<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND
EXCHANGE ACT OF 1934
For The Quarterly Period Ended June 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
AND EXCHANGE ACT OF 1934
Commission File Number: 0-19700
AMYLIN PHARMACEUTICALS, INC.
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(Exact name of registrant as specified in its charter)
Delaware 33-0266089
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
9373 Towne Centre Drive, San Diego, California 92121
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(Address of principal executive offices) (Zip code)
(619) 552-2200
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(Registrant's telephone number, including area code)
Not Applicable
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(Former name, former address and former
fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
<TABLE>
<CAPTION>
Class Outstanding at June 30,1997
----- ---------------------------
<S> <C>
Common Stock, $.001 par value 32,088,896
</TABLE>
<PAGE> 2
AMYLIN PHARMACEUTICALS, INC.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE NO.
--------
<S> <C>
COVER PAGE..................................................1
TABLE OF CONTENTS...........................................2
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
Condensed Consolidated Balance Sheets as of
June 30, 1997 and December 31, 1996....................3
Condensed Consolidated Statements of Operations
for the three months and six months ended June 30,
1997 and 1996..........................................4
Condensed Consolidated Statements of Cash Flows
for the six months ended June 30, 1997 and 1996........6
Notes to Condensed Consolidated Financial Statements...7
ITEM 2.
Management's Discussion and Analysis of
Financial Condition and Results of Operations..........9
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings.............................17
ITEM 2. Changes in Securities..........................*
ITEM 3. Defaults upon Senior Securities................*
ITEM 4. Submission of Matters to a Vote of
Security Holders..............................18
ITEM 5. Other Information..............................*
ITEM 6. Exhibits and Reports on Form 8-K..............19
SIGNATURE..................................................20
</TABLE>
* No information provided due to inapplicability of item.
<PAGE> 3
AMYLIN PHARMACEUTICALS, INC.
Condensed Consolidated Balance Sheets
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
(unaudited) (Note)
------------- -------------
<S> <C> <C>
Assets
Current Assets:
Cash and cash equivalents $ 30,744,000 $ 42,654,000
Short-term investments 18,723,000 19,469,000
Receivable from related party 720,000 2,089,000
Other current assets 889,000 1,142,000
------------- -------------
Total current assets 51,076,000 65,354,000
Property and equipment, at cost:
Equipment 13,961,000 11,480,000
Leasehold improvements 4,530,000 3,349,000
------------- -------------
18,491,000 14,829,000
Less accumulated depreciation and amortization (9,400,000) (8,075,000)
------------- -------------
9,091,000 6,754,000
Patents and other assets, net 1,642,000 1,425,000
------------- -------------
$ 61,809,000 $ 73,533,000
============= =============
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable $ 2,540,000 $ 4,829,000
Accrued liabilities 5,280,000 4,628,000
Deferred revenue from related party 11,589,000 7,954,000
Current portion of obligation under capital
leases and equipment notes payable 1,392,000 1,253,000
------------- -------------
Total current liabilities 20,801,000 18,664,000
Obligation under capital leases and
equipment notes payable 2,591,000 1,990,000
Note payable to related party 6,095,000 4,345,000
Stockholders' equity:
Common stock, $.001 par value, 50,000,000 shares authorized,
32,088,896 and 31,977,186 issued and outstanding at
June 30, 1997 and December 31, 1996, respectively 32,000 32,000
Additional paid-in capital 205,689,000 204,800,000
Accumulated deficit (172,259,000) (155,105,000)
Deferred compensation (1,138,000) (1,177,000)
Unrealized losses on short-term investments (2,000) (16,000)
------------- -------------
Total stockholders' equity 32,322,000 48,534,000
------------- -------------
$ 61,809,000 $ 73,533,000
============= =============
</TABLE>
Note: The condensed consolidated balance sheet at December 31, 1996 has been
derived from audited condensed consolidated financial statements at that date
but does not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements.
See accompanying notes.
<PAGE> 4
AMYLIN PHARMACEUTICALS, INC.
Condensed Consolidated Statements of Operations
(unaudited)
<TABLE>
<CAPTION>
Three months ended
June 30,
----------------------------
1997 1996
------------ ------------
<S> <C> <C>
Revenues under collaborative agreements
from related party $ 10,013,000 $ 7,384,000
Operating Expenses:
Research and development 17,653,000 17,151,000
General and administrative 3,363,000 2,397,000
------------ ------------
21,016,000 19,548,000
------------ ------------
Loss from operations (11,003,000) (12,164,000)
Interest and other income 655,000 535,000
Interest and other expense (157,000) (87,000)
------------ ------------
Net loss ($10,505,000) ($11,716,000)
============ ============
Net loss per share ($ 0.33) ($ 0.42)
============ ============
Shares used in computing net loss per share 32,071,000 28,123,000
============ ============
</TABLE>
See accompanying notes.
<PAGE> 5
AMYLIN PHARMACEUTICALS, INC.
Condensed Consolidated Statements of Operations
(unaudited)
<TABLE>
<CAPTION>
Six months ended
June 30,
----------------------------
1997 1996
------------ ------------
<S> <C> <C>
Revenues under collaborative agreements
from related party $ 22,371,000 $ 10,730,000
Expenses:
Research and development 34,184,000 25,791,000
General and administrative 6,209,000 4,274,000
------------ ------------
40,393,000 30,065,000
------------ ------------
Loss from operations (18,022,000) (19,335,000)
Interest and other income 1,341,000 1,169,000
Interest and other expense (473,000) (171,000)
------------ ------------
Net loss ($17,154,000) ($18,337,000)
============ ============
Net loss per share ($ 0.54) ($ 0.65)
============ ============
Shares used in computing net loss per share 32,047,000 28,084,000
============ ============
</TABLE>
See accompanying notes.
<PAGE> 6
AMYLIN PHARMACEUTICALS, INC.
Condensed Consolidated Statements of Cash Flows
(unaudited)
<TABLE>
<CAPTION>
Six months ended
June 30,
----------------------------
1997 1996
------------ ------------
<S> <C> <C>
Operating Activities:
Net Loss ($17,154,000) ($18,337,000)
Adjustments to reconcile net loss to net
cash used for operating activities:
Depreciation and amortization 1,362,000 1,091,000
Deferred revenue from related party 3,635,000 2,143,000
Deferred rent and other expense (13,000) (12,000)
Amortization of deferred compensation 299,000 --
Changes in assets and liabilities:
Receivable from related party 1,369,000 226,000
Other current assets 253,000 74,000
Accounts payable (2,289,000) (465,000)
Accrued liabilities 665,000 1,226,000
------------ ------------
Net cash flows used for operating activities (11,873,000) (14,054,000)
Investing activities:
Decrease in short-term investments 760,000 15,437,000
Purchase of equipment and leasehold improvements (3,662,000) (1,673,000)
Increase in deposits, patents and other assets (254,000) (239,000)
------------ ------------
Net cash flows (used for) provided by investing activities (3,156,000) 13,525,000
Financing activities:
Issuance of notes payable 3,524,000 1,899,000
Principal payments on capital leases and
equipment notes payable (1,034,000) (426,000)
Issuance of common stock, net 629,000 580,000
------------ ------------
Net cash flows provided by financing activities 3,119,000 2,053,000
------------ ------------
(Decrease) increase in cash and cash equivalents (11,910,000) 1,524,000
Cash and cash equivalents at beginning of period 42,654,000 16,709,000
------------ ------------
Cash and cash equivalents at end of period $ 30,744,000 $ 18,233,000
============ ============
Supplemental disclosure of cash flow information:
Interest paid $ 184,000 $ 117,000
</TABLE>
See accompanying notes.
<PAGE> 7
AMYLIN PHARMACEUTICALS, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1997
(unaudited)
1. Summary of Significant Accounting Policies
Basis of Presentation
The information contained herein has been prepared in accordance with
instructions for Form 10-Q and Article 10 of Regulation S-X. The information at
June 30, 1997, and for the three months and six months ended June 30, 1997 and
1996, is unaudited. In the opinion of management, the information reflects all
adjustments necessary to make the results of operations for the interim periods
a fair statement of such operations. All such adjustments are of a normal
recurring nature. Interim results are not necessarily indicative of results for
a full year. For a presentation including all disclosures required by generally
accepted accounting principles, these financial statements should be read in
conjunction with the audited financial statements included in the Company's
Annual Report to Shareholders for the year ended December 31, 1996.
Per Share Data
Net loss per share is computed using the weighted average number of shares
outstanding during the periods.
In February 1997, the Financial Accounting Standards Board issued Statement No.
128, Earnings per Share, which is required to be adopted on December 31, 1997.
At that time the Company will be required to change the method currently used to
compute earnings per share and to restate all prior periods. Under the new
requirements for calculating primary earnings per share, the dilutive effect of
stock options will be excluded. The impact of Statement 128 on the calculation
of primary earnings per share for the periods presented is not expected to be
material.
Consolidation
The consolidated financial statements include the accounts of the Company and
its wholly owned subsidiary, Amylin Europe Limited. All significant intercompany
transactions and balances have been eliminated.
<PAGE> 8
2. Contingency
The Company has received letters from the University of Minnesota (the
"University") asserting that pramlintide is covered by a patent (the "University
Patent") which was licensed to the Company pursuant to a License Agreement dated
November 11, 1991 among the Company, the University and Per Westermark
("Westermark") (the "University License Agreement"). In its letters, the
University claims that they and Westermark are entitled to 50% of any sublicense
fees received by the Company from sublicensing the University Patent to Johnson
& Johnson pursuant to the Company's Collaboration Agreement with Johnson &
Johnson, as well as future royalties as specified in the University License
Agreement. The Company has informed the University and Westermark that no such
sublicensing moneys have been received by the Company from Johnson & Johnson,
who is not a sublicensee under the University Patent. On December 5, 1996, the
Company filed a complaint against the University and Westermark in the U.S.
District Court for the Southern District of California seeking a declaratory
judgment that pramlintide is not covered by the University Patent and that no
moneys are owed to the University or Westermark. Although discussions were
underway with the University and Westermark, they did not result in any
agreement regarding the litigation. The Company's complaint was served on the
University and Westermark in April 1997. The Company believes that the
University's and Westermark's assertions are without merit and intends to defend
vigorously against any claims brought by the University and Westermark against
the Company related to the foregoing.
<PAGE> 9
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Except for the historical information contained herein, the discussion in
this report contains forward-looking statements that involve risks and
uncertainties. The Company's actual results could differ materially from those
discussed in this report. Factors that could cause or contribute to such
differences include, without limitation, those discussed in this "Management's
Discussion and Analysis" as well as those discussed in the Company's Annual
Report on Form 10-K for the year ended December 31, 1996 under the heading "Risk
Factors."
Since its inception in September 1987, Amylin Pharmaceuticals, Inc.
("Amylin Pharmaceuticals" or the "Company") has devoted substantially all of its
resources to its research and development programs. Substantially all of the
Company's revenues to date have been derived from fees and expense
reimbursements under collaborative agreements and from interest income. Amylin
Pharmaceuticals has not received any revenues from the sale of products. The
Company has been unprofitable since its inception and expects to incur
additional operating losses for the next several years. As of June 30, 1997, the
Company's accumulated deficit was approximately $172.3 million.
RESULTS OF OPERATIONS
Revenue
The Company had $10.0 million and $22.4 million of revenue for the three
month and six month periods ended June 30, 1997 as compared to $7.4 million and
$10.7 million for the same periods in 1996. The revenues recognized in 1997 and
1996 were related to the Company's Collaboration Agreement with LifeScan, Inc.,
a wholly owned subsidiary of Johnson & Johnson, hereinafter referred to as
Johnson & Johnson. Revenues in 1997 were comprised of Johnson & Johnson's
one-half share of collaboration development expenses incurred by Amylin and $9.0
million in license fee payments made by Johnson & Johnson in the first half of
the year. The $9.0 million of license fee payments made by Johnson & Johnson
included $6.0 million received in the first quarter of the year related to the
exercise of Johnson &
<PAGE> 10
Johnson's option to broaden the scope of the collaboration with the Company to
include all amylin agonists for the treatment of fuel metabolism disorders,
including diabetes, and $3.0 million received in the second quarter of the year
related to the exercise of Johnson & Johnson's option to broaden the scope of
the collaboration with the Company to include all amylin agonists for the
treatment of all human diseases. Revenues in 1996 were comprised of Johnson &
Johnson's one-half share of collaboration development expenses incurred by
Amylin in the first half of 1996. (See the "Liquidity and Capital Resources"
section herein for further discussion of payments expected to be received by the
Company in the future.)
Operating Expenses
The Company's total operating expenses for the quarter ended June 30, 1997
increased to $21.0 million from $19.5 million for the same period in 1996. For
the six months ended June 30, 1997, operating expenses increased to $40.4
million from $30.1 million for the same period in 1996.
Research and development expenses increased to $17.7 million for the three
months ended June 30, 1997 as compared to $17.2 million for the same period in
1996. Research and development expenses for the six months ended June 30, 1997
increased to $34.2 million from $25.8 million for the same period in 1996. The
increase in these expenditures was primarily due to the costs of expanding
pramlintide clinical development efforts. Several other factors also contributed
to this increase, including increased staffing and expanded product development
efforts.
General and administrative expenses increased to $3.4 million for the three
months ended June 30, 1997 as compared to $2.4 million for the same period in
1996. General and administrative expenses for the six months ended June 30, 1997
increased to $6.2 million from $4.3 million for the same period in 1996. The
increase was primarily related to expanded pramlintide market development
efforts in connection with the Company's collaboration with Johnson & Johnson.
Other Income and Expense
Interest and other income is principally comprised of interest income from
investment of the Company's cash reserves. Interest and other income was $0.7
million for the quarter ended June 30, 1997 as compared to $0.5 million for the
same period in 1996. Interest and other income increased to $1.3 million for the
six months ended June 30, 1997 from $1.2 million for the same period in 1996.
The increase in interest and other income was primarily due to higher average
cash reserves available for investment for the three months and six months ended
June 30, 1997 as compared to the same period in 1996.
