescent’s programs, including with respect to its regulatory strategies; |
| · | develops, maintains and enhances a sustainable, scalable, reproducible and transferable clinical and commercial-scale cGMP capabilities through a third-party or Crescent’s own manufacturing facility for the programs Crescent may develop; |
| · | seeks, obtains and maintains regulatory approvals for any product candidates for which Crescent successfully completes clinical trials; |
| · | ultimately establishes a sales, marketing and distribution infrastructure to commercialize any programs for which Crescent may obtain regulatory approval; |
| · | generates revenue from commercial sales of product candidates for which Crescent receives regulatory approval, if any; |
| · | maintains safety, tolerability and efficacy profile of any product Crescent may develop in additional indications following approval in one indication; |
| · | maintains, expands, enforces, defends and protects Crescent’s intellectual property portfolio and other intellectual property protection or regulatory exclusivity for any products Crescent may develop and defends any intellectual property-related claims; |
| · | further acquires or in-licenses product candidates or programs, intellectual property and technologies; |
| · | establishes and maintains any future collaborations, including making milestone, royalty or other payments thereunder; and |
| · | incurs additional costs of operating as a public company, including increased costs of audit, legal, regulatory and tax-related services associated with maintaining compliance with an exchange listing and SEC requirements, director and officer insurance premiums and investor and public relations costs. |
Any changes in the outcome of any of these variables with respect to the development of programs that Crescent may identify could mean a significant change in the costs and timing associated with the development of such programs. For example, if the U.S. Food and Drug Administration or another comparable regulatory authority were to require Crescent to conduct clinical trials beyond those that Crescent currently anticipates will be required to complete clinical development and obtain regulatory approval of one or more product candidates, or if Crescent experiences significant delays in Crescent’s preclinical studies or clinical trials, Crescent would be required to expend significant additional financial resources and time to advance and complete clinical development. Crescent may never obtain regulatory approval for any of its product candidates.
Crescent will not generate revenue from product sales unless and until it successfully initiates and completes clinical development and obtains regulatory approval for any product candidates. If Crescent obtains regulatory approval for any of its product candidates and does not enter into a commercialization partnership, it expects to incur significant expenses related to developing Crescent’s commercialization capability to support product sales, manufacturing, marketing, and distribution.
As a result, Crescent expects to need substantial additional funding to support its continued operations and growth strategy. Until such a time as Crescent can generate significant revenue from product sales, if ever, it expects to finance its operations through the sale of equity, debt financings or other capital sources, including collaborations with other companies or other strategic transactions. Crescent may be unable to raise additional funds or enter into such other agreements on favorable terms, or at all. If Crescent fails to raise capital or enter into such agreements as, and when needed, Crescent may have to significantly delay, scale back or discontinue the development and commercialization of one or more of its programs.
Because of the numerous risks associated with product development, Crescent is unable to accurately predict the timing or amount of increased expenses or when or if Crescent will be able to achieve or maintain profitability. Even if Crescent is able to generate product sales, Crescent may not become profitable. If Crescent fails to become profitable or is unable to sustain profitability on a continuing basis, then Crescent may be unable to continue its operations at planned levels and be forced to reduce or terminate its operations.
Crescent believes that its existing cash of $22.4 million as of March 31, 2025, together with the proceeds from the Merger and Crescent’s pre-closing financing (as defined in “— Recent Developments” below), will be sufficient to fund its operating expenses and capital expenditures requirements for at least 12 months from the date Crescent’s condensed financial statements for the period ended March 31, 2025 were available to be issued. Crescent expects to continue to incur substantial losses for the foreseeable future, and Crescent’s transition to profitability will depend upon successful development, approval and commercialization of Crescent’s product candidates and upon achievement of sufficient revenues to support Crescent’s cost structure. See “— Liquidity and Capital Resources”.
Recent Developments
The Merger and Pre-Closing Financing
GlycoMimetics and Crescent entered into the Merger Agreement on October 28, 2024, which agreement was subsequently amended on February 14, 2025 and April 28, 2025, pursuant to which, among other matters, and subject to the satisfaction or waiver of the conditions set forth in the Merger Agreement. On June 13, 2025, Crescent completed the Merger with GlycoMimetics in accordance with terms of the Merger Agreement pursuant to which, among other matters, First Merger Sub merged with and into Crescent, with Crescent surviving as a wholly-owned subsidiary of GlycoMimetics and the surviving corporation of the First Merger, and, immediately following the First Merger and as part of the same overall transaction, Crescent merged with and into Second Merger Sub, with Second Merger Sub being the surviving entity of the Second Merger. Second Merger Sub changed its corporate name to “Crescent Biopharma Operating Company, LLC” and GlycoMimetics changed its name to “Crescent Biopharma, Inc.” The Combined Company is led by pre-Merger Crescent’s management team and remains focused on developing novel biologics designed to set a new standard for treatment of solid tumors.
Immediately prior to the completion of the Merger, and in order to provide Crescent with additional capital for its development programs, Pre-Merger Crescent issued and sold, and certain new and current investors purchased, 85,506,824 shares of common stock of Pre-Merger Crescent and 19,149,690 Pre-Merger Crescent pre-funded warrants, exercisable for 19,149,690 shares of Pre-Merger Crescent common stock, at an estimated purchase price of $1.9110 per share or an estimated purchase price of $1.9109 per warrant, for the aggregate amount of $200.0 million, which includes $37.5 million of proceeds previously received from the issuance of the Convertible Notes (as defined herein) and accrued interest of $3.0 million on such Convertible Notes and the related conversion into 21,200,564 shares of Crescent common stock (the “Pre-Closing Financing”, and together with the Merger, the “Transactions”).
In accordance with an exchange ratio determined in accordance with the terms of the Merger Agreement (the “Exchange Ratio”), at the effective time of the First Merger (the “First Effective Time”), (i) each then-outstanding share of Pre-Merger Crescent common stock (including shares of Pre-Merger Crescent common stock issued in connection with the Crescent Pre-Closing Financing) was converted into the right to receive a number of shares of GlycoMimetics common stock equal to the Exchange Ratio, (ii) each then-outstanding share of Pre-Merger Crescent Preferred Stock was converted into the right to receive a number of shares of GlycoMimetics Series A non-voting convertible preferred stock, par value $0.0001 per share (the “Series A Preferred Stock”), equal to the Exchange Ratio divided by 1,000, (iii) each then-outstanding option to purchase Pre-Merger Crescent common stock was assumed by GlycoMimetics and was converted into an option to purchase shares of GlycoMimetics common stock, and (iv) each then-outstanding Pre-Merger Crescent restricted stock unit was assumed by GlycoMimetics; (v) each then-outstanding pre-funded warrant to purchase shares of Pre-Merger Crescent common stock was converted into a pre-funded warrant to purchase shares of GlycoMimetics common stock.
The Exchange Ratio is calculated as 0.1445 shares of GlycoMimetics common stock for each share of Pre-Merger Crescent common stock (and 0.0001445 shares of Series A Preferred Stock for each share of Convertible Preferred Stock) on the Closing Date, which gives effect to a 1-for-100 reverse stock split of GlycoMimetics common shares immediately prior to the Merger. After the closing of the Merger, Pre-Merger Crescent stockholders immediately before the First Effective Time, including those that purchased shares and pre-funded warrants in the Crescent Pre-Closing Financing, own approximately 97.3% of the outstanding common stock of the Combined Company and the stockholders of GlycoMimetics immediately before the First Effective Time own 2.7% of the outstanding common stock of the Combined Company, which give effect to (a) GlycoMimetics’s Net Cash (as defined in the Merger Agreement) as of the closing being approximately $2.3 million, (b) the Crescent Pre-Closing Financing for an aggregate purchase price of approximately $200.0 million, which reflects the conversion of the previously issued $37.5 million of Convertible Notes, (c) a valuation for GlycoMimetics equal to its Net Cash as of the business day immediately prior to the Closing Date, plus $8.0 million, and (d) a valuation for Crescent equal to $50.0 million, in each case as further described in the Merger Agreement.
At the Closing of the Merger based on the Exchange Ratio, the Crescent common stock and pre-funded warrants subscribed for were converted into the right to receive 12,355,716 shares of common stock and 2,767,122 pre-funded warrants. Shares of Crescent common stock and pre-funded warrants to purchase shares of Crescent common stock issued pursuant to the Subscription Agreement were converted into shares of GlycoMimetics common stock and pre-funded warrants to purchase shares of GlycoMimetics common stock at Closing per the Merger Agreement.
Impact of General Economic Risk Factors on Crescent’s Operations
Uncertainty in the global economy presents significant risks to Crescent’s business. Crescent is subject to continuing risks and uncertainties in connection with the current macroeconomic environment, including increases in inflation, fluctuating interest rates, new or increased tariffs and other barriers to trade, changes to fiscal and monetary policy or government budget dynamics (particularly in the pharmaceutical and biotech areas), recent bank failures, geopolitical factors, including the ongoing conflicts between Russia and Ukraine and in the Middle East and the responses thereto and supply chain disruptions. While Crescent is closely monitoring the impact of the current macroeconomic and geopolitical conditions on all aspects of Crescent’s business, including the impacts on participants in any future clinical trials and its employees, suppliers, vendors and business partners and Crescent’s future access to capital, the ultimate extent of the impact on Crescent’s business remains highly uncertain and will depend on future developments and factors that continue to evolve. Most of these developments and factors are outside Crescent’s control and could exist for an extended period of time. Crescent will continue to evaluate the nature and extent of the potential impacts to its business, results of operations, liquidity and capital resources. For additional information, see the section titled “Risk Factors — Risks Related to Crescent — General Risk Factors.”
Components of Results of Operations
Revenue
To date, Crescent has not generated revenue from any sources, including product sales, and does not expect to generate any revenue from the sale of products in the foreseeable future. If Crescent’s development efforts for its product candidates are successful and result in regulatory approval, Crescent may generate revenue in the future from product sales or payments from future collaboration or license agreements that Crescent may enter into with third parties, or any combination thereof. Crescent cannot predict if, when, or to what extent it will generate revenue from the commercialization and sale of Crescent’s product candidates. Crescent may never succeed in obtaining regulatory approval for any of its product candidates.
Operating Expenses
Crescent’s operating expenses consist of (i) research and development expenses and (ii) general and administrative expenses.
Research and Development
Research and development expenses consist primarily of costs incurred in connection with the research and development of Crescent’s programs. These expenses include:
| · | costs of funding research performed by third parties, including Paragon, that conduct research and development activities on Crescent’s behalf and services rendered under the Paragon Option Agreements for CR-001 and CR-002; |
| · | costs of funding upfront research and development related to CR-003 performed by Paragon prior to the execution of the Amended and Restated ADC Paragon Option Agreement in April 2025; |
| · | expenses incurred in connection with continuing Crescent’s current research programs and discovery- phase development of any programs Crescent may identify, including under future agreements with third parties, such as consultants and contractors; and |
| · | personnel-related expenses, including recruiting costs, salaries, bonuses, benefits and equity-based compensation expense. |
Crescent expenses research and development costs as incurred. For the three months ended March 31, 2025, Crescent recognized $8.0 million of research and development expenses in connection with services provided by Paragon under the Paragon Option Agreements in Crescent’s condensed statement of operations and comprehensive loss. See the section titled “Contractual Obligations and Commitments” below for further details on Crescent’s research plans.
General and Administrative
General and administrative expenses consist primarily of personnel-related expenses, including recruiting costs, salaries, bonuses, benefits and equity-based compensation, for individuals in Crescent’s executive, finance, operations, human resources, business development and other administrative functions. Other significant general and administrative expenses include legal fees relating to corporate matters and patent-related activities, insurance costs, information technology, and professional and consulting fees associated with accounting, audit, tax and investor and public relations.
Crescent expects that its general and administrative expenses will increase substantially for the foreseeable future as Crescent increases its headcount and potentially establishes office space to support its expected growth. Crescent also expects to incur increased expenses associated with the Merger and Crescent Pre-Closing Financing transactions and becoming a public company, including transactional costs and increased costs of accounting, audit, legal, regulatory and tax related services associated with maintaining compliance with SEC requirements, additional director and officer insurance costs and investor and public relations costs. Crescent also expects to incur additional intellectual property-related expenses as Crescent files patent applications to protect innovations arising from its research and development activities.
Other Expense, net
Other expense, net includes interest income of $0.2 million earned for the three months ended March 31, 2025 relating to Crescent’s money market account and interest expense of $1.1 million incurred for the three months ended March 31, 2025 relating to Crescent’s Convertible Notes issued to various investors in October 2024.
Income Taxes
No provision for income taxes was recorded for three months ended March 31, 2025. Crescent has recorded a full valuation allowance against its net deferred tax assets as of the balance sheet date, as Crescent believes it is not more likely than not that the benefit will be realized due to its cumulative losses generated to date and expectation of future losses.
