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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------------
FORM 10-Q/A
(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, 1999.
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.)
230 East Grand Avenue, South San Francisco, California 94080
(address of principal executive offices)
(650) 553-8300
(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;
16,880,775 shares outstanding at April 30, 1999.
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<PAGE>
SUGEN, Inc.
<TABLE>
INDEX
<CAPTION>
PAGE NO.
PART I. FINANCIAL INFORMATION
<S> <C> <C>
Item 1. Financial Statements and Notes
Condensed Consolidated Balance Sheets - March 31, 1999
and December 31, 1998 3
Condensed Consolidated Statements of Operations -
for the three months ended March 31, 1999 and 1998 4
Condensed Consolidated Statements of Cash Flows - for the three
months ended March 31, 1999 and 1998 5
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10
Item 3. Quantitative and Qualitative Disclosures About Market Risk 15
PART II. OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds 16
Item 5. Other Information 18
Item 6. Exhibits and Reports on Form 8-K 18
Signatures 20
Exhibit Index 21
</TABLE>
2
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS AND NOTES
SUGEN, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
March 31, December 31,
1999 1998
--------- ---------
ASSETS (unaudited)
Current assets:
Cash and cash equivalents $ 37,392 $ 23,901
Short-term investments 24,507 23,396
Accounts receivable 507 373
Prepaid expenses and other current assets 1,300 1,022
--------- ---------
Total current assets 63,706 48,692
Property and equipment, net 7,712 7,863
Other assets 3,107 2,778
--------- ---------
$ 74,525 $ 59,333
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 2,826 $ 4,883
Accrued liabilities 16,433 13,910
Deferred contract revenue 1,450 1,625
Capital lease obligations - current portion 2,905 2,779
--------- ---------
Total current liabilities 23,614 23,197
Long-term liabilities:
Capital lease obligations - non-current portion 6,257 5,724
Senior convertible notes 31,293 5,694
--------- ---------
Total long-term liabilities 37,550 11,418
Stockholders' equity:
Common stock 160,609 157,171
Deferred compensation (823) (971)
Note receivable from stockholder (883) (883)
Accumulated deficit (145,542) (130,599)
--------- ---------
Total stockholders' equity 13,361 24,718
--------- ---------
$ 74,525 $ 59,333
========= =========
See accompanying notes.
3
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SUGEN, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(unaudited)
Three Months Ended
March 31,
---------------------
1999 1998
-------- --------
Contract revenue (includes amounts from
related party) $ 4,262 $ 1,645
Costs and expenses:
Research and development 16,528 9,432
General and administrative 2,673 1,845
-------- --------
Total costs and expenses 19,201 11,277
-------- --------
Operating loss (14,939) (9,632)
Other income and expenses:
Interest income 521 979
Interest expense (487) (468)
-------- --------
Other income, net 34 511
-------- --------
Net loss $(14,905) $ (9,121)
======== ========
Basic and diluted net loss per share $ (0.89) $ (0.59)
======== ========
Shares used in computing basic and diluted net loss
per share 16,682 15,345
======== ========
See accompanying notes.
4
<PAGE>
<TABLE>
SUGEN, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Increase (decrease) in cash and cash equivalents
(In thousands)
(unaudited)
<CAPTION>
Three Months Ended
March 31,
------------------------------
1999 1998
-------- --------
<S> <C> <C>
Cash flows from operating activities
Net loss $(14,905) $ (9,121)
Adjustments to reconcile net loss to net cash provided (used) by
operating activities:
Depreciation, amortization and other non-cash items 1,613 958
Prepaid expenses and other current assets (412) (98)
Other assets (420) 1
Accounts payable (2,057) 536
Accrued liabilities 2,526 265
Deferred revenue (175) --
-------- --------
Net cash used in operating activities (13,830) (7,459)
-------- --------
Cash flows from investing activities
Sales/maturities (purchases) of short-term investments, net (1,149) (6,549)
Purchases of property and equipment, net (459) (454)
-------- --------
Net cash used in investing activities (1,608) (7,003)
-------- --------
Cash flows from financing activities
Proceeds from issuance of common stock, net 2,162 632
Proceeds from issuance of senior convertible notes, net 26,108 --
Proceeds from lease financing of property and equipment 1,351 856
Payments under capital lease obligations (692) (541)
-------- --------
Net cash provided by financing activities 28,929 947
-------- --------
Net increase (decrease) in cash and cash equivalents 13,491 (13,515)
Cash and cash equivalents at beginning of period 23,901 23,816
-------- --------
Cash and cash equivalents at end of period $ 37,392 $ 10,301
======== ========
<FN>
See accompanying notes.
</FN>
</TABLE>
5
<PAGE>
SUGEN, Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Summary of Organization and Significant Accounting Policies
Basis of Presentation
The accompanying condensed consolidated financial statements include
the accounts of SUGEN, Inc. ("SUGEN" or the "Company") and its
wholly-owned subsidiaries. All material intercompany transactions and
balances have been eliminated in consolidation. The condensed
consolidated financial statements as of March 31, 1999, the condensed
consolidated statements of operations and the condensed consolidated
statements of cash flows for the three months ended March 31, 1999 and
1998, have been prepared by the Company and are unaudited. In the
opinion of management, all necessary adjustments (consisting only of
normal recurring adjustments) which 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 are included. The
accompanying condensed consolidated financial statements should be read
in conjunction with the financial statements and notes thereto for the
year ended December 31, 1998 included in the Company's Form 10-K filed
with the U.S. Securities and Exchange Commission. 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.
Comprehensive Income (Loss)
Statement of Financial Accounting Standards No. 130, "Reporting
Comprehensive Income," requires companies to report in their annual
financial statements an additional measure of income. Comprehensive
income (loss) includes foreign currency translation gains and losses
and unrealized gains and losses on equity securities that have been
previously excluded from net income and reflected instead in equity.
Comprehensive loss was not material for the quarters ended March 31,
1999 and 1998.
Derivative Financial Instruments
Warrants issued to purchase convertible debt ("Warrant Notes") are
valued up front using the fair value method and marked-to-market
through interest expense over the remaining warrant term, until such
time as the warrant is exercised. Upon exercise, the difference between
the then current fair market value of the warrant and the beneficial
conversion feature would be recorded as a premium or discount and
amortized to interest expense over the term of the Warrant Notes. The
derivative accounting has no impact on the Company's cash flows.
Recent Accounting Pronouncement
In June 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities." SFAS No. 133 establishes
accounting and reporting standards requiring that every derivative
6
<PAGE>
SUGEN, Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
Summary of Organization and Significant Accounting Policies (continued)
instrument be recorded in the balance sheet as either an asset or
liability measured at its fair value. It requires that changes in the
derivative's fair value be recognized currently in earnings unless
specific hedge accounting criteria are met and that a company must
formally document, designate, and assess the effectiveness of
transactions that receive hedge accounting. SFAS No. 133 is effective
for fiscal years beginning after June 15, 1999.
2. Accrued Liabilities
The components of accrued liabilities consist of the following:
March 31, December 31,
1999 1998
------- -------
(In thousands)
Accrued research & development services $ 9,577 $ 6,859
Accrued compensation 1,330 1,937
Accrued professional fees 1,325 1,118
Other 4,201 3,996
------- -------
$16,433 $13,910
======= =======
3. Research and Development Collaboration Agreements
Laboratorios Del Dr. Esteve S.A.
In March 1999, the Company, through its affiliate, SUGEN Europe AG,
entered into an agreement with Laboratorios Del Dr. Esteve S.A.
("Esteve") to distribute, market and sell SUGEN's proprietary cancer
products in Spain, Portugal and Andorra. In connection with this
agreement, the Company recognized $1.4 million in net up-front fees and
Esteve, through its affiliate Laboratorios P.E.N., S.A. purchased $1.0
million of SUGEN Common Stock at $31.50 per share.
ASTA Medica Aktiengesellschaft
In March 1999, the Company received the second of two $750,000
installments in consideration to extend the period of time for the
screening and selection of active compounds under the Pan-Her program;
$375,000 was recognized as contract revenue for 1999 services and the
remaining $375,000 was in the form of the purchase of 10,964 shares of
SUGEN Common Stock at $34.20 per share.
7
<PAGE>
SUGEN, Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
4. Senior Convertible Notes
5% Senior Custom Convertible Notes due 2000
For the quarter ended March 31, 1999, $537,717 of principal and accrued
and unpaid interest relating to the Company's outstanding 5% Senior
Custom Convertible Notes due 2000 (the "1997 Notes") were converted
into 37,049 shares of Common Stock at a weighted average price of
$14.50. Through March 31, 1999, $12.4 million of principal and accrued
and unpaid interest relating to the 1997 Notes were converted into
1,039,398 shares of Common Stock at a weighted average price of $12.07
per share.
12% Senior Convertible Notes due 2002
In March 1999, the Company completed the private placement of $28.0
million principal amount of 12% Senior Convertible Notes due 2002 (the
"Notes"). The Notes are convertible into SUGEN Common Stock at $20.50
per share. Interest on the Notes may be paid in SUGEN Common Stock or
cash, at the Company's option. As part of the Note placement,
purchasers were issued warrants (the "Warrants") to acquire up to an
additional $21.0 million principal amount of 12% Senior Convertible
Notes which will mature on the third anniversary date of issuance (the
"Warrant Notes"). The Warrant Notes will have principally the same
terms and conditions as the original Notes. The Warrants to purchase
the Warrant Notes are exercisable until March 2001. The Company has the
right, at its option, to require the exercise of the Warrants by the
holders in the event that the closing price of the Company's Common
Stock exceeds certain levels during the term of the Warrants, subject
to certain limitations. On or before August 6, 1999, the then
outstanding balance of the 1997 Notes with a floating conversion
mechanism will be converted into SUGEN Common Stock in accordance with
their terms or, at a premium of approximately 125% to 132% of their
principal amount, exchanged for (i) an additional principal amount of
the 12% Senior Convertible Notes due 2002 (the "Exchange Notes") and
(ii) Warrants to acquire Warrant Notes in a principal amount equal to
75% of the principal amount of the Exchange Notes.
