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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------------
FORM 10-Q
(Mark one)
X Quarterly report pursuant to Section 13 or 15(d) of the Securities
- ------- Exchange Act of 1934. For the quarterly period ended March 31, 1998.
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.)
351 Galveston Drive, Redwood City, California 94063
(address of principal executive offices)
(650) 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;
15,419,267 shares outstanding at April 30, 1998.
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<PAGE>
SUGEN, Inc.
INDEX
PAGE NO.
--------
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements and Notes
Condensed Balance Sheets - March 31, 1998
and December 31, 1997 3
Statements of Operations - for the three
months ended March 31, 1998 4
Condensed Statements of Cash Flows - for the three
months ended March 31, 1998 and 1997 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)
March 31, December 31,
1998 1997
--------- ---------
ASSETS (unaudited)
Current assets:
Cash and cash equivalents $ 10,301 $ 23,816
Short-term investments 57,978 51,479
Accounts receivable 172 237
Prepaid expenses and other current assets 917 754
--------- ---------
Total current assets 69,368 76,286
Property and equipment, net 4,282 4,601
Other assets 3,858 3,938
--------- ---------
$ 77,508 $ 84,825
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 2,527 $ 1,991
Accrued liabilities 10,531 10,267
Deferred contract revenue 625 625
Capital lease obligations - current portion 2,332 2,277
--------- ---------
Total current liabilities 16,015 15,160
Long-term liabilities:
Capital lease obligations - non-current portion 3,412 3,152
Senior custom convertible notes 17,029 17,500
--------- ---------
Total long-term liabilities 20,441 20,652
Stockholders' equity:
Common stock 142,686 141,579
Deferred compensation (592) (695)
Note receivable from stockholder (883) (883)
Accumulated deficit (100,159) (90,988)
--------- ---------
Total stockholders' equity 41,052 49,013
--------- ---------
$ 77,508 $ 84,825
========= =========
See accompanying notes.
3
<PAGE>
SUGEN, Inc.
STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(unaudited)
Three Months Ended
March 31,
--------------------
1998 1997
-------- --------
Contract revenue (includes amounts from
related party) $ 1,645 $ 1,487
Costs and expenses:
Research and development 9,432 8,006
General and administrative 1,845 1,478
-------- --------
Total costs and expenses 11,277 9,484
-------- --------
Operating loss (9,632) (7,997)
Other income and expenses:
Interest income 979 693
Interest expense (468) (170)
-------- --------
Other income, net 511 523
-------- --------
Net loss $ (9,121) $ (7,474)
======== ========
Basic and diluted net loss per share $ (0.59) $ (0.57)
======== ========
Shares used in computing basic and diluted net loss
per share 15,345 13,022
======== ========
See accompanying notes.
4
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SUGEN, Inc.
CONDENSED STATEMENTS OF CASH FLOWS
Increase (decrease) in cash and cash equivalents
(In thousands)
(unaudited)
Three Months Ended
March 31,
-------------------
1998 1997
-------- --------
Cash flows from operating activities
Net loss $ (9,121) $ (7,474)
Adjustments to reconcile net loss to net cash provided
(used) by operating activities:
Depreciation and amortization 958 739
Deferred revenue -- (5)
Changes in operating assets and liabilities:
Prepaid expenses and other current assets (98) (319)
Other assets 1 (27)
Accounts payable 536 1,286
Accrued liabilities 265 (804)
-------- --------
Net cash used in operating activities (7,459) (6,604)
-------- --------
Cash flows from investing activities
Sales/maturities (purchases) of short-term investments, net (6,549) (4,895)
Purchases of property and equipment, net (454) (891)
-------- --------
Net cash used in investing activities (7,003) (5,786)
-------- --------
Cash flows from financing activities
Proceeds from issuance of common stock, net 632 351
Proceeds from lease financing of property and equipment 856 1,069
Payments under capital lease obligations (541) (487)
-------- --------
Net cash provided by financing activities 947 933
-------- --------
Net decrease in cash and cash equivalents (13,515) (11,457)
Cash and cash equivalents at beginning of period 23,816 24,852
-------- --------
Cash and cash equivalents at end of period $ 10,301 $ 13,395
======== ========
See accompanying notes.
5
<PAGE>
SUGEN, Inc.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
1. Summary of Significant Accounting Policies
Basis of Presentation
The financial information at March 31, 1998 and for the three months
ended March 31, 1998 and 1997 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, 1997 included in the
Company's Form 10-K. 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.
First quarter adoption of Statement 130, Reporting Comprehensive Income
In June 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 130, Reporting Comprehensive
Income ("SFAS 130"). SFAS 130 establishes new rules for the reporting
and display of comprehensive income and its components. SFAS 130
requires unrealized gains or losses on the Company's available-for-sale
securities and foreign currency translation adjustment, which prior to
adoption were reported separately in shareholders' equity, to be
included in other comprehensive income. The adoption by the Company of
SFAS 130 on January 1, 1998 had no material impact on the Company's net
income or shareholders' equity.
