SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934
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Tularik Inc.
(Name of Registrant as Specified In Its Charter)
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TULARIK INC.
Two Corporate Drive
South San Francisco, CA 94010
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be held on April 26, 2000
Notice Is Hereby Given that the Annual Meeting of Stockholders of Tularik
Inc., a Delaware corporation (the "Company"), will be held on Wednesday, April
26, 2000 at 8:00 a.m. (San Francisco time) in the auditorium of its offices at
Two Corporate Drive, South San Francisco, CA for the following purposes:
(1) To elect directors to serve for the ensuing year and until their
successors are elected.
(2) To approve an amendment to the Company's Restated Certificate of
Incorporation pursuant to which the number of shares of capital stock
authorized for issuance would be increased from 70,000,000 shares to
150,000,000 shares.
(3) To ratify the selection of Ernst & Young LLP as independent auditors of
the Company for the fiscal year ending December 31, 2000.
(4) To transact such other business as may properly come before the meeting
or any adjournment or postponement thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
The Board of Directors of the Company has fixed the close of business on March
9, 2000 as the record date for the determination of stockholders entitled to
notice of and to vote at this Annual Meeting and at any adjournment or
postponement thereof. A list of the stockholders entitled to vote at the
meeting will be available for examination by any stockholder for any purpose
germane to the meeting during ordinary business hours in the Office of the
Secretary of the Company during the ten days prior to the meeting.
By Order of the Board of Directors,
William J. Rieflin,
Secretary
March 30, 2000
South San Francisco, California
All Stockholders are cordially invited to attend the meeting in person.
Whether or not you expect to attend the meeting, please complete, date, sign
and return the enclosed proxy as promptly as possible in order to ensure your
representation at the meeting. A return envelope (which is postage prepaid if
mailed in the United States) is enclosed for that purpose. Even if you have
given your proxy, you may still vote in person if you attend the meeting.
Please note, however, that if your shares are held of record by a broker, bank
or other nominee and you wish to vote at the meeting, you must obtain from the
record holder a proxy issued in your name.
TULARIK INC.
Two Corporate Drive
South San Francisco, CA 94010
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
March 30, 2000
INFORMATION CONCERNING SOLICITATION AND VOTING
General
The enclosed proxy is solicited on behalf of the Board of Directors (the
"Board") of Tularik Inc., a Delaware corporation ("Tularik" or the "Company"),
for use at the Annual Meeting of Stockholders to be held on April 26, 2000, at
8:00 a.m. local time (the "Annual Meeting"), or at any adjournment or
postponement thereof, for the purposes set forth herein and in the accompanying
Notice of Annual Meeting. The Annual Meeting will be held in the auditorium of
the Company's offices at Two Corporate Drive, South San Francisco, CA. The
Company intends to mail this proxy statement and accompanying proxy card on or
about March 30, 2000 to all Stockholders entitled to vote at the Annual
Meeting.
Solicitation
The Company will bear the entire cost of solicitation of proxies, including
preparation, assembly, printing and mailing of this proxy statement, the proxy
card and any additional information furnished to Stockholders. Copies of
solicitation materials will be furnished to banks, brokerage houses,
fiduciaries and custodians holding in their names shares of Common Stock
beneficially owned by others to forward to such beneficial owners. The Company
may reimburse persons representing beneficial owners of Common Stock for their
costs of forwarding solicitation materials to such beneficial owners. Original
solicitation of proxies by mail may be supplemented by telephone, telegram or
personal solicitation by directors, officers or other regular employees of the
Company. No additional compensation will be paid to directors, officers or
other regular employees for such services.
Voting Rights and Outstanding Shares
Only holders of record of Common Stock at the close of business on March 9,
2000 will be entitled to notice of and to vote at the Annual Meeting. At the
close of business on March 9, 2000 the Company had outstanding and entitled to
vote 45,473,142 shares of Common Stock.
Each holder of record of Common Stock on such date will be entitled to one
vote for each share held on all matters to be voted upon at the Annual Meeting.
All votes will be tabulated by the inspector of election appointed for the
meeting, who will separately tabulate affirmative and negative votes,
abstentions and broker non-votes. Abstentions will be counted towards the
tabulation of votes cast on proposals presented to the Stockholders and will
have the same effect as negative votes. Except for Proposal 3, broker non-votes
are counted towards a quorum, but are not counted for any purpose in
determining whether a matter has been approved. With respect to Proposal 3,
abstentions and broker non-votes will have the same effect as negative votes.
Voting Via the Internet or by Telephone
For Shares Registered in the Name of a Broker or Bank
A number of brokers and banks are participating in a program provided
through ADP Investor Communication Services that offers telephone and Internet
voting options. If your shares are held in an account with a broker or bank
participating in the ADP Investor Communication Services program, you may vote
those
share telephonically by calling the telephone number shown on the voting form
received from your broker or bank, or via the Internet at ADP Investor
Communication Services' voting Web site (www.proxyvote.com).
General Information for All Shares Voted Via the Internet or By Telephone
Votes submitted via the Internet or by telephone must be received by 12:00
midnight, Central Time on April 25th, 2000. Submitting your proxy via the
Internet or by telephone will not affect your right to vote in person should
you decide to attend the Annual Meeting.
The telephone and Internet voting procedures are designed to authenticate
Stockholders' identities, to allow Stockholders to give their voting
instructions and to confirm that Stockholders' instructions have been recorded
properly. Stockholders voting via the Internet should understand that there may
be costs associated with electronic access, such as usage charges from Internet
access providers and telephone companies, that must be borne by the
Stockholder.
Revocability of Proxies
Any person giving a proxy pursuant to this solicitation has the power to
revoke it at any time before it is voted. It may be revoked by filing with the
Secretary of the Company at the Company's principal executive office, Two
Corporate Drive, South San Francisco, CA, a written notice of revocation or a
duly executed proxy bearing a later date, or it may be revoked by attending the
meeting and voting in person. Attendance at the meeting will not, by itself,
revoke a proxy.
Stockholder Proposals
The deadline for submitting a Stockholder proposal for inclusion in the
Company's proxy statement and form of proxy for the Company's 2001 annual
meeting of Stockholders pursuant to Rule 14a-8 of the Securities and Exchange
Commission is November 13, 2000. Stockholders wishing to submit proposals or
director nominations that are not to be included in such proxy statement and
proxy must do so not later than the close of business on the ninetieth (90th)
day nor earlier than the close of business on the one hundred twentieth (120th)
day prior to the first anniversary of the preceding year's annual meeting.
Stockholders are also advised to review the Company's Bylaws, which contain
additional requirements with respect to advance notice of Stockholder proposals
and director nominations.
Proposal 1
Election Of Directors
There are seven nominees for the seven Board positions presently authorized
in the Company's Bylaws. Each director to be elected will hold office until the
next annual meeting of Stockholders and until his successor is elected and has
been qualified, or until such director's earlier death, resignation or removal.