The estimated fair value of the Warrants as of March 31, 1999 was $2.0
million and is subject to quarterly adjustments for changes in the fair
value during the period the warrants are outstanding and unexercised.
The non cash fair value of the Warrants, together with the costs and
expenses related to the issuance of the Notes and Warrants of
approximately $1.9 million were recorded as debt issuance costs and
will be amortized to expense over the term of the Notes. Further, if
upon exercise of the Warrants the fair value of the Company's Common
Stock is more than $20.50 per share (the conversion price of the
Warrant Notes), the Company may record an additional non cash expense
for such beneficial conversion feature (if such benefit exceeds the
previously recorded fair value of the Warrants).
8
<PAGE>
SUGEN, Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
5. Subsequent Events
5% Senior Custom Convertible Notes due 2000
In April and May 1999, $5.0 million of the 1997 Notes were exchanged
into 12% Senior Convertible Notes due 2002, at a premium of 125% - 132%
of their principal amount, for approximately (i) $6.5 million principal
amount of the Exchange Notes and (ii) $4.9 million Warrants to acquire
Warrant Notes.
9
<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 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, 1998. 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. One of the Company's
drug candidates is SU101, a PDGF TK signalling antagonist. The Company initiated
a Phase III clinical trial for use of SU101 as a treatment for refractory
glioblastoma during the first quarter of 1998. Additionally, SUGEN currently has
underway multiple Phase II studies including SU101 in combination with BCNU in
front-line glioma, mono-therapy in ovarian and non-small cell lung cancers and
mono-therapy and in combination with mitozantrone in hormone refractory prostate
cancer. A Phase II study of SU101 as single agent therapy for refractory
anaplastic astrocytoma, another type of malignant brain tumor, is also being
conducted in parallel with the Phase III trial, and at the same centers. To
date, approximately 460 patients have been treated with SU101 in 14
Company-sponsored clinical trials. The Company's second cancer product
candidate, SU5416, is a Flk-1/KDR TK antagonist which inhibits angiogenesis (the
process by which blood vessels are formed). Currently, the Company is conducting
multiple Phase I clinical trials for SU5416 in solid tumors in Europe and the
U.S. and a Phase I/II study of SU5416 in Kaposi's sarcoma in the U.S. The
Company announced plans to accelerate the development of SU5416 with the
initiation of Phase III clinical trials in non-small cell lung and colorectal
cancers, and for Phase II/III studies in Kaposi's sarcoma. Meanwhile, the
Company will be working with certain investigators on National Cancer
Institute-sponsored Phase II and Phase I/II studies in other cancer indications.
In December 1998, the Company filed an Investigational New Drug application with
the U.S. Food and Drug Administration for its third cancer product, SU6668, a
novel broad spectrum inhibitor of angiogenesis and tumor growth, and is
currently initiating Phase I clinical trials in Europe and the U.S. using
intravenous and oral formulations, respectively. Through March 31, 1999,
substantially all of the Company's revenue apart from interest income has been
earned pursuant to collaborations with Zeneca Limited ("Zeneca"), Taiho
Pharmaceutical Ltd. ("Taiho"), Vision Pharmaceuticals L.P., an affiliate of
Allergan, Inc., Allergan, Inc. (collectively "Allergan"), and ASTA Medica
Aktiengesellschaft ("ASTA Medica").
In June 1998, the Company established SUGEN International AG ("SUGEN
International"), as a wholly owned subsidiary. SUGEN Europe AG ("SUGEN Europe")
was established in August 1998, as a
10
<PAGE>
wholly owned subsidiary of SUGEN International. Both entities are incorporated
in the Canton of Schaffhausen, Switzerland. SUGEN International and SUGEN Europe
will hold certain rights to the Company's technology portfolio outside of North
America. The entities were formed to facilitate commercialization of the
Company's products outside the United States.
The Company has not been profitable since inception and expects to
incur substantial losses for the foreseeable future, primarily due to the
acceleration of its three cancer products in clinical development along with the
manufacturing scale-up and preparation for potential New Drug Application
filings for SU101 and SU5416 in 2000. The Company expects that losses will
fluctuate from quarter to quarter and that such fluctuations may be substantial.
As of March 31, 1999, the Company's accumulated deficit was $145.5 million.
Results of Operations
The Company's consolidated revenues for the three months ended March
31, 1999 and 1998 were $4.3 million and $1.6 million, respectively. Revenues for
the three months ended March 31, 1999 included contract revenue from the Taiho,
Zeneca, Allergan and ASTA Medica collaborations. In addition, $1.4 million in
non-recurring net up front fees was recognized in connection with SUGEN Europe
establishing a marketing and distribution agreement with Laboratorios Del Dr.
Esteve S.A., Spain's second largest pharmaceutical company. These up front fees
combined with Taiho related contract funding resulted in increased revenue over
the prior year.
Research and development expenses for the three months ended March 31,
1999 and 1998 were $16.5 million and $9.4 million, respectively. The increase in
spending over the same period last year was primarily due to advancements made
in the Company's clinical programs, including additional Phase II studies and
the progression of the Phase III registrational study of SU101 and expanded
Phase I and Phase I/II studies of SU5416. Also contributing to higher expenses
in 1999 was moving the Company's third cancer product, SU6668, into clinical
development and higher personnel related costs accompanying the growth in the
Company's research and development programs. The Company expects that its
research and development expenses will continue to grow in future years due to
the clinical advancement of SU101, SU5416 and SU6668, including the related
manufacturing and process development efforts, the hiring of personnel,
additional preclinical studies, the initiation of new clinical trials on
additional drug candidates, and pursuant to requirements under the Company's
anticipated future collaborations.
General and administrative expenses for the three months ended March
31, 1999 and 1998 were $2.7 million and $1.8 million, respectively. The increase
in 1999 was primarily due to higher headcount related expenses and costs
associated with the Company's international operations. 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 and the
anticipated establishment of a sales and marketing force.
Interest income for the three months ended March 31, 1999 and 1998 were
$521,000 and $979,000, respectively. The decrease in 1999 was due to lower
investment balances resulting from the timing of cash flows generated from
financing activities. Interest expense for the three months ended March 31, 1999
and 1998 were $487,000 and $468,000, respectively. Increased interest expense
associated with the Company's capital lease financing was partially offset by
lower interest expense on the senior custom convertible notes as a significant
amount of principal has since been converted into equity. The Company expects
that interest expense will continue to increase in future periods due to
interest expenses associated with the March 1999 convertible debt financing and
continued use of capital lease financing for equipment and facility
improvements.
11
<PAGE>
Liquidity and Capital Resources
At March 31, 1999, the Company had cash, cash equivalents and
short-term investments of approximately $61.9 million compared with
approximately $47.3 million at December 31, 1998. The increase in cash and
investments during the three months ended March 31, 1999 was due to the issuance
of the March 1999 12% senior convertible notes partially offset by the operating
expenditure for the quarter.
Through March 31, 1999, the Company's principal sources of financing
have been its initial and follow-on public offerings of Common Stock, private
placements of the Company's Preferred and Common Stock and senior 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 Taiho, Zeneca, Allergan and ASTA Medica, its
cash, cash equivalents and short-term investments and capital lease financing.
At March 31, 1999, the Company had capital lease lines of $3.6 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 $1.5 million, $1.4 million and $1.1 million
in 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 cancelation. The
Company anticipates renewing certain contracts that expired in 1997 which will
increase future commitments beyond the levels indicated above for 1999 through
2001.
Net additions of equipment and leasehold improvements for the three
months ended March 31, 1999 and 1998 were $459,000 and $454,000, respectively.
The Company expects that its capital additions for 1999 will be lower than that
of the prior year as 1998 included costs associated with the completion of the
Company's new build-to-suit facility. In April 1999, the Company entered into a
third amendment to its facility lease agreement thereby exercising the first of
two available expansion options. The Company's obligations and related interest
expense will increase in future periods due to the exercise of this expansion
option, however this is not expected to have a financial impact until early
2000, the targeted completion date of the expansion.
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.
12
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Risk Factors
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
cancer drug candidates (SU101, SU5416, and SU6668) 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 a number of 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. Some 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.
Year 2000
The Year 2000 Issue is the result of information technologies, computer
systems and scientific and manufacturing equipment being written using two
digits rather than four digits to define the applicable year. As a result,
time-sensitive functions of those software programs and equipment may
misinterpret dates after January 1, 2000, to refer to the twentieth century
rather than the twenty-first century. This could cause system or equipment
shutdowns, failures or miscalculations resulting in inaccuracies in computer
output or disruptions of operations, including, among other things, inaccurate
processing of financial information and/or temporary inability to process
transactions, manufacture products, or engage in similar normal business
activities.
The Company has a Year 2000 Project ("Y2K Project") in place to address
the potential exposures related to the impact on its computer systems and
scientific and manufacturing equipment containing computer related components
for the Year 2000 ("Y2K") and beyond. Approximately half of the Company's Y2K
scheduled work is complete. The remaining work is scheduled to be completed by
the end of the fourth quarter of 1999. The Y2K Project phases include: (1)
inventorying and prioritizing business critical systems; (2) Y2K compliance
analysis; (3) remediation activities including repairing or replacing identified
systems; (4) testing; and (5) developing contingency plans.