2. Accrued Liabilities
The components of accrued liabilities consist of the following:
March 31, December 31,
1998 1997
------- -------
(In thousands)
Accrued research & development services $ 5,795 $ 5,351
Accrued compensation 890 1,176
Accrued professional fees 763 859
Other 3,083 2,881
------- -------
$10,531 $10,267
======= =======
6
<PAGE>
SUGEN, Inc.
NOTES TO FINANCIAL STATEMENTS (continued)
(Unaudited)
3. Research and Development Collaboration Agreements - ASTA Medica
Aktiengesellschaft
In January 1998, the first milestone in connection with the Company's
collaboration with ASTA Medica was achieved in the Pan-Her cancer
program. ASTA Medica exercised its option to satisfy its $500,000
milestone obligation through the purchase of 18,665 shares of SUGEN
Common Stock at a price of $26.79 per share, of which the amount in
excess of fair market value on the date of exercise was recorded as
revenue. Such amount net of royalties totaled $219,000 and is included
in contract revenue.
4. Senior Custom Convertible Notes
In March 1998, $472,500 of principal and accrued and unpaid interest
relating to SUGEN's outstanding senior custom convertible notes were
converted into 40,000 shares of Common Stock at a price of $11.81 per
share.
7
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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 words such as "intends," "believes," "anticipates," "plans,"
"expects" and similar expressions which are intended to identify forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended,
which are subject to the "safe harbor" created by those sections. The Company's
actual results could differ materially from the results discussed in these
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, 1997. Readers are
cautioned not to place undue reliance on these forward-looking statements, which
speak only as of the date hereof. The Company undertakes no obligation to
release the results of any revision to these forward-looking statements which
may be made to reflect events or circumstances occurring after the date hereof
or to reflect the occurrence of unanticipated events.
Overview
SUGEN was founded in July 1991 to discover and develop new classes of
small molecule drugs which target specific cellular signal transduction
pathways. These signalling pathways are involved in a variety of chronic and
acute pathological diseases, including cancer and diabetes as well as in
dermatologic, ophthalmic, neurologic and immune disorders. The Company's most
advanced product candidate is SU101, a PDGF TK signalling antagonist. The
Company has initiated a Phase III clinical trial for use of SU101 as a treatment
for refractory malignant glioma during the first quarter of 1998. Additionally,
SUGEN currently has underway a Phase II study of SU101 in combination with BCNU
in front-line glioma and another Phase II study of SU101 mono-therapy in hormone
refractory prostate cancer. To date, approximately 175 patients, including
patients with brain, ovarian, prostate and non-small cell lung cancers, have
been treated with SU101 in nine Company-sponsored clinical trials. The Company
is also conducting its initial Phase I clinical trial for its second cancer
product candidate, SU5416, a Flk-1/KDR TK antagonist which inhibits angiogenesis
(the process by which blood vessels are formed). In addition, the Company is
conducting a Phase I clinical trial for SU5271, an EGF antagonist, for the
treatment of psoriasis. Through March 31, 1998, substantially all of the
Company's revenue apart from interest income has been earned pursuant to
collaborations with Zeneca Limited ("Zeneca"), ASTA Medica Aktiengesellschaft
("ASTA Medica") and Vision Pharmaceuticals L.P., an affiliate of Allergan, Inc.,
and Allergan, Inc. (collectively "Allergan"). The Company intends to pursue its
cancer drug discovery programs independently in North America and its programs
in other disease areas in collaboration with established pharmaceutical
companies.
The Company has not been profitable since inception and expects to
incur substantial losses for the foreseeable future, primarily due to the
expansion of preclinical and clinical development activities as more of its
proprietary cancer-related programs progress toward and into the clinic. The
Company expects that losses will fluctuate from quarter to quarter and that such
fluctuations may be substantial. As of March 31, 1998, the Company's accumulated
deficit was $100.2 million.
Results of Operations
8
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The Company's revenues for the three months ended March 31, 1998 and
1997 were $1.6 million and $1.5 million, respectively. Revenues for the three
months ended March 31, 1998 included contract revenue from the Allergan and
Zeneca collaborations and a milestone earned in connection with the Company's
collaboration with ASTA Medica. In addition to Allergan and Zeneca contract
revenue, 1997 revenues included contract services revenue earned under the ASTA
Medica collaboration for services provided by ASTA Medica pursuant to the
collaboration but on non-collaboration programs. The Company expects to fully
utilize the remaining available credit for contract services provided by ASTA
Medica by the end of 1998, and thereafter will only recognize revenue under the
ASTA Medica collaboration upon the achievement of specified milestones.
