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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
--------------------------
SCHEDULE 13D
(RULE 13d-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT
TO RULE 13d-1 (a) AND AMENDMENTS THERETO FILED PURSUANT TO
RULE 13d-2(a)
(Amendment No. 1)1
SHAMAN PHARMACEUTICALS, INC.
(Name of Issuer)
COMMON STOCK $0.001 PAR VALUE
(Title of Class Securities)
Jean-Noel Julliard
Head of Business & Economic Affairs
Lipha S.A.
37 rue Saint-Romain
69379 Lyon, cedex 08, France
011-33-4-72-78-29-08
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
December 3, 1999
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition that is the subject of this Schedule 13D, and is filing this
schedule because Rule 13d-1 (e), 13d-1(f) or 13d-1(g), check the following box
[ ]
(continued on following pages)
(1) The remainder of this cover page shall be filled out for a
reporting person's initial filing on this form with respect to the subject class
of securities, and for any subsequent amendment containing information which
would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not
be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
Exhibit Index: Page 13
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CUSIP NO. 819319 10 SCHEDULE 13D
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1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Merck KGaA
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS
OO
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) or 2(e) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
GERMANY
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NUMBER OF SHARES 7 SOLE VOTING POWER
BENEFICIALLY OWNED BY 0
EACH REPORTING PERSON
WITH
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8 SHARED VOTING POWER
1,000,092,248*
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9 SOLE DISPOSITIVE POWER
0
- --------------------------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
1,000,092,248*
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,000,092,248*
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
98.7%*
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14 TYPE OF REPORTING PERSON
CO
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* Includes 1,000,005,000 shares that Lipha S.A. may acquire upon automatic
conversion of 133,334 shares of Series R Convertible Preferred Stock of the
Issuer (the "Series R Shares") on February 1, 2000, at the conversion price
calculated as of November 30, 1999.
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ITEM 1. SECURITY AND ISSUER
This Amendment No. 1 to the statement on Schedule 13D is being filed by
Merck KGaA, a Kommanditgesellschaft auf Aktien organized under the laws of
Germany ("KGaA" or the "Acquiror") and relates to the acquisition by Lipha S.A.,
a French corporation (collectively with Lipha Lyonnaise Industrielle
Pharmaceutique SA, its predecessor prior to an internal reorganization,
"Lipha"), of 133,334 shares of the Series R Convertible Preferred Stock ("Series
R Stock") of Shaman Pharmaceuticals, Inc., a Delaware corporation (the "Issuer"
or the "Company"). Lipha is a wholly-owned subsidiary of KGaA and KGaA may be
deemed to be the beneficial owner of the shares held by Lipha. KGaA is
controlled by E. Merck, a German partnership, which holds approximately 74% of
the shares of KGaA.
The class of securities to which this statement relates is the common
stock, par value $0.001 per share (the "Common Stock") of the Issuer.
Specifically, this statement relates to the shares of Common Stock issuable upon
the automatic conversion of the Series R Stock on February 1, 2000. The address
of the principal executive offices of the Issuer is 213 East Grand Avenue, South
San Francisco, California 94080.
Relationship with the Company
On September 23, 1996, Lipha entered into a five-year collaborative
agreement (the "Research & Development Agreement") with the Company to jointly
develop the Company's antihyperglycemic drugs. In connection with the Research &
Development Agreement, the parties also entered into a Stock Purchase Agreement
and Registration Rights Agreement (collectively with the Research & Development
Agreement, the "Agreements") providing for Lipha's purchase of Common Stock, as
described below, and giving Lipha certain rights to require that its shares of
Common Stock be registered under the Securities Act of 1933 after September 23,
1998.
Pursuant to the Agreements, in exchange for development and marketing
rights in all countries except Japan, South Korea and Taiwan, Lipha agreed to
provide up to $9.0 million in research payments and up to $10.5 million in
periodic equity investments over four years, priced at a 20% premium to a
multi-day volume weighted average price of Common Stock at the time of purchase.