Each nominee listed below is currently a director of the Company and was
elected by the Stockholders.
Directors are elected by a plurality of the votes present in person or
represented by proxy and entitled to vote. Shares represented by executed
proxies will be voted, if authority to do so is not withheld, for the election
of the seven nominees named below. In the event that any nominee should be
unavailable for election as a result of an unexpected occurrence, such shares
will be voted for the election of such substitute nominee as management may
propose. Each person nominated for election has agreed to serve if elected and
management has no reason to believe that any nominee will be unable to serve.
The Board Of Directors Recommends
A Vote In Favor Of Each Named Nominee.
Nominees
The names of the nominees for director and certain information about them
are set forth below:
Principal Occupation/
Name Age Position Held With the Company
David V. Goeddel, Ph.D..... 48 Chief Executive Officer of the Company
General Partner, Mayfield Fund/Chairman of the
A. Grant Heidrich, III..... 47 Board of the Company
Chairman and Chief Executive Officer of
Mark J. Levin.............. 49 Millennium Pharmaceuticals, Inc.
Edward R. McCracken........ 56 Chairman of The PRASAD Project
Professor, University of Texas Southwestern
Steven L. McKnight, Ph.D... 50 Medical Center
President-Emeritus, Member, Memorial Sloan-
Paul A. Marks, M.D......... 73 Kettering Cancer Center
Peter J. Sjostrand, M.D.... 53 Partner, BZ Group
David V. Goeddel, Ph.D. co-founded Tularik in November 1991 and has served
as a member of the Board since inception and as our Chief Executive Officer
since April 1996. From April 1996 to December 1997, Dr. Goeddel served as
President of the Company and from inception to March 1996, Dr. Goeddel served
as Vice President, Research of the Company. Dr. Goeddel was the first scientist
hired by Genentech, Inc. and from 1978 to 1993 served in various positions,
including Genentech Fellow, Staff Scientist and Director of Molecular Biology.
Dr. Goeddel's pioneering work in the field of gene cloning and expression of
human proteins has been the basis for five significant marketed therapeutics
developed by Genentech, including human insulin, human growth hormone,
interferon-alpha, interferon-gamma and tissue plasminogen activator. Based on
his contributions in gene cloning and expression of human proteins, Dr. Goeddel
was elected to the National Academy of Sciences and the American Academy of
Arts and Sciences. Since 1998, Dr. Goeddel has served on the board of directors
of Pharma Vision AG, an investor in Tularik. Dr. Goeddel holds a Ph.D. in
Biochemistry from the University of Colorado and subsequently performed
postdoctoral research at Stanford Research Institute.
A. Grant Heidrich, III has served as a member of the Board since November
1991 and as Chairman since February 2000. Mr. Heidrich joined Mayfield Fund in
1982 and is currently a general partner of Mayfield Fund.
3
Mr. Heidrich is a member of the board of directors of Millennium
Pharmaceuticals, Inc. Mr. Heidrich holds an M.B.A. from Columbia University
Graduate School of Business.
Mark J. Levin has served as a member of the Board since November 1991. From
November 1991 to March 1992, Mr. Levin served as Chief Executive Officer of the
Company. Since November 1994, he has served as the Chief Executive Officer of
Millennium Pharmaceuticals, Inc. and has served as a member of its board of
directors since its inception in 1993 and as its Chairman of the Board since
March 1996. Previously, Mr. Levin was a partner at Mayfield. Mr. Levin serves
on the board of directors of CytoTherapeutics Inc. He received an M.S. in
Biomedical Engineering from Washington University, St. Louis.
Paul A. Marks, M.D. has served as a member of the Board since December 1993.
He is currently President Emeritus and Member, Memorial Sloan- Kettering Cancer
Center. From July 1980 to December 1999, Dr. Marks was the President and Chief
Executive Officer of Memorial Sloan-Kettering Cancer Center, a member of the
Sloan-Kettering Institute for Cancer Research, and Attending Physician of
Memorial Hospital for Cancer and Allied Diseases. Previously, Dr. Marks was
Vice President for Health Sciences and Director of the Cancer Center at
Columbia University Medical Center. Dr. Marks is a member of the National
Academy of Sciences and the Institute of Medicine, and is a Fellow of the
American Academy of Arts and Sciences. Dr. Marks serves as a director of
several Dreyfus Funds and is Director-Emeritus of Pfizer Inc. He received his
M.D. from the College of Physicians and Surgeons, Columbia University in 1949.
Edward R. McCracken has served as a member of the Board since August 1993.
From 1984 to 1998, Mr. McCracken served as Chief Executive Officer of Silicon
Graphics, Inc. Prior to joining Silicon Graphics Mr. McCracken spent 16 years
with Hewlett-Packard Company, where he worked in a variety of senior management
positions. Mr. McCracken serves as chairman of The PRASAD Project, a charitable
foundation, and serves on the board of National Semiconductor Corporation and
Minnesota Mining and Manufacturing Company. Mr. McCracken holds an M.B.A. from
Stanford University.
Steven L. McKnight, Ph.D. co-founded Tularik in November 1991 and has served
as a member of the Board since inception. From September 1992 to September
1995, Dr. McKnight served as Director, Biology of the Company. Dr. McKnight has
been a part-time employee of, or a consultant to, the Company since January
1996. He now serves as Professor and Chairman of the Department of Biochemistry
at the University of Texas Southwestern Medical Center since 1995. Previously,
Dr. McKnight was an investigator at the Howard Hughes Medical Institute at the
Carnegie Institution of Washington. Dr. McKnight is recognized as one of the
world leaders in gene regulation based in part on his discovery of leucine
zipper proteins. Dr. McKnight is a member of the National Academy of Sciences
and the American Association of Arts and Sciences.
Peter J. Sjostrand, M.D. has served as a member of the Board since October
1996. Dr. Sjostrand is a partner of the BZ Group of Switzerland and is a member
of the Board of Pharma Vision AG. Before joining the BZ Group, Dr. Sjostrand
held various senior level positions with Astra AB from 1975 to 1993, including
Executive Vice President, Chief Financial Officer and Regional Director,
Americas. Dr. Sjostrand received his M.D. from Karolinska Institute in
Stockholm, Sweden. Dr. Sjostrand also serves on the board of AGA AB.
Board Committees and Meetings
During the fiscal year ended December 31, 1999 the Board held eight
meetings. During 1999, all but one director attended at least 75% of the
meetings of the Board and of the committees on which they served, held during
the period for which they were a director or committee member, respectively.
Mr. Levin attended all but one of the regular meetings of the Board held during
1999; however, he was unable to attend two special meetings of the Board. The
Board has an Audit Committee and a Compensation Committee. In 1999, the
Compensation Committee met eight times and the Audit Committee met once.