Research and development expenses for the three months ended March 31,
1998 and 1997 were $9.4 million and $8.0 million, respectively. The increase
during 1998 was primarily due to higher personnel related costs associated with
the expansion of the Company's research and development programs. In addition,
the progression of clinical activities, including expanded Phase II and Phase
III studies of the Company's lead anti-cancer compound, SU101, and the
initiation of Phase I studies of the Company's second cancer product candidate,
SU5416, contributed to higher expenses during 1998. The Company expects that its
research and development expenses will continue to grow in future years due to
the hiring of personnel, additional preclinical studies, the progression of
SU101 and SU5416 clinical trials, the initiation of new clinical trials on
additional drug candidates and research and development activities pursuant to
the Company's responsibilities under anticipated future collaborations.
General and administrative expenses for the three months ended March
31, 1998 and 1997 were $1.8 million and $1.5 million, respectively. The increase
in 1998 was primarily due to higher headcount related costs as well as
additional expenses in the areas of corporate and business development. The
Company expects that its general and administrative expenses will continue to
increase in order to support the Company's expanding research and development
efforts.
Interest income for the three months ended March 31, 1998 and 1997 were
$979,000 and $693,000, respectively. This increase was due to higher investment
balances arising primarily from issuances of the Company's capital stock and
convertible debt. Interest expense for the three months ended March 31, 1998 and
1997 were $468,000 and $170,000, respectively. This increase was primarily due
to the Company's continued use of capital lease financing for equipment and
property improvements and expenses related to the issuance of senior custom
convertible notes. The Company expects that interest expense will continue to
increase in future years due to the continued use of capital lease financing for
equipment and facility improvements.
Liquidity and Capital Resources
At March 31, 1998, the Company had cash, cash equivalents and
short-term investments of approximately $68.3 million compared with
approximately $75.3 million at December 31, 1997. The decrease in cash and
investments during the three months ended March 31, 1998 was primarily due to
the net loss for the quarter.
Through March 31, 1998, the Company's principal sources of financing
have been its initial and follow-on public offerings of Common Stock, placements
of the Company's Preferred and Common Stock and senior custom convertible notes,
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, Allergan and ASTA Medica, its cash, cash equivalents
and
9
<PAGE>
short-term investments and capital lease financing. At March 31, 1998, the
Company had combined capital lease lines of $5.6 million available for the
purchase of equipment and facility improvements.
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 the agreements may require the Company to make
milestone and royalty payments. Under these programs, commitments for external
research funding are approximately $1.7 million, $1.6 million, $1.4 million and
$1.1 million in 1998, 1999, 2000 and 2001, respectively. 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.
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 1998. 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 three
months ended March 31, 1998 and 1997 were $454,000 and $891,000, respectively.
The decrease in capital additions during the first quarter of 1998 from the same
period last year was primarily due to the timing of equipment purchases and
facility improvements. Capital additions during the first quarter of 1997
primarily included the costs associated with the initial phases of a limited
facility expansion and continued investment in enhancing the Company's
laboratory capabilities. The Company expects that its capital additions for 1998
will be higher than that of the prior year primarily due to anticipated facility
improvements in connection with the build-to-suit facility lease agreement which
was entered into in June 1997. Construction of the new facility is targeted for
completion during the fourth quarter of 1998, which coincides with the
expiration of the Company's current facility leases. Although the Company has
not expended significant amounts to date, the Company expects to invest in
facility improvements and incur move related costs during the course of the year
as it approaches building completion. Accordingly, it is expected that the
Company's capital lease obligations and related interest expense, as well as its
depreciation expense, will increase in future periods.
The Company estimates that its existing capital resources together with
facility and equipment financing, expected revenues from current collaborations
and net income from investment activities, will be sufficient to fund its
planned operations into 2000. However, 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 Year 2000 Issue is the result of computer programs being written
using two digits rather than four digits to define the applicable year. The
Company has reviewed its existing software programs for Year 2000 compliance and
believes that all of its internal application systems are
10
<PAGE>
currently in compliance. The Company is in the process of initiating formal
communications with all of its significant suppliers to determine the extent to
which the Company is vulnerable to those third parties' failure to remediate
their own Year 2000 Issues. The project is estimated to be completed by early
1999, which is prior to any anticipated impact on its operations. The Company
does not expect the costs of Year 2000 compliance to have a material impact on
the Company's financial results. However, there can be no assurance as to the
effect on the Company of the failure of third parties, with whom the Company
works, to achieve Year 2000 compliance on a timely basis.
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 three
drug candidates (SU101, SU5271 and SU5416) have entered clinical trials. 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 several more years, even if they are developed successfully and proven to be
safe and effective. 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. 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. 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. 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 uncertainties regarding protection of patents and
proprietary rights, government regulation, competition, employee issues,
manufacturing uncertainties, the Company's lack of sales and marketing
capabilities, uncertainty of market acceptance of the Company's products, and
uncertainties regarding pharmaceutical pricing and reimbursement.
