EXHIBIT 99.1
STOCK PURCHASE AGREEMENT
dated as of February 11, 2004,
by and among
CONNETICS CORPORATION
and
ENTITIES LISTED ON APPENDIX A (each a "Purchaser").
TABLE OF CONTENTS
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STOCK PURCHASE AGREEMENT
Section 1. Purchase and Sale of Stock................................................. 1
Section 2. The Closing................................................................ 1
2.1. The Closing................................................................ 1
2.2. Conditions to Closing...................................................... 1
Section 3. Representations, Warranties and Covenants of the Company................... 2
3.1. No Material Misstatements.................................................. 2
3.2. Incorporated Documents..................................................... 3
3.3. Books and Records; Internal Controls....................................... 3
3.4. Independent Accountants.................................................... 4
3.5. Organization; Good Standing................................................ 4
3.6. Absence of Litigation...................................................... 4
3.7. Brokers or Finders......................................................... 4
3.8. Use of Proceeds............................................................ 4
3.9. Licenses; Leases........................................................... 4
3.10. Intellectual Property...................................................... 5
3.11. Property................................................................... 6
3.12. No Violation............................................................... 7
3.13. Due Authorization and Delivery............................................. 7
3.14. No Default................................................................. 7
3.15. Capitalization............................................................. 7
3.16. Lock-Ups................................................................... 8
3.17. Employees.................................................................. 8
3.18. Market Stabilization....................................................... 8
3.19. Taxes...................................................................... 8
3.20. NASDAQ Compliance; Listing................................................. 9
3.21. Insurance.................................................................. 9
(i)
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3.22. Investment Company......................................................... 9
3.23. Solicitation; Other Issuances of Securities................................ 9
3.24. Testing and Regulations.................................................... 10
3.25. Form S-3 Eligibility....................................................... 10
3.26. Press Release.............................................................. 10
Section 4. Representations, Warranties And Covenants Of Each Purchaser................ 11
4.1. Organization............................................................... 11
4.2. Authorization, Enforcement, and Validity................................... 11
4.3. Consents and Approvals; No Violation...................................... 11
4.4. Investment Experience...................................................... 12
4.5. Investment Intent And Limitation On Dispositions........................... 12
4.6. Information And Risk....................................................... 12
4.7. Disclosures to the Company................................................. 12
4.8. Nature of Purchasers....................................................... 13
4.9. Ownership.................................................................. 13
4.10. Brokers or Finders......................................................... 13
4.11. Acknowledgement............................................................ 13
4.12. Short Sales................................................................ 13
Section 5. Survival of Representations and Warranties................................. 14
Section 6. Registration of the Shares; Compliance with the Securities Act............. 14
6.1. Registration Procedures And Expenses....................................... 14
6.2. Restrictions on Transferability............................................ 16
6.3. Termination Of Conditions And Obligations.................................. 17
Section 7. Legends.................................................................... 18
Section 8. Indemnification............................................................ 19
Section 9. Notices.................................................................... 22
(ii)
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Section 10. Miscellaneous.............................................................. 22
10.1. Amendments................................................................. 22
10.2. Headings................................................................... 23
10.3. Severability............................................................... 23
10.4. Governing Law And Forum.................................................... 23
10.5. Counterparts............................................................... 23
10.6. Entire Agreement........................................................... 23
10.7. Independent Nature Of Purchasers' Obligations And Rights................... 23
10.8. Expenses................................................................... 24
Appendix A Schedule of Purchasers
Appendix B Company Counsel Opinion
Appendix C Company Counsel Opinion (IP)
Appendix D Disclosure Schedules
Appendix E Stock Certificate and Registration Statement Questionnaire
Appendix F Certificate of Subsequent Sale
(iii)
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is made as of
the 11th day of February 2004 by and among Connetics Corporation (the
"Company"), a Delaware corporation, with its principal offices at 0000 Xxxx
Xxxxxxxx Xxxx, Xxxx Xxxx, Xxxxxxxxxx 00000, and the entities listed on Appendix
A (each, a "Purchaser").
IN CONSIDERATION of the mutual covenants contained in this
Agreement, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and the Purchasers
hereby agree as follows:
Section 1. Purchase and Sale of Stock.
Subject to the terms and conditions of this Agreement, on the
Closing Date (as defined herein), each Purchaser agrees to purchase severally
and not jointly and the Company agrees to issue and sell to such Purchaser
severally and not jointly that number of whole shares of the Company's common
stock, $0.001 par value (the "Common Stock"), set forth opposite such
Purchaser's name on Appendix A (the "Shares"), at a purchase price that is equal
to $20.25 per Share.
Section 2. The Closing.
2.1. The Closing.
(a) The purchase and sale of the Shares upon the terms
and conditions hereof will take place at a closing (the "Closing") to be held at
such place, and on the date and at such time as shall be agreed upon by the
Company and the Purchasers (the "Closing Date").
(b) The Company shall provide wire transfer instructions
for the payment of the Purchase Price prior to the Closing.
(c) At the Closing, the Company and each Purchaser shall
satisfy all of the conditions set forth in Sections 2.2(a) and (b),
respectively.
2.2. Conditions to Closing.
(a) The Company's obligation to complete the purchase and
sale of the Shares and deliver such stock certificate(s) to each Purchaser is
subject to:
(i) receipt by the Company of immediately
available funds in the full amount of the purchase price for the Shares
being purchased hereunder as set forth opposite such Purchaser's name
on Appendix A (the "Purchase Price"), in accordance with the wire
transfer instructions delivered by the Company pursuant to Section
2.1(b); and
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(ii) the accuracy in all material respects of the
representations and warranties made by such Purchaser in Section 4
below as of the Closing Date and the fulfillment in all material
respects of those undertakings of such Purchaser in this Agreement to
be fulfilled on or prior to the Closing Date.
(b) Each Purchaser's obligation to complete the purchase
and sale of the Shares is subject to:
(i) the accuracy in all material respects of the
representations and warranties made by the Company in Section 3 below
as of the Closing Date and the fulfillment in all material respects of
those undertakings of the Company in this Agreement to be fulfilled on
or prior to the Closing Date and the receipt by the Placement Agents
(as defined below) and the Purchaser of a certificate of an executive
officer of the Company to the foregoing effect;
(ii) the Shares having been listed on the Nasdaq
National Market (the "NASDAQ");
(iii) delivery by the Company to the Placement
Agents and such Purchaser of an opinion, dated as of the Closing Date,
from Xxxxxxxx & Xxxxxxxx LLP, counsel to the Company, in the form
attached as Appendix B hereto;
(iv) delivery by the Company to the Placement
Agents and such Purchaser of an opinion, dated as of the Closing Date,
from Xxxxxxxx and Xxxxxxxx & Crew LLP, counsel to the Company, in the
form attached as Appendix C hereto; and
(v) the Company's delivery to its transfer agent
of irrevocable instructions to issue to such Purchaser or in such
nominee name(s) as designated by such Purchaser in writing such number
of Shares set forth opposite such Purchaser's name on Appendix A or, if
requested by the Purchaser, one or more certificates representing such
Shares.
Section 3. Representations, Warranties and Covenants of the Company. Except as
set forth on the corresponding sections of the Company's disclosure schedule
attached hereto as Appendix D, or as specifically contemplated by this
Agreement, the Company hereby represents and warrants to, and covenants with,
each Purchaser as of the Closing Date (or such other date specified below) as
follows:
3.1. No Material Misstatements. The Private Placement
Memorandum dated February 9, 2004, relating to the offering of the Shares,
including all exhibits and annexes thereto, as the same may be amended or
supplemented (the "Memorandum"), did not, as of its date, and will not, as of
the Closing Date, contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading;
provided, however, that this
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representation and warranty shall not apply to any statements or omissions made
in reliance upon and in conformity with information furnished in writing to the
Company by a Purchaser through a Placement Agent expressly for use therein.
3.2. Incorporated Documents.
(a) The documents incorporated by reference in the
Memorandum, at the time they became effective or were filed with the Securities
and Exchange Commission (the "Commission"), as the case may be, complied in all
material respects with the requirements of the Securities Act of 1933, as
amended (the "Securities Act"), or the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), as applicable, and the rules and regulations of
the Commission thereunder, and none of such documents contained an untrue
statement of a material fact or omitted to state a material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading, and any further documents so filed and
incorporated by reference in the Memorandum, when such documents become
effective or are filed with the Commission, as the case may be, will conform in
all material respects to the requirements of the Securities Act or the Exchange
Act, as applicable, and the rules and regulations of the Commission thereunder
and will not contain an untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(b) Since January 1, 2002, the Company has filed all
documents required to be filed by it prior to the date hereof with the
Commission pursuant to the reporting requirements of the Exchange Act (the "SEC
Documents").
3.3. Books and Records; Internal Controls. The books,
records and accounts of the Company and its subsidiaries accurately and fairly
reflect, in reasonable detail, the transactions in, and dispositions of, the
assets of, and the results of operations of, the Company and its subsidiaries.
The Company and each of its subsidiaries maintains a system of internal
accounting controls sufficient to provide reasonable assurances that (i)
transactions are executed in accordance with management's general or specific
authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted
accounting principles and to maintain asset accountability, (iii) access to
assets is permitted only in accordance with management's general or specific
authorization and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences; the chief executive officer and the chief financial
officer of the Company have made all certifications required by the
Xxxxxxxx-Xxxxx Act of 2002 (the "Xxxxxxxx-Xxxxx Act") and any related rules and
regulations promulgated by the Commission, and the statements contained in any
such certification are complete and correct; the Company maintains "disclosure
controls and procedures" (as defined in Rule 13a-14(c) under the Exchange Act);
the Company is otherwise in compliance in all material respects with all
applicable effective provisions of the Xxxxxxxx-Xxxxx Act and is actively taking
steps to
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ensure that it will be in compliance with other applicable provisions of the
Xxxxxxxx-Xxxxx Act upon the effectiveness of such provisions.
3.4. Independent Accountants. Ernst & Young LLP, whose
reports are included as a part of the Memorandum, are and, during the periods
covered by their reports, were independent public accountants as required by the
Securities Act, and the rules and regulations of the Commission thereunder.
