-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Dykz2xfmaf79eC+z/B89GrKGv4+sMcDP/enC+Tc9mIWNIbIKBdJlHXN69+00dX1H wxXn5XeqWM8R7tfs/PpQUw== 0000950149-99-000975.txt : 19990518 0000950149-99-000975.hdr.sgml : 19990518 ACCESSION NUMBER: 0000950149-99-000975 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 12 CONFORMED PERIOD OF REPORT: 19990331 FILED AS OF DATE: 19990517 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AXYS PHARMECUETICALS INC CENTRAL INDEX KEY: 0000913056 STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834] IRS NUMBER: 222969941 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-22788 FILM NUMBER: 99625906 BUSINESS ADDRESS: STREET 1: 180 KIMBALL WAY CITY: SOUTH SAN FRANCISCO STATE: CA ZIP: 94080 BUSINESS PHONE: 6508291000 MAIL ADDRESS: STREET 1: 180 KIMBALL WAY CITY: SOUTH SAN FRANCISCO STATE: CA ZIP: 94080 FORMER COMPANY: FORMER CONFORMED NAME: ARRIS PHARMACEUTICAL CORP/DE/ DATE OF NAME CHANGE: 19931005 10-Q 1 QUARTERLY REPORT FOR PERIOD ENDED 3/31/99 1 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ FORM 10-Q [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: 0-22788 ------------------------ AXYS PHARMACEUTICALS, INC. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) DELAWARE 22-2969941 (STATE OR OTHER JURISDICTION OF (IRS EMPLOYER IDENTIFICATION NO.) INCORPORATION OR ORGANIZATION)
180 KIMBALL WAY SOUTH SAN FRANCISCO, CALIFORNIA 94080 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (650) 829-1000 (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE) ------------------------ Indicate by check mark whether the registrant (1) has filed all reports required by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. [X] Yes [ ] No The number of outstanding shares of the registrant's Common Stock, $0.001 par value, was 30,358,514 at April 30, 1999. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 2 AXYS PHARMACEUTICALS, INC. INDEX
PAGE ---- PART I: FINANCIAL INFORMATION Item 1. Financial Statements (unaudited) * Consolidated Balance Sheets -- March 31, 1999 and December 31, 1998.................................................... 3 Consolidated Statements of Operations -- Three months ended March 31, 1999 and 1998..................................... 4 Consolidated Statements of Cash Flows -- Three months ended March 31, 1999 and 1998..................................... 5 Notes to Consolidated Financial Statements.................. 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations................................... 9 Item 3. Quantitative and Qualitative Disclosures About Market Risk........................................................ 14 PART II: OTHER INFORMATION Item 1. Legal Proceedings........................................... 15 Item 2. Changes in Securities....................................... 15 Item 3. Defaults Upon Senior Securities............................. 15 Item 4. Submission of Matters to a Vote of Security Holders......... 15 Item 5. Other Information........................................... 15 Item 6. Exhibits and Reports on Form 8-K............................ 15 Signature............................................................ 17
- --------------- * The financial information contained herein should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 1998, filed with the Securities and Exchange Commission on March 31, 1999. 2 3 AXYS PHARMACEUTICALS, INC. PART 1: FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS CONSOLIDATED BALANCE SHEETS ASSETS
MARCH 31, 1999 DECEMBER 31, (UNAUDITED) 1998(1) ----------- ------------ (IN THOUSANDS) Current assets: Cash and cash equivalents................................. $ 28,760 $ 36,261 Marketable investments.................................... 35,277 36,456 Accounts receivable, trade................................ 4,529 2,140 Inventory................................................. 766 435 Prepaid expenses and other current assets................. 3,096 4,513 -------- -------- Total current assets.............................. 72,428 79,805 Property and equipment, net................................. 21,630 21,510 Investment in joint venture................................. 1,370 1,908 Note receivable from officer................................ 646 821 Intangible assets........................................... 3,814 2,200 Other assets................................................ 889 1,018 -------- -------- TOTAL ASSETS...................................... $100,777 $107,262 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable.......................................... $ 3,418 $ 3,788 Accrued compensation...................................... 2,694 4,232 Other accrued liabilities................................. 2,334 2,956 Deferred revenue.......................................... 4,807 8,698 Current portion of capital lease and debt obligations..... 9,227 9,872 -------- -------- Total current liabilities......................... 22,480 29,546 Capital lease and debt obligations, net of current portion................................................... 16,070 16,816 Minority Interest........................................... 8,898 388 Stockholders' equity: Preferred stock........................................... -- -- Common stock.............................................. 290,942 290,291 Accumulated other comprehensive income.................... 30 116 Accumulated deficit....................................... (237,643) (229,895) -------- -------- Total stockholders' equity........................ 53,329 60,512 -------- -------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY........ $100,777 $107,262 ======== ========
- --------------- (1) The balance sheet at December 31, 1998 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. See accompanying notes to consolidated financial statements. 3 4 AXYS PHARMACEUTICALS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
THREE MONTHS ENDED MARCH 31, ---------------------- 1999 1998 -------- ---------- (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) Revenues Collaboration and license revenue......................... $ 8,662 $ 8,351 Product and service revenue............................... 3,142 83 ------- --------- Total revenues.................................... 11,804 8,434 Operating expenses: Cost of goods sold........................................ 548 446 Research and development.................................. 15,925 15,041 General and administrative................................ 3,201 3,432 Acquired in-process research and development.............. -- 124,888 ------- --------- Total operating expenses.......................... 19,674 143,807 ------- --------- Operating loss.............................................. (7,870) (135,373) Interest income............................................. 907 1,381 Interest expense............................................ (507) (568) Equity interest in loss of joint venture.................... (563) (457) Minority interest........................................... 285 -- ------- --------- Net loss.................................................... $(7,748) $(135,017) ======= ========= Basic and diluted net loss per share........................ $ (.26) $ (4.69) ======= ========= Shares used in computing basic and diluted net loss per share..................................................... 30,321 28,782 ======= =========
See accompanying notes to consolidated financial statements. 4 5 AXYS PHARMACEUTICALS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
THREE MONTHS ENDED MARCH 31, -------------------- 1999 1998 ------- --------- (IN THOUSANDS) CASH FLOWS FROM OPERATING ACTIVITIES: Net loss.................................................... $(7,748) $(135,017) Adjustments to reconcile net loss to net cash and cash equivalents used in operating activities: Depreciation and amortization............................. 2,743 2,072 Gain on sale of fixed asset............................... (22) -- Equity interest in loss on joint venture.................. 538 457 Forgiveness of note receivable from officer............... 175 125 Acquired in-process research and development.............. -- 124,888 Changes in assets and liabilities: Accounts receivable.................................... (2,389) -- Inventory.............................................. (331) -- Prepaid expenses and other current assets.............. 1,155 1,305 Other assets........................................... (1,542) (2,791) Accounts payable and accrued liabilities............... (1,974) (2,994) Deferred revenue....................................... (3,891) (3,653) ------- --------- Net cash and cash equivalents used in operating activities................................................ (13,286) (15,608) ------- --------- CASH FLOWS FROM INVESTING ACTIVITIES: Available-for-sale securities: Purchases................................................. (8,235) (8,206) Maturities................................................ 9,259 23,805 Minority interest........................................... 8,510 -- Acquisition, net of cash balances........................... -- 13,270 Proceeds from sale of fixed assets.......................... 22 -- Purchase of property and equipment.......................... (2,477) (830) ------- --------- Net cash and cash equivalents provided by investing activities................................................ 7,079 28,039 ------- --------- CASH FLOWS FROM FINANCING ACTIVITIES: Net proceeds from issuance of common stock.................. 651 1,535 Proceeds from note receivable............................... -- 593 Principal payments on notes payable and capital leases...... (1,945) (1,630) ------- --------- Net cash and cash equivalents (used in) provided by financing activities...................................... (1,294) 498 ------- --------- Net increase (decrease) in cash and cash equivalents........ (7,501) 12,929 Cash and cash equivalents, beginning of period.............. 36,261 22,938 ------- --------- Cash and cash equivalents, end of period.................... $28,760 $ 35,867 ======= ========= SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES: Issuance of common stock and value of options and warrants issued in acquisition..................................... $ -- $ 169,730 ======= =========
See accompanying notes to consolidated financial statements. 5 6 AXYS PHARMACEUTICALS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 1999 (UNAUDITED) 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ORGANIZATION Axys Pharmaceuticals, Inc., a Delaware corporation ("Axys" or the "Company"), focuses on transforming gene discoveries into drugs. Axys' business is focused in three primary areas: (i) drug discovery and development programs in collaboration with pharmaceutical and biotechnology companies, (ii) drug discovery and development programs which are not partnered in the area of oncology, and (iii) the spin out of affiliated businesses in combinatorial chemistry, pharmacogenomics, and agricultural biotechnology. The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Arris Pharmaceuticals Canada, Inc., and Sequana Therapeutics, Inc. ("Sequana") and includes the accounts of Xyris Corporation and PPGx, Inc. the Company's majority owned subsidiaries (See "Formation of PPGx, Inc.", Note 3). All significant intercompany accounts and transactions have been eliminated. Sequana owns 50% of Genos, a joint venture with Memorial Sloan-Kettering Cancer Center ("MSKCC"). This investment is accounted for under the equity method. RECLASSIFICATIONS Certain 1998 amounts have been reclassified to conform to the March 31, 1999 presentations. BASIS OF PRESENTATION The unaudited consolidated financial statements included herein have been prepared by the Company according to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in complete financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. The financial statements reflect, in the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to state fairly the financial position and results of operations as of and for the periods indicated. The results of operations for the three-month period ended March 31, 1999 are not necessarily indicative of the results to be expected for subsequent quarters or the full fiscal year. These financial statements should be read in conjunction with the audited financial statements and the notes thereto included in the Company's 1998 Annual Report on Form 10-K filed with the Securities and Exchange Commission. 2. SECOND ROUND OF FINANCING FOR XYRIS CORPORATION In February 1999, Xyris concluded the negotiation of an exclusive license to all Axys technology in the field of agriculture (the "Technology License"). This resulted in the Company receiving additional shares of Xyris in exchange for the Technology License. Also in February 1999, Xyris completed a financing in which it raised $4,500,000 from a third party. After this financing, the third party's investment in Xyris totaled $5,000,000. Under the terms of the financing, the Company granted the third party the right (the "Put Option") to require the Company to purchase all of the third party's interest in Xyris in exchange for that number of shares of the Company whose market value equals $5,000,000 at the date of the exercise of the Put Option. The Put Option may be exercised at any time between August 5, 1999 and February 5, 2001. 6 7 AXYS PHARMACEUTICALS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) MARCH 31, 1999 (UNAUDITED) The net effect of issuance of shares in connection with the Technology License and in connection with the financing reduced the Company's ownership in Xyris from 82% to 70%. 3. FORMATION OF PPGX, INC. In February 1999, the Company announced the formation of a majority-owned subsidiary, PPGx, Inc. ("PPGx") which is engaged in the business of providing pharmacogenomic (the science of how genetic variations among individuals affects drug safety and efficacy) products and services to the pharmaceutical industry. In connection with the formation of PPGx, Axys contributed certain assets and technology in exchange for an 82% ownership interest in PPGx. PPD, Inc. ("PPD"), Axys' partner in PPGx, contributed certain assets, technology, cash and loan guarantees in exchange for an 18% ownership interest in PPGx and the exclusive, worldwide right to market the pharmacogenomic products and services of PPGx. Under the terms of a shareholder agreement between the Company and PPD, PPD has the option (the "PPD Option") to purchase 32% of PPGx from the Company at various escalating prices until February 1, 2002. Under certain circumstances, the Company has the option to put (the "Axys Put") 32% of PPGx to PPD at various escalating prices until August 1, 2002. At such time as either the PPD Option or the Axys Put are exercised, the Company would also become a co-guarantor of a certain PPGx line of credit to the extent any borrowings are outstanding at that time. Additionally, at any time after the fifth anniversary of the formation of PPGx, the Company and, provided either the PPD Option or the Axys Put have been exercised, PPD have the right to buy all of the outstanding equity interests in PPGx at fair market value in accordance with the terms of buy-sell provisions of the shareholder agreement. 4. INVENTORY Inventories are stated at the lower of cost (first-in, first-out) or market. At March 31, 1999, inventories consisted of the following (in thousands): Raw materials................................. $171 Finished goods................................ 595 ---- $766 ====
5. COMPREHENSIVE INCOME Total comprehensive loss was ($7,718) and ($135,017) for the three months ended March 31, 1999 and 1998, respectively. 7 8 AXYS PHARMACEUTICALS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) MARCH 31, 1999 (UNAUDITED) 6. SEGMENT INFORMATION Segment information consists of the following:
THREE MONTHS ENDED MARCH 31, ---------------------- 1999 1998 ------- --------- (IN THOUSANDS) Revenues: Drug discovery............................. $ 8,509 $ 7,851 ATD........................................ 3,114 583 Other...................................... 181 -- ------- --------- Total consolidated................. $11,804 $ 8,434 ======= ========= Operating income (loss): Drug discovery(1).......................... $(7,821) $(133,808) ATD........................................ 1,315 (1,209) Other...................................... (1,242) -- ------- --------- Total consolidated................. $(7,748) $(135,017) ======= =========
Other represents the results of PPGx's and Xyris' principal activities which commenced in 1999. - --------------- (1) Includes $125 million in acquired in-process research and development recorded in 1998 relating to the acquisition of Sequana Therapeutics, Inc. in January 1998. 8 9 AXYS PHARMACEUTICALS, INC. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion contains both historical information and forward-looking statements that involve risks and uncertainties. Forward-looking statements include projections and other statements about events that may occur at some point in the future. The company's actual results could differ significantly from those described in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in this section as well as under "Item 1. Business," including the sections entitled "What Factors Could Cause Our Results To Differ Significantly From Those You Might Expect?" and "What Other Matters Should Stockholders Consider with Respect to the Company?" in the Company's Annual Report on Form 10-K for the year ended December 31, 1998 filed with the Securities and Exchange Commission. OVERVIEW Since the company's founding in 1989, Axys has devoted most of its resources to research and development programs. To date, the company's revenues have resulted from its collaborative research programs with pharmaceutical companies as part of its drug discovery business and more recently from sales of chemical compound libraries as part of its Advanced Technologies Division ("ATD") combinatorial chemistry business. The company's collaborative research programs generally contain one or more of the following sources of revenue to the company: - Research Support: Payments which are generally based on the number of researchers Axys is committing to a particular program. These revenues are recorded when earned by the company. - License Fees: Payments generally made when a collaboration agreement is signed. These revenues are recorded when the agreement is signed. - Commitment Fees: Payments made in conjunction with the company's commitment to perform certain funded research. These revenues are recorded in equal periodic amounts over the course of the research efforts. - Milestone Payments: Payments which are based on the company or its partner achieving certain technical or regulatory milestones in the collaboration. These revenues are recorded upon the achievement of mutually agreed upon milestones. - Royalties: Upon commercialization of products resulting from a collaboration, the company may earn royalties based on a percentage of the revenue earned by the collaboration partner. These revenues would be recorded when product sales result from the company's collaborations. The company's sales of chemical compound libraries contain one or more of the following sources of revenue to the company: - Product Sales: As chemical compound libraries are shipped to customers of the ATD, the company records revenue based on the contracted price per compound. - License Fees: Payments made when compound supply or technology license agreements are signed. These revenues are recorded when the agreement is signed. - Commitment Fees: Payments made in conjunction with the ATD's commitment to perform certain obligations under compound supply or technology license agreements. These revenues are recorded in equal periodic amounts over the course of the relevant agreement. Although the sale of stock by the company to one of its partners is not a source of revenue, unless sold at a premium to market, the company's collaborative research programs occasionally include the sale of stock by the company to the pharmaceutical company sponsoring the research. 9 10 The company has not been profitable since inception and expects to incur substantial losses for at least the next several years, primarily due to the cost of its research and development programs, including preclinical studies and human clinical trials. The company expects that losses will fluctuate from quarter to quarter, that such fluctuations may be substantial, and that results from prior quarters may not be indicative of future operating results. As of March 31, 1999, the company's accumulated deficit was approximately $238 million. Included in the company's accumulated deficit at March 31, 1999 was approximately $147 million of acquired in-process research and development from the acquisition of Khepri Pharmaceuticals, Inc. in 1995 and the acquisition of Sequana in January 1998. RESULTS OF OPERATIONS REVENUES Collaboration and licensing revenues The company's collaboration and licensing revenues increased to $8.6 million for the three months ended March 31, 1999, compared to $8.4 million for the same period in 1998. The change was primarily due to: (i) the increase in technology licensing fees of $2,000,000; (ii) the commencement in December 1998 of research support payments in connection with an agreement with Rhone-Polenc Rorer for the development of small molecule therapeutics that inhibit cathepsin S, which may be associated with certain inflammatory diseases; and (iii) the termination fee paid by Corange International, Ltd. in connection with the termination of their collaboration in February 1999. These increases were offset by lower revenues compared to the prior year due to the following: (i) the end of the research funding in mid-1998 under the Pharmacia & Upjohn agreement for the development of inhibitors of Factor Xa; (ii) the reduction in research support in the Boehringer Ingelheim International GmbH agreement for the gene identification program in asthma; and (iii) the conclusion of the Glaxo-Wellcome Inc. agreement for the genomics work in the area of type II diabetes and related conditions. Product and service revenues The company's product and service revenues increased to $3.1 million for the three months ended March 31, 1999 compared to $83,000 for the same period in 1998. The increase was primarily due to an increase in the number of combinatorial chemistry compounds shipped in 1999 under three ATD agreements, as well as the inclusion of the service revenue recognized by PPGx, Inc., the company's majority owned subsidiary formed in February 1999, compared to the number of combinatorial chemistry compounds shipped in 1998 under one ATD agreement. Cost of Goods Sold The company's cost of goods sold increased to $548,000 for the three months ended March 31, 1999 compared to $446,000 for the same period in 1998. The costs in 1999 are directly related to the costs of producing combinatorial chemistry compounds. The costs in 1998 primarily reflect start up costs for the production of combinatorial chemistry compounds. Research and Development The company's research and development expenses increased to $15.9 million for the three months ended March 31, 1999, compared to $15.0 million for the same period in 1998. In both periods research and development expenses included the clinical costs associated with pursuing the company's own clinical programs. In 1999 those costs related to the clinical trials of both ulcerative colitis and psoriasis. In 1998 those costs related to the clinical trials of developing an inhaled therapeutic for asthma. Other factors contributing to the increase are primarily due to severance costs associated with the reduction in headcount and include the research and development expenses of the company's newly formed subsidiaries, PPGx, Inc. and Xyris Corporation. 