Results of Operations for the Three Months Ended March 31, 2025
The following table summarizes Crescent’s condensed statement of operations and comprehensive loss for the period presented (in thousands):
| Three Months Ended | ||||
| March 31, | ||||
| 2025 | ||||
| Operating expenses | ||||
| Research and development(1) | $ | 10,627 | ||
| General and administrative(2) | 3,597 | |||
| Total operating expenses | 14,224 | |||
| Loss from operations | (14,224 | ) | ||
| Other income (expense): | ||||
| Interest income | 188 | |||
| Interest expense (3) | (1,112 | ) | ||
| Total other expense, net | (924 | ) | ||
| Net loss and comprehensive loss | $ | (15,148 | ) | |
| (1) | Includes related party amount of $8,777 for the three months ended March 31, 2025. |
| (2) | Includes related party amount of $466 for the three months ended March 31, 2025. |
| (3) | Includes related party amount of $445 for the three months ended March 31, 2025. |
Research and Development Expenses
The following table summarizes Crescent’s research and development expenses incurred for the period presented (in thousands):
| Three Months Ended | ||||
| March 31, | ||||
| 2025 | ||||
| External research and development costs by selected target: | ||||
| CR-001 (1) | $ | 6,740 | ||
| CR-002 (2) | 1,370 | |||
| CR-003 (3) | 1,063 | |||
| Other research and development costs: | ||||
| Personnel-related (including stock-based compensation)(4) | 1,431 | |||
| Other | 23 | |||
| Total research and development expenses | $ | 10,627 | ||
| (1) | Includes related party amount of $5,582 for the three months ended March 31, 2025. |
| (2) | Includes related party amount of $1,370 for the three months ended March 31, 2025. |
| (3) | Includes related party amount of $1,062 for the three months ended March 31, 2025. |
| (4) | Includes related party amount of $763 for the three months ended March 31, 2025. |
Research and development expenses were $10.6 million for the three months ended March 31, 2025 and consisted primarily of the following:
| · | $5.6 million of research and development expense due to Paragon for services rendered under the Antibody Paragon Option Agreement for CR-001; |
| · | $0.9 million of research and development expense related to chemistry, manufacturing and development costs for CR-001 with a third-party contract development and manufacturing organization; |
| · | $0.2 million of research and development expense related to third-party, clinical consulting services for CR-001; |
| · | $1.4 million of research and development expense due to Paragon for services rendered under the ADC Paragon Option Agreement for CR-002; |
| · | $1.1 million of research and development expense due to Paragon for upfront research and development costs rendered prior to the execution of the Amended and Restated ADC Paragon Option Agreement in April 2025; and |
| · | $1.4 million of personnel-related costs related to recruiting costs, salaries, benefits and other compensation-related costs, including stock-based compensation expense of $0.8 million. |
General and Administrative Expenses
The following table summarizes Crescent’s total general and administrative expenses for the period presented (in thousands):
| Three Months Ended | ||||
| March 31, | ||||
| 2025 | ||||
| Personnel-related (including stock-based compensation)(1) | $ | 1,660 | ||
| Professional and consulting fees(2) | 1,610 | |||
| Legal fees related to patent(3) | 127 | |||
| Other | 200 | |||
| Total general and administrative expenses | $ | 3,597 | ||
| (1) | Includes related party amount of $213 for the three months ended March 31, 2025. |
| (2) | Includes related party amount of $150 for the three months ended March 31, 2025. |
| (3) | Includes related party amount of $103 for the three months ended March 31, 2025. |
General and administrative expenses were $3.6 million for the three months ended March 31, 2025 and consisted primarily of the following:
| · | $1.7 million of personnel-related costs related to recruiting costs, salaries, benefits and other compensation-related costs, including stock-based compensation of $0.4 million; |
| · | $1.6 million of professional and consulting fees associated with accounting, audit, investor and public relations and legal fees due to an increase in Crescent’s business activity and as Crescent prepares to become a public company; |
| · | $0.1 million of legal fees due to Paragon associated with patent-related activities; and |
| · | $0.2 million of other business expenses. |
Liquidity and Capital Resources
Sources of Liquidity
Since its inception, Crescent has incurred significant operating losses. Crescent expects to incur significant expenses and operating losses for the foreseeable future as Crescent continues the preclinical development of its programs and commences clinical development of CR-001, CR-002 and CR-003. Crescent has not yet commercialized any products and Crescent does not expect to generate revenue from sales of products for several years, if at all. To date, Crescent has funded its operations primarily with proceeds from the issuance of Series Seed convertible preferred stock and the sale of Crescent’s Convertible Notes. In September 2024, Crescent issued and sold 20,000,000 shares of Series Seed Preferred Stock to Fairmount, through an affiliate fund, at a purchase price of $0.20 per share, for total gross proceeds of $4.0 million, which qualifies as a related party transaction. In October 2024, Crescent received $37.5 million in net proceeds from the issuance of its Convertible Notes to several investors, of which Fairmount, through an affiliate fund, holds a convertible note with an initial principal amount of $15.0 million, which qualifies as a related party transaction. On June 13, 2025, Crescent received $159.5 million in proceeds from the Crescent Pre-Closing Financing. As of March 31, 2025, Crescent had cash of $22.4 million.
Cash Flows
The following table summarizes Crescent’s cash flows for the period presented (in thousands):
| Three Months Ended | ||||
| March 31, | ||||
| 2025 | ||||
| Net cash used in operating activities | $ | (10,851 | ) | |
| Net cash used in financing activities | (1,486 | ) | ||
| Net decrease in cash | $ | (12,337 | ) | |
Net Cash Used in Operating Activities
For the three months ended March 31, 2025, net cash used in operating activities was $10.9 million, which was primarily attributable to a net loss of $15.1 million, offset by non-cash charges of $1.2 million and net cash provided by changes in operating activities of $3.1 million. Non-cash charges consisted of $1.2 million in stock-based compensation expense. Net cash provided by changes in Crescent’s operating activities primarily consisted of a $0.5 million increase in accounts payable, $1.8 million increase in accrued expenses and other current liabilities, $1.2 million increase in related party accounts payable and other current liabilities, partially offset by $0.4 million increase in prepaid expenses and other current assets. The increase in amounts due to accounts payable, accrued expenses and other current liabilities, related party accounts payable and accrued expenses and other current liabilities and prepaid expenses and other current assets was primarily due to an increase in Crescent’s business activity, as well as the timing of vendor invoicing and payments.
Net Cash Used in Financing Activities
For the three months ended March 31, 2025, net cash used in financing activities was attributable to $1.5 million of deferred offering cost payments in connection with our reverse merger.
Future Funding Requirements
To date, Crescent has not generated any revenue from product sales. Crescent does not expect to generate revenue from product sales unless and until Crescent successfully completes preclinical and clinical development of, receives regulatory approval for and commercializes a product candidate. Crescent does not know when, or if, that will occur. Crescent expects its expenses to increase substantially in connection with its ongoing activities, particularly as Crescent advances the preclinical activities and studies and initiates clinical trials. In addition, if Crescent obtains regulatory approval for any programs, Crescent expects to incur significant expenses related to product sales, marketing and distribution to the extent that such sales, marketing and distribution are not the responsibility of potential collaborators. Further, Crescent expects to incur additional costs associated with operating as a public company. The timing and amount of Crescent’s operating expenditures will depend largely on the factors set out above. For more information, see the section titled “Risk Factors — Risks Related to Crescent — Risks Related to Crescent’s Financial Condition and Capital Requirements”.
Crescent’s funding requirements and timing and amount of its operating expenditures will depend on many factors, including, but not limited to:
| · | the rate of progress in the development of Crescent’s existing and future research and development and discovery-related development of its CR-001, CR-002 and CR-003 programs, including potential expansion into additional indications; |
| · | the scope, progress, results and costs of additional research programs and product candidates and discovery-related activities and preclinical studies for those programs; |
| · | the ability of Crescent to successfully file investigational new drug applications or comparable foreign applications and obtain authorization to commence Crescent’s planned clinical trials or future clinical trials for any programs Crescent may develop; |
| · | the costs of enrollment and successful completion of clinical trials; |
| · | the costs necessary to pursue positive results from Crescent’s future clinical trials that support a finding of safety and effectiveness, an acceptable risk-benefit profile in the intended populations and a competitive efficacy, safety and half-life profile; |
| · | the costs of hiring research and development, clinical, manufacturing and commercial personnel; |
| · | the costs of adding operational, financial and management information systems and personnel; |
| · | the costs necessary to obtain regulatory approvals, if any, for any approved products in the United States and other jurisdictions, and the costs of post-marketing studies that could be required by regulatory authorities in jurisdictions where approval is obtained; |
| · | the costs of developing, maintaining and enhancing sustainable, scalable, reproducible and transferable clinical and commercial-scale cGMP capabilities through a third-party or Crescent’s own manufacturing facility for the programs Crescent may develop; |
| · | the costs and timing of future commercialization activities, including establishing sales, marketing and distribution infrastructure to commercialize any programs, for any of Crescent’s product candidates for which Crescent receives regulatory approval; |
| · | the revenue, if any, received from commercial sales of Crescent’s product candidates for which Crescent receives marketing approval; |
| · | the costs and timing of preparing, maintaining, expanding, enforcing, defending and protecting Crescent’s intellectual property rights and protection or regulatory exclusivity for any products Crescent may develop and defending any intellectual property-related claims; |
| · | the timing and payment of milestone, royalty or other payments Crescent must make pursuant to its existing and potential future collaborations and licensing arrangements with third parties; |
| · | the costs Crescent incurs in maintaining business operations; |
| · | the costs associated with being a public company, including costs of audit, legal, regulatory and tax- related services associated with maintaining compliance with an exchange listing and SEC requirements, director and officer insurance premiums and investor and public relations costs; |
| · | the effect of competing technological and market developments; and |
| · | the extent to which Crescent acquires or invests in businesses, products and technologies, including entering into licensing or collaboration arrangements for programs. |
Identifying potential programs and product candidates and conducting preclinical studies and clinical trials is a time consuming, expensive and uncertain process that takes years to complete, and Crescent may never generate the necessary data or results required to obtain marketing approval and achieve product sales. In addition, Crescent’s programs, if approved, may not achieve commercial success. Crescent’s commercial revenues, if any, will be derived from sales of products that Crescent does not expect to be commercially available for many years, if ever. Accordingly, Crescent will need to obtain substantial additional funds to achieve its business objectives.
Adequate additional funds may not be available to Crescent on acceptable terms, or at all. To the extent that Crescent raises additional capital through the sale of equity or convertible debt securities, ownership interests will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of Crescent’s existing stockholders. Additional debt financing and preferred equity financing, if available, may involve agreements that include covenants limiting or restricting Crescent’s ability to take specific actions, such as incurring debt, making capital expenditures or declaring dividends and may require the issuance of warrants, which could potentially dilute ownership interests.
If Crescent raises additional funds through strategic collaborations or licensing arrangements with third parties, Crescent may have to relinquish valuable rights to its technologies, future revenue streams, research programs or product candidates or grant licenses on terms that may not be favorable to Crescent. If Crescent is unable to raise additional funds through equity or debt financings when needed, Crescent may be required to delay, limit or terminate its product development programs or any future commercialization efforts or grant rights to develop and market product candidates to third parties that Crescent would otherwise prefer to develop and market itself.
Crescent believes that its existing cash of $22.4 million as of March 31, 2025, together with the proceeds from the Merger and Crescent’s Pre-Closing Financing, will be sufficient to fund its operating expenses and capital expenditures for at least 12 months from the issuance of these financial statements. Crescent expects to continue to incur substantial losses for the foreseeable future, and Crescent’s transition to profitability will depend upon successful development, approval and commercialization of our product candidates and upon achievement of sufficient revenues to support Crescent’s cost structure.
Contractual Obligations and Other Commitments
Paragon Option Agreements
In September 2024, Crescent entered into the Antibody Paragon Option Agreement with Paragon and Parascent for CR-001 for the selected targets PD-1 and VEGF. In October 2024, Crescent entered into the initial ADC Paragon Option Agreement with Paragon and Parascent for CR-002 for an undisclosed target which was subsequently amended and restated in April 2025 to add CR-003 and its three undisclosed targets. Parascent is an entity formed by Paragon as a vehicle to hold equity in Crescent in order to share profits with certain employees of Paragon and will not perform any substantive role under the Paragon Option Agreements other than to receive such warrants. Under the Paragon Option Agreements, Crescent has the Option, on a Research Program-by-Research Program basis, to enter into a separate agreement with Paragon consistent with a set of pre-negotiated terms (a “License Agreement”). If Crescent exercises its Options and finalizes the related license agreements, it will be required to make non- refundable milestone payments to Paragon of up to $22.0 million for CR-001 , up to $46.0 million for CR-002, and up to $46.0 million for CR-003 upon the achievement of certain clinical development and regulatory milestones, as well as tiered royalty payments in the low-to-mid single-digits beginning on the first commercial sale of each developed product. From time to time, Crescent can choose to add additional targets by mutual agreement with Paragon.