11
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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 (3)
10.70 Common Stock Purchase Agreement, dated January 12,
1998, between the Registrant and Asta Medica
Aktiengesellschaft.
10.71+ First Amendment to Lease, dated March 18, 1998, between
the Registrant and Britannia Pointe Grand Limited
Partnership.
27 Financial Data Schedule
- ------------------
+ The Registrant has requested confidential treatment with
respect to portions of this Exhibit.
(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.
(3) 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 March 31,
1998.
12
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: May 13, 1998 SUGEN, Inc.
------------
By: /s/ Stephen Evans-Freke By: /s/ Susan M. Kanaya
------------------------------------ ---------------------------
Stephen Evans-Freke Susan M. Kanaya
Chairman of the Board and Treasurer
Principal Executive and Financial Principal Accounting Officer
Officer
13
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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 (3)
10.70 Common Stock Purchase Agreement, dated January 12,
1998, between the Registrant and Asta Medica
Aktiengesellschaft.
10.71+ First Amendment to Lease, dated March 18, 1998, between
the Registrant and Britannia Pointe Grand Limited
Partnership.
27 Financial Data Schedule
- ---------------------
+ The Registrant has requested confidential treatment with
respect to portions of this Exhibit.
(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.
(3) Filed as an exhibit to the Form 8-K Current Report dated
July 26, 1995 and incorporated herein by reference.
14
AGREEMENT
for the purchase of Common Stock of
SUGEN, INC.
by
ASTA MEDICA AKTIENGESELLSCHAFT
<PAGE>
<TABLE>
TABLE OF CONTENTS
<CAPTION>
Page
<S> <C> <C>
1. PURCHASE AND SALE OF COMMON STOCK...................................................................... 1
1.1 Issue of Common Stock......................................................................... 1
2. CLOSING DATE; DELIVERY................................................................................. 1
2.1 Closing....................................................................................... 1
2.2 Payment and Delivery.......................................................................... 1
3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY............................................... 2
3.1 Organization.................................................................................. 2
3.2 Authority..................................................................................... 2
3.3 Issuance of the Shares........................................................................ 2
3.4 Registration Rights Covenant.................................................................. 2
4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF PURCHASER................................................. 6
4.1 Legal Power................................................................................... 6
4.2 Due Execution................................................................................. 6
4.3 Investment Representations and Covenants...................................................... 6
4.4 Standstill Covenant........................................................................... 7
4.5 Lockup Covenant............................................................................... 8
5. CONDITIONS TO CLOSING.................................................................................. 8
5.1 Conditions to Obligations of Purchaser........................................................ 8
(a) Representations and Warranties True; Performance of Obligations...................... 8
(b) Proceedings and Documents............................................................ 8
5.2 Conditions to Obligations of the Company...................................................... 8
(a) Representations and Warranties True.................................................. 9
(b) Performance of Obligations........................................................... 9
(c) Qualifications, Legal Investment..................................................... 9
6. MISCELLANEOUS.......................................................................................... 9
6.1 Governing Law................................................................................. 9
6.2 Successors and Assigns........................................................................ 9
6.3 Entire Agreement.............................................................................. 9
6.4 Separability................................................................................... 10
6.5 Amendment and Waiver........................................................................... 10
6.6 Notices........................................................................................ 10
i
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TABLE OF CONTENTS
(continued)
Page
6.7 Fees and Expenses.............................................................................. 10
6.8 Titles and Subtitles........................................................................... 10
6.9 Counterparts................................................................................... 10
6.10 Consent to Jurisdiction and Venue.............................................................. 10
</TABLE>
ii
<PAGE>
COMMON STOCK PURCHASE AGREEMENT
THIS COMMON STOCK PURCHASE AGREEMENT (the "Agreement) is made as of the
12th day of January, 1998, by and between SUGEN, INC., a Delaware corporation
(the "Company"), and ASTA MEDICA AKTIENGESELLSCHAFT, a German corporation
("Purchaser"). Pursuant to that certain letter dated December 5, 1995 from the
Company to Purchaser, and 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 Issue of Common Stock.
(a) The Company has authorized the issuance and sale of up to
18,665 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 two hundred percent (200%) of the
Fair Market Value thereof. For purposes of this Agreement, Fair Market Value
shall equal the average closing sales price of a share of Common Stock as
reported for the Nasdaq National Market for the twenty (20) business days
preceding January 12, 1998.
(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.
2. CLOSING DATE; DELIVERY.
2.1 Closing. The closing of the sale and purchase of the Shares under
this Agreement (the "Closing") shall be held on or about 10:00 a.m. (Pacific
Standard Time) on or about January 28, 1998 (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 $499,990.55.
2.2 Payment and Delivery. At the Closing, subject to the terms and
conditions hereof, the Company will deliver to Purchaser a stock certificate,
registered in the name of
1.
<PAGE>
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.
The Company hereby represents and warrants to Purchaser as of the
Closing Date as follows:
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.
