<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A-1
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended Commission File No.
December 31, 1994 0-16124
VIPONT ROYALTY INCOME FUND, LTD.
(Exact name of registrant as specified in its charter)
Colorado 84-10710523
(State of Incorporation) (I.R.S. Employer
Identification Number)
2579 Midpoint Drive
Fort Collins, Colorado 80525
(Address of principal (Zip Code)
executive offices)
Registrant's Telephone No., including Area Code: (303) 482-5868
Securities Registered pursuant to Section 12(b) of the Act: None
Securities Registered pursuant to Section 12(g) of the Act:
Limited Partnership Interests
(Title of Class)
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 by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of Registrants' knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. /x/
State the aggregate market value of the voting stock held by
non-affiliates of the Registrant: Not applicable.
DOCUMENTS INCORPORATED BY REFERENCE
None
<PAGE> 2
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K.
(a) The following documents of the Partnership are filed as part of this
Report:
1. Financial Statements
Independent Auditors' Reports
Balance Sheets at December 31, 1994 and 1993
Statements of Operations for each of the three years ended
December 31, 1994, 1993 and 1992
Statements of Changes in Partners' Equity (Deficit) for each
of the three years ended December 31, 1994, 1993 and 1992
Statements of Cash Flows for each of the three years ended
December 31, 1994, 1993 and 1992
Notes to the Financial Statements
2. Financial Statement Schedules
Schedules for which provision is made in the applicable
regulations of the Securities and Exchange Commission have
been omitted because they are not required under the related
instructions or the information required is contained
elsewhere in the financial statements.
3. Exhibits
Pursuant to Rule 12b-32 under the Securities Exchange Act of
1934, as amended, the following document, filed with the
Securities and Exchange Commission as an Exhibit to the
Annual Report on Form 10-K for the Fiscal Year ended
December 31, 1987, file number 0-16124, is incorporated
herein by this reference:
<TABLE>
<CAPTION>
Exhibit No.
-----------
<S> <C>
Certificate of Limited Partnership 4.1
</TABLE>
Pursuant to Rule 12b-32 under the Securities Exchange Act of
1934, as amended, the following document, filed with the
Securities and Exchange Commission as an Exhibit to the
Registration Statement on Form S-1 and amendment thereto,
file number 33-11483, is incorporated herein by this
reference:
<PAGE> 3
<TABLE>
<CAPTION>
Exhibit No.
-----------
<S> <C>
Agreement of Limited Partnership 4.2
Marketing Agreement, dated August 5, 1987, between 10.1
Atrix Laboratories, Inc. and the Registrant
Purchase Option Agreement, dated August 5, 1987, 10.2
between Atrix Laboratories, Inc. and the Registrant
The following exhibits are included herewith:
Amendment No. 1 to the Agreement of
Limited Partnership 4.3
First Amendment to the Marketing Agreement 10.3
between the Company and the Partnership
dated as of October 14, 1992
First Amendment to the Purchase Option Agreement 10.4
between the Company and the Partnership
dated as of October 14, 1992
</TABLE>
(b) Reports on Form 8-K:
No reports on Form 8-K were filed during the last quarter of
the period covered by this report.
2
<PAGE> 4
SIGNATURES
Pursuant to the requirements of Section 13 and 15(d) 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.
VIPONT ROYALTY INCOME FUND, LTD.
(Registrant)
By: ATRIX LABORATORIES, INC.
Its General Partner
August 17, 1995 By: /s/ John E. Urheim
----------------------------------------------
John E. Urheim, Vice Chairman of the Board and
Chief Executive Officer
<PAGE> 5
VIPONT ROYALTY INCOME FUND, LTD.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
REPORT OF INDEPENDENT AUDITORS F-1
FINANCIAL STATEMENTS:
Balance Sheets - December 31, 1994 and 1993 F-2
Statements of Operations - Years Ended December 31, 1994, 1993 and 1992 F-3
Statements of Changes in Partners' Equity (Deficit) - Years Ended December 31,
1994, 1993 and 1992 F-4
Statements of Cash Flows - Years Ended December 31, 1994, 1993 and 1992 F-5
NOTES TO FINANCIAL STATEMENTS F-6 - F-8
</TABLE>
<PAGE> 6
REPORT OF INDEPENDENT AUDITORS
To the Partners of
Vipont Royalty Income Fund, Ltd.