The Paragon Option Agreements require Crescent, Paragon, and Parascent to develop a Research Plan for each target that includes design, modeling, synthesis, evaluation and other mutually agreed activities, which activities primarily include performing preclinical studies. Paragon will perform the activities set forth in each Research Plan on the timelines set forth in such Research Plan and in compliance with a mutually agreed budget. Each Research Program will be overseen and coordinated by a joint development committee consisting of two employees from Crescent and two employees from Paragon, with Crescent and Paragon each having one vote with respect to decisions of the committee. When Paragon and Parascent have produced an antibody or ADC, as applicable, against a selected target, and upon the completion of each Research Program, Paragon and Parascent will deliver to Crescent a data package that includes sequence information for all then-existing antibodies or ADCs, as applicable, and information directed to such target.
Under the Paragon Option Agreements, each License Agreement will include (a) an exclusive, worldwide license to all of Paragon’s right, title, and interest in and to the intellectual property resulting from the applicable Research Program to develop, manufacture, and commercialize the monospecific antibodies or ADCs, as applicable, and products directed to the selected target(s), and (b) an exclusive (in the case of the Antibody Paragon Option Agreement) or non-exclusive (in the case of the ADC Paragon Option Agreement), worldwide license to all of Paragon’s right, title and interest in and to the intellectual property resulting from the applicable Research Program to develop, manufacture and commercialize multispecific antibodies or ADCs, as applicable, and products directed to the selected target(s). Additionally, each License Agreement under the ADC Paragon Option Agreement will include a non-exclusive, worldwide license to certain patents controlled by Paragon or its affiliates that (i) include a claim that expressly recites the sequence of the monospecific antibody included in the ADC, or derived from the ADC, applicable to the Research Program, and (ii) are necessary to develop, manufacture, commercialize or otherwise exploit the ADC or derived ADCs applicable to the Research Program, but exclude any patents owned or otherwise controlled by Paragon or its affiliates that cover the composition of matter of, or any method of specifically making or using, a multispecific ADC or a multispecific product directed to targets other than the undisclosed CR-002 target that is developed, manufactured, commercialized or otherwise exploited by Paragon or its affiliate or sublicensee (other than Crescent and its affiliates and sublicensees). Each License under the ADC Paragon Option Agreement will further include a right of first negotiation for a set period of time after the execution of the License Agreement with regard to any multispecific ADCs or products that are developed by Paragon. Each License Agreement shall also grant Crescent an exclusive license to any improvements Paragon may make to the relevant product candidate, and Crescent will retain ownership over anything Crescent invents, including improvements thereto. The Option with respect to each Research Program is exercisable at Crescent’s sole discretion at any time during the period beginning on the initiation of activities under the associated Research Program and ending a specified number of days following the delivery of the data package from Paragon related to the results of the Research Program (an “Option Period”). There is no payment due upon exercise of an Option pursuant to the Paragon Option Agreements. Activities under a Research Plan may continue past the exercise of an Option or entry into a License Agreement. Crescent exercised the Option with respect to CR-001 in March 2025 and entered into the related License Agreement in April 2025 pursuant to the Antibody Paragon Option Agreement. Crescent’s Options to acquire the intellectual property rights to CR-002 and CR-003 under the ADC Paragon Option Agreement currently remain unexercised.
Upon exercise of an Option with respect to a Research Program, the parties are obligated to use reasonable efforts to finalize and execute a License Agreement within 30 days. Under the terms of a License Agreement, Crescent expects that it will have sole authority over and control of the development, regulatory approval, manufacturing and commercialization of such in-licensed intellectual property worldwide. In addition, Crescent expects to have sole authority over and control of the application for and issuance of all regulatory approvals related to such in-licensed intellectual property. Prior to entry into a License Agreement, Paragon is responsible for the prosecution, defense, maintenance and enforcement of patents related to the Research Program. Following entry into a License Agreement, Crescent expects to control prosecution, defense, maintenance and enforcement of patents licensed under such License Agreement. However, there is no assurance that Crescent will successfully negotiate future License Agreements with Paragon or that the terms will not differ from those described in this proxy statement/prospectus.
Unless terminated earlier, the Paragon Option Agreements shall continue in force on a Research Program-by-Research Program basis until the later of: (i) the end of the Option Period for such Research Program, as applicable, if such Option is not exercised by Crescent; (ii) if Crescent exercises its Option with respect to a Research Program, but the parties are unable to finalize and execute a License Agreement within 30 days, the expiration of such 30-day period (subject to any mutually agreed extension of such period); and (iii) the expiration of the applicable Research Term (as defined under the applicable Paragon Option Agreement). Crescent may terminate any Paragon Option Agreement or any Research Program at any time for any or no reason upon 30 days’ prior written notice to Paragon; provided, that Crescent must pay certain unpaid fees due to Paragon upon such termination, as well as any non-cancellable obligations reasonably incurred by Paragon in connection with its activities under any terminated Research Program. Paragon may terminate any Paragon Option Agreements or any Research Program immediately upon written notice to Crescent if, as a result of any action or failure to act by Crescent or its affiliates, such Research Program or all material activities under the applicable Research Plan are suspended, discontinued or otherwise delayed for a certain consecutive number of months. Each party has the right to terminate any Paragon Option Agreement or any Research Program upon (i) 30 days’ prior written notice of the other party’s material breach that remains uncured for the 30-day period and (ii) the other party’s bankruptcy.
Upon signing of the Antibody Paragon Option Agreement, Crescent was required to reimburse Paragon $1.5 million for upfront research and development costs related to CR-001 and other general and administrative costs incurred by Paragon prior to September 19, 2024. Contemporaneously, Crescent also issued an aggregate of 5,000,000 shares of Crescent common stock to Paragon for aggregate non-cash upfront consideration of Paragon’s entry into the Antibody Paragon Option Agreement, valued at $0.20 per share, for a total of $1.0 million. Paragon subsequently contributed 2,500,000 of such shares to Parascent. The $1.5 million of research and development costs related to CR-001 reflects the actual historical direct costs incurred by Paragon as well as a 20% mark-up on the direct costs to approximate the indirect costs incurred by Paragon from the inception of the CR-001 program to the entry into the Antibody Paragon Option Agreement. All of the costs reflected in the upfront amount were incurred by Paragon between January 1, 2024 and the parties’ entry into the Paragon Option Agreement. Such direct costs were related to development activities. Of these upfront development costs related to CR-001 incurred by Paragon prior to September 19, 2024, a total of $1.5 million was recognized as research and development expense and less than $0.1 million was recognized as general and administrative expense during the period from September 19, 2024 (inception) to December 31, 2024. Crescent paid $1.5 million to Paragon in November 2024. The non-cash upfront consideration was recorded as research and development expense in Crescent’s consolidated statement of operations and comprehensive loss during the period from September 19, 2024 (inception) to December 31, 2024 as related IP license fees associated with entering into the Option Agreement. Paragon had no investments, intangibles, debt, or other assets or liabilities related to the CR-001 program aside from standard operating liabilities that were included in the upfront amount paid by Crescent to Paragon. Paragon’s cash flows related to the CR-001 program were operating cash flows and this categorization is consistent with the presentation of research and development expense-related cash flows, as presented on Crescent’s condensed statement of cash flows. Crescent is also required to pay Paragon for certain development fees and costs on a Research Program-by-Research Program basis. No pre-development costs were incurred for CR-002 or CR-003 for periods prior to September 19, 2024 (inception).
Under the Paragon Option Agreements, the Company is also responsible for certain additional development costs incurred by Paragon. During the three months ended March 31, 2025, the Company incurred $8.3 million with Paragon, of which $8.0 million was recognized as research and development expense and $0.3 million was recognized as general and administrative expense in Crescent’s condensed statements of operations and comprehensive loss. An amount of $8.3 million is included in related party accounts payable and other current liabilities within Crescent’s condensed balance sheet as of March 31, 2025. During the three months ended March 31, 2025, the Company paid $7.2 million to Paragon for services performed in 2024.
Through the three months ended March 31, 2025, Crescent incurred a total of $6.7 million of research and development expenses for CR-001, of which $5.6 million related to development costs incurred by Paragon under the Antibody Paragon Option Agreement. As of March 31, 2025, $5.6 million related to CR-001 development costs incurred by Paragon was unpaid and accrued on Crescent’s condensed balance sheet.
Through the three months ended March 31, 2025, Crescent incurred a total of $1.4 million in research and development expenses related to CR-002. Of the total CR-002 research and development expenses incurred in the three months ended March 31, 2025, $1.4 million was related to development costs incurred by Paragon under the ADC Paragon Option Agreement for CR-002 and remains unpaid as of March 31, 2025.
The ADC Paragon Option Agreement was amended and restated in April 2025 to add CR-003. Upon the execution of the Amended and Restated ADC Paragon Option Agreement, Crescent was required to reimburse Paragon $1.1 million for upfront research and development costs related to CR-003 and other general and administrative costs incurred by Paragon prior to the three months ended March 31, 2025. The full $1.1 million was unpaid as of the March 31, 2025.
Any License Agreement entered into with respect to a given Research Program shall contain the same milestone payment obligations as the applicable Paragon Option Agreement, provided that any milestone set in such Paragon Option Agreement that has not yet been achieved and is duplicated in such License Agreement shall no longer be achievable and payable under the terms of such Paragon Option Agreement and shall only be achievable under the terms of the License Agreement. For the avoidance of doubt, if a milestone is achieved and paid by Crescent pursuant to a Paragon Option Agreement for a certain Research Program, then there shall be no milestone payment due for the achievement of such milestone under a subsequently executed License Agreement for such Research Program. Further, under a License Agreement, Crescent would also be required to make royalty payments to Paragon in the low single-digit percentage range based on net sales of products, subject to certain reductions. The royalty term will terminate on a product-by-product and country-by-country basis upon the later of the expiration of the last-to-expire valid claim within the relevant patent rights or the twelfth anniversary of the first commercial sale of such product in such country.
Furthermore, on each of December 31, 2025 and December 31, 2026, Crescent will grant Parascent warrants to purchase a number of shares equal to 1.00% of Crescent’s outstanding capital stock as of the date of the grant on a fully-diluted basis, with an exercise price equal to the fair market value of the underlying shares of Crescent common stock on each respective grant date.
Crescent considers Paragon, Parascent and Fairmount to be related parties. See the section titled “Certain Relationships and Related Party Transactions of the Combined Company — Crescent’s Relationships with Paragon, Parascent and Fairmount.”
CR-001 License Agreement
On April 28, 2025, Crescent entered into a License Agreement for all antibodies discovered, generated, identified or characterized by Paragon in the course of performing the CR-001 research program directed to PD-1 and VEGF, antibodies created by Crescent derived from the licensed antibodies and directed to PD-1 and VEGF, and products that comprise the foregoing with Paragon (the “CR-001 License Agreement”) consistent with the pre-negotiated terms agreed to upon execution of the Antibody Paragon Option Agreement, pursuant to which Paragon granted Crescent a royalty-bearing, worldwide, exclusive and sublicensable license with respect to certain inventions, patent rights, sequence information and other intellectual property rights related to bispecific and multispecific antibodies directed at PD-1 and VEGF (the “Licensed Antibody Technology”) to develop, manufacture, commercialize and otherwise exploit certain bispecific and multispecific antibodies and products targeting PD-1 and VEGF in the field of prophylaxis, palliation, treatment and diagnosis of human disease and disorders in all therapeutic areas (the “field”) and worldwide (the “territory”). Under the terms of the CR-001 License Agreement, Crescent is obligated to pay Paragon up to $22.0 million based on specific development and regulatory milestones, including a $1.5 million fee for the nomination of a development candidate and a further milestone payment of $2.5 million upon the first dosing of a human patient in a Phase 1 trial. Following the execution of the CR-001 License Agreement, Crescent is solely responsible for, and has sole authority and control over, all aspects of the development, manufacturing and commercialization of CR-001, including regulatory strategy, communications, filings and activities (including clinical trials). In addition, the following summarizes other key terms of the CR-001 License Agreement.
