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FORM 10-Q
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1999
Commission File Number 0-15313
BIO-TECHNOLOGY GENERAL CORP.
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(Exact name of registrant as specified in its charter)
Delaware 13-3033811
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
70 Wood Avenue South, Iselin, New Jersey 08830
(Address of principal executive offices)
(732) 632-8800
(Registrant's telephone number, including area code)
Former address: Not Applicable
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(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [_]
Indicate the number of shares outstanding of each of the issuer's classes of
Common Stock, as of the latest practicable date.
Common Stock, par value $.01 per share, outstanding as of May 3, 1999:
52,182,351
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<PAGE>
INDEX
Page
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Part I. Financial Information
Item 1. Financial Statements:
Consolidated Balance Sheets at
March 31, 1999 and December 31, 1998............... 3
Consolidated Statements of Operations
for the three months ended
March 31, 1999 and 1998............................ 4
Consolidated Statement of Changes in
Stockholders' Equity for the three
months ended March 31, 1999........................ 5
Consolidated Statements of Cash Flows
for the three months ended
March 31, 1999 and 1998............................ 6
Notes to Consolidated Financial Statements............. 7
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................................... 8
Part II. Other Information
Item 5. Other Information..................................... 15
Item 6. Exhibits and Reports on Form 8-K...................... 15
2
<PAGE>
PART I. FINANCIAL INFORMATION
CONSOLIDATED BALANCE SHEETS
(In thousands)
<TABLE>
<CAPTION>
March 31, 1999 December 31, 1998
(Unaudited)
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ASSETS
Current Assets:
<S> <C> <C>
Cash and cash equivalents $ 7,741 $ 9,431
Short-term investments 63,298 37,602
Accounts receivable - trade 48,246 52,429
- other 515 15,968
Inventories 6,128 4,978
Deferred income taxes 3,952 5,407
Prepaid expenses and other current assets 460 344
--------- ---------
Total current assets 130,340 126,159
Severance pay funded 2,286 2,233
Property and equipment, net 9,539 9,442
Intangibles, net 1,513 1,728
Patents, net 341 404
Other assets 2,530 2,629
--------- ---------
Total assets $ 146,549 $ 142,595
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Short-term bank loans $ 388 $ 288
Accounts payable 4,979 5,359
Other current liabilities 10,201 10,153
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Total current liabilities 15,568 15,800
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Long-term liabilities 3,962 3,818
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Stockholders' equity:
Preferred stock - $.01 par value; 4,000,000
shares authorized; no shares issued -- --
Common stock - $.01 par value; 150,000,000 shares
authorized; issued: 52,087,000 (51,934,000 at
December 31, 1998) 521 519
Capital in excess of par value 161,846 161,164
Deficit (32,390) (36,396)
Less - treasury stock at cost, 83,000 shares (340) (340)
Accumulated other comprehensive income (2,618) (1,970)
--------- ---------
Total stockholders' equity 127,019 122,977
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Total liabilities and stockholders' equity $ 146,549 $ 142,595
========= =========
</TABLE>
The accompanying notes are an integral part
of these consolidated balance sheets.
3
<PAGE>
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(in thousands except per share data)
Three Months Ended
March 31,
1999 1998
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Revenues:
Product sales $15,867 $15,736
Contract fees 2,906 1,004
Other revenues 497 150
Interest income 958 550
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20,228 17,440
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Expenses:
Research and development 4,618 5,256
Cost of product sales 2,254 2,518
General and administrative 2,664 2,052
Marketing and sales 4,559 2,647
Commissions and royalties 321 126
Interest and finance 3 21
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14,419 12,620
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Income before income taxes 5,809 4,820
Income taxes 1,803 1,455
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Net income $ 4,006 $ 3,365
======= =======
Earnings per common share:
Basic $ 0.08 $ 0.07
======= =======
Diluted $ 0.08 $ 0.07
======= =======
Weighted average number of common
and common equivalent shares:
Basic 51,940 47,318
======= =======
Diluted 52,652 50,941
======= =======
The accompanying notes are an integral part
of these consolidated statements.
4
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(UNAUDITED)
(in thousands)
Accumulated
Common Stock Capital in Other Total
Par Excess of Treasury Comprehensive Stockholders'
Shares Value Par Value Deficit Stock Income Equity
(Loss)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1998 51,934 $519 $161,164 $(36,396) $(340) $(1,970) $122,977
Comprehensive income:
Net income for three months
ended March 31, 1999............ 4,006 4,006
Unrealized (loss) on marketable
securities, net................. (648) (648)
-----
Total comprehensive income: 3,358
-----
Issuance of common stock........... 62 1 322 323
Exercise of stock options ......... 91 1 360 361
------ ---- -------- --------- ------ -------- --------
Balance, March 31, 1999 52,087 $521 $161,846 $(32,390) $(340) $(2,618) $127,019
====== ==== ======== ========= ====== ======== ========
</TABLE>
The accompanying notes are an integral part
of this consolidated statement.
5
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Three Months
Ended March 31,
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1999 1998
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Cash flows from operating activities:
<S> <C> <C>
Net income $ 4,006 $ 3,365
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 825 714
Provision for severance pay 144 2
Gain (loss) on sales of short-term investments 16 (35)
Gain on sales of fixed assets (7) --
Deferred income taxes 1,455 1,427
Common stock as payment for services 15 15
Changes in: receivables 19,636 (5,644)
inventories (1,150) (571)
prepaid expenses and other current assets (116) (75)
accounts payable (380) (387)
other assets 20 (9)
other current liabilities 148 1,184
-------- --------
Net cash provided by (used in) operating activities 24,612 (14)
-------- --------
Cash flows from investing activities:
Short-term investments (31,386) (11,417)
Capital expenditures (588) (310)
Severance pay funded (53) (10)
Proceeds from sales of fixed assets 30 --
Proceeds from sales of short-
term investments 5,026 1,375
-------- --------
Net cash used in investing activities (26,971) (10,362)
-------- --------
Cash flows from financing activities:
Proceeds from issuance of common stock 669 4,337
-------- --------
Net (decrease) increase in cash and cash equivalents (1,690) (6,039)
Cash and cash equivalents at beginning of year 9,431 9,329
-------- --------
Cash and cash equivalents at end of period $ 7,741 $ 3,290
======== ========
Supplementary Information
Other information:
Income tax paid $ 344 $ 25
</TABLE>
The accompanying notes are an integral part
of these consolidated statements.
6
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1: Statement on Adjustments
In the opinion of management, the condensed consolidated financial statements
include all adjustments, consisting of only normal recurring accruals,
considered necessary for a fair presentation. Due to fluctuations in quarterly
revenues earned, operating results for interim periods are not necessarily
indicative of the results that may be expected for the full year. The accounting
policies continue unchanged from December 31, 1998. For further information,
refer to the Consolidated Financial Statements and footnotes thereto included in
the Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1998.
7
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Three months ended March 31, 1999
compared with three months ended March 31, 1998
Statements in this Quarterly Report on Form 10-Q concerning the Company's
business outlook or future economic performance; anticipated profitability,
revenues, expenses or other financial items; introductions and advancements in
development of products, and plans and objectives related thereto; and
statements concerning assumptions made or expectations as to any future events,
conditions, performance or other matters, are "forward-looking statements" as
that term is defined under the Federal Securities Laws. Forward- looking
statements are subject to risks, uncertainties and other factors which could
cause actual results to differ materially from those stated in such statements.
Such risks, uncertainties and factors include, but are not limited to, changes
and delays in product development plans and schedules, changes and delays in
product approval and introduction, customer acceptance of new products, changes
in pricing or other actions by competitors, patents owned by the Company and its
competitors, changes in healthcare reimbursement, risk of operations in Israel,
risk of product liability, governmental regulation, dependence on third parties
to manufacture products and commercialize products, general economic conditions,
as well as other risks detailed in the Company's filings with the Securities and
Exchange Commission, including the Company's Annual Report on Form 10-K for the
year ended December 31, 1998.
OVERVIEW
The Company is engaged in the research, development, manufacture and
marketing of biopharmaceutical products. Through a combination of internal
research and development, acquisitions, collaborative relationships and
licensing arrangements, BTG has developed a portfolio of therapeutic products,
including six products that have received regulatory approval for sale, of which
five are currently being marketed. The Company seeks both broad markets for its
products as well as specialized markets where it can seek Orphan Drug status and
potential marketing exclusivity.
The Company was founded in 1980 to develop, manufacture and market novel
therapeutic products. The Company's overall administration, licensing, human
clinical studies, marketing activities, quality assurance and regulatory affairs
are primarily coordinated at the Company's headquarters in Iselin, New Jersey.
Pre-clinical studies, research and development activities and manufacturing of
the Company's genetically engineered products are primarily carried out through
its wholly owned subsidiary in Rehovot, Israel.
RESULTS OF OPERATIONS
The following tables set forth for the fiscal periods indicated the
percentage of revenues represented by certain items reflected on the Company's
statement of operations.
