<PAGE>
FORM 1O-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to ___________
Commission file number 0-19732
-------
CORVAS INTERNATIONAL, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 33-0238812
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
3030 SCIENCE PARK ROAD
SAN DIEGO, CALIFORNIA 92121
(Address of principal executive offices and zip code)
(858) 455-9800
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $0.001 par value
(Title of class)
Indicate by check mark whether the Registrant (l) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
--- ---
At November 1, 1999, there were 17,488,391 shares of Common Stock,
$0.001 par value, of the Registrant issued and outstanding.
<PAGE>
CORVAS INTERNATIONAL, INC.
INDEX
Page
----
PART I -- FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Balance Sheets as of September 30, 1999 (unaudited)
and December 31, 1998 1
Condensed Statements of Operations for the Three
and Nine Months Ended September 30, 1999 and 1998 (unaudited) 2
Condensed Statements of Cash Flows for the Nine Months
Ended September 30, 1999 and 1998 (unaudited) 3
Notes to Condensed Financial Statements (unaudited) 4
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 5
Item 3. Quantitative and Qualitative Disclosures About Market Risk 9
PART II -- OTHER INFORMATION
Item 1. Legal Proceedings 10
None
Item 2. Changes in Securities 10
Item 3. Defaults Upon Senior Securities 10
None
Item 4. Submission of Matters to a Vote of Security Holders 10
None
Item 5. Other Information 10
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits 11
(b) Reports on Form 8-K 11
None
SIGNATURES 12
<PAGE>
<TABLE>
Part I -- FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
CORVAS INTERNATIONAL, INC.
CONDENSED BALANCE SHEETS
(In thousands)
<CAPTION>
September 30, 1999 December 31, 1998
ASSETS (unaudited)
- ------ ------------------ ------------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 929 $ 611
Short-term debt securities held to maturity
and time deposits, partially restricted 18,376 17,002
Receivables 306 251
Notes receivable from related party 278 153
Other current assets 649 411
------------------ ------------------
Total current assets 20,538 18,428
Debt issuance costs 103 0
Property and equipment, net 1,153 1,484
------------------ ------------------
$ 21,794 $ 19,912
================== ==================
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Current liabilities:
Accounts payable $ 755 $ 326
Accrued liabilities 1,877 993
Accrued vacation 204 207
------------------ ------------------
Total current liabilities 2,836 1,526
------------------ ------------------
Convertible note payable 6,542 0
Stockholders' equity:
Preferred stock - Series A 1 1
Preferred stock - Series B 0 0
Common stock 17 15
Additional paid-in capital 100,358 96,223
Accumulated deficit (87,960) (77,853)
------------------ ------------------
Total stockholders' equity 12,416 18,386
Commitments and contingencies
------------------ ------------------
$ 21,794 $ 19,912
================== ==================
</TABLE>
See accompanying notes to condensed financial statements.
1
<PAGE>
<TABLE>
CORVAS INTERNATIONAL, INC.
CONDENSED STATEMENTS OF OPERATIONS
In thousands, except per share data
(unaudited)
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------------- -----------------------------
1999 1998 1999 1998
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
REVENUES:
Revenue from collaborative agreements $ 1,394 $ 1,746 $ 4,694 $ 5,239
License fees and milestones 0 0 0 2,000
Net product sales 0 0 0 43
Royalties 86 24 122 120
----------- ----------- ----------- -----------
Total revenues 1,480 1,770 4,816 7,402
----------- ----------- ----------- -----------
COSTS AND EXPENSES:
Research and development 4,119 3,852 10,901 11,534
General and administrative 2,929 762 4,564 3,028
Cost of products sold 0 0 0 18
----------- ----------- ----------- -----------
Total costs and expenses 7,048 4,614 15,465 14,580
----------- ----------- ----------- -----------
Loss from operations (5,568) (2,844) (10,649) (7,178)
OTHER INCOME:
Interest income 190 343 585 915
Interest expense (43) 0 (43) 0
Other income 0 0 0 5
----------- ----------- ----------- -----------
147 343 542 920
----------- ----------- ----------- -----------
Net loss and other comprehensive loss $ (5,421) $ (2,501) $ (10,107) $ (6,258)
=========== =========== =========== ===========
Basic and diluted net loss per share $ (0.34) $ (0.17) $ (0.65) $ (0.44)
=========== =========== =========== ===========
Shares used in calculation of basic and
diluted net loss per share 15,833 14,743 15,371 14,251
=========== =========== =========== ===========
</TABLE>
See accompanying notes to condensed financial statements.
