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EXHIBIT 10.4
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this "Agreement") dated as of May 5, 1998
is between Genentech, Inc., a Delaware corporation ("Genentech"), and Connetics
Corporation, a Delaware corporation (the "Company").
INTRODUCTION
A. The Company and Genentech have entered into a License Agreement
for Interferon Gamma dated May 5, 1998 (the "License Agreement"), along with a
Supply Agreement dated as of the date of this Agreement (such Supply Agreement
and License Agreement collectively referred to herein as the "Transaction
Agreements"), pursuant to which the Company is acquiring from Genentech certain
rights to Interferon Gamma.
B. Pursuant to the License Agreement, the Company has agreed to
issue to Genentech shares of its common stock, par value $0.001 per share (the
"Common Stock"), having a value of $4 million, determined in accordance with
the terms of this Agreement and subject to the terms and conditions herein.
AGREEMENT
The parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions.
(a) The following terms, as used herein, have the following
meanings:
"Affiliate" of an entity means, for so long as one of the
following relationships is maintained, any corporation or other business entity
controlled by, controlling, or under common control with another entity, with
"control" meaning direct or indirect beneficial ownership of more than fifty
percent (50%) of the voting stock of such corporation, or more than a fifty
percent (50%) interest in the decision-making authority of such other
unincorporated business entity.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 1976, as amended.
"Material Adverse Effect" means a material adverse effect on the
condition (financial or otherwise), results of operations, assets, business or
prospects of the Company, considered as a whole.
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"1933 Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"1934 Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder.
"Person" means an individual, corporation, partnership, association,
trust or other entity or organization, including a government or political
subdivision or an agency or instrumentality thereof.
"Register," "Registered," and "Registration" refer to a registration
effected by preparing and filing a registration statement or similar document
with the SEC in compliance with the 1933 Act.
"Registrable Securities" means (i) the Shares, and (ii) any other
shares of Common Stock of the Company issued as (or issuable upon the
conversion or exercise of any warrant, right or other security which is issued
as) a dividend or other distribution with respect to, or in exchange for or in
replacement of, the Shares; provided, however, that the foregoing definition
shall exclude in all cases any Registrable Securities sold or otherwise
transferred by Genentech in a transaction in which its rights under this
Agreement are not assigned. Notwithstanding the foregoing, Common Stock or
other securities shall only be treated as Registrable Securities if and so long
as they have not been (A) sold to or through a broker or dealer or underwriter
in a public distribution or a public securities transaction, or (B) sold in a
transaction exempt from the registration and prospectus delivery requirements
of the 1933 Act under Section 4(1) thereof so that all transfer restrictions,
and restrictive legends with respect thereto, if any, are removed upon the
consummation of such sale.
"Registrable Securities then outstanding" shall equal the number of
shares of Common Stock outstanding which are Registrable Securities.
"Form S-1" means such form under the 1933 Act in effect on the date
hereof or any successor form under the 1933 Act.
"Form S-3" means such form under the 1933 Act in effect on the date
hereof or any successor form under the 1933 Act.
"SEC" means the Securities and Exchange Commission.
"Shares" means the Original Issuance Shares and the Second Issuance
Shares, if any.
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(b) In addition, each of the following terms is defined in the
Section set forth opposite such term:
Term Section
---- -------
Acquisition 2.2(d)
Common Stock Recitals
License Agreement Recitals
Original Closing 2.2(a)
Original Closing Date 2.2(a)
Original Issuance 2.1(a)
Original Issuance Price 2.1(a)
Original Issuance Shares 2.1(a)
Second Closing 2.2(b)
Second Closing Date 2.2(b)
Second Issuance 2.1(b)
Second Issuance Price 2.1(b)
Second Issuance Shares 2.1(b)
Transaction Agreements Recitals
Violation 3.5(a)
ARTICLE II
ISSUANCE OF SHARES
2.1 Issuance of Shares. Upon the terms and subject to the conditions of
this Agreement, the Company agrees to issue to Genentech, and Genentech agrees
to acquire from the Company, shares of the Company's Common Stock as follows:
(a) Original Issuance. On the Original Closing Date (as defined
below), the Company shall issue to Genentech a number of shares of Common Stock
(the "Original Issuance Shares") equal to the lesser of: (i) $2,000,000 divided
by the Original Issuance Price (as defined below) or (ii) 9.5% of the Company's
total outstanding shares of Common Stock as of the close of business on the
third trading day before the Original Closing Date (each such number of shares
to be rounded to the nearest whole number). Such issuance shall be referred to
herein as the "Original Issuance."
The "Original Issuance Price" shall be the average daily closing
price for the Company's Common Stock for the twenty (20) trading days
immediately preceding (but not including) the third trading day before the
Original Closing Date, as reported on the Nasdaq Stock Market.
(b) Potential Second Issuance. If on the Second Closing Date (as
defined below), the aggregate market value of the Original Issuance Shares is
less than $4,000,000 (based upon the average daily closing price per share for
the Company's Common Stock for the twenty (20) trading days immediately
preceding (but not including) the third trading day before the
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Second Closing Date, as reported on the Nasdaq Stock Market (the "Second
Issuance Price")), then the Company shall issue to Genentech on the Second
Closing Date that number of additional shares of its Common Stock (the "Second
Issuance Shares") equal to the lesser of: (i) the number of shares necessary to
increase the aggregate market value of the Original Issuance Shares (based on
the Second Issuance Price) and the Second Issuance Shares (based on the Second
Issuance Price) to $4,000,000 or (ii) the number of shares necessary to increase
the aggregate number of the Company's shares of Common Stock held by Genentech
(exclusive of any shares that Genentech has purchased from parties other than
the Company) to 9.9% of the Company's total outstanding shares of Common Stock
as of the close of business on the third trading day before the Second Closing
Date (each such number of shares to be rounded to the nearest whole number).
Such issuance shall be referred to hereinafter as the "Second Issuance."
(c) Cash in Lieu of Second Issuance Shares. Notwithstanding
Section 2.1(b) above, in lieu of all or any portion of the Second Issuance
Shares that the Company is obligated to issue to Genentech on the Second Closing
Date, the Company may elect to pay Genentech the cash value of such Second
Issuance Shares (based on the Second Issuance Price). In addition, if the
Company is obligated to deliver to Genentech the number of Second Issuance
Shares specified by clause (ii) of Section 2.1(b) rather than by clause (i) of
Section 2.1(b), the Company shall pay Genentech in cash the difference between
the value of Second Issuance Shares delivered under clause (ii) and the value of
Second Issuance Shares that would otherwise have been delivered under clause
(i). Any such cash payment under this paragraph shall be made by Company check
or by a wire transfer to a bank account designated by Genentech.