<PAGE> 11
Interest and other expense is principally comprised of interest expense
resulting from long-term debt obligations. Debt financing has been utilized by
the Company to acquire laboratory and other equipment and to fund tenant
improvements to the Company's facilities. In addition, in accordance with the
terms of the Company's Collaboration Agreement with Johnson & Johnson, Johnson &
Johnson has advanced Amylin's share of pramlintide pre-launch marketing expenses
incurred since the date of the collaboration, to be repaid with interest over
time out of Amylin's share of future pramlintide profits if any. Interest and
other expense increased to $0.2 million for the three months ended June 30, 1997
from $0.1 million for the same period in 1996. Interest and other expense
increased to $0.5 million for the six months ended June 30, 1997 from $0.2
million for the same period in 1996. The increase in interest and other expense
reflects the overall higher long-term debt balance during the first half of 1997
as compared to 1996 as well as a provision of approximately $0.1 million made
for the disposal of certain pieces of equipment.
Net Loss
The net loss for the quarter ended June 30, 1997 was $10.5 million compared
to a net loss for the same quarter in 1996 of $11.7 million. The decrease in the
net loss was due to increased collaborative revenues during the second quarter
of 1997 as compared to the same period in 1996. The increased revenues were
offset partially by increased operating expenses during the same time periods.
The increase in collaborative revenues during the second quarter of 1997 was due
to the $3.0 million license fee payment received in the quarter along with
payments received for Johnson & Johnson's one-half share of collaboration
development expenses incurred by Amylin. The Company incurred a net loss of
$17.2 million for the six months ended June 30, 1997 as compared to $18.3
million for the six months ended June 30, 1996. The decrease in the net loss for
the six month period was also due to increased collaborative revenues during the
first half of 1997 as compared to the same period in 1996, offset partially by
significantly increased operating expenses during the same time periods.
Collaborative revenues during the first half of the year included $9.0 million
in license fee payments received from Johnson & Johnson along with additional
payments from Johnson & Johnson related to their one-half share of collaboration
development expenses incurred by Amylin.
Amylin expects to incur substantial operating losses over the next several
years due to continuing and increasing expenses associated with its research and
development programs, including clinical development of pramlintide, preclinical
and potential
<PAGE> 12
clinical testing of additional product candidates, and related general and
administrative support. Operating losses may fluctuate from quarter to quarter
as a result of differences in the timing of expenses incurred and revenues
recognized.
LIQUIDITY AND CAPITAL RESOURCES
Since its inception, the Company has financed its operations primarily
through private placements of preferred stock, sales of common stock, its
collaboration with Johnson & Johnson, and operating and capital lease
obligations.
In June 1995, the Company entered into a worldwide Collaboration Agreement
with Johnson & Johnson for the development and commercialization of pramlintide,
a diabetes drug candidate currently in Phase III clinical trials. In conjunction
with the Collaboration Agreement, the Company also entered into a Stock Purchase
Agreement with Johnson & Johnson Development Corporation (a wholly owned
subsidiary of Johnson & Johnson referred to herein as Johnson & Johnson) and a
Loan Agreement with Johnson & Johnson. In March 1997, Johnson & Johnson
exercised an option to broaden the scope of the existing collaboration on
pramlintide and paid the Company $6.0 million to obtain additional rights for
all amylin agonists for the treatment or prevention of fuel metabolism
disorders, including diabetes. In June 1997, Johnson & Johnson exercised an
option to broaden the scope of the existing collaboration on pramlintide and
paid the Company $3.0 million to obtain additional rights for all amylin
agonists for the treatment of human diseases. The Company will lead the research
and development while Johnson & Johnson will lead commercialization of any
future product candidates.
In addition to the above mentioned milestone-related payments and
investment, Johnson & Johnson's financial commitment to the Company now includes
the funding of 50% of development costs and 100% of pre-launch marketing costs
(Amylin Pharmaceutical's one-half share to be repaid over time from future
profits), as well as milestone payments, license fees, equity investments, and a
development loan facility for use in certain circumstances. The Company will
apply all of the license fees, any cash milestone payments, 50% of the proceeds
from Johnson & Johnson's equity investments and proceeds from draw downs under
the development loan facility towards its share of pramlintide development
expenses.
Funding available to the Company from Johnson & Johnson as of June 30, 1997
under the development loan facility (the
<PAGE> 13
"Development Loan Facility") was $57.1 million. The aggregate amount of the
Development Loan Facility is subject to adjustment for certain events, e.g.
increased by 50% of any future increases in the pramlintide development budget
and decreased by 50% of the Company's net proceeds received from future debt or
equity offerings to investors other than Johnson & Johnson or other corporate
partners. The Company is required to issue a warrant to Johnson & Johnson to
purchase 50,000 shares of the Company's common stock at an exercise price of
$12.00 per share for every $1 million of proceeds borrowed by the Company under
the Development Loan Facility. Under the terms of the Loan Agreement, the
Company is eligible in certain circumstances to make quarterly draw downs on the
then available Development Loan Facility based on pramlintide development
expenses during specified periods. The aggregate amount available to be borrowed
by the Company under the Development Loan Facility during 1997 is $42.3 million,
which is subject to adjustment based on changes to the pramlintide development
budget and on certain corporate financing activities. As of June 30, 1997 the
Company has not drawn down any proceeds available to it under the Development
Loan Facility.
The Company is dependent on the future payments from Johnson & Johnson to
continue development and commercialization of pramlintide. Johnson & Johnson may
terminate the Collaboration Agreement subject to a notice period of six months.
Johnson & Johnson's financial and other obligations under the Collaboration
Agreement would continue during any such termination notice period. In addition,
Johnson & Johnson has the right to terminate the Collaboration Agreement at any
time based on material safety or tolerability issues. Without Johnson &
Johnson's continued collaborative support, the Company might not be able to
continue the pramlintide development program, and the Company's financial
condition would be materially adversely affected.
As of June 30, 1997, Johnson & Johnson entities have made various financial
payments to the Company totaling approximately $117 million. These payments
primarily include funding of one half of the pramlintide development costs, the
purchase of $30 million of the Company's common stock, milestone and option fee
payments and license fees.
At June 30, 1997, the Company had $49.5 million in cash, cash equivalents
and short-term investments as compared to $62.1 million at December 31, 1996.
The Company invests its cash in U.S. government and other highly rated liquid
debt instruments.
The Company intends to use its financial resources for the ongoing
development of pramlintide, including the Phase III clinical trials, for
expansion of its other research, drug
<PAGE> 14
discovery and development programs, and for other general corporate purposes. To
the extent that clinical trials of the Company's compounds progress as planned,
research and development expenses will include costs of supplying materials for
and conducting pramlintide clinical trials, research activities to further
explore amylin biology, and research and development of other compounds targeted
at metabolic diseases. The amounts actually expended for each purpose may vary
significantly depending upon numerous factors, including the progress of the
Company's research and development programs, the results of preclinical and
clinical studies, the timing of regulatory submissions and approvals, if any,
technological advances, determinations as to commercial potential of the
Company's compounds, and the status of competitive products. Expenditures will
also depend upon the continued participation of Johnson & Johnson in the
collaboration, the availability of additional sources of funds, the
establishment of collaborative arrangements with other companies, and other
factors.
The Company currently leases or sub-leases approximately 99,000 square feet
of space. At this time, the Company expects to incur approximately $5.9 million
of capital expenditures in 1997. These expenditures will primarily be directed
toward the purchase of new equipment to support research and development efforts
and for tenant improvements for newly sub-leased space. In addition, some
capital expenditures will be directed toward the purchase of equipment coming
off of lease lines which will expire during the year. The Company has entered
into a loan agreement for the financing of the majority of its equipment needs
and intends to use this financing source during 1997. The Company anticipates
that it will utilize approximately $3.4 million of debt financing and $2.5
million of its own cash reserves for capital expenditures in 1997. The terms of
the Company's loan agreement call for amounts drawn down under the loan to be
repaid monthly over a four year period.
The Company does not expect to generate a positive internal cash flow for
several years due to substantial additional research and development costs,
including costs related to drug discovery, preclinical testing, clinical trials,
manufacturing costs, and general and administrative expenses necessary to
support such activities. In addition to the 1997 and 1998 funding of 50% of the
six pivotal studies and other ancillary studies in the pramlintide clinical
program, the Company plans to expand its research and development pipeline by
licensing new technologies and product candidates. The Company anticipates that
its existing cash, including interest income from cash investments, and
financial payments and loan facilities from Johnson & Johnson, will be adequate
to satisfy the Company's capital requirements
<PAGE> 15
through 1998. As an alternative to the additional funding available through the
Johnson & Johnson Development Loan Facility (as described above), the Company
may also consider additional equity offerings. Assuming continued participation
by Johnson & Johnson, the Company believes it has reasonable alternatives to
meet the financial needs of its programs. However, there can be no assurance
that additional financial resources will be raised in the necessary time frame
or on terms favorable to the Company.
The Company cannot assure that any of its drug candidates will successfully
meet all of their development goals. Important technical milestones remain to be
achieved before Amylin Pharmaceuticals can commercialize any of its products,
and failure to achieve these milestones could seriously jeopardize the Company's
chances of success and its financial condition would be adversely affected. The
Company's future capital requirements will depend on many factors, including
continued scientific progress in its research and development programs, the
magnitude of these programs, progress with preclinical and clinical trials, the
time and costs involved in preparing regulatory submissions and seeking
regulatory approvals, the costs involved in preparing, filing, prosecuting,
maintaining, and enforcing patents, competing technological and market
developments, changes in the Johnson & Johnson collaboration, the ability of the
Company to establish collaborative arrangements for its other research and
development programs, and the cost of manufacturing scale-up.
Prior to marketing, any drug developed by the Company must undergo rigorous
preclinical and clinical testing and an extensive regulatory approval process
mandated by the Food and Drug Administration (FDA) and equivalent foreign
authorities. Human clinical testing is now underway on the Company's first
product candidate, pramlintide. Subject to compliance with FDA regulations, the
Company plans to undertake extensive clinical testing to demonstrate optimal
dose, safety, and efficacy for its product candidates in humans. Although
preliminary clinical data about pramlintide's possible clinical value warrants
continuing Phase III trials, there can be no assurance that these larger and
longer studies will confirm the results of the Phase I and Phase II studies to
date. Further testing of pramlintide and the Company's other product candidates
in research or development may reveal undesirable and unintended side effects or
other characteristics that may prevent or limit their commercial use. The
Company or the FDA may suspend clinical trials at any time if the subjects or
patients participating in such trials are being exposed to unacceptable health
risks. There can be no assurance that the Company will not encounter problems in
clinical trials which will cause the Company or the FDA to delay or suspend
clinical trials. In addition, there can be no assurance that any
<PAGE> 16
of the Company's products will obtain FDA approval for any indication. Products,
if any, resulting from Amylin Pharmaceuticals' research and development programs
are not expected to be commercially available for a number of years.
The Company believes that patent and other proprietary rights are important
to its business, and in this regard intends to file applications as appropriate
for patents covering both its products and processes. Litigation, which could
result in substantial cost to the Company, may also be necessary to enforce any
patents issued to the Company or to determine the scope and validity of
third-party proprietary rights. The Company has received letters from the
University of Minnesota (the "University") asserting that pramlintide is covered
by a patent (the "University Patent") which was licensed to the Company pursuant
to a License Agreement dated November 11, 1991 among the Company, the University
and Per Westermark ("Westermark") (the "University License Agreement"). In its
letters, the University claims that they and Westermark are entitled to 50% of
any sublicense fees received by the Company from sublicensing the University
Patent to Johnson & Johnson pursuant to the Company's Collaboration Agreement
with Johnson & Johnson, as well as future royalties as specified in the
University License Agreement. The Company has informed the University and
Westermark that no such sublicensing moneys have been received by the Company
from Johnson & Johnson, who is not a sublicensee under the University Patent. On
December 5, 1996, the Company filed a complaint against the University and
Westermark in the U.S. District Court for the Southern District of California
seeking a declaratory judgment that pramlintide is not covered by the University
Patent and that no moneys are owed to the University or Westermark. Although
discussions were underway with the University and Westermark, they did not
result in any agreement regarding the litigation. The Company's complaint was
served on the University and Westermark in April 1997. The Company believes that
the University's and Westermark's assertions are without merit and intends to
defend vigorously against any claims brought by the University and Westermark
against the Company related to the foregoing. In addition, should any of the
Company's competitors have prepared and filed patent applications in the United
States which claim technology also invented by the Company, Amylin
Pharmaceuticals may have to participate in interference proceedings declared by
the U.S. Patent and Trademark Office in order to determine priority of invention
and, thus, the right to a patent for the technology, all of which could result
in substantial cost to the Company to determine its rights. It is uncertain
whether any third-party patents will require the Company to alter its products
or processes, obtain licenses, or cease certain activities. If any licenses are
required, there can be no assurances that the Company
<PAGE> 17
will be able to obtain any such license on commercially favorable terms, if at
all. Failure by the Company to obtain a license to any technology that it may
require to commercialize its products may have a material adverse impact on the
Company.
ITEM 1. LEGAL PROCEEDINGS
The Company has received letters from the University of Minnesota (the
"University") asserting that pramlintide is covered by a patent (the "University
Patent") which was licensed to the Company pursuant to a License Agreement dated
November 11, 1991 among the Company, the University and Per Westermark
("Westermark") (the "University License Agreement"). In its letters, the
University claims that they and Westermark are entitled to 50% of any sublicense
fees received by the Company from sublicensing the University Patent to Johnson
& Johnson pursuant to the Company's Collaboration Agreement with Johnson &
Johnson, as well as future royalties as specified in the University License
Agreement. The Company has informed the University and Westermark that no such
sublicensing moneys have been received by the Company from Johnson & Johnson,
who is not a sublicensee under the University Patent. On December 5, 1996, the
Company filed a complaint against the University and Westermark in the U.S.
District Court for the Southern District of California seeking a declaratory
judgment that pramlintide is not covered by the University Patent and that no
moneys are owed to the University or Westermark. Although discussions were
underway with the University and Westermark, they did not result in any
agreement regarding the litigation. The Company's complaint was served on the
University and Westermark in April 1997. The Company believes that the
University's and Westermark's assertions are without merit and intends to defend
vigorously against any claims brought by the University and Westermark against
the Company related to the foregoing.
<PAGE> 18
ITEM 4.