3.5. Organization; Good Standing. The Company and each of
its subsidiaries is duly organized, validly existing and in good standing under
the laws of their respective jurisdictions of incorporation or organization. The
Company and each of its subsidiaries is duly qualified to do business and is in
good standing as a foreign corporation in each jurisdiction in which the nature
of the business conducted by it or location of the assets or properties owned,
leased or licensed by it requires such qualification, except for such
jurisdictions where the failure to so qualify individually or in the aggregate
would not result in a material adverse effect on the assets, properties or
condition, financial or otherwise, or in the results of operations, business
affairs or business prospects of the Company and its subsidiaries considered as
a whole (a "Material Adverse Effect"); and, to the Company's knowledge, no
proceeding has been instituted in any such jurisdiction revoking, limiting or
curtailing, or seeking to revoke, limit or curtail, such power and authority or
qualification.
3.6. Absence of Litigation. Except as set forth in the SEC
Documents, there is no action, suit, proceeding, inquiry or investigation before
or by any court, public board, government agency, self-regulatory organization
or body pending or, to the knowledge of the Company, threatened in writing
against the Company or any of the Company's subsidiaries or any of the Company's
or the subsidiaries' officers or directors in their capacities as such, that,
either individually or in the aggregate, would result in a Material Adverse
Effect.
3.7. Brokers or Finders. No broker, investment banker,
financial advisor or other individual, corporation, general or limited
partnership, limited liability company, firm, joint venture, association,
enterprise, joint securities company, trust, unincorporated organization or
other entity (each a "Person"), other than CIBC World Markets Corp. and Xxxxxxx,
Xxxxx & Co. (the "Placement Agents"), the fees of which will be paid by the
Company, is entitled to any broker's, finder's, financial advisor's or other
similar fee or commission in connection with the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of the Company.
3.8. Use of Proceeds. The Company intends to use the net
proceeds from the sale of the Shares hereunder as described in the Memorandum.
3.9. Licenses; Leases. The Company and each of its
subsidiaries has all requisite corporate power and authority, and all necessary
authorizations, approvals, consents, orders, licenses, certificates and permits
of and from all governmental or regulatory bodies or
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any other person or entity (collectively, the "Permits"), to own, lease and
license its assets and properties and conduct its business, all of which are
valid and in full force and effect, except where the lack of such Permits,
individually or in the aggregate, would not result in a Material Adverse Effect
.. The Company and each of its subsidiaries has fulfilled and performed in all
material respects all of its material obligations with respect to such Permits
and no event has occurred that allows, or after notice or lapse of time would
allow, revocation or termination thereof or results in any other material
impairment of the rights of the Company thereunder. Except as may be required
under the Securities Act and state and foreign Blue Sky laws, no other Permits
are required to enter into, deliver and perform this Agreement and to issue and
sell the Shares.
3.10. Intellectual Property.
(a) (i) the Company and/or a subsidiary of the Company
owns, or holds under license, or has no reason to believe that it cannot acquire
on reasonable terms, adequate rights to use, free of any Encumbrances (as
defined below), all patents, patent rights, patent applications, licenses,
inventions, discoveries, improvements, copyrights (whether registered or
unregistered), writings and other works of authorship (including software),
know-how (including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures), trademarks
(whether registered or unregistered), trademark applications, service marks and
trade names (collectively, the "Intellectual Property") that is material and
necessary to conduct and operate the business of the Company and its
subsidiaries as currently conducted, and as currently proposed to be conducted,
as described in the Memorandum (the "Company Business"), (ii) to the Company's
knowledge, neither the use or exploitation of any of its Intellectual Property
nor the conduct and operations of the Company Business in the manner currently
conducted, each as described in the Memorandum, infringes upon, misappropriates,
violates or conflicts in any way with the Intellectual Property rights of any
other Person, (iii) to the Company's knowledge, neither the use or exploitation
of any of its Intellectual Property nor the conduct and operation of the Company
Business as currently proposed to be conducted by the Company and its
subsidiaries, as described in the Memorandum, will infringe upon,
misappropriate, violate or conflict in any way with the Intellectual Property
rights of any other Person, (iv) to the Company's knowledge, there is no, nor
has there been within the last three years, any pending or threatened assertion
or claim related to the use or exploitation of its Intellectual Property or the
conduct or operation of the Company Business as described in the Memorandum,
involving the infringement, misappropriation, or violation of, or conflict with,
in any way the Intellectual Property rights of any other Person, (v) the Company
is not, and has not been within the last three years, a party to any action,
suit, proceeding or investigation which involves a claim of infringement or
misappropriation of any Intellectual Property of any Person, (vi) the Company
has not been the subject of, and the Company has no knowledge of, any claims
with respect to the validity, enforceability or ownership of any of its
Intellectual Property, which have had, or if adversely determined would result
in, a Material Adverse Effect, and (vii) to the Company's knowledge, there have
been no unauthorized uses, disclosures, infringements, or misappropriations by
any Person of any of its Intellectual Property or any breaches by any
5
Person, including the Company or any of its subsidiaries, of any licenses or
other agreements involving its Intellectual Property.
(b) To the Company's knowledge, no Person currently is in
default with regard to any agreement relating to Intellectual Property with
respect to which the Company or any of its subsidiaries is a party or by which
any of them or their respective properties are subject or bound, and there
exists no condition or event (including the execution, delivery and performance
of this Agreement) that, with the giving of notice or the lapse of time or both,
would constitute a default by the Company or any of its subsidiaries under any
such agreement, or would give any Person any right of termination, cancellation
or acceleration of any performance under any such agreement or result in the
creation or imposition of any Encumbrance, in each case.
(c) For purposes of this Section 3.11, "Encumbrance"
means (i) any security interest, pledge, mortgage, deed of trust, hypothecation,
lien (including environmental and tax liens), charge, encumbrance, adverse
claim, preferential arrangement or restriction of any kind, including any
restriction on the use, voting, transfer, receipt of income or other exercise of
any attributes of ownership, (ii) interest of a vendor or a lessor under any
conditional sale agreement, capital lease or title retention agreement (or any
financing lease having substantially the same economic effect) and (iii) any
purchase option, call or similar right of a third Person; provided, however,
that "Encumbrance" shall not include the security interest in favor of Xxxxxxx
Sachs Credit Partners L.P. ("GSCP") in connection with the Credit and Guaranty
Agreement to which the Company and GSCP are parties.
3.11. Property. The Company and each of its subsidiaries
has good and marketable title in fee simple to all real property, and good and
marketable title to all other property owned by it, in each case free and clear
of all liens, encumbrances, claims, security interests and defects, except such
as do not materially affect the value of such property and do not materially
interfere with the use made or proposed to be made of such property by the
Company and its subsidiaries. All property held under lease by the Company and
its subsidiaries is held by them under valid, existing and enforceable leases,
free and clear of all liens, encumbrances, claims, security interests and
defects, except such as are not material and do not materially interfere with
the use made or proposed to be made of such property by the Company and its
subsidiaries. Since the respective dates as of which information is given in the
Memorandum, neither the Company nor any of its subsidiaries has sustained any
loss or interference with its assets, businesses or properties (whether owned or
leased) from fire, explosion, earthquake, flood or other calamity, whether or
not covered by insurance, or from any labor dispute or any court or legislative
or other governmental action, order or decree that would result in a Material
Adverse Effect. Except as disclosed in the Memorandum or in the SEC Documents,
since the date of the latest balance sheet included in the Memorandum, neither
the Company nor its subsidiaries has (i) issued any securities or incurred any
liability or obligation, direct or contingent, for borrowed money, except such
liabilities or obligations incurred in the ordinary course of business, (ii)
entered into any transaction not in the ordinary course of
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business or (iii) declared or paid any dividend or made any distribution on any
shares of its stock or redeemed, purchased or otherwise acquired or agreed to
redeem, purchase or otherwise acquire any shares of its capital stock.
3.12. No Violation. Neither the Company nor any of its
subsidiaries is in violation of any term or provision of its charter or by-laws
or of any franchise, license, permit, judgment, decree, order, statute, rule or
regulation, where the consequences of such violation, individually or in the
aggregate, would result in a Material Adverse Effect.
3.13. Due Authorization and Delivery. All necessary
corporate action has been duly and validly taken by the Company to authorize the
execution, delivery and performance of this Agreement and the issuance and sale
of the Shares by the Company. This Agreement has been duly and validly
authorized, executed and delivered by the Company and constitutes the legal,
valid and binding obligation of the Company enforceable against the Company in
accordance with its terms, except as the enforceability hereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights generally and by general
equitable principles, and except as the enforcement of indemnification and
contribution provisions hereof and thereof may be limited by applicable law and
public policy.
3.14. No Default. Neither the execution, delivery and
performance of this Agreement by the Company nor the consummation of any of the
transactions contemplated hereby (including, without limitation, the issuance
and sale by the Company of the Shares) will give rise to a right to terminate or
accelerate the due date of any payment due under, or conflict with or result in
the breach of any term or provision of, or constitute a default (or an event
which with notice or lapse of time or both would constitute a default) under, or
require any consent or waiver under, or result in the execution or imposition of
any lien, charge or encumbrance upon any properties or assets of the Company or
its subsidiaries pursuant to the terms of, any indenture, mortgage, deed of
trust or other material agreement or instrument to which the Company or any of
its subsidiaries is a party or by which either the Company or its subsidiaries
or any of their properties or businesses is bound, or any franchise, license,
permit, judgment, decree, order, statute, rule or regulation applicable to the
Company or any of its subsidiaries or violate any provision of the charter or
by-laws of the Company or any of its subsidiaries.
3.15. Capitalization. The Company has authorized and
outstanding capital stock as set forth under the caption "Capitalization" in the
Memorandum. The certificates evidencing the Shares are in due and proper legal
form and have been duly authorized for issuance by the Company. All of the
issued and outstanding shares of Common Stock have been duly and validly issued
and are fully paid and nonassessable. There are no statutory preemptive or other
similar rights to subscribe for or to purchase or acquire any shares of Common
Stock of the Company or any of its subsidiaries or any such rights pursuant to
its Certificate of Incorporation or by-laws or any agreement or instrument to or
by which the Company or any of its subsidiaries is a party or bound. The Shares,
when issued and sold pursuant to this Agreement, will be duly
7
and validly issued, fully paid and nonassessable and none of them will be issued
in violation of any preemptive or other similar right. Except as disclosed in
the Memorandum, there is no outstanding option, warrant or other right calling
for the issuance of, and there is no commitment, plan or arrangement to issue,
any share of stock of the Company or any of its subsidiaries or any security
convertible into, or exercisable or exchangeable for, such stock. The Common
Stock and the Shares conform in all material respects to all statements in
relation thereto contained in the Memorandum. All outstanding shares of capital
stock of each of the Company's subsidiaries have been duly authorized and
validly issued, and are fully paid and nonassessable and are owned directly by
the Company or by another wholly-owned subsidiary of the Company free and clear
of any security interests, liens, encumbrances, equities or claims, other than
those described in the Memorandum.