(d) Compliance with Rule 4460 of the Nasdaq Stock Market.
Notwithstanding Section 2.1(b) above, in order to comply with Rule 4460 of the
Nasdaq Stock Market, the sum of the Original Issuance Shares and the Second
Issuance Shares shall not be greater than 19.9% of the total outstanding shares
of Common Stock of the Company immediately prior to the Original Issuance. In
the event that such sum would otherwise be greater than 19.9% of the total
outstanding shares of Common Stock of the Company immediately prior to the
Original Issuance, then the sum shall be reduced until such sum is equal to
19.9% of the total outstanding shares of Common Stock of the Company immediately
prior to the Original Issuance, and the Company shall be obligated to pay
Genentech in cash the value of the Second Issuance Shares that would have been
issued on the Second Closing Date but for this subsection (based on the Second
Issuance Price).
2.2 Closing Dates.
(a) Original Closing Date. The closing of the acquisition
and issuance of the Original Issuance Shares (the "Original Closing") shall be
held at 4:00 p.m. Pacific time on the Effective Date (as defined in the License
Agreement) of the License Agreement (the "Original Closing Date") subject to the
satisfaction or waiver of the conditions set forth in Sections 6.1 and 6.2, or
at such other time or date as the Company and Genentech may agree orally or in
writing.
(b) Second Closing Date. The closing of the issuance of the
Second Issuance Shares (the "Second Closing"), if any, shall be held at 10:00
a.m. Pacific Standard time on
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December 28, 1998 (the "Second Closing Date") and which is following the
satisfaction or waiver of the conditions set forth in Sections 6.3 and 6.4, or
at such other time or date as the Company and Genentech may agree orally or in
writing.
(c) Location. The Original Closing and the Second Closing, if any,
shall be held at the offices of Venture Law Group, 0000 Xxxx Xxxx Xxxx, Xxxxx
Xxxx, XX 00000 or at such other place as the Company and Genentech may agree
orally or in writing.
(d) Acceleration of Second Closing Date. In the event of the sale by
the Company of all or substantially all of its assets or the acquisition of the
Company by another entity by means of merger or other transaction as a result of
which stockholders of the Company immediately prior to such acquisition possess
a minority of the voting power of the acquiring entity immediately following
such acquisition (an "Acquisition"), then the Second Closing Date shall be
accelerated to a date mutually acceptable to the company and Genentech, which
date in no event shall be later than one (1) day prior to the closing of such
Acquisition and the 9.9% ownership limitation set forth in subsection 2.1(b)
shall not apply.
2.3 Delivery. Subject to the terms and conditions of this Agreement, at the
Original Closing and at the Second Closing, as the case may be, or as soon as
practicable thereafter, the Company will deliver to Genentech stock certificates
representing the number of Shares subject to issuance hereunder. One (1)
business day prior to the Original Closing Date, the Company shall provide
Genentech with a letter from the Company specifying the calculation of the
Original Issuance Price and the number of Original Issuance Shares to be issued
at the Original Closing. One (1) business day prior to the Second Closing Date
(if required), the Company shall provide Genentech with a letter from the
Company specifying the calculation of the Second Issuance Price and the number
of Second Issuance Shares to be issued at the Second Closing.
2.4 Restriction on Transfer. Genentech hereby agrees that, without the
prior written consent of the Company, it will not, during the period commencing
on the Original Closing Date and ending on the Second Closing Date, (1) offer,
pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to
purchase, or otherwise transfer or dispose of directly or indirectly, and
Original Issuance Shares or (2) enter into any swap or other arrangement that
transfers to another, in whole or in part, any of the economic consequences of
ownership of the Original Issuance Shares, whether any such transaction
described in clause (1) or (2) above is to be settled by delivery of the
Original Issuance Shares or such other securities, in cash or otherwise.
ARTICLE III
REGISTRATION RIGHTS AND SALE OF SHARES
3.1 Form S-3 Registration. Unless otherwise requested by Genentech, the
Company will use its best efforts to prepare and file by November 1, 1998 a
registration statement on Form S-3 that contemplates a distribution of the
Registrable Securities on a delayed or continuous basis pursuant to Rule 415
under the 1933 Act and any related qualification or compliance with respect to
all of the Registrable Securities; provided, however, that the
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Company shall not be obligated to effect any such registration, qualification
or compliance if the Company shall furnish to Genentech a certificate signed by
the President of the Company stating that in the good faith judgment of the
Board of Directors of the Company, it would be seriously detrimental to the
Company and its stockholders for such Form S-3 Registration to be effected at
such time, in which event the Company shall have the right to defer the filing
or effectiveness of the Form S-3 registration statement for a period of time
deemed necessary by the Company, but in any event not to exceed 60 days. If
Form S-3 is not available for such offering by reason of any act or omission of
the Company, the Company shall prepare and file by November 1, 1998 a
registration statement on Form S-1 for the same purposes and subject to the
same conditions set forth in this paragraph.
3.2 Obligations of the Company. When required under this Article III to
effect the registration of the Registrable Securities, the Company shall, as
expeditiously as reasonably possible:
(a) Use its best efforts to cause such registration statement to
become effective prior to the Second Closing Date, and, upon the request of
Genentech, keep such registration statement effective until the date on which
the distribution contemplated in such registration statement is complete, and
update such registration statement during such period of effectiveness;
provided, however, if the Company shall furnish to Genentech a certificate
signed by the President of the Company stating that in the good faith judgment
of the Board of Directors of the Company, it would be seriously detrimental to
the Company and its stockholders for such registration statement to remain
effective, the Company shall have the right to suspend the effectiveness of the
registration statement for a period of time deemed necessary by the Company, but
in any event not to exceed 60 days.
(b) Furnish to Genentech such numbers of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
1933 Act, and such other documents as it may reasonably request in order to
facilitate the disposition of Registrable Securities.
(c) Use its best efforts to register and qualify the securities
covered by such registration statement under such other securities or Blue Sky
laws of such jurisdictions as shall be reasonably requested by Genentech;
provided, that the Company shall not be required in connection therewith or as a
condition thereto to qualify to do business or to file a general consent to
service or process in any such states or jurisdictions.
3.3. Furnish Information. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Article III with
respect to the Registrable Securities that Genentech shall furnish to the
Company such information regarding itself, the Registrable Securities held by
it, and the intended method of disposition of such securities as shall be
required to effect the registration of the Registrable Securities.
3.4 Expenses of Registration. All expenses other than underwriting
discounts and commissions incurred in connection with registrations, filings or
qualifications pursuant to this Article III, including (without limitation) all
registration, filing and qualification fees, printers'
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and accounting fees, fees and disbursements of counsel for the Company, shall be
borne by the Company.
