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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 September 30,1999
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)
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<S> <C>
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)
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(858) 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
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Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
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<CAPTION>
Class Outstanding at November 12, 1999
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<S> <C>
Common Stock, $.001 par value 53,783,441
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AMYLIN PHARMACEUTICALS, INC.
TABLE OF CONTENTS
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PAGE NO.
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COVER PAGE.................................................. 1
TABLE OF CONTENTS........................................... 2
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
Condensed Consolidated Balance Sheets as of
September 30, 1999 and December 31, 1998 .............. 3
Condensed Consolidated Statements of Operations for the
three months ended September 30,1999 and 1998 ......... 4
Condensed Consolidated Statements of Operations for the
nine months ended September 30, 1999 and 1998 ......... 5
Condensed Consolidated Statements of Cash Flows for the
nine months ended September 30, 1999 and 1998 ......... 6
Notes to Condensed Consolidated Financial Statements... 7
ITEM 2.
Management's Discussion and Analysis of
Financial Condition and Results of Operations.......... 8
ITEM 3.
Quantitative and Qualitative Disclosures
about Market Risk...................................... *
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings.............................. *
ITEM 2. Changes in Securities and Use of Proceeds...... 14
ITEM 3. Defaults upon Senior Securities................ *
ITEM 4. Submission of Matters to a Vote of
Security Holders............................... *
ITEM 5. Other Information.............................. *
ITEM 6. Exhibits and Reports on Form 8-K .............. 15
SIGNATURE................................................... 15
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* No information provided due to inapplicability of item.
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AMYLIN PHARMACEUTICALS, INC.
Condensed Consolidated Balance Sheets
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<CAPTION>
September 30, December 31,
1999 1998
(unaudited) (Note 1)
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Assets
Current Assets:
Cash and cash equivalents .................................................... $ 8,735,000 $ 8,787,000
Short-term investments ....................................................... 1,960,000 2,002,000
Other current assets ......................................................... 585,000 514,000
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Total current assets ........................................................... 11,280,000 11,303,000
Property and equipment, at cost:
Equipment .................................................................... 2,598,000 15,197,000
Leasehold improvements ....................................................... 12,000 3,955,000
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2,610,000 19,152,000
Less accumulated depreciation and amortization ............................... (1,640,000) (13,556,000)
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970,000 5,596,000
Patents and other assets, net .................................................. 2,215,000 1,924,000
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$ 14,465,000 $ 18,823,000
============= =============
Liabilities and Stockholders' Equity (Deficit)
Current Liabilities:
Accounts payable ............................................................. $ 643,000 $ 2,187,000
Accrued liabilities .......................................................... 2,423,000 2,130,000
Current portion of obligation under capital
leases and equipment notes payable ....................................... 1,319,000 1,794,000
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Total current liabilities ...................................................... 4,385,000 6,111,000
Obligation under capital leases and
equipment notes payable ..................................................... 1,977,000 4,164,000
Notes payable to related party, net of discount ................................ 43,831,000 40,010,000
Stockholders' equity (deficit):
Preferred stock, $.001 par value, 7,500,000 shares authorized
Common stock, $.001 par value, 100,000,000 shares authorized,
49,986,000 and 36,726,000 issued and outstanding at
September 30, 1999 and December 31, 1998, respectively ..................... 50,000 37,000
Additional paid-in capital ................................................... 245,657,000 229,757,000
Accumulated deficit .......................................................... (281,176,000)
Deferred compensation ........................................................ (219,000) (428,000)
Unrealized gains/(losses) on short-term investments .......................... (40,000) 2,000
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Total stockholders' equity (deficit) ........................................... (35,728,000) (31,462,000)
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$ 14,465,000 $ 18,823,000
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</TABLE>
See accompanying notes.
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AMYLIN PHARMACEUTICALS, INC.
Condensed Consolidated Statements of Operations
(unaudited)
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Three months ended
September 30,
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1999 1998
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Revenues under collaborative agreements
from related party ........................ $ 0 $ 2,678,000
Operating Expenses:
Research and development .................. 4,391,000 15,414,000
General and administrative ................ 1,652,000 2,310,000
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6,043,000 17,724,000
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Loss from operations ........................ (6,043,000) (15,046,000)
Interest and other income ................... 651,000 462,000
Interest and other expense .................. (1,428,000) (1,382,000)
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Net loss .................................... (6,820,000) (15,966,000)
Dividends paid on preferred stock ........... 131,000 --
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Net loss applicable to common stock ......... $(6,951,000) $(15,966,000)
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Net loss per share - basic and diluted ...... $ (0.17) $ (0.45)
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Shares used in computing net loss per share -
basic and diluted ........................ 41,294,000 35,506,000
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</TABLE>
See accompanying notes.