3.16. Lock-Ups. For a period starting on the Closing Date
and ending ninety (90) days after the effective date of the Registration
Statement (as defined in Section 6.1(a)(i) below), the Company will not, without
the prior written consent of CIBC World Markets Corp., sell, contract to sell or
otherwise dispose of or issue any securities of the Company that are
substantially similar to the Shares or the Common Stock, including but not
limited to any securities that are convertible into or exchangeable for, or that
represent the right to receive, Common Stock or any such substantially similar
securities, except pursuant to previously issued options, any agreements
providing for anti-dilution or other stock purchase or share issuance rights in
existence on the date hereof, any employee benefit or similar plan of the
Company in existence on the date hereof or duly adopted hereafter, or any
technology license agreement, strategic alliance or joint venture in existence
on the date hereof or which the Company may enter into hereafter.
3.17. Employees. Neither the Company nor any of its
subsidiaries is involved in any labor dispute nor, to the knowledge of the
Company, is any such dispute threatened, which dispute would result in a
Material Adverse Effect. The Company is not aware of any existing or imminent
labor disturbance by the employees of any of its principal suppliers or
contractors which would result in a Material Adverse Effect.
3.18. Market Stabilization. The Company has not taken, nor
will it take, directly or indirectly, any action designed to or which might
reasonably be expected to cause or result in, or which has constituted or which
might reasonably be expected to constitute, the stabilization or manipulation of
the price of the Common Stock or any security of the Company to facilitate the
sale or resale of any of the Shares.
3.19. Taxes. The Company and each of its subsidiaries has
filed all federal, state, local and foreign tax returns which are required to be
filed through the date hereof, which returns are true and correct in all
material respects or has received timely extensions thereof, and has paid all
taxes shown on such returns and all assessments received by it to the extent
that the same are material and have become due. There are no tax audits or
investigations pending, which
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if adversely determined would result in a Material Adverse Effect; nor are there
any material proposed additional tax assessments against the Company or any of
its subsidiaries.
3.20. NASDAQ Compliance; Listing.
(a) The Company is in compliance with the requirements of
the NASDAQ for continued listing of the Common Stock thereon and has not
received any notification that, and has no knowledge that, the NASDAQ is
contemplating terminating such listing nor, to the Company's knowledge, is there
any basis therefor. The transactions contemplated by this Agreement will not
contravene the rules and regulations of the NASDAQ.
(b) The Shares have been or will be prior to Closing duly
authorized for listing on the NASDAQ.
3.21. Insurance. The Company and its subsidiaries are
insured by insurers of recognized financial responsibility against such losses
and risks and in such amounts as are customary in the businesses in which they
are engaged or propose to engage after giving effect to the transactions
described in the Memorandum; all policies of insurance and fidelity or surety
bonds insuring the Company or any of its subsidiaries or the Company's or its
subsidiaries' respective businesses, assets, employees, officers and directors
are in full force and effect; the Company and each of its subsidiaries are in
compliance with the terms of such policies and instruments in all material
respects; and neither the Company nor any subsidiary of the Company has any
reason to believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue its business at a cost that
would not have a Material Adverse Effect.
3.22. Investment Company. The Company is not and, after
giving effect to the offering and sale of the Shares and the application of
proceeds thereof as described in the Memorandum, will not be an "investment
company" within the meaning of the Investment Company Act of 1940, as amended
(the "Investment Company Act").
3.23. Solicitation; Other Issuances of Securities. Neither
the Company nor any of its subsidiaries or affiliates, nor any Person acting on
its or their behalf, (i) has engaged in any form of general solicitation or
general advertising (within the meaning of Regulation D under the Securities
Act) in connection with the offer or sale of the Shares, (ii) has, directly or
indirectly, made any offers or sales of any security or solicited any offers to
buy any security, under any circumstances that would require registration of the
Shares under the Securities Act or (iii) has issued any shares of Common Stock
or shares of any series of preferred stock or other securities or instruments
convertible into, exchangeable for or otherwise entitling the holder thereof to
acquire shares of Common Stock which would be integrated with the sale of the
Shares to such Purchaser for purposes of the Securities Act or of any applicable
stockholder approval provisions, including, without limitation, under the rules
and regulations of any exchange or automated quotation system on which any of
the securities of the Company are listed or
9
designated, and the Company and its subsidiaries will take reasonable
precautions designed to ensure that any action or steps taken by the Company or
its subsidiaries would not require registration of any of the Shares under the
Securities Act or cause the offering of the Shares to be integrated with other
offerings. Assuming the accuracy of the representations and warranties of
Purchasers, the offer and sale of the Shares by the Company to the Purchasers
pursuant to this Agreement will be exempt from the registration requirements of
the Securities Act.
3.24. Testing and Regulations. Since the respective dates
as of which information is given in the Memorandum, the studies, tests and
preclinical and clinical trials conducted by or on behalf of the Company that
are described in the Memorandum were and, if still pending, are being conducted
in accordance with experimental protocols, procedures and controls pursuant to,
where applicable, accepted professional scientific standards; the descriptions
of the results of such studies, tests and trials contained in the Memorandum are
accurate and complete in all material respects; the Company is not aware of any
studies, tests or trials the results of which the Company believes reasonably
call into question the clinical trial results described or referred to in the
Memorandum when viewed in the context in which such results are described and
the clinical state of development; and the Company has not received any notices
or correspondence from the U.S. Food and Drug Administration or any foreign,
state or local governmental body exercising comparable authority requiring the
termination, suspension or material modification of any studies, tests or
preclinical or clinical trials conducted by or on behalf of the Company
3.25. Form S-3 Eligibility. The Company is eligible for use
of Form S-3 promulgated under the Securities Act.
3.26. Press Release. No later than 8:30 a.m. (Eastern
Standard Time) on the morning of the first business day following the Closing
Date, the Company will issue a press release announcing the closing of the sale
of the Shares.
3.27. HSR Act. The Company has filed all necessary
applications and other documents for approval by both the Federal Trade
Commission (the "FTC") and the United States Department of Justice (the "Justice
Department") under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), and the regulations promulgated pursuant thereto in
connection with its acquisition of the Soriatane-brand (acitretin) from
Xxxxxxx-Xx Xxxxx, Inc. (the "Acquisition"). The Company believes that (i) it is
unlikely that either the FTC or the Justice Department will challenge the
Acquisition as being anticompetitive and (ii) it is unlikely that either the FTC
or the Justice Department will seek to declare the Acquisition in violation of
Section 5 of the Federal Trade Commission Act or Section 7 of the Xxxxxxx Act.
10
Section 4. Representations, Warranties And Covenants Of Each Purchaser.
Each Purchaser for itself and no other Purchaser hereby
represents and warrants to, and covenants with, the Company as of the Closing
Date (or such other date specified below) as follows:
4.1. Organization. Such Purchaser is an entity duly
organized and validly existing in good standing (to the extent such concepts are
applicable) under the laws of its jurisdiction of organization. Such Purchaser
has all requisite corporate power and authority and all necessary governmental
approvals to carry on its business as now being conducted, except as would not
result in a material adverse effect on such Purchaser's ability to consummate
the transactions contemplated by this Agreement.
4.2. Authorization, Enforcement, and Validity. Such
Purchaser has the requisite power and authority to enter into this Agreement and
to consummate the transactions contemplated hereby. Such Purchaser has taken all
necessary action to authorize the execution, delivery and performance of this
Agreement. Upon the execution and delivery of this Agreement, this Agreement
shall constitute a valid and binding obligation of the Purchaser enforceable
against the Purchaser in accordance with its terms, except as enforceability
hereof may be limited by bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting the enforcement of creditors' rights generally and
by general equitable principles.
4.3. Consents and Approvals; No Violation. The execution,
delivery and performance of this Agreement by such Purchaser and the
consummation by such Purchaser of the transactions contemplated hereby will not
(i) result in a violation of such Purchaser's organizational documents; (ii)
conflict with, or constitute a default or give to others any rights of
termination, amendment, acceleration or cancellation of, any material agreement,
indenture or instrument to which such Purchaser is a party (except for such
conflicts, defaults, terminations, amendments, accelerations, cancellations and
violations as would not, individually or in the aggregate, result in a material
adverse effect on such Purchaser's ability to consummate the transactions
contemplated by this Agreement); or (iii) result in a violation of any law,
rule, regulation, order, judgment or decree applicable to such Purchaser or any
of its Subsidiaries, except for such violations as would not, individually or in
the aggregate, result in a material adverse effect on such Purchaser's ability
to consummate the transactions contemplated by this Agreement. Such Purchaser is
not required to obtain any consent, authorization or order of, or make any
filing or registration with, any court or governmental agency or any regulatory
or self-regulatory agency in order for it to execute, deliver or perform any of
its obligations under or contemplated by this Agreement, except where the
failure to obtain such consents, authorizations or orders or to make such
filings or registrations would not, individually or in the aggregate, result in
a material adverse effect on such Purchaser's ability to consummate the
transactions contemplated by this Agreement.
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4.4. Investment Experience. Such Purchaser is an
accredited investor within the meaning of Rule 501 of Regulation D promulgated
under the Securities Act, is knowledgeable, sophisticated and experienced in
making, and is qualified to make, decisions with respect to investments in
shares representing an investment decision like that involved in the purchase of
the Shares.
4.5. Investment Intent And Limitation On Dispositions.
Such Purchaser is acquiring the Shares for its own account for investment only
and has no intention of selling or distributing any of such Shares or any
arrangement or understanding with any other Persons regarding the sale or
distribution of such Shares except in accordance with the provisions of Section
6 and except as would not result in a violation of the Securities Act. Such
Purchaser will not, directly or indirectly, offer, sell, pledge, transfer or
otherwise dispose of (or solicit any offers to buy, purchase or otherwise
acquire or take a pledge of) any of the Shares except in accordance with the
provisions of Section 6 or pursuant to and in accordance with the Securities
Act.
4.6. Information And Risk.
(a) Such Purchaser has received and reviewed the
Memorandum and has requested, received, reviewed and considered all other
information such Purchaser deems relevant in making an informed decision to
purchase the Shares. Such Purchaser has had an opportunity to discuss the
Company's business, management and financial affairs with its management and
also had an opportunity to ask questions of officers of the Company that were
answered to such Purchaser's satisfaction.