3.5 Indemnification. In the event any Registrable Securities are included
in a registration statement under this Article III:
(a) To the extent permitted by law, the Company will indemnify and
hold harmless Genentech, each of its officers, each of its directors, any
underwriter (as defined in the 0000 Xxx) for Genentech and each person, if any,
who controls Genentech or such underwriter within the meaning of the 1933 Act or
the 1934 Act, against any losses, claims, damages, or liabilities (joint or
several) to which they may become subject under the 1933 Act, the 1934 Act or
other federal or state law, insofar as such losses, claims, damages, or
liabilities (or actions in respect thereof) arise out of or are based upon any
of the following statements, omissions or violations (collectively a
"Violation"); (i) any untrue statement or alleged untrue statement of a material
fact contained in such registration statement, including any preliminary
prospectus or final prospectus contained therein or any amendments or
supplements thereto, (ii) the omission or alleged omission to state therein a
material fact required to be stated therein, or necessary to make the statements
therein not misleading, or (iii) any violation or alleged violation by the
Company of the 1933 Act, the 1934 Act, any state securities law or any rule or
regulation promulgated under the 1933 Act, the 1934 Act or any state securities
law; and the Company will pay to Genentech and each such underwriter or
controlling person, as incurred, any legal or other expenses, reasonably
incurred by them in connection with investigating or defending any such loss,
claim, damage, liability, or action; provided, however, that the indemnity
agreement contained in this subsection 3.5(a) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability, or action if such
settlement is effected without the consent of the Company (which consent shall
not be unreasonably withheld), nor shall the Company be liable in any such case
for any such loss, claim, damage, liability, or action to the extent that it
arises out of or is based upon a Violation which occurs in reliance upon and in
conformity with written information furnished expressly for use in connection
with such registration by Genentech or any such underwriter or controlling
person.
(b) To the extent permitted by law, Genentech will indemnify and hold
harmless the Company, each of its directors, each of its officers who has signed
the registration statement, each person, if any, who controls the Company within
the meaning of the 1933 Act, any underwriter, any other person selling
securities in such registration statement and any controlling person of any such
underwriter or other person, against any losses, claims, damages, or liabilities
(joint or several) to which any of the foregoing persons may become subject,
under the 1933 Act, the 1934 Act or other federal or state law, insofar as such
losses, claims, damages or liabilities (or actions in respect thereto) arise out
of or are based upon any Violation, in each case to the extent (and only to the
extent) that such Violation occurs in reliance upon and in conformity with
written information furnished by Genentech expressly for use in connection with
such registration; and Genentech will pay, as incurred, any legal or other
expenses reasonably incurred by any person intended to be indemnified pursuant
to this subsection 3.5(b), in connection with investigating or defending any
such loss, claim, damage, liability, or action; provided, however, that the
indemnity agreement contained in this subsection 3.5(b) shall not
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apply to amounts paid in settlement of any such loss, claim, damage, liability
or action if such settlement is effected without the consent of Genentech,
which consent shall not be unreasonably withheld. Notwithstanding the
foregoing, in no event shall Genentech's total indemnification obligation
exceed the aggregate amounts Genentech has received from the sale of the Shares
pursuant to the registration statement filed under this Article III.
(c) Promptly after receipt by an indemnified party under this
Section 3.5 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect
thereof is to be made against any indemnifying party under this Section 3.5,
deliver to the indemnifying party a written notice of the commencement thereof
and the indemnifying party shall have the right to participate in, and, to the
extent the indemnifying party so desires, jointly with any other indemnifying
party similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party
(together with all other indemnifying parties which may be represented without
conflict by one counsel) shall have the right to retain one separate counsel,
with the reasonable fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party represented by
such counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action, if prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this Section
3.5, but the omission so to deliver written notice to the indemnifying party
will not relieve it of any liability that it may have to any indemnified party
otherwise than under this Section 3.5.
(d) If the indemnification provided for in this Section 3.5 is held
by a court of competent jurisdiction to be unavailable to an indemnified party
with respect to any loss, liability, claim, damage, or expense referred to
therein, then the indemnifying party, in lieu of indemnifying such indemnified
party hereunder, shall contribute to the amount paid or payable by such
indemnified party as a result of such loss, liability, claim, damage, or
expense in such proportion as is appropriate to reflect the relative fault of
the indemnifying party on the one hand and of the indemnified party on the
other in connection with the statements or omissions that resulted in such
loss, liability, claim, damage, or expense as well as any other relevant
equitable considerations. The relative fault of the indemnifying party and of
the indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties' relative
intent, knowledge, access to information, and opportunity to correct or prevent
such statement or omission.
(e) Notwithstanding the foregoing, to the extent that the provisions
on indemnification and contribution contained in the underwriting agreement
entered into in connection with the underwritten public offering are in
conflict with the foregoing provisions, the provisions in the underwriting
agreement shall control.
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(f) The obligations of the Company and Genentech under this Section 3.5
shall survive the completion of any offering of Registrable Securities in a
registration statement under this Article III, and otherwise.
3.6 PROCEDURE FOR SALE OF SHARES. Genentech shall notify the Company at
least twenty trading days in advance of the first proposed sale or other
transfer of any Registrable Securities. Genentech and the Company agree and
acknowledge that it is in their mutual interest that disposition of the
Registrable Securities be accomplished in a manner that does not disrupt or
undermine the trading market for the Company's Common Stock on the NASDAQ Stock
Market, and the parties will work together to explore methods of disposition in
order to achieve such goal. Genentech will also consider in good faith any
request by the Company to delay such sale or transfer for a reasonable time or
to arrange such sale or transfer through an underwriter or market maker
approved by the Company. In addition, Genentech agrees it will not transfer or
sell more than ten percent (10%) of the total number of Shares (including the
Second Issuance Shares) in any calendar week, provided that the foregoing
limitation shall not apply to any block sale or transfer arranged between
Genentech and a third party.
3.7 ASSIGNMENT OF REGISTRATION RIGHTS. The rights to cause the Company
to register Registrable Securities pursuant to this Article III may not be
assigned by Genentech without the Company's prior written consent, unless such
assignment is to an Affiliate of Genentech. Any such assignment consented to by
the Company shall be effective only if immediately following such transfer the
further disposition of such securities by the transferee or assignee is
restricted under the 1933 Act.