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company's Annual Meeting of Stockholders (the "Annual Meeting") was
held on May 29, 1997. At the Annual Meeting, the stockholders of the Company (i)
elected each of the persons listed below to serve as a director of the Company
until the next annual meeting and until their successor is elected, and (ii)
ratified the selection of Ernst & Young LLP as the Company's independent
auditors for the fiscal year ending December 31, 1997.
The Company had 32,052,147 shares of Common Stock outstanding as of March
31, 1997, the record date for the Annual Meeting. At the Annual Meeting, holders
of a total of 29,776,140 shares of Common Stock were present in person or
represented by proxy. The following sets forth information regarding the results
of the voting at the Annual Meeting:
Proposal 1: Election of Directors
<TABLE>
<CAPTION>
Shares
Voting Shares
Director in Favor Withheld
-------- ---------- --------
<S> <C> <C>
Howard E. Greene, Jr. 29,691,251 84,889
Richard M. Haugen 29,692,182 83,958
James C. Blair 29,686,959 89,181
Joseph C. Cook, Jr. 29,687,559 88,581
James C. Gaither 29,690,932 85,208
Ginger L. Howard 26,729,261 3,046,879
Vaughn M. Kailian 29,690,782 85,358
Timothy J. Wollaeger 29,690,951 85,189
</TABLE>
Proposal 2: Ratification of Selection of Independent Auditors
<TABLE>
<S> <C>
Votes in Favor: 29,504,421
Votes Against: 47,698
Abstentions: 224,021
</TABLE>
<PAGE> 19
ITEM 6
Exhibits and Reports Submitted on Form 8-K
(a) EXHIBITS. The exhibits listed below are filed with this report.
10.2 Registrant's 1991 Stock Option Plan, as amended (the "Option
Plan").
10.6 Registrant's Employee Stock Purchase Plan and related Offering
document, as amended.
10.12 Registrant's Non-Employee Directors Stock Option Plan, as
amended (the "Directors' Plan").
10.34 Registrant's Directors' Deferred Compensation Plan.
(b) REPORTS ON FORM 8-K. No reports on Form 8-K were filed during the
quarter for which this report is filed.
<PAGE> 20
AMYLIN PHARMACEUTICALS, INC.
June 30, 1997
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed in its behalf by the
undersigned thereunto duly authorized.
Amylin Pharmaceuticals, Inc.
Date: August 13, 1997 By: /s/ MARJORIE T. SENNETT
------------------------------
Marjorie T. Sennett
Senior Vice President and
Chief Financial Officer
(on behalf of the registrant
and as the registrant's
principal financial officer)
<PAGE> 1
EXHIBIT 10.2
AMYLIN PHARMACEUTICALS, INC.
1991 STOCK OPTION PLAN
ADOPTED OCTOBER 25, 1991
AS AMENDED ON FEBRUARY 9, 1994
AS AMENDED ON FEBRUARY 14, 1995
AS AMENDED ON FEBRUARY 8, 1996
AS AMENDED ON APRIL 15, 1997
AS AMENDED ON MAY 29, 1997
1. PURPOSES.
(a) The purpose of the Plan is to provide a means by
which selected Employees of and Consultants to the Company, and its Affiliates,
may be given an opportunity to purchase stock of the Company.
(b) The Company, by means of the Plan, seeks to retain
the services of persons who are now Employees of or Consultants to the Company,
to secure and retain the services of new Employees and Consultants, and to
provide incentives for such persons to exert maximum efforts for the success of
the Company.
(c) The Company intends that the Options issued under the
Plan shall, in the discretion of the Board or any Committee to which
responsibility for administration of the Plan has been delegated pursuant to
subsection 3(c), be either Incentive Stock Options or Nonqualified Stock
Options. All Options shall be separately designated Incentive Stock Options or
Nonqualified Stock Options at the time of grant, and in such form as issued
pursuant to section 6, and a separate certificate or certificates will be
issued for shares purchased on exercise of each type of Option.
(d) In order to achieve the above purposes, the Plan has
been amended from time to time.
1.
<PAGE> 2
2. DEFINITIONS.
(a) "AFFILIATE" means any "parent corporation" or
"subsidiary corporation," whether now or hereafter existing, as those terms are
defined in Sections 424(e) and (f) respectively, of the Code.
(b) "BOARD" means the Board of Directors of the Company.
(c) "CODE" means the Internal Revenue Code of 1986, as
amended.
(d) "COMMITTEE" means a Committee appointed by the Board
in accordance with subsection 3(c) of the Plan.
(e) "COMPANY" means Amylin Pharmaceuticals, Inc., a
Delaware corporation.
(f) "CONSULTANT" means any person, including an advisor,
engaged by the Company or an Affiliate to render services and who is
compensated for such services, provided that the term "Consultant" shall not
include Directors who are paid only a director's fee by the Company or who are
not compensated by the Company for their services as Directors.
(g) "CONTINUOUS STATUS AS AN EMPLOYEE OR CONSULTANT"
means the employment or consulting relationship is not interrupted or
terminated by the Company or any Affiliate. The Board, in its sole discretion,
may determine whether Continuous Status as an Employee or Consultant shall be
considered interrupted in the case of: (i) any leave of absence approved by
the Board, including sick leave, military leave, or any other personal leave;
provided, however, that for purposes of Incentive Stock Options, any such leave
may not exceed ninety (90) days, unless reemployment upon the expiration of
such leave is guaranteed by contract (including certain Company policies) or
statute; or (ii) transfers between locations of the Company or between the
Company, Affiliates or their successors.
(h) "COVERED EMPLOYEE" means the chief executive officer
and the four (4) other highest compensated officers of the Company for whom
total compensation is required to be reported to stockholders under the
Exchange Act, as determined for purposes of Section 162(m) of the Code.
(i) "DIRECTOR" means a member of the Board.
(j) "EMPLOYEE" means any person, including Officers and
Directors,
2.
<PAGE> 3
employed by the Company or any Affiliate. Neither service as a Director nor
payment of a director's fee by the Company shall be sufficient to constitute
"employment" by the Company.
(k) "EXCHANGE ACT" means the Securities Exchange Act of
1934, as amended.
(l) "FAIR MARKET VALUE" means, as of any date, the value
of the common stock of the Company determined as follows:
(i) If the common stock is listed on any
established stock exchange or a national market system, including without
limitation the National Market System of the National Association of Securities
Dealers, Inc. Automated Quotation ("NASDAQ") System, the Fair Market Value of a
share of common stock shall be the closing sales price for such stock (or the
closing bid, if no sales were reported) as quoted on such system or exchange
(or the exchange with the greatest volume of trading in common stock) on the
last market trading day prior to the day of determination, as reporting in the
Wall Street Journal or such other source as the Board deems reliable;
(ii) If the common stock is quoted on the NASDAQ
System (but not on the National Market System thereof) or is regularly quoted
by a recognized securities dealer but selling prices are not reported, the Fair
Market Value of a share of common stock shall be the mean between the high bid
and high asked prices for the common stock on the last market trading day prior
to the day of determination, as reported in the Wall Street Journal or such
other source as the Board deems reliable;
(iii) In the absence of an established market for
the common stock, the Fair Market Value shall be determined in good faith by
the Board.
(m) "INCENTIVE STOCK OPTION" means an Option intended to
qualify as an incentive stock option within the meaning of Section 422 of the
Code and the regulations promulgated thereunder.
(n) "NON-EMPLOYEE DIRECTOR" means a Director who either
(i) is not a current Employee or Officer of the Company or its parent or
subsidiary, does not receive compensation (directly or indirectly) from the
Company or its parent or subsidiary for services rendered as a consultant or in
any capacity other than as a Director (except for an amount as to which
3.
<PAGE> 4
disclosure would not be required under Item 404(a) of Regulation S-K
promulgated pursuant to the Securities Act ("Regulation S-K")), does not
possess an interest in any other transaction as to which disclosure would be
required under Item 404(a) of Regulation S-K, and is not engaged in a business
relationship as to which disclosure would be required under Item 404(b) of
Regulation S-K; or (ii) is otherwise considered a "non-employee director" for
purposes of Rule 16b-3.
(o) "NONQUALIFIED STOCK OPTION" means an Option not
intended to qualify as an Incentive Stock Option.
(p) "OFFICER" means a person who is an officer of the
Company within the meaning of Section 16 of the Exchange Act and the rules and
regulations promulgated thereunder.
(q) "OPTION" means a stock option granted pursuant to the
Plan.
(r) "OPTION AGREEMENT" means a written agreement between
the Company and an Optionee evidencing the terms and conditions of an
individual Option grant. The Option Agreement is subject to the terms and
conditions of the Plan.
(s) "OPTIONED STOCK" means the common stock of the
Company subject to an Option.
(t) "OPTIONEE" means an Employee or Consultant who holds
an outstanding Option.
(u) "OUTSIDE DIRECTOR" means a Director who either (i) is
not a current employee of the Company or an affiliated corporation, is not a
former employee of the Company or an affiliated corporation receiving
compensation for prior services (other than benefits under a tax qualified
pension plan), was not an officer of the Company or an affiliated corporation
at any time, and is not currently receiving compensation for personal services
in any capacity other than as a Director, or (ii) is otherwise considered an
"outside director" for purposes of Section 162(m) of the Code.
(v) "PLAN" means this 1991 Stock Option Plan.
(w) "RULE 16b-3" means Rule 16b-3 of the Exchange Act or
any successor to Rule 16b-3, as in effect when discretion is being exercised
with respect to the Plan.
(x) "SECURITIES ACT" means the Securities Act of 1933, as
amended.
4.
<PAGE> 5
3. ADMINISTRATION.
(a) The Plan shall be administered by the Board unless
and until the Board delegates administration to a Committee, as provided in
subsection 3(c).
(b) The Board shall have the power, subject to, and
within the limitations of, the express provisions of the Plan:
(i) To determine from time to time which of the
persons eligible under the Plan shall be granted Options; when and how each
Option shall be granted; whether the Option will be an Incentive Stock Option
or a Nonqualified Stock Option; the provisions of each Option granted (which
need not be identical), including the time or times such Option may be
exercised in whole or in part; and the number of shares for which an Option
shall be granted to each such person.
(ii) To construe and interpret the Plan and
Options granted under it, and to establish, amend and revoke rules and
regulations for its administration. The Board, in the exercise of this power,
may correct any defect, omission or inconsistency in the Plan or in any Option
Agreement, in a manner and to the extent it shall deem necessary or expedient
to make the Plan fully effective.
(iii) To amend the Plan as provided in Section 11.
(c) The Board may delegate administration of the Plan to
a committee of the Board composed of not fewer than two (2) members (the
"Committee"), all of the members of which Committee may be, in the discretion
of the Board, Non-Employee Directors and/or Outside Directors. If
administration is delegated to a Committee, the Committee shall have, in
connection with the administration of the Plan, the powers theretofore
possessed by the Board, including the power to delegate to a subcommittee of
two (2) or more Outside Directors any of the administrative powers the
Committee is authorized to exercise (and references in this Plan to the Board
shall thereafter be to the Committee or such a subcommittee), subject, however,
to such resolutions, not inconsistent with the provisions of the Plan, as may
be adopted from time to time by the Board. The Board may abolish the Committee
at any time and revest in the Board the administration of the Plan.
Notwithstanding anything in this Section 3 to the contrary, the Board or the
Committee may delegate to a committee of one or more members of the Board the
authority to grant Options to eligible persons who (1) are not then subject to
Section 16 of the Exchange Act and/or (2) are either (i) not then Covered
Employees and are not expected to be Covered Employees at the time of
recognition of income resulting from such Option, or (ii) not persons with
respect to whom the Company wishes to
5.
<PAGE> 6
comply with Section 162(m) of the Code.
4. SHARES SUBJECT TO THE PLAN.
(a) Subject to the provisions of Section 10 relating to
adjustments upon changes in stock, the stock that may be sold pursuant to
Options shall not exceed in the aggregate seven million (7,000,000) shares of
the Company's common stock. If any Option shall for any reason expire or
otherwise terminate without having been exercised in full, the stock not
purchased under such Option shall revert to and again become available for
issuance pursuant to exercises of options granted under the Plan.
(b) The stock subject to the Plan may be unissued shares
or reacquired shares, bought on the market or otherwise.
5. ELIGIBILITY.
(a) Incentive Stock Options may be granted only to
Employees. Nonqualified Stock Options may be granted only to Employees or
Consultants.
(b) No person shall be eligible for the grant of an
Option if, at the time of grant, such person owns (or is deemed to own pursuant
to Section 424(d) of the Code) stock possessing more than ten percent (10%) of
the total combined voting power of all classes of stock of the Company or of
any of its Affiliates unless the exercise price of such Option is at least one
hundred ten percent (110%) of the Fair Market Value of such stock at the date
of grant and the Option is not exercisable after the expiration of five (5)
years from the date of grant.
(c) No employee shall be eligible to be granted in any
calendar year Options covering more than 5% of the total number of shares of
the Company's common stock outstanding on the record date for the Company's
1995 Annual Meeting of Stockholders.
6. OPTION PROVISIONS.
Each Option shall be in such form and shall contain such terms and
conditions as the Board shall deem appropriate. The provisions of separate
Options need not be identical, but each Option shall include (through
incorporation of provisions hereof by reference in the Option or otherwise) the
substance of each of the following provisions:
(a) TERM. No Option shall be exercisable after the
expiration of ten (10) years from the date it was granted.
6.
<PAGE> 7
(b) PRICE. The exercise price of each Incentive Stock
Option shall be not less than one hundred percent (100%) of the Fair Market
Value of the stock subject to the Option on the date the Option is granted.
The exercise price of each Nonqualified Stock Option shall be not less than
fifty percent (50%) of the Fair Market Value of the stock subject to the Option
on the date the Option is granted.
(c) CONSIDERATION. The purchase price of stock acquired
pursuant to an Option shall be paid, to the extent permitted by applicable
statutes and regulations, either (i) in cash at the time the option is
exercised, or (ii) at the discretion of the Board or the Committee, either at
the time of the grant or exercise of the Option, (A) by delivery to the Company
of other common stock of the Company, (B) according to a deferred payment or
other arrangement (which may include, without limiting the generality of the
foregoing, the use of other common stock of the Company) with the person to
whom the Option is granted or to whom the Option is transferred pursuant to
subsection 6(d), or (C) in any other form of legal consideration that may be
acceptable to the Board.