(b) Such Purchaser recognizes that an investment in the
Shares involves a high degree of risk, including a risk of total loss of such
Purchaser's investment. Such Purchaser is able to bear the economic risk of
holding the Shares for an indefinite period, and has knowledge and experience in
the financial and business matters such that it is capable of evaluating the
risks of the investment in the Shares.
(c) Such Purchaser has, in connection with such
Purchaser's decision to purchase Shares, not relied upon any representations or
other information (whether oral or written) other than as set forth in the
representations and warranties of the Company contained herein, the Memorandum,
the SEC Documents and the other information described in Section 4.6(a), and
such Purchaser has, with respect to all matters relating to this Agreement and
the offer and sale of the Shares, relied solely upon the advice of such
Purchaser's own counsel and has not relied upon or consulted any counsel to the
Placement Agents or counsel to the Company.
4.7. Disclosures to the Company. Such Purchaser
understands that the Company is relying on the statements contained herein to
establish an exemption from registration under federal and state securities
laws. Such Purchaser will promptly notify the
12
Company of any changes in the information set forth in the Registration
Statement (as defined in Section 6.1(a)(i) below) regarding such Purchaser.
4.8. Nature of Purchasers. To the knowledge of such
Purchaser, such Purchaser: (i) is not an affiliate (as such term is defined
pursuant to Rule 12b-2 promulgated under the Exchange Act) of any other
Purchaser, (ii) is not constituted as a partnership, association, joint venture
or any other type of joint entity with any other Purchaser, and (iii) is not
acting as part of a group (as such term is defined under Section 13(d) of the
Exchange Act) with any other Purchaser. If at any time after the Closing Date
such Purchaser becomes an affiliate (as defined herein) of any other Purchaser,
such Purchaser will provide prompt written notice to the Company.
4.9. Ownership. Such Purchaser (including any Person
controlling, controlled by, or under common control with such Purchaser, as the
term "control" is defined pursuant to the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended, and its implementing regulations (the "HSR
Act")) does not, and upon the consummation of the transactions contemplated by
this Agreement will not, hold voting securities of the Company exceeding an
aggregate fair market value as of the Closing Date of fifty million dollars
($50,000,000), calculated pursuant to the HSR Act.
4.10. Brokers or Finders. No broker, investment banker,
financial advisor or other Person is entitled to any broker's, finder's,
financial advisor's or other similar fee or commission in connection with the
transactions contemplated hereby based upon arrangements made by or on behalf of
such Purchaser.
4.11. Acknowledgement. Such Purchaser acknowledges and
agrees that the Company does not make and has not made any representations or
warranties with respect to the transactions contemplated by this Agreement other
than those specifically set forth in Section 3.
4.12. Short Sales. From and after obtaining the knowledge
of the sale of the Shares contemplated hereby, such Purchaser has not taken, and
prior to the public announcement of the transaction such Purchaser shall not
take, any action that has caused or will cause such Purchaser to have, directly
or indirectly, sold or agreed to sell any shares of Common Stock, effected any
short sale, whether or not against the box, established any "put equivalent
position" (as defined in Rule 16a-1(h) under the Securities Exchange Act of
1934, as amended) with respect to the Common Stock, granted any other right
(including, without limitation, any put or call option) with respect to the
Common Stock or with respect to any security that includes, relates to or
derived any significant part of its value from the Common Stock, whether or not,
directly or indirectly, in order to hedge its position in the Shares.
13
Section 5. Survival of Representations and Warranties.
Notwithstanding any investigation made by any party to this
Agreement or by the Placement Agents, all representations and warranties as to
each respective Closing made by the Company and the Purchasers herein shall
survive for a period of one (1) year following the Closing Date.
Section 6. Registration of the Shares; Compliance with the Securities Act.
6.1. Registration Procedures And Expenses.
(a) Except for such times as the Company may be required
to suspend the use of a prospectus forming a part of the Registration Statement
(as defined below), the Company will:
(i) on a best efforts basis within thirty (30)
days after it has received from Xxxxxxx-Xx Xxxxx, Inc. ("Roche") the
financial information required to be furnished by Roche to the Company
under Section 8.8 of the Sale and Purchase Agreement, dated February 2,
2004, between the Company Roche, prepare and file with the Commission a
registration statement on Form S-3 (the "Registration Statement")
covering the resale of the Shares by each Purchaser;
(ii) use its best efforts to cause the
Registration Statement, as amended, subject to receipt of necessary
information from the Purchasers on the questionnaire attached as
Appendix E hereto, to become effective under the Securities Act as soon
as practicable but in any event no later than ninety (90) days after
the Closing Date. If such Registration Statement covering the Shares is
not declared effective by the Commission on or prior to ninety (90)
days after the Closing Date, the Company will make pro rata payments to
each Purchaser, as liquidated damages and not as a penalty, in an
amount per 30-day period (or pro rata portion thereof) equal to 1.0% of
the aggregate amount paid by such Purchaser on the Closing Date to the
Company until such Registration Statement is declared effective by the
Commission. Such payments shall be made to each Purchaser in cash not
later than three business days following the end of each 30-day period;
(iii) prepare and file with the Commission such
amendments and supplements to the Registration Statement and the
prospectus used in connection therewith (A) as may be necessary to keep
the Registration Statement continuously effective until the earlier of
(i) the second anniversary of the Closing Date, or (ii) such time as
all Shares purchased by the Purchasers have been sold pursuant to the
Registration Statement and (B) as may be reasonably requested by a
Purchaser in order to incorporate information concerning such Purchaser
or such Purchaser's intended method of distribution;
14
(iv) so long as the Registration Statement is
effective covering the resale of Shares owned by the Purchasers,
furnish to each Purchaser with respect to the Shares registered under
the Registration Statement (and to each underwriter, if any, of such
Shares) such reasonable number of copies of prospectuses and such other
documents as such Purchaser may reasonably request in order to
facilitate the public sale or other disposition of all or any of the
Shares by such Purchaser;
(v) use commercially reasonable efforts to file
documents required of the Company for normal Blue Sky clearance in
states specified in writing by the Purchasers; provided, however, that
the Company shall not be required to qualify to do business or consent
to service of process generally in any jurisdiction in which the
Company is not now so qualified or has not so consented;
(vi) bear all expenses in connection with the
procedures in paragraphs (a) through (c) of this Section 6.1 and the
registration of the Shares pursuant to the Registration Statement,
other than fees and expenses, if any, of counsel or other advisers to
the Purchasers or underwriting discounts, brokerage fees and
commissions incurred by the Purchasers, if any, in connection with an
underwritten offering of the Shares;
(vii) use all commercially reasonable efforts to
prevent the issuance of any stop order or other order suspending the
effectiveness of such Registration Statement and, if such an order is
issued, to obtain the withdrawal thereof at the earliest possible time
and to notify each Purchaser of the issuance of such order and the
resolution thereof;
(viii) furnish to each Purchaser, on the date that
such Registration Statement becomes effective, (x) a letter, dated such
date, of outside counsel representing the Company (and reasonably
acceptable to such Purchaser) addressed to such Purchaser, confirming
the effectiveness of such Registration Statement and, to the knowledge
of such counsel, the absence of any stop order, and (y) in the case of
an underwriting, (A) an opinion addressed to such Purchaser, dated such
date, of such outside counsel, in such form and substance as is
required to be given to the underwriters, and (B) a letter addressed to
such Purchaser, dated such date, from the Company's independent
certified public accountants, in such form and substance as is required
to be given by the Company's independent certified public accountants
to such underwriters;
(ix) provide to each Purchaser and its
representatives, if requested, the opportunity to conduct a reasonable
inquiry of the Company's financial and other records during normal
business hours and make available its officers, directors and employees
for questions regarding information which such Purchaser may reasonably
request in order to complete its due diligence, in each case as is
customary for similar due diligence examinations; provided that, if the
foregoing inspection and information gathering would otherwise disrupt
the Company's conduct of its business, such inspection and information
15
gathering shall, to the greatest extent possible, be coordinated on
behalf of the all of the Purchasers by one counsel designated by and on
behalf of the Purchasers; and
(x) permit counsel for the Purchasers to review
the Registration Statement and all amendments and supplements thereto,
and any comments made by the staff of the Commission and the Company's
responses thereto, within a reasonable period of time prior to the
filing thereof with the Commission (or, in the case of comments made by
the staff of the Commission, within a reasonable period of time
following the receipt thereof by the Company);
provided, that in the case of clauses (ix) and (x) above, the Company shall not
be required to provide, and shall not provide, any Purchaser with material,
non-public information unless such Purchaser agrees to receive such information
and enters into a written confidentiality agreement with the Company.
(b) The Company shall be permitted to suspend for one or
more periods (provided that the aggregate length of such suspension shall not
exceed thirty (30) days in any ninety (90)-day day period or ninety (90) days in
aggregate in any 365 day period) the actions required under Sections 6.1(a)(iii)
to the extent that the Board of Directors of the Company concludes in good faith
that because of valid business reasons, including, but not limited to, the
acquisition or divestiture of assets, pending corporate developments and similar
events, it is in the best interests of the Company to suspend such use of the
Registration Statement and the prospectus used in connection therewith.
(c) With a view to making available to the Purchasers the
benefits of Rule 144 (or its successor rule) and any other rule or regulation of
the Commission that may at any time permit the Purchaser to sell Shares to the
public without registration, the Company covenants and agrees to: (i) make and
keep public information available, as those terms are understood and defined in
Rule 144, until the earlier of (A) six months after such date as all of the
Purchasers' Shares may be resold pursuant to Rule 144(k) or any other rule of
similar effect or (B) such date as all of the Purchasers' Shares shall have been
resold; (ii) file with the Commission in a timely manner all reports and other
documents required of the Company under the Exchange Act; and (iii) furnish to
the Purchaser upon request, as long as the Purchaser owns any Shares, (A) a
written statement by the Company that it has complied with the reporting
requirements of the Exchange Act, (B) a copy of the Company's most recent Annual
Report on Form 10-K or Quarterly Report on Form 10-Q, and (C) such other
information as may be reasonably requested in order to avail the Purchaser of
any rule or regulation of the Commission that permits the selling of any such
Shares without registration.
