<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1995
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 0-15609
AGOURON PHARMACEUTICALS, INC.
(Exact name of registrant as specified in its charter)
CALIFORNIA 33-0061928
(State or other jurisdiction of (I.R.S. employer identification no.)
incorporation or organization)
10350 NORTH TORREY PINES ROAD, LA JOLLA, CALIFORNIA 92037-1020
(Address and zip code of principal executive offices)
(619) 622-3000
(Registrant's telephone number, including area code)
NONE
(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:
Approximately 10,525,000 shares of the Company's Common Stock, no par
value, were outstanding as of January 26, 1996.
<PAGE>
AGOURON PHARMACEUTICALS, INC.
INDEX
Page No.
Part I. Financial Information
Item 1. Financial Statements
Balance Sheet - 3
December 31, 1995 and June 30, 1995
Statement of Operations - Three and Six 4
Months Ended December 31, 1995 and 1994
Statement of Cash Flows- 5
Six Months Ended December 31, 1995 and 1994
Notes to Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial 7
Condition and Results of Operations
Part II. Other Information
Item 1. Legal Proceedings 9
Item 2. Changes in Securities 9
Item 3. Defaults Upon Senior Securities 9
Item 4. Submission of Matters to a Vote of Security Holders 9
Item 5. Other Information 9
Item 6. Exhibits and Reports on Form 8-K 9
Signature 10
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
AGOURON PHARMACEUTICALS, INC.
BALANCE SHEET
(Dollars in thousands)
December 31, June 30,
1995 1995
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 10,629 $ 4,358
Short-term investments 98,134 15,886
Accounts receivable 214 344
Other current assets 919 871
-------- --------
Total current assets 109,896 21,459
Property and equipment, net of accumulated
depreciation and amortization of $12,512 and $11,344
5,441 5,638
$ 115,337 $ 27,097
-------- --------
-------- --------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 9,151 $ 5,426
Accrued liabilities 945 683
Deferred revenue 17,050 5,745
Current portion of long-term debt 506 768
-------- --------
Total current liabilities 27,652 12,622
-------- --------
Long-term liabilities:
Long-term debt, less current portion 363 580
Accrued rent 1,281 1,304
-------- --------
Total long-term liabilities 1,644 1,884
-------- --------
-------- --------
Stockholders' equity:
Common stock, no par value, 75,000,000 shares
authorized, 10,486,662 and 7,359,282 shares
issued and outstanding 156,218 76,113
Accumulated deficit (70,177) (63,522)
-------- --------
Total stockholders' equity 86,041 12,591
-------- --------
$ 115,337 $ 27,097
-------- --------
-------- --------
See accompanying notes to financial statements.
<PAGE>
AGOURON PHARMACEUTICALS, INC.
STATEMENT OF OPERATIONS
(Unaudited)
(Dollars in thousands, except per share amounts)
Three Months Ended Six Months Ended
December 31, December 31,
1995 1994 1995 1994
Revenues:
Contracts $ 9,592 $ 6,501 $ 20,555 $ 12,336
Interest 1,597 313 1,994 642
---------- --------- --------- ---------
11,189 6,814 22,549 12,978
---------- --------- --------- ---------
Costs and expenses:
Research and development 14,188 7,037 26,716 15,022
General and administrative 1,092 999 2,341 1,865
Interest 41 54 147 106
---------- --------- --------- ---------
15,321 8,090 29,204 16,993
---------- --------- --------- ---------
Net loss $ (4,132) $ (1,276) $ (6,655) $ (4,015)
---------- --------- --------- ---------
---------- --------- --------- ---------
Net loss per common share $ (.40) $ (.18) $ (.73) $ (.55)
---------- --------- --------- ---------
---------- --------- --------- ---------
Shares used in computing net loss
per common share 10,432,000 7,279,000 9,076,000 7,279,000
---------- --------- --------- ---------
See accompanying notes to financial statements.
<PAGE>
AGOURON PHARMACEUTICALS, INC.
STATEMENT OF CASH FLOWS
(Unaudited)
(Dollars in thousands)
Six Months Ended
December 31,
1995 1994
------ ------
Cash flows from operating activities:
Cash received from contracts $ 31,990 $ 14,071
Cash paid to suppliers, employees and
service providers (24,039) (13,901)
Interest received 1,994 642
Interest paid (147) (106)
------- -------
Net cash provided (used) by operating
activities 9,798 706
------- -------
Cash flows from investing activities:
Net (increase) decrease in short-term
investments (82,248) 4,918
Expenditures for property and equipment (905) (1,624)
------- -------
Net cash provided (used) by investing
activities (83,153) 3,294
------- -------
Cash flows from financing activities:
Net proceeds from issuance of common stock 80,105 136
Principal payments under equipment leases (218) (302)
Increase (decrease) in long-term debt, net (261) 101
------- -------
Net cash provided (used) by financing
activities 79,626 (65)
Net increase (decrease) in cash and cash
equivalents 6,271 3,935
Cash and cash equivalents at beginning of
period 4,358 2,104
------- -------
Cash and cash equivalents at end of period $ 10,629 $ 6,039
------- -------
------- -------
Reconciliation of net loss to net cash
provided (used) by operating activities:
Net loss $ (6,655) $ (4,015)
Depreciation and amortization 1,102 1,230
Net (increase) decrease in accounts
receivable and other current assets 82 (7)
Net increase (decrease) in accounts
payable, accrued liabilities, deferred
revenue and accrued rent 15,269 3,498
------- -------
Net cash provided (used) by operating
activities $ 9,798 $ 706
------- -------
------- -------
See accompanying notes to financial statements.
<PAGE>
AGOURON PHARMACEUTICALS, INC.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
1. Nature of Operations
Agouron Pharmaceuticals, Inc. is involved in the research and
development of novel synthetic drugs for the treatment of cancer, viral
diseases and immuno-inflammatory disease. The Company intends to
commercialize any successfully developed products through its own
direct sales and marketing activities in certain markets or, when
appropriate, through manufacturing and marketing relationships with
other pharmaceutical companies.
2. Financial Statements and Estimates
The balance sheet as of December 31, 1995 and the statements of
operations and cash flows for the three-month and six-month periods
ended December 31, 1995 and 1994 have been prepared by the Company and
have not been audited. Such financials, in the opinion of management,
include all adjustments (consisting only of normal, recurring accruals)
necessary to present fairly the financial position, results of
operations and cash flows for all periods presented. These financial
statements should be read in conjunction with the financial statements
and notes thereto included in the Company's June 30, 1995 Annual Report
on Form 10-K. Interim operating results are not necessarily indicative
of operating results for the full year.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets,
liabilities, revenues and expenses and related disclosures as of the
date of the financial statements. Actual results could differ from
such estimates.
At December 31, 1995, it has been assumed that the existing
collaborations with Japan Tobacco Inc. ("JT") will continue in
accordance with their agreement terms. As such, approximately
$16,502,000 of cash received from JT has been classified as deferred
contract revenue and is being recognized as revenue on a prospective
basis as collaborative program expenses are incurred. Should any of
the underlying collaborations be terminated in advance of their
contract terms, any deferred contract revenues related to such
collaborations would immediately be recognized as revenue by the
Company.
3. Short-term Investments
Included in short-term investments at December 31, 1995 and June 30,
1995 is $1,444,000 and $172,000 of accrued interest receivable.
Included in short-term investments at December 31, 1995 is $400,000
which has been pledged as collateral in conjunction with certain
long-term debt obligations.
At December 31, 1995, the Company's short-term investments are
generally available for sale and are carried at amortized cost which
approximates market. These investments, consisting principally of
United States government securities (78%) and corporate obligations
(19%), have average maturities of less than one year.
4. Certain Concentrations
A significant portion of the Company's research and development
expenditures are related to programs funded in whole or in part by JT.
The termination of such collaborative research and development programs could
result in the absence of any prospective funding for such programs
and the need to evaluate the level of future program spending, if any.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
When used in this discussion, the words "believes", "anticipated" and
similar expressions are intended to identify forward-looking
statements. Such statements are subject to certain risks and
uncertainties which could cause actual results to differ materially
from those projected. See "Important Factors Regarding Forward-Looking
Statements" attached hereto as Exhibit 99 and incorporated herein by
reference. Readers are cautioned not to place undue reliance on these
forward-looking statements which speak only as of the date hereof. The
Company undertakes no obligation to publicly release the result of any
revisions to these forward-looking statements which may be made to
reflect events or circumstances after the date hereof or to reflect the
occurrence of unanticipated events.