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AMYLIN PHARMACEUTICALS, INC.
Condensed Consolidated Statements of Operations
(unaudited)
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Nine months ended
September 30,
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1999 1998
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Revenues under collaborative agreements
from related party ........................ $ 0 $ 15,653,000
Operating Expenses:
Research and development .................. 12,613,000 47,817,000
General and administrative ................ 4,416,000 8,598,000
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17,029,000 56,415,000
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Loss from operations ........................ (17,029,000) (40,762,000)
Interest and other income ................... 1,323,000 1,294,000
Interest and other expense .................. (4,438,000) (4,065,000)
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Net loss .................................... (20,144,000) (43,533,000)
Dividends paid on preferred stock ........... 335,000 --
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Net loss applicable to common stock ......... $(20,479,000) $(43,533,000)
============ ============
Net loss per share - basic and diluted ...... $ (0.53) $ (1.30)
============ ============
Shares used in computing net loss per share -
basic and diluted ........................ 38,453,000 33,516,000
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</TABLE>
See accompanying notes.
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AMYLIN PHARMACEUTICALS, INC.
Condensed Consolidated Statements of Cash Flows
(unaudited)
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Nine months ended
September 30,
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1999 1998
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Operating Activities:
Net loss ................................................. $(20,144,000) $(43,533,000)
Adjustments to reconcile net loss to net
cash used for operating activities:
Loss on sale of fixed assets ........................... 193,000 0
Depreciation and amortization .......................... 1,138,000 2,444,000
Deferred revenue from related party .................... 0 (5,934,000)
Interest added to debt ................................. 3,063,000 0
Amortization of deferred compensation .................. 209,000 698,000
Amortization of debt discount from warrants ............ 898,000 898,000
Stock Options issued for services ...................... 95,000 0
Changes in operating assets and liabilities:
Receivable from related party .......................... 0 756,000
Other current assets ................................... (71,000) 581,000
Accounts payable ....................................... (1,544,000) (2,364,000)
Accrued liabilities .................................... 293,000 (343,000)
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Net cash flows used for operating activities ............. (15,870,000) (46,797,000)
Investing activities:
Decrease in short-term investments ....................... (42,000) 3,849,000
Purchase of equipment and leasehold improvements ......... 0 (342,000)
Change in deposits, patents and other assets ............. (522,000) (339,000)
Proceeds from sale of fixed assets ....................... 2,401,000 0
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Net cash flows provided by (used for) investing activities 1,837,000 3,168,000
Financing activities:
Issuance of notes payable ................................ 0 6,850,000
Principal payments on capital leases and
equipment notes payable ............................... (1,782,000) (1,188,000)
Issuance of common stock, net ............................ 763,000 14,154,000
Issuance of convertible preferred stock .................. 15,000,000 0
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Net cash flows provided by financing activities ........... 13,981,000 19,817,000
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Change in cash and cash equivalents ....................... (52,000) (23,813,000)
Cash and cash equivalents at beginning of period .......... 8,787,000 46,903,000
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Cash and cash equivalents at end of period ................ $ 8,735,000 $ 23,090,000
============ ============
Supplemental disclosure of cash flow information:
Interest paid ............................................ $ 236,000 $ 411,000
Notes assumed in sale of fixed assets .................... $ 1,020,000 $ 0
Accrued dividends ........................................ $ 335,000 $ 0
Warrants issued in sale of fixed assets .................. $ 55,000 $ 0
</TABLE>
See accompanying notes.
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AMYLIN PHARMACEUTICALS, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1999
(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
September 30, 1999 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. The balance sheet at December 31, 1998 has been derived
from the audited financial statements at that date but does not include all
information and footnotes required by generally accepted accounting principles
for complete financial statements. For more complete financial information,
these financial statements should be read in conjunction with the audited
financial statements included in the Company's Annual Report on Form 10-K for
the year ended December 31, 1998.
Per Share Data
Basic and diluted net loss per share is computed using the weighted average
number of common shares outstanding during the periods.
Consolidation
The consolidated financial statements include the accounts of Amylin
Pharmaceuticals, Inc. ("Amylin" or the "Company") and its wholly owned
subsidiary, Amylin Europe Limited. All significant intercompany transactions and
balances have been eliminated.