3.2 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.
3.3 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.
2.
<PAGE>
3.4 Registration Rights Covenant.
(a) At any time during the 180-day period immediately
following the termination of the Screening Period (as defined in that certain
Collaboration Agreement between the Company and Purchaser dated as of December
5, 1995 (the "Collaboration Agreement")), Purchaser shall have the right to
cause the Company to file a registration statement under the Securities Act of
1933, as amended (the "Securities Act"), for a public offering of no less than
250,000 shares of Common Stock beneficially owned by Purchaser, provided that
such shares include all of the Shares, 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 3.4(a)
are subject to the following limitations: (i) the Company shall not be obligated
to effect more than one registration pursuant to Section 3.4(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 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) If and when the Company is required by the provisions of
Section 3.4(a) to include all of the 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
3.
<PAGE>
("SEC") a registration statement with respect to such securities and use its
best efforts to cause such registration to become and remain effective 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).
(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 registered hereunder.
(iv) Use its best efforts to register or qualify the
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 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.
(d) In the event of a registration of any of the Shares under
the Securities Act pursuant to Section 3.4(a) in connection with an underwritten
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 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.
Purchaser will also provide usual and customary indemnification to the Company
and its affiliates with respect to claims, losses and damages arising out of or
based on any untrue statement (or alleged untrue statement) of a material fact
contained in any registration statement, prospectus or other document, or any
omission (or alleged omission) to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading;
provided, however, that in no event shall any indemnity under this Section
3.4(d) exceed the gross proceeds from the offering received by Purchaser.
(e) At any time or from time to time following termination of
the Screening
4.
<PAGE>
Period (as defined in the Collaboration Agreement), if the Company shall
determine to register any of its securities either for its own account or the
account of a security holder or holders exercising their respective demand
registration rights (other than pursuant to Section 3.4(a) hereof), 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 3.4(f) below, and in any
underwriting involved therein, all 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.
(f) 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 3.4(e)(i). In such event, the right of Purchaser to registration
pursuant to Section 3.4(e) shall be conditioned upon Purchaser's participation
in such underwriting and the inclusion of Purchaser's Shares 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 3.4(e) or (f), 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
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 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 date hereof. If Purchaser or any other person does not
5.
<PAGE>
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.
(g) As used herein, "Registration Expenses" shall mean all
expenses incurred by the Company in complying with this Section 3.4, 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
3.4(a) hereof; provided, however, that in the event of a registration of the
Shares pursuant to Section 3.4(a) either as a result of a material breach of the
Collaboration Agreement by the Company or the inability to replace a Project
pursuant to Section 2.6 of the Collaboration Agreement, or if 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 3.4(a)), all Registration Expenses shall be borne by
the Company. All Registration Expenses in connection with any registration
pursuant to Section 3.4(e) hereof shall be borne by the Company; provided,
however, that any incremental expenses incurred by the Company solely by reason
of Purchaser's exercise of registration rights pursuant to Section 3.4(e) shall
be borne by the Purchaser.
(h) The rights conferred upon Purchaser under this Section 3.4
may be assigned by Purchaser to any permitted transferee of the Shares, 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 this Section 3.4(a) and only Purchaser shall be entitled
to receive notice pursuant to Section 3.4(a) hereof.
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 corporate power and is
authorized to
6.
<PAGE>
enter into this Agreement, to purchase the Shares hereunder and to carry out and
perform its obligations under the terms of this Agreement.
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
7.
<PAGE>
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 Securities Exchange Act of 1934, as amended (the "Exchange
Act")) and the number of shares being sold during any three-month period not
exceeding specified limitations. Each certificate representing 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 neither Purchaser nor
any of its affiliates will in any manner, directly or indirectly (i) 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; and (C)
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.
8.
<PAGE>
4.5 Lockup Covenant. Purchaser agrees that during the Screening Period
(as defined in the Collaboration Agreement), Purchaser will not, without the
prior written approval of the 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 the Shares to a corporation, partnership or other legal entity of
which Purchaser has actual control, 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
controlled by Purchaser (all such Shares 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 21% 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.
5. CONDITIONS TO CLOSING.
5.1 Conditions to Obligations of Purchaser. Purchaser's obligation to
purchase the Shares at the Closing is subject to the fulfillment, at or prior to
the Closing, of all of the following conditions:
(a) Representations and Warranties True; Performance of
Obligations. The representations and warranties made by the Company in Section 3
hereof shall be true and correct in all material respects on the Closing Date
with the same force and effect as if they had been made on and as of said date.
The Company shall have performed all obligations and conditions herein required
to be performed by it on or prior to the Closing Date.
(b) Proceedings and Documents. All corporate and other
proceedings in connection with the transactions contemplated at the Closing
hereby and all documents and instruments incident to such transactions shall be
reasonably satisfactory in substance and form to Purchaser.