Financial Condition
The Company relies principally on equity financings and corporate
collaborations to fund its operations and capital expenditures. At
December 31, 1995, due principally to the receipt of a $24,000,000
milestone payment from Japan Tobacco, Inc. ("JT") in August and the net
proceeds of approximately $78,589,000 from a public offering of common
stock in September, the Company had cash, cash equivalents and
short-term investments of approximately $108,763,000. Management
believes that its present capital resources, plus the funding from
certain existing collaborative relationships, will be sufficient to
meet its working capital needs at least through fiscal 1997. The
Company may require additional long-term financing to meet the
operating needs of fiscal 1998 and beyond. The Company will consider
various financing vehicles to meet such needs including collaborative
arrangements and public offerings or private placements of Company
common or preferred stock. If such vehicles are not available, the
Company may be required to delay or eliminate expenditures for certain
of its products or to license third parties to commercialize products
or technologies that the Company would otherwise seek to develop
itself.
Results of Operations
The Company is engaged in the research and development of human
pharmaceuticals utilizing protein structure-based drug design. Such
research and development has been funded from the Company's
equity-derived working capital and through various collaborative
arrangements. The Company's net operating losses reflect primarily the
result of its independent research and continued increasing investment
in clinical development activities concentrated on the Company's lead
compounds in cancer and AIDS. As product sales may not begin prior to
calendar 1997 and certain programs are expanding their preclinical and
clinical development activities, it is anticipated that net operating
losses will continue and possibly increase through fiscal 1997.
The increase in the net losses for the three and six months ended
December 31, 1995 compared to the year-earlier periods is due
principally to the Company's commitment to support expanding clinical
activities and establish a commercial infrastructure associated with
the Company's two leading product candidates. These spending increases
were partially offset by increased contract revenues.
Contract revenues in the current three- and six-month periods have
increased compared to the year earlier periods due mainly to an
anti-HIV collaboration with JT initiated in December 1994. Interest
income has increased significantly from the prior-year periods due to a
higher average investment portfolio balance resulting from the
previously described public offering and milestone payment. Partially
offsetting these revenue increases on a quarter-to-quarter and
year-to-year basis was the absence of funding from JT due to the
cancellation of a collaborative research program with JT in January
1995.
Research and development costs and expenses increased from the
prior-year periods due generally to increasing average research and
development staff levels (approximately 19%) and staff-related
expenditures, including occupancy, and significantly increased
expenditures for human clinical trial activities associated with the
Company's leading product development programs, THYMITAQ (TM) and
VIRACEPT (TM).
The increase in general and administrative costs and expenses in the
current three- and six-month periods is due chiefly to increasing
average staff levels (approximately 19% and 24%, respectively) and
staff related expenditures and certain costs associated with a growing
sales and marketing infrastructure.
Interest expense in the current-year periods is generally decreasing as
the level of debt and capital base obligations decline. Partially or
wholly offsetting these declines are the exercise costs associated with
certain lease buy-out options.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings: The Company is involved in certain
legal or administrative proceedings generally incidental to its
normal business activities. While the outcome of any such
proceedings cannot be accurately predicted, the Company does not
believe the ultimate resolution of any such existing matters
should have a material adverse effect on its financial position.
Item 2. Changes in Securities: None.
Item 3. Defaults Upon Senior Securities: None.
Item 4. Submission of Matters to a Vote of Security Holders: The
Company held its Annual Meeting of Shareholders on November 2,
1995 and proxies for such meeting were solicited pursuant to
Regulation 14A. There was no solicitation in opposition to
management's nominees for directors as listed in the proxy
statement and all such nominees were elected. The names of
directors elected at the meeting are: John N. Abelson, Patricia
M. Cloherty, A. E. Cohen, Gary E. Friedman, Michael E. Herman,
Irving S. Johnson, Peter Johnson, Antonie T. Knoppers and Melvin
I. Simon. Each director received 8,503,383 votes in favor of
his or her election.
In addition, the shareholders voted on two other proposals as
listed in the proxy statement. The proposals and the results of
the voting are summarized below.
1. The shareholders approved a proposal to amend the
Company's 1990 Stock Option Plan to increase the number of
shares available for grant by 1,000,000 shares. The vote
was 4,744,448 for, 1,289,330 against, 31,941 abstained and
2,452,219 not voted.
2. The shareholders ratified the selection of Price
Waterhouse as certified public accountants. The vote was
8,499,789 for, 6,315 against and 11,834 abstained.
Item 5. Other Information: None.
Item 6. Exhibits and Reports on Form 8-K:
a. Exhibits:
10.33 1990 Stock Option Plan (restated November 2,
1995).
10.58 First Amendment to Development and License
Agreement effective December 1, 1995 between
Japan Tobacco Inc. and the Company.
(Confidential treatment has been requested for
portion of this agreement pursuant to an
application dated January 31, 1996. The
underlying agreement was filed as Exhibit 10.54
to Form 10-Q for the period ended December 31,
1994, and portions thereof receive confidential
treatment pursuant to an order of the Securities
and Exchange Commission dated June 28, 1995.)
27 Financial Data Schedule. (Exhibit 27 is
submitted as an exhibit only in the electronic
format of this Quarterly Report on Form 10-Q
submitted to the Securities and Exchange
Commission.)
99 Important Factors Regarding Forward-Looking
Statements.
b. Reports on Form 8-K: None.
<PAGE>
SIGNATURE
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.
AGOURON PHARMACEUTICALS, INC.
Date: January 31, 1996 /s/ Steven S. Cowell
---------------------------------
Steven S. Cowell
Vice President, Finance and Chief Financial
Officer and Chief Accounting Officer
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMAY FINANCIAL INFORMATION EXTRACTED FROM THE
BALANCE SHEET AND THE STATEMENT OF OPERATIONS AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> DEC-31-1995
<CASH> 10,629
<SECURITIES> 98,134
<RECEIVABLES> 214
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 109,896
<PP&E> 17,953
<DEPRECIATION> 12,512
<TOTAL-ASSETS> 115,337
<CURRENT-LIABILITIES> 27,652
<BONDS> 0
<COMMON> 156,218
0
0
<OTHER-SE> (70,177)
<TOTAL-LIABILITY-AND-EQUITY> 115,337
<SALES> 0
<TOTAL-REVENUES> 22,549
<CGS> 0
<TOTAL-COSTS> 18,830
<OTHER-EXPENSES> 10,227
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 147
<INCOME-PRETAX> (6,655)
<INCOME-TAX> 0
<INCOME-CONTINUING> (6,655)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (6,655)
<EPS-PRIMARY> (0.73)
<EPS-DILUTED> (0.73)
</TABLE>
<PAGE>
Exhibit 10.33
AGOURON PHARMACEUTICALS, INC.
1990 STOCK OPTION PLAN
(Restated November 2, 1995)
1. Purpose.
This 1990 Stock Option Plan is intended to encourage stock ownership
in Agouron Pharmaceuticals, Inc. by the officers, directors, employees and
consultants of the Company and its affiliates in order to promote their
interest in the success of the Company and to encourage their continued
affiliation. All options granted under this 1990 Stock Option Plan are
intended to be either (a) Incentive Stock Options or (b) Non-Statutory
Stock Options.
2. Definitions.
As used herein the following definitions shall apply:
"Act" shall mean the Securities Exchange Act of 1934, as amended from
time to time.
"Affiliate" shall mean any corporation defined as a "parent
corporation" or a "subsidiary corporation" by Code Section 424(e) and (f),
respectively.
"Agreement" shall mean either a 1990 Incentive Stock Option Agreement
or a 1990 Non-Statutory Stock Option Agreement, embodying the terms of the
agreement between the Company and the Optionee with respect to Optionee's
Option.
"Board" shall mean the Board of Directors of the Company.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Company" shall mean Agouron Pharmaceuticals, Inc., a California
corporation.
"Consultant" shall mean any person who is placed on the Company's
Consultants List by the Board and who agrees in writing to be included
thereon.
"Disability" or "Disabled" shall mean the condition of being
"disabled" within the meaning of Section 422(c)(6) of the Code or any
successor provision.
"Director" shall mean the individual members of the Board.
"Employee" shall mean any salaried employee of the Company or its
Affiliates, including those employees who are officers of the Company or
its Affiliates.
"ERISA" shall mean the Employee Income Security Act or the rules
thereunder, as amended from time to time.
"Fair Market Value" of Stock on a given date shall mean an amount per
share as determined by the Board or its delegates by applying any
reasonable valuation method determined without regard to any restriction
other than a restriction which, by its terms, will never lapse.
Notwithstanding the preceding, if the Stock is traded upon an established
stock exchange or exchanges or quoted on the over-the-counter market as
reported by the National Association of Securities Dealers Automated
Quotation Systems ("NASDAQ") National Market System, then the "Fair Market
Value" of Stock on a given date per share shall be deemed to be the average
of the highest and lowest selling price per share of the Stock on the
principal stock exchange on which the Stock is then trading or on the over-
the-counter market as reported by NASDAQ National Market System on such
date or, if there was no trading of the Stock on that day, on the next
preceding day on which there was such a trade; if the Stock is not traded
upon an established stock exchange or quoted on the over-the-counter market
as reported by NASDAQ National Market System but is quoted on the NASDAQ or
a successor quotation system, the "Fair Market Value" of Stock on a given
date shall be deemed to be the mean between the closing representative
"bid" and "ask" prices per share of the Stock on such date as reported by
the NASDAQ or such quotation system or, if there shall have been no trading
of the Stock on that day, on the next preceding day on which there was such
trading.
