As filed with the Securities and Exchange Commission on January 20, 1998
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
IMMUNOMEDICS, INC.
(Exact name of registrant as specified in its charter)
Delaware 61-1009366
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
300 American Road
Morris Plains, New Jersey 07950
(973) 605-8200
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
David M. Goldenberg
Chairman and Chief Executive Officer
Immunomedics, Inc.
300 American Road
Morris Plains, New Jersey 07950
(973) 605-8200
(Name, address, including zip code, and telephone number, including
area code, of agent for service)
Copies of all communications, including all communications sent to the
agent for service, should be sent to:
Howard M. Cohen, Esq.
Warshaw Burstein Cohen
Schlesinger & Kuh, LLP
555 Fifth Avenue
New York, New York 10017
(212) 984-7700
Approximate date of commencement of proposed sale to the public: From time to
time after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box: [ ]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box: [x]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: [ ]
<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Title of Each Class Amount of Shares Proposed Proposed Amount of
of Securities to be to be Registered Maximum Maximum Registration
Registered Offering Aggregate Fee
Per Share Offering
Price
___________________ ________________ _________ _________ ____________
<S> <C> <C> <C> <C>
Common Stock, $.01 7,272,000 3.03125(3) $22,043,250 $6,503
par value per Shares (3)
share(1)
Common Stock, $.01 175,000 3.03125(3) $530,469(3) $156
par value per Shares
share(2)
___________________ ________________ _________ _________ ____________
TOTAL $6,659
___________________ ________________ _________ _________ ____________
</TABLE>
(1) Consists of shares of common stock issuable pursuant to the terms of
the Structured Equity Line Flexible Financing Agreement (the "Equity Line"),
dated as of December 23, 1997, between the Company and the selling stockholder.
(2) Consists of shares of common stock issuable upon exercise of warrants
issued or issuable to the selling stockholder in connection with the Equity
Line.
(3) Pursuant to Rule 457(c), the proposed maximum offering price per share
and proposed maximum aggregate offering price have been calculated on the basis
of the average of the high and low sale prices of the Common Stock as reported
on The Nasdaq National Market on January 14, 1998.
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 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to Section 8(a),
may determine.
<PAGE>
PROSPECTUS
Subject to Completion, January 20, 1998
7,447,000 Shares
IMMUNOMEDICS, INC.
Common Stock
This Prospectus relates to a maximum of 7,447,000 shares (the "Shares")
of common stock, par value $.01 per share (the "Common Stock"), of
Immunomedics, Inc., a Delaware corporation (the "Company"), consisting of (i)
up to 7,272,000 shares issuable from time to time, under certain circumstances,
to Cripple Creek Securities, LLC, a Delaware limited liability company (the
"Selling Stockholder"), pursuant to the terms of the Structured Equity Line
Flexible Financing Agreement (the "Equity Line"), dated as of December 23,
1997, between the Company and the Selling Stockholder and (ii) up to 175,000
shares of Common Stock issuable upon exercise of certain warrants issuable to
the Selling Stockholder pursuant to the Equity Line. See "The Company - Equity
Line."
The shares of Common Stock being registered hereby constitute the
maximum number of shares issuable by the Company pursuant to the Equity Line.
As more fully set forth herein, the Company may issue a significantly fewer
number of Shares and, in any event, may not issue more than $2.5 million of
Common Stock in any three-month investment period. See "The Company - Equity
Line."
The Shares may be offered from time to time by the Selling Stockholder
after the date of this Prospectus. The Company will not receive any proceeds
from the sale of the Shares by the Selling Stockholder but will receive the
proceeds upon the issuance of Shares, if any, to the Selling Stockholder
pursuant to the Equity Line and upon exercise of the warrants, although there
can be no assurance that any Shares will be issued under the Equity Line or
that any warrants will be exercised. See "Use of Proceeds." The Company will
pay all expenses in connection with the registration and sale of the Shares,
except that the Selling Stockholder will pay any commissions, discounts or
other fees payable to brokers and dealers in connection with any such sale.
The Company estimates that its expenses of this offering will be approximately
$________.
The Selling Stockholder has not advised the Company of any specific
plans for the distribution of the Shares other than as described herein, but it
is anticipated that the Shares will be sold from time to time primarily in
transactions (which may include block transactions) on The Nasdaq Stock Market
at the market price prevailing at the time of sale, although sales may also be
made in negotiated transactions or otherwise. There can be no assurances that
any of the Shares will be sold. See "Plan of Distribution."
The Selling Stockholder may be deemed to be an "Underwriter" as defined
in the Securities Act of 1933 (the "Securities Act"). If any broker-dealers
are used to effect sales, any commissions paid to such broker-dealers and, if
broker-dealers purchase any of the Shares as principals, any profits received
by such broker-dealers on the resale of the Shares, may be deemed to be
underwriting discounts or commissions under the Securities Act. In addition,
any profits realized by the Selling Stockholder may be deemed to be
underwriting commissions.
The Common Stock currently is traded on The Nasdaq National Market
under the symbol "IMMU." On January 16, 1998, the last sale price of the
Common Stock, as reported by The Nasdaq National Market, was $3.00 per share.
See "Risk Factors", which begins on page 6 of this Prospectus, for
certain information that should be considered by prospective investors.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is ______________, 1998
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any state in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such state.
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<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934 (the "Exchange Act") and, in accordance
therewith, files periodic reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed with the Commission may be inspected and
copied at the Public Reference Section of the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549, at the regional offices of the Commission located
at 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511 and at
Seven World Trade Center, Suite 1300, New York, New York 10048. Copies of such
material can be obtained from the Public Reference Section of the Commission at
prescribed rates by writing to the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549. In addition, copies of such reports, proxy statements,
and other information concerning the Company also may be inspected and copied
at the library of The Nasdaq Stock Market, 1735 K Street, N.W., Washington,
D.C. 20006. The Commission maintains an internet web site at
http://www.sec.gov which contains certain reports, proxy and information
statements and other information regarding registrants (including the Company)
that file electronically with the Commission.
This Prospectus constitutes a part of a Registration Statement (herein,
together with all amendments and exhibits, referred to as the "Registration
Statement") filed by the Company with the Commission under the Securities Act.
This Prospectus does not contain all of the information set forth in the
Registration Statement, certain parts of which are omitted in accordance with
the rules and regulations of the Commission. For further information with
respect to the Company and the Common Stock, reference is hereby made to the
Registration Statement. Statements contained herein concerning the provisions
of any document are not necessarily complete and, in each instance, reference
is made to the copy of such document filed as an exhibit to the Registration
Statement or otherwise filed with the Commission. Each such statement is
qualified in its entirety by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, which are on file with the Commission
(File No. 0-12104), are incorporated into this Prospectus by reference and are
made a part hereof:
(a) The Company's Annual Report on Form 10-K for its fiscal year
ended June 30, 1997;
(b) The Company's Quarterly Report on Form 10-Q for its fiscal
quarter ended September 30, 1997;
(c) The Company's Proxy Statement, dated October 7, 1997, with
respect to its 1997 annual meeting of stockholders; and
(d) The description of the Common Stock contained in Item 1 of
the Company's Registration Statement on Form 8-A, filed May 7, 1984.
All documents subsequently filed by the Company with the Commission
after the date of this Prospectus pursuant to Sections 13(a), 13(c), 14, and
15(d) of the Exchange Act, and prior to the filing of a post-effective
amendment to the Registration Statement which indicates that all securities
offered hereby have been sold or which de-registers all securities then
remaining unsold, shall be deemed to be incorporated by reference into the
Registration Statement and to be part hereof from the date of filing such
documents; provided, however, that the documents enumerated above or
subsequently filed by the Company pursuant to Sections 13(a), 13(c), 14 and
15(d) of the Exchange Act in each year during which the offering made by the
Registration Statement is in effect and prior to the filing with the Commission
of the Company's Annual Report on Form 10-K covering such year, shall not be
deemed to be incorporated by reference in the Registration Statement or be a
part hereof from and after the filing of such Annual Report on Form 10-K.
---02---
<PAGE>
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of the Registration Statement to the extent that a statement
contained herein, or in any other subsequently filed document that also is or
is deemed to be incorporated by reference herein, modifies or supersedes such
statement. Any statement contained in this Prospectus shall be deemed to be
modified or superseded to the extent that a statement contained in a
subsequently filed document, which is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any statement so
modified or superseded shall not be deemed, except as so modified or
superseded, to constitute a part of the Registration Statement.
The Company will provide without charge to each person who receives
this Prospectus, upon written or oral request of such person, a copy of any of
the information that is incorporated by reference herein (not including
exhibits to the information that is incorporated by reference unless the
exhibits themselves are specifically incorporated by reference). Such
information is available upon request from the Company, 300 American Road,
Morris Plains, New Jersey 07950, attention: Investor Relations, telephone
(973) 605-8200.
THE COMPANY
General
The Company is a biopharmaceutical company applying innovative
proprietary technology in antibody selection, modification and chemistry to the
development of products for the detection and treatment of cancers and
infectious diseases. Integral to these products are highly specific monoclonal
antibodies designed to deliver radioisotopes, chemotherapeutic agents or toxins
to tumors and sites of infection.
The Company is developing a line of in vivo imaging products for the
detection of various cancers and infectious diseases. On June 28, 1996, the
U.S. Food and Drug Administration ("FDA") licensed CEA-Scanr, the Company's
proprietary in vivo colorectal cancer imaging product, for marketing and sale
in the United States for use with other standard diagnostic modalities for the
detection of recurrent and/or metastatic colorectal cancer. On October 4,
1996, the Company was granted authorization by the European Commission (the
"EC") for the marketing and sale of CEA-Scan in the 15 countries comprising the
European Union (the "EU Countries") for the same indication as approved in the
United States. On September 16, 1997, the Company received a notice of
compliance from the Canadian Health Protection Branch permitting it to market
CEA-Scan in Canada for colorectal cancer for recurrent and metastatic
colorectal cancer. In addition, Phase III clinical trials of CEA-Scan for the
detection of lung cancer are continuing, and the Company is in discussion with
both the FDA and European regulatory authorities to evaluate Phase II clinical
trial data for the detection of breast cancer. However, no assurance can be
given as to if, or when, final regulatory approvals for any of these additional
indications for CEA-Scan may be forthcoming.
On February 14, 1997, the Company was granted authorization by the EC
for the marketing and sale of LeukoScanr, an in vivo infectious disease
diagnostic imaging product, in the EU Countries for the detection and diagnosis
of osteomyelitis (bone infection) in long bones and in diabetic foot ulcer
patients. On December 19, 1996, the Company filed a Biologics License
Application for LeukoScan with the FDA for the same indication approved by the
EC, plus an additional indication for the diagnosis of acute, atypical
appendicitis. The Company has also been pursuing the broadening of its
approval for LeukoScan in the EU Countries to include the acute, atypical
appendicitis indication. As with all regulatory filings, there can be no
assurance that such filings will be approved by the FDA or by the EC. Phase
III trials for infected prostheses are continuing, and the Company is examining
other applications for the product.
---03---
<PAGE>
The Company has developed and filed an Investigational New Drug
application for two other in vivo cancer imaging products: AFP-Scanr for the
detection and diagnosis of liver and germ cell cancers, currently in Phase II
clinical trials, and LymphoScanr for detection and diagnosis of non-Hodgkin's
lymphomas, currently in Phase III clinical trials.
The Company also is applying its expertise in antibody selection,
modification and chemistry to develop therapeutic products for cancer using
monoclonal antibodies labeled with radioisotopes or conjugated with drugs. The
Company has been conducting a multicenter Phase I/II clinical trial for
LymphoCide?, a non-Hodgkin's B-cell lymphoma therapeutic product. This trial
was designed to obtain knowledge about targeting and dosing with the murine
form of the monoclonal antibody. The Company is now advancing the humanized
form of LymphoCide into Phase I/II clinical trials and is discontinuing trials
with the murine form.
Equity Line
The Company and the Selling Stockholder entered into the
Structured Equity Line Flexible Financing Agreement (the "Equity Line"), dated
as of December 23, 1997 and a related Registration Rights Agreement (the
"Registration Rights Agreement"), dated as of December 23, 1997 whereby the
Company agreed to file under the Securities Act a registration statement (the
"Registration Statement") for the resale by the Selling Stockholder of shares
of Common Stock of which this Prospectus is a part. Pursuant to the terms of
the Equity Line, subject to the satisfaction of certain conditions, the Company
may require the Selling Stockholder to purchase shares of Common Stock over a
period of 36 months from the effective date of the Registration Statement, for
an aggregate purchase price of up to $30 million, and the Selling Stockholder,
at its option, may purchase Common Stock for an aggregate purchase price of up
to $12 million; provided, however, that the maximum amount purchased under the
Equity Line may not exceed $30 million. The Company may terminate the Equity
Line at any time without further obligation to the Selling Stockholder and the
Selling Stockholder may terminate the Equity Line without further obligation to
the Company if any change in law makes it impracticable or impossible for the
Selling Stockholder to fulfill its obligations under the Equity Line. Under
the terms of the Equity Line, during each three month period (each, an
"Investment Period") following the effective date of the Registration
Statement, the Company, subject to the satisfaction of certain conditions, can
require the Selling Stockholder to purchase shares of Common Stock for an
aggregate purchase price of between $1.0 million and $2.5 million and the
Selling Stockholder, at its option, may purchase additional shares of Common
Stock for an aggregate purchase price of $1.0 million, subject, in either case,
to the right of the Company to provide that no purchases shall be made in such
Investment Period. Prior to the beginning of each Investment Period, the
Company is required to notify the Selling Stockholder of the aggregate purchase
price of shares of Common Stock, if any, required to be purchased by the
Selling Stockholder during such Investment Period, provided that the Selling
Stockholder may select the dates on which the purchase of shares of Common
Stock from the Company shall occur. The purchase price per share to be paid by
the Selling Stockholder for the shares of Common Stock acquired under the
Equity Line will equal 98% of the lowest sales price of the Common Stock during
the three trading days immediately preceding the notice of purchase by the
Selling Stockholder.
The Selling Stockholder's obligation to purchase shares of
Common Stock under the Equity Line is subject to various conditions, including,
among other things: (i) effectiveness of the Registration Statement under the
Securities Act; (ii) the price of the Common Stock being at least $4.00 per
share or such other price as the Company may from time to time set as the
minimum purchase price; (iii) continued trading of the Common Stock on the
Nasdaq National Market; and (iv) the percentage of the Common Stock
beneficially owned by the Selling Stockholder and its affiliates being not more
than 4.9% of the then outstanding Common Stock. In addition, the Selling
Stockholder is not required to purchase, in any Investment Period, an amount in
excess of 8% of the product of the daily average value of open market trading
of the Common Stock and the number of trading days in the investment period
(the "8% Limit") during either the current or immediately preceding Investment
Period.
---04---
<PAGE>
In connection with entering into the Equity Line, the Selling
Stockholder received a four-year warrant (the "Warrant") to purchase 50,000
shares of the Common Stock at an exercise price equal to $7.5375 per share
(180% of the closing sales price of the Common Stock at the time of issuance).
In addition, the Company has agreed to issue to the Selling Stockholder, at the
end of each calendar year an additional four-year Warrant (each, an "Additional
Warrant" and collectively, the "Additional Warrants") to purchase Common Stock
in an amount equal to 5,000 shares for each $500,000 of Common Stock purchased
by the Selling Stockholder during such year, with an exercise price equal to
180% of the weighted average purchase price of the Common Stock purchased by
the Selling Stockholder during the year, provided that the number of shares
issuable upon exercise of all the Additional Warrants will not exceed 125,000.
The Company also has agreed to reimburse the Selling Stockholder for its legal
fees and expenses incurred in connection with entering into the Equity Line up
to a maximum of $25,000, and for its costs and expenses incurred in connection
with the performance of its due diligence activities up to a maximum of $40,000
initially and $6,000 quarterly thereafter.
Under the Equity Line and the related Registration Rights
Agreement, the Company agreed to file and maintain effectiveness (subject to
certain penalties for non-compliance which may be waived by the Selling
Stockholder) under the Securities Act a registration statement, of which this
Prospectus is a part, for the resale by the Selling Stockholder of the shares
of the Common Stock to be issued under the Equity Line and upon exercise of the
Warrant and the Additional Warrants.
Recent Developments
In March, 1995, the Company entered into a license agreement with
Mallinckrodt Medical B.V. pursuant to which Mallinckrodt Medical B.V. markets,
sells and distributes CEA-Scan throughout Western Europe and in specified
Eastern European countries, subject to receipt of regulatory approval in the
specified countries. In April, 1996, the Company entered into a marketing and
distribution agreement with Mallinckrodt Medical, Inc., pursuant to which
Mallinckrodt Medical, Inc., markets, sells and distributes CEA-Scan for use in
colorectal cancer diagnostic imaging in the U.S. on a consignment basis. The
Company has not been satisfied with the performance of Mallinckrodt Medical
B.V., or Mallinckrodt Medical, Inc. (collectively, the "Mallinckrodt
Affiliates") under the respective agreements. The Company is continuing
communications with the Mallinckrodt Affiliates in an effort to amicably
resolve the outstanding issues under the respective agreements with those
entities. If the outstanding issues cannot be so resolved to the Company's
satisfaction, it may decide to unilaterally terminate either or both of the
agreements. At the same time, against the possibility that such issues cannot
be totally or partially resolved, the Company is exploring potential
relationships with new distributors for CEA-Scan in the United States and
Europe. Working with its marketing consultant, the Company also has been
building an oncology sales and marketing force in the United States. On
November 28, 1997, the Company received an arbitration award of approximately
$1.8 million (including interest of approximately $300,000) from its dispute
with Pharmacia & Upjohn ("Pharmacia"). The dispute originated when Pharmacia
(then the Adria Laboratories Division of Erbamont, Inc., which later became
Pharmacia, Inc. and subsequently Pharmacia & Upjohn) terminated its 1991
Development and License Agreement with the Company (the "1991 Agreement") in
August 1995 and the parties thereafter were unable to agree upon the amount
owed to the Company as a result of such termination. Pursuant to the 1991
Agreement, the Company had granted Pharmacia an exclusive license to market
and sell CEA-Scan, AFP-Scan and LymphoScan products for certain specified
indications in the United States and Canada.
On November 28, 1997, the Company entered into a Distribution Agreement
with Eli Lilly Deutschland GmbH ("Lilly") pursuant to which Lilly will package
and distribute LeukoScan within the EU and certain other countries subject to
receipt of regulatory approvals. The Company will pay Lilly a service fee based
primarily on the number of units of product packaged and shipped. The parties
contemplate that other Company products may be handled under this arrangement
when appropriate.
---05---
<PAGE>
In November 1996, the Company filed an infringement action in The
Netherlands against Hoffmann-La Roche ("Roche") for infringement of the
Company's European patent covering specific anti-CEA antibodies, which Roche is
using in its CEA immunoassay. The patent also covers the antibody, which the
Company uses in its CEA-Scan imaging product. The Company is seeking an
injunction prohibiting sale of Roche's assay in The Netherlands and other
European Union countries in which the Company's European patent has been
issued. Roche has denied infringement and has filed nullity proceedings in The
Netherlands and in Germany, seeking to invalidate the Company's patents in
those countries. The Company has filed its Statement of Defense in the Dutch
and German nullity actions. Trial on the infringement action was held on
August 8, 1997 and resulted in a decision of noninfringement by the trial
panel. The Company believes that the judge misunderstood the scientific facts
of the case and filed an appeal in December 1997. However, there can be no
assurance that the Company will prevail in the appeal of the infringement suit
or that its patents will survive the nullity actions, although the Company
believes that Roche's infringement defense and nullity attacks are unlikely to
succeed. See "Risk Factors - Patents and Proprietary Rights."
Other Information
The Company was incorporated in Delaware in 1982. The Company's
principal offices are located at 300 American Road, Morris Plains, New Jersey
07950. The Company's telephone number is (973) 605-8200. The Company's
wholly-owned subsidiary, Immunomedics Europe, has offices located in Hillegom,
The Netherlands, to assist the Company in managing sales and marketing efforts
and coordinate clinical trials in Europe.
RISK FACTORS
In addition to the other information in this Prospectus, the following
factors should be considered carefully by potential purchasers in evaluating
the Company and its business before purchasing any shares of Common Stock
offered hereby. This Prospectus contains, in addition to historical
information, certain forward-looking statements that involve significant risks
and uncertainties. As a result, the Company's actual results could differ
materially from those expressed in or implied by the forward-looking statements
contained herein. Factors that could cause or contribute to such differences
include, but are not limited to, those discussed below, as well as those
discussed elsewhere in this Prospectus or incorporated herein by reference.
The Company undertakes no obligation to release publicly the result of any
revisions to these forward-looking statements that may be made to reflect
events or circumstances after the date of this Prospectus or to reflect the
occurrence of other unanticipated events.
Lack of Significant Product Revenues and History of Operating Losses.
Since its inception in 1982, the Company has been engaged primarily in the
research and development of proprietary products relating to the detection,
diagnosis and treatment of cancer and infectious diseases and has incurred
significant operating losses. While the Company has received approval to
market and sell CEA-Scan (in the United States, Canada and the EU Countries)
and LeukoScan (in the EU Countries) for certain indications, to date the
Company has generated only limited revenues from the sale of such products.
The Company has not achieved profitable operations and does not anticipate
achieving profitable operations during the fiscal year ending June 30, 1998.
At least until CEA-Scan and/or LeukoScan are successfully commercialized,
future revenues will be dependent in large part upon the Company entering into
new arrangements with collaborative partners and upon public and private
financings. The Company will continue to experience operating losses until
such time, if at all, that it is able to generate sufficient revenues from
sales of CEA-Scan, LeukoScan, and its other proposed in vivo products.
Further, the Company's working capital will continue to decrease until such
time, if at all, that the Company is able to generate positive cash flow from
operations or until such time, if at all, that the Company receives an
additional infusion of cash from the Equity Line or other sales of the
Company's securities, from other financings or from corporate alliances to
finance the Company's operating expenses and capital expenditures. See "Need
for Additional Capital."
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<PAGE>
Uncertainty of Product Development and Market Acceptance. With the
exception of CEA-Scan and LeukoScan, which have been licensed for certain
specific indications (as discussed above under "The Company - General"), the
Company's products are in various stages of development and face a high degree
of technological, regulatory and competitive risk. Although the Company
believes it has the expertise to develop and commercialize such products, any
or all of the Company's products may fail to be effective or may prove to have
undesirable and unintended side effects or other characteristics that may
prevent their development or regulatory approval, or limit their commercial
use. There can be no assurance that the Company will be permitted to undertake
human clinical trials for any of their development products not currently in
clinical trials or, if permitted, that such products (or any of the Company's
products currently in clinical trials) will be demonstrated to be safe and
effective. In addition, there can be no assurance that any of the Company's
products under development will obtain approval from the FDA or comparable
foreign authorities for any indication or that an approved product will be
capable of being produced in commercial quantities at reasonable costs and
successfully marketed. Products, if any, resulting from the Company's current
research and development programs are not expected to be commercially available
for several years. Even if such products become commercially available, there
can be no assurance that such products will be able to gain satisfactory market
acceptance.
Unpredictability of Preclinical and Clinical Trials. While the
Company has a number of products in various stages of preclinical testing and
clinical trials, there can be no assurance that the Company will be able to
successfully complete its ongoing clinical trials or commence the trials
currently planned. In addition, there can be no assurance that the Company
will meet its development schedule for any of its products in development. If
the Company were unable to commence clinical trials as planned, complete the
clinical trials currently underway or demonstrate the safety and efficacy of
its products, the Company's business, financial condition and results of
operations would be materially and adversely affected. There can be no
assurance that if a product from the Company's research and development
programs or any other diagnostic or therapeutic product is successfully
developed according to plans, it will be approved by the FDA or other
regulatory agencies on a timely basis or at all.
Before obtaining regulatory approvals for the commercial sale of any of
its products under development, the Company must demonstrate through
preclinical studies and clinical trials that the product is safe and
efficacious for use in the indication for which approval is sought. The results
from preclinical studies and early clinical trials may not be predictive of
results that will be obtained in later-stage testing and there can be no
assurance that the Company's future clinical trials will demonstrate the safety
and efficacy of any products or will result in approval to market products. A
number of companies in the biotechnology industry have suffered significant
setbacks in advanced clinical trials, even after promising results in earlier
trials. The rate of completion of the Company's clinical trials is dependent
upon, among other factors, the rate of patient enrollment. Patient enrollment
is a function of many factors, including the size of the patient population,
the nature of the protocol, the proximity of patients to clinical sites and the
eligibility criteria for the study. Delays in planned patient enrollment may
result in increased costs and delays, which would have a material adverse
effect on the Company.
Need for Additional Capital. At the present time, the Company believes
that its projected financial resources will be sufficient to fund anticipated
operating expenses and capital expenditures through the end of the current
fiscal year (June 30, 1998). However, the Company believes that it will
require additional financial resources by the end of calendar year 1998 in
order for it to continue its budgeted levels of research and development and
clinical trials of its proposed products and regulatory filings for new
indications of existing products. Without a significant infusion of capital,
the Company will be required to significantly reduce the amount of resources
devoted to marketing and sales, product development and clinical trials, which
would have a material adverse effect on the Company. While the Company has
obtained the Equity Line pursuant to which the Company can obligate the Selling
Stockholder to purchase up to $2.5 million in each Investment Period during the
term of the Equity Line (or $30 million in the aggregate), the Selling
Stockholder's obligations thereunder are subject to certain conditions,
including, among others, that (i) the Selling Stockholder is not required to
purchase shares in any such Investment Period in an amount in excess of the 8%
Limit (which, based upon the daily average value of open market trading during
calendar 1997, would have limited the maximum amount the Selling Stockholder
would have been required to purchase during 1997 to $9.6 million had the Equity
Line been in place during all of 1997) and (ii) purchases cannot begin until
the registration statement of which this Prospectus forms a part has been
declared effective (which the Company believes will result in proceeds
therefrom, if any, not being available until the second quarter of calendar
1998). As a result of these and other conditions, there can be no assurance
that the Company will receive any proceeds under the Equity Line or that if any
proceeds are received that they will be sufficient. See "The Company - Equity
Line." Furthermore, even if the Selling Stockholder purchases $2.5 million of
shares of Common Stock during each Investment Period, unless the Company
receives significant revenues from the sales of its products, which has not yet
occurred and of which there can be no assurance, the Company will be required
to seek additional financing in order for it to continue its budgeted levels of
research and development and clinical trials of its proposed products and
regulatory filings for new indications of existing products. However, there
can be no assurance that such additional financing will be available on terms
acceptable to the Company or at all.
---07---
<PAGE>
Stock Price Volatility; Shares Eligible for Future Sale. Pursuant to
the Equity Line, the Company may issue to the Selling Stockholder up to $2.5
million of Common Stock during each Investment Period (or $30 million in the
aggregate) at a price equal to 98% of the lowest reported sale price during the
three days immediately preceding the notice of purchase delivered by the
Selling Stockholder to the Company. In connection with the Equity Line, the
Company also issued to the Selling Stockholder the Warrant to purchase 50,000
shares of Common Stock at $7.5375 per share and may issue the Additional
Warrants to purchase up to an additional 125,000 shares of Common Stock at a
price equal to 180% of the weighted average purchase price of the Common Stock
purchased during the year with respect to which the Additional Warrant is
issued. See "The Company - Equity Line." The resale by the Selling
Stockholder of the Common Stock that it acquires could depress the market price
of the Common Stock. Moreover, as all the shares to be issued pursuant to the
Equity Line as well as the shares issuable upon exercise of the Warrant and the
Additional Warrants will be available for immediate resale, the prospects of
such sales could further adversely affect the market price for the Common
Stock.
In addition, as of December 31, 1997, the Company had an
aggregate of 36,364,502 shares of Common Stock issued and outstanding, of which
27,972,952 shares were held by non-affiliates and are freely tradeable in the
public market without restriction under the Securities Act. The remaining
8,391,550 shares are held by affiliates of the Company and are considered
"restricted securities" subject to the resale limitations of Rule 144 under the
Securities Act. The prospect of the ability to publicly resell the shares of
Common Stock not currently trading in the public market may adversely affect
the prevailing market prices for the Common Stock.
Limited Marketing Capability. While the Company's marketing strategy
initially consisted of forming corporate alliances with pharmaceutical
companies for the sale and distribution of its proposed products, whereby the
partner's established marketing, sales and distribution networks would minimize
the Company's need to expend funds to develop these areas of expertise, the
Company now believes that development of a sales force, complementary to those
of its partners, will be necessary to increase the likelihood of maximizing
market penetration for its products. The Company has only recently established
a sales and marketing organization, including the addition of a specialized
sales force in the U.S. and Europe, and there can be no assurance that the
Company can successfully maintain and continue to build such sales force. See
"Government Regulation."
---08---
<PAGE>
While the Company has entered into exclusive arrangements with
the Mallinckrodt Affiliates for the sale and distribution of CEA-Scan in the
United States and Europe, the Company has not been satisfied with the
performance of the Mallinckrodt Affiliates thereunder. See "The
Company - Recent Developments." While the Company is exploring potential
relationships with new distributors for CEA-Scan in the event the agreements
with the Mallinckrodt Affiliates are terminated, there can be no assurance that
the Company will be able to negotiate a satisfactory transition arrangement
with the Mallinckrodt Affiliates or that it will be successful in entering into
a marketing arrangement with another distributor on terms acceptable to the
Company, if at all, or that such an arrangement if entered into will be
successful. See "Government Regulation."
The Company's commercial sale of its proposed products and its
future product development, may be dependent upon entering into arrangements
with corporate partners for the development, marketing, distribution and/or
manufacturing of products utilizing the Company's proprietary technology and
there can be no assurance that they Company will be successful in forming such
relationships.
Dependence on Third Parties for Distribution of Products. The Company
currently does not have the resources to internally develop and maintain the
operating procedures required by the FDA and comparable foreign regulatory
authorities to oversee distribution of its products. See "Government
Regulation." As a result, the Company must use third parties for such function
for the foreseeable future. In the event that the agreements with the
Mallinckrodt Affiliates are terminated, the Company will be required to enter
into arrangements with other approved third parties in order to be able to
distribute its products. See "Business - Recent Developments." A failure to
have a distribution arrangement in place with a FDA-approved distributor prior
to termination of an existing arrangement would have a material adverse effect
on the Company.
Limited Manufacturing Capability. To date, the Company has
manufactured all materials used in its clinical trial programs and currently
manufactures CEA-Scan and LeukoScan, and believes that, for the foreseeable
future, it should be able to manufacture sufficient quantities of CEA-Scan and
LeukoScan. However, in the event that other Company products are approved for
marketing and sale, there can be no assurance that the Company will continue to
have the capacity and expertise to manufacture commercial quantities of
multiple products successfully or within acceptable profit margins. In
addition, the Company relies on the Mallinckrodt Affiliates for product
labelling and product inserts, which currently are considered by the FDA and
certain foreign regulatory authorities to be part of the manufacturing process.