Fort Collins, Colorado
We have audited the accompanying balance sheets of Vipont Royalty Income Fund,
Ltd., (the Partnership) as of December 31, 1994 and 1993, and the related
statements of operations, changes in partners' equity (deficit), and cash flows
for each of the three years in the period ended December 31, 1994. These
financial statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Partnership at December 31, 1994 and
1993, and the results of its operations and its cash flows for each of the
three years in the period ended December 31, 1994, in conformity with generally
accepted accounting principles.
/s/ DELOITTE & TOUCHE LLP
-------------------------------
DELOITTE & TOUCHE LLP
Denver, Colorado
January 26, 1995
F-1
<PAGE> 7
VIPONT ROYALTY INCOME FUND, LTD.
BALANCE SHEETS
DECEMBER 31, 1994 AND 1993
ASSETS
<TABLE>
<CAPTION>
1994 1993
------------ -----------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ --- $ ---
------------ -----------
TOTAL $ --- $ ---
============ ===========
LIABILITIES AND PARTNERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable - general partner $ 131,900 $ 103,274
------------ -----------
Total current liabilities 131,900 103,274
------------ -----------
COMMITMENTS (Note 3) --- ---
PARTNERS' DEFICIT
General partner 102,465 102,465
Limited partners (5,175 units
authorized, issued and outstanding) 8,901,000 8,901,000
Accumulated deficit (9,135,365) (9,106,739)
------------ -----------
Total partners' deficit (131,900) (103,274)
------------ -----------
TOTAL $ --- $ ---
============ ===========
</TABLE>
See notes to financial statements.
F-2
<PAGE> 8
VIPONT ROYALTY INCOME FUND, LTD.
STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
<TABLE>
<CAPTION>
1994 1993 1992
------------ ----------- ------------
<S> <C> <C> <C>
EXPENSES:
General and administrative
expenses $ 28,626 $ 35,245 $ 155,640
--------- -------- ---------
Total expenses 28,626 35,245 155,640
INTEREST INCOME --- --- 1,997
--------- -------- ---------
NET LOSS $ (28,626) $(35,245) $(153,643)
========= ======== =========
NET LOSS PER LIMITED PARTNERSHIP
INTEREST $ (5) $ (7) $ (29)
========= ======== =========
</TABLE>
See notes to financial statements.
F-3
<PAGE> 9
VIPONT ROYALTY INCOME FUND, LTD.
STATEMENTS OF CHANGES IN PARTNERS' EQUITY (DEFICIT)
YEARS ENDED DECEMBER 31, 1994, 1993, AND 1992
<TABLE>
<CAPTION>
General Limited
Partner 1% Partners 99% Total
---------- ------------ ------------
<S> <C> <C> <C>
BALANCE, December 31, 1991 $13,287 $ 72,327 $ 85,614
------- --------- ---------
Net Loss (1,536) (152,107) (153,643)
------- --------- ---------
BALANCE, December 31, 1992 $11,751 $ (79,780) $ (68,029)
------- --------- ---------
Net Loss (352) (34,893) (35,245)
------- --------- ---------
BALANCE, December 31, 1993 $11,399 $(114,673) $(103,274)
------- --------- ---------
Net Loss (286) (28,340) (28,626)
------- --------- ---------
BALANCE, December 31, 1994 $11,113 $(143,013) $(131,900)
======= ========= =========
</TABLE>
See notes to financial statements.
F-4
<PAGE> 10
VIPONT ROYALTY INCOME FUND, LTD.
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
<TABLE>
<CAPTION>
1994 1993 1992
------------- ------------- -------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(28,626) $(35,245) $(153,643)
Adjustments to reconcile net loss to net cash
used in operating activities:
Changes in operating assets and liabilities:
Accounts payable - Trade --- --- (1,000)
Accounts payable - General partner 28,626 35,245 53,239
-------- -------- ---------
Cash used in operating activities --- --- (101,404)
NET DECREASE IN CASH AND CASH EQUIVALENTS --- --- (101,404)
CASH AND CASH EQUIVALENTS, BEGINNING
OF YEAR --- --- 101,404
-------- -------- ---------
CASH AND CASH EQUIVALENTS, END OF YEAR $ --- $ --- $ ---
======== ======== =========
</TABLE>
See notes to financial statements.
