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                                                                  EXHIBIT 10.43


                          REGISTRATION RIGHTS AGREEMENT

         This REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of
January 2, 1997 is made and entered into between CONNECTIVE THERAPEUTICS, INC.,
a Delaware corporation (the "Company"), and Kepler Capital LLC (the "Investor").

         WHEREAS, the Company and the Investor have entered into that certain
Structured Equity Line Flexible FinancingSM Agreement, dated as of the date
hereof (the "Investment Agreement"), pursuant to which the Company will issue,
from time to time, to the Investor shares of Common Stock, par value $.001 per
share (the "Common Stock");

         WHEREAS, pursuant to the terms of, and in partial consideration for,
the Investor's agreement to enter into the Investment Agreement, the Company has
issued to the Investor a warrant dated January 2, 1997, exercisable from time to
time within five (5) years from the date of issuance (the "Warrant") for the
purchase of an aggregate of 250,000 shares of Common Stock at a price specified
in such Warrant, and the Company has agreed to issue to the Investor on each of
the first, second and third anniversary of the Commitment Period (as defined in
the Investment Agreement), certain additional warrants (the "Additional
Warrants") to purchase shares of Common Stock in an amount and at a price
determined pursuant to the Investment Agreement (the Warrant and the Additional
Warrants are herein collectively referred to as the "Warrants");

         WHEREAS, pursuant to the terms of, and in partial consideration for,
the Investor's agreement to enter into the Investment Agreement, the Company has
agreed to provide the Investor with certain registration rights with respect to
the Conversion Shares (as defined below);

         NOW, THEREFORE, in consideration of the premises, the representations,
warranties, covenants and agreements contained herein and in the Investment
Agreement, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, intending to be legally bound
hereby, the parties hereto agree as follows:

                                    ARTICLE I
                                   DEFINITIONS

         SECTION 1.1. Definitions. Capitalized terms defined in the Investment
Agreement or the Warrant shall have the same meanings herein as are ascribed to


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them therein. In addition, the following terms shall have the meanings ascribed
below:

         "Registrable Securities" means all of the Common Stock and any other
securities issued or issuable upon exercise of the Warrants as provided therein
(together, the "Conversion Shares") until (i) a registration statement under the
Act covering the offering of such Conversion Shares has been declared effective
by the SEC and such Conversion Shares have been disposed of pursuant to such
effective registration statement, (ii) such Conversion Shares are sold under
circumstances in which all of the applicable conditions of Rule 144 (or any
similar provision then in force) under the Act ("Rule 144") are met, (iii) such
Conversion Shares have been otherwise transferred and the Company has delivered
a new certificate or other evidence of ownership for such securities not bearing
a restrictive legend or (iv) such time as, in the opinion of counsel to the
Company, which counsel shall be acceptable to the Investor in its sole
discretion, such Conversion Shares may be sold without any time, volume or
manner limitation pursuant to Rule 144(k) (or any similar provision then in
effect) under the Act.

         "Registration Statement," "Warrant Registration Statement" and
"Additional Warrant Registration Statement." See Section 2.1(a).


                                   ARTICLE II
                               REGISTRATION RIGHTS

     SECTION 2.1. FORM S-3 REGISTRATION STATEMENTS.

         (a) Filing of Form S-3 Registration Statements. Subject to the terms
and conditions of this Agreement, the Company shall file with the SEC (i) by
March 15, 1997 a registration statement on Form S-3 under the Securities Act
(the "Warrant Registration Statement") for the registration of the resale by the
Investor of Common Stock to be issued upon exercise of the Warrant and (ii)
within thirty (30) days of the issuance of any Additional Warrants, a
registration statement on Form S-3 under the Securities Act (each, an
"Additional Warrant Registration Statement") for the registration of the resale
by the Investor of Common Stock to be issued upon exercise of each Additional
Warrant. The Warrant Registration Statement and each Additional Warrant
Registration Statement are each referred to herein as a "Registration Statement.

