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EXHIBIT 10.2
CONNETICS CORPORATION
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is made as of the
20th day of November, 1998, by and among Connetics Corporation, a Delaware
corporation (the "Company") and each of the persons listed on EXHIBIT A to this
Agreement (each an "Investor" and together the "Investors").
R E C I T A L S
A. Effective as of the same date as this Agreement, the Company and the
Investors have entered into a Common Stock Purchase Agreement (the "Purchase
Agreement") pursuant to which the Company has agreed to sell to the Investors
and the Investors have agreed to purchase from the Company shares of the
Company's Common Stock (all terms not otherwise defined herein shall have the
meanings ascribed in the Purchase Agreement).
B. A condition to the Investors' obligations under the Purchase Agreement
is that the Company and the Investors enter into this Agreement in order to
provide the Investors with certain rights to register the Common Stock acquired
by the Investors pursuant to the Purchase Agreement. The Company desires to
induce the Investors to purchase the Common Stock pursuant to the Purchase
Agreement by agreeing to the terms and conditions set forth in this Agreement.
NOW, THEREFORE, the parties hereby agree as follows:
AGREEMENT
1. Registration Rights. The Company and the Investors covenant and agree
as follows:
1.1 Definitions. For purposes of this SECTION 1:
(a) The terms "register," "registered," and "registration"
refer to a registration effected by preparing and filing a registration
statement or similar document in compliance with the Securities Act of 1933, as
amended (the "Securities Act"), and the declaration or ordering of effectiveness
of such registration statement or document;
(b) The term "Registrable Securities" means (i) the shares
of Common Stock issued or sold in connection with the Purchase Agreement (such
shares of Common Stock are collectively referred to as the "Shares" or "Stock")
and (ii) any other shares of common stock of the Company issued as (or issuable
upon the conversion or exercise of any warrant, right or other security which is
issued as) a dividend or other distribution with respect to, or in exchange for
or in replacement of, the Stock; provided, that the foregoing definition shall
exclude in all cases any Registrable Securities sold by a person in a
transaction in which his or her rights under this Agreement are not assigned.
Notwithstanding the foregoing, shares of common stock shall
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only be treated as Registrable Securities if and so long as they have not been
(x) sold to or through a broker or dealer or underwriter in a public
distribution or a public securities transaction, or (y) sold in a transaction
exempt from the registration and prospectus delivery requirements under Section
4(1) of the Securities Act so that all transfer restrictions, and restrictive
legends with respect thereto, if any, are removed upon the consummation of such
sale;
(c) The number of shares of "Registrable Securities then
outstanding" shall be determined by the number of shares of Common Stock then
outstanding which are Registrable Securities, plus the number of shares of
common stock issuable pursuant to then exercisable or convertible securities
which are Registrable Securities;
(d) The term "Holder" means any person owning or having the
right to acquire Registrable Securities or any assignee thereof in accordance
with this Agreement;
(e) The term "Form S-3" means such form under the Securities
Act as in effect on the date hereof or any successor form under the Securities
Act; and
(f) The term "SEC" means the Securities and Exchange
Commission.
1.2 Registration. The Company will use its reasonable best efforts
to effect a registration to permit the sale of the Registrable Securities as
described below, and pursuant thereto the Company will:
(a) prepare and file within 20 days and use its reasonable
best efforts to have declared effective by the SEC within 45 days after the
Closing, a registration statement on Form S-3 relating to resale of all of the
shares of the Registrable Securities and use its reasonable best efforts to
cause such registration statement to remain continuously effective for a period
which will terminate when all Registrable Securities covered by such
registration statement, as amended from time to time, have been sold or when the
Registrable Securities may be sold under Rule 144(k) under the Securities Act;
(b) prepare and file with the SEC such amendments and
post-effective amendments to the registration statement and any prospectus as
may be necessary to keep such registration statement effective for the period
specified in SECTION 1.2(A) and to comply with the provisions of the Securities
Act and the Exchange Act with respect to the distribution of all Registrable
Securities;
(c) notify each Investor promptly and confirm such notice in
writing (i) when the prospectus or any supplement or post-effective amendment
has been filed and, with respect to the registration statement or any
post-effective amendment, when the same has become effective, (ii) of any
request by the SEC for amendments or supplements to the registration statement
or prospectus or for additional information, (iii) of the issuance by the SEC of
any stop order suspending the effectiveness of the registration statement or the
initiation of any proceedings for that purpose, and (iv) of the receipt by the
