<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 17, 1999
REGISTRATION NO. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
CORVAS INTERNATIONAL, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 2834 33-0238812
(State or other jurisdiction of (Primary Standard (I.R.S. Employer
incorporation or organization) Industrial Classification Identification Number)
Code Number)
3030 SCIENCE PARK ROAD
SAN DIEGO, CA 92121
(858) 455-9800
(Address, including zip code and telephone number, including area
code, of Registrant's principal executive offices)
---------------
RANDALL E. WOODS
PRESIDENT AND CHIEF EXECUTIVE OFFICER
CORVAS INTERNATIONAL, INC.
3030 SCIENCE PARK ROAD
SAN DIEGO, CA 92121
(858) 455-9800
(Name, address, including zip code and telephone number,
including area code, of agent for service)
---------------
COPIES TO:
BARBARA L. BORDEN, ESQ.
DENISE L. WOOLARD, ESQ.
COOLEY GODWARD LLP
4365 EXECUTIVE DRIVE, SUITE 1100
SAN DIEGO, CA 92121
---------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
From time to time after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [x]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
<TABLE>
<CAPTION>
----------------
CALCULATION OF REGISTRATION FEE
====================================================================================================================================
PROPOSED
PROPOSED MAXIMUM
MAXIMUM AGGREGATE AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE OFFERING REGISTRATION
SECURITIES TO BE REGISTERED BE REGISTERED PER SHARE PRICE(1) FEE
- ------------------------------------------------------- --------------- --------------- ------------------- ------------------------
<S> <C> <C> <C> <C>
Common Stock, $.001 par value per share 4,224,000 $3.03 $12,798,720 $3,558.04
- ------------------------------------------------------- --------------- --------------- ------------------- ------------------------
</TABLE>
(1) Estimated in accordance with Rule 457(c) solely for the purpose of
calculating the amount of the registration fee based on the average of the high
and low prices of the Registrant's Common Stock as reported on the Nasdaq
National Market on September 9, 1999.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
================================================================================
<PAGE>
SUBJECT TO COMPLETION - DATED SEPTEMBER _, 1999
PROSPECTUS
4,224,000 SHARES
CORVAS INTERNATIONAL, INC.
COMMON STOCK
The selling stockholders are offering and selling up to 4,224,000
shares of Corvas common stock under this prospectus. We will not receive any of
the proceeds from the sale of the shares by the selling stockholders.
The selling stockholders may offer their Corvas common stock through
public or private transactions, on or off the Nasdaq National Market, at
prevailing market prices, or at privately negotiated prices.
Our common stock is listed on the Nasdaq National Market under the
ticker symbol "CVAS." On September 15, 1999, the closing price of one share of
Corvas common stock on the Nasdaq National Market was $3.00.
----------------
THE SHARES OF OUR COMMON STOCK OFFERED OR SOLD UNDER THIS PROSPECTUS
INVOLVE A HIGH DEGREE OF RISK. SEE "RISK FACTORS" BEGINNING ON PAGE 4.
----------------
THE CORVAS SHARES OFFERED OR SOLD UNDER THIS PROSPECTUS HAVE NOT BEEN
APPROVED BY THE SEC OR ANY STATE SECURITIES COMMISSION, NOR HAVE THESE
ORGANIZATIONS DETERMINED THAT THIS PROSPECTUS IS ACCURATE OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
PROSPECTUS DATED SEPTEMBER _, 1999.
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
1.
<PAGE>
THIS PROSPECTUS IS PART OF A REGISTRATION STATEMENT THAT WE FILED WITH
THE SEC. THE REGISTRATION STATEMENT INCLUDES EXHIBITS AND ADDITIONAL INFORMATION
NOT INCLUDED IN THIS PROSPECTUS.
WE HAVE NOT AUTHORIZED ANY PERSON TO GIVE YOU ANY SUPPLEMENTAL
INFORMATION OR MAKE ANY REPRESENTATIONS FOR US. YOU SHOULD ONLY RELY ON
INFORMATION ABOUT CORVAS THAT IS CONTAINED IN THIS PROSPECTUS OR IN ONE OF OUR
PUBLIC REPORTS FILED WITH THE SEC AND INCORPORATED INTO THIS PROSPECTUS.
INFORMATION CONTAINED IN THIS PROSPECTUS OR IN CORVAS' PUBLIC REPORTS MAY BECOME
OUTDATED. YOU SHOULD NOT ASSUME THAT THE INFORMATION IN THIS PROSPECTUS IS
ACCURATE OR COMPLETE AS OF ANY DATE OTHER THAN THE DATE ON THE FRONT OF THIS
PROSPECTUS OR OTHER DATE TO WHICH SPECIFIC INFORMATION CONTAINED HEREIN IS
QUALIFIED. WE ARE NOT MAKING AN OFFER OF SECURITIES IN ANY STATE WHERE THE OFFER
IS PROHIBITED.
THE COMPANY
At Corvas, we are designing and developing a new generation of
therapeutic agents for cardiovascular, cancer and other major diseases. Our drug
candidates target the following diseases.
o Major cardiovascular diseases such as heart attack, unstable
angina, deep vein thrombosis ("DVT"), pulmonary embolism and
stroke.
o Acute inflammation associated with reperfusion injury in
ischemic stroke.
o Cancer, as our drug candidates may inhibit the formation of
new blood vessels (angiogenesis) and the movement of tumor
cells in certain solid tumors (metastasis).
o Replication of the hepatitis C virus.
Many of our drug candidates are still in the research and development
stage. Corvas, alone or in conjunction with our corporate partner Pfizer Inc.
("Pfizer"), is conducting the following human clinical trials.
o International multi-center Phase II trial of our proprietary
injectable anticoagulant, rNAPc2, for the prevention of DVT,
the formation of blood clots in the veins of the legs,
following orthopedic surgery.
o Phase IIa trial of rNIF as a possible stroke therapy,
currently being conducted by Pfizer.
Before the end of 1999, we also plan to begin an additional Phase IIa
trial of rNAPc2 in coronary care patients undergoing elective coronary balloon
angioplasty. Another of our proprietary drug candidates, rNAP5, is ready to
enter Phase I clinical testing for acute cardiovascular indications. In addition
to our alliance with Pfizer for rNIF, we also have two strategic alliances with
Schering Corporation ("Schering-Plough"). The first collaboration is for the
development of synthetic oral anticoagulants for the prevention and treatment of
chronic cardiovascular diseases involving thrombosis, such as DVT, unstable
angina, atrial fibrillation and myocardial infarction (heart attack). We are
also collaborating with Schering-Plough on a program directed at the development
of oral inhibitors of a key protease associated with hepatitis C virus
replication, intended as a treatment for this chronic viral disease.
2.
<PAGE>
We have expanded our internal research efforts to include two new key
targets for the treatment of certain solid tumor cancers. This research is
focused on the development of drugs that may inhibit the formation of new blood
vessels (angiogenesis) and the metastatic migration of tumor cells in certain
solid tumors. Another of our new research programs is directed towards
discovering inhibitors of a key malaria protease.
Our principal executive offices are located at 3030 Science Park Road,
San Diego, California 92121, and our telephone number is (858) 455-9800. We were
incorporated in 1987.
CORVAS(R) is a registered trademark and the Corvas logo is a trademark
of the Company.
3.
<PAGE>
RISK FACTORS
INVESTMENT IN CORVAS SHARES INVOLVES A HIGH DEGREE OF RISK. YOU SHOULD
CONSIDER THE FOLLOWING DISCUSSION OF RISKS AS WELL AS OTHER INFORMATION IN THIS
PROSPECTUS BEFORE PURCHASING ANY CORVAS SHARES. THIS PROSPECTUS CONTAINS
FORWARD-LOOKING STATEMENTS. THESE STATEMENTS RELATE TO FUTURE EVENTS OR OUR
FUTURE CLINICAL OR PRODUCT DEVELOPMENT OR FINANCIAL PERFORMANCE. IN SOME CASES,
YOU CAN IDENTIFY FORWARD-LOOKING STATEMENTS BY TERMINOLOGY SUCH AS "MAY,"
"WILL," "SHOULD," "EXPECTS," "PLANS," "ANTICIPATES," "BELIEVES," "ESTIMATES,"
"PREDICTS," "POTENTIAL," OR "CONTINUE." OUR ACTUAL OPERATING RESULTS AND
FINANCIAL PERFORMANCE MAY PROVE TO BE VERY DIFFERENT FROM WHAT WE MIGHT HAVE
PREDICTED AS OF THE DATE OF THIS PROSPECTUS. THE RISKS DESCRIBED BELOW ADDRESS
SOME OF THE FACTORS THAT MAY AFFECT OUR FUTURE OPERATING RESULTS AND FINANCIAL
PERFORMANCE.
WE STILL ARE AT AN EARLY STAGE OF DEVELOPMENT AND WE DO NOT HAVE ANY COMMERCIAL
DRUGS OR OTHER PRODUCTS GENERATING REVENUES
We are at an early stage of development as a biotechnology and
pharmaceutical company, and we do not yet have any commercial products. Our
primary sources of revenue are research funding, license fees and milestone
payments from our corporate collaborations. Our existing drug candidates will
require significant additional development, clinical trials, regulatory
approvals and additional investment before they can be marketed for sale. We do
not expect to be able to market any of our existing drug candidates for a number
of years, if at all. We cannot assure you that any of our product development
efforts will lead to commercial drugs, either because the drug candidates fail
to be effective in targeting the desired indication in clinical trials or
because we have inadequate financial or other resources to pursue the program
through the clinical trial process.
WE HAVE A HISTORY OF OPERATING LOSSES THAT WE EXPECT TO CONTINUE FOR THE
FORESEEABLE FUTURE
We have experienced significant operating losses since our inception in
1987. At June 30, 1999, we had an accumulated deficit of approximately
$82,539,000. We expect to continue to incur substantial additional operating
losses over the next several years as we pursue our clinical trial and research
and development efforts. To become profitable, we, either alone or with others,
must successfully develop, manufacture and market our current drug candidates
and continue to identify, develop, manufacture and market additional future
drugs, all of which will require regulatory approval.
WE WILL CONTINUE TO NEED ADDITIONAL FINANCING, WHICH WE MAY NOT BE ABLE TO
OBTAIN ON ACCEPTABLE TERMS
Our operations since inception have consumed substantial amounts of
cash and we anticipate that we will continue to spend substantial additional
amounts on research and development, including amounts spent on our clinical
trials and for manufacturing clinical supplies of our drug candidates. We are
seeking to leverage our core technologies into new drug programs to diversify
our pipeline. These new programs may require additional cash investments that
are not funded through collaborations. Thus, we expect negative cash flows from
operations to continue in the foreseeable future and we also expect we will
continue to seek opportunities to raise capital.
4.
<PAGE>
We are actively seeking opportunities to fund our programs through
collaborative arrangements and to raise capital through private or public
financings. On August 18, 1999, we raised $9,750,000 through the private sale of
a 5.5% convertible senior subordinated note and the issuance of common stock. In
addition, until December 31, 1999, we have the right to sell an additional
$3,500,000 of these notes if we are able to raise an additional $1,750,000 in
notes or common stock priced at not less than $2.50 per share. The closing price
of our stock has ranged from $3.50 to $1.97 between May 1, 1999 and September
15, 1999, and we cannot assure you that we will be able to complete a financing
by year-end in order to raise this additional $5,250,000. Moreover, depending on
the market price of our common stock at the time of the second closing, we may
have to obtain stockholder approval for the financing under Nasdaq rules. We
cannot guarantee that we would obtain the necessary stockholder approval.
Even if we complete the second financing, we will continue to seek
opportunities to raise additional capital when available on favorable terms.
Because of the risks involved in investing in early-stage biotechnology
companies and the limited number of financing sources making new investments in
the biotechnology industry in general, we may have difficulties raising
additional capital in a timely manner and on acceptable terms. If we are unable
to raise additional capital, we may have to significantly delay, scale back or
discontinue one or more of our drug discovery programs, clinical trials or other
aspects of our operations. We also could be forced to seek collaborative
partners for programs at an earlier stage than would be desirable in order to
maximize the rights retained by Corvas to future product candidates.
WE RELY ON OUR COLLABORATIVE PARTNERS TO FUND PROGRAMS AND CONDUCT CLINICAL
TRIALS
We have relied and expect to continue to rely on certain established
pharmaceutical companies to fund a portion of our research and development
expenses. We have collaborative agreements with Pfizer for the development of
rNIF, an anti-inflammatory drug that we developed, and with Schering-Plough for
the discovery and commercialization of orally active inhibitors of (i)
thrombosis (Factor Xa and thrombin) for the prevention and treatment of chronic
cardiovascular disorders and (ii) a key protease associated with hepatitis C
virus replication. As a result, we depend on Pfizer and Schering-Plough for
funding these collaborations and for the clinical testing (including regulatory
compliance) of any drug candidates developed through these collaborations. We
also will depend on them to launch and commercially market any drugs approved by
the FDA or foreign regulatory agencies.
We cannot control the amount and timing of resources dedicated by our
collaborators to the advancement of our drug programs. In addition, we face the
following risks.
o That our collaborator's interests will no longer coincide with
our interests such that our drug programs will not be
advanced.
o That our collaborators will terminate a program, delay a
clinical trial, underfund a clinical trial program, stop a
clinical trial and abandon a drug candidate, repeat or conduct
new clinical trials or require a new formulation of a drug
candidate for clinical testing.
o That our collaborators will develop, independently or with
third parties, products that could compete with our future
products.
5.