On signing the Agreements, Lipha paid the Company a $1.5 million up-front
research payment and $3.0 million for the purchase of 388,918 shares of Common
Stock. Lipha made additional scheduled purchases of Common Stock, pursuant to
the terms of the Agreements, on September 23, 1997 (200,787 shares) and
September 23, 1998 (813,008 shares).
Pursuant to the Research & Development Agreement, the Company agreed,
among other things, to allocate between twenty and thirty full-time equivalent
scientists (as such term is defined in the Research & Development Agreement) to
its pharmaceuticals development obligations under the Research & Development
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Agreement. The Research & Development Agreement provided for additional
preclinical and clinical milestone payments to the Company in excess of $10.0
million per compound for each antihyperglycemic drug the Company developed and
commercialized. Lipha was to bear all preclinical, clinical, regulatory and
other development expenses associated with the compounds selected by Lipha under
the Research & Development Agreement. In addition, as products were
commercialized by Lipha, the Company would receive royalties on all product
sales outside the United States and up to 50% of the profits (if the Company
were to exercise co-promotion rights) or royalties on all product sales in the
United States. Certain of the milestone payments were to be credited against
future royalty payments, if any, due to the Company from sales of products
developed pursuant to the Research & Development Agreement. On December 3, 1998,
the parties completed a renegotiation of the terms of the Agreements. Under the
new terms, the Company forgave $6.0 million in aggregate payments due from Lipha
over the remaining term of the original Agreements in exchange for a one-time
up-front payment from Lipha of an aggregate of $2.0 million, consisting of a
$1.0 million research payment and a $1.0 million equity investment pursuant to
which, on December 3, 1998, Lipha purchased 342,231 shares of Common Stock,
bringing its total ownership of Common Stock to 1,744,944. As a result of the
Company's 20 for 1 reverse stock split effective June 22, 1999, Lipha's total
ownership of Common Stock was reduced to 87,248.
On February 1, 1999, the Company unilaterally announced that it would
immediately cease operations in its pharmaceutical business and devote most of
its efforts to the development and marketing of botanical dietary supplements
derived from tropical plant sources. Shortly thereafter, the Company informed
Lipha that it would cease to perform its obligations under the Research &
Development Agreement.
ITEM 2. IDENTITY AND BACKGROUND
The Acquiror is a Kommanditgesellschaft auf Aktien organized under the
laws of Germany with its principal offices located at Frankfurter Str. 250,
D-64293 Darmstadt, Germany. The Acquiror is part of a worldwide operating group
of companies in the business sectors of pharmaceuticals, laboratory supplies and
services and specialty chemicals. The name, business address, present principal
occupation or employment (and the name, principal business and address of any
corporation or other organization in which such employment is conducted) and
citizenship of each of the directors and executive officers of the Acquiror and
each general partner of E. Merck is set forth in Schedule A attached hereto and
incorporated herein by this reference. During the last five years, neither the
Acquiror, E. Merck nor, to the best of the Acquiror's knowledge, any of the
persons identified in Schedule A hereto has been convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors) or has been a
party to a civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a judgment,
decree or final order enjoining future violations of, or prohibiting or
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mandating activities subject to, federal or state securities laws or finding any
violation with respect to such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
Lipha acquired the Series R Stock in exchange for releasing the Company
from claims made by Lipha under the Research & Development Agreement.
ITEM 4. PURPOSE OF TRANSACTION
The Acquiror views the acquisition of shares of Common Stock and Series
R Stock of the Issuer primarily as an investment incident to its product
research and development activities and has no present intention to increase its
proportional investment in the Issuer, dispose of its shares of Common Stock or
to effect any transaction that would relate to or result in any of the events
described in subparagraphs (a) through (j) of this item. Nevertheless, there is
substantial uncertainty regarding Lipha's ongoing relationship with the Company
and the Acquiror reserves the right to change its investment in the Issuer based
upon the results of ongoing discussions between Lipha and the Issuer, the market
price of the Common Stock, alternative investment possibilities available to it,
its business and research and development strategy and other factors which may
emerge from time to time.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
As of the date hereof, Lipha owns of record and beneficially (i) 87,248
shares of Common Stock (the "Common Shares") and (ii) 133,334 shares of Series R
Stock. The Company issued Series R Stock pursuant to the terms set forth in the
Company's rights offering which was completed in August 1999 (the "Rights
Offering"). In the Rights Offering, the Company offered to the Common Stock
shareholders of record as of July 14, 1999 (including Lipha) shares of Series R
Stock at a price of $15.00 per share. Lipha acquired its shares of Series R
Stock pursuant to a Settlement Letter dated August 18, 1999 between the Company
and Lipha (the "Settlement Letter") attached hereto as exhibit 5. Under the
terms of the Settlement Letter, the Company issued 133,334 shares of Series R
Stock, having a value of $2.0 million at the Rights Offering price of $15.00
per share, to Lipha in partial settlement for claims made by Lipha under the
Research & Development Agreement. As of November 30, 1999, 777,101 shares of
Series R Stock, including those acquired by Lipha, were outstanding.