While the Company believes that these services could be replaced, no assurance
can be given that such services could be obtained or that new manufacturers
could be qualified without significant cost or delay. The Company also relies
on a single third party to perform certain end-stage portions of the
manufacturing process. While the Company has qualified a second entity in the
event a second end-stage manufacturer is required, there can be no assurance
that the Company will be able to negotiate an agreement with such entity on
terms acceptable to the Company, if at all. See "Government Regulation."
Approval of Manufacturing Facilities. While the validation and
inspection of the Company's new manufacturing facility has been substantially
completed, there can be no assurance at this time that the regulatory
authorities will approve this facility in a timely manner to meet the
manufacturing needs of the Company (although the Company has sufficient levels
of inventory to meet its needs for the foreseeable future). Failure to receive
timely approval could have a material adverse effect on the Company.
Dependence on Ascites. The Company's proposed monoclonal imaging
antibody products are currently derived from ascites fluid produced in mice,
and the Company has entered into an agreement with a third-party supplier for
the production of ascites fluid. Although CEA-Scan has been approved in the
U.S., Canada and Europe, and LeukoScan has been approved in Europe, regulatory
authorities, particularly in Europe, have expressed concerns about the use of
ascites for the production of monoclonal antibodies. While the Company
believes that its current quality control procedures help ensure the purity of
the ascites used in its products, there can be no assurance that the regulatory
authorities will agree that these procedures will be adequate for future
products. While the Company's effort to convert to cell culture production for
certain monoclonal antibodies is progressing, products manufactured by cell
culture processes will require regulatory approval for this substantial change
in production, and will require additional manufacturing equipment and
resources for this effort. See "Need for Additional Capital."
---09---
<PAGE>
Dependence on The Center for Molecular Medicine and Immunology. The
Company's product development has involved, to varying degrees, The Center for
Molecular Medicine and Immunology (also know as the Garden State Cancer Center
("CMMI"), a not-for-profit cancer research center. CMMI performs pilot and
pre-clinical trials in product areas of importance to the Company. In
addition, CMMI conducts basic research and patient evaluations in a number of
areas of potential interest to the Company, the results of which are made
available to the Company pursuant to a collaborative research and license
agreement. There can be no assurance that CMMI will be successful in its
research activities or that it will develop any potential products which can be
licensed by the Company. If CMMI were no longer to conduct such research and
patient evaluations, the Company would have to make arrangements with third
parties for the performance of this aspect of its clinical research, which may
prolong and increase expenses associated with pre-clinical and initial clinical
trial efforts.
Potential Conflicts of Interest. Dr. David M. Goldenberg, Chairman of
the Board and Chief Executive Officer of the Company, is the founder, President
and a member of the Board of Trustees of CMMI. Dr. Goldenberg devotes a
significant amount of his time to CMMI. In addition, other key personnel
currently have responsibilities both to the Company and CMMI. While certain
procedural safeguards and mechanism are in place with respect to the allocation
of research projects and licensing of proprietary rights between the Company
and CMMI, due to Dr. Goldenberg's positions with both entities, the potential
for conflicts of interest exists.
Government Regulation. The Company's proposed products will require
governmental approval before they may be manufactured, marketed and sold. In
articular, human diagnostic and therapeutic products are subject, prior to
marketing, to rigorous pre-clinical and clinical testing for approval by the
FDA. The regulatory approval process is costly and time-consuming, and there
can be no assurance that the required approvals will be obtained. Even if
regulatory approval for a product is granted, such approval may entail
limitations on the indicated uses for which the product may be marketed.
Further, even if such regulatory approval is obtained, the FDA will require
post-marketing reporting and may require surveillance programs to monitor the
usage or side effects of each drug product. A marketed product, its
manufacturer and its manufacturing facilities are subject to continual review
and periodic inspections and certain changes to the product, the manufacturer
or the manufacturing process may require approval of the FDA, which may entail
substantial delay and expense. See "Limited Marketing Capability" and "Limited
Manufacturing Capability." In addition, later discovery of previously unknown
problems with a product, manufacturer or facility, or failure to comply with
applicable requirements may result in restrictions on such product or
manufacturer, potentially including demands that production and shipment cease,
and, in some cases, that products be recalled, or to enforcement actions that
can include seizures, injunctions and criminal prosecution. Such failures, or
new information reflecting on the safety and effectiveness of the drug that
comes to light after approval, can also lead to FDA withdrawal of approval to
market the product. Further, the FDA requires that any entity responsible for
distribution of drug products maintain detailed operating procedures in
accordance with FDA standards which would enable the distributor to, among
things, track the location of a product in the event a product recall were
necessary. Similar regulatory requirements exists in most foreign countries
(including the EU Countries) and, to a lesser extent, at the state level in the
United States.
Health Care Reform. The Company's ability to commercialize its
products successfully may also depend in part on the extent to which
reimbursement for the cost of such products and related treatment will be
available from government health administration authorities, private health
insurers and other organizations. Such third-party payers are increasingly
challenging the price of medical products and services. Several proposals have
been made that may lead to a government-directed national health care system.
Adoption of such a system could further limit reimbursement for medical
products, and there can be no assurance that adequate third-party coverage will
be available to enable the Company to maintain price levels sufficient to
realize an appropriate return on this investment in product development. In
addition, there can be no assurance that the U.S. government will not implement
a system of price controls. Any such system might adversely affect the ability
of the Company to market its products profitably.
---10---
<PAGE>
Dependence on Key Personnel. The success of the Company is highly
dependent upon the continued availability of the services of Dr. Goldenberg,
both to the Company and to CMMI, the loss of which could have a materially
adverse effect on the Company. Dr. Goldenberg is employed pursuant to an
Employment Agreement which expires November 1, 1998, subject to extension for
successive one-year periods. The Company maintains a key-man life insurance
policy in the amount of $4,000,000 on the life of Dr. Goldenberg for the
benefit of the Company. The Company is also dependent on the continued
services of a limited number of executives and scientists. The loss of these
individuals could also have a material adverse effect on the Company. In
addition, the Company has an ongoing need to expand its management personnel
and support staff. Competition for qualified personnel in the biotechnology
and pharmaceutical industries is intense and there can be no assurance that the
Company will be successful in its recruitment efforts.
Technological Change and Competition. The biotechnology industry is
highly competitive, particularly in the area of cancer diagnostic and
therapeutic products. The Company is likely to encounter significant
competition with respect to its existing and proposed products currently under
development. A number of companies which are engaged in the biotechnology
field, and in particular the development of cancer diagnostic and therapeutic
products, have financial, technical and marketing resources significantly
greater than those of the Company. Some companies with established positions
in the pharmaceutical industry may be better equipped than the Company to
develop, refine and market products based on technologies applied to the
diagnosis and treatment of cancers and infectious diseases. The Company's
ability to compete in the future will depend, in part, on its ability to foster
an environment in which multi-disciplinary teams work together to develop
low-cost, well-defined processes and bring cost-beneficial products
successfully through clinical testing and regulatory approval. A significant
amount of research and antibody-based technology are also carried out at
universities and other non-profit research organizations, which are becoming
increasingly aware of the commercial value of their findings and are becoming
more active in seeking patent and other proprietary rights, as well as
licensing revenues. The Company is pursuing an area of product development in
which there is the potential for extensive technological innovation in
relatively short periods of time. The Company's competitors may succeed in
developing products that are safer or more effective than those of the
Company's potential products. Rapid technological change or developments by
others may result in the Company's present products and potential products
becoming obsolete or non-competitive. However, the Company believes that the
technological attributes of its proposed diagnostic products, including the
ease of use (e.g., single vial, rapid imaging), employment of technetium-99m
(the most widely available radioisotope) and its use of an antibody fragment
(better liver imaging, decreased HAMA response) will enable the Company to
compete effectively in the marketplace.
Patents and Proprietary Rights. The commercial success of the Company
is highly dependent upon patents and other proprietary rights owned or licensed
by the Company. While the Company actively seeks patent protection both in the
United States and abroad for its proprietary technology, there can be no
assurance that the Company's key patents will not be invalidated or will
provide protection that has commercial significance. Litigation may be
necessary to protect the Company's patent positions, which could be costly and
time consuming. The invalidation of key patents owned by or licensed to the
Company could have a material adverse effect on the Company and its business
prospects. Because of differences in patent laws, the extent of protection
provided by United States patents may differ from that of their foreign
counterparts. While the Company believes that the protection of patents is
important to its business, the Company also relies on trade secrets, unpatented
know-how and continuing technological advancement to establish and maintain its
competitive position. There can be no assurance that others may not
independently develop similar trade secrets or know-how or obtain access to the
Company's trade secrets, know-how or proprietary technology. In addition to
the Company, other private and public entities, including universities, have
filed applications for or have been issued patents and obtained other
proprietary rights to technology potentially useful to the Company. The scope
and validity of such patents, the extent to which the Company may be required
to seek a license under such patents or other proprietary rights, and the cost
or availability of such licenses are currently unknown. See "The
Company - Recent Developments."
---11---
<PAGE>
Control by Current Stockholder. As of December 31, 1997, Dr.
Goldenberg had voting discretion over an aggregate of 13,216,007 shares
(including those shares over which he is entitled to exercise voting discretion
by powers of attorney or proxy granting to him by his children and his former
wife) or approximately 36.4% of the currently outstanding Common Stock. As a
result of such holdings, Dr. Goldenberg may have the ability to determine the
election of all of the Company's director's, direct policies and control the
outcome of substantially all matters which may be put to a vote of the
Company's stockholders.
Product Liability. The clinical testing, marketing and manufacturing
of the Company's proposed products necessarily involves the risk of product
liability. While the Company currently has liability insurance at acceptable
rates, there is no assurance that such insurance will continue to be obtainable
in the future at an acceptable cost, if at all. In the event that the Company
does not or cannot maintain its existing or comparable liability insurance, the
Company's ability to test clinically and market its products may be
significantly impaired. Moreover, the amount and scope of any insurance
coverage or indemnification arrangements with any distributor or other third
party upon which the Company relies may be inadequate to protect the Company in
the event of a successful product liability claim.
Effect of Certain Anti-Takeover Provisions. The Company's Board of
Directors has the authority, without any further vote by the Company's
stockholders, to issue up to 10,000,000 shares of Preferred Stock in one or
more series and to determine the designations, powers, preferences and
relative, participating, optional or other rights thereof, including without
limitation, the dividend rate (and whether dividends are cumulative),
conversion rights, voting rights, rights and terms of redemption, redemption
price and liquidation preference. Issuance of Preferred Stock could have the
effect of delaying, deterring or preventing a change in control of the Company,
including the imposition of various procedural and other requirements that
could make it more difficult for holders of Common Stock to effect certain
corporate actions, including the ability to replace incumbent directors and to
accomplish transactions opposed by the incumbent Board of Directors. The
rights of the holders of Common Stock would be subject to, and may be adversely
affected by, the rights of the holders of any Preferred Stock that may be
issued in the future.
Lack of Dividends. The Company has not paid any cash dividends to date
on its Common Stock. It is the current policy of the Board of Directors of the
Company, in view of the Company's contemplated financial requirements, to
retain earnings, if any, to provide funds for the operation and expansion of
the Company's business. Therefore, the Board of Directors does not expect to
declare cash dividends on its Common Stock in the foreseeable future.
USE OF PROCEEDS
The Company will not receive any of the proceeds from the
resale by the Selling Stockholder of the Shares offered by this Prospectus but
will receive proceeds from the original issuance of the Shares to the Selling
Stockholder under the Equity Line and upon exercise of the Warrant and
Additional Warrants, if any. The Company could receive, before expenses, up to
$30 million under the Equity Line and up to $376,875 upon exercise of the
Warrant. In addition, the Selling Stockholder may receive Additional Warrants
to purchase up to 125,000 shares of Common Stock. The amount of gross proceeds
received will depend on the exercise price of the Additional Warrants, which is
specified in the Equity Line as 180% of the weighted average purchase price of
the Common Stock purchased during the year with respect to which an Additional
Warrant is issued. The actual amount of proceeds from the Equity Line, the
Warrant and the Additional Warrants, if any, will depend upon the market price
of the Common Stock, whether the Selling Stockholder elects to exercise the
Warrant and the Additional Warrants, if any, whether the Selling Stockholder
elects to purchase Common Stock as permitted under the terms of the Equity
Line, and whether the Company elects to require the Selling Stockholder to
purchase Common Stock as permitted under the terms of the Equity Line.
However, there can be no assurance that the Company will issue any Shares or
receive any proceeds from the Equity Line and, under the terms of the Equity
Line, it is possible that no Shares will be issued. For a description of the
terms of the Equity Line, the Warrant and the Additional Warrants, see "The
Company - Equity Line."
---12---
<PAGE>
The Company expects that any net proceeds from the Equity Line,
the Warrant and the Additional Warrants will be used for general corporate
purposes, including research and development, marketing, sales, and clinical
and regulatory activities.
SELLING STOCKHOLDER
The Selling Stockholder, Cripple Creek Securities, LLC, has not
had a material relationship with the Company within the past three years, other
than as a result of entering into the Equity Line and related agreements. See
"The Company - Equity Line." However, one of the Selling Stockholder's
members, The Palladin Group, L.P., is or was an investment manager for several
entities which, since January 1995 had purchased an aggregate of $20 million of
the Company's convertible preferred stock. As of the date hereof, none of such
entities owns any shares of Common Stock or any shares of the Company's
convertible preferred stock. The Palladine Group, L.P. also may act as a
broker on behalf of the Selling Stockholder in connection with this offering.
As of the date hereof, the Selling Stockholder does not own any
shares of the Common Stock, other than the Shares which it has the right to
acquire upon exercise of the Warrant and is offering hereby all of the shares
of Common Stock it may acquire pursuant to the Equity Line, the Warrant and the
Additional Warrants.
PLAN OF DISTRIBUTION
The Selling Stockholder, acting as principal for its own
account, directly, through agents designated from time to time, or through
brokers, dealers, agents or underwriters also to be designated, may sell all or
a portion of the Shares from time to time on terms to be determined at the time
of sale. The Selling Stockholder may from time to time sell all or a portion
of the Shares in routine brokerage transactions on the Nasdaq Stock Market or
otherwise at the prices and terms prevailing at the time of the sale. The
Selling Stockholder also may make private resales directly or through brokers
or may make resales pursuant to Rule 144 under the Securities Act. The Selling
Stockholder may pay customary brokerage fees, commissions and expenses.
To the extent required pursuant to Rule 424 under the
Securities Act, a Prospectus Supplement will be filed with the Securities and
Exchange Commission with respect to a particular offering setting forth the
terms of any offering, including the name or names of any underwriters or
agents, if any, any underwriting discounts and other items constituting
underwriters' compensation, the offering price and any discounts or
concessions allowed or reallowed or paid to dealers. Any offering price and
any discounts or concessions allowed or reallowed or paid to dealers may be
changed from time to time.
If underwriters are used in a sale, shares of Common Stock will
be acquired by the underwriters for their own account and may be resold from
time to time in one or more transactions, including negotiated transactions, at
a fixed public offering price or at varying prices determined at the time of
sale. The shares may be offered to the public either through underwriting
syndicates represented by one or more managing underwriters or directly by one
or more firms acting as underwriters. The underwriter or underwriters with
respect to a particular underwritten offering of shares to be named in the
Prospectus Supplement relating to such offering and, if an underwriting
syndicate is used, the managing underwriter or underwriters, will be set forth
on the cover of such Prospectus Supplement. Unless otherwise set forth in the
Prospectus Supplement relating thereto, the obligations of the underwriters to
purchase the Shares will be subject to conditions precedent and the
underwriters will be obligated to purchase all of the shares if any are
purchased.
---13---
<PAGE>
If dealers are utilized in the sale of shares of Common Stock
in respect of which this Prospectus is delivered, the Selling Stockholder will
sell such shares to the dealers as principals. The dealers may then resell
such shares to the public at varying prices to be determined by such dealers at
the time of resale. The names of the dealers and the terms of the transaction
will be set forth in a Prospectus Supplement relating thereto.
If an agent is used, the agent will be named, and the terms of
the agency and any commissions will be set forth in a Prospectus Supplement
relating thereto. Unless otherwise indicated in the Prospectus Supplement, any
such agent will be acting on a best efforts basis for the period of its
appointment.
Shares may be sold directly by the Selling Stockholder to
institutional investors or others, who may be deemed to be underwriters within
the meaning of the Securities Act with respect to any resale thereof. The
terms of any such sales, including the terms of any bidding or auction process,
will be described in the Prospectus Supplement relating thereto.
Agents, dealers and underwriters may be entitled under
agreements entered into with the Selling Stockholder to indemnification against
certain civil liabilities, including liabilities under the Securities Act, or
to contribution with respect to payments which such agents, dealers or
underwriters may be required to make in respect thereof. Agents, dealers and
underwriters may be customers of, engage in transactions with, or perform
services for the Company or the Selling Stockholder in the ordinary course of
business.
The Company will bear all costs and expenses of the
registration of the Shares under the Securities Act and certain state
securities laws. The Selling Stockholder will pay any transaction costs
associated with effecting
any sales that occur.
The Selling Stockholder is not restricted as to the price or
prices at which it may resell Shares acquired pursuant to the Equity Line or
upon the exercise of the Warrant or the Additional Warrants. Such resales may
have an adverse effect on the market price of the Common Stock. Moreover, the
Selling Stockholder is not restricted as to the number of Shares that may be
sold at any one time, and it is possible that a significant number of Shares
could be sold at the same time, which also may have an adverse effect on the
market price of the Common Stock.
The Company has agreed to indemnify the Selling Stockholder
against certain civil liabilities, including liabilities under the Securities
Act.
LEGAL MATTERS
Certain legal matters with respect to the validity of the Common Stock
offered hereby have been passed upon for the Company by Warshaw Burstein Cohen
Schlesinger & Kuh, LLP. As of the date of this Prospectus, certain partners of
such firm beneficially owned shares of Common Stock.
EXPERTS
The consolidated financial statements of the Company as of June 30,
1997 and 1996 and for each of the years in the three-year period ended June 30,
1997 have been incorporated by reference herein and in the registration
statement in reliance upon the report of KPMG Peat Marwick LLP, independent
certified public accountants, and upon the authority of said firm as experts in
accounting and auditing.
---14---
<PAGE>
No person is authorized in connection with any offering made hereby to give any
information or to make any representation not contained in this prospectus,
and, if given or made, such information or representation must not be relied
upon as having been authorized by the company. This prospectus does not
constitute an offer to sell or a solicitation of an offer to buy any security
other than the common stock offered hereby, nor does it constitute an offer to
sell or a solicitation of an offer to buy any of the securities offered hereby
to any person in any jurisdiction in which it is unlawful to make such an offer
or solicitation. Neither the delivery of this prospectus nor any sale made
hereunder shall under any circumstances create any implication that the
information contained herein is correct as of any date subsequent to the date
hereof.
TABLE OF CONTENTS
Page
Available Information 2
Incorporation of Certain
Documents by Reference 2
The Company 3
Risk Factors 6
Use of Proceeds 12
Selling Stockholder 12
Plan of Distribution 13
Legal Matters 14
Experts 14
7,447,000 Shares
IMMUNOMEDICS, INC.
Common Stock
___________________
PROSPECTUS
___________________
____________, 1998
---15---
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following is an itemized statement of the estimated amounts of all
expenses payable by the Company in connection with the registration of the
Shares:
SEC registration fee $6,659
Legal fees and expenses *
Accounting fees and expenses *
Miscellaneous expenses *
____________________________ _______
Total *
* To be supplied by amendment.
Item 15. Indemnification of Directors and Officers.
The Delaware General Corporation Law provides, in substance,
that Delaware corporations shall have the power, under specified circumstances,
to indemnify their directors, officers, employees and agents in connection with
actions or suits by or in the right of the corporation, by reason of the fact
that they were or are such directors, officers, employees and agents, against
expenses (including attorneys' fees) and, in the case of actions, suits or
proceedings brought by third parties, against judgment, fines and amounts paid
in settlement actually and reasonably incurred in any such action, suit or
proceeding.
The Company's Certificate of Incorporation provides that a
director shall not be personally liable to the Company or its stockholders for
monetary damages for breach of fiduciary duty as a director except for
liability (i) for breach of the director's duty of loyalty to the Company or
its stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under Section 174
of the Delaware General Corporation Law, or (iv) for any transaction from which
the director derived an improper personal benefit. The Company's Bylaws also
provide that the Company may indemnify its directors, officers and legal
representatives to the fullest extent permitted by Delaware law against all
awards and expenses (including attorneys' fees).
Item 16. Exhibits.
Exhibit No. Description
4.1 - Structured Equity Line Flexible Financing Agreement, dated as
of December 23, 1997, between the Company and Cripple Creek Securities, LLC.
4.2 - Registration Rights Agreement, dated as of December 23, 1997,
between the Company and Cripple Creek Securities, LLC.
---II-1---
<PAGE>
4.3 - Common Stock Purchase Warrant issued to Cripple Creek
Securities, LLC.
4.4 - Form of additional Common Stock Purchase Warrant issuable to
Cripple Creek Securities, LLC.
5 - Opinion of Warshaw Burstein Cohen Schlesinger & Kuh, LLP.
23.1 - Consent of KPMG Peat Marwick LLP.
23.2 - Consent of Warshaw Burstein Cohen Schlesinger & Kuh, LLP
(included in their opinion filed as Exhibit 5).
24 - Power of Attorney (included on page II-4).
Item 17. Undertakings.
The Company hereby undertakes that, for purposes of determining any
liability under the Securities Act of 1933, each filing of the Company'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.
The Company undertakes that it will:
(1) File, during any period in which it offers or sells
securities, a post-effective amendment to this registration statement
to:
(i) Include any prospectus required by section
10(a)(3) of the Securities Act;
(ii) Reflect in the prospectus any facts or events
which, individually or together, represent a fundamental
change in the information 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.
(iii) Include any additional or changed material
information on the plan of distribution.
provided, however, that the Company does not need to give the
statements in paragraph (a)(1)(i) and (a)(1)(ii) if the
information required in a post-effective amendment is
incorporated by reference from periodic reports filed by the
Company under the Exchange Act.
---II-2---
<PAGE>
(2) For determining liability under the Securities Act, treat
each post-effective amendment as a new registration statement of the
securities offered, and the offering of the securities at that time to
be the initial bona fide offering.
(3) File a post-effective amendment to remove from registration
any of the securities that remain unsold at the end of the offering.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the "Act") may be permitted to directors, officers and controlling
persons of the Company pursuant to the foregoing provisions, or otherwise, the
Company has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the Company of expenses incurred or paid by a
director, officer or controlling person of the Company 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 Company 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.
---II-3---
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe 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 Morris Plains, State of New Jersey, on January 19,
1998.
IMMUNOMEDICS, INC.
By: /s/ David M. Goldenberg
David M. Goldenberg
Chairman, Chief Executive Officer
and Director
(Principal Executive Officer)
Each person whose signature appears below constitutes and appoints
David M. Goldenberg and Kevin Brophy and each of them, his or her true and
lawful attorney-in-fact, with full power of substitution and resubstitution,
for him or her and in his or her name, place and stead, in any and all
capacities to sign any and all amendments, including post-effective amendments,
to this Registration Statement, and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission under the Securities Act of 1933, hereby ratifying and
confirming all that said attorneys-in-fact or substitutes, may lawfully do or
cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
Dated:
January 19, 1998 /s/ David M. Goldenberg
David M. Goldenberg, Chairman, Chief
Executive Officer and Director
(Principal Executive, Financial and
Accounting Officer)
January 19, 1998 /s/ W. Robert Friedman, Jr.
W. Robert Friedman, Jr., Director
January 19, 1998 /s/ Marvin E. Jaffe
Marvin E. Jaffe, Director
January 19, 1998 /s/ Richard R. Pivirotto
Richard R. Pivirotto, Director
January 19, 1998 /s/ Warren W. Rosenthal
Warren W. Rosenthal, Director
January 19, 1998 /s/ Richard C. Williams
Richard C. Williams, Director
January 19, 1998 /s/ Kevin Brophy
Kevin Brophy, Vice President, Finance
and Administration and Chief Financial
Officer (Principal Financial and
Accounting Officer)
---II-4---
<PAGE>
EXHIBIT 4.1
STRUCTURED EQUITY LINE FLEXIBLE FINANCING(SM) AGREEMENT dated
as of December 23, 1997 (the "Agreement"), between Cripple Creek
Securities, L.L.C. (the "Investor"), a limited liability company
organized and existing under the laws of the State of Delaware,
and Immunomedics, Inc., a corporation organized and existing under
the laws of the State of Delaware (the "Company").
W I T N E S S E T H :
WHEREAS, the parties desire that, upon the terms and subject
to the conditions contained herein, the Company shall issue to the
Investor, and the Investor shall purchase from the Company, from
time to time as provided herein, shares of the Company's Common
Stock, par value $0.01 per share (the "Common Stock"), for a
maximum aggregate Purchase Price of $30,000,000 (the "Maximum
Offering Amount"); and
WHEREAS, such investments will be made in reliance upon the
provisions of Section 4(2) promulgated by the Securities and
Exchange Commission ("SEC") under the United States Securities Act
of 1933, as amended (the "Securities Act"), and/or upon such other
exemption from the registration requirements of the Securities Act
as may be available with respect to any or all of the investments
in Common Stock to be made hereunder.
NOW, THEREFORE, the parties hereto agree as follows:
I.
CERTAIN DEFINITIONS
1.1 Defined Terms. As used in this Agreement (including
the recitals above), the following terms shall have the following
meanings specified or indicated (such meanings to be equally
applicable to both the singular and plural forms of the terms
defined):
"Additional Investment Amount" shall have the meaning set
forth in Section 2.1(b)(ii) hereof.
"Additional Purchase Date" shall mean, with respect to any
Investment Period for which the Company has delivered an
Additional Purchase Notice to the Investor, any Trading Day during
such Investment Period on which the Investor notifies the Company
by delivery of an Investor Notice of the Investor's election to
purchase all or a portion of the Additional Investment Amount in
respect of such Investment Period.
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<PAGE>
"Additional Purchase Notice" shall have the meaning set forth
in Section 2.1(b)(ii) hereof.
"Additional Warrant" shall have the meaning set forth in
Section 2.7(b) hereof.
"Additional Warrant Registration Statement" shall have the
meaning set forth in Section 3.2(a) hereof.
"Additional Warrant Share Amount" shall have the meaning set
forth in Section 2.7(b) hereof.
"Adverse Event" shall mean, as of the specified date, any of
the following events or circumstances which exist and either have
not been cured by such date in accordance with this Agreement or
waived by the Investor in writing: (i) one or more events
described in Section 2.6 occurs; (ii) a dispute arises between the
Investor and the Company pursuant to Section 3.3; and (iii) a
condition set forth in Article III is required to be satisfied and
is not satisfied.
"Affiliate" shall have the meaning ascribed to it in the
Securities Act.
"Balance Sheet" shall mean the unaudited consolidated balance
sheet of the Company as of September 30, 1997.
"Balance Sheet Date" shall mean September 30, 1997.
"Bankruptcy Code" shall mean title 11 of the United States
Code, as amended.
"Benefit Plan" shall have the meaning set forth in Section
5.12 hereof.
"Blue Sky Laws" shall mean the United States state securities
and takeover laws.
"Cancellation Notice" shall mean a notice delivered by the
Company in its sole and absolute discretion to the Investor with
respect to an Investment Period notifying the Investor that the
Company shall not sell and the Investor shall not purchase Common
Stock represented by the Minimum Investment Amount and the
Additional Investment Amount for such Investment Period.
"Capital Stock" shall mean any and all shares, interests,
participations or other equivalents (however designated) of
corporate stock or any and all equivalent ownership interests in a
Person (other than a corporation).
---2---
<PAGE>
"Closing" shall mean the consummation of each purchase and
sale of Common Stock pursuant to Section 2.1 hereof.
"Closing Date" shall mean, with respect to each purchase and
sale of Common Stock, subject to the conditions contained herein,
the second Trading Day following the date of receipt of the
Investor's notice to the Company of its election to purchase
Common Stock from the Company (as extended pursuant to this
Agreement).
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
"Commitment Period" shall mean the period commencing on the
date that the first Investment Period begins and expiring on the
earliest to occur of (a) the election by the Company or the
Investor to terminate the Investor's obligation to purchase Common
Stock pursuant to Section 10.4 herein, (b) the date on which the
Investor shall have made one or more purchases of Common Stock
pursuant to this Agreement in an aggregate Purchase Price of
$30,000,000 or such lesser maximum purchase amount as determined
pursuant to Section 2.2(a), (c) the date this Agreement is
terminated pursuant to Section 2.6, and (d) the date occurring
thirty-six (36) months (subject to extension as provided by
Section 2.2(b)) from the date of commencement of such period;
provided, however, that the Company and the Investor may agree in
writing to extend the Commitment Period to such other date as they
may agree.
"Common Stock" shall have the meaning set forth in the
recitals above.
"Company Assets" shall have the meaning set forth in Section
5.16 hereof.
"Condition Satisfaction Date" shall have the meaning set
forth in Section 3.2 hereof.
"Effective Date" shall mean December 23, 1997, or such later
date as the Company shall have (i) delivered fully executed
versions of the Warrant, the opinion(s) of counsel and the
Registration Rights Agreement, and any other documents required to
be delivered pursuant to the terms of this Agreement, and
(ii) agreed by such date to the final form of Exhibits to this
Agreement.
"8% Limit" shall have the meaning specified in Section 2.2(a)
hereof.
"Environmental Laws" shall mean all federal, state, local and
foreign laws and regulations relating to pollution or the
environment (including, without limitation, ambient air, surface
---3---
<PAGE>
water, ground water, land surface or subsurface strata),
including, without limitation, laws and regulations relating to
emissions, discharges, releases or threatened releases of
Materials of Environmental Concern, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Materials of Environmental
Concern.
"Equity Offering" shall mean the issuance or sale by the
Company, (a) in a registered public offering or (b) in a
transaction exempt from or not subject to the registration
requirements of the Securities Act, of any shares of Common Stock
or securities which are convertible into or exchangeable for the
Company's Common Stock or any warrants, options or other rights to
subscribe for or purchase its Common Stock or any such convertible
or exchangeable securities (other than securities issued or
issuable to any present or future employee, officer, director or
consultant of the Company pursuant to any stock or option or
similar equity-based compensation plans or otherwise
(collectively, the "Compensation Plans")), upon the conversion or
exchange of convertible or exchangeable securities or upon the
exercise of warrants (excluding the Warrant and the Additional
Warrants), or other rights, or upon the issuance of any shares of
Common Stock issued upon exercise of options, conversion or
exchange of convertible or exchangeable securities, warrants or
other rights outstanding on the date of execution and delivery of
this Agreement (other than the Additional Warrants) and listed in
the SEC Documents on file with the SEC (other than the Warrant and
the Additional Warrants) and other than (i) shares of Common Stock
which may be issued upon exercise of options granted under the
Compensation Plans, (ii) shares of Common Stock which may be
issued upon exercise of the Warrant and the Additional Warrants,
and (iii) shares of Common Stock or securities which are
convertible into or exchangeable for Common Stock or any warrants,
options or other rights to subscribe for or purchase Common Stock
or any such convertible or exchangeable securities issued in
strategic corporate partnering transactions that do not result in
any acquisition or other change in control of the Company.
"Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
"Floor Price" shall have the meaning set forth in Section
2.2(b) hereof.
"Floor Price Notice" shall mean, with respect to any
Investment Period, a written notice delivered by the Company to
the Investor on, or as of, the tenth (10th) day preceding the
commencement of an Investment Period which sets forth the minimum
dollar amount per share that the Stock Price shall be for such
Investment Period, provided that in the event a Floor Price Notice
---4---
<PAGE>
is not received with respect to a certain Investment Period, the
Floor Price set for the preceding Investment Period will continue
to be the Floor Price.
"Food and Drug Act" shall mean the Federal Food, Drug and
Cosmetic Act, 21 U.S.C. Sections 301 et seq. and the rules and
regulations promulgated thereunder.
"4.9% Limit" shall have the meaning specified in Section
2.1(c) hereof.
"Governmental Entity" shall mean any federal, state, local or
foreign legislative body, court, government, department or
instrumentality, or governmental, administrative or regulatory
authority or agency.
"Investment Amount" shall mean the amount invested by the
Investor with respect to any Mandatory Purchase Date, Additional
Purchase Date or Optional Purchase Date, as the case may be, as
notified by the Investor to the Company in accordance with Section
2.5, which Investment Amount shall be at least $50,000 and shall
be in multiples of $50,000 in excess thereof.
"Investment Period" shall mean each successive three-month
period (subject to extension as provided by Section 2.2(b))
commencing on (a) in the case of the first Investment Period, the
first Trading Day of the succeeding calendar month following the
month within which the Registration Statement is declared
effective, provided that, in the event the Registration Statement
is declared effective within the last ten (10) days of a
particular month, the first Investment Period shall commence on
the first Trading Day of the second month thereafter, and (b) in
the case of subsequent Investment Periods, commencing on the first
Trading Day subsequent to the expiration of the immediately
preceding Investment Period.
"Investor Notice" shall have the meaning set forth in Section
2.5(d)(ii) hereof.
"Knowledge of the Company" shall mean the actual knowledge,
without independent inquiry, of any of the executive officers of
the Company or its Significant Subsidiaries.
"Knowledge of the Investor" shall mean the actual knowledge,
without independent inquiry, of any of the executive officers of
the Investor or its Affiliates.
"Liens" shall have the meaning set forth in Section 5.16
hereof.
---5---
<PAGE>
"Mandatory Purchase Date" shall mean, with respect to any
Investment Period for which the Company has delivered a Mandatory
Purchase Notice to the Investor, any Trading Day during such
Investment Period on which the Investor notifies the Company by
delivery of an Investor Notice of its election to purchase all or
a portion of the Minimum Investment Amount in respect of such
Investment Period.
"Mandatory Purchase Notice" shall have the meaning set forth
in Section 2.1(b)(i) hereof.
"Material Adverse Effect" shall mean any effect on the
business, operations, properties, prospects, or financial
condition of the Company which is material and adverse to the
Company or to the Company and any other entities controlled by the
Company, taken as a whole, and/or any condition or situation which
could in the Company's reasonable judgment prohibit, impair or
otherwise interfere with the ability of the Company to enter into
and perform its obligations under this Agreement, the Registration
Rights Agreement, the Warrant or the Additional Warrants.
"Materials of Environmental Concern" shall mean hazardous
substances as defined under the Comprehensive Environmental
Response, Compensation and Liability Act, 42 U.S.C. section # 9601 et seq.
and hazardous wastes as defined under the Resource Conservation
and Recovery Act, 42 U.S.C. section # 6901, et seq. and petroleum and
petroleum products and such other chemicals, materials or
substances as are listed as "hazardous wastes", "hazardous
materials", "toxic substances", or words of similar import under
any similar federal, state, local or foreign laws.
"Maximum Offering Amount" shall have the meaning set forth in
the introductory paragraphs hereof.
"Minimum Investment Amount" shall have the meaning set forth
in Section 2.1(b)(i) hereof.
"NASD" shall mean the National Association of Securities
Dealers, Inc.
"Optional Purchase Date" shall mean any Trading Day during
the Commitment Period that the Investor in its sole discretion
elects by delivery of an Optional Purchase Notice to purchase
Common Stock from the Company.
"Optional Purchase Notice" shall have the meaning set forth
in Section 2.5(c) hereof.
---6---
<PAGE>
"Person" shall mean an individual, partnership, corporation,
limited liability company, trust or unincorporated organization,
or a government or agency or subdivision thereof.
"Principal Market" shall mean the New York Stock Exchange,
the American Stock Exchange, or the Nasdaq National Market Large
Caps, whichever is at the time the principal trading exchange or
market for the Common Stock.
"Prospectus" shall mean the prospectus included in any
Registration Statement, as amended or supplemented by any
Prospectus supplement, including post-effective amendments, and
all material incorporated by reference in such Prospectus.
"Purchase" shall have the meaning set forth in Section 2.7(b)
hereof.
"Purchase Price" shall have the meaning set forth in Section
2.3 hereof.
"Registration Rights Agreement" shall have the meaning set
forth in Section 2.7(c) hereof.
"Registration Statement" shall have the meaning set forth in
Section 3.2(a) hereof.
"SEC Documents" shall have the meaning set forth in Section
5.9 hereof.
"Securities Act" shall have the meaning set forth in the
recitals above.
"Securities Exchange Act" shall mean the Securities Exchange
Act of 1934, as amended, together with the rules and regulations
promulgated thereunder.
"Significant Subsidiaries" shall have the meaning specified
in Regulation S-X promulgated under the Securities Exchange Act.
"Stock Price" shall have the meaning set forth in Section 2.3
hereof.
"Subsidiary" shall mean, with respect to any Person, any
corporation, limited or general partnership, trust, association or
other business entity of which 50% or more of the outstanding
Capital Stock or other interests entitled to vote in the election
of the board of directors of such corporation (irrespective of
whether, at the time, Capital Stock of any other class or classes
of such corporation shall have or might have voting power by
reason of the happening of any contingency), managers, trustees or
---7---
<PAGE>
other controlling persons, or an equivalent controlling interest
therein, of such Person is, at the time, directly or indirectly,
owned by such Person and/or one or more Subsidiaries of such
Person.
"Tax Return" shall mean any report, return, information
statement or other information required to be supplied to any
federal, state, local or foreign taxing authority, or any election
permitted to be made, in connection with Taxes.
"Taxes" shall mean all taxes, charges, fees, levies, duties
or other assessments, including without limitation all net income,
gross income, gross receipts, franchise, value added, sales, use,
property, ad valorem, transfer, withholding, profits, license,
employee, payroll, social security, unemployment, excise,
estimated, severance and any other taxes, duties, withholdings,
fees, assessments or charges of any kind whatsoever, including any
interest, penalties or additional amounts attributable thereto,
imposed by any federal, state, local or foreign taxing authority.
"Trading Day" shall mean any day during which the New York
Stock Exchange shall be open for business and on which trading of
the Common Stock on the Principal Market shall not have been
suspended or limited.
"Value of Open Market Trading" shall mean, with respect to
any Trading Day, the product of the reported trading volume of the
Common Stock on the Principal Market, multiplied by the weighted
average trading price (by trading volume) of the Common Stock on
such day (each as determined in accordance with Section 12.4
hereof); provided, however, that in the event that the Company
consummates a registered public offering of Common Stock (whether
primary or secondary), the Trading Day on which such transaction
is consummated shall be excluded from any calculation under this
Agreement based upon the Value of Open Market Trading, and
provided further, that any block trades of 20,000 shares or more
of Common Stock shall not be included in the calculation when
determining reported trading volume and weighted average trading
price.
"Warrant" shall have the meaning set forth in Section 2.7(a)
hereof.
"Warrant Exercise Price" shall have the meaning set forth in
Section 2.7(a) hereof.
"Warrant Registration Statement" shall have the meaning set
forth in Section 3.2(a) hereof.
"Warrant Shares" shall have the meaning set forth in Section
2.1(c) hereof.
---8---
<PAGE>
II.
PURCHASE AND SALE OF COMMON STOCK
2.1 Investments.
(a) Subject to the terms and conditions set forth
herein (i) during any Investment Period, the Company may in its
sole and absolute discretion from time to time elect to issue and
sell to the Investor, and the Investor shall be obligated to
purchase from the Company, on any or all of such Mandatory
Purchase Dates or Additional Purchase Dates as the Investor shall
elect, shares of Common Stock at the Purchase Price determined
pursuant to Section 2.3 for an aggregate purchase price of up to
$2,500,000 (as determined in accordance with Section 2.1(b) and
(c)), and (ii) during any Investment Period, the Investor may in
its sole and absolute discretion from time to time direct the
Company to issue to the Investor, and the Company shall be
obligated to issue and sell to the Investor, shares of Common
Stock at the Purchase Price determined pursuant to Section 2.3 for
an aggregate Purchase Price of up to $1,000,000, such that the
total aggregate amount of Purchases that may be effected pursuant
to Mandatory Purchase Notices, Additional Purchase Notices and
Optional Purchase Notices in any Investment Period shall be
$3,500,000.
(b) (i) Subject to the terms and conditions of
this Agreement, on, or as of, the tenth (10th) day preceding the
commencement of an Investment Period, the Company may deliver a
written notice to the Investor (each such notice hereinafter
referred to as a "Mandatory Purchase Notice") which shall require
the Investor to purchase shares of Common Stock from the Company
during such Investment Period for an aggregate Purchase Price of
$1,000,000, subject to the limitations imposed by Section 2.2(a)
and (b) (the "Minimum Investment Amount"), provided that, on the
date of delivery of the Mandatory Purchase Notice and on the
Trading Day immediately preceding the commencement of such
Investment Period there is no Adverse Event. A Mandatory Purchase
Notice shall be irrevocable. Subject to the terms and conditions
of this Agreement, upon delivery of such Mandatory Purchase
Notice, the Investor shall be obligated to purchase on Closing
Dates in respect of each such Mandatory Purchase Date or Mandatory
Purchase Dates as the Investor elects during the Investment Period
to which such Mandatory Purchase Notice relates, shares of Common
Stock for an aggregate Purchase Price equal to the Minimum
Investment Amount. On each such Mandatory Purchase Date, the
Investor shall deliver to the Company an Investor Notice which
shall set forth the Investment Amount.
(ii) Subject to the terms and conditions of
this Agreement, on, or as of, any day on which the Company
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<PAGE>
delivers to the Investor a Mandatory Purchase Notice pursuant to
Section 2.1(b)(i), the Company may deliver a written notice to the
Investor (each such notice hereinafter referred to as an
"Additional Purchase Notice") requiring the Investor to purchase
shares of Common Stock from the Company (in addition to the
Minimum Investment Amount) during such Investment Period for an
aggregate Purchase Price of up to $1,500,000 (which shall be at
least $50,000 and multiples of $50,000 in excess thereof), subject
to the limitations imposed by Section 2.2(a) and (b) (the
"Additional Investment Amount"), provided that, on the date of
delivery of the Additional Purchase Notice and the Trading Day
immediately preceding the commencement of such Investment Period
there is no Adverse Event. An Additional Purchase Notice shall be
irrevocable. The Company may not deliver an Additional Purchase
Notice with respect to any Investment Period unless it has also
delivered a Mandatory Purchase Notice with respect to such
Investment Period. Subject to the terms and conditions of this
Agreement, upon receipt of such Additional Purchase Notice, the
Investor shall be obligated to purchase on Closing Dates in
respect of each such Additional Purchase Date or Additional
Purchase Dates as the Investor elects during the Investment Period
to which such Additional Purchase Notice relates, shares of Common
Stock for an aggregate Purchase Price equal to the Additional
Investment Amount. On each such Additional Purchase Date or
Additional Purchase Dates, the Investor shall deliver to the
Company an Investor Notice which shall set forth the Investment
Amount.
(iii) Subject to the terms and conditions of
this Agreement, the Investor shall have the right, but not the
obligation, at any time and from time to time during any
Investment Period to purchase Common Stock from the Company for an
aggregate Purchase Price of up to $1,500,000, (which shall be at
least $50,000 and multiples of $50,000 in excess thereof), subject
to the limitations imposed by Section 2.2(b), by delivering an
Optional Purchase Notice or Optional Purchase Notices to the
Company, provided that, on the Trading Day immediately preceding
the date of delivery of an Optional Purchase Notice there is no
Adverse Event. An Optional Purchase Notice shall be irrevocable.
Each Optional Purchase Notice shall set forth the Investment
Amount with respect to the Optional Purchase Date to which it
relates. The Investor may not deliver an Optional Purchase Notice
or Optional Purchase Notices with respect to any Investment Period
if it has received from the Company a Cancellation Notice
concerning any obligation of the Investor with respect to the
Minimum Investment Amount and the Additional Investment Amount for
such Investment Period.
(iv) Any Purchase made pursuant to an Optional
Purchase Notice shall, at the Investor's option and in its sole
and absolute discretion, be credited towards the Investor's
Minimum Investment Amount for which a Mandatory Purchase Notice
---10---
<PAGE>
has been given. The Investor will notify the Company of its
intent to credit all or a portion of a Purchase made pursuant to
an Optional Purchase Notice at any time prior to the end of an
Investment Period with respect to which the Investor elects to
apply such credit. Each Optional Purchase Notice shall set forth
the Investment Amount with respect to the Optional Purchase Date
to which it relates.
(c) Notwithstanding anything herein to the contrary,
the Investor shall not be required or entitled to purchase shares
of Common Stock on any Closing Date to the extent such Purchase,
when aggregated with all other shares of Common Stock then owned
by the Investor, and with the shares of Common Stock beneficially
or deemed beneficially owned by the Investor pursuant hereto, the
Warrant and the Additional Warrants (if then issued and
outstanding) ("Warrant Shares") theretofore issued to the Investor
pursuant to Section 2.7, would result in the Investor or any
affiliate of the Investor beneficially owning more than 4.9% of
all the issued and outstanding Common Stock on such Closing Date,
as determined in accordance herewith and Section 13(d) of the
Exchange Act (the "4.9% Limit").
(d) On each Closing Date, the Company shall sell to
the Investor the number of shares of Common Stock determined by
dividing the Investment Amount by the Purchase Price (rounded to
the nearest whole number of shares); provided, however, that the
Investor shall not be required to purchase from the Company shares
of Common Stock pursuant to the terms of this Agreement for an
aggregate Purchase Price in excess of the Maximum Offering Amount.
(e) On or before the thirtieth (30th) day preceding
the commencement of an Investment Period, the Company agrees to
deliver to the Investor written notice (which notice shall not be
considered legally binding for the purposes of this Agreement)
indicating the Company's intentions with respect to the Mandatory
Purchase Notice and Additional Purchase Notice, if any, for the
next succeeding Investment Period, provided that, in no event
shall such notice be considered by the parties hereto a substitute
for a Mandatory Purchase Notice or Additional Purchase Notice as
required by this Agreement.
2.2 Limitation on Investment Amount.
(a) Notwithstanding the obligation of the Investor
to purchase shares of Common Stock pursuant to Section 2.1(b)(i)
and (ii), the aggregate amount of Purchases made by the Investor
during an Investment Period pursuant to a Mandatory Purchase
Notice or an Additional Purchase Notice or any combination thereof
---11---
<PAGE>
shall not exceed the lesser of (i) the amount set forth in the
Mandatory Purchase Notice or Additional Purchase Notice or any
combination thereof, which shall not exceed $1,000,000 and
$1,500,000, respectively, (ii) an amount equal to the product
(rounded up to the next increment of $10,000) of (A) 8% of the
average daily Value of Open Market Trading of the Common Stock on
the Principal Market for each Trading Day during the Investment
Period immediately preceding the Investment Period with respect to
which a Mandatory Purchase Notice or an Additional Purchase Notice
(or combination thereof) is given times (B) the number of Trading
Days in such immediately preceding Investment Period, and (iii) an
amount equal to the product (rounded up to the next increment of
$10,000) of (A) 8% of the average daily Value of Open Market
Trading of the Common Stock on the Principal Market for each
Trading Day on which the low trading price is at or above the
Floor Price, during the Investment Period with respect to which a
Mandatory Purchase Notice or an Additional Purchase Notice (or a
combination thereof) was given times (B) the number of Trading
Days in such Investment Period (the lower of the amounts referred
to in clauses (A) and (B), the "8% Limit"); provided however, that
the foregoing limitations shall not apply to Purchases made
pursuant to Optional Purchase Notices.
Upon the Closing of a Purchase and sale of Common Stock in an
amount limited by the provisions of this Section 2.2(a), pursuant
to a Mandatory Purchase Notice or an Additional Purchase Notice
(or combination thereof in any Investment Period), the obligation
of the Investor with respect to the Minimum Investment Amount or
Additional Investment Amount, as the case may be, for such
Investment Period shall be satisfied.
(b) Notwithstanding anything to the contrary
contained herein, the Investor shall not acquire any shares of
Common Stock during any Investment Period pursuant to a Mandatory
Purchase Notice, an Additional Purchase Notice or an Optional
Purchase Notice if the Stock Price during all three (3) of the
Trading Days ending on the Trading Day prior to a Mandatory
Purchase Date, an Additional Purchase Date or an Optional Purchase
Date shall be below the floor price (per share) set by the Company
from time to time pursuant to a Floor Price Notice relating to a
particular Investment Period (the "Floor Price"). Until changed
pursuant to a Floor Price Notice, the initial Floor Price shall be
$4.00 per share. Such Investment Period and the Commitment Period
shall be extended by 1 1/2 Trading Days (rounded up to the next full
Trading Day) for each Trading Day within such Investment Period
during which the Stock Price is below the Floor Price; provided,
however, that if during any Investment Period during which the
Investor is obligated to purchase Common Stock pursuant to a
Mandatory Purchase Notice or an Additional Purchase Notice, the
Stock Price shall be below the Floor Price for more than twenty
(20) Trading Days (which need not be consecutive), (i) the
Investment Period and the Commitment Period shall be extended by
thirty (30) Trading Days only, provided, however, that the
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<PAGE>
Commitment Period shall only be extended as described in the
definition of "Commitment Period", (ii) the Investor shall not be
required to purchase any shares of Common Stock during the
remainder of the Investment Period (as so extended), regardless of
its obligation to purchase Common Stock at the commencement of the
Investment Period and the number of shares of Common Stock
actually purchased during such Investment Period, and (iii) the
Investor shall have the option to purchase shares of Common Stock
on any Trading Day (such Purchase to constitute an Optional
Purchase) within the remainder of the Investment Period provided
that, on such Trading Day the Stock Price shall not be below the
Floor Price.
2.3 Determination of Purchase Price. The purchase price
per share of the Company's Common Stock (the "Purchase Price")
shall be 98% of the low trading price of the Common Stock on the
Principal Market during the three (3) Trading Days ending on the
Trading Day prior to a Mandatory Purchase Date, an Additional
Purchase Date or an Optional Purchase Date, as the case may be,
provided, however, that if the low trading price is below the
Floor Price on any of such three (3) Trading Days, such Trading
Day shall not be considered in determining the Purchase Price, and
the Purchase Price shall be determined solely by reference to the
remaining Trading Days in such three (3) Trading Day period (the
"Stock Price").
2.4 Closings. On each Closing Date, (i) the Company
shall deliver to the Investor one or more certificates
representing the number of shares of Common Stock to be purchased
by the Investor pursuant to Section 2.1 registered in the name of
the Investor or, at the Investor's option, deposit such
certificate(s) into such Investor account or accounts previously
designated by the Investor, and (ii) the Investor shall deliver to
the Company the Investment Amount (less any amounts withheld
pursuant to Section 11.2) by federal funds wire transfer or
transfer of New York Clearing House funds to the accounts
previously designated by the Company prior to the relevant Closing
Date. In addition, on or prior to the Closing Date, each of the
Company and the Investor shall deliver all documents, instruments
and writings required to be delivered or reasonably requested by
either of them pursuant to this Agreement in order to implement
and effect the transactions contemplated herein.
2.5 Mechanics of Notification.
(a) Delivery of Mandatory Purchase Notice.
(i) On, or as of, the tenth (10th) day
immediately preceding the commencement of an Investment Period,
the Chief Executive Officer or the Chief Financial Officer (or
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<PAGE>
such other person as designated by either in writing) of the
Company may deliver a Mandatory Purchase Notice to the Investor
which shall require the Investor to purchase shares of Common
Stock from the Company for an aggregate Purchase Price of
$1,000,000, subject to the limitations imposed herein. If the
Investor in its sole and absolute discretion so elects, the
Company may not deliver a Mandatory Purchase Notice to the
Investor if there is an Adverse Event on the date on which a
Mandatory Purchase Notice is given. In addition, if the Investor
in its sole and absolute discretion so elects, if an Adverse Event
occurs after such date but prior to a Purchase by the Investor of
the Minimum Investment Amount, such Mandatory Purchase Notice
shall be null, void and of no further force or effect.
(ii) In the event the Company intends not to
obligate the Investor to purchase Common Stock represented by the
Minimum Investment Amount during an Investment Period, on, or as
of, the tenth (10th) day preceding the commencement of such
Investment Period, the Company shall deliver a Cancellation Notice
with respect to the corresponding Minimum Investment Amount to the
Investor. Such Cancellation Notice shall be irrevocable.
(iii) In the event the Company fails to
deliver a Mandatory Purchase Notice or a Cancellation Notice
pursuant to clause (a)(i) or (a)(ii) above on, or as of, the tenth
(10th) day preceding the commencement of an Investment Period, the
Company shall be deemed to have delivered a Mandatory Purchase
Notice with respect to such Investment Period.
(b) Delivery of an Additional Purchase Notice.
(i) On, or as of, any day on which the Company
delivers to the Investor a Mandatory Purchase Notice, the Chief
Executive Officer or the Chief Financial Officer (or such other
person as designated by either in writing) of the Company may
deliver an Additional Purchase Notice to the Investor stating the
Additional Investment Amount, subject to the limitations contained
herein, which the Investor shall be required to purchase during
such Investment Period (in addition to shares of Common Stock
which the Investor is required to purchase pursuant to the
delivery by the Company to the Investor of a Mandatory Purchase
Notice). An Additional Purchase Notice may not be delivered if a
Mandatory Purchase Notice is not delivered with respect to the
same Investment Period. The Company may not deliver an Additional
Purchase Notice to the Investor if there is an Adverse Event on
the date on which an Additional Purchase Notice is given, and in
addition, should an Adverse Event occur after such date but prior
to a Purchase by the Investor of the Additional Investment Amount,
such Additional Purchase Notice shall be null, void and of no
further force or effect.
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<PAGE>
(ii) In the event the Company intends not to
require the Investor to purchase Common Stock during an Investment
Period pursuant to an Additional Purchase Notice, on the day on
which the Company delivers to the Investor a Mandatory Purchase
Notice or a Cancellation Notice with respect to the corresponding
Minimum Investment Amount, as the case may be, the Company shall
deliver to the Investor a Cancellation Notice with respect to the
corresponding Additional Investment Amount. Such Cancellation
Notice shall be irrevocable.
(iii) In the event the Company fails to
deliver a Cancellation Notice regarding an Investment Period with
respect to the corresponding Additional Investment Amount,
pursuant to clause (b)(ii) above, on the day on which the Company
delivers to the Investor a Mandatory Purchase Notice or a
Cancellation Notice with respect to the corresponding Minimum
Investment Amount, as the case may be, the Company shall be deemed
to have delivered a Cancellation Notice with respect to such
Additional Investment Amount for such Investment Period.
(c) Delivery of Optional Purchase Notice. At any
time and from time to time during the Commitment Period, the
Investor may deliver a written notice to the Company (each such
notice hereinafter referred to as an "Optional Purchase Notice")
setting forth the Investment Amount, subject to the limitations
set forth in Sections 2.1 and 3.2(l) herein, which the Investor
intends to purchase from the Company. The Investor may not
deliver an Optional Purchase Notice to the Company if there is an
Adverse Event on the date on which an Optional Purchase Notice is
given, and in addition, should an Adverse Event occur after such
date but prior to the closing of the transaction on the Closing
Date associated with such Optional Purchase Notice, such Optional
Purchase Notice shall be null, void and of no further force or
effect.
(d) Date of Delivery of a Mandatory Purchase Notice,
an Additional Purchase Notice or an Optional Purchase Notice.
(i) A Mandatory Purchase Notice, an Additional
Purchase Notice and a Cancellation Notice (each, a "Company
Notice") and any other notice sent by the Company to the Investor
shall be deemed to be delivered on the Trading Day it is received
by the Investor, if such notice is received prior to 5:00 P.M. New
York time, or shall be deemed to be delivered on the immediately
succeeding Trading Day if it is received after 5:00 P.M. New York
time or on any day which is not a Trading Day (in which case the
provisions of Sections 2.1(b) and 2.2(b) must be satisfied as of
such immediately succeeding Trading Day).
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<PAGE>
(ii) An Optional Purchase Notice and any other
notice sent by the Investor to the Company notifying the Company
of the Investor's election to purchase Common Stock (each an
"Investor Notice") and any other notice sent by the Investor to
the Company shall be deemed to be delivered on the Trading Day it
is received by the Company if such notice is received prior to
5:00 P.M New York time, or shall be deemed to be delivered on the
immediately succeeding Trading Day if it is received by the
Company after 5:00 P.M. New York time (in which case the
provisions of Sections 2.1(b) and 2.2(b) must be satisfied as of
such immediately succeeding Trading Day).
2.6 Termination or Suspension of Investment Obligation.
(a) If the Investor in its sole and absolute
discretion so elects, the Investor shall not be required to
purchase any shares of Common Stock from the Company on any
Closing Date nor, if the Investor in its sole and absolute
discretion so elects, shall any Mandatory Purchase Notice,
Additional Purchase Notice or Optional Purchase Notice be
delivered at any time during the Commitment Period when there
shall exist any one or more of the following: (i) the withdrawal
of the effectiveness of the Registration Statement, (ii) the
withdrawal of the effectiveness of the Warrant Registration
Statement or the Additional Warrant Registration Statement or any
other suspension of the use of the Warrant Registration Statement
or related Prospectus or the Additional Warrant Registration
Statement or related Prospectus pursuant to the Registration
Rights Agreement, (iii) the Company's failure to satisfy the
requirements of Section 3.2 or (iv) any failure or interruption in
the compliance by the Company with the covenants provided in
Article VI. In the event that the Company shall have delivered a
Mandatory Purchase Notice or Additional Purchase Notice with
respect to an Investment Period and one or more of the events
listed in clauses (i) through (iv) above exist at the time such
Mandatory Purchase Notice or Additional Purchase Notice is given
and has not been cured by the Trading Day preceding the
commencement of the Investment Period to which such notice
relates, the Mandatory Purchase Notice or Additional Purchase
Notice shall be void and of no effect. In the event that the
Company shall have delivered a Mandatory Purchase Notice or
Additional Purchase Notice with respect to an Investment Period
and one or more of the events listed in clauses (i) through (iv)
above occur during the Investment Period, the obligation of the
Investor to purchase shares of Common Stock during such Investment
Period shall, if the Investor in its sole and absolute discretion
so elects, be reduced (but in no event shall such reduction result
in a negative number) by subtracting an amount calculated by
multiplying the amount which the Investor would otherwise be
obligated to purchase by a fraction, the numerator of which shall
be 1-1/2 times the number of Trading Days within such Investment
---16---
<PAGE>
Period that such event or events exist and the denominator of
which shall be the number of Trading Days within such Investment
Period (without adjustment for the Stock Price being below the
Floor Price pursuant to Section 2.2(b)) from the Investor's
obligation during such Investment Period. If such event remains
uncured for a period of greater than five (5) Trading Days or
exists during the last five (5) Trading Days of the Investment
Period, the remaining obligation of the Investor to purchase
shares of Common Stock pursuant to a Mandatory Purchase Notice or
an Additional Purchase Notice shall, if the Investor in its sole
and absolute discretion so elects, be canceled for the remainder
of the Investment Period. If such event exists on the last day
preceding an Investment Period on which the Company may deliver a
Mandatory Purchase Notice with respect to such Investment Period,
the Company shall have five (5) Trading Days in which to cure, and
if cured within such period, the commencement of the Investment
Period shall be postponed for such number of days during such
period as the event remained uncured, but in no event shall such
Investment Period be postponed for a period in excess of five (5)
Trading Days.
(b) The obligation of the Investor to purchase
shares of Common Stock under this Agreement may, if the Investor
in its sole and absolute discretion so elects, be terminated
(including with respect to a Closing Date which has not yet
occurred) in the event that (i) the Registration Statement shall
not have been declared effective by the SEC within the time period
described in Section 3.2(a), (ii) there shall occur any stop order
or suspension of the effectiveness of the Registration Statement,
the Warrant Registration Statement or the Additional Registration
Statement or any withdrawal of the effectiveness of the
Registration Statement, the Warrant Registration Statement or the
Additional Registration Statement for any reason other than as a
result of subsequent corporate developments which would require
such Registration Statement, the Warrant Registration Statement or
the Additional Registration Statement to be amended to reflect
such event in order to maintain its compliance with the disclosure
requirements of the Securities Act, or (iii) the Company shall at
any time fail to comply with the requirements of Sections 6.2,
6.3, 6.4, 6.5 or 6.6 and the Company shall fail to cure such
noncompliance within (A) five (5) Trading Days after receipt of
notice from the Investor of its election to terminate this
Agreement, provided that the Investor has been notified by the
Company of such noncompliance within two (2) Trading Days of the
occurrence of such noncompliance or, if the noncompliance relates
to a failure of the Company to comply with the provisions of
Section 6.5, the Investor otherwise becomes aware of such
noncompliance or (B) otherwise within five (5) Trading Days of the
occurrence of such noncompliance; provided, however, that
notwithstanding the foregoing, the Investor may, in its sole and
absolute discretion, terminate this Agreement if the Company shall
fail to maintain the listing of the Common Stock on a Principal
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<PAGE>
Market, or if trading of the Common Stock on a Principal Market
shall have been suspended for a period of five (5) consecutive
Trading Days.
2.7 Commitment Fee.
(a) On the Effective Date, the Company will issue to
the Investor a warrant exercisable by the Investor in its sole and
absolute discretion from time to time within four (4) years from
the date of issuance (the "Warrant") to purchase 50,000 shares of
Common Stock at an exercise price per share equal to 180% of the
closing sale price of the Common Stock on the Principal Market on
the Trading Day immediately preceding the Effective Date (the
"Warrant Exercise Price"). The Warrant shall provide that it
shall not be exercisable on any date to the extent that Section
2.1(c) would otherwise limit the ability of the Investor to
purchase shares of Common Stock as a result of a Mandatory
Purchase Notice or Additional Purchase Notice. The Warrant shall
be delivered by the Company to the Investor upon execution of this
Agreement by the parties hereto.