10 11 General and Administrative The company's general and administrative expenses were $3.2 million for the three months ended March 31, 1999 compared to $3.4 million for the same period in 1998. The difference between periods was due to efficiencies applied in combining general and administrative functions among the consolidating entities. Interest Income and Interest Expense Interest income decreased to $907,000 for the three months ended March 31, 1999, compared to $1.4 million for the same period in 1998. The decrease was primarily due to the decrease in average cash and investment balances between the periods. Interest expense decreased to $507,000 for the three months ended March 31, 1999, compared to $568,000 for the same period in 1998. The decrease was primarily due to the lower debt balances from the company's two lines of credit and capital lease arrangements. Equity Interest in Loss of Joint Venture Equity interest in loss of joint venture increased to $563,000 for the three months ended March 31, 1999, compared to $457,000 for the same period in 1998. This account represents the company's 50% portion of Genos' loss for the period based on the company's 50% ownership of Genos. Minority interest Minority interest represents another investor's share of a subsidiary's operating income (loss), where the company owns 51% to 99% of that subsidiary. Income reported by the company, which is attributable to a minority owner was $285,000 at March 31, 1999, compared to zero for the same period in 1998. This amount is the result of the formation of the company's majority owned subsidiaries, PPGx, Inc. and Xyris Corporation. Since the company records all of the PPGx and Xyris operating expenses as our expenses, a portion of the losses from these entities is allocated to the minority shareholders in these entities, offsetting the company's operating loss. IMPACT OF THE YEAR 2000 The Year 2000 problem or the "Y2K problem" is a problem that may arise at the turn of the century in computers or other equipment utilizing microprocessor technology. Some computer software programs and computer equipment, as well as other equipment using embedded microprocessors, use two digit date fields rather than four date digit fields (that is, "98" in the computer code refers to the year "1998"). As a result, time-related functions in such software and equipment may misinterpret dates after January 1, 2000 to refer to the twentieth century rather than the twenty-first century (that is, "02" could be interpreted as "1902" rather than "2002"). This could potentially cause system or equipment shutdowns, failures or miscalculations, resulting in inaccuracies in computer output. The Y2K problem is a global problem and has the potential to impact virtually every company to one degree or another, including Axys. The company has been addressing the Y2K problem by reviewing its core information technology systems, including its servers, databases, desktop computers, significant applications (whether licensed from third parties or developed internally) and significant microprocessor-controlled equipment for Y2K readiness. Because the Y2K problem potentially affects many other companies, the company is also in the process of reviewing the Y2K readiness of its vendors, service providers and other companies (including its collaboration partners and customers) with whom the company has significant business relationships ("Important Third Parties"). As the company completes these internal and external reviews, the company has been prioritizing the responses it needs to take to address the Y2K problem, to address the highest priorities first and to develop by the end of the second quarter of 1999 such contingency plans as management believes to be prudent. The company expects to update and revise this contingency plan throughout the remainder of 1999 as additional information becomes known. With respect to the company's core information technology systems, the review is complete and modifications have been substantially completed. The review and modification process of the 11 12 desktop computers is substantially complete. The company expects to have completed its review and to have made any necessary modifications or replacements by the end of the second quarter of 1999. With respect to third party software applications, the company expects to complete its review and to replace or upgrade such applications by the end of the third quarter of 1999. In this regard, the company has completed the replacement of its enterprise management information system with a new system that is Y2K ready. With respect to the few software applications the company has developed and licensed to third parties, the company has completed its review of some of these applications and believes them to be Y2K ready. The remaining applications are undergoing testing and if determined not to be Y2K ready, the company expects to provide upgrades to such applications, making them Y2K ready by the third quarter of 1999. With respect to other internally-developed software applications, the company has compiled a list of such applications and has completed the design of appropriate tests. The company is in the process of running these tests and expects to complete its review by the end of the second quarter. The company expects to complete the replacement or upgrade of these applications during the second and third quarters of 1999. Finally, with respect to other significant microprocessor-controlled equipment, the company has identified and completed its review of such equipment. The company expects to complete its test of such equipment and to have made any necessary upgrades or replacements by the end of the second quarter of 1999. The review of the Y2K readiness of Important Third Parties is in-progress and is expected to be substantially completed by the end of the second quarter of 1999. Following completion, the company expects to assess the nature and extent of the risk from non-readiness by such third parties and to either cease doing business with such third parties, locate back-up businesses who are Y2K ready, obtain reasonable assurances of Y2K readiness, or to implement other appropriate contingency plans, by the end of 1999. The total costs associated with the company's Y2K readiness efforts is currently projected to be in the range of $250,000. Out-of-pocket expenditures to date with respect to the Y2K problem have not been material and the time of company personnel to address Y2K readiness has also not been material. Until the reviews described above are completed, the company's estimates of the extent of the expenditures that will be necessary to address the Y2K problem are subject to change. The company believes that its Y2K readiness review and the actions it intends to take prior to the end of 1999 should result in the absence of significant Y2K-related problems for the company's computer systems, applications and microprocessor-controlled equipment. However, there can be no assurances that the company will be able to complete its review of various systems within the time frames indicated, that the company, will be completely Y2K ready by the end of 1999 or that the company will not encounter Y2K-related problems that could have a material adverse affect on the company's results of operations and financial condition. In addition, the company cannot guarantee the Y2K readiness of Important Third Parties and certain business disruptions could occur, such as a financial institution's inability to process checks drawn on bank accounts, to accept deposits or process wire transfers, an Important Third Party's business failure, interruption in deliveries of equipment, supplies and services from Important Third Parties, loss of voice and/or data connections, loss of power to electrical facilities, and other business interruptions which cannot be predicted. Accordingly, there can be no assurance that Y2K-related problems of Important Third Parties will not have a material adverse affect on the company's results of operations and financial condition. LIQUIDITY AND CAPITAL RESOURCES The company has financed its operations since inception primarily through private and public offerings of its capital stock and through corporate collaborations. As of March 31, 1999, the company had realized approximately $183 million in net proceeds from offerings of its capital stock. In addition, the company had realized approximately $174 million since inception from its corporate collaborations. The company's principal sources of liquidity are its cash and investments, which totaled $64 million as of March 31, 1999. The company has two lines of credit under which it had borrowed $25.9 million under the agreements as of March 31, 1999. The company has no additional borrowing capacity under these agreements. The company is in discussions to refinance these borrowings. 12 13 Net cash used in operating activities during the three-month period ended March 31, 1999 was $13.3 million compared to $15.6 million in the same period in 1998. The change relates to the costs incurred in 1998 in relation to the acquisition of Sequana Therapeutics, Inc., as well as the timing of cash received under the company's collaboration or combinatorial chemistry compound sales agreements. Cash used in operating activities is expected to fluctuate from quarter to quarter depending, in part, upon the timing and amounts, if any, of cash received from existing and any new collaboration agreements or the sale of combinatorial chemistry compound libraries. The company also spent approximately $2.5 million for the purchase of property, plant and equipment during the three months ended March 31, 1999. Additional equipment is expected to be acquired or leased in connection with the company's continuing research and development activities. We expect that our existing money resources, including research and development revenues from existing collaborations, will enable us to maintain current and planned operations for at least the next two years. However, we expect to raise substantial additional money to fund operations before the end of this period. In addition, we will need to continue to raise money until we achieve substantial product or royalty revenues. We expect that we will seek additional funding through one or more of the following: new collaborations, the extension of existing collaborations, through sale of our interests in our affiliated businesses, or through public or private equity or debt financings. Furthermore, we may obtain funds through arrangements with collaborative partners or others that require us to give up rights to technologies or products that we would otherwise seek to develop or commercialize ourselves. We cannot be certain that additional funding will be available or that the terms will be acceptable. Existing stockholders will experience dilution of their investment if additional funds are raised by a follow-on stock offering. If adequate funds are not available, we may delay, reduce or eliminate any of our research or development programs. CERTAIN BUSINESS RISKS We are at an early stage of development. Our technologies are, in many cases, new and all are still under development. All of our proposed products are in research or development and will require significant additional research and development efforts prior to any commercial use, including extensive preclinical and clinical testing, as well as lengthy regulatory approval involving many complexities. Our research and development efforts may not be successful, our proposed products may not prove to be safe and efficacious in clinical trials and no commercially successful products may ultimately be developed by us. In addition, many of our currently proposed products are subject to development and licensing arrangements with our collaborators. Therefore, we are dependent on the research and development efforts of these collaborators. Moreover, we are entitled only to a portion of the revenues, if any, realized from the commercial sale of any of the proposed products covered by the collaborations. We have experienced significant operating losses since our inception and expect to incur significant operating losses over at least the next several years. The development of our technology and proposed products will require a commitment of substantial funds to conduct these costly and time consuming activities. Should we or our collaborators fail to perform in accordance with the terms of the applicable agreements, any consequent loss of revenue under the collaboration agreements could have a material adverse effect on our business, financial condition and results of operations. The proposed products under development by us have never been manufactured on a commercial scale and it is possible that proposed products may not be able to be manufactured at a cost or in quantities necessary to make them commercially viable. We have no sales, marketing or distribution capability for our proposed products. If any of the products subject to our collaborative agreements are successfully developed, we must rely on our collaborators to market the products. We cannot ensure that any collaborator's marketing efforts would be successful. If we develop any products which are not subject to our collaborative agreements, we must either rely on other pharmaceutical companies to market our products or we must develop a marketing and sales force with technical expertise and supporting distribution capability in order to market our products directly. We cannot guarantee that these marketing efforts would be successful. 13 14 The foregoing risks reflect our early stage of development and the nature of our industry and products. Also inherent in the Company's stage of development are a number of additional risks, including competition, the substantially greater financial resources of a number of our competitors, the manufacturing challenges presented by the production of increasing numbers of combinatorial chemistry compounds, uncertainties regarding protection of patents and proprietary rights, government regulation, uncertainties related to clinical trials and health care reform and the potential volatility of our stock price. These risks and uncertainties are discussed further in "Item 1. Business -- What Factors Could Cause Our Results to Differ Significantly From Those You Might Expect?" and "-- What Other Matters Should Stockholders Consider with Respect to the Company?" in the Company's Report on Form 10-K for the year ended December 31, 1998, filed by the Company with the Securities and Exchange Commission on March 31, 1999. ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK Not Applicable. 14 15 AXYS PHARMACEUTICALS, INC. PART II: OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS None ITEM 2. CHANGES IN SECURITIES In February 1999, the company issued an option (the "Put Option") to The Bay City Capital Fund I, L.P. ("BCC"), granting BCC the right to require the company to purchase from BCC all of the 1,501,501 shares of Series A Preferred Stock of Xyris Corporation (the "Xyris Stock") held by BCC. If the Put Option is exercised, the company would purchase the Xyris Stock with shares of the Company's Common Stock, at its then market price, with an aggregate market value on the date the Put Option is exercised equal to $5,000,000, rounded down to the nearest whole number of shares. The Put Option was granted in connection with Series A Preferred Stock Purchase Agreement between BCC, Xyris Corporation and the Company, whereby BCC purchased Series A Preferred Stock of Xyris Corporation in connection with the additional financing of Xyris Corporation, a majority owned agricultural biotechnology subsidiary of the company. The Put Option may be exercised at any time between August 2, 1999 and February 2, 2001. The issuance of the above securities were intended to be exempt from registration and prospectus delivery requirements under the Securities Act of 1933, as amended (the "Securities Act"), by virtue of Section 4(2) thereof, due to, among other things, (i) the limited number of persons to whom the securities were issued, (ii) the distribution of disclosure documents to the investor, (iii) the fact that such investors represented and warranted to the company, among other things, that such investors were acquiring the securities for investment only and not with a view to the resale or distribution thereof, and (iv) the fact that such investors were knowledgeable, sophisticated and experienced in making investment decisions of this kind. ITEM 3. DEFAULTS UPON SENIOR SECURITIES None ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None ITEM 5. OTHER INFORMATION None ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K a) EXHIBITS 10.97 Employment Agreement, dated February 26, 1999, between the John Walker and the Registrant. 10.98 Series A Preferred Stock Purchase Agreement, dated February 2, 1999 by and among Xyris Corporation, Bay City Capital Fund I and the Registrant. 10.99 Third Amendment to Expansion Lease, dated August 24, 1998 between the Registrant and ARE-11099 North Torrey Pines, LLC. 10.100 Fourth Amendment to Expansion Lease, dated March 31, 1999 between the Registrant and ARE-11099 North Torrey Pines, LLC. 10.101 First Amendment to the Research Agreement, dated February 28, 1999 between the Registrant and Pharmacia & Upjohn, Inc.
15 16 10.102 Seventh Amendment to Standard Industrial Lease Multi-tenant, dated February 13, 1998, between Shelton Corporation and the Registrant. 10.103 Eighth Amendment to Standard Industrial Lease Multi-tenant, dated November 18, 1998 between Shelton International Holdings, Inc. and the Registrant. 10.104 Ninth Amendment to Standard Industrial Lease Multi-tenant, dated November 18, 1998 between Shelton International Holdings, Inc. and the Registrant. 10.105* Termination of Collaborative Research Agreement, dated February 13, 1999 between Corange International, Ltd. and the Registrant. 10.106* Termination Agreement, dated February 5, 1999 between Pharmacia and Upjohn AB and the Registrant. 27 Financial Data Schedule
- --------------- * Confidential treatment has been requested with respect to certain portions of this exhibit. b) REPORTS ON FORM 8-K None 16 17 AXYS PHARMACEUTICALS, INC. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. AXYS PHARMACEUTICALS, INC. Date: May 17, 1999 By: /s/ FREDERICK J. RUEGSEGGER ------------------------------------ Frederick J. Ruegsegger Senior Vice President Finance and Corporate Development and Chief Financial Officer (Principal Financial and Accounting Officer) 17 18 EXHIBIT INDEX
EXHIBIT NUMBER EXHIBIT - ------- ------- 10.97 Employment Agreement, dated February 26, 1999, between the John Walker and the Registrant. 10.98 Series A Preferred Stock Purchase Agreement, dated February 2, 1999 by and among Xyris Corporation, Bay City Capital Fund I and the Registrant. 10.99 Third Amendment to Expansion Lease, dated August 24, 1998 between the Registrant and ARE-11099 North Torrey Pines, LLC. 10.100 Fourth Amendment to Expansion Lease, dated March 31, 1999 between the Registrant and ARE-11099 North Torrey Pines, LLC. 10.101 First Amendment to the Research Agreement, dated February 28, 1999 between the Registrant and Pharmacia & Upjohn, Inc. 10.102 Seventh Amendment to Standard Industrial Lease Multi-tenant, dated February 13, 1998 between Shelton Corporation and the Registrant. 10.103 Eighth Amendment to Standard Industrial Lease Multi-tenant, dated November 18, 1998 between Shelton International Holdings, Inc. and the Registrant. 10.104 Ninth Amendment to Standard Industrial Lease Multi-tenant, dated November 18, 1998 between Shelton International Holdings, Inc. and the Registrant. 10.105* Termination of Collaborative Research Agreement, dated February 13, 1999 between Corange International, Ltd. and the Registrant. 10.106* Termination Agreement, dated February 5, 1999 between Pharmacia and Upjohn AB and the Registrant. 27 Financial Data Schedule
- --------------- * Confidential treatment has been requested with respect to certain portions of this exhibit. EX-10.97 2 EMPLOYMENT AGREEMENT 1 Exhibit 10.97 EMPLOYMENT AGREEMENT THIS EMPLOYMENT AGREEMENT ("Agreement") is entered into as of this 26th day of February, 1999, by and between JOHN WALKER ("Executive") and AXYS PHARMACEUTICALS, INC., a Delaware corporation (the "Company"). WHEREAS, the Company desires to continue to employ Executive to provide personal services to the Company, and wishes to provide Executive with certain compensation and benefits in return for such future services; and WHEREAS, Executive wishes to continue to be employed by the Company and provide personal services to the Company in return for certain compensation and benefits; and WHEREAS, Executive and the Company wish to amend and restate that Employment Agreement entered into between the two parties as of September 12, 1997 (the "Prior Agreement"). NOW, THEREFORE, in consideration of the mutual promises and covenants contained herein, it is hereby agreed by and between the parties hereto as follows: 1. EMPLOYMENT BY THE COMPANY. 1.1 The Company agrees to employ Executive in the position of President and Chief Executive Officer of the Company for the term commencing on the date of this Agreement and ending January 31, 2003. This Agreement shall automatically renew on February 1, 2003 and every February 1 thereafter unless notice (in accordance with Section 7.1 of this Agreement) is provided by either party prior to November 1, 2002 or any November 1 thereafter. During Executive's employment with the Company, Executive will devote his best efforts and substantially all of his business time and attention to the business of the Company. 1.2 Executive shall serve in an executive capacity and shall perform such duties as are customarily associated with his then current titles, consistent with the Bylaws of the Company and as required by the Company's Board of Directors (the "Board"). 1.3 The employment relationship between the parties shall also be governed by the general employment policies and practices of the Company, including those relating to protection of confidential information and assignment of inventions, except that when the terms of this Agreement differ from or are in conflict with the Company's general employment policies or practices, this Agreement shall control. 1.4 The Company and Executive each acknowledge that either party has the right to terminate Executive's employment with the Company at any time for any reason whatsoever, with or without cause or advance notice. This at-will employment relationship cannot be changed except in a writing signed by both Executive and a majority of the Board. 1. 2 1.5 This Agreement shall supercede the Prior Agreement, except as expressly set forth in this section, at the time that this Agreement becomes effective upon execution by both parties. However, Section 2.2 of the Prior Agreement, as it relates to a previously granted stock option, shall continue to apply to such option. 2. COMPENSATION. 2.1 SALARY. Executive shall receive, for services to be rendered under this Agreement, an annualized base salary ("Base Salary") equal to $410,000. Such Base Salary shall be effective as of January 1, 1999, and shall be payable in installments consistent with the Company's payroll policies. Executive's Base Salary shall be reviewed at least annually by the Board, and in the Board's sole discretion, may be increased at any time. In the event Executive's employment terminates for any reason other than death, disability, a voluntary termination not for Good Reason, or a termination for Cause, upon execution of an effective release in the form attached hereto as Exhibit A, Executive shall continue to receive his Base Salary and Target Bonus (as defined below) for a period of two (2) years, paid in installments consistent with the Company's then current payroll policies. In addition, the Company shall reimburse Executive for all costs associated with the continuation of benefits pursuant to COBRA for the shorter of: (x) two (2) years or (y) the maximum legal period for which COBRA may be extended. For purposes of this Agreement, "Good Reason" means that any of the following are undertaken without Executive's express written consent: (a) the assignment to Executive of any duties or responsibilities which result in any diminution or adverse change of Executive's position, status or circumstances of employment; (b) a reduction by the Company in Executive's Base Salary; (c) the taking of any action by the Company which would adversely affect Executive's participation in, or reduce Executive's benefits under, the Company's benefit plans (including equity benefits) as of the time this Agreement is executed, except to the extent the benefits of all other executive officers of the Company are similarly reduced; (d) a relocation of Executive's principal office to a location more than forty (40) miles from the location at which Executive was performing his duties at the time this Agreement is executed, except for required travel by Executive on the Company's business; (e) any breach by the Company of any provision of this Agreement; or (f) any failure by the Company to obtain the assumption of this Agreement by any successor or assign of the Company. For purposes of this Agreement, "Cause" means: (a) an intentional action or intentional failure to act by Executive which was performed in bad faith and to the material detriment of the Company; (b) Executive intentionally refuses or intentionally fails to act in accordance with any lawful and proper direction or order of the Board; (c) Executive willfully and habitually neglects the duties of employment; (d) Executive violates Section 5 or Section 6 of this Agreement or (e) Executive is convicted of a felony crime involving moral turpitude; provided, however, that in the event that any of the foregoing events under clauses (a), (b), (c) or (d) above is capable of being cured, the Company shall provide written notice to Executive describing the nature of such event and Executive shall thereafter have ten (10) business days to cure such event. 2.2 ANNUAL BONUS. Executive will be eligible for an annual bonus up to fifty percent (50%) of Executive's then current Base Salary upon achievement of goals specified by the 2. 3 Board (the "Target Bonus"), and up an additional fifty percent (50%), for an aggregate one hundred percent (100%) of Executive's then current Base Salary, upon overachievement of goals specified by the Board. Such goals shall be set forth in writing by the Board prior to the close of the first quarter of each fiscal year of the Company. 2.3 DEBT FORGIVENESS. (a) The Company and Executive agree that as of the date immediately prior to this Agreement, the Executive currently is obligated to pay the Company principal and accrued but unpaid interest under a $750,000 promissory note issued by the Executive to the Company in September 1997, (the "Note"), on which $560,000 in principal remains unpaid to date and $83,019.42 in interest has accrued to date. The Note is full-recourse and secured by one hundred thirty thousand two hundred thirty-six (130,236) shares of Company stock owned by Executive, bears interest at the rate of 6.02% per annum and is payable in full in January 2001. (b) Company and Executive hereby agree that Executive will issue a new note in exchange for the existing Note. Such new note (the "New Note") will contain all of the terms and conditions of the Note, except that: (i) the term of the New Note will be January 31, 2003, (ii) the interest rate of the New Note shall equal 4.71% per annum, interest compounding annually and (iii) the principal and all accrued interest under the New Note shall become immediately due and payable upon Executive's termination of service for any reason. (c) Provided that Executive continues to render services to the Company through each of the respective dates listed in the "Effective Date" column below, a proportionate amount of the principal of the New Note, together with interest accrued upon such respective principal amounts, shall be forgiven as follows:
EFFECTIVE DATE DEBT FORGIVENESS TAX GROSS-UP TOTAL 02/01/2000 $160,000 $ 64,000 $ 224,000 02/01/2001 133,333 53,333 186,666 02/01/2002 133,333 53,333 186,666 01/31/2003 133,334 53,334 186,668 -------- -------- --------- $560,000 $224,000 $ 784,000
Any amounts under the New Note not otherwise forgiven or previously paid by Executive shall be paid by Executive to the Company on January 31, 2003. (a) The "Tax Gross-Up" payments provided for in the table above shall be paid by the Company in a lump-sum payment within three (3) days following each respective "Effective Date." 1.2 MEDICAL AND DENTAL COVERAGE. The Company shall continue to provide Executive with coverage that is commensurate with coverage currently provided to Executive and which is provided to similarly situated executives of the Company. 3. 4 1.3 LIFE INSURANCE. The Company shall continue to maintain one or more life insurance policies in the name of Executive (subject to Executive's insurability) funded through the use of a split dollar agreement with a collateral assignment in favor of the Company which are projected to provide aggregate death benefits of no more than $1,200,000. 1.4 STANDARD COMPANY BENEFITS. Executive shall be entitled to all other rights and benefits for which he is eligible under the terms and conditions of such benefits which may be in effect from time to time and provided by the Company to its employees generally and to its management and executive employees in particular. 1.5 EXPENSES. Executive shall be entitled to receive prompt reimbursement of all reasonable expenses incurred by Executive in performing Company services. Executive agrees to furnish the Company reasonably adequate records and other documentary evidence of such expenses for which Executive seeks reimbursement. Such expenses shall be accounted for under the policies and procedures established by the Company. 1.6 VACATION AND SICK LEAVE. Executive shall be entitled to vacation and to sick leave in accordance with policies as periodically established by the Company for similarly situated executives. In addition, Executive shall be entitled, without loss of pay, to be absent voluntarily from the performance of employment duties for such periods of time and for such valid and legitimate reasons as the Board in its discretion may determine. 2. CONFIDENTIAL INFORMATION OBLIGATIONS. 2.1 AGREEMENT. Except as otherwise specifically modified by this Agreement, Executive agrees to execute and abide by the relevant terms concerning confidential information and inventions set forth in Executive's Employment, Confidential Information and Invention Assignment Agreement ("Confidentiality Agreement"), a copy of which has been previously executed by Executive. 2.2 REMEDIES. Executive's duties under the Confidentiality Agreement shall survive termination of his employment with the Company. Executive acknowledges that a remedy at law for any breach or threatened breach by him of the provisions of the Confidentiality Agreement would be inadequate, and he therefore agrees that the Company shall be entitled to injunctive relief in case of any such breach or threatened breach. 3. OUTSIDE ACTIVITIES. 3.1 Except with the prior written consent of the Board, Executive will not during the term of this Agreement undertake or engage in any other employment, occupation or business enterprise, other than ones in which Executive is a passive investor. Executive may engage in civic and not-for-profit activities so long as such activities do not materially interfere with the performance of his duties hereunder. 3.2 Except as permitted by Section 4.3, Executive agrees not to acquire, assume, or participate in (directly or indirectly) any position, investment or interest known by him to be adverse or antagonistic to the Company, its business, or its prospects, financial or otherwise. 4. 5 3.3 During the term of his employment by the Company, except on behalf of the Company, Executive will not have any direct or indirect business connection or interest, in any capacity whatsoever, with any other person or entity known by him to compete directly with the Company, throughout the world, in any line of business engaged in (or planned to be engaged in) by the Company. Nothing in this paragraph shall bar Executive from owning securities of any competitor corporation as a passive investor, so long as his aggregate direct holdings in any one such corporation shall not constitute more than 1% of the voting stock of that corporation. 4. RESTRICTIVE COVENANT. While employed by the Company, and for two (2) years immediately following the termination of Executive's employment, Executive shall not, without the prior written approval of the Company, directly or indirectly engage or prepare to engage in any activities in competition with the Company, or accept employment or establish a business relationship with a business engaged in or preparing to engage in competition with the Company, in any geographical location in which the Company as of the termination date either conducts or plans to conduct business. Executive agrees that this restriction is reasonably necessary to protect the Company's legitimate business interests in its trade secrets, and valuable confidential business information. In the event Executive violates the provisions of this Section 5, then (i) that stock option granted to Executive on October 16, 1998 to acquire 100,000 shares of the Company's common stock (but not the other stock options simultaneously granted to Executive on October 16, 1998) shall, to the extent not previously exercised, immediately terminate and cease to remain outstanding and (ii) the payment schedule under the New Note shall immediately accelerate and the New Note shall become immediately due and payable in full. 5. NONINTERFERENCE. While employed by the Company, and for one (1) year immediately following the termination of Executive's employment, Executive agrees not to interfere with the Company's business by: (a) soliciting, attempting to solicit, inducing, or otherwise causing any employee of the Company to terminate his or her employment in order to become an employee, consultant, or independent contractor to or for any competitor of the Company; or (b) directly or indirectly soliciting the business or services of any customer, client, vendor, or distributor of the Company which was a customer, client, vendor, or distributor of the Company at the time of termination or at any time in the year immediately preceding that date. Executive agrees that this restriction is reasonably necessary to protect the Company's legitimate business interest in its substantial relationships with specific customers, and its valuable confidential business information. 6. GENERAL PROVISIONS. 6.1 NOTICES. Any notices provided hereunder must be in writing and shall be deemed effective upon the earlier of (i) personal delivery (including delivery by fax) or (ii) the third day after mailing by first-class mail to the Company at its primary office location and to Executive at his address as then listed on the Company payroll. 5. 6 6.2 SEVERABILITY. Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal, or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality, or unenforceability will not affect any other provision or any other jurisdiction, but this Agreement will be reformed, construed and enforced in such jurisdiction as if such invalid, illegal, or unenforceable provisions had never been contained herein. 6.3 WAIVER. If either party should waive any breach of any provisions of this Agreement, that party shall not thereby be deemed to have waived any preceding or succeeding breach of the same or any other provision of this Agreement. 6.4 COMPLETE AGREEMENT. This Agreement and its Exhibits constitute the entire agreement between Executive and the Company and it is the complete, final, and exclusive embodiment of their agreement with regard to this subject matter. It is entered into without reliance on any promise or representation other than those expressly contained herein, and it cannot be modified or amended except in a writing signed by both the Executive and at least one member of the Compensation Committee of the Board. 6.5 COUNTERPARTS. This Agreement may be executed in separate counterparts, any one of which need not contain signatures of more than one party, but all of which taken together will constitute one and the same Agreement. 6.6 HEADINGS. The headings of the sections hereof are inserted for convenience only and shall not be deemed to constitute a part hereof nor to affect the meaning thereof. 6.7 SUCCESSORS AND ASSIGNS. This Agreement is intended to bind and inure to the benefit of and be enforceable by Executive and the Company, and their respective successors, assigns, heirs, executors and administrators, except that Executive may not assign any duties hereunder and may not assign any rights hereunder without the written consent of the Company, which shall not be withheld unreasonably. 6.8 CHOICE OF LAW. All questions concerning the construction, validity and interpretation of this Agreement will be governed by the law of the State of California, without regard to such state's conflict-of-laws rules. 6.9 NON-PUBLICATION. The parties mutually agree not to disclose publicly the terms of this Agreement except to the extent that disclosure is mandated by applicable law or such disclosure is to the parties' respective attorneys, accountants and other advisors. 6.10 CONSTRUCTION OF PLAN. In the event of a conflict between the text of the Agreement and any summary, description or other information regarding the Agreement, the text of the Agreement shall control. 6. 7 6.11 ATTORNEYS' FEES. If either party hereto brings any action to enforce his or its rights hereunder, each party in any such action shall be responsible for his or its costs and attorneys fees incurred in connection with such action. 6.12 TAX WITHHOLDING. All payments made pursuant to this Agreement shall be subject to all applicable federal, state and local income and employment tax withholding. 6.13 ARBITRATION. To ensure rapid and economical resolution of any and all disputes which may arise under this Agreement, the Company and Executive each agree that any and all disputes or controversies, whether of law or fact of any nature whatsoever (including, but not limited to, all state and federal statutory and common law discrimination claims), with the sole exception of those disputes which may arise from Executive's Confidentiality Agreement, arising from or regarding the interpretation, performance, enforcement or breach of this Agreement, or any other disputes or claims arising from or related to Executive's employment or the termination of his employment, shall be resolved by final and binding confidential arbitration under the procedures set forth in Exhibit B to this Agreement and the then existing Judicial Arbitration and Mediation Services Rules of Practice and Procedure (except insofar as they are inconsistent with the procedures set forth in Exhibit B). IN WITNESS WHEREOF, the parties have executed this Agreement on the day and year first above written. AXYS PHARMACEUTICALS, INC. By: /s/ Frederick J. Ruegsegger ----------------------------- Name: Frederick J. Ruegsegger Title: Senior Vice President & Chief Financial Officer Accepted and agreed this 26th day of February, 1999 /s/ John Walker - ------------------------------ John Walker 7. 8 EXHIBIT A RELEASE Certain capitalized terms used in this Release are defined in the Employment Agreement entered into as of February 26, 1999 between Axys Pharmaceuticals, Inc. and me which I have reviewed. I acknowledge that I have read and understand Section 1542 of the California Civil Code which reads as follows: "A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE debtor." I hereby expressly waive and relinquish all rights and benefits under that section and any law of any jurisdiction of similar effect with respect to my release of any claims I may have against the Company. Except as otherwise set forth in this Release, I hereby release, acquit and forever discharge the Company, its parents and subsidiaries, and their officers, directors, agents, servants, employees, shareholders, successors, assigns and affiliates, of and from any and all claims, liabilities, demands, causes of action, costs, expenses, attorneys fees, damages, indemnities and obligations of every kind and nature, in law, equity, or otherwise, known and unknown, suspected and unsuspected, disclosed and undisclosed, arising out of or in any way related to claims and demands directly or indirectly arising out of my employment with the Company or the termination of that employment, including but not limited to, claims of intentional and negligent infliction of emotional distress, any and all tort claims for personal injury, claims or demands related to salary, bonuses, commissions, or any other ownership interests in the Company, vacation pay, fringe benefits, expense reimbursements, severance pay, or any other form of disputed compensation; claims pursuant to any federal, state or local law or cause of action including, but not limited to, the federal Civil Rights Act of 1964, as amended; the federal Age Discrimination in Employment Act of 1967, as amended ("ADEA"); the federal Employee Retirement Income Security Act of 1974, as amended; the federal Americans with Disabilities Act of 1990; the California Fair Employment and Housing Act, as amended; tort law; contract law; statutory law; common law; wrongful discharge; discrimination; fraud; defamation; and breach of the implied covenant of good faith and fair dealing; provided, however, that nothing in this paragraph shall be construed in any way to release the Company from its obligation to indemnify me from any third party action brought against me based on my employment with the Company, pursuant to any applicable agreement or applicable law, or to reduce or eliminate any coverage I may have under the Company's director and officer liability policy, if any. I acknowledge that I am knowingly and voluntarily waiving and releasing any rights I may have under ADEA. I also acknowledge that the consideration given under the Agreement for the waiver and release in the preceding paragraph hereof is in addition to anything of value to which I was already entitled. I further acknowledge that I have been advised by this writing, as required by the ADEA, that: (A) my waiver and release do not apply to any rights or claims that may arise on or after the date I execute this Release; (B) I should consult with an attorney prior to executing this Release; (C) I have twenty-one (21) days to consider this Release (although I may 1. 9 choose to voluntarily execute this Release earlier); (D) I have seven (7) days following the execution of this Release to revoke this Release; and (E) this Release shall not be effective until the date upon which the revocation period has expired, which shall be the eighth day after this Release is executed by me. [NAME OF EMPLOYEE] Date: ------------------------ ----------------------------------- 2. 10 EXHIBIT B ARBITRATION PROCEDURE 1. The parties agree that any dispute that arises in connection with this Agreement or the termination of this Agreement shall be resolved by binding arbitration in the manner described below. 2. A party intending to seek resolution of any dispute under the Agreement by arbitration shall provide a written demand for arbitration to the other party, which demand shall contain a brief statement of the issues to be resolved. 3. The arbitration shall be conducted in San Francisco, California by a mutually acceptable retired judge from the panel of Judicial Arbitration and Mediation Services, Inc. ("JAMS"). At the request of either party, arbitration proceedings will be conducted in the utmost secrecy and, in such case, all documents, testimony and records shall be received, heard and maintained by the arbitrator in secrecy under seal, available for inspection only by the parties to the arbitration, their respective attorneys, and their respective expert consultants or witnesses who shall agree, in advance and in writing, to receive all such information confidentially and to maintain such information in secrecy, and make no use of such information except for the purposes of the arbitration, unless compelled by legal process. 4. The arbitrator is required to disclose any circumstances that might preclude the arbitrator from rendering an objective and impartial determination. In the event the parties cannot mutually agree upon the selection of a JAMS arbitrator, the President and Vice-President of JAMS shall designate the arbitrator. The party demanding arbitration shall promptly request that JAMS conduct a scheduling conference within fifteen (15) days of the date of that party's written demand for arbitration or on the first available date thereafter on the arbitrator's calendar. The arbitration hearing shall be held within thirty (30) days after the scheduling conference or on the first available date thereafter on the arbitrator's calendar. Nothing in this paragraph shall prevent a party from at any time seeking temporary equitable relief, from JAMS or any court of competent jurisdiction, to prevent irreparable harm pending the resolution of the arbitration. 5. Discovery shall be conducted as follows: (a) prior to the arbitration any party may make a written demand for lists of the witnesses to be called and the documents to be introduced at the hearing; (b) the lists must be served within fifteen (15) days of the date of receipt of the demand, or one day prior to the arbitration, whichever is earlier; and (c) each party may take no more than two (2) depositions (pursuant to the procedures set forth in the California Code of Civil Procedure) with a maximum of five (5) hours of examination time per deposition, and no other form of pre-arbitration discovery shall be permitted. 6. It is the intent of the parties that the Federal Arbitration Act ("FAA") shall apply to the enforcement of this provision unless it is held inapplicable by a court with jurisdiction over the dispute, in which event the California Arbitration Act ("CAA") shall apply. 1. 11 7. The arbitrator shall apply California law, including the California Evidence Code, and shall be able to decree any and all relief of an equitable nature, including but not limited to such relief as a temporary restraining order, a preliminary injunction, a permanent injunction, or replevin of Company property. The arbitrator shall also be able to award actual, general or consequential damages, but shall not award any other form of damage (e.g., punitive damages). 8. Each party shall pay its pro rata share of the arbitrator's fees and expenses, in addition to other expenses of the arbitration approved by the arbitrator, pending the resolution of the arbitration. The arbitrator shall have authority to award the payment of such fees and expenses to the prevailing party, as appropriate in the discretion of the arbitrator. Each party shall pay its own attorneys fees, witness fees and other expenses incurred for its own benefit. 9. The arbitrator shall render a written award setting forth the reasons for his or her decision. The decree or judgment of an award rendered by the arbitrator may be entered and enforced in any court having jurisdiction over the parties. The award of the arbitrator shall be final and binding upon the parties without appeal or review except as permitted by the FAA, or if the FAA is not applicable, as permitted by the CAA. 2. EX-10.98 3 SERIES A PREFERRED STOCK PURCHASE AGREEMENT 1 EXHIBIT 10.98 SERIES A PREFERRED STOCK PURCHASE AGREEMENT DATED FEBRUARY 2, 1999 BY AND AMONG XYRIS CORPORATION, A CALIFORNIA CORPORATION, BAY CITY CAPITAL FUND I, A DELAWARE LIMITED PARTNERSHIP, AND AXYS PHARMACEUTICALS, INC., A DELAWARE CORPORATION 2 TABLE OF CONTENTS
1. AGREEMENT TO SELL AND PURCHASE...........................................................................1 1.1 Authorization of Shares.........................................................................1 1.2 Sale and Purchase...............................................................................1 2. CLOSING, DELIVERY AND PAYMENT............................................................................2 2.1 Closing.........................................................................................2 2.2 Delivery........................................................................................2 3. PUT OPTION...............................................................................................2 4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND AXYS...................................................2 4.1 Organization, Good Standing and Qualification of the Company....................................3 4.2 Capitalization; Voting Rights of the Company....................................................3 4.3 Authorization; Binding Obligations of the Company...............................................3 4.4 Agreements; Action..............................................................................3 4.5 Proprietary Information and Inventions Agreements...............................................4 4.6 Organization, Good Standing and Qualification of Axys...........................................4 4.7 Capitalization of Axys..........................................................................4 4.8 Authorization; Binding Obligations of Axys......................................................4 5. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER..........................................................4 5.1 Requisite Power and Authority...................................................................4 5.2 Investment Representations......................................................................5 5.3 Transfer Restrictions...........................................................................6 6. CONDITIONS TO CLOSING....................................................................................6 6.1 Conditions to Purchaser's Obligations at the Closing............................................6 6.2 Conditions to Obligations of the Company........................................................7 7. MISCELLANEOUS............................................................................................7 7.1 Governing Law...................................................................................7 7.2 Survival........................................................................................7 7.3 Successors and Assigns..........................................................................7 7.4 Entire Agreement................................................................................7 7.5 Severability....................................................................................8 7.6 Amendment and Waiver............................................................................8 7.7 Delays or Omissions. ...........................................................................8