         (b) Effectiveness of Registration Statements. The Warrant Registration
Statement shall be declared effective by the SEC by no later than June 15, 1997
and each Additional Registration Statement shall be declared effective by the
SEC by no later than ninety (90) days following the date by which such
Additional Registration Statement is filed (or is required to be filed) with the
SEC 

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and each Registration Statement shall remain in effect until such time as the
Conversion Shares issuable upon exercise of the Warrants or Additional Warrants,
as the case may be, shall no longer constitute Registrable Securities.

         (c) Penalties for Failure to Obtain or Maintain Effectiveness of
Registration Statements. In the event the Company fails to obtain the
effectiveness of a Registration Statement within the time period set forth in
Section 2.1 (b), the Company shall pay to the Investor at the end of each thirty
(30) day period following the date by which such Registration Statement was
required to have been declared effective, in cash liquidated damages in an
amount equal to (i) $500 per day in the case of the Warrant Registration
Statement and $200 per day in the case of any Additional Warrant Registration
Statement. In addition, in the event the Company fails to maintain the
effectiveness of a Registration Statement (or the use of the underlying
prospectus) throughout the period set forth in Section 2.1(b), other than
temporary suspensions not exceeding thirty (30) days in any one twelve (12)
month period, the Company shall pay to the Investor at the end of any calendar
month in which such a suspension has occurred, in cash liquidated damages in an
amount equal to (i) $250 per day in the case of the Warrant Registration
Statement and $100 per day in the case of any Additional Warrant Registration
Statement. Such liquidated damages amount shall not be payable with respect to
deferrals of filing of a Registration Statement or suspensions of the
effectiveness of a Registration Statement (or use of the underlying prospectus)
in accordance with Section 2.1(d) although any such deferrals or suspensions
shall be counted towards the thirty (30) days allowed by the preceeding
sentence.

         (d) Deferral. Notwithstanding the foregoing, if the Company shall
furnish to the Investor fifteen (15) days prior to the date by which a
Registration Statement (or if the Company shall furnish to the Investor
subsequent to the effectiveness of a Registration Statement) is required to be
filed (or remain in effect), a certificate signed by the Chairman, President and
Chief Executive Officer of the Company stating that the Board of Directors of
the Company has, by duly authorized resolution, determined in good faith that it
would be seriously detrimental to the Company and its shareholders for such
Registration Statement to be filed (or remain in effect) and it is therefore
essential to defer the filing of such Registration Statement (or temporarily
suspend the effectiveness of such Registration Statement or use of the related
prospectus), the Company shall have the right to defer such filing (or suspend
such effectiveness or use) for a period of not more than ninety (90) days beyond
the date by which such Registration Statement was otherwise required to be filed
(or required to remain in effect). The Investor acknowledges that it would be
seriously detrimental to the Company and its shareholders for such Registration
Statement to be filed (or remain in effect) and therefore essential to defer
such filing (or suspend such effectiveness or use) if, among other things, such
filing (or use) would impose an undue burden upon the ability of the Company to
proceed with any reorganization, merger, consolidation or acquisition of the


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securities or assets of another firm or corporation or disposition of the
securities or assets of the Company or a public offering by the Company of
Common Stock or other securities of the Company registered under the Securities
Act which, in each case, is material to the Company (a "Material Transaction").
If the Company shall have delivered the certificate referred to above and
thereafter shall have entered into a definitive agreement or filed a
registration statement or a proxy statement in connection with a Material
Transaction, the Company shall, upon written notice to the Investor, have the
right to defer the filing of the Registration Statement (or suspend its
effectiveness or the use of the underlying prospectus) for whatever additional
time period (but in no event longer than forty-five (45) days) from the
expiration of the initial ninety (90)-day extension period referred to above as
is reasonably necessary to enable the Company to satisfy its disclosure
obligations under the Securities Act in such Registration Statement with respect
to the Material Transaction. The Company may not utilize this right to defer the
filing of a Registration Statement (or suspend its effectiveness or the use of
the underlying prospectus) more than once in any twelve (12) month period.

