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As filed with the Securities and Exchange Commission on November 22, 1999
Registration No. 333-_____
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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DIGENE CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 52-1536128
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
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9000 Virginia Manor Road, Suite 207
Beltsville, Maryland 20705
(301) 470-6500
(Address, including zip code, and
telephone number, including area code,
of registrant's principal executive offices)
Charles M. Fleischman
President and Chief Financial Officer
Digene Corporation
9000 Virginia Manor Road, Suite 207, Beltsville, Maryland 20705
(301) 470-6500
(Name, address, including zip code, and
telephone number, including area code,
of agent for service)
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Copies to:
Morris Cheston, Jr., Esq. James R. Tanenbaum, Esq.
Ballard Spahr Andrews & Ingersoll, LLP Stroock & Stroock & Lavan LLP
1735 Market Street, 51st Floor 180 Maiden Lane
Philadelphia, Pennsylvania 19103 New York, New York 10038-4982
(215) 665-8500 (212) 806-5400
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Approximate date of commencement of proposed sale to the public:
From time to time after this Registration Statement becomes effective.
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If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box: [ ]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box: [X]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering: [ ]
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If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: [ ]
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If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: [ ]
<TABLE>
<CAPTION>
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CALCULATION OF REGISTRATION FEE
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Title of each class of Proposed maximum aggregate Amount of
securities to be registered Amount to be registered offering price(1) registration fee
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<S> <C> <C> <C>
Common Stock, par value $.01 per share 1,500,000 shares $25,687,500 $7,141.13
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</TABLE>
(1) Estimated solely for the purposes of calculating the registration fee
pursuant to Rule 457(c).
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, as amended, or until this Registration Statement
shall become effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.
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The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
PROSPECTUS
SUBJECT TO COMPLETION, DATED NOVEMBER 22, 1999
DIGENE CORPORATION
1,500,000 SHARES
COMMON STOCK
The selling stockholders are offering to sell 1,500,000 shares of our
common stock with this prospectus. We will not receive any of the proceeds from
sales of these shares by the selling stockholders.
The selling stockholders acquired the offered shares directly from us and
certain of our stockholders in a private placement that was exempt from the
registration requirements of the federal securities laws. We are required to
register these shares under the terms of the Purchase Agreements, each dated as
of November 18, 1999, among us, certain of our stockholders and the selling
stockholders named in this prospectus.
Our common stock is traded on the Nasdaq National Market under the symbol
"DIGE." On November 19, 1999, the last sale price of the common stock, as
reported on the Nasdaq National Market, was $17.6875 per share.
The selling stockholders may sell their shares from time to time on the
Nasdaq National Market or otherwise. They may sell the shares at prevailing
market prices or at prices negotiated with purchasers. The selling stockholders
will be responsible for any commissions or discounts due to brokers or dealers.
The amount of those commissions or discounts cannot be known now because they
will be negotiated at the time of the sales. We will pay all other offering
expenses.
BEFORE BUYING ANY SHARES YOU SHOULD READ THE DISCUSSION OF MATERIAL RISKS OF
INVESTING IN COMMON STOCK IN "RISK FACTORS" BEGINNING ON PAGE 8.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF
THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
The date of this Prospectus is November 22, 1999
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You should rely only on the information contained in this prospectus. We
have not authorized anyone to provide you with information that is different
from that contained in this prospectus. The selling stockholders are offering to
sell, and seeking offers to buy, the shares of common stock only in
jurisdictions where offers and sales are permitted. The information contained in
this prospectus is accurate only as of the date of this prospectus, regardless
of the time of delivery of this prospectus or any sale of the common stock. In
this prospectus, references to "we," "us" and "our" refer to Digene Corporation
and its subsidiaries.
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TABLE OF CONTENTS
WHERE YOU CAN FIND MORE INFORMATION...........................................2
INCORPORATION OF INFORMATION WE FILE WITH THE SEC.............................3
PROSPECTUS SUMMARY............................................................4
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS..........................7
RISK FACTORS..................................................................8
USE OF PROCEEDS..............................................................21
DIVIDEND POLICY..............................................................21
SELLING STOCKHOLDERS.........................................................21
PLAN OF DISTRIBUTION.........................................................24
LEGAL MATTERS................................................................25
EXPERTS......................................................................26
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WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy any document we file at the
SEC's public reference room at 450 Fifth Street, N.W., Washington, DC 20549.
Please call the SEC at 1-800-SEC-0330 for further information on the public
reference room. The SEC maintains an internet site at http://www.sec.gov that
contains reports, proxy and information statements, and other information,
regarding issuers, including us, that file documents with the SEC
electronically. You can also inspect our SEC filings at the offices of The
Nasdaq Stock Market, 1735 K Street, N.W., Washington DC 20006.
This prospectus is a part of a registration statement on Form S-3 that we
filed with the SEC with respect to the common stock offered by this prospectus.
This prospectus does not contain all the information that is in the registration
statement. We omitted certain parts of the
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registration statement as allowed by the SEC. We refer you to the registration
statement and its exhibits for further information about us and the common stock
offered by the selling stockholders.
INCORPORATION OF INFORMATION WE FILE WITH THE SEC
The SEC allows us to "incorporate by reference" the information we file
with it, which means that we can disclose important information to you by
referring to those documents. The information incorporated by reference is an
important part of this prospectus, and the information that we file later with
the SEC will automatically update and supersede this information. We incorporate
by reference the documents listed below and any future filings made with the SEC
under Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934
until this offering is completed:
- Quarterly Report on Form 10-Q for the fiscal quarter ended September
30, 1999;
- Annual Report on Form 10-K for the fiscal year ended June 30, 1999;
- Proxy Statement for the 1999 Annual Meeting of Stockholders; and
- Registration Statement on Form 8-A dated April 3, 1996.
You may request a copy of these filings, at no cost, by writing to or
telephoning us at the address below. However, we will not provide copies of the
exhibits to these filings unless we specifically incorporated by reference the
exhibits in this prospectus.
Digene Corporation
Attention: Charles M. Fleischman
9000 Virginia Manor Road
Suite 207
Beltsville, Maryland 20705
(301) 470-6500
www.digene.com
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PROSPECTUS SUMMARY
OUR BUSINESS
This summary highlights information contained or incorporated by reference
elsewhere in this prospectus. It is not complete and does not contain all of the
information that you should consider before investing in the shares. You should
read the entire prospectus carefully including the documents incorporated by
reference, and you should consider the information set forth under "Risk
Factors."
We develop, manufacture and market our proprietary DNA and RNA testing
systems for the screening, monitoring and diagnosis of human diseases. We have
developed and are commercializing our patented Hybrid Capture(R) Gene Analysis
System and tests in three areas: women's cancers and infectious diseases, blood
viruses, and pharmaceutical clinical research. Our primary focus is in women's
cancers and infectious diseases where our lead product is the only FDA approved
test for human papillomavirus, or HPV, which is the cause of greater than 99% of
cervical cancer cases. Our product portfolio also includes DNA tests for the
detection of chlamydia, gonorrhea and other sexually transmitted infections. We
believe our Hybrid Capture technology platform represents a significant
improvement over existing technologies because of its accuracy, speed, ease of
use and ability to quantitate DNA and RNA. In the United States, we market our
products through a direct sales force and in other countries through
distributors. Abbott Laboratories, one of the world's leading medical diagnostic
companies, markets and distributes all of our women's cancers and infectious
diseases products and certain of our blood virus products in Europe, Africa and
the Middle East.
Our commercial objective is to become the world leader in gene-based
testing for women's cancers and infectious diseases. We are working to establish
our HPV test as the standard for cervical cancer screening, the world's largest
cancer screening market. Virtually all cases of cervical cancer are preventable
if detected in the precancerous stage. Currently, the Pap smear is a test used
to screen for cervical cancer. The Pap smear is a subjective, labor intensive
test that has limited sensitivity and diagnostic accuracy leading to equivocal
test results and false negative diagnoses, which result in significant costs to
the healthcare system due to over-treatment or under-diagnosis.
Our HPV test allows physicians to identify women who are most at risk of
having or developing cervical disease and cervical cancer. We intend to
capitalize on our leadership position in HPV testing to obtain a significant
share of the global cervical cancer screening market, both as a primary
screening test and as a follow-up to the Pap smear. We are targeting this global
opportunity primarily by marketing our disease management strategy for cervical
cancer screening to managed care providers in the United States and
government-funded national screening programs outside the United States. In
addition, we have developed a network of women's health advocates, public health
providers and physician organizations to communicate the diagnostic and
cost-effective benefits of HPV testing to physicians, reimbursement providers,
testing laboratories and the public.
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We have applied our Hybrid Capture technology to provide for the
simultaneous detection of chlamydia ("CT"), gonorrhea and other sexually
transmitted infections, in addition to HPV, from a single patient sample. We
also can use a liquid-based Pap smear sample for our DNA tests and have FDA
approval to use the specimen provided by Cytyc Corporation's ThinPrep(R) Pap
Test(TM) for our HPV tests. We believe the ability to perform multiple tests
from a single patient specimen provides greater convenience to patients and
their physicians and reduces healthcare costs by decreasing the frequency of
patient visits and testing.
Our second major focus is in blood viruses where we have developed unique
testing products using our Hybrid Capture System to detect the presence of
hepatitis B virus (HBV) and cytomegalovirus (CMV). These blood viruses are
leading causes of morbidity and death. Our tests detect and measure the amount
of virus in a patient sample, helping physicians determine disease prognosis and
optimize the efficacy of the antiviral therapy. The sensitivity of our blood
virus tests, along with their ability to quantitate viral load, provide a
competitive advantage over other methods. Our CMV test is the only DNA test
cleared for the detection of CMV by the FDA. Abbott, one of the world's leading
providers of HBV tests, is selling our HBV and CMV products in Europe, Africa
and the Middle East where we believe that our HBV test is the leading HBV DNA
test.
Our Hybrid Capture System utilizes signal amplification and combines the
accuracy of nucleic acid probe diagnostics with the ease of use and mass-market
capabilities of the antibody-based immunodiagnostic systems that are used
routinely by clinical labs today. Our Hybrid Capture technology uses RNA probes
to bind specific DNA sequences to create hybrid DNA:RNA molecules. The captured
hybrids are then reacted with our proprietary signal amplification system which
uses antibodies to detect DNA:RNA hybrids. The Hybrid Capture System and tests
are sensitive, rapid, accurate, objective, non-invasive and easy to use, and can
be performed by laboratory staff using standardized testing equipment. Recently,
we have developed an automated, microplate-based Hybrid Capture testing system.
In the pharmaceutical clinical research area, we are utilizing the capabilities
of our Hybrid Capture System to identify, develop and validate new gene-based
testing opportunities. As a result of the high throughput capability of the
Hybrid Capture System, PE Biosystems entered into an exclusive technology and
marketing partnership with us to address opportunities in high throughput gene
expression screening for pharmaceutical drug discovery.
We have established a strong proprietary position in our Hybrid Capture
technology. We have an exclusive license to a patent covering the use of the
monoclonal antibodies, which are central to the Hybrid Capture detection system.
Additionally, in July 1999, the European Patent Office allowed a broad patent
covering the entire Hybrid Capture System. We have exclusive licenses and
co-exclusive cross licenses with the Institut Pasteur to issued and pending
patents covering the use of HPV genetic sequences from six of the thirteen key
cancer causing HPV types. We believe that these patents create a unique
proprietary position for Digene in the HPV testing field.
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We have achieved a number of important regulatory milestones over the last
year. Our next generation Hybrid Capture II HPV Test received premarket (PMA)
approval from the FDA in March 1999 and our Hybrid Capture II CT Test received
510(k) clearance from the FDA in October 1999. In 1999, our portfolio of
women's cancers and infectious disease tests was cleared for sale in almost
every major European country and in Brazil and Argentina. In the blood virus
area, our Hybrid Capture CMV Test received 510(k) clearance from the FDA in
October 1998. In addition, we received ISO 9001 certification in June 1999.
We also have achieved a number of important commercial milestones over the
past year. We entered into a partnering arrangement with PE Biosystems in
October 1998 and into a marketing and distribution alliance with Abbott in May
1999. Our Hybrid Capture HPV Test was used in numerous clinical trials, and the
results of such trials were published in peer reviewed publications. We
developed a program to expand reimbursement coverage for our products, resulting
in coverage in the United States for our Hybrid Capture HPV Tests from
significant managed care providers.
CORPORATE INFORMATION
We were incorporated in Delaware in 1987. Our principal executive offices
are located at 9000 Virginia Manor Road, Beltsville, Maryland 20705. Our
telephone number is (301) 470-6500. After January 1, 2000, our principal
executive offices will be located at 1201 Clopper Road, Gaithersburg, Maryland
20878 and our telephone number will be 800-DIGENE-1.
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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains certain "forward-looking statements" based on our
current expectations, assumptions, estimates and projections about our business
and our industry. These forward-looking statements involve risks and
uncertainties. Words such as "believe," "anticipate," "expect," "intend,"
"plan," "will," "may" and other similar expressions identify forward-looking
statements. In addition, any statements that refer to expectations, projections
or other characterizations of future events or circumstances are forward-looking
statements. Our actual results could differ materially from those anticipated in
such forward-looking statements as a result of several factors more fully
described in "Risk Factors" and elsewhere in this prospectus. The
forward-looking statements made in this prospectus relate only to events as of
the date on which the statements are made. We undertake no obligation to update
publicly any forward-looking statements for any reason, even if new information
becomes available or other events occur in the future.
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RISK FACTORS
An investment in our common stock offering is very risky. You should
carefully consider the following risk factors in addition to the remainder of
this prospectus before purchasing our common stock. If any of the following
risks occur, our business, financial condition or operating results could be
adversely affected. In that case, the trading price of our common stock could
decline, and you may lose all or part of your investment.
WE HAVE A HISTORY OF OPERATING LOSSES AND ANTICIPATE WE WILL INCUR CONTINUED
LOSSES FOR THE FORESEEABLE FUTURE.
We have had substantial operating losses since incorporation in 1987, and
we have never earned a profit. At September 30, 1999, our accumulated deficit
was approximately $49.8 million. These losses have resulted principally from:
(1) expenses associated with our research and development programs; (2) the
expansion of our manufacturing facilities; and (3) the expansion of our sales
and marketing activities in the United States and abroad.
We expect that these operating losses will continue for the foreseeable
future. Our future profitability depends, in part, on:
- the success of our product development efforts;
- obtaining regulatory approvals for our product candidates from the FDA
and foreign regulatory authorities;
- our ability to expand our manufacturing capabilities to meet any
increase in demand for our products; and
- our sales and marketing activities.
OUR OPERATING RESULTS HAVE, AND MAY CONTINUE TO, FLUCTUATE SIGNIFICANTLY.
Our quarterly operating results have fluctuated significantly in the past.
We believe that they may continue to fluctuate significantly in the future with
lower product revenues in our first and second fiscal quarters (July 1 through
December 31) as compared with our third and fourth fiscal quarters of each year.
The lower demand for certain women's health-related medical procedures during
the summer months and the December holiday season in the United States and
Europe primarily causes this fluctuation.
In addition, our quarterly operating results, as well as our annual
results, may fluctuate from period to period due to:
- the degree of market acceptance of our products;
- the timing of regulatory approvals and other regulatory announcements;
- variations in our distribution channels;
- the timing of new product announcements and introductions of new
products by us and our competitors; and
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- product obsolescence resulting from new product introductions.
Due to any one or more of these or other factors, in one or more future
quarters our results of operations may fall below the expectations of securities
analysts and investors.