F-5
<PAGE> 11
VIPONT ROYALTY INCOME FUND, LTD.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Vipont Royalty Income Fund, Ltd. (the Partnership) is a Colorado Limited
Partnership which was formed on August 5, 1987. The Partnership's activities
to date have consisted of funding the research and development of new
periodontal products for therapeutic use. Pursuant to a vote of the limited
partners on June 20, 1990, Atrix Laboratories, Inc. (Atrix) was substituted as
the General Partner of the Partnership and owns 1 percent of the Partnership.
Pursuant to the partnership agreement, profits, losses, and distributions
are allocated one percent to the General Partner and ninety-nine percent to the
limited partners based on their respective ownership interests.
CASH AND CASH EQUIVALENTS
Cash equivalents include all highly liquid investments with a maturity
of three months or less.
RESEARCH AND DEVELOPMENT COSTS
Research and development was performed for the Partnership under a
research agreement with Atrix (Note 2). All costs associated with the
research were expensed as they were incurred. Atrix allocated costs
to the Partnership for those items which related directly to the
research performed on behalf of the Partnership.
GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses include bank service charges,
legal fees, management fees and office expenses.
INCOME TAXES
The Partnership is not considered a taxable entity for federal and
state income tax purposes. Any taxable income or losses are reported
by the partners on their own tax returns in accordance with the
partnership agreement.
LOSS PER LIMITED PARTNERSHIP INTERESTS
The loss per limited partnership interest is calculated based on the
5,175 limited partnership units outstanding.
F-6
<PAGE> 12
VIPONT ROYALTY INCOME FUND, LTD.
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
2. RESEARCH AND DEVELOPMENT
Effective August 5, 1987, the Partnership entered into contracts with Atrix
to perform research and development for new therapeutic periodontal treatment
products and the development of a method of producing sanguinarine from plant
cells in tissue culture.
Under the terms of the contracts, the Partnership made annual advance
payments to Atrix for the estimated yearly cost of the research. The advance
payments were expensed monthly as the funds were used to perform research.
Atrix received 18.3 percent of all direct and indirect research costs as
overhead reimbursement. During the year ended December 31, 1991, the remaining
funds raised by the Partnership were expended. Atrix has elected to use its
funds to continue research and development activities related to the Perio
Product.
3. RELATED PARTY TRANSACTIONS AND COMMITMENTS
See Note 2 for additional related party transactions.
The Partnership is required to pay the General Partner $12,000 annually for
management fees. The Partnership incurred $12,000 in management fees for each
year ended December 31, 1994, 1993 and 1992. The Partnership owed the General
Partner $131,900 at December 31, 1994 and $103,274 at December 31, 1993 for
expenses incurred by the General Partner on behalf of the Partnership.
The Partnership's payable to the General Partner is a result of
administrative expenses being paid by the General Partner. As the Partnership
will no longer be able to pay continued administrative expenses of the
Partnership, the General Partner has agreed to continue to fund these continued
expenses.
Pursuant to a marketing agreement, the Partnership has granted Atrix the
exclusive right, subject to certain conditions, to manufacture and market
therapeutic periodontal treatment products (the Product), if developed. In
exchange for the manufacturing and marketing rights, Atrix is required to pay
the Partnership quarterly royalty payments in the following amounts: (i) 12
percent of gross sales revenues, as that term is defined in the marketing
agreement, until such time as they equal two times the gross proceeds from the
public offering of Partnership units in 1987 allocated to the research and
development of the Perio Product; (ii) thereafter, 8% of gross sales revenues
until such time as they equal an additional two times the gross proceeds from
the public offering of Partnership units in 1987 allocated to research and
development of
F-7
<PAGE> 13
VIPONT ROYALTY INCOME FUND, LTD.
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
the Perio Product; and (iii) thereafter, 4% of gross sales revenues and
continuing until the earlier of certain events, more particularly set forth in
the marketing agreement.