5.2 Conditions to Obligations of the Company. The Company's obligation
to issue and sell the Shares at the Closing is subject to the fulfillment, to
the Company's satisfaction, on or prior to the Closing, of the following
conditions:
(a) Representations and Warranties True. The representations
and warranties made by Purchaser in Section 4 hereof shall be true and correct
at the Closing Date
9.
<PAGE>
with the same force and effect as if they had been made on and as of the date of
the Closing Date.
(b) Performance of Obligations. Purchaser shall have performed
and complied with all agreements and conditions herein required to be performed
or complied with by them on or before the Closing Date, and Purchaser shall have
delivered payment to the Company in respect of its purchase of Shares.
(c)Qualifications, Legal Investment. 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 duly 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 to
be purchased and sold at the Closing shall be legally permitted by all laws and
regulations to which Purchaser and the Company are subject.
6. MISCELLANEOUS.
6.1 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.
6.2 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.
6.3 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.
6.4 Separability. In case any provision of this Agreement shall be
invalid, illegal, or
10.
<PAGE>
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.
6.5 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.
6.6 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.
6.7 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.
6.8 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.
6.9 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.
6.10 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.
11.
<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
ASTA MEDICA AKTIENGESELLSCHAFT
By: /s/ Berndt Kastler
----------------------------------------
Name: Berndt Kastler
Title:
12.
***TEXT OMITTED AND FILED SEPARATELY
CONFIDENTIAL TREATMENT REQUESTED
UNDER 17 C.F.R. SS.SS.200.80(B)(4),
200.83 AND 240.24B-2
FIRST AMENDMENT TO LEASE
THIS FIRST AMENDMENT TO LEASE ("Amendment") is entered into as of March
18, 1998 between BRITANNIA POINTE GRAND LIMITED PARTNERSHIP, a Delaware limited
partnership ("Landlord") and SUGEN, INC., a Delaware corporation ("Tenant"),
with reference to the following facts:
A. Landlord and Tenant are parties to a Build-to-Suit Lease dated June
11, 1997 (the "Lease"), covering certain premises consisting of a building of
approximately [...***...] square feet to be constructed in the Britannia Pointe
Grand Business Park in South San Francisco, California (the "Center").
B. Landlord and Tenant wish to make certain changes in the Lease as
more particularly set forth herein.
C. Terms used herein as defined terms but not specifically defined
herein shall have the meanings assigned to such terms in the Lease.
NOW, THEREFORE, in consideration of the mutual agreements set forth
herein and for good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Landlord and Tenant agree as follows:
1. Rent Commencement Date. Section 2.1(a) of the Lease is amended to
read in its entirety as follows:
"(a) The term of this Lease shall commence upon mutual execution of
this Lease by Landlord and Tenant. Tenant's minimum rental and
Operating Expense obligations shall commence on the earlier of (i)
the later of (A) October 1, 1998 or (B) the date which is one
hundred eighty (180) days after the date Landlord delivers to Tenant
a Structural Completion Certificate pursuant to the Workletter
attached hereto as Exhibit C (subject to any adjustments authorized
or required under the provisions of such Exhibit C), notifying
Tenant that Landlord's construction of the shell of the Initial
Building pursuant to Article 5 and Exhibit C is substantially
complete, or (ii) the date Tenant takes occupancy of and commences
operation of its business in the Initial Building, the earlier of
such dates being herein called the "Rent Commencement Date." The
term of this Lease shall end on the day (the "Termination Date")
immediately preceding the date seventeen (17) years after the Rent
Commencement Date, unless sooner terminated or extended as
hereinafter provided."
- -----------------
*Confidential Treatment Requested
1.
