<PAGE>
As filed with the Securities and Exchange Commission on September 13, 1995
Registration No. 33--
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM S-4
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
-------------------
CYTOGEN CORPORATION
(Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
Delaware 2835 22-2322400
<S> <C> <C>
(State or other jurisdiction of (Primary Standard Industrial (IRS Employer
incorporation or organization) Classification Code Number) Identification Number)
</TABLE>
600 College Road East, CN 5308, Princeton, New Jersey 08540-5308, Telephone:
(609) 987-8200
(Address, including ZIP Code, and telephone number, including area code, of
registrant's principal executive offices)
-----------------
Mr. T. Jerome Madison
Vice President, Chief Financial Officer and Secretary
Cytogen Corporation
600 College Road East, CN 5308, Princeton, New Jersey 08540-5308, Telephone:
(609) 987-8200
(Name, address, including ZIP Code, and telephone number, including area code,
of agent for service)
-----------------
Copies to:
James J. Marino, Esq. Steven D. Singer, Esq.
Dechert Price & Rhoads Hale and Dorr
997 Lenox Drive, Suite 210 60 State Street
Lawrenceville, New Jersey 08648 Boston, Massachusetts 02109
(609) 520-3200 (617) 526-6000
--------------------
Approximate date of commencement of proposed sale of the securities to the
public: As soon as practicable after the effective date of this Registration
Statement and all other conditions under the Agreement and Plan of Merger, as
amended (described in the Joint Proxy Statement/Prospectus included herein) are
satisfied or waived.
If the securities being registered on this Form are being offered in connection
with the formation of a holding company and there is compliance with General
Instruction G, check the following box. [_]
----------------------
CALCULATION OF REGISTRATION FEE
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<CAPTION>
=================================================================================================================================
Amount Proposed Proposed Maximum
Title of Each Class of to be Maximum Offering Aggregate Offering Amount of
Securities to be Registered Registered (1) Price Per Share (2) Price (2) Registration Fee(3)
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.01 par value per share 5,324,487 shares $3.125 $24,568,546.87 $8,471.91
---------------------------------------------------------------------------------------------------------------------------------
Common Stock, $.01 par value per share 6,637,493 shares $3.89 $25,819,847.77 $8,903.40
=================================================================================================================================
</TABLE>
(1) Represents (a) the maximum number of shares (the "Merger Shares") of common
stock, par value $.01 per share (the"Cytogen Common Stock"), of Cytogen
Corporation ("Cytogen") issuable in connection with the merger of Cellcor,
Inc. ("Cellcor") with and into a wholly-owned subsidiary of Cytogen (the
"Merger") and (b) the maximum number of shares (the "Offering Shares") of
Cytogen Common Stock issuable in connection with an offering by Cytogen to
holders of common stock, par value $.01 per share, of Cellcor ("Cellcor
Common Stock") of rights to subscribe for and purchase shares of Cytogen
Common Stock (the "Subscription Offering").
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) and (f)(1) under the Securities Act of 1933, as
amended (the "Securities Act"). With respect to the Merger Shares, the
Proposed Maximum Offering Price Per Share is $3.125, the average of the bid
and asked prices of Cellcor Common Stock on the OTC Bulletin Board on
September 8, 1995. The Proposed Maximum Aggregate Offering Price for the
Merger Shares is the sum of (a) the product of (i) $3.125 (the average of
the bid and asked prices of Cellcor Common Stock on the OTC Bulletin Board
on September 8, 1995) and (ii) 5,936,935 (the number of shares of Cellcor
Common Stock outstanding on August 17, 1995) and (b) the product of (i)
$3.125 (the average of the bid and asked prices of Cellcor Common Stock on
the OTC Bulletin Board on September 8, 1995) and (ii) 1,925,000 (the number
of shares of Cellcor Common Stock into which the preferred stock, par value
$.01 per share, of Cellcor outstanding on August 17, 1995 is convertible).
With respect to the Offering Shares, the proposed Maximum Offering Price
per share is $3.89, the purchase price for each Offering Share in the
Subscription Offering. The Proposed Maximum Aggregate Offering Price for
the Offering Shares is the product of (i) $3.89 and (ii) the product of (x)
1.118 and (y) 5,936,935 (the number of shares of Cellcor Common Stock
outstanding on August 17, 1995) rounded down to the nearest whole number.
(3) A fee of $8,539 was paid on July 17, 1995 pursuant to Rules 14a-6(i) and 0-
11 under the Securities Exchange Act of 1934, as amended, in respect of the
Merger and Subscription Offering upon the filing of preliminary proxy
materials relating thereto. Pursuant to Rule 457(b) under the Securities
Act, the amount of such previously paid fee has been credited against the
registration fee payable in connection with this filing. Accordingly, an
additional filing fee of $8,837 is required to be paid with this
Registration Statement.
---------------
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 Commission, acting pursuant to said Section 8(a),
may determine.
===============================================================================
<PAGE>
CYTOGEN CORPORATION
Cross-Reference Sheet Pursuant to Rule 404(a) of the Securities Act of
1933, as amended, and Item 501(b) of Regulation S-K, showing the location or
heading in the Joint Proxy Statement/Prospectus of the information required by
Part I of Form S-4.
<TABLE>
<CAPTION>
Location or Heading in
S-4 Item Number and Caption Joint Proxy Statement/Prospectus
--------------------------- --------------------------------
<S> <C>
A. Information About the Transaction
1. Forepart of Registration Statement and
Outside Front Cover Page of Prospectus................ Facing Page; Cross-Reference Sheet; Outside Front
Cover Page of Joint Proxy Statement/Prospectus
2. Inside Front and Outside Back Cover Pages
of Prospectus......................................... Inside Front Cover Page of Joint Proxy
Statement/Prospectus; Available Information;
Incorporation of Certain Documents by Reference;
Table of Contents
3. Risk Factors, Ratio of Earnings to Fixed
Charges and Other Information......................... Summary; Risk Factors; Cytogen Selected
Consolidated Historical and Pro Forma Financial
Data; CytoRad Selected Historical Financial Data;
Cellcor Selected Historical Financial Data;
Comparative Per Share Data; Comparative Market
Prices
4. Terms of the Transaction.............................. The Merger Agreement; The Merger; Comparison
of Stockholders' Rights; Accounting Treatment of
the Merger; Certain Federal Income Tax
Consequences
5. Pro Forma Financial Information....................... Financial Statements -- Pro Forma Condensed
Combined Financial Statements (Unaudited)
6. Material Contacts with the Company Being
Acquired.............................................. The Merger Agreement; The Voting Agreement;
The Consulting and Management Agreement
7. Additional Information Required for
Reoffering by Persons and Parties Deemed to
be Underwriters....................................... *
8. Interests of Named Experts and Counsel................ *
9. Disclosure of Commission Position on
Indemnification for Securities Act Liabilities *
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Location or Heading in
S-4 Item Number and Caption Joint Proxy Statement/prospectus
--------------------------- --------------------------------
<S> <C>
B. Information About the Registrant
10. Information with Respect to S-3 Registrants.......... Information Concerning Cytogen; CytoRad
Incorporated Financial Statements; Cytogen
Corporation and Subsidiaries; Pro Forma
Condensed Combined Financial Statements
(Unaudited)
11. Incorporation of Certain Information by
Reference............................................ Incorporation of Certain Documents by Reference
12. Information with Respect to S-2 or S-3
Registrants.......................................... *
13. Incorporation of Certain Information by
Reference............................................ *
14. Information with Respect to Registrants
Other then S-3 or S-2 Registrants.................... *
C. Information About the Company Being Acquired *
15. Information with Respect to S-3 Companies
16. Information with Respect to S-2 or S-3
Companies............................................ Annexes E and F; Information Concerning Cellcor;
Incorporation of Certain Documents by Reference;
Comparative Market Prices; Cellcor Selected
Historical Financial Data
17. Information with Respect to Companies
Other than S-3 or S-2 Companies...................... *
D. Voting and Management Information
18. Information if Proxies, Consents or
Authorizations are to be Solicited................... Outside Front Cover Page of Joint Proxy
Statement/Prospectus; Summary; The Special
Meetings; Appraisal Rights; The Merger--Interest
of Certain Persons in the Transaction;
Incorporation of Certain Documents by Reference
19. Information if Proxies, Consents or
Authorizations are not to be Solicited or in an
Exchange Offer.......................................
</TABLE>
---------------
* Omitted because inapplicable or the answer is negative.
<PAGE>
CYTOGEN CORPORATION
600 College Road East
CN 5308
Princeton, New Jersey 08540-5308
--------------------
(609) 987-8200
September 14, 1995
Dear Stockholder:
You are cordially invited to attend a Special Meeting of the Stockholders of
CYTOGEN CORPORATION ("Cytogen") to be held at The Holiday Inn Princeton, 4355
Route One at Ridge Road, Princeton, New Jersey 08540, at 2:00 p.m. (local time)
on Monday, October 16, 1995.
At the Special Meeting, you will be asked to consider and vote upon a
proposal to approve the issuance of up to (i) an aggregate of 5,324,487 shares
of Cytogen common stock, par value $.01 per share ("Cytogen Common Stock"), in
order to effect the proposed acquisition of CELLCOR, INC. ("Cellcor") by Cytogen
(the "Merger") pursuant to an Agreement and Plan of Merger dated June 15, 1995,
as amended, among Cytogen, Cellcor Acquisition Corp., a wholly-owned subsidiary
of Cytogen (the "Merger Subsidiary"), and Cellcor (the "Merger Agreement") and
(ii) an aggregate of 6,637,493 shares of Cytogen Common Stock in connection with
an offering by Cytogen to holders of Cellcor common stock (the "Subscription
Offering").
The Merger Agreement provides that, upon the satisfaction or waiver of
certain conditions to the closing set forth therein, Cellcor will be merged with
and into the Merger Subsidiary and the Merger Subsidiary will change its name to
Cellcor, Inc. At that time, each outstanding share of Cellcor common stock, par
value $.01 per share (the "Cellcor Common Stock"), will be converted into the
right to receive .60 shares (the "Common Exchange Ratio") of Cytogen Common
Stock and each outstanding share of Cellcor Convertible Preferred Stock, par
value $.01 per share, will be converted into the right to receive 218.94 shares
(the "Preferred Exchange Ratio") of Cytogen Common Stock. In the Subscription
Offering, holders of Cellcor Common Stock may purchase 1.118 shares of Cytogen
Common Stock for each share of Cellcor Common Stock held by such holder (rounded
down to the nearest whole number) at a price of $3.89 per share of Cytogen
Common Stock. The enclosed materials provide you with a detailed description of
the Merger and the Subscription Offering. Please give these materials your
careful attention and consideration.
The Cytogen Board of Directors has unanimously concluded that each of the
Merger and the Subscription Offering is fair and in the best interests of
Cytogen and its stockholders and recommends that you vote FOR the proposal to
issue Cytogen Common Stock in connection with the Merger and the Subscription
Offering. In reaching its conclusion, the Board of Directors considered a
number of factors, including the written opinion, dated June 15, 1995 (as
reconfirmed by delivery of a written opinion dated September 7, 1995), of its
financial advisor, Smith Barney Inc., to the effect that, as of the date of such
opinion and based upon and subject to certain matters stated therein, the Common
Exchange Ratio, the Preferred Exchange Ratio and the consideration to be
received by Cytogen in the Subscription Offering, taken as a whole, were fair to
Cytogen from a financial point of view. The written opinion of Smith Barney Inc.
dated September 7, 1995 is reproduced in full as Annex C to the accompanying
Joint Proxy Statement/Prospectus. You are urged to read carefully the opinion
in its entirety.
Once you have fully reviewed the enclosed Joint Proxy Statement/Prospectus,
please complete, sign and date the accompanying proxy card and mail your proxy
card back in the enclosed prepaid envelope whether or not you plan on attending
the Special Meeting. If you attend the Special Meeting, you may vote in person
whether or not you have previously returned your proxy. Your prompt cooperation
is greatly appreciated.
Sincerely,
William C. Mills III
Chairman of the Board
<PAGE>
CYTOGEN CORPORATION
-------------------
Notice of Special Meeting of Stockholders
To Be Held on October 16, 1995
-------------------
Princeton, New Jersey
September 14, 1995
To the Stockholders of Cytogen Corporation:
NOTICE IS HEREBY GIVEN that a Special Meeting of Stockholders of Cytogen
Corporation, a Delaware corporation ("Cytogen"), will be held at The Holiday Inn
Princeton, 4355 Route One at Ridge Road, Princeton, New Jersey 08540, on Monday,
October 16, 1995, at 2:00 p.m. (local time) for the following purposes:
1. To consider and vote upon a proposal to approve the issuance of up to (i)
an aggregate of 5,324,487 shares of Cytogen common stock, par value $.01 per
share ("Cytogen Common Stock"), in order to effect the proposed acquisition of
Cellcor, Inc. ("Cellcor") by Cytogen pursuant to an Agreement and Plan of Merger
dated June 15, 1995, as amended, among Cytogen, Cellcor Acquisition Corp., a
wholly-owned subsidiary of Cytogen (the "Merger Subsidiary"), and Cellcor (the
"Merger Agreement") and (ii) an aggregate of 6,637,493 shares of Cytogen Common
Stock in connection with an offering by Cytogen to holders of Cellcor's common
stock of rights to subscribe for and purchase shares of Cytogen Common Stock
(the "Subscription Offering"). Pursuant to the Merger Agreement, Cellcor will
be merged with and into the Merger Subsidiary, and each then outstanding share
of Cellcor common stock will be converted into the right to receive .60 shares
of Cytogen Common Stock and each outstanding share of Cellcor Convertible
Preferred Stock will be converted into the right to receive 218.94 shares of
Cytogen Common Stock. In the Subscription Offering, holders of Cellcor common
stock may purchase 1.118 shares of Cytogen Common Stock for each share of
Cellcor common stock held by such holder (rounded down to the nearest whole
number) at a price of $3.89 per share of Cytogen Common Stock.
2. To consider and transact such other business as may properly come before
the Special Meeting.
Details of the Merger, Subscription Offering and other important matters are
set forth in the accompanying Joint Proxy Statement/Prospectus, which you are
urged to read carefully.
The Board of Directors has fixed the close of business on August 17, 1995 as
the record date for the determination of those stockholders entitled to notice
of and to vote at the Special Meeting or any adjournment or postponement
thereof. Accordingly, only stockholders of record at the close of business on
that date will be entitled to notice of and to vote at the Special Meeting and
any adjournment or postponement thereof. A majority of the outstanding shares
of Cytogen Common Stock entitled to vote must be represented at the Special
Meeting, in person or by proxy, to constitute a quorum for the transaction of
business.
By Order of the Board of Directors,
T. Jerome Madison
Secretary
--------------------------------------------------------------------------------
PLEASE DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD PROMPTLY IN THE ENVELOPE
PROVIDED, WHETHER OR NOT YOU INTEND TO BE PRESENT AT THE SPECIAL MEETING.
EXECUTION OF A PROXY CARD WILL NOT AFFECT YOUR RIGHT TO VOTE IN PERSON IF YOU
ARE PRESENT AT THE SPECIAL MEETING.
--------------------------------------------------------------------------------
<PAGE>
CELLCOR, INC.
200 Wells Avenue
Newton, MA 02159
-------------------
(617) 332-2500
September 14, 1995
Dear Stockholder:
You are cordially invited to attend a Special Meeting of the Stockholders of
CELLCOR, INC. ("Cellcor") to be held at the offices of Hale and Dorr, 60 State
Street, Boston, Massachusetts 02109, at 2:00 p.m. (local time) on Monday,
October 16, 1995. Only holders of record of Cellcor common stock, par value
$.01 per share (the "Cellcor Common Stock"), and Cellcor Convertible Preferred
Stock, par value $.01 per share (the "Cellcor Preferred Stock"), at the close of
business on August 17, 1995 (the "Record Date") are entitled to notice of and to
vote at the Special Meeting.
At the Special Meeting, you will be asked to consider and vote upon a
proposal to approve and adopt (i) an Agreement and Plan of Merger dated June 15,
1995, as amended, among Cytogen Corporation ("Cytogen"), Cellcor Acquisition
Corp., a wholly-owned subsidiary of Cytogen (the "Merger Subsidiary"), and
Cellcor (the "Merger Agreement") and (ii) the Merger (defined below) (together,
the "Merger Proposal"). The Merger Agreement provides that, upon the
satisfaction or waiver of certain conditions to the closing set forth therein,
(a) Cellcor will be merged with and into the Merger Subsidiary (the "Merger")
and the Merger Subsidiary will change its name to Cellcor, Inc. and (b) each
then outstanding share of Cellcor Common Stock will be converted into the right
to receive .60 shares of Cytogen common stock, par value $.01 per share
("Cytogen Common Stock"), and each then outstanding share of Cellcor Preferred
Stock will be converted into the right to receive 218.94 shares of Cytogen
Common Stock.
Holders of Cellcor Common Stock are also being asked to approve Cellcor's
1995 Stock Incentive Plan (the "1995 Plan"), which provides for the grant of
stock options and/or stock awards totalling 1,500,000 shares of Cellcor Common
Stock.
The affirmative vote of the holders of a majority of the outstanding shares
of Cellcor Common Stock and the holders of 66-2/3% of the outstanding shares of
Cellcor Preferred Stock, voting separately as two classes, is necessary to
approve and adopt the Merger Proposal. The affirmative vote of the holders of a
majority of the outstanding shares of Cellcor Common Stock present or
represented at the Special Meeting is required to approve the 1995 Plan. As of
the Record Date, Hillman Medical Ventures partnerships and certain of their
affiliates (collectively, the "Principal Stockholders"), together with certain
of the directors and executive officers of Cellcor, owned or had voting control
over an aggregate of 3,051,710 shares of Cellcor Common Stock and 5,250 shares
of Cellcor Preferred Stock, representing approximately 51.4% of the votes
entitled to be cast by the common stockholders and 100% of the votes entitled to
be cast by the preferred stockholders at the Special Meeting. Consequently, the
affirmative vote of the Principal Stockholders and said directors and executive
officers will be sufficient to approve and adopt the Merger Proposal. The
Principal Stockholders have agreed to vote their shares in favor of the adoption
and approval of the Merger Proposal. Also, each of said directors and executive
officers has advised Cellcor that he intends to vote or direct the vote of all
the outstanding shares of Cellcor Common Stock and Cellcor Preferred Stock over
which he has voting control in favor of approval and adoption of the Merger
Proposal.
In connection with the Merger, holders of record of Cellcor Common Stock at
the close of business on August 17, 1995 (the "Subscription Record Date") may
purchase up to an aggregate of 6,637,493 shares of Cytogen Common Stock (the
"Subscription Offering"). Each holder of Cellcor Common Stock will be entitled
to purchase 1.118 shares of Cytogen Common Stock for each share of Cellcor
Common Stock held by such holder at the close of business on the Subscription
Record Date (rounded down to the nearest whole number) at a price of $3.89 per
share of Cytogen Common Stock. On the Subscription Record Date, the last sale
price of Cytogen Common Stock on the Nasdaq National Market was $6.00 per share.
The enclosed materials provide you with a detailed description of the Merger,
the Subscription Offering and the 1995 Plan. Please give these materials your
careful attention and consideration.
<PAGE>
The Cellcor Board of Directors, together with a special committee of
independent directors (the "Special Committee"), has reviewed and considered the
terms and conditions of the Merger. In addition, the Cellcor Board of Directors
and the Special Committee have received the written opinion of CS First Boston
Corporation ("CS First Boston"), dated June 15, 1995, to the effect that, based
upon and subject to certain matters stated therein, as of the date of the
opinion, the consideration to be received by the holders of Cellcor Common Stock
pursuant to the Merger Agreement is fair to such stockholders from a financial
point of view. The full text of CS First Boston's written opinion, which sets
forth the assumptions made, matters considered and limitations on the review
undertaken by CS First Boston in rendering such opinion, is reproduced in full
as Annex D to the accompanying Joint Proxy Statement/Prospectus. The holders of
Cellcor Common Stock are urged to read carefully the opinion of CS First Boston
in its entirety.
The Cellcor Board of Directors, based upon the unanimous recommendation of
the Special Committee, has unanimously concluded that the Merger is fair and in
the best interests of Cellcor and its stockholders and recommends that you vote
FOR the Merger Proposal. The Cellcor Board of Directors also recommends that
you vote FOR the approval of the 1995 Plan.
Once you have fully reviewed the enclosed Joint Proxy Statement/Prospectus,
please complete, sign and date the accompanying proxy card and mail your proxy
card back in the enclosed prepaid envelope whether or not you plan on attending
the Special Meeting. If you attend the Special Meeting, you may vote in person
whether or not you have previously returned your proxy. If you hold shares of
Cellcor Common Stock and wish to purchase shares of Cytogen Common Stock in the
Subscription Offering, please complete, sign and date the enclosed Subscription
Offering Purchase Form and return it, together with the required payment, to
Mellon Securities Trust Company, the Subscription Offering Agent. Your prompt
cooperation is greatly appreciated.
Sincerely,
Gary W. Cashon, Ph.D.
Chairman of the Board
<PAGE>
CELLCOR, INC.
-------------------
Notice of Special Meeting of Stockholders
To Be Held on October 16, 1995
-------------------
Newton, Massachusetts
September 14, 1995
To the Stockholders of Cellcor, Inc.:
NOTICE IS HEREBY GIVEN that a Special Meeting of Stockholders of Cellcor,
Inc., a Delaware corporation ("Cellcor"), will be held at the offices of Hale
and Dorr, 60 State Street, Boston, Massachusetts 02109, on Monday, October 16,
1995, at 2:00 p.m. (local time) for the following purposes:
1. To consider and vote upon a proposal to approve and adopt (i) an Agreement
and Plan of Merger dated June 15, 1995, as amended, among Cytogen Corporation
("Cytogen"), Cellcor Acquisition Corp., a wholly-owned subsidiary of Cytogen
(the "Merger Subsidiary"), and Cellcor (the "Merger Agreement") and (ii) the
Merger (defined below) (together, the "Merger Proposal"). The Merger Agreement
provides that (a) Cellcor will be merged with and into the Merger Subsidiary and
the Merger Subsidiary will change its name to Cellcor, Inc. (the "Merger"), and
(b) each then outstanding share of Cellcor common stock, par value $.01 per
share ("Cellcor Common Stock") (other than shares held by Cellcor as treasury
stock or by Cytogen or Merger Subsidiary), will be converted into the right to
receive .60 shares of Cytogen common stock, par value $.01 per share ("Cytogen
Common Stock"), and each then outstanding share of Cellcor Convertible Preferred
Stock, par value $.01 per share ("Cellcor Preferred Stock") (other than shares
held by Cellcor as treasury stock or by Cytogen or Merger Subsidiary), will be
converted into the right to receive 218.94 shares of Cytogen Common Stock.
2. To consider and vote upon a proposal to approve Cellcor's 1995 Stock
Incentive Plan (the "1995 Plan").
3. To consider and transact such other business as may properly come before
the Special Meeting.
Details of the Merger, the 1995 Plan and other important matters are set
forth in the accompanying Joint Proxy Statement/Prospectus, which you are urged
to read carefully.
The Board of Directors has fixed the close of business on August 17, 1995 as
the record date for the determination of those stockholders entitled to notice
of and to vote at the Special Meeting or any adjournment or postponement
thereof. Accordingly, only stockholders of record at the close of business on
that date will be entitled to notice of and to vote at the Special Meeting and
any adjournment or postponement thereof.
The presence, in person or by proxy, of the holders of a majority of votes
entitled to be cast at the Special Meeting is necessary to constitute a quorum.
The affirmative vote of the holders of a majority of the outstanding shares of
Cellcor Common Stock and the holders of 66-2/3% of the outstanding shares of
Cellcor Preferred Stock, voting separately as two classes, is necessary to
approve and adopt the Merger Proposal. The affirmative vote of the holders of a
majority of the outstanding shares of Cellcor Common Stock present or
represented at the Special Meeting is required to approve the 1995 Plan. As of
the record date, Hillman Medical Ventures partnerships and certain of their
affiliates (collectively, the "Principal Stockholders"), together with certain
of the directors and executive officers of Cellcor, owned or had voting control
over an aggregate of 3,051,710 shares of Cellcor Common Stock and 5,250 shares
of Cellcor Preferred Stock, representing approximately 51.4% of the votes
entitled to be cast by the common stockholders and 100% of the votes entitled to
be cast by the preferred stockholders at the Special Meeting. Consequently, the
affirmative vote of the Principal Stockholders and said directors and executive
officers will be sufficient to approve and adopt the Merger Proposal. The
Principal Stockholders have agreed to vote their shares in favor of the adoption
and approval of the Merger Proposal. Also, each of said directors and executive
officers has advised Cellcor that he intends to vote or direct the vote of all
the outstanding shares of Cellcor Common Stock and Cellcor Preferred Stock over
which he has voting control in favor of approval and adoption of the Merger
Proposal.
By Order of the Board of Directors,
Gary W. Cashon, Ph.D.
--------------------------------------------------------------------------------
PLEASE DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD PROMPTLY IN THE
ENVELOPE PROVIDED, WHETHER OR NOT YOU INTEND TO BE PRESENT AT THE SPECIAL
MEETING. EXECUTION OF A PROXY CARD WILL NOT AFFECT YOUR RIGHT TO VOTE IN PERSON
IF YOU ARE PRESENT AT THE SPECIAL MEETING.
--------------------------------------------------------------------------------
<PAGE>
CYTOGEN CORPORATION
600 College Road East
CN 5308
Princeton, New Jersey 08540-5308
------------------------
(609) 987-8200
September 14, 1995
Dear Cellcor Common Stockholder:
We are pleased to inform you that Cytogen Corporation ("Cytogen") has
granted to holders of Cellcor, Inc. ("Cellcor") common stock, par value $.01 per
share ("Cellcor Common Stock"), the non-transferable right to purchase up to an
aggregate of 6,637,493 shares of Cytogen Common Stock, par value $.01 per share
("Cytogen Common Stock"), at a price of $3.89 per share of Cytogen Common Stock
(the "Subscription Offering"). All holders of Cellcor Common Stock at the close
of business on August 17, 1995 (the "Subscription Record Date") will have the
right to purchase Cytogen Common Stock in the Subscription Offering. If your
shares are not held in your own name, but in the name of a broker, bank, trust
company or other entity as record or nominee holder, you should contact your
record or nominee holder as soon as possible to communicate your desire to
purchase shares in the Subscription Offering.
Holders of Cellcor Common Stock on the Subscription Record Date will be
entitled to purchase 1.118 shares of Cytogen Common Stock for each share of
Cellcor Common Stock held by such holder at the close of business on the
Subscription Record Date (rounded down to the nearest whole number) for $3.89
per share of Cytogen Common Stock. Shares of Cytogen Common Stock may be
purchased in the Subscription Offering at any time prior to 5:00 p.m., New York
City time, on October 13, 1995 (the "Expiration Date"). No shares of Cytogen
Common Stock may be purchased in the Subscription Offering after the Expiration
Date. The issuance of the shares of Cytogen Common Stock pursuant to the
Subscription Offering is conditioned upon consummation of the transactions
contemplated by the Agreement and Plan of Merger dated June 15, 1995, as
amended, among Cytogen, Cellcor Acquisition Corp., a wholly-owned subsidiary of
Cytogen, and Cellcor (the "Merger Agreement"), including approval by the
stockholders of Cellcor and Cytogen and the satisfaction or waiver of the other
closing conditions set forth in the Merger Agreement.
The right to purchase Cytogen Common Stock pursuant to the Subscription
Offering is not transferable. No certificates representing the right to
purchase Cytogen Common Stock pursuant to the Subscription Offering will be
issued. To determine the number of shares of Cytogen Common Stock that may be
purchased by a holder of record of Cellcor Common Stock, multiply the number of
shares of Cellcor Common Stock held by such holder at the close of business on
the Subscription Record Date by 1.118 and round down to the nearest whole
number. For example, a holder of record of 100 shares of Cellcor Common Stock
would have the right to purchase 111 shares of Cytogen Common Stock at a price
of $3.89 per share, or $431.79 in the aggregate. In this example, the holder of
Cellcor Common Stock could purchase as few as one share of Cytogen Common Stock
or as many as 111 shares of Cytogen Common Stock.
The last reported sale price of Cytogen Common Stock on September 12, 1995,
the last full trading day prior to the printing of this Joint Proxy
Statement/Prospectus was $5.375 per share. The Subscription Offering price of
$3.89 per share represents a 27.6% discount from the last reported sale price of
Cytogen Common Stock on that date.
No delivery of Cytogen Common Stock issuable pursuant to the Subscription
Offering will be made prior to the consummation of the transactions contemplated
by the Merger Agreement.
TO PURCHASE SHARES IN THE SUBSCRIPTION OFFERING:
Complete the Subscription Offering Purchase Form: To purchase shares of
Cytogen Common Stock in the Subscription Offering, the record or nominee holder
must complete and sign the enclosed Subscription Offering Purchase Form.
Method of Payment: Payment of $3.89 per share of Cytogen Common Stock must
be made in United States Dollars by check, bank draft or money order, payable to
the order of Mellon Securities Trust Company as Subscription
<PAGE>
Offering Agent for Cytogen (the "Subscription Offering Agent"), or by wire
transfer to the Subscription Offering Agent pursuant to the instructions which
accompany the Subscription Offering Purchase Form. Payments for the purchase of
Cytogen Common Stock in the Subscription Offering will be held in an escrow
account maintained by the Subscription Offering Agent until after the date of
the special meetings of the stockholders of Cytogen and Cellcor.
Delivery: The completed Subscription Offering Purchase Form, with payment,
must be delivered to the Subscription Offering Agent on or before October 13,
1995, the Expiration Date. The Subscription Offering Agent has three addresses
to which delivery may be made, by mail or by hand, as follows:
<TABLE>
<S> <C> <C>
By Mail: By Overnight Delivery: By Hand:
Mellon Securities Trust Mellon Securities Trust Mellon Securities
Company Company Trust Company
P.O. Box 837 c/o Reorganization 120 Broadway
Midtown Station Department 13th Floor
New York, New York 10018 85 Challenger Road New York, New York
Overpeck Centre 10271
Ridgefield Park, New
Jersey 07660
By Facsimile Transmission
(in connection with Wire Transfer Only)
(201) 296-4062
Confirm by telephone to:
(800) 684-8824
</TABLE>
IF DELIVERY IS MADE BY MAIL, THE SENDER BEARS THE RISK OF LATE DELIVERY.
PAYMENT MAY NOT BE MADE IN CASH AND MAY ONLY BE MADE ON BUSINESS DAYS.
COMPLETED SUBSCRIPTION OFFERING PURCHASE FORMS AND PAYMENT FOR SHARES SHOULD NOT
BE SENT TO CYTOGEN OR CELLCOR.
If Your Shares are Held by Your Broker, etc.: If your shares of Cellcor
Common Stock are not held in your own name but in the name of a broker, bank,
trust company or other entity as record or nominee holder, you will need to
contact the record or nominee holder as soon as possible to communicate your
desire to purchase shares of Cytogen Common Stock in the Subscription Offering.
Purchase is Irrevocable: Once a record holder of Cellcor Common Stock has
delivered or mailed to the Subscription Offering Agent a completed Subscription
Offering Purchase Form, together with payment, the purchase of the shares of
Cytogen Common Stock represented thereby is not revocable for any reason.
However, if the transactions contemplated by the Merger Agreement are not
consummated, the purchase of shares of Cytogen Common Stock indicated on the
Subscription Offering Purchase Form will not be made and the Subscription
Offering Agent will return to the record holder an amount equal to the payment
that accompanied the Subscription Offering Purchase Form without interest or
deduction.
Use of Proceeds: The net proceeds to Cytogen from the sale of Cytogen
Common Stock pursuant to the Subscription Offering are estimated to be
approximately $10,500,000 if the minimum number of shares of Cytogen Common
Stock are purchased in the Subscription Offering. Hillman Medical Ventures and
certain of its affiliates have agreed to purchase 3,084,833 shares (subject to
adjustment) of Cytogen Common Stock in the Subscription Offering for an
aggregate purchase price of $12,000,000. Cytogen anticipates using the net
proceeds for the repayment of certain debt and general corporate purposes,
including product commercialization, late-stage product development activities
and research and development projects within Cytogen and Cellcor, and selling,
general and administrative expenses.
The Subscription Offering is described in greater detail under the heading
"SUBSCRIPTION OFFERING" in the enclosed Joint Proxy Statement/Prospectus. If
you have any questions relating to the Subscription Offering, please telephone
the Subscription Offering Agent at (800) 684-8824.
Sincerely,
William C. Mills III
Chairman of the Board
<PAGE>
CYTOGEN CORPORATION CELLCOR, INC.
600 College Road East--CN 5308 200 Wells Avenue
Princeton, New Jersey 08540-5308 Newton, Massachusetts 02159
-------------------
JOINT PROXY STATEMENT/PROSPECTUS
-------------------
SPECIAL MEETINGS OF STOCKHOLDERS OF
CYTOGEN CORPORATION AND CELLCOR, INC.
TO BE HELD ON OCTOBER 16, 1995
-------------------
CYTOGEN CORPORATION
PROSPECTUS
Common Stock, par value $.01 per share
-------------------
This Joint Proxy Statement/Prospectus relates to the proposed acquisition of
Cellcor, Inc., a Delaware corporation ("Cellcor"), by Cytogen Corporation, a
Delaware corporation ("Cytogen"), pursuant to an Agreement and Plan of Merger
dated June 15, 1995, as amended by the First Amendment to Agreement and Plan of
Merger dated as of September 7, 1995, among Cytogen, Cellcor Acquisition Corp.,
a Delaware corporation and wholly-owned subsidiary of Cytogen (the "Merger
Subsidiary"), and Cellcor (the "Merger Agreement"). It is being furnished to
(i) stockholders of Cytogen in connection with the solicitation of proxies by
the Cytogen Board of Directors for the Special Meeting of Stockholders to be
held on October 16, 1995 and any adjournment or postponement thereof (the
"Cytogen Special Meeting") and (ii) stockholders of Cellcor in connection with
the solicitation of proxies by the Cellcor Board of Directors for the Special
Meeting of Stockholders to be held on October 16, 1995 and any adjournment or
postponement thereof (the "Cellcor Special Meeting," and together with the
Cytogen Special Meeting, the "Special Meetings").
The Merger Agreement provides that, upon the satisfaction or waiver of certain
conditions to closing set forth therein, Cellcor will be merged with and into
the Merger Subsidiary and the Merger Subsidiary will change its name to Cellcor,
Inc. (the "Merger"). At that time, each outstanding share of Cellcor common
stock, par value $.01 per share ("Cellcor Common Stock") (other than shares held
by Cellcor as treasury stock or by Cytogen or the Merger Subsidiary), will be
converted into the right to receive .60 shares of Cytogen common stock, par
value $.01 per share ("Cytogen Common Stock"), and each outstanding share of
Cellcor Convertible Preferred Stock, par value $.01 per share ("Cellcor
Preferred Stock") (other than shares held by Cellcor as treasury stock or by
Cytogen or the Merger Subsidiary), will be converted into the right to receive
218.94 shares of Cytogen Common Stock. Pursuant to the Merger Agreement,
holders of record of Cellcor Common Stock at the close of business on August 17,
1995 (the "Subscription Record Date") may purchase up to an aggregate of
6,637,493 shares of Cytogen Common Stock (the "Subscription Offering"). In the
Subscription Offering, each holder of Cellcor Common Stock will be entitled to
purchase 1.118 shares of Cytogen Common Stock for each share of Cellcor Common
Stock held by such holder at the close of business on the Subscription Record
Date (rounded down to the nearest whole number) at a price of $3.89 per share of
Cytogen Common Stock.
At the Cytogen Special Meeting, stockholders of Cytogen will vote on a
proposal to approve the issuance of up to (i) an aggregate of 5,324,487 shares
of Cytogen Common Stock in order to effect the Merger, which total represents
4,711,596 shares of Cytogen Common Stock issuable to holders of Cellcor Common
Stock and Cellcor Preferred Stock on the Subscription Record Date, plus an
additional 612,891 shares of Cytogen Common Stock issuable if all Cellcor Stock
Options (defined below) outstanding as of the Subscription Record Date are
exercised before the Effective Time (defined below) and (ii) an aggregate of
6,637,493 shares of Cytogen Common Stock in connection with the Subscription
Offering (together, the "Issuance Proposal"). At the Cellcor Special Meeting,
stockholders of Cellcor will vote on (a) a proposal to approve and adopt the
Merger Agreement and the Merger (together, the "Merger Proposal"), and (b) a
proposal (the "Plan Proposal") to approve Cellcor's 1995 Stock Incentive Plan
(the "1995 Plan").