The Partnership has granted Atrix the exclusive right, but not the
obligation, to purchase all of the Partnership's right, title and interest in
the therapeutic periodontal treatment technology and products. The exercise
price for the option is equal to two times the gross proceeds from the public
offering of the Partnership units in 1987 allocated to the research and
development of the Perio Product. This option cannot be exercised until the
partners have received four times their initial investment relating to the
Perio Product.
F-8
<PAGE> 14
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Exhibit Description Page
----------- ------------------- ----
<S> <C> <C>
4.3 Amendment No. 1 to the Agreement of
Limited Partnership
10.3 First Amendment to the Marketing Agreement between
the Company and the Partnership dated as of
October 14, 1992
10.4 First Amendment to the Purchase Option Agreement
between the Company and the Partnership dated
as of October 14, 1992
</TABLE>
<PAGE> 1
Exhibit 4.3
AMENDMENT NO. 1 TO
VIPONT ROYALTY INCOME FUND, LTD.
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
This Amendment No. 1 to Vipont Royalty Income Fund, Ltd. Amended and
Restated Agreement of Limited Partnership ("Amendment No. 1"), dated as of
October 14, 1992, by and between Atrix Laboratories, Inc., a Delaware
corporation ("Atrix" or the "General Partner"), and those persons admitted as
limited partners (the "Limited Partners") pursuant to the Amended and Restated
Agreement and the Prior Agreement, both as defined below. This Amendment No. 1
amends the Vipont Royalty Income Fund, Ltd. Amended and Restated Agreement of
Limited Partnership dated as of June 20, 1990 (the "Amended and Restated
Agreement"), as well as the Partnership Documents, as hereinafter defined.
WHEREAS, Vipont Royalty Income Fund, Ltd. (the "Partnership") was formed as
a limited partnership upon the filing of a Certificate of Limited Partnership
dated August 5, 1987 in the office of the Secretary of State of the State of
Colorado, pursuant to the terms of the Agreement of Limited Partnership of the
Partnership, dated August 5, 1987 (the "Prior Agreement"); and
WHEREAS, the Partnership and the General Partner entered into the Technology
Transfer Agreement, the Research and Development Agreement, the Marketing
Agreement and the Purchase Option Agreement, all dated as of an even date with
the Prior Agreement (collectively and together with the Amended and Restated
Agreement, referred to herein as the "Partnership Documents"), for the purpose
of developing a biodegradable periodontal pocket treatment containing
sanguinarine or other benzophenanthridine alkaloids; and
WHEREAS, the funding provided by the Partnership to develop and test the
Perio Product-Sanguinarine was exhausted prior to September 30, 1991 and since
that date the General Partner has advanced funds to the Partnership to complete
the Phase III Clinical Studies and to conduct a clarifying study; and
WHEREAS, at a Special Meeting of the Limited Partners of the Partnership,
duly called and held on October 14, 1992, the Limited Partners approved a
proposal to authorize the General Partner to amend the Partnership Documents to
permit the General Partner to share in certain royalties and proceeds from the
sale of rights related to the Perio Product, as more fully described in the
Proposal section of the Partnership's Special Meeting Proxy Statement dated
August 31, 1992 (the "Proxy Statement").
<PAGE> 2
NOW, THEREFORE, in consideration of the mutual promises and agreements made
herein, the parties hereto, intending to be legally bound, hereby agree as
follows:
1. DEFINITIONS.
"Partnership Documents" means together, the Amended and Restated
Agreement of Limited Partnership, Technology Transfer Agreement, Research
and Development Agreement, Marketing Agreement, and the Purchase Option
Agreement, all between Atrix Laboratories, Inc. and the Partnership.
"Perio Product" means a biodegradable periodontal pocket treatment with
or without an active agent.
"Perio Product-Doxycycline" means the Perio Product with doxycycline.
"Perio Product-Sanguinarine" means the Perio Product with sanguinarine
or other benzophenanthridine alkaloids.
"Proposal" shall mean the proposal submitted to the Limited Partners to
amend the Partnership Documents to permit the Partnership and the General
Partner to share in certain royalties and proceeds from the sale of rights
related to the Perio Product.
"Vehicle Control" means the Perio Product utilizing the biodegradable
and biocompatible polymer without an active agent.
