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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 4, 1996
CONNECTIVE THERAPEUTICS, INC.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
0-27406 94-3173928
(Commission File Number) (IRS Employer Identification No.)
3400 West Bayshore Road, Palo Alto, CA 94303
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (415) 843-2800
N/A
(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS
On December 4, 1996, the Company sold 972,224 shares of Common Stock (the
"Shares"), at a price of $6.1714 per share for an aggregate purchase price of
approximately $6,000,000. The Shares were sold under an exemption from
registration pursuant to Regulation D of the Securities Act of 1933 to certain
institutional investors named in the Common Stock Purchase Agreement attached as
Exhibit 10.1. In connection with the transaction, the Company agreed to file on
or about February 15, 1997 a registration statement on Form S-3 covering resale
of the Shares and to maintain such registration statement in effect for up to
three years.
ITEM 7. FINANCIAL STATEMENT AND EXHIBITS.
(c) Exhibits
Exhibit 3.1 Certificate of Designation of 7% Convertible Preferred
Stock, Series A of the Registrant, as filed with the
Delaware Secretary of State on December 4, 1996
Exhibit 10.1 Common Stock Purchase Agreement, dated December 4, 1996,
among the Registrant and certain investors.
Exhibit 10.2 Registration Rights Agreement, dated December 4, 1996,
among the Registrant and certain investors.
Exhibit 10.3 Securities Purchase Agreement, dated December 4, 1996,
between the Registrant and a purchaser.
Exhibit 10.4 Warrant, dated December 4, 1996, between the Company and
a purchaser.
ITEM 9. SALE OF EQUITY SECURITIES PURSUANT TO REGULATION S.
On December 4, 1996, Connective Therapeutics, Inc., a Delaware corporation
(the "Company") issued 200 shares of 7% Convertible Preferred Stock, Series A
(the "Convertible Preferred Stock"), at a price of $10,000 per share, for an
aggregate purchase price of $2,000,000. The shares were sold to an offshore
investor pursuant to the exemption from registration under Regulation S
promulgated under the Securities Act of 1933. The Convertible Preferred Stock is
convertible into Common Stock of the Company at a conversion price equal to 85%
of the average closing bid price of the Company's Common Stock for the ten
trading days immediately preceding the conversion date, subject to certain
adjustments as set forth in the Certificate of Designation attached as Exhibit
3.1. The Convertible
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Preferred Stock will accrue dividends at the rate of 7% annually until
converted, and is redeemable by the Company if not converted within three years.
The Company also issued a warrant to the investor to purchase 20,000 shares of
Common Stock at an exercise price equal to 110% of the closing price of the
Company's Common Stock on December 4, 1996.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CONNECTIVE THERAPEUTICS, INC.
(Registrant)
Dated: December 19, 1996 By: /s/ Cynthia M. Butitta
------------------------------------------
Cynthia M. Butitta
Vice President, Finance and Administration
and Chief Financial Officer
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INDEX TO EXHIBITS
Exhibits.
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3.1 Certificate of Designation of 7% Convertible Preferr
Stock, Series A of the Registrant, as filed with the
Delaware Secretary of State on December 4, 1996
10.1 Common Stock Purchase Agreement, dated December 4, 1996,
among the Registrant and certain investors
10.2 Registration Rights Agreement, dated December 4, 1996,
among the Registrant and certain investors
10.3 Securities Purchase Agreement, dated December 4, 1996,
between the Registrant and a purchaser
10.4 Warrant, dated December 4, 1996, between the Registrant and
a purchaser
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EXHIBIT 3.1
CONNECTIVE THERAPEUTICS, INC.
CERTIFICATE OF DESIGNATIONS OF
7% CONVERTIBLE PREFERRED STOCK, SERIES A
Pursuant to Section 151 and Section 103 of the General Corporation Law of
the State of Delaware, the undersigned, Cynthia Butitta, the Vice President of
Finance and Administration and Chief Financial Officer of Connective
Therapeutics, Inc., a corporation organized and existing under the General
Corporation Law of the State of Delaware (the "Company"), does hereby certify
that pursuant to the authority conferred upon the Board of Directors by the
Amended and Restated Certificate of Incorporation of the Company, said Board of
Directors, on and effective as of December 3, 1996, adopted the following
resolution:
"RESOLVED, That the Board of Directors of the Company hereby determines
that it is in the best interests of the Company and its stockholders to create a
newly authorized series consisting of 200 shares of the Company's Preferred
Stock, par value $.001 per share, to be designated "7% Convertible Preferred
Stock, Series A" and does hereby fix and herein state and express such
designations, powers, preferences and relative and other special rights and the
qualifications, limitations and restrictions thereof, as follows:
1. DESIGNATION AND AMOUNT. There is hereby designated a series of preferred
stock, par value $.001 per share, and shall be designated as 7% Convertible
Preferred Stock, Series A (the "Series A Preferred Stock"). The number of shares
constituting the Series A Preferred Stock shall be 200. The stated value per
share of Series A Preferred Stock (the "Stated Value") shall be Ten Thousand
Dollars ($10,000) per share.
2. RANK. The Series A Preferred Stock shall rank (i) senior to (a) the Company's
Common Stock, par value $.001 per share (the "Common Stock") and (b) any class
or series of capital stock of the Company hereafter created (collectively, the
"Junior Securities") (unless, with the consent of the holders of a majority of
the outstanding shares of Series A Preferred Stock, such class or series of
capital stock specifically, by its terms ranks senior to or pari passu with the
Series A Preferred Stock); (ii) pari passu with any class or series of capital
stock of the Company hereafter created which class or series of capital stock,
with the consent of the holders of a majority of the outstanding shares of
Series A Preferred Stock, specifically, by its terms ranks pari passu with the
Series A Preferred Stock (the "Parity Securities"); and (iii) junior to any
class or series of capital stock of the Company hereafter created which class of
series of capital stock, with the consent of
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the holders of a majority of the outstanding shares of Series A Preferred Stock,
specifically, by its terms ranks senior to the Series A Preferred Stock (the
"Senior Securities").
3. LIQUIDATION PREFERENCE.
(a) If the Company shall commence a voluntary case under the Federal
bankruptcy laws or any other applicable Federal or state bankruptcy, insolvency
or similar law, or consent to the entry of an order for relief in an involuntary
case under any law or to the appointment of a receiver, liquidator, assignee,
custodian, trustee, sequestrator (or other similar official) of the Company or
of any substantial part of its property, or make an assignment of the benefit of
its creditors, or admit in writing its inability to pay its debts generally as
they become due, or if a decree or order for relief in respect of the Company
shall be entered by a court having jurisdiction in the premises in an
involuntary case under the Federal Bankruptcy laws or any other applicable
Federal or State bankruptcy, insolvency or similar law resulting in the
appointment of a receiver, liquidator, assignee, custodian, trustee,
sequestrator (or other similar official) of the company or of any substantial
part of its property, or ordering the winding up or liquidation of its affairs,
and any such decree or order shall be unstayed and in effect for a period of
sixty (60) consecutive days and, on account of any such event (a "Liquidation
Event"), the Company shall liquidate, dissolve or wind up, or if the Company
shall otherwise liquidate, dissolve or wind up, no distribution shall be made to
the holders of any shares of capital stock of the Corporation (other than Senior
Securities) upon liquidation, dissolution or winding up unless prior thereto,
the holders of shares of Series A Preferred Stock, shall have received the
Liquidation Preference (as defined below) with respect to each share. If upon
the occurrence of a Liquidation Event, the assets and funds available for
distribution among the holders of the Series A Preferred Stock and holders of
Parity Securities shall be insufficient to permit the payment to such holders of
the preferential amounts payable thereon, then the entire assets and funds of
the Company legally available for distribution to the Series A Preferred Stock
and the Parity Securities shall be distributed ratably among such shares in
proportion to the ratio that the Liquidation Preference payable on each such
share bears to the aggregate Liquidation Preference payable on each such share
bears to the aggregate Liquidation Preference payable on all such shares.
(b) For purposes hereof, the "Liquidation Preference" with respect to a
share of the Series A Preferred Stock shall mean an amount equal to the sum of
(i) the Stated Value thereof plus (ii) an amount equal to all accrued but unpaid
dividends pursuant to Section 5 hereof ending on the final date of distribution
to the holder thereof.
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4. MERGER, CONSOLIDATION, ETC. At the option of any holder of Series A Preferred
Stock, upon (i) the sale, conveyance or disposition of all or substantially all
of the assets of the Company, (ii) the effectuation by the Company of a
transaction or series of related transactions in which more than 50% of the
voting power of the Company is disposed of, or (iii) the consolidation, merger
or other business combination of the Company with or into any other Person (as
defined below) or Persons when the Company is not the survivor then such Holder
may elect (a) to treat such event as an event triggering Mandatory Redemption,
or (b) to convert all or any portion of its Series A Preferred Stock into Common
Stock pursuant to the provisions hereof, provided that the Date of Conversion
shall be deemed to be the business day immediately preceding the occurrence of
such event. Such Holder shall have the right to elect any one of the options
described in the preceding sentence at any time after it has received notice of
the Company's intent to consummate any such transaction until three business
days prior to consummation of the events listed in clauses (i) through (iii)
above. In the event the Holder elects (a) above, and either prior to
consummation by the Company of the events listed in clauses (i) through (iii)
above or at the consummation of such events the Company fails to redeem the
Holder's Series A Preferred Stock, then the Holder shall have the option to
elect either (b) above or may elect to have future conversions of Series A
Preferred Stock adjusted pursuant to Section 7(d) hereof. Nothing herein shall
limit the Holder's right to pursue actual damages for the Company's failure to
redeem the Holder's Series A Preferred Stock in accordance with the terms
hereof. In the event that such Holder does not exercise any of the options
available herein, or in the event conversion of the Series A Preferred Stock
pursuant to clause (b) above is unavailable because the Holder did not make such
election prior to the effective date of the event described in clause (iii)
above, then such Holder shall be deemed to have elected to undertake the
election set forth in clause (a) above as of such third business day. The
Company shall notify the Holder at least ten business days prior to the date of
effectiveness of the events listed in clauses (i) through (iii) above of its
intent to consummate any such transaction.
5. DIVIDENDS. Dividends with respect to each share of Series A Preferred Stock
will accrue at the rate of seven percent (7%) per annum of the Stated Value
thereof only on shares outstanding at the end of each six-month period
commencing December 4, 1996 until either conversion of the Series A Preferred
Stock into shares of Common Stock as provided herein or upon payment of the
Liquidation Preference as provided herein or redemption of the Series A
Preferred Stock upon the maturity thereof and will be based on the actual number
of days and months elapsed and computed on a 360-day year consisting of twelve
30-day months. Dividends shall be payable in arrears on the earlier to occur of
(i) the date of conversion to Common Stock (as defined in Section 7 below) as
provided herein of all or a portion of the Series A Preferred Stock (if the
Series A Preferred Stock shall be converted in part, then dividends only with
respect to the portion of the Series A Preferred Stock so converted shall be
payable at such time) and (ii)
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December 4, 1999 (the "Scheduled Redemption Date"). Dividends payable with
respect to the Series A Preferred Stock are payable to the holder of Series A
Preferred Stock registered on the books of the Company (the "Holder") at the
option of the Company in the form of either (i) such coin or currency of the
United States of America as at the time of payment is legal tender for payment
of public and private debts or (ii) the number of full shares of Common Stock
which the amount of dividends payable would entitle the Holder to acquire based
upon a price per share equal to the Conversion Price (as defined in Section 7
below). The Company shall notify the Holder in writing within two (2) business
days of the date that Notice of Conversion by the Holder is received by the
Company or three business days prior to the Scheduled Redemption Date, as
applicable, of the form in which the Company elects to pay accrued dividends. In
the event the Company fails to timely provide such notice, payments of interest
shall be in Common Stock.
6. REDEMPTION.
(a) Scheduled Redemption. On the Scheduled Redemption Date, upon surrender
of Series A Preferred Stock by the Holder to the Company, the Company shall pay
to such Holder the Stated Value thereof in such coin or currency of the United
States of America as at the time of payment is legal tender for payment of
public and private debts, together with accrued and unpaid dividends through the
Scheduled Redemption Date on such outstanding Series A Preferred Stock as set
forth in Section 5 above.
(b) Mandatory Redemption. The Series A Preferred Stock shall be subject to
redemption (the "Mandatory Redemption") at a price equal to 120% of the Stated
Value thereof plus accrued dividends payable thereon (the "Mandatory Redemption
Price"), upon the occurrence of the events set forth below. In the event that,
(i) upon giving effect to any conversion of Series A Preferred Stock in
accordance with the provisions contained in this Certificate of Designations,
the Company would be required to issue (when combined with shares of Common
Stock issued in connection with all prior conversions of Series A Preferred
Stock and shares of Common Stock issued in connection with all prior exercises
of warrants issued to the original holders of Series A Preferred Stock) in
excess of 20% of the outstanding Common Stock, the Company shall only be
required to convert the portion of the Series A Preferred Stock sought to be
converted such that the aggregate issuance of Common Stock by the Company (when
combined with shares of Common Stock issued in connection with all prior
conversions of Series A Preferred Stock and shares of Common Stock issued in
connection with all prior exercises of warrants issued to the original holders
of Series A Preferred Stock) does not exceed such amount and shall redeem in
cash within five business days from the date upon which the Company would have
otherwise been obligated to convert the Series A Preferred Stock sought to be
converted but not converted, the remaining portion of the Series A Preferred
Stock sought to be converted for the Mandatory Redemption
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Price; (ii) the holder elects to treat the failure of the Company to reserve and
keep available shares of Common Stock solely for the purpose of effecting the
conversion of the Series A Preferred Stock as provided by Section 7(c) herein,
as an event triggering Mandatory Redemption, the Company shall redeem in cash,
for the Mandatory Redemption Price, all the Series A Preferred Stock held by
such holder, within five business days from the date of election by such holder;
(iii) the holder elects to treat the delisting or the suspension of trading of
the Common Stock for five consecutive days as provided by Section 9 herein, as
an event triggering Mandatory Redemption, the Company shall redeem in cash, for
the Mandatory Redemption Price, all Series A Preferred Stock held by such
holder, within five business days from the date of election by such holder, and
(iv) in the event that a Mandatory Redemption is triggered pursuant to Section
11(b), the Company shall redeem in cash, for the Mandatory Redemption Price, all
the Series A Preferred Stock held by such holder, within five business days from
the date of election by such holder or the date on which such Mandatory
Redemption is automatic, as applicable, in each case subject to surrender of the
Series A Preferred Stock by the Holder to the Company.
7. CONVERSION.
(a) Conversion Price; Amount. Subject to Section 6(b) and this Section 7,
the Holder of Series A Preferred Stock has the right to convert Series A
Preferred Stock, in whole or from time to time in part, into shares of Common
Stock of the Company. The price at which the Holder may convert Series A
Preferred Stock (or any portion thereof) into shares of Common Stock (the
"Conversion Price") shall be 85% of the Closing Price (as defined below) of the
Common Stock on the Date of Conversion (as defined below). The "Closing Price"
with respect to the per share price of Common Stock on any day means the average
of the daily low trading prices during the ten consecutive trading days ending
on the trading day immediately prior to the Date of Conversion on the Nasdaq
National Market or on the principal national securities exchange on which the
Common Stock is listed or admitted to trading or, if the Common Stock is not
listed or admitted to trading on any national securities exchange or quoted on
such national market system, the average of the daily low trading prices during
such ten-day period in the over-the-counter market as furnished by any New York
Stock Exchange member firm that is selected from time to time by the Company for
that purpose. In lieu of any fractional share of Common Stock to which the
Holder would otherwise be entitled upon conversion of Series A Preferred Stock
(or portion thereof), the number of shares of Common Stock issuable upon
conversion of Series A Preferred Stock shall be rounded up or down to the
nearest whole number. In the case of a reasonable, good faith dispute between a
Holder and the Company with respect to the calculation of the Conversion Price,
then, at the option of either the Holder or the Company, the dispute shall be
submitted to the American Arbitration Association for resolution according to
the then applicable rules thereof. The cost of such proceeding shall be
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shared 50% by the Holder or Holders involved in the dispute and 50% by the
Company, except that each party shall bear its own legal and other expenses.
Each Holder of Series A Preferred Stock shall be entitled to convert all
or a portion of its Series A Preferred Stock into Common Stock at any time,
provided, however, that until 41 days following the date of original issuance of
Series A Preferred Stock (or any predecessor security), the Common Stock shall
bear the legend (the "Legend") provided in Section 5.02 of the Securities
Purchase Agreement of even date herewith (the "Securities Purchase Agreement").
Following such 41 day period, the Common Stock shall be freely tradable, and the
certificates representing such Common Stock shall no longer bear such Legend.
The last date on which Series A Preferred Stock may be converted is three (3)
business days prior to the Scheduled Redemption Date. A Holder may not convert
fractional shares of Series A Preferred Stock into Common Stock at any time
unless such fractional amount represents a Holder's entire position.
Notwithstanding any other provision of this Section 7, as of any date
prior to the Scheduled Redemption Date, the aggregate number of shares of Common
Stock into which Series A Preferred Stock and all other securities convertible
into Common Stock held by a Holder of Series A Preferred Stock and its
affiliates shall be convertible, together with the shares of Common Stock then
beneficially owned (as defined in the U.S. Securities Exchange Act of 1934, as
amended) by such Holder and its affiliates, shall not exceed 4.9% of the total
outstanding shares of the Company's Common Stock as of such date.
(b) Mechanics of Conversion. To convert any or all of its shares of Series
A Preferred Stock (but not a fraction thereof) a Holder must (i) complete and
sign the Notice of Conversion set forth in the Securities Purchase Agreement
entered into between the Company and the original purchasers of the Series A
Preferred Stock (the "Notice of Conversion") and deliver the Notice of
Conversion to the Company as herein provided and (ii) on or prior to the date on
which delivery of Common Stock is required to be made hereunder, deliver
certificates representing Series A Preferred Stock, duly endorsed, to the
Company, or, in the case of lost, stolen or destroyed certificates, provide an
affidavit satisfactory to the Company with respect to such lost, stolen or
destroyed certificates (the "Affidavit"), together with an agreement
satisfactory to the Company to indemnify the Company from any loss incurred by
it in connection with the certificates representing the Series A Preferred Stock
to be converted (the "Indemnity Agreement"). The Holder shall surrender the
certificates representing the Series A Preferred Stock to be converted and the
Notice of Conversion to the Company (with an advance copy by facsimile of the
Notice of Conversion). The date on which Notice of Conversion is given (the
"Date of Conversion") shall be deemed to be the date of receipt by the Company
of the facsimile of the Notice of Conversion, provided that the certificates
representing the Series A Preferred Stock or the Affidavit together with the
Indemnity Agreement
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are received by the Company as promptly as practicable thereafter. The Company
shall not be obligated to cause the transfer agent for the Common Stock (the
"Transfer Agent") to issue certificates evidencing the shares of Common Stock
issuable upon such conversion unless either the certificates representing the
Series A Preferred Stock to be converted have been received by the Company or,
if the certificates representing the Series A Preferred Stock to be converted
have been lost, stolen or destroyed, the aforementioned Affidavit and Indemnity
Agreement are received by the Company.
The Company shall cause the Transfer Agent to issue and deliver within
three (3) business days after delivery to the Company of the certificates
representing the Series A Preferred Stock to be converted to the Holder of the
certificates representing the Series A Preferred Stock to be converted at the
address of the Holder on the books of the Company or as otherwise directed
pursuant to the Notice of Conversion, a certificate or certificates for the
number of shares of Common Stock to which such Holder shall be entitled as
aforesaid. In the event the Transfer Agent shall not timely deliver a
certificate or certificates for the number of shares of Common Stock to which
such Holder shall be entitled, such Holder shall be entitled to the payments set
forth in Section 8. The person or persons entitled to receive the shares of
Common Stock issuable upon such conversion shall be treated for all purposes as
the record holder or holders of such shares of Common Stock on such date.
