<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 28, 1995
REGISTRATION NO. 33-_____
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
==========
CYTOGEN CORPORATION
(Exact name of Registrant as specified in its charter)
DELAWARE 22-2322400
(State or other juris- (I.R.S. Employer
diction of incorporation Identification No.)
or organization)
600 COLLEGE ROAD EAST, CN 5308
PRINCETON, NEW JERSEY 08540-5308
(609) 987-8210
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
T. JEROME MADISON
VICE PRESIDENT, CHIEF FINANCIAL OFFICER AND SECRETARY
CYTOGEN CORPORATION
600 COLLEGE ROAD EAST, CN 5308
PRINCETON, NEW JERSEY 08540-5308
(609) 987-8210
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copies to:
JAMES J. MARINO, ESQUIRE ROBERT ROSENMAN, ESQUIRE
DECHERT PRICE & RHOADS CRAVATH, SWAINE & MOORE
PRINCETON PIKE CORPORATE CENTER, CN 5218 WORLDWIDE PLAZA
PRINCETON, NEW JERSEY 08543-5218 825 EIGHTH AVENUE
(609) 520-3200 NEW YORK, NEW YORK 10019
(212) 474-1300
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From
time to time after this Registration Statement becomes effective.
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]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
====================================================================================================================================
Title of each class Amount to be Proposed maximum Proposed maximum Amount of
of securities to be registered(1) offering price per aggregate registration
registered share or unit(2) offering price(2) fee
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value $.01 per
share, and Warrants to Purchase
Common Stock..................... $11,000,000 100% $11,000,000 $3,793.10
====================================================================================================================================
</TABLE>
(1) Includes (a) the shares of Common Stock, par value $.01 per share (the
"Common Stock"), to be sold pursuant to the Purchase Agreement, (b) the
Warrants to purchase Common Stock, and (c) the number of shares of Common
Stock issuable under the Warrants.
(2) Estimated solely for purposes of calculating the registration fee
pursuant to Rule 457(o) under the Securities Act.
_________________________________
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 this Registration Statement shall become
effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
1
<PAGE>
EXPLANATORY NOTE
----------------
This Registration Statement includes two basic prospectuses with
corresponding forms of prospectus supplements for the offering of the Common
Stock, and the offering of Warrants and the Common Stock issuable upon exercise
of the Warrants. Following this Explanatory Note in sequential order are the (i)
basic prospectus and form of prospectus supplements for the offering of the
Common Stock, and (ii) basic prospectus and form of prospectus supplement for
the Warrants and the Common Stock issuable upon exercise of the Warrants.
<PAGE>
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.
SUBJECT TO COMPLETION -- DATED MARCH 28, 1995
PROSPECTUS
CYTOGEN CORPORATION
SHARES OF COMMON STOCK
($.01 PAR VALUE)
----------------
This Prospectus relates to the offer from time to time of
shares of Common Stock, par value $.01 per share (the "Shares" or "Common
Stock"), with a purchase price of up to $11,000,000 by Cytogen Corporation (the
"Company") through Nomura Securities International, Inc. ("Nomura"), as
underwriter (the "Arrangement"). The Shares will be purchased by Nomura from the
Company, subject to the terms and conditions of a Purchase Agreement dated March
28, 1995 (the "Purchase Agreement"), in a series of takedowns ("Takedowns") at
prices per Share equal to 90% of the average of the closing bid prices ("Trading
Price") of the Shares reported on the Nasdaq National Market ("Nasdaq") over a
twenty-one trading day pricing period ("Pricing Period") ending prior to the
Takedown. In connection with each Takedown, Nomura will purchase, at a purchase
price of $.001 per Warrant, Warrants (the "Warrants") to purchase a number of
Shares equal to 10% of the total number of Shares sold in such Takedown by the
Company. The Warrants shall be immediately exercisable at an exercise price
equal to 160% of the Trading Price of the Shares issued in such Takedown and may
be exercised during a period of three years following the Takedown.
At the commencement of each Pricing Period, the Company will
prepare and file with the Securities and Exchange Commission (the "Commission")
a supplement to this Prospectus (the "Prospectus Supplement") which sets forth
the maximum aggregate dollar amount of the Takedown, the date of commencement of
the Pricing Period, the expected maximum net proceeds and the expected closing
date. At the end of each Pricing Period, the Company will promptly prepare and
file with the Commission a Prospectus Supplement which sets forth certain terms
of the offering of the Shares, including the number of Shares being purchased
from the Company by Nomura, the price being paid by Nomura for such Shares, the
net proceeds to the Company, and the prices at which the Common Stock was sold
by Nomura during the Pricing Period. Nomura expects to sell the Shares from time
to time in at the market transactions on Nasdaq. Nomura may also sell the Shares
in negotiated transactions, or by a combination of at the market and negotiated
transactions, at fixed prices that may be changed, at market prices at the time
of sale, at prices related to market prices or at negotiated prices. Nomura
intends to effect short sales of the Common Stock during the Pricing Periods.
There can be no assurance that the short sales effected by Nomura will not have
an adverse impact on the current market price of the Common Stock. Nomura may
effect these transactions by selling the Shares to or through broker-dealers,
who may receive compensation in the form of commissions, mark-ups or other
payments from Nomura or from the purchasers of the Shares for whom the broker-
dealers may act as agent or to whom they may sell as a principal, or both. See
"UNDERWRITING".
- -------------
The Company will bear all expenses in connection with the
registration of the Common Stock, which expenses are estimated to be $410,000.
Nomura will pay any brokerage compensation in connection with its sale of the
Shares and Warrants.
The Company has agreed to indemnify Nomura and each other
underwriter within the meaning of the Securities Act of 1933 (the "Securities
Act") that may purchase from or sell for Nomura any of the Shares and Warrants,
and each person, if any, who controls Nomura or any underwriter within the
meaning of the Securities Act, against certain liabilities, including
liabilities under the Securities Act.
The Common Stock is quoted on Nasdaq under the symbol "CYTO".
On _________, 1995, the reported last sale price of the Common Stock, as
reported on Nasdaq, was $_____ per share. See "UNDERWRITING".
--------------
This Prospectus may not be used to consummate sales of the
Shares unless accompanied by a Prospectus Supplement.
____________
AN INVESTMENT IN THE SECURITIES OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS".
____________
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 [________], 1995
<PAGE>
TABLE OF CONTENTS
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Page
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<S> <C>
AVAILABLE INFORMATION........................................................ 3
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE.............................. 3
THE COMPANY.................................................................. 5
RISK FACTORS................................................................. 5
USE OF PROCEEDS............................................................. 10
UNDERWRITING................................................................ 10
LEGAL MATTERS............................................................... 12
EXPERTS..................................................................... 13
</TABLE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS IN
CONNECTION WITH THIS OFFERING. ANY INFORMATION OR REPRESENTATION NOT CONTAINED
OR INCORPORATED BY REFERENCE HEREIN MUST NOT BE RELIED ON AS HAVING BEEN
AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL
OR THE SOLICITATION OF AN OFFER TO BUY THE SECURITIES OFFERED HEREBY IN ANY
STATE TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
EXCEPT WHERE OTHERWISE INDICATED, THIS PROSPECTUS SPEAKS AS OF ITS DATE AND
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER
ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.
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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 reports, proxy statements and other information with the
Commission. Such reports, proxy statements and other information filed by the
Company can be inspected and copied at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549,
and at the following Regional Offices of the Commission: New York Regional
Office, Seven World Trade Center, Suite 1300, New York, New York 10048; and
Chicago Regional Office, Northwestern Atrium Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661-2511. Copies of such material can be
obtained from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates. The Common Stock is
traded on the Nasdaq National Market and such reports, proxy statements and
other information concerning the Company are available for inspection at the
offices of the National Association of Securities Dealers, Inc. (the "NASD"),
9513 Key West Avenue, Rockville, Maryland 20850.
The Company has filed with the Commission a Registration Statement on
Form S-3 (together with all amendments and exhibits thereto, the "Registration
Statement") under the Securities Act, with respect to the shares of Common Stock
offered hereby. This Prospectus does not contain all of the information set
forth in the Registration Statement and the exhibits and schedules thereto,
certain parts of which are omitted in accordance with the rules and regulations
of the Commission. Statements contained in this Prospectus or in any document
incorporated by reference as to the contents of any contract or other documents
referred to herein or therein are not necessarily complete and in each instance,
reference is made to the copy of such documents filed as an exhibit to the
Registration Statement or such other documents. Each such statement is qualified
in its entirety by such reference. For further information with respect to the
Company and the shares of Common Stock offered hereby, reference is hereby made
to the Registration Statement, exhibits and schedules.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
-----------------------------------------------
The Company hereby incorporates by reference into this Prospectus (i)
its Annual Report on Form 10-K for the Fiscal Year Ended December 31, 1994,
which contains audited financial statements for the Company's latest fiscal year
for which a Form 10-K was required to have been filed, (ii) all other reports
filed by the Company pursuant to Section 13(a) or 15(d) of the Exchange Act
since December 31, 1994, including but not limited to the Current Reports on
Form 8-K filed by the Company with the Commission on January 6, 1995, February
16, 1995, February 23, 1995 and February 24, 1995, respectively and (iii) the
description of the Common Stock, par value $.01 per share, as contained in its
registration statement on Form 8-A declared effective on March 9, 1992.
All documents and reports filed by the Company with the Commission
pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, subsequent
to the date hereof and prior to the filing of a post-effective amendment to the
Registration Statement which indicates that all shares of Common Stock offered
hereby have been sold or which deregisters all shares of Common Stock then
remaining unsold, shall be deemed to be incorporated by reference into this
Prospectus and to be a part hereof from the respective dates of filing of such
documents or reports.
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 this Prospectus to the extent that a statement contained herein
or in a subsequently filed document that also is or is deemed to be incorporated
by reference herein modifies or supersedes such statement. Any such statement so
modified
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<PAGE>
or superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
THE COMPANY HEREBY UNDERTAKES TO PROVIDE, WITHOUT CHARGE, TO EACH PERSON
(INCLUDING ANY BENEFICIAL OWNER) TO WHOM THIS PROSPECTUS IS DELIVERED, UPON
WRITTEN OR ORAL REQUEST OF SUCH PERSON, A COPY OF ANY AND ALL OF THE INFORMATION
THAT HAS BEEN INCORPORATED BY REFERENCE IN THIS PROSPECTUS (NOT INCLUDING
EXHIBITS TO SUCH INFORMATION UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED
BY REFERENCE INTO SUCH INFORMATION). SUCH REQUESTS SHOULD BE DIRECTED TO T.
JEROME MADISON, VICE PRESIDENT, CHIEF FINANCIAL OFFICER AND SECRETARY, AT THE
COMPANY'S PRINCIPAL EXECUTIVE OFFICES AT 600 COLLEGE ROAD EAST, CN 5308,
PRINCETON, NEW JERSEY 08540-5308; TELEPHONE: (609) 987-8210.
IN CONNECTION WITH ANY TAKEDOWN, FOLLOWING THE DETERMINATION OF THE
NUMBER OF SHARES AND THE PRICE AT WHICH NOMURA IS COMMITTED TO PURCHASE, CERTAIN
UNDERWRITERS MAY ENGAGE IN PASSIVE MARKET MAKING TRANSACTIONS IN THE COMMON
STOCK OF THE COMPANY ON NASDAQ IN ACCORDANCE WITH RULE 10b-6A UNDER THE EXCHANGE
ACT. SEE "UNDERWRITING".
--------------
4
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THE COMPANY
-----------
The Company is a biopharmaceutical company engaged in the discovery,
development, manufacture and marketing of products to better diagnose and treat
disease. The Company's current portfolio of products provides targeted delivery
of diagnostic and therapeutic substances directly to the sites of disease. The
Company is using its patented and proprietary technologies to develop specific
in vivo cancer diagnostic imaging and therapeutic products to build a focused
cancer care franchise. The Company may expand from cancer into other therapeutic
areas employing related technologies.
The Company's current focus is on: (i) Samarium 153 EDTMP ("Samarium
EDTMP"), a cancer therapy agent for the treatment of bone pain associated with
bone metastases, which is in late Phase III clinical development with a New Drug
Application submission to the U.S. Food and Drug Administration ("FDA")
anticipated in the first half of 1995; (ii) ProstaScint(TM), a prostate cancer
diagnostic imaging product, for which a Product License Application ("PLA") was
submitted to and accepted for filing by FDA effective March 13, 1995; and (iii)
OncoScint(R) CR/OV, the Company's monoclonal antibody-based diagnostic imaging
agent for colorectal and ovarian cancer, which has been approved by FDA since
December 1992 and, in its colorectal cancer application, in various European
countries since June 1991.
The Company has licensed to The DuPont Merck Pharmaceutical Company
("DuPont Merck") the manufacturing and co-marketing rights to Samarium EDTMP in
the U.S. The Company has assigned high priority to the product development and
commercialization programs for Samarium EDTMP and ProstaScint. The Company is
continuing to evaluate, invest in and support the sales and marketing activities
with respect to OncoScint CR/OV. While the product has technically performed as
predicted in clinical applications, OncoScint CR/OV has achieved very limited
sales, and negligible sales growth, in both the U.S. and European markets since
its introduction.
The Company's strategic plan also supports continued commitment to its
"linker" technology through ongoing product development efforts for cancer
therapeutic agents. The Company expects to expand its current product portfolio
through in-licensing products and technologies. In addition, the Company has
committed additional resources to its molecular recognition unit program which,
as a result of recent patent filings and development trends, has been renamed
the Totally Synthetic Affinity Reagents\SynGenes ("TSARs\SynGenes") program.
This program involves long peptides that have the ability to recognize and bind
to specific target sites in the human body. The Company believes that the
ability of these compounds to bind to predetermined sites may mediate certain
diagnostic or therapeutic effects more effectively than its current monoclonal
antibody delivery systems and other existing products.
The Company is a Delaware corporation with its principal executive
offices at 600 College Road East--CN 5308, Princeton, N.J. 08540-5308. Its
telephone number is (609) 987-8200.
RISK FACTORS
------------
An investment in the shares of Common Stock offered hereby involves a
high degree of risk. Prospective investors should carefully consider the
following risk factors in addition to the other information set forth and
incorporated by reference in this Prospectus before making any decision to
invest in the Common Stock.
HISTORY OF OPERATING LOSSES; ACCUMULATED DEFICIT. The Company commenced
its research activities in 1981, and has never made a profit nor has it ever had
positive cash flow from operations. At December 31, 1994, the Company had an
accumulated deficit of approximately $155.8 million, and the Company anticipates
it will continue to incur substantial losses in the future. The Company first
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recognized product related revenues in 1992. Product related revenues were
$400,000, $1.6 million and $1.4 million in fiscal 1992, fiscal 1993 and fiscal
1994, respectively. License and contract revenues were $13 million, $8.8 million
and $1 million in fiscal 1992, fiscal 1993 and fiscal 1994, respectively. The
Company recognized license and contract revenues of $9.1 million and $7.9
million in fiscal 1992 and fiscal 1993, respectively, which represented 68% and
76% of total revenue, from CytoRad Incorporated ("CytoRad"), a biopharmaceutical
company engaged in the research and development of proprietary antibody-based
delivery systems for the diagnosis and treatment of prostate cancers and the
treatment of ovarian cancer, utilizing technology licensed from the Company. No
CytoRad license and contract revenues were recognized in fiscal 1994. In
February 1995, CytoRad merged with and into a subsidiary of the Company. As a
result of the merger, the Company estimates that it will record in the first
quarter of 1995 approximately $20 million for acquired research and development
on its statement of operations, representing the amount by which the purchase
price exceeds CytoRad's net book value. The Company anticipates that even if its
products currently in development receive necessary regulatory approvals, its
revenues over the near term will not be sufficient to cover its operating
expenses. The Company's profitability will be dependent on its success in
developing, obtaining and maintaining regulatory approvals for, and effectively
marketing (either itself or through third parties) its products. There can be no
assurance as to when or whether profitability will be achieved.
FUTURE CAPITAL NEEDS; UNCERTAINTY OF FUNDING. The Company estimates that
its existing funds will enable it to maintain its current and planned operations
through fiscal 1995. In order to develop, manufacture and market all of its
products effectively, the Company will require substantial additional funding.
If such funding is not obtained the Company would be required to significantly
curtail its operations. In order to meet these needs, the Company intends to
seek to raise funds through additional sales of equity securities (including
pursuant to the Arrangement), which could result in substantial dilution of the
percentage ownership of the then Company stockholders, through marketing and
out-licensing arrangements, corporate partnering arrangements or strategic
mergers and acquisitions. No assurance can be given as to the Company's success
in obtaining additional funding or as to the terms of any such funding.
The offering of the Shares described herein will be contingent, in part,
upon prevailing market conditions, including the trading price and trading
volume of the Common Stock. In addition, due to the discretionary nature of the
obligation of Nomura to purchase Shares under the Purchase Agreement, there can
be no assurance that the Company will realize any significant levels of funding
from the sale of Shares pursuant to the Arrangement.
CHANGES IN CONTRACT REVENUES. A significant portion of the Company's
total revenues have historically been generated from licensing and related
contracts with third parties. With the exception of a recently executed contract
with DuPont Merck, all of these contracts have either been terminated, in which
event, the Company has reacquired the technology licensed to such third parties,
or have no continuing commercial value. With the exception of such revenues as
may be derived from its license agreement with DuPont Merck, which relates to
the Company's rights to Samarium EDTMP, the Company does not currently have any
source of contract revenues. Under its strategic plan, the Company has assigned
high priority to the product development and commercialization programs for
Samarium EDTMP and ProstaScint while it continues to evaluate, invest in and
support the sales and marketing activities with respect to OncoScint CR/OV,
which to date, has achieved very limited sales and negligible sales growth in
both the U.S. and European markets. The Company's strategic plan also supports
development of additional products and technologies. No assurances can be given
that this strategy will be successful or that the Company will in the future
achieve significant revenues through product sales, license agreements or
otherwise.
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LIMITED MANUFACTURING CAPABILITY AND EXPERIENCE. The Company has limited
commercial scale manufacturing capacity, and it has not previously produced
commercial quantities of monoclonal prostate cancer antibodies, which are a
necessary element to the development of its ProstaScint product line. An
Establishment License Application ("ELA") for the facility used by the Company
for the production of its colorectal and ovarian imaging products was approved
by FDA in December 1992. An ELA Supplement prepared in 1994 in conjunction with
the PLA for ProstaScint was submitted to and accepted for filing by FDA on March
13, 1995. The Company believes that this facility will allow it to meet its
projected production requirements for its OncoScint CR/OV and ProstaScint
product lines in both the United States and Europe for the near term, although
no assurances can be given to that effect. If the Company's projected production
requirements are not achieved it would suffer materially adverse effects. The
Company currently has the in-house production capacity necessary to produce
projected commercial quantities of prostate cancer monoclonal antibodies for
manufacture of ProstaScint. However, no assurance can be given that the facility
will receive the necessary approvals to produce commercial quantities of
antibodies for ProstaScint, or that commercial quantities of antibodies will be
otherwise obtained. The Company will be required to obtain and maintain
regulatory approval for each of its commercial manufacturing processes and
facilities. Any failure to receive, or substantial delay in obtaining, or an
inability to maintain, regulatory approval for its manufacturing processes and
facilities will have a material adverse effect on the Company.
SINGLE SUPPLIER OF CERTAIN RAW MATERIALS. The raw materials used in the
manufacture of the Company's products include two antibodies. The Company has
both exclusive and non-exclusive license agreements which permit it to use
monoclonal antibodies in the products it is developing. The Company's one
commercial product, OncoScint CR/OV, uses a monoclonal antibody which is
supplied by a single manufacturer. The Company is aware that prior to 1992 this
supplier experienced certain operational difficulties relating to variations in
product yield, although to the Company's knowledge these difficulties have not
been experienced by the supplier since such time. These difficulties did not
materially adversely affect the Company. Although the Company anticipates that
the supplier will be able to meet the Company's needs for commercial quantities
of monoclonal antibodies for OncoScint CR/OV, no assurances can be given to that
effect. Failure by the supplier to provide these requisite monoclonal antibodies
in quantities sufficient to meet demand could have a material adverse effect on
the Company's business.
