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Exhibit 10.57
CONNETICS CORPORATION
LOAN AGREEMENT
This Loan Agreement ("Agreement") is entered into as of August 21, 1998
by and between CONNETICS CORPORATION, a Delaware corporation (the "Company"),
and XXXXXX X. XXXXXXX (the "Borrower").
R E C I T A L S
The Company and Borrower are parties to an employment agreement dated
July 1, 1998 which sets forth the terms of Borrower's employment by the Company.
Borrower desires to borrow and the Company is willing to lend Borrower up to
$72,000 on a secured basis under the terms and conditions of this Agreement.
NOW, THEREFORE, the Company and Borrower agree as follows:
AGREEMENT
1. THE LOAN. Subject to the terms and conditions contained in this
Agreement, and upon execution of this Agreement, the Company will make loans to
Borrower on or before December 31, 1999 up to an aggregate principal amount of
$72,000 (collectively, the "Loan"), provided that the Loan shall be advanced to
Borrower in principal amounts of no more than $36,000, or in such lesser amounts
as requested by Borrower, within 180 days of Borrower's employment with the
Company, and $36,000, or such lesser amounts as requested by Borrower, on or
after July 1, 1999. Borrower shall provide the Company with at least three (3)
business days prior notice of each requested advance.
2. THE NOTE. Each advance under the Loan shall be evidenced by a
promissory note executed and delivered by Borrower in favor of the Company
substantially in the form attached as EXHIBIT A to this Agreement (each a "Note"
and together the "Notes"), bearing interest at the minimum allowable federal
rate per annum, compounded annually, with unpaid principal and interest due on
the third anniversary of the date of each Note, except as otherwise set forth on
the Notes or in this Agreement.
3. SECURITY AGREEMENT. The Borrower will also execute and deliver the
Security Agreement in the form attached as EXHIBIT B to this Agreement (the
"Security Agreement") as security for the Borrower's obligation to repay the
Loan.
4. ACCELERATION OF LOAN. The principal and interest under the Loan
shall immediately become due and payable in full upon the earliest to occur of
the following: (a) as provided in the Security Agreement or (b) within thirty
(30) days after the voluntary termination of Borrower's employment with the
Company or the termination of such employment for Cause (as defined below).
For purposes of this Agreement, termination shall be made for "Cause"
if it is made: (i) because of any act or failure to act by Borrower which, in
the reasonable, good faith opinion of
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the Company's Board of Directors, is in bad faith and to the material detriment
of the Company; (ii) because, in the reasonable opinion of the Company's Board
of Directors, Borrower refuses to act materially in accordance with any express,
good faith direction of the Company's Board of Directors, which refusal is not
cured within ten (10) days following written notice thereof to Borrower; (iii)
because Borrower exhibits, in the reasonable, good faith opinion of the
Company's Board of Directors, misconduct, dishonesty, habitual neglect, or gross
incompetence in the discharge of his duties as an employee of the Company; or
(iv) because Borrower is convicted of a felony.
5. FORGIVENESS OF THE LOAN. The Company may, at its option, forgive the
outstanding principal and interest owing under the Loan, or a portion thereof,
upon the due date of each Note under the Loan.
6. NO EMPLOYMENT RIGHTS. Nothing contained in this Agreement or in any
of the attachments or exhibits to this Agreement is intended or shall be
construed to confer upon the Borrower any rights to employment or continued
employment with the Company, or shall alter in any way the nature of Borrower's
current employment with the Company.
7. SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit of
the respective heirs, personal representatives, successors and assigns of the
parties to this Agreement.
8. GOVERNING LAW. This Agreement, all acts and transactions pursuant to
this Agreement, and the rights and obligations of the parties to this Agreement
shall be governed, construed and interpreted in accordance with the laws of the
State of California.
9. DISPUTE RESOLUTION. All actions or proceedings relating to this
Agreement shall be maintained in a court located in Santa Xxxxx County, State of
California, and the parties hereto expressly consent to (a) the personal
jurisdiction of the federal and state courts within Santa Xxxxx County,
California, and (b) service of process being effected upon them by registered
mail sent to the address set forth below.
10. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
of the parties with respect to the subject matter of this Agreement and
supersedes all prior agreements and understandings related to such subject
matter.
11. MODIFICATION. This Agreement shall not be amended without the
written consent of both parties to this Agreement.
12. SEVERABILITY. In the event that any provision of this Agreement
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and effect as
though written without said provision.
13. 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.
14. NOTICES. Any notice required or permitted by this Agreement shall
be in writing and shall be personally delivered or sent by prepaid registered or
certified mail, return receipt
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requested, addressed to the other party at the address shown below or at such
other address for which such party gives notice hereunder.
15. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one instrument.
16. FURTHER ACTS. Each party to this Agreement agrees to execute,
acknowledge and deliver or to cause to have executed, acknowledged and
delivered, such other and further instruments and documents as may reasonably be
requested by the other to carry out the purposes of this Agreement.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first written above.
"BORROWER" "COMPANY"
CONNETICS CORPORATION,
a Delaware corporation
/s/ Xxxxxx X. Xxxxxxx By: /s/ Xxxxxx X. Xxxxxxx
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XXXXXX X. XXXXXXX Title: _____________________________
Address: ____________________ Address: 0000 Xxxx Xxxxxxxx Xxxx
_____________________________ Xxxx Xxxx, XX 00000
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FULL RECOURSE PROMISSORY NOTE
$18,000 August 21, 1998
1. Obligation. For value received, XXXXXX X. XXXXXXX (the "Borrower")
promises to pay to CONNETICS CORPORATION, a Delaware corporation (the
"Company"), the sum of $18,000, together with interest on the unpaid principal
hereof from the date hereof at the rate of 5.48% per annum, compounded annually
(the "Loan").
2. Payment. The Loan shall be due and payable on the third anniversary
of the date hereof. Prepayment of all or any portion of the principal or
interest owing under the Loan may be made at any time without penalty. Payments
of principal and interest shall be made in lawful money of the United States of
America and shall be credited first to the accrued interest, with the remainder
applied to principal.
3. Remedies on Default. Upon any default of the Borrower under this
Note, the Company shall have, in addition to its rights and remedies under the
Security Agreement, full recourse against any real, personal, tangible or
intangible assets of the undersigned, and may pursue any legal or equitable
remedies that are available to it.
4. Governing Law; Waiver. This Note shall be governed by and construed
in accordance with the laws of California, without reference to conflict of laws
principles. The Borrower waives presentment, notice of nonpayment, notice of
dishonor, protest, demand and diligence.
5. Attorneys' Fees. If suit is brought for collection of this Note, the
Borrower agrees to pay all reasonable expenses, including attorneys' fees,
incurred by the Company in connection therewith whether or not such suit is
prosecuted to judgment.
6. Loan and Security Agreements. This Note is subject to the terms of a
Loan Agreement and Security Agreement, each dated as of August 21, 1998.
IN WITNESS WHEREOF, the Borrower has caused this Note to be executed as
of the date and year first above written.
"BORROWER"
/s/ Xxxxxx X. Xxxxxxx
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Xxxxxx X. Xxxxxxx
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SECURITY AGREEMENT
This Security Agreement is made as of August 21, 1998 between CONNETICS
CORPORATION, a Delaware corporation ("Pledgee"), and XXXXXX X. XXXXXXX
("Pledgor").
R E C I T A L S
Pledgee has made loans to Pledgor, and Pledgor has borrowed from
Pledgee, up to an aggregate principal amount of $72,000, pursuant to a Loan
Agreement (the "Loan Agreement") between Pledgor and Pledgee dated as of the
date of this Security Agreement (collectively, the "Loan"). The Loan is
evidenced by one or more promissory notes (the "Notes"), each in the form
attached to the Loan Agreement as Exhibit A. The parties intend that the Notes
are to be secured by up to 110,000 shares of the Common Stock of Pledgee held or
to be held by Pledgor (the "Shares").