<PAGE>
WE ARE ATTEMPTING TO ENTER INTO A COLLABORATIVE AGREEMENT FOR OUR RNAPC2 DRUG
CANDIDATE
We are in the process of seeking an appropriate corporate partner for
our proprietary drug candidate, rNAPc2, in order to obtain additional funding
for the continued development of this drug candidate. The process of partnering
drug programs is lengthy and subject to risk and uncertainty. We may not be able
to obtain a partner on acceptable terms or within a reasonable period of time.
WE MUST OBTAIN REGULATORY APPROVAL TO MARKET OUR PRODUCTS IN THE U.S. AND
FOREIGN JURISDICTIONS
We must obtain regulatory approval before we can market or sell our
future drug products. In the U.S., we must obtain FDA approval for each drug
that we intend to commercialize. The FDA approval process is typically lengthy
and expensive, and approval is never guaranteed. Drug products that are
distributed abroad are also subject to foreign government regulation. Since our
drug products are in the early development stage, none of our drug products has
received regulatory approval to be commercially marketed and sold. If we fail to
obtain regulatory approval, we will be unable to market and sell our future
products.
TO OBTAIN REGULATORY APPROVAL TO MARKET OUR PRODUCTS, PRECLINICAL STUDIES AND
COSTLY AND LENGTHY CLINICAL TRIALS ARE REQUIRED, AND THE RESULTS OF THE STUDIES
AND TRIALS ARE HIGHLY UNCERTAIN
As part of the FDA approval process, we must conduct, at our own
expense or our partners' expense, preclinical studies on animals and clinical
trials on humans for each drug candidate. The number of preclinical studies and
clinical trials that the FDA will require varies depending on the drug product,
the disease or condition that the drug is being developed to address, and
regulations applicable to the particular drug. We may need to perform multiple
preclinical studies using various doses and formulations before we can begin
clinical trials, which could result in delays in our ability to market any of
our drug products. Furthermore, even if we obtain favorable results in
preclinical studies on animals, the results in humans may be different.
After we have conducted preclinical studies in animals, we must
demonstrate that our drug products are safe and effective for use on the target
human patients in order to receive regulatory approval for commercial sale.
Results that are adverse or inconclusive will stop us from filing for regulatory
approval of our products. There are many factors that can cause our clinical
trials to be delayed or terminated. These factors include the risk of slow
patient enrollment, lack of sufficient supplies of the drug candidate, adverse
medical events or side effects in treated patients, longer treatment time
required to demonstrate the safe and effective use of the drug and lack of
effectiveness of the drug candidate being used.
In addition, our Phase IIa trial for rNIF is being conducted by Pfizer
and we rely on our contractual rights to access data that is collected by
Pfizer. We depend on Pfizer for the data and cannot assure you that Pfizer will
continue the clinical trial or that the FDA will approve rNIF.
6.
<PAGE>
OUR DRUG CANDIDATES MAY COMPETE WITH OTHER DRUGS THAT MAY DIMINISH THE
COMMERCIAL SUCCESS OF ANY DRUGS WE COMMERCIALIZE
The biotechnology market is highly competitive. Almost all of the
larger biotechnology companies have developed, or are attempting to develop,
drugs that will be competitive with drugs that we may develop. We expect that
the competition from other biotechnology companies, pharmaceutical companies,
and research and academic institutions will increase. These competitors have
substantially greater financial, technical, research and other resources than we
do. It is possible that our competitors will develop and market drugs that are
more efficient and commercially attractive than our future drugs or that will
render our drugs obsolete. We also cannot assure you that we will have the
financial resources, technical expertise or marketing, distribution or support
capabilities to compete successfully.
FAILURE TO RETAIN OUR PRESIDENT AND CHIEF EXECUTIVE OFFICER AND OUR EXECUTIVE
VICE PRESIDENT, RESEARCH AND DEVELOPMENT COULD ADVERSELY EFFECT OUR ABILITY TO
OBTAIN FINANCING, CONDUCT CLINICAL TRIALS OR DEVELOP DRUGS
We depend on our President and Chief Executive Officer, Randall E.
Woods, and our Executive Vice President, Research and Development, George P.
Vlasuk, Ph.D. The loss of either of these individuals may prevent us from
achieving our business objectives. Each of these employees has an employment
agreement with us, but the agreements provide for "at-will" employment with no
specified term.
WE HAVE LIMITED MANUFACTURING EXPERIENCE AND WE RELY ON THIRD PARTIES TO
MANUFACTURE OUR CLINICAL SUPPLIES
In order to be successful, our drugs must be manufactured in sufficient
quantities, in compliance with regulatory requirements, and at an acceptable
cost. We have limited experience in pilot scale manufacturing. For larger-scale
production, as is required for clinical testing, we rely on third parties to
manufacture our drug candidates. If we cannot contract for large-scale
manufacturing capabilities on acceptable terms, our ability to conduct clinical
trials may be adversely affected, and this may result in the delay or preclusion
of submission of drugs for regulatory approval, which in turn could adversely
affect our business, financial condition, prospects and results of operations.
IF WE ARE UNABLE TO PROTECT OUR PROPRIETARY TECHNOLOGY, WE MAY NOT BE ABLE TO
COMPETE AS EFFECTIVELY
Our success depends in part on our ability to obtain patent protection
for our products, both in the U.S. and other countries. The scope and extent of
patent protection for our drug candidates is uncertain. We rely on patent and
other intellectual property protection to prevent our competitors from
manufacturing and marketing our drug candidates. We cannot be certain that our
patents will be enforceable or that they will afford us protection against our
competitors, especially since there is a lengthy lead time between when a patent
application is filed and when it is actually published. We also cannot assure
you that we will not infringe on intellectual property rights of others. If a
patent holder believes that our drug candidate infringes on their patent, the
patent holder may sue us even if we have received patent protection for our
technology. If another party claims we are infringing on their technology, we
would face a number of issues, including the following.
7.
<PAGE>
o Defending a lawsuit, which is very expensive and time
consuming.
o Paying a large sum for damages if we are found to be
infringing.
o Being prohibited from selling or licensing our drugs or drug
candidates until we obtain a license from the patent holder,
who may refuse to grant us a license or will only agree to do
so on unfavorable terms. Even if we are granted a license, we
may have to pay substantial royalties or grant cross-licenses
to our patents.
o Redesigning our drug so it does not infringe on the patent
holder's technology if we are unable to obtain a license. This
may not be possible and even if it is possible, it would
require substantial additional capital and would delay
commercialization.
We also rely on trade secrets and proprietary know-how to develop and
maintain our competitive position. While we believe we use reasonable protection
to protect our trade secrets, we cannot assure you that our current or former
employees, consultants or scientific advisors, or current or prospective
collaborative partners will not unintentionally or willfully disclose our
information to competitors. Furthermore, enforcing a claim alleging the
infringement of our trade secrets would be expensive and difficult to prove,
making the outcome uncertain. There is also the possibility that our competitors
may independently develop equivalent knowledge, methods and know-how.
Since we collaborate with third parties with respect to certain of our
technology, there is also the risk that disputes may arise as to the rights to
technology or drugs developed in collaboration with other parties.
IF WE BECOME SUBJECT TO PRODUCT LIABILITY CLAIMS, IT MAY RESULT IN DAMAGES THAT
EXCEED OUR INSURANCE
Since we conduct clinical trials on humans, we face the risk that the
use of our drug candidates will result in adverse effects. Such risks will exist
even for any drugs that are approved for commercial sale. We have obtained
liability insurance of $10,000,000 for our products in clinical trials, which we
believe is sufficient considering our business. However, we cannot predict all
of the possible harms or side effects that may result and, therefore, we cannot
assure you that the amount of coverage we currently hold will be adequate to
protect us. We also cannot assure you that we will have sufficient resources to
pay for any liability resulting from a claim beyond the limit of our insurance
coverage.
WE DO NOT HAVE ANY SALES, MARKETING OR DISTRIBUTION EXPERIENCE
Since we do not have any marketed products, we have limited experience
in sales, marketing and distribution. To directly market and distribute any
products we may develop, we must build a substantial marketing and sales force
with appropriate technical expertise and supporting distribution capabilities.
Alternatively, we may obtain the assistance of a pharmaceutical company or other
entity with a large distribution system and a large direct sales force. We
cannot assure you that we will be able to establish sales, marketing and
distribution capabilities of our own or enter into separate arrangements with
third parties in a timely manner or on acceptable terms.
8.
<PAGE>
OUR STOCK HAS BEEN AND MAY CONTINUE TO BE EXTREMELY VOLATILE
The market price of our common stock has been, and is likely to
continue to be, extremely volatile, in part because our daily sales volume is
relatively low. Our stock price could be subject to wide fluctuations in
response to a variety of factors, including the following.
o Announcements of technological innovations or new services by
us or our competitors.
o Changes in the market valuations of biotechnology companies.
o Changes in financial estimates by securities analysts.
o Actions by governmental regulatory agencies.
o Announcements by us or our competitors of acquisitions,
strategic relationships, joint ventures or capital
commitments.
o Additions or departures of key personnel.
o Sales of our common stock in the open market.
o Other events or factors that may be beyond our control.
9.
<PAGE>
USE OF PROCEEDS
Corvas will not receive any proceeds from sales of Corvas shares by the
selling stockholders. The selling stockholders will receive the proceeds from
sales of these shares.
RECENT DEVELOPMENTS
PRIVATE FINANCING
On August 18, 1999, Corvas issued and sold in a private financing
1,300,000 shares of common stock for $2.50 per share and a 5.5% convertible
senior subordinated note due in August 2006 in the aggregate principal amount of
$6,500,000. The convertible note accrues interest at 5.5% per annum, compounded
semi-annually, with interest payable upon redemption or conversion. At the
option of the holder, the note is convertible into shares of Corvas common stock
at $3.25 per share, subject to adjustment for certain changes in capital or
reorganizations and subject to adjustment if Corvas sells additional securities
for less than $2.50 per share before August 18, 2000. At our option, we may pay
interest in cash or in Corvas common stock priced at the then-current market
price. We may call the note for redemption anytime after August 18, 2002.
In addition, until December 31, 1999, we have the right to sell an
additional $3,500,000 of these notes if we are able to raise an additional
$1,750,000 in notes or common stock priced at not less than $2.50 per share. The
closing price of our stock has ranged from $3.50 to $1.97 between May 1, 1999
and September 15, 1999, and we cannot assure you that we will be able to
complete a financing by year-end in order to raise this additional $5,250,000.
Moreover, depending on the market price of our common stock at the time of the
second closing, we may have to obtain stockholder approval for the financing
under Nasdaq rules.
10.
<PAGE>
SELLING STOCKHOLDERS
We are registering the 4,224,000 shares on behalf of the selling
stockholders pursuant to registration rights agreements we entered into with the
selling stockholders in connection with convertible debt and equity financings
closed concurrently on August 18, 1999.
Our registration of these Corvas shares does not necessarily mean that
the selling stockholders will sell any or all of these shares, or that Artisan
Equity Limited will elect to convert any of their convertible note into common
stock, or that it will elect to convert the convertible note for the number of
shares listed in the following table.
<TABLE>
<CAPTION>
Number of Percent of Number Number of Percent of
Shares Shares Of Shares Shares
Beneficially Beneficially Shares Beneficially Beneficially
Owned Prior to Owned Prior to Being Owned After Owned After
Name of Selling Stockholders Offering(1) Offering(1) Offered Offering(1)(3) Offering(1)(3)
---------------------------- ------------- ------------- ------- -------------- --------------
<S> <C> <C> <C> <C> <C>
International Biotechnology 3,100,000 17.0% 300,000 2,800,000 15.4%
Trust, plc(4)
Artisan Equity Limited(5) 2,924,000 14.8% 2,924,000 0 *
Sofinov Societe Financiere 1,000,000 6.0% 1,000,000 0 *
D'Innovation Inc. --------- --------- ---------
TOTAL 7,024,000 4,224,000 2,800,000
========= ========= =========
</TABLE>
* Less than 1%
(1) Unless otherwise indicated below, the persons named in the table have
sole voting and investment power with respect to all shares
beneficially owned by them, subject to community property laws where
applicable.
(2) Applicable percentage of ownership is based on 16,788,277 shares of
common stock outstanding on September 15, 1999.
(3) Assumes the sale of all shares offered hereby.
(4) Includes 1,400,000 shares of common stock issuable upon exercise of an
outstanding warrant.
(5) Assumes that the convertible note accretes until its stated maturity of
August 17, 2006, and all principal and accretion are converted into
common stock immediately prior to maturity at $3.25 per share.
11.
<PAGE>
PLAN OF DISTRIBUTION
The selling stockholders may offer their Corvas shares at various times
in one or more of the following transactions:
o on the Nasdaq National Market;
o in the over-the-counter market;
o in negotiated transactions other than the Nasdaq National Market or the
over-the-counter market;
o in connection with short sales of the Corvas shares;
o by pledge to secure debts and other obligations;
o in connection with the writing of call options, in hedge transactions
and in settlement of other transactions in standardized or
over-the-counter options; or
o in a combination of any of the above transactions.
The selling stockholders may sell their shares at market prices at the
time of sale, at prices related to such prevailing market prices, at negotiated
prices or at fixed prices. The selling stockholders may use broker-dealers to
sell their shares. If this happens, broker-dealers will either receive discounts
or commissions from the selling stockholders, or they will receive commissions
from purchasers for whom they acted as agents.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the SEC. You may read and copy the documents we file at
the SEC's public reference rooms in Washington, D.C., New York, New York and
Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information
on the public reference rooms. Our SEC filings are also available to the public
from the SEC's website at http://www.sec.gov.