3.8 TERMINATION OF REGISTRATION RIGHTS. Genentech shall not be entitled
to exercise any right provided for in this Article III, and the Company shall
have no further obligations under this Article III, after such time as Rule 144
or another similar exemption under the 1933 Act is available for the sale of
all of Genentech's shares during a three (3) month period without registration.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Genentech as of the date hereof
that:
4.1 ORGANIZATION AND STANDING. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, and has the requisite corporate power and authority to own its
properties, to carry on its business as now being conducted, and to carry out
the transactions contemplated under the Transaction Agreements. Other than as
disclosed in its SEC Filings (as defined below) or as contemplated by the
License Agreement, the Company has no subsidiaries or direct or indirect
ownership interest in any firm, corporation, association or business which,
either individually or in the aggregate, are material to the business of the
Company. The Company is qualified to do business and is in good standing as a
foreign corporation in every jurisdiction in which its ownership of property or
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conduct of business requires it so to be qualified and in which the failure to
so qualify would have a Material Adverse Effect on the Company.
4.2 CORPORATE AUTHORIZATION. The execution, delivery and performance by
the Company of this Agreement has been duly authorized by all necessary
corporate action on the part of the Company. This Agreement constitutes a valid
and binding agreement of the Company enforceable in accordance with its terms,
except as (i) the enforceability hereof and thereof may be limited by
bankruptcy, insolvency, moratorium or other similar laws affecting the
enforcement of creditors' rights generally, (ii) the availability of equitable
remedies (e.g., specific performance, injunctive relief, and other equitable
remedies) may be limited by equitable principles of general applicability,
(iii) to the extent the indemnification provisions contained in this Agreement
may be limited by applicable federal or state securities law; and (iv) that no
representation is made regarding the effect of laws relating to competition,
antitrust, intellectual property or misuse.
4.3 GOVERNMENTAL AUTHORIZATION. The execution, delivery and performance
by the Company of this Agreement will not require any action by, or filing
with, any governmental body, agency, or official other than compliance with any
applicable requirements of the 1933 Act, the 1934 Act and state Blue Sky laws.
4.4 NON-CONTRAVENTION. The execution, delivery and performance by the
Company of this Agreement does not (i) violate the certificate of incorporation
or bylaws of the Company, (ii) assuming compliance with the matters referred to
in Section 4.3, violate any material applicable law, rule, regulation,
judgment, injunction, order or decree known to it, or (iii) require any consent
or other action by any Person under, constitute a material default under, or
give rise to any material right of termination, cancellation or acceleration of
any material right or obligation of the Company to a loss of any material
benefit to which the Company is entitled under, any material written agreement
or other material written instrument binding upon the Company or any material
license, franchise, permit or other similar authorization held by the Company.
4.5 VALIDITY OF SHARES. The Shares, when issued, sold and delivered in
accordance with the terms and for the consideration set forth in this
Agreement, will be duly and validly issued, fully paid and nonassessable and
free and clear of all pledges, liens, encumbrances and restrictions other than
the restrictions on transfer set forth in Section 2.4 and Section 5.3 of this
Agreement.
4.6 SEC FILINGS. The Company has filed with the SEC via the XXXXX
system (i) its Annual Report on Form 10-K for the fiscal year ended December
31, 1997 and (ii) all other reports required to be filed by it with the SEC
pursuant to the 1934 Act since December 31, 1997 (the "SEC Filings").
4.7 ABSENCE OF CERTAIN CHANGES. Since December 31, 1997 and except as
contemplated by this Agreement or disclosed in any SEC Filings, the business of
the Company has been conducted in the ordinary course consistent with past
practices and there has not been
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any event, occurrence, development or state of circumstances or facts which,
individually or in the aggregate, has had a Material Adverse Effect on the
Company.
4.8 Changes. Except as set forth in the SEC Filings, since December
31, 1997, the Company has not, to the extent material to the Company (i)
incurred any debts, obligations or liabilities, absolute, accrued or contingent,
whether due or to become due, other than in the ordinary course of business,
(ii) mortgaged, pledged or subjected to lien, charge, security interest or other
encumbrance any of its assets, tangible or intangible, (iii) waived any debt
owed to the Company, (iv) satisfied or discharged any lien, claim or encumbrance
or paid any obligation other than in the ordinary course of business or as
contemplated in the SEC Filings, (v) declared, set aside or paid any dividends
or other distribution with respect to the capital stock of the Company, (vi)
amended any material contract or arrangement by which the Company or any of
its assets is bound, or (vii) sold, assigned or transferred any of its patents,
trademarks, copyrights, trade secrets or other intangible assets. Other than as
may be set forth in the SEC Filings, there has been no material adverse change
in the financial condition or business, assets or properties, liabilities or
operating results to the Company since the date of the financial statements
contained in the SEC Filings other than normal recurring operating losses, and
there has not occurred any loss, destruction or damage affecting the business,
properties, prospects or financial condition of the Company, whether or not
insured, which has or may have a Material Adverse Effect on the Company.
4.9 Litigation. Other than as described in the SEC Filings, there
are no legal actions, suits, arbitrations or other legal, administrative or
governmental proceedings pending or, to the best of the Company's knowledge,
threatened against the Company or its properties, assets or business, and the
Company is not aware of any facts which might result in or form the basis for
any such action, suit or other proceeding, in each case which, if adversely
determined, would, individually or in the aggregate, affect the execution and
delivery of the Transaction Agreements or the performance by the Company of its
obligations hereunder and thereunder or have a Material Adverse Effect on the
Company. The Company is not in default with respect to any judgement, order or
decree of any court or any governmental agency or instrumentality, which default
would have a Material Adverse Effect on the Company.
4.10 Compliance With Applicable Laws and Other Instruments. To the
best of the Company's knowledge, the business and operations of the Company have
been and are being conducted in accordance with all applicable laws, rules and
regulations of all governmental authorities, except for such violations of
applicable laws, rules and regulations which would not, individually or in the
aggregate, have a Material Adverse Effect on the Company.
4.11 Reports and Financial Statements. As of their respective filing
dates, the SEC Filings were prepared in all respects in accordance with the
applicable requirements of the 1933 Act or the 1934 Act, as the case may be. The
audited consolidated financial statements and unaudited interim financial
statements of the Company included in the SEC Filings comply as to form in all
respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto, and the financial statements
included in the SEC Filings have been prepared in accordance with United States
generally accepted accounting
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principles applied on a consistent basis (except as may be indicated therein on
the notes thereto) and fairly present the financial position of the Company as
at the dates thereof and the results of its operations and cash flows for the
periods then ended, subject, in the case of the unaudited interim financial
statements, to normally recurring year-end adjustments and any other
adjustments described in such financial statements.