                                   ARTICLE III
                             REGISTRATION PROCEDURES

     SECTION 3.1. FILINGS; INFORMATION. Whenever the Company is required to
effect or cause the registration of Registrable Securities pursuant to Section
2.1, the Company will use its reasonable best efforts to effect the registration
of such Registrable Securities in accordance with the intended method of
disposition thereof as quickly as practicable, and in connection with any such
request:

         (a) The Company will as expeditiously as possible but in no event later
than the time period prescribed by Section 2.1(a), prepare and file with the SEC
a registration statement on Form S-3 (if use of such form is then available to
the Company pursuant to the rules of the SEC and, if not, on such other form
promulgated by the SEC for which the Company then qualifies and which counsel
for the Company shall deem appropriate and which form shall be available for the
sale of the Registrable Securities to be registered thereunder in accordance
with the provisions of this Agreement and in accordance with the intended method
of such Registrable Securities), and use commercially reasonable efforts to
cause such filed Registration Statement to become and remain effective (pursuant
to Rule 415 under the Act or otherwise), and the Company will as expeditiously
as possible prepare and file with the SEC such amendments and supplements to
such Registration Statement and the prospectus used in connection therewith as
may be necessary to keep such Registration Statement effective for the time
periods prescribed by Section 2.1(b) and comply with the provisions of the Act
with respect to the disposition of all securities covered by such Registration
Statement during such period in accordance with the intended methods of
disposition by the Investor set forth in such Registration Statement. 


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         (b) The Company will, prior to filing a Registration Statement or
prospectus or any amendment or supplement thereto (excluding amendments deemed
to result from the filing of documents incorporated by reference therein),
furnish to the Investor and one firm of counsel representing the Investor,
copies of such Registration Statement as proposed to be filed, together with
exhibits thereto, which documents will be subject to review and approval by such
parties, and thereafter furnish to the Investor and its counsel for their review
and comment such number of copies of such Registration Statement, each amendment
and supplement thereto (in each case including all exhibits thereto), the
prospectus included in such Registration Statement (including each preliminary
prospectus) and such other documents or information as the Investor or counsel
may reasonably request in order to facilitate the disposition of the Registrable
Securities.

         (c) After the filing of the Registration Statement, the Company will
promptly notify the Investor of any stop order issued or threatened by the SEC
in connection therewith and take all reasonable actions required to prevent the
entry of such stop order or to remove it if entered.

         (d) The Company will use its reasonable efforts to (i) register or
qualify such Registrable Securities under such other securities or blue sky laws
of such jurisdictions in the United States as the Investor may reasonably (in
light of its intended plan of distribution) request, and (ii) cause such
Registrable Securities to be registered with or approved by such other
governmental agencies or authorities in the United States as may be necessary by
virtue of the business and operations of the Company and do any and all other
acts and things that may be reasonably necessary or advisable to enable the
Investor to consummate the disposition of the Registrable Securities; provided
that the Company will not be required to (A) qualify generally to do business in
any jurisdiction where it would not otherwise be required to qualify but for
this paragraph (d), (B) subject itself to taxation in any such jurisdiction or
(C) consent or subject itself to general service of process in any such
jurisdiction.

         (e) The Company will immediately notify the Investor upon the
occurrence of any of the following events in respect of a Registration Statement
or related prospectus in respect of an offering of Registrable Securities; (i)
receipt of any request for additional information by the SEC or any other
federal or state governmental authority during the period of effectiveness of
the Registration Statement for amendments or supplements to the Registration
Statement or related prospectus; (ii) the issuance by the SEC or any other
federal or state governmental authority of any stop order suspending the
effectiveness of the Registration Statement or the initiation of any proceedings
for that purpose; (iii) receipt of any notification with respect to the
suspension of the qualification or exemption from qualification of any of the
Registrable Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose; (iv) the happening of 

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any event which makes any statement made in the Registration Statement or
related prospectus or any document incorporated or deemed to be incorporated
therein by reference untrue in any material respect or which requires the making
of any changes in the Registration Statement, related prospectus or documents so
that, in the case of the Registration Statement, it 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 not misleading, and
that in the case of the related prospectus, it 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 the light of the
circumstances under which they were made, not misleading; and (vi) the Company's
reasonable determination that a post-effective amendment to the Registration
Statement would be appropriate; and the Company will promptly make available to
the Investor any such supplement or amendment to the related prospectus.