The Compensation Committee makes recommendations concerning salaries and
incentive compensation, awards stock options to employees and consultants under
the 1991 Stock Plan (the "1991 Plan") and the 1997
4
Equity Incentive Plan (the "1997 Plan"; collectively with the 1991 Plan, the
"Plans") and otherwise determines compensation levels and performs such other
functions regarding compensation as the Board may delegate. The Compensation
Committee is composed of three non-employee directors: Messrs. Heidrich and
McCracken and Dr. Marks.
The Audit Committee meets with the Company's independent auditors at least
annually to review the results of the annual audit and discuss the financial
statements; recommends to the Board the independent auditors to be retained;
and receives and considers the accountants' comments as to controls, adequacy
of staff and management performance and procedures in connection with audit and
financial controls. The Audit Committee is composed of two non-employee
directors: Messrs. Heidrich and Levin.
There are no family relationships among any directors or executive officers of
the Company.
Proposal 2
Proposed Increase In Authorized Common Stock
The Board recommends the approval of an amendment to the Company's Restated
Certificate of Incorporation (the "Certificate") pursuant to which the number
of shares of capital stock authorized for issuance would be increased from
70,000,000 shares to 150,000,000 shares. As of December 31, 1999, there were
issued and outstanding 44,835,844 shares of Common Stock. In addition, as of
December 31, 1999, 4,282,640 shares were reserved for issuance pursuant to the
exercise of outstanding stock options, 890,119 shares were reserved for
issuance upon the exercise of warrants and 500,000 shares were reserved for
issuance under our employee stock purchase plan. An additional 2,242,210 shares
are available for issuance under our stock option plans December 31, 1999. In
addition, 1,875,000 shares were offered in March 2000 (and an additional
281,250 may be offered pursuant to an over-allotment option expected to be
granted to the underwriters) in a public offering. As a result, based on our
capitalization as of December 31, 1999 but giving effect to our March 2000
public offering, the number of shares available for issuance and not
outstanding or reserved for any purpose was 10,374,187 shares (10,092,937
shares if the over-allotment option is exercised in full).
The Board of Directors has adopted resolutions setting forth the proposed
amendment to Section IV (A) of the Company's Certificate (the "Amendment"), the
advisability of the Amendment and a call for submission of the Amendment for
approval by the Stockholders at the Annual Meeting. If approved by the
Stockholders, Section IV(A) of the Certificate would be amended to read as
follows:
"This Corporation is authorized to issue two classes of stock to be
designated, respectively, "Common Stock" and "Preferred Stock." The
total number of shares which the Corporation is authorized to issue is
one hundred fifty million (150,000,000) shares. One hundred forty-five
million (145,000,000) shares shall be Common Stock, each having a par
value of one-tenth of one cent ($.001). Five million (5,000,000) shares
shall be Preferred Stock, each having a par value of one-tenth of one
cent ($.001)."
The Board of Directors believes that it is advisable to have the additional
authorized shares of Common Stock available to provide greater flexibility for
the Company's financial structure. The additional shares of Common Stock would
be available for issuance from time to time for any proper corporate purpose.
Such purposes might include, without limitation, issuance of Common Stock in
public or private sales for cash to be used as working capital, as part or all
of the consideration to be paid by the Company for acquisitions of other
business properties and in connection with stock dividends or stock splits.
Having the additional shares available will enable the Company to act when an
opportunity arises without the expense and delay involved with a special
meeting of stockholders. While the Board believes the adoption of this
amendment would significantly improve the Company's future financial
flexibility, the Company does not currently have any agreements to issue any
shares of Common Stock except for the shares reserved for issuance as listed
above.
5
Although this not the intention of this proposal, the Board recognizes that
this proposal to increase the number of authorized shares might be considered
as having the effect of discouraging attempts to take over control of the
Company, as the issuance of the shares could be used to dilute stock ownership
of, or increase the cost to, any person seeking to obtain control. For example,
in the event of a hostile attempt to take over control of the Company, it may
be possible for the Company to endeavor to impede the attempt by issuing shares
of the Common Stock, thereby diluting the voting power of the other outstanding
shares and increasing the potential cost to acquire control of the Company. The
Amendment therefore may have the effect of discouraging unsolicited takeover
attempts. By potentially discouraging initiation of any such unsolicited
takeover attempt, the proposed Amendment may limit the opportunity for the
Company's stockholders to dispose of their shares at the higher price generally
available in takeover attempts or that may be available under a merger
proposal. However, the Board of Directors is not aware of any attempt to take
control of the Company and the Board of Directors has not presented this
proposal with the intent that it be utilized as a type of anti-takeover device.
Under the Certificate, the Stockholders do not have preemptive rights with
respect to Common Stock. Thus, should the Board of Directors elect to issue
additional shares of Common Stock, existing Stockholders would not have any
preferential rights to purchase such shares. In addition, the issuance of
additional shares might have the effect of diluting the earnings per share and
book value per share of existing shares of Common Stock. Consequently, the
Board does not intend to issue Common Stock except when it is deemed to be in
the best interest of the Company and its Stockholders. The Company does not
anticipate that it will seek approval from Stockholders for issuance of
authorized shares unless required by applicable laws or stock exchange
regulations.
The Board of Directors has adopted and approved the Amendment, subject to
the requisite approval by the Stockholders. The affirmative vote of a majority
of the outstanding shares of Common Stock entitled to vote at the Annual
Meeting is required to adopt the Amendment. The Board of Directors of the
Company has considered the Amendment and recommends that the Stockholders adopt
the Amendment as set forth in this Proxy Statement.
The Board Of Directors Recommends
A Vote In Favor Of Proposal 2.
Proposal 3
Ratification Of Selection Of Independent Auditors
The Board has selected Ernst & Young LLP as the Company's independent
auditors for the fiscal year ending December 31, 2000 and has further directed
that management submit the selection of independent auditors for ratification
by the Stockholders at the Annual Meeting. Ernst & Young LLP has audited the
Company's financial statements since its inception in 1991. Representatives of
Ernst & Young LLP are expected to be present at the Annual Meeting, will have
an opportunity to make a statement if they so desire and will be available to
respond to appropriate questions.
Stockholder ratification of the selection of Ernst & Young LLP as the
Company's independent auditors is not required by the Company's Bylaws or
otherwise. However, the Board is submitting the selection of Ernst & Young LLP
to the Stockholders for ratification as a matter of good corporate practice. If
the Stockholders fail to ratify the selection, the Audit Committee and the
Board will reconsider whether or not to retain that firm. Even if the selection
is ratified, the Audit Committee and the Board in their discretion may direct
the appointment of different independent auditors at any time during the year
if they determine that such a change would be in the best interests of the
Company and its Stockholders.
