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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 10, 1998
CONNETICS CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware
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(State or other jurisdiction of incorporation)
0-27406 94-3173928
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(Commission File Number) (IRS Employer Identification No.)
3400 West Bayshore Road, Palo Alto, CA 94303
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (650) 843-2800
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(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS
A. PRIVATE PLACEMENT
On April 10, 1998, Connetics Corporation (the "Company") entered into an
agreement with Alta BioPharma Partners, L.P. ("Alta") and certain funds
affiliated with Alta (collectively the "Investors"), to sell an aggregate of
2,162,163 shares of the Company's Common Stock at a price of $4.625 per share,
for an aggregate purchase price of approximately $10,000,003.88. The financing
closed on April 10, 1998. The Company has agreed to file within ninety days of
the closing a registration statement on Form S-3 covering the resale of the
shares of Common Stock purchased by the Investors.
B. ISSUANCE OF COMMON STOCK TO SMITHKLINE BEECHAM PROPERTIES.
On April 10, 1998, the Company issued 1,037,779 shares of its Common
Stock to SmithKline Beecham Properties, Inc. ("SBP"). Such shares were issued in
connection with the Company's acquisition of rights to Ridaura(R) in December
1996. The issuance completes the Company's obligations to issue equity to SBP
under its Stock Issuance Agreement with SBP dated December 31, 1996, as amended
in December 1997.
C. AMENDMENT OF OBLIGATIONS TO SMITHKLINE BEECHAM.
On April 28, 1998, the Company entered into a Second Omnibus Amendment
with SmithKline Beecham Corporation, SBP and related entities (collectively,
"SmithKline"). Under this Amendment, the Company restructured its payment
obligations under a promissory note issued to SmithKline in connection with the
Ridaura acquisition. Under the revised payment schedule, the Company will make
payments to SmithKline as follows:
<TABLE>
<S> <C>
July 1, 1998 $1,100,000
October 1, 1998 $1,100,000
January 4, 1999 $2,500,000
April 1, 1999 $ 800,000
July 1, 1999 $ 800,000
October 1, 1999 $ 700,000
January 3, 2000 $1,500,000
April 1, 2000 $1,500,000
</TABLE>
On each payment date, the Company will also make certain interest payments.
The Company also agreed to pay SmithKline $308,311 in cash to compensate
SmithKline for a required reduction in the number of shares of Common Stock
issued to SBP on April 10, 1998. Such payment prevented the Company from having
to adjust its royalty obligations to SmithKline for Ridaura sales.
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ITEM 7. FINANCIAL STATEMENT AND EXHIBITS.
Exhibit 10.1 Common Stock Purchase Agreement, dated April
10, 1998 by and among the Company and
certain investors.
Exhibit 10.2 Registration Rights Agreement, dated April
10, 1998 by and among the Company and
certain investors.
Exhibit 10.3 Management Rights Agreement, dated April 10,
1998 between the Company and Alta BioPharma
Partners, L.P.
Exhibit 10.4(1) Stock Issuance Agreement dated December 31,
1996 between the Company and SmithKline
Beecham Properties, Inc.
Exhibit 10.5(2) Omnibus Agreement with SmithKline Beecham
Corporation and related entities dated
December 18, 1997.
Exhibit 10.6 Second Omnibus Agreement with SmithKline
Beecham Corporation and related entities
dated April 28, 1998.
Exhibit 10.7(3) Agreement on Relaxin Dated January 19, 1998
by and between the Company and the Howard
Florey Institute of Experimental Physiology
and Medicine.
(1) Incorporated by reference from an exhibit to the Company's Report on
Form 8-K (File No. 0-27406) dated January 15, 1997.
(2) Incorporated by reference from an exhibit to Post-Effective Amendment
No. 1 to the Company's Registration Statement on Form S-1 (File No.
333-41195) filed with the Commission on December 19, 1997.
(3) Incorporated by reference from Exhibit 10.56 to the Company's Annual
Report on Form 10-K (File No. 0-27406) for the fiscal year ended
December 31, 1997.
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ITEM 9. SALES OF EQUITY SECURITIES PURSUANT TO REGULATION S.
On April 28, 1998, the Company issued 1,996 shares of its Common Stock
to The Howard Florey Institute of Experimental Physiology and Medicine (the
"Florey Institute"). The issuance was made as part of consideration owed to the
Florey Institute under an Agreement on Relaxin dated January 19, 1998. Such
securities were not registered under the Securities Act of 1933, as amended, in
reliance upon Regulation S under the Securities Act. The Company determined that
the exemption under Regulation S was available due to, among other things, the
fact that the Florey Institute is located outside the United States, the fact
that the Company made no directed selling efforts in the United States, and the
fact that the Florey Institute made appropriate representations and warranties
and agreed to required restrictions in order to ensure compliance with
Regulation S. The Florey Institute is located at the University of Melbourne,
Australia.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CONNETICS CORPORATION
(Registrant)
Dated: May 6, 1998 By: /s/ John L. Higgins
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John L. Higgins
Vice President, Finance and Administration
and Chief Financial Officer
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INDEX TO EXHIBITS
EXHIBITS
Exhibit 10.1 Common Stock Purchase Agreement, dated April
10, 1998 by and among the Company and
certain investors.
Exhibit 10.2 Registration Rights Agreement, dated April
10, 1998 by and among the Company and
certain investors.
Exhibit 10.3 Management Rights Agreement, dated April 10,
1998 between the Company and Alta BioPharma
Partners, L.P.
Exhibit 10.4(1) Stock Issuance Agreement dated December 31,
1996 between the Company and SmithKline
Beecham Properties, Inc.
Exhibit 10.5(2) Omnibus Agreement with SmithKline Beecham
Corporation and related entities dated
December 18, 1997.
Exhibit 10.6 Second Omnibus Agreement with SmithKline
Beecham Corporation and related entities
dated April 28, 1998.
Exhibit 10.7(3) Agreement on Relaxin Dated January 19, 1998
by and between the Company and the Howard
Florey Institute of Experimental Physiology
and Medicine.
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(1) Incorporated by reference from an exhibit to the Company's Report on
Form 8-K (File No. 0-27406) dated January 15, 1997.
(2) Incorporated by reference from an exhibit to Post-Effective Amendment
No. 1 to the Company's Registration Statement on Form S-1 (File No.
333-41195) filed with the Commission on December 19, 1997.
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(3) Incorporated by reference from Exhibit 10.56 to the Company's Annual
Report on Form 10-K (File No. 0-27406) for the fiscal year ended
December 31, 1997.
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EXHIBIT 10.1
CONNETICS CORPORATION
COMMON STOCK PURCHASE AGREEMENT
APRIL 10, 1998
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CONNETICS CORPORATION
COMMON STOCK PURCHASE AGREEMENT
This Common Stock Purchase Agreement (the "Agreement") is entered into
as of this 10th day of April, 1998, among Connetics Corporation, a Delaware
corporation (the "Company") and Alta BioPharma Partners, L.P., Connetics
Partners (Alta Bio), LLC and Alta Embarcadero BioPharma, LLC (each a "Purchaser"
and together the "Purchasers").
SECTION 1
SALE OF COMMON STOCK
1.1 SALE OF COMMON STOCK. Subject to the terms and conditions
hereof, on the Closing Date, as defined below, the Company will issue and sell
to the Purchasers, and the Purchasers will purchase from the Company, an
aggregate of 2,162,163 shares of Common Stock, par value $0.001 per share, of
the Company (the "Common Stock"), for an aggregate purchase price of
$10,000,003.88. The number of shares of Common Stock to be purchased and the
purchase price to be paid by each Purchaser are as follows:
<TABLE>
<CAPTION>
PURCHASER NUMBER OF SHARES PURCHASE PRICE
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<S> <C> <C>
Alta BioPharma Partners, L.P. 1,367,712 $6,325,668.00
Connetics Partners (Alta Bio), LLC 745,264 $3,446,846.00
Alta Embarcadero BioPharma, LLC 49,187 $227,489.88
</TABLE>
1.2 CLOSING DATE. The closing (the "Closing") of the purchase and
sale of the Common Stock shall be held at the offices of Venture Law Group, 2800
Sand Hill Road, Menlo Park, California at 10:00 a.m. on April 10, 1998 or at
such other time and place upon which the Company and the Purchasers shall
mutually agree (the date of the Closing is hereinafter referred to as the
"Closing Date").
