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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
_______ Exchange Act of 1934. For the quarterly period ended September 30,
1996.
or
Transition report pursuant to Section 13 or 15(d) of the Securities
_______ Exchange Act of 1934. For the transition period from ___________ to
___________.
Commission File Number:
0-24814
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SUGEN, Inc.
(Exact name of registrant as specified in its charter)
Delaware 13-3629196
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
515 Galveston Drive, Redwood City, California 94063
(address of principal executive offices)
(415) 306-7700
(Registrant's telephone number, including area code)
-----------------------------
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 filing requirements
for the past 90 days. Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date. Common Stock $.01 par value;
12,909,350 shares outstanding at October 31, 1996.
This report on form 10-Q, including all exhibits, contains ___ pages. The
exhibit index is located on page 14 of this report.
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1
<PAGE>
SUGEN, Inc.
INDEX
PAGE NO.
--------
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements and Notes
Condensed Balance Sheets - September 30, 1996
and December 31, 1995 3
Statements of Operations - for the three and nine months
ended September 30, 1996 and 1995 4
Condensed Statements of Cash Flows - for the nine
months ended September 30, 1996 and 1995 5
Notes to Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 12
Signatures 13
Exhibit Index 14
2
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS AND NOTES
SUGEN, Inc.
CONDENSED BALANCE SHEETS
(In thousands)
September 30, December 31,
1996 1995
------------ ------------
ASSETS (unaudited)
Current assets:
Cash and cash equivalents $ 4,249 $ 8,226
Short-term investments 29,127 45,027
Prepaid expenses and other current assets 840 1,034
-------- --------
Total current assets 34,216 54,287
Property and equipment, net 4,064 4,513
Other assets 1,371 443
-------- --------
$ 39,651 $ 59,243
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,052 $ 652
Accrued liabilities 5,933 3,587
Deferred revenue -- 6,558
Capital lease obligations - current portion 1,706 1,354
-------- --------
Total current liabilities 8,691 12,151
Capital lease obligations - non-current portion 3,250 3,651
Commitments
Stockholders' equity:
Common stock 81,382 81,802
Deferred compensation (785) (397)
Note receivable from stockholder (883) --
Accumulated deficit (52,004) (37,964)
-------- --------
Total stockholders' equity 27,710 43,441
-------- --------
$ 39,651 $ 59,243
======== ========
See accompanying notes.
3
<PAGE>
<TABLE>
SUGEN, Inc.
STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(unaudited)
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
--------------------- --------------------
1996 1995 1996 1995
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Contract revenue (includes amounts from
related party) $ 2,430 $ 3,427 $ 10,338 $ 10,302
Costs and expenses:
Research and development 7,047 6,034 21,379 16,597
General and administrative 1,104 1,423 4,071 3,812
-------- -------- -------- --------
Total costs and expenses 8,151 7,457 25,450 20,409
-------- -------- -------- --------
Operating loss (5,721) (4,030) (15,112) (10,107)
Other income and expenses:
Interest income 450 439 1,738 1,347
Interest expense (167) (136) (521) (345)
Gain on sale of investment in Selectide Corporation -- -- -- 1,006
-------- -------- -------- --------
Other income, net 283 303 1,217 2,008
-------- -------- -------- --------
Net loss $ (5,438) $ (3,727) $(13,895) $ (8,099)
======== ======== ======== ========
Net loss per share $ (0.51) $ (0.42) $ (1.32) $ (0.93)
======== ======== ======== ========
Shares used in computing net loss
per share 10,592 8,780 10,521 8,694
======== ======== ======== ========
<FN>
See accompanying notes.
</FN>
</TABLE>
4
<PAGE>
<TABLE>
SUGEN, Inc.
CONDENSED STATEMENTS OF CASH FLOWS
Increase (decrease) in cash and cash equivalents
(In thousands)
(unaudited)
<CAPTION>
Nine Months Ended
September 30,
----------------------------
1996 1995
-------- --------
<S> <C> <C>
Cash flows from operating activities
Net loss $(13,895) $ (8,099)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization 1,673 1,154
Deferred revenue (6,558) (97)
Issuance of common stock for services -- 139
Gain on sale of investment in Selectide Corporation -- (1,006)
Changes in operating assets and liabilities:
Prepaid expenses and other current assets 194 66
Other assets (928) (63)
Accounts payable 400 39
Accrued liabilities 2,346 1,433
-------- --------
Net cash used in operating activities (16,768) (6,434)
-------- --------
Cash flows from investing activities
Sales/maturities (purchases) of short-term investments, net 15,755 (13,564)
Purchases of property and equipment (1,074) (1,413)
Proceeds from sale of investment in Selectide Corporation -- 2,923
-------- --------
Net cash provided by (used in) investing activities 14,681 (12,054)
-------- --------
Cash flows from financing activities
Proceeds from issuance of common stock, net 657 27,397
Repurchase of common stock (2,698) --
Proceeds from issuance of warrant 200 --
Proceeds from lease financing of property and equipment 995 1,338
Payments under capital lease obligations (1,044) (649)
-------- --------
Net cash provided by (used in) financing activities (1,890) 28,086
-------- --------
Net increase (decrease) in cash and cash equivalents (3,977) 9,598
Cash and cash equivalents at beginning of period 8,226 12,599
-------- --------
Cash and cash equivalents at end of period $ 4,249 $ 22,197
======== ========
<FN>
See accompanying notes.
</FN>
</TABLE>
5
<PAGE>
SUGEN, Inc.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Presentation
The financial information at September 30, 1996 and for the nine months
ended September 30, 1996 and 1995 is unaudited but includes all
adjustments (consisting only of normal recurring adjustments) which
SUGEN, Inc. (the "Company") considers necessary for the fair
presentation of the financial position at such date and the operating
results and cash flows for those periods. The accompanying condensed
financial statements should be read in conjunction with the financial
statements and notes thereto for the year ended December 31, 1995
included in the Company's Form 10-K, as amended. The results of the
Company's operations for any interim period are not necessarily
indicative of the results of the Company's operations for a full fiscal
year.
2. Research and Development Agreements
In January 1996, the Company and Amgen Inc. reached an agreement to
conclude their research collaboration one year earlier than originally
planned due to their changed research priorities over the three years.
Under the terms of this wind-down agreement, Amgen made a final cash
payment to the Company of $2.5 million (of which $1.1 million was
advanced in December 1995) and forgave certain advance payments made to
the Company for future research work. These amounts have been recorded
as wind-down revenue in 1996. Amgen also granted back to SUGEN
exclusive worldwide rights to 22 proprietary signal transduction
targets discovered in the course of the collaboration, subject to
royalty payments back to Amgen with respect to potential future product
sales. In addition, in January 1996 the Company repurchased 235,000
shares of its Common Stock from Amgen at a price of $11.48 per share,
thereby reducing Amgen's current holdings of the Company's Common Stock
to 152,878 shares. Amgen also purchased in January 1996 for $200,000 a
warrant expiring in 2003 to purchase 200,000 shares of Common Stock at
an exercise price of $15.50 per share.
3. Accrued Liabilities
The components of accrued liabilities consist of the following:
September 30, December 31,
1996 1995
------------- ------------
(In thousands)
Accrued Research & Development Services $ 2,947 $ 1,381
Accrued Compensation 707 657
Accrued Professional Fees 767 344
Other 1,512 1,205
--------- ---------
$ 5,933 $ 3,587
========= =========
6
<PAGE>
SUGEN, Inc.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
4. Stockholder's Equity
Option Exercise and Stockholder Note
In August 1996, an officer of the Company exercised options to purchase
132,333 shares of Common Stock at prices ranging from $6.00 to $7.50
per share. As consideration for the purchase, the officer issued a full
recourse Promissory Note (the "Note") to the Company. The Note bears
interest of 6.84% per annum and is due and payable on August 29, 2001.
However, in the event that the officer's continous status as an
employee, director or consultant with the Company is terminated for any
reason prior to the full payment of the Note, the Note shall be
accelerated and all remaining unpaid principal and interest shall
become due and payable on the 90th day following such termination. In
addition, the officer has pledged the shares purchased with this Note
as collateral.
Long-Term Objectives Stock Option Plan
In August 1996, the Company amended the options on 180,000 shares of
Common Stock then outstanding under the Long-Term Objectives Stock
Option Plan to modify the vesting provisions. The amendment resulted in
deferred compensation which will be amortized over the new vesting
period of approximately five years. However, recognition of the
deferred compensation may be accelerated upon achievement of certain
milestones.
5. Subsequent Events
Allergan Research and Development Collaboration Agreement
In October 1996, the Company established an ophthamology research and
development collaboration with Vision Pharmaceuticals L.P.
("Allergan"), an affiliate of Allergan, Inc. The Company received a
$2.0 million initial payment for past research services, will receive
annual research funding and expects to receive additional fees upon the
achievement of specified milestones and royalties on any product sales.
In addition, Allergan, purchased 191,571 shares of SUGEN Common Stock
at a price of $20.88 per share in connection with the collaboration
agreement. Subsequently, Allergan purchased 250,000 shares of Common
Stock in the Company's recently completed public offering as noted
below.
Common Stock
In October 1996, the Company sold 2,000,000 shares of its Common Stock
in an underwritten public offering at a price of $12.00 per share,
resulting in net proceeds of approximately $21.7 million. As part of
the offering, two of the Company's collaborators, Zeneca Limited
("Zeneca") and Allergan purchased 509,000 shares and 250,000 shares of
Common Stock, respectively.
7
<PAGE>
SUGEN, Inc.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
In addition to historical information contained herein, the following
discussion contains forward-looking statements that involve risks and
uncertainties. The Company's actual results could differ significantly from the
results discussed in the forward-looking statements. Factors that could cause or
contribute to such differences include the factors discussed below as well as
the factors discussed in the Company's Form 10-K for the year ended December 31,
1995, as amended.
Overview
SUGEN was founded in July 1991 to discover and develop small molecule drugs
that target specific cellular signal transduction pathways. These pathways have
been implicated in diseases such as cancer and diabetes as well as in
dermatologic, immunologic, cardiovascular and neurologic disorders. To date,
substantially all of the Company's revenue has been pursuant to collaborations
with Zeneca Limited ("Zeneca"), ASTA Medica Aktiengesellschaft ("ASTA Medica")
and Amgen Inc. ("Amgen"). The Company intends to pursue its drug discovery
programs independently and in collaboration with other pharmaceutical companies.
In January 1995, the Company established an oncology research collaboration
with Zeneca. The Company received a $5.0 million technology set-up fee, receives
annual research funding and will receive additional fees upon the achievement of
specified milestones. In addition, Zeneca purchased 789,141 shares of Common
Stock at a price of $15.84 per share.
In December 1995, the Company established an oncology product development
collaboration with ASTA Medica. The Company received a $4.0 million technology
set-up fee and will receive additional fees upon the achievement of specified
milestones as well as additional consideration in the form of contract services
for non-collaboration work. In addition, ASTA Medica purchased 431,137 shares of
SUGEN Common Stock for $9.0 million, or $20.88 per share.
In January 1996, the Company and Amgen terminated their research
collaboration one year prior to the scheduled expiration. In connection with the
termination, Amgen paid SUGEN $2.5 million, forgave amounts previously advanced,
and purchased from SUGEN for $200,000 a warrant to purchase 200,000 shares of
Common Stock with an exercise price of $15.50 per share. In addition, SUGEN
repurchased 235,000 of the 387,878 shares of SUGEN Common Stock held by Amgen at
$11.48 per share. The termination arrangement further provides that the Company
will make royalty and certain other payments to Amgen in the event that
designated potential products are developed and marketed.
In April 1996, the Company established a second multi-project Collaborative
Research and Development Agreement ("CRADA") with the National Cancer Institute
("NCI") for the application of SUGEN's proprietary transcript imaging technology
in order to identify the differences in expression patterns of signal
transduction genes that characterize each of the sixty tumor cell lines which
constitute the NCI's screening panel. Interesting lead compounds from the NCI's
collection will be tested in SUGEN's target-specific signal transduction assays,
and lead compounds from SUGEN also will be tested against the NCI panel. SUGEN
will have the option to license discoveries made through this process for
adoption into SUGEN's drug discovery programs.
The Company has not been profitable since inception and expects to incur
substantial losses for the foreseeable future, primarily due to the expansion of
its research and development programs, including preclinical studies and
clinical trials. The Company expects that losses will fluctuate from quarter to
quarter and that such fluctuations may be substantial. As of September 30, 1996,
the Company's accumulated deficit was $52.0 million.
8
<PAGE>
Recent Developments
In October 1996, the Company established an ophthalmology research
collaboration with Allergan. The Company received a $2.0 million initial payment
for past research services, will receive annual research funding and expects to
receive additional fees upon the achievement of specified milestones and
royalties on any product sales. In addition, Allergan purchased 191,571 shares
of Common Stock at a price of $20.88 per share.
In October 1996, the Company sold 2,000,000 shares of its common stock in
an underwritten public offering at a price of $12.00 per share, resulting in net
proceeds of approximately $21.7 million. As part of the offering, Zeneca
purchased 509,000 and Allergan purchased 250,000 shares of Common Stock,
respectively.
Results of Operations
The Company's revenues for the nine months ended September 30, 1996 were
$10.3 million, level with the same period in the prior year. For the three
months ended September 30, 1996, revenues were $2.4 million as compared to $3.4
million in the corresponding period in the previous year. The decrease in
revenue in the third quarter of 1996 compared to the corresponding period in the
previous year is primarily related to the recognition of the Zeneca set-up fee
which was fully recognized as revenue in 1995. Revenues for the nine months
ended September 30, 1996 included contract revenue from the Zeneca collaboration
and the final recognition of both the $4.0 million technology set-up fee
received in connection with the ASTA Medica collaboration and the $4.3 million
wind-down fee associated with the Amgen termination. The Company recognizes the
revenue from technology set-up fees and wind-down fees as the related activities
are performed, which is generally over a twelve-month period or less. The
Company will not recognize any additional revenue under the Amgen collaboration,
and will only recognize additional revenue under the ASTA Medica collaboration
upon the achievement of specified milestones and for contract services related
to non-collaboration work. As a result, the Company will be required to enter
into new collaborations, in addition to the Allergan collaboration, in order to
replace the revenues recognized under these collaborations in 1996. No assurance
can be given as to the ability of the Company to enter into such collaborations
on a timely basis or at all.
Research and development expenses increased to $7.0 million and $21.4
million for the three and nine months ended September 30, 1996, respectively,
from $6.0 million and $16.6 million for the comparable periods last year. The
increases during 1996 are due to the expenses associated with additional
personnel committed to the Company's research and development programs. In
addition, the progression of clinical activities, including Phase I studies of
the Company's lead anti-cancer compound, SU101, and the advancement of multiple
programs through preclinical development contributed to higher expenses during
1996. The Company expects that its research and development expenses will
continue to grow significantly throughout the remainder of 1996 and in future
years due to the hiring of personnel, additional preclinical studies, the
progression of SU101 clinical studies, the initiation of new clinical trials and
pursuant to requirements under the Company's collaborations.
General and administrative expenses increased to $4.1 million for the nine
months ended September 30, 1996, from $3.8 million in the same period last year.
However, general and administrative expenses decreased to $1.1 million for the
three months ended September 30, 1996 from $1.4 million in the comparable period
in 1995 principally due to lower headcount related expenses (including salaries,
travel, and similar expenses) and consulting services during the quarter. For
the nine months ended September 30, 1996, the increase was primarily due to
additional administrative staffing, the associated recruiting and relocation
expenses as well as costs associated with the resignation of an officer. The
Company expects that its general and administrative expenses will continue to
increase in order to support the Company's research and development efforts.
9
<PAGE>
Interest income increased to $450,000 and $1.7 million for the three and
nine months ended September 30, 1996, respectively, from $439,000 and $1.3
million earned in the comparable periods last year. The increase was due to
higher investment balances arising primarily from issuances of the Company's
capital stock. Interest expense of $167,000 and $521,000 for the three and nine
months ended September 30, 1996, respectively, increased from $136,000 and
$345,000 incurred in the same periods last year. This increase was primarily due
to the Company's continued use of capital lease financing for property
improvements and equipment related to the expansion of its facilities. The
Company expects that interest expense will continue to increase in 1996 due to
the continued use of capital lease financing for equipment and facility
improvements. A $1.0 million gain on the sale of the Company's investment in
Selectide Corporation was included in other income during 1995.
Liquidity and Capital Resources
The Company had cash, cash equivalents and short-term investments of
approximately $33.4 million at September 30, 1996 compared with approximately
$53.3 million at December 31, 1995. The cash, cash equivalents and short-term
investments balance at September 30, 1996 does not include the $21.7 million in
net proceeds received upon the completion of the Company's follow-on offering
and the $6.0 million received upon the signing of the Allergan collaboration,
both of which were completed in October 1996. The decrease in cash and
investments during the nine months ended September 30, 1996 was primarily due to
the net loss for the nine month period combined with the repurchase of the
Company's Common Stock from Amgen, as discussed above, partially offset by an
increase in accrued liabilities.
Through September 30, 1996, the Company's principal sources of financing
were its initial public offering of Common Stock, placements of the Company's
Preferred and Common Stock and funds received under the Company's corporate
collaborations. The Company's current principal sources of liquidity are its
research and development collaborations with Zeneca, ASTA Medica, and Allergan,
its cash, cash equivalents and short-term investments and capital lease
financing. The Company has a capital lease line of $3.5 million available
through December 1996 for the purchase of equipment and facility improvements,
of which $915,000 was available at September 30, 1996.
The Company has entered into license and research agreements whereby the
Company funds research projects performed by others or in-licenses compounds
from third parties. Some of these agreements may require the Company to make
milestone and royalty payments. Under these programs, total annual commitments
for research funding are approximately $3.5 million and $2.0 million in 1996 and
1997, respectively. A number of these agreements expire in late 1997, however,
the Company anticipates renewing these agreements which will increase the future
commitments of the Company. Most of these commitments are cancelable within a
three to six month period and limit the amounts payable by the Company for
sponsored research under the programs after notice of cancellation by the
Company.
From time to time, the Company evaluates potential investments in
complementary businesses, products, or technologies. Currently, the Company is
considering modest investments in such complementary businesses during 1996. The
Company has no other present undertakings, commitments or agreements with
respect to investments in other businesses.
Net additions of equipment and leasehold improvements for the nine months
ended September 30, 1996 were $1.1 million compared to $1.5 million for the same
period last year. Capital additions have decreased in 1996 due to the timing of
equipment purchases and facility improvements. Total capital spending for 1996
is anticipated to remain comparable to that of the prior year. The Company
intends to fund future capital expenditures principally through lease financing
arrangements. However, there can be no assurance that such financing will be
available.
10
<PAGE>
The Company estimates that its existing capital resources, after giving
effect to the net proceeds of its October 1996 Common Stock offering and
collaboration agreement with Allergan, together with facility and equipment
financing, anticipated revenues from its current collaborations and net income
from investment activities, will be sufficient to fund its planned operations
into the second half of 1998. The Company anticipates that the funds from future
collaborations will extend this time period. However, there can be no assurance
that the Company will enter into any such collaborations. In addition, there can
be no assurance that the underlying assumed levels of revenue and expense will
prove accurate. Whether or not these assumptions prove to be accurate, the
Company will need to raise substantial additional capital to fund its
operations. The Company intends to seek such additional funding through
collaborative arrangements, public or private equity or debt financings and
capital lease transactions; however, there can be no assurance that additional
financing will be available on acceptable terms or at all. If additional funds
are raised by issuing equity securities, further dilution to stockholders may
result. In addition, in the event that additional funds are obtained through
arrangements with collaborative partners, such arrangements may require the
Company to relinquish rights to certain of its technologies, product candidates
or products that the Company would otherwise seek to develop or commercialize
itself. If adequate funds are not available, the Company may be required to
delay, reduce the scope of or eliminate one or more of its research or
development programs, which could have a material adverse effect on the Company.
The Company is at an early stage of development and must be evaluated in
light of the uncertainties and complications present in a biotechnology company.
The Company has been in existence only since 1991 and to date a single drug
candidate (SU101) has entered human clinical testing. To achieve profitable
operations on a continuing basis, the Company, alone or with collaborative
partners, must successfully develop, manufacture, introduce and market its
proposed products. Products, if any, resulting from the Company's research and
development programs are not expected to be commercially available for a number
of years, even if they are developed successfully and proven to be safe and
effective. Before obtaining regulatory clearance for the commercial sale of any
of its products under development, the Company must demonstrate through
preclinical studies and clinical trials that the potential product is safe and
efficacious for use in humans for each target indication. The failure to
adequately demonstrate the safety and efficacy of a product under clinical
development could delay or prevent regulatory clearance of the potential product
and could have a material adverse effect on the Company. In addition, many of
the Company's currently proposed products are subject to development and
licensing arrangements with the Company's collaborators. Therefore, the Company
is dependent on the research and development efforts of these collaborators with
respect to some of its proposed products and is entitled only to a portion of
the revenues, if any, realized from the commercial sale of any of the potential
products covered by the collaborations in many jurisdictions. The Company has
experienced significant operating losses since its inception. The Company
expects to incur significant operating losses at least for the next several
years and expects cumulative losses to increase as the Company's research and
development efforts, including preclinical and clinical testing, are expanded.
Substantially all of the Company's revenues to date have been received pursuant
to the Company's collaborations. Should the Company or its collaborators fail to
perform in accordance with the terms of any of their agreements, any consequent
loss of revenue under the agreements could have a material adverse effect on the
Company's results of operations. The foregoing risks reflect the Company's early
stage of development and the nature of the Company's industry and potential
products. Also inherent at the Company's stage of development are a range of
additional risks, including manufactuting uncertainties, the Company's lack of
sales and marketing capabilities, competition, uncertainties regarding
protection of patents and proprietary rights, government regulation and
uncertainties regarding pharmaceutical pricing and reimbursement.
11
<PAGE>
PART II. OTHER INFORMATION
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit Number Description
- -------------- -----------
3.1 Restated Certificate of Incorporation (2)
3.2(ii) Bylaws of the Registrant (1)
3.3 Certificate of Designation of Series A Junior Participating
Preferred Stock of the Registrant (5)
10.54+ Research and Development Agreement between the Registrant
and Arqule, Inc.
10.55 Extension of Research and License Agreement between the
Registrant and the Max Planck Institut
10.56 Promissory Note received by the Registrant from Stephen Evans-Freke
10.57 Agreement for the purchase of Common Stock of the Registrant
by Vision Pharmaceuticals L.P.
10.58+ Collaboration Agreement by and between the Registrant and
Vision Pharmaceuticals L.P.
10.59+ Extension of Research Agreement between the Registrant and Yissum
Development Company of the Hebrew University
10.60+++ James L. Tyree Separation Agreement
27 Financial Data Schedule
- ------------------
+ The Registrant has requested confidential treatment with respect to
portions of this Exhibit.
+++ Exhibit B of this Exhibit is incorporated by reference to Exhibit
10.38 filed in response to Item 6 "Exhibits" of the Registrant's
Form 10-Q for the quarter ended June 30, 1995.
(1) Incorporated by reference to identically numbered exhibits filed in
response to Item 16 "Exhibits" of the Company's Registration
Statement on Form S-1, as amended (File Number 33-77074),
which became effective October 4, 1994.
(2) Incorporated by reference to identically numbered exhibits filed in
response to Item 14 "Exhibits" of the Company's Annual Report
of Form 10-K for the year ended December 31, 1994.
(5) Filed as an exhibit to the Form 8-K Current Report dated July 26,
1995 and incorporated herein by reference.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended September
30, 1996.
12
<PAGE>
SUGEN, Inc.
SIGNATURES
Date: November 14, 1996 SUGEN, Inc.
--------------------------------
By: /s/ Stephen Evans-Freke By: /s/ Christine E. Gray-Smith
-------------------------------- ---------------------------------
Stephen Evans-Freke Christine E. Gray-Smith
Chairman and Senior Director of Finance
Chief Executive Officer (Principal Financial and
Accounting Officer)
13
<PAGE>
SUGEN, Inc.
EXHIBIT INDEX
Exhibit Number Description
- -------------- -----------
3.1 Restated Certificate of Incorporation (2)
3.2(ii) Bylaws of the Registrant (1)
3.3 Certificate of Designation of Series A Junior Participating
Preferred Stock of the Registrant (5)
10.54+ Research and Development Agreement between the Registrant
and Arqule, Inc.
10.55 Extension of Research and License Agreement between the
Registrant and the Max Planck Institut
10.56 Promissory Note received by the Registrant from Stephen
Evans-Freke
10.57 Agreement for the purchase of Common Stock of the Registrant
by Vision Pharmaceuticals L.P.
10.58+ Collaboration Agreement by and between the Registrant and
Vision Pharmaceuticals L.P.
10.59+ Extension of Research Agreement between the Registrant and
Yissum Development Company of the Hebrew University
10.60+++ James L. Tyree Separation Agreement
27 Financial Data Schedule
- --------------------
+ The Registrant has requested confidential treatment with respect
to portions of this Exhibit.
+++ Exhibit B of this Exhibit is incorporated by reference to Exhibit
10.38 filed in response to Item 6 "Exhibits" of the Registrant's
Form 10-Q for the quarter ended June 30, 1995.
(1) Incorporated by reference to identically numbered exhibits filed
in response to Item 16 "Exhibits" of the Company's Registration
Statement on Form S-1, as amended (File Number 33-77074), which
became effective October 4, 1994.
(2) Incorporated by reference to identically numbered exhibits filed
in response to Item 14 "Exhibits" of the Company's Annual Report
of Form 10-K for the year ended December 31, 1994.
(5) Filed as an exhibit to the Form 8-K Current Report dated July
26, 1995 and incorporated herein by reference.
14
EXHIBIT 10.54
Certain confidential information contained in this
document, marked by brackets, is filed with the Securities
and Exchange Commission pursuant to Rule 24b-2 of the
Securities Exchange Act of 1934, as amended.
RESEARCH AND DEVELOPMENT AGREEMENT
between
ARQULE, INC.
and
SUGEN, INC.
<PAGE>
TABLE OF CONTENTS
Page
1. Definitions.............................................................. 1.
1.1 "Active Homolog"................................................ 1.
1.2 "Active Sugen Compound"......................................... 1.
1.3 "Affiliate"..................................................... 1.
1.4 "Array"......................................................... 2.
1.5 "Base Rate of Interest"......................................... 2.
1.6 "Confidential Information"...................................... 2.
1.7 "Directed Array"................................................ 2.
1.8 "Directed Array Program......................................... 2.
1.9 "Field"......................................................... 2.
1.10 "Licensed Compound"............................................. 2.
1.11 "Materials"..................................................... 2.
1.12 "Mapping Array"................................................. 2.
1.13 "Net Sales"..................................................... 3.
1.14 "Net Sales Price"............................................... 3.
1.15 "Party.......................................................... 3.
1.16 "Patent Rights.................................................. 3.
1.17 "Preclinical Development"....................................... 3.
1.18 "Proprietary Materials"......................................... 3.
1.19 "Research Committee"............................................ 3.
1.20 "Research Plan"................................................. 3.
1.21 "Research Program".............................................. 4.
1.22 "Research Results".............................................. 4.
1.23 "Royalty-Bearing Product"....................................... 4.
1.24 "Royalty Period"................................................ 4.
1.25 "Sublicensee"................................................... 4.
1.26 "Sublicense Revenue............................................. 4.
1.27 "Substantial Homology".......................................... 4.
1.28 "Sugen Compound"................................................ 4.
1.29 "Sugen Derivative Compound"..................................... 4.
1.30 "Target"........................................................ 5.
2. Management of Research Program........................................... 5.
2.1 Research Committee.............................................. 5.
2.1.1 Creation of Research Committee......................... 5.
2.1.2 Meetings of the Research Committee..................... 5.
2.1.3 Decisions of Research Committee........................ 5.
2.1.4 Responsibilities of Research Committee................. 5.
2.1.5 Research Committee Reports............................. 6.
2.1.6 Business Deadlock...................................... 6.
i.
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TABLE OF CONTENTS
(continued)
Page
3. License Grants........................................................... 6.
3.1 Screening Licenses.............................................. 6.
3.2 Development Licenses............................................ 6.
3.3 Commercialization Licenses...................................... 6.
3.3.1 Grant of License by ArQule to Sugen.................... 6.
3.3.2 Grant of Licenses by Sugen to ArQule................... 7.
3.3.3 Other Licenses......................................... 7.
3.4 Diligence....................................................... 7.
4. Collaborative Research Program........................................... 7.
4.1 Nature of Relationship.......................................... 7.
4.2 Conduct of Research Program..................................... 7.
4.3 Directed Array Program.......................................... 8.
4.3.1 Conduct of Directed Array Program...................... 8.
4.3.2 Completion of Testing.................................. 8.
4.4 Designation of Licensed Compounds............................... 8.
4.5 Disclosure of Research Results.................................. 8.
4.6 Research Records................................................ 8.
4.7 Payment of Costs and Expenses................................... 9.
5. Ownership of Sugen Compounds............................................. 9.
6. Intellectual Property Rights............................................. 9.
6.1 Ownership of Patent Rights...................................... 9.
6.2 Management of Joint Patent Rights...............................10.
6.3 Cooperation of the Parties......................................10.
6.4 Infringement by Third Parties...................................10.
7. Royalties; Sublicense Revenues; Reports..................................11.
7.1 Royalty Payments................................................11.
7.1.1 Sugen Royalty Payments.................................11.
7.1.2 ArQule Payments........................................11.
7.2 Reports and Payments............................................11.
7.3 Payments in U.S. Dollars........................................11.
7.4 Payments in Other Currencies....................................12.
7.5 Late Payments...................................................12.
8. Records; Inspection......................................................12.
8.1 Records.........................................................12.
ii.
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TABLE OF CONTENTS
(continued)
Page
8.2 Inspection......................................................12.
9. Proprietary Materials....................................................12.
9.1 Ownership of Proprietary Materials..............................12.
9.2 Use of Proprietary Materials....................................13.
9.3 Transfer of Proprietary Materials...............................13.
9.4 Disposition of Unused Proprietary Materials.....................13.
10. Confidential Information.................................................13.
10.1 Confidential Information........................................13.
11. Term and Termination.....................................................15.
11.1 Term............................................................15.
11.2 Termination for Breach..........................................15.
11.3 Force Majeure...................................................15.
11.4 Effect of Termination...........................................15.
11.5 Survival of Provisions..........................................15.
12. Miscellaneous............................................................15.
12.1 Publicity.......................................................15.
12.2 Relationship of Parties.........................................15.
12.3 Dispute Resolution..............................................16.
12.4 Counterparts....................................................16.
12.5 Headings........................................................16.
12.6 Binding Effect..................................................16.
12.7 Assignment......................................................16.
12.8 Notices.........................................................16.
12.9 Amendment and Waiver............................................17.
12.10 Governing Law...................................................17.
12.11 Severability....................................................17.
12.12 Entire Agreement................................................18.
12.13 Indemnification.................................................18.
iii.
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RESEARCH COLLABORATION AGREEMENT
THIS RESEARCH COLLABORATION AGREEMENT (this "Agreement") is entered
into as of September 4, 1996 (the "Effective Date") by and between ARQULE, INC.,
a Delaware corporation ("ArQule"), and SUGEN, INC., a Delaware corporation
("Sugen").
RECITALS
WHEREAS, Sugen is engaged in research involving the evaluation and
analysis of compounds related to the inhibition of tyrosine, serine and
threonine kinases;
WHEREAS, ArQule has developed certain proprietary technology enabling
it to synthesize arrays of small organic molecules suitable for screening in
molecular assays;
WHEREAS, Sugen and ArQule desire to collaborate on research directed
towards the discovery and development of new compounds by testing certain
compound arrays produced by ArQule from compounds provided by Sugen against
selected chemical targets specified by Sugen; and
WHEREAS, ArQule has developed certain proprietary compounds which can
be used to facilitate the discovery and development of new compounds from
compounds provided by Sugen; and
WHEREAS, Sugen and ArQule desire to commercialize any new compounds so
developed on the terms and subject to the conditions provided herein.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, the Parties hereby agree as follows:
1. DEFINITIONS.
1.1 "Active Homolog" shall mean any Sugen Derivative Compound that
exhibits Substantial Homology with an Active Sugen Compound as determined by
Sugen using appropriate business and scientific criteria.
1.2 "Active Sugen Compound" shall mean any Sugen Derivative Compound
which exhibits confirmed significant functional activity against a Target as
defined by Sugen using appropriate business and scientific criteria; provided,
however, that Sugen shall receive input and guidance from the Research Committee
with respect to the number of Active Sugen Compounds that are subject to this
Research Program.
1.3 "Affiliate" shall mean any person or entity which, directly or
indirectly, controls, or is controlled by, a party. For purposes of this
definition, "control" means the ownership, directly or indirectly, of more than
fifty percent (50%) of the outstanding equity securities of
1.
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CONFIDENTIAL TREATMENT REQUESTED
a corporation entitled to vote in the election of directors or a more than fifty
percent (50%) interest in the net assets or profits of an entity which is not a
corporation.
1.4 "Array" shall mean a set of [ ]
that are synthesized by ArQule using its proprietary technology and arranged in
a format such as a microtiter screening plate.
1.5 "Base Rate of Interest" shall mean the rate of interest declared
from time to time by the Bank of Boston as being its prime rate.