Following conversion a Holder's Series A Preferred Stock, or a portion
thereof, such Series A Preferred Stock or portion thereof will no longer be
outstanding. In the event less than all of a Holder's shares of Series A
Preferred Stock are converted, the Company will issue to the Holder a new
certificate representing the number of shares of Series A Preferred Stock not
converted.
(c) Reservation of Stock Issuable Upon Conversion. The Company shall at
all times reserve and keep available out of its authorized but unissued shares
of Common Stock or shares of Common Stock held in treasury, or both, solely for
the purpose of effecting the conversion of Series A Preferred Stock, such number
of shares of Common Stock as shall from time to time be sufficient to effect the
conversion of Series A Preferred Stock and all other securities of the Company
convertible or exchangeable into Common Stock. In the event the Company fails to
comply with the foregoing sentence, within five business days of the date on
which it becomes aware or should have become aware of such failure, it shall
notify the holder of Series A Preferred Stock of such failure. The holder shall
then have the option to (i) decrease the percentage of the Closing Price used to
calculate the Conversion Price pursuant to Section 7(a), by 2% for the first
thirty days following such failure, and by an additional 2% for each successive
thirty day period during which such failure continues, or (ii) treat such
failure as an event triggering Mandatory Redemption pursuant to Section 6(b).
The holder shall have the right to
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make such an election within five business days of being notified of such
failure, and in the event the holder shall not make an election within such time
period, the holder shall be deemed to have elected to treat such failure as an
event triggering Mandatory Redemption pursuant to Section 6(b) as of such fifth
business day.
(d) Adjustment to Conversion Price.
(i) If, prior to the conversion of the entire outstanding Series A
Preferred Stock, the number of outstanding shares of Common Stock is increased
by a stock split, stock dividend of shares of Common Stock or other shares of
capital stock, reclassification or other similar event, the Conversion Price
shall be proportionately reduced, or if the number of outstanding shares of
Common Stock is decreased by a combination or reclassification of shares or
other similar event, the Conversion Price shall be proportionately increased, in
each case, such that the Holder of Series A Preferred Stock will have the right
to receive upon conversion of Series A Preferred Stock the number of shares of
Common Stock (or other shares of Capital Stock) of the Company (notwithstanding
the limitation set forth in the third paragraph of Section 7(a)) which such
Holder would have been entitled to receive had the Holder converted Series A
Preferred Stock immediately prior to such action.
(ii) If, prior to the conversion of all shares of Series A Preferred
Stock, there shall be any merger, consolidation, exchange of shares,
recapitalization, reorganization or other similar event (a "Conversion
Reclassification Event"), as a result of which shares of Common Stock of the
Company shall be changed into the same or a different number of shares of the
Company or the same or another class or classes of stock or securities of the
Company or another entity, then the Holder of Series A Preferred Stock shall
thereafter have the right to receive upon conversion of Series A Preferred
Stock, upon the basis and the terms and conditions specified herein, such shares
of stock and/or securities as may be issued or payable with respect to or in
exchange for the number of shares of Common Stock immediately theretofore
receivable upon the conversion of Series A Preferred Stock (irrespective of the
limitations set forth in Section 7(a)) had such Conversion Reclassification
Event not taken place, and in any such case appropriate provisions shall be made
with respect to the rights and interests of the Holder of Series A Preferred
Stock such that the provisions hereof (including, without limitation, provisions
for adjustment of the Conversion Price and of the number of shares issuable upon
conversion of Series A Preferred Stock) shall thereafter be applicable, as
nearly as may be practicable in relation to any shares of stock or securities
thereafter deliverable upon the conversion of Series A Preferred Stock. The
Company shall not effect any Conversion Reclassification Event unless the
resulting successor or acquiring entity (if not the Company) assumes by written
instrument the obligation to deliver to the Holder of Series A Preferred Stock
such shares of stock and/or securities as the Holder of Series A Preferred Stock
is entitled to receive upon conversion in accordance with the
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foregoing.
(iii) In addition to the adjustments set forth above, if the Company
distributes to all holders of its Common Stock any of its assets or debt
securities or any rights or warrants to purchase securities other than Common
Stock, then the Conversion Price shall be adjusted in such a manner as shall be
agreed to by the Company and the Holder as shall fairly preserve the economic
rights and benefits of the Holder as contemplated by the terms of the Series A
Preferred Stock set forth herein. In the event that within 15 days of any such
event, the Company and the Holder do not reach an agreement as to the
appropriate adjustment, the Company shall retain, and pay for, a nationally
recognized investment bank or accounting firm to determine the appropriate
adjustment as soon as possible, but in any event not later than 45 days from the
date of such event.
No adjustment shall be required for cash dividends or distributions
except to the extent that any such cash dividend or distribution made on any
date would, upon payment, cause the aggregate fair market value (as determined
in good faith by the Board of Directors, whose determinations shall be
conclusive) of all such dividends and distributions which have occurred on such
date and during the 365-day period immediately preceding such date (other than
any dividends or distributions in respect of which an adjustment to the
Conversion Price pursuant to this Section 6(d) had previously been made) exceed
the product of (x) .20 times (y) the Closing Price on the record date for such
most recent dividend or distribution times (z) the number of shares of Common
Stock outstanding on such date.
(iv) (A) In the event that the Company shall, at any time after the
date of the issuance of Series A Preferred Stock until 180 days after such date,
issue shares of Common Stock in a firmly underwritten public offering and the
underwriters require the Holder to agree to restrict the sale or transfer of
such Holder's shares of Series A Preferred Stock or Conversion Shares for a
period of time (the "Blackout Period"), for the period of time commencing on the
business day subsequent to the termination of the Blackout Period and
terminating in the number of days equal to the number of days of the Blackout
Period, the Conversion Price to be in effect shall be the lesser of (i) 110% of
the price at which the Common Stock was issued in such firmly underwritten
public offering and (ii) the Conversion Price determined in accordance with
Section 7, as determined at the time of conversion of the Series A Preferred
Stock.
(B) In the event that the Company shall, at any time after the date of the
issuance of Series A Preferred Stock until 180 days after such date, issue
shares of Common Stock in a transaction not subject to the registration
requirements the Securities Act of 1933, as amended, the Conversion Price to be
in effect for the 30-day period commencing on the first day after such issuance
shall be the lesser of (i) 110% of the price at which the Common Stock is issued
in such transaction or (ii) the
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Conversion Price determined in accordance with Section 7, as determined at the
time of conversion of the Series A Preferred Stock.
(C) In the event that the Company shall at any time after the date of the
issuance of Series A Preferred Stock (x) issue shares of Common Stock without
consideration (other than in the form of a dividend) at a price per share less
than the Closing Price on the date of issue, (y) issue options, rights or
warrants to subscribe for or purchase Common Stock (or securities convertible
into Common Stock) without consideration or at a price per share (or having a
conversion price per share, if a security convertible into Common Stock) less
than the Closing Price of the Common Stock on the date of issue or (z) in the
case of securities convertible into Common Stock having a conversion price less
than the Closing Price of the Common Stock on the date of conversion, then the
Conversion Price shall be adjusted (if at all) as follows: for purposes to
determining the Closing Price of the Common Stock pursuant to Section 7 in
connection with the conversion of Series A Preferred Stock, the daily low
trading price of the Common Stock on the day on which such issuance occurs and
on all days prior thereto shall be adjusted by multiplying such daily low
trading price by a fraction, of which the numerator shall be the number of
shares of Common Stock outstanding on the date of such issuance plus the number
of shares of Common Stock which the aggregate offering price of the total number
of shares of Common Stock so to be issued (or the aggregate initial conversion
price of the convertible securities so to be issued) would purchase at the
Closing Price on the date of such issue and of which the denominator shall be
the number of shares of Common Stock outstanding on the date of such issuance
plus the number of additional shares of Common Stock to be issued (or into which
the convertible securities so to be issued are initially convertible).
(D) In the event the Company enters into transactions involving its
securities, which transactions satisfy the conditions of subsection (A) or (B)
as applicable, and also satisfy the provisions of subsection (C), the adjustment
to the Conversion Price shall be as provided in subsection (A) or (B) as
applicable, and not subsection (C).
In case the subscription price for such securities may be paid in a
consideration part or all of which shall be in a form other than cash, the value
of such consideration shall be as determined in good faith by the Board of
Directors of the Company, whose determinations shall be conclusive. Such
adjustment shall be made successively whenever the date of such issuance is
fixed and, in the event that such shares or option, rights or warrants (or
portions thereof) expire without being issued, the Conversion Price shall again
be adjusted to reflect such occurrence.
(v) If any adjustment under this Section 7(d) would create a
fractional share of
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<PAGE> 11
Common Stock or a right to acquire a fractional share of Common Stock, such
fractional share shall be disregarded and the number of shares of Common Stock
issuable upon conversion shall be the next higher number of shares.
8. PAYMENTS FOR LATE CONVERSION.
The Company acknowledges that the Holder of the Series A Preferred Stock
is entitled to assume that it will timely receive shares of Common Stock upon
conversion thereof as provided in Section 7 and that the failure of the Transfer
Agent to issue shares of Common Stock upon conversion of the Series A Preferred
Stock may result in damages to the Holder. Accordingly, the Company agrees to
pay to each Holder of Series A Preferred Stock who does not timely receive
shares of Common Stock upon conversion thereof, notwithstanding that such Holder
may not have actually suffered or has not established that it has suffered
damage as a result of such failure to timely deliver shares of Common Stock, an
amount in cash for each day that delivery of Common Stock is delinquent equal to
$50 per share of Series A Preferred Stock sought to be converted until such
delivery shall be seven (7) days delayed whereupon the amount payable in cash
for each day thereafter that delivery of Common Stock is delinquent shall equal
$200 per share of Series A Preferred Stock sought to be converted. Amounts
payable pursuant to this Section 8 shall be paid on the earlier to occur of (i)
the date of issuance of Common Stock upon conversion of the Series A Preferred
Stock and (ii) each date which is seven days (or a multiple thereof) after the
date on which Common Stock was required to be delivered upon conversion of
Series A Preferred Stock. Such payments shall be in additional to any liability
the Company may otherwise have for failure to timely convert shares of Series A
Preferred Stock.
9. OBLIGATION TO MAINTAIN LISTING OF COMMON STOCK. The Company shall maintain
the listing of the Common Stock on the Nasdaq National Market until the earlier
to occur of (i) the Scheduled Redemption Date and (ii) the date on which no
Series A Preferred Stock is outstanding. In the event the Company fails to
comply with the foregoing sentence, within five business days of the date on
which it becomes aware or should have become aware of such failure, it shall
notify the holder of Series A Preferred Stock of such failure. If a holder of
Series A Preferred Stock converts any shares of Series A Preferred Stock during
such time as the Company's Common Stock is not listed on the Nasdaq National
Market, the holder shall then have the option to (i) decrease the percentage of
the Closing Price used to calculate the Conversion Price pursuant to Section
7(a), by (x) 2% following such failure, provided the Common Stock is trading on
NASDAQ Small Capitalization Market, and by an additional 3% if such failure
further results in the Common Stock being traded in the over-the-counter market,
or (y) 5% if such failure results in the Common Stock being traded immediately
in the over-the-counter market, or (ii) treat such failure as an event
triggering Mandatory Redemption pursuant to Section 6(b). The holder shall have
the right to make such
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<PAGE> 12
an election within ten business days of being notified of such failure, and in
the event the holder shall not make an election within such time period, the
holder shall be deemed to have elected to treat such failure as an event
triggering Mandatory Redemption pursuant to Section 6(b) as of such tenth
business day. The Conversion Price adjustment described above shall become null
and void upon the Company's relisting of its Common Stock on the Nasdaq National
Market.
10. REGISTERED HOLDER. The Company may for all purposes treat the registered
holders on its books and records of Series A Preferred Stock as the Holder.
11. EVENTS OF DEFAULT.
(a) An "Event of Default" under Series A Preferred Stock occurs if:
(1) the Company defaults in effecting a conversion of Series A
Preferred Stock in accordance with the provisions hereof, or in issuing Common
Stock upon exercise of warrants to purchase Common Stock, issued in accordance
with the provisions of the Securities Purchase Agreement (the "Warrants"), and
such default continues for a period of 10 days;
(2) the Company defaults in the dividends on Series A Preferred
Stock when the same becomes due and payable or in the payment of amounts due
pursuant to Section 8 hereof and such default continues for 10 days;
(3) the Company fails to comply in any material respect with any of
its agreements in this Certificate of Designations establishing the Series A
Preferred Stock, the provisions of the Securities Purchase Agreement, or the
Warrants, each dated as of the date of the original issuance of Series A
Preferred Stock between the Company and the original Holder of Series A
Preferred Stock (other than those obligations referred to in clauses (1) and (2)
above) and such failure continues for 30 days after the notice specified below;
(4) any of the representations or warranties made by the Company
herein, in the Securities Purchase Agreement, or in any certificate or financial
or other statements heretofore or hereafter furnished by or on behalf of the
Company in connection with the execution and delivery of this Certificate of
Designations or the Securities Purchase Agreement shall be false or misleading
in any material respect at the time made;
(5) indebtedness of the Company or any Significant Subsidiary (as
such term is defined in Rule 1-02 of Regulation S-X), is not paid within any
applicable grace period after maturity or is accelerated by the holders thereof
because of a default, the total amount of such indebtedness unpaid or
accelerated exceeds $1,000,000 and such default continues for 10 days after the
notice
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<PAGE> 13
specified below;
(6) the Company or any Significant Subsidiary pursuant to or within
the meaning of any federal or state bankruptcy, insolvency or other law for the
relief of debtors ("Bankruptcy Law"):
(A) commences a voluntary case or proceeding;
(B) consents to the entry of an order for relief against it in
an involuntary case or proceeding;
(C) consents to the appointment of any receiver, trustee,
assignee, liquidator, custodian or similar official under any
Bankruptcy Law (a "Custodian") of it or for any substantial part of
its property; or
(D) makes a general assignment for the benefit of its
creditors;
or takes any comparable action under any foreign laws relating to insolvency;
(7) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(A) is for relief against the Company or any Significant
Subsidiary in an involuntary case or proceeding;
(B) appoints a Custodian of the Company or any Significant
Subsidiary or for any substantial part of its property; or
(C) orders the winding up or liquidation of the Company or any
Significant Subsidiary;
or similar relief is granted under any foreign laws and the order or decree
remains unstayed and in effect for 60 days; or
(8) any final judgment or decree for the payment of money in excess
of $2,000,000 (to the extent not covered by insurance) is rendered against the
Company or any Significant Subsidiary and is not discharged and either (A) an
enforcement proceeding has been commenced by any creditor upon such judgment or
decree or (B) there is a period of 60 days following such judgment during which
such judgment or decree is not discharged, waived or the execution thereof
stayed and, in the case of (B), such default continues for 10 days after the
notice specified below.
The foregoing will constitute Events of Default whatever the reason for
any
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<PAGE> 14
such Event of Default and whether it is voluntary or involuntary or is effected
by operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body.
A default under clauses (3), (4), (5) or (8) above is not an Event of
Default until the Holder of Series A Preferred Stock notifies the Company of
such default and the Company does not cure such default within the time
specified after receipt of such notice. Such notice must specify the default,
demand that it be remedied and state that such notice is a "Notice of Default".
The Company shall deliver to the Holder of Series A Preferred Stock,
within 30 days after the occurrence thereof, written notice of any event which
with the giving of notice, the lapse of time or both would become an Event of
Default under clauses (3), (4), (5) or (8) above, its status and what action the
Company is taking or proposes to take with respect thereto.
(b) If an Event of Default (other than an Event of Default specified in
clauses (5) or (6) above) occurs and is continuing, the Holder of Series A
Preferred Stock may elect to treat such Event of Default as triggering Mandatory
Redemption. If an Event of Default specified in clauses (5) or (6) above occurs,
such Event of Default shall be treated as triggering a Mandatory Redemption
without any election or other act on the part of the Holder of Series A
Preferred Stock.
12. NO AMENDMENT. No provision of this Certificate of Designation establishing
the Series A Preferred Stock may be amended, altered or modified without the
written agreement of the Company and the holders in interest of a majority of
the outstanding shares of Series A Preferred Stock, provided, however, that this
Certificate of Designations may not be amended, altered or modified without the
express written consent of 75% of the holders in interest of the shares of
Preferred Stock, if any such action would adversely affect the rights of such
holders of shares of Preferred Stock.
13. NO VOTING RIGHTS. Except as expressly provided by applicable law, Series A
Preferred Stock shall not entitle the Holder hereof to any of the rights of a
stockholder of the Company, including without limitation, the right to vote, to
receive dividends and other distributions, or to attend any meetings of
stockholders or any other proceedings of the Company.
14. BUSINESS DAY DEFINITION. For purposes hereof, the term "business day" shall
mean any day on which banks are generally open for business in the City of New
York.
15. NOTICE. Any notice or other communication required or permitted to be given
hereunder shall be given as provided herein or delivered against receipt if to
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<PAGE> 15
(i) the Company at Connective Therapeutics, Inc., 3400 West Bayshore Road, Palo
Alto, CA 94303 Attention: CEO; Facsimile No.: (415) 843-2899, Attention: Chief
Financial Officer and (ii) the Holder of Series A Preferred Stock, to such
Holder at its last address as shown on the Series A Preferred Stock register (or
to such other address as any such party shall have furnished to the Company in
writing). Any notice or other communication mailed or otherwise delivered shall
be deemed given at the time of receipt thereof.
16. WAIVER. Any waiver by the Company or the Holder hereof of a breach of any
provision of the this Certificate of Designations establishing the Series A
Preferred Stock shall not operate as or be construed to be a waiver of any other
breach of such provision or of any breach of any other provision of the
Certificate of Designations . The failure of the Company or the Holder hereof to
insist upon strict adherence to any term of this Certificate of Designations
establishing the Series A Preferred Stock on one or more occasions shall not be
considered a waiver or deprive that party of the right thereafter to insist upon
strict adherence to that term or any other term of this Certificate of
Designations. Any waiver must be in writing.
17. UNENFORCEABLE PROVISIONS. If any provision of this Certificate of
Designations establishing the Series A Preferred Stock is invalid, illegal or
unenforceable, the remaining provisions of Series A Preferred Stock shall remain
in effect, and if any provision is inapplicable to any person or circumstance,
it shall nevertheless remain applicable to all other persons and circumstances.
IN WITNESS WHEREOF, the undersigned authorized officer of the Company does
hereby execute and subscribe this Certificate and does affirm the foregoing as
true under the penalties of perjury this 4th day of December, 1996.
______________________________________________
Cynthia Butitta
Vice President of Finance and
Administration and Chief Financial Officer
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<PAGE> 1
EXHIBIT 10.1
CONNECTIVE THERAPEUTICS, INC.