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to other documents. The information incorporated by reference is
considered to be part of this prospectus, and information that we file later
with the SEC will automatically update and supersede this information. We
incorporate by reference the documents listed below and any future filings we
will make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934, as amended:
1. Annual Report on Form 10-K for the fiscal year ended December 31,
1998;
2. Quarterly Report on Form 10-Q for the quarter ended March 31,
1999; and
3. Quarterly Report on Form 10-Q for the quarter ended June 30,
1999.
You may request a free copy of these filings by writing to us at the
following address:
CORVAS INTERNATIONAL, INC.
ATTN: INVESTOR RELATIONS
3030 SCIENCE PARK ROAD
SAN DIEGO, CA 92121
12.
<PAGE>
LEGAL MATTERS
For purposes of this offering, Cooley Godward LLP, San Diego,
California, is giving its opinion on the validity of the shares.
EXPERTS
The financial statements of Corvas International, Inc. as of December
31, 1998 and 1997, and for each of the years in the three-year period ended
December 31, 1998, have been incorporated by reference herein and in the
Registration Statement in reliance upon the report of KPMG LLP, independent
certified public accountants, incorporated by reference herein and upon
authority of said firm as experts in accounting and auditing.
13.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth all expenses payable by Corvas in
connection with the sale of the securities being registered. All the amounts
shown are estimates except for the SEC registration fee and the Nasdaq National
Market listing fee.
SEC Registration fee............................ $ 3,558.04
Nasdaq National Market listing fee.............. 17,500.00
Legal fees and expenses......................... 10,000.00
Accounting fees and expenses.................... 8,000.00
Miscellaneous................................... 941.96
-------------
Total..................................... $ 40,000.00
=============
ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS
Section 145 of the General Corporation Law of the State of Delaware
(the "Delaware Law") empowers a Delaware corporation to indemnify any persons
who are, or are threatened to be made, parties to any threatened, pending or
completed legal action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of such
corporation), by reason of the fact that such person was an officer or director
of such corporation, or is or was serving at the request of such corporation as
a director, officer, employee or agent of another corporation or enterprise. The
indemnity may include expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement of such action, suit or proceeding, provided that
such officer or director acted in good faith and in a manner he or she
reasonably believed to be in or not opposed to the corporation's best interest,
and, for criminal proceedings, had no reasonable cause to believe his or her
conduct was illegal. A Delaware corporation may indemnify officers and directors
against expenses (including attorney's fees) in connection with the defense or
settlement of an action by or in the right of the corporation under the same
conditions, except that no indemnification is permitted without judicial
approval if the officer or director is adjudged to be liable to the corporation.
Where an officer or director is successful on the merits or otherwise in the
defense of any action referred to above, the corporation must indemnify him or
her against the expenses which such officer or director actually and reasonably
incurred.
II-1
<PAGE>
The Registrant's Bylaws contain a provision to limit the personal
liability of the directors of the Registrant for violations of their fiduciary
duty, except to the extent such limitation of liability is prohibited by the
Delaware Law. This provision eliminates each director's liability to the
Registrant or its stockholders for monetary damages except (i) for any breach of
the director's duty of loyalty to the Registrant or its stockholders, (ii) for
acts or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the Delaware Law providing
for liability of directors for unlawful payment of dividends or unlawful stock
purchases or redemptions, or (iv) for any transaction from which a director
derived an improper personal benefit. The Registrant's Bylaws provide that the
Registrant shall indemnify directors and officers to the fullest extent
permitted by law. The effect of these provisions is to eliminate the personal
liability of directors for monetary damages for actions involving a breach of
their fiduciary duty of care, including any such actions involving gross
negligence.
In addition, Registrant has entered into indemnity agreements with its
executive officers and directors whereby Registrant obligates itself to
indemnify such officers and directors from any amounts which the officer or
director becomes obligated to pay because of any claim made against him or her
arising out of any act or omission committed while he or she is acting in his or
her capacity as a director and/or officer of Registrant.
Registrant maintains directors and officers liability insurance
coverage that insures its officers and directors against certain losses that may
arise out of their positions with the Registrant and insures the Registrant for
liabilities it may incur to indemnify its officers and directors.
ITEM 16. EXHIBITS
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
------
4.3 Common Stock Purchase Agreement between the Company and
International Biotechnology Trust plc ("IBT") and
Societe Financiere D'Innovation Inc. ("Sofinov"), dated
as of August 18, 1999.
4.4 Registration Rights Agreement between the Company and IBT
and Sofinov, dated as of August 18, 1999.
4.5 Note Purchase Agreement between the Company and Artisan
Equity Limited ("Artisan"), dated as of August 18,
1999. (1)
4.6 5.5% Convertible Senior Subordinated Note Due 2006, in
the principal amount of $6,500,000, issued to Artisan,
dated as of August 18, 1999. (1)
4.7 Registration Rights Agreement between the Company and
Artisan, dated as of August 18, 1999. (1)
5.1 Opinion of Cooley Godward LLP
II-2
<PAGE>
23.1 Consent of KPMG LLP
23.2 Consent of Cooley Godward LLP. Reference is made to
Exhibit 5.1
24.1 Power of Attorney. Reference is made to page II-5.
- -----------------------------------
(1) Incorporated by reference to Schedule 13D, filed by Artisan Equity
Limited on August 27, 1999.
ITEM 17. UNDERTAKINGS
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors and executive officers of the Registrant
pursuant to provisions described in Item 15 or otherwise, the Registrant has
been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director or executive officer of the Registrant in the successful
defense of any action, suit or proceeding) is asserted by such director or
executive officer in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement to include any
material information with respect to the plan of distribution not previously
disclosed in the registration statement or any material change to such
information in the registration statement.
(2) That, for purposes of determining any liability under the
Securities Act, each filing of the Registrant's annual report pursuant to
Section 13(a) or 15(d) of the Exchange Act (and, where applicable, each filing
of an employee benefit plan's annual report pursuant to Section 15(d) of the
Exchange Act) that is incorporated by reference in the registration statement
shall be deemed to be a new registration statement relating to the securities
offered therein and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To deliver or cause to be delivered with the Prospectus, to each
person to whom the Prospectus is sent or given, the latest annual report to
security holders that is incorporated by reference in the Prospectus and
furnished pursuant to and meeting the requirements of Rule 14a-3 or Rule 14c-3
under the Exchange Act; and where interim financial information required to be
presented by Article 3 of Regulation S-X are not set forth in the Prospectus, to
deliver or cause to be delivered to each person to whom the Prospectus is sent
or given, the latest quarterly report that is specifically incorporated by
reference in the Prospectus to provide such interim financial information.
II-3
<PAGE>
(4) That, for the purposes of determining liability under the
Securities Act, each post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(5) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
(6) That, for purposes of determining any liability under the
Securities Act, the information omitted from the form of prospectus filed as
part of this Registration Statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4)
or 497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(7) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of San Diego, State of California, on September 17,
1999.
CORVAS INTERNATIONAL, INC.
By: /s/ Randall E. Woods
----------------------------------------
Randall E. Woods
President and Chief Executive Officer
POWER OF ATTORNEY
KNOW TO ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Randall E. Woods and Carolyn M. Felzer,
and each of them, as his true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution, for him and in his name, place and
stead, in any and all capacities, to sign any and all amendments (including
post-effective amendments) to this Registration Statement, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in connection therewith,
as fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming that all said attorneys-in-fact and agents, or any of
them or their or his substitute or substitutes, may lawfully do or cause to be
done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ Randall E. Woods President, Chief Executive Officer and September 17, 1999
- ------------------------------------ Director (PRINCIPAL EXECUTIVE OFFICER)
Randall E. Woods
/s/ Carolyn M. Felzer Senior Director of Finance (PRINCIPAL September 17, 1999
- ------------------------------------ FINANCIAL AND ACCOUNTING OFFICER
Carolyn M. Felzer
/s/ M. Blake Ingle, Ph.D. Chairman of the Board of Directors September 17, 1999
- ------------------------------------
M. Blake Ingle, Ph.D.
/s/ George P. Vlasuk, Ph.D. Executive Vice President, Research September 17, 1999
- ------------------------------------ and Development and Director
George P. Vlasuk, Ph.D.
/s/ Michael Sorell, M.D. Director September 17, 1999
- ------------------------------------
Michael Sorrell, M.D.
/s/ Nicole Vitullo Director September 17, 1999
- ------------------------------------
Nicole Vitullo
</TABLE>
II-5
<PAGE>
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
------
4.3 Common Stock Purchase Agreement between the Company and
International Biotechnology Trust plc ("IBT") and
Societe Financiere D'Innovation Inc. ("Sofinov"), dated
as of August 18, 1999.
4.4 Registration Rights Agreement between the Company and IBT
and Sofinov, dated as of August 18, 1999.
4.5 Note Purchase Agreement between the Company and Artisan
Equity Limited ("Artisan"), dated as of August 18,
1999. (1)
4.6 5.5% Convertible Senior Subordinated Note Due 2006, in
the principal amount of $6,500,000, issued to Artisan,
dated as of August 18, 1999. (1)
4.7 Registration Rights Agreement between the Company and
Artisan, dated as of August 18, 1999. (1)
5.1 Opinion of Cooley Godward LLP
23.1 Consent of KPMG LLP
23.2 Consent of Cooley Godward LLP. Reference is made to
Exhibit 5.1
24.1 Power of Attorney. Reference is made to page II-5.
- -----------------------------------
(1) Incorporated by reference to Schedule 13D, filed by Artisan Equity
Limited on August 27, 1999.
CORVAS INTERNATIONAL, INC.
COMMON STOCK PURCHASE AGREEMENT
THIS COMMON STOCK PURCHASE AGREEMENT (the "Agreement") is entered into
as of August 18, 1999, by and among CORVAS INTERNATIONAL, INC., a Delaware
corporation (the "Company") and the entities whose names are set forth on the
Schedule of Purchasers attached hereto as EXHIBIT A (which entity is hereinafter
referred to as the "Purchaser" or collectively as the "Purchasers").
RECITALS
WHEREAS, the Company has authorized the sale and issuance of an
aggregate of one million three hundred thousand (1,300,000) shares of its Common
Stock, $0.001 par value (the "Shares");
WHEREAS, the Company has also authorized the sale of up to $10,000,000
Convertible Senior Subordinated Notes (the "Convertible Notes") to Artisan
Equity, Ltd. (the "Note Purchaser"), pursuant to that certain Note Purchase
Agreement (the "Note Purchase Agreement") dated of even date herewith, by and
between the Company and such purchaser;
WHEREAS, the Purchasers desire to purchase the Shares on the terms and
conditions set forth herein; and
WHEREAS, the Company desires to issue and sell the Shares to Purchasers
on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual promises hereinafter set forth, the parties hereto agree as follows:
1. AGREEMENT TO SELL AND PURCHASE.
1.1 AUTHORIZATION OF SHARES. On or prior to the Closing (as
defined in Section 2 below), the Company shall have authorized the sale and
issuance to the Purchasers of the Shares. The Shares shall have the rights,
preferences, privileges and restrictions set forth in the Certificate of
Incorporation of the Company, as amended, in the form attached hereto as EXHIBIT
B.
1.2 SALE AND PURCHASE. Subject to the terms and conditions
hereof, at the Closing (as hereinafter defined) the Company hereby agrees to
issue and sell to each Purchaser, severally and not jointly, and each Purchaser
agrees to purchase from the Company, severally and not jointly, the number of
Shares set forth opposite such Purchaser's name on EXHIBIT A, at a purchase
price of two dollars and fifty cents ($2.50) per share.
1.
<PAGE>
2. CLOSING, DELIVERY AND PAYMENT.
2.1 CLOSING. The closing of the sale and purchase of the
Shares under this Agreement (the "Closing") shall take place at 10:00 a.m. on
the date hereof, at the offices of Cooley Godward LLP, 4365 Executive Drive,
Suite 1100, San Diego, California 92121 or at such other time or place as the
Company and the Purchasers may mutually agree (such date is hereinafter referred
to as the "Closing Date").
2.2 DELIVERY. At the Closing or shortly thereafter, subject to
the terms and conditions hereof, the Company will deliver to the Purchasers
certificates representing the number of Shares to be purchased at the Closing by
each Purchaser, against payment of the purchase price therefor by check, wire
transfer made payable to the order of the Company.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
Except as set forth on a Schedule of Exceptions delivered by the
Company to the Purchasers at the Closing, the Company hereby represents and
warrants to each Purchaser as of the date of this Agreement as follows:
3.1 ORGANIZATION AND STANDING. The Company is a corporation
duly organized and validly existing under, and by virtue of, the laws of the
State of Delaware and is in good standing under such laws. The Company has all
requisite corporate power to own and operate its assets and to carry on its
business as presently conducted and as currently proposed to be conducted and as
described in the SEC Documents (as hereinafter defined). The Company is
qualified to do business as a foreign corporation in each jurisdiction in which
the failure to so qualify would have a material adverse effect on the Company's
business, operations or condition (financial or otherwise), results of
operations or prospects (a "MATERIAL ADVERSE EFFECT"). The Company has no
subsidiaries.
3.2 AUTHORIZATION. 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, the authorization, sale, issuance and delivery
of the Shares and the performance of the Company's obligations under this
Agreement and the Registration Rights Agreement has been taken or will be taken
prior to the Closing Date.
3.3 VALID AND BINDING OBLIGATION. This Agreement and the
Registration Rights Agreement, when executed and delivered by the Company, will
constitute valid and binding obligations of the Company, enforceable in
accordance with their terms except as limited by (a) applicable bankruptcy,
insolvency, reorganization, moratorium or other laws of general application
affecting enforcement of creditors' rights; and (b) general principles of equity
that restrict the availability of equitable remedies. The Shares, when issued in
compliance with the provisions of this Agreement, will be duly and validly
issued, fully paid and nonassessable and free of any liens or encumbrances
created by the Company other than restrictions on transfer arising under
applicable securities laws. Assuming the accuracy of the representations and
2.