"Incentive Stock Option" shall mean an option granted pursuant to the
Plan which is designated by the Board or its delegates as an "Incentive
Stock Option" and which qualifies as an incentive stock option under
Section 422 of the Code or any successor provision.
"Non-Statutory Stock Option" shall mean a stock option granted
pursuant to the Plan which is not an Incentive Stock Option.
"Option" shall refer to either or both an Incentive Stock Option or
Non-Statutory Stock Option as the context shall indicate.
"Optionee" shall mean the recipient of an Incentive Stock Option or a
Non-Statutory Stock Option.
"Option Price" shall mean the price per share of Stock to be paid by
the Optionee upon exercise of the Option.
"Option Stock" shall mean the total number of shares of Stock the
Optionee shall be entitled to purchase pursuant to the Agreement.
"Plan" shall mean this Agouron Pharmaceuticals, Inc. 1990 Stock Option
Plan, as amended from time to time.
"Reporting Person" shall mean an Optionee who is required to file
statements relating to his or her beneficial ownership of Stock with the
SEC pursuant to Section 16(a) of the Act.
"Rule 16b-3" shall mean Rule 16b-3 (as amended from time to time),
promulgated by the SEC under the Act, and any successor thereto.
"SEC" shall mean the Securities and Exchange Commission.
"Stock" shall mean no par Common Stock of the Company.
3. Administration.
The Plan shall be administered by the Board; provided, however, that
the Board may delegate all or any part of its authority to administer the
Plan in its entirety or, with respect to any group or groups of persons
eligible to receive Options hereunder, to such persons or committee as the
Board shall in its sole discretion determine. If mandated by Rule 16b-3,
the selection and determination of Option grants to Reporting Persons shall
be only by a committee of the Board so constituted as to permit the Plan to
satisfy the requirements necessary for the exemptions provided by Rule 16b-
3 to be available (i.e., a committee of a least two disinterested persons
who are Directors). The Board and its delegates may adopt, amend and
rescind such rules and regulations for carrying out the Plan and
implementing agreements and take such act as it deems proper. The
interpretation, construction and application by the Board or any
individuals who are delegated authority by the Board to administer the Plan
or any of the provisions of the Plan or any Option granted thereunder shall
be final and binding on the Company, all Optionees, their legal
representatives, and any person who may acquire the Option directly from
the Optionee by permitted transfer, bequest or inheritance. Reference to
administrative acts by the Board in this Agreement shall also refer to acts
by its delegates, unless the context otherwise indicates. Whether or not
the Board has delegated administrative activity, the Board has the final
power to determine all questions of policy or expediency that may arise in
administration of the Plan.
4. Eligibility.
Only Employees are eligible to receive Incentive Stock Options under
the Plan. Employees, officers, Directors and Consultants of the Company or
its Affiliates are eligible to receive Non-Statutory Stock Options under
the Plan. Notwithstanding the foregoing, an individual Director who is not
also an Employee, officer or Consultant to the Company shall not be
eligible to receive Options under the Plan, unless the Board expressly
declares the individual Director eligible for participation in the Plan.
However, the Board, if it so elects, may establish a stock option grant
program under the Plan, in which all non-Employee Directors are entitled to
participate, provided that such program does not contravene any requirement
of Rule 16b-3. A member of the Board may elect to irrevocably decline to
participate in the Plan or in any other stock option plan of the Company
for a period of time in order to permit the Director to comply with the
requirements of Rule 16b-3 to be a "disinterested person."
No person shall be eligible to receive an Option for a larger number
of shares than is recommended for him by the Board. Any Optionee may hold
more than one Option (whether Incentive Stock Options, Non-Statutory Stock
Options, or both), but only on the terms and conditions and subject to the
restrictions set forth herein.
Incentive Stock Options granted to an Employee who owns stock at the
time the Incentive Stock Option is granted, representing more than ten
percent (10%) of the total combined voting power of all classes of stock of
the Company and its Affiliates shall be granted at an Option Price at least
one hundred ten percent (110%) of the Fair Market Value of the Stock at the
time the Incentive Stock Option is granted. In determining ownership of
Stock by an Employee, the attribution standards set forth in Code Section
424(d) shall be applicable.
5. Stock Subject to Plan.
Options granted under the Plan shall be for shares of the Company's
authorized but unissued or reacquired Stock. The aggregate number of
shares of Stock which may be subject to Options pursuant to the Plan shall
not exceed three million five hundred thousand (3,500,000) shares. The
number of shares available shall be adjusted as provided in Paragraph 6(j)
of this Plan. Stock issued under other stock option plans of the Company
shall not be counted against the maximum number of shares that can be
issued under the Plan.
In the event that any outstanding Option expires or is terminated for
any reason, the shares of Stock allocable to the unexercised portion of
such Option may again be subject to an Option under the Plan.
If an Optionee pays all or part of any Option Price with shares of
Stock, the number of shares deemed to be issued to the Optionee (and
counted against the maximum number of shares that can be issued under the
Plan) shall be the number of shares transferred to the Optionee by the
Company, less the number of shares transferred by the Optionee to the
Company as payment. Stock issued on the exercise of an Option, which is
forfeited in accordance with conditions contained in the grant by the
Optionee after issuance shall be deemed to have never been issued under the
Plan and, accordingly, shall not be counted against the maximum number of
shares that can be issued under the Plan. Notwithstanding the terms of the
previous two sentences, the maximum number of shares for which Incentive
Stock Options may be issued under the Plan shall be three million five
hundred thousand (3,500,000) shares, subject to adjustment as provided
under Paragraph 6(j), regardless of the fact that under the terms of the
preceding sentences, a lesser number of shares is deemed to be issued
pursuant to the exercise of Incentive Stock Options; provided further that,
to the extent required by Rule 16b-3, the maximum number of shares issuable
to Reporting Persons shall be three million five hundred thousand
(3,500,000) shares, subject to adjustment as provided under Paragraph 6(j),
regardless of the fact that under the terms of the preceding sentences a
lesser number of shares is deemed to be issued.
6. Terms and Conditions of Options.
The Board or its delegates shall authorize the granting of all Options
under the Plan with such Options to be evidenced by Incentive Stock Option
Agreements or Non-Statutory Stock Option Agreements as the case may be.
Each Agreement shall be in such form as the Board may approve from time to
time. Each Agreement shall comply with and be subject to the following
terms and conditions:
(a) Type of Option; Number of Shares. Each particular Option
Agreement shall state the type of Options to be granted (whether
Incentive Stock Options or Non-Statutory Stock Options) and the
number of shares to which the Option pertains. Under no
circumstances shall the aggregate Fair Market Value (determined as of
the time the Option is granted) of the Stock with respect to which
incentive stock options are exercisable for the first time by any
Employee during any calendar year (under all incentive stock option
plans of the Company and its Affiliates) exceed $100,000.
(b) Option Price. Each particular Option Agreement shall state
the Option Price. The Option Price for an Incentive Stock Option
shall not be less than one hundred percent (100%) of the Fair Market
Value per share of Stock on the date of the granting of the Incentive
Stock Option. The Option Price for a Non-Statutory Stock Option
shall be the price per share of Stock set by the Board or its
delegates.
(c) Sale of Stock. No shares of Stock acquired by a Reporting
Person pursuant to the Plan (other than in connection with the
exercise of an Option) may be sold for at least six (6) months after
acquisition, except in the case of death or Disability of the
Reporting Person. Certificates for shares of Stock issued and
delivered to Reporting Persons may be legended, as the Board deems
appropriate, to reflect this restriction. In addition, the Board may
require postponement for up to six (6) months of delivery to
Reporting Persons of shares otherwise deliverable to them.
Notwithstanding the foregoing, this Paragraph 6(c) shall apply to a
sale of Stock by a Reporting Person only when required by Rule 16b-3
at the time and under the circumstances of the sale.
(d) Medium and Time of Payment. The aggregate Option Price shall
be payable upon the exercise of the Option and shall be paid in any
combination of: (a) United States cash currency; (b) a cashier's or
certified check to the order of the Company; (c) a personal check
acceptable to the Company; (d) to the extent permitted by the Board,
shares of Stock of the Company (including previously owned Stock or
Stock issuable in connection with the Option exercise), properly
endorsed to the Company, whose Fair Market Value on the date of
exercise equals the aggregate Option Price of the Option being
exercised; (e) to the extent agreed to by the Board, the Optionee's
entering into an agreement with the Company, whereby a portion of the
Optionee's Options are terminated and where the "built-in gain" on
any Options which are terminated as part of such agreement equals the
aggregate Option Price of the Option being exercised. "Built-in
gain" means the excess of the aggregate Fair Market Value of any
Stock otherwise issuable on exercise of a terminated Option, over the
aggregate Option Price otherwise due the Company on such exercise.