1.3 DELIVERY. At the Closing, the Company will deliver to each
Purchaser a certificate or certificates representing the shares of Common Stock
purchased by such Purchaser, against payment of the purchase price therefor, by
wire transfer or certified or cashier's check drawn on a United States ("U.S.")
bank.
1.4 LEGEND. The certificate or certificates for the Common Stock
shall be subject to a legend restricting transfer under the Securities Act of
1933, as amended (the "Securities Act") and referring to restrictions on
transfer herein, such legend to be substantially as follows:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT
WITH A VIEW TO, OR IN CONNECTION WITH, THE
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SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISPOSITION MAY BE EFFECTED
WITHOUT (A) AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO, OR (B) AN
OPINION OF COUNSEL FOR THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR (C) FULL COMPLIANCE WITH
THE PROVISIONS OF RULE 144 UNDER THE ACT."
1.5 REMOVAL OF LEGENDS. Any legend endorsed on a certificate
pursuant to Section 1.4 hereof shall be removed (i) if the shares of the Common
Stock represented by such certificate shall have been effectively registered
under the Securities Act or otherwise lawfully sold in a public transaction,
(ii) if such shares may be transferred in compliance with Rule 144(k)
promulgated under the Securities Act, or (iii) if the holder of such shares
shall have provided the Company with an opinion of counsel, in form and
substance acceptable to the Company, stating that a public sale, transfer or
assignment of such shares may be made without registration.
SECTION 2
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the Purchasers that:
2.1 ORGANIZATION. The Company is a corporation duly organized and
validly existing under the laws of the State of Delaware and is in good standing
under such laws. The Company has requisite corporate power and authority to own,
lease and operate its properties and assets, and to carry on its business as
presently conducted and as proposed to be conducted. The Company is qualified to
do business as a foreign corporation in each jurisdiction in which the ownership
of its property or the nature of its business requires such qualification,
except where failure to so qualify would not have a materially adverse effect on
the Company.
2.2 AUTHORIZATION. The Company has all corporate right, power and
authority to enter into this Agreement and the Registration Rights Agreement
substantially in the form attached hereto as Exhibit A (the "Registration Rights
Agreement") and to consummate the transactions contemplated hereby and thereby.
All corporate action on the part of the Company, its directors and stockholders
necessary for the authorization, execution, delivery and performance of this
Agreement and the Registration Rights Agreement by the Company, and the
authorization, sale, issuance and delivery of the Common Stock and the
performance of the Company's obligations hereunder and under the Registration
Rights Agreement has been taken. This Agreement and the Registration Rights
Agreement have been duly executed and delivered by the Company and constitute
legal, valid and binding obligations of the Company enforceable in accordance
with their respective terms, subject to laws of general application relating to
bankruptcy, insolvency and the relief of debtors and rules of law governing
specific performance, injunctive relief or other equitable remedies, and to
limitations of public policy as they may apply to Section 1.6 of the
Registration Rights Agreement. Upon issuance and delivery pursuant to this
Agreement, all of the Common Stock will be duly and validly issued, fully paid
and nonassessable and free and clear of any liens and encumbrances. There are no
statutory,
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contractual or other preemptive rights or rights of first refusal with respect
to the issuance and sale of the Common Stock.
2.3 VALIDITY OF SECURITIES. The Common Stock, when issued, sold and
delivered by the Company in accordance with the terms of this Agreement, will be
duly and validly issued, fully-paid and nonassessable. The issuance, sale and
delivery of the Common Stock are not subject to preemptive or any similar rights
of the Stockholders of the Company or any liens or encumbrances arising through
the Company. Based in part upon the representations of the Purchasers in this
Agreement, the offer, sale and issuance of the Common Stock will be made in
compliance with all applicable federal and state securities laws.
2.4 CAPITALIZATION. The authorized capital stock of the Company
consists of 50,000,000 shares of Common Stock, $0.001 par value, of which at
March 31, 1998, 13,518,150 shares were issued and outstanding, and 5,000,000
shares of Preferred Stock, $0.001 par value. The Company's Board of Directors
has authorized the creation of 90,000 shares of Series B Preferred Stock for
potential issuance under the Company's stockholder rights plan. Since March 31,
1998 no shares of the Company's Common or Preferred Stock have been issued,
except pursuant to the exercise of options or warrants outstanding as of March
31, 1998. All such issued and outstanding shares have been duly authorized and
validly issued and are fully paid and nonassessable. In addition to the
foregoing, the Company has reserved and outstanding the following warrants,
rights, options and convertible securities: (i) warrants for the purchase of
18,395 shares of Common Stock at an exercise price of $4.89 per share, which
warrants expire in February 2001; (ii) warrants for the purchase of 22,728
shares of Common Stock at an exercise price of $11.00 per share, which warrants
expire in December 2000; (iii) warrants for the purchase of 73,071 shares of
Common Stock at an exercise price of $5.78, which warrants expire in December
2002; (iv) warrants for the purchase of 20,000 shares of Common Stock at an
exercise price of $7.43 per share, which warrants expire in December, 2001; (v)
warrants for the purchase of 250,000 shares of Common Stock at an exercise price
of $8.25 per share, which warrants expire in January 2002; (vi) warrants for the
purchase of 905,000 shares of Common Stock at an exercise price of $9.08 per
share, which warrants expire in May, 2001; (vii) warrants for the purchase of
6,000 shares of Common Stock at an exercise price of $6.00 per share, which
warrants expire in January, 2003; (viii) 2,600,000 shares reserved for issuance
pursuant to the Company's 1994 Stock Plan (including an increase of 600,000
shares which is subject to stockholder approval at the annual meeting of the
Company's stockholders to be held on May 22, 1998), of which, at March 31, 1998,
options (net of repurchases) to purchase 311,289 shares had been exercised,
options to purchase 1,779,405 shares were outstanding and 509,306 shares
remained available for future grant; (ix) 500,000 shares reserved for issuance
pursuant to the Company's 1995 Employee Stock Purchase Plan (including an
increase of 400,000 shares which is subject to stockholder approval at the
annual meeting of the Company's stockholders to be held on May 22, 1998), of
which, at March 31, 1998, 53,853 shares had been issued; (x) 250,000 shares
reserved for issuance under the Company's 1995 Directors' Stock Option Plan
(including an increase of 100,000 shares which is subject to stockholder
approval at the annual meeting of the Company's stockholders to be held on May
22, 1998), of which, at March 31, 1998, 105,000 options had been granted; and
(xi) a commitment from Kepler Capital LLC to purchase up to $25 million of
Common Stock over a three-year period beginning on or before December 1, 1997.
In
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addition, the Company may be obligated to issue additional shares to SmithKline
Beecham Corporation on April 10, 1998 as part of the consideration paid for the
Company's acquisition of rights to Ridaura in December, 1996. Except as
described in this Section 2.2, there are no other options, warrants, conversion
privileges or other contractual rights presently outstanding to purchase or
otherwise acquire any authorized but unissued shares of the Company's capital
stock or other securities. All of the issued and outstanding securities of the
Company have been issued in compliance with all applicable federal and state
securities laws.
2.5 NO CONFLICT. The execution and delivery of this Agreement and
the Registration Rights Agreement do not, and the consummation of the
transactions contemplated hereby and thereby will not, conflict with, or result
in any violation of, or default (with or without notice or lapse of time, or
both), or give rise to a right of termination, cancellation or acceleration of
any obligation or to a loss of a material benefit, under, any provision of the
Certificate of Incorporation or Bylaws of the Company or any mortgage,
indenture, lease or other agreement or instrument, permit, concession,
franchise, license, judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to the Company, its properties or assets, which conflict,
violation, default or right would have a material adverse effect on the
business, properties, prospects or financial condition of the Company.