<PAGE>
warranties of the Purchasers, the Shares, when issued in compliance with the
provisions of this Agreement, will be issued in compliance with applicable
United States federal and state securities laws.
3.4 SEC FILINGS; FINANCIAL STATEMENTS.
(a) The Company has delivered to the Purchasers accurate
and complete copies (excluding copies of exhibits) of each report, registration
statement (on a form other than Form S-8) and definitive proxy statement filed
by the Company with the SEC between December 31, 1998, and the date of this
Agreement (the "SEC DOCUMENTS"). As of the time it was filed with the SEC (or,
if amended or superseded by a filing prior to the date of this Agreement, then
on the date of such filing): (i) each of the SEC Documents complied in all
material respects with the applicable requirements of the Securities Act or the
Securities Exchange Act (as the case may be); and (ii) none of the SEC Documents
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
(b) The financial statements contained in the SEC
Documents: (i) complied as to form in all material respects with the published
rules and regulations of the SEC applicable thereto; (ii) were prepared in
accordance with U.S. generally accepted accounting principles applied on a
consistent basis throughout the periods covered, except as may be indicated in
the notes to such financial statements and (in the case of unaudited statements)
as permitted by Form 10-Q of the SEC, and except that unaudited financial
statements may not contain footnotes and are subject to year-end audit
adjustments; and (iii) fairly present the financial position of the Company as
of the respective dates thereof and the results of operations and cash flows of
the Company for the periods covered thereby consistent with the books and
records of the Company.
(c) Since March 31, 1999, there has not been: (i) any
change in the assets, liabilities, financial condition or operations of the
Company except changes in the ordinary course of business that have not been, in
any case or in the aggregate, materially adverse; (ii) any damage, destruction
or loss, whether or not covered by insurance, materially and adversely affecting
the properties or business of the Company; (iii) any waiver or compromise by the
Company of a material debt or obligation owed to it; or (iv) any other event or
condition out of character that has materially and adversely affected the
Company's business or prospects.
3.5 NON-CONTRAVENTION. The execution and delivery by the
Company of, and the performance by the Company of its obligations under, this
Agreement and the Registration Rights Agreement (i) will not contravene any
provision of applicable law or the certificate of incorporation or bylaws of the
Company or any agreement or other instrument binding upon the Company, or any
judgment, order or decree of any governmental body, agency or court having
jurisdiction over the Company and (ii) will not result in the creation or
imposition of any Lien upon any property or assets of the Company pursuant to
the terms of any agreement or instrument to which it is a party or by which it
may be bound or to which any of its property or assets is subject.
3.
<PAGE>
3.6 CAPITALIZATION.
(a) Immediately prior to the Closing Date and the sale
of the Convertible Notes and the Shares, the authorized capital stock of the
Company shall consist of (a) 10,000,000 shares of Preferred Stock, $.001 par
value, of which 1,000,000 shares have been designated Series A Convertible
Preferred Stock, $.001 par value, all of which are issued and outstanding, of
which 250,000 shares have been designated Series B Convertible Preferred Stock,
$.001 par value, all of which are issued and outstanding, and of which 500,000
shares have been designated Series C Junior Participating Preferred Stock, $.001
par value, none of which is issued and outstanding (b) 50,000,000 shares of
Common Stock, $.001 par value, 15,487,277 shares of which are issued and
outstanding, (c) 1,699,566 options and other rights to acquire Common Stock
under the Company's stock option plan (whether currently outstanding or granted
in the future), (d) 37,836 shares of the Company's Common Stock reserved for
issuance under the Employee Stock Purchase Plan, (e) 1,983,715 currently
outstanding warrants to acquire Common Stock of the Company and (f) 1,250,000
shares of Common Stock reserved for issuance upon the conversion of the Series A
Convertible Preferred Stock and the Series B Convertible Preferred Stock. As of
the date hereof, the Company is not subject to any obligation (contingent or
otherwise) to repurchase or otherwise acquire or retire any shares of its
capital stock or any warrants, options or other rights to acquire its capital
stock, except as set forth on Schedule 3.5(a) and except as may be contemplated
by this Agreement. As of the date hereof, the Company is not party to any voting
or similar agreement or proxies relating to the voting of shares of its capital
stock and is not aware of any such agreements or proxies to which it is not a
party except as may be contemplated by this Agreement. As of the date hereof,
all of the outstanding shares of the Company's capital stock have been duly
authorized and validly issued, and are fully paid and nonassessable, except to
the extent that such shares may be subject to restrictions on transfer under
state and/or federal securities laws as set forth herein or as otherwise
required by such law at the time a transfer is proposed. Except as set forth
herein, there are no other options, warrants, calls, preemptive (or similar)
rights, subscriptions or other rights, agreements, arrangements or commitments
of any character that obligate the Company to issue, transfer or sell, or cause
to be issued, transferred or sold, any shares of the capital sock of the Company
or other equity interests in the Company or any securities convertible into or
exchangeable for such shares of capital stock or other equity interests.
Immediately after closing the sale of the Shares pursuant to this Agreement and
the Convertibles Notes being sold concurrently with such Shares, the Company's
authorized capital shall not change and the number of authorized and outstanding
securities and the number of shares of Common Stock reserved for issuance under
outstanding options and reserved for issuance upon the conversion of the
Preferred Stock, shall not change except as follows: (a) 16,787,277 shares of
Common Stock will be issued and outstanding, (b) 2,924,000 shares of Common
Stock will be reserved for issuance upon the conversion of the Convertible Notes
and (c) 2,143,849 shares will be reserved for issuance under currently
outstanding warrants to acquire Common Stock of the Company.
(b) There are no statutory or contractual shareholders'
preemptive rights or rights of refusal with respect to the issuance of the
Shares hereunder. The Company has not violated any applicable federal or state
securities laws in connection with the offer, sale or issuance of any of its
capital stock, and, assuming the accuracy of the Purchaser's representations
4.
<PAGE>
under Section 4, the offer, sale and issuance of the Shares hereunder do not
require registration under the Securities Act.
3.7 GOVERNMENTAL CONSENT, ETC. The Company has obtained all
permits, consents, approvals or authorizations of, or declarations to or filings
with, any governmental authority required in connection with the execution,
delivery and performance by the Company of this Agreement, the Registration
Rights Agreement or the other agreements contemplated hereby, or the
consummation by the Company of any other transactions contemplated hereby,
except any notices of sale required to be filed with the SEC under Regulation D
of the Securities Act, or such post-closing filings as may be required under
applicable state securities laws, all of which will be timely filed within the
applicable periods
3.8 NO GENERAL SOLICITATION. None of the Company, its
affiliates or any person acting on its own or the Company's or its affiliates
behalf has engaged or will engage, in connection with the offering of the
Shares, in any form of general solicitation or general advertising within the
meaning of Rule 502(c) under the Securities Act.
3.9 LITIGATION, ETC. There are no actions, suits, proceedings
(except applications for regulatory approval from the Food and Drug
Administration and foreign drug agencies), orders, investigations or claims
pending or, to the Company's knowledge, threatened against or affecting the
Company (or to the Company's knowledge, pending or threatened against or
affecting any of the officers, directors or employees of the Company with
respect to its business) at law or in equity, or before or by any governmental
department, commission, board, bureau, agency or instrumentality (including,
without limitation, any actions, suit, proceedings or investigations with
respect to the transactions contemplated by this Agreement); the Company is not
subject to any arbitration proceedings under collective bargaining agreements or
otherwise or, to the Company's knowledge, any governmental investigations or
inquiries; and, to the Company's knowledge, there is no basis for any of the
foregoing. The Company is not subject to any judgment, order or decree of any
court or other governmental agency, and the Company has not received any opinion
or memorandum or legal advice from legal counsel to the effect that it is
exposed, from a legal standpoint, to any liability or disadvantage which may
result in a Material Adverse Effect. The Company has conducted and continues to
conduct its business in compliance with all applicable laws, except where the
failure to comply has not had and is not reasonably likely to have a Material
Adverse Effect.
3.10 EMPLOYEES. The Company is not aware that any executive or
key employee of the Company or any group of employees of the Company has any
plans to terminate employment with the Company. The Company has complied with
all laws relating to the employment of labor (including, without limitation,
provisions thereof relating to wages, hours, equal opportunity, collective
bargaining and the payment of social security and other taxes), except where the
failure to comply has not had and is not reasonably expected to have a Material
Adverse Effect, and the Company is not aware that it has any material labor
relations problems (including, without limitation, any union organization
activities, threatened or actual strikes or work stoppages or material
grievances). The Company is not, and to the Company's knowledge, none of its
employees is, subject to any non-compete, nondisclosure, confidentiality,
employment, consulting or similar agreements relating to, affecting or in
conflict with the present business activities of the Company, except for
5.
<PAGE>
agreements between the Company and its present and former employees that do not
conflict with such activities. The Company has no collective bargaining
agreements with any of its employees.
3.11 INTELLECTUAL PROPERTY RIGHTS. To its knowledge, the
Company owns or possesses, or can acquire on reasonable terms, Intellectual
Property Rights reasonably necessary to carry on the business now operated by
it. The Company has not received any notice of and, to its knowledge there is no
infringement of or conflict with rights of others with respect to any
Intellectual Property Rights owned or used by the Company. The Company is not
aware of any facts or circumstances that would render any Intellectual Property
Rights owned or used by the Company invalid or inadequate to protect the
interest of the Company therein, and which infringement or conflict (if the
subject of any unfavorable decision, ruling or finding) or which invalidity or
inadequacy, singularly or in the aggregate, would result in a Material Adverse
Effect. To the Company's knowledge, no person or entity is infringing or
threatening to infringe any Intellectual Property Rights owned or used by the
Company. All employees and officers other than those employees who are not privy
to any of the Company's proprietary information are bound by the confidentiality
and invention assignment agreements and such agreements do not grant to such
employees and officers rights to any Intellectual Property Rights owned or used
by the Company. All non-employee directors are bound by confidentiality
agreements and such agreements do not grant to such directors rights to any
Intellectual Property Rights owned or used by the Company.
3.12 ENVIRONMENTAL AND SAFETY LAWS. The Company is in
compliance with all applicable statutes, laws, and regulations relating to the
environment and occupational health and safety, except where the failure to
comply has not had and will not have a Material Adverse Effect, and no material
expenditures are or will be required in order to comply with any such existing
statutes, laws or regulations. The Company has not received any written notice,
demand, letter, claim, request for information or other written communication
alleging that the Company may be in violation of, or liable under, any statute,
law, regulation or permit.
3.13 RELATED-PARTY TRANSACTIONS. No employee, officer,
stockholder or director of the Company or member of his or her immediate family
is indebted to the Company, nor is the Company indebted (or committed to make
loans or extend or guarantee credit) to any of them, other than (i) for payment
of salary for services rendered, (ii) reimbursement for reasonable expenses
incurred on behalf of the Company, and (iii) for other standard employee
benefits made generally available to all employees (including stock option
agreements outstanding under any stock option plan approved by the Board of
Directors of the Company). To the Company's knowledge, none of such persons has
any direct or indirect ownership interest in any firm or corporation with which
the Company is affiliated or with which the Company has a business relationship,
or any firm or corporation that competes with the Company, except that
employees, stockholders, officers, or directors of the Company and members of
their immediate families may own stock in publicly traded companies that may
compete with the Company. To the Company's knowledge, no officer, director, or
stockholder or any member of their immediate families is, directly or
indirectly, interested in any material contract with the Company (other than
such contracts that relate to such person's ownership of capital stock or other
securities of the Company).
6.
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3.14 TITLE TO PROPERTY AND ASSETS; LEASES. The Company has
good marketable title to, or a valid leasehold interest in, the properties and
assets used by it, located on its premises or shown on the unaudited Balance
Sheet of the Company as of June 30, 1999 (THE "LATEST BALANCE SHEET") or
acquired thereafter, free and clear of all Liens (other than Permitted Liens),
except for properties and assets disposed of in the ordinary course of business
since the date of the Latest Balance Sheet and except for Liens disclosed on the
Latest Balance Sheet (including any notes thereto) and minor liens and
encumbrances which do not materially detract from the value of the property
subject thereto or materially impair the operations of the Company. The
Company's buildings, equipment and other tangible assets are in good operating
condition in all material respects and are fit for their intended use in the
ordinary course of business. The Company owns, or has a valid leasehold interest
in, all assets necessary for the conduct of its businesses as presently
conducted.
3.15 INSURANCE. The Company has in full force and effect fire
and casualty insurance policies, with extended coverage, standard comprehensive
general liability insurance and product liabilities insurance (subject to
reasonable deductibles), in amounts customary for companies similarly situation
to the Company.
3.16 SYSTEM OF INTERNAL ACCOUNTING CONTROLS. The Company
maintains a system of internal accounting controls sufficient to provide
reasonable assurances that (i) transactions are executed in accordance with
management's general or specific authorization, (ii) transactions are recorded
as necessary to permit preparation of financial statements in conformity with
generally accepted accounting principles and to maintain accountability for
assets, (iii) access to assets is permitted only in accordance with management's
general or specific authorization and (iv) the recorded accountability for
assets is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
3.17 FILING OF TAX RETURNS. The Company has filed all tax
returns that are required to be filed by it pursuant to foreign or domestic laws
and has paid all taxes due pursuant to such returns or pursuant to any
assessment received by it (except where the requirement for payment of such
taxes is being contested in good faith in appropriate proceedings), except where
the failure to file or make payment would not result in a Material Adverse
Effect. The charges, accruals, and reserves on the books of the Company in
respect of taxes or other governmental charges are, to the knowledge of the
Company, adequate.