(b) (i) Upon each and every purchase by the Investor
of Common Stock, whether pursuant to delivery of Mandatory
Purchase Notices alone or through a combination of Mandatory
Purchase Notices, Additional Purchase Notices and Optional
Purchase Notices (each, a "Purchase"), the Investor shall receive
the right to purchase Common Stock pursuant to a warrant issued by
the Company to the Investor five (5) business days following the
end of each calendar year (each, an "Additional Warrant" and,
collectively, the "Additional Warrants") during the Commitment
Period for a number of shares equal to the Additional Warrant
Share Amount for such calendar year.
(ii) Each Additional Warrant shall entitle the holder thereof
to purchase Common Stock from time to time within four (4) years
from the date of issuance at an exercise price per share equal to
180% of the weighted average of the Purchase Prices at which
shares of Common Stock were purchased at the Closings of all
Purchases by the Investor during such calendar year.
(iii) "Additional Warrant Share Amount" shall mean, for any
given calendar year, a number of shares equal to 5,000 times a
fraction, where the denominator is $500,000 and the numerator is
the aggregate Purchase Price of Common Stock purchased at the
Closings of all Purchases by the Investor in such calendar year
(rounded to the nearest $100,000 increment); provided that no more
than 125,000 Additional Warrants shall be issued pursuant to this
Section 2.7(b).
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<PAGE>
(iv) Each Additional Warrant shall provide that it shall not
be exercisable on any date to the extent that Section 2.1(c) would
otherwise limit the ability of the Investor to purchase shares of
Common Stock as a result of a Mandatory Purchase Notice or an
Additional Purchase Notice.
(c) The resale by the Investor of Common Stock
issuable upon exercise of the Warrant as well as the Additional
Warrant shall be subject to a registration rights agreement (the
"Registration Rights Agreement") entered into between the Company
and the Investor on the date of execution of this Agreement. Each
of the Warrant and each Additional Warrant shall be substantially
in the form of Exhibit A-1 and A-2 hereto, respectively.
III.
CONDITIONS TO DELIVERY OF MANDATORY
PURCHASE NOTICES, ADDITIONAL PURCHASE NOTICES, OPTIONAL PURCHASE
NOTICES AND CONDITIONS TO CLOSING
3.1 Conditions Precedent to the Obligation of the Company
to Issue and Sell Common Stock. The obligation hereunder of the
Company to issue and sell Common Stock to the Investor incident to
each Closing is subject to the satisfaction, at or before each
such Closing, of each of the conditions set forth below, which
conditions cannot be waived without the prior written consent of
the Company and the Investor.
(a) Accuracy of the Investor's Representation and
Warranties. The representations and warranties of the Investor
set forth in this Agreement shall be true and correct in all
material respects as of the date of each such Closing as though
made at each such time.
(b) Performance by the Investor. The Investor shall
have performed, satisfied and complied in all material respects
with all covenants, agreements and conditions required by this
Agreement to be performed, satisfied or complied with by the
Investor at or prior to such Closing.
(c) No Injunction. No statute, rule, regulation,
executive order, decree, ruling or injunction shall have been
enacted, entered, promulgated or endorsed by any court or
governmental authority of competent jurisdiction which, in the
reasonable opinion of the Company and its legal counsel, prohibits
or adversely affects any of the transactions contemplated by this
Agreement, and no proceeding shall have been commenced which may
have the effect of prohibiting or adversely affecting any of the
transactions contemplated by this Agreement.
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<PAGE>
3.2 Conditions Precedent to the Right of the Company to
Deliver a Mandatory Purchase Notice or an Additional Purchase
Notice, the Obligation of the Investor to Purchase Common Stock
and the Right of the Investor to Deliver an Optional Purchase
Notice. The right of the Company to deliver a Mandatory Purchase
Notice or an Additional Purchase Notice, the obligation of the
Investor hereunder to acquire and pay for Common Stock incident to
a Closing and the right of the Investor to deliver an Optional
Purchase Notice is subject to the satisfaction, on the date of
delivery of a Mandatory Purchase Notice, Additional Purchase
Notice or Optional Purchase Notice, as the case may be, and on the
applicable Closing Date (each a "Condition Satisfaction Date") of
each of the following conditions, which conditions cannot be
waived without the prior written consent of the Company and the
Investor.
(a) Registration of the Common Stock with the SEC.
The Company shall have filed with the SEC (i) a registration
statement on Form S-3 (the "Registration Statement") for the
registration of the resale by the Investor of Common Stock to be
acquired pursuant to this Agreement (not including Common Stock to
be issued upon exercise of the Warrant and Additional Warrants)
under the Securities Act, which Registration Statement shall have
been filed with the SEC as early as practicable, but in no event
later than thirty (30) days of execution of this Agreement and
which Registration Statement shall have been declared effective by
the SEC no later than ninety (90) days from the filing of the
Registration Statement, (ii) in accordance with the Registration
Rights Agreement a registration statement on Form S-3 for the
registration of the resale by the Investor of Common Stock to be
issued upon exercise of the Warrant (the "Warrant Registration
Statement"), which Warrant Registration Statement shall have been
filed within thirty (30) days of execution of this Agreement and
shall have been declared effective by the SEC no later than ninety
(90) days from the filing of the Registration Statement, (iii)
within thirty (30) days of the issuance of an Additional Warrant,
in accordance with the Registration Rights Agreement, a
registration statement on Form S-3 for the registration of the
resale by the investor of Common Stock to be issued upon exercise
of each Additional Warrant (each, an "Additional Warrant
Registration Statement"), which Additional Warrant Registration
Statement shall have been declared effective by the SEC no later
than ninety (90) days from the filing of Additional Warrant
Registration Statement. Furthermore, the Company shall have filed
(i) with the applicable states securities commissions such blue
sky filings as shall have been requested by the Investor, provided
that in connection therewith, the Company shall not be required to
file a general consent to service of process in any jurisdiction,
and (ii) any required filings with the NASD or exchange or market
where the Common Stock is traded.
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<PAGE>
(b) Effective Registration Statement. The
Registration Statement shall be in effect and shall remain
effective on each Condition Satisfaction Date and (i) neither the
Company nor the Investor shall have received notice that the SEC
has issued or intends to issue a stop order with respect to the
Registration Statement or that the SEC otherwise has suspended or
withdrawn the effectiveness of the Registration Statement, either
temporarily or permanently, or intends or has threatened to do so,
and (ii) no other suspension of the use of the Registration
Statement or Prospectus shall exist pursuant to the Registration
Rights Agreement.
(c) Accuracy of the Company's Representations and
Warranties. The representations and warranties of the Company as
set forth in this Agreement and the Registration Rights Agreement
shall be true and correct in all material respects as of each
Condition Satisfaction Date as though made at each such time
(except for representations and warranties made as of a specific
date) with respect to all periods, and as to all events and
circumstances occurring or existing to and including each
Condition Satisfaction Date.
(d) Performance by the Company. The Company shall
have performed, satisfied and complied in all material respects
with all covenants, agreements and conditions required by this
Agreement and the Registration Rights Agreement to be performed,
satisfied or complied with by the Company at or prior to each
Condition Satisfaction Date.
(e) No Injunction. No statute, rule, regulation,
executive order, decree, ruling or injunction shall have been
enacted, entered, promulgated or endorsed by any court or
governmental authority of competent jurisdiction which prohibits
or adversely affects any of the transactions contemplated by this
Agreement, and no proceeding shall have been commenced which may
have the effect of prohibiting or adversely affecting any of the
transactions contemplated by this Agreement.
(f) Adverse Changes. Since September 30, 1997, the
date through which the most recent quarterly report of the Company
on Form 10-Q has been prepared and filed with the SEC, a copy of
which is included in the SEC Documents, no event which had or is
reasonably likely to have a Material Adverse Effect has occurred,
except as disclosed in the SEC Documents subsequent to such date.
(g) No Suspension of Trading In or Delisting of
Common Stock. The trading of the Common Stock shall not have been
suspended by the SEC, the Principal Market or the NASD and the
Common Stock shall have been approved for listing or quotation on
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<PAGE>
and shall not have been delisted from the Principal Market. The
issuance of shares of Common Stock with respect to the applicable
Closing, if any, shall not violate the shareholder approval
requirements of the Principal Market.
(h) Legal Opinions. The Company shall have caused
to be delivered to the Investor, (i) within five (5) Trading Days
following the effective date of the Registration Statement, the
Warrant Registration Statement and the Additional Warrant
Registration Statement, as applicable, (ii) as of a date within
five (5) Trading Days after the date of the Company's filing of
its most recent quarterly report on Form 10-Q (or the date by
which such report is required to be filed), (iii) as of a date
within five (5) Trading Days after the date on which the Company
announces, whether on a preliminary or definitive basis, its
fourth quarter or full-year financial results, (iv) to the extent
provided by Section 3.3, and (v) as of a date within five (5)
Trading Days of a Mandatory Purchase Notice or an Additional
Purchase Notice, as the case may be, an opinion of the Company's
independent counsel containing the opinions and statements set
forth in Exhibit B hereto, addressed to the Investor stating,
inter alia, that no facts have come to such counsel's attention
that would cause it to believe that any of the Registration
Statement, the Warrant Registration Statement and the Additional
Warrant Registration Statement, as applicable (as each may be
amended, if applicable), contains an untrue statement of material
fact or omits a material fact required to make the statements
contained therein, not misleading or that the underlying
Prospectus (if applicable, as so amended or supplemented) contains
an untrue statement of material fact or omits a material fact
required to make the statements contained therein, in light of the
circumstances in which they were made, not misleading; provided,
however, that in the event that such an opinion cannot be
delivered by the Company's independent counsel to the Investor,
the Company shall promptly notify the Investor and promptly revise
each of the Registration Statement, the Warrant Registration
Statement and the Additional Warrant Registration Statement, as
applicable, and the Investor shall not deliver an Optional
Purchase Notice, and the Company shall not deliver a Mandatory
Purchase Notice or an Additional Purchase Notice or, if an
Optional Purchase Notice, a Mandatory Purchase Notice or an
Additional Purchase Notice shall have been delivered in good faith
without knowledge by the Investor or the Company that an opinion
of independent counsel cannot be delivered as required, shall
postpone such Closing Date for a period of up to five (5) Trading
Days until such an opinion is delivered to the Investor (or such
Closing shall otherwise be canceled). In the event of such a
postponement, the Purchase Price of the Common Stock to be issued
at such Closing as determined pursuant of Section 2.3 shall be the
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<PAGE>
lower of such Purchase Price as calculated as of the originally
scheduled Closing Date or as of the actual Closing Date. The
Company's independent counsel shall also deliver to the Investor
on the Effective Date opinions in form and substance satisfactory
to the Investor addressing, among other things, corporate matters
and the exemption from registration under the Securities Act of
the issuance of the Common Stock by the Company to the Investor
under this Agreement.
(i) Accountant's Letter.
(i) The Company shall engage its independent
auditors to perform the procedures in accordance with the
provisions of Statement on Auditing Standards No. 71, as amended,
as agreed to by the parties hereto, and reports thereon as shall
have been reasonably requested by the Investor with respect to
certain financial information contained in the Registration
Statement and shall have delivered to the Investor a report
addressed to the Investor, (x) within five (5) Trading Days
following the effective date of the Registration Statement and (y)
within ten (10) Trading Days following the filing with the SEC of
each SEC Document containing unaudited financial statements of the
Company which is deemed to be incorporated by reference in the
Registration Statement.
(ii) In the event that the Investor shall have
requested delivery of an "agreed upon procedures" report pursuant
to Section 3.3, the Company shall engage its independent auditors
to perform certain agreed upon procedures and report thereon as
shall have been reasonably requested by the Investor with respect
to certain financial information of the Company and the Company
shall deliver to the Investor a copy of such report addressed to
the Investor. In the event that the report required by this
Section 3.2(i) cannot be delivered by the Company's independent
auditors, the Company shall, if necessary, promptly revise the
Registration Statement and the Investor shall not deliver an
Optional Purchase Notice, and the Company shall not deliver a
Mandatory Purchase Notice or an Additional Purchase Notice or, if
an Optional Purchase Notice shall have been delivered in good
faith without knowledge by the Investor that a report of the
Company's independent auditors cannot be delivered as required or,
if a Mandatory Purchase Notice or an Additional Purchase Notice
shall have been delivered in good faith without knowledge by the
Company that a report of its independent auditors cannot be
delivered as required, postpone such Closing Date for a period of
up to five (5) Trading Days until such a report is delivered (or
such Closing shall otherwise be canceled). In the event of such a
postponement, the Purchase Price of the Common Stock to be issued
at such Closing as determined pursuant to Section 2.3 shall be the
lower of such Purchase Price as calculated as of the originally
scheduled Closing Date and as of the actual Closing Date.
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<PAGE>
(j) Officer's Certificate. The Company shall have
delivered to the Investor, on each Closing Date, a certificate in
form and substance reasonably acceptable to the Investor, executed
by an executive officer of the Company and to the effect that all
the conditions to such Closing shall have been satisfied as at the
date of each such certificate.
(k) Due Diligence. No dispute between the Company
and the Investor shall exist pursuant to Section 3.3 as to the
adequacy of the disclosure contained in the Registration
Statement.
(l) Beneficial Ownership Limitation. On each
Closing Date, (i) the Investor shall not be required or entitled
to purchase shares of Common Stock to the extent such purchase
would result in the Investor's or any affiliate of the Investor's
Common Stock holdings to exceed the 4.9% Limit, and (ii) the
Investor shall have received and been reasonably satisfied with
such other certificates and documents as shall have been
reasonably requested by the Investor in order for the Investor to
confirm the Company's satisfaction of the conditions set forth in
this Section 3.2. For purposes of clause (i) of this Section
3.2(l), in the event that the amount of Common Stock outstanding
as determined in accordance with Section 13(d) of the Exchange Act
and the regulations promulgated thereunder is greater on a Closing
Date than on the date upon which the Optional Purchase Notice,
Mandatory Purchase Notice or the Additional Purchase Notice
associated with such Closing Date is given, the amount of Common
Stock outstanding on such Closing Date shall govern for purposes
of determining whether the Investor, when aggregating all
Purchases of Common Stock made pursuant to this Agreement and, if
any, Warrant Shares, would own more than 4.9% of the Common Stock
following such Closing Date.
3.3 Due Diligence Review. The Company shall make
available for inspection and review by the Investor, advisors to
and representatives of the Investor (who may or may not be
affiliated with the Investor and who are reasonably acceptable to
the Company), any underwriter participating in any disposition of
Common Stock on behalf of the Investor pursuant to the
Registration Statement, the Warrant Registration Statement or the
Additional Warrant Registration Statement or amendments or
supplements thereto or any blue sky, NASD or other filing, all
financial and other records, all SEC Documents and other filings
with the SEC, and all other corporate documents and properties of
the Company as may be reasonably necessary for the purpose of such
review, and cause the Company's officers, directors and employees
to supply all such information reasonably requested by the
Investor or any such representative, advisor or underwriter in
connection with such Registration Statement (including, without
limitation, in response to all questions and other inquiries
reasonably made or submitted by any of them), prior to and from
time to time after the filing and effectiveness of the
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<PAGE>
Registration Statement for the sole purpose of enabling the
Investor and such representatives, advisors and underwriters and
their respective accountants and attorneys to conduct initial and
ongoing due diligence with respect to the Company and the accuracy
of the Registration Statement.
The Company shall not disclose nonpublic information to the
Investor, advisors to or representatives of the Investor unless
prior to disclosure of such information the Company identifies
such information as being nonpublic information and provides the
Investor, such advisors and representatives with the opportunity
to accept or refuse to accept such nonpublic information for
review. The Company may, as a condition to disclosing any
nonpublic information hereunder, require the Investor's advisors
and representatives to enter into a confidentiality agreement
(including an agreement with such advisors and representatives
prohibiting them from trading in Common Stock during such period
of time as they are in possession of nonpublic information) in
form reasonably satisfactory to the Company and the Investor.
Nothing herein shall require the Company to disclose
nonpublic information to the Investor or its advisors or
representatives, and the Company represents that it does not
disseminate nonpublic information to any investors who purchase
stock in the Company in a public offering, to money managers or to
securities analysts, provided, however, that notwithstanding
anything herein to the contrary, the Company will, as hereinabove
provided, immediately notify the advisors and representatives of
the Investor and, if any, underwriters, of any event or the
existence of any circumstance (without any obligation to disclose
the specific event or circumstance) of which it becomes aware,
constituting nonpublic information (whether or not requested of
the Company specifically or generally during the course of due
diligence by and such persons or entities), which, if not
disclosed in the Prospectus included in the Registration
Statement, would cause such Prospectus to include a material
misstatement or to omit a material fact required to be stated
therein in order to make the statements therein, in light of the
circumstances in which they were made, not misleading. Nothing
contained in this Section 3.3 shall be construed to mean that such
persons or entities other than the Investor (without the written
consent of the Investor prior to disclosure of such information)
may not obtain nonpublic information in the course of conducting
due diligence in accordance with the terms of this Agreement;
provided, however, that in no event shall the Investor's advisors
or representatives disclose to the Investor the nature of the
specific event or circumstances constituting any nonpublic
information discovered by such advisors or representatives in the
course of their due diligence without the written consent of the
Investor prior to disclosure of such information. The Investor's
advisors or representatives shall make complete disclosure to the
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<PAGE>
Investor's independent counsel of all events or circumstances
constituting nonpublic information discovered by such advisors or
representatives in the course of their due diligence upon which
such advisors or representatives form the opinion that the
Registration Statement contains an untrue statement of a material
fact or omits a material fact required to be stated in the
Registration Statement or necessary to make the statements
contained therein, in the light of the circumstances in which they
were made, not misleading. Upon receipt of such disclosure, the
Investor's independent counsel shall consult with the Company's
independent counsel in order to address the concern raised as to
the existence of a material misstatement or omission and to
discuss appropriate disclosure with respect thereto; provided,
however, that such consultation shall not constitute the advice of
the Company's independent counsel to the Investor as to the
accuracy of the Registration Statement and related Prospectus. In
the event after such consultation the Investor's independent
counsel reasonably believes that the Registration Statement
contains an untrue statement or a material fact or omits a
material fact required to be stated in the Registration Statement
or necessary to make the statements contained therein, in light of
the circumstances in which they were made, not misleading, (a) the
Company shall file with the SEC an amendment to the Registration
Statement responsive to such alleged untrue statement or omission
and provide the Investor, as promptly as practicable, with copies
of the Registration Statement and related Prospectus, as so
amended, (b) if the Company disputes the existence of any such
material misstatement or omission, (i) the Company's independent
counsel shall provide the Investor's independent counsel with an
opinion stating that nothing has come to their attention that
would lead them to believe that the Registration Statement or the
related Prospectus, as of the date of such opinion, contains an
untrue statement of a material fact or omits a material fact
required to be stated in the Registration Statement or the related
Prospectus or necessary to make the statements contained therein,
in light of the circumstances in which they were made, not
misleading and (ii) in the event the dispute relates to the
adequacy of financial disclosure and the Investor shall reasonably
request, the Company's independent auditors shall provide to the
Company a letter outlining the performance of such "agreed upon
procedures" as shall be reasonably requested by the Investor and
the Company shall provide the Investor with a copy of such letter,
or (c) if the Company disputes the existence of any such material
misstatement or omission, and the dispute relates to the timing of
disclosure of a material event and the Company's independent
counsel is unable to provide the opinion referenced in clause
(b)(i) above to the Investor, then this Agreement shall be
suspended for a period of up to thirty (30) days, at the end of
which, if the dispute still exists between the Company's
independent counsel and the Investor's independent counsel, the
Company shall either (i) amend the Registration Statement as
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<PAGE>
provided above, (ii) provide to the Investor the Company's
independent counsel opinion and a copy of the letter of the
Company's independent auditors referenced above, or (iii) the
obligation of the Investor to purchase shares of Common Stock
pursuant to this Agreement shall terminate. The Investor hereby
agrees to hold harmless the Company's independent auditors from
any liability that may arise out of the delivery of an "agreed
upon procedures" letter pursuant to clause (b)(ii) above.
IV.
REPRESENTATIONS AND WARRANTIES OF INVESTOR
The Investor represents and warrants to the Company as
follows:
4.1 No Present Arrangement. The Investor is entering
into this Agreement for its own account and the Investor has no
present arrangement (whether or not legally binding) at any time
to sell the Common Stock to or through any person or entity;
provided, however, that by making the representations herein, the
Investor does not agree to hold the Common Stock for any minimum
or other specific term and reserves the right to dispose of the
Common Stock at any time in accordance with federal and state
securities laws applicable to such disposition.
4.2 Sophisticated Investor. The Investor is a
sophisticated investor (as described in Rule 506(b)(2)(ii) of
Regulation D) and an accredited investor (as defined in Rule 501
of Regulation D), and Investor has such experience in business and
financial matters that it is capable of evaluating the merits and
risks of an investment in Common Stock. The Investor acknowledges
that an investment in the Common Stock is speculative and involves
a high degree of risk.
4.3 Authority. The Investor has full power and authority
as a limited liability company to execute and deliver this
Agreement and to consummate the transactions contemplated hereby
in accordance with the terms hereof. The execution and delivery
of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by the Investor. No
other proceedings on the part of Investor are necessary to approve
and authorize the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby in accordance
with the terms hereof. This Agreement has been validly executed
and delivered by the Investor and is a valid and binding agreement
of the Investor enforceable against it in accordance with its
terms, subject to applicable bankruptcy, insolvency or similar
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<PAGE>
laws relating to, or affecting generally the enforcement of,
creditors' rights and remedies or by other equitable principles of
general application.
4.4 No Brokers. The Investor has taken no action which
would give rise to any claim by any person for brokerage
commission, finder's fees or similar payments by the Company
relating to this Agreement or the transactions contemplated
hereby.
4.5 Not an Affiliate. The Investor is not an officer,
director or "affiliate" (as that term is defined in Rule 405 of
the Securities Act) of the Company.
4.6 Organization and Standing. The Investor is a limited
liability company duly organized, validly existing, and in good
standing under the laws of the State of Delaware, and has all
requisite power and authority as a limited liability company to
carry on its business as now being conducted, and is duly
qualified to do business and in good standing in each jurisdiction
in which the nature of the business conducted by it makes such
qualifications necessary, except where the failure to be so
qualified or in good standing would not reasonably be expected to
have a material adverse effect. Investor has made available to
the Company or its agents complete and correct copies of
Investor's Articles of Organization and Operating Agreement as in
effect on the date hereof.
4.7 Absence of Conflicts. The execution and delivery of
this Agreement and any other document or instrument executed in
connection herewith, and the consummation of the transactions
contemplated thereby, and compliance with the requirements
thereof, will not violate any law, rule, regulation, order, writ,
judgment, injunction, decree or award binding on the Investor, or
the provision of any indenture, instrument or agreement to which
the Investor is a party or is subject, or by which the Investor or
any of its assets is bound, or conflict with or constitute a
material default thereunder, or result in the creation or
imposition of any lien pursuant to the terms of any such
indenture, instrument or agreement, or constitute a breach of any
fiduciary duty owed by the Investor to any third party, or require
the approval of any third party (which has not been obtained)
pursuant to any material contract, agreement, instrument,
relationship or legal obligation to which the Investor is subject
or to which any of its assets, operations or management may be
subject.
4.8 Disclosure: Access to Information. The Investor has
received all documents, records, books and other information
pertaining to the Investor's investment in the Company that have
been requested by the Investor. The Investor further acknowledges
that it understands that the Company is subject to the periodic
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<PAGE>
reporting requirements of the Exchange Act, and the Investor has
reviewed or received copies of any such reports that have been
requested by it.
4.9 Manner of Sale. At no time was the Investor
presented with or solicited by or through any leaflet, public
promotional meeting, television advertisement or any other form of
general solicitation or advertising.
4.10 Financial Capability. The Investor presently has the
financial capacity and the necessary capital to perform its
obligations hereunder.
4.11 No NASD Proceedings. To the Knowledge of the Investor,
there are no disciplinary proceedings involving the Investor or
any of its employees pending before the NASD.
V.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Investor as
follows:
5.1 Corporate Organization. The Company and each of its
Subsidiaries is a corporation duly organized, validly existing
and, if applicable, in good standing under the laws of its
jurisdiction of incorporation, and has all requisite corporate
power and authority to own or lease and operate its properties and
to carry on its business as now being conducted, and is duly
qualified to do business and in good standing in each jurisdiction
in which the property owned, leased or operated by it or the
nature of the business conducted by it makes such qualification
necessary, except where the failure to be so qualified or in good
standing would not reasonably be expected to have a Material
Adverse Effect. The Company has made available to the Investor or
its agents complete and correct copies of the Certificate of
Incorporation, as amended, and by-laws of the Company as in effect
on the date hereof.
5.2 Capitalization.
(a) Except as disclosed in the SEC Documents, the
authorized Capital Stock of the Company consists of (i) 70,000,000
shares of Common Stock and (ii) 10,000,000 shares of preferred
stock, par value $0.01 per share (the "Preferred Stock"). As of
September 30, 1997, there were (i) 36,363,002 shares of Common
Stock issued and outstanding all of which are duly authorized and
validly issued, fully paid and nonassessable and (ii) 3,123,625
shares of Common Stock reserved for issuance pursuant to stock
options granted or which may be granted under the Compensation
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<PAGE>
Plans. Except as disclosed in the SEC Documents, the Company has
not issued any Common Stock since June 30, 1996, except pursuant
to the exercise of stock options and the conversion of the
Preferred Stock, nor has the Company since such date repurchased
or redeemed or acquired any such shares. No shares of Capital
Stock of the Company are entitled to preemptive rights.
(b) Except as disclosed in the SEC Documents and as
set forth in Section 5.2(a) above, the Company does not have
outstanding any Capital Stock or securities convertible into or
exchangeable for any shares of Capital Stock or any options,
warrants or other rights, agreements, arrangements or commitments
of any character to which the Company is a party or otherwise
obligating the Company to issue or sell or entitling any Person to
acquire from the Company, and the Company is not a party to any
agreement, arrangement or commitment obligating it to repurchase,
redeem or otherwise acquire, any shares of its Capital Stock or
securities convertible into or exchangeable for any of its Capital
Stock.
(c) Upon issuance of the Common Stock, and payment
of the Purchase Price therefor, pursuant to a Purchase and sale in
accordance with the terms of this Agreement, the Company will
transfer to the Investor good and valid title to the Common Stock,
free and clear of any Lien, other than Liens, if any, created by
the Investor and such Common Stock will be duly authorized, fully
paid and nonassessable.
5.3 Subsidiaries.
(a) Except as disclosed in the SEC Documents, the
Company does not have any Subsidiaries other than Immunomedics,
Europe, a Netherlands Company and Immunomedics, Ltd., an Israeli
Corporation. Except as set forth in the SEC Documents, each
Subsidiary is wholly-owned by the Company.
(b) Except as disclosed in the SEC Documents, (i)
all the outstanding stock or other equity or ownership interests
of each Subsidiary is owned free and clear of all Liens and is
validly issued and (ii) there are no options, warrants or other
rights, agreements, arrangements or commitments of any character
to which any Subsidiary is a party or otherwise obligating any
Subsidiary to issue or sell, or entitling any Person to acquire
from any Subsidiary, and no Subsidiary is a party to any
agreement, arrangement or commitment obligating it to repurchase,
redeem or otherwise acquire, any shares of the Capital Stock or
any securities convertible into or exchangeable for the Capital
Stock of any such Subsidiary.
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<PAGE>
5.4 Authorization. The Company has full corporate power
and authority to execute and deliver this Agreement, the
Registration Rights Agreement, the Warrant and the Additional
Warrants, to issue the Common Stock pursuant to this Agreement,
the Warrant and the Additional Warrants and to consummate the
transactions contemplated hereby and thereby in accordance with
the terms hereof and thereof. The execution and delivery of this
Agreement, the Registration Rights Agreement, the Warrant and the
Additional Warrants, and the issuance of the Common Stock issuable
upon a Closing and pursuant to the Warrant and the Additional
Warrants and the consummation of the transactions contemplated
hereby and thereby have been duly authorized by the Board of
Directors of the Company. No other corporate proceedings on the
part of the Company are necessary to approve and authorize the
execution and delivery of this Agreement, the Registration Rights
Agreement, the Warrants and the Additional Warrants, the issuance
of the Common Stock issuable upon a Closing and pursuant to the
Warrant and the Additional Warrants and the consummation of the
transactions contemplated hereby and thereby in accordance with
the terms hereof and thereof. This Agreement, the Registration
Rights Agreement and the Warrant have been duly executed and
delivered by the Company, and each Additional Warrant will be duly
executed and delivered by the Company, and the Common Stock
issuable in accordance with the terms of this Agreement or upon
exercise of the Warrant and each Additional Warrant will be duly
and validly issued, fully paid and nonassessable, and each of this
Agreement, the Registration Rights Agreement, the Warrant and each
Additional Warrant when executed and delivered constitute valid
and binding obligations of the Company enforceable against the
Company in accordance with their terms, except to the extent
limited by (i) bankruptcy, insolvency, reorganization, fraudulent
transfer, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights generally and (ii) general
principles of equity.
5.5 No Violation; Consents.
(a) Assuming the making or receipt of all filings,
notices, registrations, consents, approvals, permits and
authorizations described in the following paragraph, the execution
and delivery of this Agreement, the Registration Rights Agreement,
the Warrant and the Additional Warrants, the issuance of the
Common Stock, the consummation of the transactions contemplated
hereby, by the Registration Rights Agreement, the Warrant and the
Additional Warrants, the compliance by the Company with any of the
provisions hereof or of the Registration Rights Agreement, the
Warrant and the Additional Warrants, will not (i) conflict with,
violate or result in any breach of the Certificate of
Incorporation, as amended, or by-laws of the Company or its
Subsidiaries, (ii) result in a violation or breach of, or
constitute (with or without due notice or lapse of time or both) a
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<PAGE>
default or give rise to any right of termination, cancellation or
acceleration under, or result in the creation of any Lien on or
against any of the properties of the Company or any of its
Subsidiaries pursuant to any of the terms or conditions of any
note, bond, mortgage, indenture, license, agreement or other
instrument or obligation to which the Company or any of its
Subsidiaries is a party or by which any of them or any of their
properties or assets may be bound, or (iii) violate any statute,
law, rule, regulation, writ, injunction, judgment, order or decree
of any Governmental Entity, binding on the Company or any of its
Subsidiaries or any of their properties or assets, excluding from
the foregoing clauses (i) and (ii) conflicts, violations,
breaches, defaults, rights of termination, cancellation or
acceleration, and liens which, individually or in the aggregate,
would not have a Material Adverse Effect, would not prevent or
materially delay consummation of the transactions contemplated
hereby and would not affect the validity of the issuance of the
Common Stock.
(b) Except for (i) applicable requirements, if any,
under Blue Sky Laws, (ii) the filing of additional listing
applications with Nasdaq, and (iii) the filing of the Registration
Statement, Warrant Registration Statement and Additional Warrant
Registration Statement, no filing, consent, approval, permit,
authorization, notice, registration or other action of or with any
Governmental Entity is required to be made or obtained by or with
respect to the Company or any of its Subsidiaries in connection
with the execution and delivery of this Agreement, the
Registration Rights Agreement, the Warrant and the Additional
Warrants by the Company, the issuance of the Common Stock or the
consummation by the Company of the transactions contemplated
hereby and thereby.