2.6 ACCURACY OF REPORTS; FINANCIAL STATEMENTS. All reports required
to be filed with the Securities and Exchange Commission (the "SEC") by the
Company from February 1, 1996 (the date of the Company's initial public
offering) through the date of this Agreement under the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), copies of which have been made
available to each Purchaser (the "SEC Documents"), have been duly and timely
filed, were in substantial compliance with the requirements of their respective
forms when filed, were complete and correct in all material respects as of the
dates at which the information was furnished, and contained (as of such dates)
no untrue statement of a material fact nor omitted to state a material fact
necessary in order to make the statements made therein in light of the
circumstances in which made not misleading. The financial statements of the
Company included in the SEC Documents (the "Financial Statements") comply as to
form in all material respects with applicable accounting requirements and with
the published rules and regulations of the SEC with respect thereto. The
Financial Statements have been prepared in accordance with generally accepted
accounting principles consistently applied and fairly present the consolidated
financial position of the Company and any subsidiaries at the dates thereof and
the consolidated results of operations and consolidated cash flows for the
periods then ended (subject, in the case of unaudited statements, to normal,
recurring adjustments).
2.7 CHANGES. Since March 20, 1998, (the date on which the Company's
Annual Report on Form 10-K for the year ended December 31, 1997 was filed with
the SEC), there has not been (a) any incurrence by the Company of any material
liability, absolute or contingent, or (b) any event or condition of any
character that has materially and adversely affected or might materially and
adversely affect the business, properties, prospects or financial condition of
the Company (as such business is presently conducted and as it is proposed to be
conducted). There is no material liability or contingency of the Company that is
not disclosed in the SEC Documents.
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2.8 GOVERNMENTAL CONSENTS, ETC. No consent, approval or
authorization of or designation, declaration or filing with any governmental
authority on the part of the Company is required in connection with the valid
execution and delivery of this Agreement or the Registration Rights Agreement,
or the consummation of any other transaction contemplated hereby and thereby,
except such filings as may be required to be made with the SEC, the National
Association of Securities Dealers, Inc. ("NASD") and with governmental
authorities for purposes of effecting compliance with the securities and blue
sky laws in the states in which Common Stock is offered and/or sold, which
compliance will be effected in accordance with such laws.
2.9 LITIGATION. There is no pending or, to the best of the Company's
knowledge, threatened lawsuit, administrative proceeding, arbitration, labor
dispute or governmental investigation ("Litigation") to which the Company is a
party or by which any material portion of its assets, taken as a whole, may be
bound, nor is the Company aware of any basis therefor, which Litigation, if
adversely determined, would have a material adverse effect on the business,
properties, prospects or financial condition of the Company.
2.10 INTELLECTUAL PROPERTY. To its knowledge, and except as disclosed
in the SEC Documents, the Company owns or possesses sufficient legal rights to
all patents, trademarks, service marks, tradenames, copyrights, trade secrets,
licenses, information and proprietary rights and processes necessary for its
business as now conducted and as proposed to be conducted, without infringement
of any rights of a third party. The Company has not received any communications
alleging that the Company has violated or, by conducting its business as
proposed, would violate any of the patents, trademarks, service marks,
tradenames, copyrights, trade secrets or other proprietary rights or processes
of any other person or entity, which violation would have a material adverse
effect on the business, properties, prospects or financial condition of the
Company. Except as disclosed in the SEC Documents, the Company has not granted
(nor has the Company licensed from a third party) any material rights to or
licenses to its patents, trademarks, service marks, tradenames, copyrights,
trade secrets or other proprietary rights or processes.
2.11 REGISTRATION RIGHTS. Except as provided in the Registration
Rights Agreement and as disclosed in the SEC Documents, the Company has not
granted or agreed to grant any rights to register its securities under the
Securities Act, including piggy-back rights, to any person or entity.
2.12 NO MATERIAL DEFAULT. The Company is not in violation of or
default under any provision of (a) its Certificate of Incorporation or Bylaws or
(b) any mortgage, indenture, lease or other agreement or instrument, permit,
concession, franchise or license to which it is a party or by which it is bound
or (c) any federal or state judgment, order, decree, statute, law, ordinance,
rule or regulation applicable to the Company, except with respect to clauses (b)
and (c) above, such violations or defaults as would not have a material adverse
effect on the business, properties, prospects or financial condition of the
Company.
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2.13 DISCLOSURE. No representation or warranty of the Company
contained in this Agreement or the exhibits attached hereto (when read together
and taken as a whole), contains any untrue statement of a material fact or omits
to state a material fact necessary in order to make the statements contained
herein or therein in light of the circumstances under which they were made not
misleading.
2.14 SOLVENCY; NO DEFAULT. As of this date the Company has sufficient
funds and cash flow to pay its debts and other liabilities as they become due,
and the Company is not in default with respect to any material debt or
liability.
2.15 RIGHTS OF COMMON STOCK. The Common Stock shall have the rights,
preferences, privileges and restrictions provided in the Company's Amended and
Restated Certificate of Incorporation.
SECTION 3
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
Each Purchaser hereby represents and warrants to the Company as follows:
3.1 INVESTMENT. Purchaser is acquiring the Common Stock for
investment for its own account, not as a nominee or agent and not with a view to
or for resale in connection with any distribution thereof. Purchaser understands
that the Common Stock purchased by such Purchaser from the Company pursuant to
this Agreement has not been registered under the Securities Act by reason of a
specific exemption from the registration provisions of the Securities Act which
depends upon, among other things, the bona fide nature of such Purchaser's
investment intent and the accuracy of such Purchaser's representations as
expressed herein.
3.2 ACCREDITED INVESTOR. Each Purchaser is an "accredited investor"
as defined by Rule 501(a) under the Securities Act of 1933, as amended (the
"Securities Act"). The SEC documents have been made available to each Purchaser,
and each Purchaser has received all the information it has requested regarding
the Company. Each Purchaser has such business and financial experience as is
required to give it the capacity to protect its own interests in connection with
the purchase of the Common Stock.
3.3 AUTHORITY. This Agreement and the Registration Rights Agreement
have been duly executed and delivered by each Purchaser and constitute legal,
valid and binding obligations of the Purchasers, enforceable in accordance with
their respective terms, subject to laws of general application relating to
bankruptcy, insolvency and the relief of debtors and rules of law governing
specific performance, injunctive relief or other equitable remedies, and to
limitations of public policy as they may apply to Section 1.6 of the
Registration Rights Agreement. The execution and delivery of this Agreement and
the Registration Rights Agreement do not, and the consummation of the
transactions contemplated hereby and thereby will not, conflict with or result
in any violation of any obligation under any judgment, order, decree, statute,
law, ordinance, rule or regulation applicable to the Purchasers.
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3.4 GOVERNMENT CONSENTS, ETC. No consent, approval or authorization
of or designation, declaration or filing with any governmental authority on the
part of the Purchasers is required in connection with the valid execution and
delivery of this Agreement, or the offer, sale or issuance of the Common Stock,
or the consummation of any other transaction contemplated hereby.
3.5 INVESTIGATION. Each Purchaser has had a reasonable opportunity
to discuss the Company's business, management and financial affairs with the
Company's management.
SECTION 4
CONDITIONS TO OBLIGATIONS OF THE PURCHASERS
The obligations of each Purchaser to the Company under this Agreement
are subject to the fulfillment, on or before the Closing, of each of the
following conditions, unless otherwise waived:
4.1 REPRESENTATIONS AND WARRANTIES CORRECT. The representations and
warranties made by the Company in Section 2 shall be true and correct in all
material respects on the Closing Date with the same effect as though such
representations and warranties had been made on and as of the Closing Date.
4.2 COVENANTS. All covenants, agreements and conditions contained in
this Agreement to be performed by the Company on or prior to the Closing Date
shall have been performed or complied with in all material respects.
4.3 NO ORDER PENDING. There shall not then be in effect any order
enjoining or restraining the transactions contemplated by this Agreement.
4.4 NO LAW PROHIBITING OR RESTRICTING SALE. There shall not be in
effect any law, rule or regulation prohibiting or restricting such sale, or
requiring any consent or approval of any person which shall not have been
obtained to issue the Common Stock (except as otherwise referenced in this
Agreement).
4.5 COMPLIANCE CERTIFICATE. The Company shall have delivered to the
Purchasers a certificate substantially in the form attached as Exhibit B hereto,
executed by a duly authorized officer, dated the Closing Date, and certifying to
the fulfillment of the conditions specified in Sections 4.1 and 4.2.