In the case of any deferred payment arrangement, interest shall be
payable at least annually and shall be charged at the minimum rate of interest
necessary to avoid the treatment as interest, under any applicable provisions
of the Code, of any amounts other than amounts stated to be interest under the
deferred payment arrangement.
(d) TRANSFERABILITY. An Incentive Stock Option shall not
be transferable except by will or by the laws of descent and distribution, and
shall be exercisable during the lifetime of the person to whom the Incentive
Stock Option is granted only by such person. A Nonqualified Stock Option shall
only be transferable by the Optionee upon such terms and conditions as are set
forth in the Option Agreement for such Nonstatutory Stock Option, as the Board
or the Committee shall determine in its discretion. The person to whom the
Option is granted may, by delivering written notice to the Company, in a form
satisfactory to the Company, designate a third party who, in the event of the
death of the Optionee, shall thereafter be entitled to exercise the Option.
(e) VESTING. The total number of shares of stock subject
to an Option may, but need not, be allotted in periodic installments (which
may, but need not, be equal). The Option Agreement may provide that from time
to time during each of such installment periods, the Option may become
exercisable ("vest") with respect to some or all of the shares allotted to that
period, and may be exercised with respect to some or all of the shares allotted
to such period and/or any prior period as to which the Option became vested but
was not fully exercised. During the remainder of the term of the Option (if
its term extends beyond the end of the installment periods), the option may be
exercised from time to time with respect to any shares then remaining subject
to the
7.
<PAGE> 8
Option. The provisions of this subsection 6(e) are subject to any Option
provisions governing the minimum number of shares as to which an Option may be
exercised.
(f) SECURITIES LAW COMPLIANCE. The Company may require
any Optionee, or any person to whom an Option is transferred under subsection
6(d), as a condition of exercising any such Option, (1) to give written
assurances satisfactory to the Company as to the Optionee's knowledge and
experience in financial and business matters and/or to employ a purchaser
representative reasonably satisfactory to the Company who is knowledgeable and
experienced in financial and business matters, and that he or she is capable of
evaluating, alone or together with the purchaser representative, the merits and
risks of exercising the Option; and (2) to give written assurances satisfactory
to the Company stating that such person is acquiring the stock subject to the
Option for such person's own account and not with any present intention of
selling or otherwise distributing the stock. These requirements, and any
assurances given pursuant to such requirements, shall be inoperative if (i) the
issuance of the shares upon the exercise of the Option has been registered
under a then currently effective registration statement under the Securities
Act, or (ii) as to any particular requirement, a determination is made by
counsel for the Company that such requirement need not be met in the
circumstances under the then applicable securities laws.
(g) TERMINATION OF EMPLOYMENT OR CONSULTING RELATIONSHIP.
In the event an Optionee's Continuous Status as an Employee or Consultant
terminates (other than upon the Optionee's death or Disability), the Optionee
may exercise his or her Option, but only within such period of time as is
determined by the Board, and only to the extent that the Optionee was entitled
to exercise it at the date of termination (but in no event later than the
expiration of the term of such Option as set forth in the Option Agreement).
In the case of an Incentive Stock Option, the Board shall determine such period
of time (in no event to exceed ninety (90) days from the date of termination)
when the Option is granted. If, at the date of termination, the Optionee is
not entitled to exercise his or her entire Option, the shares covered by the
unexercisable portion of the Option shall revert to and again become available
for issuance pursuant to Options granted under the Plan. If, after
termination, the Optionee does not exercise his or her Option within the time
specified in the Option Agreement, the Option shall terminate, and the shares
covered by such Option shall revert to and again become available for issuance
pursuant to Options granted under the Plan.
(h) DISABILITY OF OPTIONEE. In the event an Optionee's
Continuous Status as an Employee or Consultant terminates as a result of the
Optionee's Disability, the Optionee may exercise his or her Option, but only
within twelve (12) months from the date of such termination (or such shorter
period specified in the Option Agreement), and only to the extent that the
Optionee was entitled to exercise it at the date of such
8.
<PAGE> 9
termination (but in no event later than the expiration of the term of such
Option as set forth in the Option Agreement). If, at the date of termination,
the Optionee is not entitled to exercise his or her entire Option, the shares
covered by the unexercisable portion of the Option shall revert to and again
become available for issuance pursuant to Options granted under the Plan. If,
after termination, the Optionee does not exercise his or her Option within the
time specified herein, the Option shall terminate, and the shares covered by
such Option shall revert to and again become available for issuance pursuant to
Options granted under the Plan.
(i) DEATH OF OPTIONEE. In the event of the death of an
Optionee, the Option may be exercised, at any time within twelve (12) months
following the date of death (or such shorter period specified in the Option
Agreement) (but in no event later than the expiration of the term of such
Option as set forth in the Option Agreement), by the Optionee's estate or by a
person who acquired the right to exercise the Option by bequest or inheritance,
but only to the extent the Optionee was entitled to exercise the Option at the
date of death. If, at the time of death, the Optionee was not entitled to
exercise his or her entire Option, the shares covered by the unexercisable
portion of the Option shall revert to and again become available for issuance
pursuant to Options granted under the Plan. If, after death, the Optionee's
estate or a person who acquired the right to exercise the Option by bequest or
inheritance does not exercise the Option within the time specified herein, the
Option shall terminate, and the shares covered by such Option shall revert to
and again become available for issuance pursuant to Options granted under the
Plan.
(j) EARLY EXERCISE. The Option may, but need not,
include a provision whereby the Optionee may elect at any time while an
Employee or Consultant to exercise the Option as to any part or all of the
shares subject to the Option prior to the full vesting of the Option. Any
unvested shares so purchased may be subject to a repurchase right in favor of
the Company or to any other restriction the Board determines to be appropriate.
(k) WITHHOLDING. To the extent provided by the terms of
an Option Agreement, the Optionee may satisfy any federal, state or local tax
withholding obligation relating to the exercise of such Option by any of the
following means or by a combination of such means: (1) tendering a cash
payment; (2) authorizing the Company to withhold shares from the shares of the
common stock otherwise issuable to the participant as a result of the exercise
of the Option; or (3) delivering to the Company owned and unencumbered shares
of the common stock of the Company.
9.
<PAGE> 10
7. COVENANTS OF THE COMPANY.
(a) During the terms of the Options, the Company shall
keep available at all times the number of shares of stock required to satisfy
such Options.
(b) The Company shall seek to obtain from each regulatory
commission or agency having jurisdiction over the Plan such authority as may be
required to issue and sell shares of stock upon exercise of the Options;
provided, however, that this undertaking shall not require the Company to
register under the Securities Act either the Plan, any Option or any stock
issued or issuable pursuant to any such Option. If, after reasonable efforts,
the Company is unable to obtain from any such regulatory commission or agency
the authority which counsel for the Company deems necessary for the lawful
issuance and sale of stock under the Plan, the Company shall be relieved from
any liability for failure to issue and sell stock upon exercise of such Options
unless and until such authority is obtained.
8. USE OF PROCEEDS FROM STOCK.
Proceeds from the sale of stock pursuant to Options shall constitute
general funds of the Company.
9. MISCELLANEOUS.
(a) The Board shall have the power to accelerate the time
at which an Option may first be exercised or the time during which an Option or
any part thereof will vest pursuant to subsection 6(e) only for purposes of
allowing early exercise, notwithstanding the provisions in the Option stating
the time at which it may first be exercised or the time during which it will
vest.
(b) Neither an Optionee nor any person to whom an Option
is transferred under subsection 6(d) shall be deemed to be the holder of, or to
have any of the rights of a holder with respect to, any shares subject to such
Option unless and until such person has satisfied all requirements for exercise
of the Option pursuant to its terms.
(c) Throughout the term of any Option, the Company shall
deliver to the holder of such Option, not later than one hundred twenty (120)
days after the close of each of the Company's fiscal years during the Option
term, such financial and other information regarding the Company as comprises
the annual report to the stockholders of the Company provided for in the bylaws
of the Company. This subsection shall not apply after the first registration
of an equity security of the Company under the Securities Act.
10.
<PAGE> 11
(d) Nothing in the Plan or any instrument executed or
Option granted pursuant thereto shall confer upon any Employee or Consultant or
Optionee any right to continue in the employ of the Company or any Affiliate
(or to continue acting as a Consultant) or shall affect the right of the
Company or any Affiliate to terminate the employment or consulting relationship
of any Employee or Consultant or Optionee with or without cause.
(e) To the extent that the aggregate Fair Market Value
(determined at the time of grant) of stock with respect to which Incentive
Stock Options granted after 1986 are exercisable for the first time by any
Optionee during any calendar year under all plans of the Company and its
Affiliates exceeds one hundred thousand dollars ($100,000), the Options or
portions thereof which exceed such limit (according to the order in which they
were granted) shall be treated as Nonqualified Stock Options.
10. ADJUSTMENTS UPON CHANGES IN STOCK.
(a) If any change is made in the stock subject to the
Plan, or subject to any Option (through merger, consolidation, reorganization,
recapitalization, stock dividend, dividend in property other than cash, stock
split, liquidating dividend, combination of shares, exchange of shares, change
in corporate structure or otherwise), the Plan and outstanding Options will be
appropriately adjusted in the class(es) and maximum number of shares subject to
the Plan and the class(es) and number of shares and price per share of stock
subject to outstanding Options.
(b) In the event of: (1) a merger or consolidation in
which the Company is not the surviving corporation or (2) a reverse merger in
which the Company is the surviving corporation but the shares of the Company's
common stock outstanding immediately preceding the merger are converted by
virtue of the merger into other property, whether in the form of securities,
cash or otherwise then to the extent permitted by applicable law: (i) any
surviving corporation shall assume any Options outstanding under the Plan or
shall substitute similar Options for those outstanding under the Plan, or (ii)
such Options shall continue in full force and effect. In the event any
surviving corporation refuses to assume or continue such Options, or to
substitute similar options for those outstanding under the Plan, then, with
respect to options held by persons then performing services as Employees or
Consultants for the Company, the time at which such Options may first be
exercised shall be accelerated and the Options terminated if not exercised
prior to such event. In the event of a dissolution or liquidation of the
Company, any Options outstanding under the Plan shall terminate if not
exercised prior to such event.
11.
<PAGE> 12
11. AMENDMENT OF THE PLAN.
(a) The Board at any time, and from time to time, may
amend the Plan. However, except as provided in Section 10 relating to
adjustments upon changes in stock, no amendment shall be effective unless
approved by the stockholders of the Company within twelve (12) months before or
after the adoption of the amendment, where the amendment will:
(i) Increase the number of shares reserved for
Options under the Plan;
(ii) Modify the requirements as to eligibility for
participation in the Plan (to the extent such modification requires stockholder
approval in order for the Plan to satisfy the requirements of Section 422 of
the Code); or
(iii) Modify the Plan in any other way if such
modification requires stockholder approval in order for the Plan to satisfy the
requirements of Section 422 of the Code or to comply with applicable stock
exchange listing requirements.
(b) The Board may in its sole discretion submit any other
amendment to the Plan for stockholder approval, including, but not limited to,
amendments to the Plan intended to satisfy the requirements of Section 162(m)
of the Code and the regulations promulgated thereunder regarding the exclusion
of performance-based compensation from the limit on corporate deductibility of
compensation paid to certain executive officers.
(c) It is expressly contemplated that the Board may amend
the Plan in any respect the Board deems necessary or advisable to provide
Optionees with the maximum benefits provided or to be provided under the
provisions of the Code and the regulations promulgated thereunder relating to
Incentive Stock Options and/or to bring the Plan and/or Incentive Stock Options
granted under it into compliance therewith
(d) Rights and obligations under any Option granted
before amendment of the Plan shall not be altered or impaired by any amendment
of the Plan unless (i) the Company requests the consent of the person to whom
the Option was granted and (ii) such person consents in writing.
12.
<PAGE> 13
12. TERMINATION OR SUSPENSION OF THE PLAN.
(a) The Board may suspend or terminate the Plan at any
time. Unless sooner terminated, the Plan shall terminate on October 24, 2001,
which shall be within ten (10) years from the date the Plan is adopted by the
Board or approved by the stockholders of the Company, whichever is earlier. No
Options may be granted under the Plan while the Plan is suspended or after it
is terminated.
(b) Rights and obligations under any Option granted while
the Plan is in effect shall not be altered or impaired by suspension or
termination of the Plan, except with the consent of the person to whom the
Option was granted.
13. EFFECTIVE DATE OF PLAN.
The Plan shall become effective as determined by the Board, but no
Options granted under the Plan shall be exercised unless and until the Plan has
been approved by the stockholders of the Company, and, if required, an
appropriate permit has been issued by the Commissioner of Corporations of the
State of California.
PROVISIONS APPLICABLE TO PERSONS SUBJECT TO THE LAWS OF FRANCE
The Company has adopted the following provisions in order that an
Option granted to an Employee who is subject to the laws of France will provide
the maximum benefits under the provisions of French law (the "French Option"),
and in order to provide incentives for such Employee to exert maximum efforts
for the success of the Company. Except as set forth below, the terms of the
Option Agreement for a French Option shall otherwise comply with the other
terms of the Plan.
14. ELIGIBILITY FOR FRENCH OPTION.
(a) No person shall be granted a French Option unless such person
is an Employee.
(b) Throughout the term of the Plan, no French Option shall be
granted, if by making such grant, the aggregate number of shares subject to
outstanding French Options could at any time exceed one-third of the aggregate
number of all shares of all classes of stock of the Company authorized for
issuance.
(c) No person shall be eligible for the grant of a French Option
if, at the time
13.
<PAGE> 14
of grant, such person owns (or is deemed to own pursuant to the applicable laws
of France) stock possessing more than ten percent (10%) of the total combined
voting power of all classes of stock of the Company or of any of its
Affiliates.
15. FRENCH OPTION PROVISIONS.
(a) PRICE. The exercise price of a French Option shall be no less
than the higher of: (i) ninety-five percent (95%) of the average closing sales
price for such stock (or the closing bid, if no sales were reported) as quoted
on such exchange or market (or the exchange or market with the greatest volume
of trading in the Company's common stock) for the twenty (20) market trading
days immediately preceding the day of determination, as reported in The Wall
Street Journal or such other source as the Board deems reliable; or (ii) fifty
percent (50%) of the Fair Market Value of the stock.