8
<PAGE>
Three Months Ended
March 31,
-----------------
1999 1998
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Revenues:
Product sales 78.4% 90.2%
Contract fees 14.4 5.8
Other revenues 2.5 0.9
Interest income 4.7 3.1
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Total 100.0% 100.0%
====== ======
Expenses:
Research and development 22.8 30.1
Cost of product sales 11.1 14.5
General and administrative 13.2 11.8
Marketing and sales 22.6 15.2
Commissions and royalties 1.6 0.7
Interest and finance -- 0.1
------ ------
Total 71.3 72.4
------ ------
Income before income taxes 28.7 27.6
Income taxes 8.9 8.3
------ ------
Net income 19.8% 19.3%
====== ======
The Company has historically derived its revenues from product sales as
well as from collaborative arrangements with third parties, under which the
Company may earn up-front contract fees, may receive funding for additional
research (including funding from the Chief Scientist of the State of Israel), is
reimbursed for producing certain experimental materials, may be entitled to
certain milestone payments, may sell product at specified prices, and may
receive royalties on sales of product. The Company anticipates that product
sales will constitute the majority of its revenues in the future. Revenues have
in the past displayed and will in the immediate future continue to display
significant variations due to changes in demand for its products, new product
introductions by the Company and its competitors, the obtaining of new research
and development contracts and licensing arrangements, the completion or
termination of such contracts and arrangements, the timing and amounts of
milestone payments, and the timing of regulatory approvals of products.
The following table summarizes the Company's sales of its commercialized
products as a percentage of total product sales for the periods indicated:
9
<PAGE>
Three Months Ended
March 31,
------------------------
1999 1998
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Oxandrin................................. 42.4% 59.3%
Bio-Tropin............................... 31.7 27.4
BioLon................................... 14.6 9.5
Delatestryl.............................. 9.9 1.4
Other.................................... 1.4 2.4
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Total............................. 100.0% 100.0%
====== ======
The Company believes that its product mix will change significantly as it
continues to focus on: (i) increasing market penetration of its existing
products; (ii) expanding into new markets; and (iii) commercializing additional
products.
As previously announced, as a result of a slowing in the rate of increase
of Oxandrin prescriptions, Olsten Health Services, Inc., BTG's distributor for
Oxandrin, has decided to adjust future purchases to effect an adjustment in
inventory. The timing and magnitude of the adjustment are the subject of ongoing
discussions between Olsten and BTG, and will depend in large part on end-user
demand for Oxandrin. As a result, purchases of Oxandrin by Olsten are expected
to be lower than in 1998. The Company expects during 1999 to introduce Oxandrin
to promote weight gain in patients with involuntary weight loss and pressure
ulcers. Successful penetration of this new market could lead to a more rapid
rate of Oxandrin prescription growth.
The following table summarizes the Company's U.S. and international product
sales as a percentage of total product sales for the period indicated:
Three Months Ended
March 31,
----------------------
1999 1998
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United States..................... 51.9% 60.5%
International..................... 48.1 39.5
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Total...................... 100.0% 100.0%
====== ======
Comparison of Three Months Ended March 31, 1999 and March 31, 1998
Revenues. Total revenues increased 16% in the first quarter of 1999 to
$20,228,000 from $17,440,000 in the first quarter of 1998. Product sales
slightly increased by $131,000, or 1%, in the first quarter of 1999 from the
comparable prior period, as increased sales of human growth hormone ("hGH"),
BioLon and Delatestryl to BTG's distributors were almost entirely offset by
decreased sales of Oxandrin. Oxandrin sales to Olsten Corporation ("Olsten"),
the Company's wholesale and retail distributor of Oxandrin in the United States,
decreased $2,602,000, or 28%, in the first quarter of 1999 compared to the first
quarter of 1998. The decrease in sales to Olsten was due to Olsten's change in
policy to reduce the amount of Oxandrin inventory it carries; however, end-user
sales of Oxandrin by Olsten increased in the first quarter of 1999 compared to
the first quarter of 1998 as well as the fourth quarter of 1998. Product sales
of hGH,
10
<PAGE>
BioLon and Delatestryl increased $712,000, $812,000 and $1,355,000 or 17%, 54%
and 639%, respectively. The increase in sales of hGH were primarily due to
increased sales in Japan resulting from Sumitomo Pharmaceutical Co., Ltd.
commencing distribution of the Company's hGH in Japan in January 1999. The
increase in sales of Delatestryl, which is also distributed on behalf of the
Company by Olsten, is primarily the result of the U.S. Food and Drug
Administration stopping production of a competing injectable testosterone
product currently used to treat men with hypogonadism (testosterone deficiency).
Contract fees and other revenues are primarily generated from licensing and
distribution arrangements and partial research and development funding by the
Chief Scientist of the State of Israel. Contract fees represented approximately
14% of total revenues in the first quarter of 1999 compared to 6% in the first
quarter of 1998. Of the contract fees earned in the first quarter of 1999,
$2,596,000, or 89% of total contract fees, was earned in respect of Insulin and
$175,000, or 6% of total contract fees, was earned in respect of the Company's
Vitamin D Silkis product. Of the contract fees earned in the three months ended
March 31, 1998, $500,000, or 50% of total contract fees, was earned in respect
of the license of distribution rights for BioLon in the United States and
$400,000, or 40% of total contract fees, was earned in respect of the Company's
hepatitis-B vaccine. Interest income increased $408,000, or 74%, over the
comparable prior period primarily as a result of increased cash balances
(including short-term investments) resulting mainly from exercise of warrants
(which expired December 31, 1998) and options and cash flow from operations
subsequent to March 31, 1998.
Research and Development Expense. Research and development expense
decreased 12% in the first quarter of 1999 to $4,618,000 from $5,256,000 in the
first quarter of 1998. The greater research and development expenditures in the
three month ended March 31, 1998 is mainly attributable to the Company's Phase
III clinical trial for its superoxide dismutase product. The Phase III clinical
trial, which was terminated in the second quarter of 1998, is now being
continued as a Phase II trial.
Cost of Product Sales. Cost of product sales decreased $264,000, or 10%, in
the first quarter of 1999 to $2,254,000 from $2,518,000 in the first quarter of
1998. Cost of product sales as a percentage of product sales decreased to 14.2%
as compared to 16.0% in the comparable period last year. Cost of product sales
decreased, both in absolute terms and as a percentage of revenues, primarily as
a result of increased sales of human growth hormone and manufacturing
efficiencies achieved at higher volumes, principally with BioLon. Oxandrin and
human growth hormone have a relatively low cost of manufacture as a percentage
of product sales, while BioLon has the highest cost to manufacture as a
percentage of product sales. Cost of product sales as a percentage of product
sales varies from year to year and quarter to quarter depending on the quantity
and mix of products sold.
General and Administrative Expense. General and administrative expense
increased 30% in the first quarter of 1999 to $2,664,000 versus $2,052,000 in
the comparable prior period. As a percentage of revenues, general and
administrative expense increased to approximately 13.2% of revenues in the first
quarter of 1999 versus 11.8% of revenues in the comparable prior year period.
The increase derived mainly from legal fees resulting from the reactivation in
the fourth quarter of 1998 of the Company's declaratory judgment action against
Genentech in respect of the Company's hGH in the United States.
Marketing and Sales Expense. Marketing and sales expense increased 72% in
the first quarter of 1999 to $4,559,000 from $2,647,000 for the prior year
period. As a percentage of revenues, marketing and sales expense increased to
approximately 22.6% from 15.2% for the first quarter of 1998. These expenses
primarily related to the sales and marketing force in the United States that the
Company established to promote distribution of Oxandrin in the United States.
The increase was primarily due to additional marketing and sales expenses,
primarily resulting from increased personnel and increased advertising,
promotional and market research activities.
11
<PAGE>
Commissions and Royalties. Commissions and royalties were $321,000 in
the first quarter of 1999, as compared to $126,000 in the first quarter of 1998.
These expenses consist primarily of royalties to entities from which the Company
licensed certain of its products and to the Chief Scientist.
Income Taxes. Provision for income taxes for the three months ended
March 31, 1999 was $1,803,000, representing approximately 31% of income before
income taxes as compared to $1,455,000, or 30% of income before income taxes, in
the first quarter of 1997. The Company's consolidated tax rate differs from the
statutory rate because of Israeli tax benefits, research and experimental tax
credits and similar items which reduce the tax rate.
Earnings per Common Share. The Company had approximately 4.6 million
and 1.7 million additional basic and diluted weighted average shares outstanding
for the three month period ended March 31, 1999, as compared to the same period
in 1998, respectively. The increased number of basic shares was primarily the
result of the issuance, subsequent to March 31, 1998, of approximately 3,146,000
shares upon the exercise of warrants that expired on December 31, 1998. The
increase in the number of diluted shares was the result of the increased number
of shares outstanding, partially offset by fewer outstanding options being
considered common equivalent shares because their exercise price was above the
average fair market value of the Common Stock for the first quarter of 1999,
which average fair market value was lower than in the first quarter of 1998.
LIQUIDITY AND CAPITAL RESOURCES
The Company's working capital at March 31, 1999 was $114,772,000 as
compared to $110,359,000 at December 31, 1998.
The cash flows of the Company have fluctuated significantly due to the
impact of net income and losses, capital spending, working capital requirements,
the issuance of Common Stock and other financing activities. The Company expects
that cash flow in the near future will be primarily determined by the levels of
net income and financings, if any, undertaken by the Company. Net cash decreased
by $1,690,000 and $6,039,000 in the three months ended March 31, 1999 and 1998,
respectively; however, short-term investments increased $25,696,000 and
$10,141,000, respectively, in these periods.