The Series R Stock will automatically convert into Common Stock on February 1,
2000. Each share of Series R Stock will convert into a number of shares of
Common Stock equal to $15.00 divided by the conversion price then in effect (the
"Conversion Price"). The Conversion Price will be equal to the lesser of (i)
$0.10 per share, or (ii) the price that is equal to 10% of the average closing
sales price of Common Stock for the 10 trading days ending three trading days
prior to February 1, 2000. The exact number of shares of Common Stock into which
each share of Series R Stock will be converted will not be calculable under the
terms of the Rights Offering until January
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26, 2000. For purposes of determining the number of shares of the Common Stock
beneficially owned by Lipha and Lipha's percentage ownership of Common Stock in
this statement, we have used the Conversion Price calculated as of November 30,
1999. Based on the Conversion Price as of November 30, 1999, Lipha's shares of
Series R Stock will convert into 1,000,005,000 shares of Common Stock (the
"Underlying Shares") upon the automatic conversion of the Series R Stock on
February 1, 2000. Pursuant to Rule 13d-3(d)(1) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), Lipha is deemed to beneficially own the
Underlying Shares. Because KGaA is controlled by E. Merck and because Lipha is a
wholly-owned subsidiary of KGaA, E. Merck and KGaA may be deemed to be the
beneficial owners of the shares of Common Stock and Series R Stock held by
Lipha. In accordance with Rule 13d-3(d)(1)(i) of the Exchange Act, assuming
conversion of only the shares of Series R Stock owned by Lipha, the sum of the
Common Shares and the Underlying Shares represent 98.7% of the total shares of
Common Stock. However, all shares of the Series R Stock will automatically
convert to shares of Common Stock on February 1, 2000. Assuming conversion of
all of the shares of Series R Stock into Common Stock on February 1, 2000, the
Common Shares and Underlying Shares represent 17.1% of the total shares of
Common Stock.
Except as set forth herein, there have been no transactions in the
Common Stock of the Issuer by the Acquiror or any of the executive officers or
directors identified in Schedule A hereto during the 60 days preceding the
filing of this Amendment No. 1.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDING OR RELATIONSHIPS WITH RESPECT TO
SECURITIES OF THE ISSUER.
Except as set forth herein, the Acquiror (and the executive officers
and directors identified in Schedule A hereto) do not have any arrangements,
contracts, understandings or relationships (legal or otherwise) with respect to
each other or with any other person with respect to the securities of the
Issuer.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
1. Joint Research and Product Development Agreement dated as of September
23, 1996 between the Company and Lipha (incorporated by reference to
exhibit 10.50 to the Company's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1996, as amended).*
2. Stock Purchase Agreement dated as of September 23, 1996 between the
Company and Lipha (incorporated by reference to exhibit 10.51 to the
Company's Quarterly Report on Form 10-Q for the quarter ended September
30, 1996, as amended).*
3. Registration Rights Agreement dated as of September 23, 1996 between
the Company and Lipha (attached as Exhibit A to the preceding exhibit).
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4. Letter Agreement dated December 1, 1998 (incorporated by reference to
exhibit 4 of the Reporting Person's Statement on Schedule 13D filed
June 4, 1999).
5. Settlement Letter dated as of August 18, 1999 between the Company and
Lipha.