This Joint Proxy Statement/Prospectus and the accompanying forms of proxy are
first being mailed to Cytogen and Cellcor stockholders on or about September 15,
1995.
-------------------
THE SHARES OF CYTOGEN COMMON STOCK TO BE ISSUED IN CONNECTION WITH THE
MERGER AND THE SUBSCRIPTION OFFERING 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 JOINT PROXY STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
The date of this Joint Proxy Statement/Prospectus is September 14, 1995.
<PAGE>
This Joint Proxy Statement/Prospectus also constitutes the Prospectus of
Cytogen filed with respect to the issuance of Cytogen Common Stock in connection
with the Merger and the Subscription Offering. From time to time, the Merger
and the Subscription Offering together may be hereinafter referred to as the
"Transaction." Cytogen has filed a Registration Statement on Form S-4 (together
with all amendments, documents incorporated by reference and exhibits thereto,
the "Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act"), with the Securities and Exchange Commission (the
"Commission") covering a maximum of 11,961,980 shares of Cytogen Common Stock to
be issued in connection with the Transaction.
All information contained in this Joint Proxy Statement/Prospectus relating to
Cytogen has been supplied by Cytogen and all information relating to Cellcor has
been supplied by Cellcor.
SUBSCRIPTION OFFERING
In the Subscription Offering, Cytogen is granting to the holders of record of
Cellcor Common Stock at the close of business on the Subscription Record Date
the right to purchase up to an aggregate of 6,637,493 shares of Cytogen Common
Stock. Each holder of Cellcor Common Stock will be entitled to purchase 1.118
fully-paid and non-assessable shares of Cytogen Common Stock for each share of
Cellcor Common Stock held by such holder at the close of business on the
Subscription Record Date (rounded down to the nearest whole number) at a price
of $3.89 per share of Cytogen Common Stock. Cytogen Common Stock is listed on
the Nasdaq National Market under the symbol "CYTO." The last reported sale
price of Cytogen Common Stock on September 12, 1995, the last full trading day
prior to the printing of this Joint Proxy Statement/Prospectus, was $5.375 per
share. The right to purchase shares in the Subscription Offering expires at
5:00 p.m., New York City time, on October 13, 1995 (the "Expiration Date"). The
right is not transferable and may be exercised only by holders of record of
Cellcor Common Stock at the close of business on the Subscription Record Date.
See "SUBSCRIPTION OFFERING."
<TABLE>
<CAPTION>
===============================================================================
Price Underwriting
to Discounts and Proceeds to
Public Commissions Issuer
--------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Unit...... $3.89 $- 0 - $3.89
--------------------------------------------------------------------------------
Total......... $25,819,847.77 $- 0 - $25,819,847.77
================================================================================
</TABLE>
SEE "RISK FACTORS" ON PAGE 24 FOR A DISCUSSION OF CERTAIN MATTERS WHICH
SHOULD BE CONSIDERED BY THE STOCKHOLDERS OF CELLCOR WITH RESPECT TO THE
MERGER AND THE SUBSCRIPTION OFFERING.
<PAGE>
CYTOGEN CORPORATION
CELLCOR, INC.
JOINT PROXY STATEMENT/PROSPECTUS
-------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
AVAILABLE INFORMATION................................................ 6
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE...................... 6
SUMMARY.............................................................. 8
General......................................................... 8
The Companies................................................... 9
The Special Meetings............................................ 9
The Merger...................................................... 10
Recommendations of the Boards of Directors...................... 12
Opinions of Financial Advisors.................................. 12
Management after the Merger..................................... 13
The Voting Agreement............................................ 13
The Promissory Note............................................. 13
The Consulting and Management Agreement......................... 14
Interest of Certain Persons in the Transaction.................. 14
Regulatory Approvals............................................ 15
Ownership of Cytogen Common Stock After the Transaction......... 15
Appraisal Rights................................................ 16
Accounting Treatment of the Merger.............................. 16
The Subscription Offering....................................... 16
Federal Income Tax Consequences................................. 17
Risk Factors.................................................... 17
COMPARATIVE MARKET PRICES............................................ 18
COMPARATIVE PER SHARE DATA........................................... 19
CYTOGEN SELECTED CONSOLIDATED HISTORICAL AND PRO FORMA FINANCIAL
DATA............................................................. 20
CYTORAD SELECTED HISTORICAL FINANCIAL DATA........................... 22
CELLCOR SELECTED HISTORICAL FINANCIAL DATA........................... 23
RISK FACTORS......................................................... 24
Factors Affecting Market Price of Cytogen Common Stock.......... 24
Stockholder Vote................................................ 24
Acquired Research and Development Charge........................ 25
Integration of Cellcor and Cytogen.............................. 25
History of Operating Losses; Accumulated Deficit................ 25
Future Capital Needs; Uncertainty of Funding.................... 26
New Therapeutic Approach........................................ 26
Patents and Proprietary Rights.................................. 26
</TABLE>
2
<PAGE>
<TABLE>
<S> <C>
Government Regulation.......................................... 27
Contract Revenues.............................................. 28
Limited Manufacturing Capability and Experience................ 28
Single Supplier of Certain Raw Materials....................... 29
Marketing Uncertainties........................................ 29
Dependence Upon Qualified Scientific Personnel................. 30
Potential for Product Liability Exposure....................... 30
Uncertainty of Third-Party Reimbursement....................... 30
Uncertainty Related to Healthcare Reform Measures.............. 31
Risk of Technological Obsolescence; Highly Competitive Industry 31
No Dividends Anticipated in the Future......................... 31
Dilution; Shares Eligible for Future Sale...................... 31
THE SPECIAL MEETINGS................................................ 32
Introduction................................................... 32
Cytogen Special Meeting........................................ 32
Cellcor Special Meeting........................................ 33
Voting Rights and Proxies...................................... 33
THE MERGER.......................................................... 35
Background..................................................... 35
Recommendation of the Cytogen Board of Directors; Cytogen's
Reasons for the Transaction................................. 39
Recommendation of the Cellcor Board of Directors; Cellcor's
Reasons for the Transaction................................. 40
Opinion of Smith Barney........................................ 42
Opinion of CS First Boston..................................... 46
Interest of Certain Persons in the Transaction................. 49
THE MERGER AGREEMENT................................................ 50
Effective Time................................................. 51
Conversion of Shares of Cellcor Capital Stock Pursuant to
Merger; Treatment of Options and Warrants................... 51
Representations and Warranties................................. 51
Conduct of Business Pending the Merger......................... 52
Conditions to Consummation of the Merger....................... 54
Termination of the Merger Agreement............................ 56
Termination and Expense Fee.................................... 57
Amendment and Waiver of the Merger Agreement; Extensions....... 58
Expenses and Fees.............................................. 58
Exchange of Certificates in the Merger......................... 58
THE VOTING AGREEMENT................................................ 58
THE CONSULTING AND MANAGEMENT AGREEMENT............................. 60
REGULATORY APPROVALS................................................ 60
APPRAISAL RIGHTS.................................................... 60
ACCOUNTING TREATMENT OF THE MERGER.................................. 63
FEDERAL SECURITIES LAW CONSEQUENCES................................. 64
DESCRIPTION OF CYTOGEN CAPITAL STOCK................................ 64
Cytogen Common Stock........................................... 64
Cytogen Preferred Stock........................................ 64
</TABLE>
3
<PAGE>
<TABLE>
<S> <C>
COMPARISON OF STOCKHOLDERS' RIGHTS.................................. 65
Voting......................................................... 65
Directors...................................................... 65
Liability of Officers and Directors; Indemnification........... 65
Special Meetings............................................... 66
Voting by Ballot............................................... 66
Requirement of Meeting......................................... 66
Amendment of Certificate of Incorporation and By-laws.......... 66
Dividends; Liquidation Rights.................................. 66
SUBSCRIPTION OFFERING............................................... 67
Eligible Stockholders.......................................... 67
The Offering................................................... 67
Nontransferable Rights......................................... 67
Purchase....................................................... 67
Minimum Subscription Amount.................................... 68
Maximum Number of Shares of Cytogen Common Stock Issuable in the
Subscription Offering....................................... 68
Delivery of Shares Upon Purchase............................... 69
Plan of Distribution........................................... 69
Use of Proceeds................................................ 69
CAPITALIZATION...................................................... 70
DILUTION............................................................ 71
CERTAIN FEDERAL INCOME TAX CONSEQUENCES............................. 72
Treatment of the Merger as a Reorganization.................... 72
Treatment of the Subscription Rights........................... 73
Cash Received in Lieu of Fractional Shares..................... 73
Net Operating Loss Carryforward................................ 73
MANAGEMENT AND BOARD OF CYTOGEN UPON COMPLETION OF THE MERGER....... 74
INFORMATION CONCERNING CYTOGEN...................................... 77
Business of Cytogen............................................ 77
Recent Developments............................................ 77
CYTORAD............................................................. 79
Management's Discussion and Analysis of Financial Condition
and Results of Operations................................... 79
MANAGEMENT AND BOARD OF CELLCOR..................................... 80
INFORMATION CONCERNING CELLCOR...................................... 81
Business of Cellcor............................................ 81
Recent Developments............................................ 83
APPROVAL OF CELLCOR'S 1995 STOCK INCENTIVE PLAN..................... 83
Description of Awards under the 1995 Plan...................... 84
Federal Income Tax Consequences................................ 85
EXPERTS............................................................. 87
LEGAL OPINIONS...................................................... 87
STOCKHOLDER PROPOSALS FOR 1996 CYTOGEN ANNUAL MEETING............... 87
</TABLE>
4
<PAGE>
<TABLE>
<S> <C>
INDEX TO FINANCIAL STATEMENTS....................................... F-1
</TABLE>
Annex A - Agreement and Plan of Merger, as amended
Annex B - Voting and Subscription Agreement
Annex C - Opinion of Smith Barney Inc.
Annex D - Opinion of CS First Boston Corporation
Annex E - Cellcor Annual Report on Form 10-K for the Year Ended December 31,
1994
Annex F - Cellcor Quarterly Report on Form 10-Q for the Quarter Ended June 30,
1995
Annex G - Section 262 of the Delaware General Corporation Law
--------------------------
5
<PAGE>
AVAILABLE INFORMATION
Cytogen and Cellcor are each subject to the informational requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, file reports, proxy statements and other information with
the Commission. Such reports, proxy statements and other information filed by
Cytogen and Cellcor 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, Citicorp 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. Cytogen Common Stock is listed on
the Nasdaq National Market and such reports, proxy statements and other
information concerning Cytogen are available for inspection at the offices of
the National Association of Securities Dealers, Inc. (the "NASD"), 1735 K
Street, N.W., Washington, D.C. 20006.
Cytogen has filed the Registration Statement under the Securities Act with
the Commission covering Cytogen Common Stock to be issued in connection with the
Transaction. This Joint Proxy Statement/Prospectus does not contain all the
information set forth in the Registration Statement. Such additional
information may be obtained from the Commission's principal office in
Washington, D.C. Statements contained in this Joint Proxy Statement/Prospectus
or in any document incorporated by reference in this Joint Proxy
Statement/Prospectus, as to the contents of any contract or other document
referred to herein or therein, are not necessarily complete, and in each
instance reference is made to the copy of such contract or other document filed
as an exhibit to the Registration Statement or such other document, each such
statement being qualified in all respects by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Cytogen hereby incorporates by reference into this Joint Proxy
Statement/Prospectus (i) its Annual Report on Form 10-K for the Fiscal Year
Ended December 31, 1994, which contains audited financial statements for
Cytogen's latest fiscal year for which a Form 10-K was required to have been
filed, (ii) all other reports filed by Cytogen pursuant to Section 13(a) or
15(d) of the Exchange Act since December 31, 1994, including but not limited to,
its Quarterly Reports on Form 10-Q for the Quarters Ended March 31, 1995 and
June 30, 1995, and the Current Reports on Form 8-K filed by Cytogen with the
Commission on January 6, 1995, February 16, 1995, February 23, 1995, February
24, 1995 and June 27, 1995, and (iii) the description of Cytogen Common Stock as
contained in its registration statement on Form 8-A, declared effective on March
9, 1992.
Cellcor hereby incorporates by reference into this Joint Proxy
Statement/Prospectus (i) its Annual Report on Form 10-K for the Fiscal Year
Ended December 31, 1994, which contains audited financial statements for
Cellcor's latest fiscal year for which a Form 10-K was required to have been
filed, and (ii) all other reports filed by Cellcor pursuant to Section 13(a) or
15(d) of the Exchange Act since December 31, 1994, including but not limited to
its Quarterly Reports on Form 10-Q for the Quarters Ended March 31, 1995 and
June 30, 1995 and the Current Reports on Form 8-K filed by Cellcor with the
Commission on May 2, 1995, June 2, 1995 and June 27, 1995. Cellcor's Annual
Report on Form 10-K for the Fiscal Year Ended December 31, 1994 and Quarterly
Report on Form 10-Q for the Quarter Ended June 30, 1995 are attached hereto as
Annex E and Annex F, respectively.
6
<PAGE>
All documents and reports filed by Cytogen 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 termination of the offering of Cytogen Common Stock shall be
deemed to be incorporated by reference into this Joint Proxy
Statement/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 Joint Proxy Statement/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 or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Joint Proxy Statement/Prospectus.
This Joint Proxy Statement/Prospectus incorporates documents by reference
which are not presented herein or delivered herewith. Cytogen and Cellcor
hereby undertake to provide, without charge, to each person to whom this Joint
Proxy Statement/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 Joint Proxy Statement/Prospectus (not including exhibits to
such information unless such exhibits are specifically incorporated by reference
into such information). Such requests for information relating to Cytogen
should be directed to T. Jerome Madison, Vice President, Chief Financial Officer
and Secretary, at Cytogen's principal executive offices at 600 College Road
East, CN 5308, Princeton, New Jersey 08540-5308; telephone: (609) 987-8210.
Such requests for information relating to Cellcor should be directed to Michael
J. Kosc, Treasurer, at Cellcor's principal executive offices at 200 Wells
Avenue, Newton, Massachusetts 02159; telephone: (617) 332-2500. In order to
ensure timely delivery of the documents, any request should be made by October
9, 1995.
No person has been authorized to give any information or make any
representation not contained in this Joint Proxy Statement/Prospectus and, if so
given or made, such information or representation must not be relied upon as
having been authorized. This Joint Proxy Statement/Prospectus does not
constitute an offer to sell or a solicitation of an offer to buy any securities
other than those to which it relates or an offer to sell or a solicitation of an
offer to buy any securities in any jurisdiction in which, or to any person to
whom, it is unlawful to make such offer or solicitation. Neither the delivery
of this Joint Proxy Statement/Prospectus nor the sale of any securities
hereunder under any circumstances is intended to create any implication that
there has been no change in the affairs of either Cytogen or Cellcor since the
date as of which information is furnished or the date hereof.
Cytogen and the Cytogen design, OncoScint, ProstaScint, Quadramet and SynGene
are trademarks of Cytogen, which are either registered or for which trademark
applications are pending with the United States Patent and Trademark Office
and/or abroad. This Joint Proxy Statement/Prospectus also includes trademarks
and trade names of companies other than Cytogen.
7
<PAGE>
--------------------------------------------------------------------------------
SUMMARY
The following is a brief summary of certain information contained elsewhere in
this Joint Proxy Statement/Prospectus, or incorporated by reference herein.
This summary is not intended to be complete and is qualified in its entirety by
reference to the more detailed information appearing elsewhere herein or
incorporated by reference herein. Stockholders of each of Cellcor and Cytogen
are urged to review in their entirety this Joint Proxy Statement/Prospectus, the
Annexes hereto and the documents incorporated herein by reference.
General
This Joint Proxy Statement/Prospectus relates to the proposed merger (the
"Merger") of Cellcor, Inc., a Delaware corporation ("Cellcor"), with and into
Cellcor Acquisition Corp., a Delaware corporation and a wholly-owned subsidiary
(the "Merger Subsidiary") of Cytogen Corporation, a Delaware corporation
("Cytogen"). Upon effectiveness of the Merger, each then outstanding share of
Cellcor common stock, par value $.01 per share ("Cellcor Common Stock") (other
than shares held by Cellcor as treasury stock or by Cytogen or the Merger
Subsidiary), will be converted into the right to receive .60 shares (the "Common
Exchange Ratio") of Cytogen common stock, par value $.01 per share ("Cytogen
Common Stock"), and each then outstanding share of Cellcor Convertible Preferred
Stock, par value $.01 per share ("Cellcor Preferred Stock") (other than shares
held by Cellcor as treasury stock or by Cytogen or the Merger Subsidiary), will
be converted into the right to receive 218.94 shares (the "Preferred Exchange
Ratio") of Cytogen Common Stock. As a result of the Merger, the separate
corporate existence of Cellcor will cease and the Merger Subsidiary will
continue as the surviving corporation and it will change its name to Cellcor,
Inc.
The Merger will be effected pursuant to an Agreement and Plan of Merger dated
June 15, 1995, as amended by the First Amendment to Agreement and Plan of Merger
dated as of September 7, 1995 (the "Merger Agreement"), by and among Cytogen,
Cellcor and the Merger Subsidiary, a copy of which is attached hereto as Annex
A. See "THE MERGER AGREEMENT."
This Joint Proxy Statement/Prospectus also relates to the proposed grant by
Cytogen to holders of Cellcor Common Stock of the right to purchase 1.118 fully-
paid and non-assessable shares of Cytogen Common Stock for each share of Cellcor
Common Stock held by such holders (rounded down to the nearest whole number) at
a purchase price of $3.89 per share of Cytogen Common Stock (the "Subscription
Offering"). See "SUBSCRIPTION OFFERING." From time to time, the Merger and the
Subscription Offering together may be hereinafter referred to as the
"Transaction." Pursuant to a Voting and Subscription Agreement dated June 15,
1995 (the "Voting Agreement"), among Cytogen, the Merger Subsidiary and Hillman
Medical Ventures partnerships and certain of their affiliates, the principal
stockholders of Cellcor (the "Principal Stockholders"), certain of the Principal
Stockholders have agreed to purchase for cash 3,084,833 shares of Cytogen Common
Stock pursuant to the Subscription Offering for an aggregate cash purchase price
of $12,000,000, subject to certain adjustments (the "Minimum Subscription
Amount"). As of the Cellcor Record Date (defined below), the Principal
Stockholders owned 2,759,379 shares of Cellcor Common Stock and 5,000 shares of
Cellcor Preferred Stock, representing approximately 46.5% of the votes entitled
to be cast by the common stockholders and approximately 95.2% of the votes
entitled to be cast by the preferred stockholders at the Cellcor Special Meeting
(defined below). Under the Voting Agreement, the Principal Stockholders have
agreed to vote their shares in favor of the proposal to approve and adopt the
Merger Agreement and the Merger (together, the "Merger Proposal") and have
granted a proxy to the Merger Subsidiary to so vote those shares. See "THE
VOTING AGREEMENT." A copy of the Voting Agreement is attached hereto as
Annex B.
--------------------------------------------------------------------------------
8
<PAGE>
--------------------------------------------------------------------------------
The Companies
Cytogen. Cytogen is a biopharmaceutical company engaged in the discovery,
development, manufacture and marketing of products that provide targeted
delivery of diagnostic and therapeutic substances directly to the sites of
disease. Cytogen is using its patented and proprietary technologies to develop
specific in vivo cancer imaging and therapeutic products to build a cancer care
franchise. Cytogen may expand from cancer into other therapeutic areas
employing related technologies.
Cytogen is a Delaware corporation with its principal executive offices at 600
College Road East--CN 5308, Princeton, New Jersey 08540-5308. Its telephone
number is (609) 987-8200.
Cellcor. Cellcor is a biotechnology company engaged in the development and
commercialization of autolymphocyte therapy ("ALT"), a proprietary immunotherapy
using a patient's own immune cells to treat cancer and certain infectious
diseases. Cellcor is a Delaware corporation with its principal executive
offices at 200 Wells Avenue, Newton, Massachusetts 02159. Its telephone number
is (617) 332-2500.
Merger Subsidiary. The Merger Subsidiary is a wholly-owned subsidiary of
Cytogen recently formed for the sole purpose of facilitating the Merger. Other
than in connection with the Merger Agreement, the Merger Subsidiary has no
assets (other than those received in connection with its initial capitalization)
or liabilities. The Merger Subsidiary is a Delaware corporation with its
principal executive offices at 600 College Road East--CN 5308, Princeton, New
Jersey 08540-5308. Its telephone number is (609) 987-8200.
The Special Meetings
Cytogen. A Special Meeting of the Stockholders of Cytogen (the "Cytogen
Special Meeting") will be held on Monday, October 16, 1995, at 2:00 p.m. (local
time) at The Holiday Inn Princeton, 4355 Route One at Ridge Road, Princeton, New
Jersey 08540. At the Cytogen Special Meeting, holders of shares of Cytogen
Common Stock will be asked to consider and vote upon a proposal to issue up to
an aggregate of 11,961,980 shares of Cytogen Common Stock to Cellcor's
stockholders pursuant to the terms of the Merger Agreement and in connection
with the Subscription Offering (the "Issuance Proposal").
Only holders of record of Cytogen Common Stock at the close of business on
August 17, 1995 (the "Cytogen Record Date") are entitled to notice of and to
vote at the Cytogen Special Meeting or any adjournment or postponement thereof.
At the close of business on the Cytogen Record Date, there were outstanding and
entitled to vote 33,747,501 shares of Cytogen Common Stock. Each holder of
record of Cytogen Common Stock is entitled to cast one vote per share on any
matter that may properly come before the Cytogen Special Meeting. A majority of
the issued and outstanding shares of Cytogen Common Stock entitled to vote at
the Cytogen Special Meeting must be represented at the Cytogen Special Meeting,
in person or by proxy, to constitute a quorum for the transaction of business.
The affirmative vote of the holders of record of a majority of the shares of
Cytogen Common Stock voting in person or by proxy on the Issuance Proposal is
required to approve and adopt the Issuance Proposal.
As of the Cytogen Record Date, the directors and executive officers of Cytogen
owned or had voting control over an aggregate of 522,064 shares of Cytogen
Common Stock, representing approximately 1.5% of the votes entitled to be cast
at the Cytogen Special Meeting. Each of the directors and executive officers of
Cytogen has advised Cytogen that he intends to vote or direct the
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vote of all the outstanding shares of Cytogen Common Stock over which he has
voting control in favor of the approval of the Issuance Proposal. See "THE
SPECIAL MEETINGS--Voting Rights and Proxies."
Cellcor. A Special Meeting of the Stockholders of Cellcor (the "Cellcor
Special Meeting"), will be held on Monday, October 16, 1995, at 2:00 p.m. (local
time), at the offices of Hale and Dorr, 60 State Street, Boston, Massachusetts
02109. At the Cellcor Special Meeting, holders of shares of Cellcor Common
Stock and Cellcor Preferred Stock will be asked to consider and vote upon (i) a
proposal to approve and adopt the Merger Agreement and the Merger (together, the
"Merger Proposal"), and (ii) a proposal (the "Plan Proposal") to approve
Cellcor's 1995 Stock Incentive Plan (the "1995 Plan").
Only holders of record of Cellcor Common Stock and Cellcor Preferred Stock at
the close of business on August 17, 1995 (the "Cellcor Record Date") are
entitled to notice of and to vote at the Cellcor Special Meeting or any
adjournment or postponement thereof. At the close of business on the Cellcor
Record Date, there were outstanding and entitled to vote 5,936,935 shares of
Cellcor Common Stock and 5,250 shares of Cellcor Preferred Stock. Each holder
of record on the Cellcor Record Date is entitled to cast one vote per share on
any matter to which such stockholder is entitled to vote that may properly come
before the Cellcor Special Meeting. The presence, in person or by proxy, of the
holders of record of shares representing a majority of votes entitled to be cast
at the Cellcor Special Meeting is necessary to constitute a quorum. The
affirmative vote of the holders of a majority of the outstanding shares of
Cellcor Common Stock and the holders of 66-2/3% of the outstanding shares of
Cellcor Preferred Stock, voting separately as two classes, is necessary to
approve and adopt the Merger Proposal. The affirmative vote of the holders of a
majority of the outstanding shares of Cellcor Common Stock present or
represented at the Cellcor Special Meeting is required to approve the 1995 Plan.
As of the Cellcor Record Date, the Principal Stockholders, together with
certain of the directors and executive officers of Cellcor, owned or had voting
control over an aggregate of 3,051,710 shares of Cellcor Common Stock and 5,250
shares of Cellcor Preferred Stock, representing approximately 51.4% of the votes
entitled to be cast by the common stockholders and 100% of the votes entitled to
be cast by the preferred stockholders at the Cellcor Special Meeting.
Consequently, the affirmative vote of the Principal Stockholders and said
directors and executive officers will be sufficient to approve and adopt the
Merger Proposal. Under the terms of the Voting Agreement, the Principal
Stockholders have agreed to vote their shares in favor of the adoption and
approval of the Merger Proposal and have granted a proxy to the Merger
Subsidiary to so vote those shares. See "THE VOTING AGREEMENT." Also, each of
said directors and executive officers has advised Cellcor that he intends to
vote or direct the vote of all the outstanding shares of Cellcor Common Stock
and Cellcor Preferred Stock over which he has voting control in favor of
approval and adoption of the Merger Proposal and the Plan Proposal. See "THE
SPECIAL MEETINGS--Voting Rights and Proxies."
The Merger
General. Pursuant to the Merger Agreement, Cellcor will be merged with and
into the Merger Subsidiary. As a result of the Merger, the separate corporate
existence of Cellcor will cease and the Merger Subsidiary will continue as the
surviving corporation and it will change its name to Cellcor, Inc. (the
"Surviving Corporation"). Each then outstanding share of Cellcor Common Stock
(other than shares held by Cellcor as treasury stock or by Cytogen or the Merger
Subsidiary) will be converted into the right to receive shares of Cytogen Common
Stock based upon the Common
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Exchange Ratio. Each then outstanding share of Cellcor Preferred Stock (other
than shares held by Cellcor as treasury stock or by Cytogen or the Merger
Subsidiary) will be converted into the right to receive shares of Cytogen Common
Stock based upon the Preferred Exchange Ratio. The terms of the Merger
Agreement are more fully described in "THE MERGER AGREEMENT."
Effective Time of the Merger. The Merger will become effective at the time
and on the date that a Certificate of Merger is filed with the Secretary of
State of the State of Delaware or such later date or time as is specified in
such Certificate of Merger (the "Effective Time"). It is presently contemplated
that the Effective Time will occur as soon as practicable after the requisite
approvals of the stockholders of Cellcor and Cytogen have been obtained and
other conditions to the Merger set forth in the Merger Agreement have been
satisfied or waived.
Exchange of Cellcor Stock Certificates. As soon as reasonably practicable
after the Effective Time, instructions with regard to the surrender of Cellcor
stock certificates, together with a letter of transmittal to be used for this
purpose, will be furnished to Cellcor stockholders for use in exchanging their
stock certificates for the shares of Cytogen Common Stock and cash for
fractional shares they will be entitled to receive as a result of the Merger.
Cellcor stockholders should not surrender their stock certificates for exchange
until such instructions and letter of transmittal are received.
Conditions to the Merger; Termination. In addition to approval by the holders
of the Cellcor Common Stock and the Cellcor Preferred Stock, the obligations of
the parties to consummate the Merger are subject to the satisfaction of certain
conditions, including, among other things, the approval by the holders of
Cytogen Common Stock of the Issuance Proposal and the approval for quotation on
the Nasdaq National Market of the shares of Cytogen Common Stock to be issued in
the Merger and the Subscription Offering. See "THE MERGER AGREEMENT--Conditions
to Consummation of the Merger."
The Merger Agreement may be terminated at any time prior to the Effective
Time: (i) by mutual consent of the Cytogen and Cellcor Boards of Directors, (ii)
by either Cytogen or Cellcor, if a court or other governmental entity prohibits
the Merger, (iii) by either Cytogen or Cellcor, upon a breach of the Merger
Agreement by the other or if any of the conditions precedent to their respective
obligations under the Merger Agreement have not been fulfilled, (iv) by either
Cytogen or Cellcor, if the Merger has not been consummated on or before December
31, 1995, (v) by either Cytogen or Cellcor, if the Cellcor Board of Directors,
among other things, withdraws its recommendation of the Merger Proposal, or (vi)
by either Cytogen or Cellcor, if the Merger Proposal shall have failed to
receive the requisite vote for approval by the Cellcor stockholders or the
Issuance Proposal shall have failed to receive the requisite vote for approval
by the Cytogen stockholders. See "THE MERGER AGREEMENT--Termination and Expense
Fee."
Other Transactions. Pursuant to the Merger Agreement, Cellcor has agreed
that, prior to the Effective Time, it will not and will not authorize or permit
any officer, director or employee of or any investment banker, attorney or other
advisor or representative of Cellcor to, directly or indirectly, (i) solicit,
initiate or knowingly encourage the submission of any takeover proposal or (ii)
participate in any discussions or negotiations regarding, or furnish to any
person any information with respect to, or take any other action to facilitate
any inquiries or the making of any proposal that constitutes or may reasonably
be expected to lead to, any takeover proposal. Notwithstanding the foregoing,
if the Cellcor Board of Directors, after consultation with outside counsel,
determines in good faith that such action is necessary for the Cellcor Board of
Directors to comply with its fiduciary duties under applicable law, Cellcor may,
upon receipt by Cellcor of an unsolicited written, bona fide takeover proposal,
furnish information with respect to Cellcor pursuant to a customary
confidentiality
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agreement and participate in negotiations regarding such takeover proposal. See
"THE MERGER AGREEMENT--Conduct of Business Pending the Merger--Covenants of
Cellcor."
Termination and Expense Fee. Cellcor will become obligated to pay a
termination and expense fee of $1,000,000 to Cytogen if Cellcor enters into a
definitive agreement relating to a competing takeover proposal within one year
after the Merger Agreement is terminated by Cytogen or Cellcor, if (i) the
Cellcor Board of Directors (a) withdraws or modifies, or proposes to withdraw or
modify, in a manner adverse to Cytogen or the Merger Subsidiary, the approval or
recommendation by the Cellcor Board of Directors (or any committee thereof) of
the Merger Agreement or the Merger, (b) approves or recommends, or proposes to
approve or recommend, any takeover proposal by a third party or (c) enters into
an agreement with a third party with respect to any such takeover proposal, or
(ii) any third party other than the Principal Stockholders acquires beneficial
ownership or the right to acquire beneficial ownership of 40% or more of the
outstanding shares of Cellcor Common Stock. See "THE MERGER AGREEMENT--
Termination and Expense Fee."
Recommendations of the Boards of Directors
Cytogen. The Cytogen Board of Directors has unanimously concluded that each
of the Merger and the Subscription Offering is fair and in the best interests of
Cytogen and its stockholders and recommends that Cytogen stockholders vote FOR
the Issuance Proposal. See "THE MERGER--Recommendation of the Cytogen Board of
Directors; Cytogen's Reasons for the Transaction."
Cellcor. The Cellcor Board of Directors, together with a special committee of
independent directors (the "Special Committee"), has reviewed and considered the
terms and conditions of the Merger. The Cellcor Board of Directors, based upon
the unanimous recommendation of the Special Committee, has unanimously concluded
that the Merger is fair and in the best interests of Cellcor and the holders of
Cellcor Common Stock and recommends that Cellcor stockholders vote FOR the
Merger Proposal. The Cellcor Board of Directors also has unanimously
recommended that Cellcor stockholders vote FOR the approval of the 1995 Plan.
See "THE MERGER--Recommendation of the Cellcor Board of Directors; Cellcor's
Reasons for the Transaction."
Opinions of Financial Advisors
Cytogen. Smith Barney Inc. ("Smith Barney") has acted as financial advisor to
Cytogen in connection with the Transaction and has delivered a written opinion,
dated June 15, 1995 (as reconfirmed by delivery of a written opinion dated
September 7, 1995), to the Cytogen Board of Directors to the effect that, as of
the date of such opinion and based upon and subject to certain matters stated
therein, the Common Exchange Ratio, the Preferred Exchange Ratio and the
consideration to be received by Cytogen in the Subscription Offering, taken as a
whole, were fair, from a financial point of view, to Cytogen. The full text of
the written opinion of Smith Barney dated September 7, 1995, which sets forth
the assumptions made, matters considered and limitations on the review
undertaken by Smith Barney in rendering such opinion, is attached as Annex C to
this Joint Proxy Statement/Prospectus. Cytogen stockholders are urged to read
carefully the opinion of Smith Barney in its entirety. See "THE MERGER--
Recommendation of the Cytogen Board of Directors; Cytogen's Reasons for the
Transaction" and "THE MERGER--Opinion of Smith Barney."
Cellcor. The Cellcor Board of Directors and the Special Committee have
received the written opinion of CS First Boston Corporation ("CS First Boston"),
dated June 15, 1995, to the effect that, based upon and subject to certain
matters stated therein, as of the date of such opinion, the consideration to be
received by the holders of Cellcor Common Stock pursuant to the Merger
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Agreement is fair to such stockholders from a financial point of view. The full
text of CS First Boston's written opinion, which sets forth the assumptions
made, matters considered and limitations on the review undertaken by CS First
Boston in rendering such opinion, is attached as Annex D to this Joint Proxy
Statement/Prospectus. The holders of Cellcor Common Stock are urged to read
carefully the opinion of CS First Boston in its entirety. See "THE MERGER--
Recommendation of the Cellcor Board of Directors; Cellcor's Reasons for the
Transaction" and "THE MERGER--Opinion of CS First Boston."
Management after the Merger
Immediately following the Merger, the Surviving Corporation will be operated
as a wholly-owned subsidiary of Cytogen. The management of Cytogen will remain
unchanged immediately after the Merger. Ronald J. Brenner, Ph.D., President and
Chief Executive Officer of Cellcor and a general partner of the managing general
partner of the Hillman Medical Ventures partnerships, and John E. Bagalay, Jr.,
Ph.D., a director of Cellcor, will be appointed to the Cytogen Board of
Directors after the closing of the Merger. In July 1995, Richard R. D'Antoni
and Harry W. Wilcox, III ceased to serve as Cellcor's President and Chief
Executive Officer and Cellcor's Senior Vice President of Business Development
and Chief Financial Officer, respectively. Except for Richard E. Kruger, Ph.D.
and Michael J. Kosc, Cellcor's Vice President of Regulatory Affairs and
Treasurer, respectively, and Dr. Brenner, who will cease to serve as executive
officers of Cellcor upon consummation of the Merger, the executive officers of
Cellcor immediately prior to the Effective Time will be the executive officers
of the Surviving Corporation immediately after the Effective Time. Thomas J.
McKearn, M.D., Ph.D., and T. Jerome Madison, the directors of the Merger
Subsidiary immediately prior to the Effective Time, will be the directors of the
Surviving Corporation and will hold office from the Effective Time until their
respective successors are duly elected and qualified. See "MANAGEMENT AND BOARD
OF CYTOGEN UPON COMPLETION OF THE MERGER" and "MANAGEMENT AND BOARD OF CELLCOR."
The Voting Agreement
As of the Cellcor Record Date, the Principal Stockholders owned 2,759,379
shares of Cellcor Common Stock and 5,000 shares of Cellcor Preferred Stock,
representing approximately 46.5% of the votes entitled to be cast by the common
stockholders and approximately 95.2% of the votes entitled to be cast by the
preferred stockholders at the Cellcor Special Meeting. Under the Voting
Agreement, the Principal Stockholders have agreed to vote their shares in favor
of the Merger Proposal and have granted a proxy to the Merger Subsidiary to so
vote those shares. See "THE VOTING AGREEMENT."