An inventory of business critical financial, informational and
operational systems has been completed. This inventory has been prioritized to
reflect key items of significance. Compliance analysis
13
<PAGE>
is approximately 70% complete for these systems. Remediation activities vary by
department; however, on the average, remediation activities are approximately
50% complete. Testing of the Company's information technology infrastructure is
70% complete. Testing of business critical application programs will begin in
the second quarter of 1999 and is scheduled to be complete by the fourth quarter
of 1999. Contingency planning will begin in the second quarter of 1999. The
Company believes that with the completed modifications, the Y2K issue will not
pose significant operational problems for its key computer systems and
equipment. However, if such modifications and conversions are not made, or are
not completed in a timely fashion, the Year 2000 issue could have a material
impact on the operations of the Company, the precise degree of which cannot be
known at this time.
In addition to risks associated with the Company's own computer systems
and equipment, the Company has relationships with, and is to varying degrees
dependent upon, a large number of third parties that provide information, goods
and services to the Company. These include financial institutions, suppliers,
vendors and research and development associates. If significant numbers of these
third parties experience failures in their computer systems or equipment due to
Y2K noncompliance, it could affect the Company's ability to process
transactions, manufacture products or engage in similar normal business
activities. While some of these risks are outside the control of the Company,
the Company has instituted programs, including internal records review and use
of external questionnaires, to identify key third parties, assess their level of
Y2K compliance, update contracts and address any noncompliance issues. The total
cost of the Y2K systems assessments and conversions is funded through operating
cash flows and is not expected to exceed $200,000 of which approximately $50,000
has been spent to date. The actual financial impact could, however, exceed this
estimate.
14
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Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company is exposed to market risk, including changes to interest
rates, foreign currency exchange rates and the volatility of its stock price. A
discussion of the Company's accounting policies for financial instruments and
further disclosures relating to financial instruments is included in the Summary
of Organization and Significant Accounting Policies in the Notes to Condensed
Consolidated Financial Statements.
The Company monitors the risks associated with interest rates and
foreign currency exchange rate risks and has established policies and business
practices to protect against these and other exposures. The Company places its
investments in instruments that meet high credit quality standards, as specified
in the Company's investment policy guidelines; the policy also limits the amount
of credit exposure to any one issue, issuer, or type of instrument and does not
permit derivative financial instruments in its investment portfolio. As the
result, the Company does not expect any material loss with respect to its
investment portfolio.
<TABLE>
The following table provides information about the Company's financial
instruments that are sensitive to changes in interest rates. For investment
securities, the table presents principal cash flows and related weighted-average
interest rates by expected maturity dates.
<CAPTION>
Fair
There- Value At
(in millions) 1999 2000 2001 2002 2003 after Total 3/31/99
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Assets
Cash and cash equivalents $ 37.5 -- -- -- -- -- $ 37.5 $ 37.4
Weighted average interest rate 4.78%
Short-term investments $ 17.9 $ 5.0 $ 1.3 -- -- -- $ 24.2 $ 24.5
Weighted average interest rate 5.40% 5.91% 5.04%
</TABLE>
The Company's earnings are also affected by the volatility of its stock
price and interest rates as a result of its issuance of warrants to acquire
additional 12% Senior Convertible Notes. The Company has attempted to mitigate
the earnings exposure resulting from these stock price and interest rate
fluctuations by establishing a ceiling on the amount of warrants exercisable per
calendar quarter during the first 15 months of the 2 year warrant term. Such
ceiling limits the amount of warrants exercisable to 33% of the then outstanding
balance. For example, if the volatility of the Company's Common Stock increased
by 10%, the Company's interest expense and net loss over the warrant term would
increase by approximately $760,000. Conversely, if the volatility of the
Company's Common Stock decreased by 10%, the Company's interest expense and net
loss over the warrant term would decrease by $700,000. These amounts are
determined by considering the impact of the hypothetical volatility of the
Company's Common Stock prices on the estimated fair value of the warrants.
Although changes in the valuation of this derivative would impact earnings, the
Company's cash flow would not be affected.
15
<PAGE>
PART II. OTHER INFORMATION
Item 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
On March 22, 1999, SUGEN, Inc. (the "Company") announced the private
placement of $28,000,000 aggregate principal amount of its 12% Senior
Convertible Notes due 2002 (the "Notes") and warrants (the "Warrants") to
acquire $21,000,000 principal amount of 12% Senior Convertible Notes (the
"Warrant Notes"). The private placement closed on March 24, 1999 (the "Closing
Date"). In addition, the holders of the outstanding balance of approximately
$5,700,000 of the Company's 5% Senior Custom Convertible Notes issued in
September 1997 (the "1997 Notes") have agreed, subject to certain conditions set
forth in the Securities Purchase and Exchange Agreement, that the 1997 Notes
will be converted into common stock of the Company (the "Common Stock") in
accordance with the terms of the 1997 Notes or exchanged for additional Notes
and Warrants at a premium of 125-132% of the outstanding principal amount of the
1997 Notes within 135 days of the Closing Date. The exchange of all outstanding
1997 Notes would result in the issuance of an additional $7,368,073 principal
amount of Notes and Warrants to purchase an additional $5,526,055 principal
amount of Warrant Notes. The following summary of certain terms of the Notes and
Warrants does not purport to be a complete description and is qualified in its
entirety by reference to the forms of Securities Purchase and Exchange
Agreement, Note and Warrant, each of which are incorporated by reference herein
and copies of which are filed as Exhibits 4.1, 4.2 and 4.3 to the Company's Form
8-K filed on March 24, 1999.
The Notes were sold at par, mature in March 2002 and bear interest at
the rate of 12% per annum, payable in cash or, at the election of the Company,
shares of Common Stock. The principal amount of the Notes, together with accrued
and unpaid interest, is convertible into shares of Common Stock at a conversion
price of $20.50 (the "Conversion Price"). Among other covenants, the Notes
include covenants that require the Company to meet certain cash and cash
equivalent maintenance requirements. The Warrants are exercisable at any time
until March 2001, subject to restrictions on the level of exercises in any
period as set forth in the Warrants. During the term of the Warrants, if the
closing bid price of the Company's Common Stock exceeds 175% of the Conversion
Price for a period of 20 consecutive trading days, the Company may require the
Warrant holders to exercise the Warrants and purchase the Warrant Notes, subject
to restrictions on the level of exercises that the Company may require in any
period as set forth in the Warrants. However, if the closing bid price of the
Company's Common Stock exceeds 200% of the Conversion Price for a period of 20
consecutive days, the Company, without limitation, may require the Warrant
holders to exercise the Warrants and purchase the Warrant Notes. The Warrant
Notes will have substantially the same terms as the Notes with a term of three
years from their date of issuance and an interest rate of 12.0% per annum,
payable in cash or, at the election of the Company, shares of Common Stock.
The Company has the right, subject to certain conditions set forth in
the Notes, to redeem the Notes, Warrants and Warrant Notes at any one time by
delivering a cash amount equal to the outstanding principal and accrued interest
of the Notes and Warrant Notes, plus a premium of 105%-110% depending on the
redemption date, and warrants to purchase shares of the Company's Common Stock
at the Conversion Price (the "Common Stock Warrants").
16
<PAGE>
PART II. OTHER INFORMATION
Item 2. CHANGES IN SECURITIES AND USE OF PROCEEDS (continued)
The Company also has the right to defease the Notes in accordance with
the terms set forth in the Notes. On April 23, 1999, the Company filed with the
SEC a Registration Statement on Form S-3 which covers the resale by the holders
of the Notes and Warrants issued on the Closing Date of (i) a number of shares
of Common Stock equal to at least the number of shares of Common Stock issuable
to the holders upon conversion of the Notes issued on the Closing Date and the
Warrant Notes issuable upon exercise of the Warrants issued on the Closing Date,
determined as if such Notes and the Warrant Notes, together with three months'
accrued and unpaid interest thereon, were converted in full at the Conversion
Price, and (ii) such additional number of shares of Common Stock as the Company
in its discretion determines to register in connection with the issuance of the
shares of Common Stock in payment of interest on the Notes issued on the Closing
Date and Warrant Notes issuable upon exercise of the Warrants issued on the
Closing Date and the issuance of shares of Common Stock upon exercise of any
Common Stock Warrants that may be issued upon redemption of the Notes, Warrants
and Warrant Notes. In the event the registration statement is not declared
effective within 135 days of the Closing, at the Note holders' option, the
Company will be obligated to redeem the Notes for 100% of their outstanding face
value plus accrued and unpaid interest.
Diaz & Altschul Capital, LLC of New York City was the placement agent
in the transaction. In consideration for its services as placement agent, the
Company paid Diaz & Altschul Capital, LLC a fee of $1,400,000 with respect to
the placement of the $28,000,000 principal amount of Notes issued on the Closing
Date. Diaz & Altschul Capital, LLC will be entitled to additional fees in the
event the Warrants are exercised. Such sale of securities was exempt from
registration under the Securities Act of 1933, as amended (the "Securities
Act"), pursuant to Section 4(2) thereof, as a transaction not involving any
public offering.
On March 31, 1999, in connection with the existing ASTA Medica
collaboration, the Company issued and sold 10,964 shares of SUGEN Common Stock
at $34.20 per share for a total purchase price of $375,000 under an exemption
from registration pursuant to Section 4 (2) of the Securities Act.
On February 16, 1999, the Company and Esteve, through its affiliate
Laboratorios P.E.N., S.A. entered into a Common Stock Purchase Agreement and,
the Company issued and sold 31,746 shares of SUGEN Common Stock at $31.50 per
share for a total purchase price of approximately $1.0 million under an
exemption from registration pursuant to Section 4 (2) of the Securities Act.
17
<PAGE>
PART II. OTHER INFORMATION
Item 5. OTHER INFORMATION
Dr. Heinrich Kuhn resigned from the Company's Board of
Directors effective April 22, 1999, coinciding with his retirement
from the Max-Planck Society.
Effective April 19, 1999, the Company's Board of Directors
appointed Gerald H. Moeller, Ph.D. and Samuel A. Hamad to its
Board of Directors.