WE HAVE LIMITED MANUFACTURING EXPERIENCE, AND OUR MANUFACTURING OPERATIONS MAY
BE INTERRUPTED AS A RESULT OF OUR PLANNED MOVE.
We have limited commercial-scale manufacturing experience and capabilities,
and we anticipate that we will be required to expand our manufacturing
capabilities.
To address this anticipated expansion, we have entered into a lease for a
new facility in Gaithersburg, Maryland. We intend to relocate our corporate,
research and development and manufacturing operations to this new facility in
December 1999. We cannot begin manufacturing activities at the new facility
until our manufacturing process there has been validated by the FDA. The FDA may
not provide such validation in a timely manner which could delay our ability to
meet the demand for our products. To minimize this potential problem, we will
continue manufacturing certain components in our Beltsville, Maryland facility
until our new facility is validated appropriately and will stockpile product
inventory during this second quarter of fiscal 2000. This stockpiling will cause
an increase in our expenses for this period.
Once the new facility is validated by the FDA, it will still be subject, on
an ongoing basis, to a variety of quality systems regulations, international
quality standards and other regulatory requirements, including requirements for
good manufacturing practices, which are commonly referred to as "cGMP." The
integration of our manufacturing operations into this new facility may result in
problems involving production yield and quality control and assurance. We may
encounter difficulties expanding our manufacturing operations in accordance with
these regulations and standards, which could result in a delay or termination of
manufacturing.
WE MANUFACTURE ALL OF OUR PRODUCTS IN A SINGLE FACILITY.
We face risks inherent in the operation of a single facility for
manufacture of our products. These risks include unforeseen plant shutdowns due
to personnel, equipment or other factors, and the possible inability of our
facility to produce products in quantities sufficient to meet customer demand.
Any delay in the manufacture of our products could result in delays in product
shipment.
OUR PRODUCTS MAY NOT BE FULLY ACCEPTED BY THE MARKET.
We cannot predict whether the worldwide medical community will accept our
technology to the extent we believe is appropriate or to the extent which is
required for us to operate profitably. Our success depends, in part, upon the
acceptance by third-party payors, clinical laboratories and healthcare providers
of our Hybrid Capture technology as a clinically useful and
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cost-effective detection, screening and monitoring method in the areas of
women's cancers and infectious diseases and blood viruses.
In addition, our growth and success will depend upon market acceptance by
the medical community of our HPV tests as a primary cervical cancer screening
method and as a follow-up screening method for women with equivocal Pap smears.
This entails acceptance of our HPV tests as a clinically useful and
cost-effective alternative to well-established follow-up procedures, such as Pap
smear re-testing, colposcopy and biopsy. HPV testing, in general, or our HPV
tests, in particular, may not achieve market acceptance on a timely basis and,
in fact, may never achieve market acceptance.
Furthermore, technological advancements designed to improve quality control
over sample collection and preservation, and to reduce the Pap smear test's
susceptibility to human error, may serve to increase physician reliance on the
Pap smear and solidify its market acceptance. If marketed as an adjunct to the
Pap smear test for primary screening in the United States, our HPV tests may be
seen as adding unnecessary expense to the accepted cervical cancer screening
methodology. Consequently, we can provide no assurance that our HPV tests will
be able to achieve market acceptance as a primary screening test on a timely
basis, or at all.
OUR SALES TO INTERNATIONAL MARKETS ARE SUBJECT TO ADDITIONAL RISKS THAT ARE
BEYOND OUR CONTROL.
Our international sales and operations may be limited or disrupted by:
- the imposition of government controls;
- export license requirements;
- economic and political instability;
- price controls;
- trade restrictions;
- changes in tariffs; and
- difficulties with foreign distributors.
Generally, the extent and complexity of regulation of medical products are
increasing worldwide, with regulation in some countries already nearly as
exhaustive as that in the United States. We anticipate that this trend will
continue and that the cost and time required to obtain approval to market in any
given country will increase with no assurance that such approval will be
obtained. Additionally, our business, financial condition and results of
operations may be materially and adversely affected by fluctuations in currency
exchange rates as well as increases in duty rates and difficulties in obtaining
required licenses and permits.
We may not be able to successfully commercialize any of our products in any
foreign market beyond the level of commercialization we have already achieved.
In addition, the laws of some countries do not protect our proprietary rights to
the same extent as those of the United States.
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WE HAVE LIMITED SALES AND MARKETING EXPERIENCE.
We have limited sales and marketing experience and may be unable to
successfully establish and maintain a significant sales and marketing
organization. Due to the relatively limited market awareness of our products, we
believe that the marketing effort may be a lengthy process.
We intend to continue using a direct sales force as well as a network of
distributors to market and sell our HPV tests, chlamydia and gonorrhea tests and
blood virus tests. Our direct sales force may not succeed in promoting our
products to third-party payors, clinical laboratories, healthcare providers and
government entities. The risks of pursuing this strategy include:
- we may be unable to recruit and retain skilled sales, marketing,
service or support personnel;
- agreements with distributors for U.S. and foreign sales may not be
available on terms commercially reasonable to us, or at all; and
- our sales and marketing efforts may be unsuccessful.
OUR SALES ARE HIGHLY DEPENDENT ON A SINGLE INTERNATIONAL DISTRIBUTOR.
In May 1999 we entered into a marketing and distribution agreement with
Abbott Laboratories. Under this agreement, Abbott is exclusively responsible for
sales and marketing of certain of our Hybrid Capture products in Europe, Africa
and the Middle East and, when cleared by the FDA, our Hybrid Capture II
Chlamydia and Gonorrhea Tests in the United States. We expect that sales to
Abbott will constitute a significant portion of our total revenues for the
foreseeable future. We could be materially adversely affected by:
- the loss of Abbott's sales and marketing infrastructure;
- a significant decrease in product shipments to or an inability to
collect receivables from Abbott; or
- any other adverse change in our relationship with Abbott.
OUR SALES ARE HIGHLY DEPENDENT ON REIMBURSEMENTS FROM THIRD-PARTY PAYORS.
Sales of our products in the United States and other markets will depend,
in part, on the availability of adequate reimbursement from third-party payors,
such as government insurance plans, including Medicare and Medicaid in the
United States, managed care organizations and private insurance plans.
Third-party payors often express reluctance to reimburse healthcare providers
for the use of any medical test incorporating new technology, such as ours.
Reimbursement by a third-party payor may depend on a number of factors,
including the payor's determination that our products are clinically useful,
cost-effective, not experimental or investigational, and medically necessary and
appropriate for the specific patient.
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Because each payor individually approves reimbursement, seeking such
approvals is a time consuming and costly process which requires us to provide
scientific and clinical support for the use of each of our products to each
payor separately. In addition, third-party payors are increasingly limiting
reimbursement coverage for medical diagnostic products and in many instances are
exerting pressure on medical suppliers to lower their prices. Thus, third-party
reimbursement may not be consistently available for our products or financially
adequate to cover our costs and achieve profitability.
Outside the United States, the responsibility for obtaining reimbursement
approval from third-party payors is handled by our distributors and, therefore,
is out of our direct control. Healthcare reimbursement systems vary from country
to country and, accordingly, we cannot guarantee that third-party reimbursement
will be available for our products under any other reimbursement system.
FUTURE LEGISLATION COULD AFFECT OUR ABILITY TO ACHIEVE PROFITABILITY.
One of our ongoing concerns is that from time to time, Congress has
considered restructuring the delivery and financing of healthcare services in
the United States. We cannot predict what form of legislation, if any, may be
implemented or the effect of this legislation on our business. It is possible
that future legislation will contain provisions which may adversely affect our
business, financial condition and results of operations. It is also possible
that future legislation could result in modifications to the nation's public and
private healthcare insurance systems, which could negatively affect
reimbursement policies or encourage integration or reorganization of the
healthcare industry in a manner that could negatively affect us. We cannot
predict what legislation, if any, relating to our business or to the healthcare
industry may be enacted.
OUR STRATEGY FOR THE DEVELOPMENT AND COMMERCIALIZATION OF OUR PRODUCTS AND
PRODUCT CANDIDATES IS DEPENDENT IN PART ON COLLABORATIONS WITH THIRD PARTIES.
We have entered into and intend to continue to enter into corporate
collaborations for the development of new products, clinical collaborations with
respect to trials using our products and product candidates and strategic
alliances for the distribution of our Hybrid Capture System and tests. Our
success depends in large part on the efforts of these third parties in
performing their responsibilities. We cannot assure you that we will be able to
enter into arrangements that may be necessary in order to develop and
commercialize our products or that we will realize any of the contemplated
benefits from these arrangements. Furthermore, we cannot assure you that any
revenues or profits will be derived from our collaborative and other
arrangements.
WE FACE INTENSE COMPETITION IN THE BIOTECHNOLOGY INDUSTRY.
The medical diagnostics and biotechnology industries are subject to intense
competition. We can provide no assurance that we will be able to compete
successfully against existing or future competitors. For certain of our tests,
we also compete against existing detection, screening
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and monitoring technologies, including the Pap smear, tissue culture and
antigen-based diagnostic methodologies.
Our existing and potential competitors may be able to develop technologies
that are as effective as, or more effective or easier to interpret than those
offered by us, which would render our products noncompetitive or obsolete.
Moreover, many of our existing and potential competitors have substantially
greater financial, research and development, marketing, sales, manufacturing,
distribution and technological resources than us.
In addition, many of these companies may have established third-party
reimbursement for their products. In marketing our HPV tests for primary
cervical cancer screening either in conjunction with or separate from the Pap
smear, our tests will compete against the Pap smear, which is widely accepted as
an inexpensive and, with regular use, adequate screening test for cervical
cancer. Additionally, in marketing our HPV tests for the follow-up screening of
women with equivocal Pap smears in the United States, we compete with
well-established follow-up procedures, such as Pap smear re-testing, colposcopy
and biopsy, which are also widely accepted and have a long history of use.
We face competition from a variety of technologies in the blood virus area.
There are several advanced technologies commercially available for the detection
and viral load measurement of HIV and hepatitis B virus. Additionally, there are
several emerging DNA probe amplification technologies to detect CMV being
developed by competitors.
WE MAY BE UNABLE TO PROTECT OUR PROPRIETARY RIGHTS, PERMITTING COMPETITORS TO
DUPLICATE OUR PRODUCTS AND SERVICES.
Patent protection for our technologies and products will be a crucial
factor in our ability to develop and commercialize our products. Because of the
substantial length of time and expense associated with bringing new products
through development to the marketplace, the medical diagnostics and
biotechnology industries place considerable importance on obtaining and
maintaining patent and trade secret protection for new technologies, products
and processes. Large pharmaceutical companies consider a strong patent estate
critical when they evaluate whether to enter into a collaborative arrangement to
support the research, development and commercialization of a technology. Without
the prospect of reasonable patent protection, it would be difficult for us or
any corporate partner to justify the time and money that is necessary to
complete the development of a product.
We have obtained rights to certain patents and patent applications and may,
in the future, obtain, or seek rights from third parties to additional patents
and patent applications. We can provide no assurance that patent applications
relating to our products or technologies will result in patents being issued,
that any issued patents will afford adequate protection to us, or that such
patents will not be challenged, invalidated, infringed or circumvented.
Furthermore, we can provide no assurance that others have not developed, or will
not develop, similar products or
13
<PAGE> 16
technologies that will compete with our products or technologies without
infringing upon our intellectual property rights.
Any success in protecting our proprietary rights will depend in large part
on our ability to:
- obtain, maintain and enforce patent protection for our products and
technologies both in the United States and internationally;
- license rights to patents from third parties;
- maintain trade secret protection;
- operate without infringing upon the proprietary rights of others; and
- prevent others from infringing our proprietary rights.
Any licenses we may be required to secure under any patents or proprietary
rights of third parties may not be made available on terms acceptable to us, if
at all. Moreover, the laws of certain countries may not protect our proprietary
rights to the same extent as United States law.
In addition to the risk that we could be a party to patent infringement
litigation, the U.S. Patent and Trademark Office, or its foreign counterparts,
could require us to participate in patent interference proceedings that it
declares. These proceedings are often expensive and time-consuming, even if we
were to prevail in such a proceeding. We may also be forced to initiate legal
proceedings to protect our patent position or other proprietary rights. These
proceedings typically are costly, protracted and offer no assurance of success.
We have received inquiries regarding possible patent infringements relating
to, among other things, certain aspects of our Hybrid Capture technology. We
believe that the patents of others to which these inquiries relate are either
not infringed by our Hybrid Capture technology or are invalid. Nevertheless, we
cannot be sure that our patents and patent applications will adequately protect
our Hybrid Capture technology. With respect to our products for the detection of
HPV, we continue to negotiate with a third party regarding a license to a
pending United States patent application which might cover one of the HPV types
utilized in our Hybrid Capture II HPV Test. If the patent issues and if a
license is necessary, our failure to successfully negotiate a license on
commercially reasonable terms, or at all, may require us to redesign our Hybrid
Capture II HPV Test to exclude this HPV type. Such exclusion could result in
delays in approval or marketing of the redesigned Hybrid Capture II HPV Test in
the United States.
In June 1999, Enzo Biochem, Inc. filed an action in the U.S. District Court
for the State of New York against Chugui Pharmaceutical Co., Ltd and its
subsidiaries Chugui Pharma U.S.A., Inc. and Gen-probe Incorporated, bioMerieux,
Inc. and Becton Dickinson and Company for infringement of Enzo Biochem's United
States patent covering genetic probes for detecting Neisseria gonorrhoeae. In
October 1999, Enzo Biochem contacted us to determine whether our Hybrid Capture
II Gonorrhea Test might infringe such patent. We have evaluated this matter and
its potential impact on our gonorrhea test. After consultation with our patent
counsel, we believe that the Enzo Biochem United States patent is invalid. We
cannot assure you that we
14
<PAGE> 17
will not become involved in litigation with Enzo Biochem. In addition, we can
provide no assurance that we will not be subject to further claims that our
technology, including our Hybrid Capture technology, or our products, infringe
the patents or proprietary rights of third parties.
Our success also is dependent upon the skill, knowledge and experience of
our scientific and technical personnel. To help protect our rights, we require
all employees, consultants, advisors and collaborators to enter into
confidentiality agreements that prohibit the disclosure of confidential
information to anyone outside our company and require disclosure, and in most
cases, assignment to us of their ideas, developments, discoveries and
inventions. We can provide no assurance, however, that these agreements will
provide adequate protection for our trade secrets, know-how or other proprietary
information in the event of any unauthorized use or disclosure.
WE ARE SUBJECT TO EXTENSIVE GOVERNMENT REGULATION AND MAY NOT BE ABLE TO OBTAIN
REGULATORY APPROVALS.
The FDA product clearance process is unpredictable and uncertain. We can
provide no assurance that the necessary approvals or clearances for our product
candidates will be granted on a timely basis, or at all. In particular:
- we may be unable to collect adequate data to support a premarket
approval for either our HIV test or hepatitis B virus test or to
receive approval for those tests in a timely manner;
- the FDA may determine that our gonorrhea or our combined chlamydia and
gonorrhea tests are not substantially equivalent to legally marketed
devices or that additional information or data is needed to make such
a determination;
- we may be unable to obtain or keep valid marketing authorization from
one or more of the countries to which we export our products;
- we, or recipients of our products that are limited to research use
only may fail to comply with the user certification requirements and
other regulatory limitations placed on the distribution and use of
these devices, which could result in an enforcement action by the FDA
against us; or
- we may lose previously received approvals, particularly the approvals
for our HPV tests using our Hybrid Capture I and II technologies.