The Promissory Note
Contemporaneously with the execution of the Voting Agreement, two of the
Principal Stockholders agreed to lend funds to Cellcor in exchange for Cellcor's
promissory note in the aggregate principal amount of up to $4,967,118 (the
"Note") to fund Cellcor's normal course of operations prior to closing of the
Merger. The Note, which bears interest at the rate of 6.37% per annum, will be
repaid with a portion of the proceeds of the Subscription Offering. Cytogen
expects to use approximately $4,100,000 of the net proceeds from the
Subscription Offering to repay in full the amount due under the Note. See "THE
VOTING AGREEMENT"; "SUBSCRIPTION OFFERING--Use of Proceeds."
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The Consulting and Management Agreement
In accordance with the terms of the Merger Agreement, Cytogen and Cellcor have
entered into a Consulting and Management Agreement (the "Consulting and
Management Agreement"), pursuant to which Cellcor will pay Cytogen a fixed
monthly consulting fee in consideration for Cytogen's providing management
consulting services in the clinical, regulatory, financial and human resources
areas that are necessary or desirable in connection with the operation of
Cellcor's business. The Consulting and Management Agreement provides that
Cytogen will focus on assisting Cellcor in certain of its clinical trials and in
preparing certain applications to the United States Food and Drug Administration
for approval of its product. See "THE CONSULTING AND MANAGEMENT AGREEMENT."
Interest of Certain Persons in the Transaction
Options. Under the terms of employment arrangements between Cellcor and
certain of its executive officers, outstanding options issued to such officers
will fully vest at the Effective Time. In addition, under the terms of
Cellcor's 1992 Director Stock Option Plan, the unvested options granted to a
director of Cellcor will accelerate and become fully vested upon approval of the
Merger Proposal by the Cellcor stockholders.
Also, under the terms of certain stock option agreements previously entered
into with certain other officers of Cellcor, and the Severance Policy (defined
below) adopted by the Cellcor Board of Directors, unvested options granted to
such officers will accelerate and become fully vested (i) at or before the
Effective Time, if such acceleration has been provided for by the Cellcor Board
of Directors or (ii) upon the termination of employment of such officers, if
their positions are eliminated as a result of the Merger.
Pursuant to the Merger Agreement, Cytogen has agreed to assume all outstanding
Cellcor stock options and warrants. Each such stock option and warrant will
continue to have, and be subject to, the same terms and conditions (subject to
certain adjustments). See "THE MERGER AGREEMENT--Conversion of Shares of
Cellcor Capital Stock Pursuant to Merger; Treatment of Options and Warrants."
In addition, under the terms of the Severance Policy, in the event a Cellcor
employee's position is eliminated as a result of a merger, any outstanding
options held by such employee will automatically fully vest and the employee
will be given 36 months to exercise his vested options.
Severance Policy. On November 1, 1991, the Cellcor Board of Directors adopted
a severance policy (the "Severance Policy") for all employees of Cellcor
terminated in the event of a merger, sale or consolidation of Cellcor or a
general layoff. Pursuant to the Severance Policy and modifications thereto, in
the event of a merger, certain executive officers are entitled to receive up to
12 months' salary and 12 months' continued employee benefits; and employees who
are not executive officers are entitled to receive severance pay ranging from
one month's salary for every year of service to Cellcor to a maximum of six
months' salary plus continued benefits for the corresponding period of time.
Employee Benefits. Pursuant to the Merger Agreement, Cytogen has agreed to
provide, from and after the Effective Time, benefits to employees of Cellcor at
a level substantially similar to the benefits now offered under Cytogen's
benefit plans to Cytogen's employees.
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Indemnification. The Merger Agreement provides that, from and after the
Effective Time, the Surviving Corporation will indemnify, defend and hold
harmless each person who was on or at any time prior to the date of the Merger
Agreement or who becomes prior to the Effective Time, an officer, director or
employee of Cellcor against certain losses and expenses. Cytogen has agreed to
guarantee the performance by the Surviving Corporation of its indemnification
obligations.
Election to Board of Directors. The Merger Agreement provides that, effective
as of the closing of the Merger, Dr. Brenner, as the designee of the Principal
Stockholders, and Dr. Bagalay will be elected to the Cytogen Board of Directors.
During the two-year period commencing at the Effective Time, and thereafter for
so long as the Principal Stockholders own at least 5% of the outstanding shares
of Cytogen Common Stock, Cytogen shall use its best efforts to cause to be
nominated Dr. Brenner, or such other person designated by the Principal
Stockholders, for election or re-election to the Cytogen Board of Directors.
See "THE MERGER--Interest of Certain Persons in the Transaction."
Repayment of Note. Cytogen expects to use approximately $4,100,000 of the net
proceeds from the Subscription Offering to repay in full the outstanding
principal and unpaid interest due under the Note to two of the Principal
Stockholders.
Regulatory Approvals
Cytogen and Cellcor are not aware of any governmental or regulatory
requirements relating to consummation of the Merger or the Subscription
Offering, other than compliance with applicable federal and state securities
laws and the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended
(the "HSR Act"). Cytogen and an affiliate of the Principal Stockholders filed a
notification on July 10, 1995 pursuant to the HSR Act. The 30-day waiting
period required by the HSR Act expired on August 9, 1995. See "REGULATORY
APPROVALS."
Ownership of Cytogen Common Stock After the Transaction
After giving effect to the Merger and the purchase of the Minimum Subscription
Amount, and assuming (i) no exercise of Cytogen's outstanding warrants, (ii) no
issuance of Cytogen Common Stock pursuant to outstanding contingent value rights
("CVRs") to purchase Cytogen Common Stock and (iii) no exercise of any other
outstanding options entitling the holders thereof to receive Cytogen Common
Stock or Cellcor Common Stock, the former holders of Cellcor Common Stock and
Cellcor Preferred Stock will own, in the aggregate, approximately 18.8% of the
outstanding Cytogen Common Stock, based upon the number of shares of Cytogen
Common Stock, Cellcor Common Stock and Cellcor Preferred Stock outstanding as of
the Cytogen Record Date. After giving effect to the Merger and the purchase of
the Minimum Subscription Amount, and assuming (i) exercise of all of Cytogen's
outstanding warrants, (ii) issuance of the maximum number of shares of Cytogen
Common Stock pursuant to the outstanding CVRs and (iii) exercise of all other
outstanding options entitling the holders thereof to receive Cytogen Common
Stock or Cellcor Common Stock, the former holders of Cellcor Common Stock and
Cellcor Preferred Stock will own, in the aggregate, approximately 15% of the
outstanding Cytogen Common Stock, based upon the number of shares of Cytogen
Common Stock, Cellcor Common Stock and Cellcor Preferred Stock outstanding as of
the Cytogen Record Date. The foregoing calculations do not give effect to the
issuance and sale of Cytogen Common Stock pursuant to other contractual
arrangements that may arise from time to time. See, for example, "INFORMATION
CONCERNING CYTOGEN--Recent Developments--Fletcher Fund."
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Appraisal Rights
Under Delaware law, holders of Cellcor Common Stock and Cellcor Preferred
Stock who, prior to the Cellcor Special Meeting, properly demand appraisal and
vote against or abstain from voting with respect to the Merger Proposal have the
right, if the Merger is nonetheless consummated, to require the Surviving
Corporation to purchase their shares for their "fair value." To exercise such
appraisal rights, such stockholders must comply with all applicable procedural
requirements. Stockholders of Cytogen are not entitled to appraisal rights
under Delaware law in connection with the Merger. See "APPRAISAL RIGHTS" and
Annex G to this Joint Proxy Statement/Prospectus.
Accounting Treatment of the Merger
Under applicable accounting standards, the Merger will be treated as a
purchase of Cellcor by Cytogen. Upon completion of the Merger, which is
expected to occur in fiscal 1995, an amount representing acquired research and
development will be charged to expense. Based on $5.25, the last sale price per
share of Cytogen Common Stock on August 29, 1995, this amount would be
approximately $29.4 million. To the extent the market price of Cytogen Common
Stock at the Effective Time is different from $5.25 per share, this charge to
expense would change. In addition, the charge to expense may change due to
other factors, including a change from Cellcor's stockholders' deficit balance
at June 30, 1995. This charge is a one-time charge in connection with the
Merger and will have no impact on operating results after 1995. During 1995,
total expenses will be increased by the amount of this charge. See "ACCOUNTING
TREATMENT OF THE MERGER."
The Subscription Offering
Eligible Stockholders. All holders of record of Cellcor Common Stock at the
close of business on August 17, 1995 (the "Subscription Record Date") are
eligible to purchase shares of Cytogen Common Stock in the Subscription
Offering.
The Offering. Each holder of shares of Cellcor Common Stock at the close of
business on the Subscription Record Date will be entitled to purchase 1.118
fully-paid and non-assessable shares of Cytogen Common Stock for each share of
Cellcor Common Stock held by such holder (rounded down to the nearest whole
number) for $3.89 per share of Cytogen Common Stock, at any time at or before
5:00 p.m., New York City time, on October 13, 1995 (the "Expiration Date"). See
"SUBSCRIPTION OFFERING." The right to purchase shares of Cytogen Common Stock
in the Subscription Offering is not transferable and may be exercised only by
the holder of record on the Subscription Record Date until the Expiration Date.
The issuance of shares of Cytogen Common Stock pursuant to the Subscription
Offering is conditioned upon consummation of the Merger pursuant to the Merger
Agreement. No certificates evidencing the right to purchase shares of Cytogen
Common Stock in the Subscription Offering will be issued.
Purchase. Holders of shares of Cellcor Common Stock must complete the
Subscription Offering Purchase Form and return it, with a check in the amount of
the aggregate purchase price, to such holder's broker or Mellon Securities Trust
Company (the "Subscription Offering Agent"). Shares of Cellcor Common Stock
held on the Subscription Record Date in an account with a broker or nominee must
be exercised by the holder of record. See "SUBSCRIPTION OFFERING--Purchase."
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Minimum Subscription Amount. Certain of the Principal Stockholders have
agreed in the Voting Agreement to purchase 3,084,833 shares of Cytogen Common
Stock for an aggregate cash amount of $12,000,000; provided, however, that to
the extent up to 128,534 shares of Cytogen Common Stock are purchased in the
Subscription Offering for up to $500,000 by persons other than the Principal
Stockholders, the commitment of those Principal Stockholders to purchase shares
of Cytogen Common Stock in the Subscription Offering shall be reduced by an
amount equal to such other purchases, but not to less than 2,956,299 shares and
$11,500,000.
Maximum Number of Shares of Cytogen Common Stock Issuable in Subscription
Offering. The maximum number of shares of Cytogen Common Stock issuable
pursuant to the Subscription Offering is 6,637,493, for aggregate purchase
consideration of approximately $25.8 million.
Delivery of Shares Upon Purchase. Certificates representing shares of Cytogen
Common Stock purchased in the Subscription Offering will be issued by the
Subscription Offering Agent promptly upon consummation of the Merger pursuant to
the Merger Agreement. No shares of Cytogen Common Stock purchased in the
Subscription Offering will be delivered prior to the date of the Special
Meetings. If the Merger Agreement is terminated pursuant to its terms, the
Subscription Offering will be terminated without any shares of Cytogen Common
Stock being issued pursuant thereto, and all funds deposited with the
Subscription Offering Agent will be returned to the depositing stockholders
without interest or deduction.
Use of Proceeds. Cytogen anticipates using the net proceeds received in the
Subscription Offering for the repayment of the Note and general corporate
purposes, including product commercialization, late-stage product development
activities, research and development projects within Cytogen and Cellcor, and
selling, general and administrative expenses. See "SUBSCRIPTION OFFERING--Use
of Proceeds."
Federal Income Tax Consequences
Neither Cytogen nor Cellcor has requested or will receive an advance ruling
from the Internal Revenue Service as to the tax consequences of the Transaction.
As contemplated by the Merger Agreement, each of Cytogen and Cellcor will
receive at or prior to the Effective Time opinions of the other's counsel, which
opinions will be based on customary conditions and qualifications and certain
factual representations from Cytogen and Cellcor that, for federal income tax
purposes, the Merger will constitute a reorganization under Section 368 of the
Internal Revenue Code of 1986, as amended, and that (i) no gain or loss will be
recognized by a Cellcor stockholder (other than certain holders in special
circumstances) in connection with the Merger (except that gain may be recognized
with respect to the right to purchase shares of Cytogen Common Stock in the
Subscription Offering or cash paid in lieu of fractional shares of Cytogen
Common Stock) and (ii) neither Cytogen nor Cellcor will recognize income, gain
or loss as a result of the Merger. Cellcor stockholders should consult their
own tax advisors as to the tax consequences of the Transaction to them under
federal, state, local or any other applicable law. See "CERTAIN FEDERAL INCOME
TAX CONSEQUENCES."
Risk Factors
Certain factors should be considered in evaluating the Merger Proposal and
the Issuance Proposal and the ownership of Cytogen Common Stock to be issued in
the Merger and the Subscription Offering. See "RISK FACTORS."
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COMPARATIVE MARKET PRICES
Cytogen Common Stock is quoted on the Nasdaq National Market under the
symbol "CYTO." Until May 25, 1995, Cellcor Common Stock was quoted on the
Nasdaq National Market under the symbol "CLTX." Effective May 25, 1995, Cellcor
Common Stock was delisted from the Nasdaq National Market as a result of
Cellcor's failure to meet the net tangible asset requirement set forth in the
NASD By-laws and is currently traded on the OTC Bulletin Board. The following
table sets forth for the calendar periods indicated the high and low reported
sale prices on the Nasdaq National Market and, with respect to Cellcor from and
after May 25, 1995, on the OTC Bulletin Board.
<TABLE>
<CAPTION>
Cytogen Cellcor
Common Stock Common Stock
----------------- -----------------
High Low High Low
------- -------- -------- -------
<S> <C> <C> <C> <C>
1993
First Quarter............................... $23 $10-1/4 $2-7/8 $ 7/8
Second Quarter.............................. 13-1/2 9-3/4 1-1/32 9/16
Third Quarter............................... 12-1/2 4-7/8 15/16 3/8
Fourth Quarter.............................. 8-7/8 5-5/8 1-11/16 1/2
1994
First Quarter............................... 7 3 1-5/16 11/16
Second Quarter.............................. 6-1/2 2-7/8 2-15/16 1-1/8
Third Quarter............................... 5-3/4 3 4-1/2 1-7/16
Fourth Quarter.............................. 4-1/4 2-3/8 7-1/4 3-1/2
1995
First Quarter............................... 5-1/4 3-1/16 5-1/4 2-3/16
Second Quarter.............................. 5-1/4 2-15/16 3-3/8 1-1/4
Third Quarter (through September 12, 1995).. 6-1/2 4-1/4 4-5/8 2-1/4
</TABLE>
On June 15, 1995, the last full trading day prior to the first public
announcement by Cytogen of its proposal to acquire Cellcor in the Merger, the
last sale prices per share of Cytogen Common Stock and Cellcor Common Stock were
$4.50 and $1.50, respectively, and the equivalent per share market value for
Cellcor Common Stock, reflecting the Common Exchange Ratio, was $2.70.
On September 12, 1995, the last full trading day prior to the date of
printing of this Joint Proxy Statement/Prospectus, the last sale prices per
share of Cytogen Common Stock and Cellcor Common Stock were $5.375 and $3.00,
respectively.
Because the market price of Cytogen Common Stock is subject to fluctuation,
the market value of the shares of Cytogen Common Stock that the Cellcor
stockholders will receive in the Merger may increase or decrease prior to the
Merger. Stockholders are urged to obtain current market quotations for Cytogen
Common Stock and Cellcor Common Stock.
On August 17, 1995, the approximate number of record holders of Cytogen
Common Stock was 2,602. Cytogen has not paid any cash dividends on Cytogen
Common Stock since its inception and does not anticipate paying any cash
dividends on Cytogen Common Stock in the foreseeable future. Declaration of
dividends on Cytogen Common Stock will depend, among other things, upon future
earnings, the operating and financial condition of Cytogen, its capital
requirements and general business conditions.
On August 17, 1995, the approximate number of record holders of Cellcor
Common Stock was 112. Cellcor has not paid any cash dividends on Cellcor Common
Stock since its inception.
--------------------------------------------------------------------------------
18
<PAGE>
COMPARATIVE PER SHARE DATA
The following table sets forth historical per share data for Cytogen, Cellcor
and CytoRad Incorporated ("CytoRad"), pro forma per share data for Cytogen
giving effect to the Transaction and the merger of CytoRad into a wholly-owned
subsidiary of Cytogen (the "CytoRad Merger"), which became effective on February
27, 1995, and equivalent pro forma per share data for Cellcor and CytoRad. The
information presented should be read in conjunction with the historical
financial statements and notes thereto of Cytogen, Cellcor and CytoRad and the
unaudited Pro Forma Condensed Combined Financial Statements and related notes
thereto, included or incorporated by reference in this Joint Proxy
Statement/Prospectus. Pro forma and equivalent pro forma per share data reflect
the combined results of Cytogen, Cellcor and CytoRad, after giving effect to the
Transaction and the CytoRad Merger as if such events had occurred on June 30,
1995, in the case of book value data, and on January 1, 1994, in the case of
operations data. The pro forma per share data are not necessarily indicative of
actual results had the Transaction and the CytoRad Merger occurred on such dates
or of future expected results. See "INCORPORATION OF CERTAIN DOCUMENTS BY
REFERENCE," "FINANCIAL STATEMENTS--Cytogen Corporation and Subsidiaries, Pro
Forma Condensed Combined Financial Statements (Unaudited)," "--Audited CytoRad
Incorporated Financial Statements," "--CytoRad Incorporated Financial Statements
(Unaudited)," Cellcor's financial statements and related notes thereto, which
are included in Cellcor's Reports on Form 10-K and Form 10-Q attached to this
Joint Proxy Statement/Prospectus as Annex E and Annex F, respectively, and "RISK
FACTORS--History of Operating Losses; Accumulated Deficit."
<TABLE>
<CAPTION>
Six Months Ended Year Ended
June 30, 1995 December 31, 1994
--------------------------------- -----------------------------
Pro Forma Pro Forma
Historical Cytogen Historical Cytogen
---------------- --------------- -------------- -------------
<S> <C> <C> <C> <C>
Cytogen:
Loss per common share from continuing operations.. $(1.11)(1) $(0.48) $(1.38)(1) $(1.07)
Cash dividends declared per common share.......... --- --- --- ---
Book value per common share at period end(2)...... $ 0.16 $ 0.32 $ 0.18 N/A
Equivalent Equivalent
Pro Forma Pro Forma
Historical(3) CytoRad (3) Historical CytoRad(4)
------------ ----------- ---------- ----------
CytoRad:
Loss per common share from continuing operations.. $(0.57)(1) $(0.72)(4) $(0.29)(1) $(1.61)
Cash dividends declared per common share.......... --- --- --- ---
Book value per common share at period end(2)...... N/A N/A $ 3.24 N/A
Equivalent Equivalent
Pro Forma Pro Forma
Historical Cellcor Historical Cellcor
------------ ----------- ---------- ----------
Cellcor:
Loss per common share from continuing operations.. $(0.97)(5) $(0.29)(4) $(1.33)(5) $(0.64)(4)
Cash dividends declared per common share.......... --- --- --- ---
Book value per common share at period end(2)...... $(0.29) $ 0.19(4) $ 0.61 N/A
-----------------------
</TABLE>
(1) The number of shares used to compute the historical net loss per share is
based upon the weighted average number of shares outstanding.
(2) Computed by dividing historical or pro forma stockholders' equity by the
historical or pro forma number of shares outstanding at the end of the
period or year presented. Calculations exclude redeemable common stock.
The historical or equivalent pro forma book value per common share
information as of June 30, 1995 for CytoRad is not presented in the above
table inasmuch as Cytogen's Form 10-Q for the quarter ended June 30, 1995,
which reflects the CytoRad Merger, has previously been filed with the
Commission.
(3) The per share operations data for CytoRad represent the period from January
1, 1995 to February 27, 1995 (the date of the consummation of the CytoRad
Merger).
(4) The shares used in computing the equivalent pro forma net loss per share and
equivalent pro forma book value per share are obtained by dividing the pro
forma number of shares outstanding by the Common Exchange Ratio (.60 for the
Merger and 1.50 for the CytoRad Merger).
(5) The net loss per common share is computed by dividing net loss after
adjusting for preferred stock dividends by the weighted average number of
common shares outstanding. Common stock equivalent shares are not included
in the per share calculations where the effect of their inclusion would be
antidilutive.
--------------------------------------------------------------------------------
19
<PAGE>
--------------------------------------------------------------------------------
CYTOGEN SELECTED CONSOLIDATED HISTORICAL AND PRO FORMA FINANCIAL DATA
The selected historical consolidated financial data as of December 31,
1994, January 1, 1994, January 2, 1993, December 28, 1991 and December 29, 1990
and for the years then ended are derived from Cytogen's financial statements,
which have been audited by Arthur Andersen LLP, independent public accountants.
Such financial statements are incorporated by reference in this Joint Proxy
Statement/Prospectus. The selected historical financial data as of June 30,
1995 and for the six months ended June 30, 1995 and 1994 have been derived from
the unaudited financial statements of Cytogen, incorporated by reference in this
Joint Proxy Statement/Prospectus. The unaudited financial data have been
prepared on a basis consistent with the audited financial statements and, in the
opinion of management, include all adjustments (consisting only of normal
recurring adjustments) necessary to present fairly the financial condition and
results of operations for the periods presented. The results for the six months
ended June 30, 1995 are not necessarily indicative of the results that may be
expected for the year ending December 31, 1995. The historical data should be
read in conjunction with "Management's Discussion and Analysis of Financial
Condition and Results of Operations" incorporated by reference herein from
Cytogen's Reports on Form 10-K and Form 10-Q. The pro forma financial data
assume the consummation of the Transaction. All of the data set forth below are
qualified by reference to and should be read in conjunction with the Pro Forma
Condensed Combined Financial Statements and notes thereto, included elsewhere
herein, and Cytogen's financial statements and related notes thereto, which are
incorporated by reference herein from Cytogen's Reports on Form 10-K and Form
10-Q.
<TABLE>
<CAPTION>
Six Months Ended Fiscal Year Ended
--------------------------- --------------------------------------------------------------------------
Pro Forma Historical Pro Forma Historical
--------- --------------- ------------ -----------------------------------------------------------
June 30, June 30, June 30, December 31, December 31 January 1, January 2, December 28, December 29
1995(1) 1995(2) 1994 1994(1) 1994 1994 1993 1991 1990
-------- -------- -------- ------------ ----------- ---------- ---------- ------------ -----------
(In thousands, except per share amounts)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Consolidated Statement
of Operations Data:
REVENUES:
Product related $ 780 $ 728 $ 533 $ 1,508 $ 1,411 $ 1,591 $ 367 $ --- $ ---
License and contract 1,542 792 47 1,822 1,047 8,763 13,000 7,022 1,974
------- ------- ------- ------- ------- ------- ------- ------- --------
Total revenues 2,322 1,520 580 3,330 2,458 10,354 13,367 7,022 1,974
------- ------- ------- ------- ------- ------- ------- ------- --------
OPERATING EXPENSES:
Research and
development 13,442 10,296 9,118 25,923 20,321 24,844 21,680 21,293 16,942
Selling and marketing 1,720 1,720 2,691 5,536 5,536 9,399 2,679 1,290 703
Reacquisition of
technology
and marketing
rights(2) --- 19,663 --- 4,647 4,647 --- --- --- ---
General and
administrative 5,601 3,189 2,541 8,132 4,290 7,016 5,394 3,612 4,395
Restructuring expense 825 --- --- --- --- --- --- --- ---
------- ------- ------- ------- ------- ------- ------- ------- --------
Operating expenses 21,588 34,868 14,350 44,238 34,794 41,259 29,753 26,195 22,040
------- ------- ------- ------- ------- ------- ------- ------- --------
Loss from operations (19,266) (33,348) (13,770) (40,908) (32,336) (30,905) (16,386) (19,173) (20,066)
Gain (loss) on
investments, net 244 80 638 626 (470) 1,676 3,447 3,829 2,727
------- ------- ------- ------- ------- ------- ------- ------- --------
Net loss (19,022) (33,268) (13,132) (40,282) (32,806) (29,229) (12,939) (15,344) (17,339)
Dividends on preferred
stock --- --- --- --- --- --- (1,293) (1,725) ( 1,725)
------- ------- ------- ------- ------- ------- ------- ------- --------
Net loss to common
stockholders $(19,022) $(33,268) $(13,132) $(40,282) $(32,806) $(29,229) $(14,232) $(17,069) $(19,064)
======== ======== ======== ======== ======== ======== ======== ======== ========
Net loss per common
share $ (0.48) $ (1.11) $ (0.57) $ (1.07) $ (1.38) $ (1.38) $ (0.75) $ (0.98) $ (1.36)
======= ======== ======== ======== ======== ======== ======== ======== ========
Weighted average common
shares outstanding(3) 39,792 29,982 23,163 37,657 23,822 21,121 18,994 17,345 13,971
======= ======= ======= ======= ======= ======= ======= ======= ========
</TABLE>
--------------------------------------------------------------------------------
20
<PAGE>
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Pro Forma Historical
--------- --------------------------------------------------------------------------
June 30, June 30, December 31, January 1, January 2, December 28, December 29,
1995 1995 1994 1994 1993 1991 1990
--------- -------- ------------ ---------- ---------- ------------ ------------
(In thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Balance Sheet Data:
Cash and short-term investments $20,278 $10,564 $ 7,700 $23,764 $35,738 $54,506 $39,835
Total assets 32,266 20,908 19,690 34,635 52,775 64,471 47,082
Long-term liabilities 5,164 4,768 4,310 192 276 346 1,213
Redeemable preferred stock --- --- --- --- --- 17,250 17,250
Redeemable common stock 2,000 2,000 2,000 2,000 2,000 2,000 2,000
Stockholders' equity(4) 12,549 5,168 4,368 21,731 45,411 38,760 23,193
</TABLE>
--------------------------------
(1) The pro forma loss from operations for the fiscal year ended December 31,
1994 and the six months ended June 30, 1995 exclude a nonrecurring charge
for acquired research and development, which will be charged to the
statement of operations at the Effective Time. Based on $5.25, the last
sale price per share of Cytogen Common Stock on August 29, 1995, this
amount would be $29,355,000 ($(0.78) per share and $(0.74) per share for
the fiscal year ended December 31, 1994 and the six months ended June 30,
1995, respectively). To the extent the market price of Cytogen Common
Stock at the Effective Time is different from $5.25 per share, this charge
to expense would change. In addition, this charge to expense may change
due to other factors, including a change from Cellcor's June 30, 1995
stockholders' deficit balance. See "FINANCIAL STATEMENTS--Cytogen
Corporation and Subsidiaries, Notes to Pro Forma Condensed Combined
Financial Statements (Unaudited)."
(2) On February 27, 1995, Cytogen acquired CytoRad by merging CytoRad with and
into a wholly-owned subsidiary of Cytogen. As a result of the CytoRad
Merger, (i) as of July 10, 1995, Cytogen had issued 6,034,335 shares of
Cytogen Common Stock, 4,023,395 CVRs and 4,023,395 warrants to purchase
Cytogen Common Stock and (ii) Cytogen recorded a charge to its statement of
operations in the amount of approximately $19.7 million for reacquisition
of technology and marketing rights, representing the amount by which the
purchase price exceeded the fair value of net assets acquired from CytoRad.
(3) Excludes shares reserved for issuance pursuant to the outstanding CVRs and
upon exercise of various outstanding options and warrants (historical and
pro forma) because the aggregate inclusion would be antidilutive.
(4) Cytogen has paid no cash dividends on Cytogen Common Stock since its
inception.
--------------------------------------------------------------------------------
21
<PAGE>
--------------------------------------------------------------------------------
CYTORAD SELECTED HISTORICAL FINANCIAL DATA
The selected historical financial data for CytoRad as of December 31, 1994,
January 1, 1994, January 2, 1993 and December 28, 1991 and for the years then
ended have been derived from CytoRad's financial statements, which have been
audited by Arthur Andersen LLP, independent public accountants. The selected
historical financial data for the three months ended March 31, 1995 and 1994
have been derived from the unaudited financial statements of CytoRad. The
unaudited financial data have been prepared on a basis consistent with the
audited financial statements and, in the opinion of management, include all
adjustments (consisting only of normal recurring adjustments) necessary to
present fairly the financial condition and results of operations for the periods
presented. The results for the three months ended March 31, 1995 are not
necessarily indicative of the results that would have been expected for the year
ending December 31, 1995. The historical data set forth below should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and CytoRad's financial statements included elsewhere
herein.
<TABLE>
<CAPTION>
Cumulative
from
Three Months Ended Fiscal Year Ended Inception
------------------------ -------------------------- (December 2,
1991) to
March 31, March 31, December 31, January 1, January 2, December 28, December 31,
1995(1) 1994 1994 1994 1993 1991(2) 1994
--------- --------- ------------ ---------- ---------- ------------ ------------
(In thousands, except per share amounts)
<S> <C> <C> <C> <C> <C> <C> <C>
Statement of Operations Data:
Interest income $ 148 $ 275 $ 960 $ 1,280 $ 1,415 $ --- $ 3,655
Research and development --- --- --- 10,996 11,656 --- 22,652
General and administrative 529 647 1,415 683 336 --- 2,434
Merger costs 1,923 --- 696 --- --- --- 696
-------- ------ ------- ------- ---------- ------- --------
Net loss $ (2,304) $ (372) $(1,151) $(10,399) $ (10,577) $ --- $(22,127)
======== ====== ======= ======== ========== ======= ========
Net loss per callable common
share $ (0.57) $(0.09) $ (0.29) $ (2.58) $ (3.10) $ ---
======== ====== ======= ======== ========== =======
Weighted average callable
common shares outstanding 4,025 4,025 4,025 4,025 3,415 100
======== ====== ======= ======= ========== =======
<CAPTION>
December 31, January 1, January 2, December 28,
1994 1994 1993 1991(2)
----------- --------- ---------- ------------
(In thousands)
<S> <C> <C> <C> <C>
Balance Sheet Data:
Cash and short-term investments $13,063 $15,885 $26,836 $0.1
Total assets 13,729 16,133 27,181 0.1
Total stockholders' equity(3) 13,031 15,601 26,000 0.1
---------------------------
</TABLE>
(1) Represents the results of operations for the period January 1, 1995 to
February 27, 1995. CytoRad's historical results of operations from
February 27, 1995 to March 31, 1995 have been consolidated with those of
Cytogen and have been filed with the Commission as part of the Cytogen's
Form 10-Q for the quarter ended March 31, 1995, which reflects the CytoRad
Merger. A six-month comparison is not presented above inasmuch as CytoRad
ceased to exist in the first quarter of 1995 and such a comparison would
not be meaningful.
(2) CytoRad did not commence operations until after December 28, 1991. See
"FINANCIAL STATEMENTS--CytoRad Incorporated, Notes to Financial Statements,
Note 1."
(3) CytoRad never paid cash dividends.
--------------------------------------------------------------------------------
22
<PAGE>
--------------------------------------------------------------------------------
CELLCOR SELECTED HISTORICAL FINANCIAL DATA
The selected historical financial data presented below under the captions
"Statement of Operations Data" and "Balance Sheet Data" for, and as of the end
of, each of the years in the five-year period ended December 31, 1994, are
derived from the financial statements of Cellcor, which financial statements
have been audited by KPMG Peat Marwick LLP, independent certified public
accountants. The financial statements as of December 31, 1994 and 1993, and for
each of the years in the three-year period ended December 31, 1994, and the
report thereon, are included in Cellcor's Report on Form 10-K attached to this
Joint Proxy Statement/Prospectus as Annex E. The selected data presented below
for the six-month periods ended June 30, 1995 and 1994, and as of June 30, 1995,
are derived from the unaudited financial statements of Cellcor included in
Cellcor's Report on Form 10-Q attached to this Joint Proxy Statement/Prospectus
as Annex F.
The selected historical financial data should be read in conjunction with
the financial statements for the year ended December 31, 1994, the related notes
and the independent auditors' report, which contains an explanatory paragraph
that states that Cellcor's recurring losses from operations, decreasing cash
reserves and need for additional capital to fund continuing operations raise
substantial doubt about the entity's ability to continue as a going concern.
The financial statements and the selected data do not include any adjustments
that might result from the outcome of that uncertainty. In addition, an
explanatory paragraph is included that states that Cellcor and certain of its
officers are defendants in a class action lawsuit seeking damages in unspecified
amounts, alleging that the prospectus used to sell Cellcor's stock in the
initial public offering contained false and misleading statements and omitted
material facts. Because of the uncertainty of the outcome of the lawsuit at
December 31, 1994, no provision for any liability had been recognized in the
December 31, 1994 financial statements. On April 24, 1995, Cellcor announced
that it had agreed to settle this lawsuit. See "INFORMATION CONCERNING CELLCOR-
-Recent Developments" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations" included in Cellcor's Reports on Form 10-K
and Form 10-Q attached to this Joint Proxy Statement/Prospectus as Annex E and
Annex F, respectively.
<TABLE>
<CAPTION>
Six Months
Ended
June 30, Fiscal Year Ended
--------------- --------------------------------------------------------
1995 1994 1994 1993 1992 1991 1990
---- ---- ---- ---- ---- ---- ----
(In thousands, except per share data)
Statement of Operations Data:
<S> <C> <C> <C> <C> <C> <C> <C>
Net revenue $ 802 $ 355 $ 872 $ --- $ 2,690 $1,534 $ 412
Operating loss (5,052) (3,257) (7,125) (7,640) (12,713) (9,411) (7,353)
Net loss (5,036) (3,232) (7,021) (7,406) (12,519) (9,826) (7,147)
Net loss per common share $(0.97) $(0.59) $(1.33) $(1.36) $(2.65) $(3.97) $(3.11)
Weighted average number of
shares used in the
calculation 5,453 5,436 5,442 5,436 4,718 2,472 2,297
<CAPTION>
June 30, December 31, December 31, December 31, December 31, December 31,
1995 1994 1993 1992 1991 1990
--------- ------------ ------------ ------------ ------------ ------------
(In thousands)
Balance Sheet Data:
<S> <C> <C> <C> <C> <C> <C>
Working capital (deficit) $ (2,315) $ 2,587 $3,852 $10,684 $ (8,919) $ 1,502
Total assets 2,593 5,368 6,561 15,959 4,782 4,547
Short-term debt, including
current maturities of
long-term debt --- --- 83 475 9,046 ---
Long-term debt --- --- --- --- 194 ---
Capital lease obligations 505 457 612 810 927 831
Stockholders' equity
(deficit) $(1,604) $ 3,332 $4,868 $12,066 $ (6,729) $ 2,938
</TABLE>
No cash dividends were declared or paid on Cellcor Common Stock during any of
these periods.
--------------------------------------------------------------------------------
23
<PAGE>
RISK FACTORS
The following risk factors, in addition to the other information contained
or incorporated by reference herein, should be considered (i) by holders of
Cellcor Common Stock and Cellcor Preferred Stock in evaluating the Merger
Proposal and by holders of Cellcor Common Stock in determining whether to
purchase additional shares of Cytogen Common Stock in the Subscription Offering,
(ii) by holders of Cytogen Common Stock in evaluating the Issuance Proposal and
(iii) by stockholders of both companies in evaluating the business of the
combined operations of Cellcor and Cytogen following the Merger. References in
this Joint Proxy Statement/Prospectus to Cellcor include references to the
Merger Subsidiary, as the surviving corporation in the Merger (the "Surviving
Corporation"), as appropriate.
Factors Affecting Market Price of Cytogen Common Stock
Based on the market prices prevailing immediately prior to the announcement
of the execution of the Merger Agreement, the market value of the .60 shares of
Cytogen Common Stock to be issued for each share of Cellcor Common Stock
pursuant to the Merger exceeded the market value of a share of Cellcor Common
Stock. There can be no assurance, however, that, at or after the Effective Time
(defined below), such shares of Cytogen Common Stock will maintain such market
value or equal or exceed (on an equivalent basis) the prices at which shares of
Cellcor Common Stock have traded in the past. See "COMPARATIVE MARKET PRICES."