The Board may permit deemed or constructive transfer of shares
in lieu of actual transfer and physical delivery of certificates.
Except to the extent prohibited by applicable law, the Board may take
any necessary or appropriate steps in order to facilitate the payment
of any such Option Price. Without limiting the foregoing, the Board
may cause the Company to loan the Option Price to the Optionee or to
guarantee that any Stock to be issued will be delivered to a broker
or lender in order to allow the Optionee to borrow the Option Price.
The Board, in its sole and exclusive discretion, may require
satisfaction of any rules or conditions in connection with paying the
Option Price at any particular time, in any particular form, or with
the Company's assistance.
If Stock used to pay any Option Price is subject to any prior
restrictions imposed in connection with any plan of the Company
(including this Plan), an equal number of the shares of Stock
acquired on exercise shall be made subject to such prior restrictions
in addition to any further restrictions imposed on such Stock by the
terms of the Optionee's Agreement or by the Plan.
(e) Duration of Options. Each particular Option Agreement shall
state the term of the Option; provided, however, that all Incentive
Stock Options granted under this Plan shall expire and not be
exercisable after the expiration of ten (10) years from the date
granted; provided, however, that any Incentive Stock Option granted
to an Employee who owns stock at the time the Incentive Stock Option
is granted representing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Company and its
Affiliates, shall expire and not be exercisable after the expiration
of five (5) years from the date granted. Non-Statutory Stock Options
shall expire and not be exercisable after the date set by the Board
or its delegates in the particular Option Agreement, or on any later
date subsequently approved by the Board or its delegates.
(f) Exercise of Options.
(i) Each particular Option Agreement shall state when the
Optionee's right to purchase Stock pursuant to the terms of an
Option are exercisable in whole or in part. Subject to the
earlier termination of the right to exercise the Options as
provided under this Plan, Options shall be exercisable in whole
or in part as the Board, in its sole and exclusive discretion,
may provide in the particular Option Agreement, as amended.
The Board may at any time increase the percentage an Option is
otherwise exercisable under the terms of a particular Option
Agreement. The Board, in its sole and exclusive discretion,
may permit the issuance of Stock underlying an Option prior to
the date the Option is otherwise exercisable, provided such
Stock is subject to repurchase rights which expire pro rata as
the Option would otherwise have become exercisable. Options
held by Reporting Persons shall not be exercisable for at least
six (6) months after grant, unless the death or Disability of
the Optionee occurs before the expiration of the six (6) month
period. Notwithstanding the foregoing, the terms of the
preceding sentence shall apply to an exercise only when
required by Rule 16b-3 at the time and under the circumstances
of the exercise.
(ii) If the Optionee does not exercise in any one (1) year
period the full number of shares to which he is then entitled
to exercise, he may exercise those shares in any subsequent
year during the term of the Option.
(g) Transfer of Options. To the extent required by Code Section
422 and Rule 16b-3, Options, or the rights of Optionees pursuant to
the Options, shall not be transferable in any manner, whether
voluntary or involuntary, except by will or the law of descent and
distribution or pursuant to a qualified domestic relations order as
defined in the Code or Title I of ERISA; provided, however, that a
Non-Statutory Stock Option may be transferred to a trust for the
benefit of the Optionee or members of his immediate family provided
that such transfer does not violate the requirements of Rule 16b-3.
An attempted non-permitted transfer shall be void and shall
immediately terminate the Option.
(h) Death of Optionee. If the Optionee who is an Employee,
officer or Director of the Company or its Affiliates dies while in
the employ or service of the Company or its Affiliates, or within a
period of three (3) months after termination of such employment or
term of corporate office, and before he or she has fully exercised an
Option, the Option may be exercised, regardless of the expiration
date stated in the particular Option Agreement, to the extent that
the Option was exercisable on the date of death and had not
previously been exercised, for one (1) year after the date of the
Optionee's death. Such exercise may be made by a personal
representative of the Optionee or by any person or persons who shall
have acquired the Option directly from the Optionee by bequest or
inheritance. Notwithstanding the foregoing, an Incentive Stock
Option may not be exercised after ten (10) years following the date
of grant.
(i) Termination of Employment or Service Other than Death.
Subject to the provisions of Paragraph 6(h) above, in the event that
an Optionee who is an Employee, officer or Director of the Company or
its Affiliates shall cease to be employed by or perform services for
the Company or its Affiliates prior to the Option's expiration date,
the exercise of Options held by such Optionee shall be subject to
such limitations on the periods of time during which such Options may
be exercised as may be specified in the particular Option Agreement,
as amended, between the Optionee and the Company. Notwithstanding
the foregoing (and subject to the provisions of Paragraph 6(h)
above), an Optionee who is Disabled on the date of termination of
employment or term of corporate office may exercise his Option to the
extent that the Option was exercisable on the date of such
termination and had not previously been exercised, for one (1) year
from the date of such termination; provided, however, that an Option
may not be exercised after the expiration date set forth in the
particular Option Agreement, as amended. Whether authorized leave of
absence or absence for military or governmental service shall
constitute termination of employment for purposes of the Plan, shall
be determined by the Board in their sole and exclusive discretion.
No provision of the Plan shall be construed so as to grant any
individual the right to remain in the employ or service of the
Company for any period of specific duration.
(j) Recapitalization. The number of shares issuable under the
Plan and the number and amount of the Option Stock and the Option
Price of outstanding Options shall be proportionately adjusted for
any increase or decrease in the number of issued shares of Stock
resulting from a subdivision or consolidation of shares, or for the
payment of a stock dividend or any other increase or decrease in the
number of such shares effected without receipt of consideration by
the Company in order to preclude the dilution or enlargement of
benefits under the Plan.
The Board, in its sole and exclusive discretion, may make such
equitable adjustments to the Plan and outstanding Options as it deems
appropriate in order to preclude the dilution or enlargement of
benefits under the Plan upon exchange of all of the outstanding Stock
of the Company for a different class or series of capital stock or
the separation of assets of the Company, including a spin-off or
other distribution of stock or property by the Company.
If the Company shall be the surviving corporation in any merger
or consolidation, each outstanding Option shall pertain to and apply
to the securities to which a holder of the number of shares of Option
Stock would have been entitled. A dissolution or liquidation of the
Company, a merger (other than a merger the principal purpose of which
is to change the state of the Company's incorporation) or
consolidation in which the Company is not the surviving corporation,
a reverse merger in which the Company is the surviving corporation
but the Company's Common Stock outstanding immediately preceding the
merger is converted by virtue of the merger into other property, or
other capital reorganization in which more than fifty percent (50%)
of the Company's Common Stock is exchanged (unless the dissolution or
liquidation plan, merger or consolidation agreement or capital
reorganization corporate documents expressly provide to the contrary)
shall cause each outstanding Option to terminate; provided, that each
Optionee shall, immediately prior to such event, have the right to
exercise his or her Option in whole or in part unless the Option in
connection with such event is either to be assumed by the successor
corporation or parent thereof, or to be replaced with a comparable
option to purchase shares of the capital stock of the successor
corporation or parent thereof, or the Option is to be replaced by a
comparable cash incentive program of the successor corporation based
on the value of the Option on the date of such event.
Notwithstanding the preceding, if within one (1) year from the date
of such event, an Employee's employment is involuntarily terminated,
then the Employee's outstanding Options, if any, shall become
immediately exercisable.
All adjustments required by the preceding paragraphs shall be
made by the Board, whose determination in that respect shall be
final, binding and conclusive; provided, that adjustments shall not
be made in a manner that causes an Incentive Stock Option to fail to
continue to qualify as an "incentive stock option" within the meaning
of Code Section 422.
Except as expressly provided in this Paragraph 6(j), an Optionee
shall have no rights by reason of any subdivision or consolidation of
shares of stock of any class, or the payment of any stock dividend,
or any other increase in the number of shares of stock of any class
by reason of any dissolution, liquidation, merger, consolidation,
reorganization, or separation of assets, and any issue by the Company
of shares of stock of any class, or securities convertible into
shares of stock of any class, shall not affect, and no adjustment by
reason thereof shall be made with respect to, the number or amount of
the Option Stock or the Option Price of outstanding Options.
The grant or existence of an Option shall not affect in any way
the right or power of the Company to make adjustments,
reclassifications, reorganizations or changes in its capital or
business structure or to merge, consolidate, dissolve, liquidate, or
sell or transfer all or any part of its business or assets.