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)
10.79 Common Stock Purchase Agreement, dated February 16,
1999, between the Registrant and Laboratorios P.E.N.,
S.A.
10.80+ Second Amended and Restated Master Lease Agreement,
dated February 26, 1999, between the Registrant and
Transamerica Business Credit Corporation.
10.81 Amended Letter Agreement, dated February 22, 1999,
between the Registrant and Stephen Evans Freke.
10.82 Form of Securities Purchase and Exchange Agreement,
dated as of March 19, 1999, by and between the
Company and the investors named therein. (4)
10.83 Form of 12% Senior Convertible Note due 2002. (4)
10.84 Form of 12% Senior Convertible Note Purchase Warrant.
(4)
- ---------------------
+ 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.
18
<PAGE>
PART II. OTHER INFORMATION
Item 6. EXHIBITS AND REPORTS ON FORM 8-K (continued)
(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.
(4) Filed as an exhibit to the Form 8-K Current Report
dated March 24, 1999 and incorporated herein by
reference.
(b) Reports on Form 8-K
SUGEN, Inc. filed a Current Report on Form 8-K, dated March 24,
1999, in connection with the private placement of $28,000,000
aggregate principal amount of its 12% Senior Convertible Notes due
2002.
19
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this amended report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: May 28, 1999 SUGEN, Inc.
----------------------------
By: /s/ Stephen Evans-Freke By: /s/ James L. Knighton
------------------------------- ---------------------------
Stephen Evans-Freke James L. Knighton
Chairman of the Board and Senior Vice President and
Principal Executive Officer Principal Financial Officer
20
<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 (3)
10.79 Common Stock Purchase Agreement, dated February 16,
1999, between the Registrant and Laboratorios P.E.N.,
S.A.
10.80+ Second Amended and Restated Master Lease Agreement,
dated February 26, 1999, between the Registrant and
Transamerica Business Credit Corporation.
10.81 Amended Letter Agreement, dated February 22,1999,
between the Registrant and Stephen Evans Freke.
10.82 Form of Securities Purchase and Exchange Agreement,
dated as of March 19, 1999, by and between the
Company and the investors named therein. (4)
10.83 Form of 12% Senior Convertible Note due 2002. (4)
10.84 Form of 12% Senior Convertible Note Purchase Warrant.
(4)
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.
(4) Filed as an exhibit to the Form 8-K Current Report
dated March 24, 1999 and incorporated herein by
reference.
21
EXHIBIT 10.79
AGREEMENT
FOR THE PURCHASE OF COMMON STOCK OF
SUGEN, INC.
BY
LABORATORIOS P.E.N., S.A.
<PAGE>
<TABLE>
TABLE OF CONTENTS
<CAPTION>
Page
----
<S> <C> <C>
1. PURCHASE AND SALE OF COMMON STOCK........................................................................2
1.1 Issue of Common Stock...........................................................................2
2. CLOSING DATE; DELIVERY...................................................................................2
2.1 Closing.........................................................................................2
2.2 Payment and Delivery............................................................................2
3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY.................................................3
3.1 Organization....................................................................................3
3.2 Authority.......................................................................................3
3.3 Issuance of the Shares..........................................................................3
3.4 Registration Rights Covenant....................................................................3
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.............................................................................8
4.5 Lockup Covenant.................................................................................8
5. CONDITIONS TO CLOSING....................................................................................8
5.1 Conditions to Obligations of Purchaser..........................................................8
5.2 Conditions to Obligations of the Company........................................................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
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>
<PAGE>
COMMON STOCK PURCHASE AGREEMENT
THIS COMMON STOCK PURCHASE AGREEMENT (the "Agreement") is made as of
February 16, 1999 (the "Effective Date"), by and between SUGEN, INC., a Delaware
corporation (the "Company"), and LABORATORIOS P.E.N., S.A., a Spanish company
("Purchaser"). 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 the
aggregate number of shares of its common stock, $.01 par value (the "Common
Stock"), as set forth in Section 2.1 hereof (the "Shares").
(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
closing sales price of a share of Common Stock as reported for the Nasdaq
National Market on the last trading day preceding the Effective Date.
(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"), having a value of approximately $1,000,000 based on a
price per share equal to two hundred percent (200%) of the Fair Market Value
thereof, shall be held on or about 10:00 a.m. (Pacific Standard Time) on or
about February 16, 1999 (the "Closing Date"), at the offices of Cooley Godward
LLP, Five Palo Alto Square, 3000 El Camino Real, Palo Alto, California 94306, 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 approximately $1,000,000.
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 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.
2
<PAGE>
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.
3.4 Registration Rights Covenant.
(a) In the event that the term of the Letter Agreement, dated as of
January 18, 1999 and signed by Purchaser on January 26, 1999, by and between
Purchaser and SUGEN Europe AG (the "Letter Agreement"), terminates or expires
and is not extended, and a definitive Distribution Agreement is not entered into
by the parties pursuant to the terms of, and as contemplated by, the Letter
Agreement, at any time during the 90-day period immediately following the
termination or expiration of the Letter 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 all, but
not part, of the Shares beneficially owned by Purchaser by delivering written
notice thereof to the Company specifying that all of the Shares are 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
3
<PAGE>
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 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
("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
4
<PAGE>
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 during the period set forth in Section 3.4(a), 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.
Such written request may specify all or a part of the Shares.
(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 Effective Date. If Purchaser or any other person does not agree
to the terms of any such underwriting, Purchaser and any other such
5
<PAGE>
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 termination of the
Letter Agreement by SUGEN Europe AG, 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 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
6
<PAGE>
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 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
7
<PAGE>
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; (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; and (D) in the event that the term of the Letter Agreement
terminates or expires and is not extended, and a definitive Distribution
Agreement is not entered into by the parties pursuant to the terms of, and as
contemplated by, the Letter Agreement, the restrictions set forth in this
Section 4.4 shall terminate and have no force or effect following the
termination or expiration of the Letter Agreement.
4.5 Lockup Covenant. Purchaser agrees that for three years from the date
hereof, 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 or is controlled by or under common control with Purchaser, 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, (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, and (iv) in the event that the term of
the Letter Agreement terminates or expires and is not extended, and a definitive
Distribution Agreement is not entered into by the parties pursuant to the terms
of, and as contemplated by, the Letter Agreement, the restrictions set forth in
this Section 4.5 shall terminate and have no force or effect following the
termination or expiration of the Letter Agreement.
8
<PAGE>
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 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.
9
<PAGE>
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 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.
10
<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/ James L. Knighton
-----------------------------------------
James L. Knighton
Senior Vice President and Chief Financial
Officer
LABORATORIOS P.E.N., S.A.
By: /s/ Juan Andreu
-----------------------------------------
Name: Juan Andreu
Title: General Manager
11
EXHIBIT 10.80
***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
Customer Number 1036
SECOND AMENDED AND RESTATED
MASTER LEASE AGREEMENT
Lessor: TRANSAMERICA BUSINESS CREDIT CORPORATION
Riverway II
West Office Tower
9399 West Higgins Road
Rosemont, Illinois 60018
Lessee: SUGEN, INC.
230 East Grand Avenue
South San Francisco, CA 94080-4811
This Second Amended and Restated Master Lease Agreement ("Agreement") dated as
of February 26, 1999 amends and restates a Master Lease Agreement ("Master Lease
Agreement") dated March 28, 1997 and an Amended and Restated Lease Agreement
("Amended and Restated Lease") dated as of November 12, 1997, all between
Transamerica Business Credit Corporation ("Lessor") and Sugen, Inc. ("Lessee").
Except as amended and restated by this Agreement, the Master Lease Agreement as
amended by the Amended and Restated Lease and all other documents and schedules
executed by Lessee in connection with the Master Lease Agreement, the Amended
and Restated Lease and this Agreement are ratified and confirmed in all respects
and shall remain in full force and effect. Upon the effectiveness of this
Agreement, all references in any of the lease documents executed by Lessee in
connection with the Master Lease Agreement, the Amended and Restated Lease to
the "Master Lease Agreement", "Master Lease", "this Agreement", or similar
terms, shall mean and refer to the Master Lease Agreement as amended and
restated by this Agreement. The execution, delivery and effectiveness of this
Agreement shall not, except as expressly provided herein, operate as an
amendment to or waiver of any right, power or remedy of Lessor under any of the
lease documents, or constitute an amendment or waiver of any provision of any of
the lease documents.
All equipment, software ("Software"), items designated as tenant improvements on
the applicable schedule ("Tenant Improvements") together with all present and
future additions, parts, accessories, attachments, substitutions, repairs,
improvements and replacements thereof or thereto, which are the subject of a
Lease (as defined in the next sentence) shall be referred to as "Equipment".
Simultaneous with the execution and delivery of this Agreement, the parties are
entering into or have entered into one or more Lease Schedules (each, a
"Schedule") which refer to and incorporate by reference this Agreement, each of
which constitutes a lease (each, a "Lease") for the Equipment specified therein.
Additional details pertaining to each Lease are specified in the applicable
Schedule. Each Schedule that the parties hereafter enter into shall constitute a
Lease. Lessor has no obligation to enter into any additional leases with, or
extend any future financing to, Lessee other than stated in Paragraph 1 below.
1. LEASE. Subject to and upon all of the terms and conditions
of this Agreement and each Schedule, Lessor hereby agrees to lease to Lessee and
Lessee hereby agrees to lease from Lessor the Equipment for the Term (as defined
in Paragraph 2 below) thereof. The timing and financial scope of Lessor's
obligation to enter into Leases hereunder are limited as set forth in the
Commitment Letters executed by Lessor and Lessee, dated as of March 20, 1997,
November 5, 1997, May 5, 1998 and February 5, 1999 and attached hereto as
Exhibits A, B, C and D, respectively, and any Commitment Letters hereafter
executed by Lessor and Lessee and attached hereto as Exhibits (the "Commitment
Letters").