         (f) The Company will enter into customary agreements and take such
other actions as are reasonably required in order to expedite or facilitate the
disposition of such Registrable Securities (the Investor may, at its option,
require that any or all of the representations, warranties and covenants of the
Company also be made to and for the benefit of the Investor).

         (g) The Company will make available to the Investor (and will deliver
to Investors's counsel), subject to restrictions imposed by the United States
federal government or any agency or instrumentality thereof, copies of all
correspondence between the SEC and the Company, its counsel or auditors and will
also make available for inspection by the Investor and any attorney, accountant
or other professional retained by the Investor (collectively, the "Inspectors"),
all financial and other records, pertinent corporate documents and properties of
the Company (collectively, the "Records") as shall be reasonably necessary to
enable them to exercise their due diligence responsibility, and cause the
Company's officers and employees to supply all information reasonably requested
by any Inspectors in connection with such Registration Statement. Records which
the Company determines, in good faith, to be confidential and which it notifies
the Inspectors are confidential shall not be disclosed by the Inspectors unless
(i) the disclosure of such Records is necessary to avoid or correct a
misstatement or omission in such Registration Statement or (ii) the disclosure
or release of such Records is requested or required pursuant to oral questions,
interrogatories, requests for information or documents or a subpoena or other
order from a court of competent jurisdiction or other process; provided that
prior to any disclosure or release pursuant to clause (ii), the Inspectors shall
provide the Company with prompt notice of any such request or requirement so
that the Company may seek an appropriate protective order or waive such
Inspectors' obligation not to disclose such Records; and, provided further, that
if failing the entry of a protective order or the waiver by the Company
permitting the disclosure or release of such Records, the Inspectors, upon
advice of 

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counsel, are compelled to disclose such Records, the Inspectors may disclose
that portion of the Records which counsel has advised the Inspectors that the
Inspectors are compelled to disclose. The Investor agrees that information
obtained by it solely as a result of such inspections (not including any
information obtained from a third party who, insofar as is known to the Investor
after reasonable inquiry, is not prohibited from providing such information by a
contractual, legal or fiduciary obligation to the Company) shall be deemed
confidential and shall not be used by it as the basis for any market
transactions in the securities of the Company or its Affiliates unless and until
such information is made generally available to the public. The Investor further
agrees that it will, upon learning that disclosure of such Records is sought in
a court of competent jurisdiction, give notice to the Company and allow the
Company, at its expense, to undertake appropriate action to prevent disclosure
of the Records deemed confidential.

         (h) The Company will furnish to the Investor a signed counterpart,
addressed to the Investor, of (1) an opinion or opinions of counsel to the
Company, and (2) a comfort letter or comfort letters from the Company's
independent public accountants, each in customary form and covering such matters
of the type customarily covered by opinions or comfort letters, as the case may
be, as the Investor therefor reasonably requests.

         (i) The Company will otherwise comply with all applicable rules and
regulations of the SEC, including, without limitation, compliance with
applicable reporting requirements under the Exchange Act, and will make
available to its securityholders, as soon as reasonably practicable, an earning
statement covering a period of twelve (12) months, beginning within three (3)
months after the effective date of the Registration Statement, which earning
statement shall satisfy the provisions of Section 11(a) of the Act.

         (j) The Company will use commercially reasonable efforts to secure
designation of all such Registrable Securities covered by such Registration
Statement as a NASDAQ "national market system security" within the meaning of
Rule 11Aa2-1 of the SEC and to arrange for at least two market makers to
register as such with respect to such Registrable Securities with the National
Association of Securities Dealers, Inc. (the "NASD").

         (k) The Company will appoint a transfer agent and registrar for all
such Registrable Securities covered by such Registration Statement not later
than the effective date of such Registration Statement.

         The Company may require the Investor to promptly furnish in writing to
the Company such information regarding the distribution of the Registrable
Securities as the Company may from time to time reasonably request and such
other information as may be legally required in connection with such
registration 

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including, without limitation, all such information as may be requested by the
SEC or the NASD. The Investor agrees to provide such information requested in
connection with such registration within ten (10) business days after receiving
such written request and the Company shall not be responsible for any delays in
obtaining or maintaining the effectiveness of the Registration Statement caused
by the Investor's failure to timely provide such information.