Further, we must comply with similar requirements of foreign governments
and with import and export regulations when distributing our products to foreign
nations. Each foreign country's regulatory requirements for product approval and
distribution are unique and may require the expenditure of substantial time,
money and effort. The regulation of medical devices in a number of
jurisdictions, particularly in the European Union, continues to develop.
15
<PAGE> 18
CLINICAL TRIALS FOR OUR PRODUCT CANDIDATES ARE EXPENSIVE AND THEIR OUTCOME IS
UNCERTAIN.
Conducting clinical trials is a lengthy, time-consuming and expensive
process. Before obtaining regulatory approvals for the commercial sale of any
products, we or our corporate partners must demonstrate through preclinical
testing and clinical trials that our product candidates are safe and effective
for use in humans. We have incurred and will continue to incur substantial
expense for, and devote a significant amount of time to, preclinical testing and
clinical trials.
Historically, the results from preclinical testing and early clinical
trials have often not predicted results of later clinical trials. A number of
new medical devices have shown promising results in clinical trials, but
subsequently failed to establish sufficient safety and efficacy data to obtain
necessary regulatory approvals. Data obtained from preclinical and clinical
activities is susceptible to varying interpretations, which may delay, limit or
prevent regulatory approval. In addition, regulatory delays or rejections may be
encountered as a result of many factors, including changes in regulatory policy
during the period of product development.
Clinical trials conducted by us, by our collaborators or by third parties
on our behalf may not demonstrate sufficient safety and efficacy to obtain the
requisite regulatory approvals for our product candidates. Regulatory
authorities may not permit us to undertake any additional clinical trials for
our product candidates.
Completion of clinical trials may take several years or more. The length of
time can vary substantially with the type, complexity, novelty and intended use
of the product candidate. Our commencement and rate of completion of clinical
trials may be delayed by many factors, including:
- our inability to manufacture sufficient quantities of materials used
for clinical trials;
- our inability to recruit patients at the expected rate;
- the failure of clinical trials to demonstrate a product candidate's
efficacy;
- our inability to follow patients adequately after treatment;
- our inability to predict unforeseen safety issues; and
- the potential for unforeseen governmental or regulatory delays.
If a product candidate fails to demonstrate safety and efficacy in clinical
trials, this failure may delay development of other product candidates and
hinder our ability to conduct related preclinical testing and clinical trials.
As a result of these failures, we may also be unable to find additional
collaborators or to obtain additional financing.
16
<PAGE> 19
CERTAIN KEY COMPONENTS OF OUR PRODUCTS ARE PROVIDED BY A SINGLE SUPPLIER.
Several key components of our products come from single source suppliers.
These suppliers are subject to many strict regulatory requirements regarding the
supply of these components. We cannot be sure that these suppliers will comply,
or have complied, with applicable regulatory requirements or that they will
otherwise continue to supply us with the key components we require. If suppliers
are unable or refuse to supply us, or will supply us only at a prohibitive cost,
we may not be able to access additional sources at acceptable prices, on a
timely basis, if ever.
We acquire these components on a purchase-order basis, meaning that the
supplier is not required to supply us with a specified quantity of product
within a given time period or set-aside part of its inventory for our orders. We
have not arranged for alternative supply sources.
In the event that we cannot obtain sufficient quantities of these
components on commercially reasonable terms, or in a timely manner, we would not
be able to manufacture our products on a timely and cost-competitive basis.
In addition, if any of the components of our products are no longer
available in the marketplace, we may be forced to further develop our technology
to incorporate alternate components. The incorporation of new components into
our products may require us to seek necessary approvals from the FDA or
appropriate foreign regulatory agencies prior to commercialization. We can
provide no assurance that this development would be successful or that, if
developed by us or licensed from third parties, any alternative components would
receive requisite regulatory approval on a timely basis, or at all.
The success of our products based on our Hybrid Capture technology will
depend, in part, on our ability to arrange for the distribution to our customers
of luminometers and related software and equipment with the capability to
analyze the results of our tests. Two suppliers currently provide us with all of
our luminometers. We may be unable to locate other suppliers if our current
suppliers fail to produce luminometers for us in accordance with specifications,
in accordance with applicable regulations and on a timely basis. Even if we
could locate an alternate supplier, that supplier may be more expensive than our
current suppliers and may require substantial lead time. Any of these events
could significantly inhibit our ability to market our Hybrid Capture products.
RAPID GROWTH MAY PLACE SIGNIFICANT DEMANDS ON OUR PERSONNEL.
We currently have limited management and administrative resources. If we
are successful in implementing our business strategy, we may experience a period
of rapid growth and expansion which could place significant additional demands
on our management and administrative resources.
17
<PAGE> 20
OUR SYSTEMS MAY NOT BE YEAR 2000 COMPLIANT.
We have completed an assessment of our manufacturing and research
equipment, computer programs and telephone systems and have identified the
mission-critical equipment, computer programs and systems that were not year
2000 compliant, more than 90% of which have been upgraded and/or
vendor-certified for year 2000 compliance. We have also tested a majority of
such mission-critical equipment, computer programs and systems for year 2000
compliance. We have substantially completed our upgrade and replacement
activities and expect to complete the remainder of our testing activities by
December 1999. During the remainder of calendar 1999, we intend to communicate
with our significant raw material and product vendors to determine their
respective states of year 2000 readiness.
If we, or any third parties upon which we rely, are unable to address the
year 2000 issue in a timely and successful manner, our business could be
materially adversely affected.
WE ARE EXPOSED TO PRODUCT LIABILITY CLAIMS FOR WHICH OUR INSURANCE MAY BE
INADEQUATE.
We may be exposed to liability claims arising from the use of our products
and the commercial sale of our products as well as from use of our products or
product candidates in clinical trials. These claims may be brought by consumers,
our collaborators or licensees or parties selling our products. We currently
carry product liability insurance coverage but we can provide no assurance that
this coverage will be adequate to protect us against future product liability
claims or that product liability insurance will be available to us in the future
on commercially reasonable terms, if at all. Furthermore, we can provide no
assurance that we will be able to avoid significant product liability claims and
the attendant adverse publicity.
WE ARE SUBJECT TO EXTENSIVE GOVERNMENT REGULATION CONCERNING ENVIRONMENTAL
MATTERS.
We are subject to a variety of local, state and federal government
regulations relating to the storage, discharge, handling, emission, generation,
manufacture and disposal of toxic, infectious or other hazardous substances used
to manufacture our products. We cannot completely eliminate the risk of
accidental contamination or injury from these materials. Moreover, we cannot be
sure that our collaborative partners are currently complying with the governing
standards. We also cannot be sure that we and our collaborative partners will be
in compliance with such standards in the future or that we will not incur
significant costs to comply with environmental laws and regulations in the
future. If we were to fail to comply with any of these regulations, this failure
could subject us to significant liabilities.
WE NEED TO SPEND SUBSTANTIAL FUNDS TO BECOME PROFITABLE.
We have spent, and expect to continue to spend in the future, substantial
funds to complete our planned product development efforts, expand our sales and
marketing activities and expand our manufacturing operations. We expect that our
existing capital resources will be
18
<PAGE> 21
adequate to fund our operations through calendar year 2000, but we cannot
guarantee that this will be the case.
Our future capital requirements and the adequacy of available funds will
depend on numerous factors, including:
- the successful commercialization of our existing products;
- progress in our product development efforts;
- progress with regulatory affairs activities;
- the cost and timing of expansion of manufacturing operations;
- the expansion of our European, African and Middle Eastern sales
operations with Abbott;
- the growth and success of effective sales and marketing activities;
- successful relocation to our new facility;
- the cost of filing, prosecuting, defending and enforcing patent claims
and other intellectual property rights; and
- the development of strategic alliances for the marketing of our
products.
If funds generated from our operations, together with our existing capital
resources, are insufficient to meet current or planned operating requirements,
we will have to obtain additional funds through equity or debt financing,
strategic alliances with corporate partners and others, or through other
sources. We do not have any committed sources of additional financing, and we
cannot provide assurance that additional funding, if necessary, will be
available on acceptable terms, if at all. If adequate funds are not available,
we may have to delay, scale-back or eliminate certain aspects of our operations
or attempt to obtain funds through arrangements with collaborative partners or
others. This may result in the relinquishment of our rights to certain of our
technologies, product candidates, products or potential markets. Therefore, the
inability to obtain adequate funds could have a material adverse impact on our
business, financial condition and results of operations.
THE MARKET PRICE OF OUR COMMON STOCK MAY BE ADVERSELY AFFECTED BY THE ABILITY OF
SUBSTANTIAL STOCKHOLDERS TO SELL.
As discussed above under "We need to spend substantial funds to become
profitable," we may issue additional equity securities to raise funds. In
addition, at November 19, 1999, we were obligated to issue 3,626,276 shares of
our common stock upon the exercise of stock options. Either event could reduce
the ownership percentage of the current holders of our common stock and
adversely affect the market price of our common stock.
Further, a majority of our common stock currently outstanding is freely
tradable without restriction, except as follows:
19
<PAGE> 22
- 4,785,751 shares are subject to lock-up agreements under which the
holders of those shares have agreed not to sell or otherwise dispose
of any of their shares for a period of ninety (90) days after the
effective date of the resale registration statement; and
- 4,785,751 shares currently owned by our affiliates and 86,493
additional shares may be sold only in compliance with the volume
limitations and other provisions of Rule 144 under the Securities Act.
Any stockholders that are not subject to these restrictions could freely
sell all or a large number of their shares, which could adversely affect the
market price of our common stock. Even if none of these sales happen, the
perception by investors that sales might occur could adversely affect the market
price of our common stock.
TWO OF OUR OFFICERS EFFECTIVELY CONTROL DIGENE, WHICH COULD ADVERSELY AFFECT THE
INTERESTS OF OTHER STOCKHOLDERS.
As of November 19, 1999, our Chairman and Chief Executive Officer and our
President, Chief Operating Officer and Chief Financial Officer beneficially
owned an aggregate of approximately 32.5% of our outstanding shares of common
stock. As a result, these officers, acting together, effectively control the
election of directors and matters requiring approval by our stockholders. Thus,
they may be able to prevent corporate transactions such as mergers which might
be favorable from our standpoint or the standpoint of the other stockholders.
ANTI-TAKEOVER CONSIDERATIONS.
Our board of directors has the authority, without further action by the
stockholders, to issue from time to time, up to 1,000,000 shares of preferred
stock in one or more classes or series, and to fix the rights and preferences of
such preferred stock. Our Certificate of Incorporation also provides for
staggered terms for members of the board of directors. We are subject to
provisions of Delaware corporate law which, subject to certain exceptions, will
prohibit us from engaging in any "business combination" with a person who,
together with affiliates and associates, owns 15% or more of our common stock
(referred to as an interested stockholder) for a period of three years following
the date that such person became an interested stockholder, unless the business
combination is approved in a prescribed manner. Additionally, our Bylaws
establish an advance notice procedure for stockholder proposals and for
nominating candidates for election as directors. These provisions of Delaware
law and of our Certificate of Incorporation and Bylaws may have the effect of
delaying, deterring or preventing a change in our control, may discourage bids
for our common stock at a premium over market price and may adversely affect the
market price, and the voting and other rights of the holders, of our common
stock.
20
<PAGE> 23
USE OF PROCEEDS
We will not receive any of the proceeds from the sale of our common stock
offered in this prospectus.
DIVIDEND POLICY
We have not paid any dividends on our common stock since our inception and
do not anticipate paying any dividends on our common stock in the foreseeable
future.
SELLING STOCKHOLDERS
We are registering all 1,500,000 shares covered by this prospectus on
behalf of the selling stockholders named in the table below. We issued all of
the shares to the selling stockholders in a private placement transaction. We
have registered the shares to permit the selling stockholders and their
pledgees, donees, transferees or other successors-in-interest that receive their
shares from the selling stockholders as a gift, partnership distribution or
another non-sale related transfer after the date of this prospectus to resell
the shares when they deem appropriate.
In the purchase agreements, each selling stockholder has represented that
he, she or it acquired the shares of our common stock for investment and with no
present intention of distributing those shares. In addition, each selling
stockholder has represented that he, she or it qualifies as an "accredited
investor" as such term is defined in Rule 501 under the Securities Act of 1933.
We agreed in the purchase agreements to prepare and file a registration
statement as soon as practicable and to bear all expenses other than fees and
expenses of counsel or other advisors for the selling stockholders and
underwriting discounts and commissions and brokerage commissions and fees.
Accordingly, in recognition of the fact that the selling stockholders, even
though they purchased the shares without a view to distribution, may wish to be
legally permitted to sell the shares when each deems appropriate, we filed with
the SEC a registration statement on Form S-3, of which this prospectus forms a
part. We have also agreed to prepare and file any amendments and supplements to
the registration statement as may be necessary to keep the registration
statement effective until the earlier of:
- two years after the effective date of the registration statement; or
- the date on which the shares offered in this prospectus may be resold
by the selling stockholders without registration in accordance with
Rule 144(k) under the Securities Act of 1933 or any other rule of
similar effect.
21
<PAGE> 24
None of the selling stockholders has had a material relationship with us
within the past three years except as a result of the ownership of the shares
offered in this prospectus or other of our securities.
The following table sets forth the name of each selling stockholder, the
number of shares of common stock owned beneficially by each selling stockholder
before and after this offering and the number of shares which may be offered
pursuant to this prospectus. This information is based upon information provided
by the selling stockholders. There are currently no agreements, arrangements or
understandings with respect to the sale of any of the shares. The shares are
being registered to permit public secondary trading of the shares, and the
selling stockholders may offer the shares for resale from time to time.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY NUMBER OF SHARES SHARES BENEFICIALLY
NAME OWNED PRIOR TO OFFERING BEING OFFERED OWNED AFTER OFFERING(3)
---- ----------------------- ------------- -----------------------
NUMBER(1) PERCENT(2) NUMBER(1) PERCENT(2)
<S> <C> <C> <C> <C> <C>
Alc Health Fund 85,000 * 85,000 0 *
Alc Munder Healthcare 15,000 * 15,000 0 *
Argonaut Investment Fund 1,200 * 1,200 0 *
Ltd.
Argonaut Partnership L.P. 8,400 * 8,400 0 *
Aries Domestic Fund, L.P. 21,165 * 21,165 0 *
Aries Domestic Fund II, L.P. 1,650 * 1,650 0 *
The Aries Master Fund 52,185 * 52,185 0 *
Ashton Partners, L.L.C. 10,000 * 10,000 0 *
BayStar Capital, L.P. 200,000 1.4% 200,000 0 *
BayStar International, Ltd. 100,000 * 100,000 0 *
Biotechnology Development 10,000 * 10,000 0 *
Fund, LP
Dompe Farmaceutici S.P.A. 40,000 * 40,000 0 *
David Gerstenhaber 10,000 * 10,000 0 *
Goldman Sachs Commodity
Corp., LLC
Strategic Technology Fund 15,000 * 15,000 0 *
Hardy Capital, LTD. 25,000 * 25,000 0 *
H&Q Healthcare Investors 140,000 * 140,000 0 *
H&Q Life Sciences Investors 90,000 * 90,000 0 *
</TABLE>
22
<PAGE> 25
<TABLE>
<CAPTION>
SHARES BENEFICIALLY NUMBER OF SHARES SHARES BENEFICIALLY
NAME OWNED PRIOR TO OFFERING BEING OFFERED OWNED AFTER OFFERING(3)
---- ----------------------- ------------- -----------------------
NUMBER(1) PERCENT(2) NUMBER(1) PERCENT(2)
<S> <C> <C> <C> <C> <C>
Michael Hyman 10,000 * 10,000 0 *
The Ligon Family Limited 1,900 * 1,900 0 *
Partnership
The Nadine Ligon Charitable 1,900 * 1,900 0 *
Trust
Merlin BioMed, L.P. 40,000 * 40,000 0 *
Merlin BioMed International 45,000 * 45,000 0 *
Oakpoint Asset Management 20,000 * 20,000 0 *
Pogue Capital International 50,000 * 50,000 0 *
Ltd.