3.18 INVESTMENT COMPANY. The Company is not, and upon the
issuance and sale of the Shares as herein contemplated and the application of
the net proceeds therefrom will not be, an "investment company" or an entity
"controlled" by an "investment company" as such terms are defined in the
Investment Company Act of 1940, as amended.
3.19 REAL PROPERTY HOLDING COMPANY. The Company is not a
United States Real Property Holding Corporation within the meaning of
ss.897(c)(2) of the Internal Revenue Code of 1986, as amended.
3.20 NO DEFAULTS. The Company has, in all material respects,
performed all obligations to be performed by it to date and is not in default
under any of the contracts, loans, notes, mortgages, indentures, licenses,
7.
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security agreements, agreements or leases to which it is a party or by which it
is otherwise bound, except for such defaults which in the aggregate have not had
a Material Adverse Effect. To the Company's knowledge, no other party to such
contracts, loans, notes, mortgages, debentures, licenses, security agreements,
agreements or leases is in default thereunder except those which would not have
a Material Adverse Effect. The contracts listed as exhibits to the SEC Documents
are all of the material contracts (as defined in Regulation S-K adopted under
the Securities Act of 1933) to which the Company is a party.
3.21 STOCKHOLDER RIGHTS AGREEMENT. The execution and delivery
by the Company of, and the performance by the Company of its obligations under,
this Agreement and the Registration Rights Agreement, will not contravene the
Stockholder Rights Agreement or result in the exercise of any rights under the
Stockholder Rights Agreement.
3.22 BROKERS OR FINDERS. The Company has not entered into any
agreement or arrangement giving rise to any liability for brokerage or finders'
fees or agents' commissions or any similar charges in connection with this
Agreement or the transactions contemplated hereby.
3.23 YEAR 2000 COMPLIANCE. To the Company's knowledge, the
hardware, software and software products (the "SYSTEMS") used by the Company
are, and will be, able to accurately (i) process any date rollover, (ii) process
calculations or computations regardless of the dates used in such calculations
whether before, on or after January 1, 2000, (iii) accept and respond to two
digit year date input in a manner which resolves any ambiguities as to the
century in an appropriate manner, (iv) store and display date data in a manner
which is unambiguous as to the century, and (v) recognize the year 2000 as a
leap year provided in all such cases, hardware and software used by third
parties in conjunction with the Systems (a) can accurately perform in accordance
with clauses (i) through (v) above and (b) do not affect the performance of the
Systems.
3.24 NASDAQ LISTING. The Common Stock of the Company is
designated for trading on the Nasdaq National Stock Market and the Company has
not been informed of any proceedings to revoke or suspend such designation. The
sale of Shares as contemplated hereby will not result in a violation of the
Nasdaq rules and regulations.
3.25 FORM S-3 ELIGIBILITY. The Company is eligible to file a
resale Registration Statement on Form S-3. Without limiting the generality of
the foregoing the Company has filed in a timely manner all reports required to
be filed by the Company with the Securities and Exchange Commission during the
12 calendar months and during the portion of the month immediately preceding the
date of this Agreement. The Company is not aware of any facts or circumstances
that exist as of the date of this Agreement that would cause it to lose its
eligibility.
3.26 KNOWLEDGE. As used in this Section 3, the terms
"knowledge" or "aware" when used with respect to the Company shall mean and
include the actual knowledge or awareness of any of the officers of the Company
as that term is defined in Securities Exchange Act after due inquiry of
management employees.
8.
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3.27 DISCLOSURE. Neither this Agreement nor any of the
exhibits or schedules contains any untrue statement of a material fact or omits
to state a material fact necessary to make each statement contained herein or
therein not misleading.
4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS.
Each Purchaser severally for itself and not jointly with the other
Purchaser, hereby represents and warrants to the Company as follows (such
representations and warranties do not lessen or obviate the representations and
warranties of the Company set forth in this Agreement):
4.1 REQUISITE POWER AND AUTHORITY. Purchaser has all necessary
power and authority under all applicable provisions of law to execute and
deliver this Agreement and to perform its obligations hereunder. All action on
Purchaser's part required for the lawful execution and delivery of this
Agreement have been or will be effectively taken prior to the Closing. Upon
execution and delivery, this Agreement will be a valid and binding obligation of
Purchaser, enforceable against Purchaser in accordance with its terms, except
(a) as limited by applicable bankruptcy, insolvency, reorganization, moratorium
or other laws of general application affecting enforcement of creditors' rights,
and (b) general principles of equity that restrict the availability of equitable
remedies.
4.2 INVESTMENT REPRESENTATIONS. Purchaser understands that the
Shares have not been registered under the Securities Act. Purchaser also
understands that the Shares are being offered and sold pursuant to an exemption
from registration contained in the Securities Act based in part upon Purchaser's
representations contained in this Agreement. Each Purchaser, severally for
itself and not jointly with the other Purchaser, hereby represents and warrants
as follows:
(a) PURCHASER BEARS ECONOMIC RISK. Purchaser has
substantial experience in evaluating and investing in private placement
transactions of securities in companies similar to the Company so that it is
capable of evaluating the merits and risks of its investment in the Company.
Purchaser must bear the economic risk of this investment indefinitely unless the
Shares are registered pursuant to the Securities Act, or an exemption from
registration is available in connection with a resale. Purchaser also
understands that there is no assurance that any exemption from registration
under the Securities Act will be available and that, even if available, such
exemption may not allow Purchaser to transfer all or any portion of the Shares
under the circumstances, in the amounts or at the times Purchaser might propose.
(b) ACQUISITION FOR OWN ACCOUNT. Purchaser is acquiring
the Shares for Purchaser's own account for investment only, and not with a view
towards their distribution in violation of the Securities Act, has no present
intention of selling (in connection with a distribution or otherwise), granting
any participation in or otherwise distributing the same in violation of the
Securities Act, and does not presently have reason to anticipate a change in
such intention.
(c) PURCHASER CAN PROTECT ITS INTEREST. Purchaser
represents that by reason of its, or of its management's, business or financial
experience, Purchaser has the capacity to protect its own interests in
connection with the transactions contemplated in this Agreement and in the
9.
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Shares. Purchaser is aware of no publication of any advertisement in connection
with the transactions contemplated in Agreement.
(d) ACCREDITED INVESTOR. Purchaser represents that it is
an "accredited investor" within the meaning of Rule 501(a) of Regulation D under
the Securities Act.
(e) COMPANY INFORMATION. Purchaser has received and read
the Company's Annual Report on Form 10-K for the year ended December 31, 1998
and the Form 10-Q for the period ended March 31, 1999 (including all financial
statements), and has had an opportunity to discuss the Company's business,
management and financial affairs with directors, officers and management of the
Company and has had the opportunity to review the Company's operations.
Purchaser has also had the opportunity to ask questions of, and receive answers
from, the Company and its management regarding the terms and conditions of this
investment.
(f) RULE 144. Purchaser acknowledges and agrees that the
Shares must be held indefinitely unless they are subsequently registered under
the Securities Act or an exemption from such registration is available.
Purchaser has been advised or is aware of the provisions of Rule 144 promulgated
under the Securities Act as in effect from time to time, which permits limited
resale of restricted securities subject to the satisfaction of certain
conditions, including, among other things: the availability of certain current
public information about the Company, the resale occurring following the
required holding period under Rule 144 and the number of shares being sold
during any three-month period not exceeding specified limitations.
(g) RESIDENCE. The office or offices of Purchaser in
which its investment decision was made is located at the address or addresses of
Purchaser set forth on Exhibit A of this Agreement.
4.3 FURTHER ASSURANCES. Purchaser and the Company each agrees
and covenants that at any time and from time to time, it will promptly execute
and deliver to the other party such further instruments and documents and to
take such further action as the other party may reasonably require in order to
carry out the transactions contemplated by this Agreement.
4.4 TRANSFER RESTRICTIONS. The Purchaser acknowledges and
agrees that the Shares are subject to restrictions on transfer as set forth
herein.
5. CONDITIONS TO EACH PURCHASER'S OBLIGATIONS AT THE CLOSING.
Each Purchaser's obligation to purchase the Shares at the Closing is
subject to the satisfaction, at or prior to the Closing Date, of the following
conditions:
5.1 REPRESENTATIONS AND WARRANTIES; COVENANTS. The
representations and warranties made by the Company in Section 3 hereof shall be
true and correct at and as of the Closing Date as though then made, except to
the extent of changes caused by the transactions expressly contemplated herein,
and the Company shall have performed or complied with all of the covenants
required to be performed by it hereunder prior to the Closing Date.
10.
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5.2 REGISTRATION RIGHTS AGREEMENT. The Company and the
Purchasers shall have entered into a Registration Rights Agreement substantially
in the form set forth in EXHIBIT C attached hereto (the "REGISTRATION RIGHTS
AGREEMENT"), and the Registration Rights Agreement shall be in full force and
effect.
5.3 SALE OF CONVERTIBLE NOTES. The Company shall have
completed the sale of Convertible Notes of the Company to Artisan Equity Limited
for the aggregate amount of $6,500,000 to be purchased pursuant to the Note
Purchase Agreement and the conversion price for the Convertible Notes shall be
$3.25 per share of Common Stock.
5.4 GOVERNMENTAL CONSENTS. The Company shall have made all
filings under all applicable federal and state securities laws necessary to
consummate the sale and issuance of the Shares at the Closing in compliance with
such laws, except any notices of sale required to be filed with the SEC under
Regulation D of the Securities Act, or such post-closing filings as may be
required under applicable state securities laws, all of which will be timely
filed within the applicable periods therefor.
5.5 NO MATERIAL ADVERSE CHANGE. Since March 31, 1999, there
shall have been no change in the Company's business, operations or financial
condition that has had a Material Adverse Effect.
5.6 CONSENTS AND APPROVALS. The Company shall have received
all authorizations, consents, orders and approvals of all governmental
authorities and officials necessary for the consummation of the transactions
contemplated by this Agreement.
5.7 OPINION OF THE COMPANY'S COUNSEL. The Purchasers shall
have received from Cooley Godward LLP, counsel for the Company, an opinion in
substantially the form attached hereto as EXHIBIT D, which shall be addressed to
the Purchasers, dated as of the Closing Date.
5.8 CLOSING DOCUMENTS. The Company shall have delivered to the
Purchasers all of the following documents:
(a) an officer's certificate, dated as of the Closing
Date, stating that the conditions specified in sections 5.1 through 5.7 have
been fully satisfied;
(b) certified copies of the resolutions duly adopted by
the Company's Board of Directors authorizing (i) the execution, delivery and
performance of this Agreement, the Registration Rights Agreement and each of the
other agreements contemplated hereby, (ii) the issuance and sale of the Shares,
(iii) the consummation of all other transactions contemplated by this Agreement
and the Registration Rights Agreement; and (iv) the amendment to the bylaws
expanding the Board of Directors if required.
(c) certified copies of the Company's Certificate of
Incorporation and Bylaws, each as in effect as of the Closing Date;
11.
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(d) a copy of the duly executed Registration Rights
Agreement referenced in Section 5.2 as in effect at the Closing; and
(e) copies of all third party and governmental consents,
approvals and filings required in connection with the consummation of the
transactions hereunder (including, without limitation, all blue sky law filings
and waivers of all preemptive rights and rights of first refusal), except such
as may be properly obtained subsequent to the Closing.
6. CONDITIONS TO OBLIGATIONS OF THE COMPANY.
The Company's obligation to issue and sell the Shares at the Closing is
subject to the satisfaction, on or prior to the Closing Date, of the following
conditions:
6.1 REPRESENTATIONS AND WARRANTIES TRUE. The representations
and warranties made by the Purchasers in Section 4 hereof shall be true and
correct in all material respects at the date of the Closing with the same force
and effect as if they had been made on and as of said date.
6.2 CONSENTS, PERMITS, AND WAIVERS. The Company shall have
obtained any and all consents, permits and waivers necessary or appropriate for
the consummation of the transactions contemplated by this Agreement and the
Registration Rights Agreement (except for such as may be properly obtained
subsequent to the Closing Date).
6.3 SALE OF CONVERTIBLE NOTES. The Company shall have
completed the sale of Convertible Notes of the Company to Artisan Equity Limited
for the aggregate amount of $6,500,000 to be purchased pursuant to the Note
Purchase Agreement and the conversion price for the Convertible Notes shall be
$3.25 per share of Common Stock.
7. MISCELLANEOUS.
7.1 LEGENDS. Each certificate or instrument representing
Restricted Securities shall be imprinted with a legend in substantially the
following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") AND
MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, ASSIGNED, PLEDGED OR
HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT OR UNLESS THE
COMPANY HAS RECEIVED AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY
AND ITS COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED.
7.2 INDEMNIFICATION. The Company hereby agrees to indemnify
and hold harmless each Purchaser, any affiliate of the Purchaser, any Person
controlling the Purchaser or such affiliate and their respective directors,
officers, agents and employees (each, an "INDEMNIFIED PERSON") from and against
any losses, claims, damages, liabilities, costs and expenses (including, without
limitation, reasonable fees and disbursements of counsel and accountants and
other costs and expenses incident to any actual or threatened claim, suit,
action or proceeding, whether incurred in connection with a claim against the
12.