MARKETING UNCERTAINTIES. The Company has a limited sales force and has
historically relied in large part on third parties to market its products. In
1994 and the first quarter of 1995, the Company terminated its marketing
relationship with both Oncoscint CR/OV marketing partners. Since May 1994, the
Company's direct sales force has been the sole marketer of its OncoScint CR/OV
product in the United States. The Company intends to secure alternative
marketing and distribution partners for OncoScint CR\OV in Europe and Japan. The
Company is currently evaluating its product marketing options in the United
States and is considering maintaining its direct selling efforts, as well as,
co-promotion arrangements or licensing of all rights to a third party. Depending
on the approach selected, significant resources might be required. The Company
is also exploring advances in teleradiology in order to improve the acquisition
and interpretation of an OncoScint CR/OV scan. There can be no assurance that
the Company's marketing strategy will be successful.
The Company's ability to market its products successfully in the future
will be dependent on a number of factors, many of which are not within its
control. Due to slower than anticipated growth in OncoScint CR/OV product sales,
the Company has a significant investment in inventories. These inventories
include raw materials which the Company currently estimates will not be fully
used in the foreseeable future. During fiscal 1993 and fiscal 1994, the Company
recorded $2.3 million and $1.1 million of inventory writedowns due to shelf life
expiration and other inventory realization issues. In July 1993, the Company
petitioned FDA for an extension of the shelf life of its monoclonal antibody raw
material
7
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inventories. As of December 31, 1994, the Company had raw materials of $3.2
million, of which approximately $2.0 million exceeded the currently approved FDA
shelf life. The realization of the Company's investment in inventory is
dependent upon growth in product sales and the outcome and timing of the
response by FDA to the Company's request to extend the deemed product shelf
life. The Company cannot predict with accuracy when FDA will respond to such
request and no assurances can be given that such response will be favorable to
the Company. Given the foregoing uncertainties with respect to raw material
inventory, future inventory writedowns may be required.
DEPENDENCE UPON KEY PERSONNEL. The Company's ability to develop
marketable products and to maintain a competitive position in light of
technological developments will depend, in large part, on its ability to attract
and retain qualified scientific personnel and to develop and maintain
relationships with leading research institutions. Competition for such personnel
and relationships is intense. The Company is highly dependent on the principal
members of its management and scientific staff, the loss of whose services might
impede the achievement of development objectives. The Company does not maintain
any significant amounts of key personnel insurance on the lives of its employees
or directors.
POTENTIAL FOR PRODUCT LIABILITY EXPOSURE. The Company could be subject
to product liability claims in connection with the use of products that the
Company is currently developing, manufacturing and marketing or that the Company
or its licensees may develop, manufacture and market in the future. There can be
no assurance that the Company would have sufficient resources to satisfy any
liability resulting from these claims or would be able to have its customers
indemnify or insure the Company against such claims. Although the Company
believes that its current product liability insurance coverage of $5 million per
claim and $5 million in the aggregate is adequate for its present activities,
there can be no assurance that such coverage will be adequate in terms and scope
to protect it against material adverse effects in the event of a successful
product liability claim.
PATENTS AND PROPRIETARY RIGHTS. The Company has been issued patents in
the United States and other countries and has numerous other patent applications
pending to protect its proprietary technology. There can be no assurance that
any patents that have been issued or may be issued in the future will be of
substantial protection or commercial benefit to the Company, will afford the
Company adequate protection from competing products or will not be challenged or
declared invalid. Furthermore, there can be no assurance that additional U.S. or
foreign patents will be issued to the Company. The extent to which the Company
may be required to license other patents or proprietary rights held by others
and the cost and availability of such licenses are presently unknown. The
Company is not aware that any of its activities are in violation of third-party
patents; however, any such violation could have a material adverse effect on its
business. In addition, the Company relies heavily on its proprietary
technologies for which patent applications have been filed but not yet granted
in certain countries. Insofar as the Company relies on trade secrets, non-
disclosure agreements and unpatented know-how to establish and maintain its
competitive technological position, there can be no assurance that others may
not independently develop the same or similar technologies.
GOVERNMENT REGULATION. The Company is subject to regulation by numerous
governmental authorities in the United States, including FDA and the Nuclear
Regulatory Commission, and in other countries. All of the Company's products,
manufacturing processes and facilities require governmental licensing or
approval prior to commercial use and the maintenance of such approvals
thereafter. The approval process applicable to products of the type being
developed by the Company usually takes several years and typically requires
substantial expenditures. The Company submitted an application to FDA for
marketing approval of ProstaScint in January 1995, which was accepted effective
March 13, 1995, and intends to submit an application to FDA for marketing
approval of Samarium EDTMP during the first half of 1995. No assurances can be
given, however, as to whether or when the Company will receive approval for
these products. The Company has submitted an application to FDA for repeat
administration
8
<PAGE>
of OncoScint CR/OV. To date, FDA has not issued an approval or non-approval
letter for this extended indication. The Company cannot be sure about the
outcome and timing of FDA's response. The Company may encounter significant
delays or excessive costs in its efforts to secure necessary approvals or
licenses. Future U.S. or foreign legislative or administrative acts could also
prevent or delay regulatory approval of the Company's products. Failure to
obtain or maintain requisite governmental approvals, or failure to obtain
approvals of the scope requested, could delay or preclude the Company from
marketing its products, or limit the commercial use of the products and thereby
have a material adverse effect on the Company.
VOLATILITY OF STOCK PRICE. Nomura's intention to effect short sales of
the Shares during Pricing Periods and the issuance of Shares pursuant to the
Arrangement may have a significant adverse impact on the current market price of
the Common Stock. See "UNDERWRITING--Plan of Distribution". In addition, the
----------------------------------
market price of the securities of biopharmaceutical companies generally and of
the Common Stock in particular has fluctuated over a wide range in the past and
it is likely that the price of these securities will fluctuate in the future.
Announcements of technical innovations, new commercial products, regulatory
approvals, patent or proprietary rights or other developments by the Company or
its competitors could have a significant impact on the market price of the
Common Stock.
RISK OF TECHNOLOGICAL OBSOLESCENCE; HIGHLY COMPETITIVE INDUSTRY.
Biotechnology has undergone rapid and significant technological change. The
Company expects that this technology will continue to develop rapidly, and the
Company's future success will depend, in large part, on its ability to maintain
a competitive position. Rapid technological development may result in products
or processes becoming obsolete before marketing of these products or before the
Company recovers a significant portion of the research, development and
commercialization expenses incurred with respect to those products.
There is intense competition in the biopharmaceutical industry.
Potential competitors in the United States, Europe and other markets are
numerous and include pharmaceutical, chemical, biotechnology and medical device
companies, many of which have substantially greater capital resources, marketing
experience, research and development staffs and facilities than the Company.
Furthermore, some of the Company's competitors may achieve product
commercialization earlier than the Company. The Company also experiences
competition from universities and other research institutions in the development
of the Company's technologies and processes and, in some instances, competes
with others in acquiring technology from universities. In addition, certain of
the Company's products are subject to competition from products developed using
techniques other than those developed in biotechnology.
The biopharmaceutical industry is under pressure to consolidate, with
companies merging to attain critical mass in the marketplace. This trend towards
consolidation is due to a number of factors, including, the high costs
associated with obtaining FDA approval for products, substantial resources
required to commercialize products and unfavorable conditions in the public
capital markets for biopharmaceutical companies seeking financing. The
healthcare industry in general is undergoing significant changes due to cost
containment pressures, reimbursement requirements and the increasing presence of
managed care organizations. There can be no assurance that the Company will not
be influenced by any or all of these factors, all of which are beyond its
control.
NO DIVIDENDS ANTICIPATED IN THE FUTURE. The Company has not paid any
cash dividends on the Common Stock since its inception and does not anticipate
paying any cash dividends in the future. Declaration of dividends on the Common
Stock will depend upon, among other things, future earnings, the operating and
financial condition of the Company, its capital requirements and general
business conditions.
9
<PAGE>
DILUTION; SHARES ELIGIBLE FOR FUTURE SALE. Because the Common Stock is
issuable upon exercise of certain issued and outstanding warrants and options
and pursuant to outstanding contingent value rights ("CVRs"), the interests of
the Company's then stockholders will be diluted and the market price of the
Common Stock could be adversely affected by future exercises of the warrants
and/or options or issuances of the Common Stock pursuant to the CVRs and by the
sale of such shares in the public market. As of March 15, 1995, approximately
4,285,000 shares of Common Stock were reserved for issuance upon exercise of
issued and outstanding warrants, approximately 1,874,234 shares of Common Stock
were reserved for issuance pursuant to the CVRs and approximately 5,973,135
shares of Common Stock were reserved for issuance pursuant to employee
retirement savings, stock option and stock award plans and agreements (including
an option granted to Fletcher Capital Markets, Inc., which option has since been
assigned to Harvard Management Company, Inc.).
USE OF PROCEEDS
---------------
Unless otherwise set forth in the applicable Prospectus Supplement, the
net proceeds from the Arrangement will be used for general corporate purposes,
including product commercialization, late-stage product development activities
and exploratory basic research activities within the Company, and selling,
general and administrative expenses. Under the Company's current fiscal 1995
operating budget, approximately 61% will be used for research and development
and 39% will be used for selling, general and administrative expenses.
Management of the Company believes that its current sources of liquidity will be
sufficient to meet anticipated cash requirements through fiscal 1995. To date,
the Company's major uses of cash have included research and development costs,
general and administrative expenses, expenditures for property, plant and
equipment and expenses related to marketing and selling its products.
The Company anticipates continued spending on research and development,
including the completion of Phase III clinical trials for Samarium EDTMP, the
expansion of its product development efforts for ProstaScint and the
acceleration of exploratory research in the Company's TSARs\SynGenes program.
The timing, amount and nature of these expenditures are dependent upon,
and may vary in accordance with, numerous factors including the progress of the
Company's research and development program, the Company's assessment of the
timing of FDA approval and the market potential of its products and that of
competing or complementary products, and other factors beyond the Company's
control. Pending application of the proceeds to the purposes described above,
the net proceeds from the Arrangement will be invested in high-grade, short-
term, interest-bearing investments.
UNDERWRITING
------------
PURCHASE AGREEMENT
Subject to the terms and conditions of the Purchase Agreement, Nomura,
as underwriter, has agreed to purchase, and the Company has agreed to sell to
Nomura, from time to time over the next 24 months, shares of Common Stock with
an aggregate purchase price of up to $49,000,000. The commencement of any
Takedown requires the mutual agreement of Nomura and the Company as to the
aggregate dollar amount and commencement date of the Takedown. Furthermore,
Nomura is entitled to reduce the aggregate dollar amount of a Takedown,
discontinue a Takedown or terminate the Purchase Agreement under certain
circumstances prior to the purchase of the Shares. Nomura is not obligated under
the Purchase Agreement to agree to any Takedown or to purchase a minimum number
of Shares.
10
<PAGE>
Under the Purchase Agreement, a Takedown is initiated by the delivery of
a notice by the Company to Nomura proposing an aggregate dollar amount of at
least $500,000 and the commencement date for a Takedown, which will in no event
be sooner than 10 trading days after the date of the initial delivery of a
proposal for a Takedown. If the parties agree upon such terms, a twenty-one
trading day pricing period for the Shares to be issued in the Takedown will
commence on such agreed upon date. The Trading Price for the Shares over such
Pricing Period is determined based on the average of the closing bid prices for
the Shares as quoted on Nasdaq for each day in the Pricing Period. If, on any
trading day during a Pricing Period, (i) a representation, warranty or other
statement of the Company made in the Purchase Agreement is not true and correct,
(ii) in the judgment of Nomura, the Company shall have failed to perform in any
material respect any of its obligations under the Purchase Agreement, (iii)
certain conditions set forth in the Purchase Agreement are not satisfied, or
(iv) the price or trading volume of the Common Stock drops below certain levels,
at the discretion of Nomura, the aggregate dollar amount of a Takedown is
subject to pro rata reduction and such trading day(s) are excluded in computing
the Trading Price. Nomura also has the option in the case of the foregoing
clauses (i), (ii) or (iii) of terminating the Takedown with respect to any
remaining trading days in the Pricing Period and reducing the aggregate dollar
amount of the Takedown accordingly, on a pro rata basis. At the end of the
Pricing Period, the amount of Shares to be issued and sold by the Company to
Nomura in such Takedown is determined by dividing the aggregate dollar amount of
the Takedown by the Trading Price. The purchase price for each Share to be
purchased by Nomura in a Takedown will equal 90% of the related Trading Price.
The closing date for each Takedown will be for each Pricing Period which ends
prior to June 7, 1995, four trading days after the end of such Pricing Period,
and for each Pricing Period which ends on or after June 7, 1995, two trading
days after the end of such Pricing Period.
In connection with the execution of the Purchase Agreement, the Company
has paid Nomura a $100,000 commitment fee. Under the Purchase Agreement, if
Nomura determines that it will not terminate the Purchase Agreement after an
initial six month period, the Company shall further pay Nomura a $200,000
continuation fee. In the event that the Company terminates the Purchase
Agreement at any time, except under certain limited circumstances, the Company
shall be required to pay Nomura a $250,000 termination fee. If Nomura does not
agree to a certain number of Takedowns proposed by the Company, the Company has
the option to terminate the Purchase Agreement or to terminate Nomura's
exclusive right to purchase Shares pursuant to the Purchase Agreement; in either
case, the Company will not be required to pay Nomura the termination fee
described in the preceding sentence. If (i) the Shares are not quoted on Nasdaq,
or (ii) in the case of a merger or consolidation, (A) the Company is not the
surviving entity, and (B) there is deemed to be a "change in control" of the
Company, the Company shall pay to Nomura an amount equal to 1% of the difference
between $49,000,000 and the aggregate dollar amount of Shares sold by the
Company under the Purchase Agreement. In connection with each Takedown, the
Company will sell to Nomura, at a price of $.001 per Warrant, Warrants to
purchase a number of Shares equal to 10% of the Shares sold in the Takedown. The
Warrants so issued will be exercisable at any time during the three year period
following the date of issuance at an exercise price equal to 160% of the related
Trading Price. The issuance to Nomura of the Warrants and the issuance of the
Shares to be issued upon exercise of the Warrants have been registered under the
Securities Act. The Company has agreed to pay the out-of-pocket expenses of
Nomura over the term of the Purchase Agreement, including the fees and
disbursements of counsel.
The Company and certain officers and directors of the Company have
agreed that they will not offer, sell, pledge, contract to sell or otherwise
dispose of, directly or indirectly, or announce any such offer, sale, pledge,
contract or other disposition, or cause to be filed with the Commission a
registration statement under the Securities Act relating to any securities of
the Company substantially similar to the Shares (including without limitation,
securities convertible or exchangeable for the Shares), subject to certain
exceptions, for a period of two years after the date of this Prospectus without
the prior written consent of Nomura, except as otherwise permitted in the
Purchase Agreement.
11
<PAGE>
In connection with a letter agreement between the Company and Quaker
Capital Advisors, Inc. ("Quaker") regarding the retention of Quaker to render
advisory services relating to the Company's efforts to secure equity financing,
the Company agreed to pay Quaker (i) a commitment fee equal to 0.1% of the total
amount of the Arrangement, (ii) 2.5% of the net proceeds from the sale of the
Shares to Nomura, and (iii) reimbursement for certain out-of-pocket expenses
incurred by Quaker. The commitment fee provided for in clause (i) of the
preceding sentence will be credited toward payment of the 2.5% fee described in
clause (ii). The Company further paid Quaker for general corporate finance
advisory services for the period July 1994 to November 1994 at the rate of
$5,000 per month.
The Purchase Agreement provides that the Company will indemnify Nomura
against certain liabilities, including liabilities under the Securities Act, or
contribute to payments that Nomura may be required to make in respect thereof.
The Purchase Agreement is included as an exhibit to the Registration
Statement which contains this Prospectus, and the foregoing summary of its terms
is qualified in its entirety by reference to the text of the Purchase Agreement.
PLAN OF DISTRIBUTION
Nomura expects to sell the Shares from time to time in at the market
transactions on Nasdaq. Nomura may also sell the Shares in negotiated
transactions, or by a combination of at the market and negotiated transactions,
at fixed prices that may be changed, at market prices at the time of sale, at
prices related to market prices or at negotiated prices. Nomura intends to
effect short sales of the Common Stock during the Pricing Periods. There can be
no assurance that the short sales effected by Nomura will not have an adverse
impact on the current market price of the Common Stock. Nomura expects to effect
these transactions by selling the Shares to or through broker-dealers, who may
receive compensation in the form of commissions, mark-ups or other payments from
Nomura or from the purchasers of the Shares for whom the broker-dealers may act
as agent or to whom they may sell as a principal, or both.
Any broker-dealers who act as Nomura's agent in connection with the sale
of the Shares may be deemed "underwriters" as that term is defined in the
Securities Act, and any remuneration received by them in connection therewith
may be deemed to be underwriting compensation under the Securities Act.
Nomura may engage in "passive market making" in the Common Stock on
Nasdaq in accordance with Rule 10b-6A under the Exchange Act. Rule 10b-6A
permits, upon the satisfaction of certain conditions, underwriters and selling
group members participating in a distribution that are also Nasdaq market makers
to engage in limited market making transactions during the period when Rule 10b-
6A under the Exchange Act would otherwise prohibit such activity. Rule 10b-6A
prohibits underwriters and selling group members engaged in passive market
making generally from entering a bid or effecting a purchase at a price that
exceeds the highest bid for those securities displayed on Nasdaq by a market
maker that is not participating in the distribution. Under Rule 10b-6A, each
underwriter or selling group member engaged in passive market making is subject
to a daily net purchase limitation equal to 30% of such entity's average daily
trading volume during the two full consecutive calendar months immediately
preceding the date of the filing of the registration statement under the
Securities Act pertaining to the security to be distributed.
LEGAL MATTERS
-------------
The validity of the shares of Common Stock offered hereby has been
passed on for the Company by Dechert Price & Rhoads, Princeton, New Jersey.
Certain legal matters will be passed on for Nomura by Cravath, Swaine & Moore,
New York, New York.
12
<PAGE>
EXPERTS
-------
The audited consolidated financial statements and schedules of the
Company incorporated by reference in this Prospectus and elsewhere in the
Registration Statement, to the extent and for the periods indicated in their
report, have been audited by Arthur Andersen LLP, independent public
accountants, and are incorporated herein in reliance upon the authority of said
firm as experts in giving said reports.
The audited financial statements of CytoRad incorporated by reference in
this Prospectus and elsewhere in the Registration Statement, to the extent and
for the periods indicated in their report, have been audited by Arthur Andersen
LLP, independent public accountants, and are incorporated herein in reliance
upon the authority of said firm as experts in giving said reports.
13
<PAGE>
Form of File No. 33-_____
PROSPECTUS SUPPLEMENT Filed pursuant to Rule _______
(TO PROSPECTUS DATED__________)
CYTOGEN CORPORATION
Common Stock
($.01 par value)
___________________
Subject to the terms and conditions of the Purchase Agreement
between Cytogen Corporation (the "Company") and Nomura Securities International,
Inc. ("Nomura"), on [ ], the Company and Nomura agreed upon a
Takedown with the following terms:
Maximum Takedown Amount: $______________
Maximum Expected Net
Proceeds: $______________
Pricing Period
Commencement Date: ______________, 199_
Expected Closing
Date: ______________, 199_
The Common Stock is traded on the Nasdaq National Market
("Nasdaq"). On [ ], the reported last sale price of the
Common Stock, as reported on Nasdaq, was $_____ per share .
All initially capitalized terms used herein shall have the same
meaning as specified in the Prospectus.
Nomura Securities International, Inc.
_________________________
The date of this Supplement is ______________, 19___
_________________________
[S-1]
<PAGE>
Form of File No. 33-_____
PROSPECTUS SUPPLEMENT Filed pursuant to Rule _______
(TO PROSPECTUS DATED__________)
[ ] Shares
CYTOGEN CORPORATION
Common Stock
($.01 par value)
_______________
Subject to the terms and conditions of the Purchase Agreement
between Cytogen Corporation (the "Company") and Nomura Securities
International, Inc.("Nomura"), on [ ], the Company sold an aggregate
of [ ] shares of Common Stock at the closing of the Takedown, at a purchase
price of [ ] per share to Nomura.