6.2. Restrictions on Transferability.
(a) Each Purchaser agrees that it will not effect any
disposition of the Shares that would constitute a sale within the meaning of the
Securities Act or pursuant to any
16
applicable state securities or Blue Sky laws of any state, except (i) as
contemplated in the Registration Statement referred to in Section 6.1 above,
(ii) pursuant to the requirements of Rule 144 (in which case such Purchaser will
provide the Company with reasonable evidence of such Purchaser's compliance
therewith) or (iii) pursuant to a written opinion of legal counsel reasonably
satisfactory to the Company and addressed to the Company to the effect that
registration is not required in connection with the proposed transfer; whereupon
the holder of such securities shall be entitled to transfer such securities.
Each certificate evidencing the securities transferred as above provided shall
bear the appropriate restrictive legends as may be required by Section 7.
(b) Each Purchaser acknowledges that there may
occasionally be times when the Company must suspend the use of the prospectus
forming a part of the Registration Statement until such time as an amendment or
supplement to the Registration Statement has been filed by the Company and
declared effective, or until such time as the Company has filed an appropriate
report with the Commission pursuant to the Exchange Act. Each Purchaser hereby
covenants that such Purchaser will not sell any Shares pursuant to said
prospectus during the period commencing at the time at which the Company gives
the Purchasers written notice of the suspension of the use of said prospectus
and ending at the time the Company gives the Purchasers written notice that the
Purchasers may thereafter effect sales pursuant to said prospectus. The Company
agrees to file such amendment, supplement or report as soon as practicable
following such notice of suspension.
(c) Upon any sale of Shares pursuant to the Registration
Statement, each Purchaser shall deliver to the transfer agent a certificate of
subsequent sale in the form attached hereto as Appendix F.
(d) None of the Shares shall be transferable except upon
the conditions specified in this Section 6, which are intended to ensure
compliance with the provisions of the Securities Act. Each Purchaser will cause
any proposed transferee of the Shares held by such Purchaser to agree to take
and hold such Shares subject to the provisions and upon the conditions specified
in this Section 6 if and to the extent that such Shares continue to be
restricted securities in the hands of the transferee.
6.3. Termination Of Conditions And Obligations.
(a) The conditions precedent imposed by Section 6.2 above
regarding the transferability of the Shares shall cease and terminate as to any
particular number of the Shares upon the date on which the Purchaser may sell
without volume limitations all such Shares then held by the Purchaser without
registration by reason of Rule 144 or any other rule of similar effect.
(b) The expiration or termination of this Agreement for
any reason will have no effect on the rights of any of the parties under the
provisions of this Section 6.
17
Section 7. Legends.
(a) Such Purchaser understands and agrees that each
certificate or other document evidencing any of the Shares shall be endorsed
with the legend in the form set forth below, and such Purchaser covenants that
such Purchaser will not transfer the shares represented by any such certificate
without complying with the restrictions on transfer described in the legend
endorsed on such certificate (unless there is in effect a registration statement
under the Securities Act covering such proposed transfer, such securities have
been sold under Rule 144 promulgated under the Securities Act ("Rule 144") or as
otherwise permitted by the provisions of Section 6.2 above) and understands that
the Company will refuse to register a transfer of any Shares unless the
conditions specified in the following legend are satisfied:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES
LAWS. EXCEPT AS SPECIFIED IN THIS LEGEND, SUCH SHARES MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED OR HYPOTHECATED, OR OTHERWISE TRANSFERRED IN
THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT THERETO
UNDER SUCH ACT UNLESS SOLD PURSUANT TO RULE 144 OF SUCH ACT OR UNLESS
SUCH SALE, PLEDGE, HYPOTHECATION OR TRANSFER IS OTHERWISE EXEMPT FROM
REGISTRATION AND ANY APPLICABLE STATE SECURITIES LAWS. THE COMPANY MAY
REQUEST A WRITTEN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE
COMPANY, TO THE EFFECT THAT REGISTRATION IS NOT REQUIRED IN CONNECTION
WITH SUCH SALE OR OTHER TRANSFER."
(b) Such certificates shall not contain any legend (i)
while a Registration Statement (as defined below) covering the resale of such
Shares is effective under the Securities Act, (ii) following any sale of such
Shares pursuant to an effective Registration Statement or Rule 144, or (iii) if
such Shares are eligible for sale under Rule 144(k). Following the effective
date of the Registration Statement or at such earlier time as a legend is no
longer required for certain Shares, the Company will, no later than three
trading days following the delivery by a Purchaser to the Company or the
Company's transfer agent of a legended certificate representing such securities,
deliver or cause to be delivered to such Purchaser a certificate representing
such securities that is free from all restrictive and other legends.
(c) Such Purchaser covenants that such Purchaser will not
transfer the Shares represented by any such certificate without complying with
any applicable requirements under the Securities Act to deliver the final
prospectus included in the effective Registration Statement to any offeree of
such Shares.
18
Section 8. Indemnification.
(a) For purposes of this Section 8:
(i) the term "Purchaser" shall include the
Purchaser and any affiliate (as such term is defined pursuant to Rule
12b-2 promulgated under the Exchange Act) of such Purchaser;
(ii) the term "Prospectus" shall mean the
prospectus and any amendment or supplement thereto in the form first
filed with the Commission pursuant to Rule 424(b) promulgated under the
Securities Act or, if no Rule 424(b) filing is required, filed as part
of the Registration Statement at the time of effectiveness, as
supplemented or amended from time to time; and
(iii) the term "Registration Statement" shall
include any final prospectus, exhibit, supplement or amendment included
in or relating to the Registration Statement.
(b) The Company agrees to indemnify and hold harmless
each of the Purchasers and each Person, if any, who controls any Purchaser
within the meaning of the Securities Act, against any losses, claims, damages,
liabilities or expenses, joint or several, to which such Purchasers or such
controlling Person may become subject, under the Securities Act, the Exchange
Act, or any other federal or state statutory law or regulation, or at common law
or otherwise (including in settlement of any litigation, if such settlement is
effected with the written consent of the Company), insofar as such losses,
claims, damages, liabilities or expenses (or actions in respect thereof as
contemplated below) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the Registration
Statement or Prospectus, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances in
which they were made, not misleading, or arise out of or are based in whole or
in part on any inaccuracy in the representations and warranties of the Company
contained in this Agreement, or any failure of the Company to perform its
obligations hereunder, and will reimburse each Purchaser and each such
controlling Person for any legal and other expenses reasonably incurred as such
expenses are reasonably incurred by such Purchaser or such controlling Person in
connection with investigating, defending, settling, compromising or paying any
such loss, claim, damage, liability, expense or action or enforcing the
provisions hereof; provided, however, that the Company will not be liable in any
such case to the extent that any such loss, claim, damage, liability or expense
arises out of or is based upon (i) an untrue statement or alleged untrue
statement or omission or alleged omission made in the Registration Statement or
Prospectus in reliance upon and in conformity with written information furnished
to the Company by or on behalf of the Purchaser expressly for use therein, (ii)
the failure of such Purchaser to comply with the covenants and agreements
contained in Section 6.2 above respecting sale of the Shares, (iii) the
inaccuracy of any representations made by such Purchaser
19
herein or (iv) any statement or omission in any Prospectus that is corrected in
any subsequent Prospectus that was delivered to the Purchaser a reasonable time
prior to the pertinent sale or sales by the Purchaser, and provided that the
Purchaser has been notified by the Company that such earlier Prospectus should
no longer be delivered by the Purchaser.
(c) Each Purchaser will severally, and not jointly,
indemnify and hold harmless the Company, each of its directors, each of its
officers who signed the Registration Statement and each Person, if any, who
controls the Company within the meaning of the Securities Act, against any
losses, claims, damages, liabilities or expenses to which the Company, each of
its directors, each of its officers who signed the Registration Statement or
controlling Person may become subject, under the Securities Act, the Exchange
Act, or any other federal or state statutory law or regulation, or at common law
or otherwise (including in settlement of any litigation, if such settlement is
effected with the written consent of such Purchaser) insofar as such losses,
claims, damages, liabilities or expenses (or actions in respect thereof as
contemplated below) arise out of or are based upon (i) any failure by such
Purchaser to comply with the covenants and agreements contained in Section 6.2
above respecting the sale of the Shares, (ii) the inaccuracy of any
representation made by such Purchaser herein or (iii) any untrue or alleged
untrue statement of any material fact contained in the Registration Statement or
the Prospectus, or the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances in which they were made, not misleading, in each
case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in the
Registration Statement or Prospectus in reliance upon and in conformity with
written information furnished to the Company by or on behalf of such Purchaser
expressly for use therein, and will reimburse the Company, each of its
directors, each of its officers who signed the Registration Statement or
controlling Person for any legal and other expense reasonably incurred, as such
expenses are reasonably incurred by the Company, each of its directors, each of
its officers who signed the Registration Statement or controlling Person in
connection with investigating, defending, settling, compromising or paying any
such loss, claim, damage, liability, expense or action; provided, however, that
the aggregate liability of any Purchaser hereunder shall not exceed the Purchase
Price paid by such Purchaser to the Company on the Closing Date. No Purchaser
shall be liable for the indemnification obligations of any other Purchaser.
(d) Promptly after receipt by an indemnified party under
this Section 8 of notice of the threat or commencement of any action, such
indemnified party will, if a claim in respect thereof is to be made against an
indemnifying party under this Section 8, promptly notify the indemnifying party
in writing thereof, but the omission so to notify the indemnifying party will
not relieve it from any liability which it may have to any indemnified party
hereunder or otherwise to the extent it is not prejudiced as a result of such
failure. In case any such action is brought against any indemnified party and
such indemnified party seeks or intends to seek indemnity from an indemnifying
party, the indemnifying party will be entitled to participate in, and, to the
extent that it may wish, jointly with all other indemnifying parties similarly
notified, to assume the defense thereof with counsel reasonably satisfactory to
such indemnified party;
20
provided, however, if the defendants in any such action include both the
indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be a conflict between the positions of
the indemnifying party and the indemnified party in conducting the defense of
any such action or that there may be legal defenses available to it and/or other
indemnified parties which are different from or additional to those available to
the indemnifying party, the indemnified party or parties shall have the right to
select separate counsel to assume such legal defenses and to otherwise
participate in the defense of such action on behalf of such indemnified party or
parties. Upon receipt of notice from the indemnifying party to such indemnified
party of its election to assume the defense of such action and approval by the
indemnified party of counsel, the indemnifying party will not be liable to such
indemnified party under this Section 8 for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof unless (i) the indemnified party shall have employed such counsel in
connection with the assumption of legal defenses in accordance with the proviso
to the preceding sentence (it being understood, however, that the indemnifying
party shall not be liable for the expenses of more than one separate counsel,
reasonably satisfactory to the indemnifying party, representing the indemnified
parties who are parties to such action) or (ii) the indemnified party shall not
have employed counsel reasonably satisfactory to the indemnified party to
represent the indemnified party within a reasonable time after notice of
commencement of action, in each of which cases the reasonable fees and expenses
of counsel shall be at the expense of the indemnifying party.