<PAGE>
Company or a third party claim) (collectively, "LOSSES") arising out of or
resulting from any breach of representation, warranty or covenant made or to be
performed on the part of the Company under this Agreement or the agreements
contemplated hereby or otherwise resulting from any action, claim or proceeding
arising out of the matters or transactions which are the subject of or
contemplated by this Agreement or any instrument or agreement referred to
herein, other than Losses resulting directly from the gross negligence or
willful misconduct of such Indemnified Person. If for any reason (other than the
gross negligence or willful misconduct of the Indemnified Person) the foregoing
indemnity is unavailable or insufficient to hold an Indemnified Person harmless,
then the Company shall contribute to amounts paid or payable by such Indemnified
Person in respect of such Losses in such proportion as appropriately reflects
the relative benefits received by, and fault of, the Company and such
Indemnified Person in connection with the matters as to which such Losses relate
and other equitable considerations.
7.3 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties contained herein or made in writing by any party
in connection herewith shall remain operative and in full force and effect for
eighteen months from the Closing Date.
7.4 SUCCESSORS AND ASSIGNS. Except as otherwise expressly
provided herein, all covenants and agreements contained in this Agreement by or
on behalf of any of the parties hereto shall bind and inure to the benefit of
the respective successors and assigns of the parties hereto whether so expressed
or not. In addition, and whether or not any express assignment has been made,
the provisions of this Agreement which are for the Purchasers' benefit or impose
obligations upon the Purchasers as a purchaser or holder of the Shares are also
for the benefit of, and impose such obligations upon and enforceable by and
against, any subsequent holder of such Shares.
7.5 SEVERABILITY. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement.
7.6 COUNTERPARTS. This Agreement may be executed
simultaneously in two or more counterparts, any one of which need not contain
the signatures of more than one party, but all such counterparts taken together
shall constitute one and the same Agreement.
7.7 DESCRIPTIVE HEADINGS; INTERPRETATION. The descriptive
headings of this Agreement are inserted for convenience only and do not
constitute a substantive part of this Agreement. The use of the word "including"
in this Agreement shall be by way of example rather than by limitation.
7.8 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of California as such laws
are applied to contracts entered into and performed entirely within the State of
California by California residents.
13.
<PAGE>
7.9 NOTICES. All notices, demands or other communications to
be given or delivered under or by reason of the provisions of this Agreement
shall be in writing and shall be deemed to have been given when delivered
personally to the recipient, sent to the recipient by reputable overnight
courier service (charges prepaid) or mailed to the recipient by certified or
registered mail, return receipt requested and postage prepaid. Such notices,
demands and other communications shall be sent to the Purchasers and to the
Company at the address indicated below:
To the Company: CORVAS INTERNATIONAL, INC.
3030 Science Park Road
San Diego, California 92121
Attn: President
With a copy to: COOLEY GODWARD LLP
4365 Executive Drive, Suite 1100
San Diego, California 92121
Attn: Barbara L. Borden, Esq.
To the Purchasers: To the addresses set forth on Exhibit A
With a copy to: LAPOINTE ROSENSTEIN
1250 Rene-Levesque Boulevard, West Suite 1400
Montreal, Quebec H3B 5E9
Attn: Perry Kliot, Esq.
or to such other address or to the attention of such other person as the
recipient party has specified by ten (10) days advance written notice to the
other party.
7.10 NO STRICT CONSTRUCTION. The parties hereto have
participated jointly in the negotiation and drafting of this Agreement. In the
event an ambiguity or question of intent or interpretation arises, this
Agreement shall be construed as if drafted jointly by the parties hereto, and no
presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any of the provisions of this Agreement.
7.11 EXPENSES. The Company agrees to reimburse Sofinov for all
of its costs and reasonable expenses, including reasonable attorneys' fees,
incurred in satisfaction, of its legal, scientific and patent due diligence
review and its legal review of the closing documents.
7.12 LISTING OF SHARES ON NASDAQ. Promptly following the
Closing, the Company agrees to file an Application for Listing of Additional
Shares to request the designation for trading of the Shares on the Nasdaq
National Stock Market and use reasonable best efforts to have the application
approved.
7.13 USE OF PROCEEDS. The proceeds from the sale of the Shares
hereunder will be used by the Company for working capital and for general
corporate purposes.
14.
<PAGE>
7.14 INFORMATION RIGHTS. For so long as any Purchaser holds
any of the Shares, the Company shall deliver to such Purchaser by electronic
mail or by other electronic means copies of all press releases issued by the
Company and shall deliver by mail copies of its quarterly and annual reports
filed with the SEC (including financial statements).
7.15 PUBLIC STATEMENTS OR RELEASES. None of the parties to
this Agreement shall make, issue, or release any announcement, whether to the
public generally, or to any of its employees, suppliers, or customers, with
respect to this Agreement or the transactions provided for herein, or make any
statement or acknowledgment of the existence of, or reveal the status of, this
Agreement or the transactions provided for herein, without the prior consent of
the other parties, which shall not be unreasonably withheld or delayed;
provided, that nothing in this Section 7.16 shall prevent any of the Parties
hereto from making such public announcements as it may consider necessary in
order to satisfy its legal obligations, but to the extent not inconsistent with
such obligations, it shall provide the other parties with an opportunity to
review and comment on any proposed public announcement before it is made.
8. DEFINITIONS.
For the purposes of this Agreement, the following terms have the
meanings set forth below:
"INTELLECTUAL PROPERTY RIGHTS" means all (i) patents, patent
applications, patent disclosures and inventions, (ii) trademarks, service marks,
trade dress, trade names, logos and corporate names and registrations and
applications for registration thereof together with all of the goodwill
associated therewith, (iii) copyrights (registered or unregistered) and
copyrightable works and registrations and applications for registration thereof,
(iv) mask works and registrations and applications for registration thereof, (v)
computer software, data, data bases and documentation thereof, (vi) trade
secrets and other confidential information (including, without limitation,
ideas, formulas, compositions, inventions (whether patentable or unpatentable
and whether or not reduced to practice), know-how, manufacturing and production
processes and techniques, research and development information, drawings,
specifications, designs, plans, proposals, technical data, copyrightable works,
financial and marketing plans and customer and supplier lists and information),
and (vii) copies and tangible embodiments thereof (in whatever form or medium).
"LIENS" means any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind (including, without limitation, any
conditional sale or other title retention agreement or lease in the nature
thereof), any sale of receivables with recourse against the Company or any
affiliate, any filing or agreement to file a financing statement as debtor under
the Uniform Commercial Code or any similar statute other than to reflect
ownership by a third party of property leased to the Company under a lease which
is not in the nature of a conditional sale or title retention agreement, or any
subordination arrangement in favor of another Person (other than any
subordination arising in the ordinary course of business).
"PERMITTED LIENS" means:
15.
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(a) tax liens with respect to taxes not yet due and
payable or which are being contested in good faith by appropriate proceedings
and for which appropriate reserves have been established in accordance with
generally accepted accounting principles, consistently applied;
(b) deposits or pledges made in connection with, or to
secure payment of, utilities or similar services, workers' compensation,
unemployment insurance, old age pensions or other social security obligations;
(c) purchase money security interests in any property
acquired by the Company to the extent permitted by this Agreement;
(d) interests or title of a lessor under any lease
permitted by this Agreement;
(e) mechanics', materialmen's or contractors' liens or
encumbrances or any similar lien or restriction created by statute;
(f) easements, rights-of-way, restrictions and other
similar charges and encumbrances not interfering with the ordinary conduct of
the business of the Company or detracting from the value of the assets of the
Company; and
(g) liens outstanding on the date hereof which secure
indebtedness of the Company and which are described in the schedules to this
Agreement.
"PERSON" means an individual, a partnership, a corporation, a
limited liability company, an association, a joint stock company, a trust, a
joint venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
"RESTRICTED SECURITIES" means (i) the Shares issued hereunder
and (ii) any securities issued with respect to the Shares by way of a stock
dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization. As to any
particular Restricted Securities, such securities shall cease to be Restricted
Securities when they have (a) been effectively registered under the Securities
Act and disposed of in accordance with the registration statement covering them,
or (b) been distributed to the public through a broker, dealer or market maker
pursuant to Rule 144 (or any similar provision then in force) under the
Securities Act or become eligible for sale pursuant to Rule 144(k) (or any
similar provision then in force) under the Securities Act. Whenever any
particular securities cease to be Restricted Securities, the holder thereof
shall be entitled to receive from the Company, without expense, new securities
of like tenor not bearing a Securities Act legend of the character set forth in
Section 7.2.
"SECURITIES ACT" means the Securities Act of 1933, as amended,
or any similar federal law then in force.
"SEC" means the United States Securities and Exchange
Commission and includes any governmental body or agency succeeding to the
functions thereof.
16.
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"SECURITIES EXCHANGE ACT" means the Securities Exchange Act of
1934, as amended, or any similar federal law then in force.
"STOCKHOLDER RIGHTS AGREEMENT" means the Stockholder Rights
Agreement, dated September 18, 1997, between the Company and American Stock
Transfer and Trust Company as rights agent.
[THIS SPACE INTENTIONALLY LEFT BLANK]
17.
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IN WITNESS WHEREOF, the parties hereto have executed the COMMON STOCK
PURCHASE AGREEMENT as of the date set forth in the first paragraph hereof.
COMPANY: PURCHASERS:
CORVAS INTERNATIONAL, INC. SOFINOV SOCIETE FINANCIERE
D'INNOVATION INC.
By: /s/ RANDALL E. WOODS By: /s/ JEAN-CHRISTOPHE RENONDIN
------------------------------ ---------------------------------
Randall E. Woods Name: Jean-Christophe Renondin
President and Chief Executive -------------------------------
Officer Its: VP
--------------------------------
By: /s/ DENIS DIONNE
---------------------------------
Name: Denis Dionne
-------------------------------
Its: President
--------------------------------
IBT INTERNATIONAL BIOTECHNOLOGY TRUST
By: /s/ JEREMY L. CURNOCK COOK
---------------------------------
Name: Jeremy L. Curnock Cook
-------------------------------
Its: Director
--------------------------------
[SIGNATURE PAGE TO COMMON STOCK PURCHASE AGREEMENT]
<PAGE>
CORVAS INTERNATIONAL, INC.
COMMON STOCK PURCHASE AGREEMENT
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COMMON STOCK PURCHASE AGREEMENT
EXHIBIT A
SCHEDULE OF PURCHASERS
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AGGREGATE
NAME AND ADDRESS SHARES PURCHASE PRICE
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IBT International Biotechnology Trust plc 300,000 $750,000
Five Arrows House
St. Swithin's Lane
London EC4N 8NR, England
Sofinov Societe Financiere D'Innovation Inc. 1,000,000 $2,500,000
1981, avenue McGill College 13th Floor
Montreal (Quebec) H3A 3C7
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TABLE OF CONTENTS
PAGE
1. AGREEMENT TO SELL AND PURCHASE........................................1
1.1 Authorization of Shares......................................1
1.2 Sale and Purchase............................................1
2. CLOSING, DELIVERY AND PAYMENT.........................................2
2.1 Closing......................................................2
2.2 Delivery.....................................................2
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.........................2
3.1 Organization and Standing....................................2
3.2 Authorization................................................2
3.3 Valid and Binding Obligation.................................2
3.4 SEC Filings; Financial Statements............................3
3.5 Non-Contravention............................................3
3.6 Capitalization...............................................4
3.7 Governmental Consent, etc....................................5
3.8 No General Solicitation......................................5
3.9 Litigation, etc..............................................5
3.10 Employees....................................................5
3.11 Intellectual Property Rights.................................6
3.12 Environmental and Safety Laws................................6
3.13 Related-Party Transactions...................................6
3.14 Title to Property and Assets; Leases.........................7
3.15 Insurance....................................................7
3.16 System of Internal Accounting Controls.......................7
3.17 Filing of Tax Returns........................................7
3.18 Investment Company...........................................7
3.19 Real Property Holding Company................................7
3.20 No Defaults..................................................7
3.21 Stockholder Rights Agreement.................................8
3.22 Brokers or Finders...........................................8
3.23 Year 2000 Compliance.........................................8
i.
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TABLE OF CONTENTS
(CONTINUED)
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3.24 Nasdaq Listing...............................................8
3.25 Form S-3 Eligibility.........................................8
3.26 Knowledge....................................................8
3.27 Disclosure...................................................9
4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS......................9
4.1 Requisite Power and Authority................................9
4.2 Investment Representations...................................9
4.3 Further Assurances..........................................10
4.4 Transfer Restrictions.......................................10
5. CONDITIONS TO EACH PURCHASER'S OBLIGATIONS AT THE CLOSING............10
5.1 Representations and Warranties; Covenants...................10
5.2 Registration Rights Agreement...............................11
5.3 Sale of Convertible Notes...................................11
5.4 Governmental Consents.......................................11
5.5 No Material Adverse Change..................................11
5.6 Consents and Approvals......................................11
5.7 Opinion of the Company's Counsel............................11
5.8 Closing Documents...........................................11
6. CONDITIONS TO OBLIGATIONS OF THE COMPANY.............................12
6.1 Representations and Warranties True.........................12
6.2 Consents, Permits, and Waivers..............................12
6.3 Sale of Convertible Notes...................................12
7. MISCELLANEOUS........................................................12
7.1 Legends.....................................................12
7.2 Indemnification.............................................12
7.3 Survival of Representations and Warranties..................13
7.4 Successors and Assigns......................................13
7.5 Severability................................................13
7.6 Counterparts................................................13
7.7 Descriptive Headings; Interpretation........................13
ii.