The Common Stock is traded on the Nasdaq National Market
("Nasdaq"). On [ ], the reported last sale price of the Common Stock, as
reported on Nasdaq, was $_____ per share.
_______________
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.
_______________
<TABLE>
<CAPTION>
=======================================================================================
Purchase Price (1) Proceeds To Company (2)
------------------ -----------------------
- ---------------------------------------------------------------------------------------
<S> <C> <C>
Per share................
- ---------------------------------------------------------------------------------------
Total....................
=======================================================================================
</TABLE>
(1) The Company has agreed to indemnify Nomura against certain liabilities,
including liabilities under the Securities Act of 1933.
(2) Before deducting estimated expenses of $ payable by the Company.
Nomura Securities International, Inc.
The date of this Prospectus Supplement is , 199__.
_______________
[S-1]
<PAGE>
[RECENT DEVELOPMENTS]
[USE OF PROCEEDS]
DILUTION
The net tangible book value per share of the Common Stock at
__________ ___, 199__ was $__________. Without taking into account any change in
the Company's net tangible book value after __________ ___, 199__, other than
giving effect to the issuance and sale of the Shares at the last reported sale
price as shown on the cover page (after deducting offering expenses and
underwriting discounts and commissions), the pro forma net tangible book value
per share of the Common Stock would have been $__________. This represents an
immediate increase in net tangible pro forma book value per share of $__________
to present stockholders and an immediate dilution of $__________ per share to
investors in this offering. The following table illustrates the per share effect
of this dilution on an investor's purchase of Common Stock:
<TABLE>
<S> <C> <C>
Public offering price of Common Stock.............................. $______
Net tangible book value before offering........................... $______
Increase attributable to payments by new investors................ $______
Pro forma net tangible book value after offering................... $______
Dilution to new investors.......................................... $======
</TABLE>
[UNDERWRITING]
[Sales of Common Stock by Nomura During Pricing Period]
[S-2]
<PAGE>
================================================================================
No dealer, salesperson or other person has been authorized to give any
information or to make any representations other than those contained or
incorporated by reference in this Prospectus Supplement or the accompanying
Prospectus, and, if given or made, such information or representations must not
be relied upon as having been authorized. This Prospectus Supplement and the
accompanying Prospectus do not constitute an offer to sell or a solicitation of
an offer to buy any securities to which it relates, or an offer or solicitation
of any person in any jurisdiction in which such offer or solicitation would be
unlawful. Neither the delivery of this Prospectus Supplement and the
accompanying Prospectus nor any sale made thereunder shall, under any
circumstances, create an implication that the information contained herein is
correct as of any time subsequent to its date.
_______________
TABLE OF CONTENTS
Prospectus Supplement
<TABLE>
<CAPTION>
Page
----
<S> <C>
Recent Developments ............................................... S-
Use of Proceeds ................................................... S-
Dilution .......................................................... S-
Underwriting ...................................................... S-
Prospectus
Available Information..............................................
Incorporation of Certain Documents by
Reference.........................................................
The Company........................................................
Use of Proceeds....................................................
Underwriting.......................................................
Legal Matters......................................................
Experts............................................................
</TABLE>
================================================================================
[ ] Shares
CYTOGEN CORPORATION
Common Stock
___________________
PROSPECTUS SUPPLEMENT
_______________
NOMURA SECURITIES INTERNATIONAL, INC.
[____________, 199__]
================================================================================
[S-3]
<PAGE>
SUBJECT TO COMPLETION -- DATED MARCH 28, 1995
PROSPECTUS
CYTOGEN CORPORATION
WARRANTS TO PURCHASE COMMON STOCK
AND
SHARES OF COMMON STOCK
($.01 PAR VALUE)
----------------
This Prospectus relates to (i) the sale from time to time by
Nomura Securities International, Inc. ("Nomura") of the Warrants (the
"Warrants") to purchase Common Stock, $.01 par value (the "Common Stock"), of
Cytogen Corporation (the "Company"), and (ii) the sale by the Company of the
shares of Common Stock to be issued on exercise of the Warrants by the holder of
the Warrants and any sale thereof by anyone who would be deemed an "underwriter"
within the meaning of the Securities Act of 1933 (the "Securities Act"). The
Warrants were purchased by Nomura from the Company pursuant to a Purchase
Agreement dated March 28, 1995 (the "Purchase Agreement") and a Warrant
Agreement dated as of March __, 1995 (the "Warrant Agreement") between the
Company and Mellon Securities Trust Company, as Warrant Agent (the "Warrant
Agent"), at a purchase price of $.001 per Warrant. Each Warrant is immediately
exercisable for one share of Common Stock at an exercise price equal to 160% of
a deemed average trading price of the Common Stock at the time of issuance of
the Warrants (subject to certain anti-dilution provisions contained in the
Warrant Agreement). The Warrants may be exercised during a period of three years
from the date of issue. See "DESCRIPTION OF WARRANTS".
-----------------------
At the time of sale of the Warrants by Nomura hereunder, the
Company will prepare and file with the Securities and Exchange Commission (the
"Commission") a supplement to this Prospectus (the "Prospectus Supplement")
which sets forth the exercise price and expiration date of the Warrants being
offered. Nomura may from time to time sell the Warrants in negotiated
transactions or as may otherwise be provided in the applicable Prospectus
Supplement. The Company will not receive any proceeds from sales of the Warrants
by Nomura. The Company will receive all proceeds from the exercise of the
Warrants. Except as may otherwise be provided in an applicable Prospectus
Supplement, Nomura expects to sell any Common Stock received upon exercise of
the Warrants from time to time in at the market transactions on the Nasdaq
National Market ("Nasdaq"). The Company will not receive any proceeds from sales
of the Common Stock issued upon exercise of the Warrants. See "UNDERWRITING".
------------
The Company will bear all expenses in connection with the
registration of the Warrants and Common Stock, which expenses are estimated to
be $45,000.
The Company has agreed to indemnify Nomura and each other
underwriter within the meaning of the Securities Act that may purchase from or
sell for Nomura any of the Warrants and Common Stock, and each person, if any,
who controls Nomura or any underwriter within the meaning of the Securities Act,
against certain liabilities, including liabilities under the Securities Act.
The Common Stock is quoted on Nasdaq under the symbol "CYTO."
This Prospectus may not be used to consummate sales of the
Warrants unless accompanied by a Prospectus Supplement.
____________________________
AN INVESTMENT IN THE SECURITIES OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS".
____________________________
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 [________], 1995
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.
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
AVAILABLE INFORMATION....................................................... 3
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE............................. 3
THE COMPANY................................................................. 5
RISK FACTORS................................................................ 5
USE OF PROCEEDS............................................................ 10
DESCRIPTION OF WARRANTS.................................................... 11
UNDERWRITING............................................................... 11
LEGAL MATTERS.............................................................. 12
EXPERTS.................................................................... 12
</TABLE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS IN
CONNECTION WITH THIS OFFERING. ANY INFORMATION OR REPRESENTATION NOT CONTAINED
OR INCORPORATED BY REFERENCE HEREIN MUST NOT BE RELIED ON AS HAVING BEEN
AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL
OR THE SOLICITATION OF AN OFFER TO BUY THE SECURITIES OFFERED HEREBY IN ANY
STATE TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
EXCEPT WHERE OTHERWISE INDICATED, THIS PROSPECTUS SPEAKS AS OF ITS DATE AND
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER
ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.
2
<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 reports, proxy statements and other information with the
Commission. Such reports, proxy statements and other information filed by the
Company can be inspected and copied at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549,
and at the following Regional Offices of the Commission: New York Regional
Office, Seven World Trade Center, Suite 1300, New York, New York 10048; and
Chicago Regional Office, Northwestern Atrium Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661-2511. Copies of such material can be
obtained from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates. The Common Stock is
traded on the Nasdaq National Market and such reports, proxy statements and
other information concerning the Company are available for inspection at the
offices of the National Association of Securities Dealers, Inc. (the "NASD"),
9513 Key West Avenue, Rockville, Maryland 20850.
The Company has filed with the Commission a Registration Statement on
Form S-3 (together with all amendments and exhibits thereto, the "Registration
Statement") under the Securities Act, with respect to the Warrants and shares of
Common Stock offered hereby. This Prospectus does not contain all of the
information set forth in the Registration Statement and the exhibits and
schedules thereto, certain parts of which are omitted in accordance with the
rules and regulations of the Commission. Statements contained in this Prospectus
or in any document incorporated by reference as to the contents of any contract
or other documents referred to herein or therein are not necessarily complete
and in each instance, reference is made to the copy of such documents filed as
an exhibit to the Registration Statement or such other documents. Each such
statement is qualified in its entirety by such reference. For further
information with respect to the Company and the Warrants and shares of Common
Stock offered hereby, reference is hereby made to the Registration Statement,
exhibits and schedules.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
-----------------------------------------------
The Company hereby incorporates by reference into this Prospectus (i)
its Annual Report on Form 10-K for the Fiscal Year Ended December 31, 1994,
which contains audited financial statements for the Company's latest fiscal year
for which a Form 10-K was required to have been filed, (ii) all other reports
filed by the Company pursuant to Section 13(a) or 15(d) of the Exchange Act
since December 31, 1994, including but not limited to the Current Reports on
Form 8-K filed by the Company with the Commission on January 6, 1995, February
16, 1995, February 23, 1995 and February 24, 1995, respectively and (iii) the
description of the Common Stock, par value $.01 per share, as contained in its
registration statement on Form 8-A declared effective on March 9, 1992.
All documents and reports filed by the Company with the Commission
pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, subsequent
to the date hereof and prior to the filing of a post-effective amendment to the
Registration Statement which indicates that all shares of Common Stock offered
hereby have been sold or which deregisters all shares of Common Stock then
remaining unsold, shall be deemed to be incorporated by reference into this
Prospectus and to be a part hereof from the respective dates of filing of such
documents or reports.
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 this Prospectus to the extent that a statement contained herein
or in a subsequently filed document that also is or is deemed to be incorporated
by reference herein modifies or supersedes such statement. Any such statement so
modified
3
<PAGE>
or superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
THE COMPANY HEREBY UNDERTAKES TO PROVIDE, WITHOUT CHARGE, TO EACH PERSON
(INCLUDING ANY BENEFICIAL OWNER) TO WHOM THIS PROSPECTUS IS DELIVERED, UPON
WRITTEN OR ORAL REQUEST OF SUCH PERSON, A COPY OF ANY AND ALL OF THE INFORMATION
THAT HAS BEEN INCORPORATED BY REFERENCE IN THIS PROSPECTUS (NOT INCLUDING
EXHIBITS TO SUCH INFORMATION UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED
BY REFERENCE INTO SUCH INFORMATION). SUCH REQUESTS SHOULD BE DIRECTED TO T.
JEROME MADISON, VICE PRESIDENT, CHIEF FINANCIAL OFFICER AND SECRETARY, AT THE
COMPANY'S PRINCIPAL EXECUTIVE OFFICES AT 600 COLLEGE ROAD EAST, CN 5308,
PRINCETON, NEW JERSEY 08540-5308; TELEPHONE: (609) 987-8210.
4
<PAGE>
THE COMPANY
-----------
The Company is a biopharmaceutical company engaged in the discovery,
development, manufacture and marketing of products to better diagnose and treat
disease. The Company's current portfolio of products provides targeted delivery
of diagnostic and therapeutic substances directly to the sites of disease. The
Company is using its patented and proprietary technologies to develop specific
in vivo cancer diagnostic imaging and therapeutic products to build a focused
cancer care franchise. The Company may expand from cancer into other therapeutic
areas employing related technologies.
The Company's current focus is on: (i) Samarium 153 EDTMP ("Samarium
EDTMP"), a cancer therapy agent for the treatment of bone pain associated with
bone metastases, which is in late Phase III clinical development with a New Drug
Application submission to the U.S. Food and Drug Administration ("FDA")
anticipated in the first half of 1995; (ii) ProstaScint(TM), a prostate cancer
diagnostic imaging product, for which a Product License Application ("PLA") was
submitted to and accepted for filing by FDA effective March 13, 1995; and (iii)
OncoScint(R) CR/OV, the Company's monoclonal antibody-based diagnostic imaging
agent for colorectal and ovarian cancer, which has been approved by FDA since
December 1992 and, in its colorectal cancer application, in various European
countries since June 1991.
The Company has licensed to The DuPont Merck Pharmaceutical Company
("DuPont Merck") the manufacturing and co-marketing rights to Samarium EDTMP in
the U.S. The Company has assigned high priority to the product development and
commercialization programs for Samarium EDTMP and ProstaScint. The Company is
continuing to evaluate, invest in and support the sales and marketing activities
with respect to OncoScint CR/OV. While the product has technically performed as
predicted in clinical applications, OncoScint CR/OV has achieved very limited
sales, and negligible sales growth, in both the U.S. and European markets since
its introduction.
The Company's strategic plan also supports continued commitment to its
"linker" technology through ongoing product development efforts for cancer
therapeutic agents. The Company expects to expand its current product portfolio
through in-licensing products and technologies. In addition, the Company has
committed additional resources to its molecular recognition unit program which,
as a result of recent patent filings and development trends, has been renamed
the Totally Synthetic Affinity Reagents\SynGenes program. This program involves
long peptides that have the ability to recognize and bind to specific target
sites in the human body. The Company believes that the ability of these
compounds to bind to predetermined sites may mediate certain diagnostic or
therapeutic effects more effectively than its current monoclonal antibody
delivery systems and other existing products.
The Company is a Delaware corporation with its principal executive
offices at 600 College Road East--CN 5308, Princeton, N.J. 08540-5308. Its
telephone number is (609) 987-8200.
RISK FACTORS
------------
An investment in the shares of Common Stock offered hereby involves a
high degree of risk. Prospective investors should carefully consider the
following risk factors in addition to the other information set forth and
incorporated by reference in this Prospectus before making any decision to
invest in the Common Stock.
HISTORY OF OPERATING LOSSES; ACCUMULATED DEFICIT. The Company commenced
its research activities in 1981, and has never made a profit nor has it ever had
positive cash flow from operations. At December 31, 1994, the Company had an
accumulated deficit of approximately $155.8 million, and the Company anticipates
it will continue to incur substantial losses in the future. The Company first
5
<PAGE>
recognized product related revenues in 1992. Product related revenues were
$400,000, $1.6 million and $1.4 million in fiscal 1992, fiscal 1993 and fiscal
1994, respectively. License and contract revenues were $13 million, $8.8 million
and $1 million in fiscal 1992, fiscal 1993 and fiscal 1994, respectively. The
Company recognized license and contract revenues of $9.1 million and $7.9
million in fiscal 1992 and fiscal 1993, respectively, which represented 68% and
76% of total revenue, from CytoRad Incorporated ("CytoRad"), a biopharmaceutical
company engaged in the research and development of proprietary antibody-based
delivery systems for the diagnosis and treatment of prostate cancers and the
treatment of ovarian cancer, utilizing technology licensed from the Company. No
CytoRad license and contract revenues were recognized in fiscal 1994. In
February 1995, CytoRad merged with and into a subsidiary of the Company. As a
result of the merger, the Company estimates that it will record in the first
quarter of 1995 approximately $20 million for acquired research and development
on its statement of operations, representing the amount by which the purchase
price exceeds CytoRad's net book value. The Company anticipates that even if its
products currently in development receive necessary regulatory approvals, its
revenues over the near term will not be sufficient to cover its operating
expenses. The Company's profitability will be dependent on its success in
developing, obtaining and maintaining regulatory approvals for, and effectively
marketing (either itself or through third parties) its products. There can be no
assurance as to when or whether profitability will be achieved.
FUTURE CAPITAL NEEDS; UNCERTAINTY OF FUNDING. The Company estimates that
its existing funds will enable it to maintain its current and planned operations
through fiscal 1995. In order to develop, manufacture and market all of its
products effectively, the Company will require substantial additional funding.
If such funding is not obtained the Company would be required to significantly
curtail its operations. In order to meet these needs, the Company intends to
seek to raise funds through additional sales of equity securities (including
pursuant to the Arrangement), which could result in substantial dilution of the
percentage ownership of the then Company stockholders, through marketing and
out-licensing arrangements, corporate partnering arrangements or strategic
mergers and acquisitions. No assurance can be given as to the Company's success
in obtaining additional funding or as to the terms of any such funding.
The offering of the Shares described herein will be contingent, in part,
upon prevailing market conditions, including the trading price and trading
volume of the Common Stock. In addition, due to the discretionary nature of the
obligation of Nomura to purchase Shares under the Purchase Agreement, there can
be no assurance that the Company will realize any significant levels of funding
from the sale of Shares pursuant to the Arrangement.
CHANGES IN CONTRACT REVENUES. A significant portion of the Company's
total revenues have historically been generated from licensing and related
contracts with third parties. With the exception of a recently executed contract
with DuPont Merck, all of these contracts have either been terminated, in which
event, the Company has reacquired the technology licensed to such third parties,
or have no continuing commercial value. With the exception of such revenues as
may be derived from its license agreement with DuPont Merck, which relates to
the Company's rights to Samarium EDTMP, the Company does not currently have any
source of contract revenues. Under its strategic plan, the Company has assigned
high priority to the product development and commercialization programs for
Samarium EDTMP and ProstaScint while it continues to evaluate, invest in and
support the sales and marketing activities with respect to OncoScint CR/OV,
which to date, has achieved very limited sales and negligible sales growth in
both the U.S. and European markets. The Company's strategic plan also supports
development of additional products and technologies. No assurances can be given
that this strategy will be successful or that the Company will in the future
achieve significant revenues through product sales, license agreements or
otherwise.
6
<PAGE>
LIMITED MANUFACTURING CAPABILITY AND EXPERIENCE. The Company has limited
commercial scale manufacturing capacity, and it has not previously produced
commercial quantities of monoclonal prostate cancer antibodies, which are a
necessary element to the development of its ProstaScint product line. An
Establishment License Application ("ELA") for the facility used by the Company
for the production of its colorectal and ovarian imaging products was approved
by FDA in December 1992. An ELA Supplement prepared in 1994 in conjunction with
the PLA for ProstaScint was submitted to and accepted for filing by FDA on March
13, 1995. The Company believes that this facility will allow it to meet its
projected production requirements for its OncoScint CR/OV and ProstaScint
product lines in both the United States and Europe for the near term, although
no assurances can be given to that effect. If the Company's projected production
requirements are not achieved it would suffer materially adverse effects. The
Company currently has the in-house production capacity necessary to produce
projected commercial quantities of prostate cancer monoclonal antibodies for
manufacture of ProstaScint. However, no assurance can be given that the facility
will receive the necessary approvals to produce commercial quantities of
antibodies for ProstaScint, or that commercial quantities of antibodies will be
otherwise obtained. The Company will be required to obtain and maintain
regulatory approval for each of its commercial manufacturing processes and
facilities. Any failure to receive, or substantial delay in obtaining, or an
inability to maintain, regulatory approval for its manufacturing processes and
facilities will have a material adverse effect on the Company.
SINGLE SUPPLIER OF CERTAIN RAW MATERIALS. The raw materials used in the
manufacture of the Company's products include two antibodies. The Company has
both exclusive and non-exclusive license agreements which permit it to use
monoclonal antibodies in the products it is developing. The Company's one
commercial product, OncoScint CR/OV, uses a monoclonal antibody which is
supplied by a single manufacturer. The Company is aware that prior to 1992 this
supplier experienced certain operational difficulties relating to variations in
product yield, although to the Company's knowledge these difficulties have not
been experienced by the supplier since such time. These difficulties did not
materially adversely affect the Company. Although the Company anticipates that
the supplier will be able to meet the Company's needs for commercial quantities
of monoclonal antibodies for OncoScint CR/OV, no assurances can be given to that
effect. Failure by the supplier to provide these requisite monoclonal antibodies
in quantities sufficient to meet demand could have a material adverse effect on
the Company's business.
MARKETING UNCERTAINTIES. The Company has a limited sales force and has
historically relied in large part on third parties to market its products. In
1994 and the first quarter of 1995, the Company terminated its marketing
relationship with both Oncoscint CR/OV marketing partners. Since May 1994, the
Company's direct sales force has been the sole marketer of its OncoScint CR/OV
product in the United States. The Company intends to secure alternative
marketing and distribution partners for OncoScint CR\OV in Europe and Japan. The
Company is currently evaluating its product marketing options in the United
States and is considering maintaining its direct selling efforts, as well as,
co-promotion arrangements or licensing of all rights to a third party. Depending
on the approach selected, significant resources might be required. The Company
is also exploring advances in teleradiology in order to improve the acquisition
and interpretation of an OncoScint CR/OV scan. There can be no assurance that
the Company's marketing strategy will be successful.