2. Stockholders' Equity
In March 1999, the Company completed a private stock offering of 125,000
shares of its Series A preferred stock. The proceeds to the Company from the
financing were $15.0 million. Each share of Series A preferred stock was
automatically convertible into 100 shares of common stock whenever the closing
bid price of the Company's stock remained above $2.40 per share for 30
consecutive trading days. As of September 2, 1999 the preferred stock plus
accrued dividends were converted to 12.6 million shares of Common Stock.
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In October 1999, the Company completed a private placement of 3.7 million
shares of its common stock at $5.00 per share. The proceeds to the Company from
the financing were $18.5 million. This issuance brought the total number of
outstanding shares of Amylin Pharmaceuticals stock to 53.7 million shares.
3. Sale of Cabrillo Laboratories Division
On April 30, 1999 Amylin entered into an agreement with Magellan
Laboratories Incorporated for the sale of the assets of the Cabrillo
Laboratories division of Amylin for which the Company received a cash payment of
$2.1 million. Additionally, Amylin and Magellan entered in to an agreement
pursuant to which Magellan agreed to perform a portion of Amylin's future
product development services. Magellan agreed to maintain certain product
development capabilities important for the preparation of Amylin's regulatory
filings for SYMLIN(TM) (pramlintide acetate). As a further component, Amylin
issued Magellan a warrant for the purchase of 50,000 shares of the Company's
common stock in exchange for a $500,000 credit for future laboratory services to
be provided by Magellan to Amylin. The warrant is exercisable from December 1,
1999 and may be exercised up to and including November 30, 2001. In addition, as
part of the April 30, 1999 sale of the assets of its Cabrillo Laboratories
division, the Company assigned to Magellan Laboratories its lease for the 35,500
square foot facility where its former product development operations were
located.
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 due to risks and uncertainties regarding, among other
things, the timing of filing for regulatory approvals for SYMLIN(TM)
(pramlintide acetate) and if approvals are received, time to market after
approval, the Company's burn rate and need for additional capital, the Company's
ability to consummate strategic or corporate partner transactions on favorable
terms or at all, the results of the Company's ongoing and planned clinical
studies of its product candidates, science and technology relating to the
Company's drug candidates, and the drug discovery and development process.
Additional factors that could cause or contribute to such differences include,
without limitation, those discussed in the section entitled "Liquidity and
Capital Resources" herein as well as those discussed in the Company's Annual
Report on Form 10-K for the year ended December 31, 1998, under the heading
"Risk Factors."
Since its inception in September 1987, Amylin has devoted substantially all
of its resources to its research and development programs, including research
and development of SYMLIN and AC2993 (synthetic exendin-4). 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
has no product sales and has not received any revenues from the
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sale of products. The Company has been unprofitable since its inception and
expects to incur significant additional operating losses for the next several
years. As of September 30, 1999, the Company's accumulated deficit was
approximately $281 million.
From June 1995 to August 1998, Amylin and Johnson & Johnson collaborated on
the development and commercialization of SYMLIN. Under the Collaboration
Agreement, Johnson & Johnson made payments to Amylin totaling approximately $174
million. These payments included funding of one-half of the SYMLIN development
costs, draw downs from the development loan facility under a loan and security
agreement, the purchase of $30 million of the Company's Common Stock, milestone,
license and option fee payments, and the funding of SYMLIN pre-marketing costs.
The Johnson & Johnson collaboration provided for, among other things, a
fifty-fifty sharing arrangement whereby each party would be responsible for
one-half of all development and commercialization costs and would share one-half
of all profits derived from SYMLIN. As a result of Johnson & Johnson's
withdrawal from the collaboration, Johnson & Johnson has relinquished all rights
to share in any SYMLIN profits. Additionally, following the collaboration
termination in August 1998, all product and other rights associated with SYMLIN
and related compounds reverted to Amylin. However, based on the achievement of
certain milestones in commercialization of SYMLIN, the Company has agreed to
purchase from Johnson & Johnson up to $11.4 million of bulk drug product
previously purchased by Johnson & Johnson. The Company also agreed to reimburse
Johnson & Johnson for reasonable inventory carrying costs.
Following the announcement of the termination of the Johnson & Johnson
Collaboration Agreement in March 1998, Amylin reduced its workforce and
operating expenses. In October 1998, following the announcement of the results
of the Company's European/Canadian Phase 3 studies of SYMLIN, the Company
further reduced its workforce and operating expenses. As part of its
restructuring of operations, Amylin reduced the square footage occupied by the
Company's research, development and administrative staff from 45,000 square feet
to 26,500 square feet as of March 1, 1999.