6. Prospectus for Rights to Purchase Series R Convertible Preferred Stock
of Shaman Pharmaceuticals, Inc., dated July 16, 1999, (incorporated by
reference to the Company's Registration Statement on Form S-1 filed
November 22, 1999).
* Confidential treatment has been granted with respect to certain
portions of these agreements.
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: December 3, 1999
Merck KGaA
By: /s/ Klaus-Peter Brandis
------------------------------------
Name: Klaus-Peter Brandis
Title: Departmental Director
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SCHEDULE A
DIRECTORS AND EXECUTIVE OFFICERS
OF
MERCK KGAA AND E. MERCK
The address of each of the directors, executive officers and
general partners listed below is c/o Merck KGaA at its principal offices located
at Frankfurter Str. 250, D-64293 Darmstadt, Germany. All individuals listed
below are citizens of Germany.
<TABLE>
<CAPTION>
NAME POSITION AND PRINCIPAL OCCUPATION
<S> <C>
MERCK KGaA
Dr. Heinrich Hornef Chairman, Supervisory Board (Aufsichtsrat); Member of
partners council of SAP, Walldorf, a computer
industry/software company, of Neurottstrasse 16.69190
Germany and of Friatec AG, a machine building/engineering
company, of Steinzeugstrasse 50, 68229 Mannheim, Germany
Flavio Battisti Vice Chairman, Supervisory Board (Aufsichtsrat)
Michael Fletterich Supervisory Board Member (Aufsichtsrat)
Jon Baumhauer Supervisory Board Member (Aufsichtsrat); Chief Executive
Officer, Matthias Kraus KG, a beverage manufacturer, of
Mariastrasse 14, 80639 Munchen, Germany.
Klaus Brauer Supervisory Board Member (Aufsichtsrat)
Prof. Dr. Christoph Clemm Supervisory Board Member (Aufsichtsrat)
Dr. Michael Kasper Supervisory Board Member (Aufsichtsrat)
Brigitte Niems Supervisory Board Member (Aufsichtsrat)
</TABLE>
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<TABLE>
<S> <C>
Dr. Arend Oetker Supervisory Board Member (Aufsichtsrat); Member of partners
councils of Cognos AG, an education/counseling company, of
Kielortallee 1, 20144 Hamburg, Germany, Jungheinrich AG, a
warehousing/transport/service company of Freidrich-Ebert-Damm
129, 22047 Hamburg, Germany, VAW Aluminum AG, an aluminum
manufacturer, of Georg-von-Boeselager-Strasse 25,
53117 Bonn, Germany
Hans Schonhals Supervisory Board Member (Aufsichtsrat); Member of partners
councils of Pirelli Deutschland AG, a tyre-industry business,
of 64741 Breuberg, Germany, Rohm GmbH, a plastic-industry/chemistry
company of Kirschenallee, 64293 Darmstadt, Germany
Dr. Gerhard Ziener Supervisory Board Member (Aufsichtsrat); Member of
advisory boards of Benckiser Holding GmbH, a machine-building
company, of Ludwig-Bertram-Strasse 8, 67059 Ludwigshafen, Germany
and Dohler GmbH, a good stuffs company, of Riedstrasse 9, 64295
Darmstadt, Germany
Peter Zuhlsdorff Supervisory Board Member (Aufsichtsrat); Member of partners
councils of Deutz AG, a vehicle engineering company, of
Muhlheimer Strasse 107, 51063 Koln, Germany, GFK AG, an
opinion research company, of Nordwestring 101, 90419
Nurnberg, Germany, and Deutsche Hypothekenbank AG, a
banking company, of Taunusanlage 9, 60329 Frankfurt, Germany
Dr. Walter Bardorff Director (Direktor)
Prof. Dr. Gerd Bauer Director (Direktor)
Dr. Michael Becker Director (Direktor)
Dr. Klaus Bofinger Director (Direktor)
Rolf Peter Deutsch Director (Direktor)
Prof. Dr. Christian Flamig Director (Direktor)
Walter Galinat Director (Direktor)
Dr. Jurgen Gehlhaus Director (Direktor)
Dr. Hartmut Hartner Director (Direktor)
Dr. Ullrich Hanstein Director (Direktor)
Dr. Sigmar Herberg Director (Direktor)