Quota - Rabbico II 30,400 * 30,400 0 *
Deborah Salerno 10,000 * 10,000 0 *
Special Situations Fund III, 60,000 * 60,000 0 *
L.P.
Special Situations Cayman 20,000 * 20,000 0 *
Special Situations Private
Equity Fund, L.P. 100,000 * 100,000 0 *
Veredus Partners, L.P. 86,200 * 86,200 0 *
Alan J. Weber 75,000 * 75,000 0 *
Zeke L.P. 125,000 * 125,000 0 *
----------- --------- ----
TOTAL 1,500,000 1,500,000 0
</TABLE>
- ----------
* Represents beneficial ownership of less than 1%.
(1) Unless otherwise indicated, each person has sole investment and voting power
with respect to the shares listed in the table, subject to community property
laws, where applicable. For purposes of this table, a person or group of persons
is deemed to have "beneficial ownership" of any shares which such person has the
right to acquire within 60 days.
(2) Percentage ownership is based on 14,592,511 shares of common stock
outstanding on November 19, 1999. For purposes of computing the percentage of
outstanding shares held by each person or group of persons named above, any
security which such person or group of persons has the right to acquire within
60 days is deemed to be outstanding for the purpose of computing the percentage
ownership for such person or persons, but is not deemed to be outstanding for
the purpose of computing the percentage ownership of any other person.
(3) Assumes the sale of all shares offered in this prospectus and no other
purchases or sales of our common stock.
23
<PAGE> 26
PLAN OF DISTRIBUTION
The common stock offered by this prospectus may be sold from time to time
by selling stockholders, who consist of the persons named under "Selling
Stockholders" above and those persons' pledgees, donees, transferees or other
successors-in-interest. We will pay all costs, expenses and fees in connection
with the registration of the common stock offered by this prospectus. The
selling stockholders must pay all brokerage commissions and similar selling
expenses relating to the sale of their shares. The selling stockholders may sell
their shares on the Nasdaq National Market or otherwise, at market prices or at
negotiated prices. They may sell shares by one or a combination of the
following:
- a block trade in which a broker or dealer so engaged will attempt to
sell the shares as agent, but may position and resell a portion of the
block as principal to facilitate the transaction;
- purchases by a broker or dealer as principal and resale by the broker
or dealer for its account pursuant to this prospectus;
- an exchange distribution in accordance with the rules of an exchange;
- ordinary brokerage transactions and transactions in which a broker
solicits purchasers; and
- in open-market transactions in reliance on Rule 144 under the
Securities Act of 1933, provided they meet the requirements of that
rule.
The selling stockholders may enter into hedging transactions with
broker-dealers in connection with distributions of the shares or otherwise. In
these transactions, broker-dealers may engage in short sales of the shares in
the course of hedging the positions they assume with selling stockholders. The
selling stockholders also may sell shares short and redeliver the shares to
close out short positions. The selling stockholders may enter into option or
other transactions with broker-dealers which require the delivery to the
broker-dealer of the shares. The broker-dealer may then resell or otherwise
transfer the shares under this prospectus. The selling stockholders also may
loan or pledge the shares to a broker-dealer. The broker-dealer may sell the
loaned shares, or upon a default the broker-dealer may sell the pledged shares
under this prospectus.
In effecting sales, brokers or dealers engaged by the selling stockholders
may arrange for other brokers or dealers to participate. Brokers or dealers will
receive commissions or discounts from selling stockholders in amounts to be
negotiated prior to the sale. The selling stockholders and any broker-dealers
that participate in the distribution may be deemed to be "underwriters" within
the meaning of Section 2(11) of the Securities Act of 1933, and any proceeds or
commissions received by them, and any profits on the resale of shares sold by
broker-dealers, may be deemed to be underwriting discounts and commissions.
Because the selling stockholders may be deemed to be underwriters, they will be
subject to the prospectus delivery requirements of the
24
<PAGE> 27
Securities Act of 1933.
We have agreed to indemnify each selling stockholder against certain
liabilities, including liabilities arising under the Securities Act of 1933. The
selling stockholders may agree to indemnify any agent, dealer or broker-dealer
that participates in transactions involving shares of the common stock against
certain liabilities, including liabilities arising under the Securities Act of
1933.
If any selling stockholder notifies us that a material arrangement has been
entered into with a broker-dealer for the sale of shares through a block trade,
special offering, exchange, distribution or secondary distribution or a purchase
by a broker or dealer, we will file a prospectus supplement, if required by Rule
424 under the Securities Act of 1933, setting forth:
- the name of each of the selling stockholders and the participating
broker-dealers;
- the number of shares involved;
- the price at which the shares were sold;
- the commissions paid or discounts or concessions allowed to the
broker-dealers, where applicable;
- a statement to the effect that the broker-dealers did not conduct any
investigation to verify the information set out or incorporated by
reference in this prospectus; and
- any other facts material to the transaction.
In addition, we will file a supplement to this prospectus if a selling
stockholder notifies us that a donee or pledgee intends to sell more than 500
shares of the common stock.
LEGAL MATTERS
Ballard Spahr Andrews & Ingersoll, LLP, Philadelphia, Pennsylvania will
pass on the validity of the common stock offered with this prospectus.
25
<PAGE> 28
EXPERTS
Ernst & Young LLP, independent auditors, have audited our consolidated
financial statements and schedule included in our Annual Report on Form 10-K for
the year ended June 30, 1999, as set forth in their reports, which are
incorporated by reference in this prospectus and elsewhere in this registration
statement. Our financial statements and schedule are incorporated by reference
in reliance on Ernst & Young LLP's report, given on their authority as experts
in accounting and auditing.
26
<PAGE> 29
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth the amounts of expenses attributed to the
issuance of the securities offered pursuant to this registration statement which
shall be borne by us. All of the expenses listed below, except the SEC
registration fee and the Nasdaq listing fee, represent estimates only.
<TABLE>
<CAPTION>
Estimated
----------
<S> <C>
SEC registration fee................................................... $ 7,141.13
Nasdaq listing fee..................................................... 17,500.00
Blue sky qualification fees and expenses............................... 1,000.00
Transfer agent fees.................................................... 5,000.00
Printing and engraving expenses........................................ 4,000.00
Accounting fees and expenses........................................... 20,000.00
Legal fees and expenses................................................ 75,000.00
Miscellaneous fees and expenses........................................ 3,358.87
-----------
Total....................................................... $133,000.00
</TABLE>
Item 15. Indemnification of Directors and Officers.
Our Amended and Restated Certificate of Incorporation provides that we
will, to the fullest extent permitted by the General Corporation Law of the
State of Delaware, as amended from time to time, indemnify any person who is or
was an officer or director of Digene Corporation, as well as any person who is
or was serving at our request as a director, officer, employee or agent of
another corporation or of a partnership, joint venture, trust or other
enterprise. In addition, our Amended and Restated Certificate of Incorporation
eliminates personal liability of our directors to the fullest extent permitted
by the General Corporation Law of the State of Delaware, as amended from time to
time.
Section 145 of the General Corporation Law permits a corporation to
indemnify its directors, officers, employees or agents and any person serving in
such capacity for another corporation, partnership, joint venture, trust or
other enterprise at the request of the corporation against expenses (including
attorney's fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by them in connection with any action, suit or proceeding
brought by third parties if such person acted in good faith and in a manner they
reasonably believed to be in or not opposed to the best interests of the
corporation and, with respect to any criminal action or proceeding, had no
reasonable cause to believe their conduct was unlawful. In a derivative action,
indemnification may be made only for expenses (including attorneys' fees)
actually and reasonably incurred by such parties in connection with the defense
or settlement of an action or suit and only with respect to a matter as to which
they shall have acted in good faith and in a manner they reasonably believed to
be in or not opposed to the best interest of the
II-1
<PAGE> 30
corporation, except that no indemnification shall be made if such person shall
have been adjudged liable to the corporation, unless and only to the extent that
the court in which the action or suit was brought shall determine upon
application that the defendant is fairly and reasonably entitled to
indemnification for such expenses despite such adjudication of liability.
Section 102(b)(7) of the General Corporation Law provides that a
corporation may eliminate or limit the personal liability of a director to the
corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, provided that such provision shall not eliminate or limit
the liability of a director:
- for any breach of the director's duty of loyalty to the corporation or
its stockholders;
- for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law;
- for willful or negligent conduct in paying dividends or repurchasing
stock out of other than lawfully available funds; or
- for any transaction from which the director derived an improper
personal benefit.
No such provision shall eliminate or limit the liability of a director for any
act or omission occurring prior to the date when such provision becomes
effective.
The purchase agreements (the form of which is Exhibit 4.4 to this
registration statement) each provide that the purchaser named therein will
severally, but not jointly, indemnify and hold harmless Digene Corporation and
each director, each officer who signs this registration statement or any
controlling person from and against any liability caused by:
- any failure to comply with certain covenants and agreements contained
in the purchase agreements;
- the inaccuracy of any representation made by the respective purchaser
in the applicable purchase agreement; or
- any untrue or alleged untrue statement or omission in this
registration statement or prospectus or any amendments or supplements
thereto based upon information furnished to us in writing by the
respective purchaser for use therein.
II-2
<PAGE> 31
Item 16. Exhibits and Financial Statement Schedules.
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------ -----------
<S> <C>
4.1 Form of Common Stock Certificate (Incorporated by reference to Exhibit
4.1 to the Company's Registration Statement on Form S-1 (File No.
333-2968)).
4.2 Amended and Restated Certificate of Incorporation (Incorporated by
reference to Exhibit 3.1 to the Company's Registration Statement on
Form S-1 (File No. 333-2968)).
4.3 Amended and Restated Bylaws (Incorporated by reference to Exhibit 3.2
to the Company's Annual Report on Form 10-K for the year ended June
30, 1999).
4.4 Form of Purchase Agreement.
5.1 Opinion of Ballard Spahr Andrews & Ingersoll, LLP.
23.1 Consent of Ernst & Young LLP, Independent Auditors.
23.2 Consent of Ballard Spahr Andrews & Ingersoll, LLP (included in Exhibit
5.1).
24.1 Power of Attorney (included on signature page).
</TABLE>
Item 17. Undertakings.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "Securities Act") may be permitted to directors, officers or
controlling persons of the Registrant pursuant to the foregoing provisions or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which any offers or sales are being
made, a post-effective amendment to the registration statement:
II-3
<PAGE> 32
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20% change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee" table in the
effective registration statement; and/or
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement.
Provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Registrant pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
II-4
<PAGE> 33
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Beltsville, State of Maryland, on November 22, 1999.
DIGENE CORPORATION
By: /s/ Charles M. Fleischman
-------------------------------------
Charles M. Fleischman, President,
Chief Operating Officer and
Chief Financial Officer
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Evan Jones and Charles M. Fleischman and
each or any one of them, his true and lawful attorneys-in-fact and agents, with
full power of substitution and resubstitution, for him and in his name, place
and stead, in any and all capacities, to sign any and all amendments (including
post-effective amendments) to this registration statement and any registration
statement relating to any offering made pursuant to this registration statement
that is to be effective upon filing pursuant to Rule 462(b) under the Securities
Act, and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, and each of them, full power and authority to
perform each and every act and thing requisite and necessary to be done in
connection therewith, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them, or his or their substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the date indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Evan Jones Chairman and Chief Executive November 22, 1999
- ----------------------------- Officer (principal executive
Evan Jones officer)
</TABLE>
<PAGE> 34
<TABLE>
<S> <C> <C>
/s/ Charles M. Fleischman President, Chief Operating November 22, 1999
- ----------------------------- Officer, Chief Financial Officer
Charles M. Fleischman and Director (principal
financial officer)
/s/ Joseph P. Slattery Vice President, Finance and November 22, 1999
- ----------------------------- Controller (principal
Joseph P. Slattery accounting officer)
/s/ Wayne T. Hockmeyer Director November 22, 1999
- -----------------------------
Wayne T. Hockmeyer
/s/ John H. Landon Director November 22, 1999
- -----------------------------
John H. Landon
/s/ Joseph M. Migliara Director November 22, 1999
- -----------------------------
Joseph M. Migliara
/s/ John J. Whitehead Director November 22, 1999
- -----------------------------
John J. Whitehead
</TABLE>
<PAGE> 35
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Exhibit
- ----------- -------
<S> <C>
4.1 Form of Common Stock Certificate (Incorporated by reference to Exhibit 4.1
to the Company's Registration Statement on Form S-1 (File No. 333-2968)).
4.2 Amended and Restated Certificate of Incorporation (Incorporated by
reference to Exhibit 3.1 to the Company's Registration Statement on Form
S-1 (File No. 333-2968)).
4.3 Amended and Restated Bylaws (Incorporated by reference to Exhibit 3.2 to
the Company's Annual Report on Form 10-K for the year ended June 30, 1999).
4.4 Form of Purchase Agreement.
5.1 Opinion of Ballard Spahr Andrews & Ingersoll, LLP.
23.1 Consent of Ernst & Young LLP, Independent Auditors.
23.2 Consent of Ballard Spahr Andrews & Ingersoll, LLP (included in Exhibit
5.1).
24.1 Power of Attorney (included on signature page).
</TABLE>
<PAGE> 1
EXHIBIT 4.4
PURCHASE AGREEMENT
THIS AGREEMENT is made as of the ____ day of November, 1999,
by and among Digene Corporation (the "Company"), a corporation organized under
the laws of the State of Delaware, with its principal offices at 9000 Virginia
Manor Road, Beltsville, Maryland 20705, certain stockholders of the Company who
are listed on Exhibit A hereto (each, a "Selling Stockholder" and collectively,
the "Selling Stockholders") and the purchaser whose name and address is set
forth on the signature page hereof (the "Purchaser").
IN CONSIDERATION of the mutual covenants contained in this
Agreement, the Company, the Selling Stockholders and the Purchaser agree as
follows:
SECTION 1. Authorization of Sale of the Shares. Subject to the
terms and conditions of this Agreement, the Company has authorized the sale of
up to 900,000 shares (the "Company Shares") of common stock, par value $0.01 per
share (the "Common Stock"), of the Company and the Selling Stockholders propose
to sell an aggregate of up to 600,000 shares (the "Selling Stockholder Shares"
and together with the Company Shares, the "Shares") of Common Stock. The
aggregate number of Selling Stockholder Shares to be sold by each Selling
Stockholder is set forth on Exhibit A hereto.
SECTION 2. Agreement to Sell and Purchase the Shares. At the
Closing (as defined in Section 3), (i) the Company will sell to the Purchaser,
and the Purchaser will buy from the Company, upon the terms and conditions
hereinafter set forth, the number of Shares (at the purchase price) equal to the
total number of Shares shown below to be purchased by the Purchaser, multiplied
by a fraction, the numerator of which is the number of Company Shares to be sold
by the Company pursuant to the Agreements (as defined below) and the denominator
of which is the total number of Shares to be sold pursuant to the Agreements and
(ii) each Selling Stockholder will sell to the Purchaser, and the Purchaser will
buy from each Selling Stockholder, upon the terms and conditions hereinafter set
forth, the number of Shares (at the purchase price) equal to the total number of
Shares shown below to be purchased by the Purchaser, multiplied by a fraction,
the numerator of which is the number of Selling Stockholder Shares to be sold by
the relevant Selling Stockholder pursuant to the Agreements and the denominator
of which is the total number of Shares to be sold pursuant to the Agreements:
<TABLE>
<CAPTION>
Purchase Price Per
Number of Shares to Be Share In Aggregate Purchase
Purchased Dollars Price in Dollars
---------------------- ------------------ ------------------
<S> <C> <C>
</TABLE>
The Company and the Selling Stockholders propose to enter into
this same form of purchase agreement with certain other investors (the "Other
Purchasers") and expect to
<PAGE> 2
complete sales of the Shares to them. The Purchaser and the Other Purchasers are
hereinafter sometimes collectively referred to as the "Purchasers," and this
Agreement and the agreements executed by the Other Purchasers are hereinafter
sometimes collectively referred to as the "Agreements." The term "Placement
Agent" shall mean the Prudential Vector Healthcare Group, a unit of Prudential
Securities Incorporated.