i 3 7.8 Notices.........................................................................................8 7.9 Attorneys' Fees.................................................................................8 7.10 Titles and Subtitles............................................................................8 7.11 Counterparts....................................................................................8 7.12 Pronouns........................................................................................8 7.13 California Corporate Securities Law.............................................................9
LIST OF EXHIBITS Put Option Subscription Form Exhibit A Registration Rights Agreement Exhibit B
ii 4 SERIES A PREFERRED STOCK PURCHASE AGREEMENT THIS SERIES A PREFERRED STOCK PURCHASE AGREEMENT (the "Agreement") is entered into as of February 2, 1999, by and among XYRIS CORPORATION, a California corporation (the "Company"), BAY CITY CAPITAL FUND I, a Delaware limited partnership ("Purchaser"), and AXYS PHARMACEUTICALS, INC., a Delaware corporation, as Put Grantor ("Axys"). RECITALS WHEREAS, the Company, Purchaser and Axys are parties to that certain Series A Preferred Stock Purchase Agreement dated June 1, 1998 (the "Prior Purchase Agreement"); WHEREAS, pursuant to the Prior Purchase Agreement, Purchaser purchased 150,000 shares of Series A Preferred (the "Prior Shares") and agreed to purchase 2,850,000 additional shares of Series A Preferred upon certain conditions (the "Options Shares"); WHEREAS, Purchaser now desires to purchase 1,351,501 of the Option Shares (the "Shares") on the Closing Date (as defined below) on the terms and conditions set forth herein; WHEREAS, the Company and Axys agree that Purchaser's purchase of the Shares shall fully satisfy Purchaser's obligations under the Prior Purchase Agreement; and WHEREAS, the Company desires to issue and sell the Shares to Purchaser and Axys desires to issue to Purchaser the Put Option (as defined below) for the Shares and the Prior Shares on the terms and conditions set forth herein. NOW, THEREFORE, in consideration of the foregoing recitals and the mutual promises hereinafter set forth, the parties hereto agree as follows: 1. AGREEMENT TO SELL AND PURCHASE. 1.1 AUTHORIZATION OF SHARES. On or prior to the Closing (as defined in Section 2 below), the Company shall have authorized (i) the sale and issuance to Purchaser of the Shares and (ii) the issuance of 1,351,501 shares of Common Stock upon conversion of the Shares (the "Conversion Shares"). The Shares and the Conversion Shares shall have the rights, preferences, privileges and restrictions set forth in the Amended and Restated Articles of Incorporation of the Company substantially in the form attached as Exhibit B to the Prior Purchase Agreement (the "Restated Articles"). 1.2 SALE AND PURCHASE. Subject to the terms and conditions hereof, at the Closing the Company hereby agrees to issue and sell to Purchaser and Purchaser agrees to purchase from the Company the Shares at a purchase price of three dollars and thirty-three cents ($3.33) per share. 2. CLOSING, DELIVERY AND PAYMENT. 2.1 CLOSING. The closing of the sale and purchase of the Shares under this Agreement (the "Closing") shall take place at 5:00 p.m. on the date hereof, at the offices of 1. 5 Heller, Ehrman, White & McAuliffe, 333 Bush Street, Suite 3100, San Francisco, California or at such other time or place as the Company and Purchaser may mutually agree (such date is hereinafter referred to as the "Closing Date"). 2.2 DELIVERY. At the Closing, subject to the terms and conditions hereof, the Company will deliver to Purchaser a certificate representing the Shares, against payment of the purchase price therefor by wire transfer or check made payable to the order of the Company. 3. PUT OPTION. 3.1 Subject to the terms and conditions herein set forth, Axys hereby grants Purchaser the right (the "Put Option") at any time after the Trigger Date (as defined in Section 3.3 below) to require Axys to purchase from Purchaser, the Shares and the Prior Shares in exchange for shares of Axys Common Stock, at its then "market price," with an aggregate market value on the date immediately prior to the day the Put Option is exercised equal to $4,999,998, rounded down to the nearest whole number of shares (the "Put Option Shares"), on or prior to the Expiration Date set forth in Section 3.4 below. For purposes of the Put Option, the market price for Axys Common Stock shall be (i) if the Axys Common Stock is then reported on The Nasdaq National Market or its successor, the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted in The Nasdaq National Market or its successor on the last market trading day prior to exercise of the Put Option, (ii) if the Axys Common Stock is then listed or admitted to trading on the New York Stock Exchange, the last sale price, regular way (or, in case no such sale takes places on such day, the average of the closing bid and asked prices, regular way) in either case as reported in the consolidated transaction reporting system with respect to securities listed or admitted to trading on the New York Stock Exchange on the last market trading day prior to exercise of the Put Option, (iii) if the Axys Common Stock is not then reported on The Nasdaq National Market or then listed or admitted to trading on the New York Stock Exchange, the last quoted price (or, if not so quoted, the average of the high bid and low asked prices in the over-the-counter market) as reported by the National Association of Securities Dealers, Inc. Automated Quotation System or such other system then in use on the last market trading day prior to exercise of the Put Option, or (iv) in the event none of the foregoing situations applies, the average of the closing bid and asked prices, as furnished by a professional market maker making a market in Axys Common Stock selected by the Axys Board of Directors, on the last market trading day prior to exercise of the Put Option. 3.2 The Put Option shall be deemed to have been exercised immediately prior to the close of business on the date of surrender to Axys of the Put Option Subscription Form, attached hereto as Exhibit A. 3.3 The Put Option shall not be exercisable until August 2, 1999 (the "Trigger Date"). 3.4 The Put Option shall terminate in full on February 2, 2001. 3.5 The Put Option shall not be transferable by Purchaser except to an affiliate of Purchaser reasonably acceptable to Axys who is also a transferee of the Shares and the Prior Shares and agrees in a writing reasonably acceptable to Axys to be bound by the provisions of this Agreement pertaining to the Put Option and the Put Option Shares, the Registration Rights 2. 6 Agreement and the side letter referred to in Section 3.4 thereof (the "SIDE LETTER") to the same extent as Purchaser. 3.6 Upon the exercise of the Put Option and concurrent with the issuance of the Put Option Shares within a reasonable time period (not to exceed 10 business days after Axys' receipt of the Put Option Subscription Form), Axys shall execute the Registration Rights Agreement in the form attached as Exhibit B (the "REGISTRATION RIGHTS AGREEMENT"). Purchaser shall provide such reasonable cooperation as Axys requests in connection with the issuance of the Put Option Shares. 4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND AXYS. (a) The Company hereby represents and warrants to Purchaser as of the date of this Agreement as follows: 4.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION OF THE COMPANY. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of California. The Company has all requisite corporate power and authority to own and operate its properties and assets, to execute and deliver this Agreement, to issue and sell the Shares and the Conversion Shares, to carry out the provisions of this Agreement and the Restated Articles and to carry on its business as presently conducted and as presently proposed to be conducted. 4.2 CAPITALIZATION; VOTING RIGHTS OF THE COMPANY. The authorized capital stock of the Company, immediately prior to the Closing, will consist of 10,000,000 shares of Common Stock, no par value per share, 550,000 shares of which are issued and outstanding; 8,200,000 shares of Preferred Stock no par value per share, all of which are designated Series A Preferred Stock, 2,200,000 of which are issued and outstanding. All issued and outstanding shares of the Company's Common Stock have been duly authorized and validly issued. The rights, preferences, privileges and restrictions of the Shares are as stated in the Restated Articles. The Conversion Shares have been duly and validly reserved for issuance. Other than as set forth in this Agreement; the Prior Purchase Agreement; the Series A Preferred Stock Purchase Agreement between the Company and Axys dated as of June 1, 1998; the Common Stock Purchase Agreement between the Company and Jerry Caulder, dated as of April 30, 1998; the Shareholders' Agreement between the Company, Jerry Caulder, Purchaser and Axys, dated as of June 1, 1998; and the Company's 1998 Equity Incentive Plan (pursuant to which options to purchase 20,000 shares of Common Stock are outstanding), there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or shareholder agreements, or agreements of any kind for the purchase or acquisition from the Company of any of its securities. When issued in compliance with the provisions of this Agreement and the Restated Articles, the Shares and the Conversion Shares will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances other than liens and encumbrances created by or imposed upon Purchaser; provided, however, that the Shares and the Conversion Shares may be subject to restrictions on transfer under the Company's Bylaws or state and/or federal securities laws as set forth herein or as otherwise required by such laws at the time a transfer is proposed. 4.3 AUTHORIZATION; BINDING OBLIGATIONS OF THE COMPANY. All corporate action on the part of the Company, its officers, directors and shareholders necessary for the 3. 7 authorization of this Agreement, the performance of all obligations of the Company hereunder at the Closing and the authorization, sale, issuance and delivery of the Shares pursuant hereto and the Conversion Shares pursuant to the Restated Articles has been taken or will be taken prior to the Closing. The Agreement, when executed and delivered, will be a valid and binding obligation of the Company enforceable in accordance with its terms, except (a) as limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws of general application affecting enforcement of creditors' rights; and (b) general principles of equity that restrict the availability of equitable remedies. 4.4 AGREEMENTS; ACTION. Except for agreements explicitly contemplated hereby and pursuant to the Employment Agreement by and between the Company and Jerry Caulder, dated April 30, 1998, and agreements between the Company and its employees with respect to the sale, or the issuance of options providing for the sale, of the Company's Common Stock, pursuant to the Company's 1998 Equity Incentive Plan there are no agreements, understandings or proposed transactions between the Company and any of its officers, directors, affiliates or any affiliate thereof. 4.5 PROPRIETARY INFORMATION AND INVENTIONS AGREEMENTS. Each employee, officer and consultant of the Company has executed a Proprietary Information and Inventions Agreement in the form previously approved by Axys and Purchaser. (b) Axys, as Put Grantor, hereby represents and warrants to Purchaser as of the date of this Agreement as follows: 4.6 ORGANIZATION, GOOD STANDING AND QUALIFICATION OF AXYS. Axys is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. Axys has all requisite corporate power and authority to own and operate its properties and assets, to execute and deliver this Agreement, to issue and sell the Put Option and Put Option Shares, to carry out the provisions of this Agreement relating to it as Put Grantor and to carry on its business as presently conducted and as presently proposed to be conducted. 4.7 CAPITALIZATION OF AXYS. The authorized capital stock of Axys, as of October 31, 1998, consisted of 50,000,000 shares of Common Stock, $.001 par value per share, 30,147,403 shares of which were issued and outstanding; 10,000,000 shares of Preferred Stock $.001 par value per share, none of which were issued and outstanding. All issued and outstanding shares of the Company's Common Stock have been duly authorized and validly issued. The rights, preferences, privileges and restrictions of the Shares are as stated in Axys' public filings. The Put Option Shares have been duly and validly reserved for issuance. When issued in compliance with the provisions of this Agreement and Axys' public filings, the Put Option Shares will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances other than liens and encumbrances created by or imposed upon Purchaser; provided, however, that the Put Option Shares may be subject to restrictions on transfer under state and/or federal securities laws, as set forth herein, or as otherwise required by such laws at the time a transfer is proposed. 4.8 AUTHORIZATION; BINDING OBLIGATIONS OF AXYS. All corporate action on the part of Axys, its officers, directors and stockholders necessary for the authorization of this Agreement, the performance of all obligations of Axys as Put Grantor hereunder at the Closing 4. 8 and the authorization, sale, issuance and delivery of the Put Option and the Put Option Shares pursuant hereto has been taken or will be taken prior to the Closing. The Agreement, when executed and delivered, will be a valid and binding obligation of Axys enforceable in accordance with its terms, except (a) as limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws of general application affecting enforcement of creditors' rights; and (b) general principles of equity that restrict the availability of equitable remedies. 5. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. Purchaser hereby represents and warrants to the Company as follows: 5.1 REQUISITE POWER AND AUTHORITY. Purchaser has all necessary power and authority under all applicable provisions of law to execute and deliver this Agreement and to carry out its provisions. All action on Purchaser's part required for the lawful execution and delivery of this Agreement have been or will be effectively taken prior to the Closing. Upon its execution and delivery, this Agreement will be a valid and binding obligation of Purchaser, enforceable in accordance with its terms, except (a) as limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws of general application affecting enforcement of creditors' rights, and (b) general principles of equity that restrict the availability of equitable remedies 5.2 INVESTMENT REPRESENTATIONS. Purchaser understands that neither the Shares, the Conversion Shares, the Put Option nor the Put Option Shares have been registered under the Securities Act of 1933, as amended (the "Securities Act"). Purchaser also understands that the Shares and the Put Option are being offered and sold pursuant to an exemption from registration contained in the Securities Act based in part upon Purchaser's representations contained in this Agreement. Purchaser hereby represents and warrants as follows: (a) PURCHASER BEARS ECONOMIC RISK. Purchaser has substantial experience in evaluating and investing in private placement transactions of securities in companies similar to the Company so that it 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 indefinitely unless the Shares (or the Conversion Shares) and the Put Option (or the Put Option 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, the Conversion Shares, or any shares of its Common Stock and that Axys has no present intention of registering the Put Option and only intends to register the Put Option Shares pursuant to the terms and provisions of the Registration Rights Agreement. 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 Purchaser to transfer all or any portion of the Shares or the Conversion Shares or the Put Option or the Put Option Shares under the circumstances, in the amounts or at the times Purchaser might propose. (b) ACQUISITION FOR OWN ACCOUNT. Purchaser is acquiring the Shares, the Conversion Shares, the Put Option and the Put Option Shares for Purchaser's own account for investment only, and not with a view towards their distribution; provided that Purchaser may transfer the Shares and the Conversion Shares to an affiliate of Purchaser reasonably acceptable to Axys, may transfer the Put Option as provided herein and may transfer the Put Option Shares 5. 9 (subject to the provisions of the Side Letter) as permitted by applicable law or pursuant to the Registration Rights Agreement. (c) PURCHASER CAN PROTECT ITS INTEREST. 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. Further, Purchaser is aware of no publication of any advertisement in connection with the transactions contemplated in this Agreement. (d) ACCREDITED INVESTOR. Purchaser represents that it is an accredited investor within the meaning of Regulation D under the Securities Act. (e) COMPANY INFORMATION. Purchaser has had an opportunity to discuss the Company's business, management and financial affairs with the directors of the Company. 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. (f) RULE 144. Purchaser acknowledges and agrees that the Shares and the Put Option, and, if issued, the Conversion Shares and the Put Option 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 as in effect from time to time, 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 following the required holding period under Rule 144 and the number of shares being sold during any three-month period not exceeding specified limitations. 5.3 TRANSFER RESTRICTIONS. Purchaser acknowledges and agrees that the Shares and the Put Option and, if issued, the Conversion Shares and the Put Option Shares are subject to restrictions on transfer as set forth in the Company's Bylaws. 6. CONDITIONS TO CLOSING. 6.1 CONDITIONS TO PURCHASER'S OBLIGATIONS AT THE CLOSING. Purchaser's obligations to purchase the Shares and the Put Option at the Closing are subject to the satisfaction, at or prior to the Closing Date, of the following conditions, any one or more of which may be waived in writing by Purchaser: (a) REPRESENTATIONS AND WARRANTIES TRUE; PERFORMANCE OF OBLIGATIONS. The representations and warranties made by the Company in Section 4 hereof shall be true and correct in all material respects as of the Closing Date with the same force and effect as if they had been made as of the Closing Date, and the Company shall have performed all obligations and conditions herein required to be performed or observed by it on or prior to the Closing. (b) LEGAL INVESTMENT. On the Closing Date, the sale and issuance of the Shares and the Put Option and the potential issuance of the Conversion Shares and the Put Option Shares shall be legally permitted by all laws and regulations to which Purchaser, the Company and Axys are subject. 6. 10 (c) CONSENTS, PERMITS, AND WAIVERS. The Company and Axys shall have obtained any and all consents, permits and waivers necessary or appropriate for consummation of the transactions contemplated by the Agreement, except for such as may be properly obtained subsequent to the Closing. (d) CORPORATE DOCUMENTS. The Company and Axys shall have delivered to Purchaser or its counsel, copies of all corporate documents of the Company and Axys, respectively, as Purchaser shall reasonably request. (e) RESERVATION OF CONVERSION SHARES. The Conversion Shares shall have been duly authorized and reserved for issuance by the Company and the Put Option Shares shall have been duly authorized and reserved for issuance by Axys. (f) 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 the Purchaser and its counsel, and the Purchaser and its counsel shall have received all such counterpart originals or certified or other copies of such documents as they may reasonably request. 6.2 CONDITIONS TO OBLIGATIONS OF THE COMPANY. The Company's obligation to issue and sell the Shares at the Closing and Axys' obligation to issue the Put Option are subject to the satisfaction, on or prior to the Closing, of the following conditions, any one or more of which may be waived in writing by the Company: (a) REPRESENTATIONS AND WARRANTIES TRUE. The representations and warranties made by Purchaser in Section 5 hereof shall be true and correct in all material respects at the date of the Closing, with the same force and effect as if they had been made on and as of said 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 Purchaser on or before the Closing, including but not limited to the tender of the purchase price for the Shares. (c) CONSENTS, PERMITS AND WAIVERS. The Company and Axys shall have obtained any and all consents, permits and waivers necessary or appropriate for consummation of the transactions contemplated by the Agreement, except for such as may be properly obtained subsequent to the Closing. 7. MISCELLANEOUS. 7.1 GOVERNING LAW. This Agreement shall be governed in all respects by the laws of the State of California as such laws are applied to agreements between California residents entered into and performed entirely in California. 7.2 SURVIVAL. The representations, warranties, covenants and agreements made herein shall survive any investigation made by Purchaser and the closing of the transactions contemplated hereby. All statements as to factual matters contained in any certificate or other instrument delivered by or on behalf of the Company pursuant hereto in 7. 11 connection with the transactions contemplated hereby shall be deemed to be representations and warranties by the Company hereunder solely as of the date of such certificate or instrument. 7.3 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, and administrators of the parties hereto and shall inure to the benefit of and be enforceable by each person who shall be a holder of the Shares from time to time. 7.4 ENTIRE AGREEMENT. This Agreement and the Exhibits hereto constitute the full and entire understanding and agreement between the parties with regard to the subject matter hereof and no party shall be liable or bound to any other in any manner by any representations, warranties, covenants and agreements, except as specifically set forth herein and therein. 7.5 SEVERABILITY. In case any provision of the Agreement shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. 7.6 AMENDMENT AND WAIVER. This Agreement may be amended or modified and any provision hereof may be waived only upon the written consent of the Company, the Purchaser and Axys. 7.7 DELAYS OR OMISSIONS. It is agreed that no delay or omission to exercise any right, power or remedy accruing to any party, upon any breach, default or noncompliance by another party under this Agreement or the Restated Articles, shall impair any such right, power or remedy, nor shall it be construed to be a waiver of any such breach, default or noncompliance, or any acquiescence therein, or of or in any similar breach, default or noncompliance thereafter occurring. 7.8 NOTICES. All notices required or permitted hereunder shall be in writing and shall be deemed effectively given: (a) upon personal delivery to the party to be notified; (b) when sent by confirmed telex or facsimile if sent during normal business hours of the recipient, if not, then on the next business day; (c) five days after having been sent by registered or certified mail, return receipt requested, postage prepaid; or (d) one day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications shall be sent to the Company, the Purchaser or Axys at the address as set forth on the signature page hereof for such party or at such other address as a party may designate by ten days advance written notice to the other parties hereto. 7.9 ATTORNEYS' FEES. In the event that any dispute among the parties to this Agreement should result in litigation, the prevailing party in such dispute shall be entitled to recover from the losing party all fees, costs and expenses of enforcing any right of such prevailing party under or with respect to this Agreement, including without limitation, such reasonable fees and expenses of attorneys and accountants, which shall include, without limitation, all fees, costs and expenses of appeals. 7.10 TITLES AND SUBTITLES. The titles of the sections and subsections of this Agreement are for convenience of reference only and are not to be considered in construing this Agreement. 8. 12 7.11 COUNTERPARTS. This Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which together shall constitute one instrument. 