2
<PAGE>
<TABLE>
CORVAS INTERNATIONAL, INC.
CONDENSED STATEMENTS OF CASH FLOWS
In thousands
(unaudited)
<CAPTION>
Nine Months Ended
September 30,
-----------------------------------
1999 1998
---------------- -----------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (10,107) $ (6,258)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization 424 461
Amortization of premiums and discounts on investments 55 51
Amortization of debt issuance costs (1) 0
Interest expense on convertible note 43 0
Loss on disposition of property and equipment 74 81
Stock compensation expense 724 111
Change in assets and liabilities:
(Increase) decrease in receivables (55) 29
(Increase) decrease in other current assets (238) 26
Increase in accounts payable, accrued
liabilities and accrued vacation 1,309 244
Decrease in deferred revenue 0 (3,656)
---------------- -----------------
Net cash used in operating activities (7,772) (8,911)
---------------- -----------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of investments held to maturity (19,622) (31,591)
Proceeds from maturity of investments held to maturity 18,193 36,596
Purchases of property and equipment (167) (841)
Loan to related party (125) 0
---------------- -----------------
Net cash (used in) provided by investing activities (1,721) 4,164
---------------- -----------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from issuance of common stock 3,414 3,891
Net proceeds from issuance of convertible note payable 6,397 0
---------------- -----------------
Net cash provided by financing activities 9,811 3,891
---------------- -----------------
Net increase (decrease) in cash and cash equivalents 318 (856)
Cash and cash equivalents at beginning of period 611 2,044
---------------- -----------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 929 $ 1,188
================ =================
</TABLE>
See accompanying notes to condensed financial statements.
3
<PAGE>
CORVAS INTERNATIONAL, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(unaudited)
(1) The Company
-----------
Corvas International, Inc. (the "Company") was incorporated on March
27, 1987 under the laws of the State of California. In July 1993, the Company
reincorporated in the State of Delaware. The Company is engaged in the design
and development of a new generation of therapeutic agents for cardiovascular,
cancer and other major diseases.
(2) Basis of Presentation
---------------------
The interim financial information contained herein is unaudited but, in
management's opinion, includes all adjustments, consisting only of normal
recurring adjustments, necessary for a fair presentation. The condensed
financial statements should be read in conjunction with the Company's audited
financial statements and notes thereto for the year ended December 31, 1998.
Results for the interim periods are not necessarily indicative of results for
other interim periods or for the full year.
(3) Net Loss Per Share
------------------
Net loss per share for the three and nine months ended September 30,
1999 and 1998 is computed using the weighted average number of common share
equivalents outstanding. Options, warrants and convertible preferred stock
totaling 5,085,000 and 5,176,000 shares were excluded from the calculation of
net loss per share for the periods ended September 30, 1999 and 1998,
respectively, since the effect of their inclusion would be anti-dilutive. In
addition, 2,000,000 shares of common stock from the assumed conversion of the
5.5% convertible senior subordinated note issued on August 18, 1999, due in
August 2006, were also excluded for the three and nine months ended September
30, 1999 since the effect of their inclusion would be anti-dilutive.
(4) Convertible Note Payable
------------------------
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. Upon maturity, the note will have an accreted value of
$9,503,000. 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 the Company's option,
interest may be paid in cash or in Corvas common stock priced at the
then-current market price. Corvas may call the note for redemption anytime after
August 18, 2002.
(5) Warrants
--------
As of December 31, 1998, the Company had outstanding warrants to
purchase 1,975,000 shares of common stock at an exercise price of $6.00, and an
additional 9,000 warrants at an exercise price of $6.13 or $7.00. Pursuant to
the terms of the 1,975,000 warrants, the stock purchase price and the number of
warrants outstanding are adjusted upon the issuance of additional shares of
common stock at less than the $6.00 exercise price. In accordance with such
adjustment, as of September 30, 1999, the Company had outstanding warrants to
purchase 2,135,000 shares of common stock at an exercise price of $5.55, and an
additional 9,000 warrants at an exercise price of $6.13 or $7.00.