         The Investor agrees that, upon receipt of any notice from the Company
of the happening of any event of the kind described in Section 3.1(e) hereof,
the Investor will forthwith discontinue disposition of Registrable Securities
pursuant to the Registration Statement covering such Registrable Securities
until the Investor's receipt of the copies of the supplemented or amended
prospectus contemplated by Section 3.1(e) hereof, and, if so directed by the
Company, the Investor will deliver to the Company all copies, other than
permanent file copies then in the Investor's possession, of the most recent
prospectus covering such Registrable Securities at the time of receipt of such
notice. In the event the Company shall give such notice, the Company shall
extend the period during which such Registration Statement shall be maintained
effective (including the period referred to in Section 3.1(a) hereof) by the
number of days during the period from and including the date of the giving of
notice pursuant to Section 3.1(e) hereof to the date when the Company shall make
available to the Investor a prospectus supplemented or amended to conform with
the requirements of Section 3.1(e) hereof.

     SECTION 3.2. REGISTRATION EXPENSES. In connection with each Registration
Statement, the Company shall pay the following registration expenses incurred in
connection with the registration thereunder (the "Registration Expenses"): (i)
all registration and filing fees, (ii) fees and expenses of compliance with
securities or blue sky laws (including reasonable fees and disbursements of
counsel in connection with blue sky qualifications of the Registrable
Securities), (iii) printing expenses, (iv) the Company's internal expenses
(including, without limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties), (v) the fees and expenses
incurred in connection with the listing of the Registrable Securities, (vi)
reasonable fees and disbursements of counsel for the Company and customary fees
and expenses for independent certified public accountants retained by the
Company (including the expenses of any comfort letters or costs associated with
the delivery by independent certified public accountants of a comfort letter or
comfort letters requested pursuant to Section 3.1(h) hereof), (vii) the fees and
expenses of any special experts retained by the Company in connection with such
registration and (viii) reasonable fees and expenses of one firm of counsel for
the Investor retained as the Investor's counsel with respect to such
Registration Statement (an estimate of such fees and expenses of such firm of
counsel to be provided to the Company prior to the undertaking of such counsel's
review). The Company shall have no obligation to pay any underwriting fees,
discounts or 

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commissions attributable to the sale of Registrable Securities, or the cost of
any special audit required by the Investor, such costs to be borne by the
Investor.

                                   ARTICLE IV
                        INDEMNIFICATION AND CONTRIBUTION

     SECTION 4.1. INDEMNIFICATION BY THE COMPANY. The Company agrees to 
indemnify and hold harmless the Investor, its partners, Affiliates, officers,
directors, employees and duly authorized agents, and each Person or entity, if
any, who controls the Investor within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act, together with the partners, Affiliates,
officers, directors, employees and duly authorized agents of such controlling
Person or entity (collectively, the "Controlling Persons"), from and against any
loss, claim, damage, liability, reasonable attorneys' fees, costs or expenses
and costs and expenses of investigating and defending any such claim
(collectively, "Damages"), joint or several, and any action in respect thereof
to which the Investor, its partners, Affiliates, officers, directors, employees
and duly authorized agents, and any such Controlling Person may become subject
under the Act or otherwise, insofar as such Damages (or proceedings in respect
thereof) arise out of, or are based upon, any untrue statement or alleged untrue
statement of a material fact contained in any Registration Statement or
prospectus relating to the Registrable Securities or any preliminary prospectus,
or arises out of, or are based upon, any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as the same are based upon
information furnished in writing to the Company by the Investor expressly for
use therein, and shall reimburse the Investor, its partners, Affiliates,
officers, directors, employees and duly authorized agents, and each such
Controlling Person for any legal and other expenses reasonably incurred by the
Investor, its partners, Affiliates, officers, directors, employees and duly
authorized agents, or any such Controlling Person in investigating or defending
or preparing to defend against any such Damages or proceedings; provided,
however, that the Company shall not be liable to the Investor to the extent that
any such Damages arise out of or are based upon an untrue statement or omission
made in any preliminary prospectus if (i) the Investor failed to send or deliver
a copy of the final prospectus with or prior to the delivery of written
confirmation of the sale by the Investor to the Person asserting the claim from
which such Damages arise, and (ii) the final prospectus would have corrected
such untrue statement or alleged untrue statement or such omission or alleged
omission.