2. AMENDMENTS TO THE AMENDED AND RESTATED AGREEMENT. The Amended and
Restated Agreement is amended as follows:
(a) Section 1.04 is amended in its entirety to read as follows:
Section 1.04. CHARACTER OF BUSINESS: The business of the
Partnership shall be to conduct a research and development program so
as to develop, clinically test, manufacture and market (after having
received all necessary United States and foreign governmental
approvals) a timed release periodontal pocket treatment for effective
delivery of (i) sanguinarine or other benzophenanthridine alkaloids,
(ii) doxycycline, or (iii) a Perio Product without an active agent, to
the gingival pocket to treat periodontal disease and to own, license or
sell such treatment and the technology related thereto.
2
<PAGE> 3
(b) A new Section 5.06 shall be added as follows:
Section 5.06. ROYALTIES AND SALES. The Partnership and the General
Partner shall share in all royalties and any proceeds from the sale of
rights related to the Perio Product on a percentage basis representing
the ratio of the total costs, including, but not limited to all costs
for testing, development and securing regulatory approval, if ever, of
the Perio Product to the amount that each party has contributed
("Percentage Contribution") through the date of such regulatory
approval. For the purposes of this Section 5.06, the Limited Partners
shall be credited with $10,350,000, the amount raised in the initial
public offering of the Partnership, in determining its Percentage
Contribution.
(c) The appropriate provisions of the Amended and Restated Agreement
are hereby amended to the extent necessary to take into effect the
amendments set forth in this Amendment No. 1, as more fully described and
set forth in the Proposal section of the Proxy Statement, a copy of which is
attached hereto as Exhibit A and made part hereof.
3. OTHER AGREEMENTS. Except as modified hereby or to conform to the
provisions of the Proposal, the Amended and Restated Documents shall remain in
full force and effect in accordance with its terms.
3
<PAGE> 4
IN WITNESS WHEREOF, the parties hereto have executed this Amendment No. 1 as
of the date first above written.
GENERAL PARTNER:
ATRIX LABORATORIES, INC.
By: /s/ Dr. G. Lee Southard
---------------------------
Dr. G. Lee Southard, President
LIMITED PARTNERS:
By: Atrix Laboratories, Inc.,
their Attorney-in-Fact
ATRIX LABORATORIES, INC.
By: /s/ Dr. G. Lee Southard
--------------------------------
Dr. G. Lee Southard, President
4
<PAGE> 1
Exhibit 10.3
FIRST AMENDMENT TO MARKETING AGREEMENT
This First Amendment to Marketing Agreement, dated as of October 14,
1992, by and between Atrix Laboratories, Inc. (formerly known as Vipont Research
Laboratories, Inc.), a Delaware corporation ("Atrix"), and Vipont Royalty Income
Fund, Ltd., a Colorado limited partnership (the "Partnership").
WHEREAS, the Partnership was formed as a limited partnership upon the
filing of a Certificate of Limited Partnership dated August 5, 1987 in the
office of the Secretary of State of the State of Colorado, pursuant to the terms
of the Agreement of Limited Partnership of the Partnership, dated August 5, 1987
(the "Prior Agreement"), and amended and restated pursuant to the Amended and
Restated Agreement dated as of June 20, 1990 (the "Amended and Restated
Agreement"); and
WHEREAS, the Partnership and Atrix entered into the Technology Transfer
Agreement, the Research and Development Agreement, the Marketing Agreement and
the Purchase Option Agreement, all dated as of an even date with the Prior
Agreement (collectively and together with the Amended and Restated Agreement,
referred to herein as the "Partnership Documents"), for the purpose of
developing a biodegradable periodontal pocket treatment containing sanguinarine
or other benzophenanthridine alkaloids; and
WHEREAS, the funding provided by the Partnership to develop and test
the Perio Product-Sanguinarine was exhausted prior to September 30, 1991 and
since that date Atrix has advanced funds to the Partnership to complete the
Phase III Clinical Studies and to conduct a clarifying study; and
WHEREAS, at a Special Meeting of the Limited Partners of the
Partnership, duly called and held on October 14, 1992, the Limited Partners
approved a proposal to authorize Atrix to amend the Partnership Documents to
permit Atrix to share in certain royalties and proceeds from the sale of rights
related to the Perio Product, as more fully described in the Proposal section of
the Partnership's Special Meeting Proxy Statement dated August 31, 1992 (the
"Proxy Statement").