| · | Crescent will pay Paragon a low-to-mid single-digit percentage royalty based on annual net sales of the products in the field and in the territory, subject to a 30% reduction if there is no valid patent covering the product in the country. |
| · | The royalty term ends on the later of (i) the twelfth anniversary of such date or (ii) the expiration of the last-to-expire valid patent covering the product in the country at issue. |
| · | The CR-001 License Agreement may be terminated on 60 days’ notice by Crescent; on material breach without cure; and to the extent permitted by law, on a party’s insolvency or bankruptcy. |
| · | With respect to patents licensed to Crescent under the CR-001 License Agreement that have been filed as of the effective date of the CR-001 License Agreement, Crescent will control the preparing, filing, prosecuting and maintenance of such patents. With respect to patents filed after the effective date of the CR-001 License Agreement, Paragon will control the preparing, filing, prosecuting and maintaining of such patents until the final deliverable for the relevant research program is delivered to Crescent, after which Crescent will control the preparing, filing, prosecuting and maintain of such patents. |
| · | Crescent shall have the right to grant sublicenses under the CR-001 License Agreement, provided that (i) any sublicense agreement is consistent with all relevant terms, conditions and restrictions of the CR-001 License Agreement, (ii) Crescent provides Paragon with a copy of each sublicense agreement and any amendments thereto within 30 days following execution thereof and (iii) Crescent remains responsible for all payments and obligations due under the CR-001 License Agreement. |
WuXi Biologics Master Services Agreement
On October 31, 2024, Crescent entered into a biologics master services agreement (the “WuXi Biologics MSA”) with WuXi Biologics (Hong Kong) Limited (“WuXi Biologics (Hong Kong)”). The WuXi Biologics MSA governs certain development activities and good manufacturing practice (“GMP”) manufacturing and testing for the CR-001 program, as well as potential future programs, on a work order basis. Under the WuXi Biologics MSA, Crescent is obligated to pay WuXi Biologics (Hong Kong) a service fee and all non-cancellable obligations in the amount specified in each work order associated with the agreement for the provision of services. WuXi Biologics (Hong Kong) is obligated to, among other things, (i) perform manufacturing services in accordance with applicable standards and law using personnel with appropriate qualifications, and to manufacture product in accordance with cGMP, (ii) comply with confidentiality and invention assignment provisions, (iii) notify Crescent of regulatory visits or inspections and provide redacted copies of any report or written communication received from such authorities in connection therewith and (iv) assign to Crescent all right, title and interest in and to all intellectual property created or developed in connection with the provision of the services, and all intellectual property relating to such inventions, subject to certain exceptions.
The WuXi Biologics MSA terminates on the later of (i) October 31, 2029 or (ii) the completion of services under all work orders executed by the parties prior to October 31, 2029, unless terminated earlier. The term of each work order terminates upon completion of the services under such work order, unless terminated earlier. Crescent can terminate the WuXi Biologics MSA or any work order (i) at any time upon 30 days’ prior written notice, or (ii) immediately upon written notice if WuXi Biologics (Hong Kong) fails to obtain or maintain required material governmental licenses or approvals. Either party may terminate a work order (i) at any time upon six months’ prior notice with reasonable cause, provided however that if WuXi Biologics (Hong Kong) terminates a work order in such manner, no termination or cancellation fees shall be paid by Crescent and (ii) immediately for cause upon (a) the other party’s material breach that remains uncured for 30 days after notice of such breach, (b) the other party’s bankruptcy, or (c) a force majeure event that prevents performance for a period of at least 90 days.
WuXi Cell Line License Agreement
On October 31, 2024, Crescent entered into a cell line license agreement (the “Cell Line License Agreement”) with WuXi Biologics Ireland Limited (“WuXi Biologics Ireland”). Under the Cell Line License Agreement, Crescent received a non-exclusive, worldwide, sublicensable license to certain of WuXi Biologics Ireland’s know-how, cell line, biological materials and media and feeds to make, have made, use, sell, have sold, offer for sale, import, keep and otherwise deal in and further commercialize certain therapeutic products produced through the use of the cell line licensed by WuXi Biologics Ireland under the Cell Line License Agreement (the “WuXi Biologics Ireland Licensed Products”). CR-001 is, and CR-002 may be, manufactured using a cell line licensed under Cell Line License Agreement. A cell line has not yet been selected for CR-003.
In consideration for the license, Crescent incurred a non-refundable license fee of $0.15 million. Additionally, if Crescent manufactures all of its commercial supplies of bulk drug product for a particular product with a manufacturer other than WuXi Biologics Ireland or its affiliates, it is required to make royalty payments to WuXi Biologics Ireland in an amount equal to a fraction of a single digit percentage of global net sales of the WuXi Biologics Ireland Licensed Products manufactured by a third-party manufacturer (the “Royalty”). If Crescent manufactures part of its commercial supplies of the WuXi Biologics Ireland Licensed Products with WuXi Biologics Ireland or its affiliates, then the Royalty will be reduced accordingly on a pro rata basis. Crescent has the option, at any time, to pay WuXi Biologics Ireland a non-refundable lump-sum royalty buyout payment on a drug product-by-drug product basis to extinguish future Royalty obligations with respect to such drug product.
The Cell Line License Agreement will continue indefinitely unless terminated (i) by Crescent upon six months’ prior written notice and its payment of all undisputed amounts due to WuXi Biologics Ireland through the effective date of termination, (ii) by WuXi Biologics Ireland for a material breach by Crescent that remains uncured for 60 days after written notice, (iii) by WuXi Biologics Ireland if Crescent fails to make a payment and such failure continues for 30 days after receiving notice of such failure, or (iv) by either party upon the other party’s bankruptcy.
Charles River Master Services Agreement
On December 6, 2024, Crescent entered into a master services agreement (the “Charles River MSA”) with Charles River Laboratories, Inc. (“Charles River”). The Charles River MSA governs certain clinical development activities and GMP manufacturing and testing for the CR-001 program, and potentially the CR-002 and CR-003 programs, on a non-exclusive, work order basis (each, a “Statement of Work”). Under the Charles River MSA, Crescent is obligated to pay Charles River a service fee in the amount specified in each Statement of Work associated with the agreement for the provision of services. Charles River is obligated to, among other things, (i) perform manufacturing services in accordance with applicable standards and law using personnel with appropriate qualifications, and to manufacture product in accordance with cGMP, (ii) comply with confidentiality and invention assignment provisions, (iii) notify Crescent of regulatory contact or communication and consult with Crescent regarding the response to any inquiry or observation from any regulatory authority and (iv) assign to Crescent all right, title and interest in and to all intellectual property created or developed in connection with the provision of the services, and all intellectual property relating to such inventions, subject to certain exceptions.
The Charles River MSA terminates on the later of (i) December 6, 2029, or (ii) the completion of services under all Statement of Works executed by the parties prior to December 6, 2029, unless terminated earlier. The term of each Statement of Work terminates upon completion of the services under such Statement of Work, unless terminated earlier. Crescent can terminate the Charles River MSA or any Statement of Work (i) at any time upon 30 days’ prior written notice, or (ii) for material breach of the Charles River MSA by Charles River, (x) upon 30 days’ prior written notice if such breach is not remedied within the 30 day notice period or (y) upon 15 days’ prior written notice if such breach is not capable of cure within such 30 day period. Charles River can terminate the Charles River MSA or any Statement of Work upon 30 days’ prior written notice for material breach of the Charles River MSA by Crescent if such breach is not remedied within the 30 day notice period or if such breach is not capable of cure within such 30 day notice period. Charles River can terminate any Statement of Work at any time upon 30 days’ prior written notice.
Convertible Notes
In October 2024, Crescent completed convertible note financings in which Crescent issued and sold to certain investors an aggregate principal amount of $37.5 million (of which $15.0 million is from Fairmount), with a total commitment up to $75.0 million aggregate principal in Convertible Notes at an interest rate of 12% per annum. Upon a “Next Equity Financing” under the terms of the Convertible Notes, the principal amount and all accrued interest under each convertible note will convert into a number of shares of Crescent common stock equal to the quotient obtained by dividing the purchase price by the conversion price in connection with the Next Equity Financing. All unpaid interest and principal is scheduled to mature on December 31, 2026. Prepayment is not permitted without prior written consent of the investor. Pursuant to the Subscription Agreement, the holders of the Convertible Notes have agreed to contribute such notes as consideration in exchange for shares of Crescent common stock and pre-funded warrants to purchase shares of Crescent common stock in the Crescent Pre-Closing Financing. As of March 31, 2025, the aggregate principal amount of outstanding borrowings under Crescent’s Convertible Notes was $37.5 million, with up to $75.0 million of borrowings to withdraw in total until the maturity date.
Immediately prior to the closing of the Merger, the Convertible Notes were converted into 21,200,564 shares of Pre-Merger Crescent common stock based on the aggregate principal amount of $37.5 million plus unpaid accrued interest divided by the conversion price in connection with the Pre-Closing Financing.
Critical Accounting Policies and Significant Judgments and Estimates
Crescent’s management’s discussion and analysis of its financial condition and results of operations is based on Crescent’s condensed financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires Crescent to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the condensed financial statements, as well as the reported revenues recognized and expenses incurred during the reporting periods. Crescent’s estimates are based on its historical experience and on various other factors that Crescent believes are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
While Crescent’s significant accounting policies are described in more detail in Note 2 to its condensed financial statements for the three months ended March 31, 2025 included as Exhibit 99.2 of Crescent’s Current Report on Form 8-K of which Exhibit 99.3 is a part, Crescent believes the following accounting policies used in the preparation of Crescent’s condensed financial statements require the most significant judgments and estimates.
Research and Development Contract Costs Accruals
Crescent records the costs associated with research studies and manufacturing development as incurred. These costs are a significant component of Crescent’s research and development expenses, with a substantial portion of Crescent’s ongoing research and development activities conducted by third-party service providers, including contract research organizations and contract manufacturing organizations, and Crescent’s related party Paragon.
Crescent accrues for expenses resulting from obligations under Paragon Option Agreements between Paragon, Parascent and Crescent and agreements with CROs, CMOs and other outside service providers for which payment flows do not match the periods over which materials or services are provided to Crescent. Accruals are recorded based on estimates of services received and efforts expended pursuant to agreements established with Paragon, CROs, CMOs and other outside service providers. These estimates are typically based on contracted amounts applied to the proportion of work performed and determined through analysis with internal personnel and external service providers as to the progress or stage of completion of the services. Crescent makes significant judgments and estimates in determining the accrual balance in each reporting period. In the event advance payments are made to Paragon, a CRO, CMO or outside service provider, the payments will be recorded as a prepaid asset which will be expensed as the contracted services are performed. Changes in these estimates that result in material changes to Crescent’s accruals could materially affect its results of operations. As of March 31, 2025, Crescent has not experienced any material deviations between accrued and actual research and development expenses.
Stock-Based Compensation
Crescent measures stock-based awards granted to employees, directors, and non-employees in the form of stock options to purchase shares of Crescent’s common stock, based on their fair value on the date of the grant using the Black-Scholes model. Crescent measures common stock awards, restricted common stock awards and restricted stock units using the difference, if any, between the purchase price per share of the award and the fair value of Crescent’s common stock at the date of grant. Compensation expense for those awards is recognized using the straight-line method over the requisite service period, which is generally the vesting period of the respective award for employees. Compensation expense for awards to non-employees with service-based vesting conditions is recognized in the same manner as if Crescent had paid cash in exchange for the goods or services, which is generally over the vesting period of the award. Crescent accounts for forfeitures as they occur. Crescent classifies its stock-based compensation expenses in the same manner in which the award recipient’s payroll costs are classified or in which the award recipient’s service payments are classified.
The Black-Scholes model uses inputs that are determined by the Crescent Board on the date of grant and assumptions Crescent makes for the volatility of stock-based awards, the expected term of stock-based awards, the risk-free interest rate for a period that approximates the expected term of Crescent’s stock-based awards and its expected dividend yield. Crescent has historically been a private company and lacks company-specific historical and implied volatility information of Crescent’s stock. Therefore, Crescent estimates its expected stock volatility based on the historical volatility of a representative group of public companies in the biotechnology industry for a term equal to the remaining time of the expected term. The expected term of Crescent’s stock options has been determined utilizing the “simplified” method for awards that qualify as “plain-vanilla” stock options. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve for time periods approximately equal to the remaining contractual term of the options on the date of measurement. Crescent has estimated a 0% dividend yield based on the expected dividend yield and the fact that Crescent has never paid, and does not expect to pay, any cash dividends in the foreseeable future. See Note 2 to Crescent’s condensed financial statements for the three months ended March 31, 2025 included as Exhibit 99.2 of Crescent’s Current Report on Form 8-K for information concerning specific assumptions Crescent used in applying the Black-Scholes model to determine the estimated fair value of its stock options granted in the periods presented.