Net cash provided by (used in) operating activities was $24,612,000 and
$(14,000) in the three months ended March 31, 1999 and 1998, respectively. Net
income was $4,006,000 and $3,365,000 in the same periods, respectively. In the
three months ended March 31, 1999, net cash provided by operating activities was
greater than net income primarily because of changes in receivables of
$19,636,000, deferred income taxes of $1,455,000 and depreciation and
amortization of $825,000 partially offset by changes in prepaid expenses and
other assets of $1,150,000. The decrease in accounts receivable is primarily
attributable to the decrease in accounts receivable-other consisting of proceeds
due from the exercise of warrants that expired on December 31, 1998, which
proceeds were received in January 1999. In the three months ended March 31,
1998, net cash provided by operating activities was less than net income,
primarily because of an increase in accounts receivable and other and inventory
of $5,644,000 and $571,000, respectively, and a decrease in accounts payable of
$387,000, partially offset by an increase in other current liabilities of
$1,184,000, deferred income taxes of $1,427,000 and depreciation and
amortization of $714,000.
Net cash used in investing activities was $26,971,000 and $10,362,000
in the three months ended March 31, 1999 and 1998, respectively. Net cash used
in investing activities included capital expenditures of $588,000 and $310,000
in these periods, respectively, primarily for laboratory and manufacturing
equipment. The remainder of the net cash used in investing activities was
primarily for purchases and sales of short-term investments.
12
<PAGE>
Net cash provided by financing activities was $699,000 and $4,337,000
in the three months ended March 31, 1999 and 1998, respectively, which are net
proceeds from issuances of Common Stock, primarily as a result of exercise of
stock options.
The Company has agreed to purchase a manufacturing facility in Israel
for approximately $6.5 million. The Company will initially locate its production
activities for Bio-Hep-B and Fibrimage at this new facility, and will thereafter
move the remainder of its production activities to this facility. The Company
expects the initial production facility will be ready by the end of 2000. The
Company expects it will cost approximately $30 million to complete the
production facility (excluding the cost of purchasing the facility).
The Company maintains its funds in money market funds, commercial paper
and other liquid debt instruments.
The Company manages its Israeli operations with the objective of
protecting against any material net financial loss in U.S. dollars from the
impact of Israeli inflation and currency devaluations on its non-U.S. dollar
assets and liabilities. The cost of the Company's operations in Israel, as
expressed in dollars, is influenced by the extent to which any increase in the
rate of inflation in Israel is not offset (or is offset on a lagging basis) by a
devaluation of the Israeli Shekel in relation to the U.S. dollar. The rate of
inflation (as measured by the consumer price index) was approximately 7% in 1997
and 9% in 1998, while the Shekel was devalued by approximately 9% and 18%,
respectively. In the three months ended March 31, 1999 the consumer price index
decreased at the rate of approximately 1% while the Shekel's value in relation
to the U.S. dollar increased by approximately 3%. As a result, for those
expenses linked to the Israeli Shekel, such as salaries and rent, this resulted
in corresponding decreases in these costs in U.S. dollars in 1997 and 1998, but
an increase in these costs in U.S. dollar terms in the first quarter of 1999. To
the extent that expenses in Shekels exceed BTG's revenues in Shekels (which to
date have consisted primarily of research funding from the Chief Scientist and
product sales in Israel), the devaluations of Israeli currency have been and
will continue to be a benefit to BTG's financial condition. However, should
BTG's revenues in Shekels exceed its expenses in Shekels in any material
respect, the devaluation of the Shekel will adversely affect BTG's financial
condition. Further, to the extent the devaluation of the Shekel with respect to
the U.S. dollar does not substantially offset the increase in the costs of local
goods and services in Israel, BTG's financial results will be adversely affected
as local expenses measured in U.S. dollars will increase.
At March 31, 1999, intangibles, net consist of (i) $1,191,000 (net of
amortization) relating to the repurchase of all rights to hGH previously
licensed to The DuPont Merck Pharmaceutical Company, together with all rights to
all data generated in pharmacological, toxicological and clinical studies and
encompassed in the Investigational New Drug Application and New Drug Application
files then pending with the U.S. Food and Drug Administration for the treatment
of human growth hormone-deficient children and (ii) $322,000 (net of
amortization) relating to the reacquisition of all rights to human growth
hormone licensed to Smithkline Beecham.
The Company is party to several proceedings relating to patents owned
by it or others. The Company cannot predict the costs of such proceedings, and
there can be no assurance that such costs will not be significant. Should the
Company be unsuccessful in any of these proceedings, it may be unable to
commercialize the products which are the subject of such proceedings in certain
countries, and may be unable to produce the products in Israel, which could have
a material adverse effect on the Company's revenues and results of operations.
The Company believes that its remaining cash resources as of March 31,
1999, together with anticipated product sales, scheduled payments to be made to
BTG under its current agreements with pharmaceutical partners, the proceeds from
sales of equity and continued funding from the Chief Scientist at current
levels, will be sufficient to fund the Company's current operations for the
foreseeable future. There can, however, be no assurance that product sales will
occur as anticipated, that scheduled payments will be
13
<PAGE>
made by third parties, that current agreements will not be canceled, that the
Chief Scientist will continue to provide funding at current levels, or that
unanticipated events requiring the expenditure of funds will not occur. The
satisfaction of the Company's future cash requirements will depend in large part
on the status of commercialization of the Company's products, the Company's
ability to enter into additional research and development and licensing
arrangements, and the Company's ability to obtain additional equity investments,
if necessary. There can be no assurance that the Company will be able to obtain
additional funds or, if such funds are available, that such funding will be on
favorable terms.
YEAR 2000
The Company uses and relies on a variety of information technologies,
computer systems and scientific and manufacturing equipment containing
computer-related components (such as programmable logic controllers and other
embedded systems). Certain of the Company's computer systems and equipment use
two digit fields rather than four digit fields to define the applicable year. As
a result, such systems may not be able to distinguish between dates in the 20th
century and the 21st century. This could cause system or equipment shutdowns,
failures or miscalculations resulting in inaccuracies in computer output or
disruptions of operations, including inaccurate processing of financial
information and/or temporary inabilities to process transactions, manufacture
products or engage in normal business activities.
The Company has conducted an evaluation of the actions necessary to
ensure that its business critical computer systems and equipment will be able to
function without disruption with respect to the application of dating systems in
the Year 2000. This evaluation was completed by the end of 1998, following which
the Company upgraded, replaced and tested its computer systems and equipment so
as to be able to operate without disruption due to Year 2000 issues. The Company
expects to complete all its remediation efforts before the end of 1999. However,
there can be no assurance that any required remedial actions will be able to be
completed on a timely basis. If the Company is unable to complete its remedial
actions in the necessary time frame, contingency plans will be developed to
address those business critical systems which may not be Year 2000 compliant.
In addition to risks associated with the Company's own computer systems
and equipment, the Company has relationships with, and is to varying degrees
dependent upon, a number of third parties that provide goods, services and
information to the Company. These include contract manufacturers, suppliers,
licensees, vendors, research partners and financial institutions. If any of
these third parties experience failures in their computer systems or equipment
due to Year 2000 non-compliance, which systems and equipment are outside the
control of the Company, it could affect the Company's ability to manufacture
products or engage in normal business activities. The Company has made contact
with all of its significant customers, suppliers, vendors and partners to
determine the extent to which the Company is vulnerable to their failures and to
ascertain their Year 2000 compliance and risk. Based on these responses, the
Company believes that its significant customers, suppliers, vendors and partners
will be Year 2000 compliant.
The total cost of the Year 2000 systems evaluation and remediation is
being funded through operating cash flows and the Company is expensing these
costs. While the total cost to obtain Year 2000 compliance is not known at this
time, the Company currently expects the cost to be less than $100,000, of which
approximately [$25,000] has been expended through March 31, 1999. The actual
cost, however, could exceed this estimate. The Company believes that such cost
will not have a material effect on the Company's financial position, results of
operations or cash flows.
14
<PAGE>
PART II. OTHER INFORMATION
Item 5. Other Information
In March 1999, Solchem Italiana, S.p.A. ("Solchem") filed a declaratory
judgment action in Federal court seeking a determination that it was not an
affiliate of Societa Prodottie Antibiotici, S.p.A. ("SPA") at the time BTG
contracted with SPA to be an alternative supplier of oxandrolone, and therefore
is not bound by the exclusivity provisions of the supply agreement, which
require SPA and its affiliates to supply oxandrolone exclusively to BTG in the
United States. The Company believes it has meritorious defenses to this action,
and intends to defend it vigorously.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
None
(b) Reports on Form 8-K:
10.1 Employment Agreement dated as of April 27, 1999, by and
between Bio-Technology General Corp. and Virgil Thompson.
10.2 Employment Agreement dated as of April 27, 1999, by and
among Bio-Technology General Corp., Bio-Technology General
(Israel) Ltd. and Eli Admoni.
27 Financial Data Schedule
15
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BIO-TECHNOLOGY GENERAL CORP.
----------------------------
(Registrant)
By: /s/ Sim Fass
---------------------------
Sim Fass
Chairman and
Chief Executive Officer,
Principal Executive Officer
/s/ Yehuda Sternlicht
---------------------------
Yehuda Sternlicht
Vice President-Finance and
Chief Financial Officer,
Principal Financial and
Accounting Officer
Dated: May 15, 1999
16
EMPLOYMENT AGREEMENT
AGREEMENT made as of April 27, 1999, between BIO-TECHNOLOGY
GENERAL CORP., a Delaware corporation with an office at 70 Wood Avenue South,
Iselin, New Jersey 08830 (the "Company") and Virgil Thompson, residing at
________________________________________ (the "Executive").
W I T N E S S E T H :
WHEREAS, the Company desires that Executive be employed to
serve in a senior executive capacity with the Company, and Executive desires to
be so employed by the Company, upon the terms and conditions herein set forth.