1.6 "Confidential Information" shall mean any confidential, secret, or
proprietary information regardless of whether such information is in written,
oral (provided any such oral information is reduced to writing within thirty
(30) days), electronic, or other form (a) resulting from or related to the
Research Program or (b) relating to the scientific and business affairs of
either Party (and not otherwise described in clause (a)) and which is
specifically designated as "Confidential". Such Confidential Information shall
include, without limitation, the results of any tests conducted in connection
with the Research Program, all Research Committee reports, the screening systems
used to identify Active Sugen Compounds and the compositions of the Sugen
Compounds and Sugen Derivative Compounds. Such Confidential Information may also
include, without limitation, trade secrets, know-how, inventions, technical data
or specifications, testing methods, business or financial information, research
and development activities, product and marketing plans, and customer and
supplier information.
1.7 "Directed Array" shall mean any Array comprised of Sugen Derivative
Compounds synthesized by ArQule under the Directed Array Program as set forth in
Section 4.3.
1.8 "Directed Array Program" shall mean the Directed Array component of
the Research Program as set forth in Section 4.3.
1.9 "Field" shall mean each field described on Exhibit B attached
hereto.
1.10 "Licensed Compound" shall mean any Active Sugen Compound or Active
Homolog thereto with respect to which Sugen, using one or more of the criteria
set forth on Exhibit C hereto, has elected to conduct Preclinical Development.
1.11 "Materials" shall mean any tangible research materials, whether
biological, chemical, physical, or otherwise.
1.12 "Mapping Array" shall mean an Array of [ ]
(which may include, without limitation, [ ], but may not include
[ ] and which are licensed from time to time by ArQule to
third parties on a non-exclusive basis for [ ].
2.
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CONFIDENTIAL TREATMENT REQUESTED
1.13 "Net Sales" shall mean the aggregate Net Sales Price of
Royalty-Bearing Products in any Royalty Period.
1.14 "Net Sales Price" shall mean the gross amount received on sales by
either Party and its Affiliates of Royalty-Bearing Products, less the following:
[
] In any
transfers of Royalty-Bearing Products between such Party and an Affiliate, the
Net Sales Price shall be calculated based on the final sale of the
Royalty-Bearing Product to an independent third party. In the event that such
Party receives non-monetary consideration for any Royalty-Bearing Products, the
Net Sales Price shall be calculated based on the average price charged by such
Party for such Royalty-Bearing Products during the preceding Royalty Period.
1.15 "Party" means ArQule or Sugen or their respective Affiliates;
"Parties" means ArQule and Sugen and their respective Affiliates.
1.16 "Patent Rights" shall mean all Valid Claims of all issued and
unexpired patents and reissues, reexaminations, extensions and supplementary
protection certificates thereof and all patent applications and any divisions,
continuations, or continuations-in-part thereof or patents issuing thereon. For
the purposes of this Section, "Valid Claim" shall mean either (a) a claim of an
issued patent that has not been held unenforceable or invalid by an agency or a
court of competent jurisdiction in any unappealable or unappealed decision or
(b) a claim that is based upon a specification of a pending patent application
that has not been abandoned or finally rejected without the possibility of
appeal or refiling and that has been pending in the U.S. Patent Office for less
than five (5) years or in the Japanese Patent Office for less than seven (7)
years.
1.17 "Preclinical Development" shall mean, with respect to a Licensed
Compound, the testing of the Licensed Compound in appropriate systems in order
to meet regulatory requirements for a United States Investigational New Drug
Application which, except as may be otherwise agreed to by the Research
Committee, shall include one or more of the following: (a) demonstration of
potency and efficacy in validated animal models, (b) compiling an animal
pharmacology profile, (c) testing of acute toxicity and (d) toxicology testing,
including histopathology of vital organs, all as appropriate for the disease
indication and compound selected.
1.18 "Proprietary Materials" shall mean any Materials that were
developed by a Party prior to or outside the performance of the Research
Program; provided, however, that Proprietary Materials shall not include Sugen
Derivative Compounds, Active Sugen Compounds or any Active Homologs thereto.
1.19 "Research Committee" shall mean the Research Committee described
in Section 2.1.
1.20 "Research Plan" shall mean the Research Plan attached hereto as
Exhibit A, as revised by the Research Committee from time to time.
3.
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CONFIDENTIAL TREATMENT REQUESTED
1.21 "Research Program" shall mean the collaborative research program
described in Section 4 of this Agreement.
1.22 "Research Results" shall mean any inventions (including
Materials), laboratory notes, technical data or specifications, test results, or
other information or materials that arise as a result of the Research Program.
1.23 "Royalty-Bearing Product" shall mean a product covered by Joint
Patent Rights containing as one of its constituents (a) any Active Sugen
Compound and/or any Active Homolog thereto; (b) any other compound discovered or
designed by Sugen as a direct result of information provided by ArQule to Sugen
under the Directed Array Program; or (c) any other compound discovered or
designed by ArQule or any third party customer or collaborator of ArQule from a
Sugen Compound or a Sugen Derivative Compound.
1.24 "Royalty Period" shall mean every calendar quarter, or partial
calendar quarter, commencing on the date of the first commercial sale of a
Royalty-Bearing Product in any country and continuing until the last calendar
quarter during which any Royalty-Bearing Product is sold in any country.
1.25 "Sublicensee" shall mean any non-Affiliate third party licensed by
either Party to make, use or sell any Royalty-Bearing Product.
1.26 "Sublicense Revenue" shall mean any payments that are received by
a Party from a Sublicensee, including all initial payments, royalties, milestone
payments and other periodic payments in connection with the sublicensing of any
Royalty-Bearing Product, but excluding [
]
1.27 "Substantial Homology" shall mean an alteration from an Active
Sugen Compound at [ ] sites where no more than [ ] atoms are altered
in total; e.g., [
]
1.28 "Sugen Compound" shall mean any chemical compound provided by
Sugen or its Affiliates to ArQule under the Directed Array Program. Examples of
such compounds are shown in Exhibit D, which may be updated by Sugen from time
to time in writing.
1.29 "Sugen Derivative Compound" shall mean a chemical compound
synthesized by ArQule under the Directed Array Program in [ ] steps from
another chemical compound by a process of [ ] of [ ] component
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CONFIDENTIAL TREATMENT REQUESTED
wherein [ ] structural feature is retained at each process step. The number of
intermediate steps or compounds is not relevant to the classification of a
compound as a Sugen Derivative Compound. A compound need not have structural
similarity to another compound in order to be classified as a Sugen Derivative
Compound. The term excludes those compounds synthesized by Sugen prior to
signing this Agreement.
1.30 "Target" shall mean any target in the Field selected by Sugen for
which Sugen has certain proprietary technology and/or expertise.
2. MANAGEMENT OF RESEARCH PROGRAM.
2.1 Research Committee.
2.1.1 Creation of Research Committee. The Parties hereby
create a Research Committee which shall consist of [ ] members, [ ] of which
shall be designated by ArQule and [ ] of which shall be designated by Sugen at
any time. The chairperson of the Research Committee shall be designated annually
on an alternating basis between the Parties, who shall initially be Joseph C.
Hogan, Jr. The Party not designating the chairperson shall designate one of its
representatives as secretary to the Research Committee for such year.
Each member of the Research Committee shall have equal voting rights.
2.1.2 Meetings of the Research Committee. Regular meetings of
the Research Committee shall be held with such frequency as the Parties may deem
appropriate, at such times and places as the members of the Research Committee
shall from time to time agree. Special meetings of the Research Committee may be
called by either Party on ten (10) days' written notice to the other Party
unless notice is waived by the Parties. All meetings shall alternate between the
offices of the Parties unless the Parties otherwise agree. The chairperson shall
be responsible for sending notice of meetings to all members.
2.1.3 Decisions of Research Committee. A quorum of the
Research Committee shall be present at any meeting of the Research Committee if
at least one representative of each Party is present at such meeting in person
or by telephone. If a quorum exists at any meeting, the unanimous consent of all
members of the Research Committee present at such meeting is required to take
any action on behalf of the Research Committee. Unless otherwise specifically
stated to the contrary herein, no individual Party shall purport to act on
behalf of the other Party unless and then only to the extent authorized to do so
by the Research Committee.
2.1.4 Responsibilities of Research Committee. The Research
Committee shall be responsible for the day-to-day conduct and progress of the
Research Program, including, without limitation:
(i) directing and administering the Research
Program;
(ii) providing a forum for the exchange of
scientific information among the scientists
participating in the Research Program;
5.
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(iii) reviewing test reports provided by Sugen as
to the significant functional activity
derived from testing Directed Arrays and,
based on such results, recommending to
ArQule whether to develop additional
Directed Arrays for any Active Sugen
Compound;
(iv) providing guidance to Sugen with respect to
the number of Active Sugen Compounds that
are subject to this Research Program;
(v) resolving matters involving scientific
questions; and
(vi) updating the Research Plan.
2.1.5 Research Committee Reports. Within ten (10) days
following each meeting of the Research Committee held pursuant to Section 2.1.2,
the secretary of the Research Committee shall prepare and send to each Party a
written report of actions taken at the meeting in such form and containing such
detail as shall be determined by the Research Committee.
2.1.6 Business Deadlock. In the event that the Research
Committee cannot agree with respect to a matter that is subject to its
decision-making authority, then the matter shall be resolved in accordance with
Section 12.3.
3. LICENSE GRANTS.
3.1 Screening Licenses. ArQule hereby grants to Sugen an exclusive,
royalty-free license (without the right to sublicense) to (i) test any Sugen
Derivative Compounds for significant functional activity against Targets within
the Field and (ii) and to conduct such additional tests on any such Sugen
Derivative Compounds within the Field prior to Preclinical Development as Sugen
may from time to time determine. Notwithstanding the foregoing, Sugen may from
time to time deliver Sugen Derivative Compounds to one or more third parties so
as to allow such third parties to perform testing and analytical work on any
such Sugen Derivative Compounds; provided, that, prior to delivery of any Sugen
Derivative Compounds to any such third party, Sugen and each such third party
enter into a materials transfer agreement in a form reasonably acceptable to
ArQule.
3.2 Development Licenses. Upon the identification by Sugen of any
Active Sugen Compound or any Active Homolog thereto and the determination by
Sugen that such Active Sugen Compound or any Active Homolog thereto should
properly be designated as a Licensed Compound, ArQule shall grant to Sugen,
under any intellectual property rights covering the composition, manufacture or
use of such Licensed Compound, an exclusive, royalty-free license to conduct
Preclinical Development of such Licensed Compound.
3.3 Commercialization Licenses.
3.3.1 Grant of License by ArQule to Sugen. ArQule hereby
grants to Sugen an exclusive, royalty-bearing license (with the right to grant
sublicenses) (i) to make or have
6.
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made Licensed Compounds for use, distribution and sale within the Field, and
(ii) to distribute for sale and sell Licensed Compounds within the Field.
3.3.2 Grant of Licenses by Sugen to ArQule. Sugen hereby
grants to ArQule an exclusive, royalty-bearing, worldwide license (with the
right to grant sublicenses) to incorporate Sugen Derivative Compounds which are
not Sugen Compounds, Active Sugen Compounds or Licensed Compounds in any Mapping
Arrays to be provided by ArQule to its third party customers and collaborators
for screening only outside the Field; provided, that, prior to delivering such
Sugen Derivative Compounds to any such third party customer or collaborator,
ArQule and each such third party customer or collaborator enter into a materials
transfer agreement in a form reasonably acceptable to Sugen. In connection with
the grant of the license described in this Section 3.3.2, Sugen agrees that (i)
ArQule may grant royalty-bearing world-wide licenses solely under Joint Patent
Rights to any third parties to commercialize products derived from Sugen
Derivative Compounds which are not Sugen Compounds, Active Sugen Compounds or
Licensed Compounds included in any such Mapping Arrays outside the Field, (ii)
ArQule may conduct Preclinical Development of any such Sugen Derivative
Compounds or products derived therefrom but may not itself commercialize any
such Sugen Derivative Compounds or products derived therefrom, (iii) Sugen shall
not grant to any third party a license to permit Sugen Derivative Compounds to
be included in any screening program competitive with ArQule's Mapping Array
Program and (iv) Arqule shall not grant to any third party a license to permit
Sugen Derivative Compounds or any compound discovered or designed by ArQule or
any third party customer or collaborator of ArQule from a Sugen Compound or a
Sugen Derivative Compound to be used within the Field.
3.3.3 Other Licenses. Each Party hereby agrees that no other
license is granted by either Party to any of its existing or future intellectual
property other than as is expressly described in this Agreement.
3.4 Diligence. ArQule agrees to use reasonable commercial efforts to
develop and market Mapping Arrays based on or incorporating Sugen Derivative
Compounds for which it has obtained a license under Section 3.3.2, using a level
of effort consistent with that used for other Mapping Arrays having similar
commercial potential.
4. COLLABORATIVE RESEARCH PROGRAM.
4.1 Nature of Relationship. The purpose of this research collaboration
is to identify Sugen Derivative Compounds which demonstrate certain functional
activity against selected Targets and to develop and/or license to corporate
parties compounds so identified within the Field.
4.2 Conduct of Research Program. Unless earlier terminated in
accordance with Section 11 of this Agreement, the Research Program shall be
conducted by the Parties in accordance with the Research Plan attached hereto as
Exhibit A, as amended from time to time by the Research Committee, and as
described in this Section 4.
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CONFIDENTIAL TREATMENT REQUESTED
4.3 Directed Array Program.
4.3.1 Conduct of Directed Array Program. Under the direction
of the Research Committee and in accordance with the Research Plan, ArQule will
synthesize Sugen Derivative Compounds from Sugen Compounds in such quantities
and at such times as shall be determined by the Research Committee in accordance
with Section 2.1.4. The Parties intend that ArQule will produce approximately
[ ] of each Sugen Derivative Compound in the Directed Arrays,
subject to the availability of the original Sugen Compounds; provided, however;
that the amount of each Sugen Derivative Compound that ArQule actually produces
under the Directed Array Program will ultimately be determined by the Research
Committee. Promptly upon its receipt of any such Directed Array, Sugen shall
commence testing of such Directed Array for activity against Targets; provided,
however, that it is the intention of the Parties that (i) the initial shipment
of Directed Arrays based on Sugen Compounds be delivered by ArQule to Sugen on
or before [ ] and (ii) the initial screening of such Directed
Arrays be completed by Sugen on or before [ ]. Promptly upon
the completion by Sugen of its testing of each Directed Array, Sugen shall
provide the Research Committee with notice of the discovery of Active Sugen
Compounds, together with relevant information concerning the functional activity
identified. Under the direction of the Research Committee and in accordance with
the Research Plan, ArQule will thereafter provide Sugen with additional
quantities [ ] of each such Active Sugen Compound so as
to enable Sugen to conduct additional testing or Preclinical Development of such
Active Sugen Compound.
4.3.2 Completion of Testing. The Parties shall continue the
procedure described in Section 4.3.1 for each Active Sugen Compound until the
earliest to occur of (i) the determination by Sugen to cease further testing of
such Active Sugen Compound, or (ii) the termination of this Agreement in
accordance with Section 11.
4.4 Designation of Licensed Compounds. The Parties hereby acknowledge
and agree that Sugen, in making its determination as to whether to designate any
Active Sugen Compound as a Licensed Compound, shall use the good scientific and
business criteria set forth on Exhibit C attached hereto, it being the intention
of the Parties that such criteria shall be used as the basis for determining
whether any Active Sugen Compound shall also be designated as a Licensed
Compound.
4.5 Disclosure of Research Results. Each Party agrees to promptly and
regularly communicate all Research Results to the other Party. Without limiting
the generality of the foregoing, each Party agrees to provide the Research
Committee with quarterly reports detailing all tests conducted and results
obtained by such Party in connection with the Research Program.
4.6 Research Records. Each Party shall prepare and maintain adequate
records, including bound laboratory notebooks maintained in accordance with
standard scientific procedures, containing all appropriate data reflecting the
Research Results. In addition, each Party shall retain under appropriate
conditions any necessary or desirable samples of Materials that constitute
Research Results.
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CONFIDENTIAL TREATMENT REQUESTED
4.7 Payment of Costs and Expenses. Each Party shall bear the costs and
expenses of its respective activities in connection with the Research Program
and shall promptly make payments to third parties arising therefrom.
5. OWNERSHIP OF SUGEN COMPOUNDS.
All Sugen Compounds shall be owned by Sugen or its Affiliates, except,
and only to the extent that, with respect to the Directed Array Program, ArQule
can show that any such compound [
] prior to
Sugen's description of such Sugen Compound in any written documentation.
6. INTELLECTUAL PROPERTY RIGHTS.
6.1 Ownership of Patent Rights.
(a) Sugen Patent Rights. Any Patent Rights filed by either
Party after the Effective Date of this Agreement claiming Sugen
Compounds will be owned solely by Sugen.
(b) Joint Patent Rights. Any Patent Rights conceived after the
Effective Date of this Agreement filed by either Party [
] Each of the Parties
hereby agrees that it will not practice or license such Joint Patent
Rights to any third party except as follows: [
]
provided, however, that if any such license involves an exclusive
license to commercialize a product covered by Joint Patent Rights, the
Party licensing such Joint Patent Rights shall notify the other Party
prior to the execution of any such license.
(c) Breach. If either Party shall practice or grant any
license to a third party in violation of Section 6.1(b) above, the
licensed Joint Patent Rights will immediately vest solely in the
non-granting Party and the license granted will be automatically and
immediately rescinded. The granting Party may prevent such vesting by
obtaining the written consent of the non-granting Party, which consent
will not be unreasonably withheld.
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CONFIDENTIAL TREATMENT REQUESTED
(d) Other Patent Rights. All other Patent Rights are owned
according to existing laws.
6.2 Management of Joint Patent Rights. In the case of Joint Patent
Rights, the Parties shall agree on the allocation of responsibility for, and the
expense of, the preparation, filing, prosecution, and maintenance of any Joint
Patent Rights claiming such inventions. In the event of any disagreement
concerning any Joint Patent Rights, the matter shall be resolved by the Research
Committee or, in the absence thereof, by the President of ArQule and the
Executive Vice President-Research of Sugen. The Party controlling a Joint Patent
Right shall consult with the other party as to the preparation, filing,
prosecution, and maintenance of such Joint Patent Right reasonably prior to any
deadline or action with the U.S. Patent & Trademark Office or any foreign patent
office, and shall furnish to the other Party copies of all relevant documents
reasonably in advance of such consultation. In the event that the Party
controlling a Joint Patent Right desires to abandon such Joint Patent Right, or
if the Party assuming control of a Joint Patent Right later declines
responsibility for such Joint Patent Right, the controlling Party shall provide
reasonable prior written notice to the other Party of such intention to abandon
or decline responsibility, and such other Party shall have the right, at its
expense, to prepare, file, prosecute, and maintain such Joint Patent Rights.
6.3 Cooperation of the Parties. The Parties hereby agree to file
appropriate applications for Patent Rights prior to taking any action, or
failing to take any action, that would jeopardize or prevent the obtaining of
commercially reasonable patent protection in the [
] under the Patent Rights. Each Party further agrees
to cooperate fully in the preparation, filing, and prosecution of any Patent
Rights under this Agreement. Such cooperation includes, but is not limited to:
(a) executing all papers and instruments, or requiring its
employees or agents, to execute such papers and instruments, so as to
effectuate the ownership of Patent Rights set forth in Section 6.1
above and to enable the other Party to apply for and to prosecute
patent applications in any country;
(b) promptly informing the other Party of any matters coming
to a Party's attention that may affect the preparation, filing, or
prosecution of any such patent applications; and
(c) undertaking no actions that are potentially deleterious to
the preparation, filing, or prosecution of such patent applications.
6.4 Infringement by Third Parties. ArQule and Sugen shall each promptly
notify the other in writing of any alleged or threatened infringement by a third
party of any Joint Patent Right of which they become aware. The Parties shall
consult concerning the action(s) to be taken.
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CONFIDENTIAL TREATMENT REQUESTED
7. ROYALTIES; SUBLICENSE REVENUES; REPORTS.
7.1 Royalty Payments.
7.1.1 Sugen Royalty Payments. In consideration of the licenses
granted to Sugen hereunder, Sugen shall pay to ArQule, during the Royalty
Period, as applicable (A) (i) a royalty of [ ] of Net Sales by Sugen or any
Affiliate of any Royalty-Bearing Product in the United States and (ii) a royalty
of [ ] of Net Sales by Sugen or any Affiliate of any Royalty-Bearing Product in
all other countries or (B) [
] of any Sublicense Revenues received by Sugen from any Sublicensee
in connection with its sublicensing of any Royalty-Bearing Product in any
country.
7.1.2 ArQule Payments. In consideration of the license granted
to ArQule hereunder, ArQule shall pay to Sugen, during the Royalty Period, [ ]
of any Sublicense Revenue received by ArQule from any Sublicensee in connection
with its sublicensing of any Royalty-Bearing Product.
7.2 Reports and Payments. Within [ ] days after the conclusion of each
Royalty Period, each Party shall deliver to the other Party a report containing
the following information:
[
.]
All such reports shall be maintained in confidence by the Parties. If no
royalties are due to any Party for any reporting period, the report shall so
state. Concurrent with each such report, the Party delivering the report shall
remit to the other Party any payment due for the applicable Royalty Period with
the method of payment mutually agreed to by the Parties. All amounts payable to
the Parties under this Section 7.2 will first be calculated in the currency of
sale and then converted into U.S. dollars in accordance with Section 7.3, and
such amounts shall be paid without deduction of any withholding taxes,
value-added taxes, or other charges applicable to such payments.
7.3 Payments in U.S. Dollars. All payments due under this Agreement
shall, except as provided in Section 7.4 below, be payable in United States
dollars. Conversion of foreign currency to U.S. dollars shall be made at the
average conversion rate existing in the United States (as reported in the Wall
Street Journal) during the last calendar quarter preceding the applicable
calendar quarter. Such payments shall be without deduction of exchange,
collection, or other charges.
11.
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
7.4 Payments in Other Currencies. If by law, regulation, or fiscal
policy of a particular country, conversion into United States dollars or
transfer of funds of a convertible currency to the United States is restricted
or forbidden, the paying Party shall give the other Party prompt written notice
of such restriction, which notice shall satisfy the [ ] payment
deadline described in Section 7.2. Such paying Party shall pay any amounts due
the other Party through whatever lawful methods such other Party reasonably
designates; provided, however, that if such other Party fails to designate such
payment method within [ ] days after it is notified of the restriction,
then the paying Party may deposit such payment in local currency to the credit
of the other Party in a recognized banking institution selected by the paying
Party and identified by written notice to the other Party, and such deposit
shall fulfill all obligations of the paying Party to the other Party with
respect to such payment.
7.5 Late Payments. Any payments by any Party that are not paid on or
before the date such payments are due under this Agreement shall bear interest,
to the extent permitted by law, at [ ] above the Base Rate of Interest
calculated based on the number of days that payment is delinquent.
8. RECORDS; INSPECTION.
8.1 Records. Each Party shall maintain complete and accurate records of
(i) all Royalty-Bearing Products commercialized by or through such Party under
this Agreement, (ii) all Net Sales and Sublicense Revenues received by such
Party in connection with each such Royalty-Bearing Product and (iii) any amounts
payable to such Party in relation to each such Royalty-Bearing Product, which
records shall contain sufficient information to permit each Party to confirm the
accuracy of any payments distributed in accordance with Section 7.1 of this
Agreement. Each Party shall retain such records for at least [ ] years
after the termination of this Agreement.
8.2 Inspection. Each Party shall permit the other Party, at such other
Party's expense, to examine its books of account and records which relate to
this Agreement to the extent necessary to ensure such Party's compliance with
the terms of this Agreement; provided, however, that neither Party shall be
obligated pursuant to this Section 8.2 to provide access to any information
which it reasonably considers to be a trade secret or similar confidential
information except under appropriate confidentiality agreements. The Parties
shall reconcile any underpayment or overpayment within [ ] days
after the accountant delivers the results of the audit. In the event that any
inspection performed under this Section reveals an underpayment in excess of
[ ] in any Royalty Period, the Party obligated to make the payment
shall bear the full cost of such audit.
9. PROPRIETARY MATERIALS.
9.1 Ownership of Proprietary Materials. In the course of the Research
Program, one Party (the "Provider") may transfer to the other Party (the
"Recipient") certain of its Proprietary Materials. The Recipient acknowledges
and agrees that such Proprietary Materials are and shall be owned by the
Provider. The Recipient agrees to execute and deliver any
12.
<PAGE>
documents of assignment or conveyance to effectuate the ownership rights of the
Provider in such Proprietary Materials.
9.2 Use of Proprietary Materials. The Recipient agrees to use
Proprietary Materials provided by the Provider solely for purposes set forth in
this Agreement. The Recipient shall use such Proprietary Materials only in
compliance with all applicable Federal, state, and local laws and regulations.
9.3 Transfer of Proprietary Materials. The Recipient shall not
distribute any Proprietary Materials to any third party other than its employees
who are working on the Research Program.
9.4 Disposition of Unused Proprietary Materials. Upon completion of the
Research Program, or sooner at the request of the Provider, the Recipient shall
either destroy or return to the Provider any unused Proprietary Materials.
10. CONFIDENTIAL INFORMATION.
10.1 Confidential Information.
(a) Restrictions on Confidential Information. With respect to
all Confidential Information furnished by one Party (the "Disclosing Party") to
the other (the "Receiving Party") during the term of this Agreement, the
Receiving Party shall:
(i) maintain such Confidential Information in
strict confidence;
(ii) not disclose or permit the disclosure of
such Confidential Information to any persons
other than to its directors, officers,
consultants and employees who need to know
such Confidential Information in order to
conduct the Research Program and who are
obligated to maintain the confidential
nature of such Confidential Information;
(iii) use such Confidential Information only for
the purposes set forth in this Agreement
herein and not for its own benefit or for
the benefit of any other person or business
entity; and
(iv) allow its directors, officers, employees,
agents, and other representatives to
reproduce the Confidential Information only
to the extent necessary to effect the
purposes set forth in this Agreement, with
all such reproductions being considered
Confidential Information.
13.
<PAGE>
(b) Exceptions to Restrictions. The obligations of the
Receiving Party under Subsection (a) above shall not apply to the extent that
the Receiving Party can demonstrate that certain Confidential Information:
(i) was in the public domain prior to the time
of its disclosure;
(ii) entered the public domain after the time of
its disclosure through means other than an
unauthorized disclosure resulting from an
act or omission by the Receiving Party;
(iii) was independently developed or discovered by
the Receiving Party at any time prior to the
time of its disclosure under this Agreement,
as shown by prior documentary evidence;
(iv) is or was disclosed to the Receiving Party
at any time, whether prior to or after the
time of its disclosure under this Agreement,
by a third Party having no fiduciary
relationship with the Disclosing Party and
having no obligation of confidentiality with
respect to such Confidential Information; or
(v) is required to be disclosed to comply with
applicable laws or regulations or with a
court or administrative order, provided that
the Disclosing Party receives prior written
notice of such disclosure and that the
Receiving Party takes all reasonable and
lawful actions to obtain confidential
treatment for such disclosure and, if
possible, to minimize the extent of such
disclosure.
(c) Ownership of Confidential Information. The Receiving Party
agrees that the Disclosing Party (or any third party entrusting its own
Confidential Information to the Disclosing Party) is and shall remain the
exclusive owner of the Confidential Information disclosed by the Disclosing
Party and all patent, copyright, trademark, trade secret, and other intellectual
property rights in such Confidential Information or arising therefrom. No
option, license, or conveyance of such rights to the Receiving Party is granted
except as expressly set forth in this Agreement.
(d) Return of Confidential Information. Upon the termination
of this Agreement, or at any time upon the written request of the Disclosing
Party, the Receiving Party shall return to the Disclosing Party all originals,
copies, and summaries of documents, materials, and other tangible manifestations
of Confidential Information in the possession or control of the Receiving Party,
except that the Receiving Party may retain one copy of the Confidential
Information in the possession of its legal counsel (for ArQule) and its Legal
and Trademarks Department (for Sugen) solely for the purpose of monitoring its
obligations under this Agreement.
14.
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
11. TERM AND TERMINATION.
11.1 Term. This Agreement shall commence on the Effective Date and
shall continue for a period of one (1) year unless earlier terminated pursuant
to this Section 11; provided, however, that upon the mutual agreement of the
Parties, the term of this Agreement may be extended for additional one (1) year
periods.
11.2 Termination for Breach. This Agreement may be terminated by either
Party by reason of a material breach that the breaching Party fails to remedy
within [ ] days after written notice thereof by the non-breaching Party.
11.3 Force Majeure. Neither Party will be responsible for delays
resulting from acts beyond the control of such Party, provided that the
nonperforming Party uses commercially reasonable efforts to avoid or remove such
causes of nonperformance and continues performance hereunder with reasonable
dispatch whenever such causes are removed.
11.4 Effect of Termination. Notwithstanding the termination or
expiration of this Agreement, this Agreement shall remain in effect: (a) for any
Active Sugen Compound for the period of time as is necessary to allow Sugen to
determine if such Active Sugen Compound is a Licensed Compound and (b) for any
such Licensed Compound or for any other Licensed Compound for the period of time
as is necessary to complete Preclinical Development and commercialization of
such Licensed Compound. Upon the termination of this Agreement, ArQule agrees
that it shall not initiate any programs for any other party involving the
production of Directed Arrays based upon any Sugen Compound, Sugen Derivative
Compound, Active Sugen Compound or Active Homolog thereto. ArQule agrees that
any breach of this clause may be remedied by an injunction against any such
program, among other remedies.
11.5 Survival of Provisions. The following provisions shall survive
termination or expiration of this Agreement: Sections 3, 5, 6, 7, 8, 9, 10, 11.4
and 12.
12. MISCELLANEOUS.
12.1 Publicity. No press release, advertising, promotional sales
literature, or other promotional oral or written statements to the public in
connection with or alluding to work performed under this Agreement or the
relationship between the Parties created by it, having or containing any
reference to ArQule or Sugen, shall be made by either Party without the prior
written approval of the other Party.
12.2 Relationship of Parties. For the purposes of this Agreement, each
Party is an independent contractor and not an agent or employee of the other
Party. Neither Party shall have authority to make any statements,
representations or commitments of any kind, or to take any action which shall be
binding on the other Party, except as may be explicitly provided for herein or
authorized in writing.
15.
<PAGE>
12.3 Dispute Resolution. Any disputes arising between the Parties
relating to, arising out of or in any way connected with this Agreement or any
term or condition hereof, or the performance by either Party of its obligations
hereunder, whether before or after termination of this Agreement, shall be
promptly presented to the Chief Executive Officers of each of ArQule and Sugen
for resolution and if the Chief Executive Officers or their designees cannot
promptly resolve such disputes, then such dispute shall be finally resolved by
binding arbitration. Whenever a Party shall decide to institute arbitration
proceedings, it shall give written notice to that effect to the other Party. The
Party giving such notice shall refrain from instituting the arbitration
proceedings for a period of sixty (60) days following such notice. Any
arbitration hereunder shall be conducted under the commercial rules of the
American Arbitration Association. Each such arbitration shall be conducted by a
panel of three arbitrators appointed in accordance with such rules; provided,
however, that both Parties hereto shall be entitled to representation by
counsel, to appear and present written and oral evidence and argument and to
cross-examine witnesses presented by the other Party. The arbitral panel (i)
shall have the authority to grant specific performance, (ii) may allocate
between the Parties the costs of arbitration in such equitable manner as they
may determine, but (iii) shall not render an arbitral award contrary to the
provisions of this Agreement. The arbitral award shall be in writing and the
arbitral panel shall provide written reasons for its award. The award of the
arbitral panel shall be final and binding upon the Parties hereto. Any such
arbitration shall be held in Boston, Massachusetts, or any other mutually agreed
location. Judgment upon the award so rendered may be entered in any court having
jurisdiction or application may be made to such court for judicial acceptance of
any award and an order of enforcement, as the case may be.
12.4 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, and all of which
together shall be deemed to be one and the same instrument.
12.5 Headings. All headings in this Agreement are for convenience only
and shall not affect the meaning of any provision hereof.
12.6 Binding Effect. This Agreement shall inure to the benefit of and
be binding upon the Parties and their respective lawful successors and assigns.
12.7 Assignment. This Agreement may not be assigned by either Party
without the prior written consent of the other Party, except that either of the
Parties may assign this Agreement to a successor in connection with the merger,
consolidation, or sale of all or substantially all of its assets or that portion
of its business pertaining to the subject matter of this Agreement.
12.8 Notices. All notices, requests, demands and other communications
required or permitted to be given pursuant to this Agreement shall be in writing
and shall be deemed to have been duly given upon the date of receipt if
delivered by hand, recognized national overnight courier, confirmed facsimile
transmission, or registered or certified mail, return receipt requested, postage
prepaid, to the following addresses or facsimile numbers:
16.
<PAGE>
If to ArQule:
ArQule, Inc.
200 Boston Avenue
Medford, MA 02155
Attn: Eric B. Gordon
Tel: (617) 395-4100
Fax: (617) 395-1225
with a copy (which shall not constitute notice) to:
Palmer & Dodge
One Beacon Street
Boston, MA 02108
Attn: Michael Lytton, Esq.
Tel: (617) 573-0327
Fax: (617) 227-4420
If to Sugen:
Sugen, Inc.
515 Galveston Drive
Redwood City, CA 94063-4720
Attn: Stephen Evans-Freke
Tel: (415) 306-7700
Fax: (415) 369-0741
Either Party may change its designated address and facsimile number by notice to
the other Party in the manner provided in this Section 12.8.