<PAGE>
2. Changes in Rent and Tenant Improvement Allowance. In order to
reflect an increase from $[...***...] pER square foot to $[...***...] per square
foot in Landlord's maximum contribution toward the Cost of Improvements of tHE
Tenant Improvements to be constructed pursuant to Section 5.1 and Exhibit C, the
following provisions of the Lease are amended as follows:
(a) The monthly minimum rental table in Section 3.1(a) of the Lease
is amended to read as follows:
Months Monthly Minimum Rental
------ ----------------------
001 - 012 $ [...***...] ($[...***...] per square foot)
013 - 024 [...***...] ($[...***...] per square foot)
025 - 036 [...***...] ($[...***...] per square foot)
037 - 048 [...***...] ($[...***...] per square foot)
049 - 060 [...***...] ($[...***...] per square foot)
061 - 072 [...***...] ($[...***...] per square foot)
073 - 084 [...***...] ($[...***...] per square foot)
085 - 096 [...***...] ($[...***...] per square foot)
097 - 108 [...***...] ($[...***...] per square foot)
109 - 120 [...***...] ($[...***...] per square foot)
121 - 132 [...***...] ($[...***...] per square foot)
133 - 144 [...***...] ($[...***...] per square foot)
145 - 156 [...***...] ($[...***...] per square foot)
157 - 168 [...***...] ($[...***...] per square foot)
169 - 180 [...***...] ($[...***...] per square foot)
181 - 192 [...***...] ($[...***...] per square foot)
193 - 204 [...***...] ($[...***...] per square foot)
(b) Section 3.1(c) of the Lease is amended to read in its entirety
as follows:
"(c) Rental Adjustment in Connection with Cost of
Improvements. The minimum rental amounts specified in Section
3.1(a) are based on an assumed amount of [...***...] per square
foOT for the Cost of Improvements (determined in accordance with
Exhibit C) of the Tenant Improvements to be constructed by Tenant
pursuant to Section 5.1 and Exhibit C (and are thus based on an
assumed amount of [...***...] per square foot for Landlord's share
of such Cost OF Improvements). Under no circumstances shall
Landlord's liability for such Cost of Improvements exceed the
lesser of (i) [...***...] of the total Cost of Improvements for
such Tenant ImprovemenTS or (ii) [...***...] per square foot
multiplied by the area of the Initial Building as determined in
accordance with Section 3.1(b) hereof. If, upon completion of
construction of the Tenant Improvements, it is determined that
Landlord's share of the Cost of Improvements of such Tenant
Improvements (determined in accordance with Exhibit C) is less than
[...***...] per square foot (using the area of the Premises as
determined in
- -----------------
*Confidential Treatment Requested
2.
<PAGE>
accordance with Section 3.1(b) hereof), then the minimum rental
amounts specified in Section 3.1(a) shall be adjusted as follows:
(i) If Landlord's share of such Cost of Improvements is less
than [...***...] per square foOT but is at least [...***...] per square foot,
then the minimum rental under Section 3.1(a) during months 1 through 84 of the
term of this Lease shall be decreased by $[...***...] per square foot per month
for each $[...***...] pER square foot by which Landlord's share of such Cost of
Improvements is less than [...***...] per square foot (prorated for any portion
of such shortfall representing a fraction of $[...***...] per square foot);
(ii) If Landlord's share of such Cost of Improvements is less
than [...***...] per square foot but is at least [...***...] per square foot,
then the minimum rental under Section 3.1(a) during months 1 through 84 of the
term of this Lease shall be decreased by the sum of (A) $[...***...] per square
foot per month plus (B) $[...***...] per square foot per month for each
$[...***...] per square foot by which Landlord's share of such Cost of
Improvements is less than [...***...] per square foot, and the minimum rental
under Section 3.1(a) during months 85 through 120 of the term of this Lease
shall be decreased by $[...***...] per square foot per month for each
$[...***...] per square foot by which Landlord's share of such Cost of
Improvements is less than [...***...] per square foot (prorated, in each case,
for any portion of such shortfall representing a fraction of $[...***...] per
square foot); and
(iii) If Landlord's share of such Cost of Improvements is less
than [...***...] per square foot but is more than [...***...] per square foot,
then the minimum rental under Section 3.1(a) during months 1 through 84 of the
term of this Lease shall be decreased by the sum of (A) $[...***...] per square
foot per month plus (B) $[...***...] per square foot per month for each
$[...***...] per square foot by which Landlord's share of such Cost of
Improvements is less than [...***...] per square foot, the minimum rental during
months 85 through 120 shall be decreased by the sum of (C) $[...***...] per
square foot per month plus (D) $[...***...] per square foot per month for each
$[...***...] per square foot by which Landlord's share of such Cost of
Improvements is less than [...***...] per square foot, and the minimum rental
during months 121 through 168 shall be decreased by $[...***...] per square foot
per month for each $[...***...] per square foot by which Landlord's share of
such Cost of Improvements is less than [...***...] per square foot (prorated, in
each case, for any portion of such shortfall representing a fraction of
$[...***...] per square foot)."
(c) Section 3.1(d) of the Lease is amended by changing the two
references therein to a figure of [...***...] per square foot to read, instead,
[...***...] per square foot.
(d) Section 20.1 of the Lease is amended to increase the amount of
the Security Deposit required thereunder from [...***...] to [...***...]. (e)
Paragraph 4(b) of Exhibit C to the Lease (the Workletter) is amended to read in
its entirety as follows:
"(b) Tenant's Work. Except as otherwise expressly provided in
this Workletter or by mutual written agreement of Landlord and
Tenant, the cost of
- -----------------
*Confidential Treatment Requested
3.