5.6 Compliance With Applicable Law. The businesses of
the Company are not being conducted in violation of any law,
ordinance, rule, regulation, judgment, decree or order of any
Governmental Entity, except for possible violations which,
individually or in the aggregate, would not have a Material
Adverse Effect. The Company and each of its Subsidiaries possess
all domestic and foreign governmental licenses, permits,
authorizations and approvals and have made all registrations and
given all notifications required under federal, state, local or
foreign law to carry on in all respects their businesses as
currently conducted, except as otherwise disclosed in writing by
the Company to the Investor on or prior to the date hereof, and
except where the failure to have any such licenses, permits,
authorizations or approvals, individually or in the aggregate,
would not have a Material Adverse Effect. Except as disclosed in
the SEC Documents, no investigation or review by any Governmental
Entity with respect to the Company or any of its Subsidiaries is
pending or, to the knowledge of the Company, threatened, other
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<PAGE>
than those the outcome of which, individually or in the aggregate,
would reasonably be expected to have a Material Adverse Effect.
5.7 Compliance With Food and Drug Act.
(a) FDA Permits. Except as set forth in the SEC
Documents, the Company and each of its Subsidiaries have all
material licenses, permits, consents, approvals and authorizations
that are required under the Food and Drug Act and any similar
foreign law, rule or regulation (collectively, the "FDA Permits")
in connection with the conduct of the businesses of the Company
and each of its Subsidiaries as presently conducted. The Company
has obtained and owns or has the right to use the FDA Permits in
accordance with the terms thereof. Each FDA Permit is valid and
in full force and effect. The FDA Permits are currently effective
and sufficient for the operation of the Company's businesses as
currently conducted. All information supplied by or on behalf of
the Company and each of its Subsidiaries to obtain or maintain
each FDA Permit was, as of the date given, true and complete in
all material respects. The Company and each of its Subsidiaries
has complied in all material respects with all conditions and
requirements imposed by the FDA Permits and neither the Company
nor any of its Subsidiaries has received any notice of
cancellation, suspension or termination of any of the FDA Permits
and to the Knowledge of the Company no Governmental Entity intends
to cancel, suspend or terminate any of the FDA Permits or that
valid grounds for such cancellation, suspension or termination
exist.
(b) Food and Drug Act. (i) The Company and each of
its Subsidiaries are in compliance in all material respects with
all applicable requirements of the Food and Drug Act and any
similar foreign law, rule or regulation, (ii) the Company's and
each of its Subsidiaries' existing inventory of products held for
sale, and all products manufactured by the Company, any of its
Subsidiaries or any of the Company's Affiliates and sold within
the two (2) years preceding the date hereof, have been produced in
compliance in all material respects with all applicable
requirements of the Food and Drug Act and any similar foreign law,
rule or regulation, including, without limitation, all "current
good manufacturing practices" and similar requirements thereunder
and (iii) to the Knowledge of the Company there is no event,
condition, circumstance, activity, practice, incident, action or
plan of the Company or any Subsidiary which is likely to interfere
with or prevent the Company's or any of its Subsidiaries continued
compliance with all applicable requirements of the Food and Drug
Act or any similar foreign law, rule or regulation, or which may
give rise to any common law or legal liability of the Company or
any Subsidiary under, or otherwise form the basis of any Lien or
any claim, action, suit, arbitration, inquiry, proceeding or
investigation by or before any Governmental Entity based on or
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<PAGE>
related to, the Food and Drug Act or any similar foreign law, rule
or regulation, other than those the outcome of which, individually
or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect.
5.8 Litigation. Except as disclosed in the SEC
Documents, there is no claim, action or proceeding (including any
condemnation proceeding) pending or, to the Knowledge of the
Company, threatened against or relating to the Company or any of
its Subsidiaries by or before any Governmental Entity or
arbitrator that if adversely determined, individually or in the
aggregate, would have a Material Adverse Effect, nor is there any
judgment, decree, injunction, rule or order of any Governmental
Entity or arbitrator outstanding against the Company or any of its
Subsidiaries that has had, or would reasonably be expected in the
future to have, a Material Adverse Effect or which reasonably
could be expected to materially adversely affect the transactions
contemplated by this Agreement.
5.9 SEC Documents, Financial Statements.
(a) The Common Stock is registered pursuant to
Section 12(g) of the Securities Exchange Act and the Company has
filed all reports, schedules, forms, statements and other
documents, together with all exhibits, financial statements and
schedules thereto required to be filed by it with the SEC pursuant
to the reporting requirements of the Securities Exchange Act,
including material filed pursuant to Section 13(a) or 15(d), (all
of the foregoing, whether heretofore or hereafter filed with the
SEC since January 1, 1996, and the Registration Statement, when
declared effective, being hereinafter referred to as the "SEC
Documents"). The Common Stock is currently listed or quoted on
the Principal Market, which is, as of the date hereof the Nasdaq
National Market. The Company has delivered or made available to
the Investor true and complete copies of the SEC Documents through
September 30, 1997. The Company has not provided to the Investor
any material information which, according to applicable law, rule
or regulation, should have been disclosed publicly by the Company
but which has not been so disclosed, other than with respect to
the transactions contemplated by this Agreement. As of their
respective dates, the SEC Documents complied in all material
respects with the requirements of the Securities Exchange Act or
the Securities Act, as the case may be, and the rules and
regulations of the SEC promulgated thereunder and other federal,
state and local laws, rules and regulations applicable to such SEC
Documents, and none of the SEC Documents contained any untrue
statement of a material fact or omitted to state a material fact
required to be stated herein or necessary in order to make the
statements therein, in light of the circumstances under which they
were made, not misleading. As of the date of delivery by the
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<PAGE>
Investor of the Prospectus contained in the Registration Statement
in connection with sales of Common Stock by the Investor, such
Prospectus will comply in all material respects with the
requirements of the Securities Act and the rules and regulations
of the SEC promulgated thereunder, and other federal, state and
local laws, rules and regulations applicable to such Prospectus.
The financial statements of the Company included (or incorporated
by reference) in the SEC Documents comply as to form in all
material respects with applicable accounting requirements and the
published rules and regulations of the SEC or other applicable
rules and regulations with respect thereto. Such financial
statements have been prepared in accordance with generally
accepted accounting principles ("GAAP") applied on a consistent
basis during the periods involved (except (i) as may be otherwise
indicated in such financial statements or the notes thereto or
(ii) in the case of unaudited interim statements, to the extent
they may not include footnotes or may be condensed or summary
statements) and fairly present in all material respects the
consolidated financial position of the Company and its
Subsidiaries as of the dates thereof and the results of operations
and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments).
(b) During the three (3) years preceding the date
hereof, the SEC has not issued a order preventing or suspending
the use of any prospectus relating to the offering of any shares
of Common Stock or instituted proceedings for that purpose.
5.10 No Undisclosed or Contingent Liabilities. Neither
the Company nor any of its Subsidiaries has any claims,
liabilities or obligations of any nature whatsoever (whether
absolute, accrued, contingent or otherwise and whether due or to
become due) that would be required to be reflected or reserved
against on a consolidated balance sheet of the Company and its
consolidated Subsidiaries under GAAP, except for claims,
liabilities or obligations (i) reflected or reserved against on
the Balance Sheet, (ii) disclosed in the Company's most recent
Form 10-K or any SEC Document filed subsequent to such Form 10-K
or (iii) incurred by the Company or any of its Subsidiaries since
September 30, 1997 in the ordinary course of business and
consistent with past practice and that, individually or in the
aggregate, would not have a Material Adverse Effect.
5.11 Taxes. Except as set forth in the SEC Documents, the
Company and its Subsidiaries have timely filed all necessary Tax
Returns and notices and have paid all federal, state, county,
local and foreign taxes of any nature whatsoever for all the tax
years through June 30, 1996 indicated on such Tax Returns as being
due and payable, to the extent such taxes have become due (other
than taxes which are being challenged in good faith by the Company
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<PAGE>
and have been adequately reserved for by the Company). Except as
set forth in the SEC Documents, there are no tax deficiencies
which would reasonably be expected to have a Material Adverse
Effect; the Company and its Subsidiaries have paid all Taxes which
have become due, whether pursuant to any assessments, or
otherwise, and there is no further liability (whether or not
disclosed on such returns) or assessments for any such Taxes, and
no interest or penalties accrues or accruing with respect thereto,
except as may be set forth or adequately reserved for in the
financial statements included in the SEC Documents; the amounts
currently set up as provisions for Taxes or otherwise by the
Company and its Subsidiaries on their books and records are
sufficient in all material respects for the payment of all their
unpaid federal, foreign, state, county and local taxes accrued
through the dates as of which they speak, and for which the
Company and its Subsidiaries may be liable in their own right, or
as transferee of the assets of, as successor to any other
corporation, association, partnership, joint venture or other
entity.
5.12 Employee Benefit Plans. All employee benefit plans
and other benefit arrangements covering the employees of the
Company and its Subsidiaries (the "Benefit Plans") have been
operated and administered in all material respects in compliance
with their terms and applicable law, and there are no claims,
liabilities or obligations of any kind whatsoever relating to the
Benefit Plans which individually or in the aggregate would have a
Material Adverse Effect, except for any such claims, liabilities
or obligations described in the SEC Documents.
5.13 Absence of Certain Changes. Except as set forth in
any SEC Document filed by the Company, the business of the Company
and its Subsidiaries has been conducted in the ordinary course
consistent with past practices and there has not been:
(i) any event, occurrence, development or
state of circumstances or facts which, individually or in the
aggregate, has had or would reasonably be expected to have a
Material Adverse Effect;
(ii) any declaration, setting aside or payment
of any dividend or other distribution with respect to any shares
of Capital Stock of the Company, other than the normal quarterly
dividend of the Company, or any repurchase, redemption or other
acquisition by the Company or any Subsidiary of any outstanding
shares of Capital Stock or other securities of, or other ownership
interests in, the Company or any Subsidiary;
(iii) any amendment of any material term of
any outstanding security of the Company or any Subsidiary;
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<PAGE>
(iv) any incurrence, assumption or guarantee
by the Company or any Subsidiary of any indebtedness for borrowed
money, other than working lines of credit or borrowings under
existing lines of credit;
(v) any creation or assumption by the Company
or any Subsidiary of any Lien on any material asset other than in
the ordinary course of business consistent with past practice;
(vi) any making of any loan, advance or
capital contributions to or investment in any Person in excess of
$100,000 other than loans, advances or capital contributions to or
investments in wholly-owned Subsidiaries made in the ordinary
course of business consistent with past practice;
(vii) any damage, destruction or other
casualty loss (whether or not covered by insurance) affecting the
business or assets of the Company or any Subsidiary which,
individually or in the aggregate, has had or would reasonably be
expected to have a Material Adverse Effect;
(viii) any transaction or commitment made, or
any contract or agreement entered into, by the Company or any
Subsidiary relating to its assets or business (including the
acquisition or disposition of any assets) or any relinquishment by
the Company or any Subsidiary of any contract or other right, in
either case, material to the Company and the Subsidiaries, taken
as a whole, other than transactions and commitments in the
ordinary course of business consistent with past practice and
those contemplated by this Agreement; or
(ix) any change in any method of accounting or
accounting practice by the Company or any Subsidiary.
5.14 Environmental Matters.
(a) Except as set forth in the SEC Documents, the
Company and its Subsidiaries have obtained all permits, licenses
and other authorizations, and have made all registrations and
given all notifications, that are required with respect to the
operation of their respective businesses under all applicable
Environmental Laws other than those permits, licenses, other
authorizations, registrations and notifications the failure of
which to obtain or make, individually or in the aggregate, would
not have a Material Adverse Effect.
(b) Except as set forth in the SEC Documents, the
Company and its Subsidiaries are in compliance in all material
respects with all terms and conditions of the required permits,
licenses and other authorizations referred to in subsection (a) of
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<PAGE>
this Section 5.14, and also in compliance in all material respects
with any other limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules and timetables
contained in the Environmental Laws or contained in any
regulation, code, plan, order, decree, judgment, injunction,
settlement agreement, notice or demand letter issued, entered,
promulgated or approved thereunder, other than where the failure
to be in such compliance, individually or in the aggregate, would
not have a Material Adverse Effect.
(c) Except as set forth in the SEC Documents, there
is no civil, criminal or administrative action, suit, demand,
claim, hearing, notice of violation, investigation, proceeding,
notice or demand letter (collectively "Actions") pending or, to
the knowledge of the Company, threatened against the Company or
any of its Subsidiaries relating in any way to Environmental Laws
or any regulation, code, plan, order, decree, judgment,
injunction, notice or demand letter issued, entered, promulgated
or approved thereunder other than Actions that, if determined
adversely to the Company or such Subsidiaries, would not
reasonably be expected to have a Material Adverse Effect.
5.15 Material Contracts.
(a) Except as disclosed in the SEC Documents,
neither the Company nor any Subsidiary is a party to or bound by
any agreement or arrangement material to the Company and its
Subsidiaries taken as a whole ("Material Contracts").
(b) Except as disclosed in the SEC Documents, each
Material Contract is in full force and effect and constitutes a
legal, valid and binding obligation of the Company or the
Subsidiary party thereto and, to the Knowledge of the Company,
each other party thereto, and is enforceable against the Company
or its Subsidiaries and, to the Knowledge of the Company, each
other party thereto in accordance with its terms, except to the
extent that such enforceability is limited by (i) bankruptcy,
insolvency, reorganization, fraudulent transfer, moratorium or
other similar laws now or hereafter in effect relating to
creditors' rights generally and (ii) general principles of equity,
and neither the Company nor any of its Subsidiaries, nor, to the
knowledge of the Company, any other party thereto is in conflict
therewith or in violation or breach thereof or default thereunder,
except for such conflicts, violations, breaches and defaults
which, individually or in the aggregate, would not have a Material
Adverse Effect.
5.16 Properties; Encumbrances. Subject to the next
succeeding sentence, or as disclosed in the SEC Documents, each of
the Company and its Subsidiaries has good and valid title, and in
the case of real property, insurable title, to all material
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<PAGE>
properties and assets which it purports to own (real, personal and
mixed, tangible and intangible, including all forms of goodwill,
rights, intellectual property and intellectual property rights)
(collectively, the "Company Assets"), including, without
limitation, all the material properties and assets reflected on
the Balance Sheet (except for (i) real and personal property sold
since the date of the Balance Sheet or which was obsolete or no
longer useful in connection with the businesses of the Company and
its Subsidiaries and (ii) capital leases reflected on the Balance
Sheet), and all material properties and assets purchased by the
Company and its Subsidiaries since the date of the Balance Sheet.
All Company Assets are free and clear of all liens, mortgages,
claims, interests, charges, security interests or other
encumbrances or adverse interests of any nature whatsoever and
other title or interest retention arrangements ("Liens"), except
(A) as reflected on the Balance Sheet, (B) as set forth on
Schedule 3.16, (C) statutory Liens of carriers, warehousemen,
mechanics, workmen and materialmen for liabilities and obligations
incurred in the ordinary course of business consistent with past
practice that are not yet delinquent or being contested in good
faith, (D) such defects, irregularities, encumbrances and other
imperfections of title as normally exist with respect to property
similar in character and that, individually or in the aggregate
together with all other such exceptions, do not have a Material
Adverse Effect, (E) Liens for Taxes and (F) Liens that do not
interfere with the present use of the property subject to the
Lien.
5.17 Insurance. Except as set forth in the SEC Documents,
all current primary, excess and umbrella policies of insurance
owned or held by or on behalf of or providing insurance coverage
to the Company or any of its Subsidiaries are in full force and
effect. Except as set forth in the SEC Documents, with respect to
all such insurance policies providing insurance coverage to the
Company or any of its Subsidiaries, no premiums are in arrears and
no notice of cancellation or termination has been received with
respect to any such policy, other than notices of cancellation or
termination routinely sent at the end of a policy term. The
Company believes that the insurance coverage of the Company and
its Subsidiaries is consistent with the coverage generally
maintained by corporations of similar size and engaged in similar
lines of business except that the Company generally self-insures
against potential product liability exposure with respect to its
marketed products.
5.18 Employee Claims; Labor Matters. Except as disclosed
in the SEC Documents, there are no claims or actions pending or,
to the Knowledge of the Company, threatened between the Company or
any of its Subsidiaries and any of their respective employees,
unions, or former employees that would, or would be reasonably
likely to, individually or in the aggregate, have a Material
Adverse Effect. Except as set forth in the SEC Documents, the
Company and each of its Subsidiaries is in compliance in all
material respects with the terms of any collective bargaining
agreements covering employees of the Company or any Subsidiary,
except for matters of noncompliance which, individually or in the
aggregate, would not be expected to have a Material Adverse
Effect.
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<PAGE>
5.19 Material Disclosure. Except as set forth in the SEC
Documents, to the Knowledge of the Company, there is no fact,
transaction or development which the Company has not disclosed to
the Investor in writing (including pursuant to the SEC Documents
filed prior to the date hereof) which would reasonably be
expected, individually or in the aggregate, to have a Material
Adverse Effect. This Agreement (including any Exhibit or
Schedule hereto) and any written statements, documents or
certificates furnished to the Investor by the Company or its
Subsidiaries prior to the date hereof in connection with the
transactions contemplated hereby, taken as a whole, do not and
will not contain any untrue statement of a material fact or omit
to state a material fact required to be stated herein or therein
or necessary to make the statements herein or therein, in light of
the circumstances under which they were made, not misleading.
5.20 Intellectual Property. The Company and its
Subsidiaries own or possess adequate patent rights or licenses or
other rights to use patent rights, inventions, trademarks, service
marks, trade names and copyrights necessary to conduct the general
business now operated by them and neither the Company nor any of
its Subsidiaries has received any notice of infringement or
conflict with asserted rights of others with respect to any
patent, patent rights, inventions, trademarks, service marks,
trade names or copyrights which, individually or in the aggregate,
would reasonably be expected to have a Material Adverse Effect.
5.21 No General Solicitation in Regard to this
Transaction. Neither the Company nor any of its Subsidiaries or
affiliates nor any distributor or any person acting on its or
their behalf has conducted any general solicitation (as that term
is used in Rule 502(c) of Regulation D) with respect to any of the
Common Stock offered hereby, nor have they made any offers or
sales of any security or solicited any offers to buy any security
under any circumstances that would require registration of the
Common Stock offered hereby under the Securities Act.
5.22 No Undisclosed Events or Circumstances. Since
September 30, 1997, no event or circumstance has occurred or
exists with respect to the Company or its Subsidiaries or their
respective businesses, properties, prospects, operations or
financial condition, which, under applicable law, rule or
regulation, requires public disclosure or announcement prior to
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<PAGE>
the date hereof by the Company but which has not been disclosed in
the SEC Documents or otherwise publicly disclosed in Company press
releases.
5.23 No Integrated Offering. Neither the Company, nor any
of its Subsidiaries or affiliates, nor any person acting on its or
their behalf has, directly or indirectly, made any offers or sales
of any security or solicited any offers to buy any security, other
than pursuant to this Agreement, under circumstances that would
require registration under the Securities Act of the shares of
Common Stock to be issued under this Agreement.
5.24 No Brokers. The Company has taken no action which
would give rise to any claim by any Person for brokerage
commissions, finder's fees or similar payments by the Investor
relating to this Agreement for the transactions contemplated
hereby.
5.25 No Violation of Covenants. No event of default has
occurred and is continuing (or event which with the lapse of time
or notice or both would constitute such an event) which has not
otherwise been waived under any of the revolving credit facilities
or under any indenture, mortgage, deed of trust, loan agreement or
other agreement or instrument for money borrowed or any other
material agreement to which the Company or any of its Subsidiaries
is bound, or to which any of the property or assets of the Company
or any of its Subsidiaries is subject.
VI.
COVENANTS OF THE COMPANY
6.1 Registration Rights. The Registration Rights
Agreement shall remain in full force and effect in accordance with
its terms and the Company shall comply in all respects with the
terms thereof.
6.2 Reservation of Common Stock. Except as disclosed in
the SEC Documents, the Company will reserve in each Investment
Period 625,000 shares of Common Stock, and the Company shall
continue to reserve and keep available at all times in each
Investment Period, free of preemptive rights, shares of Common
Stock for the purpose of enabling the Company to satisfy any
obligation to issue shares of its Common Stock incident to the
Closings in such Investment Period and incident to the exercise of
the Warrant and the Additional Warrants issued hereunder; such
amount of shares of Common Stock to be reserved to be calculated
based upon the minimum Purchase Price therefor under the terms of
this Agreement, and assuming the full exercise of the Warrant and
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<PAGE>
the Additional Warrants. The number of shares so reserved from
time to time, as theretofore increased or reduced as hereinafter
provided, may be reduced by the number of shares actually
delivered hereunder and the number of shares so reserved shall be
increased to reflect (a) potential increases in the Common Stock
which the Company may thereafter be so obligated to issue by
reason of adjustments to the Purchase Price therefor and the
issuance of the Warrant and each Additional Warrant and (b) stock
splits and stock dividends and distributions.
6.3 Listing of Common Stock. During the term of this
Agreement, the Company hereby agrees to maintain the listing of
the Common Stock on a Principal Market, and as soon as practicable
but in any event prior to the commencement of the Commitment
Period to list the additional shares of Common Stock issuable
under this Agreement (including Common Stock issuable upon
exercise of the Warrant and the Additional Warrants). The Company
further agrees that, if the Company applies to have the Common
Stock traded on any other Principal Market, it will include in
such application the Common Stock issuable under this Agreement
(including Common Stock issuable upon exercise of the Warrant and
the Additional Warrants), and will take such other action as is
necessary or desirable to cause the Common Stock to be listed on
such other Principal Market as promptly as possible. If the
Principal Market is the Nasdaq National Market Large Caps, the
Company shall maintain sufficient net tangible assets to satisfy
the requirements of the NASD for the listing of the Common Stock
on the Nasdaq National Market Large Caps. The Company shall
undertake its best efforts to obtain the shareholder approval
referenced in Section 3.2(g) required for the issuance of Common
Stock under this Agreement within such time period as shall not at
any time preclude the Investor from providing an Optional Purchase
Notice during the Commitment Period, or the Company from providing
a Mandatory Purchase Notice or an Additional Purchase Notice for
the maximum Investment Amount during any Investment Period.
6.4 Exchange Act Registration. During the term of this
Agreement, the Company will cause its Common Stock to continue to
be registered under Section 12(g) of the Exchange Act, will comply
in all respects with its reporting and filing obligations under
the Exchange Act, and will not take any action or file any
document (whether or not permitted by the Exchange Act or the
rules thereunder) to terminate or suspend such registration or to
terminate or suspend its reporting and filing obligations under
the Exchange Act. If required, the Company will take all action
to continue the listing and trading of its Common Stock on the
Principal Market and will comply in all respects with the
Company's reporting, filing and other obligations under the bylaws
or rules of the NASD and the Principal Market.
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<PAGE>
6.5 Legends. The certificates evidencing the Common
Stock to be issued to the Investor at each Closing and upon the
exercise of the Warrant and the Additional Warrants (and otherwise
as provided by Section 7.1) shall be free of legends or stop
transfer or other restrictions.
6.6 Corporate Existence. During the term of this
Agreement, the Company will take all steps necessary to preserve
and continue the corporate existence of the Company.
6.7 Additional SEC Documents. During the term of this
Agreement, the Company will furnish to the Investor, as and when
the originals thereof are submitted to the SEC for filing, copies
of all SEC Documents so furnished or submitted to the SEC.
6.8 "Blackout Period". During the term of this
Agreement, the Company will immediately notify the Investor upon
the occurrence of any of the following events in respect of a
registration statement or related Prospectus in respect of an
offering of securities required to be registered under this
Agreement or the Registration Rights Agreement: (a) receipt of
any request for additional information by the SEC or any other
federal or state governmental authority during the period of
effectiveness of the registration statement for amendments or
supplements to the registration statement or related Prospectus;
(b) the issuance by the SEC or any other federal or state
governmental authority of any stop order suspending the
effectiveness of the registration statement or the initiation of
any proceedings for that purpose; (c) receipt of any notification
with respect to the suspension of the qualification or exemption
from qualification of any of such registrable securities for sale
in any jurisdiction or the initiation or threatening of any
proceeding for such purpose; (d) the happening of any event which
makes any statement made in the registration statement or related
Prospectus or any document incorporated or deemed to be
incorporated therein by reference untrue in any material respect
or which requires the making of any changes in the registration
statement, related Prospectus or documents so that, in the case of
the registration statement, it will not contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading, and that in the case of the related
Prospectus, it will not contain any untrue statement of a material
fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading;
and (e) the Company's reasonable determination that a
post-effective amendment to the registration statement would be
appropriate, in which event the Company will promptly make
available to the Investor any such supplement or amendment to the
related Prospectus. The Company shall not deliver to the Investor
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<PAGE>
any Mandatory Purchase Notice or Additional Purchase Notice and
the Investor shall not deliver to the Company any Optional
Purchase Notice during the continuation of any of the foregoing
events.
VII.
LEGENDS AND DELIVERY OF CERTIFICATES,
COMPLIANCE AND INVESTOR COVENANTS
7.1 Legends and Delivery of Certificates. Each of the
Warrant and the Additional Warrants and, unless otherwise provided
below, the Common Stock will bear the following legend (the
"Legend"):
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR ANY STATE SECURITIES LAWS. THEY MAY NOT BE SOLD OR
OFFERED FOR SALE EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT AS TO THE SECURITIES UNDER THE
SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR
AN APPLICABLE EXEMPTION FROM SUCH REGISTRATION
REQUIREMENTS.
In the event shares of Common Stock are issued incident to a
Closing or upon exercise of the Warrant or an Additional Warrant
in circumstances pursuant to which shares of Common Stock are
either required to bear the Legend or are not to bear the Legend,
such certificates (bearing or not bearing the Legend, as
appropriate) shall be issued and delivered to the Investor or as
otherwise directed by the Investor on the applicable Closing Date
or within two Trading Days of the surrender of the Warrant or
Additional Warrant for exercise (together with all other
documentation required to be delivered to effect such exercise),
as applicable, in each case against payment therefor.
The Company shall cause the transfer agent for the Common
Stock to issue and deliver to the Investor or as otherwise
directed by the Investor, shares of Common Stock not bearing the
Legend, during the following periods and under the following
circumstances and without the need for any further advice or
instruction or documentation to the transfer agent by or from the
Investor:
(a) At any time from and after the effective date
of the applicable registration statement: (i) incident to any
Closing or the issuance of any shares of Common Stock; (ii)
incident to the exercise of the Warrant and any Additional
Warrant; and (iii) upon any surrender of one or more certificates
evidencing Common Stock and which bear the Legend, to the extent
accompanied by a notice requesting the issuance of new
certificates free of the Legend to replace those surrendered;
provided that in connection with such event the Investor confirms
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<PAGE>
to the transfer agent that it intends to sell such Common Stock to
a third party which is not an affiliate of the Company or the
Investor, and the Investor agrees to redeliver such Common Stock
to the transfer agent to add the Legend in the event the Common
Stock is not sold; and
(b) At any time from and after the Closing Date,
upon any surrender of one or more certificates evidencing Common
Stock and which bear the Legend, to the extent accompanied by a
notice requesting the issuance of new certificates free of the
Legend to replace those surrendered and containing or also
accompanied by representations that (i) the then holder thereof is
permitted to dispose of such Common Stock pursuant to Rule 144(k)
under the Securities Act, (ii) such holder intends to effect the
sale or other disposition of such Common Stock whether or not
pursuant to the Registration Statement, to a purchaser or
purchasers who will not be subject to the registration
requirements of the Securities Act or (iii) such holder is not
then subject to such requirements; provided that in the case of
surrenders described in clauses (ii) and (iii) thereof, the holder
provides an opinion of counsel in form and substance reasonably
satisfactory to the Company.
7.2 No Other Legend or Stock Transfer Restrictions. No
Legend has been or shall be placed on the share certificates
representing the Common Stock and no instructions or stop
transfers or other restrictions on transfer have been or shall be
given to the Company's transfer agent with respect thereto other
than as expressly set forth in this Article VII.
7.3 Investor's Compliance. Nothing in this Article VII
shall affect in any way the Investor's obligations under any
agreement to comply with all applicable securities laws upon
resale of the Common Stock.
7.4 Covenants of the Investor.
(a) The Investor shall not make any offers or sales
of the Common Stock other than pursuant to a registration
statement under the Securities Act or pursuant to an exemption
from the registration requirements thereof. The Investor will
comply with applicable prospectus delivery requirements under the
Securities Act.
(b) The Investor shall not, whether directly,
indirectly or through an affiliate, sell shares of Common Stock
short except on a neutral tick or uptick. The Investor shall use
commercially reasonable efforts not to create an intraday low in
the Common Stock.
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<PAGE>
VIII.
OTHER ISSUANCES OF COMMON STOCK
8.1 Equity Offering Adjustment to Purchase Price. In the
event that the Company makes an Equity Offering during an
Investment Period and a Mandatory Purchase Notice, Additional
Purchase Notice or Optional Purchase Notice has been delivered
with respect to such Investment Period, then notwithstanding
anything herein to the contrary, the purchase price per share of
Common Stock for any Investment Amount made during such Investment
Period prior to the consummation of the Equity Offering shall be
the lower of (a) the lowest effective purchase price per share of
Common Stock received by the Company in any such Equity Offering,
and (b) the price per share of Common Stock determined hereunder
with respect to Purchases of Common Stock effected by the Investor
(whether pursuant to a Mandatory Purchase Notice, an Additional
Purchase Notice or an Optional Purchase Notice) during such
Investment Period.
8.2 Other Adjustments to Purchase Price and Floor Price.
The daily low trading price of the Common Stock for any Trading
Day used to calculate the Purchase Price and the Floor Price shall
be adjusted proportionally to reflect any stock splits, stock
dividends, reclassifications, combinations and similar
transactions involving the Company's Common Stock.
IX.
CHOICE OF LAW AND VENUE, WAIVER OF JURY TRIAL
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED UNDER THE
LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAW OR CHOICE OF LAW. The parties hereby agree that
all actions or proceedings arising directly or indirectly from or
in connection with this Agreement shall, at the option of either
party, be litigated only in the United States District Court for
the Southern District of New York located in New York County, New
York, unless such District Court declines jurisdiction, in which
case such actions or proceedings shall be litigated only in the
state court located in New York County, New York. The parties
consent to the jurisdiction and venue of the foregoing court and
consent that any process or notice of motion or other application
to said court or a judge thereof may be served inside or outside
the State of New York or the Southern District of New York by
registered mail, return receipt requested, directed to the party
for which it is intended at its address set forth in this
Agreement (and service so made shall be deemed complete five (5)
Trading Days after the same has been posted as aforesaid) or by
personal service or in such other manner as may be permissible
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<PAGE>
under the rules of said court. The parties hereto hereby
irrevocably waive any and all right to a trial by jury with
respect to any legal proceeding arising out of or relating to this
Agreement or the transactions contemplated hereby.