7.12 PRONOUNS. All pronouns contained herein, and any variations thereof, shall be deemed to refer to the masculine, feminine or neutral, singular or plural, as the identity of the parties hereto may require. 7.13 CALIFORNIA CORPORATE SECURITIES LAW. THE SALE OF THE SECURITIES WHICH ARE THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF SUCH SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION THEREFOR PRIOR TO SUCH QUALIFICATION OR IN THE ABSENCE OF AN EXEMPTION FROM SUCH QUALIFICATION IS UNLAWFUL. PRIOR TO ACCEPTANCE OF SUCH CONSIDERATION BY THE COMPANY, THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED OR AN EXEMPTION FROM SUCH QUALIFICATION BEING AVAILABLE. 9. 13 IN WITNESS WHEREOF, the parties hereto have executed this SERIES A PREFERRED STOCK PURCHASE AGREEMENT as of the date set forth in the first paragraph hereof. COMPANY: PURCHASER: XYRIS CORPORATION BAY CITY CAPITAL FUND I By: /s/ Jerry Caulder By: /s/ Fred Craves ------------------------------ ----------------------------- Jerry Caulder Print Name: Fred Craves President Title: Gen. Partner Address: 11099 North Torrey Pines Road Address: 750 Battery Street, Suite 600 La Jolla, California 92037 San Francisco, CA 94111 Attn: President Attn: Roger Salquist FAX: (619) 794-5525 FAX: (415) 837-0996 PUT GRANTOR: AXYS PHARMACEUTICALS, INC. By: /s/ Frederick Ruegsegger ------------------------------------- Print Name: Frederick Ruegsegger Title: Sr. V.P. & CFO Address: 180 Kimball Way South San Francisco, CA 94080 Attn: Chief Financial Officer FAX: (650) 829-1001 10. 14 SERIES A PREFERRED STOCK PURCHASE AGREEMENT EXHIBIT A PUT OPTION SUBSCRIPTION FORM To: Axys Pharmaceuticals, Inc. 180 South Kimball Way South San Francisco, California 94080 Attn: Chief Financial Officer BAY CITY CAPITAL FUND I, a Delaware limited partnership ("BCC"), the holder of the Put Option (the "Put Option") described in Section 3 of that certain Series A Preferred Stock Purchase Agreement dated February 2, 1999, by and among Xyris Corporation, a California corporation ("Xyris"), BCC and Axys Pharmaceuticals, Inc., a Delaware corporation ("Axys"), hereby elects to exercise the right represented by the Put Option to sell to Axys 1,501,501 shares of Series A Preferred Stock of Xyris held by BCC in exchange for that number of shares of Axys Common Stock having an aggregate market value of $4,999,998, rounded down to the nearest whole number of shares, at the "market price" as defined in the Put Option. BCC hereby covenants to cause a certificate representing such shares of Common Stock to be delivered to Axys upon surrender of this Put Option Subscription Form in accordance with the Put Option. Dated: -------------------- BAY CITY CAPITAL FUND I, a Delaware Limited Partnership By: -------------------------------------- Name: ------------------------------------ Title: ----------------------------------- 15 SERIES A PREFERRED STOCK PURCHASE AGREEMENT EXHIBIT B FORM OF REGISTRATION RIGHTS AGREEMENT 16 REGISTRATION RIGHTS AGREEMENT ----------- --, ---- 17 TABLE OF CONTENTS SECTION 1. GENERAL.............................................................................................1 1.1 Definitions.....................................................................................1 SECTION 2. REGISTRATION; RESTRICTIONS ON TRANSFER..............................................................2 2.1 Restrictions on Transfer........................................................................2 2.2 Piggyback Registrations.........................................................................3 2.3 Form S-3 Registration...........................................................................4 2.4 Expenses of Registration........................................................................6 2.5 Obligations of the Company......................................................................6 2.6 Termination of Registration Rights..............................................................7 2.7 Delay of Registration; Furnishing Information...................................................7 2.8 Indemnification.................................................................................7 2.9 Assignment of Registration Rights...............................................................9 2.10 "Market Stand-Off" Agreement; Agreement to Furnish Information..................................9 2.11 Rule 144 Reporting.............................................................................10 SECTION 3. MISCELLANEOUS......................................................................................10 3.1 Governing Law..................................................................................10 3.2 Survival.......................................................................................10 3.3 Successors and Assigns.........................................................................11 3.4 Entire Agreement...............................................................................11 3.5 Severability...................................................................................11 3.6 Amendment and Waiver...........................................................................11 3.7 Delays or Omissions............................................................................11 3.8 Notices........................................................................................11 3.9 Attorneys' Fees................................................................................12 3.10 Titles and Subtitles...........................................................................12 3.11 Counterparts...................................................................................12
i 18 REGISTRATION RIGHTS AGREEMENT THIS REGISTRATION RIGHTS AGREEMENT (the "AGREEMENT") is entered into as of the ___ day of __________, ____, by and among AXYS PHARMACEUTICALS, INC., a Delaware corporation (the "COMPANY") and BAY CITY CAPITAL FUND I, a Delaware limited partnership ("BAY CITY CAPITAL"). RECITALS WHEREAS, the Company proposes to sell and issue shares of its Common Stock upon exercise of a put option held by Bay City Capital (the "PUT OPTION") pursuant to a Series A Preferred Stock Purchase Agreement, dated February 2, 1999, among the Company, Xyris Corporation and Bay City Capital (the "1999 XYRIS PURCHASE AGREEMENT"). WHEREAS, as a condition of entering into the 1999 Xyris Purchase Agreement, Bay City Capital has requested that the Company extend to Bay City Capital certain registration rights as set forth below on any shares of Company Common Stock issued upon exercise of the Put Option. NOW, THEREFORE, in consideration of the mutual promises, representations, warranties, covenants and conditions set forth in this Agreement and the 1999 Xyris Purchase Agreement, the parties mutually agree as follows: SECTION 1. GENERAL 1.1 DEFINITIONS. As used in this Agreement the following terms shall have the following respective meanings: "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended. "FORM S-3" means such form under the Securities Act as in effect on the date hereof or any successor registration form under the Securities Act subsequently adopted by the SEC which permits inclusion or incorporation of substantial information by reference to other documents filed by the Company with the SEC. "HOLDER" means any person owning of record Registrable Securities that have not been sold to the public or any assignee of record of such Registrable Securities in accordance with Section 2.8 hereof. "MATERIAL ADVERSE EVENT" means an occurrence having a consequence that either (a) is materially adverse to the business, prospects or financial condition of the Company or (b) has a reasonable likelihood of occurring and, if it were to occur, would be reasonably likely to materially adversely affect the business, prospects or financial condition of the Company. "REGISTER," "REGISTERED," and "REGISTRATION" refer to a registration effected by preparing and filing a registration statement in compliance with the Securities Act, and the declaration or ordering of effectiveness of such registration statement. 1. 19 "REGISTRABLE SECURITIES" means (a) Common Stock of the Company issued to Bay City Capital in connection with the Xyris Purchase Agreements; and (b) any Common Stock of the Company issued as (or issuable upon the conversion or exercise of any warrant, right or other security which is issued as) a dividend or other distribution with respect to, or in exchange for or in replacement of, such above-described securities. Notwithstanding the foregoing, Registrable Securities shall not include any securities sold by a person to the public pursuant to a registration statement or Rule 144 or sold in a private transaction in which the transferor's rights under Section 2 of this Agreement are not assigned. "REGISTRATION EXPENSES" means all expenses incurred by the Company in complying with Section 2.2 hereof, including, without limitation, all registration and filing fees, printing expenses, fees and disbursements of counsel for the Company, reasonable fees and disbursements not to exceed twenty-five thousand dollars ($25,000) of a single special counsel for the Holders, blue sky fees and expenses 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). "SEC" or "COMMISSION" means the Securities and Exchange Commission. "SECURITIES ACT" means the Securities Act of 1933, as amended. "SELLING EXPENSES" means all underwriting discounts and selling commissions applicable to the sale. "XYRIS PURCHASE AGREEMENTS" means the 1999 Xyris Purchase Agreement and the Series A Preferred Stock Purchase Agreement, dated June 1, 1998 between the Company, Xyris Corporation and Bay City Capital. SECTION 2. REGISTRATION; RESTRICTIONS ON TRANSFER 2.1 RESTRICTIONS ON TRANSFER. (a) The Holder agrees not to make any disposition of all or any portion of the Registrable Securities unless and until: (i) There is then in effect a registration statement under the Securities Act covering such proposed disposition and such disposition is made in accordance with such registration statement or such proposed disposition is otherwise exempt from registration under the Securities Act; or (ii) (A) The transferee has agreed in writing to be bound by the terms of this Agreement, (B) such Holder shall have notified the Company of the proposed disposition and shall have furnished the Company with a detailed statement of the circumstances surrounding the proposed disposition, and (C) if requested by the Company, such Holder shall have furnished the Company with an opinion of counsel, reasonably satisfactory to the Company, that such disposition will not require registration of such shares under the Securities Act. 2. 20 (iii) Notwithstanding the provisions of paragraphs (i) and (ii) above, no such registration statement or opinion of counsel shall be necessary for a transfer by a Holder which is (A) a partnership to its partners or former partners in accordance with partnership interests, (B) a corporation to its shareholders in accordance with their interest in the corporation, (C) a limited liability company to its members or former members in accordance with their interest in the limited liability company, (D) to an entity of which a majority of the equity and voting interest is owned by such Holder, directly or indirectly (an "AFFILIATE"), or (E) to the Holder's family member or trust for the benefit of an individual Holder; provided that in each case the transferee will be subject to the terms of this Agreement to the same extent as if he were an original Holder hereunder. (b) Each certificate representing Registrable Securities shall (unless otherwise permitted by the provisions of the Agreement) be stamped or otherwise imprinted with a legend substantially similar to the following (in addition to any legend required under applicable state securities laws): THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT OR UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY AND ITS COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED. (c) The Company shall be obligated to reissue promptly unlegended certificates at the request of any holder thereof if the holder shall have obtained an opinion of counsel (which counsel may be counsel to the Company) reasonably acceptable to the Company to the effect that the securities proposed to be disposed of may lawfully be so disposed of without registration, qualification or legend. (d) Any legend endorsed on an instrument pursuant to applicable state securities laws and the stop-transfer instructions with respect to such securities shall be removed upon receipt by the Company of an order of the appropriate blue sky authority authorizing such removal. 2.2 PIGGYBACK REGISTRATIONS. The Company shall notify all Holders of Registrable Securities in writing at least twenty-one (21) days prior to the filing of any registration statement under the Securities Act for purposes of a public offering of securities of the Company (including, but not limited to, registration statements relating to secondary offerings of securities of the Company, but excluding registration statements relating to employee benefit plans or with respect to corporate reorganizations or other transactions under Rule 145 of the Securities Act) and will afford each such Holder an opportunity to include in such registration statement all or part of such Registrable Securities held by such Holder. Each Holder desiring to include in any such registration statement all or any part of the Registrable Securities held by it shall, within fifteen (15) days after the above-described notice from the Company, so notify the Company in 3. 21 writing. Such notice shall state the intended method of disposition of the Registrable Securities by such Holder. If a Holder decides not to include all of its Registrable Securities in any registration statement thereafter filed by the Company, such Holder shall nevertheless continue to have the right to include any Registrable Securities in any subsequent registration statement or registration statements as may be filed by the Company with respect to offerings of its securities, all upon the terms and conditions set forth herein. (a) UNDERWRITING. If the registration statement under which the Company gives notice under this Section 2.2 is for an underwritten offering, the Company shall so advise the Holders of Registrable Securities. In such event, the right of any such Holder to be included in a registration pursuant to this Section 2.2 shall be conditioned upon such Holder's participation in such underwriting and the inclusion of such Holder's Registrable Securities in the underwriting to the extent provided herein. All Holders proposing to distribute their Registrable Securities through such underwriting shall enter into an underwriting agreement in customary form with the underwriter or underwriters selected for such underwriting by the Company. Notwithstanding any other provision of the Agreement, if the underwriter determines in good faith that marketing factors require a limitation of the number of shares to be underwritten, the number of shares that may be included in the underwriting shall be allocated, first, to the Company; second, to the Holders and any other shareholders of the Company currently having registration rights on a pro rata basis based on the total number of Registrable Securities held by the Holders and the total number of registrable securities held by such other shareholders; and third, to any shareholder of the Company (other than a Holder) on a pro rata basis. No such reduction shall (i) reduce the securities being offered by the Company for its own account to be included in the registration and underwriting, or (ii) reduce the amount of securities of the selling Holders included in the registration below twenty-five percent (25%) of the total amount of securities included in such registration, unless such registration does not include shares of any other selling shareholders, in which event any or all of the Registrable Securities of the Holders may be excluded in accordance with the immediately preceding sentence. In no event will shares of any other selling shareholder (other than those presently entitled to registration rights) be included in such registration which would reduce the number of shares which may be included by Holders without the written consent of Holders of not less than sixty-six and two-thirds percent (66 2/3%) of the Registrable Securities proposed to be sold in the offering. If any Holder disapproves of the terms of any such underwriting, such Holder may elect to withdraw therefrom by written notice to the Company and the underwriter, delivered at least ten (10) business days prior to the effective date of the registration statement. Any Registrable Securities excluded or withdrawn from such underwriting shall be excluded and withdrawn from the registration. For any Holder which is a partnership or corporation, the partners, retired partners and shareholders of such Holder, or the estates and family members of any such partners and retired partners and any trusts for the benefit of any of the foregoing person shall be deemed to be a single "Holder", and any pro rata reduction with respect to such "Holder" shall be based upon the aggregate amount of shares carrying registration rights owned by all entities and individuals included in such "Holder," as defined in this sentence. (b) RIGHT TO TERMINATE REGISTRATION. The Company shall have the right to terminate or withdraw any registration initiated by it under this Section 2.2 prior to the effectiveness of such registration whether or not any Holder has elected to include securities in 4. 22 such registration. The Registration Expenses of such withdrawn registration shall be borne by the Company in accordance with Section 2.3 hereof. 2.3 FORM S-3 REGISTRATION. In case the Company shall receive from any Holder or Holders of Registrable Securities a written request that the Company effect a registration on Form S-3 (or any successor to Form S-3) or any similar short-form registration statement and any related qualification or compliance with respect to all or a part of the Registrable Securities owned by such Holder or Holders, the Company will: (a) promptly give written notice of the proposed registration, and any related qualification or compliance, to all other holders of registrable securities; and (b) as soon as practicable, effect such registration and all such qualifications and compliances as may be so requested and as would permit or facilitate the sale and distribution of all or such portion of such Holder's or Holders' Registrable Securities as are specified in such request, together with all or such portion of the registrable securities of any other holder or holders joining in such request as are specified in a written request given within fifteen (15) days after receipt of such written notice from the Company; provided, however, that the Company shall not be obligated to effect any such registration, qualification or compliance pursuant to this Section 2.3: (i) if Form S-3 (or any successor or similar form) is not available for such offering by the Holders, or (ii) if the Holders, together with the holders of any other securities of the Company entitled to inclusion in such registration, propose to sell Registrable Securities and such other securities (if any) at an aggregate price to the public of less than one million dollars ($1,000,000), or (iii) if within thirty (30) days of receipt of a written request from the Holders pursuant to this Section, the Company gives notice to the Holders of the Company's intention to make a public offering within ninety (90) days; (iv) if the Company shall furnish to the Holders a certificate signed by the Chairman of the Board of Directors of the Company stating that in the good faith judgment of the Board of Directors of the Company, it would be seriously detrimental to the Company and its shareholders for such Form S-3 registration to be effected at such time, in which event the Company shall have the right to defer the filing of the Form S-3 registration statement for a period of not more than ninety (90) days after receipt of the request of the Holder or Holders under this Section 2.4; provided, that such right to delay a request shall be exercised by the Company not more than once in any twelve (12) month period, or (v) if the Company has already effected one (1) registration on Form S-3 for the Holders pursuant to this Section 2.3, or (vi) in any particular jurisdiction in which the Company would be required to qualify to do business or to execute a general consent to service of process in effecting such registration, qualification or compliance. 5. 23 Notwithstanding the foregoing, in the event that the Holder or Holders of Registrable Securities request the withdrawal of a registration being made pursuant to this Section 2.3 and, in such withdrawal request, the Holder(s) state that it first learned (within seven (7) days of the date of such withdrawal request) of a Material Adverse Event (which is specified in reasonable detail in such withdrawal request) not known to the Holder(s) at the time of its request for registration of their Registrable Securities pursuant to this Section 2.3, then the Holder(s) shall retain its rights to request registration pursuant to this Section 2.3 as if it had not previously requested registration hereunder. (c) Subject to the foregoing, the Company shall file a Form S-3 registration statement covering the Registrable Securities and other securities so requested to be registered as soon as practicable after receipt of the request or requests of the Holders. 2.4 EXPENSES OF REGISTRATION. Except as specifically provided herein, all Registration Expenses incurred in connection with any registration under Section 2.2 or 2.3 herein shall be borne by the Company. All Selling Expenses incurred in connection with any registrations hereunder, shall be borne by the holders of the securities so registered pro rata on the basis of the number of shares so registered. 2.5 OBLIGATIONS OF THE COMPANY. Whenever required to effect the registration of any Registrable Securities, the Company shall, as expeditiously as reasonably possible: (a) Prepare and file with the SEC a registration statement with respect to such Registrable Securities and use all reasonable efforts to cause such registration statement to become effective, and, upon the request of the Holders of a majority of the Registrable Securities registered thereunder, keep such registration statement effective for up to ninety (90) days or, if earlier, until the Holder or Holders have completed the distribution related thereto. The Company shall not be required to file, cause to become effective or maintain the effectiveness of any registration statement that contemplates a distribution of securities on a delayed or continuous basis pursuant to Rule 415 under the Securities Act. (b) Prepare and file with the SEC such amendments and supplements to such registration statement and the prospectus used in connection with such registration statement as may be necessary to comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration statement for the period set forth in paragraph (a) above. (c) Furnish to the Holders such number of copies of a prospectus, including a preliminary prospectus, in conformity with the requirements of the Securities Act, and such other documents as they may reasonably request in order to facilitate the disposition of Registrable Securities owned by them. (d) Use its reasonable best efforts to register and qualify the securities covered by such registration statement under such other securities or Blue Sky laws of such jurisdictions as shall be reasonably requested by the Holders; 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. 6. 24 (e) In the event of any underwritten public offering, enter into and perform its obligations under an underwriting agreement, in usual and customary form, with the managing underwriter(s) of such offering. Each Holder participating in such underwriting shall also enter into and perform its obligations under such an agreement. (f) Notify each Holder of Registrable Securities covered by such registration statement at any time when a prospectus relating thereto is required to be delivered under the Securities Act of the happening of any event as a result of which the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing. (g) Use its best efforts to furnish, on the date that such Registrable Securities are delivered to the underwriters for sale, if such securities are being sold through underwriters, (i) an opinion, dated as of such date, of the counsel representing the Company for the purposes of such registration, in form and substance as is customarily given to underwriters in an underwritten public offering, addressed to the underwriters, if any, and (ii) a letter dated as of such date, from the independent certified public accountants of the Company, in form and substance as is customarily given by independent certified public accountants to underwriters in an underwritten public offering addressed to the underwriters. 