<PAGE>
construction of the Tenant Improvements shall be borne [...***...]
by Landlord and [...***...] by Tenant, up to a maximum Landlord's
obligation of $[...***...] per square foot of space in the Initial
Building (measured in accordance with Section 3.1(b) of the Lease),
equating to a total Cost of Improvements for the Tenant
Improvements of $[...***...] per square foot. Tenant shall be
responsible, at its sole cost and expense (subject to any
third-party financing arrangements entered into by Tenant as
contemplated in Section 11.4 of the Lease), for payment of
[...***...] of the first $[...***...] per square foot of the Cost
of Improvements of the Tenant Improvements, for the entire Cost of
Improvements of the Tenant Improvements in excess of $[...***...]
per square foot (if any such excess occurs) and for the entire cost
of any Tenant's Work that is not part of the Tenant Improvements,
including (but not limited to), in each case, any costs or cost
increases incurred as a result of Unavoidable Delays, governmental
requirements or unanticipated conditions. If Landlord's share of
the Cost of Improvements of the Tenant Improvements is less than
$[...***...] per square foot in the aggregate, the amount of such
difference shall result in a rental adjustment pursuant to Section
3.1(c) of the Lease. The timing, conditions and other procedures
for payment or disbursement of Landlord's share of the cost of the
Tenant Improvements (up to the maximum amount specified above)
shall be subject to mutual agreement of Landlord, Tenant and
Landlord's lender (if any). To the extent the Cost of Improvements
with respect to the Tenant Improvements exceeds $[...***...] per
square foot (reduced by [...***...] of any amounts deducted from
Landlord's maximum payment obligation as a result of the final
sentence of Paragraph 4(a) hereof), whether as a result of Change
Orders, Tenant Delays and/or Unavoidable Delays or otherwise, the
amount of such excess shall in all events be Tenant's sole
responsibility and expense."
3. Stock Warrants. In partial consideration for Landlord's agreement to
enter into this Amendment and to make a larger tenant improvement allowance
available to Tenant as described above, Tenant agrees to issue and deliver to
Landlord or Landlord's assignees (which may be any partners, shareholders or
affiliates of Landlord or any affiliates of any such partners, shareholders or
affiliates of Landlord) warrants registered in the name of Landlord or
Landlord's assignees, as applicable, for the acquisition of an aggregate of
[...***...] shares of Tenant's common stock (the "Additional Warrants"), which
Additional Warrants shall be in addition to, but (except as otherwise expressly
provided below) shall be in substantially the same form as, the warrants
previously issued by Tenant pursuant to Section 4.1(a) of the Lease for
[...***...] shares (in the aggregate) of Tenant's common stock. Notwithstanding
the preceding sentence, the Additional Warrants shall have an exercise price of
$[...***...] per share, shall be dated as of the date of this Amendment and
shall be exercisable for a period of [...***...] years from the date of
issuance.
4. Use of Union Labor.
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*Confidential Treatment Requested
4.
<PAGE>
(a) The fourth sentence of Section 11.1 of the Lease, relating to
the use by Tenant of union contractors for improvements, alterations, additions
and like matters, is deleted in its entirety.
(b) Paragraph 5(a) of the Workletter attached as Exhibit C to the
Lease is amended to read in its entirety as follows:
"(a) Contractor Requirements. The contractor engaged by Tenant
for Tenant's Work, and any subcontractors, shall be duly licensed
in California and shall be subject to Landlord's prior written
approval, which approval shall not be unreasonably withheld or
delayed."
5. Full Force and Effect. Except as expressly set forth herein, the
Lease has not been modified or amended and remains in full force and effect.
6. Landlord's Notice Address. The notice address for Landlord, as set
forth in Section 21.1 of the Lease, is hereby changed to the following:
Britannia Pointe Grand Limited Partnership
1939 Harrison Street, Suite 715
Park Plaza Building
Oakland, CA 94612
Attn: T. J. Bristow
IN WITNESS WHEREOF, Landlord and Tenant have executed this Amendment as
of the date first set forth above.
"Landlord" "Tenant"
BRITANNIA POINTE GRAND LIMITED SUGEN, INC., a Delaware corporation
PARTNERSHIP, a Delaware limited
partnership
By: /s/ Stephen Evans-Freke
By: BRITANNIA POINTE GRAND, ---------------------------
LLC, a California limited liability Stephen Evans-Freke
company, General Partner Its Chairman and Chief
Executive Officer
By: /s/ T.J. Bristow By: /s/ Susan Kanaya
------------------------------ ---------------------------
T. J. Bristow Susan Kanaya
President & Manager Its: Treasurer
5.
<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 MARCH 31, 1998 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 10,301
<SECURITIES> 57,978
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 69,368
<PP&E> 12,016
<DEPRECIATION> 7,734
<TOTAL-ASSETS> 77,508
<CURRENT-LIABILITIES> 16,015
<BONDS> 20,441
0
0
<COMMON> 142,686
<OTHER-SE> (101,634)
<TOTAL-LIABILITY-AND-EQUITY> 77,508
<SALES> 0
<TOTAL-REVENUES> 1,645
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 9,432
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 468
<INCOME-PRETAX> (9,121)
<INCOME-TAX> 0
<INCOME-CONTINUING> (9,121)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (9,121)
<EPS-PRIMARY> (0.59)
<EPS-DILUTED> (0.59)
</TABLE>