4
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
EXCEPT FOR THE HISTORICAL INFORMATION CONTAINED HEREIN, THE FOLLOWING
DISCUSSION CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND
UNCERTAINTIES. THESE STATEMENTS RELATE TO FUTURE EVENTS, FUTURE CLINICAL TRIALS,
PRODUCT DEVELOPMENT OR FINANCIAL PERFORMANCE. IN SOME CASES, FORWARD-LOOKING
STATEMENTS CAN BE IDENTIFIED BY TERMINOLOGY SUCH AS "MAY," "WILL," "SHOULD,"
"EXPECTS," "PLANS," "ANTICIPATES," "BELIEVES," "ESTIMATES," "PREDICTS,"
"POTENTIAL," OR "CONTINUE." THE COMPANY'S ACTUAL RESULTS COULD DIFFER MATERIALLY
FROM THOSE PROJECTED IN THE FORWARD-LOOKING STATEMENTS. FACTORS THAT COULD CAUSE
OR CONTRIBUTE TO SUCH DIFFERENCES INCLUDE, BUT ARE NOT LIMITED TO, THOSE
DISCUSSED IN THE COMPANY'S ANNUAL REPORT ON FORM 10-K.
OVERVIEW
Formed in 1987, Corvas International, Inc. ("Corvas" or the "Company")
is a clinical-stage biopharmaceutical firm engaged in the design and development
of a new generation of therapeutic agents for cardiovascular, cancer and other
major diseases. To date, the Company has not generated significant revenues from
product sales and does not currently sell any commercial products. The Company
has not been profitable on an annual basis since inception and expects to incur
substantial additional operating losses over the next several years as the
Company progresses in its research and development programs. The Company's
historical results are not necessarily indicative of future results. In
addition, there is no assurance that the Company will successfully develop,
commercialize, manufacture or market any products or generate sufficient
revenues to become profitable on a sustained basis or at all. At September 30,
1999, the Company had an accumulated deficit of $87,960,000.
RESULTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
In the quarter ended September 30, 1999, operating revenues decreased
to $1,480,000 from $1,770,000 in the corresponding quarter of 1998. This
decrease was primarily attributable to reaching the contractual end of the
research funding from Pfizer Inc. ("Pfizer") on the neutrophil inhibitory factor
("NIF") program, and termination of the option and related research and
development agreements with Vascular Genomics Inc. ("VGI"), which covered a
vascular targeting strategy.
Total costs and expenses increased to $7,048,000 in the third quarter
of 1999 from $4,614,000 in the three months ended September 30, 1998. Research
and development expenses increased by $267,000 primarily as a result of the
Phase II clinical trial of rNAPc2, the Company's proprietary anticoagulant drug
candidate, which began late in 1998. General and administrative costs also
increased, by $2,167,000, comparing these quarters. This increase is primarily
attributable to one-time charges of $1,977,000 associated with the termination
of the option and related research and development agreements with VGI.
Total other income in the third quarter of 1999 decreased to $147,000
from $343,000 in the same quarter of 1998. This $196,000 decrease primarily
reflects lower balances available for investment and lower yields earned
thereon. In addition, $43,000 of interest expense was recorded in the third
quarter of 1999 pursuant to the August 1999 sale of a seven-year 5.5%
convertible senior subordinated note (the "Convertible Note") in the aggregate
principal amount of $6,500,000.
5
<PAGE>
NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
Operating revenues for the nine months ended September 30, 1999
decreased to $4,816,000 from $7,402,000 in the same period of 1998. Revenue from
collaborative agreements decreased by $545,000, as a result of reaching the
contractual end of research funding on the NIF program, and terminating the
option and related research and development agreements with VGI. License fees
and milestones decreased by $2,000,000, as revenue from license fees and
milestones in 1998 included two milestone payments of $1,000,000 each earned
upon commencement of Phase I clinical trials of NIF, by Pfizer, and an oral
thrombin inhibitor, by Schering Corporation ("Schering-Plough"). Revenues from
product sales decreased by $43,000 due to the 1998 transfer of tissue factor
manufacturing to two Johnson & Johnson affiliate companies.
Total costs and expenses increased by $885,000 to $15,465,000 in the
nine months ended September 30, 1999, from $14,580,000 one year earlier.
Research and development costs decreased by $633,000 due mainly to
discontinuation of the VGI program and other decreases in headcount. General and
administrative costs increased by $1,536,000 comparing the 1999 period to the
1998 period. This increase is mainly due to the VGI termination costs discussed
earlier.
Other income decreased by $378,000 comparing the nine months ended
September 30, 1999 to the same period in 1998. This primarily resulted from
decreased investment balances and returns.
Subject to the availability of additional capital, the Company expects
it will continue to incur significant expenses and operating losses over the
next several years as research and development and clinical trials progress.
However, there is no assurance that the Company will be able to raise any
additional capital. The Company also expects both its expenses and losses to
fluctuate from quarter to quarter and that such fluctuations may, at times, be
substantial.