Company of any notification with respect to the suspension of the qualification
of the Registrable Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose;
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(d) make every reasonable effort to obtain the withdrawal of
any order suspending the effectiveness of the registration statement at the
earliest possible moment;
(e) furnish to each Investor, without charge, at least one
copy of the registration statement and any post-effective amendment thereto,
including financial statements and schedules, and upon an Investor's request,
all documents incorporated therein by reference and all exhibits thereto
(including those incorporated by reference);
(f) deliver to each Investor, without charge, as many copies
of the prospectus (including each preliminary prospectus) and any amendment or
supplement thereto as such Investor may reasonably request in order to
facilitate the disposition of the Registrable Securities;
(g) cause all Registrable Securities covered by the
registration statement to be listed on each securities exchange or market on
which similar securities issued by the Company are then listed, and if the
securities are not so listed to use its reasonable best efforts promptly to
cause all such securities to be listed on either the New York Stock Exchange,
the American Stock Exchange or the Nasdaq Stock Market;
(h) use reasonable best efforts to qualify or register the
Registrable Securities for sale under (or obtain exemptions from the application
of) the Blue Sky laws of such jurisdictions as are applicable. The Company shall
not be required to qualify as a foreign corporation or to file a general consent
to service of process in any such jurisdiction where it is not presently
qualified or where it would be subject to general service of process or taxation
as a foreign corporation in any jurisdiction where it is not now so subject;
(i) otherwise use its reasonable best efforts to comply with
all applicable rules and regulations of the SEC under the Securities Act and the
Exchange Act and take such other actions as may be reasonably necessary to
facilitate the registration of the Registrable Securities hereunder; and
(j) expenses incurred in connection with a registration
requested pursuant to this SECTION 1.2 shall be borne by the Company, including
all registration, filing, qualification, printers' and accounting fees but
excluding any underwriters' discounts or commissions and any fees and
disbursements of any counsel for the selling Holders (such fees or discounts, if
any, to be borne pro rata by the Holders participating in the registration).
1.3 Restrictions; Procedure For Sales Pursuant To A Registration
Statement.
(a) Each Holder agrees to the following restrictions on and
procedures for sales made pursuant to a registration statement:
(i) Notice to Company. If any Holder proposes to sell
any Shares, the Holder shall notify the Company of its intent to do so at least
three (3) business days prior to the date of such sale (the "Notice of Sale"),
by tendering a Notice of Sale in substantially the
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form attached as EXHIBIT B. Alternatively, the Holder may give the Notice of
Sale verbally by telephoning and speaking directly with Xxxx X. Xxxxxxx or the
then current Chief Financial Officer at the Company at (000) 000-0000, and
following up by immediately sending a written Notice of Sale. Providing the
Notice of Sale to the Company shall conclusively be deemed to establish an
agreement by such Holder to comply with the registration provisions herein
described, and the Notice of Sale shall be deemed to constitute a representation
that any information previously supplied by such Holder is accurate as of the
date of such Notice of Sale.
(ii) Delay of Sale. The Company may refuse to permit the
Holder to resell any Shares for a specified period of time; provided, however,
that (a) in order to exercise this right, the Company must deliver a certificate
in writing to the Holder to the effect that the registration statement in its
then current form contains an untrue statement of material fact or omits to
state a material fact necessary in order to make the statements made therein, in
light of the circumstances under which they were made, not misleading, (b) in no
event shall such delay exceed twenty (20) days, (c) in no event shall this right
of delay be exercised on more than two (2) occasions in any twelve (12) month
period, and (d) during any suspension as contemplated by this SECTION 1.4
(A)(II), the Company will not allow any of its officers or directors to buy or
sell shares of the Company's securities.
(b) Representations of Holders. Each Holder hereby represents to
and covenants with the Company that, during the period in which a registration
statement effected pursuant to SECTION 1.2 remains effective, such Holder will:
(i) not engage in any stabilization activity in
connection with any of the Company's securities;
(ii) cause to be furnished to any purchaser of the
Shares and to the broker-dealer, if any, through whom Shares may be offered, a
copy of the Prospectus; and
(iii) not bid for or purchase any securities of the
Company or any rights to acquire the Company's securities, or attempt to induce
any person to purchase any of the Company's securities or any rights to acquire
the Company's securities other than as permitted under the Securities Exchange
Act of 1934, as amended ("Exchange Act").