NOW, THEREFORE, in consideration of the premises and of the
mutual promises, representations and covenants herein contained, the parties
hereto agree as follows:
1. EMPLOYMENT.
The Company hereby employs Executive and Executive hereby
accepts such employment, subject to the terms and conditions herein set forth.
Executive shall hold the office of President and Chief Operating Officer of the
Company, reporting to the Chief Executive Officer of the Company. As long as
Executive is serving as President of the Company, the Company will include
Executive on management's slate of nominees for election as a director of the
Company.
2. TERM.
The initial term of employment under this Agreement shall
begin on May 3, 1999 (the "Employment Date") and shall continue for a period of
two (2) years from that date, subject to prior termination in accordance with
the terms hereof. Thereafter, this Agreement shall automatically be renewed for
successive two-year terms unless either party shall give the other ninety (90)
days prior written notice of its intent not to renew this Agreement.
3. COMPENSATION.
As compensation for the employment services to be rendered by
Executive hereunder, including all services as an officer or director of the
Company and any of its subsidiaries, the Company agrees to pay, or cause to be
paid, to Executive, and Executive agrees to accept, an initial annual salary of
$320,000, payable in equal installments in accordance with Company practice.
Executive's annual salary hereunder for the remaining years of employment shall
be determined by
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<PAGE>
the Board of Directors of the Company in its sole discretion; provided, however,
that Executive's salary shall be increased each year (on the date of the annual
meeting of the Board of Directors of the Company), commencing with the 2000
annual meeting of the Board of Directors, by at least six percent (6%). In
addition, Executive shall be entitled to bonuses from time to time in such
amounts as may be determined by the Board of Directors of the Company in its
sole discretion. Such bonus may be paid, in the sole discretion of the Board of
Directors, in cash, shares of the Company's Common Stock, or a combination
thereof.
4. EXPENSES.
The Company shall pay or reimburse Executive, upon presentment
of suitable vouchers, for all reasonable business and travel expenses which may
be incurred or paid by Executive in connection with his employment hereunder.
Executive shall comply with such restrictions and shall keep such records as the
Company may deem necessary to meet the requirements of the Internal Revenue Code
of 1986, as amended from time to time, and regulations promulgated thereunder.
5. OTHER BENEFITS.
Executive shall be entitled to a vacation allowance of five
(5) weeks per annum and to participate in and receive any other benefits
customarily provided by the Company to its senior management personnel
(including any profit sharing, pension, short and long-term disability
insurance, hospital, major medical insurance and group life insurance plans in
accordance with the terms of such plans) and including stock option and/or stock
purchase plans, all as determined from time to time by the Board of Directors of
the Company. Unused annual vacations in excess of one week may not be carried
over to other years without the consent of the Chief Executive Officer of the
Company. The Company shall also provide Executive with a leased company car.
6. STOCK OPTIONS.
(a) The Compensation and Stock Option Committee of the Board
of Directors (the "Committee") has approved the grant to Executive of a stock
option (which shall be an incentive stock option to the extent permitted by
law), to purchase 200,000 shares of the Company's Common Stock (the "Options"),
at an exercise price per share equal to the fair market value of the Company's
Common Stock on the Employment Date, such Options to become exercisable as to
50,000 shares on the first anniversary date of the Employment Date and as to an
additional 50,000 shares on each successive anniversary date of the Employment
Date.
(b) Any future grant of stock options shall be subject to such
terms as the Committee in its sole discretion shall specify at the time of
grant.
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<PAGE>
7. DUTIES.
(a) Executive shall have day-to-day responsibility for the
operations of the Company (other than the operations of Bio-Technology General
(Israel) Ltd., QA/QC matters, legal matters and business development, which
shall be the responsibility of the Company's Chief Executive Officer). Although
business development shall be the responsibility of the Company's Chief
Executive Officer, the parties acknowledge that Executive will be involved in,
and have input with respect to, commercial and business development activities.
In addition, Executive shall perform such other duties and functions as the
Chief Executive Officer of the Company shall from time to time determine and
Executive shall comply in the performance of his duties with the policies of,
and be subject to, the direction of the Board of Directors of the Company. If
Executive shall be elected or appointed as a director of the Company or any of
its subsidiaries during the term of this Agreement, he will serve in such
capacity without further compensation.
(b) Executive agrees to devote his entire working time,
attention and energies to the performance of the business of the Company and of
any of its subsidiaries by which he may be employed; and Executive shall not,
directly or indirectly, alone or as a member of any partnership or other
organization, or as an officer, director or employee of any other corporation,
partnership or other organization, be actively engaged in or concerned with any
other duties or pursuits which interfere with the performance of his duties
hereunder, or which, even if non-interfering, may be, in the reasonable
determination of the Board of Directors of the Company in its sole discretion,
inimical, or contrary, to the best interests of the Company, except that
Executive shall be permitted to (i) remain on the Board of Directors of Aradigm
Corporation and Cypros Pharmaceuticals as long as such companies are not
competitors of the Company and the performance of his duties as a director does
not unreasonably interfere with the performance of his duties hereunder; (ii)
complete transitionary duties for Cytel Corporation as a consultant through July
31, 1999; and (iii) pursue such other duties or pursuits specifically authorized
by the Company's Board of Directors.
(c) All fees, compensation or commissions received by
Executive during the term of this Agreement for personal services (including,
but not limited to, commissions and compensation received as a fiduciary or a
director, and fees for lecturing and teaching) rendered at the request of the
Company shall be paid to the Company when received by Executive, except those
fees that the Company's Board of Directors determines may be kept by Executive.
This provision shall not be construed to prevent Executive from investing or
trading in nonconflicting investments as he sees fit for his own account,
including real estate, stocks, bonds, securities, commodities or other forms of
investments.
8. TERMINATION OF EMPLOYMENT; EFFECT OF TERMINATION.
(a) Executive's employment hereunder may be terminated at any
time upon written notice from the Company to Executive:
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<PAGE>
(i) upon the determination by the Board of Directors of the
Company that Executive's performance of his duties has not been fully
satisfactory for any reason which would not constitute justifiable
cause (as hereinafter defined) upon thirty (30) days' prior written
notice to Executive; or
(ii) upon the determination by the Board of Directors of the
Company that there is justifiable cause (as hereinafter defined) for
such termination upon ten (10) days' prior written notice to Executive.
(b) Executive's employment shall terminate upon:
(i) the death of Executive; or
(ii) the "disability" of Executive (as hereinafter defined
pursuant to subsection (c) herein) pursuant to subsection (f) hereof.
(c) For the purposes of this Agreement, the term "disability"
shall mean the inability of Executive, due to illness, accident or any other
physical or mental incapacity, substantially to perform his duties in a normal
manner for a period of three (3) consecutive months or for a total of six (6)
months (whether or not consecutive) in any twelve (12) month period during the
term of this Agreement as reasonably determined by the Board of Directors of the
Company after examination of Executive by an independent physician reasonably
acceptable to Executive.
(d) For the purposes hereof, the term "justifiable cause"
shall mean and be limited to: any willful breach by Executive of the performance
of any of his duties pursuant to this Agreement; Executive's conviction (which,
through lapse of time or otherwise, is not subject to appeal) of any crime or
offense involving money or other property of the Company or its subsidiaries or
which constitutes a felony in the jurisdiction involved; Executive's performance
of any act or his failure to act, for which it is determined by independent
counsel retained by the Board of Directors and reasonably acceptable to
Executive (which may be counsel for the Company), after due inquiry in which
Executive is given the opportunity to be heard, that if he were prosecuted and
convicted, a crime or offense involving money or property of the Company or its
subsidiaries, or which would constitute a felony in the jurisdiction involved,
would have occurred; any unauthorized disclosure by Executive to any person,
firm or corporation other than the Company, its subsidiaries and its and their
directors, officers and employees, of any confidential information or trade
secret of the Company or any of its subsidiaries; any attempt by Executive to
secure any improper personal profit in connection with the business of the
Company or any of its subsidiaries; the failure by Executive to devote his full
time to the affairs of the Company and its subsidiaries; the engaging by
Executive in any business other than the business of the Company and its
subsidiaries which interferes with the performance of his duties hereunder where
such conduct shall not have ceased or offense been cured within thirty (30) days
following written warning from the Company; or Executive's repeated
-4-
<PAGE>
and willful failure to follow the instructions of the Board of Directors or the
Chief Executive Officer of the Company (other than instructions which are
illegal or improper) where such conduct shall not have ceased or offense been
cured within thirty (30) days following written warning from the Company. Upon
termination of Executive's employment for justifiable cause, this Agreement
shall terminate immediately and Executive shall not be entitled to any amounts
or benefits hereunder other than such portion of Executive's annual salary and
vacation benefits as has been accrued through the date of his termination of
employment and reimbursement of expenses pursuant to Section 4 hereof.