Determination of Fair Value of Common Stock
As there has been no public market for Crescent’s common stock from September 19, 2024 (inception) to March 31, 2025, the estimated fair value of stock-based awards has been determined by the Crescent Board as of the date of grant, with input from management, and with consideration of additional objective and subjective factors that Crescent believed were relevant. In addition, the board of directors considered various objective and subjective factors to determine the fair value of Crescent’s share-based awards as of each grant date, including:
| · | the prices at which Crescent sold shares of Crescent preferred stock and preferences of the Crescent preferred stock relative to its stock-based awards at the time of each grant; |
| · | Crescent’s common stock valuations; |
| · | the progress of Crescent’s research and development programs, including the status of discovery- phase studies for Crescent’s product candidates; |
| · | Crescent’s stage of development and business strategy; |
| · | external market conditions affecting the biotechnology industry and trends within the biotechnology industry; |
| · | Crescent’s financial position, including cash on hand, and its historical and forecasted performance and operating results; and |
| · | the lack of an active public market for Crescent’s common stock and Crescent preferred stock at the grant dates. |
Crescent’s common stock valuations were prepared by a third-party valuation firm using a hybrid method, including an option pricing method (“OPM”). The OPM treats common stock and preferred stock as call options on the total equity value of a company, with exercise prices based on the value thresholds at which the allocation among the various holders of a company’s securities changes. Under this method, the common stock has value only if the funds available for distribution to stockholders exceed the value of the preferred stock liquidation preferences at the time of the liquidity event, such as a strategic sale or a merger. The hybrid method is a probability-weighted expected return method (“PWERM”), where the equity value in one or more of the scenarios is calculated using an OPM. The PWERM is a scenario-based methodology that estimates the fair value of common stock based upon an analysis of future values for a company, assuming various outcomes. The common stock value is based on the probability-weighted present value of expected future investment returns considering each of the possible outcomes available as well as the rights of each class of stock. The future value of the common stock under each outcome is discounted back to the valuation date at an appropriate risk-adjusted discount rate and probability weighted to arrive at an indication of value for the common stock. A discount for lack of marketability of the common stock is then applied to arrive at an indication of value for the common stock.
Once a public trading market for Crescent’s common stock has been established in connection with the completion of the Merger, it is no longer necessary for the board of directors to estimate the fair value of Crescent’s stock-based awards in connection with its accounting for granted stock-based awards or other such awards Crescent may grant, as the fair value of its common stock and share-based awards is determined based on the quoted market price of Crescent’s common stock.
Convertible Notes
As of March 31, 2024, Crescent has issued $37.5 million in convertible notes to certain investors. Crescent accounts for the Convertible Notes under Accounting Standard Codification (“ASC”) No. 815, Derivatives and Hedging (“ASC 815”). Under ASC 815-15-25, the election can be at the inception of a financial instrument to account for the instrument under ASC No. 825, Fair Value Measurements and Disclosures (Including the Fair Value Option) (“ASC 825” and the “Fair Value Option”). Crescent performed an analysis of all of the terms and features of the Convertible Notes and has not elected the Fair Value Option. Crescent assessed all terms and features of the Convertible Notes in order to identify any potential embedded features that would require bifurcation. As part of this analysis, Crescent assessed the economic characteristics and risks of the embedded features. Crescent determined that the share settled redemption feature was clearly and closely related to the debt host and did not require separate accounting. Crescent determined that the conversion options of the Convertible Notes, including the conversion features related to a defaulting purchaser and highest interest rate, were not clearly and closely associated with a debt host. However, these features did not meet the definition of a derivative under ASC 815, Derivatives and Hedging, and as a result, did not require separate accounting as a derivative liability.
Immediately prior to the closing of the Merger, the Convertible Notes were converted into 21,200,564 shares of Pre-Merger Crescent common stock based on the aggregate principal amount of $37.5 million plus unpaid accrued interest divided by the conversion price in connection with the Pre-Closing Financing.
Recently Issued Accounting Pronouncements
A description of recently issued accounting pronouncements that may potentially impact Crescent’s financial position, results of operations or cash flows is disclosed in Note 2 to Crescent’s condensed financial statements as of March 31, 2025 included as Exhibit 99.2 of Crescent’s Current Report on Form 8-K.
Off-Balance Sheet Arrangements
During the periods presented Crescent did not have, nor does Crescent currently have, any off-balance sheet arrangements as defined in the rules and regulations of the SEC.
Quantitative and Qualitative Disclosures About Market Risks
Interest Rate Risk
The Convertible Notes bear interest until December 2026 at a fixed rate per annum equal to 12%. An immediate 10% change in the prime rate would not have a material impact on Crescent’s debt-related obligations, financial position or results of operations.
Inflation Risk
Crescent’s results of operations and financial condition are presented based on historical cost. While it is difficult to accurately measure the impact of inflation due to the imprecise nature of the estimates required, Crescent believes the effects of inflation, if any, on its business, results of operations and financial condition have been immaterial. Crescent cannot assure you its business will not be affected in the future by inflation.
Exhibit 99.4
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
Defined terms included below shall have the same meaning as terms defined and included in the Company’s definitive proxy statement/prospectus filed with the U.S. Securities and Exchange Commission (the “SEC”) on May 12, 2025.
On October 28, 2024, Crescent entered into the Merger Agreement with GlycoMimetics and the Merger Subs, which agreement was subsequently amended on February 14, 2025 and April 28, 2025, pursuant to which, and subject to the satisfaction or waiver of the conditions set forth in the Merger Agreement, Merger Sub I will merge with and into Crescent, with Crescent surviving as a wholly owned subsidiary of GlycoMimetics and the surviving corporation of the First Merger, and, immediately following the First Merger and as part of the same overall transaction, Crescent will merge with and into Merger Sub II, with Merger Sub II being the surviving entity of the Second Merger. The closing of the Crescent Pre-Closing Financing is conditioned on the satisfaction or waiver of the conditions set forth in the Merger Agreement and occurred immediately prior to the closing of the Merger, the pro forma adjustments reflect the Merger and the Crescent Pre-Closing Financing. The Merger closed on June 13, 2025 following the effectiveness of GlycoMimetics’ registration statement on Form S-4 and receipt of approval by the stockholders of each of Crescent and GlycoMimetics, in the latter case pursuant to the GlycoMimetics Special Meeting. In connection with the Merger, Merger Sub II changed its corporate name to “Crescent Biopharma Operating Company, LLC” and GlycoMimetics changed its name to “Crescent Biopharma, Inc.” GlycoMimetics following the Merger is referred to herein as the “Combined Company.” The Combined Company is led by Crescent’s management team and remains focused on developing differentiated oncology therapeutics for patients living with solid tumors.
At the First Effective Time, upon the terms and subject to the conditions set forth in the Merger Agreement, (i) each then-outstanding share of Crescent common stock (including shares of Crescent common stock issued in connection with the Crescent Pre-Closing Financing) was automatically converted solely into the right to receive a number of shares of GlycoMimetics common stock equal to the Exchange Ratio, (ii) each then-outstanding share of Crescent preferred stock was converted into the right to receive a number of shares of GlycoMimetics Series A Preferred Stock, which are each convertible into 1,000 shares of GlycoMimetics common stock, equal to the Exchange Ratio divided by 1,000, (iii) each then-outstanding option to purchase Crescent common stock was assumed by GlycoMimetics and was converted into an option to purchase shares of GlycoMimetics, subject to adjustment as set forth in the Merger Agreement, (iv) each then-outstanding Crescent restricted stock unit was assumed by GlycoMimetics, subject to adjustment as set forth in the Merger Agreement, (v) each then-outstanding pre-funded warrant to purchase shares of Crescent common stock was converted into a pre-funded warrant to purchase shares of GlycoMimetics common stock, subject to adjustment as set forth in the Merger Agreement and the form of warrant, (vi) the vesting of each option to acquire shares of GlycoMimetics common stock that is issued and outstanding was accelerated, each in-the-money option was cancelled and converted into the right to receive immediately prior to the First Effective Time a number of shares of GlycoMimetics common stock equal to the number of shares underlying such option, and each out-of-the-money option was cancelled for no consideration; and (vii) each GlycoMimetics restricted stock unit was cancelled and converted into the right to receive a number of shares of GlycoMimetics common stock equal to the number of unsettled shares of GlycoMimetics common stock underlying such GlycoMimetics restricted stock unit.
The Exchange Ratio is calculated as 0.1445 shares of GlycoMimetics common stock for each share of Crescent common stock on the closing date. Each share of Crescent preferred stock was converted into the right to receive a number of shares of GlycoMimetics Series A Preferred Stock, equal to the Exchange Ratio divided by 1,000. Under the Exchange Ratio formula, the former Crescent stockholders immediately before the effective time, including those purchasing shares and pre- funded warrants in the Crescent Pre-Closing Financing, own approximately 97.3% of the outstanding common stock of the Combined Company, and the stockholders of GlycoMimetics immediately before the effective time own approximately 2.7% of the outstanding common stock of the Combined Company, which give effect to (a) GlycoMimetics net cash as of the closing of the Merger being approximately $2.3 million, (b) Crescent closing the Crescent Pre-Closing Financing for an aggregate gross purchase price of approximately $200.0 million, which reflects the conversion of the previously issued $37.5 million of Convertible Notes and accrued interest, (c) a valuation for GlycoMimetics equal to $8.0 million based on net cash at closing, and (d) a valuation for Crescent equal to $50.0 million plus $200.0 million of assumed proceeds in the Crescent Pre-Closing Financing, in each case as further described in the Merger Agreement.
1
The following unaudited pro forma condensed combined financial information gives effect to the Merger, which, together with the Crescent Pre-Closing Financing is accounted for as a reverse recapitalization under U.S. GAAP. For further details related to the accounting for the Merger, please see Notes 1 and 3 below. All share amounts have been adjusted to reflect the Exchange Ratio of 0.1445 shares of GlycoMimetics common stock for each share of Crescent common stock, which reflects a one-for-one-hundred reverse stock split of GlycoMimetics common stock immediately prior to the closing of the Merger, unless otherwise stated.
The unaudited pro forma condensed combined balance sheet combines the historical balance sheets of GlycoMimetics and Crescent as of March 31, 2025 and depicts the accounting of the transaction prepared pursuant to Article 11 of Regulation S-X (the “pro forma balance sheet transaction accounting adjustments”). The unaudited pro forma condensed combined statements of operations for the three months ended March 31, 2025 for GlycoMimetics and Crescent, and for the year ended December 31, 2024 for GlycoMimetics and the period from September 19, 2024 (inception) to December 31, 2024 for Crescent, combine the historical results of GlycoMimetics and Crescent for those periods and depict the pro forma transaction accounting adjustments assuming that those adjustments were made as of January 1, 2024 (the “pro forma statements of operations transaction accounting adjustments”). Collectively, the pro forma balance sheet transaction accounting adjustments and the pro forma statements of operations transaction accounting adjustments are referred to as the “transaction accounting adjustments” or “pro forma adjustments.”
These unaudited pro forma condensed combined financial information and related notes have been derived from and should be read in conjunction with:
| · | the historical unaudited financial statements of Crescent as of and for the three months ended March 31, 2025, and the related notes included as Exhibit 99.2 of this Current Report on Form 8-K and incorporated herein by reference; | |
| · | the historical unaudited financial statements of GlycoMimetics as of and for the three months ended March 31, 2025, and the related notes included in its Quarterly Report on Form 10-Q filed with the SEC on May 14, 2025; | |
| · | the historical audited financial statements of Crescent as of December 31, 2024 and for the period from September 19, 2024 (inception) to December 31, 2024, and the related notes included in the proxy statement/prospectus beginning on page F-22 and incorporated herein by reference; | |
| · | the historical audited consolidated financial statements of GlycoMimetics as of and for the year ended December 31, 2024, and the related notes included in its Annual Report on Form 10-K filed with the SEC on February 13, 2025; | |
| · | the section titled “Crescent’s Management’s Discussion and Analysis of Financial Condition and Results of Operation,” and other financial information relating to Crescent as of and for the three months ended March 31, 2025 included as Exhibit 99.3 of this Current Report on Form 8-K and incorporated herein by reference; | |
| · | the section titled “GlycoMimetics’ Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and other financial information relating to GlycoMimetics included in its Annual Report on Form 10-K filed with the SEC on February 13, 2025; | |
| · | the section titled “Crescent’s Management’s Discussion and Analysis of Financial Condition and Results of Operation,” and other financial information relating to Crescent as of and for the period ended September 19, 2024 (Inception) to December 31, 2024 included in the proxy statement/prospectus beginning on page 329 and incorporated herein by reference; and | |
| · | the section titled “GlycoMimetics’ Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and other financial information relating to GlycoMimetics included in its Quarterly Report on Form 10-Q filed with the SEC on May 14, 2025. |
The unaudited pro forma condensed combined financial information is based on the assumptions and pro forma adjustments that are described in the accompanying notes. The pro forma adjustments are preliminary, subject to further revision as additional information becomes available and additional analyses are performed. Adjustments have been made solely for the purpose of providing unaudited pro forma condensed combined financial information. Differences between these preliminary estimates and the final accounting, expected to be completed after the closing of the Merger, may occur and these differences could have a material impact on the accompanying unaudited pro forma condensed combined financial information.