2. TERM. Each Lease shall be effective and the term of each
Lease ("Term") shall commence on the commencement date specified in the
applicable Schedule which date shall not be prior to delivery,
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<PAGE>
acceptance and funding and, unless sooner terminated (as hereinafter provided),
shall expire at the end of the term specified in such Schedule; provided,
however, that obligations due to be performed by Lessee during the Term shall
continue until they have been performed in full. Schedules will only be executed
after the delivery of the Equipment to Lessee or upon completion of deliveries
of items of such Equipment with aggregate cost of not less than $[...***...].
3. RENT. Lessee shall pay as rent to Lessor, for use of the
Equipment during the Term or Renewal Term (as defined in Paragraph 8), rental
payments equal to the sum of all rental payments including, without limitation,
security deposits, advance rents and interim rents payable in the amounts and on
the dates specified in the applicable Schedule ("Rent"). If any Rent or other
amount payable by Lessee is not paid within ten days after the day on which it
becomes payable, Lessee will pay on demand, as a late charge, an amount equal to
[...***...] or other amount but only to the extent permitted by applicable law.
All payments provided for herein shall be payable to Lessor at its address
specified above, or at any other place designated by Lessor. Lessee's commitment
fees paid pursuant to the Commitment Letters shall be applied towards the second
month's rent (after deductions for expenses under paragraph 23) under the
initial Schedules and each monthly rental payment thereafter until fully
applied.
4. LEASE NOT CANCELABLE; LESSEE'S OBLIGATIONS ABSOLUTE. No
Lease may be canceled or terminated except as expressly provided herein. So long
as Lessor has not wrongfully interfered with Lessee's quiet enjoyment of the
Equipment, Lessee's obligation to pay all Rent due or to become due hereunder
shall be absolute and unconditional and shall not be subject to any delay,
reduction, set-off, defense, counterclaim or recoupment for any reason
whatsoever, including any failure of the Equipment or any representations by the
manufacturer or the vendor thereof. If the Equipment is unsatisfactory for any
reason, Lessee shall make any claim solely against the manufacturer or the
vendor thereof and shall, nevertheless, pay Lessor all Rent payable hereunder.
5. SELECTION AND USE OF EQUIPMENT. Lessee agrees that it shall
be responsible for the selection, use of, and results obtained from, the
Equipment and any other associated equipment or services.
6. WARRANTIES. LESSOR MAKES NO REPRESENTATION OR WARRANTY,
EXPRESS OR IMPLIED, AS TO ANY MATTER WHATSOEVER, INCLUDING, WITHOUT LIMITATION,
THE DESIGN OR CONDITION OF THE EQUIPMENT OR ITS MERCHANTABILITY, SUITABILITY,
QUALITY OR FITNESS FOR A PARTICULAR PURPOSE, AND HEREBY DISCLAIMS ANY SUCH
WARRANTY. LESSEE SPECIFICALLY WAIVES ALL RIGHTS TO MAKE A CLAIM AGAINST LESSOR
FOR BREACH OF ANY WARRANTY WHATSOEVER. ONCE ACCEPTED BY LESSEE, LESSEE LEASES
THE EQUIPMENT "AS IS." IN NO EVENT SHALL LESSOR HAVE ANY LIABILITY FOR, NOR
SHALL LESSEE HAVE ANY REMEDY AGAINST LESSOR FOR, ANY LIABILITY, CLAIM, LOSS,
DAMAGE OR EXPENSE CAUSED DIRECTLY OR INDIRECTLY BY THE EQUIPMENT OR ANY
DEFICIENCY OR DEFECT THEREOF OR THE OPERATION, MAINTENANCE OR REPAIR THEREOF OR
ANY CONSEQUENTIAL DAMAGES AS THAT TERM IS USED IN SECTION 2-719(3) OF THE MODEL
UNIFORM COMMERCIAL CODE, AS AMENDED FROM TIME TO TIME ("UCC"). Lessor grants to
Lessee, for the sole purpose of prosecuting a claim or receiving benefits under
the warranty, the benefits of any and all warranties made available by the
manufacturer or the vendor of the Equipment to the extent assignable.
7. DELIVERY. Lessor hereby appoints Lessee as Lessor's agent
for the sole and limited purpose of accepting delivery of the Equipment from
each vendor thereof. Lessee shall pay any and all delivery and installation
charges. Lessor shall not be liable to Lessee for any delay in, or failure of,
delivery of the Equipment.
8. RENEWAL. So long as no Event of Default or event which,
with the giving of notice, the passage of time, or both, would constitute an
Event of Default, shall have occurred and be continuing, or the Lessee shall not
have exercised its purchase option under Paragraph 9 hereof, Lessee may elect to
renew upon 60 days prior written notice to Lessor each Lease on the terms and
conditions of this Agreement or as set forth in the applicable Schedule (the
"Renewal Term"); provided, however, that if Lessee elects to renew, obligations
due to be performed by the Lessee during the Renewal Term shall continue until
they have been performed in full. The monthly rental
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* CONFIDENTIAL TREATMENT REQUESTED
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<PAGE>
payments for the Renewal Term shall be as set forth in the applicable Schedule.
9. PURCHASE OPTION. So long as no Event of Default or event
which, with the giving of notice, the passage of time, or both, would constitute
an Event of Default, shall have occurred and be continuing, Lessee may purchase
all, but not less than all, the Equipment covered by the applicable Lease on the
date specified therefor in the applicable Schedule ("Purchase Date"). The
purchase price for such Equipment shall be set forth in the applicable Schedule.
So long as no Event of Default or event which, with the giving of notice, the
passage of time, or both, would constitute an Event of Default, shall have
occurred and be continuing, Lessee may purchase all, but not less than all, the
Equipment covered by the applicable Schedule by the last date of the Renewal
Term (the "Alternative Purchase Date") at a purchase price equal to [...***...].
On the Purchase Date or the Alternative Purchase Date, as the case may be, for
any Equipment, Lessee shall pay to Lessor the purchase price, together with all
sales and other taxes applicable to the transfer of the Equipment and any other
amount payable and arising hereunder, in immediately available funds, whereupon
Lessor shall transfer to Lessee, without recourse or warranty of any kind,
express or implied, all of Lessor's right, title and interest in and to such
Equipment on an "As Is, Where Is" basis and file UCC-3 termination statements
upon reasonable request by Lessee.
10. OWNERSHIP; INSPECTION; MARKING; FINANCING STATEMENTS.
Lessee shall affix to the Equipment, other than the Tenant Improvements, any
labels supplied by Lessor indicating ownership of such Equipment. The Equipment
is and shall be the sole property of Lessor. Lessee shall have no right, title
or interest therein, except as lessee under a Lease. Other than Tenant
Improvements, the Equipment is and shall at all times be and remain personal
property and shall not become a fixture. Lessee shall obtain and record such
instruments and take such steps as may be necessary to prevent any person from
acquiring any rights in the Equipment, other than in the Tenant Improvements, by
reason of the Equipment being claimed or deemed to be real property. Lessee
shall make the Equipment and its maintenance records available for inspection by
Lessor at reasonable times and upon reasonable notice. Lessee shall execute and
deliver to Lessor for filing any UCC financing statements or similar documents
Lessor may reasonably request.
11. EQUIPMENT USE. Lessee agrees that the Equipment will be
operated by competent, qualified personnel in connection with Lessee's business
for the purpose for which the Equipment was designed and in accordance with
applicable operating instructions, laws and government regulations, and that
Lessee shall use all reasonable precautions to prevent loss or damage to the
Equipment from fire and other hazards. Lessee shall procure and maintain in
effect all orders, licenses, certificates, permits, approvals and consents
required by federal, state or local laws or by any governmental body, agency or
authority in connection with the delivery, installation, use and operation of
the Equipment.
12. MAINTENANCE. Lessee, at its sole cost and expense, shall
keep the Equipment in a suitable environment as specified by the manufacturer's
guidelines or the equivalent and meet all recertification requirements, and
shall maintain the Equipment in its original condition and working order,
ordinary wear and tear excepted. At the reasonable request of Lessor, Lessee
shall furnish all proof of maintenance.
13. ALTERATION; MODIFICATIONS; PARTS. Lessee may alter or
modify the Equipment only with the prior written consent of Lessor. Any
alteration shall be removed and the Equipment restored to its normal, unaltered
condition at Lessee's expense (without damaging the Equipment's originally
intended function or its value) prior to its return to Lessor. Any part
installed in connection with warranty or maintenance service or which cannot be
removed in accordance with the preceding sentence shall be the property of
Lessor.