4.6 REGISTRATION RIGHTS AGREEMENT. On or before the Closing, the
Company and the Purchasers shall have executed and delivered a counterpart of
the Registration Rights Agreement.
4.7 OPINION OF COMPANY COUNSEL. The Purchasers shall have received
from Venture Law Group, counsel for the Company, an opinion addressed to the
Purchasers, dated the Closing Date, in substantially the form attached as
Exhibit C hereto.
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SECTION 5
CONDITIONS TO OBLIGATIONS OF THE COMPANY
The obligations of the Company under this Agreement are subject to the
fulfillment on or prior to the Closing of each of the following conditions,
unless otherwise waived:
5.1 REPRESENTATIONS AND WARRANTIES CORRECT. The representations and
warranties made by the Purchasers in Section 3 hereof shall be true and correct
in all material respects on and as of the Closing Date with the same effect as
though such representations and warranties had been made on and as of the
Closing Date.
5.2 PERFORMANCE. All covenants, agreements and conditions contained
in this Agreement to be performed by the Purchasers on or prior to the Closing
Date shall have been performed or complied with in all material respects.
5.3 NO ORDER PENDING. There shall not then be in effect any order
enjoining or restraining the transactions contemplated by this Agreement.
5.4 NO LAW PROHIBITING OR RESTRICTING SUCH SALE. There shall not be
in effect any law, rule or regulation prohibiting or restricting such sale, or
requiring any consent or approval of any person which shall not have been
obtained to issue the Common Stock (except as otherwise provided in this
Agreement).
SECTION 6
MISCELLANEOUS
6.1 GOVERNING LAW. This Agreement and all acts and transactions
pursuant hereto and the rights and obligations of the parties hereto shall be
governed, construed and interpreted in accordance with the laws of the State of
California, without giving effect to principles of conflicts of law.
6.2 SURVIVAL. Unless otherwise set forth in this Agreement, the
warranties, representations and covenants of the Company and the Purchasers
contained in or made pursuant to this Agreement shall survive the execution and
delivery of this Agreement and the Closing.
6.3 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and assigns.
6.4 ENTIRE AGREEMENT; AMENDMENT. This Agreement, the Registration
Rights Agreement and the other documents delivered pursuant hereto constitute
the full and entire understanding and agreement between the parties with regard
to the subject matter hereof and thereof and supersede all prior agreements and
understandings among the parties relating to the subject matter hereof. Neither
this Agreement nor any term hereof may be amended, waived, discharged or
terminated other than by a written instrument signed by the party against which
enforcement of any such amendment, waiver, discharge or termination is sought.
- 8 -
<PAGE> 10
6.5 NOTICES AND DATES. Unless otherwise provided herein, any notice
required or permitted by this Agreement shall be in writing and shall be deemed
sufficient upon delivery, when delivered personally or by overnight courier and
addressed to the party to be notified at such party's address as set forth on
the signature page hereto or as subsequently modified by written notice. In the
event that any date provided for in this Agreement falls on a Saturday, Sunday
or legal holiday, such date shall be deemed extended to the next business day.
6.6 BROKERS.
(a) The Company has not engaged, consented to or authorized
any broker, finder or intermediary to act on its behalf, directly or indirectly,
as a broker, finder or intermediary in connection with the transactions
contemplated by this Agreement. The Company agrees to indemnify and hold
harmless the Purchasers from and against all fees, commissions or other payments
owing to any party acting on behalf of the Company hereunder.
(b) No Purchaser has engaged, consented to or authorized any
broker, finder or intermediary to act on its behalf, directly or indirectly, as
a broker, finder or intermediary in connection with the transactions
contemplated by this Agreement. Each Purchaser hereby agrees to indemnify and
hold harmless the Company from and against all fees, commissions or other
payments owing to any party acting on behalf of such Purchaser hereunder.
6.7 SEVERABILITY. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid, void
or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated.
6.8 COSTS AND EXPENSES. Irrespective of whether the Closing is
effected, the Company shall pay all costs and expenses that it incurs with
respect to the negotiation, execution, delivery and performance of this
Agreement. If the Closing is effected, the Company shall, at the Closing,
reimburse the reasonable fees of Pillsbury Madison & Sutro LLP, counsel for the
Purchasers, and upon receipt of a bill therefor, shall reimburse the
out-of-pocket expenses of such counsel, provided that such fees and expenses
shall not exceed $7,500.
6.9 NO THIRD PARTY RIGHTS. Nothing in this Agreement shall create or
be deemed to create any rights in any person or entity not a party to this
Agreement.
6.10 CAPTIONS AND HEADINGS. The captions and headings used herein are
for convenience and ease of reference only and are not intended to be a part of
or to affect the meaning or interpretation of this Agreement.
6.11 COUNTERPARTS. This Agreement may be executed in counterparts,
and each such counterpart shall be deemed an original for all purposes.
- 9 -
<PAGE> 11
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective authorized officers as of the date aforesaid.
CONNETICS CORPORATION
By: /s/ Thomas G. Wiggans
-------------------------------------
Thomas G. Wiggans, President
Address:
3400 West Bayshore Road
Palo Alto, CA 94303
Facsimile: (650) 843-2899
INVESTORS:
ALTA BIOPHARMA PARTNERS, L.P.
BY: ALTA BIOPHARMA MANAGEMENT, LLC
BY: /s/ Jean Deleage
-------------------------------------
MANAGING DIRECTOR
ALTA EMBARCADERO BIOPHARMA, LLC
BY: /s/ Jean Deleage
-------------------------------------
MEMBER
CONNETICS PARTNERS (ALTA BIO), LLC
BY: ALTA/CHASE BIOPHARMA MANAGEMENT, LLC
BY: /s/ Jean Deleage
-------------------------------------
MEMBER
Address:
Alta Partners
One Embarcadero Center, Suite 4050
San Francisco, CA 94111
Facsimile: (415) 362-6178
<PAGE> 12
EXHIBIT 10.1
EXHIBIT A
REGISTRATION RIGHTS AGREEMENT
<PAGE> 13
EXHIBIT 10.1
EXHIBIT B
CONNETICS CORPORATION
COMPLIANCE CERTIFICATE
The undersigned, Thomas G. Wiggans, hereby certifies as follows:
1. The undersigned is the duly elected President and Chief
Executive Officer of Connetics Corporation, a Delaware corporation (the
"Company").
2. The representations and warranties of the Company set forth in
Section 2 of the Common Stock Purchase Agreement (the "Agreement") dated April
10, 1998 are true and correct in all material respects as though made on and as
of the date hereof.
3. The Company has performed and complied with all covenants,
agreements, obligations and conditions contained in the Agreement to be
performed by the Company on or prior to the Closing Date.
The undersigned has executed this Certificate this 10th day of April,
1998.
-----------------------------------------
Thomas G. Wiggans, President and Chief
Executive Officer
<PAGE> 1
EXHIBIT 10.2
CONNETICS CORPORATION
REGISTRATION RIGHTS AGREEMENT
APRIL 10, 1998
<PAGE> 2
EXHIBIT 10.2
CONNETICS CORPORATION
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is made as of the
tenth day of April, 1998, by and among Connetics Corporation, a Delaware
corporation (the "Company") and Alta BioPharma Partners, L.P., Connetics
Partners (Alta Bio), LLC and Alta Embarcadero BioPharma, LLC each of which is
herein referred to as an "Investor."