(e) If Executive shall die during the term of his employment
hereunder, this Agreement shall terminate immediately. In such event, the estate
of Executive shall thereupon be entitled to receive such portion of Executive's
annual salary and vacation benefits as has been accrued through the date of his
death and such bonus, if any, as the Board of Directors of the Company in its
sole discretion may determine to award taking into account Executive's
contributions to the Company prior to his death. If Executive's death shall
occur while he is on Company business, the estate of Executive shall be entitled
to receive, in addition to the other amounts set forth in this subsection (e),
an amount equal to one-half his then annual salary.
(f) Upon Executive's "disability", the Company shall have the
right to terminate Executive's employment. Notwithstanding any inability to
perform his duties, Executive shall be entitled to receive his compensation as
provided herein until the termination of his employment for disability. Any
termination pursuant to this subsection (f) shall be effective on the date
thirty (30) days after which Executive shall have received written notice of the
Company's election to terminate.
(g) Notwithstanding any provision to the contrary contained
herein, in the event that Executive's employment is terminated by the Company at
any time for any reason other than justifiable cause, disability or death, or in
the event the Company shall fail to renew this Agreement or terminate
Executive's employment without justifiable cause at any time within two years
following the effective date of a Change in Control of the Company, the Company
shall pay to Executive, in full satisfaction and in lieu of any and all other
payments due and owing to Executive under the terms of this Agreement (other
than any payments constituting reimbursement of expenses pursuant to Section 4
hereof), a severance payment in an amount equal to the greater of (i) one (1)
year's salary plus Executive's most recent bonus, if any, or (ii) the product of
one (1) month's salary plus 1/12 of Executive's most recently declared bonus
multiplied by the number of years Executive has been employed by the Company,
payable bi-weekly in equal installments. In addition, upon a termination of
Executive's employment for any reason other than justifiable cause, disability
or death, fifty percent (50%) of the Options granted pursuant to Section 6(a)
hereof which are not then exercisable shall immediately become exercisable. As
used in this Agreement, a "Change in Control of the Company" shall be deemed to
occur if (i) there shall be consummated (x) any consolidation or merger of the
Company in which the Company is not the continuing or surviving corporation or
pursuant to which shares of the Company's Common Stock would be converted into
cash, securities
-5-
<PAGE>
or other property, other than a merger of the Company in which the holders of
the Company's Common Stock immediately prior to the merger have the same
proportionate ownership of common stock of the surviving corporation immediately
after the merger, or (y) any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all, or substantially all,
of the assets of the Company, or (ii) the stockholders of the Company shall
approve any plan or proposal for liquidation or dissolution of the Company, or
(iii) any person (as such term is used in Sections 13(d) and 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act")), shall become
the beneficial owner (within the meaning of Rule 13d-3 under the Exchange Act)
of 40% or more of the Company's outstanding Common Stock other than pursuant to
a plan or arrangement entered into by such person and the Company, or (iv)
during any period of two consecutive years, individuals who at the beginning of
such period constitute the entire Board of Directors of the Company shall cease
for any reason to constitute a majority thereof unless the election, or the
nomination for election by the Company's stockholders, of each new director was
approved by a vote of at least two-thirds of the directors then still in office
who were directors at the beginning of the period.
(h) Executive may terminate his employment at any time upon
thirty (30) days' prior written notice to the Company. Upon Executive's
termination of his employment hereunder, this Agreement (other than Sections 8,
10, 11, 12 and 13, which shall survive) shall terminate immediately. In such
event, Executive shall be entitled to receive such portion of Executive's annual
salary and vacation benefits as has been accrued to date. Executive shall be
entitled to reimbursement of expenses pursuant to Section 4 hereof and to
participate in the Company's benefit plans to the extent participation by former
employees is required by law or permitted by such plans, with the expense of
such participation to be as specified in such plans for former employees.
9. REPRESENTATIONS AND AGREEMENTS OF EXECUTIVE.
(a) Executive represents and warrants that he is free to enter
into this Agreement and to perform the duties required hereunder, and that there
are no employment contracts or under standings, restrictive covenants or other
restrictions, whether written or oral, preventing the performance of his duties
hereunder or requiring him to perform employment, consulting, business related
or similar duties for any other person. Notwithstanding the foregoing, the
Company agrees that Executive may act as a consultant to Cytel Corporation to
assist in certain transitionary duties until no later than July 31, 1999.
(b) Executive agrees to submit to a medical examination and to
cooperate and supply such other information and documents as may be required by
any insurance company in connection with the Company's obtaining life insurance
on the life of Executive, and any other type of insurance or fringe benefit as
the Company shall determine from time to time to obtain.
-6-
<PAGE>
10. NON-COMPETITION.
(a) Executive agrees that during his employment by the Company
and for a period of one (1) year following the termination of Executive's
employment hereunder, other than by reason of the Company's election not to
renew this Agreement (the "Non-Competitive Period"), Executive shall not,
directly or indirectly, as owner, partner, joint venturer, stockholder,
employee, broker, agent, principal, trustee, corporate officer, director,
licensor, or in any capacity whatsoever engage in, become financially interested
in, be employed by, render any consultation or business advice with respect to,
or have any connection with, any products or services or proposed products or
services which are competitive with products or services of the Company or any
of its subsidiaries, in any geographic area where, at the time of the
termination of his employment hereunder, the business of the Company or any of
its subsidiaries was being conducted or was proposed to be conducted in any
manner whatsoever; provided, however, that Executive may own any securities of
any corporation which is engaged in such business and is publicly owned and
traded but in an amount not to exceed at any one time one percent (1%) of any
class of stock or securities of such corporation. In addition, Executive shall
not, directly or indirectly, request or cause any collaborative partners,
universities, governmental agencies, contracting parties, suppliers or customers
with whom the Company or any of its subsidiaries has a business relationship to
cancel or terminate any such business relationship with the Company or any of
its subsidiaries or solicit from the Company any employee of the Company.
(b) If any portion of the restrictions set forth in this
Section 10 should, for any reason whatsoever, be declared invalid by a court of
competent jurisdiction, the validity or enforceability of the remainder of such
restrictions shall not thereby be adversely affected.
(c) Executive acknowledges that the Company conducts business
on a world-wide basis, that its sales and marketing prospects are for continued
expansion into world markets and that, therefore, the territorial and time
limitations set forth in this Section 10 are reasonable and properly required
for the adequate protection of the business of the Company and its subsidiaries.
In the event any such territorial or time limitation is deemed to be
unreasonable by a court of competent jurisdiction, Executive agrees to the
reduction of the territorial or time limitation to the area or period which such
court shall deem reasonable.
(d) The existence of any claim or cause of action by Executive
against the Company or any subsidiary shall not constitute a defense to the
enforcement by the Company or any subsidiary of the foregoing restrictive
covenants, but such claim or cause of action shall be litigated separately.
-7-
<PAGE>
11. INVENTIONS AND DISCOVERIES.
(a) Executive shall promptly and fully disclose to the
Company, and with all necessary detail for a complete understanding of the same,
all developments, know-how, discoveries, inventions, improvements, concepts,
ideas, writings, formulae, processes and methods of a financial or other nature
(whether copyrightable, patentable or otherwise) made, received, conceived,
acquired or written during working hours, or otherwise, by Executive (whether or
not at the request or upon the suggestion of the Company) during the period of
his employment with, or rendering of advisory or consulting services to, the
Company or any of its subsidiaries, solely or jointly with others, in or
relating to any activities of the Company or its subsidiaries known to him as a
consequence of his employment or the rendering of advisory and consulting
services hereunder (collectively the "Subject Matter").
(b) Executive hereby assigns and transfers, and agrees to
assign and transfer, to the Company, all his rights, title and interest in and
to the Subject Matter, and Executive further agrees to deliver to the Company
any and all drawings, notes, specifications and data relating to the Subject
Matter, and to execute, acknowledge and deliver all such further papers,
including applications for copyrights or patents, as may be necessary to obtain
copyrights and patents for any thereof in any and all countries and to vest
title thereto to the Company. Executive shall assist the Company in obtaining
such copyrights or patents during the term of this Agreement, and any time
thereafter on reasonable notice and at mutually convenient times, and Executive
agrees to testify in any prosecution or litigation involving any of the Subject
Matter; provided, however, that Executive shall be compensated in a timely
manner at the rate of $100.00 per hour (with a minimum of $500.00 per day), plus
out-of-pocket expenses incurred in rendering such assistance or giving or
preparing to give such testimony if it is required after termination of his
employment hereunder.
12. NON-DISCLOSURE OF CONFIDENTIAL INFORMATION.
(a) Executive shall not, during the term of this Agreement, or
at any time following termination of this Agreement, directly or indirectly,
disclose, permit to be known or make accessible (other than as is required in
the regular course of his duties or is required by law (in which case Executive
shall give the Company prior written notice of such required disclosure) or with
the prior written consent of the Board of Directors of the Company), to any
person, firm or corporation, any confidential information acquired by him during
the course of, or as an incident to, his employment or the rendering of his
advisory or consulting services hereunder, relating to the Company or any of its
subsidiaries, the directors of the Company or its subsidiaries, any client of
the Company or any of its subsidiaries, or any corporation, partnership or other
entity owned or controlled, directly or indirectly, by any of the foregoing, or
in which any of the foregoing has a beneficial interest, including, but not
limited to, the business affairs of each of the foregoing. Such confidential
information shall include, but shall not be limited to, proprietary technology,
trade
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<PAGE>
secrets, patented processes, research and development data, know-how, market
studies and forecasts, competitive analyses, pricing policies, employee lists,
personnel policies, the substance of agreements with customers and others,
marketing or dealership arrangements, servicing and training programs and
arrangements, customer lists and any other documents embodying such confidential
information. This confidentiality obligation shall not apply to any confidential
information which thereafter becomes publicly available other than pursuant to a
breach of this Section 12(a) by Executive.