(e) Each party hereto agrees that, if for any reason the
indemnification provisions contemplated by (b) and (c) of this Section 8 are
unavailable to or insufficient to hold harmless an indemnified party in respect
of any losses, claims, damages, liabilities or expenses (or actions in respect
thereof) referred to therein, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of such losses,
claims, damages, liabilities or expenses (or actions in respect thereof) in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party and the indemnified party in connection with the statements or omissions
which resulted in such losses, claims, damages, liabilities or expenses (or
actions in respect thereof), as well as any other relevant equitable
considerations. The relative fault of such indemnifying party and indemnified
party shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or omission or alleged
omission to state a material fact or any alleged conduct relates to information
supplied by such indemnifying party or by such indemnified party, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission or such conduct. The parties
hereto agree that it would not be just and equitable if contribution pursuant to
this Section 8(e) were determined by pro rata allocation (even if the Purchasers
or any agents or underwriters or all of them were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to in this Section 8(e). The amount paid or
payable by an indemnified party as a result of the losses, claims, damages,
liabilities or expenses (or actions in respect thereof) referred to above shall
be deemed to include any legal or other fees or expenses reasonably incurred by
such indemnified party in connection with investigating or defending any
21
such action or claim. Notwithstanding the provisions of this Section 8(e), the
aggregate liability of any Purchaser hereunder shall not exceed the Purchase
Price paid by such Purchaser to the Company on the Closing Date. The Purchasers'
obligations in this Section 8(e) to contribute shall be several in proportion to
the number or amount of Shares sold by them and not joint.
Section 9. Notices.
(a) All notices, requests, consents and other
communications hereunder shall be in writing, shall be mailed by first-class
registered or certified airmail, confirmed facsimile or nationally recognized
overnight express courier postage prepaid, and shall be as addressed as follows:
if to the Company, to:
Connetics Corporation
0000 Xxxx Xxxxxxxx Xxxx
Xxxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
with a copy to:
Xxxxxxxx & Xxxxxxxx LLP
0000 Xxxxxxxx Xxxxx
000 Xxxxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxx
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
and if to any Purchaser, at its address as set forth in Appendix A hereto, or at
such other address or addresses as may have been previously furnished to the
Company in writing in accordance with this Section 9.
(b) Such notices or other communications shall be deemed
delivered upon receipt, in the case of overnight delivery, personal delivery,
facsimile transmission (as evidenced by the confirmation thereof), or mail.
Section 10. Miscellaneous.
10.1. Amendments. 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
22
instance and either retroactively or prospectively) only with the written
consent of the Company and each Purchaser. Any amendment or waiver effected in
accordance with this Section 10.1 shall be binding upon each holder of any
securities purchased under this Agreement at the time outstanding (including
securities into which such securities are convertible), each future holder of
all such securities, and the Company.
10.2. Headings. The headings of the various sections of
this Agreement are for convenience of reference only and shall not be deemed to
be part of this Agreement.
10.3. Severability. In the event that any provision in this
Agreement is held to be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby.
10.4. Governing Law And Forum. This Agreement shall be
governed by and construed in accordance with the laws of the State of New York.
The parties hereto agree to submit to the exclusive jurisdiction of the federal
and state courts of the State of New York with respect to the interpretation of
this Agreement or for the purposes of any action arising out of or related to
this Agreement.
10.5. Counterparts. This Agreement may be executed in
multiple counterparts, each of which shall constitute an original, and all of
which together shall constitute one and the same instrument. In the event that
any signature is delivered via facsimile transmission, such signature shall
create a valid and binding obligation of the party executing (or on whose behalf
such signature is executed) the same with the same force and effect as if such
facsimile signature page were an original hereof.
10.6. Entire Agreement. This Agreement contains the entire
understanding of the parties with respect to the matters covered herein,
supersedes all prior agreements and understandings with respect to such matters
and executed by and among the Company and any of the Purchasers, and, except as
specifically set forth herein or therein, neither the Company nor the Purchasers
make any representation, warranty, covenant or undertaking with respect to such
matters.
10.7. Independent Nature Of Purchasers' Obligations And
Rights. The obligations of each Purchaser under this Agreement are several and
not joint with the obligations of any other Purchaser, and no Purchaser shall be
responsible in any way for the performance of the obligations of any other
Purchaser under this Agreement. Nothing contained herein and no action taken by
any Purchaser pursuant thereto, shall be deemed to constitute the Purchasers as
a partnership, an association, a joint venture or any other kind of entity, or
create a presumption that the Purchasers are in any way acting in concert or as
a group, or are deemed affiliates (as such term is defined under the Exchange
Act) with respect to such obligations or the transactions contemplated by this
Agreement. Each Purchaser shall be entitled to independently protect and enforce
its rights, including without limitation the rights arising out of this
Agreement, and it
23
shall not be necessary for any other Purchaser to be joined as an additional
party in any proceeding for such purpose.
10.8. Expenses. Each party hereto shall pay all costs and
expenses incurred by it in connection with the execution and delivery of this
Agreement, and all the transactions contemplated thereby, including fees of
legal counsel.
[SIGNATURE PAGES FOLLOW]
24
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed and delivered by their duly authorized representatives
as of the day and year first above written.
CONNETICS CORPORATION
By: /s/ Xxxx X. Xxxxxxx
----------------------------------------
Name: Xxxx X. Xxxxxxx
Title: Chief Financial Officer,
Executive Vice President, Finance
and Corporate Development
Purchaser: Merlin BioMed, L.P.
By: /s/ Xxxxxx Xxxxxxxxx
----------------------------------------
Name: Xxxxxx Xxxxxxxxx
Title: CFO of General Partner
Purchaser: Merlin BioMed II, L.P.
By: /s/ Xxxxxx Xxxxxxxxx
----------------------------------------
Name: Xxxxxx Xxxxxxxxx
Title: CFO of General Partner
Purchaser: Merlin BioMed International, LTD
By: /s/ Xxxxxx Xxxxxxxxx
----------------------------------------
Name: Xxxxxx Xxxxxxxxx
Title: CFO of Investment Advisor
Purchaser: Interdynamic Fund BioMed Tech.
By: /s/ Xxxxxx Xxxxxxxxx
----------------------------------------
Name: Xxxxxx Xxxxxxxxx
Title: CFO of Investment Advisor
25
Purchaser: Pharma w/ Health
By: /s/ Xxxxxx Xxxxxxxxx
----------------------------------------
Name: Xxxxxx Xxxxxxxxx
Title: CFO of Investment Advisor
Purchaser: UBS X'Xxxxxx LLC f/b/o X'Xxxxxx
PIPES Strategies Master Ltd.
By: /s/ Xxxxxx Xxxxxxx
----------------------------------------
Name: Xxxxxx Xxxxxxx
Title: Managing Director
Purchaser: UBS X'Xxxxxx LLC f/b/o X'Xxxxxx
Global Fundamental Long/Short Limited
By: /s/ Xxxxxx Xxxxxxx
----------------------------------------
Name: Xxxxxx Xxxxxxx
Title: Managing Director
Purchaser: UBS X'Xxxxxx LLC f/b/o UBS Global
Equity Arbitrage Master Limited
By: /s/ Xxxxxx Xxxxxxx
----------------------------------------
Name: Xxxxxx Xxxxxxx
Title: Managing Director
Purchaser: Truk Opportunity Fund, LLC
By: Atoll Asset Management, its
Managing Member
By: /s/ Xxxxxxx X. Xxxx
----------------------------------------
Name: Xxxxxxx X. Xxxx
Title: Principal
26
Purchaser: Atlas Equity I, Ltd
By: /s/ Xxxxx X. Xxxxxxxxx
----------------------------------------
Name: Xxxxx X. Xxxxxxxxx
Title: Authorized Signatory
Purchaser: HFR SHC Aggressive Fund
By: /s/ Xxxx Xxxxx
----------------------------------------
Name: Xxxx Xxxxx
Title: For and on behalf of HFR Asset
Management as attorney-in-fact
Purchaser: Knightsbridge Post Venture
IV L.P.
By: /s/ Xxxx X. Xxxxx
----------------------------------------
Name: Xxxx X. Xxxxx
Title: Partner of the Investment Advisor
Purchaser: Knightsbridge Integrated
Holdings, V, LP
By: /s/ Xxxx X. Xxxxx
----------------------------------------
Name: Xxxx X. Xxxxx
Title: Partner of the Investment Advisor
Purchaser: Knightsbridge Netherlands
II, L.P.
By: /s/ Xxxx X. Xxxxx
----------------------------------------
Name: Xxxx X. Xxxxx
Title: Partner of the Investment Advisor
27
Purchaser: Knightsbridge Integrated
Holdings IV Post Venture, LP
By: /s/ Xxxx X. Xxxxx
----------------------------------------
Name: Xxxx X. Xxxxx
Title: Partner of the Investment Advisor
Purchaser: Knightsbridge Post Venture
III, LP
By: /s/ Xxxx X. Xxxxx
----------------------------------------
Name: Xxxx X. Xxxxx
Title: Partner of the Investment Advisor
Purchaser: Winchester Global Trust Company
Limited as Trustee for Caduceus
Capital Trust
By: /s/ Xxxx X. Xxxxx
----------------------------------------
Name: Xxxx X. Xxxxx
Title: Partner of the Investment Advisor
Purchaser: Caduceus Capital II, L.P.
By: /s/ Xxxx X. Xxxxx
----------------------------------------
Name: Xxxx X. Xxxxx
Title: Partner of the General Partner
Purchaser: UBS Eucalyptus Fund, L.L.C.
By: /s/ Xxxx X. Xxxxx
----------------------------------------
Name: Xxxx X. Xxxxx
Title: Partner of the JV Partner
28
Purchaser: PW Eucalyptus Fund, Ltd.
By: /s/ Xxxx X. Xxxxx
----------------------------------------
Name: Xxxx X. Xxxxx
Title: Partner of the JV Partner
Purchaser: Knightsbridge Netherland I LP
By: /s/ Xxxx X. Xxxxx
----------------------------------------
Name: Xxxx X. Xxxxx
Title: Partner of the Investment Advisor
Purchaser: Knightsbridge Netherlands
III - LP
By: /s/ Xxxx X. Xxxxx
----------------------------------------
Name: Xxxx X. Xxxxx
Title: Partner of the Investment Advisor
Purchaser: Knightsbridge Integrated
Holdings II Limited
By: /s/ Xxxx X. Xxxxx
----------------------------------------
Name: Xxxx X. Xxxxx
Title: Partner of the Investment Advisor
Purchaser: Knightsbridge Venture Capital
IV, L.P.