RECITALS
WHEREAS, the Company and the Investors have entered into a Common Stock
Purchase Agreement (the "Purchase Agreement") of even date herewith pursuant to
which the Company has agreed to sell to the Investors and the Investors have
agreed to purchase from the Company shares of the Company's Common Stock (all
terms not otherwise defined herein shall have the meanings ascribed in the
Purchase Agreement); and
WHEREAS, a condition to the Investors' obligations under the Purchase
Agreement is that the Company and the Investors enter into this Agreement in
order to provide the Investors with certain rights to register the Common Stock
acquired by the Investors pursuant to the Purchase Agreement. The Company
desires to induce the Investors to purchase the Common Stock pursuant to the
Purchase Agreement by agreeing to the terms and conditions set forth herein;
NOW, THEREFORE, the parties hereby agree as follows:
1. REGISTRATION RIGHTS. The Company and the Investors covenant and
agree as follows:
1.1 DEFINITIONS. For purposes of this Section 1:
(a) The terms "register," "registered," and
"registration" refer to a registration effected by preparing and filing a
registration statement or similar document in compliance with the Securities Act
of 1933, as amended (the "Act"), and the declaration or ordering of
effectiveness of such registration statement or document;
(b) The term "Registrable Securities" means (i) the
shares of Common Stock issued or sold in connection with the Purchase Agreement
(such shares of Common Stock are collectively referred to hereinafter as the
"Shares" or "Stock") and (ii) any other shares of 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, the Stock provided, that the
foregoing definition shall exclude in all cases any Registrable Securities sold
by a person in a transaction in which his or her rights under this Agreement are
not assigned. Notwithstanding the foregoing, shares of common stock shall only
be treated as Registrable Securities if and so long as they have not been (A)
sold to or through a broker or dealer or underwriter in a public distribution or
<PAGE> 3
a public securities transaction, or (B) sold in a transaction exempt from the
registration and prospectus delivery requirements of the Act under Section 4(1)
thereof so that all transfer restrictions, and restrictive legends with respect
thereto, if any, are removed upon the consummation of such sale;
(c) The number of shares of "Registrable Securities
then outstanding" shall be determined by the number of shares of Common Stock
then outstanding which are Registrable Securities, plus the number of shares of
common stock issuable pursuant to then exercisable or convertible securities
which are Registrable Securities;
(d) The term "Holder" means any person owning or
having the right to acquire Registrable Securities or any assignee thereof in
accordance with this Agreement;
(e) The term "Form S-3" means such form under the
Act as in effect on the date hereof or any successor form under the Act; and
(f) The term "SEC" means the Securities and Exchange
Commission.
1.2 REGISTRATION. The Company will use its reasonable best
efforts to effect a registration to permit the sale of the Registrable
Securities as described below, and pursuant thereto the Company will:
(a) prepare and file and use its reasonable best
efforts to have declared effective by the SEC within 90 days after the Closing,
a registration statement on Form S-3 relating to resale of all of the shares of
the Registrable Securities and use its reasonable best efforts to cause such
registration statement to remain continuously effective for a period which will
terminate when all Registrable Securities covered by such registration
statement, as amended from time to time, have been sold or when the Registrable
Securities may be sold under Rule 144(k) under the Securities Act.
(b) prepare and file with the SEC such amendments
and post-effective amendments to the registration statement and any prospectus
as may be necessary to keep such registration statement effective for the period
specified in Section 1.2(a) and to comply with the provisions of the Securities
Act and the Exchange Act with respect to the distribution of all Registrable
Securities.
(c) notify each Investor promptly and confirm such
notice in writing (i) when the prospectus or any supplement or post-effective
amendment has been filed and, with respect to the registration statement or any
post-effective amendment, when the same has become effective, (ii) of any
request by the SEC for amendments or supplements to the registration statement
or prospectus or for additional information, (iii) of the issuance by the SEC of
any stop order suspending the effectiveness of the registration statement or the
initiation of any proceedings for that purpose, and (iv) of the receipt by the
Company of any notification with respect to the suspension of the qualification
of the Registrable Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose.
2
<PAGE> 4
(d) make every reasonable effort to obtain the
withdrawal of any order suspending the effectiveness of the registration
statement at the earliest possible moment.
(e) furnish to each Investor, without charge, at
least one copy of the registration statement and any post-effective amendment
thereto, including financial statements and schedules, and upon an Investor's
request, all documents incorporated therein by reference and all exhibits
thereto (including those incorporated by reference).
(f) deliver to each Investor, without charge, as
many copies of the prospectus (including each preliminary prospectus) and any
amendment or supplement thereto as such Investor may reasonably request in order
to facilitate the disposition of the Registrable Securities.
(g) cause all Registrable Securities covered by the
registration statement to be listed on each securities exchange or market on
which similar securities issued by the Company are then listed, and if the
securities are not so listed to use its reasonable best efforts promptly to
cause all such securities to be listed on either the New York Stock Exchange,
the American Stock Exchange or the Nasdaq Stock Market.
(h) use reasonable best efforts to qualify or
register the Registrable Securities for sale under (or obtain exemptions from
the application of) the Blue Sky laws of such jurisdictions as are applicable.
The Company shall not be required to qualify as a foreign corporation or to file
a general consent to service of process in any such jurisdiction where it is not
presently qualified or where it would be subject to general service of process
or taxation as a foreign corporation in any jurisdiction where it is not now so
subject.
(i) otherwise use its reasonable best efforts to
comply with all applicable rules and regulations of the SEC under the Securities
Act and the Exchange Act and take such other actions as may be reasonably
necessary to facilitate the registration of the Registrable Securities
hereunder.
(j) expenses incurred in connection with a
registration requested pursuant to this Section 1.2 shall be borne by the
Company, including all registration, filing, qualification, printers' and
accounting fees but excluding any underwriters' discounts or commissions and any
fees and disbursements of any counsel for the selling Holders (such fees or
discounts, if any, to be borne pro rata by the Holders participating in the
registration).
1.3 RESTRICTIONS ON AND PROCEDURE FOR SALES PURSUANT TO A
REGISTRATION STATEMENT.
(a) Each Holder agrees to the following:
(i) Notice to Company. If any Holder shall
propose to sell any Shares, the Holder shall notify the Company of its intent to
do so at least three (3) business days prior to the date of such sale (the
"Notice of Sale"), and the provision of the Notice
3
<PAGE> 5
of Sale to the Company shall conclusively be deemed to establish an agreement by
such Holder to comply with the registration provisions herein described. The
Notice of Sale shall be deemed to constitute a representation that any
information previously supplied by such Holder is accurate as of the date of
such Notice of Sale.
(ii) Notice of Sale. The Notice of Sale in
substantially the form attached as Attachment A shall be given in accordance
with the provisions of Section 2.5 hereof. However, the Holder may give the
Notice of Sale orally by telephoning John L. Higgins or the then current Chief
Financial Officer at the Company at (650) 843-2800. An oral Notice of Sale shall
be deemed to have been received only at such time as the Selling Holder speaks
directly with John L. Higgins (or such then current Chief Financial Officer). In
addition, an oral Notice of Sale shall only be deemed effective if it is
followed by a written Notice of Sale received by the Company by personal
delivery or facsimile within twenty-four (24) hours after giving the oral Notice
of Sale.
(iii) Delay of Sale. The Company may refuse to
permit the Holder to resell any Shares for a specified period of time; provided,
however, that (a) in order to exercise this right, the Company must deliver a
certificate in writing to the Holder to the effect that the registration
statement in its then current form contains an untrue statement of material fact
or omits to state a material fact necessary in order to make the statements made
therein, in light of the circumstances under which they were made, not
misleading, and (b) in no event shall such delay exceed twenty-five (25) days,
and (c) in no event shall this right of delay be exercised on more than two (2)
occasions in any twelve (12) month period. During any suspension as contemplated
by this Section 1.4 (a)(iii), the Company will not allow any of its officers or
directors to buy or sell shares of the Company's securities.
(b) Representations of Holders. Each Holder hereby
represents to and covenants with the Company that, during the period in which a
registration statement effected pursuant to Section 1.2 remains effective, such
Holder will:
(i) not engage in any stabilization activity
in connection with any of the Company's securities;
(ii) cause to be furnished to any purchaser
of the Shares and to the broker-dealer, if any, through whom Shares may be
offered, a copy of the Prospectus; and
(iii) not bid for or purchase any securities
of the Company or any rights to acquire the Company's securities, or attempt to
induce any person to purchase any of the Company's securities or any rights to
acquire the Company's securities other than as permitted under the Securities
Exchange Act of 1934, as amended ("Exchange Act").
(c) Information for Use in Registration Statement.
Each Holder represents and warrants to the Company that such Holder has
completed the information requested by the Selling Holder's Questionnaire
attached as Attachment B hereto (the "Questionnaire"), and further represents
and warrants to the Company that all information
4
<PAGE> 6
provided by such Holder in the Questionnaire is true, accurate and complete.