     SECTION 4.2. INDEMNIFICATION BY THE INVESTOR. The Investor agrees to
indemnify and hold harmless the Company, its partners, Affiliates, officers,
directors, employees and duly authorized agents and each Person or entity, if
any, who controls the Company within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act, together with the partners, Affiliates,
officers, directors, 

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employees and duly authorized agents of such controlling Person, to the same
extent as the foregoing indemnity from the Company to the Investor, but only
with reference to information related to the Investor or its plan of
distribution, furnished in writing by the Investor or on the Investor's behalf
expressly for use in any Registration Statement or prospectus relating to the
Registrable Securities, or any amendment or supplement thereto, or any
preliminary prospectus. In case any action or proceeding shall be brought
against the Company or its partners, Affiliates, officers, directors, employees
or duly authorized agents or any such controlling Person or its partners,
Affiliates, officers, directors, employees or duly authorized agents, in respect
of which indemnity may be sought against the Investor, the Investor shall have
the rights and duties given to the Company, and the Company or its partners,
Affiliates, officers, directors, employees or duly authorized agents, or such
controlling Person, or its partners, Affiliates, officers, directors, employees
or duly authorized agents, shall have the comparable rights and duties given to
the Investors by Section 4.1. The Investor also agrees to indemnify and hold
harmless any Underwriters of the Registrable Securities with reference to the
same information as to which it agrees to indemnify the Company referenced
above, their officers and directors and each Person who controls such
Underwriters on customary terms. The Company shall be entitled to receive
indemnities on customary terms from Underwriters, selling brokers, dealer
managers and similar securities industry professionals participating in the
distribution, to the same extent as provided above, with respect to information
so furnished in writing by such persons specifically for inclusion in any
prospectus or Registration Statement.

     SECTION 4.3. CONDUCT OF INDEMNIFICATION PROCEEDINGS. Promptly after receipt
by any person or entity in respect of which indemnity may be sought pursuant to
Section 4.1 or 4.2 (an "Indemnified Party") of notice of any claim or the
commencement of any action, the Indemnified Party shall, if a claim in respect
thereof is to be made against the person or entity against whom such indemnity
may be sought (an "Indemnifying Party"), notify the Indemnifying Party in
writing of the claim or the commencement of such action; in the event an
Indemnified Party shall fail to give such notice as provided in this Section 4.3
and the Indemnifying Party to whom notice was not given was unaware of the
proceeding to which such notice would have related and was materially prejudiced
by the failure to give such notice, the indemnification provided for in Section
4.1 or 4.2 shall be reduced to the extent of any actual prejudice resulting from
such failure to so notify the Indemnifying Party; provided, that the failure to
notify the Indemnifying Party shall not relieve it from any liability which it
may have to an Indemnified Party otherwise than under Section 4.1 or 4.2. If any
such claim or action shall be brought against an Indemnified Party, and it shall
notify the Indemnifying Party thereof, the Indemnifying Party shall be entitled
to participate therein, and, to the extent that it wishes, jointly with any
other similarly notified Indemnifying Party, to assume the defense thereof with
counsel reasonably satisfactory to the Indemnified Party. After notice from the
Indemnifying Party to 