14. RETURN OF EQUIPMENT. Except for Equipment that has
suffered a Casualty Loss (as defined in Paragraph 15 below) and is not required
to be repaired pursuant to Paragraph 15 below or Equipment purchased by Lessee
pursuant to Paragraph 9 above, upon expiration of the Renewal Term of a Lease,
or upon demand by Lessor pursuant to Paragraph 22 below, Lessee shall contact
Lessor for shipping instructions and, at Lessee's own risk, immediately return
the Equipment, freight prepaid, to a location in the continental United States
specified by Lessor. At the time of such return to Lessor, the Equipment shall
(i) be in the operating order, repair
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* CONFIDENTIAL TREATMENT REQUESTED
-3-
<PAGE>
and condition as required by or specified in the original specifications and
warranties of each manufacturer and vendor thereof, ordinary wear and tear
excepted, and meet all recertification requirements and (ii) be capable of being
promptly assembled and operated by a third party purchaser or third party lessee
without further repair, replacement, alterations or improvements, and in
accordance and compliance with any and all statutes, laws, ordinances, rules and
regulations of any governmental authority or any political subdivision thereof
applicable to the use and operation of the Equipment. Except as otherwise
provided under Paragraph 9 hereof, at least thirty days before the expiration of
the Renewal Term, Lessee shall give Lessor notice of its intent to return the
Equipment at the end of such Renewal Term. During the thirty-day period prior to
the end of the Renewal Term, Lessor and its prospective purchasers or lessees
shall have, upon not less than two business days' prior notice to Lessee and
during normal business hours, or at any time and without prior notice upon the
occurrence and continuance of an Event of Default, the right of access to the
premises on which the Equipment is located to inspect the Equipment, and Lessee
shall cooperate in all other respects with Lessor's remarketing of the
Equipment. The provisions of this Paragraph 14 are of the essence of the Lease,
and upon application to any court of equity having jurisdiction in the premises,
Lessor shall be entitled to a decree against Lessee requiring specific
performance of the covenants of Lessee set forth in this Paragraph 14. If Lessee
fails to return the Equipment when required, the terms and conditions of the
Lease shall continue to be applicable and Lessee shall continue to pay Rent
until the Equipment is received by Lessor.
15. CASUALTY INSURANCE; LOSS OR DAMAGE. Lessee will maintain,
at its own expense, liability and property damage insurance relating to the
Equipment, insuring against such risks as are customarily insured against on the
type of equipment leased hereunder by businesses in which Lessee is engaged in
such amounts, in such form, and with insurers satisfactory to Lessor; provided,
however, that the amount of insurance against damage or loss shall not be less
than the greater of (a) the [...***...] of the Equipment and (b) the [...***...]
of the Equipment specified in the applicable Schedule [...***...]. Each
liability insurance policy shall provide coverage (including, without
limitation, personal injury coverage) of not less than $[...***...] for each
occurrence, and shall name Lessor as an additional insured; and each property
damage policy shall name Lessor as sole loss payee and all policies shall
contain a clause requiring the insurer to give Lessor at least thirty days prior
written notice of any alteration in the terms or cancellation of the policy.
Lessee shall furnish an insurance certificate or other evidence satisfactory to
Lessor that the required insurance coverage is in effect; provided, however,
Lessor shall have no duty to ascertain the existence of or to examine the
insurance certificates or policies to advise Lessee if the insurance coverage
does not comply with the requirements of this Paragraph. If Lessee fails to
insure the Equipment as required, Lessor shall have the right but not the
obligation to obtain such insurance, and the cost of the insurance shall be for
the account of Lessee due as part of the next due Rent. Lessee consents to
Lessor's release, upon its failure to obtain appropriate insurance coverage, of
any and all information necessary to obtain insurance with respect to the
Equipment or Lessor's interest therein.
Until the Equipment is returned to and received by Lessor as
provided in Paragraph 14 above, Lessee shall bear the entire risk of theft or
destruction of, or damage to, the Equipment including, without limitation, any
condemnation, seizure or requisition of title or use ("Casualty Loss"). No
Casualty Loss shall relieve Lessee from its obligations to pay Rent except as
provided in clause (b) below. When any Casualty Loss occurs, Lessee shall
immediately notify Lessor and, at the option of Lessor, shall promptly (a) place
such Equipment in good repair and working order; or (b) pay Lessor an amount
equal to the [...***...] of such Equipment and all other amounts (excluding
Rent) payable by Lessee hereunder, together with a late charge on such amounts
at a rate per annum equal to the [...***...] hereunder (as reasonably determined
by Lessor) from the date of the Casualty Loss through the date of payment of
such amounts, whereupon Lessor shall transfer to Lessee, without recourse or
warranty (express or implied), all of Lessor's interest, if any, in and to such
Equipment on an "AS IS, WHERE IS" basis. The proceeds of any insurance payable
with respect to the Equipment shall be applied, at the option of Lessee if no
Event of Default has occurred and is continuing (and otherwise at the option of
Lessor), either towards (i) repair of the Equipment or (ii) payment of any of
Lessee's obligations hereunder. Lessee hereby appoints Lessor as Lessee's
attorney-in-fact to make claim for, receive payment of, and execute and endorse
all documents, checks or drafts issued with respect to any Casualty Loss under
any insurance policy relating to the Equipment.
16. TAXES. Lessee shall pay when due, and indemnify and hold
Lessor harmless from, all sales, use, excise and other taxes, charges, and fees
(including, without limitation, income, franchise, business and
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* CONFIDENTIAL TREATMENT REQUESTED
-4-
<PAGE>
occupation, gross receipts, licensing, registration, titling, personal property,
stamp and interest equalization taxes, levies, imposts, duties, charges or
withholdings of any nature), and if resulting from an act or omission of Lessee,
any fines, penalties or interest thereon, imposed or levied by any governmental
body, agency or tax authority upon or in connection with the Equipment, its
purchase, ownership, delivery, leasing, possession, use or relocation of the
Equipment or otherwise in connection with the transactions contemplated by each
Lease or the Rent thereunder, excluding taxes on or measured by the net income
of Lessor. Upon request, Lessee will provide proof of payment. Unless Lessor
elects otherwise, Lessor will pay all property taxes on the Equipment for which
Lessee shall reimburse Lessor promptly upon request and proof of payment. Lessee
shall timely prepare and file all reports and returns which are required to be
made with respect to any obligation of Lessee under this Paragraph 16. Lessee
shall, to the extent permitted by law, cause all billings of such fees, taxes,
levies, imposts, duties, withholdings and governmental charges to be made to
Lessor in care of Lessee. Upon request, Lessee will provide Lessor with copies
of all such billings. Lessee shall have the option to contest taxes diligently
and in good faith as long as Lessee maintains adequate reserves for such taxes
measured in accordance with General Accepted Accounting Principles.
17. LESSOR'S PAYMENT. If Lessee fails to perform its
obligations under Paragraph 15 or 16 above, or Paragraph 23 below, Lessor shall
have the right to substitute performance, in which case, Lessee shall
immediately reimburse Lessor therefor.
18. GENERAL INDEMNITY. Each Lease is a net lease. Therefore,
Lessee shall indemnify Lessor and its successors and assigns against, and hold
Lessor and its successors and assigns harmless from, any and all claims,
actions, damages, obligations, liabilities and all costs and expenses,
including, without limitation, reasonable legal fees, incurred by Lessor or its
successors and assigns arising out of each Lease including, without limitation,
the purchase, ownership, delivery, lease, possession, maintenance, condition,
use or return of the Equipment, or arising by operation of law, except that
Lessee shall not be liable for any claims, actions, damages, obligations and
costs and expenses determined by a non-appealable, final order of a court of
competent jurisdiction have occurred as a result of the gross negligence or
willful misconduct of Lessor or its successors and assigns. Lessee agrees that
upon written notice by Lessor of the assertion of any claim, action, damage,
obligation, liability or lien, Lessee shall assume full responsibility for the
defense thereof, provided that Lessor's failure to give such notice shall not
limit or otherwise affect its rights hereunder except to the extent Lessee
incurs a loss as a direct result of such failure. Any payment pursuant to this
Paragraph (except for any payment of Rent) shall be of such amount as shall be
necessary so that, after payment of any taxes required to be paid thereon by
Lessor, including taxes on or measured by the net income of Lessor, the balance
will equal the amount due hereunder. The provisions of this Paragraph with
regard to matters arising during a Lease shall survive the expiration or
termination of such Lease.
19. ASSIGNMENT BY LESSEE. Lessee shall not, without the prior
written consent of Lessor, (a) assign, transfer, pledge or otherwise dispose of
any Lease or Equipment, or any interest therein; (b) sublease or lend any
Equipment or permit it to be used by anyone other than Lessee and its employees
agents, representatives, contractors and other authorized persons, provided that
Lessee shall indemnify and hold Lessor and its successors and assigns harmless
from any liability arising under, or in connection with such persons' use or
operation of the Equipment; or (c) move any Equipment from the location
specified for it in the applicable Schedule, except that Lessee may move
Equipment to another location within the United States provided that Lessee has
delivered to Lessor (A) prior written notice thereof and (B) duly executed
financing statements and other agreements and instruments (all in form and
substance satisfactory to Lessor) necessary or, in the opinion of the Lessor,
desirable to protect Lessor's interest in such Equipment. Notwithstanding
anything to the contrary in the immediately preceding sentence, Lessee may keep
any Equipment consisting of motor vehicles or rolling stock at any location in
the United States.
20. ASSIGNMENT BY LESSOR. Lessor may assign its interest or
grant a security interest in any Lease and the Equipment individually or
together, in whole or in part. If Lessee is given written notice of any such
assignment, it shall immediately make all payments of Rent and other amounts
hereunder directly to such assignee. Each such assignee shall have all of the
rights of Lessor under each Lease assigned to it. Lessee shall not assert
against any such assignee any set-off, defense or counterclaim that Lessee may
have against Lessor or any other person. Notwithstanding any assignment by
Lessor, Lessor shall not be relieved of its obligations under any Lease, but in
no event shall Lessor be liable for any act or omission of its assignee.