LIQUIDITY AND CAPITAL RESOURCES
Since inception, the Company's operations have been funded primarily
through public offerings and private placements of debt and equity securities,
funding and milestones from collaborative agreements, license fees and interest
income earned on cash and investment balances. The Company's principal sources
of liquidity are its cash and cash equivalents, time deposits and debt
securities which, net of restricted time deposits, totaled $19,016,000 as of
September 30, 1999. Working capital at September 30, 1999 was $17,702,000. In
August 1999, Corvas raised proceeds of $9,750,000, gross, in a private financing
consisting of 1,300,000 shares of common stock at $2.50 per share and a 5.5%
Convertible Note in the aggregate principal amount of $6,500,000. Upon maturity,
the Convertible Note will have an accreted value of $9,503,000. The Company has
agreed to pay any applicable withholding taxes that may be required in
connection with the accretion, which are estimated to be 30% of the annual
accretion. 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 Convertible 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 the
Company's option, interest may be paid in cash or in Corvas common stock priced
at the then-current market price. Corvas may call the note for redemption
anytime after August 18, 2002. Subsequent to September 30, 1999, the Company
raised an additional $5,250,000, gross, through the sale of 700,000 shares of
common stock at $2.50 per share and an additional 5.5% convertible senior
subordinated note, also due in August 2006, in the aggregate principal amount of
$3,500,000. Upon maturity, this note will have an accreted value of $5,069,000.
The Company has agreed to pay any applicable withholding taxes that may be
required in connection with the accretion, which are estimated to be 30% of the
annual accretion.
6
<PAGE>
Available cash is invested in accordance with an investment policy set
by the Board of Directors. This policy provides guidelines concerning the
quality, term and liquidity of investments, and has objectives to preserve
principal, maintain adequate liquidity and maximize income. The Company
presently invests its excess cash primarily in government-backed debt
instruments and, to a smaller degree, in debt instruments of corporations with
strong credit ratings.
Net cash used in operations for the nine months ended September 30,
1999 was $7,772,000 compared to $8,911,000 for the same period one year earlier.
This decrease was primarily due to an increase in 1999 accrued liabilities. In
the nine months ended September 30, 1999, net cash used in investing activities
was $1,721,000, compared to cash provided by investing activities of $4,164,000
for the corresponding period in 1998. This was primarily the result of investing
the proceeds of the $9,750,000 financing completed in the third quarter of 1999.
Net cash provided by financing activities increased to $9,811,000 from
$3,891,000, comparing the corresponding nine month periods in 1999 and 1998, due
to the issuance of 1,300,000 shares of common stock and the $6,500,000
Convertible Note in August 1999.
Substantial additional costs will likely be incurred in the future,
including, but not limited to, costs related to ongoing and planned clinical
trials, preclinical studies, and research and development activities. Over the
next several years, the Company expects that such costs will result in
additional operating losses and negative cash flows from operations. In
addition, the Company expects that 1999 revenues will be less than those
recognized in 1998 due to the contractual end of research and development
funding of both NIF and VGI in 1999 and the milestones earned in 1998.
Management is continuing to pursue additional collaborative relationships and
ways to reduce the Company's burn rate, including, but not limited to,
allocating existing human and financial resources to clinical trials and
research programs that are more advanced. The Company believes that its existing
capital resources and interest earned thereon, including proceeds raised in the
October 1999 financing, should be sufficient to satisfy its anticipated funding
requirements into the first quarter of 2001. In the future, the Company may also
receive additional funds through milestone payments and royalties on sales of
products in connection with its alliances. However, there is no assurance that
the Company will be entitled to or will be able to raise any additional amounts
under existing or any future alliances.
Strategic collaborations with Schering-Plough and Pfizer provide for
payments to the Company if and when certain milestones are met. In addition to
future milestones, the Company may also receive royalties on sales of products
in connection with existing, as well as any future, alliances. If all milestones
on all of the Company's existing collaborations are achieved, Corvas could
receive a maximum of $67,288,000 in future milestone payments and research and
development funding over the next several years. However, there is no assurance
that the Company's existing collaborations will be successful, that the Company
will receive any future milestones or other payments pursuant to collaborative
agreements, that the collaborations will continue since the existing agreements
are terminable at the option of the collaborator upon certain events, or that
the existing collaborations will be commercially successful.