(b) TRANSFERABILITY. The terms of a French Option shall not
permit transfer of the French Option, except on death and then only to the
extent permitted by French law. Further, the terms of a French Option shall
provide that during the lifetime of the Optionee the French Option may be
exercised only by the Optionee. In the event of the death of the Optionee
during the Optionee's Continuous Status as an Employee or Consultant, such
French Option may be transferred to the extent permitted by French law. A
French Option so transferred may be exercised (to the extent the Optionee was
entitled to exercise such French Option as of the date of death) by the
transferee only within the period ending on the earlier of (i) the date six (6)
months following the date of death, or (ii) the expiration of the term of such
French Option as set forth in the Option Agreement.
16. ADJUSTMENTS UPON CHANGES IN STOCK.
Any adjustment pursuant to Section 10 of the Plan, of stock subject to
a French Option, shall be made (a) in accordance with the applicable law of the
state in which the Company is incorporated at the time the adjustment is made,
and (b) in accordance with any applicable rules of the stock exchange
(including for this purpose the NASDAQ National Market System) which the
Company uses to determine Fair Market Value.
14.
<PAGE> 1
EXHIBIT 10.6
AMYLIN PHARMACEUTICALS, INC.
EMPLOYEE STOCK PURCHASE PLAN
Adopted November 20, 1991
Amended by the Board of Directors on May 29, 1997
1. PURPOSE.
(a) The purpose of the Employee Stock Purchase Plan (the "Plan")
is to provide a means by which employees of Amylin Pharmaceuticals, Inc., a
Delaware corporation (the "Company"), and its Affiliates, as defined in
subparagraph 1(b), which are designated as provided in subparagraph 2(b), may
be given an opportunity to purchase stock of the Company.
(b) The word "Affiliate" as used in the Plan means any parent
corporation or subsidiary corporation of the Company, as those terms are
defined in Sections 424(e) and (f), respectively, of the Internal Revenue Code
of 1986, as amended (the "Code").
(c) The Company, by means of the Plan, seeks to retain the
services of its employees, to secure and retain the services of new employees,
and to provide incentives for such persons to exert maximum efforts for the
success of the Company.
(d) The Company intends that the rights to purchase stock of the
Company granted under the Plan be considered options issued under an "employee
stock purchase plan" as that term is defined in Section 423(b) of the Code.
2. ADMINISTRATION.
(a) The Plan shall be administered by the Board of Directors (the
"Board") of the Company unless and until the Board delegates administration to
a Committee, as provided in subparagraph 2(c). Whether or not the Board has
delegated administration, the Board shall have the final power to determine all
questions of policy and expediency that may arise in the administration of the
Plan.
(b) The Board shall have the power, subject to, and within the
limitations of, the express provisions of the Plan:
(i) To determine when and how rights to purchase stock of the
Company shall be granted and the provisions of each offering of such rights
(which need not be identical).
1.
<PAGE> 2
(ii) To designate from time to time which Affiliates of the
Company shall be eligible to participate in the Plan.
(iii) To construe and interpret the Plan and rights granted under
it, and to establish, amend and revoke rules and regulations for its
administration. The Board, in the exercise of this power, may correct any
defect, omission or inconsistency in the Plan, in a manner and to the extent it
shall deem necessary or expedient to make the Plan fully effective.
(iv) To amend the Plan as provided in paragraph 13.
(v) Generally, to exercise such powers and to perform such acts
as the Board deems necessary or expedient to promote the best interests of the
Company.
(c) The Board may delegate administration of the Plan to a
Committee composed of not fewer than two (2) members of the Board (the
"Committee"). If administration is delegated to a Committee, the Committee
shall have, in connection with the administration of the Plan, the powers
theretofore possessed by the Board, subject, however, to such resolutions, not
inconsistent with the provisions of the Plan, as may be adopted from time to
time by the Board. The Board may abolish the Committee at any time and revest
in the Board the administration of the Plan.
3. SHARES SUBJECT TO THE PLAN.
(a) Subject to the provisions of paragraph 12 relating to
adjustments upon changes in stock, the stock that may be sold pursuant to
rights granted under the Plan shall not exceed in the aggregate five hundred
thousand (500,000) shares of the Company's common stock (the "Common Stock").
If any right granted under the Plan shall for any reason terminate without
having been exercised, the Common Stock not purchased under such right shall
again become available for the Plan.
(b) The stock subject to the Plan may be unissued shares or
reacquired shares, bought on the market or otherwise.
4. GRANT OF RIGHTS; OFFERING.
The Board or the Committee may from time to time grant or provide for
the grant of rights to purchase Common Stock of the Company under the Plan to
eligible employees (an "Offering") on a date or dates (the "Offering Date(s)")
selected by the Board or the Committee. Each Offering shall be in such form
and shall contain such terms and conditions as the Board or the Committee shall
deem appropriate. If an employee has more than one right outstanding under the
Plan, unless he or she otherwise indicates in agreements or notices delivered
hereunder: (1) each agreement or notice delivered by that employee will be
deemed to apply to all of his or
2.
<PAGE> 3
her rights under the Plan, and (2) a right with a lower exercise price (or an
earlier-granted right, if two rights have identical exercise prices), will be
exercised to the fullest possible extent before a right with a higher exercise
price (or a later-granted right, if two rights have identical exercise prices)
will be exercised. The provisions of separate Offerings need not be identical,
but each Offering shall include (through incorporation of the provisions of
this Plan by reference in the Offering or otherwise) the substance of the
provisions contained in paragraphs 5 through 8, inclusive.
5. ELIGIBILITY.
(a) Rights may be granted only to employees of the Company or, as
the Board or the Committee may designate as provided in subparagraph 2(b), to
employees of any Affiliate of the Company. Except as provided in subparagraph
5(b), an employee of the Company or any Affiliate shall not be eligible to be
granted rights under the Plan, unless, on the Offering Date, such employee has
been in the employ of the Company or any Affiliate for such continuous period
preceding such grant as the Board or the Committee may require, but in no event
shall the required period of continuous employment be equal to or greater than
two (2) years. In addition, unless otherwise determined by the Board or the
Committee and set forth in the terms of the applicable Offering, no employee of
the Company or any Affiliate shall be eligible to be granted rights under the
Plan, unless, on the Offering Date, such employee's customary employment with
the Company or such Affiliate is at least twenty (20) hours per week and at
least five (5) months per calendar year.
(b) The Board or the Committee may provide that, each person who,
during the course of an Offering, first becomes an eligible employee of the
Company or designated Affiliate will, on a date or dates specified in the
Offering which coincides with the day on which such person becomes an eligible
employee or occurs thereafter, receive a right under that Offering, which right
shall thereafter be deemed to be a part of that Offering. Such right shall
have the same characteristics as any rights originally granted under that
Offering, as described herein, except that:
(i) the date on which such right is granted shall be the
"Offering Date" of such right for all purposes, including determination of the
exercise price of such right;
(ii) the Purchase Period (as defined below) for such right shall
begin on its Offering Date and end coincident with the end of such Offering;
and
(iii) the Board or the Committee may provide that if such person
first becomes an eligible employee within a specified period of time before the
end of the Purchase Period (as defined below) for such Offering, he or she will
not receive any right under that Offering.
(c) No employee shall be eligible for the grant of any rights
under the Plan if, immediately after any such rights are granted, such employee
owns stock possessing five percent
3.
<PAGE> 4
(5%) or more of the total combined voting power or value of all classes of
stock of the Company or of any Affiliate. For purposes of this subparagraph
5(c), the rules of Section 424(d) of the Code shall apply in determining the
stock ownership of any employee, and stock which such employee may purchase
under all outstanding rights and options shall be treated as stock owned by
such employee.
(d) An eligible employee may be granted rights under the Plan only
if such rights, together with any other rights granted under "employee stock
purchase plans" of the Company and any Affiliates, as specified by Section
423(b)(8) of the Code, do not permit such employee's rights to purchase stock
of the Company or any Affiliate to accrue at a rate which exceeds twenty-five
thousand dollars ($25,000) of fair market value of such stock (determined at
the time such rights are granted) for each calendar year in which such rights
are outstanding at any time.
(e) Officers of the Company and any designated Affiliate shall be
eligible to participate in Offerings under the Plan, provided, however, that
the Board may provide in an Offering that certain employees who are highly
compensated employees within the meaning of Section 423(b)(4)(D) of the Code
shall not be eligible to participate.
6. RIGHTS; PURCHASE PRICE.
(a) On each Offering Date, each eligible employee, pursuant to an
Offering made under the Plan, shall be granted the right to purchase up to the
number of shares of Common Stock of the Company purchasable with a percentage
designated by the Board or the Committee not exceeding fifteen percent (15%) of
such employee's Earnings (as defined in Section 7(a)) during the period which
begins on the Offering Date (or such later date as the Board or the Committee
determines for a particular Offering) and ends on the date stated in the
Offering, which date shall be no more than twenty-seven (27) months after the
Offering Date (the "Purchase Period"). In connection with each Offering made
under this Plan, the Board or the Committee shall specify a maximum number of
shares which may be purchased by any employee as well as a maximum aggregate
number of shares which may be purchased by all eligible employees pursuant to
such Offering. In addition, in connection with each Offering which contains
more than one Exercise Date (as defined in the Offering), the Board or the
Committee may specify a maximum aggregate number of shares which may be
purchased by all eligible employees on any given Exercise Date under the
Offering. If the aggregate purchase of shares upon exercise of rights granted
under the Offering would exceed any such maximum aggregate number, the Board or
the Committee shall make a pro rata allocation of the shares available in as
nearly a uniform manner as shall be practicable and as it shall deem to be
equitable.
(b) The purchase price of stock acquired pursuant to rights
granted under the Plan shall be not less than the lesser of:
(i) an amount equal to eighty-five percent (85%) of the fair
market value of the stock on the Offering Date; or
4.
<PAGE> 5
(ii) an amount equal to eighty-five percent (85%) of the fair
market value of the stock on the Exercise Date.
7. PARTICIPATION; WITHDRAWAL; TERMINATION.
(a) An eligible employee may become a participant in an Offering
by delivering a participation agreement to the Company within the time
specified in the Offering, in such form as the Company provides. Each such
agreement shall authorize payroll deductions of up to the maximum percentage
specified by the Board or the Committee of such employee's Earnings during the
Purchase Period. "Earnings" is defined as the total compensation paid to an
employee, including all salary, wages (including amounts elected to be deferred
by the employee, that would otherwise have been paid, under any cash or
deferred arrangement established by the Company), overtime pay, commissions,
bonuses, and other remuneration paid directly to the employee, but excluding
profit sharing, the cost of employee benefits paid for by the Company,
education or tuition reimbursements, imputed income arising under any Company
group insurance or benefit program, traveling expenses, business and moving
expense reimbursements, income received in connection with stock options,
contributions made by the Company under any employee benefit plan, and similar
items of compensation, or such other inclusions or exclusions as the Board or
the Committee may determine for one or more specified Offerings. The payroll
deductions made for each participant shall be credited to an account for such
participant under the Plan and shall be deposited with the general funds of the
Company. A participant may reduce (including to zero), increase or begin such
payroll deductions after the beginning of any Purchase Period only as provided
for in the Offering. A participant may make additional payments into his or
her account only if specifically provided for in the Offering and only if the
participant has not had the maximum amount withheld during the Purchase Period.
(b) At any time during a Purchase Period a participant may
terminate his or her payroll deductions under the Plan and withdraw from the
Offering by delivering to the Company a notice of withdrawal in such form as
the Company provides. Such withdrawal may be elected at any time prior to the
end of the Purchase Period except as provided by the Board or the Committee in
the Offering. Upon such withdrawal from the Offering by a participant, the
Company shall distribute to such participant all of his or her accumulated
payroll deductions (reduced to the extent, if any, such deductions have been
used to acquire stock for the participant) under the Offering, without
interest, and such participant's interest in that Offering shall be
automatically terminated. A participant's withdrawal from an Offering will
have no effect upon such participant's eligibility to participate in any other
Offerings under the Plan but such participant will be required to deliver a new
participation agreement in order to participate in subsequent Offerings under
the Plan.
(c) Rights granted pursuant to any Offering under the Plan shall
terminate immediately upon cessation of any participating employee's employment
with the Company and any designated Affiliate, for any reason, and the Company
shall distribute to such terminated
5.
<PAGE> 6
employee all of his or her accumulated payroll deductions (reduced to the
extent, if any, such deductions have been used to acquire stock for the
terminated employee), under the Offering, without interest.
(d) Rights granted under the Plan shall not be transferable, and
shall be exercisable only by the person to whom such rights are granted.
8. EXERCISE.
(a) On each exercise date, as defined in the relevant Offering (an
"Exercise Date"), each participant's accumulated payroll deductions and other
additional payments specifically provided for in the Offering (without any
increase for interest) will be applied to the purchase of whole shares of stock
of the Company, up to the maximum number of shares permitted pursuant to the
terms of the Plan and the applicable Offering, at the purchase price specified
in the Offering. No fractional shares shall be issued upon the exercise of
rights granted under the Plan. The amount, if any, of accumulated payroll
deductions remaining in each participant's account after the purchase of shares
which is less than the amount required to purchase one share of stock on the
final Exercise Date of an Offering shall be held in each such participant's
account for the purchase of shares under the next Offering under the Plan,
unless such participant withdraws from such next Offering, as provided in
subparagraph 7(b), or is no longer eligible to be granted rights under the
Plan, as provided in paragraph 5, in which case such amount shall be
distributed to the participant after said final Exercise Date, without
interest. The amount, if any, of accumulated payroll deductions remaining in
any participant's account after the purchase of shares which is equal to the
amount required to purchase whole shares of stock on the final Exercise Date of
an Offering shall be distributed in full to the participant after such Exercise
Date, without interest.