SECTION 3. Delivery of the Shares at the Closing. The
completion of the purchase and sale of the Shares (the "Closing") shall occur as
soon as practicable and as agreed by the parties hereto following notification
by the Securities and Exchange Commission (the "Commission") to the Company of
the Commission's willingness to declare effective the registration statement to
be filed by the Company pursuant to Section 8.1 hereof (the "Registration
Statement") at a place and time (the "Closing Date") to be agreed upon by the
Company, the Selling Stockholders and the Placement Agent and of which the
Purchasers will be notified by facsimile transmission or otherwise.
Each Selling Stockholder specifically agrees that its
obligations hereunder shall not be terminated, except as otherwise provided
herein, by any act of such Selling Stockholder, operation of law or otherwise,
whether by death or incapacity of such Selling Stockholder, if an individual, or
by the occurrence of any other event. If any Selling Stockholder, if an
individual, should die or become incapacitated, or if any other such event
should occur before the delivery of such Selling Stockholder's Shares hereunder,
certificates representing such Selling Stockholder's Shares shall be delivered
pursuant to the terms and conditions of this Agreement as if such death,
incapacity or other event had not occurred. Each Selling Stockholder
specifically agrees to provide to the Company on the date of the execution of
the Agreements, an irrevocable blank stock power and/or instructions to the
Company's transfer agent with respect to the exercise of options to purchase
shares of Common Stock, as applicable, to effect the agreement as set forth in
this Section 3.
At the Closing, the Company and the Selling Stockholders shall
deliver to the Purchaser one or more stock certificates registered in the name
of the Purchaser, or in such nominee name(s) as designated by the Purchaser in
writing, representing the number of Shares set forth in Section 2 above. The
name(s) in which the stock certificates are to be registered are set forth in
the Stock Certificate Questionnaire attached hereto as part of Appendix I. The
Company's obligation to complete the purchase and sale of the Shares and deliver
such stock certificate(s) to the Purchaser at the Closing shall be subject to
the following conditions, any one or more of which may be waived by the Company:
(a) receipt by the Company of same-day funds in the full amount of the purchase
price for the Company Shares being purchased hereunder; (b) completion of the
purchases and sales under the Agreements with all of the Other Purchasers; and
(c) the accuracy of the representations and warranties made by the Purchasers
and the fulfillment of those undertakings of the Purchasers to be fulfilled
prior to the Closing. The Selling Stockholders' obligation to complete the
purchase and sale of the Selling Stockholders Shares and deliver such stock
certificate(s) to the Purchaser at the Closing shall be subject to the following
conditions, any one or more of which may be waived by the Selling Stockholders:
(a) receipt by the Selling Stockholders of same-day funds in the full amount of
the purchase price for the Selling Stockholders Shares being purchased
hereunder; (b) completion of
-2-
<PAGE> 3
the purchases and sales under the Agreements with all of the Other Purchasers;
and (c) the accuracy of the representations and warranties made by the
Purchasers and the fulfillment of those undertakings of the Purchasers to be
fulfilled prior to the Closing. The Purchaser's obligation to accept delivery of
such stock certificate(s) and to pay for the Shares evidenced thereby shall be
subject to the following conditions: (a) the Commission has notified the Company
of the Commission's willingness to declare the Registration Statement effective
on or prior to the 60th day after the date such Registration Statement was filed
by the Company; and (b) the accuracy in all material respects of the
representations and warranties made by the Company and the Selling Stockholders
herein and the fulfillment in all material respects of those undertakings of the
Company and the Selling Stockholders to be fulfilled prior to the Closing. The
Purchaser's obligations hereunder are expressly not conditioned on the purchase
by any or all of the Other Purchasers of the Shares that they have agreed to
purchase from the Company and the Selling Stockholders.
SECTION 4. Representations, Warranties and Covenants of the
Company. The Company hereby represents and warrants to, and covenants with, the
Purchaser as follows:
4.1 Organization and Qualification. The Company and its
subsidiary, Digene Europe, Inc. ("Digene Europe"), is each a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Digene B.V. and Viropath B.V. is each a limited liability company with
limited liability registered at Amsterdam, The Netherlands, and is duly
organized, validly existing and in good standing under the laws of The
Netherlands. Digene do Brasil Ltda., a subsidiary of the Company ("Digene
Brasil"), is a limited liability company duly organized under the laws of
Brazil, and is validly existing under the laws of Brazil. The Company has no
Subsidiaries (as defined in the Rules and Regulations (as defined in Section 4.5
hereof)) other than Digene Europe, Digene B.V., Viropath B.V. and Digene Brasil
(collectively, the "Subsidiaries"). The Company and each of the Subsidiaries is
qualified to do business as a foreign corporation or limited liability company,
as applicable, in each jurisdiction in which qualification is required, except
where the failure to so qualify would not individually or in the aggregate have
a material adverse effect on the condition (financial or otherwise), properties,
business, prospects or results of operations of the Company and the Subsidiaries
(a "Material Adverse Effect").
4.2 Authorized Capital Stock. Except as disclosed in the
Confidential Private Placement Memorandum dated October 11, 1999 prepared by the
Company (including all Exhibits (except Exhibit E), supplements and amendments
thereto, the "Private Placement Memorandum"), the Company had authorized and
outstanding capital stock as set forth under the heading "Capitalization" in the
Private Placement Memorandum as of the date set forth therein; the issued and
outstanding shares of Common Stock have been duly authorized and validly issued,
are fully paid and nonassessable, have been issued in compliance with all
federal and state securities laws, were not issued in violation of or subject to
any preemptive rights or other rights to subscribe for or purchase securities,
and conform in all material respects to the description thereof contained in the
Private Placement Memorandum. Except as disclosed in the Private Placement
Memorandum, and except for options to purchase shares of Common Stock granted
since June 30, 1999, the Company does not have outstanding any options or
warrants to
-3-
<PAGE> 4
purchase, or any preemptive rights or other rights to subscribe for or to
purchase, any securities or obligations convertible into, or any contracts or
commitments to issue or sell, shares of its capital stock or any shares of
capital stock of any Subsidiary and there is no commitment, plan or arrangement
to issue, any securities or obligations convertible into any shares of capital
stock of the Company or the Subsidiaries or any such options, rights convertible
securities or obligations. The description of the Company's capital stock, stock
bonus and other stock plans or arrangements and the options or other rights
granted and exercised thereunder, contained or incorporated by reference in the
Private Placement Memorandum accurately and fairly presents the information with
respect to such capital stock, plans, arrangements, options and rights. All
issued shares of capital stock of each of the Subsidiaries have been duly
authorized and validly issued, are fully paid and nonassessable and are, except
for Digene Brasil, owned by the Company free and clear of any and all security
interests, liens, encumbrances, equities or claims. The Company owns sixty
percent (60%) of the outstanding capital stock of Digene Brasil and all such
shares are owned by the Company free and clear of any and all security
interests, liens, encumbrances, equities or claims.
4.3 Issuance, Sale and Delivery of the Shares. The Company
Shares have been duly authorized and, when issued, delivered and paid for in the
manner set forth in the Agreements, will be duly authorized, validly issued,
fully paid and nonassesable, and will conform in all material respects to the
description thereof set forth in the Private Placement Memorandum. The Selling
Stockholder Shares to be issued upon the exercise of outstanding stock options
(the "Options") have been duly authorized, and when issued, delivered and paid
for in accordance with the provisions of the applicable stock option grant, will
be duly authorized, validly issued, fully paid and nonassesable, and will
conform in all material respects to the description thereof set forth in the
Private Placement Memorandum. No preemptive rights or other rights to subscribe
for or purchase exist with respect to the issuance and sale of the Company
Shares by the Company pursuant to this Agreement. No stockholder of the Company
has any right (which has not been waived or has not expired by reason of lapse
of time following notification of the Company's intent to file the Registration
Statement) to request pursuant to an agreement with the Company or require the
Company to register the sale of any shares owned by such stockholder under the
Securities Act of 1933, as amended (the "Securities Act"), in the Registration
Statement. No further approval or authority of the stockholders or the Board of
Directors of the Company will be required for the issuance and sale of the
Company Shares to be sold by the Company as contemplated herein, or for the
issuance and sale of the Selling Stockholder Shares.
4.4 Due Execution, Delivery and Performance of the Agreements.
The Company has full legal right, corporate power and authority to enter into
the Agreements and perform the transactions contemplated hereby and thereby. The
Agreements have been duly authorized, executed and delivered by the Company. The
execution, delivery and performance of the Agreements by the Company and the
consummation of the transactions herein and therein contemplated do not and will
not (a) violate any provision of the organizational documents of the Company or
any of the Subsidiaries; (b) result in the creation of any lien, charge,
security interest or encumbrance upon any assets or property of the Company or
any of the Subsidiaries pursuant to the terms or provisions of any agreement,
mortgage, deed of trust, lease, franchise, license,
-4-
<PAGE> 5
indenture, permit or other instrument to which the Company or any of the
Subsidiaries is a party or by which the Company or any of the Subsidiaries or
any of their respective assets or properties may be bound or affected; or (c)
conflict with, result in the breach or violation of, or constitute, either by
itself or upon notice or the passage of time or both, a default under any
agreement, mortgage, deed of trust, lease, franchise, license, indenture, permit
or other instrument to which the Company or any of the Subsidiaries is a party
or by which the Company or any of the Subsidiaries or any of their respective
assets or properties may be bound or affected or, to the Company's knowledge,
any statute or any authorization, judgment, decree, order, rule or regulation of
any court or any regulatory body, administrative agency or other governmental
body applicable to the Company or any of the Subsidiaries or any of their
respective assets or properties, except, in the case of clause (c), for such
conflicts, breaches, violations or defaults which individually or in the
aggregate would not have a Material Adverse Effect. No consent, approval,
authorization or other order of any court, regulatory body, administrative
agency or other governmental body is required for the execution, delivery and
performance of the Agreements or the consummation of the transactions
contemplated hereby or thereby, except for compliance with the Blue Sky laws,
federal securities laws and the rules and regulations of The Nasdaq Stock
Market, Inc. applicable to the offering of the Shares. Upon their execution and
delivery, and assuming the valid execution thereof by the Selling Stockholders
and the respective Purchasers, the Agreements will constitute legal, valid and
binding obligations of the Company, enforceable in accordance with their
respective terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors' rights generally and except as enforceability may be subject to
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law) and except as the
indemnification agreements of the Company in Section 8.3 hereof may be legally
unenforceable.
4.5 Accountants; Financial Statements. Ernst & Young LLP has
expressed its opinion with respect to the consolidated financial statements to
be incorporated by reference into the Registration Statement and the Prospectus
that forms a part thereof from the Company's Annual Report on Form 10-K for the
fiscal year ended June 30, 1999 and are independent accountants as required by
the Securities Act and the rules and regulations promulgated thereunder (the
"Rules and Regulations"). The Company's consolidated financial statements
(including all notes and schedules thereto) included in or incorporated by
reference into the Private Placement Memorandum present fairly the consolidated
financial position, the results of operations, the statements of cash flows and
the statements of stockholders' equity and the other information purported to be
shown therein of the Company and the Subsidiaries at the respective dates and
for the respective periods to which they apply and such financial statements
have been prepared in conformity with generally accepted accounting principles,
consistently applied throughout the periods involved.
4.6 No Defaults. Neither the Company nor any of the
Subsidiaries is (i) in violation or default of any provision of its certificate
of incorporation, bylaws or other organizational documents, or (ii) in breach of
or default with respect to any provision of any agreement, judgment, decree,
order, mortgage, deed of trust, lease, franchise, license, indenture, permit or
other instrument to which it is a party or by which it or any of its assets or
properties
-5-
<PAGE> 6
are bound, except for breaches and defaults which individually or in the
aggregate would not have a Material Adverse Effect; and there does not exist any
state of fact which, with notice or lapse of time or both, would constitute an
event of default on the part of the Company or any of the Subsidiaries as
defined in such documents, except such defaults which individually or in the
aggregate would not have a Material Adverse Effect.
4.7 Contracts. The contracts described in the Private
Placement Memorandum that are material to the Company and the Subsidiaries are
in full force and effect and are valid and enforceable by the Company in
accordance with the terms thereof on the date hereof; and neither the Company
nor any of the Subsidiaries, nor, to the Company's knowledge, any other party
are in breach of or default under any of such contracts, which breaches and
defaults would individually or in the aggregate have a Material Adverse Effect.
4.8 No Actions. Except as disclosed in the Private Placement
Memorandum, there are no legal or governmental actions, suits or proceedings
pending or, to the Company's knowledge, threatened to which the Company or any
of the Subsidiaries is or may be a party or of which property owned or leased by
the Company or any of the Subsidiaries is or may be the subject, or related to
environmental or discrimination matters, which actions, suits or proceedings,
individually or in the aggregate, might prevent or might reasonably be expected
to materially and adversely affect the transactions contemplated by this
Agreement or result in a Material Adverse Effect; and no labor disturbance by
the employees of the Company or any of the Subsidiaries exists or, to the
Company's knowledge, is imminent which might reasonably be expected to have a
Material Adverse Effect. Except as disclosed in the Private Placement
Memorandum, neither the Company nor any of the Subsidiaries is a party to or
subject to the provisions of any material injunction, judgment, decree or order
of any court, regulatory body administrative agency or other governmental body.
4.9 Properties. Each of the Company and the Subsidiaries has
good and marketable title to all the properties and assets reflected as owned by
them in the consolidated financial statements included in the Company's Annual
Report on Form 10-K for the fiscal year ended June 30, 1999, subject to no lien,
mortgage, pledge, charge or encumbrance of any kind except (i) those, if any,
reflected in such consolidated financial statements, or (ii) those which are not
material in amount and do not adversely affect the use made and promised to be
made of such property by the Company or the Subsidiaries. Each of the Company
and the Subsidiaries holds its leased properties under valid and binding leases,
with such exceptions as are not materially significant in relation to their
respective businesses. Except as disclosed in the Private Placement Memorandum,
each of the Company and the Subsidiaries owns or leases all such properties as
are necessary to its operations as now conducted.
4.10 No Material Change. Since June 30, 1999, except for the
incurrence by the Company of indebtedness for borrowed money in the principal
amount of $1.0 million with respect to the Company's facility in Gaithersburg,
Maryland, (i) neither the Company nor the Subsidiaries have incurred any
liabilities or obligations, indirect, or contingent, or entered into any verbal
or written agreement or other transaction which is not in the ordinary course of
business or which could reasonably be expected to result in a material reduction
in the future
-6-
<PAGE> 7
earnings of the Company or the Subsidiaries or in a Material Adverse Effect;
(ii) neither the Company nor the Subsidiaries have sustained any material loss
or interference with its businesses or properties from fire, flood, windstorm,
accident or other calamity not covered by insurance; (iii) neither the Company
nor the Subsidiaries have paid or declared any dividends or other distributions
with respect to its capital stock and neither the Company nor the Subsidiaries
is in default in the payment of principal of or interest on any outstanding debt
obligations; (iv) there has not been any change in the capital stock of the
Company other than the sale of the Company Shares hereunder and shares or
options issued pursuant to employee stock option plans approved by the Company's
Board of Directors and stockholders, or indebtedness material to the Company
(other than in the ordinary course of business); and (v) there has not been a
change that would result in a Material Adverse Effect.