COMMON STOCK PURCHASE AGREEMENT
DECEMBER 4, 1996
<PAGE> 2
TABLE OF CONTENTS
Page
----
SECTION 1 - Sale of Common Stock.......................................1
1.1 Sale of Common Stock.........................................1
1.2 Closing Date.................................................1
1.3 Delivery.....................................................1
1.4 Legend.......................................................1
SECTION 2 - Representations and Warranties of the Company..............2
2.1 Organization.................................................2
2.2 Capitalization...............................................2
2.3 Authorization................................................2
2.4 No Conflict..................................................3
2.5 Accuracy of Reports; Financial Statements....................3
2.6 Changes......................................................3
2.7 Registration Rights..........................................4
2.8 Governmental Consents, etc...................................4
2.9 Litigation...................................................4
2.10 Disclosure..................................................4
2.11 Solvency; No Default........................................4
SECTION 3 - Representations and Warranties of the Purchasers...........4
3.1 Investment...................................................4
3.2 Accredited Investor..........................................5
3.3 Authority....................................................5
3.4 Government Consents, etc.....................................5
3.5 Investigation................................................5
SECTION 4 - Conditions to Obligations of the Purchasers................5
4.1 Representations and Warranties Correct.......................5
4.2 Covenants....................................................6
4.3 No Order Pending.............................................6
4.4 No Law Prohibiting or Restricting Such Sale..................6
4.5 Compliance Certificate.......................................6
4.6 Registration Rights Agreement................................6
4.7 Minimum Purchase.............................................6
4.8 Opinion of Company Counsel...................................6
SECTION 5 - Conditions to Obligations of the Company...................6
5.1 Representations and Warranties Correct.......................6
5.2 Performance..................................................6
5.3 No Order Pending.............................................7
5.4 No Law Prohibiting or Restricting Such Sale..................7
<PAGE> 3
TABLE OF CONTENTS
(Continued)
Page
----
5.5 Registration Rights Agreement................................7
5.6 Minimum Purchase.............................................7
SECTION 6 - Miscellaneous..............................................7
6.1 Governing Law................................................7
6.2 Survival.....................................................7
6.3 Successors and Assigns.......................................7
6.4 Entire Agreement; Amendment..................................7
6.5 Notices and Dates............................................7
6.6 Brokers......................................................8
6.7 Severability.................................................8
6.8 Costs and Expenses...........................................8
6.9 No Third Party Rights........................................8
6.10 Publicity...................................................9
6.11 Captions and Headings.......................................9
6.12 Counterparts................................................9
Exhibits
A. Schedule of Purchasers
B. Registration Rights Agreement
C. Form of Compliance Certificate
D. Form of Opinion of Company Counsel
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<PAGE> 4
CONNECTIVE THERAPEUTICS, INC.
COMMON STOCK PURCHASE AGREEMENT
This Common Stock Purchase Agreement (the "Agreement") is entered into as
of this 4th day of December, 1996, by and between Connective Therapeutics, Inc.,
a Delaware corporation (the "Company"), and the investors listed on Exhibit A
attached hereto (each a "Purchaser" and together the "Purchasers").
SECTION 1
SALE OF COMMON STOCK
1.1 SALE OF COMMON STOCK. Subject to the terms and conditions hereof, on
the Closing Date, as defined below, the Company will issue and sell to each
Purchaser, and each Purchaser will severally purchase from the Company, that
number of whole shares (the "Shares") of Common Stock, $0.01 par value, of the
Company (the "Common Stock") calculated by dividing the dollar amount set forth
opposite such Purchaser's name on Exhibit A by the Purchase Price Per Share. The
Purchase Price Per Share shall be $6.1714, which is the lower of (a) an amount
equal to eighty-five percent (85%) of the average closing price for the Common
Stock on the NASDAQ National Market System ("NMS") for the thirty (30) trading
days ending on and including December 3, 1996 or (b) the low bid price for the
Company's Common Stock on December 3, 1996.
1.2 CLOSING DATE. The closing of the purchase and sale of the Shares (the
"Closing") shall be held at the law offices of Venture Law Group, 2800 Sand Hill
Road, Menlo Park, California at 10:00 a.m. on December 4, 1996 or at such other
time and place upon which the Company and the Purchasers shall mutually agree
(the date of the Closing is hereinafter referred to as the "Closing Date").
1.3 DELIVERY. At the Closing, the Company will deliver to each Purchaser a
certificate or certificates representing the Shares purchased by such Purchaser,
against payment of the purchase price therefor, by wire transfer or certified or
cashier's check drawn on a United States bank.
1.4 LEGEND. The certificate or certificates for the Shares shall be
subject to a legend restricting transfer under the Securities Act of 1933, as
amended (the "Securities Act") and referring to restrictions on transfer and
rights of first refusal herein, such legend to be substantially as follows:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A
VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE
OR DISPOSITION MAY BE
<PAGE> 5
EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN
OPINION OF COUNSEL FOR THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER
THE SECURITIES ACT OF 1933."
SECTION 2
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as otherwise set forth on the Schedule of Exceptions delivered to
the Purchasers by the Company prior to the Closing Date, the Company hereby
represents and warrants to the Purchasers as follows:
2.1 ORGANIZATION. The Company is a corporation duly organized and validly
existing under the laws of the State of Delaware and is in good standing under
such laws. The Company has requisite corporate power and authority to own, lease
and operate its properties and assets, and to carry on its business as presently
conducted and as proposed to be conducted. The Company is qualified to do
business as a foreign corporation in each jurisdiction in which the ownership of
its property or the nature of its business requires such qualification, except
where failure to so qualify would not have a materially adverse effect on the
Company.
2.2 CAPITALIZATION. The authorized capital stock of the Company consists
of 50,000,000 shares of Common Stock, $0.001 par value, of which at December 2,
1996, 7,435,519 shares were issued and outstanding, and 5,000,000 shares of
Preferred Stock, $0.001 par value, none of which are issued and outstanding. All
such issued and outstanding shares have been duly authorized and validly issued
and are fully paid and nonassessable. In addition to the foregoing, the Company
has reserved and outstanding the following warrants, options and convertible
securities: (i) warrants for the purchase of 18,395 shares of Common Stock at an
exercise price of $4.89 per share, which warrants expire February 6, 2001; (ii)
warrants for the purchase of 22,727 shares of Common Stock at an exercise price
of $11.00 per share which warrants expire December 7, 2000; (iii) warrants for
the purchase of 73,071 shares of Common Stock at an exercise price of $5.78
which warrants expire December 21, 2002; (iv) 1,500,000 shares reserved for
issuance pursuant to the Company's 1994 Stock Plan, of which, at October 31,
1996, options to purchase 142,097 shares had been exercised, options to purchase
1,039,932 shares were outstanding and 317,971 shares remained available for
future grant; (v) 100,000 shares reserved for issuance pursuant to the Company's
1995 Employee Stock Purchase Plan, of which, at October 31, 1996, 3,966 shares
had been issued; and (vi) 150,000 shares reserved for issuance under the
Company's 1995 Directors' Stock Option Plan, of which, at October 31, 1996 , no
options had been granted. Except as described in this Section 2.2, there are no
other options, warrants, conversion privileges or other contractual rights
presently outstanding to purchase or otherwise acquire any authorized but
unissued shares of the Company's capital stock or other securities.
2.3 AUTHORIZATION. The Company has all corporate rights, power and
authority to enter into this Agreement and the Registration Rights Agreement in
the form attached hereto as Exhibit B (the "Registration Rights Agreement") and
to consummate the transaction contem-
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<PAGE> 6
plated hereby and thereby. All corporate action on the part of the Company, its
directors and stockholders necessary for the authorization, execution, delivery
and performance of this Agreement and the Registration Rights Agreement by the
Company, and the authorization, sale, issuance and delivery of the Shares and
the performance of the Company's obligations hereunder and under the
Registration Rights Agreement has been taken. This Agreement and the
Registration Rights Agreement have been duly executed and delivered by the
Company and constitute legal, valid and binding obligations of the Company
enforceable in accordance with their respective terms, subject to laws of
general application relating to bankruptcy, insolvency and the relief of debtors
and rules of law governing specific performance, injunctive relief or other
equitable remedies, and to limitations of public policy as they may apply to
Section 1.8 of the Registration Rights Agreement. Upon their issuance and
delivery pursuant to this Agreement, the Shares will be validly issued, fully
paid and nonassessable. Except as provided herein, the issuance and sale of the
Shares will not give rise to any preemptive rights or rights of first refusal on
behalf of any person in existence on the date hereof.
2.4 NO CONFLICT. The execution and delivery of this Agreement and the
Registration Rights Agreement do not, and the consummation of the transactions
contemplated hereby and thereby will not, conflict with, or result in any
violation of, or default (with or without notice or lapse of time, or both), or
give rise to a right of termination, cancellation or acceleration of any
obligation or to a loss of a material benefit, under, any provision of the
Certificate of Incorporation or By-laws of the Company or any mortgage,
indenture, lease or other agreement or instrument, permit, concession,
franchise, license, judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to the Company, its properties or assets, the effect of
which would have a material adverse effect on the Company or materially impair
or restrict its power to perform its obligations as contemplated hereby.
2.5 ACCURACY OF REPORTS; FINANCIAL STATEMENTS. All reports required to be
filed by the Company from February 1, 1996 (the date of the Company's initial
public offering) through the date of this Agreement under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), copies of which have been
furnished to each Purchaser (the "SEC Documents"), have been duly filed, were in
substantial compliance with the requirements of their respective forms, were
complete and correct in all material respects as of the dates at which the
information was furnished, and contained (as of such dates) no untrue statement
of a material fact nor omitted to state a material fact necessary in order to
make the statements made therein in light of the circumstances in which made not
misleading. The financial statements of the Company included in the SEC
Documents (the "Financial Statements") comply as to form in all material
respects with applicable accounting requirements and with the published rules
and regulations of the SEC with respect thereto. The Financial Statements have
been prepared in accordance with generally accepted accounting principles
consistently applied and fairly present the consolidated financial position of
the Company and any subsidiaries at the dates thereof and the consolidated
results of operations and consolidated cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal, recurring
adjustments).
2.6 CHANGES. Since September 30, 1996 (the date of the most recent
Financial Statements), there has not been any event or condition of any
character that might materially and
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<PAGE> 7
adversely affect the business, properties, prospects or financial condition of
the Company (as such business is presently conducted and as it is proposed to be
conducted).
2.7 REGISTRATION RIGHTS. Except as set forth in the Registration Rights
Agreement, and the Third Amended Investor Rights Agreement dated as of February
14, 1995, as amended through January 11, 1996 (the "Existing Rights Agreement"),
the Company is not under any obligation to register any of its presently
outstanding securities or any of its securities which may hereafter be issued.
2.8 GOVERNMENTAL CONSENTS, ETC. No consent, approval or authorization of
or designation, declaration or filing with any governmental authority on the
part of the Company is required in connection with the valid execution and
delivery of this Agreement, or the offer, sale or issuance of the Shares, or the
consummation of any other transaction contemplated hereby, except such filings
as may be required to be made with the Securities and Exchange Commission
("SEC"), the National Association of Securities Dealers, Inc. ("NASD") and in
compliance with the securities and blue sky laws in the states in which Shares
are offered and/or sold, which compliance will be effected in accordance with
such laws.
2.9 LITIGATION. There is no pending or, to the best of the Company's
knowledge, threatened lawsuit, administrative proceeding, arbitration, labor
dispute or governmental investigation ("Litigation") to which the Company is a
party or by which any material portion of its assets, taken as a whole, may be
bound and which Litigation, if adversely determined, would have a material
adverse effect on the Company's assets, liabilities, financial condition or
operations.
2.10 DISCLOSURE. No representation or warranty of the Company contained in
this Agreement or the exhibits attached hereto (when read together and taken as
a whole), contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements contained herein or
therein in light of the circumstances under which they were made not misleading.
2.11 SOLVENCY; NO DEFAULT. As of this date the Company has sufficient
funds and cash flow to pay its debts and other liabilities as they become due,
and the Company is not in default with respect to any material debt or
liability.
SECTION 3
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
Each Purchaser hereby represents and warrants to the Company as follows:
3.1 INVESTMENT. Purchaser will acquire the Shares purchased from the
Company pursuant to this Agreement for investment for its own account, not as a
nominee or agent and not with a view to or for resale in connection with any
distribution thereof. It understands that the Shares purchased by such Purchaser
from the Company pursuant to this Agreement have not been
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<PAGE> 8
registered under the Securities Act by reason of a specific exemption from the
registration provisions of the Securities Act which depends upon, among other
things, the bona fide nature of such Purchaser's investment intent and the
accuracy of such Purchaser's representations as expressed herein.
3.2 ACCREDITED INVESTOR. Each Purchaser is an "accredited investor" as
defined in Rule 501(a) under the Securities Act of 1933, as amended (the
"Securities Act"). Each Purchaser is aware of the Company's business affairs and
financial condition and has had access to and has acquired sufficient
information about the Company to reach an informed and knowledgeable decision to
acquire the Shares. Each Purchaser has such business and financial experience as
is required to give it the capacity to protect its own interests in connection
with the purchase of the Shares.
3.3 AUTHORITY. This Agreement and the Registration Rights Agreement have
been duly executed and delivered by each Purchaser and constitute legal, valid
and binding obligations of the Purchasers, enforceable in accordance with their
respective terms, subject to laws of general application relating to bankruptcy,
insolvency and the relief of debtors and rules of law governing specific
performance, injunctive relief or other equitable remedies, and to limitations
of public policy as they may apply to Section 1.8 of the Registration Rights
Agreement. The execution and delivery of this Agreement and the Registration
Rights Agreement do not, and the consummation of the transactions contemplated
hereby and thereby will not, conflict with or result in any violation of any
obligation under any judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to the Purchasers.
3.4 GOVERNMENT CONSENTS, ETC. No consent, approval or authorization of or
designation, declaration or filing with any governmental authority on the part
of the Purchasers is required in connection with the valid execution and
delivery of this Agreement, or the offer, sale or issuance of the Shares, or the
consummation of any other transaction contemplated hereby.
3.5 INVESTIGATION. Each Purchaser has had a reasonable opportunity to
discuss the Company's business, management and financial affairs with the
Company's management and such Purchaser has received satisfactory responses from
management of the Company to such Purchaser's inquiries.
SECTION 4
CONDITIONS TO OBLIGATIONS OF THE PURCHASERS
The obligations of each Purchaser to the Company under this Agreement are
subject to the fulfillment, on or before the Closing , of each of the following
conditions, unless otherwise waived:
4.1 REPRESENTATIONS AND WARRANTIES CORRECT. The representations and
warranties made by the Company in Section 2 shall be true and correct in all
material respects on the Closing
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<PAGE> 9
Date with the same effect as though such representations and warranties had been
made on and as of the Closing Date.
4.2 COVENANTS. All covenants, agreements and conditions contained in this
Agreement to be performed by the Company on or prior to the Closing Date shall
have been performed or complied with in all material respects.
4.3 NO ORDER PENDING. There shall not then be in effect any order
enjoining or restraining the transactions contemplated by this Agreement.
4.4 NO LAW PROHIBITING OR RESTRICTING SUCH SALE. There shall not be in
effect any law, rule or regulation prohibiting or restricting such sale, or
requiring any consent or approval of any person which shall not have been
obtained to issue the Shares (except as otherwise provided in this Agreement).
4.5 COMPLIANCE CERTIFICATE. The Company shall have delivered to the
Purchasers a certificate in the form of Exhibit C hereto, executed on behalf of
the Company by a duly authorized officer of the Company, dated the Closing Date,
and certifying to the fulfillment of the conditions specified in Sections 4.1
and 4.2.
4.6 REGISTRATION RIGHTS AGREEMENT. On or before the Closing, the parties
shall have executed and delivered the Registration Rights Agreement in the form
attached hereto as Exhibit B.
4.7 MINIMUM PURCHASE. The Company shall have received executed signature
pages to this Agreement for the purchase of not less than $6,000,000.
4.8 OPINION OF COMPANY COUNSEL. The Purchasers shall have received from
Venture Law Group, counsel for the Company, an opinion, dated as of the Closing,
in substantially the form of Exhibit D.
SECTION 5
CONDITIONS TO OBLIGATIONS OF THE COMPANY
The Obligations of the Company under this Agreement are subject to the
fulfillment on or prior to the Closing of each of the following conditions,
unless otherwise waived:
5.1 REPRESENTATIONS AND WARRANTIES CORRECT. The representations and
warranties made by the Purchasers in Section 3 hereof shall be true and correct
on and as of the Closing Date with the same effect though such representations
and warranties had been made on and as of the Closing Date.
5.2 PERFORMANCE. All covenants, agreements and conditions contained in
this Agreement to be performed by the Purchasers on or prior to the Closing Date
shall have been performed or complied with in all material respects.
-6-
<PAGE> 10
5.3 NO ORDER PENDING. There shall not then be in effect any order
enjoining or restraining the transactions contemplated by this Agreement.
5.4 NO LAW PROHIBITING OR RESTRICTING SUCH SALE. There shall not be in
effect any law, rule or regulation prohibiting or restricting such sale, or
requiring any consent or approval of any person which shall not have been
obtained to issue the Shares (except as otherwise provided in this Agreement).
5.5 REGISTRATION RIGHTS AGREEMENT. On or before the Closing, the parties
shall have executed and delivered the Registration Rights Agreement, in the form
attached hereto as Exhibit B.
5.6 MINIMUM PURCHASE. The Company shall have received executed signature
pages to this Agreement for the purchase of not less than $6,000,000.
SECTION 6
MISCELLANEOUS.
6.1 GOVERNING LAW. This Agreement and all acts and transactions pursuant
hereto and the rights and obligations of the parties hereto shall be governed,
construed and interpreted in accordance with the laws of the State of Delaware,
without giving effect to principles of conflicts of law.
6.2 SURVIVAL. Unless otherwise set forth in this Agreement, the
warranties, representations and covenants of the Company and the Purchasers
contained in or made pursuant to this Agreement shall survive the execution and
delivery of this Agreement and the Closing, for a period of one (1) year
following the Closing Date.
6.3 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors and
assigns.
6.4 ENTIRE AGREEMENT; AMENDMENT. This Agreement, the Registration Rights
Agreement and the other documents delivered pursuant hereto constitute the full
and entire understanding and agreement between the parties with regard to the
subject matter hereof and thereof and supersede all prior agreements and
understandings among the parties relating to the subject matter hereof. Neither
this Agreement nor any term hereof may be amended, waived, discharged or
terminated other than by a written instrument signed by the party against which
enforcement of any such amendment, waiver, discharge or termination is sought.
6.5 NOTICES AND DATES. Any notice or other communication given under this
Agreement shall be sufficient if in writing and sent by overnight courier (with
a confirmation by fax) to a party at its address set forth below (or at such
other address as shall be designated for such purpose by such party in a written
notice to the other party hereto):
-7-
<PAGE> 11
(a) if to the Company, to:
Connective Therapeutics, Inc.
3400 West Bayshore Road
Palo Alto, California 94303
Attention: President
with a copy to:
Venture Law Group
2800 Sand Hill Road
Menlo Park, California 94025
Attention: Joshua L. Green
(b) if to the Purchasers, to the addresses set forth on Exhibit A.
All such notices and communications shall be effective when received
by the addressee. 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.
6.6 BROKERS.
(a) The Company has not engaged, consented to or authorized any
broker, finder or intermediary to act on its behalf, directly or indirectly, as
a broker, finder or intermediary in connection with the transactions
contemplated by this Agreement. The Company hereby agrees to indemnify and hold
harmless the Purchasers from and against all fees, commissions or other payments
owing to any party acting on behalf of the Company hereunder.
(b) No Purchaser has engaged, consented to or authorized any broker,
finder or intermediary to act on its behalf, directly or indirectly, as a
broker, finder or intermediary in connection with the transactions contemplated
by this Agreement. Each Purchaser hereby agrees to indemnify and hold harmless
the Company from and against all fees, commissions or other payments owing to
any party acting on behalf of such Purchaser hereunder.
6.7 SEVERABILITY. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated.
6.8 COSTS AND EXPENSES. Each party hereto shall pay its own costs and
expenses incurred in connection herewith, including the fees of its counsel,
auditors and other representatives, whether or not the transactions contemplated
herein are consummated.
6.9 NO THIRD PARTY RIGHTS. Nothing in this Agreement shall create or be
deemed to create any rights in any person or entity not a party to this
Agreement.
-8-
<PAGE> 12
6.10 PUBLICITY. The Purchasers and the Company shall not issue any public
statement concerning the transactions contemplated by this Agreement without the
other party's reasonable prior written consent; provided, however, that either
party may disclose the transaction or the terms hereof or thereof from time to
time without the other party's approval if (i) such approval has been requested
and not received and such party concludes (after consulting with counsel) that
it is required by law to disclose the transaction or the terms thereof or (ii)
to the extent that similar disclosure has been previously approved pursuant to
this Section 6.10.