NOW, THEREFORE, in consideration of the mutual promises and agreements
made herein, the parties hereto, intending to be legally bound, hereby agree as
follows:
1. DEFINITIONS.
"Partnership Documents" means together, the Amended and
Restated Agreement of Limited Partnership, Technology Transfer
Agreement, Research and Development Agreement, Marketing Agreement, and
the Purchase Option Agreement, all between Atrix Laboratories, Inc. and
the Partnership.
<PAGE> 2
"Percentage Contribution" means a percentage representing the
ratio of the total costs, including, but not limited to all costs for
testing, development and securing regulatory approval, if ever, of the
Perio Product with an active agent, sanguinarine or doxycycline, and
the Perio Product without an active agent, to the amount that each
party has contributed through the date of such regulatory approval. For
purposes of this definition, the Limited Partners shall be credited
with $10,350,000, the amount raised in the initial public offering of
the Partnership.
"Perio Product" means a biodegradable periodontal pocket
treatment with or without an active agent.
"Perio Product-Doxycycline" means the Perio Product with
doxycycline.
"Perio Product-Sanguinarine" means the Perio Product with
sanguinarine or other benzophenanthridine alkaloids.
"Proposal" shall mean the proposal submitted to the Limited
Partners to amend the Partnership Documents to permit the Partnership
and the General Partner to share in certain royalties and proceeds from
the sale of rights related to the Perio Product.
"Sale of Rights" means the sale of rights related to the Perio
Product, including, but not limited to, licenses granted to
unaffiliated third parties.
"Vehicle Control" means the Perio Product utilizing the
biodegradable and biocompatible polymer without an active agent.
2. Article 4 of the Marketing Agreement is amended in its entirety
to read as follows:
If Atrix has not, within nine months after regulatory
approval of the Treatment has been obtained in any country,
introduced the Treatment to the commercial market place in such
country, then Atrix's rights hereunder shall no longer apply to
any such country and the Partnership shall thereafter have the
right to enter into exclusive agreements with third parties for
the manufacture and sale of the Treatment in each such country
in which Atrix's rights hereunder no longer apply, provided,
however, that Atrix shall have the right to a proportionate
share of royalties and any proceeds from the sale of rights
related to the Treatment, on a percentage basis representing
Atrix's Percentage Contribution. In addition, Atrix expressly
consents to the granting of a sublicense to any such third
party to use the Existing Sanguinarine Technology to
manufacture and market the Treatment, subject to the terms and
conditions of the Technology
2
<PAGE> 3
Transfer Agreement. This right of the Partnership shall be subject, in
all cases and all countries, to the requirements that (i) the royalties
payable to the Partnership by each third party shall not be less than
(12) percent of all Gross Sales Revenues from the sale of the
Treatment, and (ii) each third party agrees to be bound by and to
comply with the other terms and conditions of this Agreement with
respect to its manufacturing and sale of the Treatment.
3. Article 5 of the Marketing Agreement is amended in its entirety to read
as follows:
5.1 ROYALTIES. In consideration of the exclusive rights granted
to Atrix hereunder, Atrix shall make quarterly payments to the
Partnership based on Gross Sales Revenues of the Perio Product as
follows:
(a) Twelve (12) percent of all Gross Sales Revenues multiplied
by the Partnership's Percentage Contribution, for a period of time to
begin upon the date on which the first Gross Sales Revenues are
received by Atrix and to end upon the date on which Atrix has, pursuant
to this Agreement, paid or accrued an obligation to pay to the
Partnership an amount equal to the Partnership's Percentage
Contribution multiplied by $18,000,000;
(b) Eight (8) percent of all Gross Sales Revenues multiplied by
the Partnership's Percentage Contribution, for a period of time to
begin upon the date on which Atrix has, pursuant to this Agreement,
paid or accrued an obligation to pay to the Partnership an amount equal
to $18,000,000 and to end upon the date on which Atrix has, pursuant to
this Agreement, paid or accrued an obligation to pay to the Partnership
an amount equal to the Partnerships Percentage Contribution multiplied
by $36,000,000; and
(c) Four (4) percent of all Gross Sales Revenues multiplied by
the Percentage Contribution, for a period of time to begin upon the
date on which Atrix has, pursuant to this Agreement, paid or accrued an
obligation to pay to the Partnership an amount equal to the Percentage
Contribution multiplied by $36,000,000 and to end upon the earlier of
(i) the exercise of the option contained in the Purchase Option
Agreement (the "Purchase Option"); (ii) the termination of this
Marketing Agreement; or (iii) the termination of the Partnership.