The Company's ability to market its products successfully in the future
will be dependent on a number of factors, many of which are not within its
control. Due to slower than anticipated growth in OncoScint CR/OV product sales,
the Company has a significant investment in inventories. These inventories
include raw materials which the Company currently estimates will not be fully
used in the foreseeable future. During fiscal 1993 and fiscal 1994, the Company
recorded $2.3 million and $1.1 million of inventory writedowns due to shelf life
expiration and other inventory realization issues. In July 1993, the Company
petitioned FDA for an extension of the shelf life of its monoclonal antibody raw
material
7
<PAGE>
inventories. As of December 31, 1994, the Company had raw materials of $3.2
million, of which approximately $2.0 million exceeded the currently approved FDA
shelf life. The realization of the Company's investment in inventory is
dependent upon growth in product sales and the outcome and timing of the
response by FDA to the Company's request to extend the deemed product shelf
life. The Company cannot predict with accuracy when FDA will respond to such
request and no assurances can be given that such response will be favorable to
the Company. Given the foregoing uncertainties with respect to raw material
inventory, future inventory writedowns may be required.
DEPENDENCE UPON KEY PERSONNEL. The Company's ability to develop
marketable products and to maintain a competitive position in light of
technological developments will depend, in large part, on its ability to attract
and retain qualified scientific personnel and to develop and maintain
relationships with leading research institutions. Competition for such personnel
and relationships is intense. The Company is highly dependent on the principal
members of its management and scientific staff, the loss of whose services might
impede the achievement of development objectives. The Company does not maintain
any significant amounts of key personnel insurance on the lives of its employees
or directors.
POTENTIAL FOR PRODUCT LIABILITY EXPOSURE. The Company could be subject
to product liability claims in connection with the use of products that the
Company is currently developing, manufacturing and marketing or that the Company
or its licensees may develop, manufacture and market in the future. There can be
no assurance that the Company would have sufficient resources to satisfy any
liability resulting from these claims or would be able to have its customers
indemnify or insure the Company against such claims. Although the Company
believes that its current product liability insurance coverage of $5 million per
claim and $5 million in the aggregate is adequate for its present activities,
there can be no assurance that such coverage will be adequate in terms and scope
to protect it against material adverse effects in the event of a successful
product liability claim.
PATENTS AND PROPRIETARY RIGHTS. The Company has been issued patents in
the United States and other countries and has numerous other patent applications
pending to protect its proprietary technology. There can be no assurance that
any patents that have been issued or may be issued in the future will be of
substantial protection or commercial benefit to the Company, will afford the
Company adequate protection from competing products or will not be challenged or
declared invalid. Furthermore, there can be no assurance that additional U.S. or
foreign patents will be issued to the Company. The extent to which the Company
may be required to license other patents or proprietary rights held by others
and the cost and availability of such licenses are presently unknown. The
Company is not aware that any of its activities are in violation of third-party
patents; however, any such violation could have a material adverse effect on its
business. In addition, the Company relies heavily on its proprietary
technologies for which patent applications have been filed but not yet granted
in certain countries. Insofar as the Company relies on trade secrets, non-
disclosure agreements and unpatented know-how to establish and maintain its
competitive technological position, there can be no assurance that others may
not independently develop the same or similar technologies.
GOVERNMENT REGULATION. The Company is subject to regulation by numerous
governmental authorities in the United States, including FDA and the Nuclear
Regulatory Commission, and in other countries. All of the Company's products,
manufacturing processes and facilities require governmental licensing or
approval prior to commercial use and the maintenance of such approvals
thereafter. The approval process applicable to products of the type being
developed by the Company usually takes several years and typically requires
substantial expenditures. The Company submitted an application to FDA for
marketing approval of ProstaScint in January 1995, which was accepted effective
March 13, 1995, and intends to submit an application to FDA for marketing
approval of Samarium EDTMP during the first half of 1995. No assurances can be
given, however, as to whether or when the Company will receive approval for
these products. The Company has submitted an application to FDA for repeat
administration
8
<PAGE>
of OncoScint CR/OV. To date, FDA has not issued an approval or non-approval
letter for this extended indication. The Company cannot be sure about the
outcome and timing of FDA's response. The Company may encounter significant
delays or excessive costs in its efforts to secure necessary approvals or
licenses. Future U.S. or foreign legislative or administrative acts could also
prevent or delay regulatory approval of the Company's products. Failure to
obtain or maintain requisite governmental approvals, or failure to obtain
approvals of the scope requested, could delay or preclude the Company from
marketing its products, or limit the commercial use of the products and thereby
have a material adverse effect on the Company.
VOLATILITY OF STOCK PRICE. Nomura's intention to effect short sales of
the Shares during Pricing Periods and the issuance of Shares pursuant to the
Arrangement may have a significant adverse impact on the current market price of
the Common Stock. See "UNDERWRITING--Plan of Distribution". In
----------------------------------
addition, the market price of the securities of biopharmaceutical companies
generally and of the Common Stock in particular has fluctuated over a wide range
in the past and it is likely that the price of these securities will fluctuate
in the future. Announcements of technical innovations, new commercial products,
regulatory approvals, patent or proprietary rights or other developments by the
Company or its competitors could have a significant impact on the market price
of the Common Stock.
RISK OF TECHNOLOGICAL OBSOLESCENCE; HIGHLY COMPETITIVE INDUSTRY.
Biotechnology has undergone rapid and significant technological change. The
Company expects that this technology will continue to develop rapidly, and the
Company's future success will depend, in large part, on its ability to maintain
a competitive position. Rapid technological development may result in products
or processes becoming obsolete before marketing of these products or before the
Company recovers a significant portion of the research, development and
commercialization expenses incurred with respect to those products.
There is intense competition in the biopharmaceutical industry.
Potential competitors in the United States, Europe and other markets are
numerous and include pharmaceutical, chemical, biotechnology and medical device
companies, many of which have substantially greater capital resources, marketing
experience, research and development staffs and facilities than the Company.
Furthermore, some of the Company's competitors may achieve product
commercialization earlier than the Company. The Company also experiences
competition from universities and other research institutions in the development
of the Company's technologies and processes and, in some instances, competes
with others in acquiring technology from universities. In addition, certain of
the Company's products are subject to competition from products developed using
techniques other than those developed in biotechnology.
The biopharmaceutical industry is under pressure to consolidate, with
companies merging to attain critical mass in the marketplace. This trend towards
consolidation is due to a number of factors, including, the high costs
associated with obtaining FDA approval for products, substantial resources
required to commercialize products and unfavorable conditions in the public
capital markets for biopharmaceutical companies seeking financing. The
healthcare industry in general is undergoing significant changes due to cost
containment pressures, reimbursement requirements and the increasing presence of
managed care organizations. There can be no assurance that the Company will not
be influenced by any or all of these factors, all of which are beyond its
control.
NO DIVIDENDS ANTICIPATED IN THE FUTURE. The Company has not paid any
cash dividends on the Common Stock since its inception and does not anticipate
paying any cash dividends in the future. Declaration of dividends on the Common
Stock will depend upon, among other things, future earnings, the operating and
financial condition of the Company, its capital requirements and general
business conditions.
9
<PAGE>
DILUTION; SHARES ELIGIBLE FOR FUTURE SALE. Because the Common Stock is
issuable upon exercise of certain issued and outstanding warrants and options
and pursuant to outstanding contingent value rights ("CVRs"), the interests of
the Company's then stockholders will be diluted and the market price of the
Common Stock could be adversely affected by future exercises of the warrants
and/or options or issuances of the Common Stock pursuant to the CVRs and by the
sale of such shares in the public market. As of March 15, 1995, approximately
4,285,000 shares of Common Stock were reserved for issuance upon exercise of
issued and outstanding warrants, approximately 1,874,234 shares of Common Stock
were reserved for issuance pursuant to the CVRs and approximately 5,973,135
shares of Common Stock were reserved for issuance pursuant to employee
retirement savings, stock option and stock award plans and agreements (including
an option granted to Fletcher Capital Markets, Inc., which option has since been
assigned to Harvard Management Company, Inc.).
ABSENCE OF PUBLIC MARKET FOR WARRANTS. The Warrants will constitute a
new issue of securities with no prior public market. The Company does not intend
to apply for listing of the Warrants on any national securities exchange or
admission for quotation on Nasdaq and there is not expected to be any
established trading market for the Warrants.
USE OF PROCEEDS
---------------
The Company will not receive any of the proceeds from the sale by Nomura
of Warrants or from the re-sale of Common Stock purchased upon the exercise of
Warrants. Unless otherwise provided in an applicable Prospectus Supplement, any
net proceeds to the Company from the sale of the Common Stock upon exercise of
the Warrants will be used for general corporate purposes, including product
commercialization, late-stage product development activities and exploratory
basic research activities within the Company, and selling, general and
administrative expenses.
10
<PAGE>
DESCRIPTION OF WARRANTS
-----------------------
Each Warrant represents the right to purchase one share of Common Stock.
The Warrants are issued pursuant to the Purchase Agreement and a Warrant
Agreement between the Company and Mellon Securities Trust Company, as Warrant
Agent. The Warrants are exercisable at any time on or before three years after
the date of issuance (the "Expiration Date"). Except as described below, the
exercise price (the "Exercise Price") of the Warrants is equal to 160% of a
deemed average trading price of the Common Stock at the time of issuance of the
Warrants, as determined in accordance with the terms of the Purchase Agreement.
The Warrant Agreement provides that the Exercise Price and the number of
shares of Common Stock issuable upon exercise of each Warrant will be adjusted
in the event of stock dividends, stock splits, stock combinations,
reclassifications or reorganizations of the Common Stock, or rights offerings or
the issuance of Common Stock at below current market price per share. Fractional
shares will not be issued upon exercise of the Warrants. In lieu thereof, a cash
adjustment based on the closing price of the Common Stock as reported on Nasdaq
on the date of the exercise will be made.
The Warrant Agreement further provides that in case of any consolidation
or merger of the Company with or into another corporation or any sale, lease or
transfer to another person of all or substantially all of the assets of the
Company, the holder of each outstanding Warrant will have the right to receive,
upon exercise of the Warrant, the kind and amount of securities, cash or other
assets receivable upon the consolidation, merger, sale, lease or transfer by a
holder of the number of shares of Common Stock that would have been received
upon the exercise of the Warrant immediately prior to that event. The Warrants
do not confer upon the holder any voting rights or any other rights as a
stockholder of the Company prior to the time of exercise.
The Warrants may be exercised by the surrender of the related Warrant
Certificates to the Warrant Agent, with the warrant exercise form set forth on
the back of the Warrant Certificate duly executed and accompanied by a certified
or official bank check payable to the order of the Company in the amount of the
Exercise Price multiplied by the number of shares of Common Stock to be acquired
pursuant to the exercise or, in the event of a cashless exercise, by specifying
and receiving a number of shares of Common Stock having an aggregate fair market
value equal to the difference between (x) the fair market value of the number of
shares subject to the Warrant and (y) the Exercise Price for the shares.
The Company does not intend to apply for listing of the Warrants on any
national securities exchange or admission for quotation on Nasdaq and there is
not expected to be any established trading market for the Warrants. As of the
date hereof, a class of warrant securities and a class of contingent value
rights securities of the Company are quoted on Nasdaq.
UNDERWRITING
------------
PURCHASE AGREEMENT
The Warrants offered hereby were purchased by Nomura pursuant to the
terms of the Purchase Agreement under which Nomura agreed to purchase up to
$49,000,000 of shares of Common Stock from the Company.
11
<PAGE>
PLAN OF DISTRIBUTION
Nomura may from time to time sell the Warrants in negotiated
transactions or as may otherwise be provided in an applicable Prospectus
Supplement. Except as may otherwise be provided in an applicable Prospectus
Supplement, Nomura expects to sell any Common Stock acquired upon exercise of
the Warrants from time to time in at the market transactions on Nasdaq.
Any broker-dealers who act as Nomura's agent in connection with the sale
of the Warrants or shares of Common Stock may be deemed "underwriters" as that
term is defined in the Securities Act, and any remuneration received by them in
connection therewith may be deemed to be underwriting compensation under the
Securities Act.
LEGAL MATTERS
-------------
The validity of the Warrants and shares of Common Stock offered hereby
have been passed on for the Company by Dechert Price & Rhoads, Princeton, New
Jersey. Certain legal matters will be passed on for Nomura by Cravath, Swaine &
Moore, New York, New York.
EXPERTS
-------
The audited consolidated financial statements and schedules of the
Company incorporated by reference in this Prospectus and elsewhere in the
Registration Statement, to the extent and for the periods indicated in their
report, have been audited by Arthur Andersen LLP, independent public
accountants, and are incorporated herein in reliance upon the authority of said
firm as experts in giving said reports.
The audited financial statements of CytoRad incorporated by reference in
this Prospectus and elsewhere in the Registration Statement, to the extent and
for the periods indicated in their report, have been audited by Arthur Andersen
LLP, independent public accountants, and are incorporated herein in reliance
upon the authority of said firm as experts in giving said reports.
12
<PAGE>
Form of File No. 33-_____
PROSPECTUS SUPPLEMENT Filed pursuant to Rule _______
(TO PROSPECTUS DATED__________)
CYTOGEN CORPORATION
Warrants to Purchase Common Stock
________________________
During the period [ ] to [ ],
Nomura Securities International, Inc. sold Warrants to Purchase Common Stock,
$.01 par value (the "Common Stock"), of Cytogen Corporation on the dates set
forth below:
<TABLE>
<CAPTION>
NUMBER OF EXERCISE EXPIRATION
DATE WARRANTS PRICE DATE
- --------- --------- -------- ----------
<S> <C> <C> <C>
</TABLE>
The Common Stock is traded on the Nasdaq National Market
("Nasdaq"). On [ ], the reported last sale price of the
Common Stock, as reported on Nasdaq was $_____ per share.
All initially capitalized terms used herein shall have the same
meaning as specified in the Prospectus.
NOMURA SECURITIES INTERNATIONAL, INC.
________________________
The date of this Prospectus Supplement is ______________, 199__.
_________________________
[S-1]
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth an itemized estimate of fees and expenses
payable by the Registrant in connection with the offering of the securities
described in this Registration Statement, other than underwriting discounts and
commissions.
<TABLE>
<S> <C>
SEC registration fee.............................. $ 3,793
NASD filing fee................................... 1,600
Blue Sky fees and expenses........................ 15,000
Transfer Agent Fees............................... 5,000
Legal fees and expenses........................... 340,000
Accounting fees and expenses...................... 50,000
Printing expenses................................. 5,000
Miscellaneous..................................... 34,607
--------
Total.................................. $455,000
</TABLE>
Item 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law (the "DGCL")
provides generally and in pertinent part that a Delaware corporation may
indemnify its directors, officers, employees and agents against expenses
(including attorneys' fees), judgments, fines and settlements actually and
reasonably incurred by them in connection with any civil, criminal,
administrative or investigative action, suit or proceeding (except actions by or
in the right of the corporation), if, in connection with the matters in issue,
they acted in good faith and in a manner they reasonably believed to be in, or
not opposed to, the best interests of the corporation, and in connection with
any criminal suit or proceeding, they had no reasonable cause to believe their
conduct was unlawful. Section 145 further provides that, in connection with the
defense or settlement of any action by or in the right of the corporation, a
Delaware corporation may indemnify its directors, officers, employees and agents
against expenses actually and reasonably incurred by them if, in connection with
the matters in issue, they acted in good faith and in a manner they reasonably
believed to be in, or not opposed to, the best interests of the corporation,
except that no indemnification shall be made in respect of any claim, issue or
matter as to which such person shall have been adjudged to be liable to the
corporation, absent a determination by a court that such indemnity is proper.
Section 145 further permits a Delaware corporation to grant its directors,
officers, employees and agents additional rights of indemnification through
bylaw provisions and otherwise.
Section 102(b)(7) of the DGCL provides that a certificate of
incorporation may contain a provision eliminating or limiting the personal
liability of a director to the corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director provided that such provision
shall not eliminate or limit the liability of a director (i) for any breach of
the director's duty of loyalty to the corporation 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 DGCL (relating to
liability for unauthorized acquisitions or redemptions of, or dividends on,
capital stock) or (iv) for any transaction from which the director derived an
improper personal benefit.
II-1
<PAGE>
The Restated Certificate of Incorporation, as amended, of the Registrant
provides for the indemnification of the Registrant's directors, officers,
employees and agents to the fullest extent provided by the DGCL.
Article IX, Sections 1 and 2 of the Registrant's By-laws, as amended,
provide as follows:
"SECTION 1. A director of the Corporation shall not be
personally liable to the Corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director, except for liability
(i) for any breach of the director's duty of loyalty to the Corporation
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.
SECTION 2. Each person who has or is made a party or is
threatened to be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he or she, or a
person of whom he or she is the legal representative, is or was a
director, officer, employee or agent of the Corporation or is or was
serving at the request of the Corporation as a director, officer,
employee or agent of another corporation or of a partnership, joint
venture, trust or other enterprise, including service with respect to
employee benefit plans, whether the basis of such proceeding is alleged
action or inaction in an official capacity as a director, officer,
employee or agent or in any other capacity while serving as a director,
officer, employee or agent, shall be indemnified and held harmless by
the Corporation to the fullest extent permitted by the Delaware General
Corporation Law, as the same exists or may hereafter be amended (but, in
the case of any such amendment, only to the extent that such amendment
permits the Corporation to provide broader indemnification rights than
said law permitted the Corporation to provide prior to such amendment),
against all expense, liability and loss (including attorneys' fees,
judgments, fines, ERISA excise taxes or penalties and amounts paid or to
be paid in settlement) reasonably incurred or suffered by such person in
connection therewith and such indemnification shall continue as to a
person who has ceased to be a director, officer, employee or agent and
shall inure to the benefit of his or her heirs, executors and
administrators; provided, however, that, except as provided in this
Section 2, the Corporation shall indemnify any such person seeking
indemnification in connection with a proceeding (or part thereof)
initiated by such person only if such proceeding (or part thereof) was
authorized by the Board of Directors of the Corporation. The right to
indemnification conferred in this Section 2 shall be a contract right
and shall include the right to be paid by the Corporation the expenses
incurred in defending any such proceeding in advance of its final
disposition as authorized by the Board of Directors; provided, however,
that if the Delaware General Corporation Law so requires, the payment of
such expenses incurred by a director, officer, employee or agent of the
Corporation in his or her capacity as such in advance of the final
disposition of a proceeding shall be made only upon delivery to the
Corporation of an undertaking, by or on behalf of such director,
officer, employee or agent of the Corporation, to repay all amounts so
advanced if it shall ultimately be determined that such director,
officer, employee or agent of the Corporation is not entitled to be
indemnified under this Section 2 or otherwise."
The Registrant has entered into identical indemnification agreements
with certain of its directors, officers and consultants which generally put into
effect Sections 1 and 2 of its By-laws. In addition, the Registrant's By-laws
provide that the Registrant has the power to purchase liability insurance
policies covering its directors, officers, employees and agents, whether or not
the Registrant
II-2
<PAGE>
would have the power to indemnify such person under the DGCL. The Registrant
currently maintains such insurance.
Pursuant to the Purchase Agreement referred to in Exhibit 1.1 of this
Registration Statement, Nomura agrees to indemnify the Registrant and its
directors, officers and each person, if any, who controls the Registrant against
certain liabilities which might arise under the Securities Act of 1933 from
information furnished to the Registrant by or on behalf of Nomura.
Item 16. EXHIBITS.
NO. DESCRIPTION
- -- -----------
1.1 Purchase Agreement by and between the Registrant and Nomura Securities
International, Inc., dated March 28, 1995
4.1 Restated Certificate of Incorporation, as amended(1)
4.2 By-laws, as amended(1)
4.3 Form of Warrant Agreement by and between the Registrant and Mellon
Securities Trust Company, as Warrant Agent, dated as of March __, 1995,
including form of Warrant Certificate attached thereto as Exhibit A*
5.0 Opinion of Dechert Price & Rhoads regarding validity*
23.1.1 Consent of Dechert Price & Rhoads (contained in opinion filed as
Exhibit 5.0)*
23.2.1 Consent of Arthur Andersen LLP
23.2.2 Consent of Arthur Andersen LLP
24.0 Powers of Attorney for each person executing the Registration Statement
on behalf of the Registrant are contained on the signature pages to the
Registration Statement.