2.6 TERMINATION OF REGISTRATION RIGHTS. All registration rights granted under this Section 2 shall terminate and be of no further force and effect two (2) years after the date of this Agreement. In addition, a Holder's registration rights shall expire if all Registrable Securities held by and issuable to such Holder (and its affiliates, partners, former partners, members and former members) may be sold under Rule 144 during any ninety (90) day period. 2.7 DELAY OF REGISTRATION; FURNISHING INFORMATION. (a) No Holder shall have any right to obtain or seek an injunction restraining or otherwise delaying any such registration as the result of any controversy that might arise with respect to the interpretation or implementation of this Section 2. (b) It shall be a condition precedent to the obligations of the Company to take any action pursuant to Section 2.2 or 2.3 that the selling Holders shall furnish to the Company such information regarding themselves, the Registrable Securities held by them and the intended method of disposition of such securities as shall be required to effect the registration of their Registrable Securities. 2.8 INDEMNIFICATION. In the event any Registrable Securities are included in a registration statement under Section 2.2.or 2.3: (a) To the extent permitted by law, the Company will indemnify and hold harmless each Holder, the partners, officers and directors of each Holder, any underwriter (as defined in the Securities Act) for such Holder and each person, if any, who controls such Holder or underwriter within the meaning of the Securities Act or the Exchange Act, against any losses, claims, damages, or liabilities (joint or several) to which they may become subject under the Securities Act, the Exchange Act or other federal or state law, insofar as such losses, claims, 7. 25 damages or liabilities (or actions in respect thereof) arise out of or are based upon any of the following statements, omissions or violations (collectively a "VIOLATION") by the Company: (i) any untrue statement or alleged untrue statement of a material fact contained in such registration statement, including any preliminary prospectus or final prospectus contained therein or any amendments or supplements thereto, (ii) the omission or alleged omission to state therein a material fact required to be stated therein, or necessary to make the statements therein not misleading, or (iii) any violation or alleged violation by the Company of the Securities Act, the Exchange Act, any state securities law or any rule or regulation promulgated under the Securities Act, the Exchange Act or any state securities law in connection with the offering covered by such registration statement; and the Company will pay as incurred to each such Holder, partner, officer, director, underwriter or controlling person for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action; provided however, that the indemnity agreement contained in this Section 2.7(a) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of the Company, which consent shall not be unreasonably withheld, nor shall the Company be liable in any such case for any such loss, claim, damage, liability or action to the extent that it arises out of or is based upon a Violation which occurs in reliance upon and in conformity with written information furnished expressly for use in connection with such registration by such Holder, partner, officer, director, underwriter or controlling person of such Holder. (b) To the extent permitted by law, each Holder will, if Registrable Securities held by such Holder are included in the securities as to which such registration is being effected, indemnify and hold harmless the Company, each of its directors, its officers and each person, if any, who controls the Company within the meaning of the Securities Act, any underwriter and any other Holder selling securities under such registration statement or any of such other Holder's partners, directors or officers or any person who controls such Holder, against any losses, claims, damages or liabilities (joint or several) to which the Company or any such director, officer, controlling person, underwriter or other such Holder, or partner, director, officer or controlling person of such other Holder may become subject under the Securities Act, the Exchange Act or other federal or state law, insofar as such losses, claims, damages or liabilities (or actions in respect thereto) arise out of or are based upon any Violation, in each case to the extent (and only to the extent) that such Violation occurs in reliance upon and in conformity with written information furnished by such Holder under an instrument duly executed by such Holder and stated to be specifically for use in connection with such registration; and each such Holder will pay as incurred any legal or other expenses reasonably incurred by the Company or any such director, officer, controlling person, underwriter or other Holder, or partner, officer, director or controlling person of such other Holder in connection with investigating or defending any such loss, claim, damage, liability or action if it is judicially determined that there was such a Violation; provided, however, that the indemnity agreement contained in this Section 2.7(b) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of the Holder, which consent shall not be unreasonably withheld; provided further, that in no event shall any indemnity under this Section 2.7 exceed the net proceeds from the offering received by such Holder. (c) Promptly after receipt by an indemnified party under this Section 2.7 of notice of the commencement of any action (including any governmental action), such 8. 26 indemnified party will, if a claim in respect thereof is to be made against any indemnifying party under this Section 2.7, deliver to the indemnifying party a written notice of the commencement thereof and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume the defense thereof with counsel mutually satisfactory to the parties; provided, however, that an indemnified party shall have the right to retain its own counsel, with the fees and expenses to be paid by the indemnifying party, if representation of such indemnified party by the counsel retained by the indemnifying party would be inappropriate due to actual or potential differing interests between such indemnified party and any other party represented by such counsel in such proceeding. The failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such action, if materially prejudicial to its ability to defend such action, shall relieve such indemnifying party of any liability to the indemnified party under this Section 2.7, but the omission so to deliver written notice to the indemnifying party will not relieve it of any liability that it may have to any indemnified party otherwise than under this Section 2.7. (d) If the indemnification provided for in this Section 2.7 is held by a court of competent jurisdiction to be unavailable to an indemnified party with respect to any losses, claims, damages or liabilities referred to herein, the indemnifying party, in lieu of indemnifying such indemnified party thereunder, shall to the extent permitted by applicable law contribute to the amount paid or payable by such indemnified party as a result of such loss, claim, damage or liability in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and of the indemnified party on the other in connection with the Violation(s) that resulted in such loss, claim, damage or liability, as well as any other relevant equitable considerations. The relative fault of the indemnifying party and of the indemnified party shall be determined by a court of law by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission to state a material fact relates to information supplied by the indemnifying party or by the indemnified party and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission; provided, that in no event shall any contribution by a Holder hereunder exceed the net proceeds from the offering received by such Holder. (e) The obligations of the Company and Holders under this Section 2.7 shall survive completion of any offering of Registrable Securities in a registration statement and the termination of this Agreement. No indemnifying party, in the defense of any such claim or litigation, shall, except with the consent of each indemnified party, consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release from all liability in respect to such claim or litigation. 2.9 ASSIGNMENT OF REGISTRATION RIGHTS. The rights to cause the Company to register Registrable Securities pursuant to this Section 2 may be assigned by Bay City Capital to a transferee or assignee which is an affiliate, subsidiary, parent, general partner, limited partner, retired partner, member or retired member of Bay City Capital; provided, however, (i) Bay City Capital shall, within ten (10) days after such transfer, furnish to the Company written notice of the name and address of such transferee or assignee and the securities with respect to which such 9. 27 registration rights are being assigned and (ii) such transferee shall agree to be subject to all restrictions set forth in this Agreement. 2.10 "MARKET STAND-OFF" AGREEMENT; AGREEMENT TO FURNISH INFORMATION. Each Holder hereby agrees that such Holder shall not sell, transfer, make any short sale of, grant any option for the purchase of, or enter into any hedging or similar transaction with the same economic effect as a sale, any Common Stock (or other securities) of the Company held by such Holder (other than those included in the registration) for a period specified by the representative of the underwriters of Common Stock (or other securities) of the Company not to exceed ninety (90) days following the effective date of a registration statement of the Company filed under the Securities Act; provided that all officers and directors of the Company enter into similar agreements. Each Holder agrees to execute and deliver such other agreements as may be reasonably requested by the Company or the underwriter which are consistent with the foregoing or which are necessary to give further effect thereto. In addition, if requested by the Company or the representative of the underwriters of Common Stock (or other securities) of the Company, each Holder shall provide, within ten (10) days of such request, such information as may be required by the Company or such representative in connection with the completion of any public offering of the Company's securities pursuant to a registration statement filed under the Securities Act. The obligations described in this Section 2.10 shall not apply to a registration relating solely to employee benefit plans on Form S-1 or Form S-8 or similar forms that may be promulgated in the future, or a registration relating solely to a SEC Rule 145 transaction on Form S-4 or similar forms that may be promulgated in the future. The Company may impose stop-transfer instructions with respect to the shares of Common Stock (or other securities) subject to the foregoing restriction until the end of said ninety (90) day period. 2.11 RULE 144 REPORTING. With a view to making available to the Holders the benefits of certain rules and regulations of the SEC which may permit the sale of the Registrable Securities to the public without registration, the Company agrees to use its best efforts to: (a) Make and keep public information available, as those terms are understood and defined in SEC Rule 144 or any similar or analogous rule promulgated under the Securities Act, at all times after the effective date of the first registration filed by the Company for an offering of its securities to the general public; (b) File with the SEC, in a timely manner, all reports and other documents required of the Company under the Exchange Act; and (c) So long as a Holder owns any Registrable Securities, furnish to such Holder forthwith upon request: a written statement by the Company as to its compliance with the reporting requirements of said Rule 144 of the Securities Act, and of the Exchange Act (at any time after it has become subject to such reporting requirements); a copy of the most recent annual or quarterly report of the Company; and such other reports and documents as a Holder may reasonably request in availing itself of any rule or regulation of the SEC allowing it to sell any such securities without registration. 10. 28 SECTION 3. MISCELLANEOUS 3.1 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 entered into and to be performed entirely within California. 3.2 SURVIVAL. The representations, warranties, covenants, and agreements made herein shall survive any investigation made by any Holder and the closing of the transactions contemplated by the 1999 Xyris Purchase Agreement. All statements as to factual matters contained in any certificate or other instrument delivered by or on behalf of the Company pursuant hereto in connection with the transactions contemplated hereby shall be deemed to be representations and warranties by the Company hereunder solely as of the date of such certificate or instrument. 3.3 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 and shall inure to the benefit of and be enforceable by each person who shall be a holder of Registrable Securities from time to time; provided, however, that prior to the receipt by the Company of adequate written notice of the transfer of any Registrable Securities specifying the full name and address of the transferee, the Company may deem and treat the person listed as the holder of such shares in its records as the absolute owner and holder of such shares for all purposes, including the payment of dividends or any redemption price. 3.4 ENTIRE AGREEMENT. This Agreement, the 1999 Xyris Purchase Agreement and the side letter dated of even date herewith between Bay City Capital and the Company (the "SIDE LETTER") and the other documents delivered pursuant thereto constitute the full and entire understanding and agreement between the parties with regard to the subjects hereof and thereof and no party shall be liable or bound to any other in any manner by any representations, warranties, covenants and agreements except as specifically set forth herein and therein. 3.5 SEVERABILITY. In the event one or more of the provisions of this Agreement should, for any reason, be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality, or unenforceability shall not affect any other provisions of this Agreement, and this Agreement shall be construed as if such invalid, illegal or unenforceable provision had never been contained herein. 3.6 AMENDMENT AND WAIVER. (a) Except as otherwise expressly provided, this Agreement may be amended or modified only upon the written consent of the Company and each of the holders of the Registrable Securities. (b) Except as otherwise expressly provided, the obligations of the Company and the rights of the Holders under this Agreement may be waived only with the written consent of each of the holders of the Registrable Securities. 11. 29 3.7 DELAYS OR OMISSIONS. It is agreed that no delay or omission to exercise any right, power, or remedy accruing to any Holder, upon any breach, default or noncompliance of the Company under this Agreement shall impair any such right, power, or remedy, nor shall it be construed to be a waiver of any such breach, default or noncompliance, or any acquiescence therein, or of any similar breach, default or noncompliance thereafter occurring. It is further agreed that any waiver, permit, consent, or approval of any kind or character on any Holder's part of any breach, default or noncompliance under the Agreement or any waiver on such Holder's part of any provisions or conditions of this Agreement must be in writing and shall be effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement, by law, or otherwise afforded to Holders, shall be cumulative and not alternative. 3.8 NOTICES. All notices required or permitted hereunder shall be in writing and shall be deemed effectively given: (a) upon personal delivery to the party to be notified, (b) when sent by confirmed telex or facsimile if sent during normal business hours of the recipient; if not, then on the next business day, (c) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (d) one (1) day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications shall be sent to the party to be notified at the address as set forth on the signature pages hereof or at such other address as such party may designate by ten (10) days advance written notice to the other parties hereto. 3.9 ATTORNEYS' FEES. In the event that any suit or action is instituted to enforce any provision in this Agreement, the prevailing party in such dispute shall be entitled to recover from the losing party all fees, costs and expenses of enforcing any right of such prevailing party under or with respect to this Agreement, including without limitation, such reasonable fees and expenses of attorneys and accountants, which shall include, without limitation, all fees, costs and expenses of appeals. 3.10 TITLES AND SUBTITLES. The titles of the sections and subsections of this Agreement are for convenience of reference only and are not to be considered in construing this Agreement. 3.11 COUNTERPARTS. This Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which together shall constitute one instrument. 12. 30 IN WITNESS WHEREOF, the parties hereto have executed this REGISTRATION RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof. AXYS PHARMACEUTICALS, INC. BAY CITY CAPITAL FUND I By: By: --------------------------------- -------------------------------- Title: Title: --------------------------------- -------------------------------- Address: 180 Kimball Way Address: 750 Battery Street, Suite 600 South San Francisco, CA 94080 San Francisco, California 94111 Attn: Chief Financial Officer Attn: Roger Salquist FAX: (650) 829-1001 FAX: (415) 837-0996 REGISTRATION RIGHTS AGREEMENT SIGNATURE PAGE EX-10.99 4 THIRD AMENDMENT TO EXPANSION LEASE 1 EXHIBIT 10.99 THIRD AMENDMENT TO EXPANSION LEASE THIS THIRD AMENDMENT TO EXPANSION LEASE ("Amendment"), dated and effective as of August 24, 1998 (the "Effective Date"), is entered into by and between SEQUANA THERAPEUTICS, INC., a California corporation, doing business as AXYS PHARMACEUTICALS, INC. ("Tenant"), and ARE-11099 NORTH TORREY PINES, LLC, a Delaware limited liability company, successor in interest to ALEXANDRIA REAL ESTATE EQUITIES, INC., formerly HEALTH SCIENCE PROPERTIES, INC., a Maryland corporation ("Landlord") in connection with the following: A. Landlord and Tenant are parties to that certain Expansion Lease, dated as of November 20, 1995, as amended by that certain First Amendment to Expansion Lease dated as of October __, 1996, and by that certain Second Amendment to Expansion Lease dated as of May 20, 1997 (as amended, the "Lease"), pursuant to which Tenant leases from Landlord certain premises (the "Demised Premises") in a building located at 11099 North Torrey Pines Road, La Jolla, California (the "Building"), and more particularly described in the Lease. All capitalized terms used but not otherwise defined herein shall have the meanings given them in the Lease. B. Landlord has agreed, among other things, to lease to Tenant the suite in the Building currently designated as Suite 100, as outlined on Exhibit A attached hereto (the "Additional Space"), and Tenant has agreed to accept such Additional Space. C. Landlord and Tenant now desire to amend the Lease to reflect the lease of the Additional Space to Tenant upon the terms and conditions set forth herein. NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and the mutual covenants contained herein, the parties hereto hereby agree as follows: 1. AMENDMENT TO LEASE. 1.1 Effective from and after the Effective Date, Exhibit A-2 to the Lease is hereby replaced in its entirety with Exhibit B attached hereto. 1.2 Section 2.1.2 of the Lease is hereby amended in its entirety, effective from and after the Effective Date, to read as follows: "Designation of Demised Premises:
Suite Floor ----- ----- 1. Suite 100 First 2. Suites 160 & 160-A First 3. Suite 160 Exp. First 4. Suite 200 Second 5. Suite 210 Second 6. Suite 210 Exp. Second 7. Suite 220 Second 8. Suite 250 Second 9. Suite 280 Second 10. Suite 290 Second
1.3 Section 2.1.3(a) of the Lease is hereby amended in its entirety, effective from and after the Effective Date, to read as follows: "Rentable Area of the Demised Premises: 60,056 total sq. ft. as follows: 2 1. Suite 100: 4,508 sq. ft. 2. Suites 160 & 160-A: 25,063 sq. ft. 3. Suite 160 Exp.: 1,105 sq. ft. 4. Suite 200: 5,821 sq. ft. 5. Suite 210: 2,558 sq. ft. 6. Suite 210 Exp.: 632 sq. ft. 7. Suite 220: 4,403 sq. ft. 8. Suite 250: 2,981 sq. ft. 9. Suite 280: 5,546 sq. ft. 10. Suite 290: 7,439 sq. ft." 1.4 Section 2.1.3(b) of the Lease is hereby amended in its entirety, effective from and after the Effective Date, to read as follows: "Rentable Area of the Demised Premises: 60,056 total sq. ft. as follows: 1.5 Section 2.1.3(c) of the Lease is hereby amended in its entirety, effective from and after the Effective Date, to read as follows: "Useable Area of the Demised Premises: 52,638 total sq. ft. as follows: 1. Suites 100: 3,922 sq. ft. 2. Suites 160 & 160-A: 22,339 sq. ft. 3. Suite 160 Exp.: 962 sq. ft. 4. Suite 200: 4,992 sq. ft. 5. Suite 210: 2,194 sq. ft. 6. Suite 210 Exp.: 541 sq. ft. 7. Suite 220: 3,780 sq. ft. 8. Suite 250: 2,515 sq. ft. 9. Suite 280: 4,866 sq. ft. 10. Suite 290: 6,527 sq. ft." 1.6 Section 2.1.4 of the Lease is hereby amended in its entirety, effective from and after the Effective Date, to read as follows: "Basic Annual Rent: For all of the Demised Premises: (60,056 sq. ft.) x ($1.8567 per sq. ft.) x (12 months) = $1,338,047.68." 1.7 Section 2.1.5 of the Lease is hereby amended in its entirety, effective from and after the Effective Date, to read as follows: "Monthly Rental Installments of Basic Annual Rent: For all of the Demised Premises: (60,056 sq. ft.) x ($1.8567 per sq. ft.) = $111,503.97." 1.8 Section 2.1.6 of the Lease is hereby amended in its entirety, effective from and after the Effective Date, to read as follows: "Tenant's Pro Rata Share of the Building: 69.06%" 1.9 Section 2.1.10 of the Lease is hereby amended in its entirety, effective from and after the Effective Date, to read as follows: "Address for Rent Payment: 135 N. Los Robles Avenue, Suite 250 Pasadena, CA 91101 Attention: Accounts Receivable 3 Address for Notices to Landlord: 135 N. Los Robles Avenue, Suite 250 Pasadena, CA 91101 Attention: General Counsel Address for Notices to Tenant: 11099 North Torrey Pines Road, Suite 160 La Jolla, California, 92037" 2. IMPROVEMENTS; COMMENCEMENT. 2.1 Tenant acknowledges that: (i) the occupancy of Suite 100 is limited to a maximum of 30 persons as a result of the current exiting from such Suite, and (ii) a second one hour fire rated exit cannot practically be provided at this time. Landlord and Tenant agree that Landlord shall pay one half the cost (not to exceed $8,000) of providing a non-fire rated exit as described on the attached Exhibit C. In addition, Landlord shall provide to Tenant an allowance of $21,591.00 to be used by Tenant for improvements to Suite 100. Upon Landlord's payment of such amount at the direction of Tenant for such improvements to Suite 100, Landlord shall, for all purposes of the Lease be deemed to have fully discharged all of its obligations under Section 14.1 of the Lease with respect to Suite 100. Tenant acknowledges and agrees that Landlord's sole obligation under Section 14.1 of the Lease with respect to Suite 100 shall be to make such allowance available to Tenant. 2.2 Notwithstanding anything to the contrary contained herein, Tenant shall have no obligation to pay Rent or perform any other obligation of the Lease with respect to Suite 100 until 30 days after Landlord tenders possession of Suite 100 to Tenant. 3. MISCELLANEOUS: 3.1 This Amendment shall be deemed to have been executed and delivered within the State of California, and the rights and obligations of the parties hereto shall be construed and enforced in accordance with, and governed by, the laws of the State of California. 3.2 This Amendment is the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior and contemporaneous oral and written agreements and discussions. This Amendment may be amended only by an agreement in writing, signed by the parties hereto. 3.3 This Amendment is binding upon and shall inure to the benefit of the parties hereto, their respective agents, employees, representatives, officers, directors, divisions, subsidiaries, affiliates, assigns, heirs, successors in interest and shareholders. 3.4 Each party has cooperated in the drafting and preparation of this Amendment. Hence, in any construction to be made of this Amendment, the same shall not be construed against any party. 