3
<PAGE> 4
5.2 PROCEEDS FROM SALE OF RIGHTS. In consideration of the
exclusive rights granted to Atrix hereunder, the Partnership shall be
entitled to receive a portion of any proceeds received by Atrix from
the Sale of Rights. The Partnership's percentage interest in any such
proceeds shall be equal to its Percentage Contribution multiplied by
any proceeds received from the Sale of Rights; provided, however,
proceeds from the Sale of Rights shall only be payable to the
Partnership to the extent required in Section 5.1. Notwithstanding the
above the Partnership shall not be entitled to proceeds or payments
from the Sale of Rights to the extent such proceeds are for the
testing, development or securing regulatory approval of the Perio
Product.
4. EFFECTIVE DATE. The effective date of this First Amendment shall be
October 14, 1992.
5. TERMS. Terms used herein and not otherwise defined in this First
Amendment shall have the meaning ascribed to each of them in the Marketing
Agreement.
6. NO OTHER MODIFICATIONS. The intent of the parties hereto is to modify
only those provisions of the Marketing Agreement as are set forth herein. All
other terms and provisions set forth in the Marketing Agreement shall remain in
full force and effect.
7. NO WAIVER. Nothing in this First Amendment shall be construed as a
waiver by either party of any of its rights to exercise any right, power or
remedy hereunder or under the Marketing Agreement.
8. COUNTERPARTS. This First Amendment may be executed in counterparts, and
the signed originals shall be sent, via facsimile, to each party, each of which
shall be deemed to be an original and all of which when taken together shall
constitute a single agreement.
4
<PAGE> 5
IN WITNESS WHEREOF, the parties hereto have executed this First
Amendment as of the date first above written.
ATRIX LABORATORIES, INC.
By: /s/ Dr. G. Lee Southard
---------------------------
Dr. G. Lee Southard, President
VIPONT ROYALTY INCOME FUND, LTD.
By: /s/ Dr. G. Lee Southard
---------------------------
Dr. G. Lee Southard, President,
Atrix Laboratories, Inc., general
partner of Vipont Royalty Income
Fund, Ltd.
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Exhibit 10.4
FIRST AMENDMENT TO PURCHASE OPTION AGREEMENT
This First Amendment to Purchase Option Agreement, dated as of October
14, 1992, by and between Atrix Laboratories, Inc. (formerly known as Vipont
Research Laboratories, Inc.), a Delaware corporation ("Atrix"), and Vipont
Royalty Income Fund, Ltd., a Colorado limited partnership (the "Partnership").
WHEREAS, the Partnership was formed as a limited partnership upon the
filing of a Certificate of Limited Partnership dated August 5, 1987 in the
office of the Secretary of State of the State of Colorado, pursuant to the terms
of the Agreement of Limited Partnership of the Partnership, dated August 5, 1987
(the "Prior Agreement"), and amended and restated pursuant to the Amended and
Restated Agreement dated as of June 20, 1990 (the "Amended and Restated
Agreement"); and
WHEREAS, the Partnership and Atrix entered into the Technology Transfer
Agreement, the Research and Development Agreement, the Purchase Option Agreement
and the Purchase Option Agreement, all dated as of an even date with the Prior
Agreement (collectively and together with the Amended and Restated Agreement,
referred to herein as the "Partnership Documents"), for the purpose of
developing a biodegradable periodontal pocket treatment containing sanguinarine
or other benzophenanthridine alkaloids; and
WHEREAS, the funding provided by the Partnership to develop and test
the Perio Product-Sanguinarine was exhausted prior to September 30, 1991 and
since that date Atrix has advanced funds to the Partnership to complete the
Phase III Clinical Studies and to conduct a clarifying study; and
WHEREAS, at a Special Meeting of the Limited Partners of the
Partnership, duly called and held on October 14, 1992, the Limited Partners
approved a proposal to authorize Atrix to amend the Partnership Documents to
permit Atrix to share in certain royalties and proceeds from the sale of rights
related to the Perio Product, as more fully described in the Proposal section of
the Partnership's Special Meeting Proxy Statement dated August 31, 1992 (the
"Proxy Statement").