X.
ASSIGNMENT, ENTIRE AGREEMENT, AMENDMENT, TERMINATION
10.1 Assignment. Neither this Agreement nor any rights of
the Investor or the Company hereunder may be assigned by either
party to any other person. Notwithstanding the foregoing, the
Investor's rights and obligations under this Agreement may be
assigned at any time, in whole, with the consent of the Company
(which consent shall not be unreasonably withheld) to any
affiliate of the Investor (a "Permitted Transferee"). The rights
and obligation of the Investor under this Agreement shall inure to
the benefit of, and be enforceable by and against, any such
Permitted Transferee.
10.2 Entire Agreement, Amendment. This Agreement, the
Registration Rights Agreement, and the other documents delivered
pursuant hereto constitute the full and entire understanding and
agreement between the parties with regard to the subjects hereof
and thereof, and no party shall be liable or bound to any other
party in any manner by any warranties, representations or
covenants except as specifically set forth in this Agreement or
therein. Except as expressly provided in this Agreement, neither
this Agreement nor any term hereof may be amended, waived,
discharged or terminated other than by a written instrument signed
by the party against whom enforcement of any such amendment,
waiver, discharge or termination is sought.
10.3 Publicity. The Company agrees that it will not
disclose, and will not include in any public announcement, the
name of the Investor without its express written consent, unless
and until such disclosure is required by law or applicable
regulation, and then only to the extent of such requirement.
Except as may be required by law, the Company shall consult with
the Investor before issuing any press release or otherwise making
any public statements with respect to this Agreement and shall not
issue any such press release or make any such public statement
prior to such consultation.
10.4 Termination. (a) The Company may, in its sole
discretion, terminate this Agreement and Investor's obligation to
purchase any Investment Amount for the remainder of the Commitment
Period, without liability to the Investor (except to the extent
provided in Article XI hereof).
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<PAGE>
(b) Investor may terminate this Agreement as a result of
(i) a breach (which is not cured in accordance with this
Agreement) by the Company of any material representation,
warranty, covenant or other obligation in this Agreement or the
Registration Rights Agreement or (ii) if the Investor determines,
in its sole discretion, at any time that the adoption of, or
change in, or any change in the interpretation or application of,
any law, regulation, rule, guideline or treaty (including, but not
limited to, changes of capital adequacy) makes or will make it
impractical or impossible for the Investor to fulfill its
commitment pursuant to this Agreement.
XI.
NOTICES, ETC., COST AND EXPENSES, INDEMNIFICATION
11.1 Notices, Etc.. All notices, demands, requests,
consents, approvals or other communications required or permitted
to be given hereunder or which are given with respect to this
Agreement shall be in writing and shall be personally served or
deposited in the mail, registered or certified, return receipt
requested, postage prepaid, or delivered by reputable air courier
service with charges prepaid, or transmitted by hand delivery,
telegram, telex or facsimile, addressed as set forth below, or to
such other address as such party shall have specified most
recently by written notice: (a) if to the Company, to:
Immunomedics, Inc., 300 American Road, Morris Plains, NJ 07950;
Attention: David Goldenberg, Facsimile No.: (201) 605-8282, with
copies (which shall not constitute notice) to: Warshaw Burstein
Cohen Schlesinger and Kuh LLP, 555 Fifth Avenue, 11th floor, New
York, NY 10017; Attention: Howard M. Cohen, Esq., Facsimile No.:
(212) 972-9150; and (b) if to the Investor, to Cripple Creek
Securities L.L.C., 40 West 57th Street, New York, NY 10019,
Attention: Robert L. Chender, Facsimile No.: (212) 698-0554 with
copies (which shall not constitute notice) to: Arnold & Porter,
555 12th Street, N.W., Washington, D.C. 20004-1202, Attn. L.
Stevenson Parker, Facsimile No.: (202) 942-5999. Subject to
Section 2.5(d), notice shall be deemed given on the date of
service or transmission if personally served or transmitted by
telegram, telex or facsimile. Notice otherwise sent as provided
herein shall be deemed given on the third business day following
the date mailed or on the second business day following delivery
of such notice by a reputable air courier service.
11.2 Costs and Expenses. The Company shall be responsible
for the Investor's (a) legal fees and related expenses incurred in
entering into this Agreement up to a maximum amount of $25,000,
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which shall be payable upon execution and delivery of this
Agreement, and (b) costs and expenses in connection with the
performance of its obligations hereunder up to a maximum amount of
$40,000 initially, and $6,000 quarterly thereafter. The Company
agrees to pay the Investor within thirty (30) days following the
Investor's request therefor. In the event payment is not received
within such thirty (30) day period, Investor shall have the right
to deduct any such amounts owed by the Company to the Investor
from any amounts owed by the Investor to the Company pursuant to
Section 2.4(ii) herein.
The Company shall also be responsible for any subsequent
costs and expenses incurred by the Investor in connection with
matters set forth in the third paragraph of Section 3.3 (including
without limitation legal fees and fees of advisors and
representatives of the Investor), which amounts may be netted by
the Investor against the amount of any payment relating to the
issuance of shares of Common Stock to the Investor in connection
with any Closing.
11.3 Indemnification.
(a) Indemnification of Investor. The Company
agrees to indemnify and hold harmless the Investor and each
person, if any, who controls the Investor within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act
as follows:
(i) against any and all loss, liability,
claim, damage and expense whatsoever, as incurred, arising out of
any untrue statement of a material fact contained in the
Registration Statement (or any amendment thereto), including any
Prospectus, or in any offering circular or other document, as
applicable, or the omission or alleged omission therefrom of a
material fact required to be stated therein or necessary to make
the statement therein not misleading or arising out of any untrue
statement or alleged untrue statement of a material fact contained
in any Prospectus (or any amendment or supplement thereto), or in
any offering circular or other document, as applicable, or the
omission or alleged omission therefrom of a material fact
necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading;
(ii) against any and all loss, liability,
claim, damage and expense whatsoever, as incurred, to the extent
of the aggregate amount paid in settlement of any litigation, or
any investigation or proceeding by any governmental agency or
body, based upon any such untrue statement or omission, or any
such alleged untrue statement or omission; provided that (subject
to Section 11.3(d) below) any such settlement is effected with the
written consent of the Company; and
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<PAGE>
(iii) against any and all expenses whatsoever,
as incurred (including the fees and disbursements of counsel),
reasonably incurred in investigating, preparing or defending
against any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue statement or omission, or
any such alleged untrue statement or omission, to the extent that
any such expense is not paid under (i) or (ii) above; provided,
however, that this indemnity agreement shall not apply to any
loss, liability, claim, damage or expense to the extent arising
out of any untrue statement or omission or alleged untrue
statement or omission made in reliance upon and in conformity with
written information furnished to the Company by the Investor
expressly for use in the Registration Statement (or any amendment
thereto), including any Prospectus (or any amendment or supplement
thereto), or in any offering circular or other document, as
applicable.
(b) Indemnification of Company. The Investor
agrees to indemnify and hold harmless the Company, its directors,
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 against any and all loss, liability, claim, damage and expense
described in the indemnity contained in subsection (a) of this
Section, as incurred, but only with respect to untrue statements
or omissions, or alleged untrue statements or omissions, made in
the Registration Statement (or any amendment thereto), including
any Prospectus (or any amendment or supplement thereto), or in any
offering circular or other document, as applicable, in reliance
upon and in conformity with written information furnished to the
Company by the Investor expressly for use in the Registration
Statement (or any amendment or supplement thereto) or in any
offering circular or other document, as applicable.
(c) Action against Parties; Notification. Each
indemnified party shall give notice as promptly as reasonably
practicable to each indemnifying party of any action commenced
against it in respect of which indemnity may be sought hereunder,
but failure to so notify an indemnifying party shall not relieve
such indemnifying party from any liability hereunder to the extent
it is not materially prejudiced as a result thereof and in any
event shall not relieve it from any liability which it may have
otherwise than on account of his indemnity agreement. In case any
such action is brought against any indemnified party, and it
notifies an indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein, and to
the extent it may elect by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice
from such indemnified party, to assume the defense thereof.
Notwithstanding the foregoing, the indemnified party or parties
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<PAGE>
shall have the right to employ its own counsel in any such case
but the fees and expenses of such counsel shall be at the expense
of such indemnified party or parties unless (i) the employment of
such counsel shall have been authorized in writing by the
indemnifying party in connection with the defense of such action
at the expense of the indemnifying party, (ii) the indemnifying
party shall not have employed counsel to have charge of the
defense of such action within a reasonable time after notice of
commencement of the action, or (iii) such indemnified party or
parties shall have reasonably concluded that there may be defenses
available to it or them which are different from or additional to
those available to one or all of the indemnifying party parties
(in which case the indemnifying parties shall not have the right
to direct the defense of such action on behalf of the indemnified
parties), in any of which events such fees and expenses of one
additional counsel shall be borne by the indemnifying party. In
no event shall the indemnifying party be liable for fees and
expenses of more than one counsel (in addition to one local
counsel) separate from their own counsel for the indemnified
parties in connection with any one action or separate but similar
or related actions in the same jurisdiction arising out of the
same general allegations or circumstances. No indemnifying party
shall, without the prior written consent of the indemnified
parties, settle or compromise or consent to the entry or any
judgment with respect to any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever in respect of which
indemnification or contribution could be sought under this Section
11.3 or Section 11.4 hereof (whether or not the indemnified
parties are actual or potential parties thereto), unless such
settlement, compromise or consent (i) includes an unconditional
release of each indemnified party from all liability arising out
of such litigation, investigation, proceeding or claim and (ii)
does not include a statement as to or an admission of fault,
culpability or a failure to act by or on behalf of an any
indemnified party.
(d) Settlement without Consent if Failure to
Reimburse. If at any time an indemnified party shall have
requested an indemnifying party to reimburse the indemnified party
for the fees and expenses of counsel, such indemnifying party
agrees that it shall be liable for any settlement of the nature
contemplated by Section 11.3(a)(ii) effected without its written
consent if (i) such settlement is entered into more than 45 days
after receipt by such indemnifying party of the aforesaid request,
(ii) such indemnifying party shall have received notice of the
terms of such settlement at least 30 days prior to such settlement
being entered into and (iii) such indemnifying party shall not
have reimbursed such indemnified party in accordance with such
request prior to the date of such settlement.
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<PAGE>
11.4 Contribution. If the indemnification provided for in
Section 11.3 hereof is for any reason unavailable to or
insufficient to hold harmless an indemnified party in respect of
any losses, liabilities, claims, damages or expenses referred to
herein, then each indemnifying party shall contribute to the
aggregate amount of such losses, liabilities, claims, damages and
expenses incurred by such indemnified party, as incurred (a) in
such proportion as is appropriate to reflect the relative benefits
received by the Company on the one and the Investor on the other
hand from the offering of the Common Stock pursuant to this
Agreement or (b) if the allocation provided by clause (a) is not
permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause
(a) above but also the relative fault of the Company on the one
hand and of the Investor on the other and in connection with the
statements or omissions which resulted in such losses,
liabilities, claims, damages or expenses, as well as any other
relevant equitable considerations.
The relative benefits received by the Company on the one hand
and the Investor on the other hand in connection with the offering
of the Common Stock pursuant to this Agreement shall be deemed to
be in the same respective portions as the total proceeds from the
offering of the Common Stock pursuant to this Agreement received
by the Company from the Investor and the total profits received by
the Investor upon the sale of such Common Stock bear to the
aggregate public offering price.
The relative fault of the Company on the one hand and the
Investor on the other hand shall be determined by reference to,
among other things, whether any such untrue or alleged untrue
statement of a material fact or omission or alleged omission to
state a material fact relates to information supplied by the
Company or by the Investor and the parties' relative intent,
knowledge, access to information and opportunity to correct or
prevent such statement or omission.
The Company and the Investor agree that it would not be just
and equitable if contribution pursuant to this Section 11.4 were
determined on a pro-rata allocation or by any other method of
allocation which does not take account of the equitable
considerations referred to above in this Section 11.4. The
aggregate amount of losses, liabilities, claims, damages and
expenses incurred by an indemnified party and referred to above in
this Section 11.4 shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in
investigating, preparing or defending against any litigation, or
any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever based upon
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<PAGE>
any such untrue or alleged untrue statement or omission or alleged
omission.
Notwithstanding the provisions of this Section 11.4, the
Investor shall not be required to contribute any amount in excess
of the amount by which the total price at which the Common Stock
purchased by it and resold to the public exceeds the amount of any
damages which the Investor has otherwise been required to pay by
reason of any such untrue or alleged untrue statement or omission
or alleged omission.
No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled
to contribution from any person who was not guilty of such
fraudulent misrepresentation.
For purposes of this Section 11.4, each person, if any, who
controls the Investor within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act shall have the
same rights to contribution as such Investor, and each director of
the Company, each officer of the Company 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 shall have the same rights to
contribution as the Company.
11.5 General Indemnification. Each party shall indemnify
the other against any loss, cost or damages (including reasonable
attorney's fees and expenses) incurred as a result of such
parties' breach of any representation, warranty, covenant or
agreement in this Agreement.
XII.
MISCELLANEOUS
12.1 Counterparts. This Agreement may be executed in any
number of counterparts, all of which together shall constitute one
instrument.
12.2 Survival: Severability. (a) The representations,
warranties, covenants and agreements of the parties hereto shall
survive each Closing hereunder. The indemnity and contribution
agreements contained in Sections 11.3 and 11.4 hereof shall
survive and remain operative and in full force and effect
regardless of (i) any termination of this Agreement or of the
Commitment Period, (ii) any investigation made by or on behalf of
any indemnified party or by or on behalf of the Company, and (iii)
the consummation of the sale or successive resales of the Common
Stock. In the event that any provision of this Agreement becomes
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<PAGE>
or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force
and effect without said provision; provided that such severability
shall be ineffective if it materially changes the economic benefit
of this Agreement to any party.
12.3 Title and Subtitles. The titles and subtitles used
in this Agreement are used for convenience only and are not to be
considered in construing or interpreting this Agreement.
12.4 Reporting Entity for the Common Stock. The reporting
entity relied upon for the determination of the trading price or
trading volume of the Common Stock on any given Trading Day for
the purposes of this Agreement shall be Bloomberg or any other
reputable pricing service chosen by the Investor and reasonably
acceptable to the Company.
12.5 Effectiveness of the Agreement. This Agreement shall
be effective as of the Effective Date.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized
officers as of the date hereof.
CRIPPLE CREEK SECURITIES L.L.C. IMMUNOMEDICS, INC.
By: By:
Name: Name:
Title: Title:
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<PAGE>
EXHIBIT 4.2
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT ("Registration Rights
Agreement"), entered into as of December 23, 1997, between
Cripple Creek Securities, L.L.C., with offices at 40 West 57th
Street, 15th Floor, New York, NY 10019 (the "Investor"), and
Immunomedics, Inc., a Delaware corporation with offices at 300
American Road, Morris Plains, New Jersey 07950 (the "Company").
W I T N E S S E T H:
WHEREAS, pursuant to a Structured Equity Line Flexible
Financing(SM) Agreement, dated as of December 23, 1997 (the
"Investor Agreement"), by and between the Company and the
Investor, the Company has agreed to sell and the Investor has
agreed to purchase, from time to time as provided in the Investor
Agreement, shares of the Company's Common Stock, $0.01 par value
(the "Shares" or the "Common Stock") for a maximum aggregate
price of $30,000,000;
WHEREAS, pursuant to the terms of, and in partial
consideration for, the Investor's agreement to enter into the
Investor Agreement, the Company has issued to the Investor a
warrant dated December 23, 1997, exercisable from time to time
within four (4) years from the date of issuance (the "Warrant")
for the purchase of an aggregate of 50,000 Shares at a price
specified in such Warrant;
WHEREAS, the Company has agreed to issue from time to time
to the Investor additional four (4) year warrants to purchase up
to 125,000 Shares at prices determined pursuant to the Investor
Agreement ("Additional Warrants") upon the occurrence, if any, of
certain circumstances set forth in the Investor Agreement;
WHEREAS, pursuant to the terms of, and in partial
consideration for, the Investor's commitment to enter into the
Investor Agreement, the Company has agreed to provide the
Investor with certain registration rights with respect to the
Shares as set forth in this Registration Rights Agreement;
NOW, THEREFORE, in consideration of the mutual promises,
representations, warranties, covenants and conditions set forth
in the Investor Agreement and this Registration Rights Agreement
and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, intended to be
legally bound hereby, the Company and the Investor agree as
follows:
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<PAGE>
1. Certain Definitions. Capitalized terms used in this
Registration Rights Agreement and not otherwise defined herein
shall have the same meaning ascribed to them in the Investor
Agreement. The following terms shall have the following
respective meanings:
"Commission" shall mean the Securities and Exchange
Commission or any other federal agency at the time
administering the Securities Act.
"Investor" shall include the Investor and any permitted
assignee or transferee of the rights under the Investor
Agreement to whom the registration rights conferred by this
Registration Rights Agreement have been transferred in
compliance with Section 10 of this Registration Rights
Agreement.
The terms "register", "registered" and "registration" shall
refer to a registration effected by preparing and filing a
registration statement on Form S-3 compliance with the
Securities Act and applicable rules and regulations
thereunder, and the declaration or ordering of the
effectiveness of such registration statement.
"Registration Expenses" shall mean, subject to Section 11.2
of the Agreement, all expenses to be incurred by the Company
in connection with Investor's exercise of its registration
rights under this Registration Rights Agreement, including,
without limitation, all registration and filing fees,
printing expenses, fees and disbursements of counsel for the
Company, blue sky fees and expenses, reasonable fees and
disbursements of counsel to Investor for a "due diligence"
examination of the Company and review of the Warrant
Registration Statement and each Additional Warrant
Registration Statement, as applicable, and the expense of
any special audits incident to or required employees of the
Company, which shall be paid in any event by the Company).
"Registrable Securities" shall mean any Shares or other
securities issued or issuable to the Investor or any holder
or transferee upon the exercise of the Warrant or the
Additional Warrants as provided therein, until (i) a
registration statement under the Securities Act covering the
offering of such Shares has been declared effective by the
Commission and such Shares have been disposed of pursuant to
such effective registration statement, (ii) such Shares are
sold under circumstances in which all of the applicable
conditions of Rule 144 (or any similar provision then in
force) under the Securities Act ("Rule 144") are met, (iii)
such Shares have been otherwise transferred and the Company
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<PAGE>
has delivered a new certificate or other evidence of
ownership for such securities not bearing a restrictive
legend, or (iv) such time as, in the opinion of counsel to
the Company, which counsel shall be acceptable to the
Investor in its sole discretion, all such Shares may be sold
without any time, volume or manner limitation pursuant to
Rule 144(k) (or any similar provision then in effect) under
the Securities Act.
2. Registration Requirements. The Company shall use its
reasonable best efforts to effect the registration of the
Registrable Securities contemplated by the Warrant, and if
applicable, the Additional Warrants (including, without
limitation, the execution of an undertaking to file
post-effective amendments, appropriate qualification under
applicable blue sky or other state securities laws and
appropriate compliance with applicable regulations issued under
the Securities Act) as would permit or facilitate the sale or
distribution of all the Registrable Securities in the manner
(including manner of sale) and in all states reasonably requested
by the Warrant Holder for purposes of maximizing the proceeds
realizable by the Investor from such sale or distribution. Such
reasonable best efforts by the Company shall include without
limitation the following:
(a) Subject to the terms and conditions of this
Registration Rights Agreement, the Company shall file with the
Commission (i) no later than thirty (30) days from the date of
execution of the Investor Agreement, a registration statement on
Form S-3 under the Securities Act for the registration of the
resale by the Investor of the Registrable Securities to be issued
upon exercise of the Warrant (the "Warrant Registration
Statement") which Warrant Registration Statement shall have been
declared effective by the Commission no later than ninety (90)
days from the filing of this Registration Rights Agreement, and
(ii) no later than thirty (30) days from the date of the issuance
of each Additional Warrant, a registration of the resale by the
Investor of the Registrable Securities to be issued upon exercise
of each Additional Warrant (each, an "Additional Warrant
Registration Statement") which such Additional Warrant
Registration Statement shall have been declared effective by the
Commission within ninety (90) days of the date of issuance of
each such Additional Warrant. The Warrant Registration Statement
and each Additional Warrant Registration Statement are each
referred to herein as a "Registration Statement." Furthermore,
at the time of each Registration Statement filing, the Company
shall file (A) such blue sky filings as shall have been requested
by the Investor; and (B) any required filings with the National
Association of Securities Dealers, Inc. or exchange or market
where the Shares are traded. The Company shall use its best
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<PAGE>
efforts to have all filings declared effective as promptly as
practicable.
(b) (i) If the Company (A) fails to file the Warrant
Registration Statement complying with the requirements of this
Registration Rights Agreement within thirty (30) days from the
date of the execution of the Investor Agreement or if the
Registration Statement has not become effective on or before
ninety (90) days from the filing of the Registration Statement,
or (B) fails to file an Additional Warrant Registration Statement
complying with the requirements of this Registration Rights
Agreement within thirty (30) days of the issuance of an
Additional Warrant or if such Additional Warrant Registration
Statement has not become effective within ninety (90) days of the
filing of such Additional Warrant Registration Statement, the
Investor shall have, in addition to and without limiting any
other rights it may have at law, in equity or under the Investor
Agreement, or this Registration Rights Agreement (including the
right to specific performance), the right to receive, as liqui-
dated damages, the payments as provided in subparagraph (ii) of
this section.
(ii) In the event the Company fails to obtain the
effectiveness of a Registration Statement within the time period
set forth in Section 2(a), the Company shall pay to the Investor
an amount equal to (A) $100, in cash, for each day of the thirty
(30) day period following the date by which such Registration
Statement was required to have been declared effective and (B)
$500, in cash, for each day after such first thirty (30) day
period. In addition to the foregoing, in the event the Company
fails to maintain the effectiveness of a Registration Statement
(or the use of the underlying prospectus) throughout the period
set forth in Section 5(a), other than suspensions as set forth in
Section 5A, the Company shall pay to the Investor an amount equal
to $500, in cash, per day, in which a suspension has occurred.
(c) The Company shall enter into such customary
agreements and take all such other reasonable actions in connec-
tion therewith in order to expedite or facilitate the disposition
of such Registrable Securities. The foregoing is not intended to
require the Company to pay dividends in order to use Form S-3.
3-4. [Intentionally Omitted]
5. Registration Procedures. In the case of each
registration effected by the Company pursuant to this
Registration Rights Agreement, the Company will keep the Investor
advised in writing as to the initiation of each registration and
as to the completion thereof. At its expense, the Company will
use its reasonable best efforts to:
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<PAGE>
(a) Keep such registration effective for the period
ending forty-eight (48) months, as extended pursuant to Section
5A hereof, after the date of the initial registration of the
Warrant (in the case of the Warrant Registration Statement) and
forty-eight (48) months, as extended pursuant to Section 5A
hereof, after the date of issuance of each Additional Warrant (in
the case of an Additional Warrant Registration Statement), or
until the Investor has completed the distribution of the Shares
or securities issued or issuable by the Company upon exercise of
the Warrant and the Additional Warrants, whichever first occurs;
provided, however, that the Company's obligation under clause (a)
or clause (c) below shall only apply so long as Form S-3 (or
comparable form allowing incorporation by reference) is available
for transactions of this type.
(b) Furnish such number of prospectuses and amendments
and supplements thereto, and other documents incident thereto as
the Investor from time to time may reasonably request.
(c) Prepare and file with the Commission such
amendments and post-effective amendments to a Registration
Statement as may be necessary to keep such Registration Statement
effective for the applicable period; cause the related prospectus
to be supplemented by any required prospectus supplement, and as
so supplemented to be filed pursuant to Rule 424 under the
Securities Act; and comply with the provisions of the Securities
Act applicable to it with respect to the disposition of all
securities covered by such Registration Statement during the
applicable period in accordance with the intended methods of
disposition by the sellers thereof set forth in such Registration
Statement or supplement to such prospectus;
(d) Notify the Investor and its counsel (as designated
in writing by the Investor) promptly, and confirm such notice (a
"Notice") in writing, (i) when a prospectus or any prospectus
supplement or post-effective amendment has been filed, and, with
respect to a Registration Statement or any post-effective
amendment, when the same has become effective, (ii) of any
request by the Commission for amendments or supplements to a
Registration Statement or related prospectus or for additional
information, (iii) of the issuance by the Commission of any stop
order suspending the effectiveness of a Registration Statement or
the initiation of any proceedings for that purposes, (iv) of the
receipt by the Company of any notification with respect to the
suspension of the qualification of any of the Registrable
Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose, (v) of the
happening of any event as a result of which the prospectus
included in the Registration Statement (as then in effect)
contains any untrue statement of a material fact or omits to
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<PAGE>
state any material fact required to be stated therein or
necessary to make the statements therein (in the case of the
prospectus or any preliminary prospectus, in light of the
circumstances under which they were made) not misleading, and
(vi) of the Company's reasonable determination that a
post-effective amendment to a Registration Statement would be ap-
propriate or that there exist circumstances not yet disclosed to
the public which make further sales under such Registration
Statement inadvisable pending such disclosure and post-effective
amendment;
(e) Upon the occurrence of any event contemplated by
Section 5(d)(ii)-(vii) and immediately upon the expiration of any
Blocking Period (as defined in Section 5A), prepare, if the
occurrence of such event or period requires such preparation, a
supplement or post-effective amendment to the Registration
Statement or related prospectus or any document incorporated
therein by reference or file any other required document so that,
as thereafter delivered to the purchasers of the Registrable
Securities being sold thereunder, such prospectus will not
contain an untrue statement of a material fact or omit to state
any material fact necessary to make the statements, in light of
the circumstances under which they were made, not misleading;
(f) Obtain the withdrawal of any order suspending the
effectiveness of the Registration Statement, or the lifting of
any suspension of the qualification of any of the Registrable
Securities for sale in any jurisdiction, at the earliest possible
moment;
(g) Cause all Registrable Securities subject to
Registration Statement shall at all times be registered or
qualified for offer and sale under the securities or blue sky
laws of such jurisdictions as any Investor reasonably requests in
writing; use its best efforts to keep each such registration or
qualification effective, including through new filings or
amendments or renewals, during the period a Registration
Statement is required to be kept effective and do any and all
other acts or things necessary or advisable to enable the
disposition in such jurisdictions of the Registrable Securities
covered by the applicable Registration Statement; provided,
however, that the Company will not be required to qualify to do
business or take any action that would subject it to taxation or
general service of process in any jurisdiction where it is not
then so qualified or subject;
(h) Cause the Registrable Securities covered by the
Registration Statement to be registered with or approved by such
other governmental agencies or authorities as may be necessary to
enable the seller or sellers thereof to consummate the
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<PAGE>
disposition of such Registrable Securities in accordance with the
chosen method or methods of distribution; and
(i) Cause all Registrable Securities included in such
Registration Statement to be listed, by the date of first sale of
Registrable Securities pursuant to such Registration Statement,
on the principal securities exchange or automated interdealer
system on which the same type of securities of the Company are
then listed or traded.
5A. Suspensions of Effectiveness. The Company may
suspend dispositions under the Registration Statement and notify
the Investor that it may not sell the Registrable Securities
pursuant to any Registration Statement or prospectus (a "Blocking
Notice") if the Company's management determines in its good faith
judgment that the Company's obligation to ensure that such
Registration Statement and prospectus are current and complete
would require the Company to take actions that might reasonably
be expected to have a materially adverse detrimental effect on
the Company and its stockholders; provided that such suspension
pursuant to a Blocking Notice or the Notice described below or as
a result of the circumstances described in 5(d)(ii)-(vii) may not
exceed ninety (90) days (whether or not consecutive) in any
twelve (12) month period. The Investor agrees by acquisition of
the Registrable Securities that, upon receipt of a Blocking
Notice or "Notice" from the Company of the existence of any fact
of the kind described in the following sentence, the Investor
shall not dispose of, sell or offer for sale the Registrable
Securities pursuant to the Registration Statement until such
Investor receives (i) copies of the supplemented or amended
prospectus, or until counsel for the Company shall have
determined that such disclosure is not required due to subsequent
events, (ii) notice in writing (the "Advice") from the Company
that the use of the prospectus may be resumed and (iii) copies of
any additional or supplemental filings that are incorporated by
reference in the Prospectus. Pursuant to the immediately
preceding sentence, the Company may provide such Notice to the
Investor upon the determination by the Company of the existence
of any fact or the happening or any event that makes any
statement of a material fact made in the Registration Statement,
the prospectus, any amendment or supplement thereto, or any
document incorporated by reference therein untrue in any material
respect, or that requires the making of any additions to or
changes in the Registration Statement or the prospectus, in order
to make the statements therein not misleading in any material
respect. If so directed by the Company in connection with any
such notice, each Investor will deliver to the Company (at the
Company's expense) all copies, other than permanent file copies
then in such Investor's possession, of the prospectus covering
such Registrable Securities that was current immediately prior to
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<PAGE>
the time of receipt of such notice. In the event the Company
shall give any such Blocking Notice or Notice, the time regarding
the effectiveness of such Registration Statement set forth in
Section 5(a) shall be extended by one and one-half (1-1/2) times
the number of days during the period from and including the date
of the giving of such Blocking Notice or Notice to and including
the date when the Investor shall have received the copies of the
supplemented or amended prospectus, the Advice and any additional
or supplemental filings that are incorporated by reference in the
prospectus. Delivery of a Blocking Notice or Notice and the
related suspension of any Registration Statement shall not
constitute a default under this Registration Rights Agreement and
shall not create any obligation to pay liquidated damages under
Section 2 hereof. However, if the Investor's ability to sell
under the Registration Statement is suspended for more than the
ninety (90) days period described above, the Investor may elect,
in its sole and absolute discretion, to terminate the Investor
Agreement pursuant to Section 10.4 in the Investor Agreement.
6. Indemnification.
(a) Company Indemnity. The Company will indemnify
the Investor, each of its officers, directors and partners, and
each person controlling the Investor, within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange
Act and the rules and regulations thereunder with respect to
which registration, qualification or compliance has been effected
pursuant to this Registration Rights Agreement, against all
claims, losses, damages and liabilities (or actions in respect
thereof) arising out of or based on any untrue statement (or
alleged untrue statement) of a material fact contained in any
prospectus, offering circular or other document (including any
related registration statement, notification or the like or any
amendment thereto) incident to any such registration,
qualification or compliance, or based on any omission (or alleged
omission) to state therein a material fact required to be stated
therein or necessary to make the statements therein not
misleading, or any violation by the Company of the Securities Act
or any state securities law or in either case, any rule or
regulation thereunder applicable to the Company and relating to
action or inaction required of the Company in connection with any
such registration, qualification or compliance, and will
reimburse the Investor, each of its officers, directors and
partners, and each person controlling the Investor, each such
underwriter and each person who controls any such underwriter,
for any legal and any other expenses reasonably incurred in con-
nection with investigating and defending any such claim, loss,
damage, liability or action, provided that the Company will not
be liable in any such case to the extent that any such claim,
loss, damage, liability or expense arises out of or is based on
any untrue statement or omission (or alleged untrue statement or
---8---
<PAGE>
omission) that is made in reliance upon and in conformity with
written information furnished to the Company by Investor and
stated to be specifically for use therein. In addition to any
other information furnished in writing to the Company by the
Investor, the information in the Registration Statement concern-
ing the Investor under the captions "Selling Shareholders" (or
any similarly captioned section containing the information re-
quired pursuant to Item 507 of Regulation S-K promulgated pursu-
ant to the Securities Act) and "Plan of Distribution" (or any
similarly captioned section containing information required pur-
suant to Item 508 of Regulation S-K) shall be deemed information
furnished in writing to the Company by the Investor to the extent
it conforms to information actually supplied in writing by the
Investor. The indemnity agreement contained in this Section 6(a)
shall not apply to amounts paid in settlement of any such loss,
claim, damage, liability or action if such settlement is effected
without the consent of the Company (which consent will not be
unreasonably withheld).