(c) Information for Use in Registration Statement. Each Holder
represents and warrants to the Company that such Holder has completed the
information requested by the Selling Holder's Questionnaire attached as EXHIBIT
C to this Agreement (the "Questionnaire"), and further represents and warrants
to the Company that all information provided by such Holder in the Questionnaire
is true, accurate and complete. Each Holder understands that the written
information in the Questionnaire and all written representations made in this
Agreement are being provided to the Company specifically for use in, or in
connection with, the registration statement and the Prospectus, and has executed
this Agreement with such knowledge.
1.4 Furnish Information. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this SECTION 1 with
respect to the Registrable
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Securities of any selling Holder that such Holder shall furnish to the Company
such information regarding itself, the Registrable Securities held by it, and
the intended method of disposition of such securities as shall be required to
effect the registration of such Holder's Registrable Securities.
1.5 Delay of Registration. No Holder shall have any right to obtain
or seek an injunction restraining or otherwise delaying any such registration as
the result of any dispute that might arise with respect to the interpretation or
implementation of this SECTION 1.
1.6 Indemnification. In the event any Registrable Securities are
included in a registration statement under this SECTION 1:
(a) To the extent permitted by law, the Company will
indemnify and hold harmless each Holder, any underwriter (as defined in the
Securities) for such Holder and each person, if any, who controls such Holder or
underwriter within the meaning of the Securities or the Exchange Act, against
any losses, claims, damages, or liabilities (joint or several) to which they may
become subject under the Securities, the Exchange Act or other federal or state
law, insofar as such losses, claims, damages, or liabilities (or actions in
respect thereof) arise out of or are based upon any of the following statements,
omissions or violations (collectively a "Violation"): (i) any untrue statement
or alleged untrue statement of a material fact contained in such registration
statement, including any preliminary prospectus or final prospectus contained
therein or any amendments or supplements thereto, (ii) the omission or alleged
omission to state therein a material fact required to be stated therein, or
necessary to make the statements therein not misleading, or (iii) any violation
or alleged violation by the Company of the Securities, the Exchange Act, any
state securities law or any rule or regulation promulgated under the Securities,
the Exchange Act or any state securities law; and the Company will pay to each
such Holder, underwriter or controlling person, as incurred, any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability, or action; provided, however,
that the indemnity agreement contained in this SUBSECTION 1.6(A) shall not apply
to amounts paid in settlement of any such loss, claim, damage, liability, or
action if such settlement is effected without the consent of the Company (which
consent shall not be unreasonably withheld), nor shall the Company be liable in
any such case for any such loss, claim, damage, liability, or action to the
extent that it arises out of or is based upon a Violation which occurs in
reliance upon and in conformity with written information furnished expressly for
use in connection with such registration by any such Holder, underwriter or
controlling person.
(b) To the extent permitted by law, each selling Holder will
indemnify and hold harmless the Company, each of its directors, each of its
officers who has signed the registration statement, each person, if any, who
controls the Company within the meaning of the Securities, any underwriter, any
other Holder selling securities in such registration statement and any
controlling person of any such underwriter or other Holder, against any losses,
claims, damages, or liabilities (joint or several) to which any of the foregoing
persons may become subject, under the Securities, the Exchange Act or other
federal or state law, insofar as such losses, claims, damages, or liabilities
(or actions in respect thereto) arise out of or are based upon any Violation, in
each case to the extent (and only to the extent) that such Violation occurs in
reliance upon and in conformity with written information furnished by such
Holder expressly for
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use in connection with such registration; and each such Holder will pay, as
incurred, any legal or other expenses reasonably incurred by any person intended
to be indemnified pursuant to this SUBSECTION 1.6(b), in connection with
investigating or defending any such loss, claim, damage, liability, or action;
provided, however, that the indemnity agreement contained in this SUBSECTION
1.6(b) shall not apply to amounts paid in settlement of any such loss, claim,
damage, liability or action if such settlement is effected without the consent
of the Holder, which consent shall not be unreasonably withheld; provided, that,
in no event shall any indemnity under this SUBSECTION 1.6(b) exceed the net
proceeds from the offering received by such Holder, except in the case of
willful fraud by such Holder.
(c) Promptly after receipt by an indemnified party under
this SECTION 1.6 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this SECTION 1.6, deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party
(together with all other indemnified parties which may be represented without
conflict by one counsel) shall have the right to retain one separate counsel,
with the reasonable fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action, if prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this SECTION
1.6, but the omission so to deliver written notice to the indemnifying party
will not relieve it of any liability that it may have to any indemnified party
otherwise than under this SECTION 1.6.