4.12 Securities Laws; Governmental Approvals. Based in part upon the
representations and warranties of Genentech contained in Article V of this
Agreement, the offer, sale, issuance and delivery to Genentech of the Shares as
contemplated by this Agreement are exempt from the registration requirements of
the 1933 Act, and from the registration or qualification requirements of the
laws of any applicable state or other U.S. jurisdiction.
4.13 Capital Stock. All of the outstanding shares of the Company's capital
stock are validly issued, fully paid and nonassessable and were issued in
compliance with all applicable federal and state securities laws. Except as set
forth in the SEC Filings, the Company has not agreed to register the sale of
any of its securities under the 1933 Act, and there are no outstanding
subscriptions, options, warrants, calls, contracts, demands, commitments,
conversion rights or other agreements or arrangements of any character or
nature whatever under which the Company is or may be obligated to issue its
Common Stock, preferred stock or warrants or options to purchase Common Stock or
preferred stock. No holder of any security of the Company is entitled to any
rights of first refusal, preemptive or similar rights to purchase any securities
of the Company (including, without limitation, the Shares).
4.14 No Brokers or Finders. To the knowledge of the Company, no person,
firm or corporation has or will have, as a result of any act or omission of the
Company, any right, interest or valid claim against Genentech for any
commission, fee or other compensation as a finder or broker in connection with
the transactions contemplated by this Agreement.
4.15 Compliance with Environmental Law. Except as disclosed in the SEC
Filings, the Company is not in violation in any material respect of any
applicable statute, law, or regulation relating to the environment or
occupational health and safety, and, to the best of the Company's knowledge, no
material expenditures are or will be required in order to comply with any such
existing statute, law or regulation. To the best of the Company's knowledge,
the Company does not have any material liability to any governmental authority
or other third party arising under or as a result of any such past or existing
statute, law or regulation.
4.16 SEC Filings. The SEC Filings, when read as a whole, as of the date
such SEC Filings were made, did not contain any untrue statements of a material
fact and do not omit to state a material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
4.17 Filing of Reports. Since the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1996, the Company has filed with the SEC all
reports and other material required to be filed by it therewith pursuant to
Section 13, 14 or 15(d) of the Exchange Act, and the Company is presently
eligible to register the resale of the Shares by Genentech on a Registration
Statement on Form S-3.
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4.18 Insurance. The Company has in full force and effect fire and casualty
insurance policies, with extended coverage, sufficient in amount (subject to
reasonable deductibles) to allow it to replace any of its properties that might
be damaged or destroyed. The Company has in full force and effect products
liability and errors and omission insurance in amounts customary for companies
similarly situated.
4.19 Tax Returns, Payments, and Elections. The Company has filed all tax
returns and reports as required by law. These returns and reports are true and
correct in all material respects. The Company has paid all taxes and other
assessments due, except those contested by it in good faith. The provision for
taxes of the Company as shown in the financial statements is adequate for taxes
due or accrued as of the date thereof. The Company has not elected pursuant to
the Internal Revenue Code of 1986, as amended ("Code"), to be treated as a S
corporation or a collapsible corporation pursuant to Section 1362(a) or Section
341(f) of the Code, nor has it made any elections pursuant to the Code (other
than elections that relate solely to methods of accounting, depreciation, or
amortization) that would have a Material Adverse Effect on the Company. The
Company has never had any tax deficiency proposed or assessed against it and
has not executed any waiver of any statute of limitations on the assessment or
collection of any tax or governmental charge. Since the date of the financial
statements, the Company has made adequate provisions on its books of account
for all taxes, assessments, and governmental charges with respect to its
business, properties, and operations for such period. The Company has withheld
or collected from each payment made to each of its employees, the amount of all
taxes, including, but not limited to, federal income taxes, Federal Insurance
Contribution Act taxes and Federal Unemployment Tax Act taxes required to be
withheld or collected therefrom, and has paid the same to the proper tax
receiving officers or authorized depositaries.
4.20 HSR Filing. Acting under delegated authority of the Company's Board
of Directors, the Company's officers have determined that the fair market value
of the exclusive license granted under the License Agreement is less than
$15,000,000 and therefore that the execution and delivery of, or the
performance of the obligations of the Company or Genentech under, the
Transaction Documents (including, without limitation, the consummation of the
Original Closing and the Second Closing (collectively, the "Closings") and the
issuance of the Shares to Genentech at the Closings) shall not require that
filings under the HSR Act, or the rules or regulations promulgated thereunder,
be made prior to the Closings by the Company, Genentech, or their respective
Affiliates or ultimate parent entities, if any.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF GENENTECH
5.1 Representations and Warranties. Genentech hereby represents and
warrants to the Company as of the date hereof as follows:
(a) Genentech is a corporation duly organized, validly existing, and
in good standing under the laws of the State of Delaware.
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(b) Genentech has taken all necessary corporate action necessary for
the execution, delivery and performance of this Agreement and the consummation
of the transactions contemplated hereby, and this Agreement constitutes a valid
and legally binding obligation of Genentech enforceable in accordance with its
terms.
(c) The execution, delivery and performance by Genentech of this
Agreement does not (i) violate the certificate of incorporation or bylaws or
Genentech, (ii) assuming compliance with the matters referred to in Section
4.3, violate any material applicable law, rule, regulation, judgment,
injunction, order or decree known to it, or (iii) require any consent or other
action by any Person under, constitute a material default under, or give rise
to any material right of termination, cancellation or acceleration of any
material right or obligation of Genentech to a loss of any material benefit to
which Genentech is entitled under, any material written agreement or other
material written instrument binding upon Genentech or any material license,
franchise, permit or other similar authorization held by Genentech.
(d) The execution, delivery and performance of this Agreement by
Genentech will not require any consent, approval, authorization or permit of,
or filing with or without notification to, any governmental or regulatory
authority, United States or foreign, except for applicable requirements, if
any, of the 1933 Act or 1934 Act, and Blue Sky Laws.
5.2 Purchase of Shares for Investment. Genentech acknowledges that the
Shares have not been registered under the 1933 Act or any state securities laws
and that the Company has no present intention of registering the Shares, except
as provided in Article III hereof. Genentech represents and warrants that it is
acquiring the Shares for investment purposes only, and not as a nominee or
agent, and not with a view to, or for resale or redistribution of such Shares
in connection with, any public offering or distribution thereof, except as
provided in Article III hereof. By executing this Agreement, Genentech further
represents that it does not have any contract, undertaking, agreement or
arrangement with any person to sell, transfer or grant participations to such
person or to any third person, with respect to any of the Shares.