NOW, THEREFORE, it is agreed as follows:
AGREEMENT
1. CREATION AND DESCRIPTION OF SECURITY INTEREST; TRANSFERABILITY;
ESCROW.
(a) In consideration of the loan to Pledgor evidenced by the
Notes, Pledgor, pursuant to the Commercial Code of the State of California,
hereby pledges all of the Shares (sometimes referred to as the "Collateral") to
Pledgee, as security for the repayment of the Notes, and any extensions or
renewals of the Notes, executed by Pledgor.
(b) None of the Shares pledged under this Security Agreement
may be sold, transferred, pledged, hypothecated or otherwise disposed of by
Pledgor except as required to enable Pledgee to exercise its rights as a secured
party under this Security Agreement or any additional Security Agreement entered
or to be entered into between Pledgor and Pledgee and relating to the Shares (an
"Additional Security Agreement"), or as otherwise agreed to by Pledgor.
(c) To ensure the ability of Pledgee to exercise its rights as
a secured party hereunder, Pledgor shall, upon execution of this Agreement or
when and as requested by Pledgee, deliver and deposit with the Secretary of
Pledgee or such other person designated by Pledgee, ("Pledgeholder") the share
certificates representing the Shares currently held by Pledgor, and to do the
same in the future at such time as Pledgor may acquire additional certificates,
together with the stock power, duly endorsed in blank, in the form attached
hereto as ATTACHMENT A-1 to this Security Agreement for use in transferring all
or a portion of the Shares to Pledgee if, as and when required pursuant to this
Security Agreement; provided, however, that Borrower shall in no case be
obligated to deliver certificates to Pledgee for Collateral in excess of an
aggregate of 110,000 shares of the Pledgee's Common Stock (as adjusted for
subsequent stock splits, recapitalizations and the like) held by Pledgor. The
Shares and stock power(s) shall be held by Pledgeholder until such time as the
Notes, or any extensions or renewals of the Notes, shall be discharged. As a
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further inducement to Pledgee to loan to Pledgor the funds represented by the
Notes, the spouse of Pledgor, if any, shall execute and deliver to Pledgee the
Consent of Spouse attached as ATTACHMENT A-2 to this Security Agreement.
2. PLEDGOR'S REPRESENTATIONS AND COVENANTS. To induce Pledgee to enter
into this Security Agreement, Pledgor represents and covenants to Pledgee, its
successors and assigns, as follows:
(a) Payment of Indebtedness. Pledgor will pay the principal sum
under the Notes together with interest on the Notes, at the time and in the
manner provided in the Notes.
(b) Encumbrances. All shares now or hereafter pledged under
this Security Agreement are and shall be free of all other encumbrances,
defenses and liens, except for restrictions or liens created under a Common
Stock Purchase Agreement between Pledgor and Pledgee relating to the Shares and
as set forth in any Additional Security Agreement, and Pledgor will not further
encumber the Shares without the prior written consent of Pledgee.
3. VOTING RIGHTS. During the term of this pledge and so long as all
payments of principal and interest are made as they become due under the terms
of the Notes, Pledgor shall have the right to vote all of the Shares pledged
hereunder to the extent that they may be voted by their terms.
4. STOCK ADJUSTMENTS. In the event that during the term of the pledge
any stock dividend, reclassification, readjustment or other changes declared or
made in the capital structure of Pledgee, all new, substituted and additional
shares or other securities issued by reason of any such change shall be
delivered to and held by Pledgee under the terms of this Security Agreement in
the same manner as the Shares originally pledged hereunder. In the event of
substitution of such securities, Pledgor, Pledgee and Pledgeholder shall
cooperate and execute such documents as are reasonable so as to provide for the
substitution of such Collateral and, upon such substitution, references to
"Shares" in this Security Agreement shall include the substituted securities, as
applicable, held by Pledgor as a result thereof.