The Company believes that its existing available cash, together with the
proceeds from its sale of common stock in October 1999, and interest income from
cash investments will permit the Company to finance its current operations into
the fourth quarter of 2000.
On August 31, 1999 the Company announced the results of a one-year study of
SYMLIN in people with type 2 diabetes who use insulin. In this study, SYMLIN
produced a statistically significant lowering of the primary glucose control
endpoint as well as a statistically significant reduction in body weight for
study participants. As observed in previous studies of SYMLIN, the glycemic
"responder" rate in the SYMLIN groups in this study was approximately twice that
of the control group. Glycemic "responders" in the SYMLIN 120 microgram twice
daily group had an average reduction in HbA(1c) of at least 1.0% from Week 13
through the end of the one-year study. On November 8, 1999, the Company
announced the results of a one-year study of SYMLIN in people with type 1
diabetes. In this study, SYMLIN also produced a statistically significant
lowering of the primary glucose control endpoint. Additionally, to better
understand the effects of SYMLIN,
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independent of the effects of insulin, a "stable insulin" group was predefined
as those participants who did not vary their insulin usage by more than 10% from
baseline. SYMLIN recipients in the "stable insulin" group achieved a reduction
in HbA(1c) of 0.7% at one year compared to placebo recipients in the "stable
insulin" group. As in the insulin-using type 2 diabetes study, approximately
twice as many SYMLIN recipients were glycemic "responders," compared to the
insulin alone group. Glycemic "responders" in the SYMLIN 60 microgram three
times daily group had an average reduction in HbA(1c) of 0.7% at one year. In
addition, overweight SYMLIN recipients lost weight while those who were
overweight in the insulin alone group gained weight. The results of both studies
are consistent with those seen in earlier SYMLIN Phase 3 clinical studies.
RESULTS OF OPERATIONS
Revenue
The Company received no collaborative revenue for the period ended
September 30,1999, compared with $15.7 million received during the same period
in 1998. This reduction was due to the termination of the Company's
Collaboration Agreement with Johnson & Johnson in August 1998.
Operating Expenses
The Company's total operating expenses for the quarter ended September 30,
1999 decreased to $6.0 million from $17.7 million for the same period in 1998.
For the nine months ended September 30, 1999, operating expenses decreased to
$17.0 million from $56.4 million for the same period in 1998. Research and
development expenses for the quarter ended September 30, 1999 decreased to $4.4
million from $15.4 million for the same period in 1998. For the nine months
ended September 30, 1999, research and development expenses decreased to $12.6
million as compared to $47.8 million for the same period in 1998. General and
administrative expenses for the quarter ended September 30, 1999 decreased to
$1.7 million from $2.3 million for the same period in 1998. For the nine months
ended September 30, 1999, general and administrative expenses decreased to $4.4
from $8.6 million for the same period in 1998. The decreases in these expenses
were a result of the Company's efforts to reduce costs following the termination
of the Company's Collaboration Agreement with Johnson & Johnson and the cost
reductions implemented following unexpected clinical trial results in October
1998.
Other Income and Expense
Interest and other income is comprised of interest income from investment
of the Company's cash reserves, external service income generated by the
Company's Cabrillo division through April 30,1999 and credits from Magellan
Laboratories Incorporated. Interest and other income was $1.3 million, including
$0.4 million from Magellan for the nine-month period ended September 30, 1999,
and $1.3 million for the same period in 1998.
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,
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to fund tenant improvements to the Company's facilities, and for other working
capital purposes. In addition, in accordance with the terms of the Collaboration
Agreement, Johnson & Johnson advanced Amylin's share of SYMLIN pre-launch
marketing expenses incurred during the term of the collaboration.
Separately, in 1997, the Company received proceeds of approximately $30.6
million from a draw down under its development loan facility with Johnson &
Johnson. The proceeds were used to fund the Company's one-half share of
development expenses for SYMLIN during that year. Both the development loan and
the pre-marketing loan were provided under the terms and conditions of the
Company's Loan Agreement with Johnson & Johnson and will be repaid with interest
over time in accordance with the terms of the Loan Agreement. The loan is
secured by the Company's issued patents and pending patent applications relating
to Amylin.
In conjunction with the borrowing under the development loan facility, the
Company issued warrants to Johnson & Johnson to purchase 1,530,950 shares of the
Company's common stock with a fixed exercise price of $12 per share and a
10-year exercise period. The estimated value of the warrants is being amortized
to interest expense over the life of the development loan facility.