_________________
(1) Previously filed as exhibits to Registrant's Registration Statement on
Form S-4 (File No. 33-88612) and incorporated herein by reference
thereto.
* To be filed by Amendment
Item 17. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes:
(1) to file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement to include any
material information with respect to the plan of distribution not previously
disclosed in the Registration Statement or any material change to such
information in the Registration Statement;
II-3
<PAGE>
(2) that, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) to remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes
of determining any liability under the Securities Act of 1933, each filing of
the Registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in this
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.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
(d) The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus filed as part
of this Registration Statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act of 1933 shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
II-4
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the Town of Princeton, State of New Jersey, on March 23, 1995.
CYTOGEN CORPORATION
By: /s/ Thomas J. McKearn
---------------------------------
Thomas J. McKearn
President and Chief
Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Thomas J. McKearn and T. Jerome Madison
or either of them, his attorney-in-fact, each with the power of substitution,
for him in any and all capacities, to sign any amendments to this Registration
Statement, and to file the same, with exhibits thereto and other documents in
connection therewith, with the Securities and Exchange Commission, hereby
ratifying and confirming all that either of said attorneys-in-fact, or his
substitute or substitutes, may do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ William C. Mills III Chairman of the Board of Directors March 23, 1995
- ------------------------
William C. Mills III
/s/ Thomas J. McKearn President, Chief Executive Officer and March 23, 1995
- ------------------------- Director (Principal Executive Officer)
Thomas J. McKearn
/s/ T. Jerome Madison Vice President, Chief Financial March 23, 1995
- ------------------------- Officer, Secretary and Director
T. Jerome Madison (Principal Financial and Accounting Officer)
/s/ George W. Ebright Director March 23, 1995
- -------------------------
George W. Ebright
/s/ Robert F. Johnston Director March 23, 1995
- -------------------------
Robert F. Johnston
/s/ Charles E. Austin Director March 23, 1995
- -------------------------
Charles E. Austin
/s/ Bruce R. Ross Director March 23, 1995
- -------------------------
Bruce R. Ross
</TABLE>
II-5
<PAGE>
EXHIBIT INDEX
-------------
Exhibit
Number Description
- ------- -----------
1.1 Purchase Agreement by and between the Registrant and Nomura Securities
International, Inc., dated March 28, 1995
23.2.1 Consent of Arthur Andersen LLP
23.2.2 Consent of Arthur Andersen LLP
<PAGE>
Exhibit 1.1
-----------
Cytogen Corporation
Common Stock
(par value $0.01 per share)
____________
Purchase Agreement
March 28, 1995
Nomura Securities International, Inc.
2 World Financial Center, Building B
New York, New York 10281-1198
Dear Sirs:
Cytogen Corporation, a Delaware corporation (the "Company"),
proposes, subject to the terms and conditions stated herein, to issue and sell,
from time to time, to you (the "Purchaser") a number of shares of Common Stock,
par value $0.01 per share (the "Shares"), of the Company that, when multiplied
by the applicable Trading Price(s) (as defined below), is equal to up to
$49,000,000 (the "Purchase Amount") and the related Warrants.
1. Except as otherwise expressly provided herein, capitalized terms
used herein shall have the following meanings :
"Act" shall mean the Securities Act of 1933.
"Adjusted Takedown Amount" shall have the meaning assigned in Section
2(c) hereof.
"Basic Prospectus" shall mean the prospectus contained in the
Registration Statement at the Effective Date or any subsequent date and all
information incorporated by reference therein.
"Business Day" shall mean any trading day on Nasdaq during which
trading in the Shares is not suspended or limited for more than 60 minutes.
<PAGE>
2
"Closing Date" shall mean (i) for any Pricing Period which ends prior
to June 7, 1995, the fourth Business Day immediately following the last Business
Day of the applicable Pricing Period and (ii) for any Pricing Period which ends
on or after June 7, 1995, the second Business Day immediately following the last
Business Day of the applicable Pricing Period; provided, however, if the
-------- -------
Purchaser shall have terminated the related Takedown pursuant to the proviso in
Section 2(c) hereof, the Closing Date shall be the fourth Business Day or the
second Business Day, as the case may be, immediately following the termination
of the Takedown.
"Commission" shall mean the Securities and Exchange Commission.
"Commitment Fee" shall mean the fee to be paid by the Company to the
Purchaser as defined in Section 5(a) hereof.
"Company" shall have the meaning assigned in the first paragraph of
this Agreement.
"Continuation Fee" shall mean the fee to be paid by the Company to
the Purchaser as defined in Section 5(a) hereof.
"Diligence Period" shall mean the period of time from the Execution
Time until the First Effective Date.
"Effective Date" shall mean each date that the Registration Statement
and any post-effective amendment or amendments thereto became or become
effective and each date after the date thereof on which a document incorporated
by reference in the Registration Statement is filed with the Commission.
"Exchange Act" shall mean the Securities Exchange Act of 1934.
"Execution Time" shall mean the date and time that this Agreement is
executed and delivered by the parties hereto.
"Final Prospectus" shall mean the Basic Prospectus and any supplement
relating to the particular Shares, Warrants and Warrant Shares being sold
pursuant to this Agreement that is filed pursuant to Rule 424(b) after the
<PAGE>
3
Execution Time and all information incorporated by reference therein.
"Final Takedown Amount" shall mean the amount in dollars of Shares to
be included in a Takedown.
"First Effective Date" shall mean the date that the initial
Registration Statement is first declared effective by the Commission.
"GAAP" shall mean U.S. generally accepted accounting principles,
consistently applied.
"Initial Takedown Amount" shall have the meaning assigned in Section
2(b) hereof.
"Investment Company Act" shall mean the Investment Company Act of
1940.
"Material Adverse Effect" shall have the meaning assigned in Section
6(m) hereof.
"Minimum Price" shall mean, for any Business Day during a Pricing
Period, a closing price of the Shares as quoted on Nasdaq equal to 85% of the
closing price of the Shares as quoted on Nasdaq on the Business Day immediately
preceding the commencement of such Pricing Period.
"Minimum Volume" shall mean, for any Business Day during a Pricing
Period, a trading volume of the Shares on Nasdaq equal to 85% of the average of
the trading volume of the Shares on Nasdaq for the 63 Business Days immediately
preceding the commencement of such Pricing Period.
"Nasdaq" means the Nasdaq National Market (or, if applicable, the
principal national securities exchange on which the Shares are listed or
admitted for trading).
"Pricing Period" shall mean, subject to Section 2(c) hereof, the
Pricing Period Commencement Date and the 20 Business Days immediately following
thereafter.
"Pricing Period Commencement Date" shall mean the Business Day
selected pursuant to the procedures set forth in Section 2(b) hereof.
<PAGE>
4
"Proposed Takedown Amount" shall mean the amount in dollars of Shares
proposed to be included in a Takedown pursuant to a Takedown Notice.
"Purchase Amount" shall have the meaning assigned in the first
paragraph of this Agreement.
"Purchaser" shall have the meaning assigned in the first paragraph of
this Agreement.
"Registration Statement" shall mean the shelf registration statement
filed pursuant to Rule 415 under the Act referred to in Section 6(a) and, to the
extent applicable, any subsequent registration statement filed pursuant to
Section 7(n) hereof, including incorporated documents, exhibits, financial
statements and other information, as such registration statement may be amended
at the Execution Time (or, if not effective at the Execution Time, in the form
in which it shall become effective) and, in the event any post-effective
amendment thereto becomes effective prior to the applicable Closing Date, shall
also mean such registration statement as so amended. Such term shall include any
Rule 430A Information deemed to be included therein at the Effective Date as
provided by Rule 430A.
"Response Notice" shall mean the notice from the Purchaser described
in Section 2(b) hereof.
"Rule 415", "Rule 424" and "Rule 430A" shall refer to such rules
under the Act.
"Rule 430A Information" shall mean information with respect to the
Shares, Warrants and Warrant Shares and the offering thereof permitted to be
omitted from the Registration Statement when it becomes effective pursuant to
Rule 430A.
"Shares" shall have the meaning assigned in the first paragraph of
this Agreement.
"Takedown" shall mean any sale and purchase of Shares and Warrants
subject to a Takedown as described in Sections 2 and 3 hereof.
"Takedown Notice" shall mean the notice from the Company to the
Purchaser described in Section 2(b) hereof.
<PAGE>
5
"Termination Fee" shall mean the fee to be paid by the Company to the
Purchaser as defined in Section 5(c) hereof.
"Trading Price" shall mean, subject to Section 2(c) hereof, an amount
equal to the sum of the closing bid prices of the Shares as quoted on Nasdaq
during the Pricing Period divided by the aggregate number of Business Days in
such Pricing Period.
"Warrants" shall mean the Warrants of the Company in the form of
Exhibit A to the Warrant Agreement of even date herewith between the Company and
Mellon Securities Trust Company, as Warrant Agent, attached hereto (and
incorporated herein in its entirety) as Annex A.
"Warrant Shares" shall mean the Shares purchasable upon exercise of
the Warrants issued in accordance with Sections 2 and 3 hereof.
2. (a) Subject to the terms and conditions set forth herein, from
time to time and at any time, upon delivery by the Company to the Purchaser of a
Takedown Notice, the Company shall be obligated to sell to the Purchaser, and
the Purchaser shall be obligated to purchase from the Company, (i) the number of
Shares that, when multiplied by the applicable Trading Price, equals the Final
Takedown Amount described in paragraph (c) below and (ii) the number of Warrants
described in paragraph (d) below. Each Takedown shall occur on the related
Closing Date. In no event shall the aggregate of the Final Takedown Amounts of
Shares sold by the Company or purchased by the Purchaser pursuant to this
paragraph (a) exceed the Purchase Amount.
(b) To propose a Takedown, the Company shall, on any Business Day,
deliver a Takedown Notice to the Purchaser, at the address of the Purchaser
specified in Section 18 hereof, specifying (i) the Proposed Takedown Amount,
which in no event shall be (x) less than $500,000 or (y) when divided by the
closing bid price of the Shares as quoted on Nasdaq on such Business Day and
when added to (A) the number of Warrant Shares subject to Warrants to be issued
in such Takedown pursuant to paragraph (d) below and (B) that number of Shares
of the Company then beneficially owned (within the meaning of Rule 13d-3 under
the Exchange Act) by the Purchaser or already subject to another pending
Takedown would equal more than 9.0% of the Company's issued
<PAGE>
6
and outstanding Shares and (ii) the Pricing Period Commencement Date (which
shall be no less than ten Business Days following such Business Day). No
Takedown Notice shall be delivered on any date subsequent to two years after the
First Effective Date.
Within five Business Days of delivery of the Takedown Notice to the
Purchaser, the Purchaser shall deliver a Response Notice to the Company, at the
address of the Company specified in Section 18 hereof, specifying (i) whether
the Purchaser, in its sole discretion, accepts or rejects the recommended
Takedown and (ii) if the Purchaser so accepts such Takedown, any proposed
modification to the Proposed Takedown Amount (subject to the limitations set
forth in clauses (x) and (y) of the preceding paragraph) or the recommended
Pricing Period Commencement Date, and (iii) if the Proposed Takedown Amount is
$5,000,000 or greater, any additional due diligence requirements of the
Purchaser.
If the Purchaser accepts the proposed Takedown and the Company and
the Purchaser agree on the Proposed Takedown Amount (the Proposed Takedown
Amount as so agreed upon, the "Initial Takedown Amount") and the Pricing Period
Commencement Date, the Pricing Period shall commence on the Pricing Period
Commencement Date so agreed upon and the Takedown shall occur on the Closing
Date, subject to the satisfaction or waiver (in the Purchaser's sole discretion)
of any terms or conditions precedent to such Takedown.
On each Pricing Period Commencement Date, the Company shall file with
the Commission a supplement to the Final Prospectus setting forth the Initial
Takedown Amount, the Pricing Period Commencement Date, the expected maximum net
proceeds, the expected Closing Date and any other information that may be
required by the Commission for such Takedown.
(c) If on any Business Day during a Pricing Period:
(i) any representation, warranty or other statement of the Company
herein is not, in the sole judgment of the Purchaser, true and correct in
all respects;
(ii) the Company shall, in the sole judgment of the Purchaser, have
failed to perform in any material respect any of its obligations required
hereunder theretofore to be performed hereunder, including,
<PAGE>
7
without limitation, the obligation of the Company pursuant to Section 7(c)
hereof to amend or supplement the Final Prospectus;
(iii) any of the conditions set forth in
Section 9(f), (g), (h), (i), (l), (m), (n) or (o) hereof shall not, in the
sole judgment of the Purchaser, be then satisfied; or
(iv) either or both the trading volume of the
Shares on Nasdaq does not exceed the Minimum Volume or the closing price of
the Shares as quoted on Nasdaq does not exceed the Minimum Price;
then, in any such case, such Business Day may, in the sole discretion of the
Purchaser, be excluded from such Pricing Period for purposes of calculating the
Trading Price, and the Initial Takedown Amount for such Pricing Period shall be
decreased by an amount equal to 1/21 of such Initial Takedown Amount (such
adjusted Initial Takedown Amount shall be referred to herein as the "Adjusted
Takedown Amount"); provided, however, that, in the case of the foregoing clauses
-------- -------
(i), (ii) or (iii), the Purchaser, in its sole judgment, may terminate such
Takedown and, in such case, shall only be obligated to purchase a number of
Shares for such Takedown equal to the sum of the Initial Takedown Amount (or
Adjusted Takedown Amount, as the case may be) multiplied by a fraction, the
numerator of which is the number of Business Days that have expired during such
Pricing Period before such failure (and that have not otherwise been excluded
from such Pricing Period as described above) and the denominator of which is 21.
In the event of any election pursuant to the foregoing sentence, the Purchaser
shall notify the Company thereof by 5:00 p.m. New York City Time on the
immediately following Business Day. In any case, the final amount in dollars of
Shares to be included in a Takedown as determined under this paragraph (c) shall
be referred to herein as the "Final Takedown Amount."
(d) For each Takedown, the Company shall be obligated to sell to the
Purchaser, and the Purchaser shall be obligated to purchase from the Company,
the number of Warrants, immediately exercisable (x) for a number of Warrant
Shares equal to 10% of the number of Shares to be purchased and delivered on the
related Closing Date and (y) at an exercise price equal to 160% of the related
Trading Price. The Warrants shall have the terms and
<PAGE>
8
conditions set forth in the Warrant Agreement attached hereto (and incorporated
herein in its entirety) as Annex A.
(e) No later than 5:00 p.m. New York City Time on the last day of
each Pricing Period, the Purchaser shall notify the Company of the applicable
Trading Price and the number of Shares and Warrants to be delivered by the
Company on the Closing Date for such Pricing Period. Such notification shall be
conclusive, absent manifest error.
(f) The Purchaser agrees to offer any Shares and Warrants subject to
a Takedown for sale only in accordance with the terms and conditions set forth
in a Final Prospectus.
(g) No fractions of such Shares or Warrants shall be issued and
delivered. In lieu thereof, any such fraction shall be rounded up to the nearest
whole number and a whole Share or Warrant, as the case may be, shall be issued
and delivered, without any further payment required from the Purchaser.
3. Delivery of and payment for any Shares and Warrants subject to a
Takedown shall be made at 10:00 a.m. New York City Time on the related Closing
Date, which date and time may be postponed by agreement between the Purchaser
and the Company. Delivery of any such Shares and Warrants shall be made to the
Purchaser against (i) payment by the Purchaser of an amount equal to the sum of
(A) 90% of the Final Takedown Amount for such Shares and (B) the product of
$0.001 multiplied by the number of Warrant Shares for which the Warrants
described in Section 2(d) hereof are exercisable, to or upon the order of the
Company by certified or official bank check or checks drawn on or by a New York
Clearing House bank and payable in next day funds. Certificates for any Shares
and Warrants subject to a Takedown shall be registered in such names and in such
denominations as the Purchaser may request not less than three Business Days in
advance of the related Closing Date. The Company agrees to have any such Shares
and Warrants available for inspection, checking and packaging by the Purchaser
in New York, New York, not later than 1:00 p.m. New York City Time on the
Business Day prior to the related Closing Date.
Delivery of any Shares subject to a Takedown shall be made at such
location as the Purchaser shall reasonably designate at least one Business Day
in advance of the related Closing Date. Each closing, including the delivery
<PAGE>
9
of Warrants and the payment for Shares and Warrants, shall be at, unless
otherwise agreed to by the Company and the Purchaser, the offices of Cravath,
Swaine & Moore, 825 Eighth Avenue, New York, New York.
4. The Purchaser represents and warrants to the Company that the
execution and delivery of this Agreement by the Purchaser and the consummation
by it of the transactions contemplated hereby have been duly authorized by all
necessary corporate action, and no further consent or authorization of the
Purchaser or its Board of Directors or stockholders is required; this Agreement
has been duly executed and delivered by the Purchaser; and this Agreement
constitutes a valid and binding obligation of the Purchaser enforceable against
the Purchaser in accordance with its terms.
5. (a) Concurrently with the execution and delivery of this
Agreement, the Company shall pay the Purchaser $100,000 (the "Commitment Fee"),
which fee shall be non-refundable notwithstanding termination of this Agreement
or the failure to Takedown an amount of Shares equal to the Purchase Amount,
except in the case where the Purchaser terminates this Agreement prior to the
First Effective Date for reason of (i) potential liability on the part of the
Purchaser for any incremental charge or other expense beyond those currently
applicable, or (ii) an increase in the Purchaser's net capital obligations, as a
result of the transactions contemplated by this Agreement. If the Purchaser does
not terminate this Agreement within six months after the First Effective Date,
the Company shall further pay to the Purchaser $200,000 (the "Continuation
Fee"), which fee shall be non-refundable for any reason, including, without
limitation, termination of this Agreement or the failure to Takedown an amount
of Shares equal to the Purchase Amount.
(b) In the event that the Purchaser does not agree to (i) any three
successive Takedowns proposed by the Company in accordance with Section 2(b), or
(ii) at least four Takedowns proposed by the Company in accordance with Section
2(b) within any 12 month period, then the Company shall have the option to (x)
terminate this Agreement, without any further obligation or liability or (y)
terminate the exclusive right granted to the Purchaser in Section 7(e) to
purchase the Shares and Warrants under this Agreement; provided that, for the
--------
purposes of this paragraph (b), only one Takedown Notice shall be counted (and
only one Takedown shall be deemed to have been proposed by the Company) during
any period of 20 consecutive Business Days, and provided further, that the
-------- -------
Purchaser shall be deemed to have agreed to any Takedown proposed by the Company
if the Purchaser consents to an Initial Takedown Amount of at least $500,000. If
the Company does not exercise its option under clause (x) or (y) within 15
Business Days after the date
<PAGE>
10
when the condition described in clause (i) or (ii) first arises, the Company
shall be deemed to have irrevocably waived such option with respect to such
period.
(c) In the event that the Company terminates this Agreement for any
reason, except in the case of termination as provided in clause (x) of paragraph
(b) above or Section 12(a) and 12(d) hereof, the Company shall pay to the
Purchaser $250,000 (the "Termination Fee").
(d) If, (i) the Shares are not quoted on Nasdaq, or (ii) in the case
of a merger or consolidation, (A) the Company is not the surviving entity, and
(B) there is a Change in Control (as defined herein) of the Company, the Company
shall pay to the Purchaser an amount equal to 1% of the difference between the
Purchase Amount and the aggregate of the Final Takedown Amounts (for which
Shares and Warrants were delivered to the Purchaser). For the purposes of this
paragraph (d), a "Change in Control" will be deemed to occur if in any
transaction, including any share exchange, extraordinary dividend, acquisition,
disposition or recapitalization (or series of related transactions of such
nature), the shares held by the holders of Common Stock of the Company
immediately prior to such transaction and any shares issued in exchange or with
respect to such shares in such transaction constitute less than 50% of the total
voting power of the Company immediately after the consummation of such
transaction.