4.11 Intellectual Property. Except as disclosed in the Private
Placement Memorandum: (i) the Company and the Subsidiaries own or have obtained
valid and enforceable licenses or options for the inventions, patent
applications, patents, trademarks (both registered and unregistered),
tradenames, copyrights and trade secrets necessary for the conduct of the
Company's and the Subsidiaries' respective businesses as currently conducted and
as the Private Placement Memorandum indicates the Company and the Subsidiaries
contemplate conducting (collectively, the "Intellectual Property"); (ii) to the
Company's knowledge, there are no third parties who have any ownership rights to
any Intellectual Property that is owned by, or has been licensed to, the Company
or the Subsidiaries for the indications for the Company's products described in
the Private Placement Memorandum that would preclude the Company or the
Subsidiaries from conducting their respective businesses as currently conducted
and as the Private Placement Memorandum indicates the Company and the
Subsidiaries contemplate conducting; (iii) to the Company's knowledge, there are
currently no sales of any products that would constitute an infringement by
third parties of any Intellectual Property owned, licensed or optioned by the
Company or the Subsidiaries; (iv) there is no pending or, to the Company's
knowledge, threatened action, suit, proceeding or claim by others challenging
the rights of the Company or the Subsidiaries in or to any Intellectual Property
owned, licensed or optioned by the Company or the Subsidiaries; (v) there is no
pending or, to the Company's knowledge, threatened action, suit, proceeding or
claim by others challenging the validity or scope of any Intellectual Property
owned, licensed or optioned by the Company or the Subsidiaries; and (vi) there
is no pending or, to the Company's knowledge, threatened action, suit,
proceeding or claim by others that the Company or the Subsidiaries infringe or
otherwise violate any patent, trademark, copyright, trade secret or other
proprietary right of others, except, in the case of subsections (ii), (iii),
(iv), (v) and (vi) of this Section 4.11, where any such rights, activities,
actions, suits, proceedings or claims would not individually or in the aggregate
have a Material Adverse Effect.
4.12 Compliance. Neither the Company nor any of the
Subsidiaries has been advised, and has any reason to believe, that it is not
conducting its business in compliance with all applicable laws, rules and
regulations of the jurisdictions in which it is conducting business, including,
without limitation, all applicable local, state and federal environmental laws
and regulations; except where failure to be so in compliance would not
individually or in the aggregate have a Material Adverse Effect.
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4.13 Taxes. Each of the Company and the Subsidiaries has filed
all necessary federal, state, local and foreign income and franchise tax returns
and has paid or accrued all taxes shown as due thereon, and neither the Company
nor any of the Subsidiaries has knowledge of a tax deficiency which has been or
might be asserted or threatened against it which could have a Material Adverse
Effect.
4.14 Transfer Taxes. On the Closing Date, all stock transfers
or other taxes (other than income taxes) which are required to be paid in
connection with the sale and transfer of the Shares to be sold to the Purchaser
hereunder will be, or will have been, fully paid or provided for by the Company
and all laws imposing such taxes will be or will have been fully complied with.
4.15 Insurance. Each of the Company and the Subsidiaries
maintains insurance of the type and in the amount that the Company reasonably
believes is prudent and customary in the businesses in which the Company and the
Subsidiaries are engaged, all of which insurance is in full force and effect.
4.16 Contributions. Neither the Company at any time since its
incorporation nor the Subsidiaries at any time since they were acquired or
formed by the Company have, directly or indirectly, (i) made any unlawful
contribution to any candidate for public office, or failed to disclose fully any
contribution in violation of law, or (ii) made any payment to any federal or
state governmental officer or official, or other person charged with similar
public or quasi-public duties, other than payments required or permitted by the
laws of the United States or any jurisdiction thereof.
4.17 Year 2000 Compliance. The Company has reviewed its
operations to evaluate the extent to which the business or operations of the
Company and the Subsidiaries will be affected by the Year 2000 Problem (as
defined below). As a result of such review, the Company has no reason to
believe, and does not believe, that the Year 2000 Problem will have a Material
Adverse Effect. The "Year 2000 Problem" as used herein means any significant
risk that computer hardware or software used by the Company or any Subsidiary in
the receipt, transmission, processing, manipulation, storage, retrieval,
retransmission or other utilization of data or in the operation of mechanical or
electrical systems of any kind will not, in the case of dates or time periods
occurring after December 31, 1999, function at least as effectively as in the
case of dates or time periods occurring prior to January 1, 2000.
4.18 Stabilization. The Company has not taken and will not
take, directly or indirectly, any action designed to cause or result in, or
which constitutes or which might reasonably be expected to constitute, the
stabilization or manipulation of the price of the Common Stock to facilitate the
sale or resale of the Shares.
4.19 Investment Company. The Company is not an "investment
company" or an "affiliated person" of, or "promoter" or "principal underwriter"
for an investment company, within the meaning of the Investment Company Act of
1940, as amended.
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4.20 Offering Materials. The Company has not distributed and
will not distribute prior to the Closing Date any offering material in
connection with the offering and sale of the Shares other than the Private
Placement Memorandum or any amendment or supplement thereto. The Company has not
in the past nor will it hereafter take any action independent of the Placement
Agent to sell, offer for sale or solicit offers to buy any securities of the
Company which would bring the offer, issuance or sale of the Shares, as
contemplated by this Agreement, within the provisions of Section 5 of the
Securities Act.
4.21 Related Party Transactions. No transaction has occurred
between or among the Company, any of the Subsidiaries and their affiliates,
officers or directors or any affiliate or affiliates of any such officer or
director that is required to be described under applicable securities laws and
is not described in the Private Placement Memorandum or any document
incorporated by reference therein.
4.22 Books and Records. The books, records and accounts of the
Company and the Subsidiaries accurately and fairly reflect, in reasonable
detail, the transactions in, and dispositions of, the assets of, and the results
of operations of, the Company and the Subsidiaries. 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 authorizations, (ii) transactions are recorded as necessary
to permit preparation of financial statements in accordance with generally
accepted accounting principles and to maintain asset accountability, (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.
4.23 Additional Information. The Company represents and
warrants that the information contained in the following documents, which the
Placement Agent has furnished to the Purchaser does not include 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 case of
clauses (a), (b), (c), (e) and (f), in the light of the circumstance under which
they were made, not misleading, and, in the case of clause (d), not misleading,
as of their respective final dates:
(a) the Company's Annual Report on Form 10-K for the fiscal
year ended June 30, 1999;
(b) the Company's Proxy Statement for the 1999 Annual Meeting
of Stockholders;
(c) the Company's 1999 Annual Report to Stockholders;
(d) the Registration Statement;
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(e) the Private Placement Memorandum, including all exhibits
thereto (other than the Appendices); and
(f) all other documents, if any, filed by the Company with
the Securities and Exchange Commission since June 30,
1999 pursuant to the reporting requirements of the
Securities Exchange Act of 1934, as amended (the
"Exchange Act").
4.24 Legal Opinions. Prior to and as a condition to the Closing, (i)
Ballard Spahr Andrews & Ingersoll, LLP, counsel to the Company and the Selling
Stockholders, will deliver its legal opinion to the Purchasers in substantially
the form set forth on Exhibit B hereto, (ii) Morgan & Finegan and Arnold, Golden
& Gregory, special counsel to the Company, will deliver their legal opinions to
the Purchasers as to certain intellectual property matters in form and substance
reasonably satisfactory to the Placement Agent and its counsel, (iii) Brazilian
counsel to the Company will deliver its legal opinion to the Purchasers as to
certain matters relating to Digene Brasil in form and substance reasonably
satisfactory to the Placement Agent and its counsel and (iv) Netherlands counsel
to the Company will deliver its legal opinion to the Purchasers as to certain
matters relating to Digene B.V. and Viropath B.V. in form and substance
reasonably satisfactory to the Placement Agent and its counsel. Each such
opinion shall also state that the Placement Agent may rely thereon as though it
were addressed directly to the Placement Agent.
4.25 Certificate. At the Closing, the Company will deliver to
the Purchasers a certificate executed by the Chairman of the Board or President
and the chief financial or accounting officer of the Company, dated the Closing
Date, in form and substance reasonably satisfactory to the Purchasers, to the
effect that the representations and warranties of the Company set forth in this
Section 4 are true and correct in all material respects as of the date of this
Agreement and as of the Closing Date, and that the Company has complied with all
the agreements and satisfied all the conditions herein on its part to be
performed or satisfied on or prior to such Closing Date.
SECTION 5. Representations, Warranties and Covenants of the
Selling Stockholders. Each of the Selling Stockholders, severally and not
jointly, represents, warrants and covenants to the Company and to the Purchaser
that:
5.1 Organization and Qualification. If organized as a
partnership, such Selling Stockholder is, and at the Closing Date will be, duly
formed under the laws of the jurisdiction of its organization.
5.2 Due Execution and Delivery. Such Selling Stockholder has
full power and authority to enter into the Agreements and to carry out all the
terms and provisions hereof and thereof to be carried out by it. All
authorizations and consents necessary for the execution and delivery by such
Selling Stockholder of the Agreements have been given. The Agreements have been
duly authorized, executed and delivered by or on behalf of such Selling
Stockholder and, assuming the valid execution thereof by the Company and the
respective Purchasers, the
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Agreements will constitute legal, valid and binding obligations of such Selling
Stockholder, enforceable in accordance with their respective terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights generally
and except as enforceability may be subject to general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law) and except as the indemnification agreements of the Selling
Stockholders in Section 8.3 hereof may be legally unenforceable.
5.3 Good Title. Such Selling Stockholder now has good, valid
and marketable title to the Selling Stockholder Shares to be sold by such
Selling Stockholder hereunder or to the Options upon exercise of which such
Selling Stockholder Shares will be issued, free and clear of all encumbrances,
and at the time of delivery of the Selling Stockholder Shares to be sold by such
Selling Stockholder hereunder will have good, valid and marketable title to such
Selling Stockholder Shares, free and clear of all encumbrances. Such Selling
Stockholder now has, and at the time of delivery of the Selling Stockholder
Shares to be sold by such Selling Stockholder hereunder will have full legal
right and power, and all authorizations and approvals required by law, to sell,
transfer and deliver the Selling Stockholder Shares to the Purchasers hereunder
and under the other Agreements and to make the representations, warranties and
agreements made by such Selling Stockholder herein and therein.
5.4. No Defaults. Neither the execution, delivery or
performance of the Agreements, nor the consummation of the transactions
contemplated therein by such Selling Stockholder conflicts or will conflict with
or results or will result in any breach or violation of any of the terms or
provisions of, or constitute a default under, or result in the creation or
imposition of any encumbrance upon, any property or assets of such Selling
Stockholder pursuant to (i) the terms of its organizational documents, if any;
(ii) the terms of any contract or other agreement to which such Selling
Stockholder is a party or by which it is bound or to which any of its assets or
properties is subject, which conflict, breach, violation or default would
adversely affect such Selling Stockholder's ability to perform its obligations
hereunder; (iii) any statute, rule or regulation of any governmental body having
jurisdiction over such Selling Stockholder or any of its activities, assets or
properties; or (iv) the terms of any judgment, decree or order of any
arbitration or governmental body having such jurisdiction.
5.5. Consents. No consent, approval, authorization or order
of, or any filing or declaration with, any governmental body is required for the
consummation by such Selling Stockholder of the transactions on its part
contemplated herein, except for compliance with the Blue Sky laws and federal
securities laws applicable to the offering of the Selling Stockholder Shares
proposed to be sold by such Selling Stockholder.
5.6. Stabilization. Such Selling Stockholder has not taken and
will not take, directly or indirectly, any action designed to cause or result
in, or which constitutes or which might reasonably be expected to constitute,
the stabilization or manipulation of the price of the Common Stock to facilitate
the sale or resale of the Shares.
5.7. Material Adverse Information. The sale of the Selling
Stockholder Shares
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proposed to be sold by such Selling Stockholder is not prompted by such Selling
Stockholder's knowledge of any material adverse information concerning the
Company or the Subsidiaries which is not set forth or described in the Private
Placement Memorandum.
5.8. Material Information. On the date of the Private
Placement Memorandum, the information with respect to such Selling Stockholder
included therein did not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary in order to
make the statements therein not misleading.
5.9. Company Representations and Warranties. Such Selling
Stockholder has no reason to believe that the representations and warranties of
the Company contained in Section 4 are not true and correct in all material
respects.
5.10 Certificate. At the Closing, such Selling Stockholder
will deliver to the Purchasers a certificate executed by such Selling
Stockholder, dated the Closing Date, in form and substance reasonably
satisfactory to the Purchasers, to the effect that the representations and
warranties of such Selling Stockholder set forth in this Section 5 are true and
correct in all material respects as of the date of this Agreement and as of the
Closing Date, and that such Selling Stockholder has complied with all the
agreements and satisfied all the conditions herein on his or its part to be
performed or satisfied on or prior to such Closing Date.
SECTION 6. Representations, Warranties and Covenants of the
Purchaser. (a) The Purchaser represents and warrants to, and covenants with, the
Company and the Selling Stockholders as of the date of this Agreement and as of
the date of the Closing that: (i) the Purchaser is knowledgeable, sophisticated
and experienced in making, and is qualified to make, decisions with respect to
investments in shares representing an investment decision like that involved in
the purchase of the Shares, including investments in securities issued by the
Company, and has requested, received, reviewed and considered all information it
deems relevant in making an informed decision to purchase the Shares; (ii) the
Purchaser is acquiring the number of Shares set forth in Section 2 above in the
ordinary course of its business and for its own account for investment only and
with no present intention of distributing any of such Shares or any arrangement
or understanding with any other persons regarding the distribution of such
Shares (this representation and warranty not limiting the Purchaser's right to
sell pursuant to the Registration Statement or, other than with respect to any
claims arising out of a breach of this representation and warranty, the
Purchaser's right to indemnification under Section 8.3); (iii) the Purchaser
will not, directly or indirectly, offer, sell, pledge, transfer or otherwise
dispose of (or solicit any offers to buy, purchase or otherwise acquire or take
a pledge of) any of the Shares except in compliance with the Securities Act and
the Rules and Regulations; (iv) the Purchaser has completed or caused to be
completed the Registration Statement Questionnaire and the Stock Certificate
Questionnaire, both attached hereto as Appendix I, for use in preparation of the
Registration Statement, and the answers thereto are true and correct as of the
date hereof and will be true and correct as of the effective date of the
Registration Statement; (v) the Purchaser has, in connection with its decision
to purchase the number of Shares set forth in Section 2 above, relied solely
upon the Private Placement Memorandum and the documents included therein and the
representations and warranties of the Company contained herein; and (vi) the
Purchaser is an
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"accredited investor" within the meaning of Rule 501(a) of Regulation D
promulgated under the Securities Act.
(b) The Purchaser understands that the Shares are being
offered and sold to it in reliance upon specific exemptions from the
registration requirements of Securities Act, the Rules and Regulations and state
securities laws and that the Company is relying upon the truth and accuracy of,
and the Purchaser's compliance with, the representations, warranties,
agreements, acknowledgments and understandings of the Purchaser set forth herein
in order to determine the availability of such exemptions and the eligibility of
the Purchaser to acquire the Shares.