Interest and other expense increased to $4.4 million for the nine months
ended September 30, 1999 from $4.1 million for the same period in 1998. The
increase in interest and other expense was primarily due to the compounding of
interest associated with the development loan debt, amortization of the
valuation placed on the warrants, and interest expense related to the
pre-marketing loan.
Net Loss
The net loss for the period ended September 30, 1999 was $20.5 million
compared to a net loss for the same period in 1998 of $43.5 million. The
decrease in the net loss was primarily due to the significant reductions in work
force and lower external clinical expenses.
Amylin expects to incur substantial operating losses over the next few
years due to continuing expenses associated with its research and development
programs, including clinical development of SYMLIN and AC2993, preclinical and
potential 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 common and preferred stock, sales of common stock,
reimbursement of SYMLIN development expenses through its collaboration with
Johnson & Johnson and debt financings.
At September 30, 1999, the Company had $10.7 million in cash, cash
equivalents and short-term investments as compared to $10.8
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million at December 31, 1998. In October 1999, the Company raised $18.5 million
in a private placement of 3,700,000 shares of its common stock. The Company
invests its cash in U.S. government and other highly rated liquid debt
instruments. The Company believes that its existing cash, together with the
proceeds from its sale of common stock in October 1999 and interest income from
investments, should provide sufficient funds to continue current business
operations into the fourth quarter of 2000.
The Company intends to use its financial resources for the ongoing
development of SYMLIN, including submission of US and European regulatory
approval applications, for its AC2993 development program, and for other general
corporate purposes. As a result of the termination of the Collaboration
Agreement between the Company and Johnson and Johnson, and following the
announcement in October 1998 of unexpected results from the Company's six-month
Phase 3 European/Canadian clinical studies of SYMLIN, resources dedicated toward
the Company's other research programs were sharply reduced or eliminated. The
Company plans to continue advancing its research and development pipeline as
future resources permit. To the extent that clinical trials of the Company's
AC2993 compounds progress as planned, research and development expenses will
include costs of supplying materials for and/or conducting AC2993 clinical
trials. 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 pre-clinical 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 availability of additional sources of funds, the
establishment of collaborative arrangements with other companies, and other
factors.
The Company does not expect to generate a positive internal cash flow for
the next few years due to substantial additional research and development costs,
including costs related to research, pre-clinical testing, clinical trials,
manufacturing costs, costs associated with the submission of US and European
regulatory applications for SYMLIN, and general and administrative expenses
necessary to support such activities. Operating losses in the future may
fluctuate from quarter to quarter as a result of differences in the timing of
expenses incurred and revenues recognized.
The Company cannot make any assurances that any of its drug candidates will
successfully meet any or all of their development goals. The Company's future
capital requirements will depend on many factors, including the ability of the
Company to establish one or more development and/or commercialization
collaborations for its SYMLIN and AC2993 programs, progress with its other
ongoing and new pre-clinical studies and clinical trials, the time and costs
involved in obtaining regulatory approvals and if approved, time to market
thereafter, scientific progress in its research and development programs, the
magnitude of these programs, the costs involved in preparing, filing,
prosecuting, maintaining, enforcing or defending itself against patents,
competing technological and market developments, changes in collaborative
relationships, and manufacturing costs.
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Further testing of SYMLIN, AC2993, or 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. As is the case
for any drug in clinical testing, the Company or regulatory authorities may
suspend clinical trials at any time if the 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 regulatory authorities to delay or suspend clinical trials. In
addition, there can be no assurance that any of the Company's products will
obtain regulatory approval for any indication. Products if any, resulting from
Amylin's research and development programs are not expected to be commercially
available until 2001 or later.
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
patents issued to the Company. Litigation, whether or not there is any basis for
it, may also be required to determine the scope and validity of third-party
proprietary rights.
Year 2000 Compliance
The Year 2000 issue results from computer systems and software products
being coded using two digits rather than four to define the applicable year. The
Company's computer systems and software products with embedded technology that
are time-sensitive may recognize a date as the year 1900 rather than the year
2000 which could cause computer system failures and errors leading to a
disruption of business operations.
The Company has now completed its program for identifying and resolving
Year 2000-related issues. This program involved the review and assessment of
internal information technology and appropriate corrective action where
necessary.
The Company has also contacted important business partners in order to
assess their progress in addressing Year 2000 issues. Information provided by
them has been used to assess their commitment to Year 2000 readiness. Based on
the information provided, the Company believes that its business partners are
taking adequate steps to ensure that their business operations will not be
seriously disrupted by Year 2000 issues. Additionally, the Company's primary
computer systems do not interface directly with those of third parties, thus
providing the Company with further confidence that its operations will not be
disrupted even if third parties fail to adequately complete their Year 2000
programs. However, in the event that a third party cannot supply products or
services, the Company's operations could be adversely affected resulting in
product development delays.