6.11 CAPTIONS AND HEADINGS. The captions and headings used herein are for
convenience and ease of reference only and are not intended to be a part of or
to affect the meaning or interpretation of this Agreement.
6.12 COUNTERPARTS. This Agreement may be executed in counterparts, and
each such counterpart shall be deemed an original for all purposes.
-9-
<PAGE> 13
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective authorized officers as of the date aforesaid.
CONNECTIVE THERAPEUTICS, INC.
By:_________________________________________
Its:________________________________________
PURCHASERS:
INTEGRAL CAPITAL PARTNERS III, L.P.
by Integral Capital Management III, L.P.
its General Partner
By:_________________________________________
its General Partner
INTEGRAL CAPITAL PARTNERS
INTERNATIONAL III, L.P.
by Integral Capital Management III, L.P.
its Investment General Partner
By:_________________________________________
its General Partner
NEW YORK LIFE INSURANCE COMPANY
By:_________________________________________
Its:________________________________________
-10-
<PAGE> 14
WPG LIFE SCIENCES FUND, L.P.
by Weiss, Peck & Greer, L.L.C.
its General Partner
By:_________________________________________
Its:________________________________________
WPG INSTITUTIONAL LIFE SCIENCES
FUND, L.P.
by Weiss, Peck & Greer, L.L.C.
its General Partner
By:_________________________________________
Its:________________________________________
INVESTMENT COMPANY FOR FLANDERS
By:_________________________________________
Its:________________________________________
[signature page to Connective Therapeutics, Inc. Common Stock Purchase
Agreement]
-11-
<PAGE> 15
EXHIBIT A
SCHEDULE OF PURCHASERS
<TABLE>
<CAPTION>
No. of Shares
of Common Stock Purchase Price*
--------------- ---------------
<S> <C> <C>
Integral Capital Partners III, L.P. 261,820 $1,615,795.95
2750 Sand Hill Road
Menlo Park, California 94025
Attn: John A. Powell
Integral Capital Partners International 62,255 $ 384,200.51
III, L.P.
2750 Sand Hill Road
Menlo Park, California 94025
Attn: John A. Powell
New York Life Insurance Company 324,075 $1,999,996.46
51 Madison Avenue
New York, NY 10010
Attn: Dominique O. Semon
Venture Capital
WPG Life Sciences Fund, L.P. 121,528 $ 749,997.90
One New York Plaza
New York, NY 10004-1950
Attn: Elizabeth Greetham
WPG Institutional Life Sciences 40,509 $ 249,997.24
Fund, L.P.
One New York Plaza
New York, NY 10004-1950
Attn: Elizabeth Greetham
GIMV 162,037 $ 999,995.14
Karel Oornsstraat 37
2018 Antwerpen, Belgium
Attn: Patrick Van Beneden
Senior Investment Manager
------- -------------
TOTAL 972,224 $5,999,983.20
</TABLE>
- ------------------
* Purchase price rounded to nearest whole cent based upon price per share of
$6.1714.
<PAGE> 16
EXHIBIT B
REGISTRATION RIGHTS AGREEMENT
PLEASE SEE EXHIBIT 10.2 TO THE FORM 8-K
<PAGE> 17
EXHIBIT C
CONNECTIVE THERAPEUTICS, INC.
COMPLIANCE CERTIFICATE
The undersigned, Thomas G. Wiggans, hereby certifies as follows:
1. The undersigned is the duly elected President and Chief Executive
Officer of Connective Therapeutics, Inc., a Delaware corporation (the
"Company").
2. The representations and warranties of the Company set forth in Section
2 of the Common Stock Purchase Agreement (the "Agreement") dated December 4,
1996 are true and correct in all material respects as though made on and as of
the date hereof.
3. The Company has performed and complied with all covenants, agreements,
obligations and conditions contained in the Agreement to be performed by the
Company on or prior to the Closing Date.
The undersigned has executed this Certificate this 4th day of December,
1996.
___________________________________
Thomas G. Wiggans, President and Chief
Executive Officer
<PAGE> 18
EXHIBIT D
OPINION OF COMPANY COUNSEL
<PAGE> 19
December 4, 1996
To the Purchasers of Common
Stock of Connective Therapeutics, Inc.
Listed on Exhibit A to the Common Stock
Purchase Agreement
Ladies and Gentlemen:
We have acted as counsel for Connective Therapeutics, Inc., a Delaware
corporation (the "Company"), in connection with the sale by the Company to you
of shares of the Company's Common Stock (the "Stock") pursuant to the Common
Stock Purchase Agreement (the "Purchase Agreement") dated December 4, 1996 among
the Company and the persons listed on Exhibit A attached thereto (the
"Purchasers"), and the negotiation, execution and delivery by the Company of the
Registration Rights Agreement dated December 4, 1996 (the "Registration Rights
Agreement"). This opinion is given to you in compliance with Section 4.8 of the
Purchase Agreement. The Purchase Agreement and the Registration Rights Agreement
are referred to herein collectively as the "Agreements." Unless defined herein,
capitalized terms have the meaning given them in the Agreements.
In rendering this opinion, we have made such legal and factual
examinations and inquiries as we have deemed advisable or necessary for the
purpose of rendering this opinion. In addition, we have examined originals or
copies of documents, corporate records and other writings which we consider
relevant for the purposes of this opinion. In such examination, we have assumed
the genuineness of all signatures on original documents, the conformity to
original documents of all copies submitted to us and the due execution and
delivery of all documents where due execution and delivery are a prerequisite to
the effectiveness thereof. In making our examination of documents executed by
entities other than the Company, we have assumed that each other entity had the
power to enter into and perform all its obligations thereunder and we also have
assumed the due authorization by each such other entity of all requisite actions
and the due execution and delivery of such documents by each such other entity.
Whenever our opinion herein with respect to the existence or absence of
facts is indicated to be based on our knowledge or belief, it is intended to
signify that in the course of our representation of the Company in connection
with the transactions referred to in the first paragraph hereof, no information
has come to the attention of Joshua L. Green,
<PAGE> 20
December 4, 1996
Page 2
Stanley F. Pierson or Charles L. Moore (the only lawyers at Venture Law Group
working on this transaction) that would give them actual knowledge of the
existence or absence of such facts. We have not undertaken any independent
investigation to determine the existence or absence of such facts, and no
inference as to our knowledge of the existence or absence of such facts should
be drawn from the fact of our representation of the Company.
In rendering the opinion set forth in paragraph (a) below as to the
existence and good standing of the Company in Delaware, we have relied
exclusively on a certificate of a recent date of public officials of the State
of Delaware.
In rendering the opinion expressed in paragraph (g) below, we have assumed
and express no opinion with respect to the following: (i) that the
representations and warranties of the Purchasers set forth in the Agreements are
true and complete; and (ii) the accuracy and completeness of the information
provided by the Company to the Purchasers in connection with such offer and
sale. We have also assumed the accuracy of, and have relied upon, the Company's
representations to us that the Company has made no offer to sell the Shares by
means of any "general solicitation," as defined in Regulation D under the
Securities Act or the "publication of any advertisement" (as defined under the
California Corporate Securities Act of 1968, as amended, and the regulations
thereunder).
The opinions hereinafter expressed are subject to the following further
qualifications:
(i) Our opinions are qualified by the effect of bankruptcy,
insolvency, reorganization, arrangement, moratorium or other similar laws
relating to or affecting the rights of creditors generally, including, without
limitation, laws relating to fraudulent transfers or conveyances, preferences
and equitable subordination;
(ii) Our opinions are qualified by the limitations imposed by
general principles of equity upon the availability of equitable remedies or the
enforcement of provisions of the Agreements; and the effect of judicial
decisions which have held that certain provisions are unenforceable when their
enforcement would violate the implied covenant of good faith and fair dealing,
or would be commercially unreasonable, or where their breach is not material;
(iii) A requirement that provisions of the Agreements may only be
waived in writing will not be enforced to the extent an oral agreement has been
executed modifying provisions of the Agreements;
<PAGE> 21
December 4, 1996
Page 3
(iv) Our opinion is based upon current statutes, rules, regulations,
cases and official interpretive opinions, and it covers certain items that are
not directly or definitively addressed by such authorities;
(v) We express no opinion as to the effect of judicial decisions
which may permit the introduction of extrinsic evidence to modify the terms or
the interpretation of the Agreements;
(vi) We express no opinion as to the enforceability of provisions of
the Agreements which purport to establish evidentiary standards or to make
determinations conclusive;
(vii) We express no opinion as to the enforceability of provisions
of the Agreements expressly or by implication waiving broadly or vaguely stated
rights, or waiving rights granted by law where such waivers are against public
policy;
(viii) We express no opinion as to the enforceability of provisions
of the Agreements providing that rights or remedies are not exclusive, that
every right or remedy is cumulative, or that the election of a particular remedy
or remedies does not preclude recourse to one or more other remedies.
(ix) We express no opinion as to compliance with applicable
antifraud statutes, rules or regulations of applicable state and federal laws
concerning the issuance or sale of securities; and
(x) Provisions in the Registration Rights Agreement purporting to
provide for indemnification and contribution under certain circumstances may be
unenforceable.
Based upon and subject to the foregoing, and except as set forth in the
Schedule of Exceptions, we are of the opinion that:
(a) The Company is a corporation duly organized and existing under the
laws of the State of Delaware, and is in good standing under such laws. The
Company has the requisite corporate power to own and operate its properties and
assets, and to carry on its business as presently conducted.
(b) The Company has the requisite corporate power to execute and deliver
the Agreements, to sell and issue the Shares thereunder and to carry out and
perform its obligations under the terms of the Agreements.
<PAGE> 22
December 4, 1996
Page 4
(c) All corporate action on the part of the Company, its directors and
shareholders necessary for the authorization, execution, delivery and
performance of the Agreements by the Company, the authorization, sale, issuance
and delivery of the Shares and the performance of all of the Company's
obligations under the Agreements has been taken. The Agreements constitute valid
and binding obligations of the Company enforceable in accordance with their
terms. The Shares have been validly issued, and are fully paid and
nonassessable.
(d) The execution, delivery and performance of and compliance with the
Agreements, and the issuance of the Shares, have not resulted and will not
result in any material violation of, or conflict with, or constitute a material
default under, (i) the Company's Certificate of Incorporation or Bylaws or (ii)
any statute, rule or regulation or any judgment or order known to us of Federal
or California law to which the Company is a party, or by which the Company is
bound.
(e) To our knowledge, there are no actions, suits, proceedings or
investigations pending against the Company, or its properties before any court
or governmental agency that, either in any case or in the aggregate, might
result in any materially adverse change in the business or financial condition
of the Company or in any material liability on the part of the Company, and none
that questions the validity of the Agreements or any action taken or to be taken
in connection therewith.
(f) No consent, approval or authorization of or designation, declaration
or filing with, any governmental authority on the part of the Company is
required in connection with the valid execution and delivery of the Agreements,
or the offer, sale or issuance of the Shares, or the consummation of any other
transaction contemplated by the Agreements, except the filings that may be
required under state securities law.
(g) The offer, sale and issuance of the Shares to be issued in conformity
with the terms of the Purchase Agreement, constitute transactions exempt from
the registration requirements of Section 5 of the Securities Act.
We express no opinion as to matters governed by any laws other than the
laws of the State of California the General Corporation Law of the State of
Delaware and the federal law of the United States of America. We express no
opinion as to whether the laws of any particular jurisdiction apply, and no
opinion to the extent that the laws of any jurisdiction other than those
identified above are applicable to the Agreements or the transactions
contemplated thereby.
<PAGE> 23
December 4, 1996
Page 5
This opinion is furnished to you pursuant to Section 4.8 of the Purchase
Agreement and is solely for your benefit and may not be relied on by, nor may
copies be delivered to, any other person without our prior written consent. We
assume no obligation to inform you of any facts, circumstances, events or
changes in the law that may hereafter be brought to our attention that may
alter, affect or modify the opinion expressed herein.
Sincerely,
VENTURE LAW GROUP,
A Professional Corporation
jlg
<PAGE> 1
EXHIBIT 10.2
CONNECTIVE THERAPEUTICS, INC.
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is made as of the 4th
day of December, 1996, by and among Connective Therapeutics, Inc., a Delaware
corporation (the "Company") and the investors listed on Attachment A hereto,
each of which is herein referred to as an "Investor."
RECITALS
The Company and the Investors have entered into a Common Stock Purchase
Agreement (the "Purchase Agreement") of even date herewith pursuant to which the
Company desires to sell to the Investors and the Investors desire to purchase
from the Company shares of the Company's Common Stock. 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 shares of the Company's Common Stock acquired by
the Investors subject to the Purchase Agreement. The Company and the Investors
each desire to induce the Investors to purchase shares of Common Stock pursuant
to the Purchase Agreement by agreeing to the terms and conditions set forth
herein.
AGREEMENT
The parties hereby agree as follows:
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 "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 issuable or issued in connection with the Purchase
Agreement (such shares of Common Stock are collectively referred to hereinafter
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, 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
<PAGE> 2
distribution or a public securities transaction, or (B) sold in a transaction
exempt from the registration and prospectus delivery requirements of the 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;
(c) The number of shares of "Registrable Securities then
outstanding" shall be determined by the number of shares of Common Stock
outstanding which are, and 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 Act as
in effect on the date hereof or any successor form under the Act; and
(f) The term "SEC" means the Securities and Exchange
Commission.
1.2 FORM S-3 REGISTRATION. Subject to the terms and conditions
of this Agreement, on February 15, 1997 (the "S-3 Date") the Company will file
with the SEC and use its best efforts to effect a registration on Form S-3 and
any related qualification or compliance with respect to all or a part of the
Registrable Securities owned by the Holders.
Accordingly, the Company will:
(a) promptly give written notice of the registration,
and any related qualification or compliance, to all Holders; and
(b) as soon as practicable, effect such registration and
all such qualifications and compliances as may be necessary and as would permit
or facilitate the sale and distribution of all of the Holders' Registrable
Securities; provided, however, that the Company shall not be obligated to effect
any such registration, qualification or compliance, pursuant to this Section
1.2: if the Company shall furnish to the Holders 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 of the Form S-3
registration statement for a reasonable period of time, which shall not exceed
60 days after the S-3 Date under this Section 1.2. Provided however, that the
Company shall not defer the filing of the Form S-3 contemplated in this Section
1.2 (b) on more than one (1) occasion.
(c) Subject to the foregoing, the Company shall file a
registration statement covering the Registrable Securities on the S-3 Date.
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
-2-
<PAGE> 3
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 OBLIGATIONS OF THE COMPANY. Whenever required under this
Section 1 to effect the registration of any Registrable Securities, the Company
shall, as expeditiously as reasonably possible:
(a) Prepare and file with the SEC a registration
statement with respect to such Registrable Securities and use its best efforts
to cause such registration statement to become effective and to keep such
registration statement effective until December 4, 1999.
(b) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Act with respect to the disposition of all securities covered
by such registration statement until December 4, 1999.
(c) Furnish to the Holders such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Act, and such other documents as they may reasonably request
in order to facilitate the disposition of Registrable Securities owned by them.
(d) 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 the
Holders, 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 of process in any such states or jurisdictions.
(e) In the event of any underwritten public offering,
enter into and perform its obligations under an underwriting agreement, in usual
and customary form, with the managing underwriter of such offering. Each Holder
participating in such underwriting shall also enter into and perform its
obligations under such an agreement.
(f) Notify each Holder of Registrable Securities covered
by such registration statement at any time when a prospectus relating thereto is
required to be delivered under the Act of the happening of any event as a result
of which the prospectus included in such registration statement, as then in
effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then existing, such
obligation to continue until December 4, 1999.
(g) Cause all such Registrable Securities registered
pursuant hereunder to be listed on each securities exchange on which similar
securities issued by the Company are then listed.
-3-
<PAGE> 4
(h) Provide a transfer agent and registrar for all
Registrable Securities registered pursuant hereunder and a CUSIP number for all
such Registrable Securities, in each case not later than the effective date of
such registration.
1.4 RESTRICTIONS ON AND PROCEDURE FOR SALES.
(a) Each Holder agrees to the following:
(i) Notice to Company. If any Holder shall propose
to sell any Shares, the Holder shall notify the Company of its intent to do so
[ON OR BEFORE THE DATE OF SUCH SALE] (the "Notice of Sale"), and the provision
of 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. 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) Notice of Sale. The Notice of Sale in
substantially the form attached as Attachment B shall be given in accordance
with the provisions of Section 2.5 hereof. However, the Holder may give the
Notice of Sale orally by telephoning Cynthia M. Butitta or the then current
Chief Financial Officer at the Company at (415) 843-2800. An oral Notice of Sale
shall be deemed to have been received only at such time as the Selling Holder
speaks directly with Cynthia M. Butitta (or such then current Chief Financial
Officer). In addition, an oral Notice of Sale shall only be deemed effective if
it is followed by a written Notice of Sale received by the Company by personal
delivery or facsimile within twenty-four (24) hours after giving the oral Notice
of Sale.
(iii) Delay of Sale. The Company may refuse to
permit the Holder to resell any Shares for a specified period of time; provided,
however, that in order to exercise this right, the Company must deliver a
certificate in writing to the Holder to the effect that a delay in such sale is
necessary because a sale pursuant to the Registration Statement in its then
current form could constitute a violation of the federal securities laws, and
provided further that in no event shall such delay exceed thirty (30) trading
days. During any suspension as contemplated by this Section 1.4 (a)(iii), the
Company will not allow any of its officers or directors to buy or sell shares of
the Company's securities.
(b) Documents Required for Transfer. Each Holder making
a sale of Shares shall be required to submit the following documents to the
transfer agent (either directly or indirectly), with copies to the Company, in
order to effect the transfer:
(i) Original stock certificate representing the
Shares to be sold;
(ii) Originally executed stock power in
substantially the form of Attachment C hereto, with signature guaranteed; and
-4-
<PAGE> 5
(iii) Originally executed Seller's Representation
Certificate in the form of Attachment D hereto.
(c) Representations of Holders. Each Holder hereby
represents to and covenants with the Company that, during the period in which
any 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").
(d) 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
Attachment E hereto (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.
1.5 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 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.
1.6 UNDERWRITING REQUIREMENTS. In connection with any offering
involving an underwriting of shares of the Company's capital stock, the Company
shall not be required to include any of the Holders' securities in such
underwriting unless they accept the terms of the underwriting as agreed upon
between the Company and the underwriters selected by it (or by other persons
entitled to select the underwriters), and then only in such quantity as the
underwriters determine in their sole discretion will not jeopardize the success
of the offering by the Company. If the total amount of securities, including
Registrable Securities, requested by stockholders to be included in such
offering exceeds the amount of securities sold other than by the Company that
the underwriters determine in their sole discretion is compatible with the
success of the offering, then the Company shall be required to include in the
offering only that
-5-
<PAGE> 6
number of such securities, including Registrable Securities, which the
underwriters determine in their sole discretion will not jeopardize the success
of the offering (the securities so included to be apportioned pro rata among the
selling stockholders according to the total amount of securities entitled to be
included therein owned by each selling stockholder or in such other proportions
as shall mutually be agreed to by such selling stockholders).
1.7 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 controversy that might arise with respect to
the interpretation or implementation of this Section 1.
1.8 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 Act)
for such Holder and each person, if any, who controls such Holder or underwriter
within the meaning of the Act or the Exchange Act, against any losses, claims,
damages, or liabilities (joint or several) to which they may become subject
under the Act, 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 Act, the Exchange Act, any state securities law
or any rule or regulation promulgated under the Act, 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 1.8(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 Act, 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 Act, 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
-6-
<PAGE> 7
upon and in conformity with written information furnished by such Holder
expressly for 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 1.8(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 1.8(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
1.8(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 1.8 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 1.8, 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
1.8, 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 1.8.
(d) If the indemnification provided for in this Section
1.8 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 1.8(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.
-7-
<PAGE> 8
(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. In no event shall any contribution by a Holder for
indemnification exceed the net proceeds from the offering received by such
Holder, except in the case of willful fraud by such Holder.