The market price of the securities of biopharmaceutical companies generally
and of Cytogen 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. The prices at which Cytogen Common Stock trades after the Merger
may be influenced by many factors, including, among others, announcements of
technical innovations, corporate alliances and in-licensing of additional
products, regulatory approvals, patent or proprietary rights or other
developments by Cytogen or its competitors, the liquidity of the market for
Cytogen Common Stock, investor perceptions of Cytogen (including evaluation of
the risk factors described herein) and the industry in which Cytogen and its
subsidiaries participate, the operating results of Cytogen and its subsidiaries,
and general economic and market conditions. Similar factors affect the prices
at which Cellcor Common Stock currently trades. Cellcor stockholders should
obtain current market quotations for Cytogen Common Stock and Cellcor Common
Stock when considering how to vote in respect of the Merger and whether to
purchase Cytogen Common Stock in the Subscription Offering.
Stockholder Vote
As of the Cellcor Record Date (defined below), Hillman Medical Ventures
partnerships and certain of its affiliates, the principal stockholders of
Cellcor (the "Principal Stockholders"), together with certain of the directors
and executive officers of Cellcor, owned or had voting control over an aggregate
of 3,051,710 shares of Cellcor Common Stock and 5,250 shares of Cellcor
Preferred Stock, representing approximately 51.4% of the votes entitled to be
cast by the common stockholders and 100% of the votes entitled to be cast by the
preferred stockholders at the Cellcor Special Meeting. Consequently, the
affirmative vote of the Principal Stockholders and said directors and executive
officers will be sufficient to approve all matters to be considered at the
Cellcor Special Meeting. Under the terms of the Voting Agreement (defined
below), the Principal Stockholders have agreed to vote their shares in favor of
the Merger Proposal and have granted a proxy to the Merger Subsidiary to so vote
those shares. See "THE VOTING AGREEMENT." Also, each of said directors and
executive officers has advised Cellcor that he intends to vote or direct the
vote of all the outstanding shares of Cellcor Common Stock and Cellcor Preferred
Stock over which he has voting control in favor of approval and adoption of the
Merger Proposal. See "THE SPECIAL MEETINGS--Voting Rights and Proxies."
24
<PAGE>
Acquired Research and Development Charge
Cytogen expects to incur charges to its statement of operations currently
estimated to be approximately $29.4 million on acquired research and
development, in the quarter in which the Merger is consummated, representing the
amount by which the purchase price for the shares of Cellcor Common Stock it
will acquire in the Merger, including transaction fees and costs incident to the
Merger, exceeds the fair value of net assets acquired from Cellcor. This figure
is a preliminary estimate only and therefore is subject to change. There can be
no assurance that Cytogen will not incur additional charges in subsequent
quarters to reflect costs associated with the Merger. See "ACCOUNTING TREATMENT
OF THE MERGER" and "FINANCIAL STATEMENTS--Cytogen Corporation and Subsidiaries,
Pro Forma Condensed Combined Financial Statements (Unaudited)."
Integration of Cellcor and Cytogen
If the Merger is consummated, the successful integration of Cellcor as a
wholly-owned subsidiary of Cytogen will be important to Cytogen's future
financial performance. The anticipated benefits of Cytogen's acquisition of
Cellcor may not be achieved unless Cellcor is successfully integrated with
Cytogen's existing operations, which will require substantial attention from
Cytogen's management. If Cytogen's management is unable to manage this
integration effectively, Cytogen's business and results of operations could be
materially adversely affected.
History of Operating Losses; Accumulated Deficit
Cytogen commenced its research activities in 1981, and has never made a
profit and has never had positive cash flow from operations. At June 30, 1995,
Cytogen had an accumulated deficit of approximately $189.1 million, and Cytogen
anticipates it will continue to incur substantial losses in the future. Cytogen
first recognized product related revenues in 1992. Product related revenues
were $400,000, $1.6 million and $1.4 million in fiscal 1992, 1993 and 1994,
respectively. License and contract revenues were $13 million, $8.8 million and
$1 million in fiscal 1992, 1993 and 1994, respectively. Cytogen recognized
license and contract revenues of $9.1 million and $7.9 million in fiscal 1992
and 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 Cytogen. No CytoRad license and contract
revenues were recognized in fiscal 1994. In February 1995, CytoRad merged with
and into a wholly-owned subsidiary of Cytogen. As a result of the merger with
CytoRad, Cytogen will not recognize any further contract revenues from CytoRad
and, in the first quarter of 1995, Cytogen recorded approximately $19.7 million
for reacquisition of technology and marketing rights as a charge to its
statement of operations, representing the amount by which the purchase price
exceeded the fair value of net assets acquired from CytoRad.
Cytogen anticipates that its revenues over the near term will not be
sufficient to cover its operating expenses. Cytogen'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. There can also be no assurance that even if
Cytogen were to begin to generate profits from its own operations that such
profits would not be offset in whole or in part by Cellcor's operating losses.
Since its inception in December 1986, Cellcor has never made a profit and
has never had positive cash flow from operations. At June 30, 1995, Cellcor had
an accumulated deficit of approximately $56.4 million, primarily as a result of
substantial research and development and administrative costs associated with
start-up operations. These costs have included clinical studies of
autolymphocyte therapy ("ALT") for the treatment of metastatic renal cell
carcinoma ("mRCC"), equipping of laboratories, the establishment of the pilot
cell processing center in Boston, Massachusetts and clinical and cell processing
facilities in Atlanta, Georgia and Orange, California (and subsequent cessation
of operations at such Atlanta and Orange facilities), and the
25
<PAGE>
initiation of additional clinical studies. There can be no assurance that
Cellcor's future operations will produce significant revenues or profits.
Future Capital Needs; Uncertainty of Funding
After giving effect to the Transaction (assuming that shares of Cytogen
Common Stock are issued and sold in the Subscription Offering only to the extent
of the Minimum Subscription Amount (defined below)), Cytogen estimates that its
existing funds together with other financing and acquisition opportunities which
may become available will enable it to maintain its current and planned
operations into the first half of 1996. In order to develop, manufacture and
market all of its products effectively and to continue the development of
Cellcor's technology, Cytogen will require substantial additional funding.
Cytogen's capital requirements depend on numerous factors, including without
limitation, the progress of its research and development programs, the time and
costs involved in obtaining regulatory approvals, the cost of filing,
prosecuting, defending and enforcing any patent claims and other intellectual
property rights, competing technological and market developments, changes in
Cytogen's existing research relationships, the ability of Cytogen to establish
collaborative alliances, the development of commercialization activities and
alliances, and the purchase of additional facilities and capital equipment.
In order to meet its funding need, Cytogen intends to seek to raise funds
through (i) additional sales of equity securities (including pursuant to its
proposed arrangement with Nomura Securities International, Inc. ("Nomura") under
a purchase agreement dated March 28, 1995 between Cytogen and Nomura, pursuant
to which Cytogen could sell up to $49,000,000 of Cytogen Common Stock in a
series of transactions during a twenty-four month period, but for which the
Registration Statement on Form S-3 has not yet been declared effective by the
Commission), which could result in substantial dilution of the percentage
ownership of stockholders holding Cytogen Common Stock at that time, (ii)
marketing and out-licensing arrangements, (iii) corporate partnering
arrangements and/or (iv) strategic mergers and acquisitions. If such funding is
not obtained, Cytogen would be required to significantly curtail its and/or
Cellcor's operations. No assurance can be given as to Cytogen's success in
obtaining additional funding or as to the terms of any such funding.
New Therapeutic Approach
Cellcor's development efforts are based upon a novel approach to disease
treatment, involving the processing of living human cells outside the body,
which, to date, has been neither approved nor disapproved by the United States
Food and Drug Administration ("FDA"). There can be no assurance that such
therapies will become widely accepted by healthcare providers, physicians or
patients. Certain physicians have expressed significant reservations about the
efficacy of ALT treatment. Cellcor's success will be dependent upon the results
of its FDA-designated Pivotal Phase III clinical trial, FDA's assessment of the
Product License Application ("PLA") and Establishment License Application
("ELA") for ALT and the acceptance of ALT by urologists and oncologists.
Scientific and medical evidence has not provided a complete explanation to
support why or how Cellcor's ALT treatment for mRCC has achieved the clinical
results shown to date. The efficacy of ALT for mRCC could be called into
question and Cellcor's business could be materially adversely affected. There
can be no assurance that ALT for diseases other than mRCC will be shown to be
safe and effective or that healthcare providers, physicians or patients will
accept Cellcor's therapies. Unanticipated side effects attributable to
Cellcor's therapeutic process, or to any product or process of others
incorporating a similar therapeutic approach, could have an adverse effect on
Cellcor's ability to achieve physician and patient acceptance or to obtain
necessary regulatory approvals. See "INFORMATION CONCERNING CELLCOR--Business
of Cellcor."
Patents and Proprietary Rights
Each of Cytogen and Cellcor has been issued patents in the United States,
Cytogen has been issued patents in other countries and each of Cytogen and
Cellcor has patent applications pending to protect its proprietary technology.
In addition, each company relies heavily on its proprietary technologies for
which patent applications have been filed but not yet granted in certain
countries. There can be no assurance that
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any patents that have been issued or may be issued in the future will be of
sufficient protection or commercial benefit to the companies, will afford each
adequate protection from competing products or will not be challenged or
declared invalid. Furthermore, there can be no assurance that additional United
States or foreign patents will be issued to either company. The success of each
of Cytogen and Cellcor will depend, in part, on its respective ability to obtain
patents, maintain trade secret protection and operate without infringing on the
proprietary rights of third parties. The extent to which each may be required
to license other patents or proprietary rights held by others and the cost and
availability of such licenses are presently unknown. No assurance can be given
that any licenses required under any such patents or proprietary rights would be
made available, if at all, on terms acceptable to either company. If either
Cytogen or Cellcor does not obtain such licenses, it could encounter delays in
product introductions, or could find that the development, manufacture or sale
of products requiring such licenses could be prohibited.
Other third parties have developed or obtained rights to processes related
to those used by Cellcor and a number of patents have issued to such third
parties and other patents are likely to be pending. No assurance can be given
that Cellcor's ALT therapy does not infringe one or more existing third-party
patents, although Cellcor believes that such patents are either not infringed or
that it would have meritorious defenses available to it in an infringement
action. However, each of Cellcor and Cytogen could incur substantial costs in
defending itself in suits brought against either company because of patents it
might infringe or in filing suits against others to have such patents declared
invalid. There can be no assurance that either company would be successful in
such suits and the finding of such infringement could have a material adverse
effect on its business.
Many aspects of Cellcor's cell processing procedures are maintained as
trade secrets, and each of Cytogen and Cellcor has taken steps to protect its
proprietary standard operating procedures. Each of Cytogen and Cellcor believes
that, due to the complexity of its proprietary procedures, it would be difficult
for a competitor to replicate these procedures without devoting substantial time
and resources to such effort. However, no assurance can be given that others
will not independently develop substantially equivalent proprietary information
and techniques, or otherwise gain access to each of Cytogen and Cellcor's trade
secrets or disclose such technology, or that each of Cytogen and Cellcor can
meaningfully protect its rights to any unpatented trade secrets.
Each of Cytogen and Cellcor has in place a policy to require its employees,
consultants and advisors to execute a confidentiality agreement upon the
commencement of an employment or consulting relationship with it. Each
agreement provides that all confidential information developed or made known to
the individual during the course of the employment or consulting relationship
will be kept confidential and not disclosed to third parties except in specified
circumstances. The agreements provide that all inventions conceived by the
individual while an employee or consultant shall be the exclusive property of
Cytogen or Cellcor, as the case may be. There can be no assurance, however,
that these agreements will provide meaningful protection for Cytogen's or
Cellcor's trade secrets in the event of unauthorized use or disclosure of such
information.
The Principal Stockholders have jointly and severally agreed to indemnify,
defend and hold harmless Cytogen and Cellcor from and against all loss, damage,
liability or expense, including, without limitation, reasonable attorneys' fees
and other costs of defense, arising out of certain limited patent infringement
matters. The total amount of any such indemnification shall in no event exceed
$12,000,000.
Government Regulation
Cytogen and Cellcor are subject to regulation by numerous governmental
authorities in the United States, including FDA and the Nuclear Regulatory
Commission, and, with respect to Cytogen, in other countries. Their 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 usually takes several years and typically requires substantial
expenditures.
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Cytogen submitted an application to FDA for marketing approval of
ProstaScint(TM), a prostate cancer diagnostic imaging product ("ProstaScint"),
in January 1995, which was accepted effective March 13, 1995, and submitted an
application to FDA for marketing approval of Quadramet, which was accepted
effective August 11, 1995. No assurance can be given, however, as to whether or
when Cytogen will receive approval for these products. Cytogen has submitted an
application to FDA for repeat administration of OncoScint CR/OV. To date, FDA
has not approved this extended indication. Cytogen cannot predict with accuracy
the outcome and timing of FDA's response.
In January 1994, Cellcor initiated an FDA-designated Pivotal Phase III
clinical trial of ALT in patients with mRCC. Cellcor expects to review
preliminarily the trial data in accordance with the protocol for this study.
Based upon this review, Cytogen and Cellcor, in consultation with FDA, will
determine whether or not the PLA/ELA will be submitted and the timing of such
submission to FDA. No assurance can be given as to the outcome and timing of
FDA approval for Cellcor's product.
Cytogen and Cellcor may encounter significant delays or excessive costs in
their efforts to secure necessary approvals or licenses. Future United States
or foreign legislative or administrative acts could also prevent or delay
regulatory approval of the companies' products. Failure to obtain or maintain
requisite governmental approvals, or failure to obtain approvals of the scope
requested, could delay or preclude Cytogen and/or Cellcor from marketing their
products, or limit the commercial use of the products and thereby have a
material adverse effect on the companies.
Contract Revenues
A significant portion of Cytogen's total revenues has historically been
generated from licensing and related contracts with third parties. With the
exception of a recently executed contract with The DuPont Merck Pharmaceutical
Company ("DuPont Merck"), all of these contracts have either been terminated, in
which event, Cytogen 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 Cytogen's rights to Quadramet(R) (or Samarium 153 EDTMP), a cancer
therapy agent for the treatment of bone pain associated with bone metastases
("Quadramet"), Cytogen does not currently have any source of contract revenues.
Under its strategic plan, Cytogen has assigned high priority to the product
development and commercialization programs for Quadramet and ProstaScint while
it continues to evaluate, invest in and support the sales and marketing
activities with respect to OncoScint(R) CR/OV, a colorectal and ovarian cancer
diagnostic imaging agent, which, to date, has achieved very limited sales in
both the United States and Europe. Cytogen's strategic plan also supports
development of additional products, services and technologies. No assurance can
be given that this strategy will be successful or that Cytogen will in the
future achieve significant revenues through product sales, license agreements or
otherwise.
During 1994, SRL, Inc., a Japanese diagnostic firm ("SRL"), and Cellcor
entered into a non-exclusive technology licensing and service agreement. Under
the agreement, SRL has the right to select from several development options.
Varying payments are due to Cellcor depending on the option SRL elects. At this
time, Cellcor expects that it is unlikely that SRL will elect an option that
will have a significant impact on its operations or capital needs in 1995 and
there can be no assurance that SRL will elect any development options in the
future.
Limited Manufacturing Capability and Experience
Cytogen has limited commercial scale manufacturing capacity, and it has not
previously produced commercial quantities of prostate cancer monoclonal
antibodies, which are a necessary element to the development of its ProstaScint
product line. An ELA for the facility used by Cytogen 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. Cytogen
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
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for the near term, although no assurance can be given to that effect. If
Cytogen's projected production requirements are not achieved it would suffer
material adverse effects. Cytogen currently has the in-house production
capacity necessary to produce projected commercial quantities of prostate cancer
monoclonal antibodies for the 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. Cytogen 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 would have a material adverse effect on
Cytogen.
Cellcor also has limited commercial scale manufacturing capacity, and it
has not previously produced commercial quantities of ALT for mRCC at levels that
could be reasonably expected after FDA approval. FDA has not yet approved an
ELA for the Cellcor facility used to manufacture ALT for mRCC. Cellcor 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 would have a material adverse effect on
Cellcor.
Single Supplier of Certain Raw Materials
The raw materials used in the manufacture of Cytogen's products include two
monoclonal antibodies. Cytogen has both exclusive and non-exclusive license
agreements which permit it to use monoclonal antibodies in the products it is
developing. Cytogen's one commercial product, OncoScint CR/OV, uses a
monoclonal antibody which is supplied by a single manufacturer. Although
Cytogen anticipates that the supplier will be able to meet Cytogen's needs for
commercial quantities of monoclonal antibodies for OncoScint CR/OV, no assurance
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 Cytogen's business.
Although Cellcor seeks to maintain multiple sources of supply for devices
and materials manufactured by third parties, in a few instances, including an
important monoclonal antibody used in Cellcor's cell processing procedures,
Cellcor relies on a single source of supply. In addition, Cellcor does not have
long-term supply arrangements with any manufacturer. Therefore, there can be no
assurance that products or devices necessary to implement Cellcor's living cell
therapies will be continuously available or available upon terms favorable to
Cellcor in the future.
Marketing Uncertainties
Cytogen 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,
Cytogen terminated its marketing relationship with its United States and
European Oncoscint CR/OV marketing partners. Since May 1994, Cytogen's direct
sales force has been the sole marketer of its OncoScint CR/OV product in the
United States. Cytogen intends to secure alternative marketing and distribution
partners for OncoScint CR/OV in Europe and other major markets outside the
United States. See "INFORMATION CONCERNING CYTOGEN--Recent Developments--
Letters of Intent." There can be no assurance that Cytogen will be able to
negotiate acceptable marketing alliances, that such alliances will be available
to Cytogen on acceptable terms or that any such relationships, if established,
will be commercially successful. Cytogen is currently evaluating its product
marketing options in the United States and continues to consider the value of
maintaining its direct selling efforts, as well as co-promotion alliances or
licensing of all rights to a third party. Cytogen is currently in the process
of upgrading its customer service capability to better support the accurate use
of its diagnostic products by nuclear medicine physicians. Depending on the
success of this approach, significant resources might be required. There can be
no assurance that Cytogen's marketing strategy will be successful.
Cytogen'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, Cytogen has
a significant investment in inventories. These inventories include raw
materials
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which Cytogen currently estimates will not be fully used in the foreseeable
future. During fiscal 1993, 1994 and the first half of 1995, Cytogen recorded
$2.3 million, $1.1 million and $1.1 million, respectively, of inventory
writedowns due to shelf life expiration and other inventory realization issues.
In July 1993, Cytogen petitioned FDA for an extension of the shelf life of its
monoclonal antibody raw material inventories. As of June 30, 1995, Cytogen had
raw materials of $1.5 million, of which approximately $0.9 million exceeded the
currently approved FDA shelf life. The realization of Cytogen's investment in
inventory is dependent upon growth in product sales and the outcome and timing
of the response by FDA to Cytogen's request to extend the deemed product shelf
life. Cytogen cannot predict with accuracy when FDA will respond to such
request and no assurance can be given that such response will be favorable to
Cytogen. Given the foregoing uncertainties with respect to raw material
inventory, future inventory writedowns may be required.
Dependence Upon Qualified Scientific Personnel
Cytogen's and Cellcor's ability to develop marketable products and to
maintain a competitive position in light of technological developments will
depend, in large part, on their respective abilities 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. Each of Cytogen and Cellcor 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. Neither Cytogen nor Cellcor
owns any significant amounts of life insurance on the lives of its employees or
directors.
Potential for Product Liability Exposure
Each of Cytogen and Cellcor could be subject to product liability claims in
connection with the use of products that it is currently developing,
manufacturing and marketing or that it or any of its licensees may develop,
manufacture and market in the future. There can be no assurance that Cytogen
and Cellcor would have sufficient resources to satisfy any liability resulting
from these claims or would be able to have its customers indemnify or insure
them against such claims. Although each of Cytogen and Cellcor believes that
its current product liability insurance coverage 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.
Cellcor's research and development programs involve the controlled use of
certain bio-hazardous materials. Although Cellcor believes that its safety
procedures for handling such materials comply with the standards prescribed by
state and federal regulations, the risk of accidental contamination or injuries
from these materials cannot be completely eliminated. In the event of such an
accident, Cellcor could be held liable for any resulting damages beyond the
amount covered by workers' compensation and general liability insurance.
Uncertainty of Third-Party Reimbursement
In both domestic and foreign markets, the ability of Cytogen and Cellcor to
commercialize their products will depend, in part, on the availability of
reimbursement from third-party payors, such as government health administration
authorities, private health insurers and other organizations. Third-party
payors are increasingly challenging the price and cost-effectiveness of medical
products. While Cytogen and Cellcor have developed their respective products to
be more cost effective alternatives to other existing products, there can be no
assurance that their products will be considered cost effective. Significant
uncertainty exists as to the reimbursement status of newly-approved healthcare
products. There can be no assurance that adequate third-party insurance
coverage will be available for Cytogen or Cellcor to establish and maintain
price levels sufficient for realization of an appropriate return on their
investment in developing new therapies. Government and other third-party payors
are increasingly attempting to contain healthcare costs by limiting both
coverage and the level of reimbursement for new therapeutic products approved
for marketing by FDA and by refusing, in some cases, to provide coverage for
uses of approved products for disease indications for which FDA has not granted
marketing approval. If adequate coverage and reimbursement levels are not
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provided by government and third-party payors for therapeutic products of
Cytogen and Cellcor, the market acceptance of these products could be adversely
affected.
Uncertainty Related to Healthcare Reform Measures
There have been a number of federal and state proposals during the last few
years to subject the pricing of pharmaceuticals to government control and to
make other changes to the healthcare system of the United States. It is
uncertain what legislative proposals will be adopted or what actions federal,
state or private payors for healthcare goods and services may take in response
to any healthcare reform proposals or legislation. Cytogen cannot predict the
effect healthcare reforms may have on its business, and no assurance can be
given that any such reforms would not have a material adverse effect on Cytogen.
Risk of Technological Obsolescence; Highly Competitive Industry
Biotechnology has undergone rapid and significant technological change.
Cytogen and Cellcor expect that this technology will continue to develop
rapidly, and its 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 a significant portion of the research, development and commercialization
expenses incurred with respect to those products is recovered.
There is intense competition in the biotechnology industry. Potential
competitors in the United States, Europe and other markets are numerous and
include pharmaceutical, chemical and medical device companies, many of which
have substantially greater capital resources, marketing experience, research and
development staffs and facilities than either Cytogen or Cellcor. Furthermore,
some competitors may achieve product commercialization earlier than Cytogen or
Cellcor. Cytogen and Cellcor also experience competition from universities and
other research institutions in the development of their technologies and
processes and, in some instances, compete with others in acquiring technology
from universities. In addition, certain of Cytogen's products are subject to
competition from products developed using techniques other than those developed
in biotechnology.
The biotechnology 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 Cytogen and Cellcor
will not be influenced by any or all of these factors, all of which are beyond
their control.
No Dividends Anticipated in the Future
Cytogen has not paid any cash dividends on Cytogen Common Stock since its
inception and does not anticipate paying any cash dividends in the future.
Declaration of dividends on Cytogen Common Stock will depend upon, among other
things, future earnings, the operating and financial condition of Cytogen, its
capital requirements and general business conditions.
Dilution; Shares Eligible for Future Sale
Because Cytogen 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 Cytogen's then existing stockholders
will be diluted and the market price of Cytogen Common Stock could be adversely
affected by future exercises of the warrants and/or options or issuances of
Cytogen Common Stock pursuant to the CVRs and by the sale of such shares in the
public market. As of August 17, 1995, approximately 4,285,000 shares of Cytogen
Common Stock were reserved for issuance upon exercise of issued and outstanding
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warrants, approximately 2,012,500 shares of Cytogen Common Stock were reserved
for issuance pursuant to the CVRs and approximately 4,259,985 shares of Cytogen
Common Stock were reserved for issuance pursuant to stock option and stock award
plans and agreements. In addition, current stockholders of Cytogen will suffer
dilution in their percentage ownership interest in Cytogen as a result of the
exercise by holders of Cellcor Common Stock of their right to purchase shares of
Cytogen Common Stock in the Subscription Offering and in connection with the
issuance and sale of Cytogen Common Stock pursuant to other contractual
arrangements that may arise from time to time. See "INFORMATION CONCERNING
CYTOGEN--Recent Developments--Fletcher Fund."
The Subscription Offering price of $3.89 exceeds the net tangible book
value per share of Cytogen Common Stock. Accordingly, the purchasers of Cytogen
Common Stock in the Subscription Offering will experience immediate and
substantial dilution. See "DILUTION."
THE SPECIAL MEETINGS
Introduction
This Joint Proxy Statement/Prospectus is being furnished to the
stockholders of Cytogen and Cellcor in connection with the Transaction and for
the purposes set forth below. The Merger will be effected on the terms and
conditions described elsewhere in this Joint Proxy Statement/Prospectus pursuant
to the Merger Agreement, a copy of which is attached hereto as Annex A. See
"THE MERGER" and "THE MERGER AGREEMENT." The Subscription Offering will be
effected on the terms and conditions described elsewhere in this Joint Proxy
Statement/Prospectus. See "SUBSCRIPTION OFFERING."
This Joint Proxy Statement/Prospectus also constitutes the Prospectus of
Cytogen with respect to the shares of Cytogen Common Stock to be issued in the
Transaction.
The information herein concerning Cytogen has been supplied by Cytogen.
The information herein concerning Cellcor has been supplied by Cellcor.
This Joint Proxy Statement/Prospectus and the accompanying forms of proxy
will first be mailed to stockholders of Cytogen and Cellcor on or about
September 15, 1995.
Cytogen Special Meeting
This Joint Proxy Statement/Prospectus is being furnished to holders of
record of Cytogen Common Stock in connection with the solicitation of proxies by
the Cytogen Board of Directors for use at the Cytogen Special Meeting to be held
on Monday, October 16, 1995, at 2:00 p.m. (local time), at The Holiday Inn
Princeton, 4355 Route One at Ridge Road, Princeton, New Jersey 08540, and at any
meeting held upon adjournment or postponement thereof.
At the Cytogen Special Meeting, holders of Cytogen Common Stock will be
asked to consider and vote upon the Issuance Proposal and such other matters as
may properly be brought before the Cytogen Special Meeting. The approval of the
Issuance Proposal is required by the rules of the NASD governing corporations
with securities listed on the Nasdaq National Market.
The approval of the Issuance Proposal is a condition to the consummation of
the Merger.
THE CYTOGEN BOARD OF DIRECTORS HAS UNANIMOUSLY CONCLUDED THAT EACH OF THE
MERGER AND THE SUBSCRIPTION OFFERING IS FAIR AND IN THE BEST INTERESTS OF
CYTOGEN AND ITS STOCKHOLDERS, HAS APPROVED THE ISSUANCE PROPOSAL AND RECOMMENDS
THAT THE STOCKHOLDERS OF CYTOGEN VOTE FOR THE ISSUANCE PROPOSAL.
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Cellcor Special Meeting
This Joint Proxy Statement/Prospectus is also being furnished to holders of
record of Cellcor Common Stock and Cellcor Preferred Stock in connection with
the solicitation of proxies by the Cellcor Board of Directors for use at the
Cellcor Special Meeting to be held on Monday, October 16, 1995, at 2:00 p.m.
(local time), at the offices of Hale and Dorr, 60 State Street, Boston,
Massachusetts 02109, and at any meeting held upon adjournment or postponement
thereof.
At the Cellcor Special Meeting, the holders of Cellcor Common Stock and
Cellcor Preferred Stock will be asked to consider and vote upon the Merger
Proposal and the holders of Cellcor Common Stock will be asked to vote upon the
Plan Proposal.
The Merger Agreement provides that, upon the satisfaction or waiver of
certain conditions to closing set forth therein, (i) Cellcor will be merged with
and into the Merger Subsidiary and the Merger Subsidiary will change its name to
Cellcor, Inc. and (ii) each then outstanding share of Cellcor Common Stock will
be converted into the right to receive .60 shares (the "Common Exchange Ratio")
of Cytogen Common Stock, and each then outstanding share of Cellcor Preferred
Stock will be converted into the right to receive 218.94 shares (the "Preferred
Exchange Ratio") of Cytogen Common Stock. The terms of the Merger Agreement are
more fully described in "THE MERGER AGREEMENT."
The approval of the Merger Proposal is a condition to the consummation of
the Merger.
THE CELLCOR BOARD OF DIRECTORS, BASED UPON THE UNANIMOUS RECOMMENDATION OF
THE SPECIAL COMMITTEE, HAS UNANIMOUSLY CONCLUDED THAT THE MERGER IS FAIR AND IN
THE BEST INTERESTS OF CELLCOR AND THE HOLDERS OF CELLCOR COMMON STOCK, HAS
APPROVED THE MERGER PROPOSAL AND RECOMMENDS THAT THE STOCKHOLDERS OF CELLCOR
VOTE FOR THE MERGER PROPOSAL.
Voting Rights and Proxies
Cytogen. The Cytogen Board of Directors has fixed the close of business on
August 17, 1995 (the "Cytogen Record Date") as the record date for the
determination of stockholders entitled to notice of and to vote at the Cytogen
Special Meeting or any adjournment or postponement thereof. At the close of
business on the Cytogen Record Date, there were outstanding and entitled to vote
33,747,501 shares of Cytogen Common Stock held of record by approximately 2,602
holders.
Each holder of record of Cytogen Common Stock on the Cytogen Record Date is
entitled to cast one vote per share in person or by proxy on any matter that may
properly come before the Cytogen Special Meeting. A majority of the issued and
outstanding shares of Cytogen Common Stock entitled to vote at the Cytogen
Special Meeting must be represented at the Cytogen Special Meeting, in person or
by proxy, to constitute a quorum for the transaction of business. The
affirmative vote of the holders of a majority of the shares of Cytogen Common
Stock voting in person or by proxy on the Issuance Proposal is required to
approve and adopt the Issuance Proposal.
As of the Cytogen Record Date, the directors and executive officers of
Cytogen owned or had voting control over an aggregate of 522,064 shares of
Cytogen Common Stock, representing approximately 1.5% of the votes entitled to
be cast at the Cytogen Special Meeting. Each of the directors and executive
officers of Cytogen has advised Cytogen that he intends to vote or direct the
vote of all the outstanding shares of Cytogen Common Stock over which he has
voting control in favor of the approval of the Issuance Proposal.
As of the Cytogen Record Date, Cellcor owned no outstanding shares of
Cytogen Common Stock.
Cellcor. The Cellcor Board of Directors has fixed the close of business on
August 17, 1995 (the "Cellcor Record Date") as the record date for the
determination of stockholders entitled to notice of and to
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vote at the Cellcor Special Meeting or any adjournment or postponement thereof.
At the close of business on the Cellcor Record Date, there were outstanding and
entitled to vote 5,936,935 shares of Cellcor Common Stock held of record by
approximately 112 holders and 5,250 shares of Cellcor Preferred Stock held of
record by two holders.
Each holder of record of Cellcor Common Stock and Cellcor Preferred Stock
on the Cellcor Record Date is entitled to cast one vote per share in person or
by proxy on any matter on which such stockholder is entitled to vote that may
properly come before the Cellcor Special Meeting. The presence, in person or by
proxy, of holders of record of shares representing a majority of the outstanding
shares of Cellcor Common Stock and a majority of the outstanding shares of
Cellcor Preferred Stock constitutes a quorum for action at the Cellcor Special
Meeting.
The affirmative vote of the holders of a majority of the outstanding shares
of Cellcor Common Stock and the holders of 66-2/3% of the outstanding shares of
Cellcor Preferred Stock, voting separately as two classes, is necessary to
approve and adopt the Merger Proposal. The affirmative vote of the holders of a
majority of the outstanding shares of Cellcor Common Stock present or
represented at the Cellcor Special Meeting is required to approve the 1995 Plan.
As of the Cellcor Record Date, the Principal Stockholders, together with certain
of the directors and executive officers of Cellcor, owned or had voting control
over an aggregate of 3,051,710 shares of Cellcor Common Stock and 5,250 shares
of Cellcor Preferred Stock, representing approximately 51.4% of the votes
entitled to be cast by the common stockholders and 100% of the votes entitled to
be cast by the preferred stockholders at the Cellcor Special Meeting.
Consequently, the affirmative vote of the Principal Stockholders and said
directors and executive officers will be sufficient to approve and adopt the
Merger Proposal. Under the terms of the Voting Agreement, the Principal
Stockholders have agreed to vote their shares in favor of the Merger Proposal
and have granted a proxy to the Merger Subsidiary to so vote those shares. See
"THE VOTING AGREEMENT." Also, each of said directors and executive officers has
advised Cellcor that he intends to vote or direct the vote of all the
outstanding shares of Cellcor Common Stock and Cellcor Preferred Stock over
which he has voting control in favor of approval and adoption of the Merger
Proposal.
As of the Cellcor Record Date, Cytogen owned no outstanding shares of
Cellcor capital stock.
Proxies. All proxies in the enclosed form that are properly executed and
returned to Cellcor or Cytogen, as the case may be, will be voted at the
applicable Special Meeting or any adjournments or postponements thereof, in
accordance with any instructions thereon, or, if no instructions are made, will
be voted FOR approval of the Issuance Proposal, in the case of Cytogen, and FOR
approval of the Merger Proposal and the Plan Proposal, in the case of Cellcor.
Any proxy given pursuant to this solicitation may be revoked by any stockholder
who attends his respective Special Meeting and gives oral notice of his
intention to vote in person without compliance with any other formalities. In
addition, any Cytogen or Cellcor stockholder may revoke a proxy at any time
before it is voted by executing a subsequent proxy or by delivering a written
notice to the Secretary of Cytogen or the Secretary of Cellcor, as applicable,
stating that the proxy is revoked.
Under the rules of the NASD, brokers who hold shares in street name for
customers who are beneficial owners of those shares may be prohibited from
giving a proxy to vote shares held for such customers on certain matters without
specific instructions from such customers ("broker non-votes"). At the Cytogen
Special Meeting, in determining whether the Issuance Proposal has received the
requisite number of affirmative votes, abstentions will be counted and have the
same effect as a vote against the Issuance Proposal and broker non-votes will
have no effect on the outcome of the vote. At the Cellcor Special Meeting, (i)
in determining whether the Merger Proposal has received the requisite number of
affirmative votes, abstentions and broker non-votes will have the same effect as
a vote against such proposal and (ii) in determining whether the Plan Proposal
has received the requisite number of affirmative votes, abstentions will have
the same effect as a vote against such proposal but broker non-votes will have
no effect on the outcome of such proposal. At both the Cytogen Special Meeting
and the Cellcor Special Meeting, abstentions and broker non-votes will be
counted for purposes of determining the presence or absence of a quorum.
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The Cytogen and Cellcor Boards of Directors do not know of any matters
other than those set forth herein which may come before the respective Special
Meetings. If any other matters are properly presented at either Special Meeting
for action, it is intended that the persons named in the applicable form of
proxy and acting thereunder will vote in accordance with their best judgment on
such matters.
Proxy Solicitation. The expense of the solicitation of the stockholders of
Cytogen and Cellcor will be paid by the party incurring such cost. In addition
to the use of the mails, proxies may be solicited by directors, officers and
regular employees of Cytogen or Cellcor and such companies may also request
brokerage firms, nominees, custodians and fiduciaries to forward proxy materials
to beneficial owners of shares of Cytogen Common Stock, Cellcor Common Stock or
Cellcor Preferred Stock held of record and will provide reimbursement for their
reasonable expenses in so doing. Cytogen has also retained the firm of
Corporate Investor Communications, Inc. to assist in the solicitation of proxies
for a fee estimated at $6,500, plus expenses.
CELLCOR STOCKHOLDERS SHOULD NOT SEND ANY STOCK CERTIFICATES WITH THEIR
PROXY CARDS.
THE MERGER
The descriptions of the terms and conditions of the Merger and any related
documents included in this Joint Proxy Statement/Prospectus are qualified in
their entirety by reference to the Annexes hereto and such related documents.
The Merger Agreement (including the amendment thereto), a copy of which is
attached to this Joint Proxy Statement/Prospectus as Annex A and incorporated
herein by reference, provides for the merger of Cellcor with and into the Merger
Subsidiary. The Merger Agreement also sets forth certain representations,
warranties, agreements and conditions in connection with the Merger. See "THE
MERGER AGREEMENT."