The Company's most significant potential exposure to Year 2000 problems is
related to its dependence on commercial utilities. If the Company's water and
power supply were interrupted, its research and
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development activities as well as its general business operations would be
seriously affected until services could be restored or until suitable alternate
sources could be secured. The Company has limited back-up diesel power
generation capability. In the event of a power outage, the Company could operate
for approximately 24 hours before needing to refuel. The Company has received
reasonable assurances from local diesel suppliers that additional fuel will be
available if needed and therefore has decided not to stockpile diesel fuel. The
Company has an adequate water supply to operate for 30 days, if necessary.
Year 2000 costs to date have been primarily related to internal personnel
costs and external consulting costs, which have been expensed in the same fiscal
period as incurred. At this time, the Company has no reason to believe that Year
2000 issues will have a material impact on its business or financial condition.
Part II - Other Information
Item 1. Legal Proceedings
None.
Item 2. Changes in Securities
(a) In October 1999, Amylin's Board of Directors adopted an amendment to
the Company's Amended and Restated Bylaws that eliminated the ability of holders
of 10% or more of the Company's stock to call a special meeting of stockholders.
(c) On September 2, 1999, all of the outstanding shares of the Company's 5%
Series A Convertible Preferred Stock automatically converted into an aggregate
of 12,594,009 shares of common stock. The Company issued the Preferred Stock in
a private placement in March 1999.
All of the preferred stock automatically converted to common stock
following a period of 30 consecutive trading days in which the closing bid price
of the common stock was above $2.40 per share. Consistent with the Company's
agreements with the purchasers of the preferred stock, the Company paid a 5%
dividend in the form of 94,009 shares of common stock valued as of the closing
price on September 2, 1999. Appropriate legends are affixed to the stock
certificates issued in connection with the conversion and the distribution of
the dividend.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to Vote of Securities Holders
None.
14
<PAGE> 15
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
(a) The following exhibits are included as part of this report:
<TABLE>
<CAPTION>
Exhibit Number Description
- -------------- -----------
<S> <C>
3.5 Amendment to Amended and Restated Bylaws of the Registrant.
10.2 Registrant's 1991 Stock Option Plan, as amended.+
10.12 Registrant's Non-Employee Directors' Stock Option Plan, as amended.+
10.34 Registrant's Directors' Deferred Compensation Plan, as amended.+
27 Financial Data Schedule
</TABLE>
+ Indicates management or compensatory plan or arrangement to be identified
pursuant to Item 14(c).
(b) Reports on Form 8-K: None.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Amylin Pharmaceuticals, Inc.
Date: November 12, 1999 By: /s/ Joseph C. Cook, Jr.
----------------------------
Joseph C. Cook, Jr.
Chairman of the Board and
Chief Executive Officer
(on behalf of the registrant
and as the registrant's
principal financial officer)
15
<PAGE> 1
EXHIBIT 3.5
AMENDMENT OF THE BYLAWS
OF
AMYLIN PHARMACEUTICALS, INC.
Upon approval of the Board of Directors of Amylin Pharmaceuticals, Inc.
(the "Company"), the Company's Bylaws are amended as follows:
1. Section 6(a) of Article III is amended to read as follows:
"Section 1. Special Meetings.
(a) Special meetings of the stockholders of the corporation may be
called, for any purpose or purposes, by (i) the Chairman of the Board of
Directors, (ii) the President, or (iii) the Board of Directors pursuant to a
resolution adopted by a majority of the total number of authorized Directors
(whether or not there exist any vacancies in previously authorized directorships
at the time any such resolution is presented to the Board of Directors for
adoption), and shall be held at such place, on such date, and at such time as
the President or the Board of Directors, as the case may be, shall fix."
CERTIFICATE OF SECRETARY
I, the undersigned, certify that I am the presently elected and acting Secretary
of Amylin Pharmaceuticals, Inc., a Delaware corporation, and the above amendment
to the corporation's Bylaws was adopted at a meeting of the Board of Directors
duly held on October 12, 1999.
/s/ NANCY K. DAHL
-----------------------------------
Nancy K. Dahl
Secretary
1.
<PAGE> 1
EXHIBIT 10.2
AMYLIN PHARMACEUTICALS, INC.