(f) The obligations of the Company and Holders under
this Section 1.8 shall survive the completion of any offering of Registrable
Securities in a registration statement under this Section 1.
1.9 REPORTS UNDER SECURITIES EXCHANGE ACT OF 1934. With a view
to making available to the Holders the benefits of Rule 144 promulgated under
the Act 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 SEC 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, such action to be taken as soon as practicable after the
end of the fiscal year in which the first registration statement filed by the
Company for the offering of its securities to the general public is declared
effective;
(c) file with the SEC in a timely manner all reports and
other documents required of the Company under the Act 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 SEC Rule
144, the Act and the Exchange Act, 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.
1.10 ASSIGNMENT OF REGISTRATION RIGHTS. The rights to cause the
Company to register Registrable Securities pursuant to this Section 1 may be
assigned (but only with all related obligations) by a Holder to a transferee or
assignee of at least 10,000 shares of such securities, provided the Company is,
within a reasonable time after such transfer, furnished with written notice of
the name and address of such transferee or assignee and the securities with
respect to which such registration rights are being assigned; and provided,
further, that such assignment shall be effective only if immediately following
such transfer the further disposition of such securities
-8-
<PAGE> 9
by the transferee or assignee is restricted under the Act. For the purposes of
determining the number of shares of Registrable Securities held by a transferee
or assignee, the holdings of transferees and assignees of a partnership who are
partners or retired partners of such partnership (including spouses and
ancestors, lineal descendants and siblings of such partners or spouses who
acquire Registrable Securities by gift, will or intestate succession) shall be
aggregated together and with the partnership; provided that all assignees and
transferees who would not qualify individually for assignment of registration
rights shall have a single attorney-in-fact for the purpose of exercising any
rights, receiving notices or taking any action under Section 1.
2. MISCELLANEOUS.
2.1 SUCCESSORS AND ASSIGNS. Except as otherwise provided
herein, 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 Stock). 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 or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
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, 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 or sent by
telegram or fax, or forty-eight (48) hours after being deposited in the U.S.
mail, as certified or registered mail, with postage prepaid, and addressed to
the party to be notified at such party's address as set forth below or on
Attachment A hereto or as subsequently modified by written notice.
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
-9-
<PAGE> 10
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
(x) such provision shall be excluded from this Agreement, (y) the balance of the
Agreement shall be interpreted as if such provision were so excluded and (z) the
balance of the Agreement shall be enforceable in accordance with its terms.
[Signature Page Follows]
-10-
<PAGE> 11
The parties have executed this Registration Rights Agreement as of the
date first above written.
COMPANY: INVESTORS:
CONNECTIVE THERAPEUTICS, INC. INTEGRAL CAPITAL PARTNERS III, L.P.
by Integral Capital Management III, L.P.
By:_________________________________ its General Partner
Title:______________________________ By:_____________________________________
its General Partner
INTEGRAL CAPITAL PARTNERS
INTERNATIONAL III, L.P.
by Integral Capital Management III, L.P.
its Investment General Partner
By______________________________________
its General Partner
NEW YORK LIFE INSURANCE
COMPANY
By:_____________________________________
Its:____________________________________
WPG LIFE SCIENCES FUND, L.P.
by Weiss, Peck & Greer, L.L.C.
its General Partner
By:_____________________________________
Its:____________________________________
-11-
<PAGE> 12
WPG INSTITUTIONAL LIFE SCIENCES
FUND, L.P.
by Weiss, Peck & Greer, L.L.C.
its General Partner
By:_____________________________________
Its:____________________________________
INVESTMENT COMPANY FOR
FLANDERS
By:_____________________________________
Its:____________________________________
[signature page to Connective Therapeutics, Inc. Registration Rights Agreement]
-12-
<PAGE> 13
ATTACHMENT A
INVESTORS
<TABLE>
<CAPTION>
No. of Shares
Name/Address of Common Stock
- ------------ ---------------
<S> <C>
Integral Capital Partners III, L.P. 261,820
2750 Sand Hill Road
Menlo Park, California 94025
Attn: John A. Powell
Integral Capital Partners International 62,255
III, L.P.
2750 Sand Hill Road
Menlo Park, California 94025
Attn: John A. Powell
New York Life Insurance Company 324,075
51 Madison Avenue
New York, NY 10010
Attn: Dominique O. Semon
Venture Capital
WPG Life Sciences Fund, L.P. 121,528
One New York Plaza
New York, NY 10004-1950
Attn: Elizabeth Greetham
WPG Institutional Life Sciences 40,509
Fund, L.P.
One New York Plaza
New York, NY 10004-1950
Attn: Elizabeth Greetham
GIMV 162,037
Karel Oornsstraat 37
2018 Antwerpen, Belgium
Attn: Patrick Van Beneden
Senior Investment Manager
</TABLE>
<PAGE> 14
ATTACHMENT B
CONNECTIVE THERAPEUTICS, INC.
NOTICE OF SALE
Pursuant to the Registration Rights Agreement dated as of December 4, 1996
among Connective Therapeutics, Inc. (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 on (File No. __________).
Dated: ______________, 199__ By:___________________________________
(signature)
Name:_________________________________
(print)
Title:________________________________
(if applicable)
[NOTE: THIS NOTICE OF SALE MUST BE COMPLETED AND DELIVERED (VIA PERSONAL
DELIVERY OR FACSIMILE) TO THE CHIEF FINANCIAL OFFICER OF THE COMPANY ON OR
BEFORE THE DATE OF SALE OF THE SHARES OF THE COMPANY'S COMMON STOCK
REGISTERED PURSUANT TO THE REGISTRATION STATEMENT.]
<PAGE> 15
ATTACHMENT C
CONNECTIVE THERAPEUTICS, INC.
STOCK POWER
FOR VALUE RECEIVED, and pursuant to that certain Registration Rights
Agreement dated as of December 4, 1996 among the undersigned ("Seller"),
Connective Therapeutics, Inc., a Delaware corporation (the "Company") and the
stockholders named therein, and in accordance with the Notice of Sale dated
___________, 199__ from the Seller to the Company, Seller hereby sells, assigns
and transfers unto _______________________________________________________,
______________________________________________________________ (________) shares
of the Company's Common Stock, standing in Seller's name on the books of the
Company represented by Certificate No. ___, herewith and does hereby irrevocably
constitute and appoint the transfer agent of the Company to transfer said stock
on the books of the Company with full power of substitution in the premises.
Dated: ____________________, 199__ By: _____________________________
(signature)
Name: ___________________________
(print)
Title: __________________________
(if applicable)
THE SIGNATURE(S) ON THIS STOCK POWER MUST CORRESPOND WITH THE NAME(S) ON THE
FACE OF THE CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT,
OR ANY CHANGE. TRUSTEES, OFFICERS AND OTHER FIDUCIARIES OR AGENTS SHOULD
INDICATE THEIR TITLE OR CAPACITY.
[NOTE: THIS STOCK POWER MUST BE COMPLETED AND DELIVERED (TOGETHER WITH
YOUR STOCK CERTIFICATE AND SELLER'S REPRESENTATION CERTIFICATE) TO THE
TRANSFER AGENT (WITH COPIES TO THE COMPANY) PRIOR TO ANY SALE.]
<PAGE> 16
ATTACHMENT D
CONNECTIVE THERAPEUTICS, INC.
SELLER'S REPRESENTATION CERTIFICATE
Pursuant to the Registration Rights Agreement dated as of December 4, 1996
among Connective Therapeutics, Inc. (the "Company"), the undersigned and certain
stockholders of the Company (the "Agreement"), the undersigned hereby represents
and warrants to the Company and _________________, as the Company's Transfer
Agent, that the undersigned has complied with all terms and conditions of the
Agreement relating to the sale of the shares of the Company's Common Stock
registered pursuant to the Registration Statement (File No. ___________________)
and described in the Prospectus contained in the Registration Statement, as
amended and supplemented (the "Prospectus"), and that all information relating
to the undersigned contained in the Prospectus is true, accurate and complete as
of the date hereof.
Dated: _______________, 199__ By:___________________________________
(signature)
Name:_________________________________
(print)
Title:________________________________
(if applicable)
[NOTE: THIS SELLER'S REPRESENTATION CERTIFICATE MUST BE COMPLETED AND DELIVERED
(TOGETHER WITH YOUR STOCK CERTIFICATE AND STOCK POWER) TO THE TRANSFER AGENT
(WITH COPIES TO THE COMPANY) PRIOR TO ANY SALE.]
<PAGE> 17
ATTACHMENT E
CONNECTIVE THERAPEUTICS, INC.
SELLING STOCKHOLDER'S QUESTIONNAIRE
In connection with the Connective Therapeutics, Inc. (the "Company")
Registration Statement (File No. ___________) registering certain outstanding
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, 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:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
<PAGE> 1
EXHIBIT 10.3
SECURITIES PURCHASE AGREEMENT
BETWEEN
CONNECTIVE THERAPEUTICS, INC.
AND
EACH OF THE PURCHASERS EXECUTING A
COUNTERPART OF THE SIGNATURE PAGE HERETO
DATED AS OF
DECEMBER 4, 1996
<PAGE> 2
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT (this "Agreement"), dated as of December 4,
1996, between Connective Therapeutics, Inc., a Delaware corporation (the
"Company"), and each purchaser executing a counterpart of the signature page
hereto (each, a "Purchaser" and collectively, the "Purchasers").
W I T N E S S E T H :
WHEREAS, the Company proposes to issue and sell in accordance with
Regulation S (as hereinafter defined) under the Securities Act (as hereinafter
defined) to the Purchasers, and the Purchasers desire to purchase from the
Company (i) an aggregate of 200 shares of the Company's 7% Convertible Preferred
Stock Series A (the "Preferred Stock"), on the terms and subject to the
conditions set forth herein, and (ii) warrants to purchase up to an aggregate of
20,000 shares of the Company's Common Stock in the form attached as Exhibit A to
this Agreement (individually a "Warrant" and collectively the "Warrants").
NOW THEREFORE, in consideration of the premises, the representations,
warranties, covenants and agreements contained herein, and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, intending to be legally bound hereby, the parties hereto agree as
follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. CERTAIN DEFINITIONS. For purposes of this Agreement, the
following terms shall have the following meanings:
"Affiliate" of a Person means a Person that directly or indirectly,
through one or more intermediaries, controls, is controlled by, or is under
common control with, the first mentioned Person. The term "control" (including
the terms "controlling," "controlled by" and "under common control with") means
the possession, direct or indirect, of the power to direct or cause the
direction of the management and policies of a person, whether through the
ownership of voting securities, by contract, or otherwise.
"Capital Stock" means, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated) of corporate
stock, including each class of common stock and preferred stock of such Person.
"Certificate of Designations" means the Certificate of Designations
establishing the terms of the Preferred Stock.
"Closing" has the meaning set forth in Section 2.02.
<PAGE> 3
"Commission" means the United States Securities and Exchange Commission.
"Common Stock" means the common stock, $.001 par value per share, of the
Company.
"Conversion Shares" means the shares of Common Stock issuable upon
conversion of the Preferred Stock.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Governmental Authority" means any federal, state or other political
subdivision thereof and any agency or other entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"Legend" has the meaning set forth in Section 5.02(a).
"Irrevocable Instructions" means the Irrevocable Instructions issued by
the Company to the Transfer Agent, executed by each of the Company and the
Transfer Agent, in the form of Exhibit C hereto.
"Material Adverse Effect" has the meaning set forth in Section 3.01.
"Non-U.S. Person" means a Person that is not a U.S. Person (as such term
is defined in Regulation S under the Securities Act).
"Person" means an individual or a corporation, partnership, trust,
incorporated or unincorporated association, joint venture, joint stock company,
Governmental Authority or other entity of any kind.
"Regulation S" means Regulation S under the Securities Act, as from time
to time amended.
"SEC Reports" means the Company's Annual Report on Form 10-K for the year
ended December 31, 1995 and the Company's Quarterly Reports on Form 10-Q for the
quarters ended March 31, 1996, June 30, 1996 and September 30, 1996.
"Securities Act" means the Securities Act of 1933, as amended.
"Transaction Documents" means, collectively, this Agreement, the Warrants,
the Irrevocable Instructions, the Certificate of Designations and the Preferred
Stock.
"Transfer Agent" means U.S. State Transfer Corporation.
2
<PAGE> 4
"United States" has the meaning ascribed to such term in Rule 902(p) of
Regulation S under the Securities Act.
"U.S. Person" has the meaning ascribed to such term in Rule 902(o) of
Regulation S under the Securities Act.
"Warrant Shares" means the shares of the Company's Common Stock issuable
upon exercise of Warrants.
ARTICLE II
SALE AND PURCHASE
SECTION 2.01. AGREEMENT TO SELL AND TO PURCHASE; PURCHASE PRICE. On the
terms and subject to the conditions set forth in this Agreement, the Company
hereby agrees to issue and sell to the Purchasers, and the Purchasers hereby
agree to purchase and accept from the Company (i) an aggregate of 200 shares of
Preferred Stock at a purchase price per share of $10,000, or an aggregate
purchase price of U.S. $2,000,000, and (ii) the Warrants at an aggregate
purchase price equal to 110% of the closing bid price of the Common Stock on
December 4, 1996, payable in immediately available funds (collectively, the
"Purchase Price"). A copy of the form of Certificate of Designations
establishing the terms of the Preferred Stock is attached as Exhibit B hereto
and the terms of the Preferred Stock are hereby expressly incorporated by
reference herein, and the form of certificate of Preferred Stock is attached as
Exhibit B-1.
SECTION 2.02. CLOSING. The closing of the sale and purchase of the
Preferred Stock (the "Closing") shall be deemed to take place concurrently with
the execution and delivery of this Agreement by the parties hereto. At the
Closing, the following closing transactions shall take place, each of which
shall be deemed to occur simultaneously with the Closing: (i) the Company shall
execute, issue and deliver certificates representing the Preferred Stock to the
Purchasers; (ii) the Purchasers shall pay the Purchase Price by wire transfer to
the account designated by the Company in writing prior to the Closing; (iii) the
Company shall pay the expenses set forth in Section 6.02 hereof by wire transfer
to the account designated by the Purchasers in writing prior to the Closing;
provided that if the Purchasers so determine, such expenses may be netted
against the Purchase Price; (iv) the Company issues the Warrants to the
Purchasers; (v) the Company and the Transfer Agent shall execute and deliver the
Irrevocable Instructions; (vi) the Company shall deliver evidence of the filing
with, and acceptance by, the Secretary of State of the State of Delaware of the
Certificate of Designations; (vii) the Company shall deliver to the Purchasers a
certificate executed by the secretary of the Company, signing in such capacity,
dated the date of the Closing (A) certifying that attached thereto are true and
complete copies of (x) the Certificate of Incorporation of the Company, as
3
<PAGE> 5
amended to date, as filed in the office of the Secretary of State of the State
of Delaware and stating that no amendment or other action has been taken by the
Company, its shareholders, officers or directors in contemplation of the filing
of any such amendment or in contemplation of the liquidation or dissolution of
the Company, (y) the by-laws of the Company, as amended to date, and (z) the
resolutions duly adopted by the Board of Directors of the Company authorizing
the execution and delivery of the Transaction Documents and the consummation of
the transactions contemplated thereby (including, without limitation, the
issuance and sale of the Preferred Stock and the Warrants, the reservation and
issuance of the Conversion Shares upon conversion of the Preferred Stock, and
the reservation and issuance of the Warrant Shares upon exercise of the
Warrants), which authorization shall be in full force and effect on and as of
the date of such certificate, (B) confirming the continued good standing of the
Company since the date of a Certificate of Good Standing with respect to the
Company delivered by the Secretary of State of the State of Delaware, (C)
attesting as to the certificates representing the Company's Preferred Stock and
Common Stock, and (D) certifying and attesting to the office, incumbency, due
authority and specimen signatures of each Person who executed any Transaction
Document for or on behalf of the Company; and (viii) Venture Law Group, A
Professional Corporation, as counsel to the Company, shall deliver to the
Purchasers an opinion, dated the date of the Closing and addressed to the
Purchasers, in form and substance acceptable to the Purchasers.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
As a material inducement to the Purchasers to purchase the Preferred
Stock, the Company hereby represents and warrants to the Purchasers on and as of
the date hereof, subject to and except as set forth in a document of even date
herewith (the "Disclosure Schedule") delivered by the Company to the Purchasers
prior to the execution and delivery of this Agreement and referring to the
representations and warranties set forth in this Article III as follows:
SECTION 3.01. 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 all requisite corporate power and authority, and all
authorizations, licenses, permits and certifications necessary to own its
properties and assets and to carry on its business as it is now being conducted
and proposed to be conducted and no bankruptcy proceedings have been commenced
and no actions with respect to the liquidation, merger, consolidation or
dissolution of the Company or for the sale of all or substantially all of its
assets is pending or contemplated. The Company is duly qualified to transact
business and is in good standing in each jurisdiction in which the character of
the properties owned or leased by it or the
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nature of its businesses makes such qualification necessary, except where the
failure to so qualify or be in good standing would not have a material adverse
effect on the business, assets, operations, properties, condition (financial or
otherwise) or prospects of the Company (a "Material Adverse Effect").
SECTION 3.02. SECURITIES OF THE COMPANY. The authorized Capital Stock of
the Company consists of 50,000,000 shares of Common Stock, of which 7,435,519
shares were issued and outstanding as of December 2, 1996 and 5,000,000 shares
of preferred stock, par value $.001 per share, 200 of which have been designated
7% Convertible Preferred Stock, Series A, and none of which have been issued or
are outstanding prior to the Closing. Except as set forth in the SEC Reports,
the Company has no other authorized, issued or outstanding equity securities or
securities containing any equity features, or any other securities convertible
into, exchangeable for or entitling any person to otherwise acquire any other
securities of the Company containing any equity features, other than subsequent
issuances of securities, if any, pursuant to this Agreement, pursuant to
reservations, agreements or employee benefit plans or pursuant to the exercise
of outstanding convertible securities or options. All of the outstanding shares
of Capital Stock of the Company have been duly and validly authorized and
issued, and are fully paid and nonassessable. The Preferred Stock, the
Conversion Shares, the Warrants and the Warrant Shares have been duly and
validly authorized. When issued against payment therefor as provided in this
Agreement, the Preferred Stock will be validly issued, fully paid and
nonassessable and will entitle the holders thereof to the rights established in
the Certificate of Designations. The Conversion Shares, when issued upon
conversion of the Preferred Stock, and the Warrant Shares when issued in
accordance with the terms of the Warrants, will be validly issued, fully paid
and nonassessable, free and clear all preemptive rights, claims, liens, charges,
encumbrances and security interests of any nature whatsoever. A sufficient
number of shares of Common Stock has been duly reserved and will remain
available for issuance upon conversion of the Preferred Stock and upon the
exercise of the Warrants. Except as set forth in this Agreement and in the SEC
Reports, there are no outstanding options, warrants, agreements, conversion
rights, subscription rights, preemptive rights, rights of first refusal or other
rights or agreements of any nature outstanding to subscribe for or to purchase
any shares of Capital Stock of the Company or any other securities of the
Company of any kind. Except as otherwise required by law or as set forth in the
Certificates of Designations, there are no restrictions upon the voting or
transfer of any shares of the Company's Capital Stock pursuant to the Company's
organizational and other governing documents or any agreement or other
instruments to which the Company is a party or by which the Company or its
properties or assets are bound. The issuance of the Preferred Stock and the
Common Stock upon conversion thereof are not subject to any preemptive rights,
rights of first refusal or other similar limitation. There are no agreements or
other obligations (contingent or otherwise) that may require the Company to
repurchase or otherwise acquire any shares of its Capital Stock, other than
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agreements with officers, directors, employees or consultants of the Company
allowing the Company to repurchase at cost unvested shares upon the termination
of employment or consulting services to the Company.