2
The unaudited pro forma condensed combined financial information does not give effect to the potential impact of current financial conditions, regulatory matters, operating efficiencies or other savings or expenses that may be associated with the integration of the two companies. The unaudited pro forma condensed combined financial information is not necessarily indicative of the financial position or results of operations in the future periods or the result that actually would have been realized had GlycoMimetics and Crescent been a combined organization during the specified periods. The actual results reported in periods following the Merger may differ significantly from those reflected in the unaudited condensed combined pro forma financial information presented herein for a number of reasons, including, but not limited to, differences in the assumptions used to prepare this unaudited pro forma condensed combined financial information.
3
UNAUDITED PRO FORMA CONDENSED
COMBINED BALANCE SHEET AS
OF MARCH 31, 2025
(In thousands)
| Historical | ||||||||||||||||||||
| 5(A) Glyco Mimetics, Inc. | 5(B) Crescent Biopharma, Inc. | Transaction Accounting Adjustments | Notes | Pro Forma Combined | ||||||||||||||||
| Assets | ||||||||||||||||||||
| Current assets: | ||||||||||||||||||||
| Cash and cash equivalents | $ | 5,614 | $ | 22,429 | $ | (2,597 | ) | 5(a) | $ | 166,503 | ||||||||||
| 160,538 | 5(c) | |||||||||||||||||||
| (15,799 | ) | 5(d) | ||||||||||||||||||
| (2,886 | ) | 5(e) | ||||||||||||||||||
| (796 | ) | 5(g) | ||||||||||||||||||
| Prepaid expenses and other current assets | 378 | 409 | (378 | ) | 5(f) | 409 | ||||||||||||||
| Total current assets | 5,992 | 22,838 | 138,082 | 166,912 | ||||||||||||||||
| Other assets | — | 2,767 | (2,767 | ) | 5(d) | — | ||||||||||||||
| Total assets | $ | 5,992 | $ | 25,605 | $ | 135,315 | $ | 166,912 | ||||||||||||
| Liabilities, Convertible Preferred Stock and Stockholders’ Equity (Deficit) | ||||||||||||||||||||
| Current liabilities: | ||||||||||||||||||||
| Accounts payable | $ | 104 | $ | 634 | $ | — | $ | 738 | ||||||||||||
| Accrued expenses | 2,512 | 4,445 | (1,718 | ) | 5(a) | 2,463 | ||||||||||||||
| (1,980 | ) | 5(c) | ||||||||||||||||||
| (796 | ) | 5(g) | ||||||||||||||||||
| Related party accounts payable and other current liabilities | — | 8,381 | — | 8,381 | ||||||||||||||||
| Warrant liability, related party | — | 824 | — | 824 | ||||||||||||||||
| Lease liabilities | — | — | — | — | ||||||||||||||||
| Total current liabilities | 2,616 | 14,284 | (4,494 | ) | 12,406 | |||||||||||||||
| Notes payable, noncurrent | — | 37,482 | (37,482 | ) | 5(c) | — | ||||||||||||||
| Total liabilities | 2,616 | 51,766 | (41,976 | ) | 12,406 | |||||||||||||||
| Crescent convertible preferred stock | — | 4,000 | (4,000 | ) | 5(b) | — | ||||||||||||||
| Stockholders’ equity (deficit) | ||||||||||||||||||||
| GlycoMimetics Series A convertible preferred stock | — | — | 4,000 | 5(b) | 4,000 | |||||||||||||||
| GlycoMimetics common stock | 65 | — | (65 | ) | 5(i) | — | ||||||||||||||
| Crescent common stock | — | 1 | 3 | 5(c) | 87 | |||||||||||||||
| 12 | 5(c) | |||||||||||||||||||
| 65 | 5(i) | |||||||||||||||||||
| 6 | 5(i) | |||||||||||||||||||
| Additional paid-in capital | 500,019 | 2,853 | 39,460 | 5(c) | 183,434 | |||||||||||||||
| 160,526 | 5(c) | |||||||||||||||||||
| (18,566 | ) | 5(d) | ||||||||||||||||||
| 31 | 5(h) | |||||||||||||||||||
| (500,883 | ) | 5(i) | ||||||||||||||||||
| (6 | ) | 5(i) | ||||||||||||||||||
| Accumulated deficit | (496,708 | ) | (33,015 | ) | (880 | ) | 5(a) | (33,015 | ) | |||||||||||
| (2,886 | ) | 5(e) | ||||||||||||||||||
| (378 | ) | 5(f) | ||||||||||||||||||
| (31 | ) | 5(h) | ||||||||||||||||||
| 500,883 | 5(i) | |||||||||||||||||||
| Total stockholders’ equity (deficit) | 3,376 | (30,161 | ) | 181,291 | 154,506 | |||||||||||||||
| Total liabilities, convertible preferred stock and stockholders’ equity (deficit) | $ | 5,992 | $ | 25,605 | $ | 135,315 | $ | 166,912 | ||||||||||||
See accompanying notes to the unaudited pro forma condensed combined financial information.
4
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS AND COMPREHENSIVE LOSS FOR THE THREE MONTHS ENDED MARCH 31, 2025
(In thousands, except share and per share amounts)
| Historical | ||||||||||||||||||||
6(A) Glyco | 6(B) Crescent | Transaction Accounting Adjustments Note | Pro Forma Combined | Note | ||||||||||||||||
| Operating expenses: | ||||||||||||||||||||
| Research and development | $ | 15 | $ | 10,627 | $ | — | $ | 10,642 | ||||||||||||
| General and administrative | 2,384 | 3,597 | — | 5,981 | ||||||||||||||||
| Total operating expenses | 2,399 | 14,224 | — | 16,623 | ||||||||||||||||
| Loss from operations | (2,399 | ) | (14,224 | ) | — | (16,623 | ) | |||||||||||||
| Other income (expense): | ||||||||||||||||||||
| Interest income | 55 | 188 | — | 243 | ||||||||||||||||
| Interest expense | — | (1,112 | ) | 1,112 | 6(d) | — | ||||||||||||||
| Total other income (expense) | 55 | (924 | ) | 1,112 | 243 | |||||||||||||||
| Net loss and comprehensive loss | $ | (2,344 | ) | $ | (15,148 | ) | $ | 1,112 | $ | (16,380 | ) | |||||||||
| Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted | 64,522,757 | 16,539,912 | 6(e) | |||||||||||||||||
| Weighted-average shares used in computing net loss per share attributable to Series A non-voting convertible preferred stockholders, basic and diluted | — | 2,890 | 6(e) | |||||||||||||||||
| Net loss per share attributable to common stockholders, basic and diluted | $ | (0.04 | ) | $ | (0.84 | ) | ||||||||||||||
| Net loss per share attributable to Series A non-voting convertible preferred stockholders, basic and diluted | $ | — | $ | (843.02 | ) | |||||||||||||||
See accompanying notes to the unaudited pro forma condensed combined financial information.
5
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS AND COMPREHENSIVE LOSS FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2024
(In thousands, except share and per share amounts)
| Historical | |||||||||||||||||||||
| 6(C) Glyco Mimetics, Inc. |
6(D) Crescent Biopharma Inc. |
Transaction Accounting Adjustments Note |
Pro Forma Combined |
Note | |||||||||||||||||
| Operating expenses: | |||||||||||||||||||||
| Research and development | $ | 14,260 | $ | 14,034 | $ | — | $ | 28,294 | |||||||||||||
| General and administrative | 18,249 | 3,157 | 880 | 6(a) | 22,695 | ||||||||||||||||
| 378 | 6(b) | ||||||||||||||||||||
| 31 | 6(c) | ||||||||||||||||||||
| Restructuring and asset impairment charges | 7,530 | — | — | 7,530 | |||||||||||||||||
| Total operating expenses | 40,039 | 17,191 | 1,289 | 58,519 | |||||||||||||||||
| Loss from operations | (40,039 | ) | (17,191 | ) | (1,289 | ) | (58,519 | ) | |||||||||||||
| Other income (expense): | |||||||||||||||||||||
| Gain on sale of asset | 1,225 | — | — | 1,225 | |||||||||||||||||
| Interest income | 935 | 176 | — | 1,111 | |||||||||||||||||
| Interest expense | — | (852 | ) | 852 | 6(d) | — | |||||||||||||||
| Total other income (expense) | 2,160 | (676 | ) | 852 | 2,336 | ||||||||||||||||
| Net loss and comprehensive loss | $ | (37,879 | ) | $ | (17,867 | ) | $ | (437 | ) | $ | (56,183 | ) | |||||||||
| Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted | 64,477,249 | 16,539,461 | 6(e) | ||||||||||||||||||
| Weighted-average shares used in computing net loss per share attributable to Series A non-voting convertible preferred stockholders, basic and diluted | — | 2,890 | 6(e) | ||||||||||||||||||
| Net loss per share attributable to common stockholders, basic and diluted | $ | (0.59 | ) | $ | (2.89 | ) | |||||||||||||||
| Net loss per share attributable to Series A non-voting convertible preferred stockholders, basic and diluted | $ | — | $ | (2,897.58 | ) | ||||||||||||||||
See accompanying notes to the unaudited pro forma condensed combined financial information.
6
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
| 1. | Description of the Merger |
On October 28, 2024, Crescent entered into the Merger Agreement with GlycoMimetics and the Merger Subs, which agreement was subsequently amended on February 14, 2025 and April 28, 2025, pursuant to which, and subject to the satisfaction or waiver of the conditions set forth in the Merger Agreement, Merger Sub I will merge with and into Crescent, with Crescent surviving as a wholly owned subsidiary of GlycoMimetics and the surviving corporation of the First Merger, and, immediately following the First Merger and as part of the same overall transaction, Crescent will merge with and into Merger Sub II, with Merger Sub II being the surviving entity of the Second Merger. The Merger, including the Crescent Pre-Closing Financing, closed on June 13, 2025 following the effectiveness of GlycoMimetics’ registration statement on Form S-4 and receipt of approval by the stockholders of each of Crescent and GlycoMimetics, in the latter case pursuant to the GlycoMimetics Special Meeting. In connection with the Merger, Merger Sub II changed its corporate name to “Crescent Biopharma Operating Company, LLC” and GlycoMimetics changed its name to “Crescent Biopharma, Inc.” GlycoMimetics following the Merger is referred to herein as the “Combined Company.” Subject to the terms and conditions of the Merger Agreement, at closing of the Merger:
| a) | each then-outstanding share of Crescent common stock (including shares of Crescent common stock issued in connection with the Crescent Pre-Closing Financing) was converted into the right to receive a number of shares of GlycoMimetics common stock equal to the Exchange Ratio; |
| b) | each then-outstanding share of Crescent preferred stock was converted into the right to receive a number of shares of GlycoMimetics Series A Preferred Stock, which are each convertible into 1,000 shares of GlycoMimetics common stock, equal to the Exchange Ratio divided by 1,000; |
| c) | each then-outstanding option to purchase Crescent common stock was assumed by GlycoMimetics and was converted into an option to purchase shares of GlycoMimetics common stock, subject to adjustment as set forth in the Merger Agreement; |
| d) | each then-outstanding Crescent restricted stock unit was assumed by GlycoMimetics, subject to adjustment as set forth in the Merger Agreement; and |
| e) | each then-outstanding pre-funded warrant to purchase shares of Crescent common stock was converted into a pre-funded warrant to purchase shares of GlycoMimetics common stock, subject to adjustment as set forth in the form of pre-funded warrant. |
The shares of GlycoMimetics common stock issued in exchange for shares of Crescent restricted stock were to the same extent be unvested and subject to the same repurchase option or risk of forfeiture.
Under the terms of the Merger Agreement, the GlycoMimetics Board took actions to accelerate the vesting of certain outstanding options to purchase GlycoMimetics common stock held by a current employee, director or consultant of GlycoMimetics as of the closing of the Merger. The acceleration of vesting of GlycoMimetics options occurs upon a modification of the awards as a result of the Merger. The incremental fair value of GlycoMimetics options associated with the modification to accelerate vesting has been included as an adjustment to the unaudited pro forma condensed combined financial information.
Each option to acquire shares of GlycoMimetics common stock with an exercise price less than or equal to the GlycoMimetics Closing Price was cancelled and converted into the right to receive a number of shares of GlycoMimetics common stock underlying such GlycoMimetics option, and each option with an exercise price greater than the GlycoMimetics Closing Price to acquire shares of GlycoMimetics common stock was cancelled for no consideration. The incremental fair value of GlycoMimetics options associated with the modification to accelerate vesting and the acceleration of grant date fair value associated with the cancelation of certain stock options for no consideration has been included as an adjustment to the unaudited pro forma condensed combined financial information. Each GlycoMimetics restricted stock unit was cancelled and converted into the right to receive a number of shares of GlycoMimetics common stock equal to the number of unsettled shares of GlycoMimetics common stock underlying such GlycoMimetics restricted stock unit.