As a result of the Merger, the separate corporate existence of Cellcor will
cease and the Merger Subsidiary will continue as the Surviving Corporation and
it will change its name to Cellcor, Inc. At the Effective Time, each share of
Cellcor Common Stock then outstanding will be converted into the right to
receive shares of Cytogen Common Stock based on the Common Exchange Ratio, and
each share of Cellcor Preferred Stock then outstanding will be converted into
the right to receive shares of Cytogen Common Stock based on the Preferred
Exchange Ratio. For a description of Cytogen Common Stock, see "DESCRIPTION OF
CYTOGEN CAPITAL STOCK." Based upon the 5,936,935 shares of Cellcor Common Stock
and 5,250 shares of Cellcor Preferred Stock outstanding on the Cellcor Record
Date, without making any adjustment for fractional share interests and assuming
no exercise of Cellcor Stock Options (defined below) outstanding as of the
Cellcor Record Date, Cytogen will issue 4,711,596 shares of Cytogen Common Stock
at the Effective Time in connection with the Merger. Furthermore, assuming that
(i) shares of Cytogen Common Stock are issued and sold in the Subscription
Offering only to the extent of the Minimum Subscription Amount (defined below)
by certain of the Principal Stockholders and (ii) the approximately 33,747,501
shares of Cytogen Common Stock issued and outstanding on the Cytogen Record Date
are issued and outstanding immediately following consummation of the
Transaction, the shares issued to the Cellcor stockholders in connection with
the Merger will constitute approximately 18.8% of said issued and outstanding
shares of Cytogen Common Stock.
Background
Since 1991, Cellcor has explored establishing strategic partnerships with a
number of larger healthcare service, pharmaceutical and biotechnology companies.
These efforts intensified as a result of the restructuring of Cellcor in March
1993 and the resulting decline in Cellcor's capital resources. In addition,
Cellcor attempted to raise additional financing to support its activities,
resulting in the sale of Cellcor Preferred Stock
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in July 1994 to Hillman Medical Ventures 1994 L.P. and an affiliate of Boston
University for an aggregate consideration of $5,250,000.
Representatives of Cellcor and Cytogen have been in contact since 1992
concerning potential synergies between the two companies. In April 1993, Ronald
J. Brenner, Ph.D., a general partner of the managing general partner of the
Hillman Medical Ventures partnerships (who served as Chief Executive Officer of
Cytogen from 1984 to 1988), discussed Cellcor with Thomas J. McKearn, M.D.,
Ph.D., Cytogen's President and Chief Executive Officer, and Cellcor sent public
information to Cytogen regarding its operations. No further discussions
concerning a strategic partnership or business combination resulted from these
events.
In March 1995, Dr. Brenner initiated discussions with Dr. McKearn regarding
potential synergies between Cellcor and Cytogen. As a result of these
discussions, Frederick M. Miesowicz, Ph.D., Cellcor's Senior Vice President of
Scientific Affairs, made a scientific presentation on April 5, 1995 to Dr.
McKearn and others at Cytogen.
On April 13, 1995, Dr. Brenner and Gary W. Cashon, Ph.D., Cellcor's
Chairman of the Board, met with T. Jerome Madison, Cytogen's Vice President and
Chief Financial Officer, to discuss the possible terms and structure of a
business combination between Cellcor and Cytogen. The two companies executed a
mutual confidentiality agreement on April 19, 1995. A follow-up meeting among
Dr. Brenner, Dr. Cashon, Mr. Madison and a representative of Smith Barney Inc.
("Smith Barney"), Cytogen's financial advisor, was held on April 25, 1995.
On April 24, 1995, Mr. Madison made a preliminary due diligence visit to
Cellcor.
On May 1, 1995, Cytogen commenced its due diligence review of Cellcor's
business, and shortly thereafter, Cellcor commenced its due diligence review of
Cytogen's business. On May 8, 1995, representatives of Cellcor, Cytogen, their
respective legal counsel and Smith Barney met in New York City to discuss the
terms and structure of the proposed business combination.
The Cellcor Board of Directors met by means of a telephone conference call
on May 10, 1995 for the purpose of reviewing the status of the ongoing
discussions with Cytogen, as well as discussions with other parties. Based upon
the advice of legal counsel, a Special Committee (the "Special Committee") of
the Cellcor Board of Directors, consisting of John E. Bagalay, Jr., Ph.D., and
Stephen M. Shortell, Ph.D., was established to review the Transaction and to
make a recommendation to the Cellcor Board of Directors regarding the Merger.
The management of Cellcor and certain directors on behalf of the Cellcor Board
of Directors and Special Committee also contacted several investment banking
firms and, on May 12, 1995, Cellcor decided to retain CS First Boston
Corporation ("CS First Boston") to deliver a fairness opinion in connection with
the Merger.
On May 11, 1995, Richard R. D'Antoni, Cellcor's then President and Chief
Executive Officer, Harry W. Wilcox, III, Cellcor's then Senior Vice President of
Business Development and Chief Financial Officer, Dr. Miesowicz and Bruce
Babbitt, Ph.D., Cellcor's Vice President of Research and Development, met at
Cellcor with Dr. McKearn, Mr. Madison, John D. Rodwell, Ph.D., Cytogen's Vice
President of Research and Development, Richard J. Walsh, Cytogen's Vice
President of Corporate Development, and William C. Mills III, Cytogen's Chairman
of the Board, concerning Cellcor's business and technology.
On May 12, 1995, Cellcor received a preliminary term sheet from Cytogen
contemplating a merger of Cellcor into a wholly-owned subsidiary of Cytogen in
which Cellcor stockholders would receive .655 shares of Cytogen Common Stock for
each share of Cellcor Common Stock held by them, with equivalent provisions for
Cellcor Preferred Stock. The Cytogen proposal contemplated a subscription
offering to Cellcor stockholders at a price of $4.10 per share of Cytogen Common
Stock, and that the Principal Stockholders would commit to purchase $10 million
in such subscription offering and provide interim financing to Cellcor through
the closing of the Merger (which interim financing amount would be converted
into Cytogen Common Stock based upon the exchange ratio in the Merger).
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On May 18, 1995, the Cellcor Board of Directors met by means of a telephone
conference call to discuss the Cytogen proposal. Representatives of CS First
Boston and Cellcor's legal counsel also participated in the meeting. As a
result of the meeting, Cellcor delivered a counterproposal to Cytogen and Smith
Barney on May 19, 1995. The Cellcor counterproposal provided for a merger in
which holders of Cellcor Common Stock would receive .875 shares of Cytogen
Common Stock for each share of Cellcor Common Stock held by them (with
equivalent provisions for Cellcor Preferred Stock), subject to adjustment based
upon the average closing prices of Cytogen Common Stock during the 20 trading
days preceding the closing of the Merger. The counterproposal contemplated a
subscription offering to the Cytogen and Cellcor stockholders at a 20% discount
off the average closing prices of Cytogen Common Stock during a specified
period, and that the Principal Stockholders would commit to purchase $9 million
in a subscription offering and provide interim financing to Cellcor through the
closing of the Merger (which interim financing amount would be repaid out of the
proceeds of such subscription offering). The counterproposal also provided for
the appointment of one director to the Cytogen Board of Directors designated by
Cellcor and one director designated by the Principal Stockholders.
On May 23, 1995, Mr. D'Antoni and Dr. Cashon made a presentation to the
Cytogen Board of Directors concerning Cellcor's business. Representatives of
the companies continued to meet through early June regarding Cellcor's
organization, programs and budget, as well as the structure and the terms of the
proposed Merger. After said board meeting, Mr. D'Antoni and Dr. Cashon met with
Dr. McKearn and Mr. Madison to review Cellcor's programs and staffing.
On May 25, 1995, Cellcor Common Stock was delisted from the Nasdaq National
Market. The Nasdaq Listing Qualification Committee indicated that the delisting
was a result of Cellcor's failure to meet the net tangible asset requirement set
forth in the NASD By-laws. Since its delisting, Cellcor Common Stock has been
traded on the OTC Bulletin Board. On the day prior to delisting, the last
reported sale price of the Cellcor Common Stock on the Nasdaq National Market
was $2.875. On June 15, 1995 (the day prior to the announcement of the Merger),
the last sale price of the Cellcor Common Stock was $1.50.
On May 30, 1995, Dr. Brenner, Dr. Cashon and Mr. D'Antoni met with Dr.
McKearn and Mr. Madison at Cytogen to discuss terms of the proposed Transaction.
On June 8, 1995, legal counsel to Cytogen circulated drafts of the Merger
Agreement and Voting Agreement to Cellcor and its legal counsel. Legal counsel
for Cellcor, Cytogen and the Principal Stockholders met on June 9, 1995 to
negotiate the agreements, and revised drafts were circulated on June 10, 1995.
The Cytogen Board of Directors held a telephonic meeting in the afternoon
of June 9, 1995, at which Cytogen management and legal counsel apprised the
Cytogen Board of Directors of the status of negotiations with Cellcor.
On June 13, 1995, Cytogen issued a press release announcing the filing of a
New Drug Application ("NDA") for Cytogen's Quadramet product. On June 13, 1995,
the last reported sale price of Cytogen Common Stock on the Nasdaq National
Market was $4.75, an increase of $.875 per share over the prior day's last
reported sale price.
On June 13 and 14, 1995, representatives of Cellcor, Cytogen and the
Principal Stockholders met in New York City and Lawrenceville, New Jersey to
negotiate the final terms of the Merger Agreement, the Voting Agreement and
related agreements. In light of the decline in the last sale prices of the
Cellcor Common Stock since the delisting of the Cellcor Common Stock from the
Nasdaq National Market, and in view of recent increases in the sale price of
Cytogen Common Stock, Cellcor and Cytogen agreed upon an exchange ratio of .60
shares of Cytogen Common Stock for each share of Cellcor Common Stock and an
equivalent exchange ratio for Cellcor Preferred Stock. In addition, certain of
the Principal Stockholders, at the request of Cytogen, agreed to increase their
total commitment in the Subscription Offering to $12 million (subject to
adjustment). The price of the Cytogen Common Stock in the Subscription Offering
was set at $3.89 per share, representing a 13.6% discount from the last sale
price of the Cytogen Common Stock on June
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15, 1995. In addition, certain of the Principal Stockholders agreed to provide
interim financing to Cellcor through the closing of the Merger (which interim
financing amount would be repaid out of the proceeds of the Subscription
Offering).
On June 14, 1995, the Special Committee held a meeting in New York City
with legal counsel for Cellcor and representatives of CS First Boston to review
the terms of the Merger and the related transactions. At the Special Committee
meeting, CS First Boston delivered its oral opinion that the consideration to be
received by the holders of Cellcor Common Stock pursuant to the Merger Agreement
was fair to such stockholders from a financial point of view. After hearing
presentations from CS First Boston and legal counsel, the Special Committee
unanimously recommended approval of the Merger and the Merger Agreement by the
full Cellcor Board of Directors.
At the conclusion of the Special Committee meeting, the Cellcor Board of
Directors met to review the terms of the Merger and the related transactions.
At the Cellcor Board of Directors meeting, CS First Boston delivered its oral
opinion that the consideration to be received by the holders of Cellcor Common
Stock pursuant to the Merger Agreement was fair to such stockholders from a
financial point of view. The Cellcor Board of Directors unanimously approved
the Merger and the Merger Agreement.
On June 15, 1995, Cytogen held a special meeting of its Board of Directors
to consider the Merger that had been negotiated by representatives of Cytogen
and Cellcor. At the meeting, Smith Barney delivered its opinion to the Cytogen
Board of Directors to the effect that, as of such date and based upon and
subject to certain matters stated in such opinion, the Common Exchange Ratio,
the Preferred Exchange Ratio and the consideration to be received by Cytogen in
the Subscription Offering, taken as a whole, were fair, from a financial point
of view, to Cytogen. The Cytogen Board of Directors unanimously approved and
authorized the execution of the Merger Agreement at that meeting.
The Merger Agreement, the Voting Agreement and related agreements were
executed as of June 15, 1995. Under the terms of the Merger Agreement as so
executed, the Merger Subsidiary would have merged with and into Cellcor, with
Cellcor as the surviving corporation, whereupon Cellcor would have become a
wholly-owned subsidiary of Cytogen. On June 16, 1995, Cytogen and Cellcor
issued a joint press release announcing the Transaction.
On August 22, 1995, the Cytogen Board of Directors held a telephonic board
meeting to discuss, among other things, the status of the Merger. The Cytogen
Board of Directors authorized management to take all appropriate steps to
restructure the Merger and amend the Merger Agreement in order to preserve the
Merger as a "tax-free reorganization" for federal income tax purposes.
On August 28, 1995, Dr. McKearn, Chief Executive Officer of Cytogen, and
Dr. Brenner, President and Chief Executive Officer of Cellcor, discussed by
telephone, among other things, the steps necessary to preserve the Merger as a
"tax-free reorganization" for federal income tax purposes in light of the
difference between the then current market price per share of Cytogen Common
Stock and the $3.89 purchase price per share of Cytogen Common Stock established
for the Subscription Offering. Based on these discussions and subject to the
requisite approval of each of the Cellcor and Cytogen Boards of Directors, it
was agreed that, in order to preserve the treatment of the Merger as a "tax-free
reorganization," the structure of the Merger would be modified (and the Merger
Agreement, amended) so that Cellcor would be merged with and into Merger
Subsidiary, whereupon the separate corporate existence of Cellcor would cease
and the Merger Subsidiary would change its name to Cellcor, Inc.
On September 7, 1995, the Cellcor Board of Directors held a telephonic
board meeting to approve the amendment to the Merger Agreement (the "Merger
Agreement Amendment").
On September 7, 1995, the Cytogen Board of Directors held a board meeting
to approve the Merger Agreement Amendment. At said meeting, Smith Barney
reconfirmed its June 15, 1995 opinion by delivery of a written opinion dated
September 7, 1995 to the effect that, as of such date and based upon and subject
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to certain matters stated therein, the Common Exchange Ratio, the Preferred
Exchange Ratio and the consideration to be received by Cytogen in the
Subscription Offering, taken as a whole, were fair to Cytogen from a financial
point of view.
The parties to the Merger Agreement executed the Merger Agreement Amendment
as of September 7, 1995.
Recommendation of the Cytogen Board of Directors; Cytogen's Reasons for the
Transaction
The Cytogen Board of Directors has carefully reviewed and considered the
terms and conditions of the Transaction. The Cytogen Board of Directors has
unanimously concluded that each of the Merger and the Subscription Offering is
fair and in the best interests of Cytogen and its stockholders. Accordingly,
the Cytogen Board of Directors has unanimously approved the Issuance Proposal
and unanimously recommends that the stockholders of Cytogen vote FOR approval
and adoption of the Issuance Proposal.
During its meeting on June 15, 1995, the Cytogen Board of Directors
considered the following business issues, which had been the subject of
negotiations at the meetings on June 13 and 14, 1995, and during the ensuing
negotiations: (i) the commitment of certain of the Principal Stockholders to
purchase up to $12,000,000 of Cytogen Common Stock in the Subscription Offering
at a price of $3.89 per share; (ii) the expected operation of Cellcor prior to
the Merger, and its projected consumption of funds to be provided by the
Principal Stockholders pursuant to the promissory note attached as Exhibit B to
the Merger Agreement; (iii) the indemnification provided by the Principal
Stockholders covering limited patent infringement matters; and (iv)
representation of the Cellcor stockholders on the Cytogen Board of Directors.
The Cytogen Board of Directors also considered that after the proposed
Transaction, assuming that shares of Cytogen Common Stock are issued and sold in
the Subscription Offering only to the extent of the Minimum Subscription Amount,
the Cellcor stockholders would hold approximately 19% of the outstanding shares
of Cytogen Common Stock. During its meetings on August 22, 1995 and September
7, 1995, the Cytogen Board of Directors considered a number of business issues,
including preserving the status of the Merger as a "tax-free reorganization" for
federal income tax purposes.
The Cytogen Board of Directors considered a number of factors in the course
of its deliberations at the meetings held on June 9 and 15, 1995, August 22,
1995 and September 7, 1995, but did not assign any relative or specific weight
to the factors considered or give prominence to any specific factor or group of
factors. Material factors considered were as follows:
(i) Certain of the Principal Stockholders would purchase a number of
shares of Cytogen Common Stock so that the Subscription Offering
would produce gross proceeds to Cytogen of not less than
$12,000,000.
(ii) The shares of Cytogen Common Stock to be acquired by the Principal
Stockholders pursuant to the Subscription Offering and in the Merger
would be subject to an agreement prohibiting the transfer of those
shares until the second anniversary of the Merger, whereupon a third
of such shares would be able to be transferred with additional
thirds becoming transferable six months and one year thereafter.
(iii) The nature of Cellcor's technology and the expectation that it would
be complementary to Cytogen's technology.
(iv) The expected reductions in operating overhead Cytogen would be able
to effect in Cellcor's operations and the expectation that the
operations of the combined companies would consume cash at a lower
rate than they would individually.
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(v) Expected cash flow to be generated by Cellcor's mRCC product (which
currently is in an FDA-designated Pivotal Phase III clinical trial)
and Cellcor's chronic hepatitis B product (which currently is in a
Phase I clinical trial).
(vi) A pro forma analysis suggesting that the Transaction could extend
the number of months of Cytogen's available cash by approximately
three months.
(vii) The Common Exchange Ratio, the Preferred Exchange Ratio and the
recent trading prices for Cytogen Common Stock and Cellcor Common
Stock.
(viii) The treatment of the Merger as a "tax-free reorganization" for
federal income tax purposes.
(ix) The likelihood of consummation of the Transaction, including the
terms and conditions of the Merger Agreement and the agreement of
the Principal Stockholders under the Voting Agreement.
(x) The opinion, dated June 15, 1995 (as reconfirmed by delivery of a
written opinion dated September 7, 1995), of Smith Barney to the
Cytogen Board of Directors to the effect that, as of the date of
such opinion and based upon and subject to certain matters stated
therein, the Common Exchange Ratio, Preferred Exchange Ratio and the
consideration to be received by Cytogen in the Subscription
Offering, taken as a whole, were fair, from a financial point of
view, to Cytogen. The full text of the written opinion of Smith
Barney dated September 7, 1995, which sets forth the assumptions
made, matters considered and limitations on the review undertaken,
is attached as Annex C to this Joint Proxy Statement/Prospectus and
is incorporated herein by reference. Cytogen stockholders are urged
to read carefully the opinion of Smith Barney in its entirety.
THE CYTOGEN BOARD OF DIRECTORS HAS UNANIMOUSLY CONCLUDED THAT THE MERGER
AND THE SUBSCRIPTION OFFERING ARE FAIR AND IN THE BEST INTERESTS OF CYTOGEN AND
ITS STOCKHOLDERS AND RECOMMENDS THAT CYTOGEN STOCKHOLDERS VOTE FOR THE ISSUANCE
PROPOSAL.
Recommendation of the Cellcor Board of Directors; Cellcor's Reasons for the
Transaction
The Cellcor Board of Directors, together with the Special Committee, has
reviewed and considered the terms and conditions of the Merger. In addition,
the Cellcor Board of Directors and the Special Committee have received the
written opinion of CS First Boston, dated June 15, 1995, to the effect that,
based upon, and subject to certain matters stated therein, as of the date of
such opinion, the consideration to be received by the holders of Cellcor Common
Stock pursuant to the Merger Agreement is fair to such stockholders from a
financial point of view. The full text of CS First Boston's written opinion,
which sets forth the assumptions made, matters considered and limitations on the
review undertaken by CS First Boston in rendering such opinion, is attached as
Annex D to this Joint Proxy Statement/Prospectus. The holders of Cellcor Common
Stock are urged to read carefully the opinion of CS First Boston in its
entirety.
The Cellcor Board of Directors, based upon the unanimous recommendation of
the Special Committee, has unanimously concluded that the Merger is fair and in
the best interests of Cellcor and the holders of Cellcor Common Stock.
Accordingly, the Cellcor Board of Directors has unanimously approved the Merger
Proposal and unanimously recommends that the stockholders of Cellcor vote FOR
approval and adoption of the Merger Proposal.
In making this determination, the Cellcor Board of Directors consulted with
Cellcor's management, as well as its legal counsel and CS First Boston, and
considered a number of factors, including, without limitation, the following:
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(i) The terms of the Merger and the Subscription Offering.
(ii) The Common Exchange Ratio, the Preferred Exchange Ratio and the
recent trading prices for Cellcor Common Stock and Cytogen Common
Stock.
(iii) The fact that the Merger would provide holders of Cellcor Common
Stock with the opportunity to receive merger consideration that
represents a premium over the price at which Cellcor Common Stock
was trading since the delisting of the Cellcor Common Stock from the
Nasdaq National Market and to retain an equity interest in the
combined entity.
(iv) The financial condition of Cellcor, including its cash position and
prospects for securing additional financing absent the Merger.
(v) The opinion of CS First Boston to the effect that, as of the date of
its opinion and based upon and subject to certain matters stated
therein, the consideration to be received by the holders of Cellcor
Common Stock pursuant to the Merger Agreement is fair to such
stockholders from a financial point of view.
(vi) The commitment of certain of the Principal Stockholders to provide
interim financing to Cellcor until the consummation of the Merger,
and to invest $12 million in the Subscription Offering (a portion of
which investment would be used to repay amounts advanced by certain
of the Principal Stockholders in the interim financing).
(vii) The commitment of Cytogen to continue certain clinical trials being
conducted by Cellcor, subject to ongoing review by the Cytogen Board
of Directors.
(viii) The experience of Cytogen and its management in conducting clinical
trials and seeking FDA approval for therapies and diagnostics
related to cancer.
(ix) Information concerning the financial condition, business operations
and prospects of each of Cellcor and Cytogen as separate entities
and on a combined basis.
(x) An assessment of possible strategic alternatives, including
remaining a separate company, joint ventures and acquisitions,
taking into consideration the marketing activities conducted by
Cellcor's management and its advisors regarding potential joint
venture partners, merger candidates and equity investors.
(xi) The fact that the Merger Agreement, which prohibits Cellcor from
soliciting, initiating or knowingly encouraging submission of any
takeover proposal (as defined herein under "THE MERGER AGREEMENT--
Conduct of the Business Pending the Merger--Covenants of Cellcor--No
Solicitation of Takeover Proposals"), or participating in any
discussions or negotiations regarding, or furnishing any information
with respect to, or taking any other action to facilitate the making
of, any takeover proposal, does permit Cellcor (conditioned upon the
execution of a confidentiality agreement) to furnish information and
to participate in negotiations with any person that makes an
unsolicited written, bona fide takeover proposal, provided that the
Cellcor Board of Directors, after consultation with independent
legal counsel, determines in good faith that such action is
necessary for the Cellcor Board of Directors to comply with its
fiduciary duties under applicable law.
(xii) The treatment of the Merger as a "tax-free reorganization" for
federal income tax purposes. See "CERTAIN FEDERAL INCOME TAX
CONSEQUENCES."
(xiii) The likelihood of consummation of the Merger, including the terms
and conditions of the Merger Agreement and the limited conditions to
the consummation of the Merger.
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In view of the wide variety of factors considered in connection with its
evaluation of the Merger, the Cellcor Board of Directors did not find it
practicable to, and did not, quantify or otherwise attempt to assign relative
weights to the specific factors considered.
THE CELLCOR BOARD OF DIRECTORS, BASED UPON THE UNANIMOUS RECOMMENDATION OF
THE SPECIAL COMMITTEE, HAS UNANIMOUSLY CONCLUDED THAT THE MERGER IS FAIR AND IN
THE BEST INTERESTS OF CELLCOR AND THE HOLDERS OF CELLCOR COMMON STOCK, HAS
APPROVED THE MERGER PROPOSAL AND RECOMMENDS THAT THE STOCKHOLDERS OF CELLCOR
VOTE FOR THE MERGER PROPOSAL.
For information concerning certain federal income tax consequences of the
Merger and the opinion to be given to Cellcor in connection therewith, see
"CERTAIN FEDERAL INCOME TAX CONSEQUENCES." For information concerning
historical stock prices for Cellcor Common Stock and historical stock prices and
dividends for Cytogen Common Stock, see "COMPARATIVE MARKET PRICES."
Opinion of Smith Barney
Cytogen retained Smith Barney to act as its financial advisor in connection
with the Transaction. In connection with such engagement, Cytogen requested
that Smith Barney evaluate the fairness, from a financial point of view, to
Cytogen of the consideration to be paid and received by Cytogen in the
Transaction. On June 15, 1995, at a meeting of the Cytogen Board of Directors
held to evaluate the proposed Transaction, Smith Barney rendered an oral opinion
(subsequently confirmed by delivery of a written opinion dated such date) to the
Cytogen Board of Directors to the effect that, as of the date of such opinion
and based upon and subject to certain matters stated therein, the Common
Exchange Ratio, the Preferred Exchange Ratio and the consideration to be
received by Cytogen in the Subscription Offering, taken as a whole, were fair,
from a financial point of view, to Cytogen. At a meeting of the Cytogen Board
of Directors held on September 7, 1995 to approve the Merger Agreement
Amendment, Smith Barney reconfirmed such opinion by delivery of a written
opinion dated September 7, 1995. In connection with its opinion dated September
7, 1995, Smith Barney performed procedures to update certain of its analyses and
reviewed the assumptions on which such analyses were based and the factors
considered in connection therewith.
In arriving at its opinion, Smith Barney reviewed the Merger Agreement, the
Voting Agreement and certain related documents, and held discussions with
certain senior officers, directors and other representatives and advisors of
Cytogen and certain senior officers and other representatives and advisors of
Cellcor concerning the businesses, operations and prospects of Cytogen and
Cellcor. Smith Barney examined certain publicly available business and
financial information relating to Cytogen and Cellcor as well as certain
financial forecasts and other data for Cytogen and Cellcor which were provided
to Smith Barney by the respective managements of Cytogen and Cellcor, including
information relating to certain strategic implications and operational benefits
anticipated from the Transaction. Smith Barney reviewed the financial terms of
the Transaction as set forth in the Merger Agreement in relation to, among other
things: current and historical market prices and trading volumes of Cytogen
Common Stock and Cellcor Common Stock; the historical and projected earnings and
losses of Cytogen and Cellcor; and the capitalization and financial condition of
Cytogen and Cellcor. Smith Barney considered, to the extent publicly available,
the financial terms of certain other similar transactions recently effected
which Smith Barney considered comparable to the Transaction and analyzed certain
financial, stock market and other publicly available information relating to the
businesses of other companies whose businesses Smith Barney considered
comparable to those of Cytogen and Cellcor. Smith Barney considered the capital
intense nature of Cytogen's business and the capital resources available to
Cytogen. Smith Barney also evaluated the potential pro forma financial impact
of the Transaction on Cytogen. In addition to the foregoing, Smith Barney
conducted such other analyses and examinations and considered such other
financial, economic and market criteria as Smith Barney deemed appropriate to
arrive at its opinion. Smith Barney noted that its opinion was necessarily
based upon information available, and financial, stock market and other
conditions and circumstances existing and disclosed, to Smith Barney as of the
date of its opinion.
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In rendering its opinion, Smith Barney assumed and relied, without
independent verification, upon the accuracy and completeness of all financial
and other information publicly available or furnished to or otherwise reviewed
by or discussed with Smith Barney. With respect to each of their respective
financial forecasts and other information provided to or otherwise reviewed by
or discussed with Smith Barney, the managements of Cytogen and Cellcor advised
Smith Barney that such forecasts and other information were reasonably prepared
on bases reflecting the best currently available estimates and judgments of the
respective managements of Cytogen and Cellcor as to the future financial
performance of each of Cytogen and Cellcor and the strategic implications and
operational benefits anticipated from the Merger. Smith Barney assumed, with
the consent of the Cytogen Board of Directors, that the Merger will be treated
as a tax-free reorganization for federal income tax purposes and that Cytogen
will receive the Minimum Subscription Amount in the Subscription Offering. In
connection with its evaluation of the Preferred Exchange Ratio, Smith Barney,
with the consent of the Cytogen Board of Directors, treated the shares of
Cellcor Preferred Stock as if such shares had been fully converted into Cellcor
Common Stock prior to consummation of the Transaction. Smith Barney's opinion
relates to the relative values of Cytogen and Cellcor. Smith Barney did not
express any opinion as to what the value of Cytogen Common Stock actually will
be when issued pursuant to the Transaction or the price at which Cytogen Common
Stock will trade subsequent to the Transaction. In addition, Smith Barney did
not make or obtain an independent evaluation or appraisal of the assets or
liabilities (contingent or otherwise) of Cytogen or Cellcor nor did Smith Barney
make any physical inspection of the properties or assets of Cytogen or Cellcor.
Smith Barney was not asked to consider, and its opinion does not address, the
relative merits of the Transaction as compared to any alternative business
strategies that might exist for Cytogen or the effect of any other transaction
in which Cytogen might engage. In addition, although Smith Barney evaluated the
Common Exchange Ratio, the Preferred Exchange Ratio and the consideration to be
received by Cytogen in the Subscription Offering from a financial point of view,
Smith Barney was not asked to and did not recommend the specific consideration
payable in the Transaction. No other limitations were imposed by Cytogen on
Smith Barney with respect to the investigations made or procedures followed by
Smith Barney in rendering its opinion.
The full text of the written opinion of Smith Barney dated September 7,
1995, which sets forth the assumptions made, matters considered and the
limitations on the review undertaken, is attached hereto as Annex C and is
incorporated herein by reference. The holders of Cytogen Common Stock are urged
to read carefully this opinion in its entirety. Smith Barney's opinion is
directed only to the fairness of the Common Exchange Ratio, the Preferred
Exchange Ratio and the consideration to be received by Cytogen in the
Subscription Offering from a financial point of view, does not address any other
aspect of the Merger or related transactions and does not constitute a
recommendation to any stockholder as to how such stockholder should vote at the
Cytogen Special Meeting. The summary of the opinion of Smith Barney set forth
in this Joint Proxy Statement/Prospectus is qualified in its entirety by
reference to the full text of such opinion.
In preparing its opinion to the Cytogen Board of Directors, Smith Barney
performed a variety of financial and comparative analyses, including those
described below performed by Smith Barney in connection with its opinion dated
June 15, 1995. The summary of such analyses does not purport to be a complete
description of the analyses underlying Smith Barney's opinion. The preparation
of a fairness opinion is a complex analytic process involving various
determinations as to the most appropriate and relevant methods of financial
analyses and the application of those methods to the particular circumstances
and, therefore, such an opinion is not readily susceptible to summary
description. In arriving at its opinion, Smith Barney did not attribute any
particular weight to any analysis or factor considered by it, but rather made
qualitative judgments as to the significance and relevance of each analysis and
factor. Accordingly, Smith Barney believes that its analyses must be considered
as a whole and that selecting portions of its analyses and factors, without
considering all analyses and factors, could create a misleading or incomplete
view of the processes underlying such analyses and its opinion. In its
analyses, Smith Barney made numerous assumptions with respect to Cytogen,
Cellcor, industry performance, general business, economic, market and financial
conditions and other matters, many of which are beyond the control of Cytogen
and Cellcor. The estimates contained in such analyses are not necessarily
indicative of actual values or predictive of future results or values, which may
be significantly more or less favorable than those suggested by such analyses.
In addition, analyses relating to the value of businesses or securities do not
purport to be appraisals or to reflect the prices at which businesses
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or securities actually may be sold. Accordingly, such analyses and estimates
are inherently subject to substantial uncertainty.
Comparable Company Analysis. Using publicly available information, Smith
Barney analyzed, among other things, the market values, cash position and
technology values (equity market value, less cash) of Cytogen, Cellcor and the
following selected companies in the biotechnology industry engaged primarily in
the development of cancer therapeutics and imaging agents: Aphton Corp.;
Protein Design Labs, Inc.; Matrix Pharmaceuticals, Inc.; Medarex, Inc.; Genetic
Therapy, Inc.; Ligand Pharmaceuticals, Inc.; Agouron Pharmaceuticals, Inc.;
Genetics Institute, Inc.; Seragen, Inc.; Immunomedics, Inc.; NeoRx Corporation;
Biomira, Inc.; IDEC Pharmaceuticals Corp.; Alkermes, Inc.; ImClone Systems Inc.;
ImmunoGen, Inc.; and Repligen Corporation (the "Comparable Companies"), and
compared the technology values of the Comparable Companies with the technology
value of Cellcor implied by the Common Exchange Ratio. The range of the market
values, cash position and technology values of the Comparable Companies were as
follows: (i) market values: $24.3 million to $933.2 million (with a mean of
$152.7 million and a median of $90.9 million); (ii) cash position: $3.0 million
to $253.5 million (with a mean of $38.4 million and a median of $19.5 million);
and (iii) technology values: $15.1 million to $679.7 million (with a mean of
$114.2 million and a median of $66.2 million). The market value, cash position
and technology value of Cytogen were approximately $143.4 million, $16.6 million
and $126.8 million, respectively, and the market value, cash position and
technology value of Cellcor were approximately $7.8 million, $1.8 million and
$6.1 million, respectively. All market data for Cytogen, Cellcor and the
Comparable Companies were based on closing stock prices on June 14, 1995 and all
cash position data were based on information reported by such companies in Form
10-Q filings for the fiscal period ended March 31, 1995. Based on the total
number of shares of the capital stock of Cellcor to be acquired in the Merger
and the per share equity value of Cellcor Common Stock implied by the Common
Exchange Ratio, the Common Exchange Ratio equated to an implied technology value
of Cellcor of approximately $20.5 million.
No company or business used in the "Comparable Company Analysis" as a
comparison is identical to Cytogen or Cellcor. Accordingly, an analysis of the
results of the foregoing is not entirely mathematical; rather, it involves
complex considerations and judgments concerning differences in financial and
operating characteristics and other factors that could affect the public trading
or other values of the Comparable Companies or the business segments or
companies to which they are being compared.
Discounted Cash Flow Analysis. Smith Barney performed a discounted cash
flow analysis of the projected free cash flow of Cellcor for the fiscal years
ending December 31, 1995 through 2002, based upon certain operating and
financial assumptions, forecasts and other information provided by the
management of Cellcor and, utilizing, among other things, terminal multiples of
earnings before interest, taxes, depreciation and amortization of 5.0x to 7.0x
and discount rates of 25%, 30% and 35% with respect to cash flow generated by
Cellcor's mRCC product (which currently is in a Pivotal Phase III clinical
trial) and discount rates of 50%, 55% and 60% with respect to cash flow
generated by Cellcor's chronic hepatitis B product (which currently is in a
Phase I clinical trial). The discount rates selected by Smith Barney were based
on different assumptions regarding, among other things, uncertainty concerning
the probability and timing of product approval and introduction, market
acceptance and penetration for such products and rates of return for investments
in companies similar to Cellcor. This analysis resulted in an equity reference
range for Cellcor of approximately $4.00 to $10.00 per share. Smith Barney also
performed a discounted net income analysis of Cellcor for the fiscal year ending
December 31, 2000, based upon certain operating and financial assumptions,
forecasts and other information provided by the management of Cellcor and
utilizing, among other things, discount rates of between 25% and 45% and
terminal multiples of net income of 25.0x to 30.0x. This analysis resulted in
an equity reference range for Cellcor Common Stock of approximately $4.08 to
$10.29 per share.
Pro Forma Analysis. Smith Barney analyzed certain pro forma effects
resulting from the Merger, including, among other things, the impact of the
Transaction on the cash position of Cytogen and the pro forma equity ownership
of the combined company by the stockholders of Cytogen and Cellcor. Based on
the cash position and short term investments of Cytogen as of March 31, 1995 of
approximately $16.6 million and cash expenditure rate for Cytogen as of March
31, 1995 of approximately $24 million, and assuming a cash
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expenditure rate for Cellcor during the last six months of fiscal 1995 and the
first six months of fiscal 1996 of an aggregate of approximately $5.7 million,
the results of the pro forma analysis suggested that the Transaction could
extend the number of months of Cytogen's available cash by approximately three
months. The actual results achieved by the combined company may vary from
projected results and the variations may be material. Immediately following
consummation of the Transaction and assuming 3,083,000 shares of Cytogen Common
Stock are purchased by the Principal Stockholders in the Subscription Offering,
stockholders of Cytogen and Cellcor would own approximately 80.6% and 19.4%,
respectively, of the combined company.