(b) No rights granted under the Plan may be exercised to any
extent unless the Plan (including rights granted thereunder) is covered by an
effective registration statement pursuant to the Securities Act of 1933, as
amended (the "Securities Act"). If on an Exercise Date of any Offering
hereunder the Plan is not so registered, no rights granted under the Plan or
any Offering shall be exercised on said Exercise Date and the Exercise Date
shall be delayed until the Plan is subject to such an effective registration
statement, except that the Exercise Date shall not be delayed more than two (2)
months and the Exercise Date shall in no event be more than twenty-seven (27)
months from the Offering Date. If on the Exercise Date of any Offering
hereunder, as delayed to the maximum extent permissible, the Plan is not
registered, no rights granted under the Plan or any Offering shall be exercised
and all payroll deductions accumulated during the purchase period (reduced to
the extent, if any, such deductions have been used to acquire stock) shall be
distributed to the participants, without interest.
6.
<PAGE> 7
9. COVENANTS OF THE COMPANY.
(a) During the terms of the rights granted under the Plan, the
Company shall keep available at all times the number of shares of stock
required to satisfy such rights.
(b) The Company shall seek to obtain from each regulatory
commission or agency having jurisdiction over the Plan such authority as may be
required to issue and sell shares of stock upon exercise of the rights granted
under the Plan. If, after reasonable efforts, the Company is unable to obtain
from any such regulatory commission or agency the authority which counsel for
the Company deems necessary for the lawful issuance and sale of stock under the
Plan, the Company shall be relieved from any liability for failure to issue and
sell stock upon exercise of such rights unless and until such authority is
obtained.
10. USE OF PROCEEDS FROM STOCK.
Proceeds from the sale of stock pursuant to rights granted under the
Plan shall constitute general funds of the Company.
11. RIGHTS AS A STOCKHOLDER.
A participant shall not be deemed to be the holder of, or to have any
of the rights of a holder with respect to, any shares subject to rights granted
under the Plan unless and until certificates representing such shares shall
have been issued.
12. ADJUSTMENTS UPON CHANGES IN STOCK.
(a) If any change is made in the stock subject to the Plan, or
subject to any rights granted under the Plan (through merger, consolidation,
reorganization, recapitalization, stock dividend, dividend in property other
than cash, stock split, liquidating dividend, combination of shares, exchange
of shares, change in corporate structure or other transaction not involving the
receipt of consideration by the Company), the Plan and outstanding rights will
be appropriately adjusted in the class(es) and maximum number of shares subject
to the Plan and the class(es) and number of shares and price per share of stock
subject to outstanding rights.
(b) In the event of: (1) a dissolution or liquidation of the
Company; (2) a merger or consolidation in which the Company is not the
surviving corporation; (3) a reverse merger in which the Company is the
surviving corporation but the shares of the Company's Common Stock outstanding
immediately preceding the merger are converted by virtue of the merger into
other property, whether in the form of securities, cash or otherwise; or (4)
any other capital reorganization in which more than fifty percent (50%) of the
shares of the Company entitled to vote are exchanged, then, as determined by
the Board in its sole discretion (i) any surviving corporation may assume
outstanding rights or substitute similar rights for those under the Plan, (ii)
such rights may continue in full force and effect, or (iii) participants'
accumulated payroll
7.
<PAGE> 8
deductions may be used to purchase Common Stock immediately prior to the
transaction described above and the participants' rights under the ongoing
Offering terminated.
13. AMENDMENT OF THE PLAN.
(a) The Board at any time, and from time to time, may amend the
Plan. However, except as provided in paragraph 12 relating to adjustments upon
changes in stock, no amendment shall be effective unless approved by the
stockholders of the Company within twelve (12) months before or after the
adoption of the amendment, where the amendment will:
(i) Increase the number of shares reserved for rights under the
Plan;
(ii) Modify the provisions as to eligibility for participation
in the Plan (to the extent such modification requires stockholder approval in
order for the Plan to obtain employee stock purchase plan treatment under
Section 423 of the Code; or
(iii) Modify the Plan in any other way if such modification
requires stockholder approval in order for the Plan to obtain employee stock
purchase plan treatment under Section 423 of the Code.
It is expressly contemplated that the Board may amend the Plan in any respect
the Board deems necessary or advisable to provide eligible employees with the
maximum benefits provided or to be provided under the provisions of the Code
and the regulations promulgated thereunder relating to employee stock purchase
plans and/or to bring the Plan and/or rights granted under it into compliance
therewith.
(b) Rights and obligations under any rights granted before amendment of
the Plan shall not be impaired by any amendment of the Plan, except with the
consent of the person to whom such rights were granted or except as necessary
to comply with any laws or governmental regulation.
14. TERMINATION OR SUSPENSION OF THE PLAN.
(a) The Board may suspend or terminate the Plan at any time.
Unless sooner terminated, the Plan shall terminate on November 19, 2001. No
rights may be granted under the Plan while the Plan is suspended or after it is
terminated.
(b) Rights and obligations under any rights granted while the Plan
is in effect shall not be impaired by suspension or termination of the Plan,
except with the consent of the person to whom such rights were granted or
except as necessary to comply with any laws or governmental regulation.
15. EFFECTIVE DATE OF PLAN.
8.
<PAGE> 9
The Plan shall become effective as determined by the Board, but no
rights granted under the Plan shall be exercised unless and until the Plan has
been approved by the stockholders of the Company.
9.
<PAGE> 1
EXHIBIT 10.12
AMYLIN PHARMACEUTICALS, INC.
NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
ADOPTED ON FEBRUARY 9, 1994
AS AMENDED BY THE BOARD OF DIRECTORS ON NOVEMBER 14, 1995
AS AMENDED BY THE BOARD OF DIRECTORS ON FEBRUARY 8, 1996
AS AMENDED BY THE BOARD OF DIRECTORS ON MAY 29, 1997
1. PURPOSE.
(a) The purpose of this Non-Employee Directors' Stock Option Plan (the
"Plan") is to provide a means by which each director of Amylin Pharmaceuticals,
Inc., a Delaware corporation (the "Company"), who is not otherwise an employee
of the Company or any Affiliate of the Company (each such person being hereafter
referred to as a "Non-Employee Director") will be given an opportunity to
purchase stock of the Company.
(b) The word "Affiliate" as used in the Plan means any parent corporation
or subsidiary corporation of the Company as those terms are defined in Sections
424(e) and (f), respectively, of the Internal Revenue Code of 1986, as amended
(the "Code").
(c) The Company, by means of the Plan, seeks to retain the services of
persons now serving as Non-Employee Directors of the Company, to secure and
retain the services of persons capable of serving in such capacity, and to
provide incentives for such persons to exert maximum efforts for the success of
the Company.
(d) The Company intends that the options issued under the Plan not be
incentive stock options as that term is used in Section 422 of the Code.
2. ADMINISTRATION.
(a) The Plan shall be administered by the Board of Directors of the
Company (the "Board") unless and until the Board delegates administration to a
committee, as provided in subparagraph 2(c).
(b) The Board shall have the power, subject to, and within the limitations
of, the express provisions of the Plan:
1.
<PAGE> 2
(1) To construe and interpret the Plan and options granted under it,
and to establish, amend and revoke rules and regulations for its administration.
The Board, in the exercise of this power, may correct any defect, omission or
inconsistency in the Plan or in any option agreement, in a manner and to the
extent it shall deem necessary or expedient to make the Plan fully effective.
(2) To amend the Plan as provided in paragraph 11.
(3) Generally, to exercise such powers and to perform such acts as
the Board deems necessary or expedient to promote the best interests of the
Company.
(c) The Board may delegate administration of the Plan to a committee
composed of not fewer than two (2) members of the Board (the "Committee"). If
administration is delegated to a Committee, the Committee shall have, in
connection with the administration of the Plan, the powers theretofore possessed
by the Board, subject, however, to such resolutions, not inconsistent with the
provisions of the Plan, as may be adopted from time to time by the Board. The
Board may abolish the Committee at any time and revest in the Board the
administration of the Plan.
3. SHARES SUBJECT TO THE PLAN.
(a) Subject to the provisions of paragraph 10 relating to adjustments upon
changes in stock, the stock that may be sold pursuant to options granted under
the Plan shall not exceed in the aggregate 350,000 shares of the Company's
common stock. If any option granted under the Plan shall for any reason expire
or otherwise terminate without having been exercised in full, the stock not
purchased under such option shall revert to and again become available for
issuance pursuant to exercises of options granted under the Plan.
(b) The stock subject to the Plan may be unissued shares or reacquired
shares, bought on the market or otherwise.
4. ELIGIBILITY.
Options shall be granted only to Non-Employee Directors of the Company.
5. NON-DISCRETIONARY GRANTS.
(a) Each person who is, immediately following the Company's 1994 Annual
Meeting of Stockholders (the "1994 Annual Meeting") at which the Plan is
approved by the stockholders of the Company, a Non-Employee Director of the
Company shall be granted, effective as of the date of such Annual Meeting, an
option to purchase ten thousand (10,000) shares of common stock of the Company
on the terms and conditions set forth herein.
2.
<PAGE> 3
(b) Each person who is, subsequent to November 1, 1995, and on or prior to
May 29, 1997, elected for the first time by the Board or shareholders of the
Company to serve as a Non-Employee Director of the Company and who has not
previously served as a member of the Board shall be granted, effective as of the
date of such election, an option to purchase thirty thousand (30,000) shares of
common stock of the Company on the terms and conditions set forth herein. Each
person who is, subsequent to May 29, 1997, elected for the first time by the
Board or shareholders of the Company to serve as a Non-Employee Director of the
Company and who has not previously served as a member of the Board shall be
granted, effective as of the date of such election, an option to purchase twenty
thousand (20,000) shares of common stock of the Company on the terms and
conditions set forth herein.
(c) Commencing with the 1996 Annual Meeting of Stockholders, each person
who is, immediately following each Annual Meeting of Stockholders of the Company
that occurs in an even year (i.e. 1996, 1998, 2000, 2002, etc.) (hereinafter, an
"Even Year Annual Meeting"), a Non-Employee Director of the Company shall be
granted, effective as of the date of such Even Year Annual Meeting (and in
addition to any option granted pursuant to Section 5(b)), an option to purchase
ten thousand (10,000) shares of common stock of the Company on the terms and
conditions set forth herein.
6. OPTION PROVISIONS.
Each option shall contain the following terms and conditions:
(a) No option shall be exercisable after the expiration of ten (10) years
from the date it was granted.
(b) The exercise price of each option shall be equal to the Fair Market
Value (defined below) of the stock subject to such option on the date such
option is granted. For purposes of this Plan, "Fair Market Value" means, as of
any date, the value of the common stock of the Company determined as follows:
(1) If the common stock is listed on any established stock exchange
or a national market system, including without limitation the National Market
System of the National Association of Securities Dealers, Inc. Automated
Quotation ("NASDAQ") System, the fair market value of a share of common stock
shall be the average of the highest and lowest price at which the common stock
was sold on such exchange or national market system on the trading day
immediately preceding the date as of which the determination is to be made;
(2) If the common stock is quoted on the NASDAQ System (but not on
the National Market System thereof) or is regularly quoted by a recognized
securities dealer but selling prices are not reported, the fair market value of
a share of common stock shall be
3.
<PAGE> 4
the mean between the high bid and high asked prices for the common stock on the
trading day immediately preceding the date as of which the determination is to
be made, as reported in the Wall Street Journal or such other source as the
Board deems reliable;
(3) In the absence of an established market for the common stock,
the fair market value shall be determined in good faith by the Board.
(c) The purchase price of stock acquired pursuant to an option shall be
paid, to the extent permitted by applicable statutes and regulations, either (1)
in cash at the time the option is exercised, or (2) by delivery to the Company
of shares of common stock of the Company that have been held for the requisite
period necessary to avoid a charge to the Company's reported earnings and valued
at the Fair Market Value on the date of exercise, or (3) by a combination of
such methods of payment.
(d) An option shall not be transferable except by will or by the laws of
descent and distribution, and shall be exercisable during the lifetime of the
person to whom the option is granted only by such person or by his guardian or
legal representative.
(e) Options granted pursuant to the Plan shall vest as follows:
(1) An option granted pursuant to Section 5(a) or 5(c) shall vest
with respect to each optionee over a period of two (2) years with 0.1369863% of
the total number of shares subject to such option vesting on each day following
the date of grant of such option (provided that the grantee has, during the
entire period prior to any such vesting date, continuously served as a
Non-Employee Director), whereupon such option shall become fully exercisable in
accordance with its terms with respect to the shares vesting as of such date.
(2) An option granted pursuant to Section 5(b) shall vest according
to the following schedule:
If the optionee continues as a Non-Employee Director of the
Company or any Affiliate of the Company through the date that is one (1) year
from the date of grant thereof ("Anniversary Date"), such option shall become
exercisable as of the Anniversary Date with respect to one-fourth (1/4th) of the
total number of shares subject to such option.
Thereafter, for so long as such optionee continues as a
Non-Employee Director of the Company or an Affiliate of the Company, such option
will become exercisable with respect to an additional .0684932% of the total
number of shares subject to such option for each day subsequent to the
Anniversary Date until such option has become fully exercisable.
4.
<PAGE> 5
Notwithstanding the foregoing, in no event shall fractional shares
be issuable upon any such exercise, and in lieu of any such fractional share,
the Company shall pay cash to the holder of such option equal to the Fair Market
Value thereof.
(f) The Company may require any optionee, or any person to whom an option
is transferred under subparagraph 6(d), as a condition of exercising any such
option: (1) to give written assurances satisfactory to the Company as to the
optionee's knowledge and experience in financial and business matters; and (2)
to give written assurances satisfactory to the Company stating that such person
is acquiring the stock subject to the option for such person's own account and
not with any present intention of selling or otherwise distributing the stock.
These requirements, and any assurances given pursuant to such requirements,
shall be inoperative if (i) the issuance of the shares upon the exercise of the
option has been registered under a then-currently-effective registration
statement under the Securities Act of 1933, as amended (the "Securities Act"),
or (ii), as to any particular requirement, a determination is made by counsel
for the Company that such requirement need not be met in the circumstances under
the then-applicable securities laws.
(g) Notwithstanding anything to the contrary contained herein, an option
may not be exercised unless the shares issuable upon exercise of such option are
then registered under the Securities Act or, if such shares are not then so
registered, the Company has determined that such exercise and issuance would be
exempt from the registration requirements of the Securities Act.
7. COVENANTS OF THE COMPANY.
(a) During the terms of the options granted under the Plan, the Company
shall keep available at all times the number of shares of stock required to
satisfy such options.