(d) If the indemnification provided for in this SECTION 1.6
is held by a court of competent jurisdiction to be unavailable to an indemnified
party with respect to any loss, liability, claim, damage, or expense referred to
therein, then the indemnifying party, in lieu of indemnifying such indemnified
party hereunder, shall contribute to the amount paid or payable by such
indemnified party as a result of such loss, liability, claim, damage, or expense
in such proportion as is appropriate to reflect the relative fault of the
indemnifying party on the one hand and of the indemnified party on the other in
connection with the statements or omissions that resulted in such loss,
liability, claim, damage, or expense as well as any other relevant equitable
considerations; provided that, in no event shall any contribution by a Holder
under this SUBSECTION 1.6(d) exceed the net proceeds from the offering received
by such Holder, except in the case of willful fraud by such Holder. The relative
fault of the indemnifying party and of the indemnified party shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission to state a material fact relates to
information supplied by the indemnifying party or by the indemnified party and
the parties' relative intent, knowledge, access to information, and opportunity
to correct or prevent such statement or omission.
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(e) The obligations of the Company and Holders under this
SECTION 1.6 shall survive the completion of any offering of Registrable
Securities in a registration statement under this SECTION 1.
1.7 Reports Under Securities Exchange Act Of 1934. With a view to
making available to the Holders the benefits of Rule 144 and any other rule or
regulation of the SEC that may at any time permit a Holder to sell securities of
the Company to the public without registration or pursuant to a registration on
Form S-3, the Company agrees to:
(a) make and keep public information available, as those
terms are understood and defined in Rule 144, so long as the Company remains
subject to the periodic reporting requirements under Sections 13 or 15(d) of the
Exchange Act;
(b) take such action, including the voluntary registration
of its Common Stock under Section 12 of the Exchange Act, as is necessary to
enable the Holders to utilize Form S-3 for the sale of their Registrable
Securities;
(c) file with the SEC in a timely manner all reports and
other documents required of the Company under the Securities and the Exchange
Act; and
(d) furnish to any Holder, so long as the Holder owns any
Registrable Securities, forthwith upon request (i) a written statement by the
Company that it has complied with the reporting requirements of the Exchange Act
and the rules and regulations promulgated thereunder, or that it qualifies as a
registrant whose securities may be resold pursuant to Form S-3, (ii) a copy of
the most recent annual or quarterly report of the Company and such other reports
and documents so filed by the Company, and (iii) such other information as may
be reasonably requested in availing any Holder of any rule or regulation of the
SEC which permits the selling of any such securities without registration or
pursuant to such form.
2. MISCELLANEOUS.
2.1 Successors and Assigns. Except as otherwise provided in this
Agreement, the terms and conditions of this Agreement shall inure to the benefit
of and be binding upon the respective successors and assigns of the parties
(including transferees of any of the Shares). Nothing in this Agreement, express
or implied, is intended to confer upon any party other than the parties hereto
or their respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
2.2 Governing Law. This Agreement and all acts and transactions
pursuant hereto shall be governed, construed and interpreted in accordance with
the laws of the State of California, without giving effect to principles of
conflicts of laws.
2.3 Counterparts. This Agreement may be executed in two (2) or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
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2.4 Titles and Subtitles. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
2.5 Notices. Unless otherwise provided herein, any notice required
or permitted by this Agreement shall be in writing and shall be deemed
sufficient upon delivery, when delivered personally or by overnight courier and
addressed to the party to be notified at such party's address as set forth on
the signature page hereto or as subsequently modified by written notice. In the
event that any date provided for in this Agreement falls on a Saturday, Sunday
or legal holiday, such date shall be deemed extended to the next business day.
Notwithstanding the foregoing, any notice delivered pursuant to SECTION 1.3(E)
or SECTION 1.4 hereto must be made by personal delivery or confirmed facsimile
transmission.
2.6 Expenses. If any action at law or in equity is necessary to
enforce or interpret the terms of this Agreement, the prevailing party shall be
entitled to reasonable attorneys' fees, costs and necessary disbursements in
addition to any other relief to which such party may be entitled.
2.7 Amendments and Waivers. Any term of this Agreement may be
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the holders of
a majority of the Registrable Securities then outstanding. Any amendment or
waiver effected in accordance with this paragraph shall be binding upon each
holder of any Registrable Securities then outstanding, each future holder of all
such Registrable Securities, and the Company.