The Board Of Directors Recommends
A Vote In Favor of Proposal 3.
6
Security Ownership Of
Certain Beneficial Owners And Management
The following table sets forth certain information regarding the ownership
of the Company's Common Stock as of December 31, 1999 by: (i) each nominee for
director; (ii) each of the executive officers named in the Summary Compensation
Table; (iii) all executive officers and directors of the Company as a group;
and (iv) all those known by the Company to be beneficial owners of more than
five percent of its Common Stock.
Beneficial Ownership (1)
--------------------------------------------------
Shares Shares
Subject to a Issuable Under
Right of Options
Repurchase Exercisable
as of within 60 Days
Number of December 31, of December 31, Percent of
Beneficial Owner Shares 1999(2) 1999 Total
- ---------------- ---------- ------------ --------------- ----------
Pharma Vision AG ........................ 10,158,238 -- -- 22.7%
Spielhof 3
8750 Glaris Switzerland
Entities Affiliated with Mayfield Fund .. 3,966,474 -- 49,000 8.9%
2800 Sand Hill Road, Suite 250
Menlo Park, CA 94025(3)
David V. Goeddel, Ph.D. (4).............. 11,917,071 275,001 66,666 27.3%
Andrew J. Perlman, M.D., Ph.D. (5)....... 346,542 15,625 133,333 1.1%
Pieter B.M.W.M. Timmermans, Ph.D......... 85,570 31,597 133,333 *
Terry J. Rosen, Ph.D. (6)................ 191,752 34,084 134,666 *
William J. Rieflin (7)................... 124,252 56,251 99,999 *
A. Grant Heidrich, III (8)............... 3,966,474 -- 49,000 8.9%
Mark J. Levin (9)........................ 479,818 -- 99,000 1.3%
Edward R. McCracken...................... -- -- 89,000 *
Steven L. McKnight, Ph.D. (10)........... 583,313 4,687 399,000 2.2%
Paul A. Marks, M.D. (11)................. 65,875 7,125 16,000 *
Peter J. Sjostrand, M.D. (12)............ 10,158,238 -- 49,000 22.7%
All executive officers and directors as a
group (12 persons) (13)................. 17,343,433 425,621 1,435,662 41.5%
- --------
* Less than one percent.
(1) This table is based upon information supplied by officers, directors and
principal Stockholders and Schedules 13D and 13G filed with the Securities
and Exchange Commission (the "SEC"). Unless otherwise indicated in the
footnotes to this table and subject to community property laws where
applicable, the Company believes that each of the Stockholders named in
this table has sole voting and investment power with respect to the shares
indicated as beneficially owned. Applicable percentages are based on
44,835,844 shares outstanding on December 31, 1999, adjusted as required by
rules promulgated by the SEC.
(2) The unvested portion of the shares of Common Stock is subject to a right of
repurchase by the Company, at the original option exercise price, in the
event the holder ceases to provide service to the Company and its
affiliates. The option exercise prices range from $0.025 to $3.00. See
"Executive Compensation" for more detail on the Company's right to
repurchase.
(3) Includes 158,659 shares held by Mayfield Associates, 479,818 shares held by
Mayfield Medical Partners and 3,327,997 shares held by Mayfield VI.
Mayfield VI Management Partners is the general partner of Mayfield VI and
Mayfield VI is a general partner of Mayfield Medical Partners. Mr. Heidrich
is a general partner of Mayfield Associates and of Mayfield VI Management
Partners. Mr. Levin is a general partner of Mayfield Medical Partners.
(4) Includes 10,158,238 shares held by Pharma Vision. Dr. Goeddel is a director
of Pharma Vision AG and disclaims beneficial ownership of these shares
except to the extent of his pecuniary interest in these
7
shares. Does not include 240,000 shares held in trust for Dr. Goeddel's
children, for which Dr. Goeddel is not the trustee and disclaims beneficial
ownership. Includes 500 shares issued pursuant to the Company's 401(m)
plan.
(5) Includes 195,000 shares held in a revocable trust of which Dr. Perlman
and his wife, Dr. Phyllis Gardner, are sole trustees. Drs. Perlman and
Gardner, each acting alone, have the power to vote and dispose of such
shares. Does not include 30,000 shares held in trust for Dr. Perlman's
minor children, for which Dr. Perlman is not the trustee and disclaims
beneficial ownership. Includes 500 shares issued pursuant to the
Company's 401(m) plan.
(6) Includes 70,336 shares held in a revocable trust of which Dr. Rosen and
his wife are sole trustees. Dr. and Mrs. Rosen, each acting alone, have
the power to vote and dispose of such shares. Does not include 39,998
shares held in trust for Dr. Rosen's minor children, for which Dr. Rosen
is not the trustee and disclaims beneficial ownership. Includes 500
shares issued pursuant to the Company's 401(m) plan.
(7) Does not include 19,998 shares held in trust for Mr. Rieflin's minor
children, for which Mr. Rieflin is not the trustee and disclaims
beneficial ownership. Includes 500 shares issued pursuant to the
Company's 401(m) plan.
(8) Includes 158,659 shares held by Mayfield Associates, 479,818 shares held
by Mayfield Medical Partners and 3,327,997 shares held by Mayfield VI.
Mr. Heidrich is a general partner of Mayfield Associates and of Mayfield
VI Management Partners. Mayfield VI Management Partners is the general
partner of Mayfield VI and Mayfield VI is a general partner of Mayfield
Medical Partners. Mr. Heidrich disclaims beneficial ownership of these
shares except to the extent of his proportionate partnership interest in
these shares.
(9) Includes 479,818 shares held by Mayfield Medical Partners. Mr. Levin is a
general partner of Mayfield Medical Partners and disclaims beneficial
ownership of these shares except to the extent of his proportionate
partnership interest in these shares.
(10) Does not include 200,000 shares held in trust for Dr. McKnight's
children, for which Dr. McKnight is not the trustee and disclaims
beneficial ownership. Includes 206,000 shares held in trust for the
Steven L. McKnight Exempt Family Trust. Dr. and Mrs. McKnight, each
acting alone, have the power to vote and dispose of such shares. Dr.
McKnight disclaims beneficial ownership of these shares.
(11) Includes 65,354 shares held in trust for the Paul A. Marks 1999 Grantor
Annuity Trust. Dr. and Mrs. Marks, each acting alone, have the power to
vote and dispose of such shares family. Dr. Marks disclaims beneficial
ownership of these shares.
(12) Includes 10,158,238 shares held by Pharma Vision AG. Dr. Sjostrand is a
director of Pharma Vision and disclaims beneficial ownership of these
shares except to the extent of his pecuniary interest in these shares.