(b) Investor Indemnity. The Investor will, if
Registrable Securities held by it are included in the securities
as to which such registration, qualification or compliance is
being effected, indemnify the Company, each of its directors,
officers, partners, and each underwriter, if any, of the
Company's securities covered by such a registration statement,
each person who controls the Company or such underwriter within
the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act and the rules and regulations thereunder, each
other Investor (if any), and each of their officers, directors
and partners, and each person controlling such other Investor (if
any), and each of their officers, directors, and partners, and
each person controlling such other Investor against all claims,
losses, damages and liabilities (or actions in respect thereof)
arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in any such
registration statement (or any amendment thereto), prospectus,
offering circular or other document, or any omission (or alleged
omission) to state therein a material fact required to be stated
therein or necessary to make the statement therein not
misleading, and will reimburse the Company and its directors,
officers and partners, or control persons for any legal or any
other expenses reasonably incurred in connection with
investigating and defending any such claim, loss, damage,
liability or action, in each case to the extent, but only to the
extent, that such untrue statement (or alleged untrue statement)
or omission (or alleged omission) is made in such registration
statement, prospectus, offering circular or other document in
reliance upon and in conformity with written information
furnished to the Company by the Investor and stated to be
---9---
<PAGE>
specifically for use therein, and provided that no Investor shall
be liable under this indemnity for an amount in excess of the
proceeds received by the Investor from the sale of the
Registrable Securities pursuant to such Registration Statement.
In addition to any other information furnished in writing to the
Company by the Warrant Holder, the information in the
Registration Statement concerning the Investor under the captions
"Selling Shareholders" (or any similarly captioned section
containing the information required pursuant to Item 507 of
Regulation S-K promulgated pursuant to the Securities Act) and
"Plan of Distribution" (or any similarly captioned section
containing information required pursuant to Item 508 of
Regulation S-K) shall be deemed information furnished in writing
to the Company by the Investor to the extent it conforms to
information actually supplied in writing by the Investor. The
indemnity agreement contained in this Section 6(b) shall not
apply to amounts paid in settlement of any such claims, losses,
damages or liabilities if such settlement is effected without the
written consent of the Investor (which consent shall not be
unreasonably withheld).
(c) Procedure. Each party entitled to indemnification
under this Article (the "Indemnified Party") shall give notice to
the party required to provide indemnification (the "Indemnifying
Party") promptly after such Indemnified Party has actual
knowledge of any claim as to which indemnity may be sought, and
shall permit the Indemnifying Party to assume the defense of any
such claim in any litigation resulting therefrom, provided that
counsel for the Indemnifying Party, who shall conduct the defense
of such claim or any litigation resulting therefrom, shall be
approved by the Indemnified Party (whose approval shall not be
unreasonably withheld), and the Indemnified Party may participate
in such defense at such party's expense, and provided further
that the failure of any Indemnified Party to give notice as
provided herein shall not relieve the Indemnifying Party of its
obligations under this Article except to the extent that the
Indemnifying Party is materially and adversely affected by such
failure to provide notice. The Indemnifying Party shall not, in
connection with any one such action or proceeding or separate but
substantially similar or related actions or proceedings in the
same jurisdiction arising out of the same general allegations or
circumstances, be liable for the reasonable fees and expenses of
more than one separate firm of attorneys (in addition to any
local counsel) at any time for such Indemnified Party, provided,
however, that if separate firm(s) of attorneys are required due
to a conflict of interest, then the indemnifying party shall be
liable for the reasonable fees and expenses of each such separate
firm. No Indemnifying Party, in the defense of any such claim or
litigation, shall, except with the consent of each Indemnified
Party, consent to entry of any judgment or enter into any
---10---
<PAGE>
settlement which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to
such claim or litigation. Each Indemnified Party shall furnish
such information regarding itself or the claim in question as an
Indemnifying Party may reasonably request in writing and as shall
be reasonably required in connection with the defense of such
claim and litigation resulting therefrom.
7. Contribution. If the indemnification provided for in
Section 6 herein is unavailable to the Indemnified Parties in
respect of any losses, claims, damages or liabilities referred to
herein (other than by reason of the exceptions provided therein),
then each such Indemnifying Party, in lieu of indemnifying such
Indemnified Party, shall contribute to the amount paid or payable
by such Indemnified Party as a result of such losses, claims,
damages or liabilities (i) as between the Company and the
Investor on the one hand and the underwriters on the other, in
such proportion as is appropriate to reflect the relative
benefits received by the Company and the Investor on the one hand
or underwriters, as the case may be, on the other from the
offering of the Registrable Securities, or if such allocation is
not permitted by applicable law, in such proportion as is
appropriate to reflect not only such relative benefits but also
the relative fault of the Company on the one hand and of the
Investor, on the other in connection with the statements or
omissions which resulted in such losses, claims, damages or li-
abilities, as well as any other relevant equitable considerations
and (ii) as between the Company on the one hand and the Investor
on the other, in such proportion as is appropriate to reflect the
relative fault of the Company and of the Investor in connection
with the statements or omissions which resulted in such losses,
claims, damages or liabilities, as well as any other relevant
equitable considerations.
The relative benefits received by the Company on the one
hand and the Investor, on the other shall be deemed to be in the
same proportion as the proceeds from the offering received by the
Company from the initial sale of the Registrable Securities by
the Company to the Investor pursuant to this Registration Rights
Agreement bear to the proceeds received by the Investor from the
sale of Registrable Securities pursuant to a Registration
Statement. The relative fault of the Company on the one hand and
of the Investor on the other shall be determined by reference to,
among other things, whether the untrue or alleged untrue
statement of a material fact or omission or alleged omission to
state a material fact relates to information supplied by the
Company or by the Investor.
In no event shall the obligation of any Indemnifying Party
---11---
<PAGE>
to contribute under this Section 7 exceed the amount that such
Indemnifying Party would have been obligated to pay by way of
indemnification if the indemnification provided for under Section
6(a) or 6(b) hereof had been available under the circumstances.
The Company and the Investor agree that it would not be just
and equitable if contribution pursuant to this Section 7 were
determined by pro rata allocation or by any other method of
allocation which does not take account of the equitable
considerations referred to in the immediately preceding
paragraphs. The amount paid or payable by an Indemnified Party
as a result of the losses, claims, damages and liabilities
referred to in the immediately preceding paragraphs shall be
deemed to include, subject to the limitations set forth above,
any legal or other expenses reasonably incurred by such
Indemnified Party in connection with investigating or defending
any such action or claim. Notwithstanding the provisions of this
section, no Investor shall be required to contribute any amount
in excess of the amount by which the Investor, the total price at
which the shares of Common Stock offered by the Investor and
distributed to the public, or offered to the public, exceeds the
amount any damages that the Investor has otherwise been required
to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11 (f) of the
Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
8. Survival. The indemnity and contribution agreements
contained in Sections 6 and 7 and the representations and
warranties of the Company referred to in Section 2(e)(i) shall
remain operative and in full force and effect regardless of (i)
any termination of the Investor Agreement or any underwriting
agreement, (ii) any investigation made by or on behalf of any
Indemnified Party or by or on behalf of the Company and (iii) the
consummation of the sale or successive resales of the Registrable
Securities.
9. Information by Investor. The Investor shall promptly
furnish to the Company such information regarding the Investor
and the distribution proposed by such Investor as the Company may
reasonably request in writing and as shall be reasonably required
in connection with any registration, qualification or compliance
referred to in this Registration Rights Agreement. All
information provided to the Company by the Investor shall be
accurate and complete in all material respects and the Investor
shall promptly notify the Company if any such information becomes
incorrect or incomplete. If the Investor does not timely provide
all such reasonably requested information, it shall not be
entitled to the liquidated damages contemplated by paragraph
---12---
<PAGE>
2(b)(ii) to the extent that such delay in the Registration
Statement becoming effective is caused by such failure to timely
provide information unless such Investor shall be able to
demonstrate to the Company's satisfaction that such failure to
timely provide did not proportionately contribute to the event
giving rise to the indemnity obligation.
10. Transfer or Assignment of Registration Rights. Neither
this Registration Rights Agreement nor any rights of the Investor
or the Company hereunder may be assigned by either party to any
other person; provided, however, that the Investor may assign
this Agreement with the consent of the Company, which consent
shall not be unreasonably withheld. Notwithstanding the
foregoing, the Investor's rights and obligations under this
Registration Rights Agreement may be assigned at any time, in
whole or in part, to any affiliate of the Investor (a "Permitted
Transferee"), and the rights and obligation of the Investor under
this Registration Rights Agreement shall inure to the benefit of,
and be enforceable by and against, any such Permitted Transferee.
11. Miscellaneous.
(a) Entire Agreement. This Registration Rights
Agreement contains the entire understanding and agreement of the
parties relating to the registration of Shares underlying the
Warrant and the Additional Warrants, and may not be modified or
terminated except by a written agreement signed by both parties.
(b) Notices. Any notice or other communication given or
permitted under this Registration Rights Agreement shall be in
writing and shall be deemed to have been duly given if personally
delivered or sent by registered or certified mail, return receipt
requested, postage prepaid or by air courier, (a) if to Investor,
at its address hereinabove set forth, (b) if to the Company, to
Immunomedics, Inc., at its address hereinabove set forth, and (c)
if to a Permitted Transferee, at the address thereof furnished by
like notice to the Company, or (d) to any such address at such
other addresses as shall be so furnished to the other parties by
like notice.
(c) Gender of Terms. All terms used herein shall be
deemed to include the feminine and the neuter, and the singular
and the plural, as the context requires.
(d) Governing Law; Consent of Jurisdiction; Waiver of
Jury Trial. This Registration Rights Agreement and the validity
and performance of the terms hereof shall be governed by and
construed in accordance with the laws of the State of New York
without regard to principles of conflicts of law or choice of
law, except to the extent that the law of Delaware regulates the
---13---
<PAGE>
Company's issuance of securities. The parties hereto hereby
agree that all actions or proceedings arising directly or
indirectly from or in connection with this Registration Rights
Agreement shall be litigated only in the Supreme Court of the
State of New York or the United States District Court for the
Southern District of New York located in New York County, New
York. To the extent permitted by applicable law, the parties
hereto consent to the jurisdiction and venue of the foregoing
courts and consent that any process or notice of motion or other
application to either of said courts or a judge thereof may be
served inside or outside the State of New York or the Southern
District of New York by registered mail, return receipt
requested, directed to the such party at its address set forth in
this Registration Rights Agreement (and service so made shall be
deemed complete five (5) days after the same has been posted as
aforesaid) or by personal service or in such other manner as may
be permissible under the rules of said courts. The parties
hereto hereby waive any right to a jury trial in connection with
any litigation pursuant to this Registration Rights Agreement.
(e) Titles. The titles used in this Registration Rights
Agreement are used for convenience only and are not to be
considered in construing or interpreting this Registration Rights
Agreement.
(f) Rule 144. The Company will use its reasonable
best efforts to file all reports required to be filed by it under
the Securities Act and the Exchange Act and that it will take
such further action as holders of Registrable Securities may
reasonably request, all to the extent required from time to time
to enable the Investor to sell Registrable Securities without
registration under the Act within the limitation of the
exemptions provided by (a) Rule 144, as such Rule may be amended
from time to time, or (b) any similar role or regulation
hereafter adopted by the SEC. If at any time the Company is not
required to file such reports, it will, upon the request of the
Investor, make publicly available other information so long as
necessary to permit sales pursuant to Rule 144. Upon the request
of the Investor, the Company will deliver to the Investor a
written statement as to whether it has complied with such
requirements.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Registration Rights Agreement to be duly executed as of the date
first above written.
CRIPPLE CREEK SECURITIES, L.L.C. IMMUNOMEDICS, INC.,
By:_________________________ By:_________________________
Name:_______________________ Name:_______________________
Title:______________________ Title:______________________
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<PAGE>
EXHIBIT 4.3
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, OR ANY STATE SECURITIES LAWS. THEY MAY NOT BE SOLD OR
OFFERED FOR SALE EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT AS TO THE SECURITIES UNDER SAID ACT AND ANY APPLICABLE
STATE SECURITIES LAWS OR AN APPLICABLE EXEMPTION FROM SUCH
REGISTRATION REQUIREMENTS.
Right to Purchase Shares of Common Stock
of Immunomedics, Inc.
___________________________
Common Stock Purchase Warrant
Immunomedics, Inc., a Delaware corporation having an address
at 300 American Road, Morris Plains, New Jersey 07950 (the
"Company"), hereby certifies that for $10.00 and other good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Cripple Creek Securities, L.L.C. having an
address at 40 West 57th Street, 15th Floor, New York, NY 10019,
("Purchaser") or any other Warrant Holder is entitled, on the
terms and conditions set forth below, to purchase from the Company
at any time after the date hereof (subject to the provisions of
Section 2 hereof) and ending forty-eight (48) months after the
date hereof, up to 50,000 fully paid and nonassessable shares of
Common Stock, $0.01 par value, of the Company (the "Common Stock")
at the Purchase Price (hereinafter defined), as the same may be
adjusted pursuant to Section 5 herein.
1. Definitions.
(a) The term "Warrant Holder" shall mean the Purchaser
or any assignee of all or any portion of this Warrant at any given
time who, at the time of assignment, acquired the right to
purchase at least 1000 Warrant Shares (such number being subject
to adjustment after the date hereof pursuant to Section 5 herein.)
(b) The term "Warrant Shares" shall mean the Shares of
Common Stock or other securities issuable upon exercise of this
Warrant.
(c) The term "Purchase Price" shall mean $7.5375,
which represents 180% of the closing sale price of the Common
Stock on the Principal Market on the Trading Day immediately
preceding the Effective Date.
(d) Other terms used herein which are defined in the
Structured Equity Line Flexible Financing (SM) Agreement dated as
of December 23, 1997 (the "Agreement") or the Registration Rights
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<PAGE>
Agreement, dated as of December 23, 1997 (the "Registration Rights
Agreement"), shall have the same meanings herein as therein.
2. Exercise of Warrant.
This Warrant may be exercised by Warrant Holder, in whole or
in part, at any time and from time to time, on or after the date
hereof, by surrender of this Warrant, together with the Purchase
Price (as defined in Section 1) for each share of Common Stock as
to which the Warrant is exercised, and the form of subscription
attached hereto as Schedule A duly executed by Warrant Holder, to
the Company at its principal office; provided that in the event
that prior to such date (i) the Company declares a record date for
a material dividend or distribution in respect of the Common Stock
(representing at least 50% of the aggregate market value of the
Common Stock in cash or securities or other assets, other than
Common Stock); or (ii) if at any time (A) there occurs any
consolidation or merger of the Company with or into any other
corporation or other entity or person (whether or not the Company
is the surviving corporation) or there occurs any other corporate
reorganization or transaction or series of related transactions,
and as a result thereof the shareholders of the Company pursuant
to such merger, consolidation, reorganization or other transaction
own in the aggregate less than 50% of the voting power and common
equity of the ultimate parent corporation or other transaction, or
(B) the Company transfers all or substantially all of the
Company's assets to another corporation or other entity or person,
the Warrant shall become exercisable thereafter at the Adjusted
Purchase Price. The "Adjusted Purchase Price" shall equal the
lesser of (i) $7.5375 (as adjusted from time to time pursuant to
Section 5 hereof) and (ii) 80.0% (as adjusted from time to time
pursuant to Sections 5(c) and 5(f) hereof) of the Transaction
Value per share of Common Stock issuable upon exercise of the
Warrant. The term "Transaction Value" means, in the case of a
merger, acquisition, sale of Common Stock, sale of assets or
similar transaction, the fair market value of the consideration to
be received per share of Common Stock, as evidenced by the average
of the closing sale price for the Common Stock during the ten
Trading Days following the announcement of such definitive
agreement and in the case of a material special dividend or
distribution, the fair market value of the dividend or
distribution as determined in good faith by the Company's Board of
Directors; provided that if the dividend or distribution is in the
form of an instrument that trades "when issued," the fair market
value thereof shall be determined by reference to the average of
the closing sale price for such instrument in the when issued
market (or in the absence of a closing sale price, the average of
the closing bid and asked price) during the ten trading days
---2---
<PAGE>
following such record date. In the event that the Warrant is not
exercised in full, the number of Warrant Shares shall be reduced
by the number of Warrant Shares for which this Warrant is
exercised and the Company, at its expense, shall forthwith issue
and deliver to or upon the order of Warrant Holder a new Warrant
of like tenor in the name of Warrant Holder or as Warrant Holder
(upon payment by Warrant Holder of any applicable transfer taxes)
may request, reflecting such adjusted Warrant Shares.
(a) Subject to the terms and conditions of this
Warrant, as soon as practicable after the exercise of this Warrant
in full or in part, and in any event within three (3) Trading Days
thereafter, the Company at its expense (including, without
limitation, the payment by it of any applicable issue taxes) will
cause to be issued in the name of and delivered to Warrant Holder,
or as Warrant Holder (upon payment by Warrant Holder of any
applicable transfer taxes) may lawfully direct, a certificate or
certificates for the number of fully paid and non-assessable
shares of Common Stock to which Warrant Holder shall be entitled
on such exercise, together with any other stock or other
securities or property (including cash, where applicable) to which
Warrant Holder is entitled upon such exercise.
(b) This Warrant may not be exercised as to fractional
shares of Common Stock. In the event that the exercise of this
Warrant, in full or in part, would result in the issuance of any
fractional share of Common Stock, then in such event Warrant
Holder shall be entitled to cash equal to the Fair Market Value of
such fractional share. For purposes of this Warrant, Fair Market
Value equals the closing sale price of the Common Stock on the New
York Stock Exchange, the American Stock Exchange or the Nasdaq
National Market, whichever is the principal trading exchange or
market for the Common Stock (the "Principal Market") on the date
of determination.
(c) Notwithstanding any provision of this Section 2,
as of any date prior to the date of exercise of this Warrant or
any portion thereof, the aggregate number of shares of Common
Stock into which this Warrant, all other warrants and all other
securities convertible into or exchangeable for Common Stock held
by the Warrant Holder and its affiliates shall be convertible or
exchangeable, together with the shares of Common Stock then
beneficially owned (as such term is defined in the Exchange Act)
by such Warrant Holder and its affiliates, shall not exceed 4.9%
of the total outstanding shares of Common Stock as of such date.
This Warrant shall not be exercisable on any date to the extent
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<PAGE>
that such exercise would limit the ability of the Purchaser to
purchase shares of Common Stock as a result of a Mandatory
Purchase Notice or an Additional Purchase Notice (as such terms
are defined in the Agreement) pursuant to Section 2.1(c) of the
Agreement.
3. [Intentionally Omitted.]
4. Covenants of the Company.
(a) The Company shall use its reasonable best efforts
to insure that a Registration Statement under the Securities Act
covering the resale or other disposition thereof of the Warrant
Shares by Warrant Holder is effective to the extent as provided in
the Registration Rights Agreement or, to the extent applicable,
pursuant to Section 3.2(a) of the Agreement.
(b) The Company shall take all necessary actions and
proceedings as may be required and permitted by applicable law,
rule and regulation, including, without limitation the
notification of the National Association of Securities Dealers,
for the legal and valid issuance of this Warrant and the Warrant
Shares to the Warrant Holder under this Warrant.
(c) From the date hereof through the last date on
which this Warrant is exercisable, the Company shall take all
steps reasonably necessary and within its control to insure that
the Common Stock remains listed on the Principal Market and shall
not amend its Certificate of Incorporation or Bylaws so as to
constitute a breach of the Company's obligations hereunder or so
as to adversely affect any rights of the Warrant Holder under this
Warrant.
(d) The Company shall at all times reserve and keep
available, solely for issuance and delivery as Warrant Shares
hereunder, such shares of Common Stock as shall from time to time
be issuable as Warrant Shares.
(e) The Warrant Shares, when issued in accordance with
the terms hereof, will be duly authorized and, when paid for or
issued in accordance with the terms hereof, shall be validly
issued, fully paid and non-assessable. The Company has authorized
and reserved for issuance to Warrant Holder the requisite number
of shares of Common Stock to be issued pursuant to this Warrant.
(f) With a view to making available to Warrant Holder
the benefits of Rule 144 promulgated under the Securities Act and
any other rule or regulation of the SEC that may at any time
---4---
<PAGE>
permit the Warrant Holder to sell securities of the Company to the
public without registration, the Company agrees to use its
reasonable best efforts to:
(i) make and keep public information available,
as those terms are understood and defined in Rule 144, at all
times;
(ii) file with the SEC in a timely manner all
reports and other documents required of the Company under the
Securities Act and the Exchange Act; and
(iii) furnish to any Warrant Holder forthwith
upon request a written statement by the Company that it has
complied with the reporting requirements of Rule 144 and of the
Securities Act and the Exchange Act, a copy of the most recent
annual or quarterly report of the Company, and such other reports
and documents so filed by the Company as may be reasonably
requested to permit any such Warrant Holder to take advantage of
any rule or regulation of the SEC permitting the selling of any
such securities without registration.
5. Adjustment of Exercise Price and
Number of Shares.
The number of, and kind of, securities purchasable upon
exercise of this Warrant and the Purchase Price shall be subject
to adjustment from time to time as follows:
(a) Subdivisions. Combinations and Other Issuances.
If the Company shall at any time after the date hereof but prior
to the expiration of this Warrant subdivide its outstanding
securities as to which purchase rights under this Warrant exist,
by split-up, spin-off, or otherwise, or combine its outstanding
securities as to which purchase rights under this Warrant exist,
the number of Warrant Shares as to which this Warrant is
exercisable as of the date of such subdivision, split-up, spin-off
or combination shall forthwith be proportionately increased in the
case of a subdivision, or proportionately decreased in the case of
a combination. Appropriate adjustments shall also be made to the
Purchase Price payable per share, but the aggregate purchase price
payable for the total number of Warrant Shares purchasable under
this Warrant as of such date shall remain the same.
(b) Stock Dividend. If at any time after the date
hereof the Company declares a dividend or other distribution on
Common Stock payable in Common Stock or other securities or rights
convertible into Common Stock ("Common Stock Equivalents") without
---5---
<PAGE>
payment of any consideration by holders of Common Stock for the
additional shares of Common Stock or the Common Stock Equivalents
(including the additional shares of Common Stock issuable upon
exercise or conversion thereof), then the number of shares of
Common Stock for which this Warrant may be exercised shall be
increased as of the record date (or the date of such dividend
distribution if not record date is set) for determining which
holders of Common Stock shall be entitled to receive such
dividends, in proportion to the increase in the number of
outstanding shares (and shares of Common Stock issuable upon
conversion of all such securities convertible into Common Stock)
of Common Stock as a result of such dividend, and the Purchase
Price per share shall be adjusted so that the aggregate amount
payable for the purchase of all the Warrant Shares issuable
hereunder immediately after the record date (or on the date of
such distribution, if applicable), for such dividend shall equal
the aggregate amount so payable immediately before such record
date (or on the date of such distribution, if applicable).
(c) Other Distributions. If at any time after the date
hereof the Company distributes to holders of its Common Stock,
other than as part of its dissolution, liquidation or the winding
up of its affairs, any shares of its capital stock, any evidence
of indebtedness or any of its assets (other than cash, Common
Stock or securities convertible into or exchangeable for Common
Stock), then the Company shall decrease the per share Purchase
Price of this Warrant by an appropriate amount based upon the
value distributed on each share of Common Stock as determined in
good faith by the Company's Board of Directors.
(d) Merger, Etc. If at any time after the date hereof
there shall be a merger or consolidation of the Company with or
into or a transfer of all or substantially all of the assets of
the Company to another entity, then the Warrant Holder shall be
entitled to receive upon payment of the aggregate Purchase Price
then in effect, the number of shares or other securities or
property of the company or of the successor corporation resulting
from such merger or consolidation, which would have been received
by Warrant Holder for the shares of stock subject to this Warrant
had this Warrant been exercised just prior to such transfer,
merger or consolidation becoming effective or to the applicable
record date thereof, as the case may be.
(e) Reclassification, Etc. If at any time after the
date hereof there shall be a reorganization or reclassification of
the securities as to which purchase rights under this Warrant
exist into the same or a different number of securities of any
---6---
<PAGE>
other class or classes, then the Warrant Holder shall thereafter
be entitled to receive upon exercise of this Warrant, during the
period specified herein and upon payment of the Purchase Price
then in effect, the number of shares or other securities or
property resulting from such reorganization or reclassification,
which would have been received by the Warrant Holder for the
shares of stock subject to this Warrant had this Warrant at such
time been exercised.
(f) Purchase Price Adjustment. In the event that the
Company issues or sells any Common Stock or securities which are
convertible into or exchangeable for its Common Stock or any
convertible securities, or any warrants or other rights to
subscribe for or to purchase or any options for the purchase of
its Common Stock or any such convertible securities (other than
shares or options issued or which may be issued to any employee,
officer, director or consultant of the Company pursuant to any
stock or option or similar equity-based compensation plans or
otherwise now or hereafter established or shares issued upon
exercise of options, warrants or rights outstanding on the date of
the Agreement and listed in the SEC Documents) at an effective
purchase price per share which is less than ninety percent (90%)
of the Fair Market Value (including any applicable underwriting
discounts and/or commissions) of the Common Stock on the Trading
Day next preceding such issue or sale (as the case may be), then
in each such case, the Purchase Price in effect immediately prior
to such issue or sale shall be reduced effective concurrently with
such issue or sale to an amount determined by multiplying the
Purchase Price then in effect by a fraction, (x) the numerator of
which shall be the sum of (1) the number of shares of Common Stock
outstanding immediately prior to such issue or sale, including,
without limitation, under any provision of the Warrants plus (2)
the number of shares of Common Stock which the aggregate
consideration received by the Company for such additional shares
would purchase at such Fair Market Value and (y) the denominator
of which shall be the number of shares of Common Stock of the
Company outstanding immediately after such issue or sale
including, without duplication, those deemed to have been issued
under any provision of the Warrants. For purposes of the foregoing
fraction, Common Stock outstanding shall include, without
limitation, any Equity Offerings (as defined in the Agreement)
then outstanding, whether or not they are exercisable or
convertible when such fraction is to be determined.
The number of shares which may be purchased hereunder shall
be increased proportionately to any reduction in Purchase Price
pursuant to this paragraph 5(f), so that after such adjustments
---7---
<PAGE>
the aggregate Purchase Price payable hereunder for the increased
number of shares of Common Stock shall be the same as the
aggregate Purchase Price in effect just prior to such adjustment.
Notwithstanding anything else contained in this warrant to
the contrary, there shall be no adjustment of the Purchase Price
or the number of shares of Common Stock issuable pursuant to the
exercise of this Warrant in the event that during the term of this
Warrant, the Company issues shares of Common Stock, or securities
convertible into Common Stock to the Purchaser.
(g) Adjustments: Additional Shares, Securities or
Asset. In the event that at any time, as a result of an
adjustment made pursuant to this Section 5, the Warrant Holder
shall, upon exercise of this Warrant, become entitled to receive
shares and/or other securities (other than Common Stock) then,
wherever appropriate, all references herein to shares of Common
Stock shall be deemed to refer to and include such shares and/or
other securities or assets; and thereafter the number of such
shares and/or other securities or assets shall be subject to
adjustment from time to time in a manner and upon terms as nearly
equivalent as practicable to the provisions of this Section 5.
6. No Impairment.
The Company will not, by amendment of its Certificate of
Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or
any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms of this Warrant, but will at
all times in good faith assist in the carrying out of all such
terms and in the taking of all such action as may be necessary or
appropriate in order to protect the rights of the Warrant Holder
against impairment. Without limiting the generality of the
foregoing, the Company (a) will not increase the par value of any
Warrant Shares above the amount payable therefor on such exercise,
and (b) will take all such action as may be reasonably necessary
or appropriate in order that the Company may validly and legally
issue fully paid and nonassessable Warrant Shares on the exercise
of this Warrant. By acceptance hereof, the Holder of this Warrant
acknowledges and agrees that the transactions specified in Section
2(i) and (ii) hereof shall not constitute an impairment of the
rights of the Warrant Holder hereunder.
7. Notice of Adjustments.
Whenever the Purchase Price or number of Warrant Shares
purchasable hereunder shall be adjusted pursuant to Section 5
---8---
<PAGE>
hereof, the Company shall execute and deliver to the Warrant
Holder a certificate setting forth, in reasonable detail, the
event requiring the adjustment, the amount of the adjustment, the
method by which such adjustment was calculated and the Purchase
Price and number of shares purchasable hereunder after giving
effect to such adjustment, and shall cause a copy of such
certificate to be mailed (by first class mail, postage prepaid) to
the Warrant Holder.
8. Rights As Stockholder.
Prior to exercise of this Warrant, the Warrant Holder shall
not be entitled to any rights as a stockholder of the Company with
respect to the Warrant Shares, including (without limitation) the
right to vote such shares, receive dividends or other
distributions thereon or be notified of stockholder meetings.
However, in the event of any taking by the Company of a record of
the holders of any class of securities for the purpose of
determining the holders thereof who are entitled to receive any
dividend or other distribution (other than a cash dividend) any
right to subscribe for, purchase or otherwise acquire any shares
of stock of any class or any other securities or property, or to
receive any other right, the Company shall mail to each Warrant
Holder, at least 10 days prior to the date specified, therein, a
notice specifying the date on which any such record is to be taken
for the purpose of such dividend, distribution or right, and the
amount and character of such dividend, distribution or right.
9. Replacement of Warrant.
On receipt of evidence reasonably satisfactory to the Company
of the loss, theft, destruction or mutilation of the Warrant and,
in the case of any such loss, theft or destruction of the Warrant,
on delivery of an indemnity agreement or security reasonably
satisfactory in form and amount to the Company or, in the case of
any such mutilation, on surrender and cancellation of such
Warrant, the Company at its expense will execute and deliver, in
lieu thereof, a new Warrant of like tenor.
10. Specific Enforcement; Consent to
Jurisdiction; Waiver of Jury Trial.
(a) The Company and the Warrant Holder acknowledge and
agree that irreparable damage would occur in the event that any of
the provisions of this Warrant were not performed in accordance
with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an
---9---
<PAGE>
injunction or injunctions to prevent or cure breaches of the
provisions of this Warrant and to enforce specifically the terms
and provisions hereof, this being in addition to any other remedy
to which either of them may be entitled by law or equity.