12.9 Amendment and Waiver. This Agreement may be amended, supplemented,
or otherwise modified at any time, but only by means of a written instrument
signed by both Parties. Any waiver of any rights or failure to act in a specific
instance shall relate only to such instance and shall not be construed as an
agreement to waive any rights or fail to act in any other instance, whether or
not similar.
12.10 Governing Law. This Agreement and the legal relations among the
Parties shall be governed by and construed in accordance with the laws of the
Commonwealth of Massachusetts irrespective of any conflict of laws principles.
12.11 Severability. In the event that any provision of this Agreement
shall, for any reason, be held to be invalid or unenforceable in any respect,
such invalidity or unenforceability shall not affect any other provision hereof,
and this Agreement shall be construed as if such invalid or unenforceable
provision had not been included herein.
17.
<PAGE>
12.12 Entire Agreement. This Agreement constitutes the entire agreement
between the Parties with respect to the subject matter hereof and supersedes any
and all prior or contemporaneous oral and prior written agreements and
understandings.
12.13 Indemnification. To the maximum extent permitted by law each
Party shall indemnify and hold harmless the other Party from and against all
claims, expenses or liability of whatever nature arising from any default, act,
omission or negligence of the Indemnifying Party, or the Indemnifying Party's
agents or employees or others exercising rights by, through or under the
Indemnifying Party, or the failure of the Indemnifying Party or such persons to
comply with any applicable laws, rules, regulations, codes, ordinances or
directives of governmental authorities, in each case to the extent the same are
related, directly or indirectly, to this Agreement and/or the Research Program
described herein; provided, however, that in no event shall the Indemnifying
Party be obligated under this section to indemnify the Indemnified Party where
such claim, expense or liability results solely from any omission, fault,
negligence or other misconduct of the Indemnified Party.
IN WITNESS WHEREOF, the undersigned have duly executed and delivered
this Agreement as a sealed instrument effective as of the date first above
written.
ARQULE, INC.
By: /s/ Eric B. Gordon
------------------------------------------
Name: Eric B. Gordon
Title: President
SUGEN, INC.
By: /s/ Stephen Evans-Freke
------------------------------------------
Name: Stephen Evans-Freke
Title: Chairman and Chief Executive Officer
18.
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
EXHIBIT A
RESEARCH PLAN
ARQULE/SUGEN PROJECT PLAN
[
]
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
Arqule/SUGEN Project Plan
- --------------------------------------------------------------------------------
[
]
2.
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
EXHIBIT B
DESCRIPTION OF FIELD
The Field shall mean, with respect to any Target, the field of [
] Such Field includes
[
]
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
EXHIBIT C
LICENSED COMPOUND CRITERIA
Compounds will evaluated as Licensed Compound candidates based good scientific
and business criteria, including one or more of the following:
o Compound potency as measured by [
]
o Compound selectivity as calculated by [
]
o Assessment of effects on [
]
o Assessment of effects on [ ]
o Assessment of [ ]
o Assessment of effects on [ ]
o Assessment of effects on [ ] in appropriate species
o Assessment of [ ]
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
EXHIBIT D
SUGEN COMPOUNDS
[
]
1.
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
[
]
2.
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
[
]
3.
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
[
]
4.
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
[
]
5.
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
[
]
6.
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
[
]
7.
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
[
]
8.
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
[
]
9.
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
[
]
10.
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
[
]
11.
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
[
]
12.
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
[
]
13.
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
[
]
14.
EXHIBIT 10.55
[SUGEN LETTERHEAD]
May 2, 1996
MAX-PLANCK INSTITUT fuer physiologische und
klinische Forschung W. G. Kerckhoff
Institut Abteilung Molekulare Zellbiologie
Parkstrasse 1,
61231 Bad Nauheim GERMANY
MAX-PLANCK-GESELLSCHAFT zur Forderung
der Wissenschaften e.V.
Residenzstrasse 1a, W-8000
Muenchen 2
Garching Innovation GmbH
Koeniginstrasse 19
80539 Muechen
Gentlemen:
We refer to the Research and License Agreement into which our company
entered with yourselves on October 1, 1993. The Agreement provided for a
"Research Period" (as so defined) of three years commencing on the Effective
Date, which Period is due to expire as of October 1, 1996. We propose by this
Letter Agreement that all the parties commit to a three-year extension of the
Research Period, thereby providing for SUGEN's research funding obligations and
the performance obligations of all parties to be extended until October 1, 1999.
All other provisions of the Agreement between us will remain in full force and
effect, with the sole modification that the "MPI Research Project" definition
shall be extended to include investigations into the field of neurite outgrowth
promotion as well as the other fields already cited, all restricted to such
investigations as are under the leadership of Prof. Dr. Werner Risau.
If you are in agreement with the above, please so indicate by signing
both copies of this Letter Agreement, returning one to us and retaining the
other for your own files.
Sincerely,
SUGEN, Inc.
By: /s/ Stephen Evans-Freke
-------------------------------------
Name: Stephen Evans-Freke
Title: Chairman and Chief
Executive Officer
<PAGE>
2 May 1996
Page 2
Acknowledged and Agreed to:
MAX-PLANCK INSTITUT fuer physiologische und
klinische Forschung W. G. Kerckhoff Institut
Abteilung Molekulare Zellbiologie
By: /s/ Werner Rissau
-------------------------------------
Name: Prof. Dr. Werner Rissau
Title: Direktor am Institute
MAX-PLANCK-GESELLSCHAFT zur Forderung der Wissenschaften e.V.
By: /s/ Heinrich Kuhn
-------------------------------------
Name: Dr. Heinrich Kuhn
Title: Leiter des Patentreferates
GARCHING INNOVATION GmbH
By: /s/ Heinrich Kuhn
-------------------------------------
Name: Dr. Heinrich Kuhn
Title: Geschaftsfuhrer
EXHIBIT 10.56
PROMISSORY NOTE
$1,107,228.03 Redwood City, California
August 29, 1996
FOR VALUE RECEIVED, the undersigned hereby executes this full recourse
promissory note (the "Note") and unconditionally promises to pay to the order of
SUGEN, INC., a Delaware corporation (the "Company"), or its successors or
assigns, at 515 Galveston Drive, Redwood City, California, or at such other
place as the holder hereof may designate in writing, in lawful money of the
United States of America and in immediately available funds, the principal sum
of one million, one hundred seven thousand, two hundred twenty eight dollars and
three cents ($1,107,228.03) (of which two hundred twenty four thousand one
hundred seventy eight dollars and thirty six cents ($224,178.36) shall consist
of a loan for the purpose of the payment of tax withholding associated with the
August 29, 1996 stock option exercise) together with interest accrued from the
date hereof on the unpaid principal at the rate of 6.84% per annum, compounded
annually, or the maximum rate permissible by law (which under the laws of the
State of California shall be deemed to be the laws relating to permissible rates
of interest on commercial loans), whichever is less, as follows:
Principal Repayment. The outstanding principal amount
hereunder shall be due and payable in full on August 29, 2001 (the
"Principal Repayment Date").
Interest Payments. Interest shall be payable in arrears on the
Principal Repayment Date and shall be calculated on the basis of a
365-day year for the actual number of days elapsed;
provided, however, that in the event that the undersigned's continuous
status as an employee, director or consultant with the Company is
terminated for any reason prior to payment in full of this Note, this
Note shall be accelerated and all remaining unpaid principal and
interest shall become due and payable on the ninetieth (90th) day
following such termination; provided, further, that in the event that
the undersigned requests the release of any percentage of the shares of
the Common Stock from the Stock Pledge Agreement (of even date herewith
between the undersigned and the Company) prior to the Principal
Repayment Date, the same percentage of the principal of the Note,
together with all accrued interest then outstanding under the Note,
shall become due immediately prior to the release of such percentage of
shares from the Pledge Agreement.
If the undersigned fails to pay any of the principal and accrued
interest when due, the Company, at its sole option, shall have the right to
accelerate this Note, in which event the entire principal balance and all
accrued interest shall become immediately due and payable, and immediately
collectible by the Company pursuant to applicable law.
<PAGE>
This Note may be prepaid at any time without penalty. All money paid
toward the satisfaction of this Note shall be applied first to the payment of
interest as required hereunder and then to the retirement of the principal.
The full amount of this Note is secured by a pledge of shares of Common
Stock of the Company, and is subject to all of the terms and provisions of the
related Stock Pledge Agreement.
The undersigned hereby represents and agrees that the amounts due under
this Note are not consumer debt, and are not incurred primarily for personal,
family or household purposes, but are for business and commercial purposes only.
The undersigned hereby waives presentment, protest and notice of
protest, demand for payment, notice of dishonor and all other notices or demands
in connection with the delivery, acceptance, performance, default or endorsement
of this Note.
The holder hereof shall be entitled to recover, and the undersigned
agrees to pay when incurred, all costs and expenses of collection of this Note,
including without limitation, reasonable attorneys' fees.
This Note shall be governed by, and construed, enforced and interpreted
in accordance with, the laws of the State of California, excluding conflict of
laws principles that would cause the application of laws of any other
jurisdiction.
Signed /s/ Stephen Evans-Freke
-----------------------------------
Stephen Evans-Freke
EXHIBIT 10.57
AGREEMENT
for the purchase of Common Stock of
SUGEN, INC.
by
VISION PHARMACEUTICALS L.P.
<PAGE>
TABLE OF CONTENTS
Page
1. Purchase and Sale of Common Stock........................................ 1.
1.1 Initial Issuance of Common Stock................................ 1.
1.2 Subsequent Issuance of Common Stock............................. 1.
2. Closing; Delivery........................................................ 2.
2.1 Closing......................................................... 2.
2.2 Payment and Delivery............................................ 4.
3. Representations, Warranties and Covenants of the Company................. 4.
3.1 Organization.................................................... 4.
3.2 Capitalization.................................................. 4.
3.3 Authority....................................................... 5.
3.4 Financial Statements............................................ 5.
3.5 Issuance of the Shares.......................................... 5.
3.6 No Conflict with Law or Documents............................... 5.
3.7 Absence of Certain Developments................................. 5.
3.8 Litigation...................................................... 6.
3.9 Registration Rights Covenant.................................... 6.
3.10 Covenant to Keep Public Information Available...................12.
3.11 SEC Reports.....................................................12.
3.12 Securities Law Compliance.......................................12.
3.13 Registration Rights.............................................12.
4. Representations, Warranties and Covenants of Purchaser...................12.
4.1 Legal Power.....................................................12.
4.2 Due Execution...................................................13.
4.3 Investment Representations and Covenants........................13.
4.4 Standstill Covenant.............................................14.
4.5 Lockup Covenant.................................................14.
4.6 Right of First Offer............................................15.
5. Miscellaneous............................................................17.
5.1 Governing Law...................................................17.
5.2 Successors and Assigns..........................................17.
5.3 Entire Agreement................................................17.
5.4 Separability....................................................17.
5.5 Amendment and Waiver............................................17.
5.6 Notices.........................................................17.
5.7 Fees and Expenses...............................................18.
5.8 Titles and Subtitles............................................18.
5.9 Counterparts....................................................18.
5.10 Consent to Jurisdiction and Venue...............................18.
5.11 Guarantee.......................................................18.
i.
<PAGE>
COMMON STOCK PURCHASE AGREEMENT
THIS COMMON STOCK PURCHASE AGREEMENT (the "Agreement) is made as of
September 30, 1996 (the "Effective Date") by and between SUGEN, INC., a Delaware
corporation (the "Company"), and VISION PHARMACEUTICALS L.P., a Texas limited
partnership ("Purchaser"), and, for purposes of Section 5.11 only, ALLERGAN,
INC., a Delaware corporation ("Allergan"). In consideration of the mutual
promises, representations, warranties and conditions set forth in this
Agreement, the Company and Purchaser agree as follows:
1. PURCHASE AND SALE OF COMMON STOCK.
1.1 Initial Issuance of Common Stock.
(a) The Company has authorized the issuance and sale to
Purchaser of up to 191,571 shares (the "Shares") of its common stock, $.01 par
value (the "Common Stock").
(b) In reliance upon Purchaser's representations and
warranties contained in Section 4 hereof and subject to the terms and conditions
set forth herein, the Company agrees to sell to Purchaser the Shares, to be
issued and sold at a price per share equal to $20.88.
(c) In reliance upon the representations and warranties of the
Company contained in Section 3 hereof and subject to the terms and conditions
set forth herein, Purchaser hereby agrees to purchase the Shares at the per
share purchase price set forth above.
1.2 Subsequent Issuance of Common Stock.
(a) The Company agrees to use all reasonable efforts to offer
or, if applicable, to arrange for its underwriters to offer, Purchaser or its
designated affiliate the opportunity to purchase in the Company's next private
offering of equity securities of the Company to institutional investors and/or
individuals (other than a sale of equity securities of the Company in connection
with a scientific or commercial collaboration or intellectual property licensing
agreement) or directed public offering or underwritten public offering of the
Company's Common Stock pursuant to an effective registration statement under the
Securities Act of 1933, as amended (the "Securities Act"), on the same terms as
others purchasing in such offering, the number of shares of Common Stock or
other equity securities of the Company (the "Additional Shares") representing an
aggregate investment of $3.0 million. Purchaser hereby confirms its intention to
purchase the Additional Shares in the Company's next offering, provided (i) the
closing date, or effective date if such offering is registered under the
Securities Act, of such offering takes place within two (2) years of the date of
this Agreement; (ii) such offering results in gross proceeds to the Company of
at least $10.0 million; (iii) the purchase of such shares by Purchaser would not
result in beneficial ownership by Purchaser of greater than 9.9% of the then
outstanding Common Stock of the Company; (iv) if such offering is an
underwritten public offering of Common Stock, Purchaser shall not purchase
Common Stock at a price per share
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more than 3.0% greater than the closing price of the Common Stock on the day of
the pricing of such offering or the day prior to the pricing if the pricing
occurs prior to the opening of the Nasdaq National Market on the day of pricing;
and (v) if such offering is not an underwritten public offering of Common Stock
(A) Purchaser shall not purchase Common Stock at a price per share greater than
the closing price of the Common Stock on the day of the pricing of such offering
or the day prior to the pricing if the pricing occurs prior to the opening of
the Nasdaq National Market on the day of pricing and (B) if the Company's next
offering consists of a private offering of preferred stock, within sixty days
following the closing of such preferred stock offering, Purchaser shall have the
option to purchase Common Stock at a price per share equal to the closing price
of the Common Stock on the day of the pricing of such offering or the day prior
to the pricing if the pricing occurs prior to the opening of the Nasdaq National
Market on the day of pricing in lieu of purchasing the preferred stock offered
in the private offering. However, Purchaser shall be under no obligation to
purchase any or all of such securities.
(b) Notwithstanding anything in this Agreement to the
contrary, in the event the Additional Shares are made available to Purchaser in
accordance with the terms of this Agreement and Purchaser fails to purchase, or
make a bona fide offer to purchase, such securities (provided the provisions of
Section 1.2(a) are complied with), the Company shall have the right for a period
of 90 days from the closing date, or if such offering is registered under the
Securities Act, the effective date, of its offering to terminate the
Collaboration Agreement by giving Purchaser 10 days written notice. In the event
the Company exercises its termination option pursuant to this Section 1.2(b), it
shall retain the payments made under the Collaboration Agreement between the
Company and Purchaser dated as of the date of this Agreement (the "Collaboration
Agreement").
2. CLOSING; DELIVERY.
2.1 Closing. The closing of the sale of purchase of Shares under this
Agreement (the"Closing") shall take place at 5:00 p.m. on the date of
satisfaction of the conditions set forth below (the "Closing Date"), at the
offices of Cooley Godward LLP, Five Palo Alto Square, 3000 El Camino Real, Palo
Alto, California, or at such other time and place as the Company and Purchaser
may agree. At the Closing, the Company will issue and sell, and Purchaser will
purchase, the Shares for an aggregate purchase price of $4,000,002.48.
(a) The obligations of Purchaser to purchase the Shares at the
Closing are subject to the fulfillment on or before the Closing Date of each of
the following conditions, which may be waived only in writing, on or before
October 4, 1996:
(i) The representations and warranties of the Company
contained in Section 3 shall be true and correct in all material respects on and
as of the Closing Date with the same force and effect as if such representations
and warranties had been made on and as of the Closing Date.
2.
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(ii) The Company shall have performed and complied
with all agreements, obligations and conditions contained in this Agreement that
are required to be performed or complied with by it on or before the Closing
Date.
(iii) All authorizations, approvals, or permits, if
any, of any governmental authority or regulatory body of the United States or of
any state that are required in connection with the lawful sale and issuance of
the Shares at the Closing pursuant to this Agreement shall have been obtained
and shall be effective on and as of the Closing Date. No stop order or other
order enjoining the sale of the Shares shall have been issued and no proceedings
for such purpose shall be pending or, to the knowledge of the Company,
threatened by the SEC, or any commissioner of corporations or similar officer of
any state having jurisdiction over this transaction. At the time of the Closing,
the sale and issuance of the Shares shall be legally permitted by all laws and
regulations to which Purchaser and the Company are subject.
(iv) The parties shall have executed and delivered to
each other the Collaboration Agreement dated as of the Closing Date.
(v) Purchaser shall have received from Cooley Godward
LLP, counsel for the Company, an opinion dated as of the Closing Date covering
the matters set forth in Exhibit A.
(vi) Purchaser shall have received a certificate
representing the Shares, duly registered in Purchaser's name.
(b) The obligations of the Company are subject to fulfillment
on or before the Closing Date of each of the following conditions, which may be
waived only in writing, on or before October 4, 1996:
(i) The representations and warranties of the
Purchaser contained in Section 4 shall be true and correct in all material
respects on and as of the Closing Date with the same force and effect as if such
representations and warranties had been made on and as of the Closing Date.
(ii) The Purchaser shall have performed and complied
with all agreements, obligations and conditions contained in this Agreement that
are required to be performed or complied with by it on or before the Closing
Date.
(iii) All authorizations, approvals, or permits, if
any, of any governmental authority or regulatory body of the United States or of
any state that are required in connection with the lawful sale and issuance of
the Shares at the Closing pursuant to this Agreement shall have been obtained
and shall be effective on and as of the Closing Date. No stop order or other
order enjoining the sale of the Shares shall have been issued and no proceedings
for such purpose shall be pending or, to the knowledge of the Company,
threatened
3.
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by the SEC, or any commissioner of corporations or similar officer of any state
having jurisdiction over this transaction. At the time of the Closing, the sale
and issuance of the Shares shall be legally permitted by all laws and
regulations to which Purchaser and the Company are subject.
(iv) The parties shall have executed and delivered to
each other the Collaboration Agreement dated as of the Closing Date.
(v) Purchaser shall have delivered an aggregate of
$4,000,002.48 to the Company.
2.2 Payment and Delivery. At the Closing, subject to the terms and
conditions hereof, the Company will deliver to Purchaser an opinion from Cooley
Godward LLP, counsel to the Company, covering the matters set forth in Exhibit A
attached hereto and a stock certificate, registered in the name of Purchaser,
representing the Shares to be purchased by Purchaser from the Company, dated as
of the Closing, against payment of the purchase price therefor by wire transfer,
unless other means of payment shall have been agreed upon by Purchaser and the
Company.
3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY.
Subject to and except as disclosed by the Company in the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 1995 (the
"Form 10-K"), quarterly reports on Form 10-Q for the quarters ended March 31,
1996 and June 30, 1996 (the "Form 10-Qs") and Proxy Statement for the 1996
Annual Meeting of Stockholders, dated as of April 5, 1996 (the "Proxy
Statement"), each previously delivered to Purchaser, or in the Schedule of
Exceptions attached hereto as Exhibit B (the "Schedule of Exceptions"), the
Company hereby represents and warrants to Purchaser as follows as of the date
hereof and as of the Closing Date, and all such representations and warranties
shall survive the Closing:
3.1 Organization. The Company is a corporation, duly incorporated,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation. The Company has all requisite power and authority to own or lease
its properties and to conduct its business as now conducted. The Company holds
all licenses and permits required for the conduct of its business as now
conducted, which, if not obtained, would have a material adverse effect on the
business, financial condition or results of operations of the Company taken as a
whole. The Company is qualified as a foreign corporation and is in good standing
in all states where the conduct of its business or its ownership or leasing of
property requires such qualification, except where the failure to so qualify
would not have a material adverse effect on the business, financial condition or
results of operations of the Company taken as a whole.
3.2 Capitalization. The authorized, issued and outstanding capital
stock of the Company and a description of the Company's stock option and stock
purchase plans is as set forth in the Proxy Statement. All of the issued and
outstanding shares of common stock have
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been duly authorized, validly issued and are fully paid and nonassessable.
Except for rights granted under the Company's 1992 Stock Option Plan, 1994
Non-Employee Directors' Stock Option Plan, Employee Stock Purchase Plan,
Long-Term Objectives Stock Option Plan for Senior Management and Preferred Share
Purchase Rights Plan and the outstanding warrants described in the Form 10-K
(certain of which have been exercised as described in Schedule 3.2), there are
no existing subscriptions, options, warrants, calls, commitments, agreements,
conversion or other rights of any character (contingent or otherwise) to
purchase or otherwise acquire from the Company, at any time, or upon the
happening of any stated event, any shares of the capital stock of the Company.
On September 27, 1996, 10,685,896 shares of the Common Stock were outstanding,
and no other shares of Company stock were outstanding.
3.3 Authority. The Company has all requisite power and authority to
enter into this Agreement, and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of the Company, and upon execution and delivery by
the Company, this Agreement will constitute a valid and binding obligation of
the Company, enforceable against the Company in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium and
similar laws relating to or affecting creditor's rights from time to time in
effect, and subject to general equity principles.
3.4 Financial Statements. The financial statements of the Company
included in the Form 10-K and Form 10-Qs fairly presented in all material
respects the financial position and results of operations of the Company at
their respective dates and for the respective periods to which they apply; and
such financial statements have been prepared in accordance with generally
accepted accounting principles consistently applied throughout the periods
involved except as otherwise stated therein.
3.5 Issuance of the Shares. The Shares, when issued pursuant to the
terms of this Agreement, will be duly and validly authorized and issued, fully
paid and nonassessable.
3.6 No Conflict with Law or Documents. The execution, delivery and
consummation of this Agreement and the transactions contemplated hereby will not
(a) conflict with any provisions of the Certificate of Incorporation or the
Bylaws of the Company; (b) result in any violation of or default or loss of a
benefit under, or permit the acceleration of any obligation under or conflict
with (in each case, upon the giving of notice, the passage of time, or both) any
mortgage, indenture, lease, agreement or other instrument, permit, franchise
license, judgment, order, decree, law, ordinance, rule or regulation applicable
to the Company or its respective properties.
3.7 Absence of Certain Developments. Since June 30, 1996, the Company
has not (a) incurred or become subject to any material liabilities (absolute or
contingent) except current liabilities incurred, and liabilities under contracts
entered into, in the ordinary course of business, consistent with past
practices; (b) mortgaged, pledged or subjected to lien, charge or
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any other encumbrance any material assets, tangible or intangible except in the
ordinary course of business, consistent with past practices; (c) sold, assigned
or transferred any material assets or canceled any material debts or obligations
except in the ordinary course of business, consistent with past practices; (d)
suffered any extraordinary losses, or waived any rights of substantial value;
(e) entered into any material transaction other than in the ordinary course of
business, consistent with past practices; or (f) otherwise had any change in its
condition, financial or otherwise, except for changes in the ordinary course of
business, consistent with past practices, none of which individually or in the
aggregate has been materially adverse to the Company.
3.8 Litigation. To the Company's knowledge, there are no actions,
suits, proceedings or investigations pending or threatened against or affecting
the Company that in the aggregate could reasonably be anticipated to result in
any material adverse effect on the Company.
3.9 Registration Rights Covenant.
(a) At any time during the 180-day period immediately
following the earlier of (i) the expiration of the initial Research Term (as
defined in the Collaboration Agreement) without giving effect to any extensions
thereof or (ii) the earlier termination of the Research Term pursuant to Article
X of the Collaboration Agreement, Purchaser shall have the right to cause the
Company to file a registration statement under the Securities Act for a public
offering of all or part of the Shares, but in no event less than 100,000 Shares,
beneficially owned by Purchaser by delivering written notice thereof to the
Company specifying the number of Shares to be included in such registration and
the intended method of distribution thereof (the "Registration Request"). Upon
receipt of the Registration Request, the Company shall, as expeditiously as
possible, use its best efforts to promptly effect the registration under the
Securities Act, and all applicable state securities laws, to the extent
necessary to permit the sale or other disposition by Purchaser of the Shares to
be so registered in accordance with such notice.
(b) The demand registration rights granted in Section 3.9(a)
are subject to the following limitations: (i) the Company shall not be obligated
to effect more than one registration pursuant to Section 3.9(a), (ii) the
Company shall not be obligated to effect such registration for a period of 60
days following the closing of an underwritten public offering of the Company's
equity securities that is in registration at the time of the receipt of the
Registration Request (provided that the period within which Purchaser may demand
registration hereunder will be extended by the number of days by which the
registration requested by Purchaser is delayed pursuant to this sentence); and
(iii) if the Company shall furnish to Purchaser a certificate signed by the
Chairman of the Board of Directors of the Company stating that in the good faith
judgment of the Board of Directors of the Company, it would be seriously
detrimental to the Company and its stockholders for such registration to be
effected at such time, then the Company shall have the right to defer the filing
of the registration for a period of not more than 180 days after receipt of the
Registration Request (provided that the period within which
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Purchaser may demand registration hereunder will be extended by the number of
days by which the registration requested by Purchaser is delayed pursuant to
this sentence).
(c) In addition to the rights provided by Section 3.9(a), if
the Additional Shares are not freely transferable without restriction under the
Securities Act, within 90 days immediately following the purchase of the
Additional Shares, the Company shall file a registration statement under the
Securities Act for a public offering of the Additional Shares.
(d) If and when the Company is required by the provisions of
Section 3.9(a) or (c) to include any of the Shares or Additional Shares in a
registration under the Securities Act, Purchaser will furnish in writing such
information as is reasonably requested by the Company for inclusion in the
registration statement relating to such offering and such other information and
documentation as the Company shall reasonably request, and the Company will, as
expeditiously as possible:
(i) Prepare and file with the Securities and Exchange
Commission ("SEC") a registration statement with respect to such securities and
use its best efforts to cause such registration to become and remain effective
(i) with respect to the Shares, for such period as may be necessary to permit
the successful marketing of such securities, but not exceeding 120 days
(excluding any period during which a stop order is in effect) and (ii) with
respect to the Additional Shares, until such time as the Additional Shares are
freely transferable without restriction under the Securities Act.
(ii) Prepare and file with the SEC such amendments
and supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to comply with the provisions of the
Securities Act and to keep such registration statement effective for that period
of time specified in paragraph (i) of this section.
(iii) Furnish to Purchaser such number of
prospectuses and preliminary prospectuses in conformity with the requirements of
the Securities Act and such other documents as such Purchaser may reasonably
request in order to facilitate the public sale or other disposition of the
Shares or Additional Shares registered hereunder.
(iv) Use its best efforts to register or qualify the
Shares or Additional Shares covered by such registration statement under such
other securities or blue sky laws of such jurisdictions as Purchaser shall
reasonably request and do any and all other acts and things which may be
necessary or desirable to enable Purchaser to consummate the public sale or
other disposition in such jurisdictions of the Shares or Additional Shares
covered by such registration statement, provided that the Company shall not be
required in connection therewith or as a condition thereto to qualify to do
business or to file a general consent to service of process in any such states
or jurisdictions.
(e) In the event of a registration of any of the Shares or
Additional Shares under the Securities Act pursuant to Section 3.9(a) or (c) in
connection with an underwritten
7.
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public offering, the Company will enter into and perform its obligations under
an underwriting agreement, in usual and customary form, with the managing
underwriters of such offering, including without limitation providing usual and
customary indemnification. In the event Purchaser proposes to sell Shares or
Additional Shares in accordance with this Section pursuant to an underwritten
offering, the Company shall have the right to approve the managing underwriters
for such offering; provided, however, that such approval shall not be
unreasonably withheld.
(f) At any time or from time to time following the earlier of
(i) the expiration of initial Research Term (as defined in the Collaboration
Agreement) without giving effect to any extension thereof or (ii) the earlier
termination of the Research Term pursuant to Article X of the Collaboration
Agreement, if the Company shall determine to register any of its securities
under the Securities Act either for its own account or the account of a security
holder or holders exercising their respective demand registration rights, other
than a registration relating solely to employee benefit plans, or a registration
relating solely to a Rule 145 transaction, or a registration on any registration
form that does not permit secondary sales, then the Company will:
(i) promptly give to Purchaser a written notice
thereof; and
(ii) use its best efforts to include in such
registration (and any related qualification under blue sky laws or other
compliance), except as set forth in Section 3.9(g) below, and in any
underwriting involved therein, all of the Shares specified in a written request
or requests made by Purchaser and received by the Company within twenty (20)
days after the written notice from the Company described in clause (i) above is
mailed or delivered by the Company. Such written request may specify all or a
part of the Shares.
(g) If the registration of which the Company gives notice to
Purchaser is for a registered public offering involving an underwriting, the
Company shall so advise Purchaser as a part of the written notice given pursuant
to Section 3.9(f)(i). In such event, the right of Purchaser to registration
pursuant to Section 3.9(f) shall be conditioned upon Purchaser's participation
in such underwriting and the inclusion of all or any part of the Shares
specified in Purchaser's notice in the underwriting to the extent provided
herein. Purchaser shall (together with the Company and the other holders of
securities of the Company with registration rights to participate therein
distributing their securities through such underwriting) enter into an
underwriting agreement in customary form with the representative of the
underwriter or underwriters selected by the Company.
Notwithstanding any other provision of Sections 3.9(f) or (g), if the
representative of the underwriters advises the Company in writing that marketing
factors require a limitation on the number of shares to be underwritten, the
representative may (subject to the limitations set forth below) exclude all of
the Shares from, or limit the number of Shares to be included in, the
registration and underwriting. The Company shall so advise Purchaser and other
holders of securities requesting registration, and the number of shares that are
entitled to be included in the
8.
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registration and underwriting shall be allocated first to the Company for
securities being sold for its own account and thereafter the number of shares
that are entitled to be included in the registration shall be allocated among
Purchaser and other holders requesting inclusion of shares on a pro rata basis,
subject to any prior agreements among the Company and its other stockholders,
but only to the extent that such other agreements provide for additional
limitations on the number of shares such other stockholders or the Company will
be entitled to include in the registration, which agreements are in effect as of
the Effective Date. If Purchaser or any other person does not agree to the terms
of any such underwriting, Purchaser and any other such person shall be excluded
therefrom by written notice from the Company or the underwriter. Any Shares or
other securities excluded or withdrawn from such underwriting shall also be
withdrawn from such registration.
(h) As used herein, "Registration Expenses" shall mean all
expenses incurred by the Company in complying with this Section 3.9, including,
without limitation, all registration, qualification and filing fees; printing
expenses; fees and disbursements of counsel for the Company (and the fees and
disbursements of counsel for the Company in its capacity as counsel to the
Purchaser hereunder; if Company counsel does not make itself available for this
purpose, the Company will pay the reasonable fees and disbursements of one
counsel for the Purchaser as selected by Purchaser) and of the Company's
independent accounting firm; blue sky fees and expenses; underwriting discounts
and commissions and the expense of any special audits incident to or required by
any such registration (but excluding the compensation of regular employees of
the Company which shall be paid in any event by the Company). Purchaser will pay
all Registration Expenses in connection with a registration pursuant to Section
3.9(a) hereof; provided, however, that in the event Purchaser withdraws its
demand for registration after having learned of a material adverse change in the
condition, business, or prospects of the Company from that known to Purchaser at
the time of its demand (in which case Purchaser shall retain its rights pursuant
to Section 3.9(a)), all Registration Expenses shall be borne by the Company. All
Registration Expenses in connection with any registration pursuant to Section
3.9(c) and (f) hereof shall be borne by the Company; provided, however, that any
incremental filing fees or other expenses incurred by the Company solely by
reason of Purchaser's exercise of registration rights pursuant to Section 3.9(f)
shall be borne by the Purchaser.
(i) The rights conferred upon Purchaser under this Section 3.9
may be assigned by Purchaser to any permitted transferee of the Shares or the
Additional Shares, as applicable, provided that each such transfer complies with
Section 4.5, and provided, further, that only Purchaser shall be authorized to
give notice to the Company of any request for registration under Section 3.9(a)
and only Purchaser shall be entitled to receive notice pursuant to Section
3.9(c) hereof.
(j) In the event any Shares or Additional Shares are included
in a registration statement under Sections 3.9(a), (c) or (f):
(i) To the extent permitted by law, the Company will
indemnify and hold harmless Purchaser, the partners, officers, directors and
legal counsel of Purchaser, any
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underwriter (as defined in the Securities Act) for Purchaser and each person, if
any, who controls Purchaser or such underwriter within the meaning of the
Securities Act or the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), against any losses, claims, damages, or liabilities (joint or several) to
which they may become subject under the Securities Act, the Exchange Act or
other federal or state law, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
of the following statements, omissions or violations (collectively a
"Violation") by the Company: (a) any untrue statement or alleged untrue
statement of a material fact contained in such registration statement, including
any preliminary prospectus or final prospectus contained therein or any
amendments or supplements thereto, (b) the omission or alleged omission to state
therein a material fact required to be stated therein, or necessary to make the
statements therein not misleading, or (c) any violation or alleged violation by
the Company of the Securities Act, the Exchange Act, any state securities law or
any rule or regulation promulgated under the Securities Act, the Exchange Act or
any state securities law in connection with the offering covered by such
registration statement; and the Company will reimburse Purchaser and each
partner, officer or director, underwriter or controlling person for any legal or
other expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action; provided however,
that the indemnity agreement contained in this Section 3.9(j)(i) shall not apply
to amounts paid in settlement of any such loss, claim, damage, liability or
action if such settlement is effected without the consent of the Company, which
consent shall not be unreasonably withheld, nor shall the Company be liable in
any such case for any such loss, claim, damage, liability or action to the
extent that it arises out of or is based upon a Violation which occurs in
reliance upon and in conformity with written information furnished expressly for
use in connection with such registration by Purchaser or such partner, officer,
director, underwriter or controlling person of Purchaser.