</TABLE>
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<TABLE>
<S> <C>
Dr. Hans-Joachim Lohrisch Director (Direktor)
Dr. Ingeborg Lues Director (Direktor)
Prof. Dr. Hans-Eckart Radunz Director (Direktor)
Dr. Bernd Reckmann Director (Direktor)
Dr. Karl Roser Director (Direktor)
Prof. Dr. Erhard Schnurr Director (Direktor)
Joachim Szebel Director (Direktor)
Jurgen Schupp Director (Direktor)
Dr. Gregor Wehner Director (Direktor)
Ernst-Jorg Zehelein Director (Direktor)
Walter Zywottek Director (Direktor)
York Bernau Departmental Director (Abteilungsdirektor)
Rudolf Bracher Departmental Director (Abteilungsdirektor)
Klaus-Peter Brandis Departmental Director (Abteilungsdirektor)
Dr. Jurgen Eichler Departmental Director (Abteilungsdirektor)
Dr. Rolf Fohring Departmental Director (Abteilungsdirektor)
Winfried Muller Departmental Director (Abteilungsdirektor)
Friedrich Schmitt Departmental Director (Abteilungsdirektor)
Gerhard Weber Departmental Director (Abteilungsdirektor)
E. MERCK
Prof. Dr. Hans Joachim Langmann Executive Board Member (Geschaftsleitung), E. Merck;
general partner, E. Merck
Wolfgang Honn Executive Board Member (Geschaftsleitung), E. Merck;
general partner, E. Merck; Director of VWR Scientific
Products Corp. ("VWR"), an indirect subsidiary of Merck KGaA
Dr. Michael Romer Executive Board Member (Geschaftsleitung), E. Merck;
general partner, E. Merck
Prof. Dr. Bernhard Scheuble Executive Board Member (Geschaftsleitung), E. Merck;
general partner, E. Merck
Prof. Dr. Thomas Schreckenbach Executive Board Member (Geschaftsleitung), E. Merck;
general partner, E. Merck
</TABLE>
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<TABLE>
<S> <C>
Dr. Harald J. Schroder Executive Board Member (Geschaftsleitung), E. Merck;
general partner, E. Merck; Chairman, Board of Directors of
EM Industries Incorporated, an indirect subsidiary of Merck
KGaA, of 7 Skyline Drive, Hawthorne, NY 10532; Director of
VWR
Dr. Johannes Sombroek Executive Board Member (Geschaftsleitung), E. Merck;
general partner, E. Merck
Jon Baumhauer Chairman, Partners Council, E. Merck; see also, entry under
Merck KGaA
Dr. Heinrich Hornef Partners Council Member, E. Merck
Karl-Heinrich Kraft Partners Council Member, E. Merck
Albrecht Merck Partners Council Member, E. Merck
Dr. Arend Oetker Partners Council Member, E. Merck
Dr. Frank Stangenberg-Haverkamp Partners Council Member, E. Merck
Dr. Gerhard Ziener Partners Council Member, E. Merck
Peter Zuhlsdorff Partners Council Member, E. Merck
Prof. Dr. Christoph Clemm Partners Council Member, E. Merck; see also, entry under
Merck KGaA
</TABLE>
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Description Page
- ------- ----------- ----
<S> <C> <C>
1. Joint Research and Product Development Agreement dated as of September
23, 1996 between the Company and Lipha (incorporated by reference to
exhibit 10.50 to the Company's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1996, as amended).*
2. Stock Purchase Agreement dated as of September 23, 1996 between the
Company and Lipha (incorporated by reference to exhibit 10.51 to the
Company's Quarterly Report on Form 10-Q for the quarter ended September
30, 1996, as amended).*
3. Registration Rights Agreement dated as of September 23, 1996 between
the Company and Lipha (attached as Exhibit A to the preceding exhibit).
4. Letter Agreement dated December 1, 1998 (incorporated by reference to
exhibit 4 of the Reporting Person's Statement on Schedule 13D filed
June 4, 1999).
5. Settlement Letter dated as of August 18, 1999 between the Company and
Lipha.