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the Indemnified Party of its election to assume the defense of such claim or
action, the Indemnifying Party shall not be liable to the Indemnified Party for
any legal or other expenses subsequently incurred by the Indemnified Party in
connection with the defense thereof other than reasonable costs of
investigation; provided that the Indemnified Party shall have the right to
employ separate counsel to represent the Indemnified Party and its controlling
persons who may be subject to liability arising out of any claim in respect of
which indemnity may be sought by the Indemnified Party against the Indemnifying
Party, but the fees and expenses of such counsel shall be for the account of
such Indemnified Party unless (i) the Indemnifying Party and the Indemnified
Party shall have mutually agreed to the retention of such counsel or (ii) in the
reasonable judgment of the Company and such Indemnified Party, representation of
both parties by the same counsel would be inappropriate due to actual or
potential conflicts of interest between them, it being understood, however, that
the Indemnifying Party shall not, in connection with any one such claim or
action or separate but substantially similar or related claims or actions in the
same jurisdiction arising out of the same general allegations or circumstances,
be liable for the fees and expenses of more than one separate firm of attorneys
(together with appropriate local counsel) at any time for all Indemnified
Parties, or for fees and expenses that are not reasonable. No Indemnifying Party
shall, without the prior written consent of the Indemnified Party, effect any
settlement of any claim or pending or threatened proceeding in respect of which
the Indemnified Party is or could have been a party and indemnity could have
been sought hereunder by such Indemnified Party, unless such settlement includes
an unconditional release of such Indemnified Party from all liability arising
out of such claim or proceeding. Whether or not the defense of any claim or
action is assumed by the Indemnifying Party, such Indemnifying Party will not be
subject to any liability for any settlement made without its consent, which
consent will not be unreasonably withheld.

     SECTION 4.4. CONTRIBUTION. If the indemnification provided for in this
Article IV is unavailable to the Indemnified Parties in respect of any Damages
referred to herein, then each Indemnifying Party, in lieu of indemnifying such
Indemnified Party, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such Damages as between the Company on the one
hand and the Investor on the other, in such proportion as is appropriate to
reflect the relative fault of the Company and of the Investor in connection with
such statements or omissions, as well as other equitable considerations. The
relative fault of the Company on the one hand and of the Investor on the other
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by such party, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.


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         The Company and the Investor agree that it would not be just and
equitable if contribution pursuant to this Section 4.4 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
Damages referred to in the immediately preceding 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 4.4, the Investor shall in no event be required to contribute any amount
in excess of the amount by which the total price at which the Registrable
Securities of the Investor were sold to the public (less underwriting discounts
and commissions) exceeds the amount of any damages which the Investor 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 Act) shall be
entitled to contribution from any Person who was not guilty of such fraudulent
misrepresentation.

                                    ARTICLE V
                                  MISCELLANEOUS

     SECTION 5.1. TERM. The registration rights provided to the holders of
Registrable Securities hereunder shall terminate at such time as no Registrable
Securities are outstanding or may be issuable in the future upon the issuance of
Additional Warrants; provided, however, that the provisions of Article IV hereof
shall survive any termination of this Agreement.

     SECTION 5.2. RULE 144. The Company covenants that it will file all
reports required to be filed by it under the Act and the Exchange Act and that
it will take such further action as holders of Registrable Securities may
reasonably request, all to the extent required from time to time to enable the
Investor to sell Registrable Securities without registration under the Act
within the limitation of the exemptions provided by (a) Rule 144, as such Rule
may be amended from time to time, or (b) any similar rule or regulation
hereafter adopted by the SEC. If at any time the Company is not required to file
such reports, it will, upon the request of any holder of Registrable Securities,
make publicly available other information so long as necessary to permit sales
pursuant to Rule 144. Upon the request of the Investor, the Company will deliver
to the Investor a written statement as to whether it has complied with such
requirements.

     SECTION 5.3. AMENDMENT AND MODIFICATION. Any provision of this Agreement 
may be waived, provided that such waiver is set forth in a writing executed by
the party against whom the enforcement of such waiver is sought. The provisions
of this Agreement, including the provisions of this sentence, may not be


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amended, modified or supplemented, and waivers or consents to departures from
the provisions hereof may not be given, unless the Company has obtained the
written consent of the holders of a majority of the then outstanding Registrable
Securities. Notwithstanding the foregoing, the waiver of any provision hereof
with respect to a matter that relates exclusively to the rights of holders of
Registrable Securities whose securities are being sold pursuant to a
Registration Statement and does not directly or indirectly affect the rights of
other holders of Registrable Securities may be given by holders of at least a
majority of the Registrable Securities being sold by such holders; provided that
the provisions of this sentence may not be amended, modified or supplemented
except in accordance with the provisions of the immediately preceding sentence.
No course of dealing between or among any Person having any interest in this
Agreement will be deemed effective to modify, amend or discharge any part of
this Agreement or any rights or obligations of any person under or by reason of
this Agreement.