(k) Rights as a Shareholder. An Optionee shall not have rights
as a shareholder with respect to any shares until the date of the
issuance of a stock certificate to him for such shares. No
adjustment shall be made for dividends (ordinary or extraordinary,
whether in cash, securities or other property) or distributions or
other rights for which the record date is prior to the date of
issuance of such stock certificate, except as provided in Paragraph
6(j) above.
(l) Modification, Extension and Renewal of Options. Subject to
the terms and conditions of the Plan, the Board may modify (including
lowering the Option Price or changing Incentive Stock Options into
Non-Statutory Stock Options), extend or renew outstanding Options
granted under the Plan, or accept the surrender of outstanding
Options under this Plan and/or other stock option plans of the
Company (to the extent not previously exercised) and authorize the
granting of new Options in substitution therefor. Notwithstanding
the foregoing, no modification of an Option shall, without the
consent of the Optionee, alter or impair any rights or obligations
under any Option previously granted under the Plan.
(m) Investment Purpose. Each Option under the Plan shall be
granted on the condition that the purchase of Stock thereunder shall
be for investment purposes and the Optionee's own account, and not
with a view to resale or distribution. In the event the Stock
subject to such Option is registered under the Securities Act of
1933, as amended, or in the event a resale of such Stock without such
registration would otherwise be permissible, such condition shall be
inoperative if, in the opinion of counsel for the Company, such
condition is not required under the Securities Act of 1933, or any
other applicable law, regulation or rule of any governmental agency.
(n) Transfer and Exercise of Options. To the extent required by
Code Section 422, each Incentive Stock Option shall state that it is
not transferable or assignable by Optionee otherwise than by will or
the laws of descent and distribution, and that during an Optionee's
lifetime, such Incentive Stock Option shall be exercisable only by
the Optionee. Options held by Reporting Persons shall be
nontransferable otherwise than by will or the laws of descent and
distribution, or pursuant to a qualified domestic relations order as
defined in the Code or Title I of ERISA, to the extent required by
Rule 16b-3.
(o) Other Provisions. Each Option Agreement may contain such
other provisions, including without limitation, restrictions upon the
exercise or transferability of the Option, as the Board may deem
advisable. Any Incentive Stock Option agreement shall contain such
limitations and restrictions upon the exercise of the Incentive Stock
Option as shall be necessary in order that such Incentive Stock
Option will be an "incentive stock option" as defined in Code Section
422, or to conform to any change in the law.
(p) Withholding Taxes. When the Company becomes required to
collect federal and state income and employment taxes in connection
with the exercise of an Option ("withholding taxes"), the Optionee
shall promptly pay to the Company the amount of such taxes in cash,
unless the Board permits or requires payment in another form.
Subject to such conditions as it may require, the Board, in its sole
discretion, may allow an Optionee to reimburse the Company for
payment of withholding taxes with shares of Stock. If an Optionee is
a Reporting Person at the time of exercise and is given an election
to pay any withholding taxes with Stock, the Board shall have sole
discretion to approve or disapprove such election.
(q) Limitation on Grants. The following limitation will apply to
grants of Options under the Plan: no Employee will be granted
Options under the Plan to receive more than seven hundred fifty
thousand (750,000) shares of Stock in any one fiscal year. The
limitation set forth in this Paragraph 6(q) is intended to satisfy
the requirements applicable to Options intended to qualify as
"performance-based compensation" within the meaning of Section
162(m) of the Code. In the event that such limitation is not
required to qualify Options as performance-based compensation, this
limitation shall not apply under the Plan.
7. Term of Plan.
Incentive Stock Options may be granted pursuant to the Plan from time
to time within a period of ten (10) years from the date the Plan is adopted
by the Board, or the date the Plan is approved by the shareholders of the
Company, whichever is earlier.
8. Amendment of Plan.
The Board may, insofar as permitted by law, from time to time, with
respect to any shares at the time not subject to Options, suspend or
discontinue the Plan or revise or amend it in any respect whatsoever,
except that, without approval of the shareholders, no such revision or
amendment shall change the number of shares for which Options may be
granted under the Plan, change the designation of the class of persons
eligible to receive Options, materially increase the benefits accruing to
Optionees under the Plan, or decrease the price at which Incentive Stock
Options may be granted. Furthermore, the Plan may not, without the
approval of the shareholders, be amended in any manner that will cause
Incentive Stock Options issued under it to fail to meet the requirements of
"incentive stock options" as defined in Code Section 422. The Board may
amend the Plan from time to time to the extent necessary to comply with
Rule 16b-3, or any successor rule or other regulatory requirement.
9. Application of Funds.
The proceeds received by the Company from the sale of Stock pursuant
to the exercise of an Option will be used for general corporate purposes.
10. No Obligation To Exercise Option.
The granting of an Option shall impose no obligation upon the Optionee
to exercise such Option.
11. Indemnification.
In addition to such other rights of indemnification as they may have
as Directors, Employees or agents of the Company, the Directors or any
individuals who are delegated authority by the Board to administer the
Plan, shall be indemnified by the Company against: (i) their reasonable
expenses, including attorneys' fees actually and necessarily incurred in
connection with the defense of any action, suit or proceeding, or in
connection with any appeal therein, to which they or any of them may be a
party by reason of any action taken or failure to act under or in
connection with the Plan or any Option granted thereunder; and (ii) against
all amounts paid by them in settlement thereof (provided such settlement is
approved by independent legal counsel selected by the Company), or paid by
them in satisfaction of a judgment in any such action, suit or proceeding,
except in actions to matters as to which it shall be adjudged in such
action, suit or proceeding that such Director or individual is liable for
negligence or misconduct in the performance of his duties; this
indemnification is expressly conditioned upon the indemnified party within
ninety (90) days after institution of any such action, suit or proceeding
offering the Company in writing the opportunity, at its own expense, to
handle and defend the same.
12. Approval Of Shareholders.
The portions of the Plan dealing with Incentive Stock Options shall
not take effect unless approved by the shareholders of the Company's
preferred (if any) and Common Stock, which approval must occur within a
period commencing twelve (12) months before and ending twelve (12) months
after the date the Plan is adopted by the Board. Nothing in the Plan shall
be construed to limit the authority of the Company to exercise its
corporate rights and powers, including the right of the Company to grant
options for proper corporate purposes otherwise than under the Plan to any
person or entity.
Adopted October 16, 1990; amended August 14, 1991, October 15, 1992,
September 2, 1994 and September 18, 1995 (restated and last approved by
Shareholders November 2, 1995) (conformed to Code changes November 4,
1993).
AGOURON PHARMACEUTICALS, INC.
By: /s/ Peter Johnson
--------------------------------
Peter Johnson, President
<PAGE>
Exhibit 10.58
PORTIONS OF THIS DOCUMENT HAVE BEEN OMITTED
(DESIGNATED BY AN ASTERIX (*) AND WHITE SPACE)
AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT DATED
JANUARY 31, 1996; FILE NO. 0-15609
FIRST AMENDMENT TO
DEVELOPMENT AND LICENSE AGREEMENT
Effective as of December 1, 1994, Agouron Pharmaceuticals, Inc., a California
corporation ("Agouron") and Japan Tobacco Inc., a Japanese corporation
("JT"), for good and valuable consideration, agree as follows:
1. Agouron and JT entered into a Development and License Agreement dated
December 1, 1994 ("Agreement") and have conducted collaborative
development activities pursuant to the terms of such Agreement.
2. The parties wish to amend and restate the below-noted schedules,
exhibits and attachments to the Agreement to read in full as stated in
the correspondingly numbered schedules, exhibits and attachments which
are attached hereto and incorporated herein by reference:
Schedule 4
Exhibit 1
Exhibits 2A and 2B*
Exhibit 3
Attachment 1
Attachment 2
Attachment 4
Attachment 5
Attachment 6
Attachment 7
_______________________
*These two exhibits have been combined into one and renamed "Exhibit 2."
3. Except as modified by the terms contained herein, the provisions of
the Agreement shall remain in full force and effect.
AGOURON PHARMACEUTICALS, INC. JAPAN TOBACCO INC.
By /s/ Gary E. Friedman, Esq. By /s/ Masamichi Nishimoto
------------------------ ---------------------------
Name Gary E. Friedman, Esq. Name Masamichi Nishimoto
Title Vice President and General Counsel Title Executive Director
Date 10/11/95 Date 11/10/95
<PAGE>
SCHEDULE 4
AGOURON PATENT RIGHTS
ATTACHED HERETO
<PAGE>
SCHEDULE 4
AGOURON PATENT RIGHTS
*
<PAGE>
EXHIBIT 1
*
ATTACHED HERETO
(Three pages deleted listing schedule.)
*
<PAGE>
EXHIBIT 2
*
ATTACHED HERETO
(Two pages deleted listing budget.)
*
<PAGE>
EXHIBIT 3
*
ATTACHED HERETO
(Four pages deleted describing schedule.)