(e) Any payment pursuant to this Section 5 shall be made within
two Business Days following the respective event which gives rise to such
payment obligation and shall be to or upon the order of the Purchaser by
certified or official bank check or checks drawn on or by a New York Clearing
House bank and payable in next day funds.
6. The Company represents and warrants to, and agrees with, the
Purchaser that:
(a) The Company meets the requirements for the use of Form S-3
under the Act and has filed or shall file pursuant to Rule 415 under the Act
with the Commission a shelf registration statement on such Form, including a
basic prospectus or prospectuses and forms of prospectus supplements, for
registration under the Act of the offering of (i) such number of Shares as the
Company may from time to time request the Purchaser to Takedown in accordance
with this Agreement, (ii) the number of Warrants related to such
<PAGE>
11
number of Shares referred to in clause (i), and (iii) the number of Warrant
Shares related to such number of Warrants referred to in clause (ii); provided,
--------
however, the sum of such Shares, Warrants and Warrant Shares so registered shall
- -------
not exceed 10% of the aggregate market value of the issued and outstanding
voting equity securities of the Company held by non-affiliates (calculated as of
a date within 60 days prior to the date of filing). The Company may have filed
one or more amendments thereto, each of which has previously been furnished to
you. In connection with each Pricing Period and Takedown and any sale of the
Warrants and Warrant Shares, the Company will file with the Commission one or
more final prospectus supplements relating to the Shares, Warrants and Warrant
Shares in accordance with Rules 430A and 424(b). The Company has included in
such registration statement, as amended at the Effective Date, all information
(other than Rule 430A Information) required by the Act and the rules thereunder
to be included in the Final Prospectus with respect to the Shares, Warrants and
Warrant Shares and the offering thereof. As filed, each final prospectus
supplement or supplements shall contain all Rule 430A Information, together with
all other such required information, with respect to the Shares, Warrants and
Warrant Shares and the offering thereof. Except to the extent the Purchaser
shall agree in writing to a modification, each prospectus supplement shall be in
all substantive respects in the form furnished to the Purchaser prior to the
Execution Time or, to the extent not completed at the Execution Time, shall
contain only such specific additional information and other changes (beyond that
contained in the Basic Prospectus) as the Company has advised the Purchaser,
prior to the Execution Time, will be included or made therein.
(b) On each Effective Date, the Registration Statement did or will,
and when the Final Prospectus is first filed (if required) in accordance with
Rule 424(b) and on each Pricing Period Commencement Date, each day during the
Pricing Period and each Closing Date, the Final Prospectus will, comply in all
material respects with the applicable requirements of the Act and the Exchange
Act and the respective rules and regulations thereunder; on each Effective Date,
the Registration Statement did not or will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein not misleading; and, on
each Effective Date, the Final Prospectus, if not filed pursuant to Rule 424(b),
did not or will not, and on the date of any filing pursuant to
<PAGE>
12
Rule 424(b) and on each Pricing Period Commencement Date, each day during a
Pricing Period and each Closing Date, the Final Prospectus (together with any
supplement thereto) will not, include any untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not misleading;
provided, however, that the Company makes no representations or warranties as to
- -------- -------
the information contained in or omitted from the Registration Statement or the
Final Prospectus (or any supplement thereto) in reliance upon and in conformity
with information furnished in writing to the Company by the Purchaser
specifically for inclusion in the Registration Statement or the Final Prospectus
(or any supplement thereto). Any reference in this Agreement to a Registration
Statement, a Basic Prospectus, or a Final Prospectus shall be deemed to refer to
and include the documents incorporated by reference therein pursuant to Item 12
of Form S-3; and any reference herein to the terms "amend", "amendment" or
"supplement" with respect to a Registration Statement, a Basic Prospectus or a
Final Prospectus shall be deemed to refer to and include the filing of any
document under the Exchange Act after any Effective Date of a Registration
Statement or the issue date of a Basic Prospectus or a Final Prospectus, as the
case may be, deemed to be incorporated therein by reference.
(c) The Company has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the State of Delaware, with
power and authority (corporate and other) to own and lease its properties and
conduct its business as described in the Final Prospectus, and has been duly
qualified as a foreign corporation for the transaction of business and is in
good standing under the laws of each other jurisdiction in which it owns or
leases properties, or conducts any business, so as to require such
qualification, except where the failure to be so qualified would not have a
Material Adverse Effect on the Company.
(d) Each subsidiary of the Company has been duly incorporated and is
validly existing as a corporation in good standing under the laws of its
jurisdiction of incorporation; and all the issued shares of capital stock of
each such subsidiary have been duly and validly authorized and issued, are fully
paid and non-assessable and are owned beneficially and of record by the Company
or one of its subsidiaries, free and clear of all liens, encumbrances, equities
or claims.
<PAGE>
13
(e) Neither the Company nor any of its subsidiaries has sustained
since the date of the latest financial statements included or incorporated by
reference in the Final Prospectus any material loss or interference with its
business from fire, explosion, flood or other calamity, whether or not covered
by insurance, or from any labor dispute or court or governmental action, order
or decree, otherwise than as set forth or contemplated in the Final Prospectus;
and, since the respective dates as of which information is given in the
Registration Statement and the Final Prospectus, there has not been any change
in the capital stock or long-term debt of the Company or any of its subsidiaries
or any material adverse change, or any development involving a prospective
material adverse change, in or affecting the general affairs, management,
financial position, stockholders' equity or results of operations of the Company
and its subsidiaries, otherwise than as set forth or contemplated in the Final
Prospectus.
(f) The Company and its subsidiaries have good title in fee simple
to or a leasehold interest in all real property and personal property material
to its business, in each case free and clear of all liens, encumbrances and
defects except such as are described in the Final Prospectus or such as do not
materially affect the value of such property and do not interfere with the use
made and proposed to be made of such property by the Company and its
subsidiaries; and any real property and buildings and personal property held
under lease by the Company and its subsidiaries are held by them under valid,
subsisting and enforceable leases with such exceptions as are not material and
do not interfere with the use made and proposed to be made of such property and
buildings and personal property by the Company and its subsidiaries.
(g) The Company has an authorized capitalization as set forth in the
Final Prospectus, and all the issued shares of capital stock of the Company have
been duly and validly authorized and issued and are fully paid and non-
assessable; and all the issued shares of capital stock of each subsidiary of the
Company have been duly and validly authorized and issued and are fully paid and
non-assessable. All such shares of capital stock of each subsidiary of the
Company are owned beneficially and of record by the Company or one of its
subsidiaries, free and clear of all liens, encumbrances, equities or claims.
<PAGE>
14
(h) This Agreement has been duly authorized, executed and delivered
by the Company and constitutes the valid and legally binding agreement of the
Company, enforceable against the Company in accordance with its terms.
(i) The Warrant Agreement has been duly authorized, executed and
delivered by the Company and constitutes the valid and binding agreement of the
Company, enforceable against the Company in accordance with its terms.
The Shares to be issued and sold by the Company to the Purchaser
hereunder have been, or will be at the time of issuance, registered under the
Act, duly and validly authorized and, when issued and delivered against payment
therefor as provided herein, will be duly and validly issued and fully paid and
non-assessable and will conform to the description of the Shares contained in
the Final Prospectus.
(k) The Warrants to be issued and sold by the Company to the
Purchaser hereunder (A) have been, or will be at the time of issuance, duly and
validly authorized, (B) when duly executed, issued and delivered by the Company
and duly countersigned by the Warrant Agent in accordance with the terms of this
Agreement and the Warrant Agreement will constitute valid and binding
obligations of the Company, enforceable in accordance with their terms, (C) have
been, or will be at the time of issuance, registered under the Act, and (D) will
not at the time of receipt by the holder be subject to any restrictions on
transfer or sale, except any restrictions imposed by applicable securities laws;
and the stockholders of the Company have no preemptive rights with respect to
the Warrants.
(l) The Warrant Shares to be issued upon exercise of the Warrants
(A) have been, or will be at the time of issuance, duly and validly authorized,
(B) have been or will be at the time the corresponding Warrants are issued, duly
reserved for issuance upon the exercise of the Warrants from time to time in
accordance with the terms of the Warrants and the Warrant Agreement, (C) will be
when issued and delivered against payment therefor at the time of the exercise
of the Warrants in accordance with the terms of the Warrants and the Warrant
Agreement duly and validly issued, fully paid and non-assessable, (D) have been,
or will be at
<PAGE>
15
the time the corresponding Warrants are issued, registered under the Act and (E)
will not at the time of receipt by the holder of the corresponding Warrants be
subject to any restrictions on transfer or sale, except any restrictions imposed
by applicable securities laws; and the stockholders of the Company have no
preemptive rights with respect to the Warrants or the Warrant Shares to be
issued upon exercise thereof.
(m) The issue and sale of the Shares, Warrants and Warrant Shares to
be sold by the Company hereunder and the compliance by the Company with all the
provisions of this Agreement and the Warrant Agreement and the consummation of
the transactions herein and therein contemplated will not conflict with or
result in a breach or violation of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which the Company or any of its
subsidiaries is a party or by 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, except for such conflicts, breaches or violations
which, individually or in the aggregate, would not have a material adverse
effect on the general affairs, management, financial position, prospects,
stockholders' equity or results of operations of the Company and its
subsidiaries (a "Material Adverse Effect"), nor will such action by the Company
result in any violation of the provisions of the Certificate of Incorporation or
By-Laws of the Company or any statute or any order, rule or regulation of any
court or governmental agency or body having jurisdiction over the Company or any
of its subsidiaries or any of their properties; and no consent, approval,
authorization, order, registration or qualification of or with any such court or
governmental agency or body is required for the issue and sale of the Shares,
Warrants and Warrant Shares by the Company or the consummation by the Company of
the transactions contemplated by this Agreement and the Warrant Agreement,
except the registration under the Act of the Shares, Warrants and Warrant Shares
and such consents, approvals, authorizations, registrations or qualifications as
maybe required under state securities or Blue Sky laws in connection with the
purchase and distribution of the Shares, Warrants and Warrant Shares by the
Purchaser.
(n) Neither the Company nor any of its subsidiaries is in violation
of its Certificate of
<PAGE>
16
Incorporation or By-Laws or in default in the performance or observance of any
obligation, agreement, covenant or condition contained in any indenture,
mortgage, loan agreement or note or any contract, lease or other instrument to
which it is a party or by which it or any of them or their properties may be
bound, except for such violations or defaults which, individually or in the
aggregate, would not have a Material Adverse Effect.
(o) The statements made in the Final Prospectus under the caption
"Description of Securities", insofar as they purport to constitute a summary of
the terms of the Shares, Warrants and Warrant Shares, and under the caption
"Underwriting--Purchase Agreement" are accurate and fair summaries.
(p) Other than as set forth in the Final Prospectus, there are no
legal or governmental proceedings pending to which the Company or any of its
subsidiaries is a party or of which any property of the Company or any of its
subsidiaries is the subject which, if determined adversely to the Company or any
of its subsidiaries, would individually or in the aggregate have a Material
Adverse Effect; and no such proceedings to the best of the Company's knowledge
are threatened or contemplated by governmental authorities or threatened by
others.
(q) The Company and its subsidiaries have filed all federal or state
income or franchise tax returns required to be filed and have paid all taxes
shown thereon as due (except taxes being contested in good faith as to which
adequate provisions have been made to the extent required by GAAP), and there is
no material tax deficiency which has been or might reasonably be expected to be
asserted against the Company or any of its subsidiaries.
(r) Neither the Company, any of its subsidiaries nor any predecessor
of any of the foregoing has authorized or conducted or has knowledge of the
generation, transportation, storage, use, treatment, disposal or release of any
hazardous substance, hazardous waste, hazardous material, hazardous constituent,
toxic substance, pollutant, contaminant, petroleum product (including crude oil
or any fraction thereof, natural gas, liquefied gas or synthetic gas defined or
regulated under any environmental law) (collectively, "Hazardous Materials") on,
in or under any real property leased, owned, used, operated or by any means
controlled by the Company or any subsidiary (the "Real
<PAGE>
17
Property") which, in the case of any of the foregoing, is required to be
disclosed (directly or by incorporation by reference) in the Final Prospectus,
or in any of the Company's filings required under the Exchange Act, and which is
not so disclosed in accordance with such requirements; the Real Property and the
Company's and each subsidiary's, as the case may be, operations are in
compliance in all material respects with all federal, state and local laws,
ordinances, rules and regulations relating to health, safety and the environment
(collectively, "Environmental Laws"); the Company and each subsidiary has all
licenses, permits and authorizations required to be had under any Environmental
Law, and is and has operated in compliance therewith, except for such of the
foregoing as, individually or in the aggregate, would not have a Material
Adverse Effect; except as described in the Final Prospectus, neither the Company
nor any of its subsidiaries has received any written or oral notice from any
governmental entity or third party, and there is no pending or threatened, and
there are no circumstances with respect to the Real Property or the operations
of the Company or its subsidiaries that could reasonably be anticipated to form
the basis of any, claim, litigation or any administrative agency proceeding
that: (1) alleges a violation of any Environmental Laws by the Company or any
subsidiary, (2) alleges the Company, any subsidiary or any predecessor of any of
the foregoing has any indemnity or similar obligation is a liable party under
the Comprehensive Environmental Response, Compensation, and Liability Act, 42
U.S.C. (S)(S) 9601, et seq. or any state superfund law, (3) alleges possible
-- ---
contamination of the environment by the Company or any subsidiary or (4) alleges
possible contamination of the Real Property, except for such of the foregoing
as, individually or in the aggregate, would not have a Material Adverse Effect.
(s) No labor dispute with the employees of, or representatives of
employees of, the Company or any of its subsidiaries exists or, to the best of
its knowledge, is imminent, and the Company is not aware of any existing or
reasonably foreseeable labor disturbance by the employees of any of its
principal suppliers, manufacturers or contractors which, in any such case, might
be expected to result in any Material Adverse Effect.
(t) The Company and its subsidiaries each owns or possesses, or can
acquire on reasonable terms, the patents, patent rights, licenses, inventions,
copyrights, know how (including trade secrets and other unpatented and
<PAGE>
18
unpatentable proprietary or confidential information, systems or procedures),
trade marks, service marks and trade names presently employed by it in
connection with the business now operated by them, and neither the Company nor
any subsidiary has received any written notice of infringement of or conflict
with asserted rights of others with respect to any of the foregoing which,
individually or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, would result in any Material Adverse Effect.
(u) There are no transactions with affiliates, as defined in Rule
405 under the Act, which are required to be disclosed in the Final Prospectus
that are not fairly disclosed therein.
(v) The Company is not and, after giving effect to the offering and
sale of the Shares, Warrants and Warrant Shares, will not be an open-end
investment company, unit investment trust or face-amount certificate company
that is or is required to be registered under the Investment Company Act; and
neither the Company nor any affiliated entity is directly or indirectly
controlled by or acting on behalf of any person that is such a company or trust.
(w) The Shares and Warrant Shares have been, or at time of issuance
will be, approved for quotation on Nasdaq under the symbol "CYTO".
(x) Neither the Company nor any of its affiliates does business with
the government of Cuba or with any person or affiliate located in Cuba within
the meaning of Section 517.075 of Florida Statutes (Chapter 92-198, Laws of
Florida).
(y) Arthur Andersen LLP, who have certified certain financial
statements of the Company and its subsidiaries, are independent public
accountants as required by the Act and the rules and regulations of the
Commission thereunder.
7. The Company agrees with the Purchaser:
(a) The Company will use its best efforts to cause the Registration
Statement and any amendment thereto to become effective to the extent required
to fulfill the terms of this Agreement if not already effective. Prior to the
termination of the offering of the Shares, Warrants and
<PAGE>
19
Warrant Shares, the Company will not file any amendment of a Registration
Statement or any supplement to a Basic Prospectus (including a Final Prospectus
and including any documents to be incorporated by reference therein) unless the
Company has furnished the Purchaser a copy for review by the Purchaser prior to
filing and will not file any such proposed amendment or supplement to which the
Purchaser reasonably objects within five Business Days of such furnishing
thereof. Subject to the foregoing sentence, the Company will cause each Final
Prospectus, properly completed, and any supplement thereto, to be filed with the
Commission pursuant to the applicable paragraph of Rule 424(b) within the time
period prescribed and will provide evidence satisfactory to the Purchaser of
such timely filing. The Company will promptly advise the Purchaser (i) when the
initial Registration Statement, if not effective at the Execution Time, and any
amendment thereto, shall have become effective, (ii) when any Final Prospectus,
and any supplement thereto, shall have been filed with the Commission pursuant
to Rule 424(b), (iii) when, prior to termination of the offering of the Shares,
Warrants and Warrant Shares or prior to the termination of this Agreement, any
new Registration Statement or amendment to a Registration Statement shall have
been filed or become effective, (iv) of any request by the Commission for any
amendment of a Registration Statement or supplement to any Final Prospectus or
for any additional information, (v) of the issuance by the Commission of any
stop order suspending the effectiveness of any Registration Statement or the
institution or threatening of any proceeding for that purpose and (vi) of the
receipt by the Company of any notification with respect to the suspension of the
qualification of the Shares, Warrants and Warrant Shares for sale in any
jurisdiction or the initiation or threatening of any proceeding for such
purpose. The Company will use its best efforts to prevent the issuance of any
such stop order or suspension and, if issued, to obtain as soon as possible the
withdrawal thereof.
(b) Promptly from time to time to take such action as the Purchaser
may reasonably request to qualify the Shares, Warrants and Warrant Shares for
offering and sale under the securities laws of such jurisdictions as the
Purchaser may request and to comply with such laws so as to permit the
continuance of sales and dealings therein in such jurisdictions for as long as
may be necessary to complete the distribution of the Shares, Warrants and
Warrant Shares, provided that in connection therewith the Company shall not
<PAGE>
20
be required to qualify as a foreign corporation or to file a general consent to
service of process in any jurisdiction.
(c) To furnish the Purchaser, without charge, with copies of each
Registration Statement (including exhibits thereto) and any Final Prospectus,
and any supplement thereto, in such quantities as the Purchaser may from time to
time reasonably request, and, if at any time any event shall have occurred as a
result of which a Final Prospectus as then amended or supplemented would include
an untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made when such Final Prospectus is
delivered, not misleading, or, if for any other reason it shall be necessary
during such same period to amend or supplement a Final Prospectus in order to
comply with the Act or the Exchange Act and the respective rules and regulations
thereunder, to notify the Purchaser and upon the Purchaser's request to prepare
and file (subject to the second sentence of Section 7(a) hereof) with the
Commission an amendment or supplement which will correct such statement or
omission or effect such compliance and furnish without charge to the Purchaser
and to any dealer in securities as many copies as the Purchaser may from time to
time reasonably request of such amendment or supplement.
(d) To make generally available to its security holders as soon as
practicable, but in any event not later than 18 months after each effective date
of each Registration Statement (as defined in Rule 158(c) under the Act), an
earning statement of the Company and its subsidiaries (which need not be
audited) complying with Section 11(a) of the Act and the rules and regulations
of the Commission thereunder (including, at the option of the Company, Rule 158
under the Act).
(e) During the period beginning at the Execution Time and continuing
until two years after the First Effective Date (and during any Pricing Period
subsequent to such date) unless this Agreement is earlier terminated, not to,
and not to permit any of its subsidiaries to, offer, sell, pledge, contract to
sell or otherwise dispose of, directly or indirectly, or announce any such
offer, sale, pledge, contract or other disposition, or cause to be filed with
the Commission a registration statement under the Act relating to, any
securities of the Company or any of its subsidiaries that are substantially
similar to the Shares,
<PAGE>
21
including but not limited to any securities that are convertible into or
exchangeable for or that represent the right to receive the Shares or any such
substantially similar securities (other than (i) pursuant to employee stock
option plans, (ii) upon the conversion or exchange of convertible or
exchangeable securities outstanding as of, the date of this Agreement, (iii) an
equity investment by the other party or partner to, and in connection with, any
license agreement, research and development agreement, joint-venture or other
similar corporate alliance, (iv) pursuant to the Amended and Restated Agreement
with Fletcher Capital Markets, Inc. dated as of May 6, 1994, or (v) in
connection with a merger or acquisition, which transaction shall be governed by
Section 7(j) hereof) without the prior written consent of the Purchaser.