(13) Includes shares described in the notes above, as applicable.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 (the "1934 Act")
requires the Company's directors and executive officers, and persons who own
more than ten percent of a registered class of the Company's equity
securities, to file with the SEC initial reports of ownership and reports of
changes in ownership of Common Stock and other equity securities of the
Company. Officers, directors and greater than ten percent Stockholders are
required by SEC regulation to furnish the Company with copies of all Section
16(a) forms they file.
To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended December 31, 1999, all
Section 16(a) filing requirements applicable to its officers, directors and
greater than ten percent beneficial owners were complied with; except that an
initial report of ownership was filed one day late by Mr. Heidrich, Entities
affiliated with Mayfield Fund and the other general partners of such entities
and an initial report of ownership was filed four days late by Mr. McCracken.
8
Executive Compensation
Compensation of Directors
The Company does not provide cash compensation to members of its Board for
serving on its Board or for attendance at committee meetings. The members of
the Board are eligible for reimbursement for some expenses incurred in
connection with attendance at Board meetings in accordance with Company policy.
Each non-employee director of the Company receives stock option grants under
the 1997 Non-Employee Directors' Stock Option Plan (the "Directors' Plan").
Only non-employee directors of the Company or an affiliate of such directors
(as defined in the Internal Revenue Code, as amended (the "Code") are eligible
to receive options under the Directors' Plan. Options granted under the
Directors' Plan are intended by the Company not to qualify as incentive stock
options under the Code.
Option grants under the Directors' Plan are non-discretionary. On the date
of the annual meeting of Stockholders each year, each member of the Board who
is not an employee of the Company and who was a director on December 31 of the
prior year or, where specified by the non-employee director, an affiliate of
such director, is automatically granted under the Directors' Plan, without
further action by the Company, the Board or the Stockholders of the Company, an
option to purchase 8,000 shares of Common Stock of the Company. No other
options may be granted at any time under the Directors' Plan. The exercise
price of options granted under the Directors' Plan is equal to the fair market
value of the Common Stock subject to the option at the close of the market on
the date of the option grant. These options vest on an annual basis. Options
granted under the Directors' Plan may not be exercised after the expiration of
ten years from the date it was granted. In the event of a merger of the Company
with or into another corporation or a consolidation, acquisition of assets or
other change-in-control transaction involving the Company, each option either
will continue in effect, if the Company is the surviving entity, or will be
assumed or an equivalent option will be substituted by the successor
corporation, if the Company is not the surviving entity.
During the last fiscal year, the Company granted options covering 8,000
shares to each non-employee director of the Company (in one case to an
affiliate of a non-employee director), at an exercise price per share of $3.00,
the fair market value of such Common Stock on the date of the 1999 annual
meeting of Stockholders. As of December 31, 1999, 16,000 options had been
exercised under the Directors' Plan.
In consideration for consulting services, the Company granted Dr. McKnight
additional options to purchase 25,000 shares of Common Stock in June 1999 at an
exercise price of $3.00 per share. The $3.00 per share exercise price for these
options was equal to the fair market value of the Common Stock on the date of
grant as determined by the compensation committee. These options vest in a
series of equal monthly installments beginning on the grant date of the option
and extending through the next four years of service. In consideration for
consulting services, in addition to the options described above, the Company
pays Dr. McKnight $85,000 per year. Dr. McKnight spends approximately 20% of
his time providing consulting services to the Company. Between January 1995 and
February 1998, the Company forgave $165,968 of the principal and $24,780 of the
interest due on a loan of $240,000 the Company provided to Dr. McKnight in June
1992 to cover housing differential costs in connection with his move to
California from another state. In addition, the Company has paid $153,082 to
Dr. McKnight to offset taxable income to him arising as a consequence of the
loan forgiveness. No amounts are due by Dr. McKnight on this loan.
9
Compensation of Executive Officers
Summary of Compensation
The following table shows for the fiscal years ended December 31, 1999 and
1998, compensation awarded or paid to, or earned by, the Company's Chief
Executive Officer and its other four most highly compensated executive officers
at December 31, 1999, the end of the fiscal year, and a former executive
officer who departed from the Company during fiscal year 1999 (the "Named
Executive Officers"):
Summary Compensation Table
Long-Term
Annual Compensation Compensation Awards
----------------------------- -------------------
All
Securities Other
Other Annual Underlying Compens-
Name and Principal Salary Bonus Compensation Options ation
Position Year ($) ($)(1) ($)(2) (#) ($)(3)
------------------ ---- -------- ------- ------------ ---------- --------
Dr. David V. Goeddel.... 1999 $349,135 150,000 $1,535
Chief Executive Officer 1998 $324,077 150,000 $1,629
Dr. Andrew J. Perlman... 1999 $249,481 50,000 $2,777
Executive Vice
President 1998 $234,231 50,000 $3,738
Dr. Pieter B.M.W.M.
Timmermans............. 1999 $244,481 50,000 $1,874
Vice President, 1998 $229,538 50,000 $1,626
Pharmacology and
Preclinical Development
Dr. Terry Rosen......... 1999 $239,135 $20,000 75,000 $1,936
Vice President, 1998 $214,077 $20,000 50,000 $ 950
Research Operations
William J. Rieflin...... 1999 $234,308 $23,533 50,000 $ 970
Vice President, 1998 $214,538 $23,533 50,000 $ 950
General Counsel &
Secretary
John P. McLaughlin ..... 1999 $229,904 $74,823 100,000 $1,299
Former President (4) 1998 $275,000 500,000 $1,413
- --------
(1) Amounts reflect forgiveness of loans given in connection with relocations
to the San Francisco Bay area.. See "Related Party Transactions."
(2) As permitted by rules promulgated by the SEC, no amounts are shown with
respect to certain "perquisites" where such amounts do not exceed the
lesser of 10% of the sum of the amount in the salary and bonus columns or
$50,000.
(3) Includes term-life insurance premiums paid by the Company on behalf of
these named executive officers, wellness benefits and taxable travel
reimbursement. Also includes the Company's matching payments in stock under
its 401(m) plan. The value of the stock awarded under this plan to each of
Drs. Goeddel, Perlman, Timmermans and Rosen and Messrs. McLaughlin and
Rieflin in 1999 was $750.
(4) Mr. McLaughlin resigned as President of the Company as of September 30,
1999.