1991 STOCK OPTION PLAN
ADOPTED OCTOBER 25, 1991
AS AMENDED ON FEBRUARY 9, 1994, FEBRUARY 14, 1995,
FEBRUARY 8, 1996, APRIL 15, 1997, MAY 29, 1997,
FEBRUARY 18, 1998, MAY 20, 1998 and OCTOBER 12, 1999
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.
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.
1.
<PAGE> 2
(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,
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 or the SmallCap 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 day of determination, as reported 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 or the SmallCap 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 day of
determination, as reported in the Wall Street Journal or such other source as
the Board deems reliable;
2.
<PAGE> 3
(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 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.
3.
<PAGE> 4
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 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 eight hundred thousand (7,800,000) 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.
4.
<PAGE> 5
(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.
(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
5.
<PAGE> 6
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 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
6.
<PAGE> 7
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 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
7.
<PAGE> 8
(3) delivering to the Company owned and unencumbered shares of the common stock
of the Company.
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.
(c) Effective as of June 1, 1998, the Company shall not implement
without prior stockholder approval any stock option exchange program or
repricing program intended to reduce the exercise price applicable to Options
granted pursuant to the Plan. This subsection 7(c) may not be amended or
modified by the Company without prior stockholder approval.
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.
8.
<PAGE> 9
(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. 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
9.
<PAGE> 10
(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. 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.
10.
<PAGE> 11
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 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.
11.
<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, February 8, 1996,
May 29, 1997, May 20, 1998 and October 12, 1999
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:
(i) 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.
(ii) To amend the Plan as provided in paragraph 11.
1.
<PAGE> 2
(iii) 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.
(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
2.
<PAGE> 3
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:
(i) If the common stock is listed on any established stock
exchange or a national market system, including without limitation the National
Market System or the SmallCap 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 are reported) on such exchange or national
market system on the trading day on which the determination is to be made, as
reported 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 or the SmallCap 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 closing
sales price for such stock (or the closing bid if no sales are reported) on the
trading day on which the determination is to be made, 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.
(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.
3.
<PAGE> 4
(e) Options granted pursuant to the Plan shall vest as follows:
(i) 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.
(ii) 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.
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.
4.
<PAGE> 5
(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.
(c) Effective as of June 1, 1998, the Company shall not implement
without prior stockholder approval any stock option exchange program or
repricing program intended to reduce the exercise price applicable to Options
granted pursuant to the Plan. This subsection 7(c) may not be amended or
modified by the Company without prior stockholder approval.
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.
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.
5.
<PAGE> 6
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
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.
(a) 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:
(i) Increase the number of shares reserved for options under
the Plan; or
(ii) 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.
6.
<PAGE> 7
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
ORIGINALLY EFFECTIVE AS OF AUGUST 25, 1997
AMENDED AND RESTATED EFFECTIVE OCTOBER 12, 1999
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C> <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-Elective Contributions...........................................2
2.15 Non-Employee Director................................................2
2.16 Participant..........................................................3
2.17 Plan.................................................................3
2.18 Plan Year............................................................3
2.19 Share................................................................3
2.20 Valuation Date.......................................................3
3. PARTICIPATION.................................................................3
3.1 Participation of Eligible Directors..................................3
3.2 Irrevocability of Participation During the Plan 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...............................................5
</TABLE>
i
<PAGE> 3
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
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
7. ADMINISTRATION................................................................6
7.1 General..............................................................6
7.2 Procedures...........................................................7
7.3 Claims...............................................................7
8. AMENDMENT AND TERMINATION.....................................................7
8.1 Amendment or Termination.............................................7
8.2 Accrued Benefits.....................................................8
9. SALE OR MERGER OF THE COMPANY.................................................8
10. MISCELLANEOUS.................................................................8
10.1 Benefits Fully Vested................................................8
10.2 No Right to Continue as Director.....................................9
10.3 Successors and Assigns...............................................9
10.4 Assignment or Alienation.............................................9
10.5 Entire Agreement.....................................................9
10.6 Headings.............................................................9
10.7 Gender and Number....................................................9
10.8 Governing Law........................................................9
</TABLE>
ii
<PAGE> 4
AMYLIN PHARMACEUTICALS, INC.