SECTION 3.03. AUTHORIZATION; ENFORCEABILITY. The Company has the corporate
power and authority to execute, deliver and perform the terms and provisions of
each of the Transaction Documents, and has taken all necessary corporate action
to authorize the execution, delivery and performance by it of each of the
Transaction Documents and to consummate the transactions contemplated thereby.
No other corporate proceedings on the part of the Company are necessary and no
consent of the shareholders of the Company is required for the valid execution
and delivery by the Company of the Transaction Documents and the performance and
consummation by the Company of the transactions contemplated thereby. The
Company has duly executed and delivered each of the Transaction Documents. The
Transaction Documents constitute the legal, valid and binding obligations of the
Company, (and in the case of the Irrevocable Instructions, the Transfer Agent),
enforceable against the Company (and in the case of the Irrevocable
Instructions, the Transfer Agent), in accordance with their respective terms,
except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general principles of equity.
SECTION 3.04. NO VIOLATION; CONSENTS. (a) The Company is not in violation
of the applicable provisions of any law, statute, rule, regulation, order, writ,
injunction, judgment or decree of any court or Governmental Authority to or by
which the Company or any of its property or assets is bound and which could
reasonably be expected to have a Material Adverse Effect, nor has any event
occurred which (i) violates, results in a breach of or constitutes (with due
notice or lapse of time or both) a default or gives rise to an event of
acceleration under any contract, lease, loan or credit agreement, mortgage,
security agreement, trust indenture or other agreement or instrument to which
the Company is a party or by which it is bound or to which any of its properties
or assets is subject, nor results in the creation or imposition of any lien,
security interest, charge or encumbrance of any kind upon any of the properties,
assets or Capital Stock of the Company and which could reasonably be expected to
have a Material Adverse Effect or (ii) violates any provision of the
organizational and other governing documents of the Company. The execution,
delivery and performance by the Company of the Transaction Documents and the
consummation of the transactions contemplated thereby do not and will not (i)
contravene the applicable provisions of any law, statute, rule, regulation,
order, writ, injunction, judgment or decree of any court or Governmental
Authority to or by which the Company or any of its property or assets is bound,
(ii) violate, result in a breach of or constitute (with due notice or lapse of
time or both) a default or give rise to an event of acceleration under any
contract, lease, loan or credit agreement, mortgage, security agreement, trust
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indenture or other agreement or instrument to which the Company is a party or by
which it is bound or to which any of its properties or assets is subject, nor
result in the creation or imposition of any lien, security interest, charge or
encumbrance of any kind upon any of the properties, assets or Capital Stock of
the Company which could reasonably be expected to have a Material Adverse
Effect, or (iii) violate any provision of the organizational and other governing
documents of the Company.
(b) No consent, approval, authorization or order of, or filing or
registration with, any court or Governmental Authority or other Person within
the United States is required to be obtained or made by the Company for the
execution, delivery and performance of the Transaction Documents or the
consummation of any of the transactions contemplated thereby, except for those
consents or authorizations previously obtained and those filings previously
made.
SECTION 3.05. SECURITIES ACT REPRESENTATIONS. The Company is a "reporting
issuer" as that term is defined in Rule 902(l) of Regulation S under the
Securities Act. No form of general or public solicitation or advertising was
used by the Company or any Person acting on its behalf in connection with the
offer or sale of the Preferred Stock. Neither the Company nor any Person acting
on its behalf has (i) offered Preferred Stock to any Person (including
Purchaser) in the United States or offered or sold Preferred Stock to or for the
account or benefit of any U.S. Person or (ii) made any "directed selling
efforts" (as defined in Rule 902(b) of Regulation S under the Securities Act) in
the United States with respect to the Preferred Stock. The Company has not sold
and will not sell any Preferred Stock in this offering other than the Preferred
Stock being sold to the Purchasers hereunder. Assuming the accuracy of the
Purchasers' representations pursuant to Section 4.02 hereof, the sale of the
Preferred Stock hereunder is, and the issuance of the Conversion Shares upon
conversion of the Preferred Stock will be, exempt from the registration
requirements of the Securities Act.
SECTION 3.06. SOLVENCY; NO DEFAULT. (a) The Company is, as of the date
hereof, Solvent. "Solvent" means that (i) the fair saleable value of the assets
of the Company exceeds the total amount of its debts and other liabilities
(including any guarantees and other contingent, subordinated, unmatured or
unliquidated liabilities whether or not reduced to judgment, disputed or
undisputed, secured or unsecured), (ii) the Company has sufficient funds and
cash flow to pay its liability on its existing and anticipated debts as they
become absolute and matured, (iii) final judgments against the Company in
pending or threatened actions for money damages will not be rendered at a time
when, or in an amount such that the Company will be unable to satisfy any such
judgments promptly in accordance with their terms (taking into account the
maximum reasonable amount of such judgments in any such actions (other than
amounts that would be remote) and the earliest reasonable time at which such
judgments would be rendered), and (iv) the
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Company does not have unreasonably small capital with which to engage in its
present or anticipated business.
(b) The Company is not, and immediately after the consummation of the
transactions contemplated hereby will not be, in default under or with respect
to its organizational and other governing documents, or any provision of any
security issued by the Company, or of any agreement, instrument or other
undertaking to which the Company is a party or by which it or any of its
property or assets is bound which, either individually or in the aggregate,
could reasonably be expected to have a Material Adverse Effect.
SECTION 3.07. NO BROKERS. No broker, finder, agent or similar intermediary
is entitled to any broker's, finder's, placement or similar fee or other
commission in connection with the transactions contemplated hereby based on any
agreement, arrangement or understanding with the Company, except for dealings
with AFO Capital Advisors LLC, whose fees will be paid by the Purchasers.
SECTION 3.08. FINANCIAL CONDITION; NO ADVERSE CHANGES. (a) The audited
financial statements of the Company and the related Preferred Stock thereto as
at December 31, 1995 reported on by Ernst & Young LLP, independent auditors,
copies of which have heretofore been furnished to the Purchasers, present fairly
the financial condition, results of operations and cash flows of the Company at
such date and for the periods set forth therein. The unaudited balance sheets,
statements of operations and statements of cash flows at and for the period
ended September 30, 1996 (such audited and unaudited financial statements,
collectively, the "Financial Statements"), copies of which have heretofore been
furnished to the Purchasers, present fairly the financial condition, results of
operations and cash flows of the Company at such date and for the periods set
forth therein. The Financial Statements, including the related schedules and
notes thereto (if any), have been prepared in accordance with generally accepted
accounting principles as set forth in the opinions and pronouncements of the
Accounting Principles Board of American Institute of Certified Public
Accountants and statements and pronouncements of the Financial Accounting
Standards Board as in effect on the date of the Closing, applied on a consistent
basis (except for changes concurred in by the Company's independent public
accountants) unless otherwise expressly stated therein. During the period from
September 30, 1996 to and including the date hereof, there has been no sale,
transfer or other disposition by the Company of any material part of the
business, property or securities of the Company and no purchase or other
acquisition of any business, property or securities by the Company material in
relation to the financial condition of the Company.
(b) Except as are fully reflected or reserved against in the Financial
Statements and the notes thereto, there are no liabilities or obligations with
respect to the Company of any nature whatsoever (whether absolute, accrued,
contingent or
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otherwise and whether or not due) which, either individually or in the
aggregate, are reasonably expected to have a Material Adverse Effect.
(c) Since September 30, 1996, there has been no development or event, nor
any prospective development or event known to the Company, or any litigation,
proceeding or other action seeking an injunction or other restraining order,
damages or other relief from a court or administrative agency of competent
jurisdiction pending or, to the best knowledge of the Company, threatened, or
any action of any Governmental Authority, which has had or could reasonably be
expected to have a Material Adverse Effect.
SECTION 3.09. DISCLOSURE. The representations and warranties of the
Company in this Agreement and the statements contained in the SEC Reports and
the schedules, certificates and exhibits furnished to the Purchasers by or on
behalf of the Company in connection herewith do not contain any untrue statement
of a material fact and do not omit to state any material fact necessary to make
the statements herein or therein not misleading. The Company hereby acknowledges
that the Purchasers are and will be relying on the SEC Reports and the Company's
representations, warranties and covenants contained herein in making an
investment decision with respect to the Preferred Stock and Conversion Shares
and will be relying thereon (together with future reports filed with the
Commission) in connection with any transfer of Preferred Stock and Conversion
Shares.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
Each Purchaser hereby acknowledges, represents and warrants to the Company
as follows:
SECTION 4.01. AUTHORIZATION; ENFORCEABILITY; NO VIOLATIONS. (a) If such
Purchaser is a corporation, limited partnership, or limited liability company,
it is duly organized, formed or incorporated (as the case may be), validly
existing and in good standing under the laws of the jurisdiction of its
organization, formation or incorporation, and has all requisite power and
authority to execute, deliver and perform the terms and provisions of this
Agreement and has taken all necessary action to authorize the execution,
delivery and performance by it of this Agreement and to consummate the
transactions contemplated hereby.
(b) The execution, delivery and performance by such Purchaser of this
Agreement and of the Transaction Documents, and the consummation by such
Purchaser of the transactions contemplated hereby and thereby do not and will
not violate any provision of (i) such Purchaser's organizational documents, if
any, and (ii) any law, statute, rule, regulation, order, writ, injunction,
judgment or decree of any court of Governmental Authority to or by which the
Purchaser or any of its property or assets is bound, to which such Purchaser is
subject, or (iii) violate, result in a breach of or constitute (with due notice
or lapse of time or both) a default or give rise to an event of acceleration
under any contract, lease, loan or credit agreement, mortgage, security
agreement, trust indenture or other agreement or instrument to which the
Purchaser is a party or by which it is bound or to which any of its properties
or assets is subject, nor result in the creation or imposition of any lien,
security interest, charge or encumbrance of any kind upon any of the properties
or assets of the Purchaser which could reasonably be expected to have a Material
Adverse Effect; nor has any event occurred which (i) violates, results in a
breach of or constitutes (with due notice or lapse of time or both) a default or
gives rise to an event of acceleration under any contract, lease, loan or credit
agreement, mortgage, security agreement, trust indenture or other agreement or
instrument to which the Purchaser is a party or by which it is bound or to which
any of its properties or assets is subject, nor results in the creation or
imposition of any lien, security interest, charge or encumbrance of any kind
upon any of the properties or assets of the Purchaser and which could reasonably
be expected to have a Material Adverse Effect or (ii) violates any provision of
the organizational and other governing documents of the Purchaser. Such
Purchaser has duly executed and delivered this Agreement. Assuming the due
execution hereof by the Company, this Agreement constitutes the legal, valid and
binding obligation of such Purchaser, enforceable against such Purchaser in
accordance with its terms, except as enforceability may be limited by
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applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally and by general
principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law).
SECTION 4.02. SECURITIES ACT REPRESENTATIONS; LEGENDS. (a) Such Purchaser
understands that (i) the offering and sale of the Preferred Stock and the
Warrants to be issued and sold hereunder is intended to be exempt from the
registration requirements of the Securities Act; (ii) neither the Preferred
Stock, the Conversion Shares, the Warrants nor the Warrant Shares have been
registered under the Securities Act or any other applicable securities laws and
such securities may be resold only if registered under the Securities Act or if
an exemption from such registration requirements is available; and (iii) the
Company is not required to register any resale of the Preferred Stock, the
Conversion Shares, the Warrants or the Warrant Shares under the Securities Act;
provided, however, the resale of the the Conversion Shares and the Warrant
Shares will be subject to registration under the Securities Act (unless an
appropriate exemption therefrom is available), if at any time the Company
determines, based on advise of counsel that there has been a change under the
Securities Act or any other applicable securities law or in the interpretation
of the provisions thereof, such that (x) the Preferred Stock will no longer be
convertible into freely tradeable Conversion Shares or (y) the Warrants will no
longer be exchangeable into freely tradeable Warrant Shares at any time
beginning 41 days following the date of original issuance of the Preferred Stock
and the Warrants.
(b) The Preferred Stock and the Warrants to be acquired by such Purchaser
pursuant to this Agreement are being acquired for its own account, for
investment purposes, and not with a view to, or for sale in connection with, any
distribution thereof or of Conversion Shares issuable upon conversion of the
Preferred Stock or of Warrant Shares issuable upon exercise of the Warrants, in
violation of the Securities Act or any other securities laws which may be
applicable.
(c) Such Purchaser is not an affiliate of the Company (as such term is
defined in the Securities Act).
(d) Such Purchaser is a Non-U.S. Person.
(e) Such Purchaser (i) has sufficient knowledge and experience in
financial and business matters so as to be capable of evaluating the merits and
risks of its investment in the Preferred Stock and the Warrants and Purchaser is
capable of bearing the economic risks of such investment, including a complete
loss of its investment in the Preferred Stock and the Warrants; (ii) believes
that its investment in the Preferred Stock is suitable for it based upon its
objectives and financial needs, and such Purchaser has adequate means for
providing for its current financial needs
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and business contingencies and has no present need for liquidity of investment
with respect to the Preferred Stock and the Warrants; (iii) has no present plan,
intention or understanding and has made no arrangement to sell the Preferred
Stock, the Conversion Shares, the Warrants or the Warrant Shares at any
predetermined time or for any predetermined price; (iv) has not purchased, sold
or entered into, and has no present intention to and will not, until expiration
of the Restricted Period, purchase, sell or enter into, any put option, short
position or similar arrangement with respect to the Common Stock, or any
intention to settle any such option, position or understanding with any
Conversion Shares or any Warrant Shares.
(f) No oral or written representations have been made to such Purchaser by
or on behalf of the Company in connection with the offering and sale of the
Preferred Stock or the Warrants hereunder other than those set forth in the SEC
Reports, the Preferred Stock, the Warrants or as set forth herein, and such
Purchaser is not subscribing for the Preferred Stock or the Warrants as a result
of, or in response to, any advertisement, article, notice or other communication
published in any newspaper, magazine or similar media or broadcast over
television or radio, or presented at any seminar or meeting.
(g) At the time the buy order for the Preferred Stock and the Warrants
being purchased hereunder was originated, such Purchaser was outside of the
United States.
(h) Such Purchaser acknowledges that Regulation S under the Securities Act
restricts the transferability in the United States of securities, such as the
Preferred Stock, the Conversion Shares, the Warrants and the Warrant Shares
issued in reliance upon the exemption from the registration requirements of the
Securities Act provided by Regulation S thereunder.
(i) Such Purchaser acknowledges that Rule 144A under the Securities Act
may not be available with respect to resales of the Preferred Stock, the
Conversion Shares, the Warrants or the Warrant Shares.
SECTION 4.03. NO BROKERS. No broker, finder, agent or similar intermediary
is entitled to any broker's, finder's, placement or similar fee or other
commission in connection with the transactions contemplated hereby based on any
agreement, arrangement or understanding with such Purchaser, except for dealings
with AFO Capital Advisors LLC, whose fees will be paid by the Purchasers.
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ARTICLE V
COVENANTS OF THE COMPANY
SECTION 5.01. (a) EXEMPTION FROM REGISTRATION. The Company will not make
any offer to sell, solicit any offer to buy, agree to sell or sell any security
or right to acquire any security, except at such time and in such manner so as
not to cause the loss of any of the exemptions for the offer and sale of the
Preferred Stock hereunder and for the issuance of Conversion Shares upon
conversion of the Preferred Stock from the registration requirements under the
Securities Act or under the securities or "blue sky" laws of any jurisdiction in
which such offer, sale or issuance is made.
(b) LIMITATIONS ON SALE OR TRANSFER OF THE COMPANY'S
SECURITIES. The Company will not, without the prior written consent of a
majority in interest of the Preferred Stock then outstanding, make any offer to
sell, solicit any offer to buy, agree to sell or sell any shares of Preferred
Stock, any shares of Common Stock, any other shares of capital stock of the
Company, or any other securities convertible into or exercisable or exchangeable
for Preferred Stock, Common Stock or any such capital stock, or grant any
options, rights or warrants to purchase Preferred Stock, Common Stock or any
other shares of capital stock of the Company, or any other securities
convertible into or exercisable or exchangeable for Preferred Stock, Common
Stock or any such capital stock during the period commencing the date of the
Closing and ending one hundred and eighty (180) days thereafter, except for (i)
the shares Preferred Stock and warrants issued in accordance with this
Agreement, or of Common Stock issuable upon conversion of the Preferred Stock,
(ii) any shares of Preferred Stock or Common Stock issuable upon the exercise of
an option, right or warrant or the conversion of a security outstanding on the
date hereof, or (iii) any shares of the Company's capital stock issued pursuant
to the Company's stock option or other benefit or incentive plans maintained for
its officers, directors, employees or consultants, (iv) shares of the Company's
Common Stock issued pursuant to a firmly underwritten public offering, (v)
shares of the Company's Common Stock issued pursuant to an exemption from
registration under the Securities Act; provided, however, that such shares may
not subsequently be registered for resale or, in the case of an offering
pursuant to Regulation S, may not be resold into the United States, prior to the
expiration of such 180 day period; and (vi) shares of the Company's Common Stock
issued and issuable pursuant to the transactions described in the Disclosure
Schedule; provided further, that the Company shall not engage in any
transactions described in this Section 5.01(b), if in the reasonable opinion of
Company counsel such transactions would cause the Company to lose the
availability of an exemption from the registration requirements of the
Securities Act with respect to the sale of Series A Preferred Stock contemplated
by this Agreement.
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(c) REGISTRATION RIGHTS. If at any time the Company
determines, as provided in Section 4.02, that registration of the resale the
Conversion Shares or the Warrant Shares is required, the Company shall
immediately notify the Purchaser, and the Purchaser shall have (i) the right to
demand that the Company register the Conversion Shares and the Warrant Shares
for resale on Form S-3 (or such other applicable Form) under the Securities Act
and (ii) the right to have the Conversion Shares and the Warrant Shares included
in any registration statement filed by the Company to register the issuance or
the resale of its securities, in each case on conventional terms including
standard representations and warranties, covenants, conditions, agreements,
indemnification and contribution provisions and allocation of costs provisions
and rights. In the event the Purchaser shall demand registration of the
Conversion Shares and the Warrant Shares pursuant to clause (i) above, the
Company shall file a registration statement within 45 days of receipt by the
Company from the Purchaser of such demand and shall use its best efforts to have
such registration statement declared effective promptly thereafter. The Company
shall keep the registration statement filed pursuant to either of clause (i) or
clause (ii) above effective until the Scheduled Redemption Date in the case of
the Conversion Shares or the expiration date in the case of the Warrant Shares
or until the Purchaser shall have sold all of its Conversion Shares and Warrant
Shares.
SECTION 5.02 LEGEND. (a) The certificates representing the Preferred Stock
will bear a legend in substantially the following form by which such Purchaser
and each subsequent holder of such securities will be bound (the "Legend"):
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR ANY OTHER APPLICABLE SECURITIES LAWS AND HAVE BEEN ISSUED IN RELIANCE
UPON AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
AND SUCH SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED,
PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF
REGISTRATION UNDER THE SECURITIES ACT OR UNLESS SUCH TRANSACTION IS EXEMPT
FROM, OR NOT SUBJECT TO, SUCH REGISTRATION."
(b) Following termination of the Restricted Period, upon conversion of the
Preferred Stock, the Conversion Shares shall be issued and transferable without
the Legend provided for in subsection (a) above, except as provided by Section
4.02(a) above.
SECTION 5.03. DOCUMENTATION REQUIRED TO EFFECT CONVERSION OF PREFERRED
STOCK. In order for Purchaser to effect the conversion of Preferred Stock into
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unlegended Conversion Shares, the Purchaser shall be required only to deliver a
Notice of Conversion substantially in the form of Exhibit B hereto. The Company
agrees that it will not require the delivery of additional documentation, the
provision of any additional representations or warranties by the Purchaser or
impose any limitations on the conversion of the Preferred Stock into unlegended
Conversion Shares. The Irrevocable Instructions shall direct the Transfer Agent
to issue unlegended Conversion Shares without requesting any additional
documentation or representations or warranties from the Purchaser.