By: /s/ Xxxx X. Xxxxx
----------------------------------------
Name: Xxxx X. Xxxxx
Title: Partner of the Investment Advisor
29
Purchaser: Knightsbridge Venture Capital
III LP
By: /s/ Xxxx X. Xxxxx
----------------------------------------
Name: Xxxx X. Xxxxx
Title: Partner of the Investment Advisor
Purchaser: Xxxxx Bros. Investments II, L.P.
By: Xxxxx Bros. Capital, L.P.,
(general partner)
By: Xxxxx Bros. Capital (GP), LLC,
(general partner)
By: /s/ Xxxxx Xxxxx
----------------------------------------
Name: Xxxxx Xxxxx, Ph.D.
Title: Managing Member
Purchaser: Xxxxx Biotech Fund I, L.P.
By: Xxxxx Bros. Capital, L.P.,
(general partner)
By: Xxxxx Bros. Capital (GP), LLC,
(general partner)
By: /s/ Xxxxx Xxxxx
----------------------------------------
Name: Xxxxx Xxxxx, Ph.D.
Title: Managing Member
Purchaser: Xxxxx Biotech Fund II, L.P.
By: Xxxxx Bros. Capital, L.P.,
(general partner)
By: Xxxxx Bros. Capital (GP), LLC,
(general partner)
By: /s/ Xxxxx Xxxxx
----------------------------------------
Name: Xxxxx Xxxxx, Ph.D.
Title: Managing Member
30
Purchaser: Xxxxx Biotech Fund II (Z), L.P.
By: Xxxxx Bros. Capital, L.P.,
(general partner)
By: Xxxxx Bros. Capital (GP), LLC,
(general partner)
By: /s/ Xxxxx Xxxxx
----------------------------------------
Name: Xxxxx Xxxxx, Ph.D.
Title: Managing Member
Purchaser: Alexandra Global Master Fund LTD
By: /s/ [illegible]
----------------------------------------
Name: Alexandra Investment Management as
investment advisor for Alexandra
Global Master Fund LTD
Title: Partner
Purchaser: Citadel Equity Fund Ltd.
By: Citadel Limited Partnership its
Portfolio Manager
By: GLB Partners, L.P. its General Partner
By: Citadel Investment Group, L.L.C. its
General Partner
By: /s/ Xxxxx X. Xxxxxxx
----------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Senior Vice President
31
Purchaser: Highbridge International LLC
By: Highbridge Capital Management, LLC
By: /s/ Xxxx X. Chill
----------------------------------------
Name: Xxxx X. Chill
Title: Managing Director
32
APPENDIX A
SCHEDULE OF PURCHASERS
AGGREGATE NUMBER AGGREGATE
PURCHASER PURCHASER ADDRESS TAX ID NO. OF SHARES PURCHASE PRICE
--------- ----------------- ---------- --------- --------------
Merlin BioMed, L.P. 000 Xxxx Xxx. 00-0000000 40,000 $ 810,000
Xxxxx 000
Xxx Xxxx, XX 00000
Merlin BioMed II, L.P. 000 Xxxx Xxx. 00-0000000 18,000 $ 364,500
Xxxxx 000
Xxx Xxxx, XX 00000
Merlin BioMed 000 Xxxx Xxx. X/X 25,500 $ 516,375
International, LTD Xxxxx 000
Xxx Xxxx, XX 00000
Interdynamic Fund 000 Xxxx Xxx. N/A/ 11,300 $ 228,825
Xxxxx 000
Xxx Xxxx, XX 00000
Pharma w/ Health 000 Xxxx Xxx. X/X 30,200 $ 611,550
Xxxxx 000
Xxx Xxxx, XX 00000
UBS X'Xxxxxx LLC f/b/o UBS X'Xxxxxx LLC N/A 32,000 648,000
X'Xxxxxx PIPES Strategies One X. Xxxxxx Dr.
Master Ltd. 00xx Xxxxx
Xxxxxxx, XX 00000
UBS X'Xxxxxx LLC f/b/o UBS X'Xxxxxx LLC N/A 83,200 $ 1,684,800
X'Xxxxxx Global One X. Xxxxxx Dr.
Fundamental Long/Short Ltd. 00xx Xxxxx
Xxxxxxx, XX 00000
UBS X'Xxxxxx LLC f/b/o UBS UBS X'Xxxxxx LLC N/A 44,800 $ 907,200
Global Equity Arbitrage One X. Xxxxxx Dr.
Master Ltd. 00xx Xxxxx
Xxxxxxx, XX 00000
Truk Opportunity Fund, LLC 00 Xxxxxxxxxxx Xxxxx 00-0000000 165,000 $ 3,341,250
Xxxxx 0000
Xxx Xxxx, XX 00000
Atlas Equity I, Ltd Balyasny Capital 00-0000000 100,000 $ 2,025,000
Management, L.P.
000 X. Xxxxxxx
Xxxxx 0000
Xxxxxxx, XX 00000
Attn.: Xxxxxxx Xxxxxx
Winchester Global Trust c/o OrbiMed Advisors 00-0000000 198,000 $ 4,009,500
Company Limited as Trustee LLC
for Caduceus Capital Trust 000 Xxxxx Xxx.
00xx Xxxxx
Xxx Xxxx, XX 00000
Caduceus Capital II, L.P. c/o OrbiMed Advisors 00-0000000 86,000 $ 1,741,500
LLC
000 Xxxxx Xxx.
00xx Xxxxx
Xxx Xxxx, XX 00000
33
UBS Eucalyptus Fund, L.L.C. c/o OrbiMed Advisors 00-0000000 196,000 $ 3,969,000
LLC
000 Xxxxx Xxx.
00xx Xxxxx
Xxx Xxxx, XX 00000
PW Eucalyptus Fund, Ltd. c/o OrbiMed Advisors N/A 25,000 $ 506,250
LLC
000 Xxxxx Xxx.
00xx Xxxxx
Xxx Xxxx, XX 00000
HFR SHC Aggressive Fund c/o OrbiMed Advisors N/A 25,000 $ 506,250
LLC
000 Xxxxx Xxx.
00xx Xxxxx
Xxx Xxxx, XX 00000
Knightsbridge Post Venture c/o OrbiMed Advisors 00-0000000 19,100 $ 386,775
IV L.P. LLC
000 Xxxxx Xxx.
00xx Xxxxx
Xxx Xxxx, XX 00000
Knightsbridge Integrated c/o OrbiMed Advisors 00-0000000 17,400 $ 352,350
Holdings, V, LP LLC
000 Xxxxx Xxx.
00xx Xxxxx
Xxx Xxxx, XX 00000
Knightsbridge Netherlands c/o OrbiMed Advisors 00-0000000 6,400 $ 129,600
II, L.P. LLC
000 Xxxxx Xxx.
00xx Xxxxx
Xxx Xxxx, XX 00000
Knightsbridge Integrated c/o OrbiMed Advisors 00-0000000 11,400 $ 230,850
Holdings IV Post Venture, LLC
LP 000 Xxxxx Xxx.
00xx Xxxxx
Xxx Xxxx, XX 00000
Knightsbridge Post Venture c/o OrbiMed Advisors 00-0000000 11,600 $ 234,900
III, LP LLC
000 Xxxxx Xxx.
00xx Xxxxx
Xxx Xxxx, XX 00000
Knightsbridge Netherland I c/o OrbiMed Advisors 00-0000000 7,900 $ 159,975
LP LLC
000 Xxxxx Xxx.
00xx Xxxxx
Xxx Xxxx, XX 00000
Knightsbridge Netherlands c/o OrbiMed Advisors 00-0000000 2,600 $ 52,650
III - LP LLC
000 Xxxxx Xxx.
00xx Xxxxx
Xxx Xxxx, XX 00000
Knightsbridge Integrated c/o OrbiMed Advisors N/A 12,400 $ 251,100
Holdings II Limited LLC
000 Xxxxx Xxx.
00xx Xxxxx
Xxx Xxxx, XX 00000
34
Knightsbridge Venture c/o OrbiMed Advisors 00-0000000 3,300 $ 66,825
Capital IV, L.P. LLC
000 Xxxxx Xxx.
00xx Xxxxx
Xxx Xxxx, XX 00000
Knightsbridge Venture c/o OrbiMed Advisors 00-0000000 2,900 $ 58,725
Capital III LP LLC
000 Xxxxx Xxx.
00xx Xxxxx
Xxx Xxxx, XX 00000
Xxxxx Bros. Investments 000 Xxxxxxx Xxx. 00-0000000 4,750 $ 96,187.50
II, L.P. Xxx Xxxx, XX 00000
Xxxxx Biotech Fund I, L.P. 000 Xxxxxxx Xxx. 00-0000000 46,550 $942,637.50
Xxx Xxxx, XX 00000
Xxxxx Biotech Fund II, L.P. 000 Xxxxxxx Xxx. 00-0000000 43,050 $871,762.50
Xxx Xxxx, XX 00000
Xxxxx Biotech Fund II (Z), 000 Xxxxxxx Xxx. 00-0000000 5,650 $114,412.50
L.P. Xxx Xxxx, XX 00000
Alexandra Global Master x/x Xxxxxxxxx X/X 000,000 $ 2,025,000
Fund Investment Management
000 Xxxxx Xxx.
00xx Xxxxx
Xxx Xxxx, XX 00000
Citadel Equity Fund Ltd. c/o Citadel Limited 00-0000000 275,000 $ 5,568,750
Partnership
000 X. Xxxxxxxx Xx.
Xxxxxxx, XX 00000
Attn.: Xxxxx Xxxxxxx
Highbridge International c/o Highbridge N/A 1,350,000 $27,337,500
LLC Capital Management,
LLC
0 Xxxx 00xx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Attn.: Xxxx X. Chill
Xxx X. Xxxxxx
35
APPENDIX B
FORM OF COMPANY COUNSEL OPINION
The Placement Agents shall receive on the Closing Date from counsel for
the Company, an opinion, addressed to each of the Placement Agents and the
Purchasers and dated such Closing Date, and stating in effect that:
(a) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and has
corporate power and authority to own its properties and conduct its business as
described in the Memorandum;
(b) The Company has an authorized capitalization as set
forth in the Memorandum, and all of the issued and outstanding shares of Common
Stock have been duly authorized and validly issued and are fully paid and non
assessable; and the Shares to be issued and sold by the Company pursuant to the
Agreement have been duly authorized for issuance and sale to the Purchasers
pursuant to the Agreement and, when issued and delivered by the Company pursuant
to the Agreement against payment of the consideration set forth therein, will be
validly issued, fully paid and non assessable, and the Common Stock and the
Shares will conform in all material respects to the descriptions thereof
contained in the Memorandum;
(c) The issuance and sale of the Shares by the Company is
not subject to any preemptive or other similar rights of any securityholder of
the Company. Except as disclosed in the Memorandum, there are no preemptive or
other rights to subscribe for or to purchase or any restriction upon the voting
or transfer of the Shares pursuant to the Company's Certificate of Incorporation
or by-laws or other governing documents or any agreements or other instruments
to which the Company is a party or by which it is bound. To such counsel's
knowledge, except as disclosed in the Memorandum, there is no outstanding
option, warrant or other right calling for the issuance of, and no commitment,
plan or arrangement to issue, any share of stock of the Company or any security
convertible into, exercisable for, or exchangeable for stock of the Company.