3.5 Each term of this Amendment is contractual and not merely a recital. 3.6 This Amendment may be executed in counterparts, and when each party has signed and delivered at least one such counterpart, each counterpart shall be deemed an original, and, when taken together with other signed counterparts, shall constitute one Amendment, which shall be binding upon and effective as to all parties. 3.7 The unenforceability of a portion of this Amendment shall not affect the enforceability of the remainder of this Amendment. 4 3.8 The parties will execute all such further and additional documents as shall be reasonable, convenient, necessary or desirable to carry out the provisions of this Amendment. 3.9 Except as specifically amended or modified by this Amendment, the Lease (including, without limitation, the First Amendment and the Second Amendment) remains in full force and effect. 3.10 EACH PARTY ACKNOWLEDGES THAT IT HAS HAD ADEQUATE OPPORTUNITY TO CONSULT WITH LEGAL COUNSEL OF ITS CHOOSING IN CONNECTION WITH THE EXECUTION HEREOF AND HAS DONE SO, OR VOLUNTARILY ELECTED NOT TO DO SO. IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the date first written above. "Tenant" SEQUANA THERAPEUTICS, INC., a California corporation By: Fred Ruegsegger ------------------------------------- Its: Sr VP & CFO ------------------------------------ "Landlord" ARE-11099 NORTH TORREY PINES, LLC, a Delaware limited liability company By: ALEXANDRIA REAL ESTATE EQUITIES, INC., a Maryland corporation By: Lynne Anne Shapiro ------------------------------ Its: General Counsel ------------------------------ EX-10.100 5 FOURTH AMENDMENT TO EXPANSION LEASE 1 EXHIBIT 10.100 FOURTH AMENDMENT TO EXPANSION LEASE THIS FOURTH AMENDMENT TO EXPANSION LEASE ("Amendment"), dated and effective as of March 31, 1999 (the "Effective Date"), is entered into by and between SEQUANA THERAPEUTICS, INC., a California corporation, doing business as AXYS PHARMACEUTICALS, INC. ("Tenant"), and ARE - 11099 NORTH TORREY PINES, LLC, a Delaware limited liability company, successor-in-interest to ALEXANDRIA REAL ESTATE EQUITIES, INC., formerly HEALTH SCIENCE PROPERTIES, INC., a Maryland corporation ("Landlord") in connection with the following: A. Landlord and Tenant are parties to that certain Expansion Lease, dated as of November 20, 1995, as amended by that certain First Amendment to Expansion Lease dated as of October __, 1996, by that certain Second Amendment to Expansion Lease dated as of May 20, 1997, and by that certain Third Amendment to Expansion Lease ("Third Amendment") dated as of August 24, 1998 (as amended, the "Lease"), pursuant to which Tenant leases from Landlord certain premises (the "Demised Premises") in a building located at 11099 North Torrey Pines Road, La Jolla, California (the "Building"), and more particularly described in the Lease. All capitalized terms used but not otherwise defined herein shall have the meanings given them in the Lease. B. Landlord has agreed to provide a tenant improvement allowance to Tenant for a portion of the Demised Premises, conditioned upon Tenant repaying such tenant improvement allowance over the remainder of the term of the Lease, and Tenant has agreed to accept such tenant improvement allowance upon such condition. C. Landlord and Tenant now desire to amend the Lease to reflect Landlord's provision of the tenant improvement allowance to and the amortized repayment thereof by Tenant upon the terms and conditions set forth herein. NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and the mutual covenants contained herein, the parties hereto hereby agree as follows: 1. AMENDMENTS TO LEASE. 1.1 Section 4.6 of the Lease is hereby amended by (i) adding the title "Tenant Improvement Allowances:" at the beginning of such section (after the number of the section), (ii) renumbering the existing text of Section 4.6 as Section 4.6(a), (iii) changing all existing references in the Lease from "Tenant Improvements" to "Suite 160 & 210 Tenant Improvements," (iv) changing all existing references in the Lease from "TI Allowance" to "Suite 160 & 210 TI Allowance," and (v) adding the following as Section 4.6(b): "(b) Landlord shall provide Tenant with a tenant improvement allowance (the "Suite 100 TI Allowance") of up to Three Hundred Thousand Dollars ($300,000) for tenant improvements which Tenant desires to make to Suite 100 (the "Suite 100 TI's"). Such amount shall be paid by Landlord to Tenant in one lump sum payment upon: (i) lien free completion of the Suite 100 TI's, (ii) Tenant's acceptance thereof from the contractor or contractors performing such work, and (iii) presentation to Landlord of lien waivers, receipts for payment and such other evidence of the payment in full of all costs and expenses of the Suite 100 TI's as Landlord shall reasonably request. If the total cost of the Suite 100 TI's exceeds the Suite 100 TI Allowance, the overage shall be the sole responsibility of Tenant, and shall be at Tenant's sole cost and expense. Except for the payment of the Suite 100 TI Allowance and as set forth in the Third Amendment, Landlord shall have no obligation or liability of any kind with respect to the Suite 100 TI's, which shall be subject to all of the approvals and conditions described in Article 17 hereof with respect to Alterations undertaken by Tenant." 1.2 Section 5.2 of the Lease is hereby amended in its entirety, effective from and after the Effective Date, to read as follows: 2 "5.2 In addition to Basic Annual Rent, Tenant agrees to pay to Landlord as additional rent ("Additional Rent") at times hereinafter specified in this Lease (i) Tenant's pro rate share ("Tenant's Pro Rata Share"), as set forth in Section 2.1.6 and as may be subsequently amended, of Operating Expenses as provided in Article 7, (ii) commencing June 1, 1999, tenant improvement rent equal to the actual amount of the Suite 100 TI Allowance actually paid by Landlord, fully amortized, with interest at a rate of 13% per annum, in 31 equal monthly installments commencing June 1, 1999 and ending December 1, 2001 ($11,445.04 per month if the full $300,000 Suite 100 TI Allowance is used by Tenant), and (iii) any other amounts that Tenant assumes or agrees to pay under the provisions of this Lease that are owed to Landlord, including without limitation the cost of utilities not paid by Tenant directly to the supplier and any and all other sums that may become due by reason of any default of Tenant or failure on Tenant's part to comply with the agreements, terms, covenants and conditions of this Lease to be performed by Tenant, after notice and lapse of applicable cure period." 2. MISCELLANEOUS: 2.1 This Amendment shall be deemed to have been executed and delivered within the State of California, and the rights and obligations of the parties hereto shall be construed and enforced in accordance with, and governed by, the laws of the State of California. 2.2 This Amendment is the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior and contemporaneous oral and written agreements and discussions. This Amendment may be amended only by an agreement in writing, signed by the parties hereto. 2.3 This Amendment is binding upon and shall inure to the benefit of the parties hereto, their respective agents, employees, representatives, officers, directors, divisions, subsidiaries, affiliates, assigns, heirs, successors in interest and shareholders. 2.4 Each party has cooperated in the drafting and preparation of this Amendment. Hence, in any construction to be made of this Amendment, the same shall not be construed against any party. 2.5 Each term of this Amendment is contractual and not merely a recital. 2.6 This Amendment may be executed in counterparts, and when each party has signed and delivered at least one such counterpart, each counterpart shall be deemed an original, and, when taken together with other signed counterparts, shall constitute one Amendment, which shall be binding upon and effective as to all parties. 2.7 The unenforceability of a portion of this Amendment shall not affect the enforceability of the remainder of this Amendment. 2.8 The parties will execute all such further and additional documents as shall be reasonable, convenient, necessary or desirable to carry out the provisions of this Amendment. 2.9 Except as specifically amended or modified by this Amendment, the Lease (including, without limitation, the First Amendment, the Second Amendment, and the Third Amendment) remains in full force and effect. 2.10 EACH PARTY ACKNOWLEDGES THAT IT HAS HAD ADEQUATE OPPORTUNITY TO CONSULT WITH LEGAL COUNSEL OF ITS CHOOSING IN CONNECTION WITH THE EXECUTION HEREOF AND HAS DONE SO, OR VOLUNTARILY ELECTED NOT TO DO SO. IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the date first written above. 3 "Tenant" SEQUANA THERAPEUTICS, INC., a California corporation, d/b/a Axys Pharmaceuticals, Inc. By: Daniel H. Petree ----------------------------------- Its: President & COO ----------------------------------- "Landlord" ARE - 11099 NORTH TORREY PINES, LLC, a Delaware limited liability company By: ALEXANDRIA REAL REAL ESTATE EQUITIES, INC., a Maryland corporation By: Lynne Anne Shapiro ---------------------------- Its: General Counsel ---------------------------- EX-10.101 6 FIRST AMENDMENT TO THE RESEARCH AGREEMENT 1 EXHIBIT 10.101 FIRST AMENDMENT TO RESEARCH AGREEMENT THIS FIRST AMENDMENT TO RESEARCH AGREEMENT (the "Amendment") is made and entered into effective as of February 28, 1999, by and between AXYS PHARMACEUTICALS, INC. (formerly known as ARRIS PHARMACEUTICAL CORPORATION), a Delaware corporation having its principal place of business at 180 Kimball Way, South San Francisco, CA 94080 ("Axys"), and PHARMACIA & UPJOHN INC., a Delaware corporation having its principal place of business at 7000 Portage Road, Portage, Michigan 49001 ("P&U"). Axys and P&U may be referred to herein as a "Party" or, collectively, as "Parties". RECITALS A. Axys and P&U entered into a Research Agreement dated February 29, 1996 (the "Agreement"), regarding the provision by Axys to P&U of, among other things, certain libraries of combinatorial chemistry compounds. B. Axys and P&U desire to amend the Agreement to memorialize their agreement to reduce the number of compounds remaining to be delivered to P&U under the Agreement and to revise the delivery schedule for such compounds. NOW, THEREFORE, the Parties agree as follows: 1. AMENDMENT OF THE AGREEMENT The Parties hereby agree to amend the terms of the Agreement as provided below. To the extent that the Agreement is explicitly amended by this Amendment, the terms of the Amendment will control where the terms of the Agreement are contrary to or conflict with the following provisions. Where the Agreement is not explicitly amended, the terms of the Agreement will remain in force. Capitalized terms used in this Amendment that are not otherwise defined herein shall have the same meanings as such terms are defined in the Agreement. 1.1 REVISED DELIVERY OBLIGATION AND SCHEDULE. Notwithstanding any provision of the Agreement, the parties hereby agree that (a) Axys shall only be obligated to develop and provide to P&U an additional 50,000 compounds, in addition to the compounds previously provided to P&U and (b) said 50,000 compounds shall be delivered to P&U prior to December 31, 1999 and such deliveries shall be in the same format as previously agreed to by the parties. Notwithstanding the third sentence of Section 5.2 of the Agreement, Axys shall not be entitled to the one-time supplemental fee of $50,000 upon completion of the delivery of said 50,000 compounds. 1.2 EXTENSION OF TERM. Notwithstanding the first sentence of Section 7.1 of the Agreement, the parties agree that the Agreement shall remain in effect until the earlier of (a) the completion of delivery of said 1. 2 50,000 compounds by Axys under the Agreement or (b) December 31, 1999, unless the parties otherwise agree in writing. 2. MISCELLANEOUS 2.1 COUNTERPARTS. This Amendment may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, the Parties have executed this Amendment in duplicate originals by their authorized officers as of the date and year first above written. PHARMACIA & UPJOHN INC. By: /s/ Douglas R. Morton, PH.D. Title: GVP, Technology Acquisition & Skill- base Development By:________________________________________ Title:_____________________________________ AXYS PHARMACEUTICALS, INC. By: /s/ Frederick J. Ruegsegger Title: Sr. VP & CFO By:________________________________________ Title:_____________________________________ 2. EX-10.102 7 SEVENTH AMENDMENT TO THE LEASE AGREEMENT 1 EXHIBIT 10.102 SEVENTH AMENDMENT TO STANDARD INDUSTRIAL LEASE MULTI-TENANT PAGE 1 OF 1 LEASE DATE FEBRUARY 26, 1993 BETWEEN AXYS PHARMACEUTICALS INC. A CALIFORNIA CORPORATION, SUCCESSOR IN INTEREST TO ARRIS PHARMACEUTICAL CORPORATION, A DELAWARE CORPORATION ("LESSEE") AND SHELTON CORPORATION, A HAWAII CORPORATION, SUCCESSOR IN INTEREST TO SHELTON PROPERTIES, INC., A HAWAII CORPORATION ("LESSOR") THIS SEVENTH AMENDMENT TO STANDARD INDUSTRIAL LEASE MULTI-TENANT Lease Agreement ("Seventh Amendment") is entered into this 13th day of February, 1998, by and between AxyS PHARMACEUTICAL, a Delaware corporation, successor in interest to Arris Pharmaceuticals Inc., a California corporation, ("Lessee") and SHELTON CORPORATION, a Hawaii corporation, successor in interest to, Shelton Properties Inc., a Hawaii corporation ("Lessor"). WHEREAS Lessor and Lessee have entered into that certain Standard Industrial Lease Agreement (Multi-Tenant), dated October 15, 1992 and Amendment No. 1, dated December 29, 1992, Second Amendment, dated August 1, 1993, Third Amendment, dated March 29, 1994, Fourth Amendment, dated October 1, 1994, Fifth Amendment, dated August 18, 1995, and Sixth Amendment, dated March 27, 1996 (the "Lease") under which Lessee leased a portion of that certain Business Park commonly known as Oyster Point Business Park and described as 385 Oyster Point Boulevard, South San Francisco, California (the "Building"), Units 1, 3, 4, 5, 6, 11, 12, 13, and 14, (the "Premises"); and WHEREAS Lessor and Lessee wish to amend the Lease as follows: NOW, THEREFORE, Lessor and Lessee agree as follows: 1) TENANT'S NAME: Tenant's name is hereby changed to AxyS Pharmaceuticals Inc., a California corporation. 2) MAILING ADDRESS FOR ALL CORRESPONDENCE: The mailing address for all correspondence, invoices and notices to tenant under the Lease, Section 23, shall, from and after the effective date of January 21, 1998, be as follows: AxyS Pharmaceuticals, Inc. 180 Kimball Way South San Francisco, CA 94080 Telephone Number: (650) 829-1000 Fax Number: (650) 829-1001 2 4) Except as set forth in this Amendment, all terms and conditions of the Lease shall remain in full force and effect. IN WITNESS WHEREOF, Lessor and Lessee have executed this Seventh Amendment as of the date and year first written above. LESSOR: LESSEE: Shelton Corporation, a Hawaii corporation AxyS Pharmaceuticals Inc., a California corporation By: AMB Institutional Realty Advisors, Limited Partnership, a Delaware limited Partnership, its investment advisor By: AMB Institutional Realty Advisors, Inc., a Maryland corporation, Its: General Partner By: /s/ Gayle P. Starr By: /s/ Frederick Ruegsegger ------------------------------- ------------------------------------ Print Name: Gayle P. Starr Print Name: Frederick Ruegsegger ----------------------- ---------------------------- Its: Regional Manager Its: Senior VP & Chief Financial Officer ------------------------------ ----------------------------------- Date: 3/11/98 Date: 2/24/98 ----------------------------- ---------------------------------- EX-10.103 8 EIGHTH AMENDMENT TO THE LEASE AGREEMENT 1 EXHIBIT 10.103 EIGHTH AMENDMENT TO STANDARD INDUSTRIAL LEASE MULTI-TENANT THIS EIGHTH AMENDMENT TO STANDARD INDUSTRIAL LEASE MULTI-TENANT (this "Eighth Amendment") is made and entered into as of November 18, 1998, by and between SHELTON INTERNATIONAL HOLDINGS, INC., a Hawaii corporation, formerly known as Shelton Properties, Inc., a Hawaii corporation ("Lessor"), and AXYS PHARMACEUTICALS INC., a Delaware corporation, successor in interest to Arris Pharmaceutical Corporation, a Delaware corporation ("Lessee"). RECITALS A. Lessor, as "Lessor", and Lessee, as "Lessee", are parties to that certain Standard Industrial Lease-Multi-Tenant dated October 15, 1992 and First Addendum to Standard Industrial Lease, Second Addendum to Standard Industrial Lease and Third Addendum to Standard Industrial Lease (collectively, the "Original Lease"), as amended by (i) that certain Amendment No. 1 dated as of December 29, 1992, (ii) Second Amendment to Lease Agreement dated as of August 1, 1993, (iii) Third Amendment to Lease dated as of March 29, 1994, (iv) Fourth Amendment to Lease Agreement dated as of October 1, 1994, (v) Fifth Amendment to Lease Agreement dated as of August 28, 1995, (vi) Sixth Amendment to Lease Agreement dated as of March 27, 1996, and (vii) Seventh Amendment to Standard Industrial Lease Multi-Tenant dated as of February 13, 1998 (the Original Lease, as so amended, is referred to herein as the "Lease"), respecting certain "Premises" (as more particularly described in the Lease) commonly known as 385 Oyster Point Boulevard, Units 1, 3, 4, 5, 6, 11, 12, 13 and 14, South San Francisco, California 94080 (collectively, the "Premises"). All initial capitalized terms used herein but not herein defined shall have the meaning ascribed to such terms in the Lease. B. Lessor and Lessee now desire to enter into this Eighth Amendment to amend the Lease to provide for (i) the expansion of the Premises leased pursuant to the Lease to include certain "Additional Premises" (as hereinafter defined); and (ii) the extension of the term of the Lease so as to expire upon October 31, 2002, all upon the terms and subject to the conditions more particularly set forth herein. NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Lessor and Lessee agree as follows: 1. (a) As of the "Additional Premises Commencement Date" (as hereinafter defined), the Premises leased pursuant to the Lease shall include both the existing Premises (as described in Recital A above) plus that certain space containing approximately 2,700 square feet of floor area commonly known as 385 Oyster Point Boulevard, Unite 10 (the "Additional Premises"). The Additional Premises shall be leased by Lessee pursuant hereto in an "AS IS", "WHERE IS" condition, the parties hereby agreeing and acknowledging that neither Lessor nor any of Lessor's employees, agents, representatives or contractors has made any representations or warranties to Lessee as to the Additional Premises, its condition or use by Lessee; excepting only that prior to the delivery of possession of the Additional Premises, Lessor shall remove from the Additional Premises (i) any personal property or debris left in the Additional Premises by the existing tenant thereof upon the surrender of the Additional Premises by such existing tenant and (ii) the temporary office improvements made by the existing tenant of the Additional Premises located in the rear of the original office area within the Additional premises (the parties agreeing that Lessor's obligation shall only include removal of temporary office improvements but not improvements included as a part of such original office build out). As used herein, the "Additional Premises Commencement Date" shall mean the later to occur of December 1, 1998 or such date as Lessor delivers notice to Lessee that the Additional Premises are available for occupancy by Lessee in the condition required by this Eighth Amendment. The parties hereby acknowledge that the Additional Premises are presently leased to and occupied by an existing tenant and, accordingly, Lessor's ability to lease and deliver the Additional Premises pursuant hereto is subject to the condition precedent that Lessor terminate such existing tenant's lease and cause such existing tenant to vacate the Additional Premises (the "Condition Precedent"). Lessor shall not be liable for any failure to satisfy such Condition Precedent or any delay in the delivery of the Additional Premises pursuant hereto, nor shall any such delay affect this Eighth Amendment, except, however, that if such Condition Precedent is not satisfied by February 1, 1999, then, notwithstanding anything to the contrary contained in this Eighth Amendment, either party shall have the right to elect, by written notice 2 delivered to the other party prior to the satisfaction of the Condition Precedent, to nullify and terminate this Eighth Amendment, in which event this Eighth Amendment shall be of no force or effect and neither party shall have any right, obligation or liability hereunder. (b) Lessee's lease of the Additional Premises from and after the Additional Premises Commencement Date pursuant hereto shall be for a term co-terminous with the lease of the remainder of the Premises and shall otherwise be subject to all the terms and conditions of the Lease then applicable to the remainder of the Premises subject to the following: (i) The term of the Lease of the Premises (including the Additional Premises) is hereby extended to expire upon October 21, 2002. (ii) Base Rent payable under the Lease from and after the Additional Premises Commencement Date shall be as follows: from the Additional Premises Commencement Date through and including August 31, 1999, Base Rent shall equal $50,635.32 per month (being the sum of $48,016.32 per month allocable to the Premises other than the Additional Premises plus $2,619.00 per month allocable to the Additional Premises); from September 1, 1999 through and including August 31, 2000, Base Rent shall equal $52,663.98 per month; from September 1, 2000 through and including August 31, 2001, Base Rent shall equal $54,769.46 per month; and from September 1, 2001 through and including October 31, 2002, Base Rent shall equal $56,960.24 per month. (iii) The Additional Premises shall be deemed for all purposes of the Lease (as hereby amended) to contain 2,700 square feet of floor area, such that from and after the Additional Premises Commencement Date, the Premises (including both the original Premises describe in Recital A above and the Additional Premises) shall be deemed to contain 52,200 square feet of floor area, and Lessee's Share of Real Property Taxes shall be deemed to be 12.923% and Lessee's Share of Operating Expenses shall be deemed to be 12.923%. (iv) From and after the Additional Premises Commencement Date, the Security Deposit required of Lessee under the Lease shall be increased to equal $56,139.54 and, accordingly, upon the Additional Premises Commencement Date, Lessee shall deposit with Lessor the sum of $2,619.00 to increase the Security Deposit to such required amount. (v) Lessee shall not cause or permit the Additional Premises to be integrated with, or metered jointly with, the remainder of the Premises for purposes of utility and mechanical systems serving the Additional Premises. (c) Each party represents and warrants that it has had no dealings with any real estate broker or agent in connection with the negotiation of this Eighth Amendment or the lease of the Additional Premises by Lessee pursuant hereto and that it knows of no real estate broker, agent or finder who is or might be entitled to a commission or fee in connection with this Eighth Amendment or the lease of the Additional Premises pursuant hereto. If either party has dealt with any finder or real estate broker with respect to leasing or renting the Additional Premises pursuant hereto, such party shall be solely responsible for the payment of any fees due said finder or broker and shall indemnify, defend and hold harmless the other party from and against any liabilities, damages or claims with respect thereto, including, without limitation, attorneys' fees and costs. 2. This Eighth Amendment may be executed in any number of counterparts, each of which shall be deemed to be an original, but all of which, taken together, shall constitute one and the same instrument. 3. Except as specifically amended by this Eighth Amendment, the Lease shall continue in full force and effect. In the event of any conflict between the provisions of the Lease and the provisions of this Eighth Amendment, the provisions of this Eighth Amendment shall prevail. IN WITNESS WHEREOF, Lessor and Lessee have entered into this Eighth Amendment as of the date first written above. 