(b) Each of the Company and the Warrant Holder hereby
(i) agree that all actions or proceedings arising directly or
indirectly from or in connection with this Warrant shall be
litigated only in the Supreme Court of the State of New York or
the United States District Court for the Southern District of New
York located in New York County, New York and (ii) to the extent
permitted by applicable law, consent to the jurisdiction and venue
of the foregoing courts and consent that any process or notice of
motion or other application to either of said courts or a judge
thereof may be served inside or outside the State of New York or
the Southern District of New York by registered mail, return
receipt requested, directed to the such party at its address set
forth in this Warrant (and service so made shall be deemed
complete five (5) days after the same has been posted as
aforesaid) or by personal service or in such other manner as may
be permissible under the rules of said courts. The parties hereto
hereby waive any right to a jury trial in connection with any
litigation pursuant to this Warrant.
11. Entire Agreement: Amendments.
This Warrant, the Exhibits hereto and the provisions
contained in the Agreement, the Registration Rights Agreement and
incorporated into this Warrant and the Warrant Shares contain the
entire understanding of the parties with respect to the matters
covered hereby and thereby and except as specifically set forth
herein and therein. This Warrant and any term thereof may be
changed, waived, discharged or terminated only by an instrument in
writing signed by the party against which enforcement of such
change, waiver, discharge or termination is sought.
12. Restricted Securities.
Sections 6.5, 7.1, 7.2 and 7.3 of the Agreement are
incorporated herein by reference and hereby made a part hereof.
13. Notices.
Any notice or other communication required or permitted to be
given hereunder shall be in writing and shall be effective (a)
upon hand delivery or delivery by telex (with correction answer
back received), telecopy or facsimile at the address or number
---10---
<PAGE>
designated below (if delivered on a business day during normal
business hours where such notice is to be received), or the first
business day following such delivery (if delivered other than on a
business day during normal business hours where such notice is to
be received) or (b) on the second business day following the date
of mailing by express courier service, fully prepaid, addressed to
such address, or upon actual receipt of such mailing, whichever
shall first occur. The addresses for such communications shall be:
to the Company:
Immunomedics,Inc.
300 American Road
Morris Plains, NJ 07950
Attn: David Goldenberg
Fax: (973) 605-8282
with copies to:
Warshaw Burstein Cohen Schlesinger and
Kuh, LLP
555 Fifth Avenue, 11th Floor
New York, NY 10017
Attn: Howard M. Cohen, Esq.
Fax: (212) 972-9150
to the Warrant Holder:
Cripple Creek Securities, LLC
40 West 57th Street, 15th Floor
New York, NY 10019
Attn: Robert Chender
Fax: (212) 698-0554
with copies to:
The Palladin Group, L.P.
40 West 57th Street
15th Floor
New York, NY 10019
Attn: Jeff Devers
Fax: (212) 698-0599
and
---11--
<PAGE>
Steve Parker, Esq.
Arnold & Porter
555 12th Street, N.W.
Washington, D.C. 20004
Fax: (202) 942-5999
Either party hereto may from time to time change its address for
notices under this Section 13 by giving at least 10 days prior
written notice of such changed address to the other party hereto.
14. Miscellaneous.
This Warrant shall be construed and enforced in accordance
with and governed by the laws of the State of New York. The
headings in this Warrant are for purposes of reference only, and
shall not limit otherwise affect any of the terms hereof. The
invalidity or unenforceability of any provision hereof shall in no
way affect the validity or enforceability of any other provisions.
15. Expiration
The right to exercise this Warrant shall expire forty-eight
(48) months after the date hereof.
Dated: December 23, 1997
IMMUNOMEDICS, INC.
By: __________________________
Title: ___________________
[CORPORATE SEAL]
Attest:
By: ________________________
Its:
---12---
<PAGE>
SCHEDULE A
FORM OF WARRANT EXERCISE
(To be signed only on exercise of Warrant)
TO _________________________________
The undersigned, the holder of the within Warrant, hereby
irrevocably elects to exercise this Warrant for, and to purchase
thereunder, ________ shares of Common Stock of Immunomedics, Inc.,
a Delaware corporation (the "Company"), and herewith makes payment
of $ ____________ therefor, and requests that the certificates for
such shares be issued in the name of, and delivered to
_______________________________________, whose address is
_________________________________.
Dated: ____________________________________
(Signature must conform to name of holder as specified
on the face of the Warrant)
____________________________________
(Address)
---13---
<PAGE>
EXHIBIT 4.4
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, OR ANY STATE SECURITIES LAWS. THEY MAY NOT BE SOLD OR
OFFERED FOR SALE EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT AS TO THE SECURITIES UNDER SAID ACT AND ANY APPLICABLE
STATE SECURITIES LAWS OR AN APPLICABLE EXEMPTION FROM SUCH
REGISTRATION REQUIREMENTS.
Right to Purchase Shares of Common Stock
of Immunomedics, Inc.
___________________________
Common Stock Purchase Warrant
Immunomedics, Inc., a Delaware corporation having an address
at 300 American Road, Morris Plains, New Jersey 07950 (the
"Company"), hereby certifies that for $10.00 and other good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Cripple Creek Securities, L.L.C. having an
address at 40 West 57th Street, 15th Floor, New York, NY 10019,
("Purchaser") or any other Warrant Holder is entitled, on the
terms and conditions set forth below, to purchase from the Company
at any time after the date hereof (subject to the provisions of
Section 2 hereof) and ending forty-eight (48) months after the
date hereof, up to _____ fully paid and nonassessable shares of
Common Stock, $0.01 par value, of the Company (the "Common Stock")
at the Purchase Price (hereinafter defined), as the same may be
adjusted pursuant to Section 5 herein.
1. Definitions.
(a) The term "Warrant Holder" shall mean the Purchaser
or any assignee of all or any portion of this Warrant at any given
time who, at the time of assignment, acquired the right to
purchase at least 1000 Warrant Shares (such number being subject
to adjustment after the date hereof pursuant to Section 5 herein.)
(b) The term "Warrant Shares" shall mean the Shares of
Common Stock or other securities issuable upon exercise of this
Warrant.
(c) The term "Purchase Price" shall mean $_____, which
represents 180% of the closing sale price of the Common Stock on
the Principal Market on the Trading Day immediately preceding the
Effective Date.
[FN]
Total of all Additional Warrants are not to exceed
125,000.
---1---
<PAGE>
(d) Other terms used herein which are defined in the
Structured Equity Line Flexible Financing (SM) Agreement dated as
of December 23, 1997 (the "Agreement") or the Registration Rights
Agreement, dated as of December 23, 1997 (the "Registration Rights
Agreement"), shall have the same meanings herein as therein.
2. Exercise of Warrant.
This Warrant may be exercised by Warrant Holder, in whole or
in part, at any time and from time to time, on or after the date
hereof, by surrender of this Warrant, together with the Purchase
Price (as defined in Section 1) for each share of Common Stock as
to which the Warrant is exercised, and the form of subscription
attached hereto as Schedule A duly executed by Warrant Holder, to
the Company at its principal office; provided that in the event
that prior to such date (i) the Company declares a record date for
a material dividend or distribution in respect of the Common Stock
representing at least 50% of the aggregate market value of the
Common Stock (in cash or securities or other assets, other than
Common Stock); or (ii) if at any time (A) there occurs any
consolidation or merger of the Company with or into any other
corporation or other entity or person (whether or not the Company
is the surviving corporation) or there occurs any other corporate
reorganization or transaction or series of related transactions,
and as a result thereof the shareholders of the Company pursuant
to such merger, consolidation, reorganization or other transaction
own in the aggregate less than 50% of the voting power and common
equity of the ultimate parent corporation or other transaction, or
(B) the Company transfers all or substantially all of the
Company's assets to another corporation or other entity or person,
the Warrant shall become exercisable thereafter at the Adjusted
Purchase Price. The "Adjusted Purchase Price" shall equal the
[FN]
The Purchase Price for each Additional Warrant
shall be equal to 180% of the weighted average of the
Purchase Prices at which shares of Common Stock were
purchased at the Closings of all Purchases by the Investor
during the calendar year immediately preceding the date of
issuance of such Additional Warrant. Issuance dates for
Additional Warrants are within the first five business days
of calendar year end during the Commitment Period, at the
end of the Commitment Period of other than a year end.
---2---
<PAGE>
lesser of (i) $______ (as adjusted from time to time pursuant to
Section 5 hereof) and (ii) 80.0% (as adjusted from time to time
pursuant to Sections 5(c) and 5(f) hereof) of the Transaction
Value per share of Common Stock issuable upon exercise of the
Warrant. The term "Transaction Value" means, in the case of a
merger, acquisition, sale of Common Stock, sale of assets or
similar transaction, the fair market value of the consideration to
be received per share of Common Stock, as evidenced by the average
of the closing sale price for the Common Stock during the ten
Trading Days following the announcement of such definitive
agreement and in the case of a material special dividend or
distribution, the fair market value of the dividend or
distribution as determined in good faith by the Company's Board of
Directors; provided that if the dividend or distribution is in the
form of an instrument that trades "when issued," the fair market
value thereof shall be determined by reference to the average of
the closing sale price for such instrument in the when issued
market (or in the absence of a closing sale price, the average of
the closing bid and asked price) during the ten trading days
following such record date. In the event that the Warrant is not
exercised in full, the number of Warrant Shares shall be reduced
by the number of Warrant Shares for which this Warrant is
exercised and the Company, at its expense, shall forthwith issue
and deliver to or upon the order of Warrant Holder a new Warrant
of like tenor in the name of Warrant Holder or as Warrant Holder
(upon payment by Warrant Holder of any applicable transfer taxes)
may request, reflecting such adjusted Warrant Shares.
(a) Subject to the terms and conditions of this
Warrant, as soon as practicable after the exercise of this Warrant
in full or in part, and in any event within three (3) Trading Days
thereafter, the Company at its expense (including, without
limitation, the payment by it of any applicable issue taxes) will
cause to be issued in the name of and delivered to Warrant Holder,
or as Warrant Holder (upon payment by Warrant Holder of any
applicable transfer taxes) may lawfully direct, a certificate or
certificates for the number of fully paid and non-assessable
shares of Common Stock to which Warrant Holder shall be entitled
on such exercise, together with any other stock or other
securities or property (including cash, where applicable) to which
Warrant Holder is entitled upon such exercise.
(b) This Warrant may not be exercised as to fractional
shares of Common Stock. In the event that the exercise of this
[FN]
Same as price reflected in Section 1(c).
---3---
<PAGE>
Warrant, in full or in part, would result in the issuance of any
fractional share of Common Stock, then in such event Warrant
Holder shall be entitled to cash equal to the Fair Market Value of
such fractional share. For purposes of this Warrant, Fair Market
Value equals the closing sale price of the Common Stock on the New
York Stock Exchange, the American Stock Exchange or the Nasdaq
National Market, whichever is the principal trading exchange or
market for the Common Stock (the "Principal Market") on the date
of determination.
(c) Notwithstanding any provision of this Section 2,
as of any date prior to the date of exercise of this Warrant or
any portion thereof, the aggregate number of shares of Common
Stock into which this Warrant, all other warrants and all other
securities convertible into or exchangeable for Common Stock held
by the Warrant Holder and its affiliates shall be convertible or
exchangeable, together with the shares of Common Stock then
beneficially owned (as such term is defined in the Exchange Act)
by such Warrant Holder and its affiliates, shall not exceed 4.9%
of the total outstanding shares of Common Stock as of such date.
This Warrant shall not be exercisable on any date to the extent
that such exercise would limit the ability of the Purchaser to
purchase shares of Common Stock as a result of a Mandatory
Purchase Notice or an Additional Purchase Notice (as such terms
are defined in the Agreement) pursuant to Section 2.1(c) of the
Agreement.
3. [Intentionally omitted.]
4. Covenants of the Company.
(a) The Company shall use its reasonable best efforts
to insure that a Registration Statement under the Securities Act
covering the resale or other disposition thereof of the Warrant
Shares by Warrant Holder is effective to the extent as provided in
the Registration Rights Agreement or, to the extent applicable,
pursuant to Section 3.2(a) of the Agreement.
(b) The Company shall take all necessary actions and
proceedings as may be required and permitted by applicable law,
rule and regulation, including, without limitation the
notification of the National Association of Securities Dealers,
for the legal and valid issuance of this Warrant and the Warrant
Shares to the Warrant Holder under this Warrant.
(c) From the date hereof through the last date on
which this Warrant is exercisable, the Company shall take all
steps reasonably necessary and within its control to insure that
---4---
<PAGE>
the Common Stock remains listed on the Principal Market and shall
not amend its Certificate of Incorporation or Bylaws so as to
constitute a breach of the Company's obligations hereunder or so
as to adversely affect any rights of the Warrant Holder under this
Warrant.
(d) The Company shall at all times reserve and keep
available, solely for issuance and delivery as Warrant Shares
hereunder, such shares of Common Stock as shall from time to time
be issuable as Warrant Shares.
(e) The Warrant Shares, when issued in accordance with
the terms hereof, will be duly authorized and, when paid for or
issued in accordance with the terms hereof, shall be validly
issued, fully paid and non-assessable. The Company has authorized
and reserved for issuance to Warrant Holder the requisite number
of shares of Common Stock to be issued pursuant to this Warrant.
(f) With a view to making available to Warrant Holder
the benefits of Rule 144 promulgated under the Securities Act and
any other rule or regulation of the SEC that may at any time
permit the Warrant Holder to sell securities of the Company to the
public without registration, the Company agrees to use its
reasonable best efforts to:
(i) make and keep public information available,
as those terms are understood and defined in Rule 144, at all
times;
(ii) file with the SEC in a timely manner all
reports and other documents required of the Company under the
Securities Act and the Exchange Act; and
(iii) furnish to any Warrant Holder forthwith
upon request a written statement by the Company that it has
complied with the reporting requirements of Rule 144 and of the
Securities Act and the Exchange Act, a copy of the most recent
annual or quarterly report of the Company, and such other reports
and documents so filed by the Company as may be reasonably
requested to permit any such Warrant Holder to take advantage of
any rule or regulation of the SEC permitting the selling of any
such securities without registration.
5. Adjustment of Exercise Price and Number of Shares.
The number of, and kind of, securities purchasable upon
exercise of this Warrant and the Purchase Price shall be subject
to adjustment from time to time as follows:
---5---
<PAGE>
(a) Subdivisions. Combinations
and Other Issuances. If the Company shall at any time after the
date hereof but prior to the expiration of this Warrant subdivide
its outstanding securities as to which purchase rights under this
Warrant exist, by split-up, spin-off, or otherwise, or combine its
outstanding securities as to which purchase rights under this
Warrant exist, the number of Warrant Shares as to which this
Warrant is exercisable as of the date of such subdivision,
split-up, spin-off or combination shall forthwith be
proportionately increased in the case of a subdivision, or
proportionately decreased in the case of a combination.
Appropriate adjustments shall also be made to the Purchase Price
payable per share, but the aggregate purchase price payable for
the total number of Warrant Shares purchasable under this Warrant
as of such date shall remain the same.
(b) Stock Dividend. If at any time after the date
hereof the Company declares a dividend or other distribution on
Common Stock payable in Common Stock or other securities or rights
convertible into Common Stock ("Common Stock Equivalents") without
payment of any consideration by holders of Common Stock for the
additional shares of Common Stock or the Common Stock Equivalents
(including the additional shares of Common Stock issuable upon
exercise or conversion thereof), then the number of shares of
Common Stock for which this Warrant may be exercised shall be
increased as of the record date (or the date of such dividend
distribution if not record date is set) for determining which
holders of Common Stock shall be entitled to receive such
dividends, in proportion to the increase in the number of
outstanding shares (and shares of Common Stock issuable upon
conversion of all such securities convertible into Common Stock)
of Common Stock as a result of such dividend, and the Purchase
Price per share shall be adjusted so that the aggregate amount
payable for the purchase of all the Warrant Shares issuable
hereunder immediately after the record date (or on the date of
such distribution, if applicable), for such dividend shall equal
the aggregate amount so payable immediately before such record
date (or on the date of such distribution, if applicable).
(c) Other Distributions. If at any time after the date
hereof the Company distributes to holders of its Common Stock,
other than as part of its dissolution, liquidation or the winding
up of its affairs, any shares of its capital stock, any evidence
of indebtedness or any of its assets (other than cash, Common
Stock or securities convertible into or exchangeable for Common
Stock), then the Company shall decrease the per share Purchase
Price of this Warrant by an appropriate amount based upon the
---6---
<PAGE>
value distributed on each share of Common Stock as determined in
good faith by the Company's Board of Directors.
(d) Merger, Etc. If at any time after the date hereof
there shall be a merger or consolidation of the Company with or
into or a transfer of all or substantially all of the assets of
the Company to another entity, then the Warrant Holder shall be
entitled to receive upon payment of the aggregate Purchase Price
then in effect, the number of shares or other securities or
property of the company or of the successor corporation resulting
from such merger or consolidation, which would have been received
by Warrant Holder for the shares of stock subject to this Warrant
had this Warrant been exercised just prior to such transfer,
merger or consolidation becoming effective or to the applicable
record date thereof, as the case may be.
(e) Reclassification, Etc. If at any time after the
date hereof there shall be a reorganization or reclassification of
the securities as to which purchase rights under this Warrant
exist into the same or a different number of securities of any
other class or classes, then the Warrant Holder shall thereafter
be entitled to receive upon exercise of this Warrant, during the
period specified herein and upon payment of the Purchase Price
then in effect, the number of shares or other securities or
property resulting from such reorganization or reclassification,
which would have been received by the Warrant Holder for the
shares of stock subject to this Warrant had this Warrant at such
time been exercised.
(f) Purchase Price Adjustment. In the event that the
Company issues or sells any Common Stock or securities which are
convertible into or exchangeable for its Common Stock or any
convertible securities, or any warrants or other rights to
subscribe for or to purchase or any options for the purchase of
its Common Stock or any such convertible securities (other than
shares or options issued or which may be issued to any employee,
officer, director or consultant of the Company pursuant to any
stock or option or similar equity-based compensation plans or
otherwise now or hereafter established or shares issued upon
exercise of options, warrants or rights outstanding on the date of
the Agreement and listed in the SEC Documents) at an effective
purchase price per share which is less than ninety percent (90%)
of the Fair Market Value (including any applicable underwriting
discounts and/or commissions) of the Common Stock on the Trading
Day next preceding such issue or sale (as the case may be), then
in each such case, the Purchase Price in effect immediately prior
to such issue or sale shall be reduced effective concurrently with
such issue or sale to an amount determined by multiplying the
---7---
<PAGE>
Purchase Price then in effect by a fraction, (x) the numerator of
which shall be the sum of (1) the number of shares of Common Stock
outstanding immediately prior to such issue or sale, including,
without limitation, under any provision of the Warrants plus (2)
the number of shares of Common Stock which the aggregate
consideration received by the Company for such additional shares
would purchase at such Fair Market Value and (y) the denominator
of which shall be the number of shares of Common Stock of the
Company outstanding immediately after such issue or sale
including, without duplication, those deemed to have been issued
under any provision of the Warrants. For purposes of the foregoing
fraction, Common Stock outstanding shall include, without
limitation, any Equity Offerings (as defined in the Agreement)
then outstanding, whether or not they are exercisable or
convertible when such fraction is to be determined.
The number of shares which may be purchased hereunder shall
be increased proportionately to any reduction in Purchase Price
pursuant to this paragraph 5(f), so that after such adjustments
the aggregate Purchase Price payable hereunder for the increased
number of shares of Common Stock shall be the same as the
aggregate Purchase Price in effect just prior to such adjustment.
Notwithstanding anything else contained in this warrant to
the contrary, there shall be no adjustment of the Purchase Price
or the number of shares of Common Stock issuable pursuant to the
exercise of this Warrant in the event that during the term of this
Warrant, the Company issues shares of Common Stock, or securities
convertible into Common Stock to the Purchaser.
(g) Adjustments: Additional Shares, Securities or
Asset. In the event that at any time, as a result of an
adjustment made pursuant to this Section 5, the Warrant Holder
shall, upon exercise of this Warrant, become entitled to receive
shares and/or other securities (other than Common Stock) then,
wherever appropriate, all references herein to shares of Common
Stock shall be deemed to refer to and include such shares and/or
other securities or assets; and thereafter the number of such
shares and/or other securities or assets shall be subject to
adjustment from time to time in a manner and upon terms as nearly
equivalent as practicable to the provisions of this Section 5.
6. No Impairment.
The Company will not, by amendment of its Certificate of
Incorporation or through any reorganization, transfer of assets,
---8---
<PAGE>
consolidation, merger, dissolution, issue or sale of securities or
any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms of this Warrant, but will at
all times in good faith assist in the carrying out of all such
terms and in the taking of all such action as may be necessary or
appropriate in order to protect the rights of the Warrant Holder
against impairment. Without limiting the generality of the
foregoing, the Company (a) will not increase the par value of any
Warrant Shares above the amount payable therefor on such exercise,
and (b) will take all such action as may be reasonably necessary
or appropriate in order that the Company may validly and legally
issue fully paid and nonassessable Warrant Shares on the exercise
of this Warrant. By acceptance hereof, the Holder of this Warrant
acknowledges and agrees that the transactions specified in Section
2(i) and (ii) hereof shall not constitute an impairment of the
rights of the Warrant Holder hereunder.
7. Notice of Adjustments.
Whenever the Purchase Price or number of Warrant Shares
purchasable hereunder shall be adjusted pursuant to Section 5
hereof, the Company shall execute and deliver to the Warrant
Holder a certificate setting forth, in reasonable detail, the
event requiring the adjustment, the amount of the adjustment, the
method by which such adjustment was calculated and the Purchase
Price and number of shares purchasable hereunder after giving
effect to such adjustment, and shall cause a copy of such
certificate to be mailed (by first class mail, postage prepaid) to
the Warrant Holder.
8. Rights As Stockholder.
Prior to exercise of this Warrant, the Warrant Holder shall
not be entitled to any rights as a stockholder of the Company with
respect to the Warrant Shares, including (without limitation) the
right to vote such shares, receive dividends or other
distributions thereon or be notified of stockholder meetings.
However, in the event of any taking by the Company of a record of
the holders of any class of securities for the purpose of
determining the holders thereof who are entitled to receive any
dividend or other distribution (other than a cash dividend), any
right to subscribe for, purchase or otherwise acquire any shares
of stock of any class or any other securities or property, or to
receive any other right, the Company shall mail to each Warrant
Holder, at least 10 days prior to the date specified, therein, a
notice specifying the date on which any such record is to be taken
for the purpose of such dividend, distribution or right, and the
amount and character of such dividend, distribution or right.
---9---
<PAGE>
9. Replacement of Warrant.
On receipt of evidence reasonably satisfactory to the Company
of the loss, theft, destruction or mutilation of the Warrant and,
in the case of any such loss, theft or destruction of the Warrant,
on delivery of an indemnity agreement or security reasonably
satisfactory in form and amount to the Company or, in the case of
any such mutilation, on surrender and cancellation of such
Warrant, the Company at its expense will execute and deliver, in
lieu thereof, a new Warrant of like tenor.
10. Specific Enforcement; Consent to
Jurisdiction; Waiver of Jury Trial.
(a) The Company and the Warrant Holder acknowledge and
agree that irreparable damage would occur in the event that any of
the provisions of this Warrant were not performed in accordance
with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent or cure breaches of the
provisions of this Warrant and to enforce specifically the terms
and provisions hereof, this being in addition to any other remedy
to which either of them may be entitled by law or equity.
(b) Each of the Company and the Warrant Holder hereby
(i) agree that all actions or proceedings arising directly or
indirectly from or in connection with this Warrant shall be
litigated only in the Supreme Court of the State of New York or
the United States District Court for the Southern District of New
York located in New York County, New York and (ii) to the extent
permitted by applicable law, consent to the jurisdiction and venue
of the foregoing courts and consent that any process or notice of
motion or other application to either of said courts or a judge
thereof may be served inside or outside the State of New York or
the Southern District of New York by registered mail, return
receipt requested, directed to the such party at its address set
forth in this Warrant (and service so made shall be deemed
complete five (5) days after the same has been posted as
aforesaid) or by personal service or in such other manner as may
be permissible under the rules of said courts. The parties hereto
hereby waive any right to a jury trial in connection with any
litigation pursuant to this Warrant.
11. Entire Agreement: Amendments.
This Warrant, the Exhibits hereto and the provisions
contained in the Agreement, the Registration Rights Agreement and
incorporated into this Warrant and the Warrant Shares contain the
---10---
<PAGE>
entire understanding of the parties with respect to the matters
covered hereby and thereby and except as specifically set forth
herein and therein. This Warrant and any term thereof may be
changed, waived, discharged or terminated only by an instrument in
writing signed by the party against which enforcement of such
change, waiver, discharge or termination is sought.
12. Restricted Securities.
Sections 6.5, 7.1, 7.2 and 7.3 of the Agreement are
incorporated herein by reference and hereby made a part hereof.
13. Notices.
Any notice or other communication required or permitted to be
given hereunder shall be in writing and shall be effective (a)
upon hand delivery or delivery by telex (with correction answer
back received), telecopy or facsimile at the address or number
designated below (if delivered on a business day during normal
business hours where such notice is to be received), or the first
business day following such delivery (if delivered other than on a
business day during normal business hours where such notice is to
be received) or (b) on the second business day following the date
of mailing by express courier service, fully prepaid, addressed to
such address, or upon actual receipt of such mailing, whichever
shall first occur. The addresses for such communications shall be:
---11---
<PAGE>
to the Company:
Immunomedics,Inc.
300 American Road
Morris Plains, NJ 07950
Attn: David Goldenberg
Fax: (973) 605-8282
with copies to:
Warshaw Burstein Cohen Schlesinger and
Kuh, LLP
555 Fifth Avenue, 11th Floor
New York, NY 10017
Attn: Howard M. Cohen, Esq.
Fax: (212) 972-9150
to the Warrant Holder:
Cripple Creek Securities, LLC
40 West 57th Street, 15th Floor
New York, NY 10019
Attn: Robert Chender
Fax: (212) 698-0554
with copies to:
The Palladin Group, L.P.
40 West 57th Street
15th Floor
New York, NY 10019
Attn: Andrew Kaplan
Fax: (212) 698-0599
and
Steve Parker, Esq.
Arnold & Porter
555 12th Street, N.W.
Washington, D.C. 20004
Fax: (202) 942-5999
Either party hereto may from time to time change its address for
notices under this Section 13 by giving at least 10 days prior
written notice of such changed address to the other party hereto.
---12---
<PAGE>
14. Miscellaneous.
This Warrant shall be construed and enforced in accordance
with and governed by the laws of the State of New York. The
headings in this Warrant are for purposes of reference only, and
shall not limit otherwise affect any of the terms hereof. The
invalidity or unenforceability of any provision hereof shall in no
way affect the validity or enforceability of any other provisions.
15. Expiration
The right to exercise this Warrant shall expire forty-eight
(48) months after the date hereof.
Dated: ______________, ____
IMMUNOMEDICS, INC.
By: _____________________________
Title: _______________________
[CORPORATE SEAL]
Attest:
By: _________________________
Its:
---13---
<PAGE>
SCHEDULE A
FORM OF WARRANT EXERCISE
(To be signed only on exercise of Warrant)
TO _________________________________
The undersigned, the holder of the within Warrant, hereby
irrevocably elects to exercise this Warrant for, and to purchase
thereunder, ________ shares of Common Stock of Immunomedics, Inc.,
a Delaware corporation (the "Company"), and herewith makes payment
of $ ____________ therefor, and requests that the certificates for
such shares be issued in the name of, and delivered to
_______________________________________, whose address is
_________________________________.
Dated: ____________________________________
(Signature must conform to name of holder as specified
on the face of the Warrant)
____________________________________
(Address)
EXHIBIT 5
WARSHAW BURSTEIN COHEN
SCHLESINGER & KUH, LLP
555 Fifth Avenue
New York, New York 10017
Telephone: (212) 984-7700
Facsimile: (212) 972-9150
January 19, 1998
Immunomedics, Inc.
300 American Road
Morris Plains, New Jersey 07950
Gentlemen and Ladies:
You have requested our opinion, as counsel for Immunomedics, Inc., a
Delaware corporation (the "Company"), in connection with the Registration
Statement on Form S-3 (the "Registration Statement") under the Securities Act
of 1933 (the "Act"), filed by the Company with the Securities and Exchange
Commission (the "Commission").
The Registration Statement relates to the offering by the Selling
Stockholder of up to 7,447,000 shares of the Company's common stock, $.01 par
value per share (the "Common Stock"), consisting of (i) 7,272,000 shares
issuable from time to time, under certain circumstances, to Cripple Creek
Securities, LLC, a Delaware limited liability company (the "Selling
Stockholder"), pursuant to the terms of the Structured Equity Line Flexible
Financing Agreement (the "Equity Line"), dated as of December 23, 1997, between
the Company and the Selling Stockholder and (ii) 175,000 shares (the "Warrant
Shares") of Common Stock issuable upon exercise of certain warrants (the
"Warrants") issuable to the Selling Stockholder pursuant to the Equity Line.
In the preparation of our opinion, we have examined (1) the Restated
Certificate of Incorporation of the Company, as amended to date, (2) the
By-Laws of the Company, in effect on the date hereof, (3) minutes of meetings
of the Company's Board of Directors, as made available to us by executive
officers of the Company, (4) a certificate from an executive officer of the
Company, (5) the Registration Statement, (6) the Equity Line, including the
exhibits incorporated by reference therein, and (7) the Warrant. In our
examinations, we have assumed the genuineness of all signatures, the
authenticity of all documents submitted to us as originals, the conformity to
the originals of all documents submitted to us as certified, photostatic or
conformed copies, and the authenticity of the originals of all such latter
documents.
Based upon such examination, we are of the opinion that:
(1) the Shares, when issued and delivered in accordance with
the terms of the Equity Line Agreement, will be validly issued, fully paid and
non-assessable; and
(2) the Warrant Shares, when issued and delivered in
accordance with the terms of the Warrant, will be validly issued, fully paid
and non-assessable.
---E-1---
<PAGE>
We hereby consent to the filing of our opinion as an exhibit to the
Registration Statement and to the reference to our firm under the caption
"Legal Matters" in the prospectus included in the Registration Statement. In
so doing, we do not admit that we are in the category of persons whose consent
is required under Section 7 of the Act or the rules and regulations of the
Commission promulgated thereunder.
Certain partners of our Firm beneficially own shares of Common Stock.
Sincerely yours,
WARSHAW BURSTEIN COHEN
SCHLESINGER & KUH, LLP
MDS/MNL
---E-2---
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors
Immunomedics, Inc.
We consent to the use of our reports incorporated herein by reference and to
the reference to our firm under the heading "Experts" in the Prospectus.
KPMG PEAT MARWICK LLP
Short Hills, New Jersey
January 19, 1998
---E-3---
<PAGE>