(b) All information and documents relating to the Company and
its affiliates as hereinabove described (or other business affairs) shall be the
exclusive property of the Company, and Executive shall use commercially
reasonable best efforts to prevent any publication or disclosure thereof. Upon
termination of Executive's employment with the Company, all documents, records,
reports, writings and other similar documents containing confidential
information, including copies thereof, then in Executive's possession or control
shall be returned and left with the Company.
13. SPECIFIC PERFORMANCE.
Executive agrees that if he breaches, or threatens to commit a
breach of, any of the provisions of Sections 10, 11 or 12 (the "Restrictive
Covenants"), the Company shall have, in addition to, and not in lieu of, any
other rights and remedies available to the Company under law and in equity, the
right to have the Restrictive Covenants specifically enforced by any court of
competent jurisdiction, it being agreed that any breach or threatened breach of
the Restrictive Covenants would cause irreparable injury to the Company and that
money damages would not provide an adequate remedy to the Company.
Notwithstanding the foregoing, nothing herein shall constitute a waiver by
Executive of his right to contest whether a breach or threatened breach of any
Restrictive Covenant has occurred.
14. AMENDMENT OR ALTERATION.
No amendment or alteration of the terms of this Agreement
shall be valid unless made in writing and signed by both of the parties hereto.
15. GOVERNING LAW.
This Agreement shall be governed by the laws of the State of
New Jersey applicable to agreements made and to be performed therein.
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<PAGE>
16. SEVERABILITY.
The holding of any provision of this Agreement to be invalid
or unenforceable by a court of competent jurisdiction shall not affect any other
provision of this Agreement, which shall remain in full force and effect.
17. NOTICES.
Any notices required or permitted to be given hereunder shall
be sufficient if in writing, and if delivered by hand, or sent by certified
mail, return receipt requested, to the addresses set forth above or such other
address as either party may from time to time designate in writing to the other,
and shall be deemed given as of the date of the delivery or mailing.
18. WAIVER OR BREACH.
It is agreed that a waiver by either party of a breach of any
provision of this Agreement shall not operate, or be construed, as a waiver of
any subsequent breach by that same party.
19. ENTIRE AGREEMENT AND BINDING EFFECT.
This Agreement contains the entire agreement of the parties
with respect to the subject matter hereof and shall be binding upon and inure to
the benefit of the parties hereto and their respective legal representatives,
heirs, distributors, successors and assigns. Notwithstanding the foregoing, all
prior agreements between Executive and the Company relating to the
confidentiality of information, trade secrets, patents and stock options shall
not be affected by this Agreement.
20. SURVIVAL.
The termination of Executive's employment hereunder or the
expiration of this Agreement shall not affect the enforceability of Sections 8,
10, 11, 12 and 13 hereof.
21. FURTHER ASSURANCES.
The parties agree to execute and deliver all such further
documents, agreements and instruments and take such other and further action as
may be necessary or appropriate to carry out the purposes and intent of this
Agreement.
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<PAGE>
22. HEADINGS.
The Section headings appearing in this Agreement are for the
purposes of easy reference and shall not be considered a part of this Agreement
or in any way modify, demand or affect its provisions.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date and year first above written.
BIO-TECHNOLOGY GENERAL CORP.
By: /s/ Sim Fass
------------------------------
/s/ Virgil Thompson
----------------------------------
Virgil Thompson
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EMPLOYMENT AGREEMENT
AGREEMENT made as of April 27, 1999, among BIO-TECHNOLOGY
GENERAL CORP., a Delaware corporation with an office at 70 Wood Avenue South,
Iselin, New Jersey 08830 ("BTG"), BIO-TECHNOLOGY GENERAL (ISRAEL) LTD., an
Israeli corporation and a wholly-owned subsidiary of BTG having an office at
Kiryat Weizmann, Rehovot, Israel 76326 ("BTG-ISRAEL" and, together with BTG,
the "Company") and Eli Admoni, residing at 10 Hapartizanim Street, Petah-Tikva,
49552, Israel (the "Executive").
W I T N E S S E T H :
WHEREAS, the Company desires that Executive be employed to
serve in a senior executive capacity with the Company, and Executive desires to
be so employed by the Company, upon the terms and conditions herein set forth.
NOW, THEREFORE, in consideration of the premises and of the
mutual promises, representations and covenants herein contained, the parties
hereto agree as follows:
1. EMPLOYMENT.
The Company hereby employs Executive and Executive hereby
accepts such employment, subject to the terms and conditions herein set forth.
Executive shall hold the office of Senior Vice President of BTG and President of
BTG-Israel reporting to the Chief Executive Officer of BTG.
2. TERM.
The initial term of employment under this Agreement shall
begin on the date hereof (the "Employment Date") and shall continue for a period
of two (2) years from that date, subject to prior termination in accordance with
the terms hereof. Thereafter, this Agreement shall automatically be renewed for
successive two-year terms unless either party shall give the other ninety (90)
days prior written notice of its intent not to renew this Agreement.
3. COMPENSATION.
As compensation for the employment services to be rendered by
Executive hereunder, including all services as an officer or director of the
Company and any of its subsidiaries, the Company agrees to pay, or cause to be
paid, to Executive, and Executive agrees to accept, payable in equal
installments in accordance with Company practice, an initial annual salary of
$250,000. Executive's annual salary hereunder for the remaining years of
employment shall be determined by
<PAGE>
the Board of Directors of BTG in its sole discretion; provided, however, that
Executive's salary shall be increased each year (on the date of the annual
meeting of the Board of Directors of BTG), commencing with the 2000 annual
meeting of the BTG Board of Directors, by at least six percent (6%). In
addition, Executive shall be entitled to bonuses from time to time in such
amounts as may be determined by the Board of Directors of BTG in its sole
discretion. Such bonus may be paid, in the sole discretion of the Board of
Directors, in cash, shares of BTG Common Stock, options to purchase shares of
BTG Common Stock or any combination thereof.
4. EXPENSES.
The Company shall pay or reimburse Executive, upon presentment
of suitable vouchers, for all reasonable business and travel expenses which may
be incurred or paid by Executive in connection with his employment hereunder,
including without limitation telephone and facsimile expenses at his home.
Executive shall comply with such restrictions and shall keep such records as the
Company may deem necessary, as set forth in its written policies.
5. OTHER BENEFITS.
Executive shall be entitled to such vacations (which shall be
at least four weeks per annum) and to participate in and receive any other
benefits customarily provided by the Company to its senior management personnel
(including any profit sharing, pension, short and long-term disability
insurance, hospital, major medical insurance and group life insurance plans in
accordance with the terms of such plans) and including stock option and/or stock
purchase plans, all as determined from time to time by the Board of Directors of
BTG. Unused annual vacations in excess of one week may not be carried over to
other years without the consent of the Chief Executive Officer of BTG.
BTG-Israel shall provide Executive with a company car and the
other benefits provided Israeli employees by BTG-Israel. In addition, BTG-Israel
shall reimburse to Executive all income taxes paid by Executive in respect of
BTG-Israel providing Executive with a company car and reimbursing Executive for
his telephone and facsimile expenses at his home.
6. STOCK OPTIONS.
(a) The Company will recommend to the Compensation and Stock
Option Committee of the BTG Board of Directors (the "Committee") that Executive
be granted a non-qualified stock option, pursuant to a non-qualified stock
option agreement substantially in the form of Exhibit 6(a) hereto, to purchase
100,000 shares of BTG Common Stock (the "Options"), at an exercise price per
share equal to the fair market value of BTG Common Stock on the date of grant,
such Options to become exercisable as to 25,000 shares on the first anniversary
date of this
-2-
<PAGE>
Agreement and as to an additional 25,000 shares on each successive anniversary
date of this Agreement.
(b) Any future grant of stock options shall be subject to such
terms as the Committee in its sole discretion shall specify at the time of
grant.
7. DUTIES.
(a) Executive shall be responsible for the overall management
of BTG-Israel, shall assist in acquisitions and commercial activities and
perform such other duties and functions as the Chief Executive Officer of BTG
shall from time to time determine and Executive shall comply in the performance
of his duties with the policies of, and be subject to, the direction of the
Board of Directors of BTG. If Executive shall be elected or appointed as a
director of BTG or BTG-Israel during the term of this Agreement, he will serve
in such capacity without further compensation. Executive shall, without further
compensation, serve as an executive officer and director of any other subsidiary
of the Company (collectively the "subsidiary" or "subsidiaries") specified by
the Chief Executive Officer of BTG and, in the performance of such duties,
Executive shall comply with the policies of the Board of Directors of each such
subsidiary.
(b) Executive agrees to devote his entire working time,
attention and energies to the performance of the business of the Company and of
any of its subsidiaries by which he may be employed; and Executive shall not,
directly or indirectly, alone or as a member of any partnership or other
organization, or as an officer, director or employee of any other corporation,
partnership or other organization, be actively engaged in or concerned with any
other duties or pursuits which interfere with the performance of his duties
hereunder, or which, even if non-interfering, may be, in the reasonable
determination of the Board of Directors of BTG in its sole discretion, inimical,
or contrary, to the best interests of the Company, except those duties or
pursuits specifically authorized by the BTG Board of Directors. Notwithstanding
the foregoing, Executive may remain as a director of Kupat Holim Health
Services, Dolev Insurance Corporation and Magor Holdings as long as such
services do not unreasonably interfere or conflict with Executive's performance
of his duties hereunder.