3 LESSOR: LESSEE: SHELTON INTERNATIONAL HOLDINGS, AXYS PHARMACEUTICALS, INC., INC., a Hawaii corporation a Delaware corporation By: AMB INVESTMENT MANAGEMENT, INC., By: /s/ Frederick Ruegsegger a Maryland corporation, ------------------------------- Its Investment Advisor Print Name: Frederick Ruegsegger ----------------------- By: /s/ Gayle P. Starr Its: Sr. V.P. & CFO --------------------------------- ------------------------------ Print Name: Gayle P. Starr ------------------------- Its: Vice President -------------------------------- EX-10.104 9 NINTH AMENDMENT TO THE LEASE AGREEMENT 1 EXHIBIT 10.104 NINTH AMENDMENT TO STANDARD INDUSTRIAL LEASE MULTI-TENANT THIS NINTH AMENDMENT TO STANDARD INDUSTRIAL LEASE MULTI-TENANT (this "Ninth Amendment") is made and entered into as of November 18, 1998, by and between SHELTON INTERNATIONAL HOLDINGS, INC., a Hawaii corporation, formerly known as Shelton Properties, Inc., a Hawaii corporation ("Lessor"), and AXYS PHARMACEUTICALS INC., a Delaware corporation, successor in interest to Arris Pharmaceutical Corporation, a Delaware corporation ("Lessee"). RECITALS A. Lessor, as "Lessor", and Lessee, as "Lessee", are parties to that certain Standard Industrial Lease-Multi-Tenant dated October 15, 1992 and First Addendum to Standard Industrial Lease, Second Addendum to Standard Industrial Lease and Third Addendum to Standard Industrial Lease (collectively, the "Original Lease"), as amended by (i) that certain Amendment No. 1 dated as of December 29, 1992, (ii) Second Amendment to Lease Agreement dated as of August 1, 1993, (iii) Third Amendment to Lease dated as of March 29, 1994, (iv) Fourth Amendment to Lease Agreement dated as of October 1, 1994, (v) Fifth Amendment to Lease Agreement dated as of August 28, 1995, (vi) Sixth Amendment to Lease Agreement dated as of March 27, 1996 (vii) Seventh Amendment to Standard Industrial Lease Multi-Tenant dated as of February 13, 1998, and (viii) Eighth Amendment to Standard Industrial Lease Multi-Tenant (the "Eighth Amendment") dated as of November 18, 1998 (the Original Lease, as so amended, is referred to herein as the "Lease"), respecting certain "Premises" (as more particularly described in the Lease) commonly known as 385 Oyster Point Boulevard, Units 1, 3, 4, 5, 6, 11, 12, 13 and 14, South San Francisco, California 94080 (collectively, the "Premises"). All initial capitalized terms used herein but not herein defined shall have the meaning ascribed to such terms in the Lease. B. Lessor and Lessee now desire to enter into this Ninth Amendment to amend the Lease to correct certain typographical errors made in the Eighth Amendment, all as more particularly set forth herein. NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Lessor and Lessee agree as follows: 1. (a) The reference in Recital B of the Eighth Amendment to "October 31, 2002" is hereby modified to refer to "November 30, 2003". (b) The reference in Section 1(b)(i) of the Eighth Amendment to "October 31, 2002: is hereby modified to refer to "November 30, 2003". (c) Section 1(b)(ii) of the Eighth Amendment is hereby entirely amended and restated as follows: "Base Rent payable under the Lease from and after the Additional Premises Commencement Date shall be as follows: from the Additional Premises Commencement Date through and including November 30, 1999, Base Rent shall equal $50,635.32 per month (being the sum of $48,016.32 per month allocable to the Premises other than the Additional Premises plus $2,619.00 per month allocable to the Additional Premises); from December 1, 1999 through and including November 30, 2000, Base Rent shall equal $52,663.98 per month; from December 1, 2000 through and including November 30, 2001, Base Rent shall equal $54,769.46 per month; from December 1, 2001 through including November 30, 2002, Base Rent shall equal $56,960.24 per month; and from December 1, 2002 through and including November 30, 2003. Base Rent shall equal $59,238.65 per month." 2. This Ninth Amendment may be executed in any number of counterparts, each of which shall be deemed to be an original, but all of which, taken together, shall constitute one and the same instrument. 3. Except as specifically amended by this Ninth Amendment, the Lease shall continue in full force and effect. In the event of any conflict between the provisions of the Lease and the provisions of this Ninth Amendment, the provisions of this Ninth Amendment shall prevail. 2 IN WITNESS WHEREOF, Lessor and Lessee have entered into this Ninth Amendment as of the date first written above. SHELTON INTERNATIONAL HOLDINGS, INC., AXYS PHARMACEUTICALS INC., a Hawaii corporation a California corporation By: AMB INVESTMENT MANAGEMENT, By: /s/ Frederick Ruegsegger INC. ---------------------------- a Maryland corporation, Print Name: Frederick Ruegsegger Its Investment Advisor -------------------- Its: Sr VP & CFO By: /s/ Gayle P. Starr --------------------------- --------------------------------- Print Name: Gayle P. Starr ------------------------- Its: Vice President -------------------------------- EX-10.105 10 TERMINANTION OF COLLABORATIVE RESEARCH AGREEMENT 1 [*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES AND EXCHANGE ACT OF 1934, AS AMENDED. EXHIBIT 10.105 TERMINATION OF COLLABORATIVE RESEARCH AGREEMENT BETWEEN SEQUANA THERAPEUTICS, INC. AND CORANGE INTERNATIONAL LTD This Termination Agreement, effective as of February 13, 1999 (the "Effective Date"), is made by and between Sequana Therapeutics, Inc., a California corporation (d/b/a Axys Pharmaceuticals, Inc, ("Axys")) and Corange International Ltd., a Bermuda Corporation, ("Corange") and terminates the Collaborative Research Agreement entered into as of the 30th day of June 1995, by and between Axys and Corange, as amended (the "Collaboration Agreement"). WHEREAS, the Parties desire to terminate the Collaboration Agreement. NOW, THEREFORE, in consideration of the foregoing premises and of the mutual promises and covenants set forth below, for other good and valuable consideration, the receipt and sufficiency of which the Parties acknowledge, the Parties intending to be legally bound, agree as follows: 1. Unless otherwise defined in this Termination Agreement, capitalized terms shall have the meanings given to them in the Collaboration Agreement. 2. The Collaboration Agreement is hereby terminated and, except as set forth herein, shall be of no further force or effect, such termination to be effective as of the Effective Date. Except as specifically granted herein, all rights, privileges, obligations and licenses granted under the Collaboration Agreement are canceled. The Parties acknowledge and agree that Articles IX and X of the Collaboration Agreement shall not survive termination of the Collaboration Agreement. 3. (a) Axys shall deliver to Corange or its designee as soon as reasonably practicable following the Effective Date: (i) [*] contained in the Osteoporosis Database and (ii) duplicate copies of all data contained in the Osteoporosis Database excluding any data relating to [*] sample collections, in a file format mutually agreed by the parties. Such delivery shall be performed in accordance with instructions provided by Corange or its designee and at Corange's or its designee's expense. (b) In the event that Axys or Corange or its designee are able to successfully negotiate an agreement with [*] as described in paragraph 8 within [*] following the Effective Date, Axys shall deliver to Corange or its designee as soon as reasonably practicable thereafter, [*] contained in the Osteoporosis Database and duplicate copies of all data relating to the [*] contained in the Osteoporosis Database. In the 2 event that Axys or Corange or its designee are able to successfully negotiate an agreement with [*] as described in paragraph 8 within [*] following the Effective Date, Axys shall deliver to Corange or its designee as soon as reasonably practicable thereafter, [*] contained in the Osteoporosis Database and duplicate copies of all data relating to the [*] contained in the Osteoporosis Database. All such deliveries shall be performed in accordance with instructions provided by Corange or its designee and at Corange's or its designee's expense. 4. Corange or its designee will pay to Axys within thirty (30) days following the Effective Date the sum of [*], upon receipt of invoice. 5. Corange acknowledges and agrees that Axys has fulfilled all of its obligations under the Collaboration Agreement and there are no funds to be returned to Corange under Section 2.4 of the Collaboration Agreement. Axys acknowledges and agrees that Corange has fulfilled all of its obligations under the Collaboration Agreement. Other than the payment obligations contained in this Termination Agreement, Corange has no further payment obligations to Axys under the Collaboration Agreement. 6. Subject to paragraphs 3 and 7, each Party shall have the right to use and exploit the Osteoporosis Database without a duty to account to the other Party for profits derived therefrom. 7. (a) Subject to paragraph 10(a) below, Corange hereby grants to Axys and Axys hereby accepts a perpetual, paid-up, exclusive (even as to Corange), world-wide license (with the right to grant sublicenses) under Corange's interest in the Joint Results to use the [*] data contained in the Osteoporosis Database, for any purpose. (b) Subject to paragraph 10(b) below, Corange hereby grants to Axys and Axys hereby accepts a perpetual, paid-up, exclusive (even as to Corange), world-wide license (with the right to grant sublicenses) under Corange's interest in the Joint Results to use the [*] data contained in the Osteoporosis Database, for any purpose. 8. Promptly following the Effective Date, Axys will endeavor to negotiate on behalf of Corange or its designee, agreements with each of [*] to (i) allow [*] provided to Axys by [*] to be transferred to Corange or its designee; (ii) fix the maximum royalty payment which may be owed by Corange or its designee to [*] by Corange or its designee of diagnostic and therapeutic products which result from the use of samples and data from the [*] and to [*] by Corange or its designee of diagnostic and therapeutic products which result from the use of samples and data from the [*], with [*] as under the agreement between Axys and [*]; (iii) grant Corange or its designee a non-exclusive license to develop and commercialize diagnostic and therapeutic products; and (iv) relieve Axys of any royalty or milestone [*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES AND EXCHANGE ACT OF 1934, AS AMENDED. 2 3 obligations to [*] with respect to Corange's or its designee's use of the [*]. In the event that Axys is unable to successfully negotiate one or both of the agreements described in this paragraph 8 within a period of [*] from the Effective Date, either Corange or its designee or Axys may endeavor to negotiate such agreements for a further [*] period during which time Axys agrees to use reasonable efforts to assist Corange or its designee in obtaining such agreements. 9. In the event that Axys and/or Corange or its designee are able to successfully negotiate both agreements as described in paragraph 8 above within [*] following the Effective Date, Corange or its designee will pay Axys [*]. In the event that Axys and/or Corange or its designee are able to successfully negotiate only one of the agreements as described in paragraph 8 above within [*] following the Effective Date, Corange or its designee will pay Axys [*] if such agreement is with [*] or [*] if such agreement is with [*]. 10. (a) In the event that Axys and/or Corange or its designee are unable to successfully negotiate an agreement with [*] as described in paragraph 8 above, Corange or its designee's scientists will have the right to access the [*] for additional analyses, on Axys' premises, for a period of [*] from the end of the negotiation periods referred to in paragraph 8 above, upon payment to Axys, within thirty (30) days of the end of the negotiation periods described in paragraph 8 above, of the sum of [*]. In such event Axys will also provide Corange or its designee with duplicate copies of all data related to the [*] contained in the Osteoporosis Database. If Corange or its designee fails to make such payments within the said thirty (30) day period, Corange's or its designee's rights with respect to the [*] data contained in the Osteoporosis Database will terminate and the rights granted in paragraph 7(a) above will be deemed granted by Corange to Axys. (b) In the event that Axys and/or Corange or its designee are unable to successfully negotiate an agreement with [*] as described in paragraph 8 above, Corange or its designee will have the right to receive and use [*], in Axys possession, upon payment to Axys within thirty (30) days of the end of the negotiation periods described in paragraph 8 above, of the further sum of [*] and a written agreement from Corange or its designee reasonably acceptable to Axys, within that same thirty (30) day period, to assume responsibility for [*] with respect to Corange's or its designee's use of such samples. In such event Axys will also provide Corange or its designee with duplicate copies of all data related to the [*] contained in the Osteoporosis Database. If Corange or its designee fails to make such payment and provide such written agreement within the said thirty (30) day period, Corange's or its designee's rights with respect to the [*] data contained in the Osteoporosis Database will terminate and the rights granted in paragraph 7(b) above, will be deemed granted by Corange to Axys. [*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES AND EXCHANGE ACT OF 1934, AS AMENDED. 3 4 11. Neither Party hereto shall issue any press release or other publicity materials, or make any public representation with respect to the existence of the Termination Agreement or the subject matter hereto without the prior written consent of the other Party. However, this restriction shall not apply to disclosures required by law or regulation. 12. Section 17 of the Collaboration Agreement shall continue in full force and effect. 13. Section 12 of the Collaboration Agreement shall continue in full force and effect. Further, Corange agrees to indemnify, defend and hold Axys, its Affiliates and sublicensees and their respective directors, officers, employees and agents harmless from and against any losses, costs, claims, damages, liabilities or expense (including reasonable attorneys fees and other expenses of litigation) arising out of or in connection with Corange's or its designee's transfer or use of the biological materials and data provided by Axys to Corange or its designee under this Termination Agreement. 14. Each Party hereby covenants and represents to the other Party that it has full right and authority to enter into this Termination Agreement. 15. This Termination Agreement shall not be assignable by either Party hereto, except to an Affiliate, without the prior written consent of the other Party. 16. This Termination Agreement represents the entire understanding and agreement between the Parties hereto with respect to the subject matter hereof. This Termination Agreement may be amended, modified, supplemented or changed only by an agreement in writing which is signed by each Party. 17. This Termination Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same instrument. IN WITNESS WHEREOF, the parties hereto cause this Termination Agreement to be duly executed in its name and on its behalf, as of the Effective Date. SEQUANA THERAPEUTICS, INC. CORANGE INTERNATIONAL LTD. By: /s/ Daniel H. Petree By: /s/ C. George Burch /s/ John S.T. Stout ----------------------------- ---------------------- ---------------------------- Name: Daniel H. Petree Name: C. George Burch Name: John S.T. Stout ----------------------------- ---------------------- ---------------------- Title: CEO Title: Director Title: Director --------------------------- ---------------------- ---------------------
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES AND EXCHANGE ACT OF 1934, AS AMENDED. 4 EX-10.106 11 TERMINATION AGREEMENT 1 [*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES AND EXCHANGE ACT OF 1934, AS AMENDED. EXHIBIT 10.106 TERMINATION AGREEMENT THIS TERMINATION AGREEMENT (the "Agreement") is made and entered into as of February 5, 1999 , by and between AXYS PHARMACEUTICALS, INC. (formerly known as Arris Pharmaceutical Corporation), a Delaware corporation having a place of business at 180 Kimball Way, South San Francisco, CA 94080 ("Axys"), and PHARMACIA AND UPJOHN AB, a corporation organized and existing under the laws of Sweden having a place of business at Lindhagensgatan 133, Stockholm, Sweden ("P&U"). Axys and P&U may be referred to herein as a "Party" or, collectively, as "Parties." RECITALS A. Axys (under its former name Arris Pharmaceutical Corporation) and Pharmacia AB (a precursor corporation to P&U) entered into a collaboration agreement August 29, 1995, regarding inter alia use of Axys technology to identify orally active inhibitors of specific coagulation cascade enzymes (as amended, the "Collaboration Agreement"). B. Axys and P&U now desire to terminate the Collaboration Agreement and to set forth specific the terms regarding each Party's rights and obligations upon such termination, as provided below in this Agreement. NOW, THEREFORE, the Parties agree as follows: 1. DEFINITIONS Capitalized terms used in this Agreement, unless otherwise defined herein, shall have the same meanings as defined in the Collaboration Agreement. 2. TERMINATION OF THE COLLABORATION AGREEMENT Effective as of March 1, 1998 the ("Termination Date"), the Collaboration Agreement is terminated, and all rights and obligations of the Parties under the Collaboration Agreement are terminated except for those rights specifically identified below in this Agreement which shall survive such termination. Specific consequences of such termination are set forth below. 3. CONSEQUENCES OF TERMINATION 3.1 Axys hereby agrees that all obligations of P&U under the Collaboration Agreement to pay Axys research support or other amounts, including without limitation any amounts that are owed to Axys under the Collaboration Agreement, are hereby terminated, and P&U shall not be obligated to pay Axys any amounts pursuant to obligations under the Collaboration Agreement. Further, any and all obligations of P&U 1. 2 to use diligence to conduct any work under the Collaboration Agreement terminate. P&U hereby agrees that all obligations of Axys under the Collaboration Agreement to conduct Research are hereby terminated, and Axys shall not be obligated to account to P&U for any expenditures of any amounts paid by P&U to Axys or to make any payments to P&U based upon or under the Collaboration Agreement. Further, any and all obligations of Axys to use diligence to conduct any work under the Collaboration Agreement terminate. 3.2 As of the Termination Date, any and all rights of P&U to use or practice the Arris Know-How, Arris Delta Technology, Arris Improvement Technology and Arris Patents shall immediately terminate and revert exclusively and solely to Axys. Commencing on the Termination Date and continuing thereafter, Axys shall have, and P&U hereby grants to Axys, the sole and exclusive right and license, with full rights to sublicense, to use and practice all Research Technology, Joint Patents, Pharmacia Patents and Pharmacia Know-How to develop, make, have made, use, import, sell and offer for sale Collaboration Products, and after the Termination Date P&U shall have no further rights thereto except as provided below. In addition, for clarity it is understood and agreed that all obligations of and limitations on the Parties under Section 2.10 of the Collaboration Agreement terminate immediately upon the Termination Date, and each Party shall be free to do research, development and commercialization work in the Field independent of and without obligation to the other Party except as specifically provided in this Agreement. 3.3 As soon as practicable, P&U shall provide to Axys copies of all data, results, and internal study reports resulting from or developed under P&U's activities in the Research that are reasonably required by Axys to continue the work in the Field, and all compounds, reagents and physical samples that are in P&U's possession resulting from or developed under the Research and that are reasonably required by Axys to continue the work in the Field. Further, Axys shall have reasonable access to review and copy the laboratory notebooks that contain the data and results of P&U's work under the Research, to the extent reasonably required by Axys to continue the work in the Field. 3.4 Axys hereby agrees that Axys shall pay P&U a royalty equal to [*] sales of Axys Products (as defined below) by Axys or its Affiliates or sublicensees, provided that for sales by sublicensees, such royalty shall not in any event exceed [*] of the royalties paid to Axys by such sublicensees based on sales of such Axys Products. Such royalty amounts shall be calculated and payable in the manner and for the time period comparable to that required of P&U for such Collaboration Products under the Collaboration Agreement. 3.5 As used above, the term "Axys Products" shall mean a Collaboration Product that: [*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES AND EXCHANGE ACT OF 1934, AS AMENDED. 2. 3 (a) contains a Collaboration Compound that was identified prior to [*] and (b) is sold in a country where there is an issued patent in the Arris Patents, Joint Patents or Pharmacia Patents that claims an invention that is made in the course of the Research and that relates directly to such Collaboration Product or its manufacture or use. For clarity, it is understood and agreed that products sold in countries that do not have an issued patent as required in subsection (b) shall not be royalty bearing under Section 3.5. 3.6 P&U shall have the right to publish or present the results of P&U's work on the Research, subject to the prior review by Axys for patentability and protection of Confidential Information. P&U shall provide Axys the opportunity to review any proposed abstracts, manuscripts or presentations that cover or include the results of the Research (the "Proposed Publication"), prior to any publication or disclosure of the information in the Proposed Publication. Axys shall respond in writing promptly and in no event later than thirty (30) days after its receipt of the Proposed Publication with either approval of the Proposed Publication or a specific statement of concern, based upon either the need to seek patent protection covering, or concern regarding competitive disadvantage arising from publication of, information in the Proposed Publication. In the event of such concern, P&U agrees not to submit such Proposed Publication for publication or make other disclosure thereof until Axys is given a reasonable period of time (not to exceed an additional thirty (30) days) to seek patent protection for any material therein and to delete from the Proposed Publication any Confidential Information upon reasonable request based upon the commercial value of the secrecy of such information. Axys shall have full rights to publish all results and information relating to the Research, subject to Axys agreement to give P&U appropriate recognition in such publications of P&U Research work or results to extent included in such publication. 3.7 Sections 3.5, 8.1 and 10.6 and Articles 1, 7, 9 and 11 of the Collaboration Agreement shall survive the termination of the Collaboration Agreement. 4. MISCELLANEOUS 4.1 This Agreement shall be governed by and interpreted in accordance with the laws of the State of California, USA, applicable to contracts entered into and to be performed wholly within the State of California, excluding conflict of laws principles. 4.2 Any dispute arising under this Agreement shall be resolved in accordance with Section 11.12 of the Collaboration Agreement. [*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES AND EXCHANGE ACT OF 1934, AS AMENDED. 3. 4 4.3 Each Party agrees to execute, deliver and acknowledge such further instruments and to do all such other acts as may be necessary or appropriate in order to carry out the purposes and intent of this Agreement. 4.4 This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, the Parties have executed this Agreement in duplicate originals by their authorized officers as of the date and year first above written. PHARMACIA AND UPJOHN AB By: /s/ Ulf Lindqvist /s/ Fredrik Berg ---------------------------- ---------------------- Title: Director R.D. Operations Fredrik Berg ------------------------ VP, Asst. Gen. Counsel ---------------------- AXYS PHARMACEUTICALS, INC. By: /s/ John P. Walker --------------------------- Title: Chairman/CEO ----------------------- [*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES AND EXCHANGE ACT OF 1934, AS AMENDED. EX-27 12 FINANCIAL DATA SCHEDULE
5 This schedule contains summary financial information extracted from the consolidated balance sheets, statements of operations and statements of cash flows included in the Company's Form 10-Q for the period ended March 31, 1999, and is qualified in its entirety by reference to such financial statements and notes thereto. 1,000 3-MOS DEC-31-1999 JAN-01-1999 MAR-31-1999 28,760 35,277 4,529 0 766 72,428 52,094 (30,464) 100,777 22,480 0 0 0 290,942 53,329 100,777 3,142 8,662 548 0 19,126 0 507 (7,748) 0 (7,748) 0 0 0 (7,748) (.26) (.26)
-----END PRIVACY-ENHANCED MESSAGE-----