(ii) To the extent permitted by law, Purchaser will
indemnify and hold harmless the Company, each of its directors, its officers and
legal counsel and each person, if any, who controls the Company within the
meaning of the Securities Act, any underwriter and any other person selling
securities under such registration statement or any of such other person's
partners, directors or officers or any person who controls such person, against
any losses, claims, damages or liabilities (joint or several) to which the
Company or any such director, officer, controlling person, underwriter or other
such person, or partner, director, officer or controlling person of such person
may become subject under the Securities Act, the Exchange Act or other federal
or state law, insofar as such losses, claims, damages or liabilities (or actions
in respect thereto) arise out of or are based upon any Violation, in each case
to the extent (and only to the extent) that such Violation occurs in reliance
upon and in conformity with written information furnished by Purchaser under an
instrument duly executed by Purchaser and stated to be specifically for use in
connection with such registration; and Purchaser will reimburse any legal or
other expenses reasonably incurred by the Company or any such director, officer,
controlling person, underwriter or other person, or partner, officer, director
or controlling person of such other person in connection with investigating or
defending any such loss, claim, damage, liability or action if it is judicially
determined that there was such a Violation; provided, however, that the
indemnity agreement contained in this Section 3.9(j)(ii)
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shall not apply to amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the consent of
Purchaser, which consent shall not be unreasonably withheld; provided further,
that in no event shall any indemnity under this Section 3.9(j)(ii) exceed the
net proceeds from the offering received by such Purchaser
(iii) Promptly after receipt by an indemnified party
under this Section 3.9(j) of notice of the commencement of any action (including
any governmental action), such indemnified party will, if a claim in respect
thereof is to be made against any indemnifying party under this Section 3.9(j),
deliver to the indemnifying party a written notice of the commencement thereof
and the indemnifying party shall have the right to participate in, and, to the
extent the indemnifying party so desires, jointly with any other indemnifying
party similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party shall
have the right to retain its own counsel, with the fees and expenses to be paid
by the indemnifying party, if representation of such indemnified party by the
counsel retained by the indemnifying party would be inappropriate due to actual
or potential differing interests between such indemnified party and any other
party represented by such counsel in such proceeding. The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such action, if materially prejudicial to its ability to
defend such action, shall relieve such indemnifying party of any liability to
the indemnified party under this Section 3.9(j), but the omission so to deliver
written notice to the indemnifying party will not relieve it of any liability
that it may have to any indemnified party otherwise than under this Section
3.9(j).
(iv) If the indemnification provided for in this
Section 3.9(j) is held by a court of competent jurisdiction to be unavailable to
an indemnified party with respect to any losses, claims, damages or liabilities
referred to herein, the indemnifying party, in lieu of indemnifying such
indemnified party thereunder, shall to the extent permitted by applicable law
contribute to the amount paid or payable by such indemnified party as a result
of such loss, claim, damage or liability in such proportion as is appropriate to
reflect the relative fault of the indemnifying party on the one hand and of the
indemnified party on the other in connection with the Violation(s) that resulted
in such loss, claim, damage or liability, as well as any other relevant
equitable considerations. The relative fault of the indemnifying party and of
the indemnified party shall be determined by a court of law by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission to state a material fact relates to information supplied by
the indemnifying party or by the indemnified party and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission; provided, that in no event shall any contribution by
Purchaser hereunder exceed the proceeds from the offering received by Purchaser.
(v) The obligations of the Company and Purchaser
under this Section 3.9(j) shall survive completion of any offering of securities
in a registration statement pursuant to Section 3.9. No indemnifying party, in
the defense of any such claim or litigation, shall, except with the consent of
each indemnified party, consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term thereof the giving by
the
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claimant or plaintiff to such indemnified party of a release from all liability
in respect to such claim or litigation.
(k) If Purchaser purchases the Additional Shares in a private
offering in which investors obtain registration rights, Purchaser shall be
entitled to either the registration rights provided to investors in such private
offering or the registration rights provided herein, in its discretion.
3.10 Covenant to Keep Public Information Available. The Company
covenants and agrees that it will file the reports required to be filed by it
under the Securities Act and the Exchange Act and the rules and regulations
adopted by the SEC thereunder as such may be amended from time to time (the
"Rules"), and will take such further actions as Purchaser may reasonably
request, all to the extent required from time to time to enable Purchaser to
sell Shares at such times as are permitted by this Agreement without
registration under the Securities Act within the limitations of Rule 144 of the
Rules or any similar rule or regulation hereafter adopted by the SEC. Upon the
request of Purchaser, the Company will supply Purchaser with a certificate
certifying compliance with this provision.
3.11 SEC Reports. All of the reports filed by the Company under the
Exchange Act prior to the date of this Agreement (the "SEC Reports") comply in
all material respects with the requirements of the Exchange Act. None of the SEC
Reports contains, as of the respective dates thereof, any untrue statement of a
material fact or omits to state any material fact required to be stated therein
or necessary to make the statements therein not misleading in light of the
circumstances under which they were made.
3.12 Securities Law Compliance. Assuming the accuracy of the
representations and warranties of Purchaser contained in Section 4, the offer,
issuance, sale and delivery of the Shares constitute an exempt transaction under
the Securities Act, and the offer, issuance, sale and delivery of Additional
Shares pursuant to Section 1.2 shall be made in compliance with the Securities
Act.
3.13 Registration Rights. Except as set forth in the Schedule of
Exceptions, the Company is not under any obligation to register any of its
presently outstanding securities or any of its securities which may hereafter be
issued.
4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF PURCHASER.
Purchaser hereby represents, warrants and covenants with the Company as
follows:
4.1 Legal Power. Purchaser has the requisite partnership power and is
authorized to enter into this Agreement, to purchase the Shares hereunder and to
carry out and perform its obligations under the terms of this Agreement.
12.
<PAGE>
4.2 Due Execution. This Agreement has been duly authorized executed and
delivered by Purchaser, and upon due execution and delivery by the Company, this
Agreement will be a valid and binding agreement of Purchaser.
4.3 Investment Representations and Covenants.
Purchaser is acquiring the Shares for its own account, not as nominee
or agent, for investment and not with a view to or for resale in connection
with, any distribution or public offering thereof within the meaning of the
Securities Act. Purchaser understands that the Shares have not been registered
under the Securities Act, but are instead being offered and sold to Purchaser
pursuant to an exemption from registration contained in the Securities Act based
in part upon the following representations and warranties:
(a) Purchaser is capable of evaluating the merits and risks of
its investment in the Company and has the capacity to protect its own interests.
Purchaser must bear the economic risk of this investment unless the Shares are
registered pursuant to the Securities Act, or an exemption from registration is
available. Purchaser understands that the Company has no present intention of
registering the Shares. Purchaser also understands that there is no assurance
that any exemption from registration under the Securities Act will be available
and that, even if available, such exemption may not allow such Purchaser to
transfer all or any portion of the Shares under the circumstances, in the
amounts or at the times Purchaser might propose.
(b) Purchaser is acquiring the Shares for such Purchaser's own
account for investment only, and not with a view towards their distribution.
(c) Purchaser represents that by reason of its, or of its
management's, business or financial experience, Purchaser has the capacity to
protect its own interests in connection with the transactions contemplated in
this Agreement.
(d) Purchaser has had an opportunity to discuss the Company's
business, management and financial affairs with directors, officers and
management of the Company and has had the opportunity to review the Company's
operations and facilities. Purchaser has also had the opportunity to ask
questions of and receive answers from, the Company and its management regarding
the terms and conditions of this investment.
(e) Purchaser acknowledges and agrees that the Shares must be
held indefinitely unless they are subsequently registered under the Securities
Act or an exemption from such registration is available. Purchaser has been
advised or is aware of the provisions of Rule 144 promulgated under the
Securities Act, which permits limited resale of shares purchased in a private
placement subject to the satisfaction of certain conditions, including, among
other things: the availability of certain current public information about the
Company, the resale occurring not less than two years after a party has
purchased and paid for the security to be sold, the sale being through an
unsolicited "broker's transaction" or in transactions directly with a market
maker (as said term is defined under the Exchange Act) and the number of shares
13.
<PAGE>
being sold during any three-month period not exceeding specified limitations.
Each certificate representing the Shares shall be stamped or otherwise imprinted
with a legend substantially similar to the following:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE "ACT") AND MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED UNLESS AND
UNTIL THEY ARE REGISTERED UNDER THE ACT OR UNLESS (A) THE COMPANY HAS
RECEIVED AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY AND ITS
COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED OR (B) SUCH SALE IS MADE
PURSUANT TO RULE 144 UNDER THE ACT.
4.4 Standstill Covenant. Purchaser agrees that prior to the earlier of
(i) the expiration of initial Research Term (as defined in the Collaboration
Agreement) without giving effect to any extension thereof or (ii) the earlier
termination of the Research Term pursuant to Article X of the Collaboration
Agreement, neither Purchaser nor any of its affiliates will in any manner,
directly or indirectly (i) other than as permitted by this Agreement, effect,
seek, offer or propose to effect any acquisition of any securities or assets of
the Company, any tender or exchange offer, merger, business combination,
recapitalization or other extraordinary transaction involving the Company or any
solicitation of proxies or consents to vote any voting securities of the
Company, (ii) form, join or in any way participate in a "group" (as defined in
the Exchange Act) with respect to any voting securities of the Company, (iii)
solicit or participate in any solicitation of proxies relating to the election
of directors of the Company, or (iv) enter into any agreement with any other
person with respect to the foregoing, or assist any other person to do any of
the foregoing; provided that (A) Purchaser may purchase additional securities in
an amount sufficient to allow Purchaser to own up to 4.9% of the then
outstanding shares of Common Stock of the Company (excluding any shares issued
directly to Purchaser or its affiliates by the Company); (B) the transfer of
Shares in accordance with Section 4.5 and the voting thereof by the transferee
shall not be deemed a prohibited group formation or proxy solicitation; (C) the
restrictions contained in this Section shall terminate automatically upon the
acquisition by any person or group (as defined in the Exchange Act), other than
Purchaser and its affiliates, of more than 20% of the outstanding voting
securities of the Company or upon the commencement (as provided in Rule 14d-2
under the Exchange Act) of a tender offer other than by or on behalf of
Purchaser or its affiliates (with securities or cash) which has not been
approved by a majority of the Company's Board of Directors for the Company's
voting securities and (D) this sentence shall not prohibit the acquisition or
disposition of shares for investment purposes only in the open market in the
ordinary course by any pension fund or trust for the benefit of employees of
Purchaser or its affiliates.
4.5 Lockup Covenant. Purchaser agrees that prior to the earlier of (i)
the expiration of the initial Research Term (as defined in the Collaboration
Agreement) without giving effect to any extensions thereof or (ii) the earlier
termination of the Research Term pursuant to Article X of the Collaboration
Agreement, Purchaser will not, without the prior written approval of the
14.
<PAGE>
Company, offer, sell or otherwise dispose of, directly or indirectly, any
capital stock of the Company which Purchaser may own directly, indirectly or
beneficially; provided that (i) Purchaser may transfer some or all of such
capital stock (A) pursuant to and in accordance with the terms of any merger,
consolidation, reclassification of shares or capital reorganization of
Purchaser, or pursuant to a sale of all or substantially all of the stock or
assets of Purchaser; and (B) to a corporation, partnership or other legal entity
of which Purchaser is in control of, under common control with or controlled by,
but only if such transferee agrees in writing to hold such capital stock subject
to all of the provisions of this Agreement and to transfer such capital stock to
Purchaser if such transferee ceases to be in control of, under common control
with or controlled by Purchaser (all such capital stock so transferred shall be
deemed to be shares held by Purchaser for all purposes hereunder), (ii) the
restrictions contained in this sentence shall terminate automatically upon the
acquisition by any person or group (as defined in the Exchange Act), other than
Purchaser and its affiliates, of more than 20% of the outstanding voting
securities of the Company, and (iii) this sentence shall not prohibit the
acquisition or disposition of shares for investment purposes only in the open
market in the ordinary course by any pension fund or trust for the benefit of
employees of Purchaser or its affiliates.
4.6 Right of First Offer. Purchaser agrees that Purchaser will not
sell, assign, pledge, or in any manner transfer any of the Shares or any right
or interest therein, whether voluntarily or by operation of law, except by a
transfer which meets the requirements set forth elsewhere in this Agreement and
hereinafter set forth in this Section 4.6:
(a) If Purchaser receives from anyone a bona fide offer
acceptable to Purchaser to purchase any of the Shares, or intends to make a bona
fide offer to sell any Shares, then Purchaser shall first give written notice
thereof to the Company. The notice shall name the proposed transferee, if known,
and state the number of shares to be transferred, the price per share or method
for determining the price and all other terms and conditions of the offer.
(b) For five (5) business days following receipt of such
notice, the Company shall have the option to purchase all of the shares (but not
less than all) specified in the notice at the price and upon the terms set forth
in such bona fide offer. In the event the Company elects to purchase all the
shares, it shall give written notice to the Purchaser of its election and
settlement for said shares shall be made as provided below in paragraph (c).
(c) In the event the Company elects to acquire any of the
Shares as specified in Purchaser's notice, the Company shall so notify Purchaser
and settlement thereof shall be made in cash within ten (10) business days after
the Company receives Purchaser's notice; provided that if the terms of payment
set forth in Purchaser's notice were other than cash against delivery, the
Company shall pay for said shares on the same terms and conditions set forth in
Purchaser's notice.
(d) In the event the Company does not elect to acquire all of
the shares specified in Purchaser's notice, Purchaser may, within the sixty-day
period following the expiration of the option rights granted to the Company
herein, sell elsewhere the shares specified
15.
<PAGE>
in Purchaser's notice which were not acquired by the Company, in accordance with
the provisions of this Agreement, provided that said sale shall not be on terms
and conditions more favorable to Purchaser than those contained in the bona fide
offer set forth in Purchaser's notice.
(e) Anything to the contrary contained herein notwithstanding,
the following transactions shall be exempt from the provisions of this Section
4.6:
(i) A transfer of any or all of the Shares pursuant
to and in accordance with the terms of any merger, consolidation,
reclassification of shares or capital reorganization of Purchaser, or pursuant
to a sale of all or substantially all of the stock or assets of Purchaser; and
(ii) A transfer of any or all of the Shares to a
corporation, partnership or other legal entity of which Purchaser is in control
of, under common control with or controlled by, but only if such transferee
agrees in writing to hold such Shares subject to all of the provisions of this
Agreement and to transfer such Shares to Purchaser if such transferee ceases to
be in control of, under common control with or controlled by Purchaser (all such
Shares so transferred shall be deemed to be shares held by Purchaser for all
purposes hereunder).
In any such case, the transferee, assignee, or other
recipient shall receive and hold such stock subject to the provisions of this
Agreement, and there shall be no further transfer of such stock except in
accordance with this Agreement.
(f) Any sale or transfer, or purported sale or transfer, of
Shares shall be null and void unless the terms, conditions and provisions of
this Agreement are strictly observed and followed.
(g) The foregoing right of first offer shall terminate on
either of the following dates, whichever shall first occur:
(i) The earlier of (i) the expiration of the Research
Term (as defined in the Collaboration Agreement) including any extensions
thereof or (ii) the earlier termination of the Research Term pursuant to Article
X of the Collaboration Agreement; or
(ii) Upon the registration of the Shares pursuant to
a registration statement filed with, and declared effective by, the SEC under
the Securities Act.
(h) The certificate representing the Shares shall bear on its
face the following legend so long as the foregoing right of first offer remains
in effect:
16.
<PAGE>
"The shares represented by this certificate are subject to a
right of first offer option in favor of the Company, as provided in the
Common Stock Purchase Agreement dated as of September 30, 1996 by and
between the Company and Vision Pharmaceuticals L.P.
5. MISCELLANEOUS.
5.1 Governing Law. This Agreement shall be governed by and construed
under the laws of the State of California as applied to agreements among
California residents, made and to be performed entirely within the State of
California, without regard to principles of conflict of laws.
5.2 Successors and Assigns. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors, and administrators of the
parties hereto.
5.3 Entire Agreement. This Agreement and the Exhibits hereto, and the
other documents delivered pursuant hereto, constitute the full and entire
understanding and agreement among the parties with regard to the subjects hereof
and no party shall be liable or bound to any other party in any manner by any
representations, warranties, covenants, or agreements except as specifically set
forth herein or therein. Nothing in this Agreement, express or implied, is
intended to confer upon any party, other than the parties hereto and their
respective successors and assigns, any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
herein.
5.4 Separability. In case any provision of this Agreement shall be
invalid, illegal, or unenforceable, it shall to the extent practicable, be
modified so as to make it valid, legal and enforceable and to retain as nearly
as practicable the intent of the parties, and the validity, legality, and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
5.5 Amendment and Waiver. Except as otherwise provided herein, any term
of this Agreement may be amended, and the observance of any term of this
Agreement may be waived (either generally or in a particular instance, either
retroactively or prospectively, and either for a specified period of time or
indefinitely), with the written consent of the Company and Purchaser. Any
amendment or waiver effected in accordance with this section shall be binding
upon any holder of any security purchased under this Agreement (including
securities into which such securities have been converted), each future holder
of all such securities, and the Company.
5.6 Notices. All notices and other communications required or permitted
hereunder shall be in writing and shall be deemed effectively given upon
personal delivery, on the first business day following mailing by overnight
courier, or on the fifth day following mailing by registered or certified mail,
return receipt requested, postage prepaid, addressed to the Company and
Purchaser at the addresses included herein.
17.
<PAGE>
5.7 Fees and Expenses. The Company and Purchaser shall bear their own
expenses and legal fees with respect to this Agreement and the transactions
contemplated hereby.
5.8 Titles and Subtitles. The titles of the paragraphs and
subparagraphs of this Agreement are for convenience of reference only and are
not to be considered in construing this Agreement.
5.9 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one instrument.
5.10 Consent to Jurisdiction and Venue. Any claim or controversy
arising out of or related to this Agreement or any breach hereof shall be
submitted to a court of applicable jurisdiction in the State of California and
each party hereby consents to the jurisdiction and venue of such court.
5.11 Guarantee. Allergan guarantees the performance of each obligation
of Purchaser under this Agreement, whether or not Allergan has received any
notice which is to be provided to Purchaser pursuant to this Agreement.
18.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Common Stock
Purchase Agreement as of the date set forth in the first paragraph hereof.
SUGEN, INC.
By: /s/ Stephen Evans-Freke
-------------------------------------------
Name: Stephen Evans-Freke
Title: Chief Executive Officer
and Chairman of the Board
Address: 515 Galveston Drive
Redwood City, CA 94063-4720
VISION PHARMACEUTICALS L.P., A TEXAS LIMITED
PARTNERSHIP DBA ALLERGAN
By: Allergan General, Inc.
Its: General Partner
By: /s/ Francis R. Tunney
-------------------------------------------
Francis R. Tunney
Secretary
Address: c/o Allergan, Inc.
2525 Dupont Drive
Irvine, CA 92612
Guarantee of performance given by:
ALLERGAN, INC.
By: /s/ Francis R. Tunney
-------------------------------------------
Name: Francis R. Tunney, Jr.
Title: Corporate Vice President
and General Counsel
Address: 2525 Dupont Drive
Irvine, CA 92612
19.
<PAGE>
EXHIBIT A
FORM OF OPINION FROM
COOLEY GODWARD CASTRO HUDDLESON & TATUM
Organization. The Company is a corporation, duly incorporated, validly existing
and in good standing under the laws of the jurisdiction of its incorporation.
The Company has all requisite power and authority to own or lease its properties
and to conduct its business as now conducted. The Company is qualified as a
foreign corporation and is in good standing in all states where the conduct of
its business or its ownership or leasing of property requires such
qualification, except where the failure to so qualify would not have a material
adverse effect on the business, financial condition or results of operations of
the Company taken as a whole.
Authority. The Company has all requisite power and authority to enter into this
Agreement, and to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement and the Collaboration Agreement and the
consummation of the transactions contemplated hereby and thereby have been duly
authorized by all necessary corporate action on the part of the Company, and
upon execution and delivery by the Company, this Agreement and the Collaboration
Agreement will constitute valid and binding obligations of the Company,
enforceable against the Company in accordance with their respective terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium and
similar laws relating to or affecting creditor's rights from time to time in
effect and subject to general equity principles.
Shares validly issued. The Shares have been duly authorized, and upon issuance
and delivery against payment therefor in accordance with the terms of the
Agreement, will be validly issued, outstanding, fully paid and nonassessable.
<PAGE>
EXHIBIT B
SCHEDULE OF EXCEPTIONS PURSUANT TO SECTION 3
This Schedule of Exceptions is made and given pursuant to Section 3 of
the Agreement. The paragraph numbers in this Schedule of Exceptions correspond
to the paragraph numbers in the Agreement; however, any information disclosed
herein under any paragraph number shall be deemed to be disclosed and
incorporated into any other paragraph number under the Agreement where such
disclosure would be appropriate. Any terms defined in the Agreement shall have
the same meaning when used in this Schedule of Exceptions as when used in the
Agreement unless the context otherwise requires.
3.2 Capitalization. The following warrants were exercised for the
number of shares indicated in cashless transactions on the dates indicated:
Shares Shares Warrant
Date Warrantholder Issued Netted Out Total
---- ------------- ------ --------- -----
3/22/96 Silicon Valley Bank 1,811 855 2,666
1/5/96 Western Technology 3,623 1,710 5,333
Investment
On September 30, 1996, 20,410 shares of Common Stock were issued under
the Company's Employee Stock Purchase Plan.
3.13 Registration Rights. The Company has granted registration rights
to the following security holders with respect to the number of shares
indicated:
Security Holder Number of Shares
--------------- ----------------
Asta Medica Aktiengesellschaft 431,137
Zeneca Limited 1,071,016
AMGEN, Inc. 200,000
Sanwa Business Credit Corp. 2,666
Dr. Heinrich Kuhn 15,000
Financing for Science International, Inc. 20,798
Genentech, Inc. 133,333
Comdisco 76,847
EXHIBIT 10.58
Certain confidential information contained in this
document, marked by brackets, is filed with the Securities
and Exchange Commission pursuant to Rule 24b-2 of the
Securities Exchange Act of 1934, as amended.
COLLABORATION AGREEMENT
by and between
SUGEN, INC.
and
VISION PHARMACEUTICALS L.P.
<PAGE>
TABLE OF CONTENTS
PAGE
1. DEFINITIONS............................................................. 1
2. SCOPE AND GOVERNANCE ................................................... 5
2.1 Scope Of The Collaboration..................................... 5
2.2 Research Management Committee.................................. 5
2.3 Research Management Committee Functions And Powers............. 6
2.4 Information And Reports........................................ 6
2.5 RMC Dispute Resolution......................................... 6
3. TARGET RESEARCH AND VALIDATION.......................................... 6
3.1 Testing and Validation of [ ] Target in Allergan Models....... 6
3.2 Transfer of SUGEN Technology................................... 7
3.3 Transfer of Allergan Technology................................ 7
3.4 Ocular Target Identification................................... 7
3.5 Target Validation.............................................. 7
4. COMPOUND SCREENING AND SELECTION........................................ 8
4.1 Assay Development.............................................. 8
4.2 Screening To Identify Active Compounds......................... 8
4.3 Further Investigation on Active Compounds...................... 9
4.4 Selection of Leads for Preclinical Investigation............... 9
4.5 Selection of Drug Candidates................................... 9
4.6 Substitution of Drug Candidate................................. 10
4.7 Designation of Back-Up Compounds............................... 10
4.8 Development of Drug Candidates................................. 11
4.9 Product Development By SUGEN................................... 11
4.10 Excluded Compounds............................................. 11
5. LICENSE GRANTS; EXCLUSIVITY............................................. 12
5.1 License Grants For Collaborative Research...................... 12
5.2 Execution of Commercial License Agreement...................... 12
5.3 Diligence Obligations; Grant Back.............................. 13
5.4 Exclusivity.................................................... 13
5.5 License Covenants.............................................. 14
i.
<PAGE>
TABLE OF CONTENTS
(CONTINUED)
PAGE
6. FEES AND PAYMENTS....................................................... 14
6.1 Initial Research Payment....................................... 14
6.2 Research Funding............................................... 14
6.3 Milestone Payments To SUGEN.................................... 15
6.4 Equity Investments............................................. 16
7. INTELLECTUAL PROPERTY................................................... 16
7.1 Ownership Of Technology........................................ 16
7.2 Patent Prosecution............................................. 16
7.3 Infringement................................................... 17
7.4 Trademarks..................................................... 17
7.5 Disclosure Of Inventions....................................... 17
7.6 Cross-Licenses Regarding Compound Inventions................... 17
8. REPRESENTATIONS AND WARRANTIES.......................................... 18
8.1 Representations And Warranties................................. 18
8.2 SUGEN Representations and Warranties........................... 18
8.3 Disclaimer Concerning Technology............................... 19
8.4 Disclaimer Concerning Library Compounds........................ 19
9. CONFIDENTIALITY; PUBLICATION............................................ 19
9.1 Confidentiality................................................ 19
9.2 Authorized Disclosure.......................................... 20
9.3 Publications................................................... 21
10. TERM AND TERMINATION.................................................... 21
10.1 Term Of The Agreement.......................................... 21
10.2 Termination For Material Breach................................ 21
10.3 Termination For Technical Failure.............................. 21
10.4 Termination By Allergan Without Cause.......................... 22
10.5 Accrued Rights, Surviving Obligations.......................... 22
ii.
<PAGE>
TABLE OF CONTENTS
(CONTINUED)
PAGE
11. INDEMNITY............................................................... 22
11.1 Indemnification................................................ 22
11.2 Control Of Defense............................................. 22
12. GOVERNING LAW; DISPUTE RESOLUTION....................................... 23
12.1 Governing Law.................................................. 23
12.2 Legal Compliance............................................... 23
12.3 Dispute Resolution............................................. 23
12.4 Jurisdiction And Venue......................................... 23
13. GENERAL PROVISIONS...................................................... 23
13.1 Notices........................................................ 23
13.2 Force Majeure.................................................. 24
13.3 Entirety Of Agreement.......................................... 24
13.4 Non Waiver..................................................... 24
13.5 Disclaimer Of Agency........................................... 24
13.6 Severability................................................... 24
13.7 Affiliates; Assignment......................................... 25
13.8 Headings....................................................... 25
13.9 Limitation Of Liability........................................ 25
13.10 Counterparts................................................... 25
13.11 Public Disclosure.............................................. 25
13.12 Guarantee...................................................... 25
iii.
<PAGE>
COLLABORATION AGREEMENT
THIS COLLABORATION AGREEMENT (the "Agreement") is entered into as of
October 4, 1996 (the "Effective Date") by and between SUGEN INC., a Delaware
corporation ("SUGEN") with its offices at 515 Galveston Drive, Redwood City,
California 94063-4720, VISION PHARMACEUTICALS L.P., a Texas limited partnership
("Allergan") with offices at 2525 Dupont Drive, Irvine, CA 92623 and ALLERGAN,
INC., a Delaware Corporation, solely as a guarantor of the performance under
this Agreement by Vision Pharmaceuticals L.P.
RECITALS
WHEREAS, SUGEN is a leader in the research and discovery of signal
transduction targets and the development of screening assays based on such
targets, for the discovery of small molecules with activities that may be useful
as human therapeutic drugs; and
WHEREAS, SUGEN has developed screening assays based on tyrosine kinases
and phosphatases and serine-threonine kinases, including [ ], and has
identified and/or isolated several classes of compounds that are active
inhibitors in such assays, which may be useful as drugs for treatment of
conditions or diseases caused by or relating to neovascularization; and
WHEREAS, Allergan is engaged in the research, development, marketing,
manufacture and distribution of therapeutic and prophylactic products,
particularly in the ophthalmic field, and has developed certain tissues and cell
lines that may be useful for identifying targets relating to [ ]
neovascularization; and
WHEREAS, SUGEN and Allergan desire to enter into a collaborative relationship to
conduct research on signal transduction targets, including the [ ],
that may be involved in modulating [ ] neovascularization and to
discover, develop, manufacture and market ophthalmology drug products, for use
in treating or preventing ophthalmic diseases including macular degeneration,
based upon inhibition of validated signal transduction targets; and
WHEREAS, Allergan and SUGEN are also entering into a stock purchase
agreement under which Allergan will purchase $4 million in SUGEN common stock,
and may purchase an additional $3 million;
NOW, THEREFORE, in consideration of the foregoing and the covenants and
premises contained in this Agreement, the parties agree as follows:
1. DEFINITIONS
As used herein, the following terms shall have the following meanings:
"Active Compound" shall mean a chemical compound provided by SUGEN or
Allergan or obtained from a third party for screening pursuant to Sections
4.2(a) and 4.2(b), that
1.
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
demonstrates the requisite activity levels in a Target Assay as determined by
the RMC pursuant to Section 4.2(c), but excluding all Excluded Compounds.
"Active Compound List" shall mean the list of Active Compounds
described in Section 4.2(c), as updated from time to time during the Agreement.
"Affiliate" shall mean any company or entity controlled by,
controlling, or under common control with a party hereto and shall include
without limitation any company fifty percent (50%) or more of whose voting stock
or participating profit interest is owned or controlled, directly or indirectly,
by a party, and any company which owns or controls, directly or indirectly,
fifty percent (50%) or more of the voting stock of a party.
"Allergan Biomaterials" shall mean those [ ] identified in
Exhibit A attached hereto, which Allergan owns or controls, as such Exhibit
is amended from time to time.
"Allergan Know-How" shall mean, to the extent useful in the
Collaboration Field, tangible or intangible know-how, trade secrets, inventions
(whether or not patentable), data, preclinical and clinical results, physical,
chemical or biological material, and other information that Allergan owns,
controls or to which it has a license (with the right to sublicense) on the
Effective Date, and any replication or any part of such information or material.
The Allergan Biomaterials are included within the scope of "Allergan Know-How".
"Allergan Patents" shall mean, to the extent useful in the
Collaboration Field, all foreign and domestic: (a) patents issued or existing as
of the Effective Date; and (b) patents issuing from patent applications that are
pending as of the Effective Date (including provisionals, divisionals,
continuations and continuations-in-part of such applications); and (c)
substitutions, extensions, reissues, renewals and inventors certificates
relating to the foregoing patents, which Allergan owns or controls or to which
Allergan has a license (with the right to sublicense).
"Allergan Technology" shall mean the Allergan Patents and Allergan
Know-How.
"Back-Up Compounds" shall have the meaning ascribed in Section 4.7.
"Collaboration" shall mean the programs of collaborative research and
development as described in Articles 2, 3 and 4.
"Collaboration Field" shall mean the discovery, selection, synthesis,
investigation, and preclinical and clinical development of drugs that, [
] of tyrosine kinases and tyrosine phosphatases and serine-threonine
kinases, can treat or prevent human ophthalmic diseases.
"Collaboration Know-How" shall mean any and all tangible or intangible
know-how, trade secrets, inventions (whether or not patentable), data,
preclinical and clinical results, physical, chemical or biological material, and
other information that is (a) useful in the Licensed
2.
<PAGE>
Field and/or that relates to Active Compounds, and (b) that is in any way
derived from or developed pursuant to activities undertaken by either party or,
to the extent a party is legally free to do so, such party's consultants or
collaborators, in the conduct of the Collaboration, and any replication or any
part of such information or material.
"Collaboration Patents" shall mean all foreign and domestic patents
(including substitutions, extensions, reissues, renewals and inventors
certificates relating thereto) that issue from patent applications (including
provisionals, divisionals, continuations and continuations-in- part of such
applications) that claim inventions in the Collaboration Know-How and that are
filed by or on behalf of one or both of the parties hereto.
"Collaboration Technology" shall mean the Collaboration Patents and the
Collaboration Know-How.
"Compound Invention" shall have the meaning ascribed in Section 7.1.
"Confidential Information" shall mean all information, inventions,
know-how or data disclosed by a party to the other pursuant to this Agreement
including, without limitation, manufacturing, marketing, financial, personnel,
scientific and other business information and plans, and the material terms of
this Agreement, whether in oral, written, graphic or electronic form.
"Derivative Compound" shall mean a compound that is an analog, homolog,
or isomer of an Active Compound, resulting from Allergan's or its Affiliate's
activities during the Term of the Agreement, whether made under an analoging
program, or a chemical synthesis program based on structure-function
relationships, or otherwise.
"Drug Candidate" shall mean the Active Compound selected as a Drug
Candidate by Allergan pursuant to Section 4.5 for clinical development, or the
substitute for any such compound as designated under Section 4.6.
"Excluded Compound" shall have the meaning ascribed in Section 4.10.
"GLP Tox" shall mean toxicology studies carried out in accordance with
Good Laboratory Practice, as described in 21 C.F.R. ss. 312 as revised, or the
European equivalent.