5.3 Restricted Securities. Genentech understands that the Shares may not
be sold, transferred, or otherwise disposed of without registration under the
1933 Act or an exemption therefrom, and that in the absence of an effective
registration statement covering the Shares or an available exemption from
registration under the 1933 Act, the Shares must be held indefinitely. In
particular, Genentech is aware that the shares may not be sold pursuant to Rule
144 promulgated under the 1933 Act unless the conditions of that Rule are met.
5.4 Legend. Each certificate representing the Shares shall be endorsed
with the following legend:
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD,
TRANSFERRED OR ASSIGNED UNLESS THERE IS AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT COVERING SUCH SECURITIES, THE TRANSFER IS
MADE IN COMPLIANCE WITH RULE 144 PROMULGATED UNDER SUCH ACT, OR
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THE COMPANY RECEIVES AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE COMPANY STATING THAT SUCH SALE, TRANSFER OR
ASSIGNMENT IS EXEMPT FROM THE REGISTRATION AND DELIVERY
REQUIREMENTS OF SUCH ACT.
The Company need not register a transfer of any Shares and may
instruct its transfer agent not to register the transfer of the Shares, unless
the conditions specified in the foregoing legend are satisfied.
5.5 Access to Information. Genentech acknowledges that it has
received all information it has requested regarding the Company's business,
management, and financial affairs and the terms and conditions of the issuance
of the Shares. Without limiting the foregoing, Genentech acknowledges that the
Company's periodic reports required to the filed with the SEC under the 1934 Act
are available to Genentech on the SEC's World Wide Web home page at
xxxx://xxx.xxx.xxx and that Genentech has obtained and reviewed such reports to
the extent it believes necessary to evaluate an investment in the Company.
ARTICLE VI
CONDITIONS TO CLOSINGS
6.1 Conditions to Original Issuance Obligations of Genentech. The
obligation of Genentech to consummate the Original Issuance is subject to the
satisfaction or Genentech's waiver, on or prior to the Original Closing Date, of
each of the following conditions:
(a) The representations and warranties made by the Company
in Article IV shall be true and correct when made, and shall be true and
correct on the Original Closing Date with the same force and effect as if they
had been made on and as of each of such dates, and the Company shall have
performed all covenants, obligations and conditions required to be performed or
observed by the Company on or prior to the Original Closing Date, or such
performance shall have expressly waived by Genentech in writing.
(b) The Company shall have obtained all consents (including
all third party and governmental or regulatory consents, approvals or
authorizations required in connection with the valid execution and delivery of
this Agreement), permits and waivers necessary or appropriate for consummation
of the transactions contemplated by the Original Issuance under this Agreement.
(c) No Delaware, U.S. or U.S. state governmental authority
or other agency or commission or Delaware, U.S. or U.S. state court of competent
jurisdiction shall have enacted, issued, promulgated, endorsed, or entered any
law, rule, regulation, executive order, decree, injunction or other order which
is then in effect and has the effect of making illegal the issuance of the
Original Issuance Shares to Genentech or otherwise preventing the consummation
of any of the transactions contemplated under this Agreement.
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(d) The Company and Genentech shall have executed and delivered the
Transaction Agreements.
(e) There shall be no temporary restraining order, preliminary
injunction or permanent injunction or other order preventing the consummation of
the Original Issuance issued by any court which remains in effect, no litigation
seeking the issuance of such an order or injunction and no claims or actions
threatened or pending which have a reasonably likely prospect of resulting in
such order or injunction preventing the consummation of the Original Issuance.
(f) The Company shall not be in material breach of the Transaction
Agreements.
(g) Genentech shall have received from the Company's counsel an
opinion in form and substance reasonably satisfactory to Genentech's Counsel
regarding the Original Issuance.
6.2 Conditions to the Original Issuance Obligations of the Company.
The obligations of the Company to issue the Original Issuance Shares is subject
to the satisfaction or the Company's waiver, on or prior to the Original Closing
Date, of each of the following conditions:
(a) The representations and warranties made by Genentech in Article V
shall be true and correct when made, and shall be true and correct on the
Original Closing Date with the same force and effect as if they had been made on
and as of such date and Genentech shall have performed all covenants,
obligations and conditions required to be performed or observed by Genentech on
or prior to the Original Closing Date or such performance shall have been
expressly waived by the Company in writing.
(b) The Company and Genentech shall have executed and delivered the
Transaction Agreements.
(c) Genentech shall have obtained all consents (including all third
party and governmental or regulatory consents, approvals or authorizations
required in connection with the valid execution and delivery of this Agreement),
permits and waivers necessary or appropriate for consummation of the
transactions contemplated by the Original Issuance under this Agreement.
(d) No Delaware, U.S. or U.S. state governmental authority or other
agency or commission or Delaware, U.S. or U.S. state court of competent
jurisdiction, shall have enacted, issued, promulgated, enforced, or entered any
law, rule, regulation, executive order, decree, injunction or other order which
is then in effect and has the effect of making illegal the issuance of the
Original Issuance Shares to Genentech or otherwise preventing the consummation
of any of the transactions contemplated under this Agreement.
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6.3 Conditions to Second Closing Obligations of Genentech. The obligation
of Genentech to consummate the Second Closing is subject to the satisfaction or
Genentech's waiver, on or prior to the Second Closing Date, of each of the
following conditions:
(a) The representations and warranties made by the Company in Section
4.1 through and including Section 4.5, Section 4.10 and Section 4.12 shall be
true and correct on the Second Closing Date with the same force and effect as
if they had been made on and as of such date, and the Company shall have
performed all covenants, obligations and conditions required to be performed or
observed by it on or prior to the Second Closing Date.
(b) The Company shall have obtained all consents (including all third
party and governmental or regulatory consents, approvals or authorizations
required in connection with the valid execution and delivery of this
Agreement), permits and waivers necessary or appropriate for consummation of
the transactions contemplated by the Second Closing under this Agreement.
(c) No Delaware, U.S. or U.S. state governmental authority or other
agency or commission or Delaware, U.S. or U.S. state court of competent
jurisdiction shall have enacted, issued, promulgated, enforced, or entered any
law, rule, regulation, executive order, decree, injunction or other order which
is then in effect and has the effect of making illegal the issuance of the
Second Issuance Shares to Genentech or otherwise preventing the consummation of
any of the transactions contemplated under this Agreement.
(d) There shall be no temporary restraining order, preliminary
injunction or permanent injunction or other order preventing the consummation
of the Second Closing issued by any court which remains in effect, no
litigation seeking the issuance of such an order or injunction and no claims or
actions threatened or pending which have a reasonably likely prospect of
resulting in such order or injunction preventing the consummation of the Second
Closing.
(e) At the time of the closing on the Second Closing Date, the
issuance of the Shares to Genentech shall be legally permitted by all laws and
regulations to which Genentech and the Company are subject.