*
<PAGE>
ATTACHMENT 1
JOINT VENTURE AGREEMENT
ATTACHED HERETO
<PAGE>
ATTACHMENT 1
JOINT VENTURE AGREEMENT
Effective as of the 1st day of January, 1996 (the "Effective Date"),
Agouron Pharmaceuticals, Inc. ("Agouron"), a California corporation with
offices at 10350 North Torrey Pines Road, La Jolla, California, United
States of America and Japan Tobacco Inc. ("JT"), a Japanese corporation
with offices at JT Building, 2-1, Toranomon 2-chome, Minato-ku, Tokyo 105
JAPAN, associate themselves to form a Joint Venture in the form of a
general partnership under the California Uniform Partnership Act and the
laws of the State of California on the terms and conditions set forth
below. Agouron and JT intend by this Agreement to form a Partnership to
serve as licensee to implement the commercialization of the Compound and/or
Products within the *.
1. Name and Place of Business.
The name of the Partnership is "Agouron/JT Nelfinavir Non-Exclusive
Territories Joint Venture," a California general partnership (the
"Partnership"), and its principal place of business is 10350 North Torrey
Pines Road, La Jolla, California 92037, or such other place or places as
the Partners may hereafter determine.
2. Definitions.
Words and terms having their initial letters capitalized in this
Partnership Agreement shall (unless otherwise expressly provided herein or
unless the context otherwise requires) have the respective meanings set
forth in Exhibit A.
3. Business and Purpose of Partnership.
The purpose (character of business) of the Partnership is to conduct
any and all business that may be legally conducted by a California general
partnership, including the exclusive right (with right of sublicense) to
use, offer for sale, sell and import in or into *
4. Term.
The term of the Partnership shall begin on the Effective Date and
shall continue, unless earlier terminated in accordance with the provisions
of this Partnership Agreement, until the later to occur of *
In no event shall the Term extend beyond December
31, 2030.
5. Capital Contributions.
5.01 Agouron Contribution. Agouron shall contribute the sum of
One Dollar ($1.00) (and the property described in Exhibit B hereto). The
Agouron Capital Account shall be credited with an amount to be mutually
determined (and valued) at a later date; such amount to represent the fair
market value of the property and cash contributed.
5.02 JT Contribution. JT shall contribute the sum of One Dollar
($1.00) (and the property described in Exhibit C hereto). The JT Capital
Account shall be credited with an amount to be mutually determined (and
valued) at a later date; such amount to represent the fair market value of
the property and cash contributed.
5.03 Return of Capital Contributions. Except as provided in this
Partnership Agreement, no Partner shall have priority over any other
Partner, either as to the return of contributions of capital or as to
allocations or Distributions. Other than upon the termination and
dissolution of the Partnership as provided in this Partnership Agreement,
there has been no time agreed upon when the contribution of each Partner is
to be returned. No Partner shall be entitled to receive any interest on
its contributions to the capital of the Partnership.
6. Compensation to Partners and Affiliates.
Except as otherwise agreed to by the Partners, no Partner or Affiliate
of a Partner shall receive compensation for services rendered on behalf of
the Partnership. The Partners agree that *
7. Partnership Expenses and Distributions.
7.01 Partner Expenses. Each partner shall, at its own expense and
at no expense to the Partnership, pay all expenses which are unrelated to
the business of the Partnership.
7.02 Partnership Expenses. The Partnership shall pay or reimburse
any Partner for all expenses of the Partnership, provided such expenses are
necessary for and appropriate to the business of the Partnership.
7.03 Distributions. Subject to the provisions of paragraph 5.04
of the Development Agreement, distributions shall be made *
to Agouron and * to JT.
8. Management.
8.01 General. The overall business of the Partnership shall be
managed by *
shall implement the provisions of this Agreement
and shall conduct meetings at regular intervals, *
Meetings may be conducted in person or by conference telephone, provided
that any decision made during a telephone conference meeting is evidenced
by a conformed writing * Minutes
shall be maintained, * reflecting actions taken at the meetings.
8.02 *
8.03 *
8.04 *
8.05 *
9. Assignment.
9.01 *
9.02 Effect of Prohibited Assignment. Any attempted assignment,
sale, transfer, exchange or other transfer in contravention of any of the
provisions of this Agreement shall be void and ineffective, and shall not
bind or be recognized by the Partnership.
10. Books, Records, Accountings and Reports.
10.01 Maintenance and Inspection. The Partnership's books and
records, the Agreement and all amendments thereto, and any separate
certificates of Partnership shall be maintained at the principal office of
the Partnership or such other place as the Partners may determine, and
shall be open to the inspection, examination or copying by Partners or
their duly authorized representatives at all reasonable times.
10.02 Financial Statements. At least once each year, Agouron
shall cause the preparation of financial statements (balance sheet,
statement of income or loss, and statement of change in financial position)
at Partnership expense. Copies of the financial statements shall be
distributed to each Partner within ninety (90) days after the close of each
taxable year of the Partnership.
10.03 Tax Matters. Agouron shall cause income tax returns for the
Partnership to be prepared and timely filed with the appropriate
authorities at Partnership expense. The Partnership Agreement was drafted
with the intent of not adversely affecting the tax liabilities of the
Partners. If the form of the Agreement as currently drafted adversely
affects the tax liabilities of the Partners, the Partners will attempt to
restructure their business arrangements to minimize the tax effects.
11. Rights, Authority, Powers, Responsibilities and Duties of the Partners.
11.01 Powers of Partners. Each Partner shall each have a fiduciary
responsibility to the other Partner. The Partners shall have such
authority, rights and powers as are conferred by law and required or
appropriate to the management of the Partnership business.
11.02 Partnership Decisions. Except as is otherwise specifically
set forth hereafter,
*
The Partnership may, with the
unanimous written consent of both Partners, enter into separate contracts
and agreements with either Partner.
11.03 Tax Matters Partner. Agouron shall act as the "tax matters
partner" as defined in United States Internal Revenue Code Section
6231(a)(7). As the "tax matters partner," Agouron shall have the right to
represent the Partnership in discussions with the Internal Revenue Service
regarding the tax treatment of items of Partnership income, loss,
deductions or credits, or any other matter reflected on the Partnership's
information returns, and to agree to final Partnership administrative
adjustments or file a petition in the appropriate judicial forum for a
readjustment of the items in question.
11.04 *
12. Withdrawal Rights; Development Agreement.
*
Any withdrawal in contravention of
the terms of this Agreement shall not dissolve the Partnership.
Notwithstanding any terms herein to the contrary, this Agreement is to be
construed and interpreted in a manner consistent with the terms and intent
of the Development Agreement. In the event of any conflict between this
Agreement and the Development Agreement, the Development Agreement shall
control.
13. Certain Transactions, Dispute Resolution, Disclosure and Government
Regulation.
13.01 Certain Transactions. A Partner or any Affiliate thereof, or
any shareholder, officer, director, employee or any person owning a legal
or beneficial interest therein, may engage in or possess an interest in any
other business or venture of every nature and description, independently or
with others. No Partner shall have any interest in any other business or
venture of the other Partner or its Affiliates solely by reason of this
Agreement.
13.02 Dispute Resolution;. In the event of any controversy or
claim arising out of or relating to any provision of this Agreement, the
Partners shall try to settle their differences amicably between themselves.
Any unresolved disputes arising between the Partners relating to, arising
out of, or in any way connected with this Agreement or any term or
condition hereof, or the performance by either Partner of its obligations
hereunder, whether before or after termination of this Agreement, except as
otherwise provided in this Agreement, shall be finally resolved by binding
arbitration. Whenever a Partner shall decide to institute arbitration
proceedings, it shall give written notice to that effect to the other
Partner. The Partner giving such notice shall refrain from instituting the
arbitration proceedings for a period of sixty (60) days following such
notice. If JT is the Partner initiating the arbitration, the arbitration
shall be held in San Diego, California, according to the rules of the
American Arbitration Association ("AAA"). If Agouron is the Partner
initiating the arbitration, the arbitration shall be held in Tokyo, Japan,
according to the rules of the Japan Commercial Arbitration Association
("JCAA"). The arbitration shall be conducted by a single arbitrator
mutually chosen by the Partners. If the Partners can not agree upon a
single arbitrator within fifteen (15) days after the institution of the
arbitration proceeding, then the arbitration will be conducted by a panel
of three arbitrators appointed in accordance with applicable AAA or JCAA
rules; provided, however, that each Partner shall, within thirty (30) days
after the institution of the arbitration proceedings, appoint one
arbitrator with the third arbitrator being chosen by the other two
arbitrators. If only one Partner appoints an arbitrator, then such
arbitrator shall be entitled to act as the sole arbitrator to resolve the
controversy. Any arbitration hereunder shall be conducted in the English
language to the maximum extent possible. All arbitrator(s) eligible to
conduct the arbitration must agree to render their opinion(s) within thirty
(30) days of the final arbitration hearing. The arbitrator(s) shall have
the authority to grant injunctive relief and specific performance and to
allocate between the Partners the costs of arbitration in such equitable
manner as he determines; provided, however, that each Partner shall bear
its own costs and attorneys and witness' fees. Notwithstanding the terms
of this Paragraph 13.02, a Partner shall also have the right to obtain
prior to the arbitrator(s) rendering the arbitration decision, provisional
remedies including injunctive relief or specific performance from a court
having jurisdiction thereof. The arbitrator(s) will, upon the request of
either Partner, issue a written opinion of the findings of fact and
conclusions of law and shall deliver a copy to each of the Partners.