Premium Analysis. Smith Barney compared the implied premium payable in the
Transaction with the premiums paid in the following selected merger and
acquisition transactions in the biotechnology industry, based on stock prices as
of the announcement date and effective date of such transactions relative to
stock prices one month prior to the announcement date: Bio-Technology General
Corporation/Gynex Pharmaceuticals, Inc.; Eli Lilly and Company/Sphinx
Pharmaceuticals Corporation; Amgen, Inc./Synergen, Inc.; Glaxo plc/Affymax N.V.;
and Ligand Pharmaceuticals, Inc./Glycomed, Inc. The premiums paid in such
transactions ranged from approximately 19% to 100% as of the announcement date
of such transactions and approximately 10.6% to 100% as of the effective date of
such transactions, as compared to the premium payable in the Transaction of
approximately 87.8%, based on closing sale prices of Cytogen Common Stock and
Cellcor Common Stock on June 14, 1995 (the last trading day prior to execution
of the Merger Agreement), of $4.50 and $1.44, respectively, and (17.8)%, based
on closing sale prices of Cytogen Common Stock and Cellcor Common Stock on May
24, 1995 (the last trading day prior to the delisting of Cellcor Common Stock
from the Nasdaq National Market), of $3.94 and $2.88, respectively.
Other Factors and Comparative Analyses. In rendering its opinion, Smith
Barney considered certain other factors and conducted certain other comparative
analyses, including, among other things, a review of (i) the historical and
projected financial results of Cytogen and Cellcor; (ii) the history of trading
prices and volumes for Cytogen Common Stock and Cellcor Common Stock and the
relationship between movements of Cytogen Common Stock and Cellcor Common Stock
and the movements of the common stock of comparable companies; (iii) the
relative differences in the filing prices and offering prices of selected
biotechnology public offerings; and (iv) the institutional equity ownership of
the combined company.
Pursuant to the terms of Smith Barney's engagement, Cytogen has agreed to
pay Smith Barney for its services in connection with the Transaction an
aggregate financial advisory fee equal to 2% of the total consideration payable
(including liabilities assumed) in connection with the Merger and the
Subscription Offering up to the Minimum Subscription Amount, and 3% of the total
consideration payable in connection with the Subscription Offering in excess of
$12.0 million. Cytogen also has agreed to reimburse Smith Barney for travel and
other out-of-pocket expenses incurred by Smith Barney in performing its
services, including the fees and expenses of its legal counsel, and to indemnify
Smith Barney and related persons against certain liabilities, including
liabilities under the federal securities laws, arising out of Smith Barney's
engagement.
Smith Barney has advised Cytogen that, in the ordinary course of business,
Smith Barney and its affiliates may actively trade the securities of Cytogen and
Cellcor for their own account or for the account of their customers and,
accordingly, may at any time hold a long or short position in such securities.
Smith Barney has in the past provided financial advisory and investment banking
services to Cytogen unrelated to the Transaction, and has received compensation
for such services.
Smith Barney is a nationally recognized investment banking firm and was
selected by Cytogen based on Smith Barney's experience and expertise. Smith
Barney regularly engages in the valuation of businesses and their securities in
connection with mergers and acquisitions, negotiated underwritings, competitive
bids, secondary distributions of listed and unlisted securities, private
placements and valuations for estate, corporate and other purposes.
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Opinion of CS First Boston
Cellcor retained CS First Boston to deliver an opinion to the Special
Committee and the Cellcor Board of Directors as to the fairness to the holders
of Cellcor Common Stock, from a financial point of view, of the consideration to
be received by such stockholders pursuant to the Merger Agreement. On June 14,
1995, CS First Boston provided an oral opinion to the Special Committee and the
Cellcor Board of Directors, which was subsequently confirmed by delivery of a
written opinion on June 15, 1995, that, as of the dates of such opinions, the
consideration to be received by the holders of Cellcor Common Stock pursuant to
the Merger Agreement is fair to such stockholders from a financial point of
view. CS First Boston was not requested by the Special Committee and the
Cellcor Board of Directors to provide, and CS First Boston did not provide, an
opinion as to the fairness to the holders of Cellcor Preferred Stock, from a
financial point of view, of the consideration to be received by such
stockholders pursuant to the Merger Agreement. References herein to the opinion
of CS First Boston are, unless otherwise noted, references to its written
opinion dated June 15, 1995. This summary of the opinion of CS First Boston is
qualified in its entirety by reference to the full text of such opinion.
The full text of the written opinion of CS First Boston dated June 15,
1995, which sets forth the assumptions made, matters considered and limitations
on the review undertaken in rendering such opinion, is attached hereto as Annex
D and is incorporated herein by reference. The holders of Cellcor Common Stock
are urged to read carefully this opinion in its entirety.
CS First Boston's opinion is directed only to the Special Committee and the
Cellcor Board of Directors and addresses only the fairness from a financial
point of view of the consideration to be received by the holders of Cellcor
Common Stock pursuant to the Merger Agreement and does not constitute a
recommendation to any stockholder as to how such stockholder should vote at the
Cellcor Special Meeting or whether any such stockholder should exercise its
rights under the Subscription Offering. The Common Exchange Ratio was
determined through negotiations between Cellcor and Cytogen and was recommended
by the Special Committee for approval, and was subsequently approved, by the
Cellcor Board of Directors. CS First Boston did not make a recommendation with
respect to the Common Exchange Ratio. No limitations were placed on CS First
Boston by the Special Committee or the Cellcor Board of Directors with respect
to the investigations made or the procedures followed by CS First Boston in
preparing and rendering its opinion.
In arriving at its opinion, CS First Boston (i) reviewed certain publicly
available business and financial information relating to Cellcor and Cytogen,
including the Merger Agreement and the Voting Agreement, (ii) reviewed certain
other information, including financial forecasts, provided by Cellcor and
Cytogen, (iii) met with Cellcor's and Cytogen's respective managements to
discuss the business and prospects of Cellcor and Cytogen, respectively, (iv)
considered the impact on the value of Cellcor of the Principal Stockholders'
representation to CS First Boston that they would not provide further financing
to Cellcor on a stand-alone basis such that Cellcor could continue its ongoing
operations, (v) considered the marketing activities conducted by Cellcor's
management and its advisors regarding potential joint venture partners, merger
candidates and equity investors, (vi) considered certain financial and stock
market data of Cellcor and Cytogen and compared such data with similar data for
other publicly held companies in businesses similar to those of Cellcor and
Cytogen, (vii) considered the financial terms of certain other business
combinations and other transactions which have recently been effected, and
(viii) considered such other information, financial studies, analyses and
investigations and financial, economic and market criteria which CS First Boston
deemed relevant.
In connection with its review, CS First Boston did not assume any
responsibility for independent verification of any of the foregoing information
and relied on its being complete and accurate in all material respects. With
respect to the financial forecasts, CS First Boston assumed that such forecasts
were reasonably prepared on bases reflecting the best currently available
estimates and judgments of Cellcor's and Cytogen's respective management as to
the future financial performance of Cellcor and Cytogen, respectively. In
addition, CS First Boston did not make an independent evaluation or appraisal of
the assets or liabilities (contingent or otherwise) of Cellcor or Cytogen, nor
was CS First Boston furnished with any such evaluations
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or appraisals. CS First Boston did not express any opinion as to what the value
of Cytogen Common Stock will be when issued to Cellcor stockholders pursuant to
the Merger or the prices at which Cytogen Common Stock will trade subsequent to
the Merger. Also, CS First Boston was not requested to, and did not, solicit
third party indications of interest in acquiring all or any part of Cellcor, nor
did CS First Boston seek financing for Cellcor. CS First Boston's opinion is
necessarily based upon financial, economic, market and other conditions as they
existed and could be evaluated on the date of its opinion.
The following is a summary of the analyses performed by CS First Boston in
connection with its June 14, 1995 oral opinion and its June 15, 1995 written
opinion.
Marketing and Fund Raising Attempts by Cellcor. CS First Boston considered
the marketing activities conducted by Cellcor's management and its advisors
regarding potential joint venture partners, merger candidates and equity
investors. CS First Boston noted that in the course of such marketing
activities, no viable joint venture, acquisition, investment or other financial
arrangement was presented to Cellcor other than the Merger.
Liquidation Analysis. CS First Boston concluded that if Cellcor were
liquidated, holders of Cellcor Common Stock were unlikely to receive any funds.
Historical Exchange Ratio Analysis. CS First Boston reviewed the
historical average exchange ratios of Cellcor Common Stock to Cytogen Common
Stock based on each company's average market prices for the relevant periods and
compared those historical ratios to the Common Exchange Ratio. This analysis
showed that, during the ten days ended June 13, 1995, the average exchange ratio
was 0.519; during the 25 days ended June 13, 1995, the average exchange ratio
was 0.618; during the 50 days ended June 13, 1995, the average exchange ratio
was 0.608; during the 75 days ended June 13, 1995, the average exchange ratio
was 0.664; and during the 100 days ended June 13, 1995, the average exchange
ratio was 0.773. Due to a decline in the price of Cellcor Common Stock
following the delisting of Cellcor Common Stock from the Nasdaq National Market
on May 25, 1995, CS First Boston also performed this analysis for periods prior
to such date. This analysis showed that, during the ten days ended May 24,
1995, the average exchange ratio was 0.694; during the 25 days ended May 24,
1995, the average exchange ratio was 0.662; during the 50 days ended May 24,
1995, the average exchange ratio was 0.659; during the 75 days ended May 24,
1995, the average exchange ratio was 0.755; and during the 100 days ended May
24, 1995, the average exchange ratio was 0.818. As of May 24, 1995, the day
prior to the delisting of Cellcor Common Stock, the exchange ratio was 0.730,
and as of June 13, 1995, two days prior to the execution of the Merger
Agreement, the exchange ratio was 0.263.
Survival Time Analysis. CS First Boston analyzed Cellcor's and Cytogen's
survival times and determined that Cellcor would exhaust its funds before the
end of June 1995 and Cytogen would exhaust its funds early in the first quarter
of 1996, assuming neither company received additional equity financing. CS
First Boston determined, however, that the combined company would have a lower
cash burn rate than the sum of each independently, and, taken together with the
$12 million of new equity capital from the Minimum Subscription Amount, the
combined company would likely survive until April 1996. In addition, CS First
Boston noted that, as evidenced by Cytogen's ability to obtain financing by
entering into strategic partnerships with larger companies, Cytogen would be
better positioned than Cellcor to obtain future equity financing.
Comparable Acquisitions Analysis. Using publicly available information, CS
First Boston analyzed the premiums paid and the ratio of technology value
(equity market value less cash plus debt) to accumulated deficit in the
following acquisition transactions in the biotechnology industry: (i) the
acquisition of Repligen Corporation by Medco Research, Inc.; (ii) the
acquisition of Telios Pharmaceuticals, Inc. by Integra Lifesciences Corporation;
(iii) the acquisition of Glycomed Incorporated by Ligand Pharmaceuticals
Incorporated; (iv) the acquisition of Synergen, Inc. by Amgen Inc.; (v) the
acquisition of Vestar, Inc. by NeXagen, Inc.; (vi) the acquisition of CytoRad by
Cytogen; (vii) the acquisition of BioSurface Technology, Inc. by Genzyme
Corporation; and (viii) the acquisition of TSI Corporation by Genzyme
Transgenics Corporation. CS First Boston selected acquisition transactions
between biotechnology companies that were announced between January 1994 and
June 1995, and excluded acquisitions of biotechnology companies by
pharmaceutical
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companies. CS First Boston compared the premium represented by the Common
Exchange Ratio over the price per share of Cellcor Common Stock prior to the
announcement of the Merger and the premiums paid for the acquired comparable
companies. For the acquired comparable companies, the range of percentages by
which the acquisition prices exceeded the market prices for the dates one day
and one month prior to the dates of the announcements of the transactions were
30% to 124% (median of 43%) and 21% to 187% (median of 73%), respectively, and
for Cellcor such amounts were 128% and a discount of 1%, respectively. CS First
Boston also calculated the ratio of technology value to accumulated deficit of
the acquired comparable companies which ranged from 0.19 to 2.05 (median of
0.45) as compared to the implied value of 0.36 for Cellcor based on the Common
Exchange Ratio and the Preferred Exchange Ratio. However, CS First Boston did
not place significant emphasis on the ratio of technology value to accumulated
deficit due to the substantial differences between the past and future products
of the acquired comparable companies and Cellcor.
CS First Boston also determined that the range of survival times
(calculated based on the ratio of cash and cash equivalents plus the unused
portion of available committed credit to the monthly cash burn rate) for the
acquired comparable companies analyzed as of the date of the information
contained in each company's Form 10-Q filing prior to the announcement of the
relevant acquisition transaction was four to 178 months (median of 28 months) as
compared to three months (as of March 31, 1995) for Cellcor.
Comparable Public Companies Analysis. CS First Boston reviewed and
compared certain financial data of Cellcor with comparable information of the
following publicly traded companies in the biotechnology industry: Amylin
Pharmaceuticals, Inc.; Applied Immune Sciences, Inc.; Cytogen; Genta
Incorporated; Idec Pharmaceuticals Corporation; Immunogen, Inc.; Medarex, Inc.;
Medimmune, Inc.; and Seragen, Inc. The criteria used by CS First Boston in
selecting these companies was that each company had a survival time of less than
twenty-four months, was in late-stage clinical trials, and had no substantial
marketed products. CS First Boston calculated the ratio of technology value to
accumulated deficit of the comparable companies which ranged from 0.17 to 2.69
(median of 0.73) as compared to the implied value of 0.36 for Cellcor based on
the Common Exchange Ratio and the Preferred Exchange Ratio. As noted above,
however, CS First Boston did not place significant emphasis on the ratio of
technology value to accumulated deficit in considering the fairness of the
consideration to be received by holders of Cellcor Common Stock pursuant to the
Merger Agreement. CS First Boston also compared Cellcor's survival time to the
comparable companies and determined that Cellcor had a survival time of three
months as of March 31, 1995 as compared to a range of four to 21 months (median
of 12 months) for the comparable companies.
In preparing its opinion for Cellcor, CS First Boston performed the
financial and comparative analyses and considered all the factors described
above. The summary of such analyses does not purport to be a complete
description of the analyses underlying CS First Boston's opinion. The
preparation of a fairness opinion is a complex analytic process involving
various determinations as to the most appropriate and relevant methods of
financial analyses and the application of those methods to the particular
circumstances and, therefore, such an opinion is not readily susceptible to
summary description. CS First Boston believes that its analyses must be
considered as a whole and that selecting portions of its analyses or portions of
the factors considered by it, without considering all analyses and factors,
could create an incomplete view of the evaluation process underlying its
opinion. In its analyses, CS First Boston made numerous assumptions with
respect to Cellcor and Cytogen, industry performance, general business,
regulatory, economic, market and financial conditions and other matters, many of
which are beyond the control of Cellcor and Cytogen. The estimates contained in
such analyses are not necessarily indicative of actual values or predictive of
future results or values, which may be significantly more or less favorable than
those suggested by such analyses. In addition, analyses relating to the value
of businesses or securities do not purport to be appraisals or to reflect the
prices at which businesses or securities actually may be sold. Accordingly,
because such estimates of actual values or future results or values are
inherently subject to substantial uncertainty, CS First Boston assumes no
responsibility for their accuracy.
Cellcor selected CS First Boston to deliver a fairness opinion in
connection with the Merger because CS First Boston is an internationally
recognized investment banking firm and is regularly engaged in the
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valuation of businesses and their securities in connection with mergers and
acquisitions, negotiated underwritings, secondary distributions of listed and
unlisted securities, private placements and other activities. Other than
rendering its fairness opinion in connection with the Merger, CS First Boston
has not previously rendered investment banking services to Cellcor.
As compensation for CS First Boston's services to Cellcor, Cellcor agreed
to pay CS First Boston a fee of $50,000 upon the execution of CS First Boston's
engagement letter and an additional fee of $300,000 for delivery of CS First
Boston's opinion within ten days after execution of the Merger Agreement.
Cellcor has also agreed to reimburse CS First Boston for its out-of-pocket
expenses, including the fees and expenses of its legal counsel, and to indemnify
CS First Boston and its affiliates against certain liabilities, including
liabilities under the federal securities laws, relating to or arising out of its
engagement.
Interest of Certain Persons in the Transaction
Options. Under the terms of employment arrangements between Cellcor and
each of Mr. D'Antoni, former President and Chief Executive Officer of Cellcor,
and Mr. Wilcox, former Senior Vice President of Business Development and Chief
Financial Officer of Cellcor, the outstanding options of Messrs. D'Antoni and
Wilcox fully vested on July 14, 1995, the date on which each ceased to serve as
an executive officer of Cellcor. See "MANAGEMENT AND BOARD OF CELLCOR." The
terms of these agreements resulted in accelerated vesting of options to purchase
an aggregate of 424,834 shares of Cellcor Common Stock, with exercise prices
ranging from $1.25 to $3.625. In addition, under the terms of Cellcor's 1992
Director Stock Option Plan, the unvested options granted to Dr. Shortell will
accelerate and become fully vested upon approval of the Merger Proposal by the
Cellcor stockholders. Assuming the Merger is consummated on September 30, 1995,
the terms of the plan will result in the accelerated vesting of an aggregate of
5,837 shares of Cellcor Common Stock with an exercise price of $1.18.
Also, under the terms of certain stock option agreements previously entered
into with Dr. Babbitt and Dr. Miesowicz, each of whom is an executive officer of
Cellcor, and the Severance Policy (defined below), unvested options granted to
such officers will accelerate and become fully vested (i) at or before the
Effective Time, if such acceleration has been provided for by the Cellcor Board
of Directors or (ii) upon the termination of employment of such officers, if
their positions are eliminated as a result of the Merger. Assuming the Merger
is effective on September 30, 1995, and further assuming that such acceleration
has been provided for or such officers' positions are eliminated, then the terms
of these agreements may result in the accelerated vesting of up to an aggregate
of 265,307 shares of Cellcor Common Stock held by such officers, with exercise
prices ranging from $1.375 to $3.625 per share. See "MANAGEMENT AND BOARD OF
CELLCOR."
Pursuant to the Merger Agreement, Cytogen has agreed to assume all Cellcor
Stock Options and Cellcor Warrants (each defined below). Each Cellcor Stock
Option and Cellcor Warrant will continue to have, and be subject to, the same
terms and conditions (subject to certain adjustments). See "THE MERGER
AGREEMENT--Conversion of Shares of Cellcor Capital Stock Pursuant to Merger;
Treatment of Options and Warrants."
In addition, under the terms of the Severance Policy, in the event a
Cellcor employee's position is eliminated as a result of a merger, any
outstanding options held by such employee will automatically fully vest and the
employee will be given 36 months to exercise his vested options.
Severance Policy. On November 1, 1991, the Cellcor Board of Directors
adopted a severance policy (the "Severance Policy") for all employees of Cellcor
terminated in the event of a merger, sale or consolidation of Cellcor or a
general layoff. Pursuant to the Severance Policy and modifications thereto, in
the event of a merger, Mr. D'Antoni, Dr. Miesowicz and Mr. Wilcox are entitled
to receive 12 months' salary and 12 months' continued employee benefits; Dr.
Kruger and Dr. Babbitt are entitled to receive six months' salary and six
months' continued benefits; and employees who are not executive officers are
entitled to receive severance pay ranging from one month's salary for every year
of service to Cellcor to a maximum of six months' salary plus continued benefits
for the corresponding period of time.
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Employee Benefits. Pursuant to the Merger Agreement, Cytogen has agreed to
provide benefits to employees of Cellcor, from and after the Effective Time, at
a level substantially similar to the benefits offered under Cytogen's benefit
plans to Cytogen's employees at the date of the Merger Agreement.
Indemnification. The Merger Agreement provides that, from and after the
Effective Time, the Surviving Corporation will indemnify, defend and hold
harmless each person who was on or at any time prior to the date of the Merger
Agreement or who becomes prior to the Effective Time, an officer, director or
employee of Cellcor (collectively, the "Indemnified Parties") against (i) all
losses, claims, damages, costs, expenses, liabilities or judgments or amounts
that are paid in settlement with the approval of the indemnifying party of or in
connection with any claim, action, suit, proceeding or investigation based in
whole or in part on or arising in whole or in part out of the fact that such
person is or was a director, officer or employee of Cellcor, whether pertaining
to any matter existing or occurring at or prior to the Effective Time and
whether asserted or claimed prior to, or at or after, the Effective Time
("Indemnified Liabilities") and (ii) all Indemnified Liabilities based in whole
or in part on, or arising in whole or in part out of, or pertaining to the
Merger Agreement or the transactions contemplated thereby, in each case to the
full extent a corporation is permitted under the Delaware General Corporation
Law ("DGCL") to indemnify its own directors, officers and employees, as the case
may be. Without limiting the foregoing, in the event any such claim, action,
suit, proceeding or investigation is brought against any Indemnified Party
(whether arising before or after the Effective Time), (a) the Indemnified
Parties may retain counsel satisfactory to them and Cellcor (or after the
Effective Time, them and the Surviving Corporation), (b) Cellcor (or after the
Effective Time, the Surviving Corporation) will pay all reasonable fees and
expenses of such counsel for the Indemnified Parties promptly as statements
therefor are received, and (iii) Cellcor (or after the Effective Time, the
Surviving Corporation) will use all reasonable efforts to assist in the vigorous
defense of any such matter, provided that neither of Cellcor nor the Surviving
Corporation will be liable for any settlement of any claim effected without its
written consent, which consent, however, may not be unreasonably withheld.
Cytogen has agreed to guarantee the performance by the Surviving Corporation of
its indemnification obligations.
The Merger Agreement further provides that, prior to the Effective Time,
Cellcor may purchase, subject to certain restrictions, a directors' and
officers' liability insurance policy at a total cost of not more than $240,000.
Cytogen has agreed that, after the Effective Time, it will not cause such policy
to be rescinded or materially altered.
Election to Board of Directors. The Merger Agreement provides that,
effective as of the Closing (defined below), Dr. Brenner, as the designee of the
Principal Stockholders, and Dr. Bagalay will be elected to the Cytogen Board of
Directors. During the two-year period commencing at the Effective Time and
thereafter for so long as the Principal Stockholders own at least 5% of the
outstanding shares of Cytogen Common Stock, Cytogen shall use its best efforts
to cause to be nominated Dr. Brenner, or such other person designated by the
Principal Stockholders, for election or re-election to the Cytogen Board of
Directors.
Repayment of Note. Cytogen expects to use approximately $4,100,000 of the
net proceeds from the Subscription Offering to repay in full the outstanding
principal and unpaid interest due under the Note (defined below) to two of the
Principal Stockholders.
THE MERGER AGREEMENT
The following is a summary of the material provisions of the Merger
Agreement (including the amendment thereto), a copy of which is attached to this
Joint Proxy Statement/Prospectus as Annex A and incorporated herein by
reference. Capitalized terms which are not otherwise defined in this summary
have the meanings set forth in the Merger Agreement. The following description
of the Merger Agreement is qualified in its entirety by reference to the
complete text of the Merger Agreement.
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Effective Time
If the Merger Proposal is adopted by the requisite vote of Cellcor
stockholders and the Issuance Proposal is approved by the requisite vote of
Cytogen stockholders, the Merger will become effective upon the satisfaction of
various conditions and upon the filing of a Certificate of Merger with the
Secretary of State of the State of Delaware, or at such later date or time as is
specified in such Certificate of Merger (the date and time of such filing, or
such later date or time as set forth therein, being the "Effective Time").
Under the terms of the Merger Agreement, the Merger will be consummated as soon
as practicable (and in any event within two business days) after satisfaction or
waiver of all of the conditions to the Merger set forth in the Merger Agreement.
Conversion of Shares of Cellcor Capital Stock Pursuant to Merger; Treatment of
Options and Warrants
At the Effective Time, each share of Cellcor Common Stock issued and
outstanding immediately prior to the Effective Time (other than shares held by
Cellcor as treasury stock or by Cytogen or the Merger Subsidiary) shall be
converted into the right to receive shares of Cytogen Common Stock based on the
Common Exchange Ratio, and each share of Cellcor Preferred Stock issued and
outstanding immediately prior to the Effective Time (other than shares held by
Cellcor as treasury stock or by Cytogen or the Merger Subsidiary) shall be
converted into the right to receive shares of Cytogen Common Stock based on the
Preferred Exchange Ratio; provided, however, that the Common Exchange Ratio and
the Preferred Exchange Ratio shall be subject to equitable adjustment in the
event of any stock split, stock dividend, reverse stock split or any
combination, reclassification, recapitalization or other like change in respect
of Cytogen Common Stock occurring after the date of the Merger Agreement and
prior to the Effective Time.
At the Effective Time, all then outstanding options to purchase Cellcor
Common Stock granted under employee stock option plans ("Cellcor Stock Options")
and all outstanding warrants to purchase Cellcor Common Stock ("Cellcor
Warrants") shall be assumed by Cytogen and shall continue to have, and be
subject to, the same terms and conditions, except that (i) each such option
shall be exercisable for that number of whole shares of Cytogen Common Stock
which equals the number of shares of Cellcor Common Stock covered by such option
immediately prior to the Effective Time multiplied by the Common Exchange Ratio
and rounded down to the nearest whole number, and each such warrant shall be
exercisable for that number of whole shares of Cytogen Common Stock which equals
the number of shares of Cellcor Common Stock covered by such warrant immediately
prior to the Effective Time multiplied by the Common Exchange Ratio and rounded
to the nearest whole number; and (ii) the exercise price per share under each
such option and warrant shall equal the exercise price immediately prior to the
Effective Time divided by the Common Exchange Ratio and rounded to the nearest
cent. Cytogen shall reserve for issuance the number of shares of Cytogen Common
Stock that will become issuable upon the exercise of such options and warrants
and, promptly after the Effective Time, issue to each holder of such outstanding
options and warrants a document evidencing the assumption by Cytogen of
Cellcor's obligations with respect thereto.
The adjustment provided in the Merger Agreement with respect to any Cellcor
Stock Options that are "incentive stock options" (as defined in Section 422 of
the Internal Revenue Code of 1986, as amended (the "Code")) shall be and is
intended to be effected in a manner that is consistent with Section 424(a) of
the Code. Notwithstanding the foregoing, with respect to each holder of Cellcor
Stock Options who is subject to Section 16 of the Exchange Act ("Section 16"),
the assumption of Cellcor Stock Options by Cytogen shall be effected in a manner
that does not result in any liability of such holder under Section 16.
Representations and Warranties
The Merger Agreement contains various representations and warranties of the
parties thereto. The Merger Agreement includes representations and warranties
by Cellcor as to, among other things, (i) its corporate organization, standing
and power; (ii) the due authorization for and enforceability of the Merger
Agreement with respect to Cellcor; (iii) its capitalization; (iv) the absence of
any legal obligation to any person to sell assets or to effect any merger,
consolidation or reorganization of Cellcor or to enter into any agreement
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with respect thereto; (v) the absence of any conflict with its organizational
documents or with certain contracts or with applicable law; (vi) certain
governmental and regulatory authorizations, consents and approvals; (vii) the
accuracy of Cellcor's financial statements and information contained in certain
filings of Cellcor with the Commission and the absence of any material
undisclosed liabilities; (viii) the conduct of Cellcor's business in the
ordinary course and absence of certain changes since December 31, 1994; (ix)
payment of taxes; (x) pending or threatened litigation; (xi) compliance with
applicable laws, except as disclosed; (xii) validity of title or leasehold
interests in, and certain other matters relating to, real and tangible
properties material to the business of Cellcor; (xiii) intellectual property
matters; (xiv) employee benefit plans and employee-related agreements of
Cellcor; (xv) material contracts and agreements; (xvi) environmental laws;
(xvii) the approval of the Merger Proposal by the Cellcor Board of Directors and
such Board of Directors' recommendation that the Cellcor stockholders approve
and adopt the Merger Proposal; (xviii) the vote of Cellcor stockholders
necessary to approve and adopt the Merger Proposal; (xix) the delivery of a
fairness opinion by CS First Boston; (xx) brokers and finders employed by
Cellcor; and (xxi) the inapplicability of the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act").
The Merger Agreement also includes representations and warranties by
Cytogen and the Merger Subsidiary as to (i) their corporate organization,
standing and power; (ii) the due authorization for and enforceability of the
Merger Agreement with respect to Cytogen and the Merger Subsidiary; (iii) their
respective capitalization; (iv) the absence of any conflict with their
respective organizational documents or with certain contracts or with applicable
law; (v) certain governmental and regulatory authorizations, consents and
approvals; (vi) the accuracy of Cytogen's financial statements and information
contained in certain filings of Cytogen with the Commission and the absence of
any material undisclosed liabilities; (vii) the conduct of Cytogen's business in
the ordinary course and absence of certain changes since December 31, 1994;
(viii) payment of taxes; (ix) pending or threatened litigation; (x) compliance
with applicable laws, except as disclosed; (xi) validity of title or leasehold
interests in, and certain other matters relating to, real and tangible
properties material to the business of Cytogen; (xii) intellectual property
matters; (xiii) employee benefit plans and employee-related agreements of
Cytogen; (xiv) material contracts and agreements; (xv) environmental laws; (xvi)
the approval of the Merger Agreement by the Cytogen Board of Directors and its
recommendation that the Cytogen stockholders approve the Issuance Proposal;
(xvii) the vote of Cytogen stockholders necessary to approve the Issuance
Proposal; (xviii) the delivery of a fairness opinion by Smith Barney; and (xix)
brokers and finders employed by Cytogen.
Conduct of Business Pending the Merger
Covenants of Cellcor.
General. Pursuant to the Merger Agreement, Cellcor has agreed that, prior
to the Effective Time, it shall, among other things, carry on its business only
in the ordinary course, use its reasonable best efforts to preserve intact its
present business organization and keep available the services of its present
officers and employees, maintain insurance policies in coverage amounts in
effect generally prior to the date of the Merger Agreement and maintain its
books, records and accounts with respect to the assets and operations of Cellcor
in a usual, regular and ordinary manner on a basis consistent with past
practices.
In addition, Cellcor has agreed that, prior to the Effective Time, it shall
not do any of the following without the written consent of Cytogen: (i) amend
its Certificate of Incorporation or By-laws; (ii) change its authorized or
issued capital stock or issue any shares of its capital stock (other than shares
of Cellcor Common Stock upon exercise of outstanding Cellcor Stock Options or
Cellcor Warrants) or securities convertible into any such shares or issue any
options, warrants or any other rights to acquire shares of its capital stock;
(iii) enter into any contract or commitment the performance of which may extend
beyond the Closing involving payments in any year exceeding $5,000, except those
made in the ordinary course of business, the terms of which are consistent with
past practice and reasonable in light of current conditions; (iv) enter into any
employment or consulting contract or arrangement with any person which is not
terminable at will, without penalty or continuing obligation; (v) sell,
transfer, lease or otherwise dispose of any of its assets with a value
individually in excess of $5,000; (vi) except as otherwise permitted, incur,
create, assume or suffer to exist any
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mortgage, pledge, lien or other encumbrance affecting title on any of its assets
or other property; (vii) make, change or revoke any tax election or make any
agreement or settlement with any taxing authority; (viii) change any of the
accounting principles or practices used by it (except as required by generally
accepted accounting principles consistently applied); (ix) declare or pay any
dividend or other distribution in respect of any class of its capital stock, or
make any payment to redeem, purchase or otherwise acquire, or call for
redemption, any of such stock or any securities convertible into or exchangeable
for such stock; (x) increase or otherwise change the compensation payable or to
become payable to any officer or employee; (xi) make or authorize the making of
any capital expenditure in excess of $3,000 individually or $18,000 in the
aggregate; (xii) incur any debt or other obligation for money borrowed (other
than in an amount not greater than $4,967,118 pursuant to the Note; (xiii)
guarantee or become a co-maker or accommodation maker or otherwise become or
remain contingently liable in connection with any liability or obligation of any
person; (xiv) lend, advance funds or make an investment in or capital
contribution to any person; (xv) make or authorize the making of any expenditure
of money or incurrence of any obligation, including borrowing under the Note,
inconsistent with the budget attached as Schedule 5.1.4 to the Merger Agreement;
or (xvi) enter into any agreement to do any of the foregoing.
No Solicitation of Takeover Proposals. Pursuant to the Merger Agreement,
Cellcor has further agreed that, prior to the Effective Time, (i) Cellcor shall
not, nor shall it authorize or permit any officer, director or employee of or
any investment banker, attorney or other advisor or representative of Cellcor
to, directly or indirectly, (a) solicit, initiate or knowingly encourage the
submission of any takeover proposal (defined as any proposal for a merger or
other business combination involving Cellcor or any proposal or offer to acquire
in any manner, directly or indirectly, an equity interest in not less than 40%
of the outstanding voting securities of or substantial assets of Cellcor) or (b)
participate in any discussions or negotiations regarding, or furnish to any
person any information with respect to, or take any other action to facilitate
any inquiries or the making of any proposal that constitutes or may reasonably
be expected to lead to any takeover proposal; provided, however, if the Cellcor
Board of Directors, after consultation with outside counsel, determines in good
faith that such action is necessary for the Cellcor Board of Directors to comply
with its fiduciary duties under applicable law, Cellcor may upon receipt by
Cellcor of an unsolicited written, bona fide takeover proposal, furnish
information with respect to Cellcor pursuant to a customary confidentiality
agreement and participate in negotiations regarding such takeover proposal; (ii)
neither the Cellcor Board of Directors nor any committee thereof shall (a)
withdraw or modify, or propose to withdraw or modify, in a manner adverse to
Cytogen or the Merger Subsidiary, the approval or recommendation by such Board
of Directors or any such committee of the Merger Agreement or the Merger, (b)
approve or recommend, or propose to approve or recommend, any takeover proposal,
or (c) enter into any agreement with respect to any takeover proposal; provided,
however, that, in the event the Cellcor Board of Directors receives an
unsolicited written takeover proposal and if the Cellcor Board of Directors,
after consultation with outside counsel and with a financial advisor of
nationally recognized reputation, determines in good faith that such action is
necessary for the Cellcor Board of Directors to comply with its fiduciary duties
under applicable law, then the Board of Directors may withdraw or modify its
approval or recommendation of the Merger Agreement and the Merger taken
together, approve or recommend any such takeover proposal, or terminate the
Merger Agreement in order to enter into an agreement with respect to such a
takeover proposal, in each case at any time after Cytogen's receipt of written
notice advising Cytogen that the Cellcor Board of Directors has received a
takeover proposal, specifying the material terms and conditions of such takeover
proposal and identifying the person making such takeover proposal; and (iii)
Cellcor shall promptly advise Cytogen orally and in writing of any request for
information or any takeover proposal, the material terms and conditions of such
request or takeover proposal, and the identity of the person making any such
request or takeover proposal.
Covenants of Cytogen. Pursuant to the Merger Agreement, Cytogen has agreed
that it shall do the following, among other things: (i) use its best efforts to
obtain all necessary state securities law or "blue sky" permits and approvals
required to carry out the transactions contemplated by the Merger Agreement, and
Cellcor shall furnish all information concerning Cellcor and the holders of
shares of Cellcor Common Stock and Cellcor Preferred Stock as may be reasonably
requested in connection with any such action; (ii) contemporaneously with the
solicitation of proxies for approval of the Issuance Proposal, make the
Subscription Offering to the holders of Cellcor Common Stock; (iii) use its best
efforts to list on the Nasdaq
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National Market, upon official notice of issuance, the Cytogen Common Stock to
be issued pursuant to the Transaction; and (iv) after the Effective Time (a)
pursue the development and commercialization of and otherwise exploit Cellcor
technology, and (b) seek the authorizations and approvals of FDA appropriate to
such exploitation, including, without limitation, approval of an ELA and PLA;
provided, however, that Cytogen's obligations in this regard ultimately shall be
governed by the best interests of Cytogen and the holders of Cytogen Common
Stock as determined in good faith by the Cytogen Board of Directors.