"Grant-Back License" shall have the meaning ascribed in Section 5.3.
"IND" shall mean an Investigational New Drug Application filed with the
United States Food and Drug Administration, or the equivalent application or
filing necessary to commence human clinical trials in another country, as
applicable.
"License Agreement" shall mean the agreement, substantially in the form
attached to this Agreement as Exhibit B, pursuant to which SUGEN will grant to
Allergan an exclusive, world-wide, royalty-bearing, sublicensable license to
make, have made and develop Drug
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Candidates and/or Back-Up Compounds for use in the Licensed Field and to make,
have made, use, sell and offer for sale approved pharmaceutical products
containing a Drug Candidate or Back-Up Compound.
"Licensed Field" shall mean the discovery, development, manufacture,
use, marketing and sale of drugs for the treatment or prevention of ophthalmic
diseases.
"NDA" shall mean a New Drug Application filed with the United States
Food and Drug Administration, or the equivalent community application filed in
the European Union, or the equivalent application filed as a national
application in Japan, the United Kingdom, France, Germany, Spain or Italy.
"Regulatory Approval" shall mean any and all approvals (including price
and reimbursement approvals), licenses, registrations, or authorizations of any
country, federal, state or local regulatory agency, department, bureau or other
government entity that is necessary for the manufacture, use, storage, import,
transport and/or sale of a pharmaceutical product containing a Drug Candidate or
Back-Up Compound in a country.
"Research Management Committee" or "RMC" shall mean the committee
formed pursuant to Section 2.2.
"Research Plan" shall mean the plan for conducting the research under
the Collaboration, as amended from time to time by the RMC, which plan including
all amendments shall be attached to the Agreement as Exhibit E.
"Research Term" shall mean the three (3) years following the Effective
Date or, subject to negotiation and agreement by the parties of terms therefor,
such longer period as the parties may agree.
"Restricted Compounds" shall have the meaning assigned to it in Section
4.4.
"SUGEN Know-How" shall mean, to the extent useful in the Licensed
Field, tangible or intangible know-how, trade secrets, inventions (whether or
not patentable), data, preclinical and clinical results, physical, chemical or
biological material, and other information that SUGEN owns, controls or to which
it has a license (with the right to sublicense) on the Effective Date, and any
replication or any part of such information or material.
"SUGEN Library" shall mean the collection of synthetic small molecule
and natural product extract compounds (a) that are owned by SUGEN on the
Effective Date or at any time during the Research Term, or (b) as to which SUGEN
has access and the right to sublicense from third parties.
"SUGEN Patents" shall mean, to the extent useful in the Licensed Field,
all foreign and domestic: (a) patents issued existing as of the Effective Date;
and (b) patents issuing from patent applications that are pending as of the
Effective Date (including provisionals, divisionals,
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CONFIDENTIAL TREATMENT REQUESTED
continuations and continuations-in-part of such applications); and (c)
substitutions, extensions, reissues, renewals and inventors certificates
relating to the foregoing patents, which SUGEN owns or controls or to which
SUGEN has a license (with the right to sublicense). SUGEN Patents existing as of
the Effective Date include the patents and applications listed in Exhibit C
attached hereto.
"SUGEN Technology" shall mean the SUGEN Patents, SUGEN Know-How, the
SUGEN Library and, to the extent SUGEN is free to grant licenses hereunder,
patents or know-how owned or controlled by SUGEN covering compounds in the SUGEN
Library, methods of use or biological assays to the extent useful in the
Licensed Field and acquired after the Effective Date.
"Target Assays" shall have the meaning assigned to it in Section 4.1.
"Term of the Agreement" shall have the meaning assigned to such phrase
in Article 10.
"Validated Target" shall mean a signal transduction target, selected
from the group of tyrosine kinases and tyrosine phosphatases and
serine-threonine kinases, that has been determined by the RMC to be [ ]
where inhibition of target function in in vitro and in vivo models lead to
effective inhibition of pathophysiology.
2. SCOPE AND GOVERNANCE
2.1 Scope Of The Collaboration. The parties hereby agree to establish
and conduct, during the Research Term, a collaborative research program in the
Collaboration Field. The initial Research Plan for conducting such research
program is attached hereto as Exhibit E. The parties will collaborate in
identifying and validating signal transduction targets, developing and using
screens based on such targets to identify, discover and/or synthesize Active
Compounds, and performing such preclinical studies as are necessary in order for
Allergan to select Drug Candidates for clinical development into pharmaceutical
products.
2.2 Research Management Committee. Promptly after the Effective Date,
the parties will form a Research Management Committee ("RMC") comprised of [ ]
representatives of each of SUGEN and Allergan. One member of the RMC shall be
selected to act as the chairperson of the RMC, with each chairperson acting for
a term of twelve (12) months. The chairperson shall be selected alternately by
Allergan and SUGEN, and Allergan shall designate the first chairperson. The RMC
shall determine the specific goals for the Collaboration, shall manage the
ongoing research and preclinical investigations conducted under the
Collaboration, and will monitor the progress and results of such work. All
decisions of the RMC shall be unanimous. The RMC shall meet on a quarterly basis
or at such other frequency as the RMC agrees. The parties shall agree upon the
time and place of meetings, substitutions and qualifications of RMC members, and
other similar matters. Within thirty (30) days after each meeting, the RMC
chairperson will provide the parties with a written report describing, in
reasonable detail, the status of the Collaboration, a summary of the results and
progress to
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date, the issues requiring resolution, and the agreed resolution of previously
reported issues. A reasonable number of additional representatives of a Party
may attend meetings of the RMC in a non-voting capacity.
2.3 Research Management Committee Functions And Powers. The Research
Management Committee shall encourage and facilitate ongoing cooperation between
the parties, establish, update and review the Research Plan and other plans for
accomplishing the Collaboration goals, allocate tasks and coordinate activities
required to perform the Collaboration, monitor progress of the Collaboration and
the parties' diligence in carrying out their responsibilities thereunder,
oversee the conduct of all patent matters, and carry out the other duties and
responsibilities described for it in this Agreement. In addition, the RMC shall
establish criteria for and designate Validated Targets under Section 3.5,
designate the activity levels in Target Assays that should be demonstrated by a
particular compound screened in the Target Assay for such compound to be deemed
an Active Compound pursuant to Section 4.2(c), establish additional criteria, if
needed, for selecting Back-Up Compounds, and review and approve the designation
of Back-Up Compounds under Section 4.7.
2.4 Information And Reports. Except as otherwise provided, the parties
will make available and disclose to one another all results of the work
conducted pursuant to the Collaboration prior to and in preparation for RMC
meetings, in the form and format to be designated by the RMC.
2.5 RMC Dispute Resolution. If the RMC is unable to decide or resolve
an issue unanimously, the issue shall be referred to the Executive Vice
President of Product Development of SUGEN and the Corporate Vice President of
Science and Technology of Allergan, who shall not be members of the RMC. Such
officers of the parties will meet promptly thereafter and shall negotiate in
good faith to resolve such issue. If they cannot resolve the issue within thirty
(30) days of commencing such negotiations, the issue shall be resolved as
provided in Section 12.3.
3. TARGET RESEARCH AND VALIDATION
3.1 Testing and Validation of [ ] Target in Allergan Models.
Promptly after the Effective Date, SUGEN shall provide to the RMC a list of
compounds from the SUGEN Library that represent lead structures with varying
specificities in SUGEN assays. Such list shall provide the structures and
properties of such compounds. The RMC shall select up to [ ] such compounds
to test in Allergan's ocular models. SUGEN shall provide Allergan with at least
[ ] of each such selected compound based on
activity levels supporting dosing of [ ] per day, solely for the
purpose of testing hereunder. Allergan shall test such compounds in Allergan's
ocular disease models in accordance with the Research Plan, to evaluate SUGEN's
[ ] compounds for efficacy, and to develop, where appropriate, an
[ ]. Allergan understands that such SUGEN compounds provided
under this Section 3.1 may constitute Excluded Compounds that are not available
for selection as Active Compounds under Section 4.2(c).
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3.2 Transfer of SUGEN Technology. Commencing promptly after the
Effective Date, and from time to time thereafter, SUGEN will transfer to
Allergan such of the SUGEN Patents and SUGEN Know-How as is reasonably necessary
to enable Allergan to perform the Collaboration research hereunder in accordance
with the Research Plan. During the Term of the Agreement, SUGEN will provide
Allergan with reasonable technical assistance relating to the use of such SUGEN
Know-How and the practice of such SUGEN Patents in the Collaboration Field,
solely to the extent permitted under the licenses granted to Allergan herein. In
addition, SUGEN will provide to Allergan, prior to Allergan commencing the
testing under Section 3.1, the results of SUGEN's prior screening of SUGEN
compounds in SUGEN's [ ] assays, with respect to a reasonable number
of compounds that demonstrated significant activity in such assays, including
those compounds on the list provided by SUGEN to the RMC.
3.3 Transfer of Allergan Technology. Commencing promptly after the
Effective Date, Allergan will transfer to SUGEN on an ongoing basis such
reasonable quantities of the Allergan Biomaterials as are needed to enable SUGEN
to perform the Collaboration research in accordance with the Research Plan, and
shall disclose to SUGEN such of the Allergan Know- How and Allergan Patents as
is reasonably necessary to enable SUGEN to perform the Collaboration research
hereunder in accordance with the Research Plan. During the Collaboration,
Allergan will provide SUGEN with reasonable technical assistance relating to the
use of such Allergan Know-How and the practice of the Allergan Patents in the
Collaboration Field, solely to the extent permitted under the licenses granted
to SUGEN herein.
3.4 Ocular Target Identification. SUGEN shall perform research in
accordance with the Research Plan on the Allergan Biomaterials, including
without limitation an [
] in such Allergan Biomaterials, utilizing the SUGEN Technology and
Allergan Technology as needed. SUGEN shall report the results of such research
promptly to the RMC. Allergan shall cooperate with SUGEN in performing such
research and target identification activity, as provided in the Research Plan.
3.5 Target Validation. Following the identification of signal
transduction targets as specified in Section 3.4, the parties will cooperate and
work to validate such identified targets as set forth in the Research Plan. The
parties will seek to establish in in vitro and in vivo models whether [
] If such activity can be demonstrated, based on
criteria established by the RMC, the target will generally be considered to be
validated, although the RMC shall determine, in good faith, whether the target
in question is deemed a Validated Target for purposes of this Agreement. Upon
the identification of a Validated Target, the parties shall proceed as provided
in Article 4 to develop Target Assays based on such Validated Target, to screen
appropriate compounds from the SUGEN Library and other compounds reasonably
submitted by Allergan for screening, if any, against such assays, to identify
Active Compounds, and to select certain Active Compounds for further
investigation hereunder.
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4. COMPOUND SCREENING AND SELECTION
4.1 Assay Development. Upon the selection by the RMC of a specific
signal transduction target as a Validated Target, SUGEN will use reasonable
efforts in accordance with the Research Plan to develop [ ] assays based
upon such Validated Target (the "Target Assays"). It is understood that as
of the Effective Date, SUGEN has already developed certain assays based on
the [ ] target, which assays shall be deemed Target Assays if the
[ ] target is determined to be a Validated Target. All such Target Assays
will be optimized for efficient screening of the compounds to determine [
] of compounds, in order to identify Active
Compounds. During the Research Term, SUGEN shall continue to develop and
improve the Target Assays. Allergan shall cooperate with SUGEN as reasonable
in developing such Target Assays.
4.2 Screening To Identify Active Compounds.
(a) Compounds for Screening. During the Research Term, SUGEN
will make the compounds in the SUGEN Library (but excluding the Excluded
Compounds) available for screening in the Target Assays on a blinded basis. The
RMC may also select for screening appropriate Derivative Compounds made,
identified or acquired during the Research Term and compounds reasonably
proposed for screening by Allergan. In addition, the RMC may agree to obtain
from third parties rights to screen compounds owned or controlled by such
parties; provided, however, that if there would be any amounts payable to such
third party for screening such compounds or making, using or selling products
containing such compounds, no such third party compounds will be screened
without the consent of both parties.
(b) Screening. SUGEN shall use reasonable efforts to conduct
the screening in the appropriate Target Assays of all compounds made available
by SUGEN or selected for screening under Section 4.2(a), in accordance with the
Research Plan. The primary goal of the screening is to determine the activity of
such selected compounds to identify Active Compounds. If so directed by the RMC,
SUGEN shall also use reasonable efforts to obtain additional data from screening
of compounds relating to [ ] of compounds. In addition to the foregoing,
SUGEN has already screened numerous compounds in the [ ] assays and
identified certain compounds from the SUGEN Library as active in such assays. If
the [ ] target is a Validated Target, SUGEN will provide the RMC with the
results of such screening which have not previously been provided.
(c) Identification of Active Compounds. Promptly after
completing the screening of a batch of compounds under this Section 4.2 in the
appropriate Target Assays, SUGEN will provide to the RMC the results of such
screening. The RMC will review such Target Assay results promptly after receipt
and will determine which of the screened compounds meet the requirements
established by the RMC for identification as Active Compounds. Upon identifying
Active Compounds, the RMC shall add such compounds to the list of all Active
Compounds, which shall be maintained by the RMC, and shall forward the updated
list to each party. SUGEN will promptly provide to the RMC any information in
SUGEN's possession regarding the chemical structure and properties of Active
Compounds.
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CONFIDENTIAL TREATMENT REQUESTED
4.3 Further Investigation on Active Compounds. From time to time as
appropriate during the Research Term, with the goal of promptly identifying
appropriate Active Compounds for preclinical work under Section 4.4 in
accordance with the Research Plan, the RMC will select specific Active Compounds
that appear the most promising in the Licensed Field for testing in Allergan's
[ ] models and/or in such other tests or investigations as the RMC
deems appropriate. Promptly after such selection, Allergan will conduct such
[ ] model or other appropriate testing required by the RMC on the
selected Active Compounds. SUGEN shall assist the RMC in making such
determination, at its request, by performing on selected Active Compounds, as
appropriate, further specificity determination, in vitro and in vivo potency and
safety evaluation, and initial in vivo assessment, as provided in the Research
Plan. Allergan and SUGEN shall promptly provide to the RMC the results of all
work either party performs pursuant to this Section 4.3.
4.4 Selection of Leads for Preclinical Investigation. For each
Validated Target, Allergan shall select and the RMC shall approve and prioritize
up to [ ] Active Compounds with activity against such Validated Target that
are most promising for preclinical investigation by Allergan. At the time of
such approval of selected compounds, such compounds shall be designated as
"Restricted Compounds," provided that such compounds have not been previously
designated as Excluded Compounds under Section 4.10. From time to time
thereafter the RMC may designate additional Active Compounds as "Restricted
Compounds", or remove such designation from previously designated Active
Compounds, so long as the total number of such Restricted Compounds with respect
to a particular Validated Target shall not exceed [
] at any time. Allergan shall use reasonable efforts to conduct, at its
expense, all preclinical testing and investigations necessary for Allergan to
select appropriate Active Compounds to designate as Drug Candidates for further
development. Such further development may include, at Allergan's reasonable
discretion, medicinal chemistry to optimize lead compounds, selection or
synthesis of Derivative Compounds, GLP Tox studies, formulation and process
development, animal testing and other preclinical pharmaceutical development
necessary to prepare and file an IND. Except as provided in Section 3.1,
Allergan will be responsible for providing at its own expense the supply of all
Drug Candidates and Back-Up Compounds necessary for preclinical and clinical
development under Sections 4.3 and 4.4 worldwide. Allergan shall provide
promptly to the RMC the results of all work it performs pursuant to this Section
4.4. Allergan shall use reasonable efforts to conduct such investigations in
order to select a Drug Candidate as soon as practicable. From the date upon
which each Restricted Compound is designated hereunder until the date that is
[ ] months following such date of designation, but not later than [ ]
months after the end of the Research Term, SUGEN will not grant any license to
a third party under its interest in the Restricted Compound or designate such
compound as an Excluded Compound. However, such [ ] month period may be
extended with respect to a particular Restricted Compound by an amount of time,
not to exceed in any event [ ], equivalent to the amount of time in
excess of [ ] that was required by Allergan to obtain supply of such
Restricted Compound as necessary for Allergan to conduct testing hereunder.
4.5 Selection of Drug Candidates. With respect to each Validated
Target, Allergan shall have the right to select, by written notice to SUGEN and
the RMC, an Active Compound
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that is active in the Target Assays for such target as the Drug Candidate for
clinical development. Allergan shall also designate the Back-Up Compounds with
respect to such specified Drug Candidate, as provided in Section 4.7. Upon
selection of such Drug Candidate and Back-Up Compounds, Allergan shall have a
period of [ ] days after the date of such notice to conduct an investigation
to determine whether there exist any third party patent rights that may be
infringed by the manufacture, use or sale of such selected Drug Candidate, or
whether patent protection can be obtained on such Drug Candidate. If in such
period Allergan reasonably determines that there is a risk of infringement of a
third party's patent rights by the manufacture, use or sale of such Drug
Candidate, or that valid patents will not be obtained which cover such selected
Drug Candidate, Allergan may by written notice to SUGEN and the RMC delivered
prior to the end of such period withdraw such selection and such Active Compound
shall no longer be a Drug Candidate. Allergan shall use commercially reasonable
efforts to select a Drug Candidate active with respect to each Validated Target
prior to the end of the Research Term. Such commercial reasonableness shall
include consideration of all Collaboration activities being conducted by
Allergan hereunder. Promptly after the first selection of a Drug Candidate and
Back-Up Compounds therefor hereunder, the parties shall enter into the License
Agreement with respect to the Drug Candidate and the Back-Up Compounds therefor.
The License Agreement shall be amended to identify any additional Drug Candidate
and Back-Up Compounds selected for any other Validated Target as permitted under
this Section 4.5, and to reflect any substitution of a Drug Candidate and
Back-Up Compound(s) as permitted in Sections 4.6 and 4.7.
4.6 Substitution of Drug Candidate. In the event that, during the Term
of the Agreement, Allergan determines, based on its good faith and commercially
reasonable judgment, that neither a Drug Candidate designated under Section 4.5
nor any of its Back-Up Compounds can be demonstrated with reasonable effort and
expense to be safe and effective in the Licensed Field, then Allergan may give
SUGEN written notice, prior to the end of such period, that it elects to
relinquish all rights to such Drug Candidates and Back-Up Compounds. Upon such
notice, all such compounds shall lose their designation as Drug Candidates and
Back-Up Compounds and shall no longer be subject to the License Agreement.
Promptly after such notice, but in any event prior to the end of the Term of the
Agreement, Allergan may select from the Active Compounds, by giving written
notice to SUGEN and the RMC, a substitute Drug Candidate and up to [ ]
Back-Up Compounds for such Drug Candidate; provided, however, that Allergan
may not select as such Drug Candidate any Excluded Compound. With respect
to such designated substitute Drug Candidate, Allergan shall have the same
[ ] day period of intellectual property review as provided in Section
4.5 above. After such period, provided that Allergan has not withdrawn such
designation during the period, the parties shall amend the License Agreement to
identify such newly-designated Drug Candidate, and the Back-Up Compounds that
are designated under Section 4.7 with respect to such new Drug Candidate.
4.7 Designation of Back-Up Compounds. Promptly after Allergan
designates a Drug Candidate as provided in Section 4.5 or 4.6, Allergan shall
designate in writing to the RMC a set of up to [ ] Active Compounds (but
excluding any Excluded Compound) that are isomers, analogs or homologs of such
Drug Candidate to be the designated back-up compounds thereto ("Back-Up
Compounds"). The RMC shall review such designation to assure, using
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reasonable discretion, that such designated compounds are isomers, analogs or
homologs of the designated Drug Candidate and that such Back-Up Compounds meet
any additional criteria that may be established by the RMC for selection as
Back-Up Compounds. From time to time during the Term of the Agreement, Allergan
may substitute, for an existing Back-Up Compound within such set, a different
Active Compound (but excluding any Excluded Compounds) that is an isomer, analog
or homolog of the relevant Drug Candidate. Allergan may make [ ] such
substitutions with respect to a particular set of Back-Up Compounds during the
Research Term. Any such substitutions which Allergan proposes to make after the
Research Term are subject to SUGEN's approval, which approval shall not be
unreasonably withheld.
4.8 Development of Drug Candidates. As described in Article 3 of the
License Agreement, Allergan shall have the sole responsibility for conducting
clinical development of Drug Candidates and/or Back-Up Compounds, with the goal
of obtaining Regulatory Approval of pharmaceutical products containing a Drug
Candidate or Back-Up Compound. Once every [ ], Allergan shall provide SUGEN
a written report summarizing the results and progress of Allergan's efforts on
the Drug Candidates and Back-Up Compounds, including preclinical investigations
and clinical trials. In addition, at least every [ ] Allergan will meet
with SUGEN to discuss such results and efforts, and shall give reasonable
consideration to any comments or suggestions from SUGEN.
4.9 Product Development By SUGEN. Subject to Section 5.4 and the
limitations in this Section, SUGEN shall have the right, but not the obligation,
to develop, either alone or with others, any Active Compounds (excluding
compounds owned solely by Allergan). For so long as any Active Compound is
designated as a Drug Candidate or a Back-Up Compound, SUGEN shall not license
such Drug Candidate or Back-Up Compound therefor to any Third Party, and SUGEN
shall not itself develop such compound outside the Collaboration, provided,
however, that SUGEN shall retain the right to use such Drug Candidate or Back-Up
Compound solely for internal research purposes.
4.10 Excluded Compounds. An "Excluded Compound" shall be any compound
in the SUGEN Library that meets one of the following criteria:
(a) the compound is listed on Exhibit D attached hereto as of
the Effective Date;
(b) the compound is selected by a corporate partner of SUGEN
as a lead candidate for preclinical and clinical development, prior to selection
by Allergan of such compound as a Drug Candidate or Back-up Compound, and based
on such selection the corporate partner makes, within a reasonable time after
the selection, a significant economic payment to SUGEN and commits to use
diligence in such efforts, at least comparable to the economic and diligence
commitments of Allergan hereunder and under the License Agreement when Allergan
selects a Drug Candidate, unless such compound at the time of such selection by
the corporate partner is designated as a Restricted Compound;
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(c) the compound is a member of a set of up to [ ] compounds
that are isomers, analogs or homologs of a compound that meets the criteria of
subsection (b) above, which set of compounds are designated by the relevant
corporate partner as back-up compounds to such compound selected as provided in
subsection (b);
(d) the compound is selected by SUGEN as a lead candidate for
preclinical and clinical development, prior to selection by Allergan of such
compound as a Drug Candidate or Back-up Compound, and SUGEN commits and
continues to expend a significant amount of resources on the diligent
preclinical and clinical development of such compound (or back-ups selected as
provided in subsection (e) below), unless such compound at the time of such
selection by SUGEN is designated as a Restricted Compound;
(e) the compound is a member of a set of up to [ ] compounds
that are isomers, analogs or homologs of a compound that meets the criteria of
subsection (d) above, which set of compounds are designated by SUGEN as back-up
compounds to such compound selected by SUGEN as provided under subsection (d);
or
(f) SUGEN has granted an exclusive license to the compound for
commercialization purposes to Zeneca or to Asta Medica under the terms of the
applicable collaboration agreement between SUGEN and such corporate partner as
in effect on the Effective Date, unless such compound is at such time designated
as a Restricted Compound, a Drug Candidate, or Back-Up Compound.
5. LICENSE GRANTS; EXCLUSIVITY
5.1 License Grants For Collaborative Research.
(a) Grant by SUGEN. SUGEN hereby grants to Allergan, during
the Term of the Agreement, a nonexclusive, worldwide, non-transferable,
royalty-free license under the SUGEN Technology and SUGEN's interest in the
Collaboration Technology, subject to the terms of this Agreement, solely to the
extent necessary or appropriate to carry out Allergan's research and preclinical
development responsibilities under the Collaboration.
(b) Grant by Allergan. Allergan hereby grants to SUGEN, during
the Term of the Agreement, a nonexclusive, worldwide, non-transferable,
royalty-free license under the Allergan Technology and Allergan's interest in
the Collaboration Technology, subject to the terms of this Agreement, solely to
the extent necessary or appropriate to carry out SUGEN's research
responsibilities under the Collaboration.
5.2 Execution of Commercial License Agreement. Promptly after selection
of the first Drug Candidate, but in any event prior to the filing of an IND by
Allergan for such compound, SUGEN and Allergan shall enter into the License
Agreement with respect to such Drug Candidate and Back-Up Compounds therefor for
development in the Field (as defined in the License Agreement). Each such Drug
Candidate and Back-Up Compound shall be listed in an exhibit to the License
Agreement, which exhibit shall be amended from time to time as
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necessary to maintain a current list of such Drug Candidates and Back-Up
Compounds selected for development.
5.3 Diligence Obligations; Grant Back. If Allergan does not enter into
a License Agreement with SUGEN with respect to a Drug Candidate and Back-Up
Compounds therefor prior to the earlier of [ ]
or the [ ] anniversary of the Effective Date (or such further period as the
parties may agree, if any), then, provided that such failure to enter the
License Agreement in such time frame was not directly caused by SUGEN's material
breach of its obligations under the Agreement, the Agreement shall terminate and
the parties shall enter into a license agreement under which Allergan grants to
SUGEN a fully paid, exclusive, worldwide license, with the right to sublicense,
under all Allergan's interest in the Collaboration Technology to make, use and
sell Active Compounds (excluding any compounds owned solely by Allergan) for use
within the Licensed Field (the "Grant-Back License"). In addition to the
foregoing, in the event that Allergan does not file an IND covering a Drug
Candidate or Back-Up Compound by the [ ] anniversary of the Effective Date,
then, provided that such failure to file the IND in such time frame was not
directly caused by SUGEN's material breach of its obligations under the
Agreement, this Agreement shall terminate, and Allergan and SUGEN will promptly
enter into the Grant-Back License. In the event that the Agreement terminates
pursuant to this Section 5.3, then in addition Allergan covenants that, for a
period of [ ] years after the Term of the Agreement, Allergan shall not make,
use or sell any Active Compounds (excluding Active Compounds owned solely by
Allergan) for use in the Licensed Field, and shall not make, use or sell any
Active Compounds owned solely by Allergan for use in treating or preventing
human ophthalmic neovascular disease. SUGEN agrees that in the event Allergan
fails to enter into the License Agreement with SUGEN or to file an IND covering
a Drug Candidate in such time period as provided above for any reason,
termination of this Agreement in respect of such failure, the execution of such
Grant-Back License and the granting of the above covenant by Allergan shall be
SUGEN's sole and exclusive remedies for such failure.
5.4 Exclusivity.
(a) SUGEN acknowledges and agrees that it will not collaborate
with, or grant licenses under its interest in the Collaboration Technology or
the Active Compounds to, third parties, or conduct research, development or
commercialization except pursuant to this Agreement and the License Agreement:
(i) during the Research Term in the [ ], (ii) after the Research Term and
until expiration of the Term of the Agreement, as to the use of any Validated
Target for the discovery, identification, development, and/or commercialization
of products useful in the [ ], and (iii) after the Term of Agreement, as to
the use of any Validated Target for the discovery, identification, development,
and/or commercialization of products useful in the [ ] (as defined in the
License Agreement) pursuant to the License Agreement.
13.
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CONFIDENTIAL TREATMENT REQUESTED
(b) Allergan acknowledges and agrees that it will not
collaborate with, or grant licenses under its interest in Collaboration
Technology or the Active Compounds to, any third parties, or conduct research,
development or commercialization except pursuant to this Agreement and the
License Agreement: (i) during the Term of Agreement in the [
], and (ii) during the term of the License Agreement with respect to the
use of any Validated Target for the discovery, identification, development,
and/or commercialization of products useful in the [ ] provided that Allergan
shall be permitted to sublicense as permitted in the License Agreement or
otherwise collaborate as necessary to commercialize Drug Candidates or Back-Up
Compounds as contemplated herein and under the License Agreement.
5.5 License Covenants. Allergan covenants that, for the longer of
the term of the License Agreement or the Term of the Agreement plus [ ]
neither Allergan, nor any of its Affiliates, shall develop or commercialize any
Active Compounds or any Derivative Compound thereof for use in the [
]
except pursuant to the terms of this Agreement and the License Agreement.
Allergan further covenants that, for the Term of the Agreement plus [ ] neither
Allergan, nor any of its Affiliates, shall prepare any derivatives, analogs or
other chemical modifications of the Active Compounds in the SUGEN Library except
as permitted under the terms of this Agreement, but excluding any compounds (i)
owned by Allergan as of the Effective Date, (ii) in the public domain or known
to Allergan prior to disclosure of such Active Compound by SUGEN to Allergan, or
(iii) independently developed by Allergan without use of any SUGEN Technology,
as demonstrated by Allergan's written documents. Allergan covenants that in any
sublicense agreement entered into by Allergan or its Affiliate that grants
rights under the rights granted by SUGEN in the License Agreement, Allergan
shall impose on such sublicensee the same restrictions as are imposed on
Allergan and its Affiliates in this Section 5.5.
6. FEES AND PAYMENTS
6.1 Initial Research Payment. [ ]
Allergan shall pay SUGEN an initial research payment of $2.0 million for
research efforts in the Collaboration Field prior to the Effective Date.
6.2 Research Funding. Allergan agrees to pay SUGEN, on a quarterly
basis in advance, payable no later than the [ ] day of the quarter, amounts
pursuant to the research budget established by the RMC to support SUGEN's
research and screening efforts under the Collaboration. Such amounts shall not
exceed a total of [ ] on an annualized basis prior to the date when the
parties have identified a Validated Target. Commencing in the first calendar
quarter after the first designation of a Validated Target by the RMC, the
funding provided by Allergan shall equal on an annualized basis [ ] per year
for the balance of the Research Term, subject to SUGEN providing the RMC, and
the RMC approving, a workplan that supports such funding. The first and last
quarter's payments hereunder shall be pro rated, with the first quarter payment
due [ ] days after the Effective Date.
14.
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CONFIDENTIAL TREATMENT REQUESTED
6.3 Milestone Payments To SUGEN. With respect to Validated Targets, and
all Drug Candidates with activity in the Target Assays based on such Validated
Targets, Allergan will pay to SUGEN the milestone payment in the amounts listed
below, within [ ] business days after the occurrence of the following events:
- --------------------------------------------------------------------------------
MILESTONE EVENT AMOUNT OF PAYMENT
- --------------------------------------------------------------------------------
(1) [ ] [ ]
- --------------------------------------------------------------------------------
(2) [ [ ]
]
- --------------------------------------------------------------------------------
(3) [ [ ]
]
- --------------------------------------------------------------------------------
(4) [ [ ]
]
- --------------------------------------------------------------------------------
(5) [ [ ]
]
- --------------------------------------------------------------------------------
(6) [ [ ]
]
- --------------------------------------------------------------------------------
The milestone payments for milestone [ ] are payable [
]
With respect to a particular Validated Target, the milestone payments for
milestones [ ] are payable the [ ] occurs;
provided, however, that if there is approval of an NDA for a product containing
a Drug Candidate or Back-Up Compound thereof, and thereafter Allergan [
] thereof, then Allergan
will pay SUGEN for milestones [ ] with respect to [
] thereof within [ ] business days after filing
an NDA on such different Drug Candidate or Back-Up Compound thereof, and shall
pay SUGEN for milestone [ ] with respect to [
] thereof, if it occurs.
In the event that, with respect to the first Validated Target,
milestones [ ] all occur in 1998, then Allergan may [
]
As provided in Section 4.3 of the License Agreement, Allergan will have
certain rights to credit against royalties otherwise due SUGEN an amount equal
to [ ] of the sum of
15.
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CONFIDENTIAL TREATMENT REQUESTED
all milestone payments it has paid to SUGEN hereunder with respect to milestones
[ ] with respect to that Drug Candidate or Back-Up Compound.
6.4 Equity Investments.
(a) Pursuant to the terms of the Stock Purchase Agreement
between the parties, Allergan is agreeing to purchase from SUGEN, and SUGEN is
agreeing to sell and issue, $4.0 million in SUGEN common stock, at a purchase
price of $20.88 per share.
(b) Pursuant to the terms of the Stock Purchase Agreement,
Allergan may purchase stock of SUGEN equivalent to $3.0 million at the offering
price in the next offering; however, Allergan shall be under no obligation to
purchase any or all of such securities.
(c) Notwithstanding anything in this Agreement to the
contrary, in the event Allergan fails to purchase, or make a bona fide offer to
purchase, SUGEN securities as provided in the Stock Purchase Agreement, SUGEN
shall have the right to terminate this Agreement immediately upon written notice
to Allergan.
7. INTELLECTUAL PROPERTY
7.1 Ownership Of Technology. Inventorship with respect to inventions
made pursuant to work carried out under the Collaboration shall be determined in
accordance with United States rules of inventorship. Except as provided below,
each party shall own solely all inventions made [ ] made hereunder. All
inventions (the "Compound Inventions") made by or on behalf of Allergan
comprising compounds that are isomers, analogs or homologs of an Active Compound
unless such compound is (i) in the public domain or known to Allergan prior to
disclosure of such Active Compound by SUGEN to Allergan, or (ii) independently
developed by Allergan without use of the SUGEN Technology, as shown by written
documents of Allergan, and all intellectual property rights with respect to such
inventions, shall be [ ] subject to the cross-licenses in Section 7.6 below.
Any assignments necessary to accomplish the foregoing are hereby made and
Allergan agrees to execute such further documents as may be reasonably requested
by SUGEN with respect thereto.