Each Holder understands that the written information in the Questionnaire and
all written representations made in this Agreement are being provided to the
Company specifically for use in, or in connection with, the registration
statement and the Prospectus, and has executed this Agreement with such
knowledge.
1.4 FURNISH INFORMATION. It shall be a condition precedent
to the obligations of the Company to take any action pursuant to this Section 1
with respect to the Registrable Securities of any selling Holder that such
Holder shall furnish to the Company such information regarding itself, the
Registrable Securities held by it, and the intended method of disposition of
such securities as shall be required to effect the registration of such Holder's
Registrable Securities.
1.5 DELAY OF REGISTRATION. No Holder shall have any right to
obtain or seek an injunction restraining or otherwise delaying any such
registration as the result of any dispute that might arise with respect to the
interpretation or implementation of this Section 1.
1.6 INDEMNIFICATION. In the event any Registrable Securities
are included in a registration statement under this Section 1:
(a) To the extent permitted by law, the Company will
indemnify and hold harmless each Holder, any underwriter (as defined in the Act)
for such Holder and each person, if any, who controls such Holder or underwriter
within the meaning of the Act or the Exchange Act, against any losses, claims,
damages, or liabilities (joint or several) to which they may become subject
under the Act, the Exchange Act or other federal or state law, insofar as such
losses, claims, damages, or liabilities (or actions in respect thereof) arise
out of or are based upon any of the following statements, omissions or
violations (collectively a "Violation"): (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 Act, the Exchange Act, any state securities law
or any rule or regulation promulgated under the Act, the Exchange Act or any
state securities law; and the Company will pay to each such Holder, underwriter
or controlling person, as incurred, 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 subsection 1.6(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 any such Holder, underwriter or controlling person.
5
<PAGE> 7
(b) To the extent permitted by law, each selling
Holder will indemnify and hold harmless the Company, each of its directors, each
of its officers who has signed the registration statement, each person, if any,
who controls the Company within the meaning of the Act, any underwriter, any
other Holder selling securities in such registration statement and any
controlling person of any such underwriter or other Holder, against any losses,
claims, damages, or liabilities (joint or several) to which any of the foregoing
persons may become subject, under the 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
expressly for use in connection with such registration; and each such Holder
will pay, as incurred, any legal or other expenses reasonably incurred by any
person intended to be indemnified pursuant to this subsection 1.6(b), in
connection with investigating or defending any such loss, claim, damage,
liability, or action; provided, however, that the indemnity agreement contained
in this subsection 1.6(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, that, in no event shall any indemnity under this subsection
1.6(b) exceed the net proceeds from the offering received by such Holder, except
in the case of willful fraud by such Holder.
(c) Promptly after receipt by an indemnified party
under this Section 1.6 of notice of the commencement of any action (including
any governmental action), such indemnified party will, if a claim in respect
thereof is to be made against any indemnifying party under this Section 1.6,
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
(together with all other indemnified parties which may be represented without
conflict by one counsel) shall have the right to retain one separate counsel,
with the reasonable 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 prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this Section
1.6, 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 1.6.
(d) If the indemnification provided for in this
Section 1.6 is held by a court of competent jurisdiction to be unavailable to an
indemnified party with respect to any loss, liability, claim, damage, or expense
referred to therein, then the indemnifying party, in lieu of indemnifying such
indemnified party hereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such loss, liability, claim, damage, or
expense in such proportion as is appropriate to reflect the relative fault of
the indemnifying party on the one
6
<PAGE> 8
hand and of the indemnified party on the other in connection with the statements
or omissions that resulted in such loss, liability, claim, damage, or expense as
well as any other relevant equitable considerations; provided, that, in no event
shall any contribution by a Holder under this Subsection 1.6(d) exceed the net
proceeds from the offering received by such Holder, except in the case of
willful fraud by such Holder. The relative fault of the indemnifying party and
of the indemnified party shall be determined 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.
(e) The obligations of the Company and Holders under
this Section 1.6 shall survive the completion of any offering of Registrable
Securities in a registration statement under this Section 1.
1.7 REPORTS UNDER SECURITIES EXCHANGE ACT OF 1934. With a
view to making available to the Holders the benefits of Rule 144 and any other
rule or regulation of the SEC that may at any time permit a Holder to sell
securities of the Company to the public without registration or pursuant to a
registration on Form S-3, the Company agrees to:
(a) make and keep public information available, as
those terms are understood and defined in Rule 144, so long as the Company
remains subject to the periodic reporting requirements under Sections 13 or
15(d) of the Exchange Act;
(b) take such action, including the voluntary
registration of its Common Stock under Section 12 of the Exchange Act, as is
necessary to enable the Holders to utilize Form S-3 for the sale of their
Registrable Securities;
(c) file with the SEC in a timely manner all reports
and other documents required of the Company under the Act and the Exchange Act;
and
(d) furnish to any Holder, so long as the Holder
owns any Registrable Securities, forthwith upon request (i) a written statement
by the Company that it has complied with the reporting requirements of the
Exchange Act and the rules and regulations promulgated thereunder, or that it
qualifies as a registrant whose securities may be resold pursuant to Form S-3,
(ii) a copy of the most recent annual or quarterly report of the Company and
such other reports and documents so filed by the Company, and (iii) such other
information as may be reasonably requested in availing any Holder of any rule or
regulation of the SEC which permits the selling of any such securities without
registration or pursuant to such form.
1.8 ASSIGNMENT OF REGISTRATION RIGHTS. The rights to cause
the Company to register Registrable Securities pursuant to this Section 1 may be
assigned (but only with all related obligations) by a Holder to a transferee or
assignee of at least 500,000 shares of such securities (as adjusted for stock
splits, stock dividends and the like) or, if less, all of such Holder's
Registrable Securities, provided in either case that the Company is, within a
reasonable time after such transfer, furnished with written notice of the name
and address of such transferee
7
<PAGE> 9
or assignee and the securities with respect to which such registration rights
are being assigned; and provided, further, that such assignment shall be
effective only if immediately following such transfer the further disposition of
such securities by the transferee or assignee is restricted under the Act. For
the purposes of determining the number of shares of Registrable Securities held
by a transferee or assignee, the holdings of transferees and assignees of a
partnership who are partners or retired partners of such partnership (including
spouses and ancestors, lineal descendants and siblings of such partners or
spouses who acquire Registrable Securities by gift, will or intestate
succession) shall be aggregated together and with the partnership; provided that
all assignees and transferees who would not qualify individually for assignment
of registration rights shall have a single attorney-in-fact for the purpose of
exercising any rights, receiving notices or taking any action under Section 1.
1.9 NO OTHER REGISTRATION RIGHTS. This Agreement shall not
be construed to grant the Investors "piggy-back" registration rights or any
other right to have their securities registered under the Act, except as
expressly set forth in Section 1.2 hereof.
2. MISCELLANEOUS.
2.1 SUCCESSORS AND ASSIGNS. Except as otherwise provided
herein, the terms and conditions of this Agreement shall inure to the benefit of
and be binding upon the respective successors and assigns of the parties
(including transferees of any of the Shares). Nothing in this Agreement, express
or implied, is intended to confer upon any party other than the parties hereto
or their respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
2.2 GOVERNING LAW. This Agreement and all acts and
transactions pursuant hereto shall be governed, construed and interpreted in
accordance with the laws of the State of California, without giving effect to
principles of conflicts of laws.
2.3 COUNTERPARTS. This Agreement may be executed in two (2)
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
2.4 TITLES AND SUBTITLES. The titles and subtitles used in
this Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
2.5 NOTICES. Unless otherwise provided herein, any notice
required or permitted by this Agreement shall be in writing and shall be deemed
sufficient upon delivery, when delivered personally or by overnight courier and
addressed to the party to be notified at such party's address as set forth on
the signature page hereto or as subsequently modified by written notice. In the
event that any date provided for in this Agreement falls on a Saturday, Sunday
or legal holiday, such date shall be deemed extended to the next business day.
Notwithstanding the foregoing, any notice delivered pursuant to Section 1.3(e)
or Section 1.4 hereto must be made by personal delivery or confirmed facsimile
transmission.