-5-
<PAGE>
21. DEFAULT; NO WAIVER. Lessee or any guarantor of any or all
of the obligations of Lessee hereunder (together with Lessee, the "Lease
Parties") shall be in default under each Lease upon the occurrence of any of the
following events (each, an "Event of Default"): (a) Lessee fails to pay within
ten days of when due any amount required to be paid by Lessee under or in
connection with any Lease; (b) any of the Lease Parties fails to perform in any
material respect any other provision under or in connection with a Lease or
violates in any material respect any of the covenants or agreements of such
Lease Parties under or in connection with a Lease; (c) any representation made
or financial information delivered or furnished by any of the Lease Parties
under or in connection with a Lease shall prove to have been inaccurate in any
material respect when made; (d) any of the Lease Parties makes an assignment for
the benefit of creditors, whether voluntary or involuntary, or consents to the
appointment of a trustee or receiver, or if either shall be appointed for any of
the Lease Parties or for a substantial part of its property without its consent
and, in the case of any such involuntary proceeding, such proceeding remains
undismissed or unstayed for forty-five days following the commencement thereof;
(e) any petition or proceeding is filed by or against any of the Lease Parties
under any Federal or State bankruptcy or insolvency code or similar law and, in
the case of any such involuntary petition or proceeding, such petition or
proceeding remains undismissed or unstayed for forty-five days following the
filing or commencement thereof, or any of the Lease Parties takes any action
authorizing any such petition or proceeding; (f) any of the Lease Parties fails
to pay when due any indebtedness for borrowed money or under conditional sales
or installment sales contracts or similar agreements, leases or obligations
evidenced by bonds, debentures, notes or other similar agreements or instruments
to any creditor (including Lessor under any other agreement) after any and all
applicable cure periods therefor shall have elapsed if the amount involved
exceeds $[...***...] in the aggregate; (g) any judgment shall be rendered
against any of the Lease Parties which shall remain unpaid or unstayed for a
period of sixty days; (h) any of the Lease Parties shall dissolve, liquidate,
wind up or cease its business, sell or otherwise dispose of all or substantially
all of its assets; (i) any of the Lease Parties shall amend or modify its name,
unless such Lease Party delivers to Lessor thirty days prior to any such
proposed amendment or modification written notice of such amendment or
modification and within ten days before such amendment or modification delivers
executed financing statements (in form and substance satisfactory to the Lessor)
provided that Lessee shall have 10 business days after notice to cure any
default under this paragraph (i); (j) any of the Lease Parties shall merge or
consolidate with any other entity or make any material change in its capital
structure, in each case without Lessor's prior written consent, which shall not
be unreasonably withheld; (k) any of the Lease Parties shall suffer any loss or
suspension of any material license, permit or other right or asset which loss
has a material adverse effect on Lessee's ability to perform hereunder, or fail
generally to pay its debts as they mature, or call a meeting for purposes of
compromising its debts; or (l) any of the Lease Parties shall deny or disaffirm
its obligations hereunder or under any of the documents delivered in connection
herewith.
22. REMEDIES. Upon the occurrence and continuation of an Event
of Default for ten days after notice for a payment Event of Default and for
thirty days after notice for all other Events of Default, Lessor shall have the
right, in its sole discretion, to exercise any one or more of the following
remedies: (a) terminate each Lease; (b) declare any and all Rent and other
amounts then due and any and all Rent and other amounts to become due under each
Lease (collectively, the "Lease Obligations") immediately due and payable; (c)
take possession of any or all items of Equipment, wherever located, without
demand, notice, court order or other process of law, and without liability for
entry to Lessee's premises, for damage to Lessee's property or otherwise; (d)
demand that Lessee immediately return any or all Equipment to Lessor in
accordance with Paragraph 14 above, and, for each day that Lessee shall fail to
return any item of Equipment, Lessor may demand an amount equal to the Rent
payable for such Equipment in accordance with Paragraph 14 above; (e) lease,
sell or otherwise dispose of the Equipment in a commercially reasonable manner,
with or without notice and on public or private bid; (f) recover the following
amounts from the Lessee (as damages, including reimbursement of costs and
expenses, liquidated for all purposes and not as a penalty): (i) all costs and
expenses of Lessor reimbursable to it hereunder, including, without limitation,
expenses of disposition of the Equipment, reasonable legal fees and all other
amounts specified in Paragraph 23 below; (ii) an amount equal to the sum of (A)
any accrued and unpaid Rent through the later of (1) the date of the applicable
default or (2) the date that Lessor has obtained possession of the Equipment or
such other date as Lessee has made an effective tender of possession of the
Equipment to Lessor (the "Default Date") and (B) if Lessor resells or re-lets
the Equipment, Rent at the periodic rate provided for in each Lease for the
additional period that it takes Lessor to resell or re-let all of the Equipment;
(iii) the present value of all future Rent reserved in the Leases and
- --------------------
* CONFIDENTIAL TREATMENT REQUESTED
-6-
<PAGE>
contracted to be paid over the unexpired Term of the Leases discounted at
[...***...] simple interest per annum; (iv) the present value of the
reversionary value of the Equipment as of the expiration of the Term of the
applicable Lease as set forth on the applicable Schedule discounted at
[...***...] simple interest; and (v) any indebtedness for Lessee's indemnity
under Paragraph 18 above, plus a late charge at the rate specified in Paragraph
3 above, less the amount received by Lessor, if any, upon sale or re-let of the
Equipment; and (g) exercise any other right or remedy to recover damages or
enforce the terms of the Leases. Upon the occurrence and continuance of an Event
of Default or an event which with the giving of notice or the passage of time,
or both, would result in an Event of Default, Lessor shall have the right,
whether or not Lessor has made any demand or the obligations of Lessee hereunder
have matured, to appropriate and apply to the payment of the obligations of
Lessee hereunder all security deposits and other deposits (general or special,
time or demand, provisional or final) now or hereafter held by and other
indebtedness or property now or hereafter owing by Lessor to Lessee. Lessor may
pursue any other rights or remedies available at law or in equity, including,
without limitation, rights or remedies seeking damages, specific performance and
injunctive relief. Any failure of Lessor to require strict performance by
Lessee, or any waiver by Lessor of any provision hereunder or under any
Schedule, shall not be construed as a consent or waiver of any other breach of
the same or of any other provision. Any amendment or waiver of any provision
hereof or under any Schedule or consent to any departure by Lessee herefrom or
therefrom shall be in writing and signed by Lessor.
No right or remedy is exclusive of any other provided herein
or permitted by law or equity. All such rights and remedies shall be cumulative
and may be enforced concurrently or individually from time to time.
23. LESSOR'S EXPENSE. Lessee shall pay Lessor on demand all
its reasonable expenses which shall not exceed the amounts set forth in each
Commitment Letter without the written consent of Lessee (including reasonable
legal fees and expenses) incurred in connection with the preparation, execution
and delivery of this Agreement and any other agreement and transaction
contemplated hereby and all costs and expenses in protecting and enforcing
Lessor's rights and interests in each Lease and the Equipment, including,
without limitation, legal, collection and remarketing fees and expenses incurred
by Lessor in enforcing the terms, conditions or provisions of each Lease or,
upon the occurrence and continuation of an Event of Default.
24. LESSEE'S WAIVERS. To the extent permitted by applicable
law, Lessee hereby waives any and all rights and remedies conferred upon a
lessee by Sections 2A-508 through 2A-522 of the UCC; provided, however, that
Lessee shall have the right to recover damages from Lessor for any breach by
Lessor of its obligations under this Agreement. To the extent permitted by
applicable law, Lessee also hereby waives any rights now or hereafter conferred
by statute or otherwise which may require Lessor to sell, lease or otherwise use
any Equipment in mitigation of Lessor's damages as set forth in Paragraph 22
above or which may otherwise limit or modify any of Lessor's rights or remedies
under Paragraph 22, except that Lessee shall have the right to require Lessor to
convey to Lessee, without representation, warranty or recourse, all of Lessor's
rights, title and interest in and to the Equipment upon Lessor's receipt,
following an event of default and the exercise of the Lessor's remedies, of the
amounts specified in Paragraph 22(f). Any action by Lessee against Lessor for
any default by Lessor under any Lease shall be commenced within one year after
any such cause of action accrues.
25. NOTICES; ADMINISTRATION. Except as otherwise provided
herein, all notices, approvals, consents, correspondence or other communications
required or desired to be given hereunder shall be given in writing and shall be
delivered by overnight courier, hand delivery or certified or registered mail,
postage prepaid, if to Lessor, then to Technology Finance Division, 76 Batterson
Park Road, Farmington, Connecticut 06032, Attention: Assistant Vice President,
Lease Administration, with a copy to Lessor at Riverway II, West Office Tower,
9399 West Higgins Road, Rosemont, Illinois 60018, Attention: Legal Department,
if to Lessee, then to Sugen, Inc., 351 Galveston Drive, Redwood City, California
94063-4720, Attention: Vice President Finance or such other address as shall be
designated by Lessee or Lessor to the other party. All such notices and
correspondence shall be effective when received.
26. REPRESENTATIONS. Lessee represents and warrants to Lessor
that (a) Lessee is duly organized, validly existing and in good standing under
the laws of the State of its incorporation; (b) the execution, delivery and
performance by Lessee of this Agreement are within Lessee's powers, have been
duly authorized by all
- --------------------
* CONFIDENTIAL TREATMENT REQUESTED
-7-
<PAGE>
necessary action, and do not and will not contravene (i) Lessee's organizational
documents or (ii) any law or contractual restriction binding on or affecting
Lessee; (c) no authorization or approval or other action by, and no notice to or
filing with, any governmental authority or regulatory body is required for the
due execution, delivery and performance by Lessee of this Agreement; (d) each
Lease constitutes the legal, valid and binding obligations of Lessee enforceable
against Lessee in accordance with its terms except as may be limited by
bankruptcy, reorganization, receivership, insolvency or other laws affecting the
enforcement of creditor's rights generally; (e) to the knowledge of Lessee the
cost of each item of Equipment does not exceed the fair and usual price for such
type of equipment purchased in like quantity and reflects all discounts,
rebates, and allowances for the Equipment (including, without limitation,
discounts for advertising, prompt payment, testing or other services) given to
the Lessee by the manufacturer, supplier or any other person; and (f) all
information supplied by Lessee to Lessor in connection herewith is correct and
does not omit any material statement necessary to insure that the information
supplied is not misleading.