(c) All fees, compensation or commissions received by
Executive during the term of this Agreement for personal services (including,
but not limited to, commissions and compensation received as a fiduciary or a
director, and fees for lecturing and teaching) rendered at the request of the
Company shall be paid to the Company when received by Executive, except those
fees that the BTG Board of Directors determines may be kept by Executive. This
provision shall not be construed to prevent Executive from investing or trading
in nonconflicting investments as he sees fit for his own account, including real
estate, stocks, bonds, securities, commodities or other forms of investments.
-3-
<PAGE>
8. TERMINATION OF EMPLOYMENT; EFFECT OF TERMINATION.
(a) Executive's employment hereunder may be terminated at any
time upon written notice from BTG to Executive:
(i) upon the determination by the Board of Directors of BTG
that Executive's performance of his duties has not been fully
satisfactory for any reason which would not constitute justifiable
cause (as hereinafter defined) upon thirty (30) days' prior written
notice to Executive; or
(ii) upon the determination by the Board of Directors of BTG
that there is justifiable cause (as hereinafter defined) for such
termination upon ten (10) days' prior written notice to Executive.
(b) Executive's employment shall terminate upon:
(i) the death of Executive; or
(ii) the "disability" of Executive (as hereinafter defined
pursuant to subsection (c) herein) pursuant to subsection (f) hereof.
(c) For the purposes of this Agreement, the term "disability"
shall mean the inability of Executive, due to illness, accident or any other
physical or mental incapacity, substantially to perform his duties in a normal
manner for a period of three (3) consecutive months or for a total of six (6)
months (whether or not consecutive) in any twelve (12) month period during the
term of this Agreement as reasonably determined by the Board of Directors of BTG
after examination of Executive by an independent physician reasonably acceptable
to Executive.
(d) For the purposes hereof, the term "justifiable cause"
shall mean and be limited to: any willful breach by Executive of the performance
of any of his duties pursuant to this Agreement; Executive's conviction (which,
through lapse of time or otherwise, is not subject to appeal) of any crime or
offense involving money or other property of the Company or its subsidiaries or
which constitutes a felony in the jurisdiction involved; Executive's performance
of any act or his failure to act, for which it is determined by independent
counsel retained by the Board (which may be counsel for the Company), after due
inquiry in which Executive is given the opportunity to be heard, that if he were
prosecuted and convicted, a crime or offense involving money or property of the
Company or its subsidiaries, or which would constitute a felony in the
jurisdiction involved, would have occurred; any unauthorized disclosure by
Executive to any person, firm or corporation other than the Company, its
subsidiaries and its and their directors, officers and employees, of any
confidential information or trade secret of the Company or any of its
subsidiaries; any attempt by Executive to secure any improper personal profit in
connection with the business of the Company
-4-
<PAGE>
or any of its subsidiaries; the failure by Executive to devote his full time to
the affairs of the Company and its subsidiaries; Executive's pursuit of
activities which in the reasonable determination of the Board of Directors of
BTG are inimical, or contrary, to the best interests of the Company; the
engaging by Executive in any business other than the business of the Company and
its subsidiaries which interferes with the performance of his duties hereunder;
or Executive's repeated and willful failure to follow the instructions of the
Board of Directors or the Chief Executive Officer of BTG (other than
instructions which are illegal or improper) where such conduct shall not have
ceased or offense cured within 30 days following written warning from the
Company. Upon termination of Executive's employment for justifiable cause, this
Agreement shall terminate immediately and Executive shall not be entitled to any
amounts or benefits hereunder other than such portion of Executive's annual
salary as has been accrued through the date of his termination of employment and
reimbursement of expenses pursuant to Section 4 hereof.
(e) If Executive shall die during the term of his employment
hereunder, this Agreement shall terminate immediately. In such event, the estate
of Executive shall thereupon be entitled to receive such portion of Executive's
annual salary as has been accrued through the date of his death and such bonus,
if any, as the Board of Directors of BTG in its sole discretion may determine to
award taking into account Executive's contributions to the Company prior to his
death. If Executive's death shall occur while he is on Company business, the
estate of Executive shall be entitled to receive, in addition to the other
amounts set forth in this subsection (e), an amount equal to one-half his then
annual salary.
(f) Upon Executive's "disability", the Company shall have the
right to terminate Executive's employment. Notwithstanding any inability to
perform his duties, Executive shall be entitled to receive his compensation as
provided herein until the termination of his employment for disability. Any
termination pursuant to this subsection (f) shall be effective on the date 30
days after which Executive shall have received written notice of the Company's
election to terminate.
(g) Notwithstanding any provision to the contrary contained
herein, in the event that Executive's employment is terminated by the Company at
any time for any reason other than justifiable cause, disability or death, or in
the event the Company shall fail to renew this Agreement at any time within two
years following the effective date of a Change in Control of BTG, the Company
shall pay to Executive, in full satisfaction and in lieu of any and all other
payments due and owing to Executive under the terms of this Agreement (other
than any payments constituting reimbursement of expenses pursuant to Section 4
hereof), an amount equal to the greater of (i) one year's salary plus
Executive's most recent bonus, if any, or (ii) the product of one month's salary
plus 1/12 of Executive's most recently declared bonus multiplied by the number
of years Executive has been employed by the Company; provided, however, that if
Executive's employment is terminated by the Company for any reason other than
justifiable cause, death or disability prior to the first anniversary of the
Employment Date, then the Company shall continue to pay to Executive all amounts
due him under this Agreement until the second anniversary of the Employment
Date.
-5-
<PAGE>
As used in this Agreement, a "Change in Control of BTG" shall be deemed to occur
if (i) there shall be consummated (x) any consolidation or merger of BTG in
which BTG is not the continuing or surviving corporation or pursuant to which
shares of BTG's Common Stock would be converted into cash, securities or other
property, other than a merger of BTG in which the holders of BTG Common Stock
immediately prior to the merger have the same proportionate ownership of common
stock of the surviving corporation immediately after the merger, or (y) any
sale, lease, exchange or other transfer (in one transaction or a series of
related transactions) of all, or substantially all, of the assets of BTG, or
(ii) the stockholders of BTG shall approve any plan or proposal for liquidation
or dissolution of BTG, or (iii) any person (as such term is used in Sections
13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")), shall become the beneficial owner (within the meaning of Rule
13d-3 under the Exchange Act) of 40% or more of BTG's outstanding Common Stock
other than pursuant to a plan or arrangement entered into by such person and
BTG, or (iv) during any period of two consecutive years, individuals who at the
beginning of such period constitute the entire Board of Directors of BTG shall
cease for any reason to constitute a majority thereof unless the election, or
the nomination for election by BTG's stockholders, of each new director was
approved by a vote of at least two-thirds of the directors then still in office
who were directors at the beginning of the period.
(h) Executive may terminate his employment at any time upon 30
days' prior written notice to the Company. Upon Executive's termination of his
employment hereunder, this Agreement (other than Sections 8, 10, 11, 12 and 13,
which shall survive) shall terminate immediately. In such event, Executive shall
be entitled to receive such portion of Executive's annual salary as has been
accrued to date. Executive shall be entitled to reimbursement of expenses
pursuant to Section 4 hereof and to participate in the Company's benefit plans
to the extent participation by former employees is required by law or permitted
by such plans, with the expense of such participation to be as specified in such
plans for former employees.
(i) Upon termination of Executive's employment for any reason
other than justifiable cause, Executive shall be entitled to all funds
contributed by BTG-ISRAEL on his behalf for "directors insurance" and Keren
Hishtalmut.
9. REPRESENTATIONS AND AGREEMENTS OF EXECUTIVE.
(a) Executive represents and warrants that he is free to enter
into this Agreement and to perform the duties required hereunder, and that there
are no employment contracts or under standings, restrictive covenants or other
restrictions, whether written or oral, preventing the performance of his duties
hereunder or requiring him to perform employment, consulting, business related
or similar duties for any other person.
(b) Executive agrees to submit to a medical examination and to
cooperate and supply such other information and documents as may be required by
any insurance company in connection
-6-
<PAGE>
with the Company's obtaining life insurance on the life of Executive, and any
other type of insurance or fringe benefit as the Company shall determine from
time to time to obtain.
10. NON-COMPETITION.
(a) Executive agrees that during his employment by the Company
and for a period of one (1) year following the termination of Executive's
employment hereunder, other than by reason of the Company's election not to
renew this Agreement (the "Non-Competitive Period"), Executive shall not,
directly or indirectly, as owner, partner, joint venturer, stockholder,
employee, broker, agent, principal, trustee, corporate officer, director,
licensor, or in any capacity whatsoever engage in, become financially interested
in, be employed by, render any consultation or business advice with respect to,
or have any connection with, any business engaged in the research, development,
testing, design, manufacture, sale, lease, marketing, utilization or
exploitation of any products or services which are designed for the same purpose
as, are similar to, or are otherwise competitive with, products or services of
the Company or any of its subsidiaries, in any geographic area where, at the
time of the termination of his employment hereunder, the business of the Company
or any of its subsidiaries was being conducted or was proposed to be conducted
in any manner whatsoever; provided, however, that Executive may own any
securities of any corporation which is engaged in such business and is publicly
owned and traded but in an amount not to exceed at any one time one percent (1%)
of any class of stock or securities of such corporation. In addition, Executive
shall not, directly or indirectly, request or cause any collaborative partners,
universities, governmental agencies, contracting parties, suppliers or customers
with whom the Company or any of its subsidiaries has a business relationship to
cancel or terminate any such business relationship with the Company or any of
its subsidiaries or solicit, interfere with or entice from the Company any
employee (or former employee) of the Company.