Notwithstanding the foregoing, if at any time the Company determines,
based on advice of counsel that there has been a change under the Securities Act
or any other applicable securities law or in the interpretation of the
provisions thereof, such that the Preferred Stock will no longer be convertible
into freely tradeable Conversion Shares at any time beginning 41 days following
the date of original issue of the Preferred Stock, the Purchaser hereby agrees
to deliver to the Company, upon their reasonable request, such additional
documentation as reasonably necessary in order to allow the Company to issue
unlegended Conversion Shares in compliance with any such changes under or
interpretations of the provisions of the Securities Act or other applicable
securities laws.
SECTION 5.04. RULE 144; CURRENT INFORMATION. For so long as any Preferred
Stock or Conversion Shares are outstanding, the Company will (i) file all
reports required to be filed by it under the Securities Act and the Exchange Act
and will take such further actions as any Purchaser may reasonably request, all
to the extent required from time to time to enable such Purchaser to sell
Preferred Stock and Conversion Shares without registration under the Securities
Act pursuant to the safe harbors and exemptions provided by Rule 144, under the
Securities Act, as such rules may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission, and (ii) furnish each
Purchaser with all reports, proxy statements and registration statements which
the Company files with the Commission or distributes to its securityholders
pursuant to the Securities Act and the Exchange Act at the times of such filings
and distributions. Upon the request of any Purchaser, the Company will deliver
to such Purchaser a written statement as to whether it has complied with the
foregoing requirements.
SECTION 5.05. RESERVATION OF CONVERSION SHARES. The Company shall at all
times reserve and keep available, free from preemptive rights, out of its
authorized but unissued shares of Common Stock or its issued shares of Common
Stock held in its treasury, or both, sufficient shares of Common Stock to
provide for the issuance of the Conversion Shares from time to time as the
Preferred Stock become convertible pursuant to their terms.
SECTION 5.06. STOCK LISTING. The Company shall endeavor to have the
Conversion Shares approved for quotation, prior to issuance, upon the Nasdaq
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National Market or any similar system of automated dissemination of securities
prices upon which the Common Stock is listed or traded at the time of issuance
of such Conversion Shares.
SECTION 5.07. IRREVOCABLE INSTRUCTIONS; NO ADDITIONAL CONVERSION
REQUIREMENTS. The Company shall take no action to cause the Transfer Agent to
act in contravention to the terms of the Irrevocable Instructions and shall take
all additional actions necessary, if any, to cause the Transfer Agent to issue
shares of Common Stock upon conversion of the Preferred Stock as contemplated
herein and in the Certificate of Designations. The Company further agrees that
it shall not terminate its relationship with the Transfer Agent unless a
successor transfer agent shall be appointed and the Company and such successor
transfer agent shall have executed the Irrevocable Instructions. The Company
agrees that it shall not, and shall not cause to Transfer Agent to, require any
additional documentation, representation or additional agreement from the
Purchaser as a condition to the Purchaser's being allowed to acquire Common
Stock without a Legend upon conversion of Preferred Stock in accordance with the
terms hereof.
ARTICLE VI
MISCELLANEOUS
SECTION 6.01. BLACKOUT PERIOD. Each Purchaser hereby agrees that in the
event that at any time after the date hereof until 180 days after such date, the
Company shall issue shares of Common Stock in a firmly underwritten public
offering, the Purchaser shall, at the underwriters' request, agree to restrict
the sale or transfer of such Purchaser's shares of Preferred Stock, Conversion
Shares, Warrants or Warrant Shares for a period of time (the "Blackout Period"),
provided that the Company, its officers, directors, consultants and all
shareholders and persons holding securities convertible or exercisable for
Common Stock in an amount equal to or greater than the number of shares of
Common Stock held by Purchaser (for purposes of calculating the number of shares
of Common Stock held by Purchaser, the Purchaser shall be deemed to hold such
number of shares of Common Stock as it would be entitled to, had Purchaser
converted all of its Preferred Stock at the Conversion Price in effect on the
date the Blackout Period begins together with Warrant Shares issuable upon
exercise of outstanding Warrants, and for purposes of determining the number of
shares of Common Stock held by persons holding securities convertible or
exchangeable for Common Stock, the number of shares of Common Stock shall be
similarly calculated) are also subject to such restriction on sale or transfer
of the securities held by them, respectively, for the Blackout Period.
SECTION 6.02. PRESS RELEASES AND DISCLOSURE. No party hereto shall issue
any press release or make any other public disclosure (pursuant to filing of
Exchange Act
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<PAGE> 18
reports with the Commission or otherwise) related to this Agreement or any of
the transactions contemplated hereby without the prior written approval of the
other party hereto, except as may be necessary or appropriate in the opinion of
the party seeking to make disclosure to comply with the requirements of
applicable law or stock exchange rules (provided that, unless otherwise required
by applicable law, regulation, order or the like, or agreed to between the
parties, (i) no Exchange Act filing shall disclose more than the title and
amount of securities issued, the conversion formula, the amount of proceeds and
the intended use of proceeds, and (ii) no press release shall disclose more than
the title and amount of securities issued, a general description of the
conversion formula, the amount of proceeds and the intended use of proceeds, and
provided further that in no event shall the identity of a Purchaser be disclosed
without such Purchaser's prior written consent unless such disclosure is
required by applicable law, regulation, order or the like, in which event the
Company shall, prior to complying with such law, regulation, order or the like,
give written notice to Purchaser so as to allow Purchaser to contest such
disclosure). If any such press release or public disclosure is so required, the
party making such disclosure shall consult with the other party prior to making
such disclosure, and the parties shall use all reasonable efforts, acting in
good faith, to agree upon a text for such disclosure which is satisfactory to
all parties.
SECTION 6.03. EXPENSES. Except as otherwise expressly provided for herein,
and subject to the consummation of the transactions contemplated herein, the
Company will pay all of its and all of the Purchasers' expenses (including
attorneys' fees and expenses) in connection with the negotiation of the
Transaction Documents, the performance of the obligations of each thereunder,
and the consummation of the transactions contemplated thereby (whether
consummated or not). Such Purchasers' expenses shall be payable at the Closing
and may be netted against the Purchase Price otherwise payable by the
Purchasers.
SECTION 6.04. NOTICES. All notices, demands, requests, consents, approvals
or other communications required or permitted to be given hereunder or which are
given with respect to this Agreement shall be in writing and shall be personally
served or deposited in the mail, registered or certified, return receipt
requested, postage prepaid, or delivered by reputable air courier service with
charges prepaid, or transmitted by hand delivery, telegram, telex or facsimile,
addressed as set forth below, or to such other address as such party shall have
specified most recently by written notice: (i) if to the Company, to: Connective
Therapeutics, Inc., 3400 West Bayshore Road, Palo Alto, CA 94303 Attention: CFO,
Facsimile No.: (415) 843-2899; with a copy to Joshua L. Greene, Esq. at Venture
Law Group; Facsimile No.: (415) 233-8386 and (ii) if to a Purchaser, to such
Purchaser's address set forth on its counterpart signature page hereto. Notice
shall be deemed given on the date of service or transmission if personally
served or transmitted by telegram, telex or facsimile. Notice otherwise sent as
provided herein shall be deemed given on the
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<PAGE> 19
third business day following the date mailed or on the next business day
following delivery of such notice to a reputable air courier service.
SECTION 6.05. ENTIRE AGREEMENT. This Agreement (together with the other
Transaction Documents and all other documents delivered pursuant hereto and
thereto) constitutes the entire agreement of the parties with respect to the
subject matter hereof and supersedes all prior and contemporaneous agreements,
representations, understandings, negotiations and discussions between the
parties, whether oral or written, with respect to the subject matter hereof.
SECTION 6.06. AMENDMENT AND WAIVER. This Agreement may not be amended,
modified, supplemented, restated or waived except by a writing executed by the
Company and the majority holders in interest of each of the shares of Preferred
Stock and the Warrants; provided, however, that this Agreement may not be
amended, modified, supplement, restated or waived without the express written
consent of all the holders in interest of the shares of Preferred Stock and
Warrants, if any such action would adversely affect the rights of such holders
of shares of Preferred Stock or Warrants. Waivers may be made in advance or
after the right waived has arisen or the breach or default waived has occurred.
Any waiver may be conditional. No waiver of any breach of any agreement or
provision herein contained shall be deemed a waiver of any preceding or
succeeding breach thereof nor of any other agreement or provision herein
contained. No waiver or extension of time for performance of any obligations or
acts shall be deemed a waiver or extension of the time for performance of any
other obligations or acts.
SECTION 6.07. ASSIGNMENT; NO THIRD PARTY BENEFICIARIES. This Agreement and
the rights, duties and obligations hereunder may not be assigned or delegated by
either the Company, on the one hand, or a Purchaser, on the other hand, without
the prior written consent of the other parties hereto; provided that the rights,
duties and obligations hereunder of the Purchaser shall be assigned in
connection with any transfer of Series A Preferred Stock to any third party.
Except as provided in the preceding sentence, any purported assignment or
delegation of rights, duties or obligations hereunder made without the prior
written consent of the other parties hereto shall be void and of no effect. This
Agreement and the provisions hereof shall be binding upon and shall inure to the
benefit of each of the parties and their respective successors and permitted
assigns. This Agreement is not intended to confer any rights or benefits on any
Persons other than as set forth above.
SECTION 6.08. SEVERABILITY. This Agreement shall be deemed severable, and
the invalidity or unenforceability of any term or provision hereof shall not
affect the validity or enforceability of this Agreement or of any other term or
provision hereof. Furthermore, in lieu of any such invalid or unenforceable term
or provision, the parties hereto intend that there shall be added as a part of
this Agreement a provision as similar in terms to such invalid or unenforceable
provision as may be possible and be valid and enforceable.
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<PAGE> 20
SECTION 6.09. FURTHER ASSURANCES. Each party hereto, upon the request of
any other party hereto, shall do all such further acts and execute, acknowledge
and deliver all such further instruments and documents as may be necessary or
desirable to carry out the transactions contemplated by this Agreement.
SECTION 6.10. TITLES AND HEADINGS. Titles, captions and headings of the
sections of this Agreement are for convenience of reference only and shall not
affect the construction of any provision of this Agreement.
SECTION 6.11. GOVERNING LAW; SUBMISSION TO JURISDICTION.
(a) THIS AGREEMENT SHALL BE GOVERNED BY, INTERPRETED UNDER,
AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF DELAWARE
APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED WITHIN THE STATE OF DELAWARE
WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS-OF-LAW
THEREOF.
(b) EACH OF THE PARTIES TO THIS AGREEMENT IRREVOCABLY SUBMIT
TO THE NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK IN ANY ACTION, SUIT OR PROCEEDING BROUGHT AGAINST
IT IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED
THEREUNDER OR FOR RECOGNITION OR ENFORCEMENT OR ENFORCEMENT OF ANY JUDGMENT, AND
THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY AGREE THAT ALL CLAIMS IN
RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD OR DETERMINED IN SUCH
FEDERAL COURT; PROVIDED HOWEVER, THAT IF FOR WHATEVER REASON THE UNITED STATES
DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK WILL NOT OR CANNOT HEAR
SUCH ACTION, SUIT OR PROCEEDING, SUCH ACTION, SUIT OR PROCEEDING MAY BE HEARD OR
DETERMINED IN ANY NEW YORK STATE COURT LOCATED IN THE CITY AND COUNTY OF NEW
YORK AND EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY SUBMITS TO THE
JURISDICTION OF SUCH COURTS IN RESPECT OF ANY SUCH ACTION, SUIT OR PROCEEDING.
TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE PARTIES HERETO HEREBY WAIVE AND
AGREE NOT TO ASSERT BY WAY OF MOTION, AS A DEFENSE OR OTHERWISE, IN ANY SUCH
SUIT, ACTION OR PROCEEDING, THAT SUCH SUIT, ACTION OR PROCEEDING IS BROUGHT IN
ANY INCONVENIENT FORUM, THAT THE VENUE OF THE SUIT, ACTION OR PROCEEDING IS
IMPROPER, OR THAT THE RELATED DOCUMENTS OR THE SUBJECT MATTER THEREOF MAY NOT BE
LITIGATED IN OR BY SUCH COURTS.
SECTION 6.12. COUNTERPARTS. This Agreement may be executed in
multiple counterparts, each of which shall be deemed an original, all of which
taken together shall constitute one and the same instrument.
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<PAGE> 21
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by the undersigned, thereunto duly authorized, as of
the date first set forth above.
CONNECTIVE THERAPEUTICS, INC.
By:_________________________________________
Name:
Title:
[NAME OF PURCHASER]
By:_________________________________________
Name:
Purchaser's Address for Notices
Pursuant to Section 6.03:
Attention:
Facsimile No.:
20
<PAGE> 22
EXHIBIT A
FORM OF WARRANT
Please see Exhibit 10.4 to Form 8-K
<PAGE> 23
EXHIBIT B
CONNECTIVE THERAPEUTICS, INC. - NOTICE OF CONVERSION
7% CONVERTIBLE PREFERRED STOCK, SERIES A
(To be executed by the Holder in order to convert the Series A Preferred Stock
or portion thereof)
The undersigned hereby irrevocably elects to convert [the entire amount] [______
shares] of the Series A Preferred Stock represented by Certificate No. _________
into shares of Common Stock, $___ par value (the "Common Stock"), of Connective
Therapeutics Inc. (the "Company") as of the Date of Conversion (which shall be
the date of receipt by facsimile by the Company of this Notice of Conversion).
If shares are to be issued in the name of a person other than the undersigned,
the undersigned will pay all transfer taxes payable with respect thereto and is
delivering herewith such certificates as reasonably requested by the Company or
its Transfer Agent. No fee will be charged to the Holder for any conversion,
except for transfer taxes, if any.
The undersigned represents and warrants that the number of shares of Common
Stock to be received upon conversion, together with the shares of Common Stock
beneficially owned by the undersigned (and its affiliates) on the Date of
Conversion, do not exceed 4.9% of the outstanding shares of Common Stock of the
Company (as set forth in the Company's most recent filing with the Securities
and Exchange Commission unless the Company shall notify the Holder that a lesser
number of shares is outstanding).
If the stock certificate is to be made out in another person's name, fill in the
form below:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type other person's name, address and zip code)
________________________________________________________________________________
(Insert assignee's U.S. social security or tax identification number, if any)
Conversion calculations: _________________________________
Date of Conversion
_________________________________
Applicable Conversion Price
______________________________
Total number of shares $________________________________
(assuming dividends payable Accrued Dividend
in shares)
[Name of Holder]
By:______________________________
Name:
Title:
B-1
<PAGE> 1
EXHIBIT 10.4
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY OTHER
APPLICABLE SECURITIES LAWS AND HAVE BEEN ISSUED IN RELIANCE UPON AN EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH SECURITIES
LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE
REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE
DISPOSED OF, NOR MAY SUCH SECURITIES BE EXERCISED BY OR ON BEHALF OF A U.S.
PERSON (AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT) IN THE ABSENCE OF
REGISTRATION UNDER THE SECURITIES ACT OR UNLESS SUCH TRANSACTION IS EXEMPT FROM,
OR NOT SUBJECT TO, SUCH REGISTRATION.
December 4, 1996
Warrant to Purchase up to
20,000 Shares of Common Stock
of Connective Therapeutics, Inc.
Connective Therapeutics, Inc., a Delaware corporation (the
"Company"), hereby certifies that in consideration of the Purchasers' (as
defined below) acquisition of shares of 7% Convertible Preferred Stock, Series A
of the Company, pursuant to the Securities Purchase Agreement, dated as of
December 4, 1996 (the "Agreement"), the receipt and sufficiency of which are
hereby acknowledged, __________________ (the "Purchaser") or any other Warrant
Holder is entitled, on the terms and conditions set forth below, to purchase
from the Company at any time after the date hereof and ending on December 4,
2001 (sixty (60) months after the original issuance of this Warrant) up to
20,000 fully paid and nonassessable shares of Common Stock, $.001 par value, of
the Company (the "Common Stock"), as the same my be adjusted pursuant to Section
5 herein, at the Purchase Price (hereinafter defined), as the same may be
adjusted pursuant to Section 5 herein.
1. Definitions.
(a) the term "Warrant Holder" shall mean the Purchaser or any
assignee of all or any portion of this Warrant.
<PAGE> 2
(b) the term "Warrant Shares" shall mean the shares of Common Stock
or other securities issuable upon exercise of this Warrant.
(c) the term "Purchase Price" shall initially mean 110% of the
closing bid price for the Common Stock on December 4, 1996, as may be adjusted
pursuant to Section 5 herein.
(d) other capitalized terms used herein which are defined in the
Agreement, or in the Certificate of Designations (the "Certificate of
Designations") establishing the terms of the 7% Convertible Preferred Stock,
Series A issued by the Company to the Purchaser pursuant to the Agreement (the
"Series A Preferred Stock", collectively, the Certificate of Designations and
the Series A Preferred Stock shall hereinafter be referred to as the "Preferred
Stock"), shall have the same meanings herein as therein.
2. Exercise or Exchange of Warrant.
(a) This Warrant may be exercised by the Warrant Holder, in whole or
in part, at any time and from time to time by surrender of this Warrant,
together with the form of subscription at the end hereof duly executed by
Warrant Holder, together with the full Purchase Price (as defined in Section 1)
for each share of Common Stock as to which this Warrant is exercised to the
Company at the address set forth in Section 13 hereof. In the event that the
Warrant is not exercised in full, the number of Warrant Shares shall be reduced
by the number of such Warrant Shares for which this Warrant is exercised, and
the Company, at its expense, shall forthwith issue and deliver to or upon the
order of Warrant Holder a new Warrant of like tenor in the name of Warrant
Holder or as Warrant Holder may request, reflecting such adjusted Warrant
Shares.
The Warrants are exchangeable for their value in Common Stock based upon
the closing bid price of such Common Stock as quoted on the Principal Market (as
herein defined) on the date prior to the date of exchange. In the event Warrants
are exchanged for shares, the value of the Warrants so exchanged shall equal the
Closing Price on the date of delivery of notice of exercise minus the Purchase
Price.
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<PAGE> 3
(b) The "Date of Exercise" of the Warrant shall be the date that the
advance copy of the form of exercise attached hereto as Exhibit A (the "Exercise
Form"), is sent by facsimile to the Company, provided that the original Warrant
and Exercise Form are received by the Company within reasonable time thereafter.
If Warrant Holder has not sent advance notice by facsimile, the Date of Exercise
shall be the date the original Exercise Form is received by the Company.
3. Delivery of Stock Certificates.
(a) Subject to the terms and conditions of this Warrant, as soon as
practicable after the exercise of this Warrant in full or in part, and in any
event within two (2) days thereafter, the Company at its expense (including,
without limitation, the payment by it of any applicable issue taxes) will cause
to be issued in the name of and delivered to the Warrant Holder, or as the
Warrant Holder may lawfully direct, a certificate or certificates for the number
of fully paid and non-assessable shares of Common Stock to which the Warrant
Holder shall be entitled on such exercise, together with any other stock or
other securities or property (including cash, where applicable) to which the
Warrant Holder is entitled upon such exercise in accordance with the provisions
hereof.
(b) This Warrant may not be exercised as to fractional shares of
Common Stock. In the event that the exercise of this Warrant, in full or in
part, would result in the issuance of any fractional share of Common Stock, then
in such event the Warrant Holder shall be entitled to cash equal to the fair
market value of such fractional share. For purposes of this Warrant, "fair
market value" shall equal the closing bid price of the Common Stock on the
Nasdaq National Market or Small-Cap Market, the American Stock Exchange or the
New York Stock Exchange, whichever is the principal trading exchange or market
for the Common Stock (the "Principal Market") on the date of determination or,
if the Common Stock is not listed or admitted to trading on any national
securities exchange or quoted on the Nasdaq National Market or Small-Cap Market,
the closing bid price on the over-the-counter market as furnished by any New
York Stock Exchange member firm reasonably selected from time to time by the
Company for that purpose, or, if the Common Stock is not listed or admitted to
trading on any national securities exchange or quoted on the
3
<PAGE> 4
Nasdaq National Marketor Small-Cap Market or traded over-the-counter and the
average price cannot be determined as contemplated above, the fair market value
of the Common Stock shall be as reasonably determined in good faith by the
Company's Board of Directors.
