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Exhibit 5
Date: August 18, 1999
Xx. Xxxx X. Xxxxx
President and CEO
Shaman Pharmaceuticals Inc.
000 Xxxx Xxxxx Xxxxxx
Xxxxx Xxx Xxxxxxxxx, XX 00000-0000
Settlement Letter
Dear Xx. Xxxxx:
This Settlement is dated as of August 18, 1999 by and between Shaman
Pharmaceuticals Inc., a Delaware corporation ("Shaman"), and Lipha s.a., a
French corporation ("Lipha") and sets forth a supplemental agreement of the
parties with respect to the Joint Research and Product Development and
Commercialization Agreement (the "Research Agreement") dated as of September 23,
1996 between Shaman and Lipha.
WHEREAS, Lipha has advanced certain sums of money to Shaman in December 1998 in
connection with the Research Agreement, and a dispute has arisen in connection
with such advance and the parties desire to settle such dispute;
NOW, THEREFORE, Shaman and Lipha agree as follows:
1. In consideration of the release and discharge granted by Lipha pursuant to
Section 2 below, Shaman agrees to pay to Lipha Two Million Ten Dollars
($2,000,010.00) (the "Indebtedness) in accordance with the terms set forth in
Section 3 below.
2. In consideration of receipt of payment in full from Shaman of the
Indebtedness referred to in Section 1 above as provided in Section 3 below,
Lipha agrees to release and discharge Shaman from all claims, suits and causes
of action that Lipha may have against Shaman for refund of advances made or
other monies paid by Lipha to Shaman in December 1998 , including release and
discharge of Shaman's obligation to credit such advances made or other monies
paid toward $6 million of amounts payable by Lipha to Shaman in the future under
the Research Agreement.
3. Lipha agrees to exchange such Indebtedness of Shaman to Lipha for the
issuance to Lipha of 133,334 shares of Series R Convertible Preferred Stock of
Shaman ("Preferred Stock") pursuant to the terms described in the prospectus
dated July 16, 1999, previously delivered to the undersigned in connection with
Shaman's public offering of the Series R Preferred Stock. Upon receipt of
133,334 shares of such Preferred Stock, the Indebtedness shall be canceled and
shall be deemed to be paid in full by Shaman to Lipha. If less than 133,334
shares of such Preferred Stock are received by Lipha, the Indebtedness shall be
canceled and shall be deemed to be paid
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only to the extent of the number of shares of Preferred Stock so received times
$15.00 per share, and the balance of the Indebtedness shall be canceled and
shall be deemed paid in full upon receipt by Lipha of payment by Shaman of such
balance in cash, such payment to be effected by Shaman within 180 days after the
expiration (currently August 23, 1999) of the public offering of the Series R
Preferred Stock pursuant to the prospectus dated July 16, 1999 (or any extension
of the expiration date pursuant to the terms of said prospectus).
Enclosed herewith is Lipha's completed and signed subscription agreement for
133,334 shares of such Preferred Stock. The undersigned understands and agrees
that the terms and conditions of the Series R Preferred Stock subscription
documents enclosed herewith remain unchanged and in full force and effect.
Yours very truly,
AGREED:
LIPHA S.A.
By /s/ Xxxxx Xxxxxxx
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Name: Xxxxx Xxxxxxx
Title: Managing Director
Lipha S.A.
00, xxx Xxxxx-Xxxxxx
Xxxx Cedex, F-69379
AGREED:
Shaman Pharmaceuticals, Inc. hereby agrees to accept the cancellation of the
above-referenced $2,000,010 indebtedness of Shaman Pharmaceuticals, Inc. to
Lipha s.a. in lieu of cash, in payment of the purchase price for the shares of
Series R Preferred Stock to be purchased by Lipha pursuant to the foregoing.
SHAMAN PHARMACEUTICALS INC.
By /s/ Xxxx X. Xxxxx
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Name: Xxxx X. Xxxxx
Title: President and Chief Executive Officer