6. Prospectus for Rights to Purchase Series R Convertible Preferred Stock
of Shaman Pharmaceuticals, Inc., dated July 16, 1999, incorporated by
reference to the Company's Registration Statement on Form S-1 filed
November 22, 1999.
</TABLE>
* Confidential treatment has been granted with respect to certain
portions of these agreements.
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Exhibit 5
Date: August 18, 1999
Ms. Lisa A. Conte
President and CEO
Shaman Pharmaceuticals Inc.
213 East Grand Avenue
South San Francisco, CA 94080-4812
Settlement Letter
Dear Ms. Conte:
This Settlement is dated as of August 18, 1999 by and between Shaman
Pharmaceuticals Inc., a Delaware corporation ("Shaman"), and Lipha s.a., a
French corporation ("Lipha") and sets forth a supplemental agreement of the
parties with respect to the Joint Research and Product Development and
Commercialization Agreement (the "Research Agreement") dated as of September 23,
1996 between Shaman and Lipha.
WHEREAS, Lipha has advanced certain sums of money to Shaman in December 1998 in
connection with the Research Agreement, and a dispute has arisen in connection
with such advance and the parties desire to settle such dispute;
NOW, THEREFORE, Shaman and Lipha agree as follows:
1. In consideration of the release and discharge granted by Lipha pursuant to
Section 2 below, Shaman agrees to pay to Lipha Two Million Ten Dollars
($2,000,010.00) (the "Indebtedness) in accordance with the terms set forth in
Section 3 below.
2. In consideration of receipt of payment in full from Shaman of the
Indebtedness referred to in Section 1 above as provided in Section 3 below,
Lipha agrees to release and discharge Shaman from all claims, suits and causes
of action that Lipha may have against Shaman for refund of advances made or
other monies paid by Lipha to Shaman in December 1998 , including release and
discharge of Shaman's obligation to credit such advances made or other monies
paid toward $6 million of amounts payable by Lipha to Shaman in the future under
the Research Agreement.
3. Lipha agrees to exchange such Indebtedness of Shaman to Lipha for the
issuance to Lipha of 133,334 shares of Series R Convertible Preferred Stock of
Shaman ("Preferred Stock") pursuant to the terms described in the prospectus
dated July 16, 1999, previously delivered to the undersigned in connection with
Shaman's public offering of the Series R Preferred Stock. Upon receipt of
133,334 shares of such Preferred Stock, the Indebtedness shall be canceled and
shall be deemed to be paid in full by Shaman to Lipha. If less than 133,334
shares of such Preferred Stock are received by Lipha, the Indebtedness shall be
canceled and shall be deemed to be paid
<PAGE> 2
only to the extent of the number of shares of Preferred Stock so received times
$15.00 per share, and the balance of the Indebtedness shall be canceled and
shall be deemed paid in full upon receipt by Lipha of payment by Shaman of such
balance in cash, such payment to be effected by Shaman within 180 days after the
expiration (currently August 23, 1999) of the public offering of the Series R
Preferred Stock pursuant to the prospectus dated July 16, 1999 (or any extension
of the expiration date pursuant to the terms of said prospectus).
Enclosed herewith is Lipha's completed and signed subscription agreement for
133,334 shares of such Preferred Stock. The undersigned understands and agrees
that the terms and conditions of the Series R Preferred Stock subscription
documents enclosed herewith remain unchanged and in full force and effect.
Yours very truly,
AGREED:
LIPHA S.A.
By /s/ Andre Meynaud
---------------------------------
Name: Andre Meynaud
Title: Managing Director
Lipha S.A.
37, rue Saint-Romain
Lyon Cedex, F-69379
AGREED:
Shaman Pharmaceuticals, Inc. hereby agrees to accept the cancellation of the
above-referenced $2,000,010 indebtedness of Shaman Pharmaceuticals, Inc. to
Lipha s.a. in lieu of cash, in payment of the purchase price for the shares of
Series R Preferred Stock to be purchased by Lipha pursuant to the foregoing.
SHAMAN PHARMACEUTICALS INC.
By /s/ Lisa A. Conte
------------------------------------
Name: Lisa A. Conte
Title: President and Chief Executive Officer