(b) The Company shall seek to obtain from each regulatory commission or
agency having jurisdiction over the Plan such authority as may be required to
issue and sell shares of stock upon exercise of the options granted under the
Plan; provided, however, that this undertaking shall not require the Company to
register under the Securities Act either the Plan, any option granted under the
Plan, or any stock issued or issuable pursuant to any such option. If the
Company is unable to obtain from any such regulatory commission or agency the
authority which counsel for the Company deems necessary for the lawful issuance
and sale of stock under the Plan, the Company shall be relieved from any
liability for failure to issue and sell stock upon exercise of such options.
8. USE OF PROCEEDS FROM STOCK.
Proceeds from the sale of stock pursuant to options granted under the
Plan shall constitute general funds of the Company.
5.
<PAGE> 6
9. MISCELLANEOUS.
(a) Neither an optionee nor any person to whom an option is transferred
under subparagraph 6(d) shall be deemed to be the holder of, or to have any of
the rights of a holder with respect to, any shares subject to such option unless
and until such person has satisfied all requirements for exercise of the option
pursuant to its terms.
(b) Nothing in the Plan or in any instrument executed pursuant thereto
shall confer upon any Non-Employee Director any right to continue in the service
of the Company or any Affiliate or shall affect any right of the Company, its
Board or stockholders or any Affiliate to terminate the service of any
Non-Employee Director with or without cause.
(c) No Non-Employee Director, individually or as a member of a group, and
no beneficiary or other person claiming under or through him, shall have any
right, title or interest in or to any option reserved for the purposes of the
Plan except as to such shares of common stock, if any, as shall have been
reserved for him pursuant to an option granted to him.
(d) In connection with each option made pursuant to the Plan, it shall be
a condition precedent to the Company's obligation to issue or transfer shares to
a Non-Employee Director, or an affiliate of such Non-Employee Director, or to
evidence the removal of any restrictions on transfer, that such Non-Employee
Director make arrangements satisfactory to the Company to insure that the amount
of any federal or other withholding tax required to be withheld with respect to
such sale or transfer, or such removal or lapse, is made available to the
Company for timely payment of such tax.
10. ADJUSTMENTS UPON CHANGES IN STOCK.
(a) If any change is made in the stock subject to the Plan, or subject to
any option granted under the Plan (through merger, consolidation,
reorganization, recapitalization, stock dividend, dividend in property other
than cash, stock split, liquidating dividend, combination of shares, exchange of
shares, change in corporate structure or otherwise), the Plan and outstanding
options will be appropriately adjusted in the class(es) and maximum number of
shares subject to the Plan and the class(es) and number of shares and price per
share of stock subject to outstanding options.
(b) In the event of: (1) a dissolution or liquidation of the Company; (2)
a merger or consolidation in which the Company is not the surviving corporation;
(3) a reverse merger in which the Company is the surviving corporation but the
shares of the Company's common stock outstanding immediately preceding the
merger are converted by virtue of the merger into other property, whether in the
form of securities, cash or otherwise; or (4) any other capital reorganization
in which more than fifty percent (50%) of the shares of the
6.
<PAGE> 7
Company entitled to vote are exchanged, then to the extent permitted by
applicable law, the time during which such options may be exercised shall be
accelerated and the options terminated if not exercised prior to such event.
11. AMENDMENT OF THE PLAN.
The Board at any time, and from time to time, may amend the Plan.
Except as provided in paragraph 10 relating to adjustments upon changes in
stock, no amendment shall be effective unless approved by the stockholders of
the Company within twelve (12) months before or after the adoption of the
amendment, where the amendment will:
(1) Increase the number of shares reserved for options under
the Plan; or
(2) Modify the Plan in any other way if such modification requires
stockholder approval in order for the Plan to comply with the requirements of
Rule 16b-3 promulgated under the Exchange Act or Section 162(m) of the Code.
(b) Rights and obligations under any option granted before any amendment
of the Plan shall not be altered or impaired by such amendment of the Plan
unless (i) the Company requests the consent of the person to whom the option was
granted and (ii) such person consents in writing.
12. TERMINATION OR SUSPENSION OF THE PLAN.
(a) The Board may suspend or terminate the Plan at any time. Unless sooner
terminated, the Plan shall terminate on February 8, 2004. No options may be
granted under the Plan while the Plan is suspended or after it is terminated.
(b) Rights and obligations under any option granted while the Plan is in
effect shall not be altered or impaired by suspension or termination of the
Plan, except with the consent of the person to whom the option was granted.
13. EFFECTIVE DATE OF PLAN; CONDITIONS OF EXERCISE.
(a) The Plan shall become effective upon adoption by the Board of
Directors, subject to the condition subsequent that the Plan is approved by the
stockholders of the Company in accordance with Rule 16-b(3)(1) of the
Regulations under the Securities Exchange Act prior to June 30, 1994.
(b) No option granted under the Plan shall be exercised or exercisable
unless and until the condition of subparagraph 13(a) above has been met.
7.
<PAGE> 1
EXHIBIT 10.34
AMYLIN PHARMACEUTICALS, INC.
DIRECTORS' DEFERRED COMPENSATION PLAN
EFFECTIVE AS OF AUGUST 25, 1997
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
1. PURPOSE OF THE PLAN.................................................. 1
2. DEFINITIONS.......................................................... 1
2.1 Account........................................................ 1
2.2 Beneficiary.................................................... 1
2.3 Benefit........................................................ 1
2.4 Board.......................................................... 1
2.5 Code........................................................... 1
2.6 Company........................................................ 2
2.7 Compensation................................................... 2
2.8 Compensation Reductions........................................ 2
2.9 Deferred Compensation Agreement................................ 2
2.10 Director....................................................... 2
2.11 Effective Date................................................. 2
2.12 Eligible Director.............................................. 2
2.13 Fair Market Value.............................................. 2
2.14 Non-Employee Director.......................................... 2
2.15 Participant.................................................... 2
2.16 Plan........................................................... 2
2.17 Plan Year...................................................... 2
2.18 Share.......................................................... 3
2.19 Valuation Date................................................. 3
3. PARTICIPATION........................................................ 3
3.1 Participation of Eligible Directors............................ 3
3.2 Irrevocability of Participation During Year.................... 4
3.3 Suspended Participation........................................ 4
3.4 Termination of Participation................................... 4
4. PLAN ACCOUNTS........................................................ 4
4.1 Accounts....................................................... 4
4.2 Investment of Accounts......................................... 4
4.3 Value of Accounts.............................................. 5
4.4 Funds Unsecured................................................ 5
5. BENEFITS............................................................. 5
5.1 Retirement Benefits............................................ 5
5.2 Death Benefits................................................. 6
6. SOURCE OF BENEFITS................................................... 6
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
7. ADMINISTRATION....................................................... 6
7.1 General........................................................ 6
7.2 Procedures..................................................... 6
7.3 Claims......................................................... 6
8. AMENDMENT AND TERMINATION............................................ 7
8.1 Amendment or Termination....................................... 7
8.2 Accrued Benefits............................................... 7
9. SALE OR MERGER OF THE COMPANY........................................ 7
10. MISCELLANEOUS........................................................ 8
10.1 Benefits Fully Vested.......................................... 8
10.2 No Right to Continue as Director............................... 8
10.3 Successors and Assigns......................................... 8
10.4 Assignment or Alienation....................................... 8
10.5 Entire Agreement............................................... 8
10.6 Headings....................................................... 8
10.7 Gender and Number.............................................. 8
10.8 Governing Law.................................................. 9
</TABLE>
<PAGE> 4
AMYLIN PHARMACEUTICALS, INC.
DIRECTORS' DEFERRED COMPENSATION PLAN
Effective as of August 25, 1997
AMYLIN PHARMACEUTICALS, INC., a Delaware corporation (the "Company"),
hereby adopts the Amylin Pharmaceuticals, Inc. Directors' Deferred Compensation
Plan (the "Plan") for the nonemployee directors of the Company upon the terms
and conditions set forth below.
The benefits payable under the Plan are and at all times will be mere
unsecured contractual rights against the Company payable from the Company's
general assets. It is intended that the Plan shall constitute an unfunded
deferred compensation arrangement for purposes of United States federal income
tax laws, and all documents, agreements or instruments made or given pursuant to
the Plan shall be interpreted so as to carry out this intent.
1. PURPOSE OF THE PLAN
The purpose of this Plan is to provide deferred compensation benefits to
nonemployee directors of the Company, payable by the Company. This Plan will
provide benefits derived from contributions by the Company hereunder of a
nonemployee director's compensation as to which he or she has elected to defer
payment under the Plan.
2. DEFINITIONS
The capitalized terms defined in this Section 2 shall have the meanings
set forth below.
2.1 ACCOUNT. A separate Plan account, which is a bookkeeping record,
established for each Participant to which shall be allocated Compensation
Reductions in accordance with Section 4.1.
2.2 BENEFICIARY. The beneficiary or beneficiaries designated by a
Participant to receive any remaining Benefits due under the Plan after his or
her death. If the Participant has not designated a Beneficiary, the Beneficiary
shall be the Participant's surviving spouse or, if none, the Participant's
estate.
2.3 BENEFIT. The benefit or benefits provided under this Plan, which for
a Participant shall be equal to the account balance of such Participant's
Account.
2.4 BOARD. The Board of Directors of the Company.
2.5 CODE. The Internal Revenue Code of 1986, as it may be amended from
time to time.
1.
<PAGE> 5
2.6 COMPANY. Amylin Pharmaceuticals, Inc., a Delaware corporation, or any
successor corporation.
2.7 COMPENSATION. All the fees (paid in cash or by check) received by a
Participant from the Company for a Plan Year for his or her services as a
Director, including but not limited to, the meeting attendance fee.
2.8 COMPENSATION REDUCTIONS. The amount of Compensation which a
Participant has elected to defer pursuant to a Deferred Compensation Agreement,
and that the Company and the Participant mutually agree shall be deferred in
accordance with the Plan.
2.9 DEFERRED COMPENSATION AGREEMENT. An agreement by which a Participant
elects to reduce all of his or her Compensation for a Plan Year in order for the
Company to make contributions to the Plan on his or her behalf.
2.10 DIRECTOR. A member of the Board.
2.11 EFFECTIVE DATE. August 25, 1997.
2.12 ELIGIBLE DIRECTOR. A Director who is not an employee of the Company.
2.13 FAIR MARKET VALUE. The fair market value of a share of Common Stock
of the Company is the closing sales price for such stock as quoted on a national
securities exchange or the National Market System of the National Association of
Securities Dealers, Inc. Automated Quotation System on the day of determination,
as reported in The Wall Street Journal or such other source as the Company deems
reliable.
2.14 NON-EMPLOYEE DIRECTOR. A Director who either (i) is not a current
employee or officer of the Company or its parent or subsidiary, does not receive
compensation (directly or indirectly) from the Company or its parent or
subsidiary for services rendered as a consultant or in any capacity other than
as a Director (except for an amount as to which disclosure would not be required
under Item 404(a) of Regulation S-K promulgated pursuant to the Securities Act
of 1933, as amended ("Regulation S-K")), does not possess an interest in any
other transaction as to which disclosure would be required under Item 404(a) of
Regulation S-K, and is not engaged in a business relationship as to which
disclosure would be required under Item 404(b) of Regulation S-K; or (ii) is
otherwise considered a "non-employee director" for purposes of Rule 16b-3
promulgated under the Exchange Act of 1934, as amended.
2.15 PARTICIPANT. Any Eligible Director who has elected to participate in
the Plan by entering into a Deferred Compensation Agreement.
2.16 PLAN. The Amylin Pharmaceuticals, Inc. Corporation Directors'
Deferred Compensation Plan, as amended from time to time.
2.17 PLAN YEAR. The calendar year.
2.
<PAGE> 6
2.18 SHARE. A participating interest under the Plan, which shall be equal
to the Fair Market Value of a share of Common Stock of the Company.
2.19 VALUATION DATE. The last day of each month coinciding with or next
following the date of each meeting of the Board, or such other date as shall be
established by the Company.
3. PARTICIPATION
3.1 PARTICIPATION OF ELIGIBLE DIRECTORS.
(a) Each Eligible Director may begin to participate in the Plan on
the Effective Date; provided, however, that such Eligible Director completes and
signs a Deferred Compensation Agreement and returns such Deferred Compensation
Agreement to the designated representative of the Company prior to the Effective
Date or such earlier date established by the Company and announced to the
Eligible Director. Such Deferred Compensation Agreement shall be effective for
the period beginning on the Effective Date and ending on December 31, 1997.
(b) Each Director who becomes an Eligible Director after the
Effective Date may begin to participate in the Plan by completing and signing a
Deferred Compensation Agreement and returning such Deferred Compensation
Agreement to the designated representative of the Company; provided, however,
that such completion and return of the Deferred Compensation Agreement to the
Company occurs within thirty (30) days after the date that the Director becomes
an Eligible Director. Such Deferred Compensation Agreement shall be effective
for the period beginning on the date the Eligible Director completes and returns
the Deferred Compensation Agreement to the Company and ending on the last day of
the Plan Year within which such participation begins.
(c) An Eligible Director who did not become a Participant in
accordance with the terms of paragraph (a) or (b) may participate in the Plan
effective as of the beginning of any Plan Year following the Plan Year in which
he or she becomes an Eligible Director by completing and signing a Deferred
Compensation Agreement and returning such Deferred Compensation Agreement to the
designated representative of the Company prior to the beginning of the Plan Year
(or such earlier date established by the Company and announced to the Eligible
Director) for which deferral of Compensation is intended to commence. Such
Deferred Compensation Agreement shall be effective for that Plan Year.
(d) If a Participant wishes to defer Compensation under the terms of
the Plan for any Plan Year subsequent to the first Plan Year in which the
Participant began to participate in the Plan, such Participant must complete and
sign a new Deferred Compensation Agreement and return such Deferred Compensation
Agreement to the designated representative of the Company prior to the beginning
of the Plan Year (or such earlier date established by the Company and announced
to the Participant) for which such election is to be effective. Such Deferred
Compensation Agreement shall be effective for that Plan Year.
3.