5. WARRANTS AND RIGHTS. In the event that, during the term of this
pledge, subscription warrants or other rights or options shall be issued in
connection with the pledged Shares, such rights, warrants and options shall be
the property of Pledgor and, if exercised by Pledgor, all new stock or other
securities so acquired by Pledgor as it relates to the pledged Shares then held
by Pledgeholder shall be immediately delivered to Pledgeholder, to be held under
the terms of this Security Agreement in the same manner as the Shares pledged.
6. DEFAULT. Pledgor shall be deemed to be in default of all of the
Notes under the Loan and of this Security Agreement in the event:
(a) Payment of principal or interest on any Note shall be
delinquent for a period of 10 days or more; or
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(b) Pledgor fails to perform any of the covenants contained in
this Security Agreement or in the Loan Agreement for a period of 10 days after
written notice thereof from Pledgee.
In the event of any foreclosure of the security interest, the Pledgee
may sell the Shares at a private sale or may repurchase the Shares itself. The
parties agree that, prior to the establishment of a public market for the
Shares, the securities laws affecting sale of the Shares make a public sale of
the Shares commercially unreasonable. The parties further agree that the
repurchasing of said Shares by Pledgee, or by any person to whom the Pledgee may
have assigned its rights under this Security Agreement, is commercially
reasonable if made at a price determined by the Pledgee's Board of Directors in
its discretion, fairly exercised, representing what would be the fair market
value of the Shares reduced by any limitation on transferability, whether due to
the size of the block of Shares or the restrictions of applicable securities
laws. The proceeds of any sale shall be applied in the following order:
(a) To the extent necessary, proceeds shall be used to
pay all reasonable expenses of Pledgee in enforcing
this Security Agreement, including, without
limitation, reasonable attorney's fees and legal
expenses incurred by Pledgee.
(b) To the extent necessary, proceeds shall be used to
satisfy any remaining indebtedness under the Notes.
(c) Any remaining proceeds shall be delivered to Pledgor.
7. WITHDRAWAL OR SUBSTITUTION OF COLLATERAL. Pledgor shall not sell,
withdraw, pledge, substitute or otherwise dispose of all or any part of the
Collateral without the prior written consent of Pledgee.
8. TERM. The pledge of Shares shall continue until the payment of all
indebtedness secured hereby, at which time the remaining pledged Shares shall be
promptly delivered to Pledgor.
9. INSOLVENCY. Pledgor agrees that if a bankruptcy or insolvency
proceeding is instituted by or against Pledgor, or if a receiver is appointed
for the property of Pledgor, or if Pledgor makes an assignment for the benefit
of creditors, the entire amount unpaid on all of the Notes shall become
immediately due and payable, and Pledgee may proceed as provided in the case of
default.
10. PLEDGEHOLDER LIABILITY. In the absence of willful or gross
negligence, Pledgeholder shall not be liable to any party for any of his or her
acts, or omissions to act, as Pledgeholder.
11. INVALIDITY OF PARTICULAR PROVISIONS. Pledgor and Pledgee agree that
the unenforceability or invalidity of any provision or provisions of this
Security Agreement shall not render any other provision or provisions herein
contained unenforceable or invalid.
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12. SUCCESSORS OR ASSIGNS. Pledgor and Pledgee agree that all of the
terms of this Security Agreement shall be binding on their respective successors
and assigns, and that the term "Pledgor" and the term "Pledgee" as used in this
Security Agreement shall be deemed to include, for all purposes, the respective
designees, successors, assigns, heirs, executors and administrators.
13. GOVERNING LAW. This Security Agreement shall be interpreted and
governed under the laws of the State of California.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
/s/ Xxxxxx X. Xxxxxxx
"PLEDGOR" ---------------------------------
XXXXXX X. XXXXXXX
Address:
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"PLEDGEE" CONNETICS CORPORATION
By: /s/ Xxxxxx X. Xxxxxxx
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Title:
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