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TABLE OF CONTENTS
(CONTINUED)
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7.8 Governing Law...............................................13
7.9 Notices.....................................................14
7.10 No Strict Construction......................................14
7.11 Expenses....................................................14
7.12 Listing of Shares on Nasdaq.................................14
7.13 Use of Proceeds.............................................14
7.14 Information Rights..........................................15
7.15 Public Statements or Releases...............................15
8. DEFINITIONS..........................................................15
iii.
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REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT, dated as of August 18, 1999 (this
"Agreement"), is made by and among CORVAS INTERNATIONAL, INC., a Delaware
corporation (the "COMPANY"), IBT INTERNATIONAL BIOTECHNOLOGY TRUST and SOFINOV
SOCIETE FINANCIERE D'INNOVATION INC., the purchasers of the Company's Common
Stock (the "PURCHASERS" and together with the Company, the "PARTIES").
This Agreement is made pursuant to the Common Stock Purchase Agreement,
dated as of August 18, 1999 (as amended and modified from time to time, the
"Purchase Agreement"), between the Company and the Purchasers, which provides
for the sale of 1,300,000 shares of Common Stock of the Company to the
Purchasers for the aggregate amount of $3,250,000 at a price per share of $2.50.
In order to induce the Purchasers to enter into the Purchase Agreement, the
Company has agreed to provide the registration rights set forth in this
Agreement. The execution of this Agreement is a condition to the closing under
the Purchase Agreement.
The Parties hereby agree as follows:
1. CERTAIN DEFINITIONS. EXCEPT AS DEFINED IN THIS AGREEMENT,
CAPITALIZED TERMS USED HEREIN AND NOT OTHERWISE DEFINED SHALL HAVE THE MEANING
ASCRIBED TO THEM IN THE PURCHASE AGREEMENT. As used in this Agreement, the
following terms shall have the following respective meanings:
"SEC" means the United States Securities and Exchange Commission.
"COMMON STOCK" means the common stock of the Company, par value $0.001
per share.
"REGISTRABLE SECURITIES" means (a) the 1,300,000 shares of Common Stock
sold to the Purchasers pursuant to the Purchase Agreement and (b) any 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, such
above-described securities.
"RESTRICTED SECURITIES" means (a) any and all shares of Common Stock
sold to the Purchasers pursuant to the Purchase Agreement and (b) any 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, such
above-described securities all times subsequent thereto until, as to any
restricted security, (i) the sale of such restricted security has been
effectively registered under the Securities Act and such restricted security has
been disposed of in accordance with the method of distribution set forth in the
Registration Statement relating thereto, or (ii) it is distributed to the
public, or is otherwise able to be sold, pursuant to Rule 144(k) (or any similar
provision then in force, but not Rule 144A) under the Securities Act.
"SECURITIES ACT" means the Securities Act of 1933, as amended, or any
similar federal statute, and the rules and regulations of the SEC thereunder,
all as the same shall be in effect at the time.
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"SECURITIES EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended, or any similar federal statute, and the rules and regulations of the
SEC thereunder, all as the same shall be in effect at the time.
"SELLING EXPENSES" means all underwriting discounts and selling
commissions applicable to the sale.
"SPECIAL COUNSEL" means Lapointe Rosenstein, special counsel to
Purchasers, or such other special counsel as may be designated in writing to the
Company by the holders of a majority of Registrable Securities outstanding.
2. SHELF REGISTRATION.
(a) RESTRICTIONS ON TRANSFER. Each holder of Registrable
Securities agrees not to make any disposition of all or any portion of the
Registrable Securities unless and until:
(i) there is in effect a registration statement under
the Securities Act covering such proposed disposition and such disposition is
made in accordance with such registration statement; or
(ii) (A) The transferee has agreed in writing to be bound
by the terms of this Agreement, (B) such holder of Registrable Securities shall
have notified the Company of the proposed disposition and shall have furnished
the Company with a detailed statement of the circumstances surrounding the
proposed disposition, and (C) if reasonably requested by the Company, such
holder of Registrable Securities shall have furnished the Company with an
opinion of counsel, reasonably satisfactory to the Company, that such
disposition will not require registration of such shares under the Securities
Act. It is agreed that the Company will not require opinions of counsel for
transactions made pursuant to Rule 144 except in unusual circumstances or for
transfers by a Purchaser to an affiliate (as defined in the Securities Act).
(b) CLOSING. Within 30 days after the Closing Date, the
Company shall file a registration statement on Form S-3 (or successor form) or
if at the time of the filing the Company is no longer eligible to file on Form
S-3, on Form S-1 (the "REGISTRATION STATEMENT") pursuant to Rule 415 (or any
similar rule that may be adopted by the SEC) under the Securities Act. The
Company agrees to use its reasonable best efforts to cause the Registration
Statement to be declared effective by the SEC within 90 days of the Closing Date
and thereafter to maintain the effectiveness of the Registration Statement until
the earlier to occur of: (i) such time as all the Registrable Securities
registered in the Registration Statement have been sold in accordance with the
Registration Statement, or (ii) such time as all the Registrable Securities are
salable in the public markets within a three month period under the volume
restrictions under Rule 144 as promulgated under the Securities Act.
3. REGISTRATION PROCEDURES. If and whenever the Company is required
by the provisions of Section 2 to effect the registration of any Registrable
Securities under the Securities Act, the Company shall, as expeditiously as
reasonably possible:
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(a) Prepare and file with the SEC, within the time period
specified in Section 2 hereof, a registration statement with respect to such
Registrable Securities and use its reasonable best efforts to cause such
registration statement to become effective;
(b) As expeditiously as reasonably practicable, prepare and
file with the SEC such amendments and post-effective amendments to the
registration statement as may be necessary to keep the registration statement
effective for the applicable period, cause the related Prospectus to be
supplemented by any required Prospectus supplement, and as so supplemented to be
filed pursuant to Rule 424 (or any similar provisions then in force) under the
Securities Act;
(c) promptly notify the Special Counsel and notify such
registered holders of Registrable Securities promptly (and in each case, if
requested, confirm any such oral or telephonic notice in writing), (i) when a
Prospectus or any Prospectus supplement or post-effective amendment related to
such Registrable Securities (A) has been filed and (B) with respect to a
registration statement or any post-effective amendment related to such
Registrable Securities, when the same has been filed and has become effective,
(ii) of the receipt of any comments from the SEC relating to a registration
statement, (iii) of any request by the SEC for amendments or supplements to a
registration statement or related Prospectus or for additional information, (iv)
of the issuance by the SEC of any stop order suspending the effectiveness of a
registration statement or the initiation of any proceedings for that purpose,
(v) if at any time the representations and warranties of the Company contained
in the Purchase Agreement in connection with the sale of Restricted Securities
by selling holders thereof cease to be true and correct in all material
respects, (vi) of the receipt by the Company of any notification with respect to
the suspension of the qualification or exemption from qualification of any of
the Registrable Securities for sale or exchange in any jurisdiction of the
United States of America or the initiation of any proceeding for such purpose,
(vii) of the happening of any event that makes any statement of a material fact
made in such registration statement or related Prospectus or any document
incorporated or deemed to be incorporated therein by reference untrue or that
requires the making of any changes in a registration statement or related
Prospectus so that such documents will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading (provided that the timely filing of a
report under the Securities Exchange Act which is incorporated by reference in
the registration statement and related Prospectus shall constitute effective
notice under this subsection (vii)), and (viii) of the determination of the
Company that a post-effective amendment to a registration statement would be
appropriate;
(d) use its reasonable best efforts to obtain the withdrawal
of any order suspending the effectiveness of a registration statement or the
lifting of any suspension of the qualification (or exemption from qualification)
of any of the Registrable Securities for sale or exchange in any jurisdiction of
the United States of America, as promptly as practicable;
(e) if reasonably requested by any Purchaser of Registrable
Securities covered by a registration statement, (i) promptly incorporate in a
Prospectus supplement or post-effective amendment such information as such
Purchaser reasonably requests to be included therein as is required by
applicable law or as necessary so that the registration statement does not
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include an untrue statement of a material fact or omit to state a material fact
with respect to such Purchaser or such Purchaser's planned method of
distribution, (ii) make all required filings of such Prospectus supplement or
such post-effective amendment as soon as the Company has received notification
of the matters to be incorporated in such Prospectus supplement or such
post-effective amendment, and (iii) supplement or make amendments to any
registration statement as is required by applicable law;
(f) furnish to each selling Purchaser of Registrable
Securities upon request, and the Special Counsel, without charge, at least one
conformed copy of the registration statement or statements and any
post-effective amendment thereto, including financial statements and schedules,
without charge, as well as all documents incorporated therein by reference or
deemed incorporated therein by reference and all exhibits (including those
previously furnished or incorporated by reference), at the earliest practicable
time under the circumstances after the filing of such documents with the SEC;
(g) promptly deliver to each Purchaser of Registrable
Securities and the Special Counsel, without charge, such number of copies of the
Prospectus or Prospectuses (including each preliminary prospectus) and any
amendment or supplement thereto as they may reasonably request; the Company
consents to the use of such Prospectus or any amendment or supplement thereto in
accordance with applicable law by each selling Purchaser of Registrable
Securities in connection with the offering and sale of the Registrable
Securities covered by such Prospectus or any amendment or supplement thereto in
accordance with applicable law;
(h) prior to any public offering of Registrable Securities,
use its reasonable best efforts to register or qualify or cooperate with the
selling Purchaser of Registrable Securities and the Special Counsel in
connection with the registration or qualification (or exemption from such
registration or qualification) of such Registrable Securities for offer and
sale, as the case may be, under the securities or Blue Sky laws of such state or
local jurisdictions in the United States as any seller reasonably requests in
writing; keep each such registration or qualification (or exemption therefrom)
effective during the period such registration statement is required to be kept
effective and do any and all other acts or things necessary or advisable to
enable the disposition in such jurisdictions of the Registrable Securities
covered by the applicable registration statement; PROVIDED, HOWEVER, that the
Company will not be required to (i) qualify generally to do business in any
jurisdiction where it is not then so qualified, (ii) take any action that would
subject it to general service of process in any such jurisdiction where it is
not then so subject, (iii) take any action that would subject it to taxation in
any jurisdiction where it is not then subject or (iv) register or qualify
securities prior to the effective date of any registration statement under
Section 2 hereof; and
(i) upon the occurrence of any event contemplated by paragraph
3(c)(vii) or 3(c)(viii) above, as promptly as practicable thereafter, prepare
and file with the SEC a supplement or post-effective amendment to the applicable
registration statement or a supplement to the related Prospectus or any document
incorporated therein by reference or file any other required document so that,
as thereafter delivered to the purchasers of the Registrable Securities being
sold thereunder, such Prospectus will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
4.
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4. INFORMATION AND LIMITATIONS ON DISTRIBUTIONS. If and whenever
the Company is required by the provisions of Section 2 to effect the
registration of any Registrable Securities under the Securities Act, the Company
may require each Selling Purchaser of Registrable Securities as to which any
registration is being effected to furnish to the Company such information
regarding the distribution of such securities as the Company may from time to
time reasonably request in writing. Notwithstanding any other provision of the
Agreement, following the effectiveness of the Registration Statement filed
pursuant to Section 2 hereunder, the Company may, at any time, suspend the
effectiveness of the Registration Statement for no longer than an aggregate of
forty-five (45) days in any 12 month period, as appropriate (a "SUSPENSION
PERIOD"), by delivering a signed certificate of an authorized officer to the
Purchasers 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
to disclose any previously undisclosed material corporate development that would
be required to be disclosed if the registration statement is not suspended. The
Company will use its best efforts to minimize the length of any Suspension
Period. The Purchasers agree that, upon the receipt of any notice from the
Company of a Suspension Period, the Purchaser will not sell any Registrable
Securities pursuant to any registration statement covering such Registrable
Securities until (i) Purchaser is advised in writing by the Company that the use
of the applicable prospectus may be resumed, (ii) Purchaser has received copies
of any additional, supplemental or amended prospectus, if applicable, and (iii)
Purchaser has received copies of any additional or supplemental filings which
are incorporated or deemed to be incorporated by reference in such prospectus.
5. TERMINATION OF REGISTRATION RIGHTS. All registration rights
granted under Section 2 shall terminate and be of no further force and effect
upon the earlier to occur of: (i) such time as all the Registrable Securities
registered in the Registration Statement have been sold in accordance with the
Registration Statement or (ii) such time as all the Registrable Securities are
salable in the public markets within a three month period under the volume
restrictions under Rule 144 as promulgated under the Securities Act
6. RULE 144 REPORTING. With a view of making available to the
holders of Registrable Securities the benefits of certain rules and regulations
of the SEC which may permit the sale of the Registrable Securities to the public
without registration, the Company agrees to use its best efforts to:
(a) Make and keep public information available, as those terms
are understood and defined in Rule 144 or any similar or analogous rule
promulgated under the Securities Act;
(b) File with the SEC, in a timely manner, all reports and
other documents required of the Company under the Securities Exchange Act; and
(c) So long as any holder of Registrable Securities owns any
Registrable Securities, furnish to such holder forthwith upon request: a written
statement by the Company as to its compliance with the reporting requirements of
said Rule 144 of the Securities Act, and of the Exchange Act; a copy of the most
recent annual or quarterly report of the Company; and such other reports and
documents as a holder may reasonably request in availing itself of any rule or
regulation of the SEC allowing it to sell any such securities without
registration.
5.
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7. EXPENSES. The Company shall pay all fees and expenses incurred
by it or Purchasers incident to the performance of or compliance with this
Agreement by the Company including, without limitation, (i) all Securities Act
and Securities Exchange Act, stock exchange registration and filing fees, (ii)
all fees and expenses incurred in connection with compliance with state
securities or Blue Sky laws, (iii) all expenses in preparing or assisting in
preparing, printing and distributing any Registration Statement, any Prospectus,
any amendments or supplements thereto, other documents relating to the Company's
performance of and compliance with this Agreement, and (iv) the expenses, fees
and disbursements of one special counsel to the Purchasers not to exceed U.S.