<PAGE> 7
3.2 IRREVOCABILITY OF PARTICIPATION DURING THE PLAN YEAR. A Participant
may not terminate his or her Deferred Compensation Agreement with respect to a
Plan Year on or after the first day of such Plan Year.
3.3 SUSPENDED PARTICIPATION. A Participant who ceases to be an Eligible
Director, but who continues to be a Director, shall become a suspended
Participant in the Plan as of the date on which the Participant ceases to be an
Eligible Director. During the period of suspension, no Compensation Reductions
shall be allocated to such suspended Participant's Account in accordance with
Section 4. However, the Participant shall be entitled to benefit in accordance
with the other provisions of the Plan throughout the period during which he or
she is a suspended Participant. A suspended Participant shall cease to be a
suspended Participant as of the date he or she again becomes an Eligible
Director. If such suspended Participant again becomes an Eligible Director in
the same Plan Year in which a Deferred Compensation Agreement was previously in
effect, such Deferred Compensation Agreement shall automatically once again
become effective for the remainder of such Plan Year. If such suspended
Participant again becomes an Eligible Director in a Plan Year following the last
Plan Year for which a Deferred Compensation Agreement was in effect, such
suspended Participant may elect to participate in the Plan by following the
procedures specified in Section 3.1(b).
3.4 TERMINATION OF PARTICIPATION. A Participant shall cease to be a
Participant as of the date he or she ceases serving as a Director.
4. PLAN ACCOUNTS
4.1 ACCOUNTS. The Company shall maintain or cause to be maintained for
each Participant an Account with respect to which the Company shall allocate
amounts equal to the Participant's Compensation Reductions for each Plan Year,
effective as of the date such Compensation Reductions would have been paid to
the Participant as Compensation in the absence of a Deferred Compensation
Agreement.
4.2 INVESTMENT OF ACCOUNTS.
(a) Each Compensation Reduction allocated to a Participant's Account
shall be converted into that number of Shares that equal the amount of such
Compensation Reduction divided by the Fair Market Value of the Common Stock of
the Company as of the date such Compensation Reduction would have been paid to
the Participant as Compensation in the absence of a Deferred Compensation
Agreement. The calculation of the number of Shares need not be rounded to the
nearest whole Share, so that a fraction of a Share (calculated to the nearest
one-hundredth of a Share) may be allocated to a Participant's Account.
(b) In the event any dividends or distributions are made with respect
to the Common Stock of the Company, the Company shall allocate an amount to the
Participant's Account that is equal to the amount of such dividends or
distributions that would have been made with respect to the Shares allocated to
a Participant's Account if they were shares of the Common Stock of the Company.
Such dividend/distribution allocations shall be converted into that
4.
<PAGE> 8
number of whole and/or fractional Shares that equal the amount of such
allocation divided by the Fair Market Value of the Common Stock of the Company
as of the date such dividends or distributions are made with respect to the
Common Stock of the Company to the Company's stockholders of record.
4.3 VALUE OF ACCOUNTS. The value of a Participant's Account as of any
Valuation Date shall be equal to the number of Shares allocated to a
Participant's Account multiplied by the Fair Market Value of one share of the
Common Stock of the Company.
4.4 FUNDS UNSECURED. Notwithstanding any other provisions of this Plan,
all Benefits payable under the Plan are subject to the claims of the general
creditors of the Company. No trust shall be established to hold any assets which
may be set aside by the Company to pay the Benefits under the Plan and the
Company shall be under no obligation to set aside any amounts to pay Benefits.
The maintenance of separate Accounts by the Company as provided herein shall
neither require nor be considered a segregation of any funds or property from
the Company's general assets. Participants shall have no preferred claim on or
beneficial ownership interest in any assets of the Company prior to the time
actual payments of Benefits are received, and all rights of the Participants to
Benefits are mere unsecured contractual rights against the Company.
5. BENEFITS
5.1 RETIREMENT BENEFITS.
(a) When a Participant ceases serving as a Director and providing
services to the Company in any other capacity, the Participant shall be entitled
to receive the value of his or her Account determined as of the Valuation Date
coinciding with or next preceding the date of the distribution, which shall be
paid out by the Company in cash (or by check) and/or in the form of the
Company's Common Stock, either in a single lump sum payment or in equal annual
installments (in terms of the number of Shares allocated to a Participant's
Account), as determined by the Company in its sole discretion.
(b) If the Company determines that the distribution of a
Participant's Account shall be in installment payments, the number of
installment payments shall be the lesser of (i) ten (10) or (ii) two (2) times
the number of Plan Years the Participant entered into a Deferred Compensation
Agreement with the Company under the Plan.
(c) If a Participant ceases serving as a Director and otherwise
providing services to the Company on or before June 30 of any Plan Year, the
lump sum payment or the first installment payment shall be paid by the Company
no later than the last day of such Plan Year. If the Participant ceases serving
as a Director and otherwise providing services to the Company on or after July 1
of any Plan Year, the lump sum payment or the first installment payment shall be
paid by the Company no later than January 31 of the following Plan Year. If the
payment of a Participant's Account is made in installment payments, the second
installment payment shall be paid during January of the Plan Year following the
Plan Year in which the first installment payment was paid and all remaining
installment payments shall be paid annually in the
5.
<PAGE> 9
month of January. The value of an installment shall be determined by multiplying
the number of Shares to be paid out in such installment by the Fair Market Value
of one share of the Company's Common Stock on the last trading day immediately
preceding such installment payment.
5.2 DEATH BENEFITS. In the event the Participant dies prior to receiving
all of his or her Benefits, his or her remaining Benefits shall be paid by the
Company in cash (or by check) and/or in the form of the Company's Common Stock,
as determined by the Company in its sole discretion, to the Participant's
Beneficiary in a lump sum payment as soon as administratively feasible after the
Participant's death.
6. SOURCE OF BENEFITS
Benefits payable under this Plan shall be paid out of the Company's
general assets and allocated as payments out of the appropriate Participant's
Account under the Plan.
7. ADMINISTRATION
7.1 GENERAL. This Plan shall be administered by the President and Chief
Executive Officer of the Company (the "Administrator"). Such Administrator shall
exercise all administrative powers and duties under the Plan in accordance with
the terms and purposes of the Plan. The Administrator shall determine the amount
of the Benefits due to each Participant or Beneficiary from the Plan and shall
cause them to be paid in accordance with the Plan.
7.2 PROCEDURES. The Administrator may adopt such rules and regulations
not inconsistent with the provisions of the Plan as deemed necessary or
appropriate for the proper administration of the Plan and shall have the
authority, in the Administrator's sole discretion, to interpret and construe any
provision of the Plan. To the extent permitted by law, (i) all such rules,
regulations, interpretations and constructions shall be final and binding on the
Company and all Participants and their legal representatives, beneficiaries,
successors, and assigns, subject to review as provided in Section 7.3, (ii) the
Administrator shall not be subject to any individual liability with respect to
the Plan and (iii) the Administrator shall be indemnified by the Company for any
action or omission made with respect to the Plan which does not demonstrate bad
faith, willful misconduct, criminal act, or gross negligence.
7.3 CLAIMS. Any denial by the Administrator of a claim for benefits under
the Plan by a Participant or Beneficiary shall be stated in writing by the
Administrator and delivered or mailed to the Participant or Beneficiary. Such
notice shall set forth the specific reasons for the denial, written to the best
of the Administrator's ability in a manner that may be understood without legal
counsel. In addition, the Administrator shall afford a reasonable opportunity to
any Participant or Beneficiary whose claim for benefits has been denied for a
review of the decision denying the claim. In the event of further disagreement
following any further decision of the Administrator after such a review, either
the Participant or the Administrator may appeal to the full Board, which
decision shall be final.
6.
<PAGE> 10
8. AMENDMENT AND TERMINATION
8.1 AMENDMENT OR TERMINATION.
(a) The Company shall have the absolute right to amend the Plan in
any respect to the extent necessary to obtain favorable rulings from the
Internal Revenue Service as to the status of the Plan as an unfunded deferred
compensation arrangement for United States federal income tax purposes, provided
that an application seeking such rulings is submitted to the Internal Revenue
Service within one year after the Effective Date. If such rulings are sought
within one year after the Effective Date but not obtained ultimately, the
Company may elect to terminate the Plan within thirty (30) days after it becomes
apparent that favorable rulings will not be obtained. In this event, the Company
shall notify all Participants of its election to terminate the Plan, and
Participants shall be entitled to receive the amounts in their respective
Accounts, if any.
(b) While the Company intends and expects the Plan to continue to
fulfill its purposes and serve the best interests of the Company in its present
form, the Company reserves the right to amend or terminate the Plan at any time,
subject, except where Section 8.1(a) applies, to the provisions of Section 8.2
and Section 9.
8.2 ACCRUED BENEFITS.
(a) Except where Section 8.1(a) applies, no termination of the Plan
or any amendments thereto which affect Benefits under the Plan shall, without
the written consent of a Participant, eliminate or reduce any Benefit of the
Participant under the Plan to which, as of the date of such termination or
amendment, such Participant would be entitled under the provisions of Section 5
had he or she ceased serving as a Director immediately prior to such date.
(b) In the event of any amendment of the Plan which affects the
amount of Benefits payable under the Plan, Participants shall be entitled to
receive the greater of (i) the Benefit provided under the Plan as amended, or
(ii) the Benefit described above in Section 8.2(a).
(c) Upon termination of the Plan, all Deferred Compensation
Agreements shall terminate immediately and all Participants' full Compensation
on a non-deferred basis will be restored. Each and every Participant shall
receive payment of the value of his or her Account in accordance with the
provisions of Section 5 as if the Participants had ceased serving as Directors
on the date of the Plan's termination.
9. SALE OR MERGER OF THE COMPANY
In the event of a sale, merger, reorganization, consolidation or other
similar transaction (a "Change of Ownership Transaction") involving the Company,
no Participant in the Plan will be considered to have ceased serving as a
Director for purposes of the Plan, nor will any such Participant be entitled to
receive Benefits pursuant to Section 5, until such Participant actually ceases
serving as Director of the Company or any acquiring or successor company or
entity, and otherwise ceases to provide services to the Company unless payment
of Benefits is otherwise
7.
<PAGE> 11
directed by the Administrator of the Plan. Notwithstanding the foregoing
sentence, in the event of the occurrence of a "Change in Control" (defined
below) of the Company, a Participant shall be entitled to receive Benefits
pursuant to Section 5 immediately prior to the effective date of such Change in
Control. For purposes of the foregoing sentence, "Change in Control" is defined
as any of the following: (i) any merger, acquisition, consolidation,
reorganization or other similar transaction pursuant to which the shareholders
of the Company immediately prior to such merger, consolidation, reorganization
or other similar transaction do not, immediately thereafter, own more than 50%
of the outstanding voting securities of the resulting entity, or (ii) any
liquidation or dissolution of the Company or any sale of all or substantially
all of the assets of the Company. In any event, no Change of Ownership
Transaction involving the Company or Change in Control of the Company shall,
without the written consent of a Participant, eliminate or reduce any Benefit of
the Participant under the Plan to which, as of the date of such Change of
Ownership Transaction or Change in Control, such Participant would be entitled
under the provisions of Section 5 had he or she ceased serving as a Director
immediately prior to such date.
10. MISCELLANEOUS
10.1 BENEFITS FULLY VESTED. All Benefits under the Plan, to the extent
accrued, shall be fully vested at all times hereunder.
10.2 NO RIGHT TO CONTINUE AS DIRECTOR. Nothing contained in this Plan or
in any agreement or instrument executed pursuant to the Plan shall be construed
as conferring upon any Participant the right to continue serving as a Director.
10.3 SUCCESSORS AND ASSIGNS. This Plan shall be binding upon the Company
and its successors and assigns as well as each Participant and his or her
representatives, successors, heirs, assigns, and Beneficiary.
10.4 ASSIGNMENT OR ALIENATION. To the extent permitted by law, benefits
of Participants under this Plan may not be anticipated, assigned (either by law
or in equity), transferred, alienated or subject to attachment, garnishment,
levy, execution or other legal or equitable process.
10.5 ENTIRE AGREEMENT. The Plan and a Participant's Deferred Compensation
Agreement, and any subsequently adopted amendment to either of these documents,
shall constitute the total agreement or contract between the Company and such
Participant regarding the Plan. No oral statement regarding the Plan may be
relied upon by the Participant. If there are any conflicts between the terms of
the Plan and a Participant's Deferred Compensation Agreement, the terms of the
Plan shall control.
10.6 HEADINGS. The headings herein are for reference only. In the event
of a conflict between a heading and content of a Section of this Plan, the
content of the Section shall control.
10.7 GENDER AND NUMBER. Whenever used herein, the masculine shall be
interpreted to include the feminine and neuter, the neuter to include the
masculine and
8.
<PAGE> 12
feminine, the singular to include the plural and the plural to include the
singular, unless the context requires otherwise.
10.8 GOVERNING LAW. The place of administration of this Plan shall
conclusively be deemed to be within the State of California, and the Plan shall
be governed by and in all respects construed in accordance with the substantive
laws of the State of California, except where such laws are superseded by
federal laws.
IN WITNESS WHEREOF, the Company has executed this Plan this 5th day of
August, 1997.
AMYLIN PHARMACEUTICALS, INC.
By: Richard M. Haugen
-------------------------------------
Title: President and Chief Executive
Officer
-----------------------------------
9.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED BALANCE SHEET AND CONDENSED CONSOLIDATED STATEMENT OF
OPERATIONS FILED AS PART OF THE QUARTERLY REPORT ON FORM 10-Q AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH QUARTERLY REPORT ON FORM 10-Q.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 30,744,000
<SECURITIES> 18,723,000
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 51,075,000
<PP&E> 18,491,000
<DEPRECIATION> 9,400,000
<TOTAL-ASSETS> 61,809,000
<CURRENT-LIABILITIES> 20,800,000
<BONDS> 0
0
0
<COMMON> 32,000
<OTHER-SE> 32,290
<TOTAL-LIABILITY-AND-EQUITY> 61,809
<SALES> 0
<TOTAL-REVENUES> 23,712
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 40,393
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 473,000
<INCOME-PRETAX> (17,154,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (17,154,000)
<EPS-PRIMARY> (0.54)
<EPS-DILUTED> (0.54)
</TABLE>