10
Stock Option Grants and Exercises
The Company grants options to its executive officers under the Plans. As of
December 31, 1999, options to purchase 4,288,977 shares were outstanding under
the Plans and options to purchase 2,228,228 shares remained available for
grant. The following tables show for the fiscal year ended December 31, 1999
certain information regarding options granted to, exercised by and held at year
end by, the Company's Chief Executive Officer and each of its four other most
highly compensated executive officers at December 31, 1999:
Option Grants in Fiscal 1999
Potential Realizable
Value at Assumed
Annual Rates of
Stock Price
Appreciation for
Individual Grants Option Term (3)
---------------------------------------------------------- --------------------
Number of
Securities
Underlying % of Total Options Exercise Or
Options Granted to Employees Base Price Expiration
Name Granted (#)(1) in Fiscal Year (2) (per share) Date 5% 10%
- ---- -------------- -------------------- ----------- ---------- ---------- ----------
Dr. Goeddel............. 150,000 9.41% $ 3.00 3/11/09 $ 282,000 $ 717,185
Dr. Perlman............. 30,000 1.88% $ 3.00 6/17/09 $ 56,610 $ 143,437
20,000 1.26% $ 3.00 11/5/09 $ 37,740 $ 95,625
Dr. Timmermans.......... 40,000 2.51% $ 3.00 3/11/09 $ 75,480 $ 191,249
10,000 0.63% $ 3.00 6/17/09 $ 18,870 $ 47,812
Dr. Rosen............... 50,000 3.14% $ 3.00 3/11/09 $ 94,350 $ 239,062
25,000 1.57% $18.50 12/15/09 $290,875 $737,106
Mr. Rieflin............. 50,000 3.14% $ 3.00 6/17/09 $ 94,350 $ 239,062
Mr. McLaughlin(4)....... 100,000 6.28% $ 3.00 12/31/99 $ 8,100 $ 15,900
- --------
(1) Options generally vest over a four year period, 25% after one year and
2.083% per month thereafter. The options will fully vest upon a change of
control, as defined in the Company's option plans, unless the acquiring
company assumes the options or substitutes similar options. In the event of
a merger of the Company with or into another corporation or a
consolidation, acquisition of assets or other change-in-control transaction
involving the Company, each option either will continue in effect, if the
Company is the surviving entity, or will be assumed or an equivalent option
will be substituted by the successor corporation, if the Company is not the
surviving entity.
(2) Based on options to purchase 1,593,250 shares granted in 1999.
(3) The potential realizable value is based on the term of the option at its
time of grant. It is calculated by assuming that the stock price on the
date of grant appreciates at the indicated annual rate, compounded annually
for the entire term of the option and that the option is exercised and sold
on the last day of its term for the appreciated stock price. These amounts
represent certain assumed rates of appreciation only, in accordance with
the rules of the SEC, and do not reflect the Company's estimate or
projection of future stock price performance. Actual gains, if any, are
dependent on the actual future performance of the Company's Common Stock
and no gain to the optionee is possible unless the stock price increases
over the option term, which will benefit all Stockholders. For example, a
Stockholder who purchased one share of stock on December 10, 1999 at
$14.00, held the stock for ten years and sold it on December 9, 2009 while
the stock appreciated at 5% and 10% per year would have profits of $8.80
and $22.31, respectively on his $14.00 investment.
(4) In connection with Mr. McLaughlin's resignation, the expiration date for
12,500 of these options was December 31, 1999. The potential realizable
value calculations are based upon this expiration date. 87,500 of these
options were not vested as of September 30, 1999 and may not be exercised.
11
Aggregated Option Exercises in Fiscal 1999 and
Value of Options at End of Fiscal 1999
Option grants under the Plans are discretionary. The exercise price of
options granted under the Plans is equal to the fair market value of the Common
Stock subject to the option at the close of the market on the date of the
option grant. Options granted to employees under the Plans typically vest on a
monthly basis over a four year period, except that options granted to new
employees typically vest one-quarter after one year's service to the Company
and then monthly thereafter. Options granted under the Plans may not be
exercised after the expiration of ten years from the date it was granted. In
the event of a merger of the Company with or into another corporation or a
consolidation, acquisition of assets or other change-in-control transaction
involving the Company, each option either will continue in effect, if the
Company is the surviving entity, or will be assumed or an equivalent option
will be substituted by the successor corporation, if the Company is not the
surviving entity.
The following tables show for the fiscal year ended December 31, 1999,
certain information regarding options granted to, exercised by, and held at
year end by, the Named Executive Officers:
Number of Value of
Securities Unexercised
Underlying In-the-Money
Unexercised Options
Options at at December 31,
December 31, 1999 1999 ($)
Shares Acquired Value Vested/ Exercisable/
Name on Exercise Realized($)(1) Unvested(2) Unexercisable(2)(3)
- ---- --------------- -------------- ----------------- -------------------
Dr. Goeddel............. 933,334 $1,287,500 16,667/49,999 $1,958,314/$0
Dr. Perlman............. 151,667 $ 318,750 43,750/89,583 $3,916,657/$0
Dr. Timmermans.......... -- $ -- 49,306/84,027 $3,916,657/$0
Dr. Rosen............... 157,334 $ 223,750 40,104/94,562 $3,568,314/$0
Mr. Rieflin............. 50,001 $ -- 37,500/62,499 $2,937,471/$0
Mr. McLaughlin.......... 262,501 $ -- 0/0 0/0
- --------
(1) Value realized is based on the fair market value of the Company's Common
Stock on the date of exercise minus the exercise price without taking into
account any taxes that may be payable in connection with the transaction.
(2) Reflects shares vested and unvested at December 31, 1999. Options granted
under the Plans are immediately exercisable, but are subject to the
Company's right to repurchase unvested shares on termination of employment.
(3) Fair market value of the Company's Common Stock at December 31, 1999
($32.375) minus the exercise price of the options.
Employment Agreements, Termination of Employment Agreements and Change of
Control Agreements
Each executive officer has entered into a standard form confidential
information and invention assignment agreement that provides that the employee
will not disclose any confidential information of the Company received during
the course of employment and that, with some exceptions, the employee will
assign to the Company any and all inventions conceived or developed during the
course of employment.
In October 1999, the Company entered into an agreement with John P.
McLaughlin, its former President. Under the terms of the agreement, Mr.
McLaughlin received his salary and health benefits through December 31, 1999
and is receiving a portion of his salary and health benefits through June 30,
2000. In addition, the vesting of options to purchase 37,500 shares of Common
Stock was accelerated. The Company provided Mr. McLaughlin with a one-year loan
in the principal amount of $787,503 at an annual interest rate of 5.54%, in
exchange for a promissory note secured by a pledge of 262,501 shares of Common
Stock.
12
Report of the Compensation Committee of the Board on Executive Compensation
The Compensation Committee of the Company is currently comprised of three
non-employee directors, Messrs. Heidrich and McCracken and Dr. Marks. The
Compensation Committee:
.approves the Company's rewards strategy and programs;
. makes recommendations concerning salaries and incentive compensation for
employees of, and consultants to, the Company;
. establishes and approves salaries and incentive compensation for certain
senior officers and employees; and
. administers and grants stock options pursuant to the Company's stock
option plans.