7
Immediately following the Merger, GlycoMimetics securityholders as of immediately prior to the Merger own approximately 2.7% of the outstanding capital stock of the Combined Company on a fully diluted basis, former Crescent securityholders, excluding shares purchased in the Crescent Pre-Closing Financing, own approximately 33.6% of the outstanding capital stock of the Combined Company on a fully diluted basis, and shares and pre-funded warrants issued in the Crescent Pre-Closing Financing own approximately 63.7% of the outstanding capital stock of the Combined Company on a fully diluted basis. Crescent stockholders received approximately 23,100,404 shares on a fully diluted basis in connection with the Merger, including (i) 4,364,255 shares of GlycoMimetics common stock and stock options subject to vesting terms, based on the number of shares of Crescent common stock outstanding immediately prior to the Merger, including Crescent restricted stock, (ii) the shares of common stock and pre-funded warrants issued in the Crescent Pre-Closing Financing, and (iii) Crescent preferred stock outstanding as of March 31, 2025, which was exchanged into shares of newly created GlycoMimetics Series A Preferred Stock which are each convertible into 1,000 shares of GlycoMimetics common stock, equal to the Exchange Ratio divided by 1,000. These estimates were subject to certain inputs, which include, but are not limited to, (a) GlycoMimetics’ net cash as of the closing of the Merger being approximately $2.3 million, (b) Crescent closing the Crescent Pre-Closing Financing for an aggregate purchase price of approximately $200.0 million, which reflects the contribution and cancellation of the previously issued $37.5 million of Convertible Notes and accrued interest, (c) a valuation for GlycoMimetics equal to $8.0 million based on net cash at closing, and (d) a valuation for Crescent equal to $50.0 million plus $200 million of assumed proceeds in the Crescent Pre-Closing Financing, in each case as further described in the Merger Agreement. The following table summarizes the pro forma number of shares of common stock of the Combined Company outstanding following the consummation of the transactions:
| Pro Forma | ||||||||
| (Assuming GlycoMimetics Net Cash | ||||||||
| at Closing of $2.3 million) | ||||||||
| Equity Capitalization Summary (fully diluted basis) | Number of Shares | % | ||||||
| Upon Consummation of the Merger | Owned | Ownership | ||||||
| Crescent stockholders | 7,977,566 | 33.6 | % | |||||
| GlycoMimetics stockholders | 645,320 | 2.7 | % | |||||
| Investors participating in the Subscription Agreement(1) | 15,122,838 | 63.7 | % | |||||
| Total common stock of the combined company | 23,745,724 | 100.0 | % | |||||
(1) Includes 2,767,122 pre-funded warrants issued in the Crescent Pre-Closing Financing after reflecting the Exchange Ratio.
8
Consummation of the Merger was subject to certain closing conditions, including, among other things, (1) approval by GlycoMimetics stockholders of the issuance of GlycoMimetics common stock, including shares of GlycoMimetics common stock issuable upon conversion of the GlycoMimetics Series A Preferred Stock, and the other transactions proposed under the Merger Agreement, (2) approval by the requisite Crescent stockholders of the adoption and approval of the Merger Agreement and the transactions contemplated thereby, (3) Nasdaq’s approval of the listing application to be submitted in connection with the Merger, and (4) the effectiveness of this registration statement.
The employment agreements for GlycoMimetics employees include entitlement to change in control payments for certain executives, and severance for certain non-executives, the aggregate of which was treated as pre-Merger compensation expense of GlycoMimetics and was reflected as an increase to accrued expenses of GlycoMimetics, which was assumed by the Combined Company at the closing of the Merger to the extent they are not yet settled in cash beforehand by GlycoMimetics. Prior to the closing of the Merger, GlycoMimetics also has or expects to (i) discontinue its research and development activities, (ii) close out of all contracts related to GlycoMimetics’ worldwide clinical trial, and (iii) terminate its office space leases. Additionally, GlycoMimetics’ current Directors & Officers (“D&O”) policy was fully utilized at the closing of the Merger.
Private Financing Transaction — Subscription Agreement
In connection with the Merger, on February 14, 2025, Crescent and GlycoMimetics entered into the Subscription Agreement with certain institutional and accredited investors, pursuant to which such investors have agreed, subject to the terms and conditions of such agreements, to purchase immediately prior to the consummation of the Merger, 85,506,824 shares of Crescent common stock and 19,149,690 pre-funded warrants before giving effect to the Exchange Ratio, at a purchase price of $1.9110 per share and $1.9109 per warrant, for an aggregate purchase price of $200.0 million in a private placement, which includes $37.5 million proceeds received as of March 31, 2025 from the issuance of a convertible note and accrued interest. The closing of the Crescent Pre-Closing Financing was conditioned on the satisfaction or waiver of the conditions set forth in the Merger Agreement and occurred immediately prior to the closing of the Merger. At the closing of the Merger, based on the Exchange Ratio, the Crescent common stock and pre-funded warrants subscribed for were converted into the right to receive 12,355,716 shares of Crescent common stock and 2,767,122 pre-funded warrants. Shares of Crescent common stock and pre-funded warrants to purchase shares of Crescent common stock issued pursuant to the Subscription Agreement were converted into shares of GlycoMimetics common stock and pre-funded warrants to purchase shares of GlycoMimetics common stock at the closing of the Merger per the Merger Agreement.
| 2. | Basis of Presentation |
The unaudited pro forma condensed combined financial information has been prepared in accordance with Article 11 of Regulation S-X. The adjustments presented in the unaudited pro forma condensed combined financial information have been identified and presented to provide relevant information necessary for an understanding of the Combined Company upon consummation of the Merger. The unaudited pro forma condensed combined statement of operations data for the three months ended March 31, 2025 and the unaudited pro forma condensed combined statement of operations for the year ended December 31, 2024 give effect to the Merger as if it had been consummated on January 1, 2024. The unaudited pro forma condensed combined balance sheet as of March 31, 2025 gives effect to the Merger and combines the historical balance sheets of GlycoMimetics and Crescent as if the Merger had been consummated on March 31, 2025.
The unaudited pro forma condensed combined financial information is based on the assumptions and adjustments that are described in the accompanying notes. The pro forma adjustments are preliminary, subject to further revision as additional information becomes available and additional analyses are performed. Differences between these preliminary accounting conclusions and estimates and the final accounting conclusions and amounts may occur as a result of, among other reasons: (i) changes in initial assumptions in the determination of the accounting acquirer and related accounting, (ii) changes in the amount of GlycoMimetics’ net cash to be assumed at the closing date, and (iii) other changes in GlycoMimetics’ assets and liabilities, which are expected to be completed after the closing of the Merger, and these differences could have a material impact on the accompanying unaudited pro forma condensed combined financial information and the Combined Company’s future results of operations and financial position. Prior to the consummation of the Merger, GlycoMimetics effected a one-for-one-hundred reverse stock split of GlycoMimetics’ common stock, which became effective on June 13, 2025, which is reflected in the Exchange Ratio of 0.1445.
9
| 3. | Accounting for the Merger |
The unaudited pro forma condensed combined financial information gives effect to the Merger, which was accounted for under U.S. GAAP as a reverse recapitalization of GlycoMimetics by Crescent, as the transaction is, in essence, the issuance of equity for GlycoMimetics’ net assets, which will primarily consist of nominal operations and assets consisting of cash and nominal other assets immediately before the Merger. Under this method of accounting, Crescent was considered the accounting acquirer for financial reporting purposes. This determination is based on the expectations that, immediately following the Merger:
| · | Immediately prior to the Merger, Crescent is not a variable interest entity as it has sufficient equity at risk in order to fund its next development milestones; |
| · | Crescent stockholders own a substantial majority of the voting rights in the Combined Company through existing ownership and additional interest through the Subscription Agreement; |
| · | Crescent’s largest stockholder retains the largest interest in the Combined Company (24.9%); |
| · | Crescent designated the initial members of the Combined Company board of directors; |
| · | Crescent’s executive management team became the management of the Combined Company; and |
| · | The Combined Company was renamed “Crescent Biopharma, Inc.” |
As a result of Crescent being the accounting acquirer, Crescent’s assets and liabilities were recorded at their pre-combination carrying amounts. GlycoMimetics’ assets and liabilities were measured and recognized at their fair values as of the effective time of the Merger, which approximate the carrying value of the acquired other non-operating assets and liabilities, with no goodwill or other intangible assets recorded. Any difference between the consideration transferred and the fair value of the net assets of GlycoMimetics following the determination of the actual consideration transferred for GlycoMimetics was reflected as an adjustment to additional paid-in capital. For periods prior to closing of the Merger, the historical financial statements of Crescent became the historical financial statements of the Combined Company.
| 4. | Shares of GlycoMimetics Common Stock, Convertible Preferred Stock, Options, and Warrants Issued to Crescent Stockholders upon Closing of the Merger |
At the closing of the Merger, all outstanding shares of Crescent common stock, on a fully-diluted basis, were exchanged for shares of GlycoMimetics common stock based on the Exchange Ratio of 0.1445 shares of GlycoMimetics common stock for each share of Crescent common stock, determined in accordance with the terms of the Merger Agreement. Each share of Crescent preferred stock was converted into the right to receive a number of shares of GlycoMimetics Series A Preferred Stock, equal to the Exchange Ratio divided by 1,000 (and each such share of GlycoMimetics Series A Preferred Stock has the right to convert into 1,000 shares of GlycoMimetics common stock, subject to certain limitations). The number of shares of GlycoMimetics common stock that GlycoMimetics issued to Crescent’s stockholders assumed GlycoMimetics net cash at the closing of the Merger is $2.3 million and was determined as follows:
| Shares of Crescent common stock outstanding as of March 31, 2025(1) (2) | 6,169,753 | |||
| Shares of Crescent common stock to be issued upon conversion of Crescent convertible preferred stock | 20,000,000 | |||
| Shares of Crescent common stock to be issued upon exercise of Crescent stock options(1)(3) | 26,004,515 | |||
| Shares of Crescent common stock to be issued upon vesting of Crescent restricted stock units(4) | 3,033,820 | |||
| Shares of Crescent common stock to be issued in connection with the Purchase Agreements, see Note 5(c) | 85,506,824 | |||
| Crescent pre-funded warrants to be issued in connection with the Purchase Agreements, see Note 5(c) | 19,149,690 | |||
| Total Crescent fully diluted shares prior to the closing of the merger | 159,864,602 | |||
| Exchange Ratio | 0.1445 | |||
| Fully diluted shares to be issued to Crescent stockholders and Investors participating in Purchase Agreements upon closing of the merger | 23,100,404 |
| (1) | On April 14, 2025, as a result of Dr. Violin no longer serving as Chief Executive Officer and President, Crescent repurchased 885,045 shares of unvested restricted stock at the price Dr. Violin originally purchased such shares, and Dr. Violin agreed to forfeit 3,717,141 unvested stock options. |
10
| (2) | Represents shares of Crescent common stock outstanding as of March 31, 2025, including 822,605 shares of unvested Crescent restricted stock and 5,618 shares issued with respect to stock options exercised during the three months ended March 31, 2025. |
| (3) | Represents the outstanding stock options as of March 31, 2025 to acquire Crescent common stock and stock options granted during April and May 2025 to acquire Crescent common stock net of cancellations. |
| (4) | Represents the outstanding restricted stock units as of March 31, 2025 to acquire Crescent common stock. |
| 5. | Adjustments to Unaudited Pro Forma Condensed Combined Balance Sheet as of March 31, 2025 |
The pro forma notes and adjustments, based on preliminary estimates that could change materially as additional information is obtained, are as follows:
Pro forma notes:
5(A) Derived from the unaudited condensed consolidated balance sheet of GlycoMimetics as of March 31, 2025.
5(B) Derived from the unaudited condensed balance sheet of Crescent as of March 31, 2025.
Pro forma Balance Sheet Transaction Accounting Adjustments:
5(a) To reflect incremental compensation expense of $0.9 million related to severance and retention payments resulting from pre-existing employment agreements or from approval from the GlycoMimetics Board that were incurred upon the closing of the Merger. This amount is in addition to existing severance and retention payments of $1.7 million owed and unpaid by GlycoMimetics on March 31, 2025. The pro forma adjustment is reflected as a decrease in cash of $2.6 million for the severance payments made subsequent to March 31, 2025, a decrease to accrued expenses of $1.7 million and an increase to accumulated deficit of $0.9 million.