(f) To furnish to its stockholders as soon as practicable after the
end of each fiscal year an annual report (including a balance sheet and
statements of income, stockholders' equity and cash flows of the Company and its
consolidated subsidiaries certified by independent public accountants) and, as
soon as practicable after the end of each of the first three quarters of each
fiscal year (beginning with the fiscal quarter ending after the Effective Date),
consolidated summary financial information of the Company and its subsidiaries
for such quarter in reasonable detail.
(g) So long as this Agreement shall not have been terminated and
during the period that any Warrants are outstanding, to furnish to the Purchaser
copies of all reports or other communications (financial or other) furnished to
stockholders, and deliver to the Purchaser (i) as soon as they are available,
copies of any reports and financial statements furnished to or filed with the
Commission, Nasdaq or any national securities exchange on which any class of
securities of the Company is listed and (ii) such additional information
concerning the business and financial condition of the Company as the Purchaser
may from time to time reasonably request (such financial statements to be on a
consolidated basis to the extent the accounts of the Company and its
subsidiaries are consolidated in reports furnished to its stockholders generally
or to the Commission).
(h) That, if it commences engaging in business with the government
of Cuba or with any person or affiliate located in Cuba after the date the
Registration Statement
<PAGE>
22
becomes or has become effective with the Commission or with the Florida
Department of Banking and Finance (the "Department"), whichever date is later,
or if the information reported in a Final Prospectus, if any, concerning the
Company's business with Cuba or with any person or affiliate located in Cuba
changes in any material way, the Company will provide the Department notice of
such business or change, as appropriate, in a form acceptable to the Department.
(i) On each date on which any Registration Statement or any Final
Prospectus shall be amended or supplemented to include additional financial
information as a result of the filing with the Commission of the Company's
Annual Report on Form 10-K or Quarterly Report on Form 10-Q or Current Report
on Form 8-K (to the extent the Form 8-K relates to events specified in Item 2 of
Form 8-K or includes financial statements or information pursuant to Item 7 of
Form 8-K), the Company shall cause Arthur Andersen LLP concurrently to furnish
the Purchaser with a letter, dated such date, in form and substance satisfactory
to the Purchaser, to the effect set forth in Annex I hereto but modified to
relate to the Registration Statement and such Final Prospectus as amended or
supplemented at such date, with such changes as may be necessary to reflect
changes in the financial statements and other information derived from the
accounting records of the Company.
(j) Not to merge or consolidate with or into, or sell, transfer or
lease all or substantially all its property to, any other entity, unless, in the
case of a merger or consolidation, the Company shall be the surviving entity or,
in the case of a merger or consolidation of the Company with a subsidiary
thereof, no reclassification, capital reorganization or other change of
outstanding securities shall result therefrom. Notwithstanding the foregoing,
upon any merger or consolidation of the Company or sale or other conveyance of
all or substantially all of its assets, the Purchaser shall have the right to
terminate this Agreement.
(k) During the period beginning on any Pricing Period Commencement
Date and ending on the related Closing Date, not to:
(i) issue Shares by dividend or other distribution on any stock of
the Company for no consideration or effect a stock split or reverse stock
split of the outstanding Shares;
<PAGE>
23
(ii) permit to occur any reclassification, capital reorganization or
other change of outstanding Shares (other than a change in par value or as
a result of an issuance of Shares by way of dividend or other
distribution);
(iii) issue or distribute to all or substantially all holders of
Shares evidences of indebtedness, any other securities of the Company or
any cash, property or other assets, if such issuance or distribution does
not constitute a cash dividend or distribution out of surplus or net
profits and earnings legally available therefor; and
(iv) issue or distribute any evidence of indebtedness, securities,
cash or property or other assets, or make any distribution of any kind
whatsoever, in any year in an amount in excess of the Company's earnings
and profits for such year;
(l) From and after any delivery of a Takedown Notice and through
the related Closing Date, and thereafter to the extent the Purchaser is engaged
in a distribution (as such term is used in Rule 10b-6 under the Exchange Act) of
any Shares and Warrants delivered to the Purchaser on such Closing Date, not to,
by the use of any means or instrumentality of interstate commerce, or of the
mails, or of any facility of any national securities exchange, either alone or
with one or more other persons, to bid for or purchase for any account in which
the Company has a beneficial interest, any Shares or Warrants (or any security
of the same class or series), or any right to purchase any Shares or Warrants
(or any security of the same class or series), or to attempt to induce any
person to purchase any Shares or Warrants or right (or any security of the same
class or series) .
(m) To use its best efforts to have the Shares and Warrant Shares
issued hereunder quoted on Nasdaq.
(n) Subject to the limitations set forth in Section 6(a), the
Company shall file an additional Registration Statement (and use its best
efforts to cause such Registration Statement to become effective) to register
Shares, Warrants and Warrant Shares to be issued pursuant to this Agreement at
any time when the remaining aggregate dollar amount of Shares, Warrants and
Warrant Shares that
<PAGE>
24
can be issued under any effective Registration Statement is less than
$2,000,000.
(o) For (i) the period of 18 months after the termination of this
Agreement, at the expense of the Company, and (ii) the period thereafter, at the
expense of the Purchaser, in connection with any sale of the Warrants or Warrant
Shares by the Purchaser, the Company shall upon request of the Purchaser, obtain
opinions of counsel to the Company (which counsel and opinions, in form,
scope and substance, shall be reasonably satisfactory to the Purchaser),
addressed to the Purchaser covering to the extent applicable, the matters set
forth in Section 9(c) of this Agreement, provided, however, the Company shall
-------- -------
not be obligated to obtain more than four opinions during any fiscal year.
8. The Company covenants and agrees with the Purchaser that the
Company will pay or cause to be paid upon demand the following: (i) the fees,
disbursements and expenses of the Company's counsel and accountants in
connection with the registration of the Shares, Warrants and Warrant Shares
under the Act and all other expenses in connection with the preparation,
printing and filing of a Registration Statement and any Final Prospectus and
amendments and supplements thereto and the mailing and delivering of copies
thereof to the Purchaser and dealers; (ii) the cost of printing or producing
this Agreement, the Blue Sky Memorandum and any other documents in connection
with the offering, purchase, sale and delivery of the Shares, Warrants and
Warrant Shares; (iii) all expenses in connection with the qualification of the
Shares, Warrants and Warrant Shares for offering and sale under state securities
laws as provided in Section 7(b) hereof, including the fees and disbursements of
counsel for the Purchaser in connection with such qualification and in
connection with the Blue Sky survey; (iv) the filing fees incident to securing
any required review by the National Association of Securities Dealers, Inc. (the
"NASD") of the terms of the sale of the Shares, Warrants and Warrant Shares; (v)
the cost of preparing stock and warrant certificates; (vi) the cost and charges
of any transfer agent or registrar; (vii) all out-of-pocket expenses of the
Purchaser, including fees and disbursements of counsel (and an estimate of such
fees and disbursements shall be provided to the Company on a weekly basis, if so
requested), stock transfer taxes on resale of any Shares, Warrants and Warrant
Shares by the Purchaser and advertising expenses connected with any offers the
Purchaser may make, incurred in connection with the performance of its
obligations hereunder; and (viii) all other costs and expenses incident to the
performance of its obligations hereunder which are not otherwise specifically
provided for in this Section 8.
9. The (i) effectiveness of this Agreement, (ii) commencement of
each Pricing Period on the related Pricing Period Commencement Date and (iii)
obligations of the Purchaser hereunder as to the purchase of Shares and Warrants
to be delivered at each Closing Date shall be subject, in each case in the sole
judgement of the Purchaser, to the satisfaction, at and as of each of (unless
otherwise indicated) the First Effective Date, 8:30 a.m. New
<PAGE>
25
York City Time on such Pricing Period Commencement Date and 10:00 a.m. New York
City Time on such Closing Date, of the following conditions:
(a) all representations and warranties of the Company herein shall
be true and correct;
(b) the Company shall have performed in all material respects all
its obligations hereunder theretofore to be performed;
(c) On the First Effective Date and on each Closing Date, Dechert,
Price & Rhoads, counsel for the Company, shall have furnished to the Purchaser
their written opinion, dated the respective date of delivery thereof, in form
and substance satisfactory to the Purchaser, to the effect that:
(i) the Company is a corporation validly existing and in good
standing under the laws of the State of Delaware, with corporate power and
corporate authority to own its properties and conduct its business as
described in the Final Prospectus;
(ii) the Company has been duly qualified as a foreign corporation
for the transaction of business and is in good standing under the laws of
each other jurisdiction in which it owns or leases properties, or conducts
any business, so as to require such qualification, except where the failure
to be so qualified would not have a Material Adverse Effect on the Company;
(iii) each subsidiary of the Company has been duly incorporated and
is validly existing as a corporation in good standing under the laws of its
jurisdiction of incorporation; and all the outstanding shares of capital
stock of each such subsidiary have been duly and validly authorized and
issued, are fully paid and non-assessable and are owned beneficially and of
record by the Company or one of its subsidiaries, free and clear of all
liens, encumbrances, or adverse claims;
(iv) the Company has an authorized capitalization as set forth in
the Final Prospectus, and the Shares (including, in the case of such
opinion to be delivered on any Closing Date, the Shares to be sold by the
Company on such Closing Date) have been duly and
<PAGE>
26
validly authorized and issued and are fully paid and nonassessable and have
been admitted for quotation on Nasdaq;
(v) this Agreement has been duly authorized,
executed and delivered by the Company;
(vi) the Warrant Agreement has been duly authorized, executed and
delivered by the Company and constitutes the valid and binding agreement of
the Company, enforceable against the Company in accordance with its terms
subject to appropriate creditors' rights and equitable exceptions to
enforceability;
(vii) no consent, approval, authorization, order, registration or
qualification of or with any such court or governmental agency or body is
required for the issue and sale of the Shares and Warrants or the
consummation by the Company of the transactions contemplated by this
Agreement, except the registration under the Act of the Shares and
Warrants, and such consents, approvals, authorizations, registrations or
qualifications as may be required under state securities or Blue Sky laws
in connection with the purchase and distribution of the Shares by the
Purchaser;
(viii) the statements made in the Final Prospectus under the caption
"Description of Securities", insofar as they purport to constitute a
summary of the terms of the Shares, Warrants and Warrant Shares, and under
the caption "Underwriting--Purchase Agreement", fairly summarize in all
material respects the matters therein described;
(ix) to the knowledge of such counsel, no holders of securities of
the Company have rights to the registration of such securities under the
Registration Statement;
(x) the Registration Statement has become effective under the Act;
any required filing of the Basic Prospectus and the Final Prospectus, and
any supplements thereto, pursuant to Rule 424(b) has been made in the
manner and within the time period required by Rule 424(b); to the best
knowledge of such counsel, no stop order suspending the effectiveness of
the Registration Statement has been issued and no
<PAGE>
27
proceedings for that purpose have been instituted or threatened;
(xi) the issue and sale of the Shares and Warrants subject to the
related Takedown and the compliance by the Company with all the provisions
of this Agreement and the Warrant Agreement and the consummation of the
transactions herein and therein contemplated: (a) will not conflict with or
result in a breach or violation of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument identified on the Exhibit List
to a Registration Statement or any document incorporated by reference
therein to which the Company or any of its subsidiaries is a party or by
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, which would have a Material Adverse Effect; (b) will not result in
any violation of the provisions of the (A) Certificate of Incorporation or
By-Laws of the Company or (B) any statute or any order, rule or regulation
known to such counsel of any court or governmental agency or body having
jurisdiction over the Company or any of its subsidiaries or any of their
properties, except for any violation under applicable state securities laws
or Blue Sky laws, as to which such counsel need not express any opinion;
(xii) in the case of such opinion to be delivered on any Closing Date,
the Warrants to be issued (A) have been, or will be at the time of
issuance, duly and validly authorized, (B) will be duly executed and issued
by the Company and duly countersigned by the Warrant Agent and constitute
valid and binding obligations of the Company, enforceable in accordance
with their terms, subject to appropriate exceptions for creditors' rights
and principles of equity, (C) have been registered under the Act, and (D)
are not subject to any restrictions on transfer or sale, except any
restrictions imposed by applicable securities laws; and the stockholders of
the Company have no preemptive rights with respect to the Warrants under
the provisions of the Certificate of Incorporation or By-Laws of the
Company or any statute or any order, rule or regulation known to such
counsel of any court or governmental agency or body having jurisdiction
over
<PAGE>
28
the Company, or to the knowledge of such counsel, any other documents or
agreements; and
(xiii) in the case of such opinion to be delivered on any Closing Date,
the Warrant Shares to be issued upon exercise of the Warrants (A) have
been, or will be at the time of issuance, duly and validly authorized, (B)
have been duly reserved for issuance upon the exercise of the Warrants from
time to time in accordance with the terms of the Warrants and the Warrant
Agreement, (C) will be at the time of the exercise of the Warrants in
accordance with the terms thereof duly and validly issued, fully paid and
non-assessable, (D) have been registered under the Act, and (E) will not at
the time of receipt by the holder of the corresponding Warrants be subject
to any restrictions on transfer or sale, except any restrictions imposed by
applicable securities laws; and the stockholders of the Company have no
preemptive rights with respect to the Warrants or the Warrant Shares to be
issued upon exercise thereof under the provisions of the Certificate of
Incorporation or By-Laws of the Company or any statute or any order, rule
or regulation known to such counsel of any court or governmental agency or
body having jurisdiction over the Company, or to the knowledge of such
counsel, any other documents or agreements.
In rendering such opinion, such counsel may state that they express
no opinion as to the laws of any jurisdiction other than the laws of the United
States, Delaware and New York.
In addition, such counsel shall state that such counsel has
participated in conferences with representatives of the Purchaser, officers and
other representatives of the Company and representatives of the independent
certified public accountants of the Company, at which conferences the contents
of the Registration Statement and the Final Prospectus and related matters were
discussed and, although such counsel does not pass upon and does not assume any
responsibility for the accuracy, completeness or fairness of the statements
contained in the Registration Statement and the Final Prospectus (except as to
(viii) above), on the basis of the foregoing (relying as to materiality to a
large extent upon the discussions with, and representations and opinions of,
officers and other representatives of the Company), no facts have come to the
attention of such
<PAGE>
29
counsel which causes such counsel to believe that: (i) the Registration
Statement and the Final Prospectus (except the financial statements and other
information of an accounting nature included therein, as to which such counsel
need express no opinion) were not appropriately responsive, in all material
respects, to the requirements of the Act and the applicable rules and
regulations of the Commission thereunder, and (ii) the Registration Statement at
the Effective Date contained an untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading or that the Final Prospectus, at the date
thereof, includes any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided, that such
counsel need express no comment with respect to the financial statements,
schedules and other financial data included in the Registration Statement or
Final Prospectus.
(d) Cravath, Swaine & Moore, counsel for the Purchaser, shall have
furnished to the Purchaser such opinions or letters, dated the respective date
of delivery thereof, with respect to the issuance and sale of the Shares,
Warrants and Warrant Shares, the Registration Statement and the Final
Prospectus, as well as such other matters relating to the transactions
contemplated hereby as the Purchaser may request, and such counsel shall have
received such papers and information as they may reasonably request to enable
them to pass upon such matters;
(e) On the First Effective Date, on each Pricing Period Commencement
Date and on each Closing Date, Arthur Andersen LLP shall have furnished to
the Purchaser a letter or letters, dated the respective date of delivery
thereof, in form and substance satisfactory to the Purchaser, to the effect set
forth in Annex I hereto;
(f) (i) neither the Company nor any of its subsidiaries shall have
sustained since the date of the latest financial statements included or
incorporated by reference in the Final Prospectus any loss or interference with
its business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or governmental action,
order or decree, otherwise than as set forth or contemplated in the Final
Prospectus, and (ii) since the respective dates as of which information is given
in the Final Prospectus there
<PAGE>
30
shall not have been any change in the capital stock or long-term debt of the
Company or any of its subsidiaries or any change, or any development involving a
prospective change, in or affecting the condition (financial or other),
earnings, general affairs, business, operations, properties, management,
stockholders' equity, results of operations or prospects of the Company and its
subsidiaries, taken as a whole, otherwise than as set forth or contemplated in
the Final Prospectus, the effect of which, in any such case described in clause
(i) or (ii), is in the Purchaser's sole judgment so material and adverse as to
make it impracticable or inadvisable to proceed with the offering or the
delivery of the Shares and Warrants subject to the related Takedown on the terms
and in the manner contemplated in the Final Prospectus;
(g) (i) no downgrading shall have occurred in the rating accorded
the Company's existing or proposed debt securities or preferred stock by any
"nationally recognized statistical rating organization," as that term is defined
by the Commission for purposes of Rule 436(g)(2) under the Act, and (ii) no such
organization shall have publicly announced that it has under surveillance or
review, with possible negative implications, its rating of any of the Company's
debt securities or preferred stock;
(h) there shall not have occurred any of the
following: (i) a suspension or material limitation in trading in securities
generally on the New York Stock Exchange or Nasdaq; (ii) a suspension or
material limitation in trading in the securities of the Company or any of its
subsidiaries on Nasdaq; (iii) a general moratorium on commercial banking
activities in New York declared by either Federal or New York State authorities;
or (iv) the outbreak or escalation of hostilities involving the United States or
the declaration by the United States of a national emergency or war if the
effect of any such event specified in this clause (iv) in the Purchaser's
judgment makes it impracticable or inadvisable to proceed with the resale of, or
the delivery of, the Shares and Warrants being delivered at such Closing Date on
the terms and in the manner contemplated in the Final Prospectus;
(i) on such Closing Date, the Shares to be sold by the Company on
such Closing Date shall have been admitted for quotation on Nasdaq;
<PAGE>
31
(j) at the First Effective Date (and within 10 days after the
election or appointment of each executive officer that is a member of the
Management Committee or director elected or appointed after the Execution Time),
the Company shall have obtained and delivered to the Purchaser executed copies
of an agreement from each executive officer that is a member of the Management
Committee and director of the Company, in a form satisfactory to the Purchaser,
to the effect that, during the period beginning at the First Effective Date and
continuing until two years thereafter, such executive officer or director will
not offer, sell, pledge, contract to sell or otherwise dispose of, directly or
indirectly, or announce any such offer, sale, pledge, contract or other
disposition, or cause to be filed with the Commission a registration statement
under the Act relating to, except as provided hereunder, any securities of the
Company or any of its subsidiaries that are substantially similar to the Shares,
including but not limited to any securities that are convertible into or
exchangeable for or that represent the right to receive the Shares or any such
substantially similar securities (other than pursuant to employee stock option
plans existing on, or upon the conversion or exchange of convertible or
exchangeable securities outstanding as of, the date of this Agreement) without
the prior written consent of the Purchaser; provided, however, upon five
-------- -------
Business Days' prior written notice to the Purchaser, such executive officer or
director may sell securities of the Company at any time not included within a
Pricing Period (and the Business Day immediately preceding a Pricing Period).
The agreement of any executive officer or director under this paragraph (j)
shall terminate 30 days after the date such person no longer serves the Company
in such capacity, provided that the Company furnishes prior written notice to
Purchaser of such termination of service.