The Company's executive compensation program is designed to provide
incentives to the Company's executive officers and, thereby, to promote
achievement of the Company's business goals and Stockholder returns. Executive
compensation consists of a combination of base salary, stock incentives and
employee benefits. The Compensation Committee considers stock incentives to be
a critical component of an executive's compensation package in order to help
align executive interests with Stockholder interests.
Compensation Philosophy
The objectives of the executive compensation program are to align
compensation with business objectives and individual performance, and to enable
the Company to attract, retain and motivate executive officers who are expected
to contribute to the long-term success of the Company. The Company's executive
compensation philosophy is based on the principles of competitive and fair
compensation and sustained performance.
Competitive And Fair Compensation
The Company is committed to providing an executive compensation program that
helps attract and retain highly qualified executives. To ensure that
compensation is competitive, the Compensation Committee compares the Company's
compensation practices with those of other companies in the industry and sets
the Company's compensation guidelines based on this review. The Compensation
Committee believes compensation for the Company's executive officers is within
the range of compensation paid to executives with comparable qualifications,
experience and responsibilities who are with companies that are in the same or
similar business and of comparable size and success as the Company. The
Compensation Committee also strives to achieve equitable relationships both
among the compensation of individual officers and between the compensation of
officers and other employees throughout the Company.
Sustained Performance
Executive officers are rewarded based upon corporate performance and
individual performance. Corporate performance is evaluated by reviewing the
extent to which strategic, scientific and business goals are met, including
such factors as timely achievement of clinical and preclinical results,
identification of validated drug discovery targets, effective development of
new assays for high throughput screening, identification of lead compounds,
formation of new business alliances and meeting stated financial objectives.
Individual performance is evaluated by reviewing attainment of specified
individual objectives and the degree to which teamwork and Company values are
fostered.
13
In evaluating each executive officer's performance, the Compensation
Committee generally conforms to the following process:
. Company and individual goals and objectives generally are set at the
beginning of the performance cycle.
. At the end of the performance cycle, the accomplishment of the
executive's goals and objectives and his or her contributions to the
Company are evaluated.
. The executive's performance is then compared with peers within the
Company and the results are communicated to the executive.
. The comparative results, combined with comparative compensation practices
of other companies in the industry, are then used to determine salary and
stock compensation levels.
Annual compensation for the Company's executives generally consists of two
elements--salary and stock options.
The salary for executives is generally set by reviewing compensation for
competitive positions in the market and the historical compensation levels of
the executives. Increases in annual salaries are based on actual corporate and
individual performance against targeted performance and various subjective
performance criteria. Targeted performance criteria vary for each executive
based on his or her area of responsibility. Subjective performance criteria
include an executive's ability to motivate others, develop the skills necessary
to mature with the Company and recognize and pursue new business opportunities
to enhance the Company's growth and success. The Compensation Committee does
not use a specific formula based on these targeted performance and subjective
criteria, but instead makes an evaluation of each executive officer's
contributions in light of all such criteria.
Compensation at the executive officer level also includes the long-term
incentives afforded by stock options. The Company's stock option program is
designed to promote the identity of long-term interests between the Company's
employees and its Stockholders and assist in the retention of executives. The
Compensation Committee of the Board believes that the award of stock options by
the Company will, among other things, create incentives for executive officers
of the Company to contribute to the success of the entire organization through
the ownership of equity.
The size of option grants is generally intended to reflect the executive's
position with the Company and his or her contributions to the Company,
including his or her success in achieving the individual performance criteria
described above. The Company's option program generally uses a four-year
vesting period to encourage key employees to continue in the employ of the
Company. All stock options granted to executive officers in 1999 under the
Company's stock option plans were granted at fair market value on the date of
grant. During 1999, the current executive officers received options to purchase
an aggregate of 405,000 shares of Common Stock of the Company, at a weighted
average exercise price of $3.96 per share.
All executive officers of the Company other than Dr. Goeddel are eligible to
participate in the Company's 1999 Employee Stock Purchase Plan (the "Purchase
Plan"). The Purchase Plan is available to all other employees of the Company
and generally permits participants to purchase shares at a discount of
approximately 15% from the fair market value at the beginning or end of the
applicable purchase period.
Compliance With Internal Revenue Code Section 162(M).
Section 162(m) of the Internal Revenue Code, of 1986, as amended (the
"Code"), generally disallows a tax deduction to public companies for
compensation over $1.0 million paid to the corporation's Chief Executive
Officer and the four other most highly compensated executive officers.
Qualifying performance-based compensation will not be subject to the deduction
limit if certain requirements are met. The Company generally intends to
structure the stock options granted to its executive officers in a manner that
complies with the statute
14
to mitigate any disallowance of deductions under Section 162(m). However, the
Compensation Committee reserves the right to use its judgment to authorize
compensation payments that may be in excess of the limit when the Compensation
Committee believes such payment is appropriate, after taking into consideration
changing business conditions or the officer's performance, and is in the best
interests of the Stockholders.
Dr. Goeddel's 1999 Compensation
Dr. Goeddel is eligible to participate in the same executive compensation
plans available to the other executive officers of the Company, except that Dr.
Goeddel is currently unable to participate in the Purchase Plan. The
Compensation Committee believes that Dr. Goeddel's annual compensation,
including the portion of his compensation based upon the Company's merit-based
stock option program, has been set at a level competitive with other companies
in the industry.
Dr. Goeddel's salary for 1999 increased to $350,000 from $325,000 in 1998.
In March, 1999, Dr. Goeddel was granted a stock option to purchase 150,000
shares of the Company's Common Stock at an exercise price of $3.00 per share
(the fair market value of a share of the Company's Common Stock on the date of
grant as determined by the Board) for services performed during the prior year.
In determining Dr. Goeddel's 1999 compensation, including whether to grant
stock options of the Company to Dr. Goeddel, the Compensation Committee
considered Dr. Goeddel's overall compensation package as compared with other
chief executives in the Company's industry and past option grants as well as
the effectiveness of Dr. Goeddel's leadership of the Company and the resulting
success of the Company in the attainment of its goals.
Compensation Committee
A. Grant Heidrich, III
Edward R. McCracken
Paul A. Marks, M.D.
Compensation Committee Interlocks and Insider Participation
The Compensation Committee of the Board consists of three non-employee
directors: Mr. Heidrich (Chairman), Mr. McCracken and Dr. Marks. There are no
Compensation Committee interlocks.
Performance Measurement Comparison(1)
The graph below compares total stockholder returns of the Common Stock with
the cumulative total stockholder return of the Nasdaq Composite Index and the
Nasdaq Pharmaceutical Index. The Nasdaq Composite Index tracks the aggregate
price performance of equity securities of companies traded on the Nasdaq. The
Nasdaq Pharmaceutical Index tracks approximately 25 domestic stocks in the
biotechnology sector. All values assume reinvestment of the full amount of all
dividends and are calculated as of December 31 of each year: The graph
commences as of December 10, 1999, the date the Common Stock of the Company
first started trading on the Nasdaq National Market.