The Company leases its laboratory and office facilities under an
operating lease that expires in September 2006. Future capital requirements of
the Company will depend on many factors, including, but not limited to, the
following: the scientific progress in and magnitude of its drug discovery
programs; the progress and results of preclinical and clinical testing; the
costs involved in regulatory compliance; the costs of filing, prosecuting,
maintaining and enforcing patents; the progress of competing technologies and
other market developments; the changes in its existing collaborative
relationships; the Company's ability to establish and maintain collaborative or
licensing arrangements; the cost of manufacturing scale-up; and the
effectiveness of activities and arrangements of the Company or its collaborative
partners to commercialize the Company's products.
7
<PAGE>
To continue its long-term product development efforts, the Company
will, in the future, have to raise substantial additional funding either through
collaborative arrangements or through public or private financings. The
Company's ability to raise additional funds through sales of securities depends
in part on investors' perceptions of the biotechnology industry, in general, and
of Corvas, in particular. The market for securities of biotechnology companies,
including Corvas, has historically been highly volatile and investors have not
been focusing on the biotechnology market; accordingly, there is no assurance
that additional funding will be available, or, if available, that it will be
available on acceptable terms. If additional funds are raised by issuing
securities, further dilution, possibly substantial, to existing stockholders
will likely result. The Company may enter into additional collaborative
relationships to develop and commercialize certain of its current or future
technologies or products. There is no assurance that the Company will be able to
establish such relationships on satisfactory terms, if at all, or that
agreements with collaborators will successfully reduce the Company's funding
requirements. In addition, the Company has not attempted to establish bank
financing arrangements, and there is no assurance that it would be able to
establish such arrangements on satisfactory terms, if at all. If adequate funds
are not available in the future, the Company may be required to delay, scale
back or discontinue one or more of its drug discovery programs, clinical trials
or other aspects of its operations, or obtain funds through arrangements with
collaborative partners or others which may require the Company to relinquish
rights to certain of its technologies, product candidates or products that the
Company would not otherwise relinquish or at prices below what the Company would
otherwise choose to accept for relinquishing such rights.
IMPACT OF THE YEAR 2000
Any computer systems with date fields coded to accept only two digits
will be unable to properly interpret dates beyond the end of 1999, which could
lead to business interruptions commonly referred to as the "Year 2000" or "Y2K"
issue.
Corvas has established an internal task force to address the impact of
any potential Y2K disruptions and to administer the Company's Y2K program. The
task force meets regularly to review potential exposure of the Company's
information systems, laboratory and office equipment, corporate infrastructure,
key vendors and suppliers, corporate partners, communication and utility
providers, financial institutions and certain governmental agencies. This
assessment of both internal systems and external providers is an ongoing process
that will continue into the year 2000. The task force has completed an initial
inventory and review of all hardware and software, and is in the process of
testing the items deemed to be critical in nature. As of September 30, 1999, the
Company's review of its financial, informational and operational systems had not
identified any material Y2K issues, and the Company does not expect costs
connected with remediation, if any, to be material.
In addition to risks associated with the Company's internal operating
systems, the Company is potentially vulnerable to failure by third parties to
adequately address their Y2K issues. Corvas continues to access the readiness of
its key third parties by monitoring such parties' readiness statements. To date,
no significant issues have been identified relating to third party vendors.
However, there is no assurance that the systems of third parties on which the
Company relies will be Y2K ready, or that any system failure by such parties
would not have a material adverse effect on the Company. Corvas believes that
its most likely exposure will be from third parties that fail to remediate their
Y2K issues. The Company has developed a contingency plan that identifies and
addresses material risks to Corvas in the event of third party system failures.
The plan specifically addresses potential power outages and outlines steps to
avoid problems relating to contract manufacturing and drug shipments for
clinical trials.
8
<PAGE>
As the Company continues its ongoing evaluation of the impact of Y2K
issues, there is no assurance that additional costs and efforts will not be
required which may have a material adverse impact on the Company's business,
financial condition or results of operations. Furthermore, the Y2K issue is
complex and there is no assurance that the Company will be able to address any
problems that may arise without incurring a material adverse effect on the
Company's business, financial condition or results of operations.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company invests its excess cash in short-term, high quality fixed
income investments that are held to maturity. The Company does not invest in
derivative financial instruments or any other market risk sensitive instruments.
Interest income earned on the Company's short-term investment portfolio is
affected by changes in the general level of interest rates. The Company believes
that its interest rate market risk is limited, and that it is not exposed to
significant changes in fair value because such investments are held to maturity.
The fair value of each investment approximates its amortized cost. At September
30, 1999, there have not been any material changes in market risk as reported by
the Company in its Annual Report on Form 10-K for the year ended December 31,
1998, except as to the market risk associated with the Convertible Note issued
in August 1999.
Due to the fixed rate nature of the Convertible Note, an immediate 10%
change in interest rates would not have a material impact on the Company's
financial condition or the results of its operations.