8
<PAGE> 10
2.6 EXPENSES. If any action at law or in equity is necessary
to enforce or interpret the terms of this Agreement, the prevailing party shall
be entitled to reasonable attorneys' fees, costs and necessary disbursements in
addition to any other relief to which such party may be entitled.
2.7 AMENDMENTS AND WAIVERS. Any term of this Agreement may
be amended and the observance of any term of this Agreement may be waived
(either generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the holders of
a majority of the Registrable Securities then outstanding. Any amendment or
waiver effected in accordance with this paragraph shall be binding upon each
holder of any Registrable Securities then outstanding, each future holder of all
such Registrable Securities, and the Company.
2.8 SEVERABILITY. If one or more provisions of this
Agreement are held to be unenforceable under applicable law, the parties agree
to renegotiate such provision in good faith. In the event that the parties
cannot reach a mutually agreeable and enforceable replacement for such
provision, then (x) such provision shall be excluded from this Agreement, (y)
the balance of the Agreement shall be interpreted as if such provision were so
excluded and (z) the balance of the Agreement shall be enforceable in accordance
with its terms.
2.9 ENTIRE AGREEMENT. This Agreement, and the documents
referred to herein (with the exception of the registration statement) constitute
the entire agreement between the parties hereto pertaining to the subject matter
hereof, and any and all other written or oral agreements existing between the
parties hereto are expressly canceled.
9
<PAGE> 11
The parties have executed this Registration Rights Agreement as of the
date first above written.
COMPANY:
CONNETICS CORPORATION
By: /s/ Thomas G. Wiggans
-------------------------------------
Thomas G. Wiggans, President
Address:
3400 West Bayshore Road
Palo Alto, CA 94303
Facsimile: (650) 843-2899
INVESTORS:
ALTA BIOPHARMA PARTNERS, L.P.
BY: ALTA BIOPHARMA MANAGEMENT, LLC
BY: /s/ Jean Deleage
-------------------------------------
MANAGING DIRECTOR
ALTA EMBARCADERO BIOPHARMA, LLC
BY: /s/ Jean Deleage
-------------------------------------
MEMBER
CONNETICS PARTNERS (ALTA BIO), LLC
BY: ALTA/CHASE BIOPHARMA MANAGEMENT, LLC
BY: /s/ Jean Deleage
-------------------------------------
MEMBER
Address:
Alta Partners
One Embarcadero Center, Suite 4050
San Francisco, CA 94111
Facsimile: (415) 362-6178
<PAGE> 12
ATTACHMENT A
CONNETICS CORPORATION
NOTICE OF SALE
Pursuant to the Registration Rights Agreement dated as of April 10, 1998
among Connetics Corporation (the "Company"), the undersigned and certain
stockholders of the Company, the undersigned hereby gives notice to the Company
of the undersigned's intent to sell _______ shares of the Company's Common Stock
registered pursuant to the registration statement (File No. ) filed pursuant to
such Agreement.
Dated: ___________________ By:_____________________________________
(signature)
Name:___________________________________
(print)
Title:__________________________________
(if applicable)
[NOTE: THIS NOTICE OF SALE MUST BE COMPLETED AND DELIVERED (VIA PERSONAL
DELIVERY OR FACSIMILE) TO THE CHIEF FINANCIAL OFFICER OF THE COMPANY ON
OR THREE (3) BUSINESS DAY BEFORE THE DATE OF SALE OF THE SHARES OF THE
COMPANY'S COMMON STOCK REGISTERED PURSUANT TO THE REGISTRATION
STATEMENT.]
<PAGE> 13
ATTACHMENT B
CONNETICS CORPORATION
SELLING STOCKHOLDER'S QUESTIONNAIRE
In connection with the Connetics Corporation (the "Company")
Registration Statement (File No. ) registering certain shares of the Company's
Common Stock, the undersigned represents and warrants that the information set
forth below is true, accurate and complete:
1. As of the date hereof, the undersigned beneficially owns ______
shares of the Company's Common Stock.
2. Except as described below, the undersigned has not had a
material relationship with the Company or any of its predecessors or affiliates
within the last three years.
The term "material relationship" has not been defined by the Securities
and Exchange Commission (the "SEC"). However, the SEC has indicated that it will
probably construe as a "material relationship" any relationship which tends to
prevent arms length bargaining in dealings with a company, whether arising from
a close business connection or family relationship, a relationship of control or
otherwise. It seems prudent, therefore, to consider that the undersigned would
have such a relationship, for example, with any organization of which the
undersigned is an officer, director, trustee or partner or in which the
undersigned owns, directly or indirectly, ten percent (10%) or more of the
outstanding voting stock, or in which the undersigned has some other substantial
interest, and with any person or organization with whom the undersigned has, or
with whom any relative or spouse (or any other person or organization as to
which the undersigned has any of the foregoing other relationships) has, a
contractual relationship.
If applicable, please describe the material relationship with the
Company:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Dated: ___________________ By:______________________________________
(signature)
Name:____________________________________
(print)
Title:___________________________________
(if applicable)
<PAGE> 1
EXHIBIT 10.3
ALTA BIOPHARMA PARTNERS LIMITED PARTNERSHIP
MANAGEMENT RIGHTS, INVESTMENTS IN CERTAIN COUNTRIES,
INDEMNIFICATION AND SUPERFUND REQUIREMENTS
MANAGEMENT RIGHTS
The Investor, Alta BioPharma Partners, L.P., requires the following
contractual management rights, in addition to rights to nonpublic financial
information, inspection rights, and other rights specifically provided to all
investors:
1. Investor shall be entitled to reasonably consult with and advise
management of the Company on significant business issues, including
management's proposed annual operating plans, and management will meet
with Investor regularly during each year at the Company's facilities at
mutually agreeable times for such consultation and advice and to review
progress in achieving said plans.
2. Investor may examine the books and records of the Company and inspect
its facilities and may request information at reasonable times and
intervals concerning the general status of the Company's financial
condition and operations, provided that access to highly confidential
proprietary information and facilities need not be provided.
3. If Investor is not represented on the Company's Board of Directors, the
Company shall invite a representative of the Investor to attend all
meetings of its Board of Directors in a nonvoting observer capacity, and
in this respect shall give such representative copies of all notices,
minutes, consents and other material that it provides to its directors;
provided, however, that the Company reserves the right to exclude such
representative from access to any material or meeting or portion thereof
if the Company believes upon advice of counsel that such exclusion is
reasonably necessary to preserve the attorney-client privilege, to
protect highly confidential proprietary information or for other similar
reasons. Such representative may participate in discussions of matters
brought to the Board.
Investor agrees, and any representative of the Investor will agree, to
hold in confidence and trust and not use or disclose any confidential
information provided to or learned by it in connection with its rights.
The rights described herein are nonassignable and shall terminate and be
of no further force or effect when the Investor no longer holds at least 800,000
shares of the Company's Common Stock (as adjusted for stock splits, stock
dividends, recapitalizations and the like), provided that if, prior to a
transaction which would cause the expiration of such rights pursuant to the
foregoing clause, the Investor delivers to the Company an opinion of counsel to
the Investor that the expiration of such rights will cause the Investor to
<PAGE> 2
cease to qualify as a Venture Capital Operating Company (as such term is defined
at 29 C.F.R. Section 2510.3-101 or its successor regulation), such rights will
continue for as long as necessary to enable the Investor to comply with such
regulation. The confidentiality provision hereof will survive the termination of
this Agreement.
The Investor, Alta BioPharma Partners, L.P., requires that the Company
be in compliance with the terms of the Investments Relating To Certain
Countries, the indemnification of Alta BioPharma Partners, L.P. and the
Indemnified Parties, and the SuperFund requirements of CERCLA (Comprehensive
Environmental Response Compensation and Liability Act).
INVESTMENTS RELATING TO CERTAIN FOREIGN COUNTRIES
The Company has not participated and is not participating in, an
anti-Israeli boycott within the scope of Chapter 7 of Part 2 of division 4 of
Title 2 of the California Government Code as in effect from time to time.