(d) The Company has been duly qualified to do business as
a foreign corporation and is in good standing under the laws of the States of
California, Indiana, New Jersey, New York, Tennessee and Texas;
(e) To such counsel's knowledge, all of the issued shares
of capital stock of each subsidiary of the Company are owned directly or
indirectly by the Company free and clear of all liens, encumbrances, equities or
claims;
(f) To such counsel's knowledge and other than as set
forth in the Memorandum, there are no legal or governmental proceedings pending
to which the Company or any of its subsidiaries is a party or of which any
property of the Company or any of its subsidiaries is the subject which, if
determined adversely to the Company or any of its subsidiaries, would
36
individually or in the aggregate have a material adverse effect on the current
or future consolidated financial position, stockholders' equity or results of
operations of the Company and its subsidiaries taken as a whole, and, to such
counsel's knowledge, no such proceedings are threatened or contemplated by
governmental authorities or threatened by others;
(g) The Agreement has been duly authorized, executed and
delivered by the Company.
(h) Section 6.1 of the Agreement constitutes the legal,
valid and binding obligation of the Company enforceable against the Company in
accordance with its terms except as such enforceability may be limited by
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws affecting the enforcement of creditors' rights
generally and by general equitable principles;
(i) The issue and sale of the Shares and the performance
by the Company of its obligations under the provisions of the Agreement and the
consummation of the transactions therein contemplated, will not result in a
violation of the charter or bylaws of the Company, and to such counsel's
knowledge, will not result in violation of any law, administrative regulation or
administrative or court decree applicable to the Company or any subsidiary of
the Company or any of their properties, and, to such counsel's knowledge, will
not constitute a material breach of the terms, conditions or provisions of or
constitute a default under any contract, undertaking, indenture or other
agreement by which the Company is now bound or to which it is now a party and
which has been included as an exhibit to the Company's SEC Documents filed with
the Commission prior to the date hereof and incorporated by reference in the
Memorandum;
(j) No consent, approval, authorization, license, order,
registration or qualification of or with any court or governmental agency or
body is required for the issue and sale of the Shares or the consummation by the
Company of the transactions contemplated by the Agreement, except such as have
been obtained under the Securities Act and such as may be required under state
securities or Blue Sky laws of any state in connection with the purchase of the
Shares by the several Purchasers;
(k) The statements set forth in the Memorandum under the
caption "Description of Capital Stock", insofar as they purport to constitute a
summary of the terms of the Common Stock and the Shares, are accurate and
correct summaries in all material respects;
(l) The SEC Documents (other than the financial
statements, supporting schedules, footnotes, and other financial and statistical
information therein, as to which such counsel need express no opinion), when
they were filed with the Commission, complied as to form in all material
respects with the requirements of the Exchange Act, and the rules and
regulations of the Commission thereunder;
37
(m) No registration of the Shares under the Securities
Act is required for the offer and sale of the Shares by the Company to the
Purchasers in the manner contemplated by the Agreement and the Memorandum;
(n) The Shares have been approved for listing on the
Nasdaq National Market; and
(o) The Company is not and, after giving effect to the
offering and sale of the Shares and the application of the proceeds thereof as
described in the Memorandum under the caption "Use of Proceeds", will not be an
"investment company," as such term is defined in the Investment Company Act of
1940.
In addition, such counsel shall state that nothing has come to such
counsel's attention that leads such counsel to believe that (1) the Memorandum
and any further amendments or supplements thereto made by the Company prior to
the Closing Date contained as of the date of the Memorandum and as of the
Closing Date an untrue statement of a material fact or omitted or omits, as the
case may be, to state a material fact necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading, or (2)
any of the documents incorporated by reference in the Memorandum or any further
amendment or supplement to any such incorporated document made by the Company,
when they became effective or were filed with the Commission, as the case may
be, and as of the Closing Date, contained an untrue statement of a material fact
or omitted to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made when such
documents were so filed, not misleading (it being understood that such counsel
need not make any comment with respect to the financial statements, supporting
schedules, footnotes, and other financial and statistical information contained
in the Memorandum or any amendments or supplements thereto, or any of the
documents included or deemed to be included therein).
38
APPENDIX C
FORM OF COMPANY COUNSEL OPINION (IP)
The Placement Agents shall receive on the Closing Date from
intellectual property counsel for the Company, an opinion, addressed to each of
the Placement Agents and the Purchasers and dated such Closing Date, and stating
in effect that:
(a) To the best of knowledge of such counsel, the Company has
valid, binding and enforceable licenses or other rights to use
U.S. Patent No. 6,126,920 (the `920 patent) related to
clobetasol propionate foam (OLUX(R)) and betamethasone
valerate foam (Luriq(R)).
(b) Attached Schedule A to such opinion ("U.S. Patent
Applications") lists pending U.S. patent applications which
are being prosecuted by such counsel and which, to the best of
their knowledge, are owned by the Company. Where the Company
is listed as the owner, an assignment from the inventors to
the Company has been recorded or is being recorded in the
United States Patent and Trademark Office, or the inventor(s)
has a duty to assign to the Company. Based on the
Certification by the Officer of the Company (as identified in
such opinion), to the best of their knowledge, there are no
claims or potential claims to any ownership interest or liens
on any of the patents or patent applications listed in
Schedule A by any party other than the Company.
(c) Based on the Certification by the Officer of the Company, to
the best of their knowledge, (1) the Company has not received
notice of any claim of misappropriation of any intellectual
property rights or infringement of any patents held by others,
and (2) there is no pending or threatened action, suit,
proceeding or claim by others that the Company is infringing a
patent or has misappropriated any intellectual property
rights.
39
APPENDIX D
DISCLOSURE SCHEDULES
None
00
XXXXXXXX X
STOCK CERTIFICATE AND
REGISTRATION STATEMENT QUESTIONNAIRES
1. Name of selling stockholder (beneficial owner):
If not correct, please print the correct name:_________________________
___________________________________
2. Have you held any position or office or had any material relationship
(other than just purchasing securities) within the past three years
with Connetics Corporation ("Connetics")?
[ ] YES [ ] NO If the answer is YES, please
describe fully. Use additional pages if required.
3. Connetics is registering the following common stock on behalf of the
selling stockholder named above. The prospectus will show all of this
common stock as offered for sale for the account of the selling
stockholder. The selling stockholder is not required to register or
sell any of this common stock, but absent registration, sale of this
common stock is restricted.
_______ shares of common stock outstanding
The foregoing shows the correct number of shares of common stock to be
included in the registration statement.
[ ] YES [ ] NO If the answer is NO, please explain:
4. Please list on the following page all securities of Connetics, except
those shown in paragraph 3 above, which the selling stockholder
beneficially owns. For purposes of this questionnaire, beneficial
ownership means direct or indirect voting or investment power over
outstanding stock and stock which a person has the right to acquire now
or within 60 days.
41
I represent and warrant that the information furnished in this questionnaire is
correct. I understand that Connetics may rely on this information in preparing a
registration statement and prospectus covering the offer and sale of the common
stock shown in paragraph 3 above and that I can only distribute the shares of
common stock included in the registration statement in the manner described
therein under the caption "Plan of Distribution". I will notify Connetics
immediately of any change in this information before the effective date of the
registration statement. I understand that any material error in a registration
statement based on materially incorrect information which I have furnished in
this questionnaire may result in a violation of law and potential legal
liability for the selling stockholder.
___________________________________ Date: ____________, 2004
Signature
If signing on behalf of an entity,
please print name and title:
______________________________
Please fax this selling stockholder questionnaire as soon as possible to
Connetics at [ ]. No cover sheet is required, but you must include both pages.
If you have any questions, please call [ ] ([title]) at Connetics' executive
offices, [phone], or [MoFo contact] (special counsel) at [phone]. Thank you.
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APPENDIX F
CERTIFICATE OF SUBSEQUENT SALE
Nasdaq National Market
[ ]
[ ]
RE: Sale of Shares of Common Stock of Connetics Corporation
(the "Company") pursuant to the Company's Registration
Statement on Form S-3 dated _____________ (the
"Registration Statement")
Ladies and Gentlemen:
The undersigned hereby certifies, in connection with the sale of shares
of Common Stock of the Company included in the table of Selling Stockholders in
the Registration Statement, that the undersigned has sold the shares pursuant to
the Registration Statement and in a manner described under the caption "Plan of
Distribution" in the Registration Statement and that such sale complies with all
applicable securities laws, including, without limitation, the Registration
Statement delivery requirements of the Securities Act of 1933, as amended.
Selling Stockholder (the beneficial owner):_____________________________________
Record Holder (e.g., if held in name of nominee):_______________________________
Restricted Stock Certificate No.(s):____________________________________________
Number of Shares Sold:__________________________________________________________
Date of Sale:___________________________________________________________________
Except as otherwise agreed between the Company and the Selling
Stockholder, in the event that you receive a stock certificate(s) representing
more shares of Common Stock than have been sold by the undersigned, then you
should return to the undersigned a newly issued certificate for such excess
shares in the name of the Record Holder and BEARING A RESTRICTIVE LEGEND.
Further, you should place a stop transfer on your records with regard to such
certificate.
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Very truly yours,
Dated:_______________________ By:____________________________
Print Name:____________________
Title:_________________________
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