Underlying market risk exists related to an increase in the Company's
stock price or an increase in interest rates which may make conversion of the
Convertible Note into common stock beneficial to the holder.
Conversion of the Convertible Note would have a dilutive effect on the Company.
9
<PAGE>
PART II -- OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
None
Item 2. CHANGES IN SECURITIES
In August 1999, Corvas raised proceeds of $9,750,000, gross, in a
private financing consisting of 1,300,000 shares of common stock at $2.50 per
share and a 5.5% Convertible Note in the aggregate principal amount of
$6,500,000. Upon maturity, the Convertible Note will have an accreted value of
$9,503,000. The Company has agreed to pay any applicable withholding taxes that
may be required in connection with the accretion, which are estimated to be 30%
of the annual accretion. 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 Convertible 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 the Company's option, interest may be paid in cash or in Corvas
common stock priced at the then-current market price. Corvas may call the note
for redemption anytime after August 18, 2002.
In October 1999, the Company raised an additional $5,250,000, gross,
through the sale of 700,000 shares of common stock at $2.50 per share and an
additional 5.5% convertible senior subordinated note, also due in August 2006,
in the aggregate principal amount of $3,500,000. Upon maturity, this note will
have an accreted value of $5,069,000. The Company has agreed to pay any
applicable withholding taxes that may be required in connection with the
accretion, which are estimated to be 30% of the annual accretion.
Each of the investors in the August 1999 and October 1999 financings
was an "accredited investor" within the meaning of Rule 501(a) promulgated under
the Securities Act of 1933, as amended (the "Securities Act"). The Company
relied on the exemption provided by Section 4(2) under the Securities Act.
In the event of any insolvency, bankruptcy, reorganization, sale of all
or substantially all of the assets, dissolution, liquidation or other
arrangements with creditors, the Company must pay in full the accrued but unpaid
principal and interest outstanding on either of the convertible notes, in the
event that they have not been converted into common stock of the Company, in
preference to any payments made to holders of the Company's preferred or common
stock.
Item 3. DEFAULTS UPON SENIOR SECURITIES
None
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
Item 5. OTHER INFORMATION
None
10
<PAGE>
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits
Exhibit Number Description
-------------- -----------
4.8 Common Stock Purchase Agreement between the
Company and Societe Financiere D'Innovation Inc.
("Sofinov") and Finsbury Technology Trust
("Finsbury") and Westcoast and Company
("Westcoast"), dated as of October 20, 1999.
4.9 Registration Rights Agreement between the Company
and Sofinov and Finsbury and Westcoast, dated as
of October 20, 1999.
4.10 5.5% Convertible Senior Subordinated Note Due
2006, in the principal amount of $3,500,000,
issued to Artisan Equity Limited, dated as of
October 20, 1999.(1)
10.65 Letter of Agreement between the Company and
Schering Corporation and Schering-Plough Ltd.,
effective as of September 8, 1999.
27.1 Financial Data Schedule.
b. Reports on Form 8-K
There were no reports on Form 8-K filed for the quarter ended
September 30, 1999.
- -----------------------------------
(1) Incorporated by reference to Schedule 13D, filed by Artisan Equity Limited
on November 5, 1999.
11
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
CORVAS INTERNATIONAL, INC.
Date: November 11, 1999 By:/s/ RANDALL E. WOODS
-------------------------------------
Randall E. Woods
President and Chief Executive Officer
Date: November 11, 1999 By:/s/ CAROLYN M. FELZER
-------------------------------------
Carolyn M. Felzer
Senior Director of Finance
Principal Financial Officer
12
CORVAS INTERNATIONAL, INC.
COMMON STOCK PURCHASE AGREEMENT
THIS COMMON STOCK PURCHASE AGREEMENT (the "Agreement") is entered into
as of October 20, 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 seven hundred thousand (700,000) 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 August 18, 1999, by and between
the Company and such purchaser;
WHEREAS, the Company issued a $6,500,000 Convertible Note to the Note
Purchaser in August 1999 (the "First Note");
WHEREAS, concurrently with the sale of the Shares, the Company will
issue a $3,500,000 Convertible Note to the Note Purchaser (the "Second Note");
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
2.