(f) There shall be no material default or breach under the
Transaction Agreements by the Company.
6.4 Conditions to Second Closing Obligations of the Company. The
obligations of the Company to issue the Second Issuance Shares (if any) is
subject to the satisfaction or the Company's waiver, on or prior to a Second
Closing Date, of each of the following conditions:
(a) The representations and warranties made by Genentech in Article V
shall be true and correct when made, and shall be true and correct on the
Second Closing Date with the same force and effect as if they had been made on
and as of such date.
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(b) Genentech and the Company shall have obtained all consents
(including all third party and governmental or regulatory consents, approvals or
authorizations required in connection with the valid execution and delivery of
this Agreement), permits and waivers necessary or appropriate for consummation
of the transactions contemplated by the Second Closing under this Agreement.
(c) No Delaware, U.S. or U.S. state governmental authority or other
agency or commission or Delaware, U.S. or U.S. state court of competent
jurisdiction shall have enacted, issued, promulgated, enforced, or entered any
law, rule, regulation, executive order, decree, injunction or other order which
is then in effect and has the effect of making illegal the issuance of the
Second Issuance Shares to Genentech or otherwise preventing the consummation of
any of the transactions contemplated under this Agreement.
(d) There shall be no temporary restraining order, preliminary
injunction or permanent injunction or other order preventing the consummation of
the Second Closing issued by any court which remains in effect, no litigation
seeking the issuance of such an order or injunction and no claims or actions
threatened or pending which have a reasonably likely prospect of resulting in
such order or injunction preventing the consummation of the Second Closing.
(e) At the time of the closing on the Second Closing Date, the
issuance of the Shares to Genentech shall be legally permitted by all laws and
regulations to which Genentech and the Company are subject.
ARTICLE VII
ADDITIONAL COVENANTS OF THE COMPANY
The Company covenants and agrees that:
7.1 Reservation of Shares: The Company shall at all times reserve and
keep available out of its authorized but unissued shares of Common Stock such
number of shares of Common Stock as shall be sufficient to complete the issuance
of the Shares under this Agreement.
7.2 Maintenance of Registration under the 1934 Act during Pendency of S-3
Registration Statement. The Company shall use its best efforts to maintain the
effectiveness of the registration of its Common Stock under Section 12(g) of the
1934 Act during the effectiveness of the registration statement filed under
Article III.
7.3 Confidentiality. Except for information disclosed under the License
Agreement (which shall be governed by Section 7.0 of the License Agreement), the
Company will hold, and will use all reasonable business efforts to cause its
respective officers, directors, employees, accountants, counsel, consultants,
advisors and agents to hold, in confidence, all confidential documents and
information concerning Genentech furnished to the Company in connection with the
transactions contemplated by this Agreement and the Transaction Agreements,
except to the extent that such information can be shown to have been (i)
previously known on a
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nonconfidential basis by the Company, (ii) in the public domain through no fault
of the Company of (iii) later lawfully acquired by the Company from sources
other than Genentech; provided that the Company may disclose such information to
its officers, directors, employees, accountants, counsel, consultants, advisors
and agents in connection with the transactions contemplated by this Agreement
and the Transaction Agreements so long as (a) such disclosure is necessary for
the evaluation and consummation of the transactions contemplated by this
Agreement and the Transaction Agreements and (b) such Persons are informed by
the Company of the confidential nature of such information and are bound in
writing by the Company to treat such information confidentially. The Company
shall exercise at least the same care with respect to such information as they
would take to preserve the confidentiality of their own similar information. If
this Agreement is terminated, the Company use all reasonable business efforts to
cause their respective officers, directors, employees, accountants, counsel,
consultants, advisors and agents to, destroy or deliver to Genentech, upon
request, all documents and other materials, and all copies thereof, obtained by
the Company or on their behalf from Genentech in connection with this Agreement
or the Transaction Agreements that are subject to such confidence. This Section
7.3 shall survive any termination of this Agreement.
ARTICLE VIII
ADDITIONAL COVENANTS OF GENENTECH
Genentech covenants and agrees that:
8.1 Confidentiality. Except for information disclosed under the
License Agreement (which shall be governed by Section 7.0 of the License
Agreement), Genentech will hold, and will use all reasonable business efforts to
cause its respective officers, directors, employees, accountants, counsel,
consultants, advisors and agents to hold, in confidence, all confidential
documents and information concerning the Company furnished to Genentech in
connection with the transactions contemplated by this Agreement and the
Transaction Agreements, except to the extent that such information can be shown
to have been (i) previously known on a nonconfidential basis by Genentech, (ii)
in the public domain through no fault of Genentech or (iii) later lawfully
acquired by Genentech from sources other than the Company; provided that
Genentech may disclose such information to its officers, directors, employees,
accountants, counsel, consultants, advisors and agents in connection with the
transactions contemplated by this Agreement and the Transaction Agreements so
long as (a) such disclosure is necessary for the evaluation and consummation of
the transactions contemplated by this Agreement and the Transaction Agreements
and (b) such Persons are informed by Genentech of the confidential nature of
such information and are bound in writing by Genentech to treat such information
confidentially. Genentech shall exercise at least the same care with respect to
such information as they would take to preserve the confidentiality of their own
similar information. If this Agreement is terminated, Genentech use all
reasonable business efforts to cause their respective officers, directors,
employees, accountants, counsel, consultants, advisors and agents to, destroy or
deliver to the Company, upon request, all documents and other materials, and all
copies
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thereof, obtained by Genentech or on their behalf from the Company in connection
with this Agreement or the Transaction Agreements that are subject to such
confidence. This Section 8.1 shall survive any termination of this Agreement.
8.2 1934 ACT FILINGS. Genentech agrees and acknowledges that it shall
have sole responsibility for making any filings with the SEC pursuant to
Sections 13 and 16 of the 1934 Act as a result of its acquisition of the Shares
and any future retention or transfer thereof.
ARTICLE IX
ADDITIONAL COVENANTS OF GENENTECH AND THE COMPANY
Genentech and the Company covenant and agree that:
9.1 BEST EFFORTS. Subject to the terms and conditions of this Agreement,
Genentech and the Company will use their best efforts to take, or cause to be
taken, all actions and to do, or cause to be done, all things necessary or
desirable under applicable laws and regulations to consummate the transactions
contemplated by this Agreement and the Transaction Agreements. The Company and
Genentech agree to execute and deliver such other documents, certificates,
agreements and other writings and to take such other actions as may be necessary
or desirable in order to consummate or implement expeditiously the transactions
contemplated by this Agreement and the Transaction Agreements.