     SECTION 5.4. SUCCESSORS AND ASSIGNS; ENTIRE AGREEMENT. This Agreement and
all of the provisions hereof shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns. The Investor may
assign its rights under this Agreement to any subsequent holder of Warrants or
Conversion Shares, provided that the Company shall have the right to require any
holder of Registrable Securities to execute a counterpart of this Agreement as a
condition to such holder's claim to any rights hereunder. This Agreement,
together with the Investment Agreement and the Warrants sets forth the entire
agreement and understanding between the parties as to the subject matter hereof
and merges and supersedes all prior discussions, agreements and understandings
of any and every nature among them.

     SECTION 5.5. SEPARABILITY. In the event that any provision of this 
Agreement or the application of any provision hereof is declared to be illegal,
invalid or otherwise unenforceable by a court of competent jurisdiction, the
remainder of this Agreement shall not be affected except to the extent necessary
to delete such illegal, invalid or unenforceable provision unless that provision
held invalid shall substantially impair the benefits of the remaining portions
of this Agreement.

     SECTION 5.6. NOTICES. All notices, demands, requests, consents, approvals
or other communications required or permitted to be given hereunder or which are
given with respect to this Agreement shall be in writing and shall be personally
served or deposited in the mail, registered or certified, return receipt
requested, postage prepaid, or delivered by reputable air courier service with
charges prepaid, or transmitted by hand delivery, telegram, telex or facsimile,
addressed as set forth below, or to such other address as such party shall have
specified most recently by written notice: (i) if to the Company, to: Connective
Therapeutics, Inc., 3400 West Bayshore Road, Palo Alto, CA 94303; Attention: Ms.
Cynthia Butitta, Facsimile No.: (415) 843-2899, with copies (which shall not
constitute notice) to: Venture Law

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<PAGE>   14
Group, 2800 Sand Hill Road, Menlo Park, CA 94025 Attention: Joshua Greene, Esq.,
Facsimile No.: (415) 233-8386; and (ii) if to the Investor, to Kepler Capital
LLC, 40 West 57th Street, New York, NY 10019; Attention: Robert L. Chender,
Facsimile No.: (212) 698-0554. Notice shall be deemed given on the date of
service or transmission if personally served or transmitted by telegram, telex
or facsimile. Notice otherwise sent as provided herein shall be deemed given on
the third business day following the date mailed or on the second business day
following delivery of such notice by a reputable air courier service.

     SECTION 5.7. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAW OF THE STATE OF DELAWARE, WITHOUT
GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAWS THEREOF.

     SECTION 5.8. HEADINGS. The headings in this Agreement are for
convenience of reference only and shall not constitute a part of this Agreement,
nor shall they affect their meaning, construction or effect.

     SECTION 5.9. COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed to be an original instrument and all
of which together shall constitute one and the same instrument.

     SECTION 5.10. FURTHER ASSURANCES. Each party shall cooperate and take
such action as may be reasonably requested by another party in order to carry
out the provisions and purposes of this Agreement and the transactions
contemplated hereby.

     SECTION 5.11. REMEDIES. In the event of a breach or a threatened breach
by any party to this Agreement of its obligations under this Agreement, any
party injured or to be injured by such breach will be entitled to specific
performance of its rights under this Agreement or to injunctive relief, in
addition to being entitled to exercise all rights provided in this Agreement and
granted by law. The parties agree that the provisions of this Agreement shall be
specifically enforceable, it being agreed by the parties that the remedy at law,
including monetary damages, for breach of any such provision will be inadequate
compensation for any loss and that any defense or objection in any action for
specific performance or injunctive relief that a remedy at law would be adequate
is waived.

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<PAGE>   15
         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by the undersigned, thereunto duly authorized, as of the date first set
forth above.

                                            CONNECTIVE THERAPEUTICS, INC.

                                            By:_________________________
                                               Name:
                                               Title:

                                            KEPLER CAPITAL LLC

                                            By:_________________________
                                               Name:
                                               Title:



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