NOW, THEREFORE, in consideration of the mutual promises and agreements
made herein, the parties hereto, intending to be legally bound, hereby agree as
follows:
1. DEFINITIONS.
"Percentage Contribution" means a percentage representing the
ratio of the total costs, including, but not limited to all costs for
testing, development and securing regulatory approval, if ever, of the
Perio Product with an active agent, sanguinarine or doxycycline, and
the Perio Product without an active agent, to the amount that each
party
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has contributed through the date of such regulatory approval. For
purposes of this definition, the Limited Partners shall be credited
with $10,350,000, the amount raised in the initial public offering of
the Partnership.
"Perio Product" means a biodegradable periodontal pocket
treatment with or without an active agent.
"Purchase Option" shall mean the exclusive right, but not the
obligation, to purchase all of the Partnership's right, title and
interest in and to the Perio Product, on the terms and conditions set
forth in this Agreement.
"Sale of Rights" means the sale of rights related to the Perio
Product, including, but not limited to, licenses granted to
non-affiliated third parties.
2. Article 2 of the Purchase Option Agreement is amended in its
entirety to read as follows:
2.1. EXERCISE. Subject to the terms of this Agreement,
the Partnership hereby irrevocably and exclusively grants to
Atrix and its Affiliates the Purchase Option. The Purchase
Option shall not be exercisable until after such time, if ever,
as Atrix has paid or accrued an obligation to pay to the
Partnership, pursuant to the Marketing Agreement, royalties on
Gross Sales Revenues and/or proceeds from the Sale of Rights
equal to the Partnership's Percentage Contribution multiplied
by $36,000,000. Atrix or its Affiliates may exercise the
Purchase Option by notifying the Partnership of its exercise in
writing, after which time Atrix shall have no obligation to pay
any additional royalties or proceeds from the Sale of Rights
which accrue after the Purchase Option Notice Date pursuant to
the Purchase Option Agreement.
2.2. PURCHASE PRICE. The exercise price of the
Purchase Option (the "Purchase Price") shall be equal to the
sum of the Partnership's Percentage Contribution multiplied by
$18,000,000 and is payable in cash or such other forms of
consideration as the parties hereto and Limited Partners owning
at that time not less than 75% of the Partnership's Interests
may agree, such Purchase Price to be paid on the Purchase
Option Exercise Date (or such later date as the parties hereto
and Limited Partners owning at that time not less than 75% of
the Partnership's Interests may agree).
3. EFFECTIVE DATE. The effective date of this First Amendment
shall be October 14, 1992.
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4. TERMS. Terms used herein and not otherwise defined in this First
Amendment shall have the meaning ascribed to each of them in the Purchase Option
Agreement.
5. NO OTHER MODIFICATIONS. The intent of the parties hereto is to
modify only those provisions of the Purchase Option Agreement as are set forth
herein. All other terms and provisions set forth in the Purchase Option
Agreement shall remain in full force and effect.
6. NO WAIVER. Nothing in this First Amendment shall be construed as a
waiver by either party of any of its rights to exercise any right, power or
remedy hereunder or under the Purchase Option Agreement.
7. COUNTERPARTS. This First Amendment may be executed in counterparts,
and the signed originals shall be sent, via facsimile, to each party, each of
which shall be deemed to be an original and all of which when taken together
shall constitute a single agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this First
Amendment as of the date first above written.
ATRIX LABORATORIES, INC.
By: /s/ Dr. G. Lee Southard
---------------------------
Dr. G. Lee Southard, President
VIPONT ROYALTY INCOME FUND, LTD.
By: /s/ Dr. G. Lee Southard
---------------------------
Dr. G. Lee Southard, President,
Atrix Laboratories, Inc., general
partner of Vipont Royalty Income
Fund, Ltd.
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