Decisions of the arbitrator(s) shall be final and binding on all of the
Partners. Judgment on the award so rendered may be entered in any court
having jurisdiction thereof.
13.03 Disclosure of Agreement. Except as agreed to by the
Partners, neither Agouron nor JT shall release any information to any third
party with respect to any of the terms of this Agreement without the prior
written consent of the other, which consent shall not unreasonably be
withheld. This prohibition includes, but is not limited to, press
releases, educational and scientific conferences, promotional materials and
discussions with the media. If a Partner determines that it is required by
law to release information to any third party regarding the terms of this
Agreement, it shall notify the other Partner of this fact prior to
releasing the information. The notice to the other Partner shall include
the text of the information proposed for release. The other Partner shall
have the right to confer with the notifying Partner regarding the necessity
for the disclosure and the text of the information proposed for release.
Notwithstanding the preceding, JT and Agouron shall have the right to
disclose the terms of this Agreement to persons it proposes to enter into
business relationships with, if such persons are subject to confidentiality
and use obligations equivalent to those applicable to the disclosing
Partner hereunder.
13.04 Government Approvals. The Partners will obtain any government
approval(s) required to enable this Agreement to become effective,
including but not limited to the requirements for filing a fictitious
business name in each county in which the Partnership transacts business
pursuant to applicable law, or to enable any payment hereunder to be made,
or any other obligation hereunder to be observed or performed. Each
Partner will keep the other informed of progress in obtaining any such
government approval and will cooperate with the other Partner in any such
efforts.
13.05 Export Controls. The Partners agree to abide by the United
States laws and regulations governing exports and re-exports *
The Partners
acknowledge that any performance under this Agreement is subject to any
restrictions which may be imposed by the United States laws and regulations
governing exports and re-exports. Each Partner agrees to provide the other
Partner with any assistance, including written assurances, which may be
required by a competent governmental authority and by applicable laws and
regulations as a precondition for any disclosure of technology or software
by the other Partner under the terms of this Agreement. The obligations of
this Paragraph 13.05 shall survive termination or expiration of this
Agreement.
14. Termination and Dissolution of the Partnership.
14.01 Court Directed Winding Up. Upon a petition executed by a
Partner or Partners, a court of competent jurisdiction may enter a decree
ordering the winding up of the Partnership if: (a) it is not reasonably
practicable to carry on the business in conformity with the Agreement; (b)
a Partner has been guilty of, or has knowingly countenanced persistent and
pervasive fraud or abuse of authority, or persistent unfairness toward any
Partner, or the Partnership Property is being misapplied or wasted by such
Partner; or (c) dissolution is reasonably necessary for the protection of
rights or interests of any Partner who petitions under this Paragraph. Any
decree entered pursuant to this Paragraph shall designate the Partner or
Partners who are to wind up the affairs of the Partnership.
14.02 Events Causing Dissolution. The Partnership shall be wound
up and dissolved upon the earlier to occur of: (a) the sufferance of an
Event of Insolvency by a Partner, unless within one hundred twenty (120)
days thereafter the remaining Partner elects to continue the business of
the Partnership; (b) the entry of a decree of judicial dissolution; (c) the
written decision of both Partners to wind up and dissolve the Partnership;
or (d) the expiration of the term of the Partnership.
14.03 Winding Up. Upon a winding up and dissolution of the
Partnership for any reason, the Partners shall take full account of the
Partnership assets and liabilities. To the extent funds are required to pay
unsecured creditors of the Partnership, the Partners shall liquidate such
assets as are necessary as promptly as is consistent with obtaining the
fair market value thereof. In addition, the Partners shall determine
whether all the Partnership Property should be sold, or whether a portion
of the Partnership Property should be distributed in kind to the Partners.
Thereafter, the Partners shall apply the proceeds from any liquidation sale
and distribute the remaining Partnership Property (if any): (a) first, to
the payment of creditors of the Partnership, but excluding secured
creditors whose obligations will be assumed or otherwise transferred on the
liquidation of Partnership assets; (b) second, to the repayment of any
outstanding loans made by Partners to the Partnership; and (c) third, to
the Partners as provided in Paragraph 7.03 of this Agreement.
15. Miscellaneous.
15.01 Counterparts. This Partnership Agreement may be executed in
several counterparts. All executed counterparts shall constitute one
Partnership Agreement.
15.02 No Waiver. Any failure by either Partner to enforce any
right which it may have hereunder in any instance shall not be deemed to
waive any right which it or the other Partner may have in any other
instance with respect to any provision of this Agreement, including any
provision which such Partner has failed to enforce.
15.03 Severability; Ambiguities. In the event that any provision
of this Agreement is judicially determined to be unenforceable, in part or
whole, the remaining provisions or portions thereof of this Agreement shall
be valid and binding to the fullest extent possible, and the Partners shall
endeavor to negotiate additional terms, as feasible, in a timely manner so
as to fully effectuate the original intent of the Partners, to the extent
possible. Ambiguities, if any, in this Agreement shall not be construed
against any Partner, irrespective of which Partner may be deemed to have
authored the ambiguous provision.
15.04 Government Acts. In the event that any act, regulation,
directive, or law of a government within any country *
, including its departments, agencies or courts, should make impossible or
prohibit, restrain, modify or limit any material act or obligation of
either Partner under this Agreement, the Partner, if any, not so affected
shall have the right, at its option, to suspend or terminate this Agreement
as to such country * or to make such
modifications therein as may be necessary.
15.05 Notification of Authorities. After execution of this
Agreement, to the extent required by law, Agouron, after consultation with
JT, shall notify the appropriate United States and foreign authorities
about the terms of this Agreement and JT, after consultation with Agouron,
shall notify the appropriate Japanese authorities about the terms of this
Agreement. The Partners shall keep each other fully advised of the status
and progress of the notification procedures.
15.06 Captions; Number; Official Language. The captions of the
Articles and Paragraphs of this Agreement are for general information and
reference only and this Agreement shall not be construed by reference to
such captions. Where applicable in this Agreement, the singular includes
the plural and vice versa. English shall be the official language of this
Agreement and any license agreement provided for hereunder and all
communications between the Partners hereto shall be conducted in that
language.
15.07 Force Majeure. Neither Partner shall be responsible to the
other Partner for any failure or delay in performing any of its obligations
under this Agreement if such failure or delay is caused by any act of God,
earthquake, fire, casualty, flood, war, any act, exercise, assertion or
requirement of governmental authority, epidemic, riot, insurrection, or
other cause beyond the reasonable control of the Partner affected, if the
Partner affected shall have used its best efforts to avoid such occurrence.
If either Partner believes that the performance of any of its obligations
under this Agreement will be delayed as a result of any of the reasons
stated in this Paragraph 15.07, such Partner shall promptly notify the
other Partner of such delay and the cause therefor and shall provide such
other Partner with its estimate of when the performance of its obligations
will recommence.
15.08 Amendment. This Agreement, including the exhibits,
constitutes the full agreement of the Partners with respect to the subject
matter of this Agreement, and incorporates any prior discussions between
them with respect to such subject matter. This Agreement, including the
attachments hereto, shall not be amended, supplemented or otherwise
modified except by an instrument in writing signed by a duly authorized
officer of both Partners.
15.09 Applicable Law. This Agreement shall be construed, and the
rights of the Partners shall be determined, in accordance with the laws of
the State of California, and the United States without regard to its
conflict of law provisions.
15.10 Notices. Any notice required or permitted to be given under
this Agreement shall be in writing and shall be given in person, delivered
by recognized overnight delivery service, sent by mail (certified or
registered or air mail for addresses outside of the continental U.S.) or by
telefax (or other similar means of electronic communication), whose receipt
is confirmed by confirming telefax, and addressed, in the case of Agouron,
to the President and, in the case of JT, to the President at the addresses
shown at the beginning of this Agreement, or such other person and/or
address as may have been furnished in writing to the notifying Partner in
accordance with the provisions of this Paragraph 15.10. Except as
otherwise provided herein, any notice shall be deemed delivered upon the
earlier of (i) actual receipt, (ii) two (2) business days after delivery to
such overnight express service, (iii) five (5) business days after
deposited in the mail, or (iv) the date of receipt of the confirming
telefax.