Mutual Covenants. Pursuant to the Merger Agreement, each of Cellcor, the
Merger Subsidiary and Cytogen, as appropriate, shall, among other things, (i)
prepare, file and use all reasonable efforts to have the Registration Statement
declared effective under the Securities Act as promptly as practicable after its
filing; (ii) cooperate with each other party and use its best efforts to
promptly prepare and file all necessary documentation, to effect all necessary
applications, notices, petitions, filings and other documents, and to obtain as
promptly as practicable all necessary permits, consents, orders, approvals and
authorizations of, or any exemption by, all third parties and governmental
entities necessary or advisable to consummate the transactions contemplated by
the Merger Agreement and the Voting Agreement; (iii) furnish, upon request, each
other party with all information concerning itself, its subsidiaries, directors,
officers and stockholders and such other matters as may be reasonably necessary
or advisable in connection with the Registration Statement or any other
statement, filing, notice or application made by or on behalf of each such party
or any of its subsidiaries to any governmental entity in connection with the
Merger and the other transactions contemplated by the Merger Agreement and the
Voting Agreement; (iv) promptly furnish each other party with copies of written
communications received by each such party, or any of its subsidiaries,
affiliates or associates (as such terms are defined in Rule 12b-2 under the
Exchange Act as in effect on the date of execution of the Merger Agreement),
from, or delivered by any of the foregoing to, any governmental entity in
respect of the transactions contemplated by the Merger Agreement; (v) take all
actions necessary to ensure that the consummation of the Merger and the other
transactions contemplated by the Merger Agreement will not render Section 203 of
the DGCL applicable to such transactions; (vi) use its best efforts to cause the
Merger to be treated as a reorganization within the meaning of Section 368(a) of
the Code; (vii) take such action with respect to each Cellcor Stock Option as
may be necessary to cause the same to be assumed by Cytogen, subject to certain
amendments; (viii) use its best efforts to enter into, not later than July 1,
1995, an agreement providing for Cytogen to provide Cellcor with certain
management services prior to the Effective Time; (ix) subject to the terms and
conditions of the Merger Agreement, use all reasonable best efforts to take, or
to cause to be taken, all actions and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to effect
and make effective the transactions contemplated by the Merger Agreement.
Conditions to Consummation of the Merger
General. The respective obligations of Cellcor, Cytogen and the Merger
Subsidiary to effect the Merger and the other transactions contemplated by the
Merger Agreement are subject to the satisfaction at or prior to the Effective
Time of the following conditions:
(i) the Registration Statement shall have been declared effective by
the Commission under the Securities Act; no stop order suspending the
effectiveness of the Registration Statement will have been issued by the
Commission; and no proceedings for that purpose shall have been initiated, or to
the knowledge of the parties, threatened by the Commission;
(ii) the Merger Proposal shall have been approved and adopted by the
requisite vote of holders of the outstanding shares of Cellcor Common Stock and
Cellcor Preferred Stock, voting separately as two classes, and the Issuance
Proposal shall have been approved by the requisite vote of the Cytogen
stockholders;
(iii) other than the filing of the merger documents as required by
Delaware law, all authorizations, consents, waivers, orders and approvals
required to be obtained, and all filings, notices and declarations required to
be made, by Cytogen and Cellcor prior to the consummation of the Merger and the
transactions contemplated by the Merger Agreement shall have been obtained from,
and made with, all required
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governmental entities and all other third parties, except for such
authorizations, consents, waivers, orders, approvals, filings, notices or
declarations which would not have a material adverse effect at or after the
Effective Time on either Cellcor or Cytogen (unless this condition is waived, in
whole or in part, to the extent permitted by applicable law);
(iv) Cytogen shall have received all state securities and "blue sky"
permits and other authorizations necessary to consummate the transactions
contemplated by the Merger Agreement; and
(v) the shares of Cytogen Common Stock to be issued in the Transaction
shall have been approved for quotation on the Nasdaq National Market.
Cytogen's Conditions. The obligations of Cytogen and the Merger
Subsidiary to effect the Merger and the transactions contemplated by the Merger
Agreement are also subject to the fulfillment prior to or at the closing of the
transactions contemplated by the Merger Agreement, which shall be on a date not
later than the second business day after satisfaction of certain conditions
contained in the Merger Agreement (the "Closing") of the following conditions
(any one or more of which may be waived in whole or in part by Cytogen and the
Merger Subsidiary in their sole discretion):
(i) each of the representations and warranties of Cellcor contained in
the Merger Agreement shall be true and correct in all material respects on and
as of the time of the Closing (except where such representations and warranties
speak as of an earlier date), with the same force and effect as though such
representations and warranties had been made on, as of and with reference to
such time;
(ii) Cellcor shall have performed all of the covenants and complied
with all of the provisions required by the Merger Agreement to be performed or
complied with by it on or before the Closing, in each case in all material
respects;
(iii) Cytogen shall have received from Hale and Dorr, counsel for
Cellcor, an opinion dated the date of Closing in form and substance reasonably
satisfactory to Cytogen, to the effect that, among other things, the Merger will
be treated as a reorganization qualifying under the provisions of Section 368 of
the Code and that generally neither Cytogen, the Merger Subsidiary nor Cellcor
nor the holders of Cellcor Common Stock and Cellcor Preferred Stock, other than
certain holders in special circumstances (such as holders who received Cellcor
Common Stock upon a recent exercise of an option), will recognize any gain or
loss for federal income tax purposes as a result of the Merger (except to the
extent holders of Cellcor Common Stock and Cellcor Preferred Stock receive the
right to purchase shares of Cytogen Common Stock in the Subscription Offering or
cash in lieu of fractional shares of Cytogen Common Stock);
(iv) all instruments and documents required on Cellcor's part to
effectuate and consummate the transactions contemplated by the Merger Agreement
shall be delivered to Cytogen and the Merger Subsidiary and shall be in form and
substance reasonably satisfactory to Cytogen and the Merger Subsidiary and their
counsel;
(v) no temporary restraining order, preliminary or permanent
injunction or other order of any court of competent jurisdiction or other legal
or regulatory restraint or prohibition preventing the consummation of the Merger
or limiting or restricting Cytogen's ownership or control of the business or the
operation of the business of Cellcor after the Merger shall have been issued nor
shall any proceeding by a governmental entity seeking any of the foregoing be
pending; nor shall there be any action taken, or any statute, rule, regulation
or order enacted, entered, enforced or deemed applicable to the Merger which
makes the consummation of the Merger illegal;
(vi) there shall have been no material adverse change concerning
Cellcor since December 31, 1994; and
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(vii) the Principal Stockholders shall have fulfilled in all material
respects their obligations under the Voting Agreement.
Cellcor's Conditions. The obligations of Cellcor to effect the Merger
are subject to the fulfillment prior to or at the date of Closing of the
following conditions (any one or more of which may be waived in whole or in part
by Cellcor at Cellcor's option):
(i) each of the representations and warranties of Cytogen and the
Merger Subsidiary contained in the Merger Agreement shall be true and correct in
all material respects on and as of the time of the Closing (except where such
representations and warranties speak as of an earlier date), with the same force
and effect as though such representations and warranties had been made on, as of
and with reference to such time;
(ii) Cytogen and the Merger Subsidiary shall have performed all of the
covenants and complied with all the provisions required by the Merger Agreement
to be performed or complied with by them at or before the date of Closing, in
each case in all material respects;
(iii) Cellcor shall have received from Dechert Price & Rhoads, counsel
for Cytogen and the Merger Subsidiary, an opinion dated the date of Closing in
form and substance reasonably satisfactory to Cellcor, to the effect that, among
other things, the Merger will be treated as a reorganization qualifying under
the provisions of Section 368 of the Code and that generally neither Cytogen,
the Merger Subsidiary nor Cellcor nor the holders of Cellcor Common Stock and
Cellcor Preferred Stock, other than certain holders in special circumstances
(such as holders who received Cellcor Common Stock upon a recent exercise of an
option), will recognize any gain or loss for federal income tax purposes as a
result of the Merger (except to the extent holders of Cellcor Common Stock and
Cellcor Preferred Stock receive the right to purchase shares of Cytogen Common
Stock in the Subscription Offering or cash in lieu of fractional shares of
Cytogen Common Stock);
(iv) all instruments and documents required on the part of Cytogen and
the Merger Subsidiary to effectuate and consummate the transactions contemplated
by the Merger Agreement shall be delivered to Cellcor and shall be in form and
substance reasonably satisfactory to Cellcor and its counsel;
(v) no temporary restraining order, preliminary or permanent
injunction or other order of any court of competent jurisdiction or other legal
or regulatory restraint or prohibition preventing the consummation of the Merger
shall have been issued nor shall any proceeding by a governmental entity seeking
any of the foregoing be pending; nor shall there be any action taken, or any
statute, rule, regulation or order enacted, entered, enforced or deemed
applicable to the Merger which makes the consummation of the Merger illegal;
(vi) effective as of the date of Closing, Dr. Brenner and Dr. Bagalay
shall be elected to the Cytogen Board of Directors; and
(vii) there shall have been no material adverse change concerning
Cytogen since December 31, 1994.
Termination of the Merger Agreement
The Merger Agreement may be terminated at any time prior to the Closing:
(i) by mutual consent of the Boards of Directors of Cytogen and
Cellcor;
(ii) by either Cytogen or Cellcor if any United States federal or state
court of competent jurisdiction or other governmental entity shall have issued
an injunction or taken any other action permanently restraining, enjoining or
otherwise prohibiting the Merger and such injunction or other action shall have
become final and non-appealable;
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(iii) by either Cytogen or Cellcor, if there has been a breach of any
representation, warranty or covenant on the part of the other and, in the case
of Cellcor, on the part of the Merger Subsidiary, set forth in the Merger
Agreement, or if any condition to Closing has not been fulfilled; provided,
however, that if such breach is curable by the other party through the exercise
of its best efforts, the non-breaching party may not terminate the Merger
Agreement unless such breach has not been cured within fifteen (15) business
days after such breach is discovered by the non-breaching party;
(iv) by either Cytogen or Cellcor, if the Merger shall not have been
consummated prior to December 31, 1995, but only if the failure to consummate is
for a reason other than a failure by such party to satisfy the conditions to the
Merger of the other party as described above;
(v) by Cytogen, if (a) the Cellcor Board of Directors (1) withdraws or
modifies, or proposes to withdraw or modify, in a manner adverse to Cytogen or
the Merger Subsidiary, the approval or recommendation by the Cellcor Board of
Directors (or any committee thereof) of the Merger Agreement or the Merger, (2)
approves or recommends, or proposes to approve or recommend, any takeover
proposal by a third party or (3) enters into an agreement with a third party
with respect to any such takeover proposal, or (b) any third party other than
the Principal Stockholders acquires beneficial ownership or the right to acquire
beneficial ownership of 40% or more of the outstanding shares of Cellcor Common
Stock;
(vi) by Cellcor, if the Cellcor Board of Directors (a) withdraws or
modifies, or proposes to withdraw or modify, in a manner adverse to Cytogen or
the Merger Subsidiary, the approval or recommendation by the Cellcor Board of
Directors (or any committee thereof) of the Merger Agreement or the Merger, (b)
approves or recommends, or proposes to approve or recommend, any takeover
proposal by a third party or (c) enters into an agreement with a third party
with respect to any such takeover proposal, but only in the event that the
Cellcor Board of Directors, after consultation with independent legal counsel,
determines in good faith that such action is necessary to comply with its
fiduciary duties under applicable law; and
(vii) by either Cytogen or Cellcor if (a) the Merger Proposal shall
have failed to receive the requisite vote for approval by the Cellcor
stockholders or (b) the Issuance Proposal shall have failed to receive the
requisite vote for approval by the Cytogen stockholders.
Termination and Expense Fee
Cellcor will become obligated to pay a termination and expense fee of
$1,000,000 to Cytogen if Cellcor enters into a definitive agreement relating to
a competing takeover proposal, within one year after the Merger Agreement is
terminated (i) by Cytogen, if (a) the Cellcor Board of Directors (1) withdraws
or modifies, or proposes to withdraw or modify, in a manner adverse to Cytogen
or the Merger Subsidiary, the approval or recommendation by the Cellcor Board of
Directors (or any committee thereof) of the Merger Agreement or the Merger, (2)
approves or recommends, or proposes to approve or recommend, any takeover
proposal by a third party or (3) enters into an agreement with a third party
with respect to any such takeover proposal, or (b) any third party other than
the Principal Stockholders acquires beneficial ownership or the right to acquire
beneficial ownership of 40% or more of the outstanding shares of Cellcor Common
Stock; or (ii) by Cellcor, if the Cellcor Board of Directors (a) withdraws or
modifies, or proposes to withdraw or modify, in a manner adverse to Cytogen or
the Merger Subsidiary, the approval or recommendation by the Cellcor Board of
Directors (or any committee thereof) of the Merger Agreement or the Merger, (b)
approves or recommends, or proposes to approve or recommend, any takeover
proposal by a third party or (c) enters into an agreement with a third party
with respect to any such takeover proposal, but only in the event that the
Cellcor Board of Directors, after consultation with independent legal counsel,
determines in good faith that such action is necessary to comply with its
fiduciary duties under applicable law.
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Amendment and Waiver of the Merger Agreement; Extensions
The Merger Agreement may be amended with the approval of the Boards of
Directors of Cytogen, Cellcor and the Merger Subsidiary at any time prior to the
approval of the Merger Proposal by the Cellcor stockholders except that after
such approval, no amendment which by applicable law requires the approval of
such stockholders may be made without such approval. At any time prior to the
Effective Time, Cytogen and Cellcor may (i) extend the time for the performance
of obligations of the other parties under the Merger Agreement, (ii) waive any
inaccuracies in the representations and warranties of the other applicable party
contained in the Merger Agreement or (iii) waive compliance with any of the
agreements or conditions contained therein.
Expenses and Fees
All costs and expenses incurred in connection with the Merger Agreement
and the transactions contemplated thereby will be paid by the party incurring
such expenses.
Exchange of Certificates in the Merger
As soon as reasonably practicable after the Effective Time, Mellon
Securities Trust Company (the "Exchange Agent") shall mail to each holder of
record of certificates, which immediately prior to the Effective Time
represented outstanding shares of Cellcor Common Stock and Cellcor Preferred
Stock (the "Certificates"), a transmittal letter and instructions to be used in
effecting the surrender of the Certificates in exchange for (i) a certificate
representing the number of whole shares of Cytogen Common Stock which such
holder has the right to receive pursuant to the Merger, and (ii) cash for
fractional shares of Cytogen Common Stock to which such holder would otherwise
be entitled. CELLCOR STOCKHOLDERS ARE REQUESTED NOT TO SURRENDER THEIR
CERTIFICATES FOR EXCHANGE UNTIL SUCH TRANSMITTAL LETTER AND INSTRUCTIONS ARE
RECEIVED BY THEM. After the Effective Time and until surrendered as provided
above, Certificates shall be deemed to represent only the right to receive
certificates representing the number of whole shares of Cytogen Common Stock
into which the shares of Cellcor Common Stock and Cellcor Preferred Stock
formerly represented by such Certificates were converted in the Merger and a
cash payment in lieu of any fractional shares. The holders of Certificates
shall not be entitled to receive dividends or any other distributions from
Cytogen until such Certificates are so surrendered.
THE VOTING AGREEMENT
As a condition to their willingness to enter into the Merger Agreement,
Cytogen and the Merger Subsidiary have required that the Principal Stockholders
execute, and the Principal Stockholders have executed, a Voting and Subscription
Agreement, dated June 15, 1995, with Cytogen and the Merger Subsidiary (the
"Voting Agreement"). Pursuant to the Voting Agreement, each Principal
Stockholder has agreed, among other things, (i) to vote its shares of Cellcor
Common Stock and Cellcor Preferred Stock, as the case may be, in favor of the
Merger Proposal, (ii) to grant a proxy to the Merger Subsidiary to so vote its
shares, (iii) to refrain from electing to treat the Merger as a liquidation
pursuant to the Cellcor Certificate of Designation (defined below) in the case
of the Cellcor Preferred Stock, and (iv) to purchase for cash shares of Cytogen
Common Stock offered as part of the Subscription Offering to the extent and in
the manner described below.
Contemporaneously with the execution of the Voting Agreement, two of the
Principal Stockholders have agreed to lend funds to Cellcor in exchange for
Cellcor's promissory note in the aggregate principal amount of up to $4,967,118
(the "Note") to fund Cellcor's normal course of operations prior to Closing.
The Note, which bears interest at the rate of 6.37% per annum, will be repaid
with a portion of the proceeds of the Subscription Offering.
Subject to the terms and conditions set forth in the Voting Agreement,
upon the Effective Time, two of the Principal Stockholders have agreed that they
will purchase for cash 3,084,833 shares of Cytogen
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Common Stock offered to the holders of Cellcor Common Stock for aggregate cash
consideration of $12,000,000 (the "Minimum Subscription Amount"); provided,
however, that to the extent up to 128,534 shares of Cytogen Common Stock are
purchased in the Subscription Offering for up to $500,000 by persons other than
the Principal Stockholders, the commitment under the Voting Agreement shall be
reduced by an amount equal to such other purchases, but not to less than
2,956,299 shares and $11,500,000; and provided, further, that a portion of such
investment will be used to repay the Note. It shall be a condition precedent to
the Principal Stockholders' obligation to purchase the shares of Cytogen Common
Stock offered to the Principal Stockholders in the Subscription Offering that
(i) the waiting period under the HSR Act shall have expired or been terminated
and (ii) no order, decree or ruling issued by any governmental entity shall be
in effect prohibiting the purchase or delivery of the shares of Cytogen Common
Stock in the Subscription Offering.
For a two-year period after the Effective Time, no Principal Stockholder
shall contract to sell, sell or otherwise transfer or dispose of any shares of
Cytogen Common Stock received upon exchange of its shares in the Merger or
purchased in the Subscription Offering or any interest therein or any voting
rights with respect thereto (the "Converted Shares"), except that a Principal
Stockholder may transfer its Converted Shares after the Effective Time to an
affiliate who agrees in a writing delivered to Cytogen to be bound by these
provisions of the Voting Agreement. Upon each of the second anniversary of the
Effective Time, six months thereafter and the third anniversary of the Effective
Time, each Principal Stockholder may contract to sell, sell, or otherwise
transfer or dispose of one-third, two-thirds and all of the Converted Shares,
respectively.
Cytogen shall transfer enough proceeds of the Subscription Offering to
the Surviving Corporation so as to enable the Surviving Corporation to perform
its obligations under the Note. The Note will be due and payable upon the later
of (i) effectiveness of the Merger and the closing of the Subscription Offering,
provided, however, that the Subscription Offering produces aggregate proceeds to
Cytogen of not less than $12,000,000 and (ii) December 31, 1995.
Upon the purchase of the shares of Cytogen Common Stock in the
Subscription Offering, Cytogen and the Principal Stockholders shall enter into a
Registration Rights Agreement For Common Stock (the "Registration Rights
Agreement") pursuant to which the Principal Stockholders will be granted the
right to have their shares of Cytogen Common Stock registered under certain
circumstances. Under the terms of the Registration Rights Agreement, if Cytogen
at any time or from time to time proposes to register shares of Cytogen Common
Stock under the Securities Act (other than in a registration in connection with
an exchange offer or an offering of securities solely to the existing
stockholders or employees of Cytogen), the Principal Stockholders may request
registration of their shares of Cytogen Common Stock, and Cytogen will use its
best efforts to effect the registration of such shares, subject to certain
conditions and limitations. In addition, at any time after the second
anniversary of the date of the Registration Rights Agreement, the Principal
Stockholders may make a written request for registration of their shares of
Cytogen Common Stock under the Securities Act (a "Demand Registration") and
Cytogen shall effect such Demand Registration, subject to certain conditions and
limitations. Under the terms of the Registration Rights Agreement, the
Principal Stockholders are entitled to two Demand Registrations.
If the Effective Time shall not have occurred by December 31, 1995, the
Voting Agreement and the parties' obligations provided therein (and the proxy
provided for therein) will terminate on the first to occur of (i) termination of
the Merger Agreement in accordance with its terms, (ii) December 31, 1995, or
(iii) written notice of termination of the Voting Agreement by Cytogen to the
Principal Stockholders.
The Principal Stockholders have jointly and severally agreed to
indemnify, defend and hold harmless Cytogen and Cellcor from and against all
loss, damage, liability or expense, including, without limitation, reasonable
attorneys' fees and other costs of defense, arising out of certain limited
patent infringement matters. The total amount of any such indemnification shall
in no event exceed $12,000,000.
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THE CONSULTING AND MANAGEMENT AGREEMENT
In accordance with Section 5.15 of the Merger Agreement, Cytogen and
Cellcor have entered into a Consulting and Management Agreement (the "Consulting
and Management Agreement"), dated as of July 1, 1995, pursuant to which Cytogen
will provide management consulting services in the clinical, regulatory,
financial and human resources areas that are necessary or desirable in
connection with the operation of Cellcor's business.
Under the terms of the Consulting and Management Agreement, Cytogen
will focus on (i) assisting Cellcor in the management and oversight of the FDA-
designated Pivotal Phase III clinical trials of ALT in patients with mRCC, (ii)
the preparation by Cellcor of an ELA/PLA for submission to FDA, and (iii) the
conduct of a Phase I/II clinical trial using ALT for the treatment of chronic
hepatitis B. See "INFORMATION CONCERNING CELLCOR--Business of Cellcor."
All the services rendered by Cytogen pursuant to the Consulting and
Management Agreement will be subject to oversight and control by the Cellcor
Board of Directors. Cellcor will retain control and authority over all
interactions with FDA, and all significant decisions relating to the business of
Cellcor will require the approval of the Cellcor Board of Directors or the
Chairman of the Cellcor Board of Directors.
In consideration of providing the management consulting services to
Cellcor under the Consulting and Management Agreement, Cellcor will pay Cytogen
a fixed monthly consulting fee of $30,000 plus reasonable out-of-pocket expenses
incurred in connection therewith. Cytogen and Cellcor have agreed that all
expenditures by Cellcor under the Consulting and Management Agreement will not
be included in the amounts budgeted for Cellcor's operations as set forth in
Schedule 5.14 to the Merger Agreement.
The initial term of Cytogen's engagement under the Consulting and
Management Agreement commenced on July 1, 1995 and will continue through and
until December 31, 1995 (the "Initial Term"), unless terminated earlier upon (i)
the termination of the Merger Agreement, (ii) the closing of the transactions
contemplated by the Merger Agreement, or (iii) 30 days written notice of a
material default under the Consulting and Management Agreement. The Merger
Agreement may be terminated by either Cytogen or Cellcor if, among other things,
the Merger Proposal fails to receive the requisite vote for approval by the
Cellcor stockholders or the Issuance Proposal fails to receive the requisite
vote for approval by the Cytogen stockholders. See "THE MERGER AGREEMENT--
Termination of the Merger Agreement." After the expiration of the Initial Term,
the engagement will be renewed automatically on a month-to-month basis, unless
terminated upon 30 days prior written notice delivered by either party to the
other.
REGULATORY APPROVALS
Cytogen and Cellcor are not aware of any governmental or regulatory
requirements relating to consummation of the Merger or the Subscription
Offering, other than compliance with applicable federal and state securities
laws and the HSR Act. Cytogen and an affiliate of the Principal Stockholders
filed a notification on July 10, 1995 pursuant to the HSR Act. The 30-day
waiting period required by the HSR Act expired on August 9, 1995.
APPRAISAL RIGHTS
Holders of Cytogen Common Stock do not have rights of appraisal under
Section 262 ("Section 262") of the DGCL in connection with the Merger because
Cytogen is not a constituent corporation in the Merger. However, holders of
Cellcor Common Stock and holders of Cellcor Preferred Stock are entitled to
appraisal rights under Section 262 in connection with the Merger.
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If the Merger is consummated, holders of Cellcor Common Stock and
holders of Cellcor Preferred Stock who hold such shares of record on the date of
making a written demand for appraisal as described below, continuously hold such
shares through the Effective Time and otherwise comply fully with the procedures
prescribed in Section 262, will be entitled to an appraisal by the Delaware
Court of Chancery of the "fair value" of their shares (exclusive of any element
of value arising from the accomplishment or expectation of the Merger) and to
receive from the Surviving Corporation payment of such fair value in cash.
Shares of Cellcor Common Stock and Cellcor Preferred Stock that are
outstanding immediately prior to the Effective Time and with respect to which
appraisal shall have been properly demanded in accordance with Section 262 shall
not be converted into the right to receive shares of Cytogen Common Stock in the
Merger at or after the Effective Time unless and until the holder of such shares
withdraws his demand for such appraisal or becomes ineligible for such
appraisal.
Under Section 262, not less than 20 days prior to the Cellcor Special
Meeting, Cellcor is required to notify each stockholder eligible for appraisal
rights of the availability of such appraisal rights. This Joint Proxy
Statement/Prospectus constitutes notice to holders of Cellcor Common Stock and
Cellcor Preferred Stock that appraisal rights are available to them.
The following is a brief summary of the statutory procedures to be
followed by a holder of Cellcor Common Stock or Cellcor Preferred Stock in order
to perfect appraisal rights under the DGCL. This summary is not intended to be
complete and is qualified in its entirety by reference to Section 262 which is
attached hereto as Annex G and is incorporated herein by reference. Any Cellcor
stockholder considering demanding appraisal is advised to read the full text of
Section 262 contained in Annex G and to consult legal counsel.
If any holder of Cellcor Common Stock or Cellcor Preferred Stock
elects to exercise such stockholder's appraisal rights, such stockholder must
satisfy each of the following conditions:
(i) A written demand for appraisal of shares of Cellcor Common
Stock or Cellcor Preferred Stock must be delivered to Cellcor by any holder
thereof seeking appraisal before the taking of the vote on the Merger at
the Cellcor Special Meeting. Such demand must reasonably inform Cellcor of
the identity of the stockholder and that the stockholder intends thereby to
demand appraisal of his shares. Merely voting against, or failing to vote
in favor of, the approval of the Merger Agreement will not constitute a
demand for appraisal within the meaning of Section 262.
(ii) Stockholders electing to exercise their appraisal rights under
Section 262 must not vote for approval of the Merger. A failure to vote
will satisfy this condition. If, however, a stockholder votes for approval
and adoption of the Merger Agreement and the Merger or returns a signed
proxy but does not specify a vote against the approval of the Merger or a
direction to abstain, the proxy will be voted for the approval of the
Merger, which will have the effect of waiving such stockholder's appraisal
rights.
(iii) Such stockholder must continually hold such shares from the
date of making of the demand through the Effective Time.
(iv) A demand for appraisal must be executed by or for the Cellcor
stockholder of record, fully and correctly, as such stockholder's name
appears on the stock certificates. If Cellcor Common Stock or Cellcor
Preferred Stock is owned of record in a fiduciary capacity, such as by a
trustee, guardian or custodian, such demand must be executed by the
fiduciary. If Cellcor Common Stock or Cellcor Preferred Stock is owned of
record by more than one person, as in a joint tenancy or tenancy in common,
such demand must be executed by all joint owners. An authorized agent,
including an agent for two or more joint owners, may execute the demand for
appraisal for a stockholder of record, so long as the agent identifies the
record owner and expressly discloses the fact that, in exercising the
demand, such agent is acting as agent for the record owner.
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A record owner who holds Cellcor Common Stock or Cellcor Preferred Stock as
a nominee for others may exercise appraisal rights with respect to the shares
held for all or fewer than all beneficial owners of shares of Cellcor Common
Stock or Cellcor Preferred Stock as to which the holder is the record owner. In
such case, the written demand must set forth the number of shares covered by
such demand. Where the number of shares is not expressly stated, the demand
will be presumed to cover all shares of Cellcor Common Stock or Cellcor
Preferred Stock outstanding in the name of such record owner. Beneficial owners
who are not record owners and who intend to exercise appraisal rights should
instruct the record owner to comply strictly with the statutory requirements
with respect to the delivery of written demand for appraisal. A demand for
appraisal submitted by a beneficial owner who is not the record owner will not
be honored.
If any holder of Cellcor Common Stock or Cellcor Preferred Stock fails to
comply with any of the conditions of Section 262 and the Merger becomes
effective, such stockholder will be entitled to receive the consideration
provided for in the Merger Agreement, but will have no appraisal rights with
respect to such holder's Cellcor Common Stock or Cellcor Preferred Stock, as the
case may be.
A Cellcor stockholder who elects appraisal rights must mail or deliver the
written demand for appraisal to: Cellcor, Inc., 200 Wells Avenue, Newton,
Massachusetts 02159, Attention: Treasurer. The written demand for appraisal
should specify the stockholder's name and mailing address and the number of
shares of Cellcor Common Stock or Cellcor Preferred Stock covered by the demand,
and should state that the stockholder is thereby demanding appraisal in
accordance with Section 262.
Within 10 days after the Effective Time, the Surviving Corporation must
provide notice as to the date of effectiveness of the Merger to all Cellcor
stockholders who have duly and timely delivered demands for appraisal and
otherwise complied with Section 262 ("Dissenting Stockholders").
Within 120 days after the Effective Time, any Dissenting Stockholder is
entitled, upon written request, to receive from the Surviving Corporation a
statement setting forth the aggregate number of shares not voted in favor of the
Merger and with respect to which demands for appraisal have been received by
Cellcor, and the number of holders of such shares. Such statement must be
mailed within 10 days after the written request therefor has been received by
the Surviving Corporation.
Within 120 days after the Effective Time, either the Surviving Corporation
or any Dissenting Stockholder may file a petition in the Delaware Court of
Chancery demanding a determination of the fair value of each share of Cellcor
Common Stock and Cellcor Preferred Stock. If a petition for an appraisal is
timely filed, at the hearing on such petition, the Delaware Court of Chancery
will determine which Cellcor stockholders are entitled to appraisal rights and
thereafter will appraise the shares of Cellcor Common Stock and Cellcor
Preferred Stock owned by such stockholders, determining the fair value of such
shares, exclusive of any element of value arising from the accomplishment or
expectation of the Merger, together with a fair rate of interest to be paid, if
any, upon the amount determined to be the fair value.
In determining fair value, the Delaware Court of Chancery is to take into
account all relevant factors. In Weinberger v. UOP, Inc., et al., the Delaware
Supreme Court discussed the factors that could be considered in determining fair
value in an appraisal proceeding, stating that "proof of value by any techniques
or methods which are generally considered acceptable in the financial community
and otherwise admissible in court" should be considered and that "[f]air price
obviously requires consideration of all relevant factors involving the value of
a company." The Delaware Supreme Court stated that in making this determination
of fair value, the Delaware Court of Chancery and the appraiser must consider
"all factors and elements which reasonably might enter into the fixing of
value," including "market value, asset value, dividends, earnings prospects, the
nature of the enterprise and any other factors which were known or which could
be ascertained as of the date of merger and which throw any light on future
prospects of the merged corporation." The Delaware Supreme Court construed
Section 262 to mean that "elements of future value, including the nature of the
enterprise, which are known or susceptible of proof as of the date of the merger
and not the product of speculation, may
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be considered." However, the court noted that, in determining fair value under
Section 262, "the speculative elements of value that may arise from the
"accomplishment" or "expectation" of the merger are excluded."
Stockholders of Cellcor considering whether to seek appraisal should bear
in mind that the fair market value of their Cellcor Common Stock or Cellcor
Preferred Stock determined under 262 could be more than, the same as or less
than the value of the consideration to be paid pursuant to the Merger Agreement,
and that an opinion of an investment banking firm as to fairness from a
financial point of view is not necessarily an opinion as to fair value under
Section 262 of the DGCL.
The cost of the appraisal proceeding may be determined by the Delaware
Court of Chancery and assessed upon the parties as the Court deems equitable in
the circumstances. Upon application of a Dissenting Stockholder, the Court may
order that all or a portion of the expenses incurred by any Dissenting
Stockholder in connection with the appraisal proceeding, including without
limitation, reasonable attorneys' fees and the fees and expenses of experts, be
charged pro rata against the value of all shares entitled to appraisal. In the
absence of such a determination or assessment, each party bears its own
expenses.
A Dissenting Stockholder who has duly demanded appraisal in compliance with
262 will not, after the Effective Time, be entitled to vote for any purpose the
Cellcor Common Stock or Cellcor Preferred Stock subject to such demand or to
receive payment of dividends or other distributions on such Cellcor Common Stock
or Cellcor Preferred Stock except for dividends or other distributions payable
to stockholders of record at a date prior to the Effective Time.
At any time within 60 days after the Effective Time, any Dissenting
Stockholder may withdraw his demand for appraisal and accept the consideration
to be paid under the Merger Agreement without interest. After this period, a
Dissenting Stockholder may withdraw his demand for appraisal only with the
consent of the Surviving Corporation. If no petition for appraisal is filed
with the Delaware Court of Chancery within 120 days after the Effective Time,
Dissenting Stockholder' rights to appraisal shall cease and they shall be
entitled to receive the consideration to be paid under the Merger Agreement
without interest. Inasmuch as the Surviving Corporation has no obligation or
intention to file such a petition, any Cellcor stockholder who desires such a
petition to be filed is advised to file it on a timely basis. No petition
timely filed in the Delaware Court of Chancery demanding appraisal shall be
dismissed as to any Cellcor stockholder without the approval of the Delaware
Court of Chancery, and such approval may be conditioned upon such terms as the
Delaware Court of Chancery deems just.
Failure to take any required step in connection with the exercise of
appraisal rights may result in the termination or waiver of such rights.
ACCOUNTING TREATMENT OF THE MERGER
Under applicable accounting standards, the Merger will be treated as a
purchase of Cellcor by Cytogen. Upon completion of the Merger, which is
expected to occur in fiscal 1995, an amount representing acquired research and
development will be charged to expense. Based on $5.25, the last sale price per
share of Cytogen Common Stock on August 29, 1995, this amount would be
approximately $29.4 million. To the extent the market price of Cytogen Common
Stock at the Effective Time is different from $5.25 per share, this charge to
expense would change. In addition, the charge to expense may change due to
other factors, including a change from Cellcor's stockholders' deficit balance
at June 30, 1995. This charge is a one-time charge in connection with the
Merger and will have no impact on operating results after 1995. During 1995,
total expenses will be increased by the amount of this charge.
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FEDERAL SECURITIES LAW CONSEQUENCES
All shares of Cytogen Common Stock received by Cellcor stockholders in the
Merger will be freely transferable, except that shares of Cytogen Common Stock
received by persons who are deemed to be "affiliates" (as such term is defined
under the Securities Act) of Cellcor prior to or at the Effective Time may be
resold by them only in transactions permitted by the resale provisions of Rule
145 promulgated under the Securities Act (or Rule 144 in the case of such
persons who become affiliates of Cytogen) or as otherwise permitted under the
Securities Act. Persons who may be deemed to be affiliates of Cytogen or
Cellcor generally include individuals or entities that control, are controlled
by, or are under common control with, such party and may include certain
officers and directors of such party as well as principal stockholders of such
party. This Joint Proxy Statement/Prospectus does not cover any resales of
Cytogen Common Stock received by persons who may be deemed to be affiliates of
Cytogen or Cellcor. Cellcor's affiliates have entered into agreements pursuant
to which they have agreed to comply with the applicable requirements of Rule
145. Certain of these affiliates will enter into the Registration Rights
Agreement pursuant to which they will be granted the right to have their shares
of Cytogen Common Stock registered under certain circumstances. See "THE VOTING
AGREEMENT."
DESCRIPTION OF CYTOGEN CAPITAL STOCK
Cytogen Common Stock
Cytogen is authorized to issue up to 69,600,000 shares of Cytogen Common
Stock. As of the Cytogen Record Date, (i) 33,747,501 shares of Cytogen Common
Stock were issued and outstanding and (ii) approximately 4,285,000 shares of
Cytogen Common Stock were reserved for issuance upon exercise of issued and
outstanding warrants, approximately 2,012,500 shares of Cytogen Common Stock
were reserved for issuance pursuant to the CVRs and approximately 4,259,985
shares of Cytogen Common Stock were reserved for issuance pursuant to stock
option and stock award plans and agreements.
Each share of Cytogen Common Stock is entitled to one vote per share.
Subject to the preferential rights, if any, of holders of any then outstanding
preferred stock, the holders of Cytogen Common Stock are entitled to receive
dividends when, as and if declared by the Cytogen Board of Directors out of
funds legally available therefor. The terms of Cytogen Common Stock do not
grant to the holders thereof any preemptive, subscription, redemption,
conversion or sinking fund rights. Subject to the preferential rights of
holders of any then outstanding preferred stock, the holders of Cytogen Common
Stock are entitled to share ratably in the assets of Cytogen legally available
for distribution to stockholders in the event of Cytogen's liquidation,
dissolution or winding up.