INDEMNIFICATION
The Company will use its reasonable efforts to limit the liability, to
the fullest extent permissible under the governing law of such company's state
of incorporation, of any director representing Alta BioPharma Partners, L.P. and
each of his or her affiliated parties.
CERCLA
SUPERFUND REQUIREMENTS
1. The Company, to the best of its knowledge, has not caused or allowed,
nor has the Company contracted with any party for, the generation, use,
transportation, treatment, storage or disposal of any Hazardous
Substances (as defined below) in connection with the operations of its
business or otherwise.
2. The Company, to the best of its knowledge, the operations of its
business, and any real property that the Company owns, leases, or
otherwise occupies or uses (the "Premises") are in compliance with all
applicable Environmental Laws (as defined below) and orders or
directives of any governmental authorities having jurisdiction under
such Environmental Laws including, without limitation, any Environmental
Laws or orders or directives with respect to any cleanup or remediation
of any release or threat of release of Hazardous Substances.
3. The Company, to the best of its knowledge, has not received any
citation, directive, letter or other communication, written or oral, or
any notice of any proceedings, claims or lawsuits, from any person,
entity or governmental authority arising out of the ownership or
occupation of the Premises, or the conduct of its operations, nor is it
aware of any basis thereof.
4. The Company, to the best of its knowledge, has obtained and is
maintaining in full force and effect all necessary permits, licenses and
approvals required by any Environmental Laws applicable to the Premises
and the business operations conducted thereon
<PAGE> 3
(including operations conducted by tenants on the Premises) and is in
compliance with all such permits, licenses and approvals.
5. The Company, to the best of its knowledge, has not caused, or allowed a
release, or a threat of release, of any Hazardous Substance unto, nor to
the best of the Company's knowledge has the Premises or any property at
or near the Premises ever been subject to a release, or a threat of a
release, of any Hazardous Substance.
The term, "Environmental Laws" shall mean any federal, state or local
law, ordinance or regulation pertaining to the protection of human health or the
environment including, without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act, 42 U.S.C. Sections 9601, et seq.,
Emergency Planning and Community Right-to-Know Act, 42 U.S.C Sections 11001, et
seq., and the Resource Conservation and Recovery Act, 42 U.S.C. Sections 6901,
et seq.
The term, "Hazardous Substance" includes oil and petroleum products,
asbestos, polychlorinated biphenyls and urea formaldehyde, and any other
materials classified as hazardous or toxic under any Environmental Laws.
I ACKNOWLEDGE AND AGREE TO THE TERMS OF THIS DOCUMENT IN REGARDS TO THE
ALTA BIOPHARMA PARTNERS L.P. MANAGEMENT RIGHTS, INVESTMENTS RELATING TO CERTAIN
FOREIGN COUNTRIES, INDEMNIFICATION AND THE CERCLA REQUIREMENTS.
CONNETICS, INC.
Date: April 10, 1998 By: /s/ Thomas G. Wiggans
------------------------------------
Title: __________________________________
ACCEPTED AND AGREED:
ALTA BIOPHARMA PARTNERS, L.P.
BY: ALTA BIOPHARMA MANAGEMENT, LLC
BY: /s/ Jean Deleage
---------------------------------
MANAGING DIRECTOR
<PAGE> 1
EXHIBIT 10.6
SECOND OMNIBUS AMENDMENT
This SECOND OMNIBUS AMENDMENT dated as of April 28, 1998 is between
SmithKline Beecham Corporation, a Pennsylvania corporation ("SBC"), SmithKline
Beecham Inc., a Canadian corporation (successor by merger to SmithKline Beecham
Pharma Inc., a Canadian corporation) ("SBI"), SmithKline Beecham Properties,
Inc., a Delaware corporation ("SB Properties") and SmithKline Beecham
Inter-American Corporation, a Delaware corporation ("IAC") (collectively SBC,
SBI, SB Properties and IAC are referred to herein as the "Vendor") and Connetics
Corporation, a Delaware corporation (the "Company").
RECITALS
A. The Company and Vendor entered into an Asset Purchase Agreement
dated December 2, 1996 (the "Asset Purchase Agreement") pursuant to which the
Company acquired from Vendor on December 31, 1996 all rights to Ridaura(R), a
pharmaceutical product;
B. In connection with such transaction, the Company and SB
Properties entered into a Stock Issuance Agreement dated December 31, 1996 (the
"Equity Agreement") and the Company issued to SBC a Secured Promissory Note
dated December 31, 1996, which was amended on November 11, 1997 (the "Note");
C. On December 18, 1997, the Company and Vendor entered into an
Omnibus Amendment pursuant to which certain amendments were made to the Asset
Purchase Agreement, the Equity Agreement and the Note (the "December 1997
Amendment"); and
D. The Company and Vendor wish to make certain further changes to
the obligations contained in the Equity Agreement and the Note.
AGREEMENT
NOW THEREFORE, the parties hereto agree as follows:
1. Amendment to Secured Promissory Note. Section 2 of the Note is
hereby amended to read in its entirety as follows (with any undefined
capitalized terms having the meanings given in the Note):
"Maker promises to make payments of principal under this Note on
the following dates (each a "Payment Date"):
July 1, 1998 $1,100,000
October 1, 1998 $1,100,000
January 4, 1999 $2,500,000
April 1, 1999 $ 800,000
July 1, 1999 $ 800,000
October 1, 1999 $ 700,000
January 3, 2000 $1,500,000
<PAGE> 2
April 1, 2000 $1,500,000
On each Payment Date in addition to the payment of principal set
forth above for such Payment Date, the Maker shall pay the Payee
interest on all principal amounts outstanding under the Note (except no
interest shall accrue for the principal amounts due after January 4,
1999 until such date) for the period from the immediately prior Payment
Date through the day preceding the current Payment Date at the Interest
Rate (as defined below), calculated on the basis of actual days and a
360-day year. The "Interest Rate" shall be equal to the sum of (a) the
prime rate as publicly announced by Citibank NA from time to time plus
(b) 2% in the case of each Payment Date prior to and including January
4, 1999 or 3% in the case of each other Payment Date."
2. Deferred Purchase Price. The parties acknowledge that Section
2.1(c) of the Equity Agreement (as amended by the December 1997 Amendment)
resulted in a reduction in the number of shares of the Company's Common Stock
otherwise issuable to SB Properties. To compensate SB Properties for this
reduction, the Company agrees to pay SB Properties the amount of $308,311 within
five (5) days of the execution of this Second Omnibus Amendment. Such payment
shall constitute the full remaining consideration owed to SB Properties pursuant
to the Equity Agreement. Therefore, the parties agree that Section 4.2 of the
Asset Purchase Agreement shall remain in effect as provided in the original
Asset Purchase Agreement and shall not be amended as provided in Section 1.3 of
the December 1997 Amendment. Section 1.3 of the December 1997 Amendment is
expressly superseded by this Section 2.
3. Filing of S-3 Registration Statement. With regard to the
registration statement on Form S-3 that the Company is obligated to file and
effect pursuant to Article 3 of the Equity Agreement, the Company shall use its
best efforts to prepare and file such registration statement on or before June
12, 1998, subject to the terms and conditions of Article 3 of the Equity
Agreement.
4. Miscellaneous. Except as set forth in this Second Omnibus
Amendment, the provisions of the Equity Agreement, the Asset Purchase Agreement
and the Note shall continue in effect without change. This Second Omnibus
Amendment may be executed in counterparts.
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<PAGE> 3
IN WITNESS WHEREOF this Second Omnibus Amendment has been executed by
the parties hereto as of the date first above written.
SMITHKLINE BEECHAM CORPORATION
By: /s/ Donald Parman
-----------------------------------------
Title: Secretary
SMITHKLINE BEECHAM PROPERTIES, INC.
By: /s/ Donald Parman
-----------------------------------------
Title: Vice President
SMITHKLINE BEECHAM INC.
By: /s/ Donald Parman
-----------------------------------------
Title: Attorney
SMITHKLINE BEECHAM INTER-AMERICAN
CORPORATION
By: /s/ Donald Parman
-----------------------------------------
Title: Vice President
CONNETICS CORPORATION
By: /s/ Thomas G. Wiggans
-----------------------------------------
Title: President and Chief Executive Officer
- 3 -