(k) the Company shall have furnished or caused to be furnished to
the Purchaser on the First Effective Date, on such Pricing Period Commencement
Date and on such Closing Date, certificates of officers of the Company,
satisfactory to the Purchaser, (i) as to the accuracy of the representations and
warranties of the Company herein, on and as of the First Effective Date, Pricing
Period Commencement Date or Closing Date, as the case may be, (ii) as to the
performance by the Company of all its obligations hereunder to be performed on
and as of the First Effective Date, on or prior to such Pricing Period
Commencement Date, and on or prior to such Closing Date, as the case may be,
(iii) as to
<PAGE>
32
the matters set forth in paragraphs (f), (g), (h), (i) and (m) of this Section
9, and as to such other matters as the Purchaser may reasonably request;
(l) (i) prior to 10:00 a.m. New York City Time of each Business Day
of any Pricing Period, the Company shall make available to the Purchaser the
Chief Financial Officer and Vice President/Operations of the Company (or other
appropriate financial and operations officials of senior management acceptable
to the Purchaser) for a due diligence update telephone conference call and (ii)
at dates, times and locations reasonably specified by the Purchaser, the
Purchaser and its counsel shall have conducted such investigations, inquiries
and conferences with such directors, officers, employees and agents (including,
without limitation, outside accountants and counsel) of the Company and its
subsidiaries, been furnished and reviewed such documentation of the Company and
its subsidiaries and conducted such other procedures, as the Purchaser and its
counsel deem necessary, in their discretion, to have a satisfactory "due
diligence" defense under Sections 11 and 12(2) of the Act;
(m) no statute, rule, regulation, executive order, decree, ruling or
injunction (either temporary, preliminary or final) shall have been enacted,
entered, promulgated or endorsed by any court of competent jurisdiction or
governmental authority or self-regulatory organization of competent
jurisdiction, which prohibits the consummation of any of the transactions
contemplated by this Agreement or a Final Prospectus or limits any trading
activities permitted or otherwise contemplated by this Agreement or a Final
Prospectus. The Purchaser shall have no reasonable grounds to believe that, as a
result of a change in any applicable statutory or regulatory provision or as a
result of a current or future interpretation of any current or future statutory
or regulatory provision by the respective staffs of the Commission, NASD or any
other applicable governmental or regulatory body or self-regulatory
organization, the transactions (including, without limitation, the trading
activities described in a Registration Statement and the pricing mechanism
described in Section 2 hereof) contemplated or permitted by this Agreement may
be limited in any material respect, the Purchaser may become liable for any
incremental charge or other expense beyond those currently applicable as a
result of the transactions contemplated by this Agreement or a Final Prospectus,
or the Purchaser's net capital obligations may be materially
<PAGE>
33
increased beyond those currently applicable with respect to this Agreement;
(n) on such Pricing Period Commencement Date, the Purchaser shall be
satisfied, in its sole judgment, (i) with the condition (financial or other),
earnings, general affairs, business, operations, properties, management,
stockholders' equity, results of operations and prospects of the Company and its
subsidiaries, taken as a whole, whether or not arising from transactions in the
ordinary course of business and (ii) that no condition or circumstance
(including, without limitation, any economic, political, legal, tax and
regulatory condition within or outside the United States) exists, or may, during
the Pricing Period, exist, that adversely affects, or will adversely affect, the
price or value of securities, including, without limitation, the Shares, on the
New York Stock Exchange or Nasdaq or prevent or restrict settlement of
transactions in the Shares on Nasdaq; and
(o) on or prior to such Pricing Period Commencement Date and on or
prior to such Closing Date, if the related Final Takedown Amount is proposed to
(or will) exceed $500,000, the Company shall have furnished to the Purchaser
such further information, certificates and documents and satisfied such other
conditions as the Purchaser may reasonably request.
10. The obligations of the Company hereunder as to the sale of
Shares and Warrants to be delivered to the Purchaser at each Closing Date shall
be subject to the satisfaction, in each case in the sole judgment of the
Company, at and as of each Closing Date, of the following conditions:
(a) the representations and warranties of the Purchaser set forth in
Section 4 hereof shall be true and correct;
(b) the Purchaser shall have performed in all material respects all
its obligations hereunder theretofore to be performed; and
(c) no statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or endorsed by any
court of governmental authority or competent jurisdiction which
<PAGE>
34
prohibits consummation of any of the transactions contemplated by this
Agreement.
11. (a) The Company will indemnify and hold harmless the Purchaser
against any losses, claims, damages or liabilities to which the Purchaser may
become subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon an untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement for the registration of the Shares,
Warrants and Warrant Shares as originally filed or in any amendment thereof or
supplement thereto, or in the Basic Prospectus or a Final Prospectus, or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and will
reimburse the Purchaser for any legal or other expenses incurred by the
Purchaser in connection with investigating or defending any such action or claim
as such expenses are incurred; provided, however, that the Company shall not be
-------- -------
liable in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made therein in reliance upon and in
conformity with information furnished in writing to the Company by the Purchaser
specifically for inclusion therein; and provided further that the foregoing
-------- -------
indemnity agreement with respect to any Final Prospectus shall not inure to the
benefit of the Purchaser if it is conclusively determined by a court of
competent jurisdiction not subject to appeal that a copy of a Final Prospectus
was not sent or given by or on behalf of the Purchaser to the purchaser of the
Shares, Warrants or Warrant Shares who has asserted a claim, if required by law
to have been so delivered, at or prior to the written confirmation of the sale
of Shares, Warrants or Warrant Shares to such person, and if a Final Prospectus
would have cured the defect giving rise to such loss, claim, damage or
liability.
(b) The Purchaser will indemnify and hold harmless the Company to
the same extent as the foregoing indemnity from the Company to the Purchaser,
but only with reference to information furnished in writing to the Company by
the Purchaser specifically for inclusion therein. The Company hereby
acknowledges that the only information so furnished by the Purchaser to the
Company is the name of the
<PAGE>
35
Purchaser at the bottom of the outside front cover of the prospectus supplement
included in a Final Prospectus.
(c) Promptly after receipt by an indemnified party under subsection
(a) or (b) above of notice of the commencement of any action, such indemnified
party shall, if a claim in respect thereof is to be made against an indemnifying
party under such subsection, notify the indemnifying party in writing of the
commencement thereof; but the omission so to notify the indemnifying party shall
not relieve it from any liability which it may have to any indemnified party
otherwise than under such subsection. In case any such action shall be brought
against any indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
therein and, to the extent that it shall wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel satisfactory to such indemnified party (which shall not, except with the
consent of the indemnified party, be counsel to the indemnifying party), and,
after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party shall not be
liable to such indemnified party under such subsection for any legal expenses of
other counsel or any other expenses, in each case subsequently incurred by such
indemnified party, in connection with the defense thereof other than reasonable
costs of investigation.
(d) If the indemnification provided for in this Section 11 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a), (b) or (c) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities (or
actions in respect thereof) in such proportion as is appropriate to reflect the
relative benefits received by the Company on the one hand and the Purchaser on
the other from the sale of the Shares, Warrants and Warrant Shares under this
Agreement. If, however, the allocation provided by the immediately preceding
sentence is not permitted by applicable law or if the indemnified party failed
to give the notice required under subsection (c) above, then each indemnifying
party shall contribute to such amount paid or payable by such indemnified party
in such proportion as is appropriate to reflect not only such relative benefits
but
<PAGE>
36
also the relative fault of the Company on the one hand and the Purchaser on the
other in connection with the statements or omissions which resulted in such
losses, claims, damages or liabilities (or actions in respect thereof), as well
as any other relevant equitable considerations. The relative benefits received
by the Company on the one hand and the Purchaser on the other shall be deemed to
be in the same proportion as the Purchase Amount bears to the aggregate of the
total discounts and commissions, the fair market value of the Warrants and the
Commitment Fee and the Continuation Fee received by the Purchaser with respect
to the Shares and Warrants sold under this Agreement. The relative fault shall
be determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company on the one hand
or the Purchaser on the other and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission. The Company and the Purchaser agree that it would not be just and
equitable if contributions pursuant to this subsection (d) were determined by
pro rata allocation or by any other method of allocation which does not take
account of the equitable considerations referred to above in this subsection
(d). The amount paid or payable by an indemnified party as a result of the
losses, claims, damages or liabilities (or actions in respect thereof) referred
to above in this subsection (d) shall be deemed to include any legal or other
expenses incurred by such indemnified party in connection with investigating or
defending any such action or claim. Notwithstanding the provisions of this
subsection (d), the Purchaser shall not be required to contribute any amount in
excess of the amount by which the total price at which the Shares purchased by
the Purchaser exceeds the amount of any damages which the Purchaser has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation.
(e) The obligations of the Company under this Section 11 shall be
in addition to any liability which the Company may otherwise have and shall
extend, upon the same terms and conditions, to each underwriter, within the
meaning of the Act, who may purchase from or sell for the Purchaser any Shares,
Warrants or Warrant Shares, and to
<PAGE>
37
each person, if any, who controls the Purchaser or any such underwriter within
the meaning of the Act; and the obligations of the Purchaser under this Section
11 shall be in addition to any liability which the Purchaser may otherwise have
and shall extend, upon the same terms and conditions, to each officer and
director of the Company and to each person, if any, who controls the Company
within the meaning of the Act.
12. (a) At any time during the Diligence Period, the Purchaser or
the Company may terminate this Agreement and neither the Purchaser nor the
Company shall have any further obligations hereunder, including payment of the
Termination Fee; provided, however, the Company shall be required to pay the
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out-of-pocket expenses of the Purchaser, including the fees and disbursements of
counsel.
(b) This Agreement may be terminated at any time as to any portion
of the Purchase Amount not yet utilized hereunder by either party hereto at any
time upon 10 Business Days' written notice to the other party. Notwithstanding
the foregoing sentence, this Agreement may not be terminated as to any portion
of the Purchase Amount not yet utilized but as to which a Takedown has been
agreed to by the Company and the Purchaser.
(c) This Agreement may be terminated by the Purchaser at any time as
to any balance of the Purchase Amount not yet utilized hereunder (i) if in the
Purchaser's sole judgment there occurs a material adverse change in the
financial condition, results of operations, or business or prospects of the
Company since the date hereof or (ii) upon the occurrence of any event described
in Section 9(g), Section 9(h), Section 9(i) or Section 9(m) hereof.
(d) This Agreement may be terminated by the Company, without any
obligation to pay the Termination Fee, or by the Purchaser if the Commission
makes a determination that the Purchaser is in violation of any Federal
securities law or regulation thereunder in connection with any distribution of
securities hereunder.
(e) Notwithstanding the foregoing, in any event this Agreement shall
terminate two years after the First Effective Date, other than with respect to
which a Takedown has been agreed to by the Company and the Purchaser.
<PAGE>
38
13. Each of the Company and the Purchaser shall have the right to
approve before issuance any press release or other public announcement or
statement with respect to any of the transactions contemplated hereby. During
any Pricing Period, the Company shall not make any press release or public
announcement without providing the Purchaser with notice of the substance
thereof a reasonable time prior to such release or announcement.
14. The failure of the Company to comply with any representation,
warranty, statement or condition with respect to the Execution Time, any
Effective Date or any Business Day during a Pricing Period, any Pricing Period
Commencement Date or any Closing Date, and any waiver of such failure by the
Purchaser, shall not affect the Company's obligations to comply with any
representation, warranty, statement or condition with respect to any other
Effective Date, any other Business Day during a Pricing Period, any other
Pricing Period Commencement Date or any other Closing Date.
15. The respective indemnities, agreements, representations,
warranties and other statements of the Company and the Purchaser, as set forth
in this Agreement or made by or on behalf of them, respectively, pursuant to
this Agreement, shall remain in full force and effect, regardless of any
investigation (or any statement as to the results thereof) made by or on behalf
of the Purchaser or any controlling person of the Purchaser, or the Company, or
any officer or director or controlling person of the Company, and shall survive
delivery of and payment for the Shares, Warrants and Warrant Shares.
16. If this Agreement shall be terminated pursuant to Section 5(b)
or Section 12 hereof, the Company shall not then be under any obligation or
liability to the Purchaser except as provided in Section 5, Section 7, Section 8
and Section 11 hereof. Notwithstanding any termination of this Agreement, the
provisions of this Agreement addressing the registration and exercise terms of
the Warrants and the issuance and registration of the Warrant Shares shall
remain in effect as to any outstanding Warrants and related Warrant Shares;
provided, however, this requirement shall expire three years after the last
- -------- -------
Closing Date under this Agreement.
17. In the event any provision of this Agreement or the Warrant
Agreement is not permitted, allowed or
<PAGE>
39
approved by the Commission, Nasdaq, the NASD, any state securities commission or
any other similar regulatory body or organization, the Company and the Purchaser
agree to use their best efforts to amend the applicable terms of this Agreement
or the Warrant Agreement in order to obtain such required approval.
18. All statements, requests, notices and agreements hereunder shall
be in writing and, if to the Purchaser, shall be delivered or sent by mail,
telex or facsimile transmission to Nomura Securities International, Inc., 2
World Financial Center, Building B, New York, New York 10281-1198, Attention:
U.S. Corporate Finance-Paul L. McDermott, facsimile: (212) 667-1045, with
a copy to the attention of the Legal Department, Charles K. Whitehead,
facsimile: (212) 667-1024; and if to the Company shall be delivered or
sent by mail, telex or facsimile transmission to the Company at the address of
the Company set forth in the Registration Statement, Attention: T. Jerome
Madison. Any such statements, requests, notices or agreements shall take effect
upon receipt thereof.
19. This Agreement shall be binding upon, and inure solely to the
benefit of, the Purchaser and the Company and, to the extent provided in
Sections 11 and 14 hereof, each underwriter, within the meaning of the Act, who
may purchase from or sell for the Purchaser any Shares, Warrants or Warrant
Shares, the officers and directors of the Company and each person who controls
the Company or the Purchaser or any such underwriter within the meaning of the
Act, and their respective heirs, executors, administrators, successors and
assigns, and no other person shall acquire or have any right under or by virtue
of this Agreement. No purchaser of any of the Shares, Warrants or Warrant Shares
from the Purchaser shall be deemed a successor or assign by reason merely of
such purchase.
20. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York (without regard to conflicts of law
rules).
21. This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original, but all such counterparts shall
together constitute one and the same instrument.
If the foregoing is in accordance with your understanding, please
sign and return to us five
<PAGE>
40
counterparts hereof, and, upon the acceptance hereof by you, this letter and
such acceptance hereof shall constitute a binding agreement between you and the
Company.
Very truly yours,
CYTOGEN CORPORATION,
by /s/ T. Jerome Madison
__________________________
Name: T. Jerome Madison
Title: Vice President,
Chief Financial Officer
and Secretary
Accepted as of the date hereof
at New York, New York:
NOMURA SECURITIES INTERNATIONAL, INC.,
by /s/ Paul L. McDermott
_____________________________
Name: Paul L. McDermott
Title: Managing Director
6
<PAGE>
41
ANNEX I
Pursuant to Section 7(i) and Section 9(e) of this Agreement, the
accountants shall furnish letters to the Purchaser to the effect that:
(i) they are independent certified public accountants with respect
to the Company and its subsidiaries within the meaning of the Act and the
applicable published rules and regulations thereunder;
(ii) in their opinion, the financial statements, any supplementary
financial information and schedules and pro forma financial information examined
by them and included or incorporated by reference in the Registration Statement
or the Final Prospectus comply as to form in all material respects with the
applicable accounting requirements of the Act or the Exchange Act, as
applicable, and the related rules and regulations thereunder; and they have made
a review in accordance with standards established by the American Institute of
Certified Public Accountants of the consolidated interim financial statements,
selected financial data, pro forma financial information and condensed financial
statements derived from audited financial statements of the Company for the
periods specified in such letter, as indicated in their reports thereon, copies
of which have been furnished to the Purchaser;
(iii) the unaudited selected financial information with respect to the
consolidated results of operations and financial position of the Company for the
five most recent fiscal years included in the Final Prospectus and included or
incorporated by reference in Item 6 of the Company's Annual Report on Form 10-K
for the most recent fiscal year agrees with the corresponding amounts in the
audited consolidated financial statements for such five fiscal years which were
included or incorporated by reference in the Company's Annual Reports on Form
10-K for such fiscal years;
(iv) on the basis of limited procedures, not constituting an
examination in accordance with generally accepted auditing standards, consisting
of a reading of the unaudited financial statements and other information
referred to below, a reading of the latest available interim financial
statements of the Company and its subsidiaries, inspection of the minute books
of
<PAGE>
42
the Company and its subsidiaries since the date of the latest audited financial
statements included or incorporated by reference in the Final Prospectus,
inquiries of officials of the Company and its subsidiaries responsible for
financial and accounting matters and such other inquiries and procedures as are
customarily made or carried out by such firm in connection with public offerings
and sales of equity securities (such inquiries and procedures to be specified in
such letter), nothing came to their attention that caused them to believe that:
(A) the unaudited condensed consolidated statements of income,
consolidated balance sheets and consolidated statements of cash flows
included or incorporated by reference in the Company's Quarterly Reports on
Form 10-Q incorporated by reference in the Final Prospectus do not comply
as to form in all material respects with the applicable accounting
requirements of the Exchange Act as it applies to Form 10-Q and the related
published rules and regulations thereunder or are not in conformity with
generally accepted accounting principles applied on a basis substantially
consistent with the basis for the audited consolidated statements of
income, consolidated balance sheets and consolidated statements of cash
flows included or incorporated by reference in the Company's Annual Report
on Form 10-K for the most recent fiscal year;
(B) any other unaudited income statement data and balance sheet
items included in the Prospectus do not agree with the corresponding items
in the unaudited consolidated financial statements from which such data and
items were derived, and any such unaudited data and items were not
determined on a basis substantially consistent with the basis for the
corresponding amounts in the audited consolidated financial statements
included or incorporated by reference in the Company's Annual Report on
Form 10-K for the most recent fiscal year;
(C) the unaudited financial statements which were not included in
the Final Prospectus but from which were derived the unaudited condensed
financial statements referred to in clause (A) and
<PAGE>
43
any unaudited income statement data and balance sheet items included in the
Final Prospectus and referred to in clause (B) were not determined on a
basis substantially consistent with the basis for the audited financial
statements included or incorporated by reference in the Company's Annual
Report on Form 10-K for the most recent fiscal year;
(D) any unaudited pro forma consolidated condensed financial
statements included or incorporated by reference in the Final Prospectus do
not comply as to form in all material respects with the applicable
accounting requirements of the Act and the published rules and regulations
thereunder or the pro forma adjustments have not been properly applied to
the historical amounts in the compilation of those statements;
(E) as of a specified date not more than five days prior to the date
of such letter, there have been any changes in the consolidated capital
stock or any increase in the consolidated long-term debt of the Company and
its subsidiaries, or any decreases in consolidated net current assets or
net assets or other items specified by the Purchaser, or any increases in
any items specified by the Purchaser, in each case as compared with amounts
shown in the latest balance sheet included or incorporated by reference in
the Final Prospectus, except in each case for changes, increases or
decreases which the Final Prospectus discloses have occurred or may occur
or which are described in such letter; and
(F) for the period from the date of the latest financial statements
included or incorporated by reference in the Final Prospectus to the
specified date referred to in clause (E), there were any decreases in
consolidated net revenues or operating profit or the total or per share
amounts of consolidated net income or other items specified by the
Purchaser, or any increases in any items specified by the Purchaser, in
each case as compared with the comparable period of the preceding year and
with any other period of corresponding length specified by the Purchaser,
except in each case for increases or decreases
<PAGE>
44
which the Final Prospectus discloses have occurred or may occur or which
are described in such letter; and
(G) the financial and other information included in the Final
Prospectus under the headings "Selected Financial Data", "Supplementary
Financial Information", "Executive Compensation" and "Ratio of Earnings to
Fixed Charges" or incorporated by reference into the Registration Statement
is not in conformity with the disclosure requirements of Regulation S-K.
(v) in addition to the examination referred to in their reports
included or incorporated by reference in the Final Prospectus and the limited
procedure, inspection of minute books, inquiries and other procedures referred
to in paragraphs (iii) and (iv) above, they have carried out certain specified
procedures, not constituting an examination in accordance with generally
accepted auditing standards, with respect to certain amounts, percentages and
financial information specified by the Purchaser which are derived from the
general accounting records of the Company and its subsidiaries which appear in
the Final Prospectus and have compared certain of such amounts, percentages and
financial information with the accounting records of the Company and its
subsidiaries and have found them to be in agreement.
<PAGE>
Exhibit 23.2.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
-----------------------------------------
As independent public accountants, we hereby consent to the incorporation by
reference in this Registration Statement of our report dated February 27, 1995,
included in CYTOGEN Corporation's Form 10-K for the year ended December 31, 1994
and to all references to our firm included in this Registration Statement.
ARTHUR ANDERSEN LLP
Philadelphia, Pennsylvania
March 21, 1995
<PAGE>
Exhibit 23.2.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
-----------------------------------------
As independent public accountants, we hereby consent to the incorporation by
reference in this Registration Statement of our report dated February 9, 1994
(except with respect to the matter discussed in Note 5, as to which the date is
November 15, 1994) on the financial statements of CytoRad Incorporated, included
in CYTOGEN Corporation's Form 8-K as filed with the Commission on February 24,
1995 and to all references to our firm included in this Registration Statement.
ARTHUR ANDERSEN LLP
Philadelphia, Pennsylvania
March 21, 1995