27. FURTHER ASSURANCES. Lessee, upon the request of Lessor,
will execute, acknowledge, record or file, as the case may be, such further
documents and do such further acts as may be reasonably necessary, desirable or
proper to carry out more effectively the purposes of this Agreement. Lessee
hereby appoints Lessor as its limited attorney-in-fact to execute on behalf of
Lessee and authorizes Lessor to file without Lessee's signature any UCC
financing statements and amendments Lessor deems advisable.
28. FINANCIAL STATEMENTS. Lessee shall deliver to Lessor: (a)
as soon as available, but not later than 120 days after the end of each fiscal
year of Lessee and its consolidated subsidiaries, the consolidated balance
sheet, income statement and statements of cash flows and shareholders equity for
Lessee and its consolidated subsidiaries (the "Financial Statements") for such
year, reported on by independent certified public accountants without an adverse
qualification; and (b) as soon as available, but not later than 60 days after
the end of each of the first three fiscal quarters in any fiscal year of Lessee
and its consolidated subsidiaries, the Financial Statements for such fiscal
quarter, as filed with the SEC. Lessee shall also deliver to Lessor as soon as
available copies of all press releases and other similar communications issued
by Lessee and upon request of Lessor.
29. CONSENT TO JURISDICTION. Lessee irrevocably submits to the
jurisdiction of any Illinois state or federal court sitting in Illinois for any
action or proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby, and Lessee irrevocably agrees that all claims
in respect of any such action or proceeding may be heard and determined in such
Illinois state or federal court.
30. WAIVER OF JURY TRIAL. LESSEE AND LESSOR IRREVOCABLY WAIVE
ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT
OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
31. FINANCE LEASE. Lessee and Lessor agree that each Lease is
a "Finance Lease" as defined by Section 2A-103(g) of the UCC. Lessee
acknowledges that Lessee has reviewed and approved each written Supply Contract
(as defined by UCC 2A-103(y)) covering Equipment purchased from each "Supplier"
(as defined by UCC 2A-103(x)) thereof.
32. NO AGENCY. Lessee acknowledges and agrees that neither the
manufacturer nor supplier, nor any salesman, representative or other agent of
the manufacturer or supplier, is an agent of Lessor. No salesman, representative
or agent of the manufacturer or supplier is authorized to waive or alter any
term or condition of this Agreement or any Schedule and no representation as to
the Equipment or any other matter by the manufacturer or supplier shall in any
way affect Lessee's duty to pay Rent and perform its other obligations as set
forth in this Agreement or any Schedule.
33. SPECIAL TAX INDEMNIFICATION. Lessee acknowledges that
Lessor, in determining the Rent due hereunder, has assumed that certain tax
benefits as are provided to an owner of property under the Internal Revenue Code
of 1986, as amended (the "Code"), and under applicable state tax law, including,
without limitation, depreciation deductions under Section 168(b) of the Code,
and deductions under Section 163 of the Code in an amount at least equal to the
amount of interest paid or accrued by Lessor with respect to any indebtedness
incurred by Lessor in financing its purchase of the Equipment, are available to
Lessor as a result of the lease of the
-8-
<PAGE>
Equipment. In the event Lessor is unable to obtain such tax benefits as a result
of an act or omission of Lessee of which Lessee has prior written notice and
opportunity of comply, is required to include in income any amount other than
the Rent or is required to recognize income in respect of the Rent earlier than
anticipated pursuant to this Agreement, Lessee shall pay Lessor additional rent
("Additional Rent") in a lump sum in an amount needed to provide Lessor with the
same after-tax yield and after-tax cash flow as would have been realized by
Lessor had Lessor (i) been able to obtain such tax benefits, and (ii) not been
required to recognize income in respect of the Rent earlier than anticipated
pursuant to this Agreement. The Additional Rent shall be computed by Lessor,
which computation shall be binding on Lessee absent good faith contest by
Lessee. The Additional Rent shall be due immediately upon written notice by
Lessor to Lessee of Lessor's inability to obtain tax benefits, the inclusion of
any amount in income other than the Rent or the recognition of income in respect
of the Rent earlier than anticipated pursuant to this Agreement. The provisions
of this Paragraph 33 shall survive the termination of this Agreement.
34. GOVERNING LAW; SEVERABILITY. EACH LEASE SHALL BE GOVERNED
BY THE LAWS OF THE STATE OF ILLINOIS WITHOUT GIVING EFFECT TO THE CONFLICT OF
LAW PRINCIPLES THEREOF. IF ANY PROVISION SHALL BE HELD TO BE INVALID OR
UNENFORCEABLE, THE VALIDITY AND ENFORCEABILITY OF THE REMAINING PROVISIONS SHALL
NOT IN ANY WAY BE AFFECTED OR IMPAIRED.
LESSEE ACKNOWLEDGES THAT LESSEE HAS READ THIS AGREEMENT AND THE SCHEDULES
HERETO, UNDERSTANDS THEM, AND AGREES TO BE BOUND BY THEIR TERMS AND CONDITIONS.
FURTHER, LESSEE AND LESSOR AGREE THAT THIS AGREEMENT AND THE SCHEDULES DELIVERED
AND SIGNED BY LESSEE AND LESSOR IN CONNECTION HEREWITH FROM TIME TO TIME AND THE
COMMITMENT LETTERS, ARE THE COMPLETE AND EXCLUSIVE STATEMENT OF THE AGREEMENT
BETWEEN THE PARTIES, SUPERSEDING ALL PROPOSALS OR PRIOR AGREEMENTS, ORAL OR
WRITTEN, AND ALL OTHER COMMUNICATIONS BETWEEN THE PARTIES RELATING TO THE
SUBJECT MATTER HEREOF.
-9-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed or caused
this Agreement to be duly executed by their duly authorized officers as of this
26th day of February, 1999.
SUGEN, INC.
By: /s/ James Knighton
--------------------------------------------------------
Name: James Knighton
Title: Senior Vice President and Chief Financial Officer
Hereunto Duly Authorized
Federal Identification Number 13-3629196
TRANSAMERICA BUSINESS CREDIT CORPORATION
By: /s/ Gary P. Moro
--------------------------------------------------------
Name: Gary P. Moro
Title: Vice President
-10-
EXHIBIT 10.81
CONFIDENTIAL
Date: February 22, 1999
To: Stephen Evans-Freke
Chairman and Chief Executive Officer
cc: Susan Kanaya, Treasurer, SUGEN, Inc.
Suzanne Hooper, Cooley Godward LLP
From: Donald E. Nickelson
Chairman of the Compensation Committee
SUGEN, Inc. Board of Directors
Reference: Modification of July 21, 1998 Letter Agreement
Dear Stephen:
At its meeting on February 22, 1999, the Compensation Committee of SUGEN Inc.'s
Board of Directors agreed to modify the second paragraph of its letter agreement
with you dated July 21, 1998. As modified, such paragraph will read in its
entirety as follows:
"In consideration for your commitment to serve as Chief Executive
Officer for up to one further year, SUGEN promises to transfer to you
up to 100,000 shares of fully paid-up common stock of SUGEN, Inc.
("Shares"), provided the following conditions are satisfied. If SUGEN
appoints a new Chief Executive Officer prior to January 1, 2000, SUGEN
will transfer 50,000 shares to you within 10 days following such
appointment, but not earlier than January 4, 1999. If SUGEN (including
its affiliated entities) raises at least an additional $30 million in
new money prior to July 1, 1999, SUGEN will transfer to you 50,000
Shares within 10 days following the completion of such transaction, but
not earlier than January 4, 1999. Both contingencies may be met by any
means in order to count for these purposes. Until the time of transfer
under the foregoing conditions, you are not a shareholder of SUGEN in
respect of any of the 100,000 Shares. Notwithstanding the foregoing,
should a Change of Control (as hereinafter defined) occur prior to
January 1, 2000, SUGEN will transfer to you, not later than the date of
such Change of Control, such number of the 100,000 shares as have not
already been transferred to you. For this purpose, "Change of Control"
means any consolidation or merger of SUGEN, Inc. with any other
corporation (other than a wholly-owned subsidiary of SUGEN, Inc.) in
which the stockholders of SUGEN, Inc. immediately prior to such
consolidation or merger do not own in excess of fifty percent (50%) of
the equity interests in the surviving corporation in such consolidation
or
1.
<PAGE>
merger immediately after consummation of such consolidation or merger,
any sale or transfer of all or substantially all of the assets of
SUGEN, Inc., or any share exchange pursuant to which all of the
outstanding shares of SUGEN, Inc.'s Common Stock are exchanged into
other securities (except securities of an entity in which the
stockholders of SUGEN, Inc. immediately prior to such exchange own
greater than fifty percent (50%) of the equity interests immediately
after such exchange) or property."
In all other respects, the letter agreement dated July 21, 1998 remains in full
force and effect.
If this proposal is acceptable to you, please confirm this by signing below in
the indicated space on each copy of this letter, returning one to me with copies
to Susan Kanaya and Suzanne Hooper, and retaining the other for your records.
Sincerely,
Donald E. Nickelson
Agreed:
______________________________________ Date: ____________________________
Stephen Evans-Freke
Chairman and Chief Executive Officer
2.
<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, 1999 and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 37,392
<SECURITIES> 24,507
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 63,706
<PP&E> 14,279
<DEPRECIATION> 6,567
<TOTAL-ASSETS> 74,525
<CURRENT-LIABILITIES> 23,614
<BONDS> 0
0
0
<COMMON> 160,609
<OTHER-SE> (147,248)
<TOTAL-LIABILITY-AND-EQUITY> 74,525
<SALES> 0
<TOTAL-REVENUES> 4,262
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 16,528
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 487
<INCOME-PRETAX> (14,905)
<INCOME-TAX> 0
<INCOME-CONTINUING> (14,905)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (14,905)
<EPS-BASIC> (.89)
<EPS-DILUTED> (.89)
</TABLE>