<PAGE>
created by the Company other than restrictions on transfer arising under
applicable securities laws. Assuming the accuracy of the representations and
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 June 30, 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
Second Note 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, 16,788,391 shares of which are issued and outstanding, (c)
1,694,052 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) 2,143,848 currently outstanding warrants to
acquire Common Stock of the Company, (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 and (g) 2,924,000 shares of
Common Stock reserved for issuance upon conversion of the First Note. 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 Second Note 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) 17,488,391 shares of
Common Stock will be issued and outstanding, (b) 1,559,707 shares of Common
Stock will be reserved for issuance upon the conversion of the Second Note and
(c) 2,143,848 shares will be reserved for issuance under currently outstanding
warrants to acquire Common Stock of the Company.
4.
<PAGE>
(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
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
5.
<PAGE>
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 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.
<PAGE>
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.
7.
<PAGE>
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,
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.
8.
<PAGE>
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.
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.
9.
<PAGE>
(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 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, the
Form 10-Q for the period ended March 31, 1999 (including all financial
statements), the Form 10-Q for the period ended June 30, 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:
10.
<PAGE>
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.
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 the Second Note of the Company to the Note Purchaser for the aggregate
amount of $3,500,000 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 June 30, 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.
11.
<PAGE>
(c) certified copies of the Company's Certificate of
Incorporation and Bylaws, each as in effect as of the Closing Date;
(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 the Second Note of the Company to the Note Purchaser for the aggregate
amount of $3,500,000 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.
12.
<PAGE>
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 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.
13.
<PAGE>
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.
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.
14.
<PAGE>
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.
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).
15.
<PAGE>
"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:
(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.
16.
<PAGE>
"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.
"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.
<PAGE>
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: Vice President
By: /s/ DENIS DIONNE
-----------------------------
Name: Denis Dionne
Its: President
FINSBURY TECHNOLOGY TRUST
By:/s/DAVID FALLON;
------------------------------
/s/NATHAN BROWN
------------------------------
Name: David Fallon; Nathan Brown
Its: Rea Brothers Limited
Secretaries
WESTCOAST AND COMPANY
By: /s/ KENNETH A. KALINA
-----------------------------
Name: Kenneth A. Kalina
Its: Fund Controller
[SIGNATURE PAGE TO COMMON STOCK PURCHASE AGREEMENT]
<PAGE>
CORVAS INTERNATIONAL, INC.
COMMON STOCK PURCHASE AGREEMENT
<PAGE>
<TABLE>
COMMON STOCK PURCHASE AGREEMENT
EXHIBIT A
SCHEDULE OF PURCHASERS
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
AGGREGATE
NAME AND ADDRESS SHARES PURCHASE PRICE
- ---------------------------------------------------------- ----------------- ----------------------------------
<S> <C> <C>
Sofinov Societe Financiere D'Innovation Inc. 400,000 $1,000,000
1981, avenue McGill College 13th Floor
Montreal (Quebec) H3A 3C7
Finsbury Technology Trust 200,000 $500,000
Alderman's House
Alderman's Walk
London, EC2M 3XR United Kingdom
Westcoast and Company 100,000 $250,000
c/o State Street Bank and Trust
225 Franklin Street
Boston, MA 02110
Attn: Anna Barnes - MCO
</TABLE>
<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..............................8
3.20 No Defaults................................................8
3.21 Stockholder Rights Agreement...............................8
3.22 Brokers or Finders.........................................8
3.23 Year 2000 Compliance.......................................8
3.24 Nasdaq Listing.............................................8
3.25 Form S-3 Eligibility.......................................8
<PAGE>
3.26 Knowledge...................................................9
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..................11
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............................................13
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
7.8 Governing Law..............................................14
7.9 Notices....................................................14
7.10 No Strict Construction.....................................14
7.11 Expenses...................................................14
<PAGE>
7.12 Listing of Shares on Nasdaq................................15
7.13 Use of Proceeds............................................15
7.14 Information Rights.........................................15
7.15 Public Statements or Releases..............................15
8. DEFINITIONS.........................................................15
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT, dated as of October 20, 1999 (this
"Agreement"), is made by and among CORVAS INTERNATIONAL, INC., a Delaware
corporation (the "COMPANY"), SOFINOV SOCIETE FINANCIERE D'INNOVATION INC.,
FINSBURY TECHNOLOGY TRUST AND WESTCOAST AND COMPANY, 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 October 20, 1999 (as amended and modified from time to time, the
"Purchase Agreement"), between the Company and the Purchasers, which provides
for the sale of 700,000 shares of Common Stock of the Company to the Purchasers
for the aggregate amount of $1,750,000 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 700,000 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.
1.
<PAGE>
"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 covering the
resale of all the Registrable Securities. 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:
2.
<PAGE>
(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
3.
<PAGE>
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.
<PAGE>
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.
<PAGE>
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.