7.2 Patent Prosecution. Allergan Patents and SUGEN Patents, and
applications therefore, shall be prosecuted and maintained by [
] provided, however, that the parties shall
consult with and consider the comments of the RMC with respect to the
prosecution of applications for [
] Collaboration Patents for inventions owned by one party
pursuant to Section 7.1 above shall be prosecuted and maintained by the [
] Except as provided below, [ ] shall
be responsible for filing and prosecuting applications for, and maintaining,
jointly owned Collaboration Patents, using counsel of its choice, throughout the
world. [ ] shall reimburse [ ] for one-
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CONFIDENTIAL TREATMENT REQUESTED
half of all expenses [ ] incurs for filing applications for, and maintenance
of, such jointly-owned Collaboration Patents world wide. For jointly-owned
Collaboration Patents that claim inventions relating primarily to the [
] shall be responsible, at its expense subject to reimbursement as
provided below, for prosecuting applications for, and maintaining, such patents,
using counsel of its choice, throughout the world. As provided in Section 4.5 of
the License Agreement, if a Licensed Product is commercially sold, [ ] may
recover [ ] of its costs in prosecuting jointly-owned Collaboration Patents
relating primarily to the [ ] that claim such Licensed Product. In
the event that a party decides not to proceed with prosecuting an application
for, or maintaining, a Collaboration Patent for which it is responsible under
this Section 7.2, it shall give the other party [ ] days' notice before any
relevant deadline and transmit all information reasonable and appropriate
relating to such Collaboration Patent, and such other party shall have the right
to pursue, at its own expense, prosecution of such application for, or
maintenance of, such patent, in which event the party not pursuing such
Collaboration Patent shall assign all of its rights in such patent to the other
party.
7.3 Infringement. The License Agreement shall provide for enforcement
of the patents licensed to Allergan under such License Agreement and defense
against third party claims of infringement, and such matters will be governed
thereby. If any patent infringement matters arise with respect to this
Agreement, the parties will discuss in good faith the manner in which they will
proceed to address such issues.
7.4 Trademarks. Each party shall obtain, own and enforce its own
trademarks with respect to its own activities.
7.5 Disclosure Of Inventions. SUGEN and Allergan will disclose promptly
to each other all discoveries or inventions made hereunder, including
discoveries or inventions made by consultants or contractors of SUGEN and
Allergan pursuant to the Collaboration, prior to any public disclosure or filing
of patent applications and allowing sufficient time for comment and review by
the other party. Without limiting the foregoing, Allergan shall disclose to
SUGEN promptly all compounds made by or on behalf of Allergan that are chemical
modifications of Active Compounds. All compounds comprising Compound Inventions
shall be included within the Collaboration Technology.
7.6 Cross-Licenses Regarding Compound Inventions. SUGEN hereby grants
Allergan an exclusive, world-wide license under SUGEN's rights in the Compound
Inventions, and all Collaboration Patents claiming such Compound Inventions,
solely for use in the Licensed Field. Allergan hereby grants SUGEN an exclusive
option to obtain the exclusive, world-wide license under Allergan's rights in
the Compound Inventions, and all Collaboration Patents claiming such Compound
Inventions, solely for use outside the Licensed Field. Such option may be
exercised in writing prior to the [ ] anniversary of the end of the Term of
the Agreement, and such license shall be subject to SUGEN's agreement to pay
Allergan a commercially reasonable royalty to be negotiated in good faith by the
parties at the time SUGEN exercises such option.
17.
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CONFIDENTIAL TREATMENT REQUESTED
8. REPRESENTATIONS AND WARRANTIES
8.1 Representations And Warranties. Each party represents to the other
that:
(a) Corporate and Partnership Power. It is duly organized and
validly existing under the laws of its state or country of incorporation or
formation, and has full corporate or partnership power and authority to enter
into this Agreement and to carry out the provisions hereof.
(b) Due Authorization. It is duly authorized to execute and
deliver this Agreement and to perform its obligations hereunder, and the person
or persons executing this Agreement on its behalf has been duly authorized to do
so by all requisite corporate or partnership action.
(c) Binding Agreement. This Agreement is legally binding upon
it, enforceable in accordance with its terms. The execution, delivery and
performance of this Agreement by it does not conflict with any agreement,
instrument or understanding, oral or written, to which it is a party or by which
it may be bound, nor violate any material law or regulation of any court,
governmental body or administrative or other agency having jurisdiction over it.
(d) Grant of Rights; Maintenance of Agreements. It has not,
and will not during the term of this Agreement, grant any right to any third
party which would conflict with the rights granted to the other party hereunder.
It has (or will have at the time performance is due) maintained and will
maintain and keep in full force and effect all agreements (including license
agreements) and filings (including patent filings) necessary to perform its
obligations hereunder.
(e) Validity. It is aware of no action, suit or inquiry or
investigation instituted by or before any court or governmental agency which
questions or threatens the validity of this Agreement or of any SUGEN Patent.
(f) Third Party Rights. It is aware of no third party patent
right which would be infringed by its conduct of the Collaboration or
commercialization of Active Compounds as contemplated hereby.
8.2 SUGEN Representations and Warranties. SUGEN represents and warrants
that:
(a) SUGEN owns or holds licenses to the SUGEN Patents and
SUGEN Know-How and has sufficient rights and power to grant the licenses to
Allergan which it purports to grant herein.
(b) [
]
18.
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CONFIDENTIAL TREATMENT REQUESTED
[
]
(c) [
] and
8.3 Disclaimer Concerning Technology. EXCEPT AS SET FORTH IN SECTIONS
8.1(f) AND 8.2 ABOVE, THE TECHNOLOGY AND INTELLECTUAL PROPERTY RIGHT PROVIDED BY
EACH PARTY HEREUNDER IS PROVIDED "AS IS" AND EACH PARTY EXPRESSLY DISCLAIMS ANY
AND ALL WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION
THE WARRANTIES OF DESIGN, MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE,
NONINFRINGEMENT OF THE INTELLECTUAL PROPERTY RIGHTS OF THIRD PARTIES, OR ARISING
FROM A COURSE OF DEALING, USAGE OR TRADE PRACTICES, IN ALL CASES WITH RESPECT
THERETO. Without limiting the generality of the foregoing, each party expressly
does not warrant (i) the success of any study or test commenced under the
Collaboration or (ii) the safety or usefulness for any purpose of the technology
it provides hereunder.
8.4 Disclaimer Concerning Library Compounds. EXCEPT AS SET FORTH IN
SECTIONS 8.1(f) AND 8.2 ABOVE, THE SUGEN LIBRARY COMPOUNDS ARE PROVIDED BY SUGEN
"AS IS" AND SUGEN EXPRESSLY DISCLAIMS ANY AND ALL WARRANTIES OF ANY KIND,
EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION THE WARRANTIES OF DESIGN,
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THE
INTELLECTUAL PROPERTY RIGHTS OF THIRD PARTIES, OR ARISING FROM A COURSE OF
DEALING, USAGE OR TRADE PRACTICES, IN ALL CASES WITH RESPECT THERETO. Without
limiting the generality of the foregoing, SUGEN expressly does not warrant (i)
that any SUGEN Library compound it provides hereunder is free from any third
party rights, except as otherwise provided in Sections 8.1(f) and 8.2, or (ii)
the safety or usefulness for any purpose of any SUGEN Library compound it
provides hereunder.
9. CONFIDENTIALITY; PUBLICATION
9.1 Confidentiality. Except to the extent expressly authorized by this
Agreement or otherwise agreed in writing by the parties, the parties agree that,
for the term of this Agreement and for five (5) years thereafter, the receiving
party shall keep confidential and shall not publish or otherwise disclose and
shall not use for any purpose other than as provided for in this Agreement any
Confidential Information furnished to it by the other party pursuant to this
Agreement, unless the receiving party can demonstrate by competent proof that
such Confidential Information:
(a) was already known to the receiving party, other than under
an obligation of confidentiality, at the time of disclosure by the other party;
19.
<PAGE>
(b) was generally available to the public or otherwise part of
the public domain at the time of its disclosure to the receiving party;
(c) became generally available to the public or otherwise part
of the public domain after its disclosure and other than through any act or
omission of the receiving party in breach of this Agreements;
(d) was disclosed to the receiving party, other than under an
obligation of confidentiality to a third party, by a third party who had no
obligation to the disclosing party not to disclose such information to others;
or
(e) was independently discovered or developed by the receiving
party without the use of Confidential Information belonging to the disclosing
party.
However, (a) and (e) shall not apply with respect to inventions of
which ownership is transferred pursuant to Section 7.1 above. Such inventions
shall be deemed to be the Confidential Information of the party to which they
are assigned.
9.2 Authorized Disclosure. Each party may disclose Confidential
Information belonging to the other party to the extent such disclosure is
reasonably necessary in the following instances:
(a) filing or prosecuting patents relating to Active Compounds
or Licensed Products;
(b) regulatory filings;
(c) prosecuting or defending litigation;
(d) complying with applicable governmental regulations;
(e) conducting pre-clinical or clinical trials of Active
Compounds or Drug Candidates; and
(f) disclosure to Affiliates, sublicensees, employees,
consultants or agents who agree to be bound by similar terms of confidentiality
and non-use at least equivalent in scope to those set forth in this Article 9.
Notwithstanding the foregoing, in the event a party is required to make a
disclosure of the other party's Confidential Information pursuant to this
Section 9.2, it will, except where impracticable, give reasonable advance notice
to the other party of such disclosure and use efforts to secure confidential
treatment of such information at least as diligent as such party would use to
protect its own confidential information, but in no event less than reasonable
efforts. In any event, the parties agree to take all reasonable action to avoid
disclosure of Confidential Information hereunder. The parties will consult with
each other and agree on the provisions of this
20.
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CONFIDENTIAL TREATMENT REQUESTED
Agreement to be redacted in any filings made by the parties with the Securities
and Exchange Commission or as otherwise required by law.
9.3 Publications. Each party primarily responsible for a proposed
publication relating to any activities conducted under the Collaboration and any
Active Compound or Licensed Product, whether written or oral, shall at least
[ ] days before presentation or submission of the proposed publication to a
third party, subject such proposed publication to each member of the RMC for
review in connection with obtaining or preserving patent rights and/or to
determine whether confidential information should be modified or deleted. The
RMC shall have [ ] in which to review each proposed publication. The review
period may be extended for an additional [ ] days when the RMC provides a
reasonable need for such extension, including, but not limited to the
preparation and filing of pertinent patent applications. If after [ ] days,
the other party has not provided the RMC and the publishing party with a valid
request for extension of the review period, such publication shall be considered
approved for submission for publication. By mutual agreement of the parties,
this period may be further extended. The obligations under this Section 9.3
shall not apply to publications of marketing materials for a Licensed Product
after its first commercial sale except where the proposed publication is
reasonably related to obtaining or preserving patent rights.
10. TERM AND TERMINATION
10.1 Term Of The Agreement. This Agreement shall become effective upon
the Effective Date and continue for a term (the "Term of Agreement") of five (5)
years, or such different period if the Agreement is earlier terminated pursuant
to Section 6.4, 10.2, 10.3 or 10.4 or is extended upon terms mutually agreeable
to both parties
10.2 Termination For Material Breach. Each party shall have the right
to terminate this Agreement after [ ] days prior written notice to the
other that the other party has committed a material breach of the Agreement,
unless the other party cures the breach within such period of time, or, in the
case that such breach cannot be cured within such period, the party continues to
use diligent efforts to cure such breach until actually cured. All licenses
granted to the non-breaching party under Section 5.1 of this Agreement shall
survive such termination.
10.3 Termination For Technical Failure. If after the end of the first
[ ] months of the Research Term the parties have not identified a Validated
Target, the RMC shall meet promptly after expiration of such [ ] month
period to consider whether it is unlikely due to technical or scientific
limitations that the parties will be able to identify a Drug Candidate under the
Collaboration. The RMC shall notify the parties of such determination within
[ ] days after the expiration of such [ ] month period. If the RMC
determines that identification of a Drug Candidate is unlikely, then thereafter
Allergan will be entitled to terminate the Agreement on [ ] days written
notice without further obligation, except for any payments owed SUGEN that
accrued prior to such termination and for any obligations that survive as
provided in Section 10.5.
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CONFIDENTIAL TREATMENT REQUESTED
10.4 Termination By Allergan Without Cause. Prior to the end of the
Research Term, but not sooner than [ ] months after the Effective
Date, Allergan may terminate the Agreement without cause. Upon such termination,
(a) Allergan shall pay SUGEN an amount not to exceed [ ] required
to support SUGEN's research during the [
] year period following the effective date of such termination by Allergan,
such amount to be calculated by [ ] but in no event beyond the end of the
Research Term; and (b) Allergan shall grant to SUGEN the Grant- Back License and
shall provide the covenant as set forth in Section 5.3, which shall be
Allergan's only obligation to SUGEN with respect to any termination without
cause under this Section 10.4; provided, however, that the foregoing shall not
limit or constitute a waiver of any other right that SUGEN may have under law or
equity in the event of material breach of this Agreement by Allergan.
10.5 Accrued Rights, Surviving Obligations. Termination of this
Agreement shall not affect any accrued rights of either party other than as may
be provided in Section 10.2. The terms of Sections 5.3, 5.4, 5.5, 6.3, 7.1
through 7.4 (so long as a License Agreement shall remain in effect), Section 7.5
(for so long as necessary to comply therewith with respect to discoveries or
inventions made prior to such termination), Sections 7.6, 9, 10 and 11 of this
Agreement shall survive termination of this Agreement. Promptly after
termination of this Agreement each party shall return or dispose of any Know-How
of the other in the accordance with the instructions of the other, including
without limitation any compounds, assays or other biological or chemical
materials.
11. INDEMNITY
11.1 Indemnification. Each party hereby agrees to save, defend and hold
the other party and its directors, officers, employees, and agents harmless from
and against any and all claims, suits, actions, demands, liabilities, expenses
and/or loss, including reasonable legal expense and attorneys' fees
(collectively, "Claims") for damage to persons or property resulting directly or
indirectly from actions in connection with the Collaboration by the indemnifying
party, its Affiliates, agents or sublicensees, but only to the extent such
Claims result from the negligence or willful misconduct of the indemnifying
party or its Affiliates, agents or sublicensees and do not result from the
negligence of the party seeking indemnification.
11.2 Control Of Defense. Any entity entitled to indemnification under
this Article shall give notice to the indemnifying party of any Claims that may
be subject to indemnification, promptly after learning of such Claim, and the
indemnifying party shall assume the defense of such Claims with counsel
reasonably satisfactory to the indemnified party. If such defense is assumed by
the indemnifying party with counsel so selected, the indemnifying party will not
be subject to any liability for any settlement of such Claims made by the
indemnified party without its consent (but such consent will not be unreasonably
withheld or delayed), and will not be obligated to pay the fees and expenses of
any separate counsel retained by the indemnified party with respect to such
Claims.
22.
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12. GOVERNING LAW; DISPUTE RESOLUTION
12.1 Governing Law. This Agreement shall be governed by California law,
excluding its choice of law rules.
12.2 Legal Compliance. Within thirty days of the date hereof, the
parties shall review in good faith and cooperate in taking such actions to
ensure compliance of this Agreement with all applicable laws.
12.3 Dispute Resolution. Except as provided in Section 2.5, in the
event of any dispute, the parties shall refer such dispute to the CEO of SUGEN
and the CEO of Allergan for attempted resolution by good faith negotiations
within sixty (60) days after such referral is made. During such period of good
faith negotiations, any applicable time periods under this Agreement shall be
tolled. In the event such executives are unable to resolve such dispute within
such sixty (60) day period, either party may invoke such other actions or
remedies as may be available to it under applicable law.
12.4 Jurisdiction And Venue. Except as provided in Sections 2.5 or 12.3
above, any claim or controversy arising out of or related to this Agreement or
any breach hereof shall be adjudicated in the state and federal courts having
jurisdiction over disputes arising in the State of California, and the parties
hereby consent to the jurisdiction and venue of such court.
13. GENERAL PROVISIONS
13.1 Notices. All notices required or permitted to be given under this
Agreement shall be in writing and shall be mailed by registered or certified
mail, Federal Express or DHL, addressed to the signatory to whom such notice is
required or permitted to be given and transmitted by facsimile to the number
indicated below. All notices shall be deemed to have been given when mailed, as
evidenced by the postmark at the point of mailing, or faxed.
All notices to Allergan shall be addressed as follows:
Vision Pharmaceuticals L.P.
c/o Allergan, Inc.
2525 Dupont Drive
Irvine, CA 92623
Attn: Executive Vice President, Research and Development
Fax: (714) 246-6987
with a copy to:
Allergan, Inc.
2525 Dupont Drive
Irvine, CA 92623
Attn: Allergan General Counsel
Fax: (714) 246-4774
23.
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All notices to SUGEN shall be addressed as follows:
SUGEN, INC.
515 Galveston Drive
Redwood City, CA 94063 4720
Attn: President
Fax: (415) 369-0741
with a copy to:
Cooley Godward LLP
Five Palo Alto Square
3000 El Camino Real
Palo Alto, California 94306
Attn: Brian C. Cunningham, Esq.
Fax: (415) 857-0663
Any party may, by written notice to the other, designate a new address
or fax number to which notices to the party giving the notice shall thereafter
be mailed or faxed.
13.2 Force Majeure. No party shall be liable for any delay or failure
of performance to the extent such delay or failure is caused by circumstances
beyond its reasonable control and that by the exercise of due diligence it is
unable to prevent, provided that the party claiming excuse uses its best efforts
to overcome the same.
13.3 Entirety Of Agreement. This Agreement embodies the entire, final
and complete agreement and understanding between the parties and replaces and
supersedes all prior discussions and agreements between them with respect to its
subject matter. No modification or waiver of any terms or conditions hereof
shall be effective unless made in writing and signed by a duly authorized
officer of each party.
13.4 Non Waiver. The failure of a party in any one or more instances to
insist upon strict performance of any of the terms and conditions of this
Agreement shall not constitute a waiver or relinquishment, to any extent, of the
right to assert or rely upon any such terms or conditions on any future
occasion.
13.5 Disclaimer Of Agency. Neither party is, or will be deemed to be,
the legal representative or agent of the other, nor shall either party have the
right or authority to assume, create, or incur any third party liability or
obligation of any kind, express or implied, against or in the name of or on
behalf of another except as expressly set forth in this Agreement.
13.6 Severability. If a court of competent jurisdiction declares any
provision of this Agreement invalid or unenforceable, or if any government or
other agency having jurisdiction over either SUGEN or Allergan deems any
provision to be contrary to any laws, then that provision shall be severed and
the remainder of the Agreement shall continue in full force and
24.
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effect. To the extent possible, the parties shall revise such invalidated
provision in a manner that will render such provision valid without impairing
the parties' original intent.
13.7 Affiliates; Assignment. Except as otherwise provided herein,
neither party may assign its rights or delegate its duties under this Agreement
without the prior written consent of the other party, not to be unreasonably
withheld; provided, however, that either party may assign this Agreement to any
of its Affiliates or to any successor by merger or sale of substantially all of
its business unit to which this Agreement relates in a manner such that the
assignor will remain liable and responsible for the performance and observance
of all its duties and obligations hereunder. This Agreement shall be binding
upon the successors and permitted assigns of the parties. Any attempted
delegation or assignment not in accordance with this Section 13.7 shall be of no
force or effect. Notwithstanding the foregoing provisions of this Section 13.7,
[
]
13.8 Headings. The headings contained in this Agreement have been added
for convenience only and shall not be construed as limiting.
13.9 Limitation Of Liability. No party shall be liable to another for
indirect, incidental, consequential or special damages, including but not
limited to lost profits, arising from or relating to any breach of this
Agreement, regardless of any notice of the possibility of such damages. Nothing
in this Section is intended to limit or restrict the indemnification rights or
obligations of any party.
13.10 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be an original and all of which shall
constitute together the same document.
13.11 Public Disclosure. Except for such disclosure as is deemed
necessary, in the reasonable judgment of a party, to comply with applicable laws
or regulations, no announcement, news release, public statement, publication, or
presentation relating to the existence of this Agreement, or the terms hereof,
will be made without the other party's prior written approval, which approval
shall not be unreasonably withheld. The parties agree that they will use
reasonable efforts to coordinate the initial announcement or press release
relating to the existence of this Agreement in the form attached as Exhibit F,
so that such initial announcement or press release by each is made
contemporaneously.
13.12 Guarantee. Allergan, Inc. guarantees the performance of each
obligation of Vision Pharmaceuticals, L.P. under this Agreement, whether or not
Allergan, Inc. has received any notice which is to be provided to Vision
Pharmaceuticals, Inc. pursuant to this Agreement.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement.
SUGEN INC. VISION PHARMACEUTICALS L.P.
Texas limited partnership, dba Allergan,
by Allergan General, Inc., its general
partner
By: /s/ Stephen Evans-Freke By: /s/ Francis R. Tunney
------------------------------- -------------------------------
Name: Stephen Evans-Freke Name: Francis R. Tunney, Jr.
------------------------------- -------------------------------
Title: Chairman of the Board & CEO Title: Secretary
------------------------------- -------------------------------
Guarantee of performance by:
ALLERGAN, INC.
By:
-------------------------------
Name:
-------------------------------
Title:
-------------------------------
26.
<PAGE>
EXHIBIT A
ALLERGAN BIOMATERIALS
[
]
<PAGE>
EXHIBIT B
FORM OF LICENSE AGREEMENT
<PAGE>
LICENSE AGREEMENT
THIS LICENSE AGREEMENT (the "Agreement") is made and entered into as of
_____________, 199__ (the "Effective Date") by and between SUGEN, INC., a
Delaware corporation ("SUGEN"), VISION PHARMACEUTICALS, L.P., a Texas Limited
Partnership ("Allergan"), with a headquarters at 2525 Dupont Drive, Irvine,
California 90723, and Allergan, Inc., a Delaware corporation, solely as a
guarantor of the performance under this Agreement by Vision Pharmaceuticals,
L.P.
RECITALS
WHEREAS, SUGEN and Allergan have entered into a Collaboration Agreement
dated as of October ___, 1996 (the "Collaboration Agreement"); and
WHEREAS, the parties have jointly engaged in research, discovery and
preclinical investigations on certain compounds potentially useful for
inhibiting neovascularization relating to ophthalmic diseases, and Allergan has
selected certain of such compounds as Drug Candidates, as defined in the
Collaboration Agreement; and
WHEREAS, Allergan intends to file an IND with respect to one or more of
such Drug Candidates and to commence clinical development with the intention of
obtaining regulatory approval of at least one such compound as a Licensed
Product for commercialization;
NOW, THEREFORE, in consideration of the foregoing and the covenants and
premises contained herein, the parties agree as follows:
1. Definitions
As used herein, the following capitalized terms shall have the
following meanings:
1.1 "Active Compound" shall have the meaning ascribed in the
Collaboration Agreement.
1.2 "Advertising and Promotion" means the promotion of Licensed
Products through any means, including without limitation, television
advertisements, advertisements appearing in journals, newspapers, magazines or
other media, including direct mail, seminars and conventions, product samples,
promotional literature, visual aids, three dimensional promotional items, and
other selling materials, hospital formulary presentations, presentations to
state and other governmental formularies, and symposia and leader development
activities.
1.3 "Advertising and Promotion Cost" means actual direct costs incurred
for Advertising and Promotion.
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1.4 "Affiliate" shall mean any company or entity controlled by,
controlling, or under common control with a party hereto and shall include
without limitation any company fifty percent (50%) or more of whose voting stock
or participating profit interest is owned or controlled, directly or indirectly,
by a party, and any company which owns or controls, directly or indirectly,
fifty percent (50%) or more of the voting stock of a party.
1.5 "Allowable Expenses" shall mean, with respect to any particular
Licensed Product, the sum of Manufacturing Costs, Financing Cost Allowance,
Advertising and Promotion Costs, Selling Expenses, Third Party Contract Costs,
Third Party Royalties, Post-Marketing Study Costs.
1.6 "Back-Up Compounds" shall have the meaning ascribed in the
Collaboration Agreement. Back-Up Compounds shall be listed on Exhibit B attached
hereto, which Exhibit shall be updated and amended from time to time to the
extent Allergan selects additional Back-Up Compounds for other Drug Candidates
or substitutes new Back-Up Compounds for existing Back-Up Compounds pursuant to
the Collaboration Agreement.
1.7 "Collaboration Agreement" shall mean the Collaboration Agreement
entered into by and between SUGEN and Allergan as of October ___, 1996.
1.8 "Collaboration Know-How" shall have the meaning ascribed in the
Collaboration Agreement.
1.9 "Collaboration Patents" shall have the meaning ascribed in the
Collaboration Agreement.
1.10 "Collaboration Royalties" shall mean those royalties payable to
SUGEN for Licensed Products under Section 4.1 of this Agreement, or which are
reimbursed by Allergan to SUGEN for the payment of royalties to Third Parties
for sales of Licensed Products.
1.11 "Collaboration Technology"67 shall have the meaning ascribed in
the Collaboration Agreement.
1.12 "Confidential Information"67 shall mean each party's confidential
information, inventions, know how or data disclosed pursuant to this Agreement
or the Collaboration Agreement, including without limitation technical, business
development manufacturing, marketing, financial, personnel and other business
information and plans, and the terms of this Agreement, whether in oral,
written, graphic or electronic form.
1.13 "Development Costs" means all direct and indirect costs allocable
to any particular Drug Candidate calculated as set forth on Exhibit C.
2.
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1.14 "Drug Candidate" shall have the meaning ascribed in the
Collaboration Agreement. Drug Candidates shall be listed on Exhibit B attached
hereto, which Exhibit shall be updated and amended from time to time to the
extent Allergan selects additional Drug Candidates, or substitutes new Drug
Candidates for existing Drug Candidates, as permitted under the Collaboration
Agreement.
1.15 "Field" shall mean the treatment or prevention of ophthalmic
diseases.
1.16 "Financing Cost Allowance" shall mean, with respect to Allergan's
costs associated with sales of Licensed Products, Allergan's financing cost
allowance calculated using the prime rate of the Bank of America for the
reporting period and the average investment during the period in accounts
receivable from sales of and inventories of Licensed Products.
1.17 "IND" shall mean an Investigational New Drug Application filed
with the United States Food and Drug Administration, or the equivalent
application or filing necessary to commence human clinical trials in another
country, as applicable.
1.18 "Licensed Know-How" shall mean all SUGEN Know-How and SUGEN's
interest in Collaboration Know-How that is necessary or useful to the
manufacture, use, sale, offer for sale or import of Licensed Products, including
without limitation all information obtained from screening activities in the
course of the work conducted under the Collaboration Agreement.
1.19 "Licensed Patents" shall mean all SUGEN Patents and all
Collaboration Patents that would be infringed by the manufacture, use, sale,
offer for sale or import of Licensed Products, but for the license granted
herein, all of which shall be listed on Exhibit A hereto, as amended from time
to time.
1.20 "Licensed Product" shall mean a pharmaceutical product containing
a Drug Candidate or a Back-Up Compound therefor, which product has received
Regulatory Approval for commercial marketing and sale for use in the Field, and
including all formulations, line extensions, or modes of administration thereof.
1.21 "Licensed Technology" shall mean the Licensed Patents and the
Licensed Know-How.
1.22 "Manufacturing Costs" shall mean, with respect to Licensed
Products sold during a particular quarter: (a) the actual costs of manufacturing
and packaging the Licensed Products, consisting of the cost of all raw materials
and components, the direct labor costs associated with such manufacturing and
packaging, including fully allocated benefits for such direct labor costs and
allocated overhead costs associated with such manufacturing and packaging, and
(b) costs of handling and distribution within Allergan
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CONFIDENTIAL TREATMENT REQUESTED
or its Affiliates (but not including shipping or freight charges deducted under
the Net Sales calculation for Licensed Products), all in accordance with
generally accepted accounting principles consistently applied.
1.23 "Net Sales" shall mean, with respect to a Licensed Product, the
amount billed for sales of such Licensed Product to Third Parties less the
following items, as allocable to such product: [
]
1.24 "NDA" shall mean a New Drug Application filed with the United
States Food and Drug Administration, the equivalent community application filed
in the European Union, or the equivalent application filed as a national
application in Japan, the United Kingdom, France, Germany, Spain or Italy.
1.25 "Option Market" shall mean the countries listed in Exhibit D.
1.26 "Post-Marketing Study Costs" shall mean direct costs which are
associated with but not limited to regulatory, medical, product surveillance,
and pharmacoeconomic studies for a Licensed Product at any time following
Regulatory Approval of such Licensed Product and any Phase IIIb studies
conducted prior to Regulatory Approval.
1.27 "Profit" shall mean, with respect to any particular Licensed
Product, Net Sales less the following items, as allocable to such Licensed
Product: (i) Allowable Expenses and (ii) Collaboration Royalties.
1.28 "Profit Share Option" shall have the meaning ascribed in Section
5.1.
1.29 "Regulatory Approval" shall mean any and all approvals (including
price and reimbursement approvals), licenses, registrations, or authorizations
of any country, federal, state or local regulatory agency, department, bureau or
other government entity that is necessary for the manufacture, use, storage,
import, transport and/or sale of a Licensed Product in a country.
1.30 "Selling Expenses" shall mean allocated direct costs of the sales
force that sells a particular Licensed Product, and including training, sales
bulletins and price lists and other communications, sales meetings, contract
specialty force, consultants, call reporting and other monitoring/tracking
costs, district and regional sales management, home office personnel who are
significantly dedicated to such Licensed Product (such as product manager,
advertising promotion manager and market research specialist) and other
ancillary services, all of the foregoing only to the extent directly allocable
to activities relating to the marketing or selling of such Licensed Product.
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1.31 "SUGEN Know-How" shall have the meaning ascribed in the
Collaboration Agreement.
1.32 "SUGEN Patents" shall have the meaning ascribed in the
Collaboration Agreement.
1.33 "Third Party" shall mean any person or entity other than Allergan
and SUGEN, and their respective Affiliates.
1.34 "Third Party Contract Costs" shall mean costs charged by a Third
Party to Allergan for the performance of services related to the manufacturing,
marketing, sale or distribution of Licensed Products.
1.35 "Third Party Royalties"2 means royalties payable by Allergan to a
Third Party in respect of the sale of Licensed Products.
1.36 "Valid Claim" shall mean a claim in an issued, unexpired patent
that has not been held invalid or unenforceable in an unappealed and
unappealable judgment of a court of competent jurisdiction.
2. Licenses
2.1 License to Allergan.2 Subject to the other provisions of this
Agreement, SUGEN hereby grants to Allergan the following rights and licenses:
(a) an exclusive, world-wide royalty-free license under the
Licensed Technology to make and to use Drug Candidates and Back-Up Compounds
therefor, in order to conduct pre-clinical and clinical development of such
compounds in order to obtain Regulatory Approval for use in the Field as
Licensed Products;
(b) an exclusive, world-wide, royalty-bearing license under
the Licensed Technology, to make, have made, use, sell, offer for sale, and
import Licensed Products.
2.2 Sublicensing. Allergan shall have the right to sublicense the
rights granted by SUGEN in Section 2.1 to (i) Affiliates, (ii) to third parties
in countries in the Option Market, during the term of the Profit Share Option
granted in Section 5.1, or after SUGEN's exercise of such option, with the
approval of SUGEN, which shall not be unreasonably withheld, and (iii) to third
parties in countries in the Option Market after the term of the option granted
in Section 5.1, if SUGEN does not exercise such Profit Share Option, and all
countries outside the Option Market, upon notice to SUGEN. Each such sublicense
shall be on terms substantially consistent with those provided in this
Agreement.
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CONFIDENTIAL TREATMENT REQUESTED
2.3 Due Diligence. Allergan shall devote the same degree of attention,
resources and diligence to its efforts to develop, manufacture, market and sell
Licensed Products as it devotes to its other compounds of equivalent economic
potential. In the event that Allergan does not file an IND covering a Drug
Candidate or a Back-Up Compound therefor [ ] after Allergan designates such
Drug Candidate, then such Active Compound and all Back-Up Compounds relating to
such compound shall no longer be Drug Candidates, and Allergan shall surrender
all rights to such compounds under this Agreement and the Collaboration
Agreement.
2.4 Obligation to Inform. Allergan agrees to keep SUGEN fully informed
on a reasonable basis of the development and commercialization of all Licensed
Products, including but not limited to providing periodic written updates on the
progress of each filing for Regulatory Approval.
3. PRODUCT DEVELOPMENT; MANUFACTURE AND SUPPLY
3.1 Development of Drug Candidates By Allergan.
(a) Product Development. Allergan shall be responsible for
preparing and providing to SUGEN a Development Plan for each Drug Candidate (or
Back-Up Compound, if in development) selected by Allergan for development
pursuant to Section 4.5 of the Collaboration Agreement and licensed hereunder.
Allergan shall be responsible for funding and performing the Development Plan
world-wide. Allergan agrees to use commercially reasonable efforts to conduct
each such Development Plan in order to obtain Regulatory Approval of Licensed
Products.
(b) Disclosure of Study Data. Allergan will provide SUGEN
reports at least [ ] summarizing all preclinical, clinical,
regulatory, commercial and other information, protocols, procedures, results and
communications that result from the activities under the Development Plan or
that otherwise relate to development efforts conducted by or on behalf of
Allergan or its Affiliates with respect to Drug Candidates and Back-Up
Compounds. In each such report, Allergan shall provide SUGEN a description of
the progress made during the [ ] towards obtaining Regulatory Approval of
Licensed Products and the plans for the [ ]. In addition, Allergan will
meet with SUGEN at least once every [ ] to discuss results and progress
of Allergan's development efforts hereunder, and will give reasonable
consideration to any comments and suggestions from SUGEN regarding such results
or efforts.