9.2 CERTAIN FILINGS. The Company and Genentech shall cooperate with one
another (i) in determining whether any action by or in respect of, or filing
with, any governmental body, agency, official or authority is required, or any
actions, consents, approvals or waivers are required to be obtained from parties
to any material contracts, in connection with the consummation of the
transactions contemplated by this Agreement and the Transaction Agreements and
(ii) in taking such actions or making any such filings, furnishing information
required in connection therewith and seeking timely to obtain any such actions,
consents, approvals or waivers.
9.3 PUBLICITY. The Company and Genentech agree that, except as may
otherwise be required by applicable laws, regulations, rules, or orders,
including the disclosure requirements of the SEC and the Nasdaq Stock Market,
no information concerning this Agreement and the transactions contemplated
herein (except information which is already in the public domain) shall be made
public by either party without the prior written consent of the other party.
Notwithstanding the foregoing, with respect to complying with the disclosure
requirements of the SEC, in connection with any required SEC filing of the
Transaction Agreements by the Company, the Company shall seek confidential
treatment of portions of the Transaction Agreements from the SEC and Genentech
shall have the right to review and comment on the portions of the Transaction
Agreements for which confidentiality is sought prior to their being filed with
the SEC. Genentech shall provide its comments, if any, on such application as
soon as practicable and in no event later than seven (7) days after such
application is provided to Genentech.
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ARTICLE X
SURVIVAL
10.1 Survival. The representations and warranties of the parties hereto
contained in this Agreement or in any certificate or other writing delivered
pursuant hereto or in connection herewith shall survive the Original Closing
for a period of two (2) years.
ARTICLE XI
TERMINATION
11.1 Grounds for Termination. This Agreement may be terminated at any
time prior to the Original Closing or the Second Closing, as applicable:
(i) by mutual written agreement of the Company and Genentech; or
(ii) by either the Company or Genentech if there shall be any
law or regulation that makes consummation of the issuances of Shares
contemplated in this Agreement illegal or otherwise prohibited or if
consummation of the issuances of Shares contemplated hereby would violate any
nonappealable final order, decree or judgment of any court or governmental
body having competent jurisdiction; and in such event, the Company shall be
obligated to pay to Genentech in cash the value of the Original Issuance Shares
and the Second Issuance Shares (if any), as the case may be, that would have
been issued on the originally scheduled Original Closing Date and Second
Closing Date, but for this subsection (based upon the average daily closing
price per share for the Company's Common Stock for the twenty (20) trading days
immediately preceding (but not including) the third trading day before the
originally scheduled Original Closing Date and based upon the average daily
closing price per share for the Company's Common Stock for the twenty (20)
trading days immediately preceding (but not including) the third trading day
before the originally scheduled Second Closing Date, as the case may be, as
reported in Nasdaq Stock Market).
11.2 Effect of Termination. If this Agreement is terminated as
permitted by Section 11.1, termination shall be without liability of either
party (or any stockholder, director, officer, employee, agent, consultant or
representative of such party) to the other party to this Agreement; provided
that if such termination shall result from the willful failure of either party
to fulfill a condition to the performance of the obligations of the other
party, failure to perform a covenant of this Agreement or breach by either
party hereto of any representation or warranty or agreement contained herein,
such party shall be fully liable for any and all damages incurred or suffered
by the other party as a result of such failure or breach. The provisions of
Sections 7.3 and 8.1 shall survive any termination hereof pursuant to Section
11.1 or otherwise.
ARTICLE XII
MISCELLANEOUS
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12.1 Notices. Any notices permitted or required by this Agreement shall be
sent by facsimile, or by courier, or by certified or registered mail and shall
be effective when received if sent and addressed as follows or to such other
address as may be designated by a party in writing:
If to Genentech: Genentech, Inc.
0 XXX Xxx
Xxxxx Xxx Xxxxxxxxx, XX 00000
Attn: Corporate Secretary
Fax: (000) 000-0000
If to Connetics: Connetics Corporation
0000 X. Xxxxxxxx Xxxx
Xxxx Xxxx, XX 00000
Attn: Chief Executive Officer
Fax: (000) 000-0000
12.2 Amendments and Waivers
(a) Any provision of this Agreement may be amended or waived prior to
the Closing Dates if, but only if, such amendment or waiver is in writing and is
signed, in the case of an amendment, by each party to this Agreement, or in the
case of a waiver, by the party against whom the waiver is to be effective.
(b) No failure or delay by any party in exercising any right, power
or privilege hereunder shall operate as a waiver thereof nor shall any single
or partial exercise thereof preclude any other or further exercise thereof or
the exercise of any other right, power or privilege. The rights and remedies
herein provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
12.3 Expenses. Except as provided in Sections 3.4 and 3.5, all costs and
expenses incurred in connection with this Agreement shall be paid by the party
incurring such cost or expense.
12.4 Successors and Assigns. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns; provided that no party may assign, delegate
or otherwise transfer any of its rights or obligations under this Agreement,
except that Genentech may assign this Agreement to an Affiliate, without the
prior written consent of the other party.
12.5 Governing Law. This Agreement shall be governed by and construed in
accordance with the law of the State of California, without regard to the
conflicts of law rules of such state.
12.6 Counterparts; Third Party Beneficiaries. This Agreement may be signed
in any number of counterparts, each of which shall be an original, with the
same effect as if the signatures thereto and hereto were upon the same
instrument. No provision of this Agreement is
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intended to confer upon any Person other than the parties hereto any rights or
remedies hereunder.
12.7 Entire Agreement. This Agreement and the Transaction Agreements
constitute the entire agreement between the parties with respect to the subject
matter of this Agreement and supersedes all prior agreements and understandings,
both oral and written, between the parties with respect to the subject matter of
this Agreement, except for the Confidentiality Agreement between the parties
dated January 9, 1997, which shall remain in full force and effect. No
representation, inducement, promise, understanding, condition or warranty not
set forth herein has been made or relied upon by either party hereto.
[Signature Page Follows.]
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IN WITNESS WHEREOF, the parties have each caused this Agreement to be
executed by their duly-authorized representatives as of the date first above
written.
GENENTECH, INC.
By: /s/ Xxxxxxxx X. Xxxxx
-------------------------------
Name: Xxxxxxxx X. Xxxxx
-----------------------------
Title: Vice President, Business and
----------------------------
Corporate Development
CONNETICS CORPORATION
By: /s/ X. Xxxxxxx
-------------------------------
Name: Xxxxxx Xxxxxxx
-----------------------------
Title: President/CEO
----------------------------
SIGNATURE PAGE TO STOCK ISSUANCE AGREEMENT