DIRECTORS' DEFERRED COMPENSATION PLAN
ORIGINALLY EFFECTIVE AS OF AUGUST 25, 1997
AMENDED AND RESTATED EFFECTIVE OCTOBER 12, 1999
AMYLIN PHARMACEUTICALS, INC., a Delaware corporation (the "Company"),
hereby adopts the Amylin Pharmaceuticals, Inc. Directors' Deferred Compensation
Plan (the "Plan") for the Non-Employee 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 Non-Employee Directors of the Company, payable by the Company. This Plan will
provide benefits derived from (i) contributions by the Company hereunder of a
Non-Employee Director's compensation as to which he or she has elected to defer
payment under the Plan and (ii) other discretionary contributions by the
Company.
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 and Non-Elective Contributions 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 Non-Employee Director.
2.13 FAIR MARKET VALUE. The fair market value of a share of Common Stock of
the Company is, as of any date, the value of the Common Stock of the Company, as
determined as follows:
(a) If the Common Stock is listed on any established stock
exchange or a national market system, including without limitation the National
Market System or the SmallCap 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 are reported) on such exchange or national
market system on the trading day on which the determination is to be made, as
reported in The Wall Street Journal or such other source as the Board deems
reliable;
(b) If the Common Stock is quoted on the NASDAQ System (but
not on the National Market System or the SmallCap 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 closing
sales price for such stock (or the closing bid, if no sales are reported) on the
trading day on which the determination is to be made, as reported in The Wall
Street Journal or such other source as the Board deems reliable;
(c) In the absence of an established market for the Common
Stock, the Fair Market Value shall be determined in good faith by the Board.
2.14 NON-ELECTIVE CONTRIBUTIONS. An amount credited to the Account of a
Participant by the Company without reduction of the Participant's Compensation.
2.15 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
2.
<PAGE> 6
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.
2.16 PARTICIPANT. Any Eligible Director who has elected to participate in
the Plan by entering into a Deferred Compensation Agreement.
2.17 PLAN. The Amylin Pharmaceuticals, Inc. Corporation Directors' Deferred
Compensation Plan, as amended from time to time.
2.18 PLAN YEAR. The calendar year.
2.19 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.
2.20 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
3.
<PAGE> 7
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.
(e) In addition to the participation described in Sections
3.1(a) through 3.1(d), a Non-Employee Director may become a Participant if the
Company, in its sole discretion, awards to the Non-Employee Director
Non-Elective Contribution amounts. Except as otherwise provided in the Plan or
in a written agreement between the Non-Employee Director and the Company, any
such award shall be subject to the same terms and conditions as Compensation
Reductions.
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
or Non-Elective Contributions 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
4.
<PAGE> 8
Participant's Compensation Reductions and Non-Elective Contributions for each
Plan Year. For Compensation Reductions, such allocations shall be 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. For
Non-Elective Contributions, such allocations shall be effective on the date
determined by the Company, in its sole discretion.
4.2 INVESTMENT OF ACCOUNTS.
(a) Each Compensation Reduction or Non-Elective Contribution
allocated to a Participant's Account shall be converted into that number of
Shares that equal the amount of such Compensation Reduction or Non-Elective
Contribution divided by the Fair Market Value of the Common Stock of the Company
as of the date such Compensation Reduction or Non-Elective Contribution is
allocated to the Participant's Account. 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 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
5.
<PAGE> 9
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. Notwithstanding the foregoing, the aggregate number of shares of the
Company's Common Stock distributable to the Company's Non-Employee Directors
under this Plan shall not exceed the least of (i) one percent (1%) of the
Company's outstanding Common Stock on the Effective Date; (ii) one percent (1%)
of the outstanding voting power of the Company's outstanding securities on the
Effective Date or (iii) twenty-five thousand (25,000) shares of the Company's
Common Stock, or such other applicable limitation that would cause the Plan to
require shareholder approval as set forth in Rule 4460(i)(1)(A) of the NASDAQ
Stock Market Marketplace Rules.
(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 for which the Participant entered into a Deferred
Compensation Agreement with the Company under the Plan or was credited with a
Non-Elective Contribution 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 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
6.
<PAGE> 10
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.
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.
7.
<PAGE> 11
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 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.
8.
<PAGE> 12
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 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 Amendment and Restatement
of the Plan this _______ day of _________________, 1999.
AMYLIN PHARMACEUTICALS, INC.
By:
--------------------------------
Title:
-----------------------------
9.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED BALANCE SHEET AND THE CONDENSED CONSOLIDATED STATEMENT OF
OPERATIONS AS 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>
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<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
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<CURRENT-ASSETS> 11,280,000
<PP&E> 2,610,000
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<TOTAL-LIABILITY-AND-EQUITY> 14,465,000
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<OTHER-EXPENSES> 17,029,000
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<INCOME-PRETAX> (20,144,000)
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