2.8 Severability. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, the parties agree to renegotiate
such provision in good faith. In the event that the parties cannot reach a
mutually agreeable and enforceable replacement for such provision, then (a) such
provision shall be excluded from this Agreement, (b) the balance of the
Agreement shall be interpreted as if such provision were so excluded and (c) the
balance of the Agreement shall be enforceable in accordance with its terms.
2.9 Entire Agreement. This Agreement, and the documents referred to
in this Agreement (with the exception of the registration statement) constitute
the entire agreement between the parties hereto pertaining to the subject matter
hereof, and any and all other written or oral agreements existing between the
parties hereto are expressly canceled.
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IN WITNESS WHEREOF, the parties have executed this Registration Rights Agreement
as of the date first written above.
"COMPANY"
Connetics Corporation Address:
0000 Xxxx Xxxxxxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
By: ____________________________ Facsimile: (000) 000-0000
Xxxxxx X. Xxxxxxx
President and Chief Executive Officer
INVESTOR(S)
By: ____________________________ Address:
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EXHIBIT A
LIST OF INVESTORS
Name Number of Shares
---- ----------------
1) Xxxxxxxxx X. Xxxxxx 50,000
2) Xxxx X. Xxxx 12,500
3) Xxxxx Family Partnership 10,000
4) Alta BioPharma Partners, L.P. 155,397
5) Alta Embarcadero BioPharma, LLC 5,857
6) Connetics Partners (Alta Bio), LLC 88,746
7) Domain Partners III, L.P. 241,640
8) DP III Associates, L.P. 8,360
9) Domain Partners IV, L.P. 1,220,747
10) XX XX Associates, L.P. 29,253
11) Jalaa Equities 25,000
12) New Enterprise Associates VIII, Limited Partnership 1,233,750
13) NEA Presidents Fund, L.P. 15,000
14) NEA Ventures 1998, Limited Partnership 1,250
15) Merlin BioMed Asset Management 45,000
16) Snowdon L.P. 25,000
Total shares issued: 3,167,500
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EXHIBIT B
CONNETICS CORPORATION
NOTICE OF SALE
Pursuant to the Registration Rights Agreement dated as of
_______________, 1998 among Connetics Corporation (the "Company"), the
undersigned and certain stockholders of the Company, the undersigned hereby
gives notice to the Company of the undersigned's intent to sell _______ shares
of the Company's Common Stock registered pursuant to the registration statement
(File No. _______) filed pursuant to such Agreement.
Dated: ___________________ By:_____________________________________
(signature)
Name:___________________________________
(print)
Title:__________________________________
(if applicable)
[NOTE: THIS NOTICE OF SALE MUST BE COMPLETED AND DELIVERED (BY PERSONAL
DELIVERY OR FACSIMILE) TO THE CHIEF FINANCIAL OFFICER OF THE COMPANY ON
_____________________, 19__, OR THREE (3) BUSINESS DAY BEFORE THE DATE OF SALE
OF THE SHARES OF THE COMPANY'S COMMON STOCK REGISTERED PURSUANT TO THE
REGISTRATION STATEMENT.]
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EXHIBIT C
CONNETICS CORPORATION
SELLING STOCKHOLDER'S QUESTIONNAIRE
In connection with the Connetics Corporation (the "Company") Registration
Statement (File No. _______________) registering certain shares of the Company's
Common Stock, the undersigned represents and warrants that the information set
forth below is true, accurate and complete:
1. As of the date hereof, the undersigned beneficially owns ______ shares
of the Company's Common Stock.
2. Except as described below, the undersigned has not had a material
relationship with the Company or any of its predecessors or affiliates within
the last three years.
The term "material relationship" has not been defined by the Securities
and Exchange Commission (the "SEC"). However, the SEC has indicated that it will
probably construe as a "material relationship" any relationship which tends to
prevent arms length bargaining in dealings with a company, whether arising from
a close business connection or family relationship, a relationship of control or
otherwise. It seems prudent, therefore, to consider that the undersigned would
have such a relationship, for example, with any organization of which the
undersigned is an officer, director, trustee or partner or in which the
undersigned owns, directly or indirectly, ten percent (10%) or more of the
outstanding voting stock, or in which the undersigned has some other substantial
interest, and with any person or organization with whom the undersigned has, or
with whom any relative or spouse (or any other person or organization as to
which the undersigned has any of the foregoing other relationships) has, a
contractual relationship.
If applicable, please describe the material relationship with the
Company:
Dated: ___________________ By:______________________________________
(signature)
Name:____________________________________
(print)
Title:___________________________________
(if applicable)