The graph below shows the cumulative total stockholder return assuming the
investment of $100 and the reinvestment of dividends, although dividends have
not been declared on the Common Stock, and is based on the returns of the
component companies weighted according to their market capitalizations as of
the end of each period for which returns are indicated.
The stockholder return shown on the graph below is not necessarily
indicative of future performance and the Company will not make or endorse any
predictions as to future stockholder returns.
15
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
AMONG Tularik, NASDAQ AND NASDAQ Pharma
PERFORMANCE GRAPH APPEARS HERE
Measurement Period NASDAQ
(Fiscal Year Covered) Tularik NASDAQ Pharma
- ------------------- ---------- --------- ----------
Measurement Pt- 12/10/99 $100 $100 $100
FYE 12/13/99 $103 $101 $ 97
FYE 12/14/99 $ 97 $ 99 $ 97
FYE 12/15/99 $ 93 $100 $100
FYE 12/16/99 $ 99 $103 $ 98
FYE 12/17/99 $177 $104 $ 96
FYE 12/20/99 $157 $105 $ 95
FYE 12/21/99 $153 $108 $ 94
FYE 12/22/99 $158 $109 $ 96
FYE 12/23/99 $169 $110 $ 99
FYE 12/27/99 $161 $110 $100
FYE 12/28/99 $165 $110 $ 99
FYE 12/29/99 $161 $112 $ 98
FYE 12/30/99 $163 $112 $ 98
FYE 12/31/99 $161 $112 $ 97
- --------
(1) This Section is not "soliciting material," is not deemed "filed" with the
SEC and is not to be incorporated by reference in any filing of the Company
under the 1933 Act or the 1934 Act whether made before or after the date
hereof and irrespective of any general incorporation language in any such
filing.
Related Party Transactions
At December 31, 1999, the Company had loans outstanding in the principal
amount of $94,312 to Mr. Rieflin and $200,000 to Dr. Rosen, both of whom are
executive officers of the Company. Each of such loans was entered into for the
purpose of providing housing assistance to such officers. Mr. Rieflin's loan
was entered into in November 1997 and Dr. Rosen's loan was entered into in
January 1994. Each such loan is evidenced by a full recourse promissory note
secured by shares of the Company's Common Stock. The Company has forgiven
$47,066 of the principal of Mr. Rieflin's loan and will forgive an additional
$23,533 in November 2000 and 2001 if Mr. Rieflin continues as an employee of
the Company through those dates. The Company has forgiven $126,044 of the
principal of Dr. Rosen's loan and will forgive an additional $26,044 in January
2000-2004 if Dr. Rosen continues as an employee of the Company through those
dates. Neither Mr. Rieflin nor Dr. Rosen has repaid any principal amounts due
on their loans, which are due on November 14, 2001 and January 5, 2004,
respectively. The annual interest rate on Mr. Rieflin's loan is 6.1% and on Dr.
Rosen's loan is 5.0%. Since the commencement of fiscal 1999, the largest
aggregate indebtedness of Mr. Rieflin and Dr. Rosen under such loans was
$80,716 and $150,149, respectively, including principal and accrued interest.
The Company believes that all of the transactions discussed above were made
on terms no less favorable to the Company than could have been obtained from
unaffiliated third parties. All future transactions, including loans, between
the Company and its officers, directors, principal Stockholders and their
affiliates will be approved by a majority of the Board, including a majority of
the independent and disinterested directors, and will be on terms no less
favorable to the Company than could be obtained from unaffiliated third
parties.
Each executive officer and director has entered into an indemnification
agreement with the Company. These agreements, among other things, require the
Company to indemnify each director and officer to the fullest extent permitted
by Delaware law, including indemnification for expenses such as attorneys'
fees, judgments, fines and settlement amounts incurred by the director or
officer in any action or proceeding, including any action by or in the right of
the Company, arising out of the person's services as a director or officer of
the Company, any subsidiary of the Company or any other company or enterprise
to which the person provides services at the Company's request.
16
Other Matters
The Board knows of no other matters that will be presented for consideration
at the Annual Meeting. If any other matters are properly brought before the
meeting, it is the intention of the persons named in the accompanying proxy to
vote on such matters in accordance with their best judgment.
By Order of the Board of Directors
William J. Rieflin
Secretary
March 30, 2000
A copy of the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1999 is available without charge upon written request to:
Secretary, Tularik Inc., Two Corporate Drive, South San Francisco, CA 94080.
17
Tularik, Inc.
ANNUAL MEETING OF STOCKHOLDERS
Wednesday, April 26, 2000
8:00 a.m. local time
Two Corporate Drive
South San Francisco, CA 94080
- --------------------------------------------------------------------------------
Tularik Inc.
Two Corporate Drive
South San Francisco, California 94080 proxy
- --------------------------------------------------------------------------------
This proxy is solicited on behalf of the Board of Directors for the Annual
Meeting of Stockholders, April 26, 2000.
The undersigned hereby appoints Luis Bayol, David V. Goeddel, Corrine H. Lyle
and William J. Rieflin, or any of them, proxy or proxies, with full power of
substitution, to vote on behalf of the undersigned all shares of Common Stock of
Tularik Inc. (the "Company") that the undersigned is entitled to vote at the
annual meeting of stockholders of the Company to be held at 8:00 a.m., local
time, on April 26, 2000 at the offices of the Company, and at every adjournment
thereof.
See reverse for voting instructions.
. Please detach here .
The Board of Directors Recommends a Vote FOR Items 1, 2 and 3.
1. Election of directors: 01 David V. Goeddel, Ph.D.
02 A. Grant Heidrich, III
03 Mark Levin
04 Steven L. McKnight, Ph.D.
05 Edward R. McCracken
06 Paul A. Marks, M.D.
07 Peter Sjostrand, M.D.
[_] Vote FOR all nominees (except as marked)
[_] Vote WITHHELD from all nominees
(Instructions: To withhold authority to vote
for any indicated nominee, write the number(s)
of the nominee(s) in the box provided to the right.) [______________________]
2. PROPOSAL to increase the number of authorized shares.
[_] For [_] Against [_] Abstain
3. PROPOSAL to approve the appointment of Ernst & Young as Independent Public
Accountants.
[_] For [_] Against [_] Abstain
4. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
This proxy, when properly executed, will be voted in the manner directed herein
by the undersigned stockholder. If no direction is made, this proxy will be
voted for Proposals 1, 2 and 3.
Address Change? Mark Box [_] Indicate changes below: Date ___________________
[______________________]
Signature(s) in Box
Please sign exactly as
name appears at left.
Joint owners should
each sign personally.
Persons signing in a
representative capacity
should indicate the
capacity in which they
sign.