4. Covenants of the Company.
(a) The Company shall use its reasonable best efforts to insure that
a Registration Statement under the Act covering the issuance of the Warrant
Shares and the resale or other disposition thereof by the Warrant Holder is
effective to the extent provided in Section 4.02(a) of the Securities Purchase
Agreement.
(b) The Company shall take all necessary action and proceedings as
may be required and permitted by applicable law, rule and regulation, including,
without limitation the notification of the Nasdaq National Market, for the legal
and valid issuance of this Warrant and the Warrant Shares to the Warrant Holder.
(c) From the date hereof through the last date on which this Warrant
is exercisable, the Company shall take all steps reasonably necessary and within
its control to insure that the Common Stock remains listed or quoted on the
Principal Market and shall not amend its Certificate of Incorporation or Bylaws
so as to adversely affect any rights of the Warrant Holder under this Warrant.
(d) The Company shall at all times reserve and keep available,
solely for issuance and delivery as Warrant Shares hereunder, such shares of
Common Stock as shall from time to time be issuable as Warrant Shares.
(e) The Warrant Shares, when issued in accordance with the terms
hereof; will be duly authorized and, when paid for or issued in accordance with
the terms hereof, shall be validly issued, fully paid and non-assessable. The
Company has authorized and reserved for issuance to Warrant Holder the requisite
number of shares of Common Stock to be issued pursuant to this Warrant.
4
<PAGE> 5
(f) With a view to making available to Warrant Holder the benefits
of Rule 144 promulgated under the Securities Act ("Rule 144") and any other rule
or regulation of the Commission that may at any time permit Warrant Holder to
sell securities of the Company to the public without registration, the Company
agrees to use its reasonable best efforts to:
(i) make and keep public information available, as those terms are
understood and defined in Rule 144, at all times; and
(ii) file with the Commission in a timely manner all reports and
other documents required of the Company under the Securities
Act and the Exchange Act.
5. Adjustment of Purchase Price and Number of Shares. The number of
and kind of securities purchasable upon exercise of this Warrant and the
Purchase Price shall be subject to adjustment from time to time as follows:
(a) Subdivisions, Combinations and Other Issuances. If the Company
shall at any time after the date hereof but prior to the expiration of this
Warrant subdivide its outstanding securities as to which purchase rights under
this Warrant exist, by split-up, spin-off, or otherwise, or combine its
outstanding securities as to which purchase rights under this Warrant exist, the
number of Warrant Shares as to which this Warrant is exercisable as of the date
of such subdivision, split-up, spin-off or combination shall forthwith be
proportionately increased in the case of a subdivision, or proportionately
decreased in the case of a combination. Appropriate adjustments shall also be
made to the Purchase Price, but the aggregate purchase price payable for the
total number of Warrant Shares purchasable under this Warrant as of such date
shall remain the same.
(b) Stock Dividend. If at any time after the date hereof the Company
declares a dividend or other distribution on Common Stock payable in Common
Stock or other securities or rights convertible into or exchangeable for Common
Stock ("Common Stock Equivalents"), without payment of any consideration by
holders of Common Stock for the
5
<PAGE> 6
additional shares of Common Stock or the Common Stock Equivalents (including the
additional shares of Common Stock issuable upon exercise or conversion thereof),
then the number of shares of Common Stock for which this Warrant may be
exercised shall be increased as of the record date (or the date of such dividend
distribution if no record date is set) for determining which holders of Common
Stock shall be entitled to receive such dividends, in proportion to the increase
in the number of outstanding shares (and shares of Common Stock issuable upon
conversion of all such securities convertible into Common Stock) of Common Stock
as a result of such dividend, and the Purchase Price shall be adjusted so that
the aggregate amount payable for the purchase of all the Warrant Shares issuable
hereunder immediately after the record date (or on the date of such
distribution, if applicable), for such dividend shall equal the aggregate amount
so payable immediately before such record date (or on the date of such
distribution, if applicable).
(c) Other Distributions. If at any time after the date hereof the
Company distributes to holders of its Common Stock, other than as part of a
dissolution or liquidation or the winding up of its affairs, any shares of its
capital stock, any evidence of indebtedness or any of its assets (other than
cash, Common Stock or securities convertible into or exchangeable for Common
Stock), then, in any such case, the Warrant Holder shall be entitled to receive,
upon exercise of this Warrant, with respect to each share of Common Stock
issuable upon such exercise, the amount of cash or evidences of indebtedness or
other securities or assets which such Warrant Holder would have been entitled to
receive with respect to each such share of Common Stock as a result of the
happening of such event had this Warrant been exercised immediately prior to the
record date or other date determining the shareholders entitled to participate
in such distribution (the "Determination Date") or, in lieu thereof, if the
Board of Directors of the Company should so determine at the time of such
distribution, a reduced Purchase Price determined by multiplying the Purchase
Price on the Determination Date by a fraction, the numerator of which is the
result of such Purchase Price reduced by the value of such distribution
applicable to one share of Common Stock (such value to be determined in good
faith by the Company's Board of Directors) and the denominator of which is such
Purchase Price.
6
<PAGE> 7
(d) Merger, Consolidation, etc. If at any time after the date hereof
there shall be a merger or consolidation of the Company with or into, or a
transfer of all or substantially all of the assets of the Company to, another
entity (a "Consolidation Event"), then the Warrant Holder shall be entitled to
receive upon such transfer, merger or consolidation becoming effective, and upon
payment of the aggregate Purchase Price then in effect, the number of shares or
other securities or property of the Company or of the successor corporation
resulting from such merger or consolidation, which would have been received by
Warrant Holder for the shares of stock subject to this Warrant had this Warrant
been exercised immediately prior to such transfer, merger or consolidation
becoming effective or to the applicable record date thereof, as the case may be.
The Company shall not effect any Consolidation Event unless the resulting
successor or acquiring entity (if not the Company) assumes by written instrument
the obligation to deliver to the Warrant Holder such shares of stock and/or
securities as the Warrant Holder is entitled to receive had this Warrant been
exercised in accordance with the foregoing; provided, however, that if as of the
third business day prior to the consummation of the Consolidation Event the
closing bid price of the Common Stock shall be equal to at least 200% of the
Purchase Price, then the Warrant shall be automatically exchanged on the date of
consummation of the Consolidation Event, as provided in Section 2 hereof.
(e) Reclassification, Etc. If at any time after the date hereof
there shall be a reclassification of any securities as to which purchase rights
under this Warrant exist, into the same or a different number of securities of
any other class or classes, then the Warrant Holder shall thereafter be entitled
to receive upon exercise of this Warrant, during the period specified herein and
upon payment of the Purchase Price then in effect, the number of shares or other
securities or property resulting from such reorganization or reclassification,
which would have been received by the Warrant Holder for the shares of stock
subject to this Warrant had this Warrant at such time been exercised.
(f) Purchase Price Adjustment. In the event that the Company issues
or sells any Common Stock or securities which are convertible into or
exchangeable for its Common Stock or any convertible securities, or any warrants
or other rights to subscribe for or to purchase
7
<PAGE> 8
or any options for the purchase of its Common Stock or any such convertible
securities (other than issuance of Preferred Stock or of shares of Common Stock
upon conversion thereof, shares or options issued or which may be issued
pursuant to the Company's employee or director option plans or shares issued
upon exercise of options, warrants or rights outstanding on the date of the
Agreement and listed in the SEC Reports) at an effective purchase price per
share which is less than the lesser of (a) the Purchase Price then in effect or
(b) the fair market value (as hereinabove defined) of the Common Stock on the
trading day next preceding such issue or sale, then in each such case, the
Purchase Price in effect immediately prior to such issue or sale shall be
reduced effective concurrently with such issue or sale to an amount determined
by multiplying the Purchase Price then in effect by a fraction, (x) the
numerator of which shall be the sum of (1) the number of shares of Common Stock
outstanding immediately prior to such issue or sale, including, without
duplication, those deemed to have been issued under any provision of the
Preferred Stock and the Warrants plus (2) the number of shares of Common Stock
which the aggregate consideration received by the Company for such additional
shares would purchase at such fair market value or Purchase Price, as the case
may be, then in effect; and (y) the denominator of which shall be the number of
shares of Common Stock of the Company outstanding immediately after such issue
or sale including, without duplication, those deemed to have been issued under
any provision of the Preferred Stock and Warrants. For purposes of the foregoing
fraction, Common Stock outstanding shall include, without limitation, any equity
offerings then outstanding, whether or not they are exercisable or convertible
when such fraction is to be determined.
The number of shares which may be purchased hereunder shall be
increased proportionately to any reduction in Purchase Price pursuant to this
paragraph 5(f), so that after such adjustments the aggregate Purchase Price
payable hereunder for the increased number of shares of Common Stock shall be
the same as the aggregate Purchase Price in effect immediately prior to such
adjustments.
Notwithstanding anything else contained in this Warrant to the
contrary, there shall be no adjustment of the Purchase Price or the number of
shares of Common Stock issuable pursuant to the exercise of this
8
<PAGE> 9
Warrant in the event that during the term of this Warrant, the Company issues
shares of Common Stock, or securities convertible into Common Stock to the
Purchaser.
(g) Adjustments: Additional Shares, Securities or Assets. In the
event that at any time, as a result of an adjustment made pursuant to this
Section 5, Warrant Holder shall, upon exercise of this Warrant, become entitled
to receive shares and/or other securities or assets (other than Common Stock)
then, wherever appropriate, all references herein to shares of Common Stock
shall be deemed to refer to and include such shares and/or other securities or
assets; and thereafter the number of such shares and/or other securities or
assets shall be subject to adjustment from time to time in a manner and upon
terms as nearly equivalent as practicable to the provisions of this Section 5.
6. No Impairment. The Company will not, by amendment of its
Certificate of Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms of this Warrant, but will at all times in good faith assist in the
carrying out of all such terms and in the taking of all such action as may be
necessary or appropriate in order to protect the rights of the Warrant Holder
against impairment. Without limiting the generality of the foregoing, the
Company (a) will not increase the par value of any Warrant Shares above the
amount payable therefor on such exercise, and (b) will take all such action as
may be reasonably necessary or appropriate in order that the Company may validly
and legally issue fully paid and nonassessable Warrant Shares on the exercise of
this Warrant.
7. Notice of Adjustments; Notices. Whenever the Purchase Price or
number of Warrant Shares purchasable hereunder shall be adjusted pursuant to
Section 5 hereof, the Company shall execute and deliver to the Warrant Holder a
certificate setting forth, in reasonable detail, the event requiring the
adjustment, the amount of the adjustment, the method by which such adjustment
was calculated and the Purchase Price and number of shares purchasable hereunder
after giving effect to such adjustment, and shall cause a copy of such
certificate to be mailed
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(by first class mail, postage prepaid) to the Warrant Holder.
8. Rights As Stockholder. Prior to exercise of this Warrant, the
Warrant Holder shall not be entitled to any rights as a stockholder of the
Company with respect to the Warrant Shares, including (without limitation) the
right to vote such shares, receive dividends or other distributions thereon or
be notified of stockholder meetings. However, in the event of any taking by the
Company of a record of the holders of any class of securities for the purpose of
determining the holders thereof who are entitled to receive any dividend (other
than a cash dividend) or other distribution, any right to subscribe for,
purchase or otherwise acquire any shares of stock of any class or any other
securities or property, or to receive any other right, the Company shall mail to
each Warrant Holder, at least 10 days prior to the date specified therein, a
notice specifying the date on which any such record is to be taken for the
purpose of such dividend, distribution or right, and the amount and character of
such dividend, distribution or right.
9. Replacement of Warrant. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of the
Warrant and, in the case of any such loss, theft or destruction of the Warrant,
upon delivery of an indemnity agreement or security reasonably satisfactory in
form and amount to the Company or, in the case of any such mutilation, on
surrender and cancellation of such Warrant, the Company at its expense will
execute and deliver, in lieu thereof, a new Warrant of like tenor.
10. Consent to Jurisdiction.
Each of the Company and the Warrant Holder (i)
hereby irrevocably submits to the non-exclusive jurisdiction of the United
States District Court for the Southern District of New York for the purposes of
any suit, action or proceeding arising out of or relating to this Warrant and
(ii) hereby waives, and agrees not to assert in any such suit, action or
proceeding, any claim that it is not personally subject to the jurisdiction of
such court, that the suit, action or proceeding is brought in an inconvenient
forum or that the venue of the suit, action or proceeding is improper. Each of
the Company and the Warrant Holder consents to
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process being served in any such suit, action or proceeding by mailing a copy
thereof to such party at the address in effect for notices to it under this
Warrant and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing in this paragraph shall affect or
limit any right to serve process in any other manner permitted by law.
11. Entire Agreement; Amendments. This Warrant, the Agreement, and
the Certificate of Designations contain the entire understanding of the parties
with respect to the matters covered hereby and thereby. No provision of this
Warrant may be waived or amended other than by a written instrument signed by
the party against whom enforcement of any such amendment or waiver is sought.
12. Restricted Securities.
(a) Registration or Exemption Required. This Warrant has been issued
in a transaction exempt from the registration requirements of the Act by virtue
of Regulation S. This Warrant and the Warrant Shares issuable upon exercise of
this Warrant may not be resold into the United States, or to a U.S. person (as
defined in Regulation S) for a period of forty (40) days from the date of
original issuance of this Warrant; and thereafter, may not be sold into the
United States or to a U.S. person (as defined in Regulation S) except pursuant
to an effective registration statement or an exemption to the registration
requirements of the Act and applicable state laws. Prior to the expiration of
such 40-day period, this Warrant may not be exercised in the United States nor
may the Warrant Shares be delivered to an account within the United States
(except to the extent such Warrant may be exercised by, and such Warrant Shares
delivered to, certain professional fiduciaries as provided by Regulation S).
(b) Legend. For a period of forty (40) days from the date of
original issuance of this Warrant, the Warrant and any Warrant Shares issued
upon exercise thereof shall bear the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY OTHER APPLICABLE
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SECURITIES LAWS AND HAVE BEEN ISSUED IN RELIANCE UPON AN EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH
SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED,
PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF, NOR MAY SUCH
SECURITIES BE EXERCISED BY OR ON BEHALF OF A U.S. PERSON (AS
DEFINED IN REGULATION S UNDER THE SECURITIES ACT) IN THE ABSENCE OF
REGISTRATION UNDER THE SECURITIES ACT OR UNLESS SUCH TRANSACTION IS
EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION."
After the expiration of such 40-day period, the Warrant and any
Warrant Shares (whether issued prior to or subsequent to such 40-day period
shall be freely tradable and shall no longer be required to bear the legend. The
Warrant Holder shall not be required to make any representation or warranty, or
submit any documentation or legal opinion in order to have the legend removed
from its Warrant or Warrant Shares or to have Warrant Shares issued to it
without the legend after the expiration of such 40-day period.
(c) Assignment. Assuming the conditions of (a) above regarding
registration or exemption have been satisfied, the Warrant Holder may sell,
transfer, assign, pledge or otherwise dispose of this Warrant, in whole or in
part. The Warrant Holder shall deliver a written notice to Company,
substantially in the form of the Assignment attached hereto as Exhibit B,
indicating the person or persons to whom the Warrant shall be assigned and the
respective number of warrants to be assigned to each assignee. The Company shall
effect the assignment within ten (10) days, and shall deliver to the assignee(s)
designated by Warrant Holder a Warrant or Warrants of like tenor and terms for
the appropriate number of shares.
13. Notices. Any notice or other communication required or permitted
to be given hereunder shall be in writing and shall be effective (a) upon hand
delivery or delivery by facsimile at the address or number designated below (if
delivered on a business day during normal business hours where such notice is to
be received), or the first business day
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following such delivery (if delivered other than on a business day during normal
business hours where such notice is to be received) or (b) on the second
business day following the date of mailing by express courier service, fully
prepaid, addressed to such address, or upon actual receipt of such mailing,
whichever shall first occur. The addresses for such communications shall be:
to the Company:
Connective Therapeutics, Inc.
3400 West Bayshore Road
Palo Alto, California 94303
Attn: Ms. Cynthia Butitta
Fax: (415) 843 2899
to the Warrant Holder:
---------------------------------
---------------------------------
---------------------------------
Either party hereto may from time to time change its address or facsimile number
for notices under this Section 13 by giving at least 10 days prior written
notice of such changed address or facsimile number to the other party hereto.
14. Miscellaneous. This Warrant and any term hereof may be changed,
waived, discharged or terminated only by an instrument in writing signed by the
party against which enforcement of such change, waiver, discharge or termination
is sought. This Warrant shall be construed and enforced in accordance with and
governed by the laws of the State of Delaware. The headings in this Warrant are
for purposes of reference only, and shall not limit or otherwise affect any of
the terms
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hereof. The invalidity or unenforceability of any provision hereof shall in no
way affect the validity or enforceability of any other provision.
[Signatures on next page.]
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<PAGE> 15
CONNECTIVE THERAPEUTICS, INC.
By
________________________________________________
Title:
[CORPORATE SEAL]
Attest:
By _____________________________________________
Its:
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EXHIBIT A
EXERCISE FORM
CONNECTIVE THERAPEUTICS, INC.
The undersigned hereby irrevocably exercises the right to purchase
__________________ shares of Common Stock of CONNECTIVE THERAPEUTICS, INC., a
_________________ corporation, evidenced by the attached Warrant, and herewith
makes payment of the Purchase Price with respect to such shares in full in the
form of [cash or check in the amount of $___] {Warrant Shares in an amount equal
to the amount set forth in the attached Warrant to be cancelled in connection
with such exercise], all in accordance with the conditions and provisions of
said Warrant.
[The undersigned represents that it is not a U.S. Person (as such
term is defined in Regulation S under the Securities Act of 1933, as amended)
nor is this Warrant being exercised on behalf of a U.S. Person.] [The
undersigned represents that it is a U.S. Person (as such term is defined in
Regulation S under the Securities Act of 1933, as amended) or that this Warrant
is being exercised on behalf of a U.S. Person, and is herewith providing the
Company with an opinion of counsel that an exemption from the registration
requirements of the Securities Act is available with respect to such exercise.]
The undersigned requests that stock certificates for such Warrant
Shares be issued, and a Warrant representing any unexercised portion hereof be
issued, pursuant to this Warrant in the name of the registered Holder and
delivered to the undersigned at the address set forth below.
Dated:____________________
________________________________________________________________________________
Signature of Registered Holder
Name of Registered Holder (Print)
________________________________________________________________________________
Address
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EXHIBIT B
ASSIGNMENT
(To be executed by the registered Warrant Holder
desiring to transfer the Warrant)
FOR VALUED RECEIVED, the undersigned Warrant Holder of the attached Warrant
hereby sells, assigns and transfers unto the persons below named the right to
purchase _____________ shares of the Common Stock of CONNECTIVE THERAPEUTICS,
INC. evidenced by the attached Warrant and does hereby irrevocably constitute
and appoint ________________________ attorney to transfer the said Warrant on
the books of the Company, with full power of substitution in the premises.
Dated: ________________________________________
Signature
Fill in for new Registration of Warrant:
__________________________________________________
Name
__________________________________________________
Address
__________________________________________________
Please print name and address of assignee
(including zip code number)
________________________________________________________________________________
NOTICE
The signature to the foregoing Exercise Form or Assignment must correspond to
the name as written upon the face of the attached Warrant in every particular,
without alteration or enlargement or any change whatsoever.
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