6.
<PAGE>
(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,
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.
7.
<PAGE>
(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, 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
8.
<PAGE>
respect to any matter arising under this Agreement. The tribunal shall consist
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. (858) 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 amended to add
9.
<PAGE>
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 INC.
1981, avenue McGill College, 13th Floor
Montreal (Quebec) H3A 3C7
By: /s/ JEAN CHRISTOPHE RENONDIN
----------------------------------------
Name: Jean Christophe Renondin
Its: Vice President
By: /s/ DENIS DIONNE
----------------------------------------
Name: Denis Dionne
Its: President
FINSBURY TECHNOLOGY TRUST
Alderman's House
Alderman's Walk
London, EC2M 3XR United Kingdom
By: /s/DAVID FALLON; /s/NATHAN BROWN
----------------------------------------
Name: David Fallon; Nathan Brown
Its: Rea Brothers Limited Secretaries
WESTCOAST AND COMPANY
c/o State Street Bank and Trust
225 Franklin Street
Boston, MA 02110
Attn: Anna Barnes - MCO
By: /s/ KENNETH A. KALINA
----------------------------------------
Name: Kenneth A. Kalina
Its: Fund Controller
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
[LETTERHEAD OF SCHERING CORPORATION]
September 8, 1999
Mr. Randall E. Woods
President and Chief Executive Officer
Corvas International, Inc.
3030 Science Park Road
San Diego, California 92121
RE: Factor Xa Research Programs
Dear Mr. Woods:
This "Letter of Agreement" is to notify you of Schering's decision to
extend the term of the Factor Xa Research Program under the Agreement by and
between Corvas International, Inc. ("Corvas") and Schering Corporation and
Schering-Plough Ltd. (collectively "Schering"), effective as of December 14,
1994, as amended by that certain Letter of Understanding signed on December 17,
1996, as extended by that certain Letter of Agreement dated December 15, 1998
(extending the term of the Factor Xa Research Program through September 14,
1999), as further amended by that certain Amendment Agreement dated February 18,
1999, as further amended by that certain Second Amendment Agreement dated June
29, 1999 (the Agreement, with all amendments and extensions, hereby referred to
collectively as the "Agreement"), subject to the following modifications:
1. The Factor Xa Research Program shall be extended for an additional
period of three (3) months to terminate on December 14, 1999 (the "Extension").
2. Schering shall pay to Corvas one million dollars ($1,000,000) in
research funding for the three month extension, such payment to be made on or
before September 30, 1999.
3. Schering and Corvas shall, within fourteen (14) days of the date
hereof, amend Exhibit G of the Agreement to set forth the responsibilities of
the parties with respect to performance of the research collaboration during the
Extension.
<PAGE>
Mr. Randall E. Woods 2 September 8, 1999
4. Except as specifically amended hereby, all other terms and
provisions of the Agreement shall remain unchanged and in full force and effect.
Unless otherwise defined herein, capitalized terms herein shall have
the same meanings as set forth in the Agreement.
We at Schering look forward to continuing our collaborative research
efforts under the Agreement.
Please indicate Corvas' acceptance and agreement to the provisions set
forth in this Letter of Agreement by signing below on behalf of Corvas and
returning one signed original to Schering.
Very truly yours,
LEGAL REVIEW LEGAL REVIEW
Schering Corporation Schering -Plough Ltd.
/s/ DAVID POORVIN, PH.D. /s/ DAVID POORVIN, PH.D.
------------------------- -------------------------
David Poorvin, Ph.D. David Poorvin, Ph.D.
Vice President Prokurist
Acknowledged and Agreed to
Corvas International, Inc.
By: /s/ RANDALL E. WOODS
--------------------------
Title: President and CEO
-----------------------
Date: September 10, 1999
------------------------
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 929
<SECURITIES> 18,376
<RECEIVABLES> 584
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 20,538
<PP&E> 5,344
<DEPRECIATION> 4,191
<TOTAL-ASSETS> 21,794
<CURRENT-LIABILITIES> 2,835
<BONDS> 6,542
0
1
<COMMON> 17
<OTHER-SE> 12,399
<TOTAL-LIABILITY-AND-EQUITY> 21,794
<SALES> 0
<TOTAL-REVENUES> 4,816
<CGS> 0
<TOTAL-COSTS> 15,465
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 43
<INCOME-PRETAX> (10,107)
<INCOME-TAX> 0
<INCOME-CONTINUING> (10,107)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (10,107)
<EPS-BASIC> (.65)
<EPS-DILUTED> (.65)
</TABLE>