$3,000 (the "AUTHORIZED REGISTRATION EXPENSES"). Such expenses shall not include
any printing costs incurred at the election of the Purchasers, Selling Expenses
and all other expenses, fees and disbursements incident to any registration
either initiated or effected pursuant to this Agreement which are not explicitly
included as Authorized Registration Expenses.
8. INDEMNIFICATION. In the event any Registrable Securities are
included in a registration statement under this Agreement:
(a) To the extent permitted by law, the Company will indemnify
and hold harmless each Purchaser, the partners, officers and directors of each
Purchaser, any underwriter (as defined in the Securities Act) for such Purchaser
and each person, if any, who controls such Purchaser or underwriter within the
meaning of the Securities Act or the Securities Exchange Act, against any
losses, claims, damages, or liabilities (joint or several) to which they may
become subject under the Securities Act, the Securities 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") by the Company:
(i) any untrue statement or alleged untrue statement of a material fact
contained in such registration statement, including any preliminary prospectus
or final prospectus contained therein or any amendments or supplements thereto,
(ii) the omission or alleged omission to state therein a material fact required
to be stated therein, or necessary to make the statements therein not
misleading, or (iii) any violation or alleged violation by the Company of the
Securities Act, the Securities Exchange Act, any state securities law or any
rule or regulation promulgated under the Securities Act, the Securities Exchange
Act or any state securities law in connection with the offering covered by such
registration statement; and the Company will pay as incurred to each such
Purchaser, partner, officer, director, underwriter or controlling person for 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 Section 8 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 such Purchaser, partner, officer,
director, underwriter or controlling person of such Purchaser.
(b) To the extent permitted by law, each Purchaser will, if
Registrable Securities held by such Purchaser are included in the securities as
to which such registration qualifications or compliance is being effected,
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indemnify and hold harmless the Company, each of its directors, its officers and
each person, if any, who controls the Company within the meaning of the
Securities Act, any underwriter and any other Purchaser selling securities under
such registration statement or any of such other Purchaser's partners, directors
or officers or any person who controls such Purchaser, against any losses,
claims, damages or liabilities (joint or several) to which the Company or any
such director, officer, controlling person, underwriter or other such Purchaser,
or partner, director, officer or controlling person of such other Purchaser may
become subject under the Securities Act, the Securities Exchange Act or other
federal or state law, insofar as such losses, claims, damages or liabilities (or
actions in respect thereto) arise out of or are based upon any Violation, in
each case to the extent (and only to the extent) that such Violation occurs in
reliance upon and in conformity with written information furnished by such
Purchaser, the partners, officers and directors of such Purchaser, any
underwriter (as defined in the Securities Act) for such Purchaser and each
person, if any, who controls such Purchaser or underwriter within the meaning of
the Securities Act or the Securities Exchange Act under an instrument duly
executed by such Purchaser and stated to be specifically for use in connection
with such registration; and each such Purchaser will pay as incurred any legal
or other expenses reasonably incurred by the Company or any such director,
officer, controlling person, underwriter or other Purchaser, or partner,
officer, director or controlling person of such other Purchaser in connection
with investigating or defending any such loss, claim, damage, liability or
action if it is judicially determined that there was such a Violation; PROVIDED,
HOWEVER, that the indemnity agreement contained in this Section 8 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 such Purchaser,
which consent shall not be unreasonably withheld; PROVIDED FURTHER, that in no
event shall any indemnity under this Section 8 exceed the net proceeds from the
offering received by such Purchaser.
(c) Promptly after receipt by an indemnified party under this
Section 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 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 shall
have the right to retain its own counsel, with the 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, only if materially prejudicial to its ability
to defend such action, shall relieve such indemnifying party of any liability to
the indemnified party under this Section 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 8.
(d) The obligations of the Company and the Purchasers under
this Section 8 shall survive completion of any offering of Registrable
Securities in a registration statement and the termination of this agreement. No
indemnifying party, in the defense of any such claim or litigation, shall,
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except with the consent of each indemnified party, consent to entry of any
judgment or enter into any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such indemnified party
of a release from all liability in respect to such claim or litigation.
9. CONTRIBUTION. If for any reason the indemnity set forth in
Section 8 is unavailable or is insufficient to hold harmless an indemnified
party, then the indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of the aggregate losses, claim,
damages, liabilities and expenses of the nature contemplated by said indemnity
(i) in such proportion as is appropriate to reflect the relative fault of the
indemnifying party on the one hand and such indemnified party on the other
(determined by reference to, among other things, whether the untrue statement of
a material fact or omission to state a material fact relates to information
supplied by the indemnifying party or such indemnified party and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such untrue statement or omission), or (ii) if the allocation provided
by clause (i) above is not permitted by applicable law or provides a lesser sum
to such indemnified party than the amount hereinafter calculated, in such
proportion as is appropriate to reflect not only the relative fault of the
indemnifying party and such indemnified party but also the relative benefits
received by the indemnifying party on the one hand and such indemnified party on
the other, as well as any other relevant equitable considerations.
The Parties agree that it would not be just and equitable if
contribution pursuant to this Section 9 were determined by pro rata allocation
or by any other method of allocation which does not take account of the
equitable considerations referred to in the immediately preceding paragraph. The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages, liabilities or expenses referred to in such paragraph shall be
deemed to include, subject to the limitations set forth above, any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 9, a Purchaser shall not be required to contribute
any amount in excess of the amount by which the net proceeds of the sale of
Registrable Securities sold by such Purchaser and distributed to the public
exceeds the amount of any damages which such Purchaser has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person which is not guilty of such fraudulent
misrepresentation.
10. ARBITRATION. A party asserting the existence of any dispute or
controversy arising out of or in connection with this Agreement (a "DISPUTE"),
including any Dispute relating to the existence, materiality or cure of a
claimed material breach, shall notify the other parties to this Agreement in
writing of the existence and subject matter of the Dispute. For a thirty (30)
day period following such notification, the Parties shall meet and negotiate in
good faith to attempt the resolve the Dispute and shall escalate the Dispute to
the respective Chief Executive Officers of the Parties if resolution is not made
within the first fifteen (15) days. If such efforts do not resolve the Dispute
within such thirty (30) day period, the Dispute shall be referred to and finally
resolved by arbitration under the rules of the American Arbitration Association,
and except for proceedings commenced to enforce an arbitration award, each party
hereby irrevocably waives its right to commence any proceeding in any court with
respect to any matter arising under this Agreement. The tribunal shall consist
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of a sole arbitrator appointed jointly by the Parties. In the case of the
parties failing to choose a sole arbitrator, the tribunal shall consist of three
arbitrators, two of whom shall be appointed by the respective parties and the
third arbitrator shall be appointed jointly by the first two. The place of
arbitration shall be San Diego County, California or such other location as the
parties shall agree. The language of the arbitration shall be English. No
arbitrator shall be an affiliate, employee, officer or director of either party
or of their respective affiliates, nor shall any arbitrator have any interest
that would be affected in any material respect by the outcome of the Dispute.
The decision of the sole arbitrator or of a majority of the arbitrators, where
applicable, shall be final and binding on the parties and their respective
successors and assigns. The decision shall not be subject to appeal or judicial
review except in circumstances of fraud. The prevailing party in any such
arbitration shall be entitled to recover reasonable fees of attorneys and other
professionals in addition to all court costs and arbitrator's fees which that
party may incur as a result. Judgment upon the award granted by the
arbitrator(s) may be entered in any court having jurisdiction over the relevant
party or its assets
11. MISCELLANEOUS.
(a) All covenants and agreements contained in this Agreement
by or on behalf of any of the signatories shall bind and inure to the benefit of
the respective successors or permitted assigns of the signatories, whether so
expressed or not. The Purchasers may assign all or some of their rights under
this Agreement in connection with a transfer of Registrable Securities in
accordance with Section 2(a)(ii) of this Agreement; PROVIDED that if such
transfer requires an amendment to the Registration Statement, the transferring
Purchaser shall be obligated to pay all expenses in preparing or assisting in
preparing, printing and filing such amendment; PROVIDED FURTHER, that the
Company will prepare the first such amendment at the Company's expense.
(b) All notices, consents and other communications under this
Agreement shall be in writing and shall be deemed to have been duly given when
(a) delivered by hand, (b) sent by telecopier (with receipt confirmed), provided
that a copy is mailed by registered mail, return receipt requested, or (c) when
received by the addressee, if sent by Express Mail, Federal Express or other
express delivery service (receipt requested), in each case to the appropriate
addresses and telecopier numbers set forth below (or to such other addresses and
telecopier numbers as a party may designate as to itself by notice to the other
parties):
(i) If to the Company: 3030 Science Park Road, San
Diego, CA 92121, Attention: President, telecopier no. (619) 455-9854; or
(ii) If to the Purchasers: at the addresses set forth on
the signature page hereof.
(c) This Agreement shall be governed in all respects by the
law of the State of California, without giving effect to its principles
regarding conflicts of law.
(d) This Agreement may not be amended or modified, and no
provision hereof may be waived, except upon the approval of the Company and the
holders of at least a majority of the then outstanding Common Stock issued
pursuant to the Purchase Agreement; PROVIDED, HOWEVER, this Agreement may be
9.
<PAGE>
amended to add additional parties without the consent of the Purchasers. The
failure of any of the Parties to insist upon strict adherence to any term of
this Agreement on any occasion shall not be considered a waiver of that term or
deprive such Party of the right thereafter to insist upon strict adherence to
that term or any other term of this Agreement.
(e) 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.
(f) In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstances, is held
invalid, illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect and of
the remaining provisions contained herein shall not be in any way impaired
thereby, it being intended that all of the rights and privileges of the
Purchasers shall be enforceable to the fullest extent permitted by law.
(g) This Agreement is intended by the parties as a final
expression of their agreement and a complete and exclusive statement of the
agreement and understanding of the parties hereto in respect of the subject
matter contained herein. There are no restrictions, promises, warranties or
undertakings other than those set forth or referred to herein. This Agreement
supersedes all prior agreements and understandings between the Parties with
respect to such subject matter.
[THIS SPACE INTENTIONALLY LEFT BLANK]
10.
<PAGE>
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the day
and year first above written.
CORVAS INTERNATIONAL, INC.
3030 Science Park Road
San Diego, California 92121
By: /s/ RANDALL E. WOODS
-----------------------------------------
Name: Randall E. Woods
Its: President and Chief Executive Officer
PURCHASERS:
SOFINOV SOCIETE FINANCIERE D'INNOVATION
1981, avenue McGill College, 13th Floor
Montreal (Quebec) H3A 3C7
By: /s/ JEAN CHRISTOPHE RENONDIN
-----------------------------------------
Name: Jean-Christophe Renondin
---------------------------------------
Its: VP
----------------------------------------
By: /s/ DENIS DIONNE
-----------------------------------------
Name: Denis Dionne
---------------------------------------
Its: President
----------------------------------------
IBT INTERNATIONAL BIOTECHNOLOGY TRUST
Five Arrows House
St. Swithin's Lane
London EC4N 8NR, England
By: /s/ JEREMY L. CURNOCK COOK
-----------------------------------------
Name: Jeremy L. Curnock Cook
----------------------------------------
Its: Director
----------------------------------------
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
EXHIBIT 5.1
[COOLEY GODWARD LLP LETTERHEAD]
September 16, 1999
Corvas International, Inc.
3030 Science Park Road
San Diego, CA 92121
Ladies and Gentlemen:
You have requested our opinion with respect to certain matters in connection
with the filing by Corvas International, Inc. (the "Company") of a Registration
Statement on Form S-3 (the "Registration Statement") including a related
prospectus, with the Securities and Exchange Commission covering the offering of
4,224,000 shares of the Company's Common Stock, $.001 par value (the
"Securities") on behalf of certain selling stockholders, including 1,300,000
shares of Common Stock (the "Shares") and up to 2,924,000 shares of Common Stock
(the "Convertible Note Shares") issuable upon the conversion of convertible
notes held by certain selling securityholders (the "Convertible Notes").
In connection with this opinion, we have examined and relied upon the
Registration Statement and related Prospectus, the Convertible Notes, the
Company's Restated Certificate of Incorporation and Bylaws, as amended, and such
other documents, records, certificates, memoranda and other instruments as we
deem necessary as a basis for this opinion. We have assumed the genuineness and
authenticity of all documents submitted to us as originals, the conformity to
originals of all documents submitted to us as copies thereof, and the due
execution and delivery of all documents where due execution and delivery are a
prerequisite to the effectiveness thereof.
On the basis of the foregoing, and in reliance thereon, we are of the opinion
that (i) the Shares are validly issued, fully paid and nonassessable and (ii)
the Convertible Note Shares, when issued upon conversion of the Convertible
Notes, will be validly issued, fully paid and nonassessable.
We consent to the reference to our firm under the caption "Legal Matters" in the
Prospectus included in the Registration Statement and to the filing of this
opinion as an exhibit to the Registration Statement.
Very truly yours,
COOLEY GODWARD LLP
/s/ Barbara L. Borden
- -----------------------------
Barbara L. Borden
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
THE BOARD OF DIRECTORS
CORVAS INTERNATIONAL, INC.:
We consent to the use of our report incorporated herein by reference
and to the reference to our firm under the heading "Experts" in the registration
statement on Form S-3 of Corvas International, Inc.
KPMG LLP
San Diego, California
September 16, 1999