3.2 Manufacture and Supply by Allergan. Allergan will be responsible for
providing at its own expense the supply of all Drug Candidate and Back-Up
Compounds
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CONFIDENTIAL TREATMENT REQUESTED
necessary for preclinical and clinical development of Licensed Products
and all Licensed Products necessary for commercialization worldwide.
4. PAYMENTS
4.1 Royalties. Allergan shall pay SUGEN a royalty of [ ] on
world-wide Net Sales by Allergan, its Affiliates or its sublicensees. For Net
Sales in a country in which: (i) no Valid Claim of a Licensed Patent exists, and
(ii) there is no claim in a pending patent application included in the Licensed
Patents in such country covering the Licensed Product (with any application
which has been filed for more than [ ] without issuance being no longer
deemed "pending"), and (iii) [
] then the payments due to SUGEN under this
Section 4.1 with respect to the Net Sales in such country at such time shall be
[ ] In the event Valid Claims covering the Licensed Product are established
or reestablished in such country, or any [
] the payments due to SUGEN with respect to Net Sales
after such date under this Section 4.1 shall revert to the full percentage set
forth above.
4.2 Reimbursement of Royalties Due to Third Parties. In addition to the
royalty obligation under Section 4.1, Allergan will reimburse SUGEN all
royalties paid by SUGEN to ArQule on Licensed Products sold by Allergan in any
country, such reimbursement by Allergan not to exceed a total of [ ]. SUGEN
will provide to Allergan the information reasonably necessary to determine such
third party royalties, and such royalties shall be paid at the same time as and
in addition to the royalty payments made under Section 4.1.
4.3 Credit of Milestone Payments. Commencing with the [ ] calendar
quarter after the calendar quarter in which the first royalty-bearing sale of a
Licensed Product occurs in any country, Allergan may credit against royalties
otherwise due SUGEN under Section 4.1 of this Agreement an amount equal to
[ ] of the total amounts of payments for milestones [ ] paid by Allergan
to SUGEN pursuant to Section 6.3 of the Collaboration Agreement (the "Creditable
Amount"); provided, however, that the amount so credited in any calendar quarter
shall not exceed [ ] of the royalties otherwise payable for such quarter by
Allergan under Section 4.1 of this Agreement across all Licensed Products, and
further provided that the aggregate amount so credited shall not exceed the
Creditable Amount.
4.4 Period of Royalty Obligation. The royalty obligation under Section
4.1 shall commence on the date of first commercial sale of a Licensed Product in
a country and shall expire, on a product-by-product and country-by-country
basis, upon the later of:
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CONFIDENTIAL TREATMENT REQUESTED
(a) the last to expire patent containing a Valid Claim that covers the
manufacture, use, sale, offer for sale or import of such Licensed Product in a
country, or (b) the date that is [ ] after the date of first commercial
sale of such Licensed Product in such country.
4.5 Credit for Certain Patent Costs. Allergan may credit against
royalties otherwise due SUGEN under Section 4.1 of this Agreement an amount
equal to [ ] of the total amounts expended by Allergan, pursuant to Section
7.2 of the Collaboration Agreement, in prosecuting those jointly-owned
Collaboration Patents relating primarily to the [ ] (as defined in
the Collaboration Agreement) that claim the manufacture, use or sale of Licensed
Products being sold by Allergan or its Affiliates or sublicensees; provided,
however, that the total of the amount so credited plus amounts credited under
Sections 4.3 and 7.4(c) in any calendar quarter shall not exceed [ ] of the
royalties otherwise payable for such quarter by Allergan under Section 4.1 of
this Agreement across all Licensed Products.
5. PROFIT SHARING
5.1 Profit Share Option.2 Allergan hereby grants SUGEN an option (the
"Profit Share Option"), exercisable as provided below, to pay Allergan a share
of the Development Costs of developing Licensed Products in the Option Market,
in order to obtain the right to a share in the Profits derived from sales of
Licensed Products in the Option Market. In order to evaluate the Profit Share
Option, Allergan shall give SUGEN written notice as soon as practicable after
completion of Phase I that Allergan intends in good faith to commence the first
Phase II (or equivalent) clinical trial on a Drug Candidate or Back-Up Compound
in the Option Market. Such notice shall include details about the plans and
reasonably expected Development Costs for obtaining Regulatory Approval of such
Drug Candidate as a Licensed Product for sale in the Option Market. Allergan and
SUGEN shall exchange sales projections and any available marketing analyses then
in their possession for such Licensed Products in the Option Market. Such
Development Costs, sales projections and market analyses shall be provided
without warranty. If SUGEN elects to exercise the Profit Share Option, SUGEN
shall provide Allergan written notice of such exercise within [ ] after the
date of receipt of such notice from Allergan, and the parties shall proceed as
set forth below.
5.2 Commitment to Pay Development Costs. If SUGEN exercises the Profit
Share Option, SUGEN agrees to pay Allergan for [ ] of the Development Costs
for the Option Market. Within [ ] days after the end of a particular
calendar quarter, Allergan shall provide SUGEN a report and invoice setting
forth a summary of the Development Costs incurred in such quarter and the amount
equal to SUGEN's share hereunder of such costs, and an updated Development Plan
and the budget for the
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CONFIDENTIAL TREATMENT REQUESTED
remaining period of development. SUGEN shall make payment to Allergan of its
share of such Development Costs within [ ] days of receipt of such invoice.
5.3 Right to Share of Profits. If SUGEN has made payment of all amounts
of its share of the Development Costs, Allergan shall pay SUGEN an amount equal
to [ ] of the Profits resulting from sales of Licensed Product in [ ]
and [ ]of the Profits from sales of Licensed Product in all other countries
of the Option Market. Notwithstanding the foregoing, on a country-by-country
basis in each country of the Option Market where a Valid Claim exists,
commencing on the date (the "Limitation Date") that is [ ] prior to the
expiration of the last to expire of the patents for the Licensed Technology that
have issued in a particular country in the Option Market covering the Licensed
Product, the amount of the Profit that SUGEN shall be paid based on sales of
such Licensed Products in such country after the applicable Limitation Date
shall not exceed, as a percentage basis of the Net Sales attributable to such
sales of Licensed Products, the percentage that is represented by [
] divided by (b) [ ] during such quarter. For illustrative purposes, such
calculation of SUGEN's share of the Profits for sales of Licensed Products made
after the Limitation Date in a particular country in the Option Market shall not
exceed, for a particular quarter:
[
]
where "prior" quarter means the full calendar quarter just prior to the
Limitation Date.
5.4 Payment of Share. Within [ ] after the end of a particular
calendar quarter, Allergan shall provide SUGEN a report and statement setting
forth a summary of the total Net Sales of Licensed Products in the Option Market
during such quarter and a summary of the items deducted from the Net Sales, as
provided in Section 1.24, in calculating the Profit on such Licensed Products
sales in the Option Market. Such calculations shall be broken into detail with
respect to [ ] as one territory, and the rest of the Option Market as the
other territory, and the statement shall indicate the total amount owed SUGEN as
its share of such Profit, based on the above share calculation. Allergan shall
make payment to SUGEN of its share of such Profits at the same time as providing
such report, but in no event later than [ ] after the end of the applicable
quarter.
5.5 Right to Terminate Funding. At any time, SUGEN shall have the right
to terminate its funding obligation under Section 5.2 on [ ] written notice,
and in the event of such termination SUGEN shall not be entitled to any share of
Profits or to any refund of Development Costs paid by SUGEN.
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CONFIDENTIAL TREATMENT REQUESTED
6. PAYMENT: RECORD; AUDIT
6.1 Payments; Reports. All amounts payable to SUGEN under this Agreement shall
be paid in U.S. dollars. The royalty obligation under Section 4.1 shall accrue
at the time of sale of the Licensed Products to a third party. Royalty
obligations that accrue during a particular quarter, shall be paid within
[ ] after the end of each calendar quarter, and other payments owing shall
be made as specified herein. Each payment of royalties and amounts due to SUGEN
under Sections 4.1 and 4.2 shall be accompanied by a statement of the amount of
Net Sales during such period on a product-by-product and country-by-country
basis, and all other information necessary to determine the appropriate amount
of such payments, and any additional information or reports required under the
Agreement.
6.2 Exchange Rate. The rate of exchange to be used in computing the
amount of currency equivalent in United States dollars due SUGEN shall be made
at the period end rate of exchange quoted on the last business day of the
royalty period in the Wall Street Journal.
6.3 Records and Audit. During the term of this Agreement and for a period of
[ ] years thereafter, Allergan shall keep complete and accurate records
pertaining to the sale or other disposition of the Licensed Products
commercialized by it, in sufficient detail to permit SUGEN to confirm the
accuracy of all payments due hereunder and compliance with the covenant set
forth in Section 2.3. SUGEN shall have the right to cause an independent,
certified public accountant to audit such records to confirm Allergan's Net
Sales, royalty payments, and, if applicable, calculation of Profits; provided,
however, that such auditor shall not disclose Allergan's Confidential
Information to SUGEN, except to the extent such disclosure is necessary to
verify the amount of royalties and other payments due under this Agreement. Such
audits may be exercised once a year, within [ ] years after the royalty or
Profits period to which such records relate, upon notice to Allergan and during
normal business hours. Any amounts shown to be owing by such audits shall be
paid immediately with interest in the amount of [ ] per month (or the
maximum amount permitted by law, if less) from the date first owed until paid.
SUGEN shall bear the full cost of such audit unless such audit discloses a
variance in the amounts paid by Allergan of more than [ ] from the amount of
royalties and/or other payments actually owed. In such case, Allergan shall bear
the full cost of such audit. The terms of this Section shall survive any
termination or expiration of this Agreement for a period of [ ] years.
6.4 Withholding of Taxes. Any withholding of taxes levied by tax
authorities outside the United States on the payments hereunder shall be borne
by SUGEN and deducted by Allergan from the sums otherwise payable by it
hereunder for payment to the proper tax authorities on behalf of SUGEN. Allergan
agrees to cooperate with SUGEN in
10.
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the event SUGEN claims exemption from such withholding or seeks deductions under
any double taxation or other similar treaty or agreement from time to time in
force, such cooperation to consist of providing receipts of payment of such
withheld tax or other documents reasonably available to Allergan. If in the
opinion of either party the provisions of this Section become extremely
burdensome, the parties agree to meet and discuss such other options as may be
available to them.
6.5 Blocked Currency. In each country where the local currency is
blocked and cannot be removed from the country, at the election of Allergan,
royalties accrued in that country may be paid to SUGEN in the country in local
currency by deposit in a local bank designated by SUGEN.
6.6 Non-Monetary Consideration. In the event Allergan or its Affiliates
or sublicensees receives any non-monetary consideration in connection with the
sale or other commercial transfer of Licensed Products, Allergan's royalty and,
if applicable, reimbursement obligations to SUGEN under Articles 3, 4 and 5
shall be based on the monetary value of such other consideration. In such case,
Allergan shall disclose the terms of such arrangement to SUGEN and the parties
shall endeavor in good faith to agree on such monetary value.
7. OWNERSHIP; PATENTS
7.1 Ownership. Allergan acknowledges and agrees that SUGEN is and shall
remain the sole owner of the SUGEN Technology and SUGEN's interest in the
Collaboration Technology and that Allergan has no rights therein other than the
license rights specifically granted herein or as may be granted by the
Collaboration Agreement.
7.2 Patents. Provision is made in the Collaboration Agreement for the
ownership, filing, prosecution and maintenance of Collaboration Patents, SUGEN
Patents and Allergan Patents and such matters shall be governed thereby.
7.3 Infringement of Licensed Patents by Third Parties.67
(a) Notice. Each party shall promptly notify the other in
writing of any alleged or threatened infringement of the Licensed Patents which
may adversely impact the rights of the parties hereunder, of which it becomes
aware.
(b) Cooperation. Both parties to this Agreement agree that
neither will notify a Third Party (except for the parties' outside litigation
counsels) of the infringement of any of the Licensed Patents by a third party in
the Field without first obtaining the consent of the other party, which consent
shall not be unreasonably denied. Both parties shall use their best efforts in
cooperating with each other to terminate such infringement without litigation,
with each party being responsible for the payment of its
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CONFIDENTIAL TREATMENT REQUESTED
own out-of-pocket costs (including legal costs) relating thereto. Any monetary
settlement reached shall, after reimbursement of both parties for such
out-of-pocket costs, be divided between the parties in accordance with their
economic interests as directly related to the profitability of the Licensed
Products.
(c) Enforcement Action. In the event that any alleged or
threatened infringement of the Licensed Patents by a third party in the Field
cannot be terminated without litigation, Allergan shall have the first right,
but not the obligation, to take appropriate action against any person or entity
directly or contributorily infringing such Licensed Patent. In the event
Allergan fails to institute an infringement suit or take other reasonable action
in response to such infringement within ninety (90) days after notice in
accordance with paragraph (a) above, SUGEN shall have the right, but not the
obligation, upon thirty (30) days' notice to Allergan to institute such suit or
take other appropriate action in its own name, the joint owner's name, or both.
Regardless of which party brings such enforcement action, the other party hereby
agrees to cooperate reasonably in any such effort, including, if required,
bringing a legal action or furnishing a power of attorney. The party not
bringing the action shall have the right to participate in such action at its
own expense with its own counsel and any recovery obtained by settlement or
otherwise shall be disbursed as follows: Each party shall first recover any
reasonable expenses incurred in such action (including counsel fees).
Thereafter, the parties shall share any remaining recovery in accordance with
their economic interests as directly related to the profitability of the
product.
7.4 INFRINGEMENT OF THIRD PARTY PATENT RIGHTS.
(a) Joint Strategy. In the event that the manufacture, use or
sale of a Licensed Product becomes the subject of a claim of infringement of a
patent, copyright or other proprietary right anywhere in the world, and without
regard to which party is charged with said infringement, and the venue of such
claim, the parties shall promptly confer to discuss the claim.
(b) Defense. Unless the parties otherwise agree, [ ] shall
have the first right but not the obligation to assume the primary responsibility
at its expense for the conduct of the defense of any such claim. [ ] shall
have the right, but not the obligation, to participate in any such suit at its
sole option and at its own expense. Each party shall reasonably cooperate with
the party conducting the defense of the claim. Neither party shall enter into
any settlement that affects the other party's rights or interests without such
other party's written consent, not to be unreasonably withheld. If [ ] in
its good faith, reasonable judgment determines that payment must be made to a
third party (the "Third Party Payment") in order to avoid infringement of such
third party's patent, [ ] shall make such payment.
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(c) Allergan Payment Credit. Allergan may credit against
royalties otherwise due SUGEN under Section 4.1 of this Agreement an amount
equal to [ ] of the sum of the following payments made or expenses incurred
by [ ] (i) Third Party Payments, (ii) payments resulting from a final court
order or settlement agreement entered into in good faith in connection with the
disposition of a third party claim of infringement, and (iii) costs and expenses
actually incurred in defending against a third party infringement claim;
provided, however, that the amount so credited in any calendar quarter, together
with any amount creditable for such quarter pursuant to Section 4.3 of this
Agreement, shall not exceed [ ] of the royalties otherwise payable for such
quarter by Allergan. Any amounts which Allergan is entitled to credit against
royalties under this Section 7.4(c) shall be carried forward until all such
amount have been credited.
7.5 Patent Marking. Allergan shall mark, if necessary, all products
manufactured, used or sold under the terms of this Agreement, or their
containers, in accordance with the applicable patent marking laws, as required.
8. CONFIDENTIALITY
8.1 Confidentiality. Except to the extent expressly authorized by this
Agreement or otherwise agreed in writing by the parties, each party agrees that,
for the term of this Agreement and for five (5) years thereafter, it shall keep
confidential and shall not publish or otherwise disclose and shall not use for
any purpose other than as provided for in this Agreement any Confidential
Information furnished to it by the other party pursuant to this Agreement unless
the receiving party can demonstrate by competent proof that such Confidential
Information:
(a) was already known to the receiving party, other than under
an obligation of confidentiality, at the time of disclosure by the other party;
(b) was generally available to the public or otherwise part of
the public domain at the time of its disclosure to the receiving party;
(c) became generally available to the public or otherwise part
of the public domain after its disclosure and other than through any act or
omission of the receiving party in breach of such Agreements;
(d) was disclosed to the receiving party, other than under an
obligation of confidentiality to a third party, by a third party who had no
obligation to the disclosing party not to disclose such information to others;
or
13.
<PAGE>
(e) was independently discovered or developed by the receiving
party without the use of Confidential Information belonging to the disclosing
party.
8.2 Authorized Disclosure. Each party may disclose Confidential
Information belonging to the other party to the extent such disclosure is
reasonably necessary in the following instances:
(a) filing or prosecuting patents relating to Licensed
Products;
(b) regulatory filings;
(c) prosecuting or defending litigation;
(d) complying with applicable governmental regulations;
(e) conducting pre clinical or clinical trials of Licensed
Products; and
(f) disclosure to Affiliates, sublicensees, employees,
consultants or agents who agree to be bound by similar terms of confidentiality
and non-use at least equivalent in scope to those set forth in this Article 8.
Notwithstanding the foregoing, in the event a party is required to make
a disclosure of the other party's Confidential Information pursuant to this
Section 8.2 it will, except where impracticable, give reasonable advance notice
to the other party of such disclosure and endeavor in good faith to secure
confidential treatment of such information. In any event, the parties agree to
take all reasonable action to avoid disclosure of Confidential Information
hereunder. The parties will consult with one another and agree on the provisions
of this Agreement to be redacted in any filings made by the parties with the
United States Securities and Exchange Commission or as otherwise required by
law.
9. REPRESENTATIONS AND WARRANTIES
9.1 Representations and Warranties. Each party represents and warrants
that:
(a) Corporate or Partnership Power. It is duly organized and
validly existing under the laws of its state or country of incorporation or
organization, and has full corporate or partnership power, as applicable, and
authority to enter into this Agreement and to carry out the provisions hereof.
(b) Due Authorization. It is duly authorized to execute and
deliver this Agreement and to perform its obligations hereunder. The person or
persons executing this Agreement on its behalf has been duly authorized to do so
by all requisite corporate or partnership action, as applicable.
14.
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
(c) Binding Agreement. This Agreement is legally binding upon
it and enforceable in accordance with its terms. The execution, delivery and
performance of this Agreement does not conflict with any agreement, instrument
or understanding, oral or written, to which it is a party or by which it may be
bound, nor violate any material law or regulation of any court, governmental
body or administrative or other agency having jurisdiction over it.
(d) Grant of Rights; Maintenance of Agreements. It has not,
and will not during this Agreement, grant any right to any third party which
would conflict with the rights granted to the other party hereunder. It has (or
will have at the time performance is due) maintained and will maintain and keep
in full force and effect all agreements (including license agreements) and
filings (including patent filings) necessary to perform its obligations
hereunder.
(e) Validity. It is aware of no action, suit or inquiry or
investigation instituted by or before any court or governmental agency which
questions or threatens the validity of this Agreement or of any SUGEN Patent.
(f) Third Party Rights. Other than as disclosed to the other
Party, it is aware of no third party patent right that would be infringed by the
commercialization of a Drug Candidate or Back-Up Compound as contemplated
hereby.
9.2 Sugen Representations and Warranties. SUGEN represents and warrants
that it:
(a) owns or holds licenses to the SUGEN Patents and SUGEN
Know-How and has sufficient rights and power to grant the licenses to Allergan
which it purports to grant herein.
(b) [
]
and
(c) [
]
[
]
15.
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
9.3 SUGEN Disclaimer. EXCEPT AS SET FORTH IN SECTIONS 9.1(f) AND 9.2
ABOVE, THE LICENSED TECHNOLOGY IS PROVIDED "AS IS" AND SUGEN EXPRESSLY DISCLAIMS
ANY AND ALL WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, INCLUDING WITHOUT
LIMITATION THE WARRANTIES OF DESIGN, MERCHANTABILITY, FITNESS FOR A PARTICULAR
PURPOSE, NONINFRINGEMENT OF THE INTELLECTUAL PROPERTY RIGHTS OF THIRD PARTIES OR
ARISING FROM A COURSE OF DEALING, USAGE OR TRADE PRACTICES, IN ALL CASES WITH
RESPECT THERETO. Without limiting the generality of the foregoing, SUGEN
expressly does not warrant (i) the success of any development or clinical trial,
study or test commenced by Allergan under this Agreement, or (ii) the safety or
usefulness for any purpose of the Drug Candidates or the Licensed Technology.
9.4 Allergan Disclaimer. EXCEPT AS SET FORTH IN SECTIONS 9.1(f)AND 9.2
ABOVE, ALLERGAN EXPRESSLY DISCLAIMS ANY AND ALL WARRANTIES OF ANY KIND,
EXPRESSED OR IMPLIED, INCLUDING WITHOUT LIMITATION THE WARRANTIES OF DESIGN,
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NONINFRINGEMENT OF THE
INTELLECTUAL PROPERTY RIGHTS OF THIRD PARTIES OR ARISING FROM A COURSE OF
DEALING, USAGE OR TRADE PRACTICES, IN ALL CASES WITH RESPECT THERETO. Without
limiting the generality of the foregoing, Allergan expressly does not warrant
(i) the success of any development or clinical trial, study or test commenced by
Allergan under this Agreement, or (ii) regulatory approval, product
introduction, safety, usefulness or commercial success of any Licensed Product.
9.5 SUGEN Grant of Rights. SUGEN has not, and will not during the term
of this Agreement, grant any right to any third party which would directly
conflict with and materially impair the rights granted to Allergan hereunder.
9.6 SUGEN Right to Sublicense. SUGEN represents and warrants that it
has all right, power and authority necessary to sublicense Allergan under rights
licensed to SUGEN from third parties which are necessary for Allergan to exploit
the Licensed Technology as contemplated in Section 2.1.
10. INDEMNIFICATION
10.1 Indemnification. Each party hereby agrees to save, defend and hold
the other party and its agents and employees harmless from and against any and
all suits,
16.
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
claims, actions, demands, liabilities, expenses and/or loss, including
reasonable legal expense and attorneys' fees, other than claims for infringement
as provided in Section 7.4, (collectively, "Claims") resulting directly or
indirectly from actions by the indemnifying party, its Affiliates, agents or
sublicensees in connection with the manufacture, use or sale of Licensed
Products, but only to the extent such Claims result from the negligence and
willful misconduct of the indemnifying party or its employees and agents and
only to the extent such Claims do not result from the negligence of the party
seeking indemnification.
10.2 Control of Defense. Any entity entitled to indemnification under
this Article shall give written notice to the indemnifying party of any Claims
that may be subject to indemnification, promptly after learning of such Claim,
and the indemnifying party shall assume the defense of such Claims with counsel
reasonably satisfactory to the indemnified party. If such defense is assumed by
the indemnifying party with counsel so selected, the indemnifying party will not
be subject to any liability for any settlement of such Claims made by the
indemnified party without its consent (but such consent will not be unreasonably
withheld or delayed), and will not be obligated to pay the fees and expenses of
any separate counsel retained by the indemnified party with respect to such
Claims.
11. TERM AND TERMINATION OF AGREEMENT
11.1 Term. Except as provided under Section 11.2 below, (a) the term of
this Agreement shall commence upon the Effective Date and shall expire on the
expiration date of the last to expire royalty obligation or obligation to pay a
share of Profit, and (b) upon expiration of this Agreement, Allergan shall have
a fully paid, exclusive license to use any Licensed Know How to make, have made,
use and sell Licensed Products for use within the Field, and a fully paid,
nonexclusive license under SUGEN's interest in the Licensed Know-How for any
other use within the Field.
11.2 Termination for Material Breach. Each party shall have the right
to terminate the Agreement after [ ] written notice to the other that the
other is in material breach of the Agreement, unless the other party cures the
breach before the expiration of such period of time, or, in the case that such
breach cannot be cured within such period, the party continues to use diligent
efforts to cure such breach until actually cured. In addition, this Agreement
shall terminate in the event the Collaboration Agreement is terminated pursuant
to Section 5.3 thereof. Upon termination, all licenses granted to the
non-breaching party shall survive and all licenses granted to the breaching
party under the Agreement shall automatically terminate, but such termination
shall not impair any other rights the non-breaching party may have at law or
equity.
17.
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
11.3 Termination at Election of Allergan. Allergan may terminate this
Agreement in its entirety at any time upon not less than [ ] days notice to
SUGEN, without liability to SUGEN; provided, however, that after such
termination Allergan shall not directly or indirectly make, have made, use, or
sell any Licensed Products. Allergan may terminate this Agreement with respect
to any Drug Candidate and/or Back-Up Compound at any time upon not less than
[ ] notice to SUGEN, provided, however, that after such termination
Allergan shall not directly or indirectly make, have made, use or sell any
products incorporating such Drug Candidate or Back-Up Compound.
11.4 Termination of Collaboration Agreement. This Agreement shall
automatically terminate if the Collaboration Agreement terminates pursuant to
the following sections of the Collaboration Agreement: Sections 5.3, 6.4, 10.2
due to Allergan's uncured material breach, 10.3 or 10.4.
11.5 Accrued Rights; Surviving Obligations. Termination of this
Agreement shall not affect any accrued rights of either party. The terms of
Articles 7, 8, 10, 11 and 12 of this Agreement shall survive termination of this
Agreement. Promptly after termination of this Agreement each party shall return
or dispose of any Confidential Information and other know how of the other party
in accordance with its instructions, including without limitation any compounds,
assays or other biological or chemical materials.
12. GOVERNING LAW; DISPUTE RESOLUTION
12.1 Governing Law. This Agreement shall be governed by California law,
excluding its choice of law rules.
12.2 Dispute Resolution. In the event of any dispute, the parties shall
refer such dispute to the Chief Executive Officer or President of each of SUGEN
and Allergan for attempted resolution by good faith negotiations within thirty
(30) days after such referral is made during which time, any applicable statutes
of limitations and/or time periods hereunder shall be tolled. In the event such
officers are unable to resolve such dispute within such thirty (30) day period,
either party may invoke the provisions of Section 12.3 below.
12.3 Jurisdiction and Venue. Except as provided in Section 12.2 above,
any claim or controversy arising out of or related to this Agreement or any
breach hereof shall be submitted to a state or federal court of general
jurisdiction in the State of California, and the parties hereby consent to the
jurisdiction and venue of such court.
18.
<PAGE>
13. GENERAL PROVISIONS
13.1 Notices. All notices required or permitted to be given under this
Agreement shall be in writing and shall be mailed by registered or certified
mail, Federal Express or DHL addressed to the signatory to whom such notice is
required or permitted to be given and transmitted by facsimile to the number
indicated below. All notices shall be deemed to have been given when mailed, as
evidenced by the postmark at the point of mailing, or faxed.
All notices to Allergan shall be addressed as follows:
Vision Pharmaceuticals, L.P.
c/o Allergan, Inc.
Attention: Vice President, Corporate Development
2525 Dupont Drive
Irvine, CA 92713
Fax: (714) 246-4774
with a copy to:
Allergan, Inc.
Attention: General Counsel
2525 Dupont Drive
Irvine, CA 92713
Fax: (714) 246-4774
All notices to SUGEN shall be addressed as follows:
SUGEN, INC.
515 Galveston Drive
Redwood City, CA 94063 4720
Attn: President
Fax: (415) 369-0741
19.
<PAGE>
with a copy to:
Cooley Godward L.L.P.
Five Palo Alto Square
3000 El Camino Real
Palo Alto, California 94306
Attn: Brian C. Cunningham, Esq.
Fax: (415) 857-0663
Any party may, by written notice to the other, designate a new address
or fax number to which notices to the party giving the notice shall thereafter
be mailed or faxed.
13.2 Compliance with Laws. Allergan and SUGEN shall review in good
faith and cooperate in taking actions to ensure the compliance of this Agreement
with all applicable laws. Allergan and SUGEN shall each provide the other party
with such reasonable assistance as may be required for the party requesting such
assistance to comply with all laws, ordinances, rules, regulations and the like
of all governmental units or agencies having jurisdiction pertaining to this
Agreement, including without limitation, obtaining all import, export and other
permits, certificates, licenses or the like required by such laws, ordinances,
rules, regulations and the like, necessary to permit the parties to perform
hereunder and to exercise their respective rights hereunder.
13.3 Force Majeure. No party shall be liable for any delay or failure
of performance to the extent such delay or failure is caused by circumstances
beyond its reasonable control and that by the exercise of due diligence it is
unable to prevent, provided that the party claiming excuse uses its best efforts
to overcome the same.
13.4 Entirety of Agreement. This Agreement embodies the entire, final
and complete agreement and understanding between the parties and replaces and
supersedes all prior discussions and agreements between them with respect to its
subject matter. No modification or waiver of any terms or conditions hereof
shall be effective unless made in writing and signed by a duly authorized
officer of each party.
13.5 Non Waiver. The failure of a party in any one or more instances to
insist upon strict performance of any of the terms and conditions of this
Agreement shall not constitute a waiver or relinquishment, to any extent, of the
right to assert or rely upon any such terms or conditions on any future
occasion.
13.6 Disclaimer of Agency. Neither party is, nor will be deemed to be,
the legal representative or agent of the other, nor shall either party have the
right or authority to assume, create, or incur any third party liability or
obligation of any kind, express or
20.
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
implied, against or in the name of or on behalf of another except as expressly
set forth in this Agreement.
13.7 Severability. If a court of competent jurisdiction declares any
provision of this Agreement invalid or unenforceable, or if any government or
other agency having jurisdiction over either SUGEN or Allergan deems any
provision to be contrary to any laws, then that provision shall be severed and
the remainder of the Agreement shall continue in full force and effect. To the
extent possible, the parties shall revise such invalidated provision in a manner
that will render such provision valid without impairing the parties' original
intent.
13.8 Affiliates; Assignment. Except as otherwise provided herein,
neither party may assign its rights or delegate its duties under this Agreement
without the prior written consent of the other party, not to be unreasonably
withheld; provided, however, that either party may assign this Agreement to any
of its Affiliates or to any successor by merger or sale of substantially all of
its business unit to which this Agreement relates in a manner such that the
assignor will remain liable and responsible for the performance and observance
of all its duties and obligations hereunder. This Agreement shall be binding
upon the successors and permitted assigns of the parties. Any attempted
delegation or assignment not in accordance with this Section 13.8 shall be of no
force or effect. Notwithstanding the foregoing provisions of this Section 13.8,
[
]
13.9 Headings. The headings contained in this Agreement have been added
for convenience only and shall not be construed as limiting.
13.10 Limitation of Liability. No party shall be liable to another for
indirect, incidental, consequential or special damages, including but not
limited to lost profits, arising from or relating to any breach of this
Agreement, regardless of any notice of the possibility of such damages. Nothing
in this Section is intended to limit or restrict the indemnification rights or
obligations of any party.
13.11 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be an original and all of which shall
constitute together the same document.
13.12 English Language. This Agreement has been prepared in the English
language and shall be construed in the English language.
13.13 Public Announcement. Except for such disclosure as is deemed
necessary, in the reasonable judgment of a party, to comply with applicable laws
or regulations, no announcement, news release, public statement, publication or
presentation relating to the existence of this Agreement, or the terms hereof,
will be made without the other party's
21.
<PAGE>
prior written approval, which approval shall not be unreasonably withheld. The
parties agree that they will use reasonable efforts to coordinate the initial
announcement or press release relating to the existence of this Agreement so
that such initial announcement or press release by each is made
contemporaneously.
13.14 Guarantee. Allergan, Inc. guarantees the performance of each
obligation of Vision Pharmaceuticals, L.P. under this Agreement, whether or not
Allergan, Inc. has received any notice which is to be provided to Vision
Pharmaceuticals, Inc. pursuant to this Agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement.
SUGEN INC. VISION PHARMACEUTICALS, L.P., a
Texas limited partnership, dba Allergan,
by Allergan General, Inc., its general
partner
By: By:
------------------------------- ---------------------------------
Name: Name: Francis R. Tunney, Jr.
------------------------------- ---------------------------------
Title: Title: Secretary
------------------------------- ---------------------------------
Guarantee of performance given by:
ALLERGAN, INC.
By:
-------------------------------
Name:
-------------------------------
Title:
-------------------------------
22.
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
EXHIBIT A
LICENSED PATENTS
[ ]
23.
<PAGE>
EXHIBIT B
DRUG CANDIDATES AND BACKUP COMPOUNDS
24.
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
EXHIBIT C
DEVELOPMENT COSTS
[
]
25.
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
[
]
26.
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
[
]
27.
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
EXHIBIT D
OPTION MARKET COUNTRIES
[
]
28.
<PAGE>
3 CONFIDENTIAL TREATMENT REQUESTED
EXHIBIT C
EXISTING SUGEN PATENTS
[ ]
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
[
]
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
[
]
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
[
]
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
EXHIBIT D
EXCLUDED COMPOUNDS
The SUGEN compounds identified internally as:
[
]
<PAGE>
EXHIBIT E
RESEARCH PLAN
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
[
]
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
[
]
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
[
]
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
[
]
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
[
]
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
[
]
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
[
]
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
[
]
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
[
]
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
[
]
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
[
]
<PAGE>
EXHIBIT F
PRESS RELEASE
<PAGE>
For Immediate Release SUGEN Contact: Nina W. Ferrari
(415) 306-7700 (office)
[email protected]
Burns McClellan, Inc.