(b) If any portion of the restrictions set forth in this
Section 10 should, for any reason whatsoever, be declared invalid by a court of
competent jurisdiction, the validity or enforceability of the remainder of such
restrictions shall not thereby be adversely affected.
(c) Executive acknowledges that the Company conducts business
on a world-wide basis, that its sales and marketing prospects are for continued
expansion into world markets and that, therefore, the territorial and time
limitations set forth in this Section 10 are reasonable and properly required
for the adequate protection of the business of the Company and its subsidiaries.
In the event any such territorial or time limitation is deemed to be
unreasonable by a court of competent jurisdiction, Executive agrees to the
reduction of the territorial or time limitation to the area or period which such
court shall deem reasonable.
(d) The existence of any claim or cause of action by Executive
against the Company or any subsidiary shall not constitute a defense to the
enforcement by the Company or any subsidiary of the foregoing restrictive
covenants, but such claim or cause of action shall be litigated separately.
-7-
<PAGE>
11. INVENTIONS AND DISCOVERIES.
(a) Executive shall promptly and fully disclose to the
Company, and with all necessary detail for a complete understanding of the same,
all developments, know-how, discoveries, inventions, improvements, concepts,
ideas, writings, formulae, processes and methods of a financial or other nature
(whether copyrightable, patentable or otherwise) made, received, conceived,
acquired or written during working hours, or otherwise, by Executive (whether or
not at the request or upon the suggestion of the Company) during the period of
his employment with, or rendering of advisory or consulting services to, the
Company or any of its subsidiaries, solely or jointly with others, in or
relating to any activities of the Company or its subsidiaries known to him as a
consequence of his employment or the rendering of advisory and consulting
services hereunder (collectively the "Subject Matter").
(b) Executive hereby assigns and transfers, and agrees to
assign and transfer, to the Company, all his rights, title and interest in and
to the Subject Matter, and Executive further agrees to deliver to the Company
any and all drawings, notes, specifications and data relating to the Subject
Matter, and to execute, acknowledge and deliver all such further papers,
including applications for copyrights or patents, as may be necessary to obtain
copyrights and patents for any thereof in any and all countries and to vest
title thereto to the Company. Executive shall assist the Company in obtaining
such copyrights or patents during the term of this Agreement, and any time
thereafter on reasonable notice and at mutually convenient times, and Executive
agrees to testify in any prosecution or litigation involving any of the Subject
Matter; provided, however, that Executive shall be compensated in a timely
manner at the rate of $100.00 per hour (with a minimum of $500 per day), plus
out-of-pocket expenses incurred in rendering such assistance or giving or
preparing to give such testimony if it is required after termination of his
employment hereunder.
12. NON-DISCLOSURE OF CONFIDENTIAL INFORMATION.
(a) Executive shall not, during the term of this Agreement, or
at any time following termination of this Agreement, directly or indirectly,
disclose, permit to be known or make accessible (other than as is required in
the regular course of his duties or is required by law (in which case Executive
shall give the Company prior written notice of such required disclosure) or with
the prior written consent of the Board of Directors of BTG), to any person, firm
or corporation, any confidential information acquired by him during the course
of, or as an incident to, his employment or the rendering of his advisory or
consulting services hereunder, relating to the Company or any of its
subsidiaries, the directors of the Company or its subsidiaries, any client of
the Company or any of its subsidiaries, or any corporation, partnership or other
entity owned or controlled, directly or indirectly, by any of the foregoing, or
in which any of the foregoing has a beneficial interest, including, but not
limited to, the business affairs of each of the foregoing. Such confidential
information shall include, but shall not be limited to, proprietary technology,
trade secrets, patented processes, research and development data, know-how,
market studies and forecasts, competitive
-8-
<PAGE>
analyses, pricing policies, employee lists, personnel policies, the substance of
agreements with customers and others, marketing or dealership arrangements,
servicing and training programs and arrangements, customer lists and any other
documents embodying such confidential information. This confidentiality
obligation shall not apply to any confidential information which thereafter
becomes publicly available other than pursuant to a breach of this Section 12(a)
by Executive.
(b) All information and documents relating to the Company and
its affiliates as hereinabove described (or other business affairs) shall be the
exclusive property of the Company, and Executive shall use commercially
reasonable best efforts to prevent any publication or disclosure thereof. Upon
termination of Executive's employment with the Company, all documents, records,
reports, writings and other similar documents containing confidential
information, including copies thereof, then in Executive's possession or control
shall be returned and left with the Company.
13. SPECIFIC PERFORMANCE.
Executive agrees that if he breaches, or threatens to commit a
breach of, any of the provisions of Sections 10, 11 or 12 (the "Restrictive
Covenants"), the Company shall have, in addition to, and not in lieu of, any
other rights and remedies available to the Company under law and in equity, the
right to have the Restrictive Covenants specifically enforced by any court of
competent jurisdiction, it being agreed that any breach or threatened breach of
the Restrictive Covenants would cause irreparable injury to the Company and that
money damages would not provide an adequate remedy to the Company.
Notwithstanding the foregoing, nothing herein shall constitute a waiver by
Executive of his right to contest whether a breach or threatened breach of any
Restrictive Covenant has occurred.
14. AMENDMENT OR ALTERATION.
No amendment or alteration of the terms of this Agreement
shall be valid unless made in writing and signed by both of the parties hereto.
15. GOVERNING LAW.
This Agreement shall be governed by the laws of the State of
New Jersey applicable to agreements made and to be performed therein.
16. REIMBURSEMENT OF EXPENSES.
In the event the Company or Executive brings an action to
enforce any provision of this Agreement, such action is brought in the United
States and Executive is the prevailing party in such action, then, in addition
to all amounts Executive is otherwise due hereunder, the Company
-9-
<PAGE>
shall reimburse Executive for 50% (100% in the case of an action brought by the
Company) of his reasonable out-of-pocket legal fees and expenses incurred in
connection with such action.
17. SEVERABILITY.
The holding of any provision of this Agreement to be invalid
or unenforceable by a court of competent jurisdiction shall not affect any other
provision of this Agreement, which shall remain in full force and effect.
18. NOTICES.
Any notices required or permitted to be given hereunder shall
be sufficient if in writing, and if delivered by hand, or sent by certified
mail, return receipt requested, to the addresses set forth above or such other
address as either party may from time to time designate in writing to the other,
and shall be deemed given as of the date of the delivery or mailing.
19. WAIVER OR BREACH.
It is agreed that a waiver by either party of a breach of any
provision of this Agreement shall not operate, or be construed, as a waiver of
any subsequent breach by that same party.
20. ENTIRE AGREEMENT AND BINDING EFFECT.
This Agreement contains the entire agreement of the parties
with respect to the subject matter hereof, shall be binding upon and inure to
the benefit of the parties hereto and their respective legal representatives,
heirs, distributors, successors and assigns. Notwithstanding the foregoing, all
prior agreements between Executive and the Company relating to the
confidentiality of information, trade secrets, patents and stock options shall
not be affected by this Agreement.
21. SURVIVAL.
The termination of Executive's employment hereunder or the
expiration of this Agreement shall not affect the enforceability of Sections 8,
10, 11, 12 and 13 hereof.
22. FURTHER ASSURANCES.
The parties agree to execute and deliver all such further
documents, agreements and instruments and take such other and further action as
may be necessary or appropriate to carry out the purposes and intent of this
Agreement.
-10-
<PAGE>
23. HEADINGS.
The Section headings appearing in this Agreement are for the
purposes of easy reference and shall not be considered a part of this Agreement
or in any way modify, demand or affect its provisions.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
-11-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date and year first above written.
BIO-TECHNOLOGY GENERAL CORP.
By: /s/ Sim Fass
-----------------------------------
BIO-TECHNOLOGY GENERAL (ISRAEL) LTD.
By: /s/
-----------------------------------
/s/ Eli Admoni
---------------------------------------
Eli Admoni
-12-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AND THE CONSOLIDATED STATEMENT OF OPERATIONS AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 7,741
<SECURITIES> 63,298
<RECEIVABLES> 48,761
<ALLOWANCES> 0
<INVENTORY> 6,128
<CURRENT-ASSETS> 130,340
<PP&E> 28,316
<DEPRECIATION> 18,777
<TOTAL-ASSETS> 146,549
<CURRENT-LIABILITIES> 15,568
<BONDS> 0
0
0
<COMMON> 521
<OTHER-SE> 126,498
<TOTAL-LIABILITY-AND-EQUITY> 146,549
<SALES> 15,867
<TOTAL-REVENUES> 20,228
<CGS> 2,254
<TOTAL-COSTS> 14,416
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3
<INCOME-PRETAX> 5,809
<INCOME-TAX> 1,803
<INCOME-CONTINUING> 4,006
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,006
<EPS-PRIMARY> 0.08
<EPS-DILUTED> 0.08
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