(c) The Purchaser understands that its investment in the
Shares involves a significant degree of risk and that the market price of the
Common Stock has been volatile and that no representation is being made as to
the future value of the Common Stock. The Purchaser has the knowledge and
experience in financial and business matters as to be capable of evaluating the
merits and risks of an investment in the Shares and has the ability to bear the
economic risks of an investment in the Shares.
(d) The Purchaser understands that no United States federal or
state agency or any other government or governmental agency has passed upon or
made any recommendation or endorsement of the Shares.
(e) The Purchaser understands that, until such time as the
Registration Statement has been declared effective and the certificate in the
form of Appendix II hereto has been delivered to the Company or the Shares may
be sold pursuant to Rule 144 under the Securities Act without any restriction as
to the number of securities as of a particular date that can then be immediately
sold, the Shares may bear a restrictive legend in substantially the following
form (and a stop-transfer order may be placed against transfer of the
certificates for the Shares):
"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended. The
securities may not be sold, transferred or assigned in the
absence of an effective registration statement for the
securities under said Act, or an opinion of counsel, in form,
substance and scope reasonably acceptable to the Company, that
registration is not required under said Act or unless sold
pursuant to Rule 144 under said Act."
(f) The Purchaser's principal executive offices are in the
jurisdiction set forth immediately below the Purchaser's name on the signature
pages hereto.
(g) The Purchaser hereby covenants with the Company not to
make any sale of the Shares under the Registration Statement without effectively
causing the prospectus delivery requirement under the Securities Act to be
satisfied, and the Purchaser acknowledges and agrees that such Shares are not
transferable on the books of the Company unless the
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<PAGE> 14
certificate submitted to the transfer agent evidencing the Shares is accompanied
by a separate officer's certificate: (i) in the form of Appendix II hereto, (ii)
executed by an officer of, or other authorized person designated by, the
Purchaser, and (iii) to the effect that (A) the Shares have been sold in
accordance with the Registration Statement and (B) the requirement of delivering
a current prospectus has been satisfied. The Purchaser acknowledges that there
may occasionally be times when the Company must suspend the use of the
prospectus forming a part of the Registration Statement until such time as an
amendment to the Registration Statement has been filed by the Company and
declared effective by the Commission, or until such time as the Company has
filed an appropriate report with the Commission pursuant to the Exchange Act.
The Purchaser hereby covenants that it will not sell any Shares pursuant to said
prospectus during the period commencing at the time at which the Company gives
the Purchaser written notice of the suspension of the use of said prospectus and
ending at the time the Company gives the Purchaser written notice that the
Purchaser may thereafter effect sales pursuant to said prospectus. The Purchaser
further covenants to notify the Company promptly of the sale of all of its
Shares.
(h) The Purchaser further represents and warrants to, and
covenants with, the Company that (i) the Purchaser has full right, power,
authority and capacity to enter into this Agreement and to consummate the
transactions contemplated hereby and has taken all necessary action to authorize
the execution, delivery and performance of this Agreement, and (ii) upon the
execution and delivery of this Agreement, this Agreement shall constitute a
legal, valid and binding obligation of the Purchaser, enforceable in accordance
with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors' rights generally and except as enforceability may be subject to
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law) and except as the
indemnification agreements of the Purchaser in Section 8.3 hereof may be legally
unenforceable.
SECTION 7. Survival of Representations, Warranties and
Agreements. Notwithstanding any investigation made by any party to this
Agreement or by the Placement Agent, all covenants, agreements, representations
and warranties made by the Company, the Selling Stockholders and the Purchaser
herein and in the certificates for the Shares delivered pursuant hereto shall
survive the execution of this Agreement, the delivery to the Purchaser of the
Shares being purchased and the payment therefor.
SECTION 8. Registration of the Shares; Compliance with the
Securities Act.
8.1 Registration Procedures and Expenses. The Company shall:
(a) as soon as practicable, prepare and file with the
Commission the Registration Statement on Form S-3
relating to the sale of the Shares by the Purchaser from
time to time on the Nasdaq National Market or the
facilities of any national securities exchange on which
the Common Stock is then traded or in privately-
negotiated transactions;
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<PAGE> 15
(b) use its reasonable efforts, subject to receipt of
necessary information from the Purchasers, to cause the
Commission to notify the Company of the Commission's
willingness to declare the Registration Statement
effective within 60 days after the Registration Statement
is filed by the Company;
(c) promptly prepare and file with the Commission such
amendments and supplements to the Registration Statement
and the prospectus used in connection therewith as may be
necessary to keep the Registration Statement effective
until the earlier of (i) two years after the effective
date of the Registration Statement or (ii) the date on
which the Shares may be resold by the Purchasers without
registration by reason of Rule 144(k) under the Securities
Act or any other rule of similar effect;
(d) furnish to the Purchaser with respect to the Shares
registered under the Registration Statement (and to each
underwriter, if any, of such Shares) such number of copies
of prospectuses and such other documents as the Purchaser
may reasonably request, in order to facilitate the public
sale or other disposition of all or any of the Shares by
the Purchaser; provided, however, that the obligation of
the Company to deliver copies of prospectuses to the
Purchaser shall be subject to the receipt by the Company
of reasonable assurances from the Purchaser that the
Purchaser will comply with the applicable provisions of
the Securities Act and of such other securities or blue
sky laws as may be applicable in connection with any use
of such prospectuses;
(e) file documents required of the Company for normal blue sky
clearance in states specified in writing by the Purchaser;
provided, however, that the Company shall not be required
to qualify to do business or consent to service of process
in any jurisdiction in which it is not now so qualified or
has not so consented; and
(f) bear all expenses in connection with the procedures in
paragraphs (a) through (e) of this Section 8.1 and the
registration of the Shares pursuant to the Registration
Statement, other than fees and expenses, if any, of
counsel or other advisers to the Purchaser or the Other
Purchasers and underwriting discounts, brokerage fees and
commissions incurred by the Purchaser or the Other
Purchasers, if any.
The Company understands that the Purchaser disclaims being an
underwriter, but the Purchaser being deemed an underwriter shall not relieve the
Company of any obligations it has hereunder. A draft of the proposed form of the
Registration Statement is attached to the Private Placement Memorandum as
Exhibit D and a questionnaire related thereto to be completed by the Purchaser
is attached hereto as Appendix I.
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8.2 Transfer of Shares After Registration. The Purchaser
agrees that it will not effect any disposition of the Shares or its right to
purchase the Shares that would constitute a sale within the meaning of the
Securities Act, except as contemplated in the Registration Statement referred to
in Section 8.1, and that it will promptly notify the Company of any changes in
the information set forth in the Registration Statement regarding the Purchaser
or its plan of distribution.
8.3 Indemnification. For the purpose of this Section 8.3:
(i) the term "Purchaser/Affiliate" shall mean any
affiliates of the Purchaser and any person who
controls the Purchaser or any affiliate of the
Purchaser within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act; and
(ii) the term "Registration Statement" shall include any
final prospectus, exhibit, supplement or amendment
included in or relating to, and any document
incorporated by reference in, the Registration
Statement referred to in Section 8.1.
(a) The Company agrees to indemnify and hold harmless each of
the Purchasers and each Purchaser/Affiliate, against any losses, claims,
damages, liabilities or expenses, joint or several, to which such Purchasers or
such Purchaser/Affiliates may become subject, under the Securities Act, the
Exchange Act, or any other federal or state statutory law or regulation, or at
common law or otherwise (including in settlement of any claims or litigation, if
such settlement is effected with the written consent of the Company), insofar as
such losses, claims, damages, liabilities or expenses (or actions in respect
thereof as contemplated below) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in the
Registration Statement, including the prospectus, financial statements and
schedules, and all other documents filed as a part thereof, as amended at the
time of effectiveness of the Registration Statement, including any information
deemed to be a part thereof as of the time of effectiveness pursuant to
paragraph (b) of Rule 430A, or pursuant to Rule 434, of the Rules and
Regulations, or the prospectus, in the form first filed with the Commission
pursuant to Rule 424(b) of the Rules and Regulations, or filed as part of the
Registration Statement at the time of effectiveness if no Rule 424(b) filing is
required (the "Prospectus"), or any amendment or supplement thereto, or arise
out of or are based upon the omission or alleged omission to state in any of
them a material fact required to be stated therein or necessary to make the
statements in the Registration Statement or any amendment or supplement thereto
not misleading or in the Prospectus or any amendment or supplement thereto not
misleading in the light of the circumstances under which they were made, or
arise out of or are based in whole or in part on any inaccuracy in the
representations and warranties of the Company contained in this Agreement, or
any failure of the Company to perform its obligations hereunder or under law,
and will reimburse each Purchaser and each such Purchaser/Affiliate for any
legal and other expenses as such expenses are reasonably incurred by such
Purchaser or such Purchaser/Affiliate in connection with investigating,
defending, settling, compromising or paying any such loss, claim, damage,
liability, expense or action; provided, however, that the Company will not be
liable in
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any such case to the extent that any such loss, claim, damage, liability or
expense arises out of or is based upon (i) an untrue statement or alleged untrue
statement or omission or alleged omission made in the Registration Statement,
the Prospectus or any amendment or supplement thereto in reliance upon and in
conformity with written information furnished to the Company by or on behalf of
the Purchaser expressly for use therein, or (ii) the failure of such Purchaser
to comply with the covenants and agreements contained in Sections 6(b), 6(g) or
8.2 hereof respecting the sale of the Shares, or (iii) the inaccuracy of any
representations made by such Purchaser herein or (iv) any statement or omission
in any Prospectus or any amendment or supplement thereto that is corrected in
any subsequent Prospectus or any amendment or supplement thereto that was
delivered to the Purchaser prior to the pertinent sale or sales by the
Purchaser.
(b) Each Purchaser will severally, but not jointly, indemnify
and hold harmless the Company and each Selling Stockholder, each of the
Company's directors, each of the Company's officers who signed the Registration
Statement and each person, if any, who controls the Company or any Selling
Stockholder within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act, against any losses, claims, damages, liabilities or
expenses to which the Company, each of its directors, each of its officers who
signed the Registration Statement, any Selling Stockholder or any of their
respective controlling persons may become subject, under the Securities Act, the
Exchange Act, or any other federal or state statutory law or regulation, or at
common law or otherwise (including in settlement of any claim or litigation, if
such settlement is effected with the written consent of such Purchaser) insofar
as such losses, claims, damages, liabilities or expenses (or actions in respect
thereof as contemplated below) arise out of or are based upon (i) any failure to
comply with the covenants and agreements contained in Sections 6(b), 6(g) or 8.2
hereof respecting the sale of the Shares or (ii) the inaccuracy of any
representation made by such Purchaser herein or (iii) any untrue or alleged
untrue statement of any material fact contained in the Registration Statement,
the Prospectus, or any amendment or supplement thereto, or arise out of or are
based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements in the
Registration Statement or any amendment or supplement thereto not misleading or
in the Prospectus or any amendment or supplement thereto not misleading in the
light of the circumstances under which they were made, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in the Registration
Statement, the Prospectus, or any amendment or supplement thereto, in reliance
upon and in conformity with written information furnished to the Company by the
Purchaser expressly for use therein, and will reimburse the Company, each of its
directors, each of its officers who signed the Registration Statement or
controlling person for any legal and other expense reasonably incurred by the
Company, each of its directors, each of its officers who signed the Registration
Statement or controlling person in connection with investigating, defending,
settling, compromising or paying any such loss, claim, damage, liability,
expense or action.
(c) Each Selling Stockholder will severally indemnify and hold
harmless each Purchaser, each Purchaser/Affiliate, the Company, each of its
directors and each of its officers who signed the Registration Statement and
each person, if any, who controls the Company within the meaning of Section 15
of the Securities Act or Section 20 of the Exchange Act,
-17-
<PAGE> 18
against any losses, claims, damages, liabilities or expenses to which the
Company, each of its directors, each of its officers who signed the Registration
Statement or controlling person may become subject, under the Securities Act,
the Exchange Act, or any other federal or state statutory law or regulation, or
at common law or otherwise (including the settlement of any claim or litigation,
if such settlement is effected with the written consent of such Selling
Stockholder) insofar as such losses, claims, damages, liabilities or expenses
(or actions in respect thereof as contemplated below) arise out of, or are based
upon (i) any failure to comply with the covenants and agreements of such Selling
Stockholder contained in the Agreements or (ii) the inaccuracy of any
representation made by such Selling Stockholder in the Agreements or (iii) any
untrue or alleged untrue statement of any material fact contained in the
Registration Statement, the Prospectus, or any amendment or supplement thereto,
or arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements in the Registration Statement or any amendment or supplement thereto
not misleading or in the Prospectus or any amendment or supplement thereto not
misleading in the light of the circumstances under which they were made, in each
case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in the
Registration Statement, the Prospectus, or any amendment or supplement thereto,
in reliance upon and in conformity with written information furnished to the
Company by such Selling Stockholder expressly for use therein.
(d) Promptly after receipt by an indemnified party under this
Section 8.3 of notice of the threat or commencement of any action, such
indemnified party will, if a claim in respect thereof is to be made against an
indemnifying party under this Section 8.3 promptly notify the indemnifying party
in writing thereof; but the omission so to notify the indemnifying party will
not relieve it from any liability which it may have to any indemnified party for
contribution or otherwise than under the indemnity agreement contained in this
Section 8.3 or to the extent it is not prejudiced as a result of such failure.
In case any such action is brought against any indemnified party and such
indemnified party seeks or intends to seek indemnity from an indemnifying party,
the indemnifying party will be entitled to participate in, and, to the extent
that it may wish, jointly with all other indemnifying parties similarly
notified, to assume the defense thereof with counsel reasonably satisfactory to
such indemnified party; provided, however, if the defendants in any such action
include both the indemnified party and the indemnifying party and, based upon
the advice of such indemnified party's counsel, the indemnified party shall have
reasonably concluded that there may be a conflict of interest between the
positions of the indemnifying party and the indemnified party in conducting the
defense of any such action or that there may be legal defenses available to it
and/or other indemnified parties which are different from or additional to those
available to the indemnifying party, the indemnified party or parties shall have
the right to select separate counsel to assume such legal defenses and to
otherwise participate in the defense of such action on behalf of such
indemnified party or parties. Upon receipt of notice from the indemnifying party
to such indemnified party of its election so to assume the defense of such
action and approval by the indemnified party of counsel, the indemnifying party
will not be liable to such indemnified party under this Section 8.3 for any
legal or other expenses subsequently incurred by such indemnified party in
connection with the defense thereof unless (i) the indemnified party shall have
employed such counsel in connection with the assumption of legal defenses in
accordance with the proviso
-18-
<PAGE> 19
to the preceding sentence (it being understood, however, that the indemnifying
party shall not be liable for the expenses of more than one separate counsel,
representing the indemnified parties who are parties to such action, plus local
counsel, if appropriate) or (ii) the indemnifying party shall not have employed
counsel reasonably satisfactory to the indemnified party to represent the
indemnified party within a reasonable time after notice of commencement of
action, in each of which cases the reasonable fees and expenses of counsel shall
be at the expense of the indemnifying party.