15.11 Succession. This Agreement shall be binding upon all
successors in interest, assigns, trustees and other legal representatives
of the Partners.
IN WITNESS WHEREOF, the undersigned have executed this Agreement of
Partnership to be effective as of the Effective Date.
AGOURON PHARMACEUTICALS, INC.
By: ----------------------------------
Name: ----------------------------------
Its: ----------------------------------
JAPAN TOBACCO INC.
By: ----------------------------------
Name: ----------------------------------
Its: ----------------------------------
<PAGE>
Exhibit A
DEFINITIONS
"Affiliate" shall have the meaning defined in the Development Agreement,
which definition is incorporated herein by reference.
"Agouron Patent Rights" shall have the meaning defined in the
Development Agreement, which definition is incorporated herein by reference.
"Agreement" or "Partnership Agreement" shall mean this Agreement of
Partnership, together with all amendments, attached exhibits, or other
documents which may be incorporated herein by reference.
"Compound and/or Products" shall have the meaning defined in the
Development Agreement, which definition is incorporated herein by reference.
"Development Agreement" shall mean that certain Development and License
Agreement Between Japan Tobacco Inc. and Agouron Pharmaceuticals, Inc. dated
December 1, 1994.
"Development Program" shall have the meaning defined in the Development
Agreement, which definition is incorporated herein by reference.
"Development Program Patent Rights" shall have the meaning defined in
the Development Agreement, which definition is incorporated herein by
reference.
"Distributions" shall refer to any cash or other property distributed to
Partners arising from their interests in the Partnership, but shall not
include any payments to a Partner or its Affiliates as compensation for
services.
"Event of Insolvency" shall mean when a Partner: (a) petitions for,
obtains or becomes subject to an order for relief under the federal
bankruptcy laws; or other similar order, judgment or decree of insolvency
under applicable law; (b) makes an assignment for the benefit of creditors;
or (c) seeks, consents to or suffers the appointment of a receiver or trustee
to any substantial part of its assets that is not vacated within one hundred
fifty (150) days; an attachment or execution on any substantial part of its
assets that is not released within one hundred fifty (150) days; or a
charging order against its interest in the Partnership that is not released
or satisfied within one hundred fifty (150) days.
*
"Partners" shall refer to Japan Tobacco Inc. and Agouron
Pharmaceuticals, Inc. Reference to a "Partner" shall refer to either or both
of them as the context shall require.
"Partnership" shall refer to the partnership created under this
Partnership Agreement.
"Property" or "Partnership Property" shall refer to the assets of the
Partnership, as the same may be acquired, owned, modified, operated, financed
or refinanced, or otherwise dealt with or disposed of by the Partnership.
"Property" or "Partnership Property" shall also refer to any other real or
personal property of whatever nature acquired by or contributed to the
Partnership during the term of the Partnership.
"Registration" means the official approval by the government or health
authority in each country * which is required
for a Product to be offered for sale in the country concerned, including such
authorizations as may be required for the production, importation, pricing
and sale of such Product.
*
<PAGE>
Exhibit B
DESCRIPTION OF PROPERTY AND ASSETS
CONTRIBUTED BY AGOURON
*
<PAGE>
Exhibit C
DESCRIPTION OF PROPERTY AND ASSETS
CONTRIBUTED BY JT
*
<PAGE>
ATTACHMENT 2
TRADEMARK LICENSE
*
<PAGE>
ATTACHMENT 4
ACCOUNTING TERMS/DEFINITIONS
*
<PAGE>
ATTACHMENT 5
DEVELOPMENT COSTS AND REIMBURSEMENT PROCEDURES
ATTACHED HERETO
<PAGE>
ATTACHMENT 5
DEVELOPMENT COSTS AND REIMBURSEMENT PROCEDURES
*
The purpose of this document is to define development costs and to
describe/define a methodology to reimburse such costs.
Development Costs
Development Costs ("DC") shall consist of *
<PAGE>
Budgeting and Reporting
*
Reimbursement
*
<PAGE>
SCHEDULE 1
*
<PAGE>
SCHEDULE 2
*
<PAGE>
SCHEDULE 3
*
<PAGE>
ATTACHMENT 6
PREMARKETING EXPENSES AND REIMBURSEMENT PROCEDURES
*
<PAGE>
ATTACHMENT 7
RESEARCH PROGRAM FOUR TERMS AND CONDITIONS
*
<PAGE>
<PAGE>
Exhibit 99
Agouron Pharmaceuticals, Inc.
Important Factors Regarding
Forward-Looking Statements
The following factors, among others, could cause actual results to differ
materially from those contained in forward-looking statements made in this
report and presented elsewhere by management from time to time. Reference is
also made to the "Risk Factors" described in the Company's Prospectus dated
September 15, 1995.
Uncertainty of Product Development: The Company has not yet completed the
development of any products and does not expect to have any products
commercially available until calendar 1997, if at all. There can be no
assurance that further research and development will be successful or will
result in drugs that will qualify for approval by regulatory authorities for
commercial sale.
Uncertainty Associated with Clinical Testing: Historical results of clinical
testing of VIRACEPT (TM) and THYMITAQ (TM) are not necessarily predictive of
future results. There can be no assurance that clinical studies of products
under development will demonstrate the safety and efficacy of such products.
The failure to adequately demonstrate the safety and efficacy of a
therapeuticproduct could delay or prevent regulatory approval of the product.
There can be no assurance that unacceptable toxicities or side effects will
not occur at any time in the course of human clinical trials or commercial
use of the Company's drugs. The appearance of any such unacceptable
toxicities or side effects could interrupt, limit, delay or abort the
development of any of the Company's drugs or, if previously approved,
necessitate their withdrawal from the market. Futhermore, there can be no
assurance that disease resistance will not limit the efficacy of VIRACEPT.
Delays in planned patient enrollment in the Company's current clinical
trials or future clinical trials may result in increased costs, program
delays or both.
History of Operating Losses: The Company has not generated revenues from the
commercialization of any products and expects to incur substantial net
operating losses for the next few years. There can be no assurance that the
Company will ever achieve product revenues or profitable operations.
Additional Financing Requirements and Access to Capital: Additional funding
may be required before the commercialization of any products. No assurance
can be given that additional financing will be available when needed or on
terms acceptable to the Company. If adequate funds are not available, the
Company may be required to delay or eliminate expenditures for certain of its
programs or to license third parties to commercialize products or
technologies that the Company would otherwise seek to develop and
commercialize itself.
Dependence on Others: The Company's strategy for development and
commercialization of certain of its products entails entering into various
arrangements with corporate partners, licensees and others. There can be no
assurance that any revenues or profits will be derived from such
arrangements, that any of the Company's current strategic arrangements will
be continued, or that the Company will be able to enter into future
collaborations.
Lack of Manufacturing Capabilities: The Company has not yet manufactured its
product candidates in commercial quantities under current Good Manufacturing
Practices. No assurance can be given that the Company, on a timely basis,
will be able to make the transition to commercial production successfully or
be able to arrange for contract manufacturing.
Lack of Sales and Marketing Capabilities: The Company has no experience in
the sales, marketing and distribution of pharmaceutical products. There can
be no assurance that the Company will be able to establish sales, marketing
and distribution capabilities or make arrangements with its collaborators,
licensees or others to perform such activities or that such efforts will be
successful.
Patents and Proprietary Technology: No assurance can be given that the
Company's patent applications will issue as patents or that any patents that
may be issued will provide the Company with adequate protection for the
covered products or technology. Additionally, there can be no assurance that
the Company's confidentiality agreements will adequately protect its trade
secrets, know-how or other proprietary information. Further, there can be no
assurance that the Company's activities will not infringe on the patents or
proprietary rights of others or that the Company will be able to obtain
licenses to any technology that it may require to conduct its business or
that, if obtainable, such technology can be licensed at a reasonable cost.
Technological Change and Competition: There can be no assurance that
competitors will not succeed in developing technologies and products that are
more effective than any which have been or are being developed by the Company
or which would render the Company's technology and products obsolete and
noncompetitive. Many of the Company's competitors have substantially greater
financial and technical resources and production, marketing and development
capabilities and experience than the Company. Accordingly, certain of the
Company's competitors may succeed in obtaining regulatory approval for
products more rapidly or effectively than the Company. If the Company
commences commercial sales of its products, it will also be competing with
respect to manufacturing efficiency and sales and marketing capabilities,
areas in which it currently has no experience.
Volatility of Stock Price: The market price of the Common Stock has in
recent years fluctuated significantly, and it is likely that the price of
Common Stock will fluctuate in the future. Announcements by the Company or
others regarding its existing and future collaborations, results of clinical
trails, scientific discoveries, technological innovations, commercial
products, patents or proprietary rights or regulatory actions may have a
significant adverse effect on the market price of the Common Stock.
Fluctuations in financial performance from period to period also may have a
significant impact on the market price of the Common Stock.