Justin Jackson
(212) 505-1919
Allergan Contact: Jeff D'Eliscu
(714) 246-4636 (office)
(714) 675-9475 (home)
SUGEN AND ALLERGAN COLLABORATE TO FIGHT OPHTHALMIC
DISEASES WITH ANGIOGENESIS INHIBITORS
Redwood City, CA, Irvine, CA, October 8, 1996 -- SUGEN, Inc. (Nasdaq: SUGN) and
Allergan, Inc. (NYSE: AGN) announced today that they have entered into an
exclusive collaboration to identify, develop and commercialize novel
pharmaceutical compounds utilizing SUGEN's proprietary small molecule signal
transduction inhibition technology for the treatment of ophthalmic diseases.
During the course of the collaboration, Allergan will be SUGEN's exclusive
corporate partner in the ophthalmic field and will have rights to all ophthalmic
uses of collaboration products and technology worldwide. SUGEN will be
responsible for identifying and validating novel signal transduction targets
which contribute to ophthalmic diseases. SUGEN will also be responsible for
assay design and identification of target specific lead compounds. Allergan will
take responsibility for in vivo ophthalmic disease models and for preclinical,
clinical and commercial development of all collaboration drug candidates. The
collaboration will focus initially on the development of angiogenesis inhibitors
for the treatment of ophthalmic neovascular diseases such as age-related macular
degeneration and diabetic retinopathy.
Allergan will pay SUGEN a $2 million initial research payment and is purchasing
$4 million of SUGEN Common Stock at $20.88 per share. Additionally, Allergan
intends to purchase $3 million of SUGEN Common Stock at the market price of
SUGEN's next equity offering. SUGEN will receive research and drug discovery
funding for three years, as well as milestone payments and royalties on
worldwide sales of any collaboration products. In addition, SUGEN will have the
right to contribute to Phase II/III clinical development costs on each program,
thereby earning participation in the profits from successful collaboration
products in North America and Europe over and above its royalty entitlements.
-more-
<PAGE>
"Recent advances in our understanding of the signalling mechanisms involved in
new blood vessel growth suggest that intervening against certain growth factor
receptors and their associated signalling pathways may provide a promising
approach to the development of novel angiogenesis inhibitors," commented Dr.
Lester J. Kaplan, corporate vice president, Science and Technology of Allergan.
"We believe that combining the technologies developed by SUGEN with Allergan's
ophthalmic research provide the opportunity for defining the correct signal
trasduction targets and for developing novel target-specific drugs to address
major ophthalmic diseases."
"SUGEN is very pleased to be partnering with an industry leader in
ophthalmology. Ophthalmic diseases represent a major area of opportunity for
SUGEN's drug discovery platform, but clearly it did not make sense for SUGEN to
bring in-house the preclinical, clinical and marketing expertise that are unique
to drug development in ophthalmology. This collaboration will optimize the
complementary strengths of both companies in this field." stated Stephen Evans-
Freke, Chairman and CEO of SUGEN, Inc.
The retinal neovascularization associated with ophthalmic diseases, such as
age-related macular degeneration and diabetic retinopathy, is a key contributor
to vision loss. This neovascularization can be provoked when too little oxygen
is available to the eye. The retina then becomes hypoxic (oxygen starved) and
responds by secreting messenger proteins that trigger the sprouting of new blood
vessels which can compromise vision quality and in severe cases lead to loss of
sight. Macular degeneration in particular constitutes a patient population of
over five million in North America, for whom there is no satisfactory therapy
currently available.
Allergan, Inc., headquartered in Irvine, California, is a technology-driven,
global health care company focused on specialty pharmaceutical products for
specific disease areas that deliver value to customers, satisfy unmet medical
needs and improve patients' lives.
SUGEN, Inc. is a biopharmaceutical company focusing on the development of new
classes of small molecule drugs which interact in a specific manner with
different members of the tyrosine kinase, tyrosine phosphatase and
serine-threonine kinase families of signal transduction molecules, and their
signalling pathways. These pathways are involved in a number of human diseases
including cancer and diabetes, as well as disorders of the body's immune
defenses and neurological systems. The Company has research and development
collaborations with Zeneca and ASTA Medica, as well as two Collaborative
Research and Development Agreements (CRADAs) with the National Cancer Institute.
###
EXHIBIT 10.59
Certain confidential information contained in this
document, marked by brackets, is filed with the Securities
and Exchange Commission pursuant to Rule 24b-2 of the
Securities Exchange Act of 1934, as amended.
AMENDMENT
THIS AMENDMENT AGREEMENT is made effective as of May 31, 1996, by and
between Sugen, Inc. ("Sugen") and Yissum Research Development Company of the
Hebrew University of Jerusalem ("Yissum").
WHEREAS, Sugen and Yissum are parties to an Amended and Restated
Research and License Agreement effective March 27, 1995, as to research and
development regarding the prevention, mitigation, treatment, cure or diagnosis
of cancer and angiogenesis diseases and disorders (the "Research Agreement");
and
WHEREAS, Sugen and Yissum desire to amend the Research Agreement as set
forth below pursuant to the provisions of Section 18(e) of the Research
Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, and for good and valuable consideration, the
sufficiency of which is hereby acknowledged, Sugen and Yissum hereby agree as
follows:
1. Capitalized terms used herein without definition shall have the
meanings ascribed to them in the Research Agreement.
2. The definition of "Research Period" in Section 1 of the Research
Agreement is hereby amended by deleting the term "June 1, 1996" in such
definition and replacing such term with the term "June 1, 1997"
3. Section 1 of the Research Agreement is hereby amended by adding the
following new definition to the text thereof:
"Work Plan" - means each of the periodic work plans described in
Section 2(b)."
4. Section 2(b) of the Research Agreement is hereby amended by adding
the following new text to the end thereof:
"Yissum hereby agrees to procure the production of Work Plans, and the
Research's performance in accordance with each Work Plan, in accordance
with this Agreement. Yissum shall cause the Researcher to produce a
Work Plan, in form and substance reasonably satisfactory to Sugen, for
each twelve-month period (or lesser period or periods if agreed between
the parties) during the Research Period prior to the performance of
services thereunder and in no event later than the date of October 1
(or, if earlier, the date that is the last day of any agreed to Work
Plan) during each year during the Research Period. Each Work Plan will
set forth goals, objectives and a time line and will include, without
limitation, priorities and guidelines in connection with the Research
to be performed."
1.
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
5. Section 3(a) of the Research Agreement is hereby amended by deleting
the text thereof and substituting the following:
"In consideration for the performance of the Research and in order to
finance it, Sugen undertakes to pay Yissum at the rate of [ ] per
year beginning on October 1, 1994 and ending on May 31, 1996 and at the
rate of [ ] per year beginning on June 1, 1996 and ending on June
1, 1997. Payments shall be made in advance in quarterly installments."
6. The parties hereto acknowledge that as of September 1, 1996, Sugen
has paid to Yissum, and Yissum has received, [ ] of the [ ] referred to
in Section 3(a) of the Research Agreement as amended as set forth above.
7. The term "Agreement" as used in the Research Agreement and all other
instruments and agreements executed thereunder shall for all purposes refer to
the Research Agreement as amended by this Amendment Agreement.
8. Except to the extent expressly amended by the terms of this
Amendment Agreement, all the terms and conditions of the Research Agreement and
all other instruments and agreements executed thereunder remain in full force
and effect.
9. Sugen hereby represents and warrants to Yissum that the execution
and delivery of this Amendment Agreement have been duly authorized by all
requisite action on the part of Sugen. Yissum hereby represents and warrants to
Sugen that the execution and delivery of this Amendment Agreement have been duly
authorized by all requisite action on the part of Yissum.
10. This Amendment Agreement may be executed in any number of duplicate
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have duly signed this Amendment
Agreement effective as of the day and year first written above.
SUGEN, INC. YISSUM RESEARCH DEVELOPMENT
COMPANY OF THE HEBREW
UNIVERSITY OF JERUSALEM
By: /s/ K. Peter Hirth By: /s/ Uri Litvin
--------------------------------------- ------------------------------
Name: K. Peter Hirth, Ph.D. Name: Uri Litvin
Title: Executive Vice President Title: Managing Director
Drug Research & Development
2.
EXHIBIT 10.60
[SUGEN LETTERHEAD]
July 18, 1996
James L. Tyree
950 Vista Drive
Hillsborough CA 94010
Dear Jim:
This letter sets forth the separation agreement (the "Agreement") which
SUGEN, Inc. (the "Company") is offering to you.
1. SEPARATION. Your last day of work with the Company shall be June 6,
1996 (the "Separation Date"). You agree that, effective as of the Separation
Date, you hereby resign as an employee of the Company and as an officer and
director of the Company. You agree to provide the Company with a separate letter
of resignation to that effect, no later than the Effective Date. The Company
agrees to retain you, and you agree to serve as a consultant to the Company, and
to make yourself available for such purposes upon reasonable request by the
Company, until October 9, 1997. The Company agrees that such services are deemed
to be "employment" for the purposes of your stock option agreements but for no
other purposes.
2. ACCRUED SALARY; PAID TIME OFF. You acknowledge that on or about the
Separation Date, the Company paid you all accrued salary, and all accrued and
unused vacation earned through the Separation Date, subject to standard payroll
deductions and withholdings.
3. STOCK OPTIONS. The Company shall continue to vest your stock options
as shown on the attached Exhibit A for twelve (12) months after the Separation
Date. This will result in your vesting in up to 38,667 additional options to
purchase Company stock. In accordance with your option agreements, the exercise
period for all of your vested options will continue until January 9, 1998.
4. SEVERANCE PACKAGE. The Company will make severance payments to you
in the form of continuance of your base salary in effect on the Separation Date
for twelve (12) months following the Separation Date. You acknowledge that these
payments have already begun. They will be made on the Company's ordinary payroll
dates, and will be subject to standard payroll deductions and withholding. In
addition, the Company has since the Separation Date, and will continue to loan
you a monthly maximum of three thousand dollars ($3,000) toward your monthly
mortgage payment, until the earlier of the sale of the property or twelve (12)
months after the Separation Date, but in no event fewer than six (6) months
after the Separation Date. The Company agrees not to declare an Event of Default
as defined in that certain Loan Agreement dated August 29, 1994 (set forth in
Exhibit B), under paragraph 9(b) of the Loan Agreement, until January 1, 1998.
The Company will also pay you, upon your repayment of your loan obligations to
the Company as provided for in paragraph 5 below, an amount equal to the
Financing Loans advanced to you pursuant to the Loan Agreement. This amount will
be no less than $76,103.60 and no greater than
<PAGE>
James L. Tyree
July 18, 1996
Pag 2
$94,103.60, and will be subject to standard payroll deductions and withholding,
including deductions and withholding based on your income by reason of the
forgiveness of your loan obligations and forgiveness of your interest payment
obligation. In addition, the Company will reimburse you for the reasonable cost
of office service (not to exceed $800 per month) for six (6) months after the
Effective Date, or until such time as you commence other employment.
5. RESIDENTIAL LOAN. The Company will forgive in part and modify in
part those certain Promissory Notes Secured by Deed of Trust in the amounts of
$175,000 and "Up To $130,500.00," respectively, dated August 29, 1994 (the
"Notes"), which Notes are secured by a Short Form Deed of Trust and Assignment
of Rents of even date (the "Lien"), copies of which are attached hereto as part
of Exhibit B, as follows:
a. Of the unpaid balance of $175,000.00, the Company
will forgive your obligation to pay $87,500.00 upon
your repayment of the remaining balance of
$87,500.00;
b. The remaining balance of $87,500.00 will become due
and payable by you upon the earlier of:
i. The sale, transfer, conveyance, or
assignment of any interest in the real
property which is currently the subject of
the Lien;
ii. January 1, 1998;
iii. Any other Event of Default as defined in the
Loan Agreement.
c. The Company will forgive the Financing Loans, as
defined in the Loan Agreement, and your interest
obligations on all of your loans, upon your repayment
of the remaining balance of $87,500.00 of your loan
obligation. You acknowledge and understand that the
taxing authorities require the imputation of interest
in this circumstance, and that such imputed interest
will be reflected in your tax statement.
d. The Company will execute a release of the Lien ("Lien
Release") in a form set forth in Exhibit C, to be
held in escrow by Company counsel until the Effective
Date of this Agreement. The Lien Release shall not be
effective until this Agreement takes effect, on the
Effective Date, within two business days of which
date the Company's counsel shall file the Lien
Release with the County of San Mateo.
6. TERMINATION OF AGREEMENTS. Subject to the provisions of paragraphs
13 and 15 below, and except for the provisions of the Proprietary Information
and Inventions Agreement as referenced in paragraph 11 of this Agreement, you
and the Company agree to terminate as of June 6,
<PAGE>
James L. Tyree
July 18, 1996
Page 3
1996 that certain offer letter agreement ("Offer Letter") dated April 28, 1994,
signed by you on May 2, 1994, and to terminate that certain Deferred
Compensation Agreement dated August 29, 1994.
7. HEALTH INSURANCE. To the extent permitted by the federal COBRA law
and by the Company's current group health insurance policies, you will be
eligible to continue your health insurance benefits, and the Company agrees to
pay your health insurance continuation premiums for twelve (12) consecutive
months through June 30, 1997; provided, however, that the Company's obligation
to make such payments shall cease immediately if you become eligible for other
health insurance benefits at the expense of another employer. You agree to
notify a duly authorized officer of the Company, in writing, immediately upon
your acceptance of any employment which provides health insurance benefits.
8. OTHER COMPENSATION OR BENEFITS. You acknowledge that, except as
expressly provided in this Agreement, you will not receive any additional
compensation, severance or benefits after the Separation Date. In particular,
this includes without limitation, cancellation of paid life insurance benefits
and vacation accrual. However, if permitted by the Plan's eligibility
requirements, you may continue to participate in the Company's 401(k) Plan.
9. EXPENSE REIMBURSEMENTS. You acknowledge that you have submitted your
final documented expense reimbursement statement reflecting all business
expenses you incurred through the Separation Date, if any, for which you seek
reimbursement and that the Company has reimbursed you for these expenses
pursuant to its regular business practice.
10. RETURN OF COMPANY PROPERTY. You represent that you have returned to
the Company all Company documents (and all copies thereof) and other Company
property which you have had in your possession at any time, including, but not
limited to, Company files, notes, drawings, records, business plans and
forecasts, financial information, specifications, computer- recorded
information, tangible property (including, but not limited to, computers),
credit cards, entry cards, identification badges and keys; and, any materials of
any kind which contain or embody any proprietary or confidential information of
the Company (and all reproductions thereof).
11. PROPRIETARY INFORMATION OBLIGATIONS. Both during and after your
employment you acknowledge your continuing obligations under your Proprietary
Information and Inventions Agreement not to use or disclose any confidential or
proprietary information of the Company without prior written authorization from
a duly authorized representative of the Company. A copy of your Proprietary
Information and Inventions Agreement is attached hereto as Exhibit D.
12. CONFIDENTIALITY. The provisions of this Agreement shall be held in
strictest confidence by you and the Company and shall not be publicized or
disclosed in any manner whatsoever; provided, however, that: (a) you may
disclose this Agreement to your immediate family; (b) the parties may disclose
this Agreement in confidence to their respective attorneys, accountants,
auditors, tax preparers, and financial advisors; (c) the Company may disclose
this Agreement as necessary to fulfill standard or legally required corporate
reporting or disclosure
<PAGE>
James L. Tyree
July 18, 1996
Page 4
requirements; (d) the parties may disclose this Agreement insofar as such
disclosure may be necessary to enforce its terms or as otherwise required by
law; and (e) the Company agrees to notify its key employees of the
nondisparagement agreement in paragraph 13 below.
13. NONDISPARAGEMENT. Both you and the Company agree not to disparage
the other party, and the other party's officers, directors, employees,
shareholders and agents, in any manner likely to be harmful to them or their
business, business reputation or personal reputation; provided that both you and
the Company shall respond accurately and fully to any question, inquiry or
request for information when required by legal process. In the event of any
breach of this paragraph by you, the Company will have the right to stop further
performance of this Agreement immediately, including without limitation, the
termination of your consulting arrangement, salary continuance, stock option
vesting, forgiveness of loan obligations and interest, payment of Financing
Loans, payment of the amount equal to the Financing Loans, and health coverage.
In the event of any breach of this paragraph by the Company, you will have the
right to declare this Agreement to be null and void in all respects.
14. RELEASE. In exchange for the payments and other consideration under
this Agreement to which you would not otherwise be entitled, you agree to
execute the Employee Agreement and Release attached hereto as Exhibit E.
15. DEFAULT. Without limiting either party's rights in paragraph 13
above, your material default of any of the provisions of this Agreement will
give the Company the immediate right to terminate its further performance of
this Agreement, and a material default by the Company will permit you, at your
option to (a) seek enforcement of the terms of this Agreement; or (b) declare
this Agreement to be null and void in all respects, including the Employee
Agreement and Release.
16. CONFIDENTIAL ARBITRATION. To ensure rapid and economical resolution
of any and all disputes which may arise in connection with this Agreement, you
and the Company agree that any and all disputes, claims, causes of action, in
law or equity, arising from or relating to this Agreement or its enforcement,
performance, breach, or interpretation, with the sole exception of those
disputes which may arise from either (a) your Proprietary Information Agreement,
or (b) the provisions of paragraph 13 above, shall be resolved by final and
binding confidential arbitration held in San Francisco, California through
Judicial Arbitration & Mediation Services/Endispute, Inc. ("JAMS") under the
then existing JAMS Rules of Practice and Procedure. Any such arbitration shall
be conducted in the utmost secrecy. Nothing in this paragraph is intended to
prevent either you or the Company from obtaining injunctive relief in court to
prevent irreparable harm pending the conclusion of any such arbitration.
17. MISCELLANEOUS. This Agreement, including Exhibits A, B (as amended
herein), C, D, and E together constitute the complete, final and exclusive
embodiment of the entire agreement between you and the Company with regard to
this subject matter. It is entered into without reliance on any promise or
representation, written or oral, other than those expressly contained herein,
and it supersedes any other such promises, warranties or representations. This
Agreement may not be
<PAGE>
James L. Tyree
July 18, 1996
Page 5
modified or amended except in a writing signed by both you and a duly authorized
officer of the Company. This Agreement shall bind the heirs, personal
representatives, successors and assigns of both you and the Company, and inure
to the benefit of both you and the Company, their heirs, successors and assigns.
If any provision of this Agreement is determined to be invalid or unenforceable,
in whole or in part, this determination will not affect any other provision of
this Agreement and the provision in question shall be modified by the court or
arbitrator so as to be rendered enforceable. This Agreement shall be deemed to
have been entered into and shall be construed and enforced in accordance with
the laws of the State of California as applied to contracts made and to be
performed entirely within California.
If this Agreement is acceptable to you, please sign below and on the
attached Employee Agreement and Release, which is part of this Agreement, and
return the originals of both to me.
Please accept my best wishes for success in your future endeavors.
Sincerely,
SUGEN, INC.
By: /s/ Stephen Evans-Freke
-------------------------
Stephen Evans-Freke
AGREED:
/s/ James L. Tyree
-------------------------
James L. Tyree
Exhibit A - Stock Option Status Report
Exhibit B - Loan Agreement, including Exhibits
Exhibit C - Lien Release (Full Reconveyance)
Exhibit D - Proprietary Information and Inventions Agreement
Exhibit E - Employee Agreement and Release
<PAGE>
<TABLE>
EXHIBIT A
OPTION STATUS AS OF JUNE 6, 1996
<CAPTION>
Vesting
Grant Date of Total Currently Through Total
Number Grant Granted Price Vested June 6,1997 Canceled
- ------ ----- ------- ----- ------ ----------- --------
<C> <C> <C> <C> <C> <C> <C> <C>
258/260 (1),(3) 6/17/94 93,332 $6.0000 51,332 18,667 23,333
261 (2),(3) 6/17/94 53,333 6.0000 13,333 - 40,000
296 (3) 2/23/95 50,000 6.5625 15,625 12,500 21,875
SR-002 (2),(4) 7/26/95 90,000 8.1250 - - 90,000
580 (1),(3) 1/18/96 30,000 11.7500 1,875 7,500 20,625
---------- ----------- ----------- ---------
316,665 82,165 38,667 195,833
========== =========== =========== =========
<FN>
Note:
(1) Total Options Granted include both ISOs and NSOs (2) Contingent options vest
based on certain criteri
(3) Option granted under the 1992 Stock Option Plan
(4) Option granted under the Long-Term Objectives Stock Option Plan for Senior
Management
1994 Grants have been restated to effect the September 1994 3.75-for-1 reverse
stock split
</FN>
</TABLE>
<PAGE>
EXHIBIT B
LOAN AGREEMENT
This Exhibit B is incorporated by reference to Exhibit 10.38 filed in response
to Item 6 "Exhibits" of the Registrant's Form 10-Q for the quarter ended June
30, 1995.
<PAGE>
- ----------------------------------------------------------------------------
ALL.
-----------------
PTN.
- ----------------------------------------------------------------------------
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO
Name - -
Street Sugen, Inc.
Address 515 Galveston Drive
Redwood City, CA 94063
City & SPACE ABOVE THIS LINE FOR RECORDER'S USE
State - -
---------------------------------------------------------------------
TO 430.1 CA (7-84) Full Reconveyance
- --------------------------------------------------------------------------------
SUGEN, INC., as duly appointed Trustee under Deed of Trust hereinafter referred
to, having received from holder of the obligations thereunder a written request
to reconvey, reciting that the promissory notes secured by the Deed of Trust
will become unsecured obligations, and said Deed of Trust having been
surrendered to said Trustee, does hereby RECONVEY, without warranty, to the
person or persons legally entitled thereto, the estate now held by it
thereunder. Said Deed of Trust was executed by JAMES L. TYREE and RENEE TYREE,
husband and wife
Trustors,
and recorded in the official records of San Mateo County, California,
as follows:
REC. June 12, 1996 AS INSTR. NO. 96-070557 IN BOOK/REEL N/A
------------- --------- -----------
DESC.
LOT 13, AS SHOWN ON THAT CERTAIN MAP ENTITLED, "MAP OF HILLSBOROUGH PARK,
HILLSBOROUGH SAN MATEO COUNTY, CALIFORNIA" FILED IN THE OFFICE OF THE RECORDER
OF THE COUNTY OF SAN MATEO, STATE OF CALIFORNIA ON APRIL 14, 1924 IN BOOK 11 OF
MAPS AT PAGE(S) 58 TO 61 INCLUSIVE.
Dated __________________________________ ____________________________________
================================================================================
STATE OF _______________________________ )
) ss.
COUNTY OF _____________________________ )
On _______________________, 19___, before me, ________________________________ ,
personally appeared _______________________________________________,
|_| personally known to me
-or-
|_| proved to me on the basis of satisfactory evidence
to be the person(s) whose name(s) is/are subscribed to the
within instrument and acknowledged to me that he/she/they
executed the same in his/her/their authorized capacity(ies),
and that by his/her/their signature(s) on the instrument the
person(s) or the entity upon behalf of which the person(s)
acted, executed the instrument.
Witness my hand and official seal.
-------------------------------------------------------------
Signature of the Notary CAPACITY CLAIMED BY SIGNER
Though statute does not require the Notary to fill in the data below, doing so
may prove invaluable to persons relying on the document.
|_| Individual
|_| Corporate Officer(s)
---------------------------------------------------------------------------
|_| Partner(s) |_| Limited
|_| General
|_| Attorney-in-Fact
|_| Trustee(s)
|_| Guardian/Conservator
|_| Other: ____________________________________________________________________
---------------------------------------------------------------------------
SIGNER IS REPRESENTING:
Name of person(s) or entity(ies)
- --------------------------------------------------------------------------------
_________________________________________________________ This certificate must
be attached to the document described at right:
(C)1993 National Notary Association, Canoga Park, CATitle or Type of Document:
- --------------------------------------------------------------------------------
Number of Pages:____________________ Date of Document: _________________________
Signer(s) other than named above: ______________________________________________
================================================================================
EXHIBIT C
1 of 2
<PAGE>
Title or Trust No.
Chicago Title #500309
Escrow of Loan No.
WHEN RECORDED MAIL TO:
Sugen, Inc.
515 Galveston Drive
Redwood City, CA 94063
SPACE ABOVE THIS LINE FOR RECORDER'S USE
- --------------------------------------------------------------------------------
SUBSTITUTION OF TRUSTEE
WHEREAS, JAMES L. TYREE and RENEE TYREE, husband and wife were the original
Trustors, North American Title Company, was the original Trustee, and SUGEN,
INC. was the Beneficiary under that certain Deed of Trust, dated August 29,
1994, recorded June 12, 1996, as Document No. 96-070557 of Official Records of
San Mateo County, California (the "Deed of Trust");
WHEREAS, the undersigned desires to substitute a new Trustee under said Deed of
Trust in the place and stead of North American Title Company.
WHEREAS, the Deed of Trust encumbers the following described property, located
in the County of San Mateo, State of California:
LOT 13, AS SHOWN ON THAT CERTAIN MAP ENTITLED, "MAP OF HILLSBOROUGH PARK,
HILLSBOROUGH SAN MATEO COUNTY, CALIFORNIA" FILED IN THE OFFICE OF THE RECORDER
OF THE COUNTY OF SAN MATEO, STATE OF CALIFORNIA ON APRIL 14, 1924 IN BOOK 11 OF
MAPS AT PAGE(S) 58 TO 61 INCLUSIVE.
NOW THEREFORE, the undersigned hereby substitutes itself, SUGEN, Inc., a
Delaware corporation, as Trustee under said Deed of Trust. The address of said
Trustee is 515 Galveston Drive, Redwood City, CA 94063.
SUGEN, Inc.
By:________________________________________________
Name:______________________________________________
Title:_____________________________________________
Dated:_____________________________________________
<TABLE>
<CAPTION>
==============================================================================================================================
<S> <C> <C>
STATE OF CALIFORNIA ) CAPACITY CLAIMED BY SIGNER
) ss. Though statute does not require the
COUNTY OF __________________________ ) Notary to fill in the data below, doing
so may prove invaluable to persons
On _________________________, 19___, before me, __________________________________, relying on the document.
personally appeared ___________________________________,
|_| Individual
|_| personally known to me |_| Corporate Officer(s)
-or- __________________________________
|_| proved to me on the basis of satisfactory evidence |_| Partner(s) |_| Limited
to be the person whose name is subscribed to within the |_| General
instrument and acknowledged to me that he executed the same in |_| Attorney-in-Fact
his authorized capacity, and that by his signature on the |_| Trustee(s)
instrument, the person or the entity upon behalf of which the |_| Guardian/Conservator
person acted, executed the instrument. |_| Other:____________________________
__________________________________
Witness my hand and official seal.
SIGNER IS REPRESENTING:
Name of person(s) or entity(ies)
-------------------------------------- --------------------------------------
Signature of the Notary --------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
This certificate must be attached to the Title or Type of Document:____________________________________________
document described at right: Number of Pages:_______________ Date of Document:_____________________
Signer(s) other than named above:_____________________________________
(C)1993 National Notary Association, Canoga Park, CA
==============================================================================================================================
</TABLE>
<PAGE>
EXHIBIT D
EMPLOYEE'S SECRECY AGREEMENT
CLERICAL
I recognize that SUGEN INC., a Delaware corporation, together with its
subsidiaries (hereinafter collectively called the "Company") is engaged in a
continuous program of research, development, and production respecting its
business, present and future, including fields generally related to its
business.
I understand that:
1. My employment creates a relationship of confidence and trust between
me and the Company with respect to any information:
(a) Applicable to the business of the Company; or
(b) Applicable to the business of any client or customer of
the Company, which may be made known to me by the Company or by any client or
customer of Company, or learned by me during the period of my employment.
2. The Company possesses and will continue to possess information that
has been created, discovered, developed, or otherwise become known to the
Company (including without limitation information created, discovered,
developed, or made known by me during the period of or arising out of my
employment by the Company) and/or in which property rights have been assigned or
otherwise conveyed to the Company, which information has commercial value in the
business in which the Company is engaged. All of the aforementioned information
is hereinafter called "Proprietary Information." By way of illustration, but not
limitation, Proprietary Information includes trade secrets, processes, formulas,
data and know-how, improvements, inventions, techniques, marketing plans,
strategies, forecasts, and customer lists.
In consideration of my employment or continued employment, as the case may be,
and the compensation received by me from the Company from time to time, I hereby
agree as follows:
1. All Proprietary Information shall be the sole property of the
Company and its assigns, and the Company and its assigns shall be the sole owner
of all patents and other rights in connection therewith. I hereby assign to the
Company any rights I may have or acquire in such Proprietary Information. At all
times, both during my employment by the Company and after its termination, I
will keep in confidence and trust all Proprietary Information, and I will not
use or disclose any Proprietary Information or anything relating to it without
the written consent of the Company, except as may be necessary in the ordinary
course of performing my duties as an employee of the Company.
2. I agree that during the period of my employment by the Company I
will not, without the Company's express written consent, engage in any
employment or activity other than for the Company in any business in which the
Company is now or may hereafter become engaged. In the event of the termination
of my employment by me or by the Company for any
<PAGE>
reason, I will deliver to the Company all documents and data of any nature
pertaining to my work with the Company and I will not take with me any documents
or data of any description or any reproduction of any description containing or
pertaining to any Proprietary Information.
3. I represent that my performance of all the terms of this Agreement
as an employee of the Company does not and will not breach any agreement to keep
in confidence proprietary information acquired by me in confidence or in trust
prior to my employment by the Company. I have not entered into, and I agree I
will not enter into, any agreement either written or oral in conflict herewith.
4. This Agreement shall be effective as of the first day of my
employment by the Company, namely:_____________________________________________.
5. This Agreement shall be binding upon me, my heirs, executors,
assigns, and administrators and shall inure to the benefit of the Company its
successors, and assigns.
Accepted and Agreed To:
By: /s/ James L. Tyree
---------------------------
Date: 6/6/94
-------------
2.
<PAGE>
EXHIBIT E
EMPLOYEE AGREEMENT AND RELEASE
Except as otherwise set forth in this Agreement, I hereby release,
acquit and forever discharge the Company, its parents and subsidiaries, and
their officers, directors, agents, servants, employees, attorneys, shareholders,
successors, assigns and affiliates, of and from any and all claims, liabilities,
demands, causes of action, costs, expenses, attorneys fees, damages, indemnities
and obligations of every kind and nature, in law, equity, or otherwise, known
and unknown, suspected and unsuspected, disclosed and undisclosed, arising out
of or in any way related to agreements, events, acts or conduct at any time
prior to and including the execution date of this Agreement, including but not
limited to: all such claims and demands directly or indirectly arising out of or
in any way connected with my employment with the Company or the termination of
that employment; claims or demands related to salary, bonuses, commissions,
stock, stock options, or any other ownership interests in the Company, vacation
pay, fringe benefits, expense reimbursements, severance pay, or any other form
of compensation; claims pursuant to the Offer Letter; claims pursuant to the
Deferred Compensation Agreement; claims pursuant to any federal, state or local
law, statute, or cause of action including, but not limited to, the federal
Civil Rights Act of 1964, as amended; the federal Americans with Disabilities
Act of 1990; the federal Age Discrimination in Employment Act of 1967, as
amended ("ADEA"); the California Fair Employment and Housing Act, as amended;
tort law; contract law; wrongful discharge; discrimination; harassment; fraud;
defamation; emotional distress; and breach of the implied covenant of good faith
and fair dealing.
I acknowledge that I am knowingly and voluntarily waiving and releasing
any rights I may have under ADEA. I also acknowledge that the consideration
given for the waiver and release in the preceding paragraph hereof is in
addition to anything of value to which I was already entitled. I further
acknowledge that I have been advised by this writing, as required by the ADEA,
that: (a) my waiver and release do not apply to any rights or claims that may
arise after the execution date of this Agreement; (b) I have the right to
consult with an attorney prior to executing this Agreement; (c) I have
twenty-one (21) days to consider this Agreement (although I may choose to
voluntarily execute this Agreement earlier); (d) I have seven (7) days following
the execution of this Agreement by the parties to revoke the Agreement; and (e)
this Agreement shall not be effective until the date upon which the revocation
period has expired, which shall be the eighth day after this Agreement is
executed by me ("Effective Date").
In giving this release, which includes claims which may be unknown to
me at present, I acknowledge that I have read and understand Section 1542 of the
California Civil Code which reads as follows: "A general release does not extend
to claims which the creditor does not know or suspect to exist in his favor at
the time of executing the release, which if known by him must have materially
affected his settlement with the debtor." I hereby expressly waive and
relinquish all rights and benefits under that section and any law of any
jurisdiction of similar effect with respect to my release of any claims I may
have against the Company.
By: /s/ James L. Tyree
------------------------
James L. Tyree
Date: 07/18/96
--------------------
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE COMPANY'S FORM 10-Q FOR THE THREE MONTHS ENDED SEPTEMBER 30,
1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 4,249
<SECURITIES> 29,127
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 34,216
<PP&E> 7,793
<DEPRECIATION> 3,729
<TOTAL-ASSETS> 39,651
<CURRENT-LIABILITIES> 8,691
<BONDS> 3,250
<COMMON> 81,382
0
0
<OTHER-SE> (53,672)
<TOTAL-LIABILITY-AND-EQUITY> 39,651
<SALES> 0
<TOTAL-REVENUES> 10,338
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 21,379
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 521
<INCOME-PRETAX> (13,895)
<INCOME-TAX> 0
<INCOME-CONTINUING> (13,895)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (13,895)
<EPS-PRIMARY> (1.32)
<EPS-DILUTED> (1.32)
</TABLE>