(e) If the indemnification provided for in this Section 8.3 is
required by its terms but is for any reason held to be unavailable to or
otherwise insufficient to hold harmless an indemnified party under paragraphs
(a), (b) or(c) of this Section 8.3 in respect to any losses, claims, damages,
liabilities or expenses referred to herein, then each applicable indemnifying
party shall contribute to the amount paid or payable by such indemnified party
as a result of any losses, claims, damages, liabilities or expenses referred to
herein (i) in such proportion as is appropriate to reflect the relative benefits
received by the Company, each Selling Stockholder and the Purchaser from the
placement of the Common Stock contemplated by this Agreement or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but the relative fault of the Company, each
Selling Stockholder and the Purchaser in connection with the statements or
omissions or inaccuracies in the representations and warranties in this
Agreement that resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations. The relative
benefits received by the Company and each Selling Stockholder, respectively, on
the one hand and each Purchaser on the other shall be deemed to be in the same
proportion as the amount paid by such Purchaser to the Company and each Selling
Stockholder, respectively, pursuant to this Agreement for the Shares purchased
by such Purchaser that were sold pursuant to the Registration Statement bears to
the difference (the "Difference") between the amount such Purchaser paid for the
Shares that were sold pursuant to the Registration Statement and the amount
received by such Purchaser from such sale. The relative fault of the Company and
each Selling Stockholder, respectively, on the one hand and each Purchaser on
the other shall be determined by reference to, among other things, whether the
untrue or alleged statement of a material fact or the omission or alleged
omission to state a material fact or the inaccurate or the alleged inaccurate
representation and/or warranty relates to information supplied by the Company,
by such Selling Stockholder or by such Purchaser and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The amount paid or payable by a party as a result of
the losses, claims, damages, liabilities and expenses referred to above shall be
deemed to include, subject to the limitations set forth in paragraph (d) of this
Section 8.3, any legal or other fees or expenses reasonably incurred by such
party in connection with investigating or defending any action or claim. The
provisions set forth in paragraph (d) of this Section 8.3 with respect to the
notice of the threat or commencement of any action shall apply if a claim for
contribution is to be made under this paragraph (e); provided, however, that no
additional notice shall be required with respect to any threat or action for
which notice has been given under paragraph (d) for purposes of indemnification.
The Company, the Selling Stockholders and each Purchaser agree that it would not
be just and equitable if contribution pursuant to this Section 8.3 were
determined solely by pro rata allocation (even if the Purchaser were treated as
one entity for such purpose) or
-19-
<PAGE> 20
by any other method of allocation which does not take account of the equitable
considerations referred to in this paragraph. Notwithstanding the provisions of
this Section 8.3, no Purchaser shall be required to contribute any amount in
excess of the amount by which the Difference exceeds the amount of any damages
that such Purchaser has otherwise been required to pay by reason of such untrue
or alleged untrue statement or omission or alleged omission. Notwithstanding the
provisions of this Section 8.3, no Selling Stockholder shall be required to
contribute any amount in excess of the gross proceeds received by such Selling
Stockholder for the sales of Selling Stockholder Shares under the Agreements. 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
who was not guilty of such fraudulent misrepresentation. The Purchasers'
obligations to contribute pursuant to this Section 8.3 are several and not
joint.
8.4 Termination of Conditions and Obligations. The conditions
precedent imposed by Section 6 or this Section 8 upon the transferability of the
Shares shall cease and terminate as to any particular number of the Shares upon
the passage of two years from the effective date of the Registration Statement
covering such Shares or at such time as an opinion of counsel satisfactory in
form and substance to the Company shall have been rendered to the effect that
such conditions are not necessary in order to comply with the Securities Act.
8.5 Information Available. So long as the Registration
Statement is effective covering the resale of Shares owned by the Purchaser, the
Company will furnish to the Purchaser:
(a) as soon as practicable after available (but in the case of
the Company's Annual Report to Stockholders, within 120
days after the end of each fiscal year of the Company),
one copy of (i) its Annual Report to Stockholders (which
Annual Report shall contain financial statements audited
in accordance with generally accepted accounting
principles by a national firm of independent public
accountants), (ii) upon the request of the Purchaser, its
Annual Report on Form 10-K, (iii) upon the request of the
Purchaser, its Quarterly Reports on Form 10-Q, (iv) upon
the request of the Purchaser, its Current Reports on Form
8-K, and (v) a full copy of the particular Registration
Statement covering the Shares (the foregoing, in each
case, excluding exhibits);
(b) upon the request of the Purchaser, all exhibits excluded
by the parenthetical to subparagraph (a)(v) of this
Section 8.5; and
(c) upon the request of the Purchaser, a reasonable number of
copies of the prospectuses to supply to any other party
requiring such prospectuses;
and the Company, upon the reasonable request of the Purchaser, will meet with
the Purchaser or a representative thereof at the Company's headquarters to
discuss information relevant for disclosure in the Registration Statement
covering the Shares and will otherwise cooperate with any Purchaser conducting
an investigation for the purpose of reducing or eliminating such
-20-
<PAGE> 21
Purchaser's exposure to liability under the Securities Act, including the
reasonable production of information at the Company's headquarters, subject to
appropriate confidentiality limitations.
SECTION 9. Broker's Fee. The Purchaser acknowledges that the
Company and the Selling Stockholders intend to pay to the Placement Agent a fee
in respect of the sale of the Shares to the Purchaser. Each of the parties
hereto hereby represents that, on the basis of any actions and agreements by it,
there are no other brokers or finders entitled to compensation in connection
with the sale of the Shares to the Purchaser.
SECTION 10. Notices. All notices, requests, consents and other
communications hereunder shall be in writing, shall be mailed by first-class
registered or certified airmail, confirmed facsimile or nationally recognized
overnight express courier postage prepaid, and shall be deemed given when so
mailed and shall be delivered as addressed as follows:
(a) if to the Company, to:
<TABLE>
<CAPTION>
before January 1, 2000 after January 1, 2000
---------------------- ---------------------
<S> <C>
Digene Corporation Digene Corporation
9000 Virginia Manor Road 1201 Clopper Road
Beltsville, Maryland 20705 Gaithersburg, Maryland 20878
Attention: Charles M. Fleischman Attention: Charles M. Fleischman
Facsimile: (301) 471-6496 Phone: 800-DIGENE-1
</TABLE>
with a copy to:
Ballard Spahr Andrews & Ingersoll, LLP 1735
Market Street, 51st Floor Philadelphia,
Pennsylvania 19103-7599
Attention: Morris Cheston, Jr., Esq.
Facsimile: (215) 864-8999
or to such other person at such other place as the
Company shall designate to the Purchaser in writing; and
(b) if to the Purchaser, at its address as set forth at the
end of this Agreement, or at such other address or
addresses as may have been furnished to the Company in
writing.
(c) if to the Selling Stockholders, at the addresses set forth
in Exhibit A hereto.
-21-
<PAGE> 22
SECTION 11. Changes. This Agreement may not be modified or
amended except pursuant to an instrument in writing signed by the Company and
the Purchaser.
SECTION 12. Headings. The headings of the various sections of
this Agreement have been inserted for convenience of reference only and shall
not be deemed to be part of this Agreement.
SECTION 13. Severability. In case any provision contained in
this Agreement should be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby.
SECTION 14. Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York and the
federal law of the United States of America.
SECTION 15. Counterparts. This Agreement may be executed in
two or more counterparts, each of which shall constitute an original, but all of
which, when taken together, shall constitute but one instrument, and shall
become effective when one or more counterparts have been signed by each party
hereto and delivered to the other parties.
SECTION 16. Entire Agreement. This Agreement and the
instruments referenced herein contain the entire understanding of the parties
with respect to the matters covered herein and therein and, except as
specifically set forth herein or therein, none of the Company, the Selling
Stockholders or the Purchaser makes any representation, warranty, covenant or
undertaking with respect to such matters.
SECTION 17. Third Party Beneficiaries. This Agreement is
intended for the benefit of the parties hereto and their respective permitted
successors and assigns, and is not for the benefit of, nor may any provision
hereof be enforced by, any other person.
-22-
<PAGE> 23
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their duly authorized representatives as of the day
and year first above written.
DIGENE CORPORATION
By:
-------------------------------
Name:
Title:
SELLING STOCKHOLDERS:
ARMONK PARTNERS
By:
-------------------------------
Name:
Title:
VALLEY PARTNERS
By:
-------------------------------
Name:
Title:
----------------------------------
Evan Jones
----------------------------------
Charles M. Fleischman
----------------------------------
Attila T. Lorincz
-23-
<PAGE> 24
Print or Type:
Name of Purchaser
(Individual or Institution):
---------------------------------
Name of Individual representing
Purchaser (if an Institution):
---------------------------------
Title of Individual representing
Purchaser (if an Institution):
---------------------------------
Signature by:
Individual Purchaser or Individual
representing Purchaser:
---------------------------------
Address:
---------------------------------
Telephone:
---------------------------------
Facsimile:
---------------------------------
-24-
<PAGE> 25
SUMMARY INSTRUCTION SHEET FOR PURCHASER
(to be read in conjunction with the entire
Purchase Agreement which follows)
A. Complete the following items on BOTH Purchase Agreements:
1. Page 24 - Signature:
(i) Name of Purchaser (Individual or Institution)
(ii) Name of Individual representing Purchaser (if an
Institution)
(iii) Title of Individual representing Purchaser (if an
Institution)
(iv) Signature of Individual Purchaser or Individual
representing Purchaser
2. Appendix I - Stock Certificate Questionnaire:
Provide the information requested by the Stock Certificate
Questionnaire.
Appendix I - Registration Statement Questionnaire:
Provide the information requested by the Registration
Statement Questionnaire.
3. Return BOTH properly completed and signed Purchase Agreements
including the properly completed Appendix I to:
Prudential Vector Healthcare Group
1751 Lake Cook Road, Suite 350
Deerfield, Illinois 60015
Attention: Barry M. Deutsch
B. Instructions regarding the transfer of funds for the purchase of Shares
will be sent by facsimile to the Purchaser by the Placement Agent at a
later date.
C. Upon the resale of the Shares by the Purchasers after the Registration
Statement covering the Shares is effective, as described in the
Purchase Agreement, the Purchaser:
(i) must deliver a current prospectus of the Company to
the buyer (prospectuses must be obtained from the
Company at the Purchaser's request); and
(ii) must send a letter in the form of Appendix II to the
Company so that the Shares may be properly
transferred.
<PAGE> 26
Appendix I
(one of two)
DIGENE CORPORATION
STOCK CERTIFICATE QUESTIONNAIRE
Pursuant to Section 3 of this Agreement,
please provide us with the following information:
1. The exact name that your Shares are to be
registered in (this is the name that will appear
on your stock certificate(s)). You may use a
nominee name if appropriate:
----------------------
2. The relationship between the Purchaser of the
Shares and the Registered Holder listed
in response to item 1 above:
----------------------
3. The mailing address of the Registered Holder
listed in response to item 1 above:
----------------------
----------------------
----------------------
----------------------
4. The Social Security Number or Tax
Identification Number of the Registered
Holder listed in response to item 1 above:
----------------------
<PAGE> 27
Appendix I
(two of two)
DIGENE CORPORATION
REGISTRATION STATEMENT QUESTIONNAIRE
In connection with the preparation of the Registration
Statement, please provide us with the following information:
1. Pursuant to the "Selling Stockholder" section of the
Registration Statement, please state your or your organization's name exactly as
it should appear in the Registration Statement:
2. Please provide the number of shares that you or your
organization will own immediately after Closing, including those Shares
purchased by you or your organization pursuant to this Agreement and those
shares purchased by you or your organization through other transactions:
3. Have you or your organization had any position, office or
other material relationship within the past three years with the Company or its
affiliates?
Yes No
----- -----
If yes, please indicate the nature of any such relationships
below:
-----------------------------------------------------------
-----------------------------------------------------------
-----------------------------------------------------------
<PAGE> 28
APPENDIX II
Attention:
PURCHASER'S CERTIFICATE OF SUBSEQUENT SALE
The undersigned, [an officer of, or other person duly author-
ized by] _____________________________________________________________
[fill in official name of individual or institution]
hereby certifies that he/she [said institution] is the Purchaser of the shares
evidenced by the attached certificate, and as such, sold such shares on ________
[date]
in accordance with
Registration Statement number ________________________________________
[fill in the number of or otherwise
________________________________ and the requirement of delivering a
identify Registration Statement]
current prospectus by the Company has been complied with in connection with such
sale.
Print or Type:
Name of Purchaser
(Individual or
Institution):
----------------------
Name of Individual
representing
Purchaser (if an
Institution)
----------------------
Title of Individual
representing
Purchaser (if an
Institution):
----------------------
Signature by:
Individual Purchaser
or Individual
representing Purchaser:
--------------------
<PAGE> 29
EXHIBIT A
SELLING STOCKHOLDERS
<TABLE>
<CAPTION>
Name of Aggregate Number of
Selling Stockholder Address for Notices Shares to be Sold
- ------------------- ------------------- -------------------
<S> <C> <C>
Armonk Partners 9000 Virginia Manor Road 285,400
Beltsville, MD 20705
Valley Partners 3939 Butler Road 87,600
Glyndon, MD 21071
Evan Jones 9000 Virginia Manor Road 88,000
Beltsville, MD 20705
Charles M. Fleischman 9000 Virginia Manor Road 88,000
Beltsville, MD 20705
Attila T. Lorincz, Ph.D. 9000 Virginia Manor Road 51,000
Beltsville, MD 20705
Total 600,000
</TABLE>
<PAGE> 1
EXHIBIT 5.1
Ballard Spahr Andrews & Ingersoll, LLP
1735 Market Street, 51st Floor
Philadelphia, Pennsylvania 19103
November 22, 1999
Digene Corporation
9000 Virginia Manor Road, Suite 207
Beltsville, Maryland 20705
Re: Registration Statement on Form S-3 for Digene Corporation
Ladies and Gentlemen:
We have acted as counsel to Digene Corporation, a Delaware corporation
(the "Company"), and are rendering this opinion in connection with the filing of
a Registration Statement on Form S-3 (the "Registration Statement") by the
Company with the Securities and Exchange Commission under the Securities Act of
1933, as amended, relating to the registration by the Company of 1,500,000
shares of the Company's common stock, par value $.01 share (the "Common Stock"),
to be sold by the holders thereof as described in the Registration Statement
(the "Selling Stockholders").
We have examined originals or copies, certified or otherwise
identified to our satisfaction, of the Registration Statement and all exhibits
thereto and such corporate records and other agreements, documents and
instruments, and such certificates or comparable documents of public officials
and officers and representatives of the Company and have made such inquiries of
such officers and representatives and have considered such matters of law as we
have deemed appropriate as the basis for the opinion hereinafter set forth,
including the Company's Amended and Restated Bylaws, as amended, certain
resolutions adopted by the Board of Directors of the Company relating to the
issuance of the Common Stock and statements from certain officers of the
Company.
Based upon and subject to the limitations, qualifications, exceptions
and assumptions set forth herein, we are of the opinion that the shares of
Common Stock to be sold by the Selling Stockholders are duly authorized, legally
issued, fully paid and nonassessable.
We express no opinion as to the law of any jurisdiction other than the
law of the State of Delaware.
We hereby consent to the sole use of this opinion as Exhibit 5.1 to
the Registration Statement and to the use of our name under the heading "Legal
Matters" in the Prospectus included therein.
Very truly yours,
/s/ Ballard Spahr Andrews & Ingersoll, LLP
<PAGE> 1
EXHIBIT 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3 No. 333-_____) and related Prospectus of
Digene Corporation for the registration of 1,500,000 shares of its common
stock and to the incorporation by reference therein of our report dated August
20, 1999, with respect to the consolidated financial statements and schedule of
Digene Corporation included in its Annual Report (Form 10-K) for the year ended
June 30, 1999, filed with the Securities and Exchange Commission.
/s/ Ernst & Young LLP
Washington, DC
November 19, 1999