5(b) To reflect the exchange of all outstanding shares of Crescent preferred stock, with a carrying amount of $4.0 million, into newly created GlycoMimetics Series A Preferred Stock at closing of the Merger, with the terms of GlycoMimetics Series A Preferred Stock resulting in classification within stockholders’ equity.
5(c) To reflect the issuance of 12,355,716 shares of Crescent common stock and 2,767,122 pre-funded warrants, after giving effect to the Exchange Ratio, pursuant to the Subscription Agreement, for an aggregate purchase price of $200.0 million (which includes $37.5 million of gross proceeds previously received by Crescent from the issuance of its Convertible Notes). The aggregate proceeds are net less than $0.1 million of debt issuance costs and include accrued interest of $2.0 million as of March 31, 2025 adjusted through accumulated deficit (see Note 6(d)), for net proceeds prior to transaction costs of $160.5 million. The issuance of shares in connection with the Subscription Agreement are recorded as the issuance of Crescent common stock at par value, with the remaining amount recorded to additional paid-in-capital.
11
The net cash proceeds received prior to direct and incremental transaction costs from the Subscription Agreement and corresponding adjustment to additional paid-in-capital upon close of the Merger is determined as follows (in thousands):
| Aggregate purchase price of Purchase Agreement | $ | 200,000 | ||
| Net proceeds previously received from issuance of convertible note as of March 31, 2025 | (37,482 | ) | ||
| Debt issuance costs recorded as part of issuance of convertible note as of March 31, 2025 | (19 | ) | ||
| Accrued interest payable as part of issuance of convertible note as of March 31, 2025, see Note 6(d) | (1,961 | ) | ||
| Net proceeds received prior to direct and incremental transaction costs from the Purchase Agreement upon close of the Merger | $ | 160,538 | ||
| Issuance of Crescent common stock and pre-funded warrants at par value upon close of the Merger | (12 | ) | ||
| Additional paid-in capital related to the issuance of Crescent common stock and pre-funded warrants upon close of the Merger (excluding Crescent common stock issued in connection with conversion of convertible note) | $ | 160,526 |
5(d) To reflect estimated transaction costs of $15.8 million, not yet reflected in the historical financial statements, that are expected to be incurred by Crescent in connection with the Merger, and $2.8 million reflected in the historical financial statements as deferred offering costs, such as advisory, legal and auditor fees, as a reduction in cash and a reduction in other assets in the unaudited pro forma condensed combined balance sheet. As the Merger was accounted for as a reverse recapitalization equivalent to the issuance of equity for the net assets, primarily cash, of GlycoMimetics, these direct and incremental costs are treated as a reduction of the net proceeds received within additional paid-in capital.
5(e) To reflect estimated transaction costs of $2.9 million, not yet reflected in the historical financial statements, which are expected to be incurred by GlycoMimetics in connection with the Merger, such as advisory, legal and auditor fees and including the estimated $1.6 million cost of a D&O tail policy, as a reduction in cash and a reduction in accumulated deficit of $2.9 million in the unaudited pro forma condensed combined balance sheet.
5(f) To derecognize $0.4 million of GlycoMimetics’ prepaid expenses and other current assets consisting of $0.1 million of prepaid expenses related to software that were not utilized and $0.3 million of prepaid insurance primarily related to the current GlycoMimetics’ D&O insurance policy that was fully utilized at the closing of the Merger.
5(g) To reflect the derecognition of GlycoMimetics’ other accrued expenses that were paid prior to the closing of the Merger.
5(h) To reflect the one-time stock compensation expense of less than $0.1 million in general and administrative expense related to the acceleration of stock options pursuant to a modification to accelerate vesting of certain stock options per the terms of the Merger Agreement.
5(i) To reflect the recapitalization of Crescent and the derecognition of accumulated other comprehensive income and the accumulated deficit of GlycoMimetics, which is reversed to additional paid-in capital.
The derecognition of accumulated deficit of GlycoMimetics of $500.9 million is determined as follows (in thousands):
| Accumulated deficit of GlycoMimetics as of March 31, 2025 | $ | 496,708 | ||
| Compensation expense related to GlycoMimetics severance and retention payments, see Note 5(a) | 880 | |||
| Estimated transaction costs of GlycoMimetics, see Note 5(e) | 2,886 | |||
| Derecognition of GlycoMimetics prepaid expenses, see Note 5(f) | 378 | |||
| Pre-merger stock-based compensation expense for GlycoMimetics’ accelerated awards, see Note 5(h) | 31 | |||
| Total adjustment to derecognize the accumulated deficit of GlycoMimetics | $ | 500,883 |
| 6. | Adjustments to Unaudited Pro Forma Condensed Combined Statement of Operations and Comprehensive Loss |
The pro forma notes and adjustments, based on preliminary estimates that could change materially as additional information is obtained, are as follows:
Pro forma notes:
6(A) Derived from the unaudited condensed consolidated statements of operations and comprehensive loss of GlycoMimetics for the three months ended March 31, 2025.
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6(B) Derived from the unaudited condensed statement of operations and comprehensive loss of Crescent for the three months ended March 31, 2025.
6(C) Derived from the audited consolidated statements of operations and comprehensive loss of GlycoMimetics for the year ended December 31, 2024.
6(D) Derived from the audited statement of operations and comprehensive loss of Crescent for the period September 19, 2024 (inception) to December 31, 2024.
Crescent and GlycoMimetics did not record any provision or benefit for income taxes during the year ended December 31, 2024 because each company incurred a pre-tax loss in 2024 and each company maintained a full valuation allowance on its deferred tax assets.
Crescent and GlycoMimetics did not record any provision or benefit for income taxes during the three months ended March 31, 2025 because each company expects to incur a pre-tax loss in 2025 and each company maintained a full valuation allowance on its deferred tax assets. Accordingly, no pro forma adjustments have an impact on associated income tax.
Pro forma Statements of Operations Transaction Accounting Adjustments:
6(a) To reflect incremental compensation expense related to severance and retention payments recorded in general and administrative expenses of $0.9 million, resulting from pre-existing employment agreements or from approval from the GlycoMimetics Board that were incurred upon the closing of the Merger, assuming that the adjustment described in Note 5(a) was made on January 1, 2024.
6(b) To reflect the derecognition of GlycoMimetics’ prepaid expenses and other current assets of $0.4 million related to $0.1 million of software that was not utilized, and prepaid insurance of $0.3 million primarily related to the current GlycoMimetics D&O policy that was fully utilized at the closing of the Merger, assuming the adjustment made in Note 5(f) was made on January 1, 2024.
6(c) To reflect the one-time stock compensation expense of less than $0.1 million in general and administrative expense acceleration of stock options pursuant to a modification to accelerate vesting of certain stock options assuming the adjustment made in Note 5(h) was made on January 1, 2024.
6(d) To reflect Crescent’s interest expense related to its Convertible Notes that is recorded in its historical financial statements, to be derecognized in the unaudited pro forma condensed combined statement of operations of $1.1 million for the three months ended March 31, 2025 and $0.9 million for the period from September 19, 2024 (inception) to December 31, 2024, assuming the adjustment described in Note 5(c) was made on January 1, 2024.
6(e) The pro forma combined basic and diluted net loss per share has been adjusted to reflect the pro forma net loss for the three months ended March 31, 2025 and the twelve months ended December 31, 2024. In addition, the number of shares used in calculating the pro forma combined basic and diluted net loss per share has been adjusted to reflect the total number of shares of common stock of the Combined Company for the respective periods, after giving effect to the one-for-one-hundred reverse stock split on GlycoMimetics’ common stock reflected in the Exchange Ratio of 0.1445. Pro forma weighted average shares outstanding includes the pre-funded warrants related to the Subscription Agreement as the exercise price is negligible and they are fully vested and exercisable. Shares of GlycoMimetics Series A Preferred Stock share the same characteristics as common stock and have no substantive preference attributed to them and, accordingly, have been considered a class of common stock in the computation of net loss per share regardless of their legal form. Net loss is allocated to common stock based on its proportional ownership on an as-converted basis. Net loss is not allocated to participating securities as they do not have an obligation to fund losses.
13
The pro forma weighted average shares have been calculated as follows:
| March 31, 2025 Basic |
December 31, 2024 Basic |
|||||||
| and Diluted | and Diluted | |||||||
| Net loss attributable to common stockholders | $ | (13,944 | ) | $ | (47,809 | ) | ||
| Net loss attributable to Series A non-voting convertible preferred stockholders | $ | (2,436 | ) | $ | (8,374 | ) | ||
| Historical weighted average number of GlycoMimetics common shares outstanding | 645,223 | 644,772 | ||||||
| Shares of GlycoMimetics common stock issued to Crescent stockholders upon close of Merger, assuming consummation of the Merger as of January 1, 2024(1) | 15,894,689 | 15,894,689 | ||||||
| Pro forma combined weighted average number of common shares outstanding | 16,539,912 | 16,539,461 | ||||||
| Pro forma combined weighted average number of shares of Series A Preferred Stock outstanding | 2,890 | 2,890 | ||||||
| Net loss per share attributable to common stockholders, basic and diluted | $ | (0.84 | ) | $ | (2.89 | ) | ||
| Net loss per share attributable to Series A non-voting convertible preferred stockholders, basic and diluted | $ | (843.02 | ) | $ | (2,897.58 | ) | ||
| (1) | Represents the shares of GlycoMimetics common stock and pre-funded warrants issued to Crescent stockholders at the closing of the Merger, excluding (i) the outstanding and unvested Crescent restricted stock awards and units of Crescent common stock at the closing of the Merger that were converted to the right to receive 557,252 shares of the GlycoMimetics common stock and 3,757,652 options to purchase shares of GlycoMimetics common stock after reflecting the Exchange Ratio and (ii) the outstanding shares of Crescent preferred stock that were exchanged for 2,890 shares of GlycoMimetics Series A Preferred Stock. The 557,252 shares of GlycoMimetics common stock issued in exchange for shares of Crescent restricted stock awards and units and 3,757,652 options to purchase shares of GlycoMimetics common stock issued in exchange for options to purchase shares of Crescent common stock are subject to the same vesting and forfeiture conditions, applicable, as they were prior to the Merger. |
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Please see below selected financial data presenting selected share and per share data reflecting the effect of the reverse stock split on all periods previously reported. The selected financial data is derived from the consolidated financial statements included in the GlycoMimetics Annual Report on Form 10-K filed with the SEC on February 13, 2025 and Quarterly Report on Form 10-Q filed with the SEC on May 14, 2025, as adjusted to reflect the Exchange Ratio of 0.1445, which is reflective of a one-for-one-hundred reverse stock split, for all periods presented.
| Years Ended | ||||||||
| AS REPORTED | December 31, | |||||||
| (in thousands, except for per share amounts) | 2024 | 2023 | ||||||
| Weighted average number of GlycoMimetics common shares outstanding, basic and diluted | 64,477,249 | 63,342,465 | ||||||
| Common shares outstanding at period end | 64,483,958 | 64,393,744 | ||||||
| Net loss attributable to common stockholders | $ | (37,879 | ) | $ | (36,899 | ) | ||
| Net loss per share, basic and diluted | $ | (0.59 | ) | $ | (0.58 | ) | ||
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2025 | 2024 | |||||||
| Weighted average number of GlycoMimetics common shares outstanding, basic and diluted | 64,522,257 | 64,457,233 | ||||||
| Common shares outstanding at period end | 64,532,091 | 64,450,835 | ||||||
| Net loss attributable to common stockholders | $ | (2,344 | ) | $ | (10,737 | ) | ||
| Net loss per share, basic and diluted | $ | (0.04 | ) | $ | (0.17 | ) | ||
| AS ADJUSTED FOR ONE-FOR-ONE-HUNDRED REVERSE STOCK | Years Ended | |||||||
| SPLIT (REFLECTED IN EXCHANGE RATIO OF 0.1445) | December 31, | |||||||
| (in thousands, except for per share amounts) | 2024 | 2023 | ||||||
| Weighted average number of GlycoMimetics common shares outstanding, basic and diluted | 644,772 | 633,425 | ||||||
| Common shares outstanding at period end | 644,840 | 643,937 | ||||||
| Net loss attributable to common stockholders | $ | (37,879 | ) | $ | (36,899 | ) | ||
| Net loss per share, basic and diluted | $ | (58.75 | ) | $ | (58.25 | ) | ||
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2025 | 2024 | |||||||
| Weighted average number of GlycoMimetics common shares outstanding, basic and diluted | 645,223 | 644,572 | ||||||
| Common shares outstanding at period end | 645,321 | 644,508 | ||||||
| Net loss attributable to common stockholders | $ | (2,344 | ) | $ | (10,737 | ) | ||
| Net loss per share, basic and diluted | $ | (3.63 | ) | $ | (16.66 | ) | ||
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