The transfer agent and registrar for Cytogen Common Stock is Mellon
Securities Trust Company, New York, New York.
Cytogen Preferred Stock
Cytogen has the authority to issue up to 5,400,000 shares of preferred
stock, par value $.01 per share, in one or more series as determined by the
Cytogen Board of Directors. As of the date hereof, there were no shares of
preferred stock outstanding. The Cytogen Board of Directors may, without
further action by the stockholders of Cytogen, issue series of preferred stock
and fix the rights and preferences of such shares, including the dividend
rights, dividend rates, conversion rights, exchange rights, voting rights, terms
of redemption, redemption price or prices, liquidation preferences and the
number of shares constituting any series or the designation of such series.
Shares of any series of preferred stock of Cytogen may be represented by
depositary shares evidenced by depositary receipts, each representing a
fractional interest in a share of preferred stock of such series and deposited
with a depositary. The use of this mechanism could increase the number of
interests in preferred stock issued by Cytogen. The rights of the holders of
Cytogen Common Stock will be subject to, and may be adversely affected by, the
rights of holders of preferred stock issued by Cytogen
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in the future. In addition, the issuance of preferred stock could have the
effect of making it more difficult for a third party to acquire, or of
discouraging a third party from attempting to acquire, control of Cytogen.
COMPARISON OF STOCKHOLDERS' RIGHTS
The following is a summary of certain material differences between the
rights of holders of Cellcor Common Stock and Cellcor Preferred Stock on the one
hand and Cytogen Common Stock on the other. Because each of Cellcor and Cytogen
is organized under the laws of Delaware, these differences arise from various
provisions of the Certificate of Incorporation (the "Cellcor Certificate"), the
Certificate of Designation (the "Cellcor Certificate of Designation") and the
By-laws (the "Cellcor By-laws") of Cellcor and the Certificate of Incorporation
(the "Cytogen Certificate") and the By-laws (the "Cytogen By-laws") of Cytogen.
The following discussion of certain of such differences does not purport to be
complete and is qualified in its entirety by reference to the Cellcor
Certificate, the Cellcor Certificate of Designation, the Cellcor By-laws, the
Cytogen Certificate and the Cytogen By-laws, respectively. Copies of such
documents may be obtained from Cellcor and Cytogen, respectively. See
"AVAILABLE INFORMATION."
Voting
Except in connection with the amendment or repeal of the Cellcor
Certificate, as described below, the holders of shares of Cellcor Preferred
Stock do not have any voting rights. The holders of shares of Cellcor Common
Stock and Cytogen Common Stock are entitled to one vote for each share held at
all meetings of stockholders (and written actions in lieu of meetings).
Directors
The Cellcor By-laws currently provide that the Cellcor Board of Directors
consist of between three and nine members, with the actual number to be
determined at the annual meeting of stockholders. Within these limits, the
number of directors may be increased or decreased at any time by the
stockholders or by the vote of a majority of the directors then in office;
however, the number may be thus decreased only to eliminate vacancies existing
by reason of the death, resignation or removal of one or more of the directors.
The Cytogen By-laws provide that the number of directors constituting the Board
of Directors shall be not less than two nor more than ten, with the number fixed
from time to time by the Board of Directors.
Both the Cellcor By-laws and the Cytogen By-laws provide that a director
may be removed either for or without cause at any time by the affirmative vote
of the holders of a majority of the shares of the respective corporations. The
Cellcor By-laws provide that vacancies occurring for any reason, including a
removal of directors, may be filled by the vote of a majority of the holders of
shares of Cellcor Common Stock at a meeting called for that purpose, or by the
vote of a majority of the remaining members of the Cellcor Board of Directors.
The Cytogen By-laws provide that any vacancies created by a removal of directors
may be filled by the vote of a majority of the holders of shares of Cytogen
Common Stock entitled to vote or, if the vacancies are not so filled, by the
vote of a majority of the remaining members of the Cytogen Board of Directors.
The Cytogen By-laws provide that vacancies occurring for any other reason,
including the newly created directorships, may be filled by a majority vote of
the remaining members of the Cytogen Board of Directors.
Liability of Officers and Directors; Indemnification
Both the Cellcor Certificate and the Cytogen Certificate provide that the
directors of the respective companies are not liable to the respective
corporations or their stockholders for monetary damages for breach of fiduciary
duty as a director, except to the extent such exemption from liability is not
permitted under the DGCL. The Cellcor Certificate provides that the amendment
or repeal of the article in the Cellcor Certificate granting this exemption from
liability requires the vote of at least 66-2/3% of the stockholders of Cellcor
entitled to vote at an annual election of directors. The Cytogen Certificate is
silent on this matter.
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In addition, both the Cellcor Certificate and the Cytogen By-laws, as both
are supplemented by the provisions of the DGCL, provide for the indemnification
of officers and directors for expenses incurred by them by reason of their
position with the respective corporations, to the maximum extent legally
permissible. However, the Cellcor Certificate does not provide for
indemnification of all employees and agents, as do the Cytogen By-laws. The
Cellcor Certificate provides that the amendment or repeal of the article in the
Cellcor Certificate concerning indemnification requires the vote of at least 66-
2/3% of the stockholders of Cellcor entitled to vote at an annual election of
directors. The Cytogen Certificate is silent on this matter.
Special Meetings
Under the DGCL, special meetings of stockholders may be called by the Board
of Directors or such persons authorized by the corporation's certificate of
incorporation or by-laws. The Cellcor By-laws provide that the Board of
Directors, the Chairman of the Board, the President or persons holding at least
25% of the voting power of the outstanding stock entitled to vote at such
meeting can call a special meeting of stockholders. The Cytogen By-laws provide
that the Board of Directors, the Chairman of the Board or the President or
persons holding at least 10% of the voting power of the outstanding stock
entitled to vote at such meeting can call a special meeting of stockholders.
Voting by Ballot
The Cellcor By-laws provide that any stockholder present or represented at
a meeting and entitled to vote in an election can require that a vote be held by
ballot. The Cytogen By-laws provide that a ballot can be requested only by the
vote of 10% of the stockholders entitled to vote at a meeting.
Requirement of Meeting
The Cellcor Certificate provides that if any class of stock is registered
pursuant to the Exchange Act, any action by that class of stockholders must be
taken at a meeting and may not be taken by written consent. The Cytogen
Certificate is silent on this matter.
Amendment of Certificate of Incorporation and By-laws
Under the DGCL, a certificate of incorporation may be amended by the
affirmative vote of a majority of the outstanding stock entitled to vote
thereon, and a majority of the outstanding stock of each class entitled to vote
thereon as a class, unless a greater percentage is required by the certificate
of incorporation. The Cellcor Certificate and the Cellcor Certificate of
Designation provide that the Cellcor Certificate may not be amended in any way
that negatively affects the rights or privileges of the Cellcor Preferred Stock
without the approval of the holders of 66-2/3% of the outstanding Cellcor
Preferred Stock. The Cytogen Certificate refers to the DGCL in providing for
the manner in which the Cytogen Certificate may be amended.
Each of the Cellcor By-laws and the Cytogen By-laws can be amended, altered
or repealed by the respective Boards of Directors or by the vote of the holders
of the majority of the outstanding stock entitled to vote thereon.
Dividends; Liquidation Rights
The Cellcor Certificate of Designation provides that the holders of shares
of Cellcor Preferred Stock are entitled to receive dividends of $100 per share
per annum, payable when and as declared by the Cellcor Board of Directors.
Cellcor may not declare or pay any dividends on shares of Cellcor Common Stock
until the holders of Cellcor Preferred Stock have received the dividends to
which they are entitled. The Cellcor Certificate provides that dividends may
be declared on the shares of Cellcor Common Stock as and when determined by the
Cellcor Board of Directors, and subject to any preferential dividend rights of
the Cellcor Preferred Stock. The Cytogen By-laws provide that the Cytogen Board
of Directors may, at any regular or special meeting, declare and pay dividends
upon the shares of the capital stock of Cytogen.
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In the event of any liquidation, dissolution or winding up of Cellcor, the
holders of Cellcor Preferred Stock are entitled to payment, before any payment
is made to the holders of Cellcor Common Stock, of an amount equal to $1,000 per
share, plus any dividends accrued but unpaid thereon, whether or not declared.
The shares of Cytogen Common Stock do not have any such preferential rights.
SUBSCRIPTION OFFERING
Cytogen is granting non-transferable rights to holders of Cellcor Common
Stock to purchase up to an aggregate of 6,637,493 shares of Cytogen Common Stock
at a price of $3.89 per share of Cytogen Common Stock (the "Purchase Price").
The purpose of the Subscription Offering is to give all holders of Cellcor
Common Stock an opportunity to purchase Cytogen Common Stock at the same price
and on the other terms as the Principal Stockholders are purchasing shares of
Cytogen Common Stock. The Merger Agreement requires Cytogen to make the
Subscription Offering. The following describes the Subscription Offering and
provides instructions as to how holders of Cellcor Common Stock may purchase
shares of Cytogen Common Stock in the Subscription Offering.
Eligible Stockholders
All holders of record (the "Record Holders") of Cellcor Common Stock at the
close of business on August 17, 1995 (the "Subscription Record Date") are
eligible to purchase shares of Cytogen Common Stock in the Subscription
Offering. If a holder of Cellcor Common Stock holds such shares not in his own
name but in the name of a broker, bank, trust company or other entity as record
or nominee holder, the stockholder will need to contact such Record Holder as
soon as possible to purchase shares of Cytogen Common Stock in the Subscription
Offering.
The Offering
Each Record Holder at the close of business on the Subscription Record Date
will be entitled to purchase 1.118 shares of Cytogen Common Stock for each share
of Cellcor Common Stock held by such holder (rounded down to the nearest whole
number) for $3.89 per share of Cytogen Common Stock at any time at or before
5:00 p.m., New York City time, on October 13, 1995 (the "Expiration Date"). The
right to purchase shares of Cytogen Common Stock in the Subscription Offering is
not transferable and may be exercised only by the Record Holder on the
Subscription Record Date until the Expiration Date. The issuance of shares of
Cytogen Common Stock pursuant to the Subscription Offering is conditioned upon
consummation of the Merger pursuant to the Merger Agreement. No certificates
evidencing the right to purchase shares of Cytogen Common Stock in the
Subscription Offering will be issued.
Nontransferable Rights
The right to purchase Cytogen Common Stock pursuant to the Subscription
Offering is not transferable. No certificates representing the right to
purchase Cytogen Common Stock pursuant to the Subscription Offering will be
issued.
Purchase
A Record Holder must complete and sign the Subscription Offering Purchase
Form enclosed with this Joint Proxy Statement/Prospectus (the "Subscription
Offering Purchase Form"). Payment of the Purchase Price must be made in United
States Dollars by check, bank draft or money order, payable to the order of
Mellon Securities Trust Company, as Subscription Offering Agent (the
"Subscription Offering Agent") for Cytogen, or by wire transfer to the
Subscription Offering Agent pursuant to the instructions accompanying the
Subscription Offering Purchase Form. Payment may not be made in cash and may
only be made on business days. The completed Subscription Offering Purchase
Form, accompanied by payment of the Purchase Price, must be delivered to the
Subscription Offering Agent on or before the Expiration Date. The addresses of
the
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<PAGE>
Subscription Offering Agent to which delivery may be made, by mail or by hand,
are set forth in the letter from Cytogen's Chairman of the Board to the holders
of Cellcor Common Stock that accompanies this Joint Proxy Statement/Prospectus.
If delivery is made by mail, the holder of Cellcor Common Stock bears the
risk of late delivery. Completed Subscription Offering Purchase Forms should
not be sent to Cellcor or Cytogen.
If shares of Cellcor Common Stock are not held in the stockholder's own
name but in the name of a broker, bank, trust company or other entity as Record
Holder, the stockholder will need to contact the Record Holder as soon as
possible to purchase shares in the Subscription Offering. Any Subscription
Offering Purchase Form must be signed by the Record Holder.
Once a Record Holder has delivered or mailed a completed Subscription
Offering Purchase Form, together with payment, the purchase of shares of Cytogen
Common Stock represented thereby is not revocable for any reason. However, the
issuance of the shares of Cytogen Common Stock pursuant to the Subscription
Offering is conditioned upon consummation of the transactions contemplated by
the Merger Agreement, including approval by the stockholders of Cellcor and
Cytogen at the Special Meetings and the satisfaction or waiver of the other
closing conditions set forth in the Merger Agreement. See "THE MERGER
AGREEMENT--Conditions to Consummation of the Merger." If the transactions
contemplated by the Merger Agreement are not consummated, the purchase of the
shares of Cytogen Common Stock indicated on the Subscription Offering Purchase
Form will not be made and the Subscription Offering Agent will return to the
Record Holder an amount equal to the payment that accompanied the Subscription
Offering Purchase Form without interest or deduction.
All questions as to validity, form or eligibility (including times of
receipt and matters relating to beneficial ownership) pertaining to the purchase
of shares in the Subscription Offering will be determined by Cytogen, which
determination shall be final and binding. No alternative, conditional or
contingent purchase of shares will be accepted. Cytogen reserves the absolute
right to reject any or all Subscription Offering Purchase Forms not properly
submitted or the acceptance of which would, in the opinion of Cytogen, be
unlawful. Cytogen also reserves the right to waive any irregularities or
conditions, and Cytogen's interpretation of the terms and conditions of the
Subscription Offering shall be final and binding. Any irregularities in
connection with Subscription Offering Purchase Form must be cured within such
times as Cytogen shall determine, unless waived. Neither Cytogen nor the
Subscription Offering Agent, however, shall be under any duty to give
notification of defects in Subscription Offering Purchase Forms, nor shall
either incur any liability for failure to give such notification. Subscription
Offering Purchase Forms received by the Subscription Offering Agent that are not
properly submitted and as to which the irregularities have not been cured or
waived will be returned by the Subscription Offering Agent to the appropriate
Record Holder before the Expiration Date, but only if time permits.
Minimum Subscription Amount
Certain of the Principal Stockholders have agreed in the Voting Agreement
to purchase 3,084,833 shares of Cytogen Common Stock for an aggregate cash
amount of $12,000,000; provided, however, that to the extent up to 128,534
shares of Cytogen Common Stock are purchased in the Subscription Offering for up
to $500,000 by persons other than the Principal Stockholders, the commitment of
those Principal Stockholders to purchase shares of Cytogen Common Stock in the
Subscription Offering shall be reduced by an amount equal to such other
purchases, but not to less than 2,956,299 shares and $11,500,000.
Maximum Number of Shares of Cytogen Common Stock Issuable in the Subscription
Offering
The maximum number of shares of Cytogen Common Stock issuable pursuant to
the Subscription Offering is 6,637,493, for aggregate purchase consideration of
approximately $25.8 million.
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Delivery of Shares Upon Purchase
Certificates representing shares of Cytogen Common Stock purchased in the
Subscription Offering will be issued by the Subscription Offering Agent promptly
upon consummation of the Merger pursuant to the Merger Agreement. No shares of
Cytogen Common Stock purchased in the Subscription Offering will be delivered
prior to the date of the Special Meetings. If the Merger Agreement is
terminated pursuant to its terms, the Subscription Offering will be terminated
without any shares of Cytogen Common Stock being issued pursuant thereto, and
all funds deposited with the Subscription Offering Agent will be returned to the
depositing stockholders without interest or deduction.
Plan of Distribution
The Subscription Offering is being made directly by Cytogen, and Cytogen
has made no arrangements with brokers or dealers to solicit the purchase of
shares by Record Holders.
The Purchase Price was established by negotiation with the Principal
Stockholders and Cellcor in connection with the Merger Agreement and the Voting
Agreement. The Merger Agreement requires that Cytogen conduct the Subscription
Offering in order to permit all holders of Cellcor Common Stock to purchase
shares of Cytogen Common Stock at the same price and on the same terms as the
Principal Stockholders are purchasing shares of Cytogen Common Stock.
Cytogen will not make the Subscription Offering or offer to sell any shares
of Cytogen Common Stock in states or other jurisdictions where it is unlawful to
do so or where the laws, rules, regulations or orders would require Cytogen, in
its sole determination, to incur costs, obligations or time delays
disproportionate to the net proceeds to be realized by Cytogen from such offers,
sales or issuances.
Use of Proceeds
The net proceeds from the Subscription Offering (assuming that shares of
Cytogen Common Stock are issued and sold only to the extent of the Minimum
Subscription Amount) will be approximately $10,500,000, after deducting
Cytogen's estimated expenses of the Transaction of approximately $1,500,000.
Cytogen expects to use approximately $4,100,000 to repay in full the amount due
under the Note. The proceeds from the Note, which bears interest at the rate of
6.37% per annum, have been used by Cellcor for working capital and other general
corporate purposes. Cytogen anticipates using the remaining net proceeds for
general corporate purposes, including product commercialization, late-stage
product development activities, research and development projects within Cytogen
and Cellcor, and selling, general and administrative expenses. Management of
Cytogen believes that its current sources of liquidity together with the net
proceeds from the Subscription Offering (assuming that shares of Cytogen Common
Stock are issued and sold only to the extent of the Minimum Subscription Amount)
will be sufficient to meet anticipated cash requirements into the first half of
1996. To date, Cytogen'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.
In connection with its product commercialization, product development
efforts and research and development projects, Cytogen anticipates using a
portion of the net proceeds for expansion of its product development efforts for
ProstaScint, acceleration of exploratory research in Cytogen's TSARs\SynGenes
program (defined below) and funding of Cellcor's FDA-designated Pivotal Phase
III clinical trial of ALT in patients with mRCC.
The timing, amount and nature of these expenditures are dependent upon, and
may vary in accordance with, numerous factors including the progress of
Cytogen's research and development program, Cytogen'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 Cytogen's control. Pending
application of the proceeds to the purposes described above, the net proceeds
from the Subscription Offering will be invested in high-grade, short-term,
interest-bearing investments.
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CAPITALIZATION
The following table sets forth the capitalization of Cytogen (i) as of June
30, 1995 on an unaudited historical basis and (ii) as adjusted to give effect to
the issuance of shares of Cytogen Common Stock in connection with the
Transaction as if it had been consummated as of that date. See "SUBSCRIPTION
OFFERING--Use of Proceeds." The table should be read in conjunction with the
Cytogen Corporation and Subsidiaries, Pro Forma Condensed Combined Financial
Statements and notes thereto included in this Joint Proxy Statement/Prospectus
and Cytogen's consolidated financial statements and notes thereto incorporated
by reference into this Joint Proxy Statement/Prospectus.
<TABLE>
<CAPTION>
June 30, 1995
-----------------------------
Historical As Adjusted
----------- ----------------
(amounts in thousands)
<S> <C> <C>
LIABILITIES:
Current liabilities............................ $ 8,972 $ 12,553
Long-term liabilities.......................... 4,768 5,164
--------- --------
Total liabilities........................... 13,740 17,717
REDEEMABLE COMMON STOCK,
250,000 shares issued and outstanding,
at redemption value............................ 2,000 2,000
--------- --------
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value,
5,400,000 shares authorized - none issued... --- ---
Common stock, $.01 par value,
69,600,000 shares authorized - 31,696,000
(39,493,000 shares as adjusted) issued and
outstanding................................. 317 395(1)(3)
Additional paid-in capital..................... 193,911 230,656(1)(3)
Deferred compensation.......................... --- (87)
Unrealized gains on investments................ 28 28
Accumulated deficit............................ (189,088) (218,443)(2)
--------- --------
Total stockholders' equity.................. 5,168 12,549
--------- --------
TOTAL CAPITALIZATION............................. $ 20,908 $ 32,266
========= ========
-------------------
</TABLE>
(1) Assumes (i) the issuance of 4,711,596 shares of Cytogen Common Stock in
connection with the Merger (assuming no exercise of outstanding Cellcor
Stock Options after the Cellcor Record Date) and (ii) the issuance of
3,084,833 shares of Cytogen Common Stock in connection with the Subscription
Offering (assuming rights are exercised only to the extent of the Minimum
Subscription Amount by certain of the Principal Stockholders).
(2) Includes the portion of purchase price allocated to acquired research and
development of $29,355,000, which will be charged to the statement of
operations upon the consummation of the Merger. To the extent that the
market price of Cytogen Common Stock at the Effective Time is different from
$5.25 per share, the amount of the purchase price and charge to expense
would change. In addition, this charge to expense may change due to other
factors including a change from Cellcor's stockholders' deficit balance at
June 30, 1995.
(3) Excludes 1,800,000 shares of Cytogen Common Stock issued and sold pursuant
to the exercise of the Option by Fletcher Capital (as such terms are defined
below) in August 1995 and 665,352 shares issued and sold to Fletcher Fund
(defined below) in September 1995, for an aggregate purchase price of
approximately $10.0 million (or $4.058 per share). See "INFORMATION
CONCERNING CYTOGEN--Recent Developments."
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DILUTION
The net tangible book value per share of Cytogen Common Stock at June
30, 1995 was $0.16. Net tangible book value per share is equal to Cytogen's
total tangible assets less total liabilities, divided by the total number of
shares of Cytogen Common Stock outstanding./1/ Without taking into account any
change in Cytogen's net tangible book value after June 30, 1995, other than
giving effect to the issuance and sale of shares of Cytogen Common Stock in the
Subscription Offering to the extent of the Minimum Subscription Amount at $3.89
per share (after deducting estimated expenses), the pro forma net tangible book
value per share of Cytogen Common Stock would have been $0.45. This represents
an immediate increase in net tangible pro forma book value per share of $0.29 to
present Cytogen stockholders and an immediate dilution of $3.44 per share to the
purchasers in the Subscription Offering. The following table illustrates the
per share effect of this dilution:
<TABLE>
<CAPTION>
<S> <C>
Sales price per share of Cytogen Common Stock....... $3.89
Net tangible book value per share before
Subscription Offering........................ $0.16
Increase per share attributable to payments
by purchasers in the Subscription Offering... $0.29
Pro forma net tangible book value after sale/1 2/.. $0.45
Dilution to purchasers in the Subscription Offering. $3.44
</TABLE>
_________________________________________
1. Excludes 250,000 shares of redeemable Cytogen Common Stock, 4,285,000
shares of Cytogen Common Stock issuable upon exercise of outstanding
warrants, 2,012,500 shares of Cytogen Common Stock issuable pursuant to
contingent value rights to purchase Cytogen Common Stock, 5,324,487 shares
of Cytogen Common Stock issuable in connection with the Merger, 2,711,620
shares of Common Stock issuable upon the exercise of outstanding stock
options and other contractual rights to purchase shares of Cytogen Common
Stock that may arise from time to time. See "INFORMATION CONCERNING
CYTOGEN--Recent Developments."
2. The above calculation does not give effect to the issuance and sale of
1,800,000 shares of Cytogen Common Stock pursuant to the exercise of the
Option by Fletcher Capital in August 1995 or of 665,352 shares of Cytogen
Common Stock to Fletcher Fund. See "INFORMATION CONCERNING CYTOGEN--Recent
Developments." The effect of the exercise of the Option by Fletcher
Capital and the sale of shares to Fletcher Fund on the purchasers of
Cytogen Common Stock in the Subscription Offering is to increase the pro
forma net tangible book value by $0.24 per share to $0.69 per share.
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CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following discussion is based, in part, on the opinions of Dechert
Price & Rhoads, counsel for Cytogen, and Hale and Dorr, counsel for Cellcor, and
is a summary of the material federal income tax consequences that may be
relevant to holders of shares of Cellcor capital stock upon the exchange of such
shares for shares of Cytogen Common Stock pursuant to the Merger and upon the
receipt of the right to participate in the Subscription Offering (the
"Subscription Rights"). This summary does not address specific tax consequences
that may be relevant to a particular stockholder subject to special treatment
under certain federal income tax laws (including, for example, persons who
acquired shares of Cellcor Common Stock pursuant to the exercise of employee
stock options or otherwise as compensation, financial institutions, broker-
dealers, insurance companies, non-United States persons and tax-exempt
institutions). In addition, this summary does not address the tax consequences
of the Transaction under the laws of any state, local or foreign jurisdictions.
The discussion is based on the Code, applicable United States Treasury
regulations, judicial authority and administrative rulings and practice. Any of
such authorities is subject to change at any time by legislative, judicial or
administrative action. Any such change could be applied retroactively in a
manner that could adversely affect a person exchanging shares in the Merger.
HOLDERS OF CELLCOR CAPITAL STOCK ARE URGED TO CONSULT THEIR TAX ADVISORS
WITH RESPECT TO THE FEDERAL INCOME TAX CONSIDERATIONS THAT MAY BE SPECIFIC TO
THEM, AS WELL AS WITH RESPECT TO ANY STATE, LOCAL OR FOREIGN TAX CONSIDERATIONS
OF PARTICIPATING IN THE MERGER OR HOLDING SHARES OF CYTOGEN COMMON STOCK.
Treatment of the Merger as a Reorganization
Consummation of the Merger is conditioned upon the receipt by Cytogen of an
opinion of Hale and Dorr and the receipt by Cellcor of an opinion of Dechert
Price & Rhoads that the Merger qualifies as a reorganization for federal income
tax purposes, together with certain attendant tax consequences thereto.
Hale and Dorr and Dechert Price & Rhoads expect to deliver their respective
opinions immediately before or at the Closing, based upon certain assumptions
and representations, that the Merger will qualify as a reorganization within the
meaning of Section 368 of the Code, provided the fair market value of the
Subscription Rights granted to holders of Cellcor Common Stock in connection
with the Transaction, plus the amount of cash received by the Cellcor
stockholders pursuant to the exercise of applicable dissenters' appraisal rights
or in lieu of fractional shares of Cytogen Common Stock, will not exceed 50% of
the sum of (i) the fair market value of the Subscription Rights, (ii) the fair
market value of the shares of Cytogen Common Stock delivered to holders of
Cellcor capital stock pursuant to the Merger and (iii) the amount of cash
received by the Cellcor stockholders pursuant to the exercise of applicable
dissenters' appraisal rights or in lieu of fractional shares of Cytogen Common
Stock. The value of the Subscription Rights is a factual question not addressed
in the opinions of counsel and must be determined by taking into account all
facts and circumstances relating to the Subscription Rights. For purposes of
this discussion, the value of each Subscription Right is assumed to be equal to
the difference between the value of 1.118 shares of Cytogen Common Stock on the
date of the Merger and the Subscription Right exercise price. The following
discussion generally assumes that the Transaction will qualify as a
reorganization, as described above.
A holder of shares of Cellcor capital stock will recognize no gain or loss
for federal income tax purposes as a result of the Transaction, except that (i)
such holder will recognize gain to the extent of the value of the Subscription
Rights granted to such holder in connection with the Transaction and (ii) such
holder may recognize gain or loss to the extent of cash delivered in lieu of
fractional shares, as described below.
The gain, if any, recognized by a holder on the receipt of the Subscription
Rights will be equal to the lesser of (i) the gain realized by the holder with
respect to the Transaction, measured by the difference between (a) the fair
market value of the Subscription Rights and Cytogen Common Stock (including the
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<PAGE>
amount, if any, of cash received in lieu of fractional shares, as discussed
below) received in connection with the Transaction and (b) the holder's adjusted
tax basis in the shares of Cellcor capital stock surrendered in connection with
the Transaction and (ii) the fair market value of the Subscription Rights
received.
If the shares of Cellcor capital stock are held as a capital asset at the
time of the Merger, gain, if any, recognized by a holder will be treated as
capital gain, and will be treated as long-term capital gain if the Cellcor
capital stock was held for more than one year as of the date of the Merger,
provided that all or a portion of such gain may be characterized as a dividend
(taxable at ordinary income rates) to the extent of the accumulated earnings and
profits of Cellcor at the Effective Time under the principles of Section 302 of
the Code.
A holder's aggregate tax basis in the shares of Cytogen Common Stock
received in the Merger will be equal to such holder's aggregate adjusted tax
basis in the shares of Cellcor capital stock surrendered in the Merger,
increased by the amount of gain, if any, recognized by such person as a result
of the receipt of Subscription Rights and decreased by the fair market value of
the Subscription Rights received (and further decreased by any basis allocated
to a fractional share, as described below). The holder's holding period for
shares of Cytogen Common Stock received in the Merger will include the holding
period for the shares of Cellcor capital stock surrendered in the Merger.
Treatment of the Subscription Rights
A holder's tax basis in the Subscription Rights received in connection with
the Transaction will be equal to the fair market value of such Subscription
Rights on the date of the Merger.
If the Subscription Rights granted to a holder are exercised, the holder's
tax basis in the shares of Cytogen Common Stock received in connection with an
exercise of the Subscription Rights will be equal to the sum of the holder's tax
basis in the Subscription Rights and the amount paid upon exercise of the
Subscription Rights.
If a holder's Subscription Rights expire unexercised, the holder should
recognize a loss upon such expiration in the amount of the holder's tax basis in
the Subscription Rights. Provided shares of Cytogen Common Stock that would be
acquired upon exercise of the Subscription Rights would be held as a capital
asset, such loss will be a capital loss, and will be a short-term capital loss
if the Subscription Rights have been held for one year or less.
Cash Received in Lieu of Fractional Shares
If a holder of Cellcor capital stock receives cash in lieu of fractional
shares of Cytogen Common Stock in connection with the Merger, the holder will be
treated for federal income tax purposes as if it received a fractional share of
Cytogen Common Stock in exchange therefor (with an appropriate amount of tax
basis in the holder's Cellcor capital stock allocated to such fractional shares
under the rules described above) and as if such share were thereafter redeemed
by Cytogen in exchange for cash. The taxation of such deemed redemption is
subject to the rules of Section 302 of the Code, and holders are urged to
consult their tax advisors in that regard.
Net Operating Loss Carryforward
Upon the consummation of the Merger, Cellcor (in the form of its successor,
the Merger Subsidiary) will experience a greater than 50% change in ownership.
As a result, under applicable Code provisions, Cellcor's ability to use its
existing net operating loss carryforward to offset income (other than certain
income attributable to existing appreciation in the assets of Cellcor at the
time of the Merger) in future years will be limited. Generally, the annual
limitation on Cellcor's ability to use its net operating loss carryforward will
be equal to the fair market value of Cellcor's stock at the time of the Merger
multiplied by a federally prescribed interest rate. To the extent that the
annual limitation exceeds the amount of the net operating loss carryforward used
to offset taxable income in any year, the excess amount of the limitation will
be added to the amount of the limitation applicable to the following year.
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<PAGE>
Generally, following the consummation of the Merger, Cellcor's net
operating loss carryforward (subject to the limitations described in the
preceding paragraph) will only be available to offset income realized by Cellcor
in future tax periods and will not be available to offset the income of Cytogen
or its affiliates.
MANAGEMENT AND BOARD OF CYTOGEN UPON COMPLETION OF THE MERGER
The management of Cytogen will be unaffected by the Merger. The Merger
Agreement provides that, effective as of the Closing, Dr. Brenner, as the
designee of the Principal Stockholders, and Dr. Bagalay will be elected to the
Cytogen Board of Directors. During the two-year period commencing at the
Effective Time, and thereafter for so long as the Principal Stockholders own at
least 5% of the outstanding shares of Cytogen Common Stock, Cytogen will use its
best efforts to cause to be nominated Dr. Brenner, or such other person
designated by the Principal Stockholders, for election or re-election to the
Cytogen Board of Directors. The following sets forth certain information with
respect to each executive officer and director of Cytogen after giving effect to
the Merger:
William C. Mills III, 40, has served as Chairman of the Board of Cytogen
since January 1995 and has been a director of Cytogen since July 1983. Since
April 1, 1988, he has been a General Partner of The Venture Capital Fund of New
England, Boston, Massachusetts, a series of private venture capital
partnerships. Prior to that, Mr. Mills was a General Partner of PaineWebber
Ventures, and certain of its predecessor partnerships since April 1981. Mr.
Mills holds an A.B. degree from Princeton University, an S.M. degree in
Chemistry from The Massachusetts Institute of Technology, and an S.M. degree in
Management from M.I.T.'s Sloan School of Management.
Thomas J. McKearn, 46, joined Cytogen in July 1981 as Vice President,
Research and Development. He has served as Cytogen's Chief Executive Officer
since January 1994 and as President of Cytogen since September 1991. Dr.
McKearn previously served as Executive Vice President of Cytogen from June 1990
to August 1991 and Senior Vice President, Scientific Affairs of Cytogen through
June 1990. He has been a director of Cytogen since 1981. From 1978 until he
joined Cytogen, Dr. McKearn was an Assistant Professor in the Department of
Pathology at the University of Pennsylvania and Head of the Immunoprotein
Laboratory at the Hospital of the University of Pennsylvania. He retains a
position as Adjunct Associate Professor in the Department of Pathology at the
University of Pennsylvania. Dr. McKearn is a member of the Scientific Advisory
Board for Rider College and the New Jersey Cancer Institute. Dr. McKearn holds
a B.A. degree from Indiana University, a Ph.D. degree in Immunology from the
University of Chicago and an M.D. degree from the Pritzker School of Medicine at
the University of Chicago.
T. Jerome Madison, 55, joined Cytogen in October 1993 as Vice President of
Finance and Chief Financial Officer and Secretary. He has been a director of
Cytogen since December 1994. Mr. Madison is the sole stockholder, officer and
director of Somerset Central Corporation, a New Jersey corporation through which
Mr. Madison provides services to Cytogen. Previously, Mr. Madison served as
President, Chief Executive Officer and General Partner of Montgomery Partners, a
venture capital group, from 1991 to 1993 and as President, Chief Executive
Officer and General Partner of Founders Court, also a venture capital group,
from 1986 to 1991. Mr. Madison was Vice President for finance and
administration of Cytogen from 1982 to 1986. Prior to first joining Cytogen, he
served as Corporate Controller for Rorer Group Inc. Mr. Madison holds a B.S.
from The Wharton School of the University of Pennsylvania and an M.B.A. from
Monmouth College. He is also a Certified Public Accountant.
Richard Murawski, 47, joined Cytogen in April 1994 as Vice President,
Operations. Mr. Murawski served as Vice President, Operations of Immunomedics,
a biopharmaceutical company engaged in the development of antibody products for
cancers and infectious diseases, from 1993 to 1994 and as Director of
Manufacturing and Director of Operations with Welgen/Wellcome from 1990 to 1992.
From 1971 through 1990, Mr. Murawski held numerous positions in the areas of
production, engineering and manufacturing at Schering Corporation, a Union, New
Jersey research-based company engaged in the manufacture and
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production of pharmaceutical and healthcare products. He holds a B.S. in
Chemical Engineering from Newark College of Engineering (currently New Jersey
Institute of Technology).
Pamela M. Murphy, 45, joined Cytogen in March 1994 as Vice President,
Corporate Communications. Ms. Murphy served as Vice President, Corporate
Administration from 1990 to 1994 for Greenwich Pharmaceuticals, a development
stage company seeking treatments for autoimmune diseases. From 1987 to 1990,
Ms. Murphy held the position of Director of Corporate Communications with
Greenwich Pharmaceuticals. Prior to that, Ms. Murphy held various regional and
national positions with multiple publishing corporations. Ms. Murphy holds a
B.S. degree in Education and Psychology from Northern Arizona University.
John D. Rodwell, 48, joined Cytogen in September 1981. He served as
Director, Chemical Research and then as Vice President, Discovery Research, from
1984 until January 1989, at which time he assumed his present responsibilities
as Vice President, Research and Development. From 1980 to 1981, Dr. Rodwell was
a Research Assistant Professor and, from 1976 to 1980, he was a postdoctoral
fellow, both in the Department of Microbiology at the University of Pennsylvania
School of Medicine, where he currently is an Adjunct Associate Professor in the
Department of Microbiology. He holds a B.A. degree from the University of
Massachusetts, an M.S. degree in Organic Chemistry from Lowell Technology
Institute and a Ph.D. degree in Biochemistry from the University of California
at Los Angeles.
Richard J. Walsh, 51, joined Cytogen in June 1994 as Vice President of
Corporate Development. Mr. Walsh served as Vice President of Biotechnology
Acquisitions for American Cyanamid Company from 1992 to 1994. Prior to that
position, for six years he was Vice President, Product Licensing and Technology
Transfer at The Warner-Lambert Company. From 1967 through 1986, Mr. Walsh held
a variety of domestic and international sales, marketing and licensing positions
within Parke-Davis and its parent, The Warner-Lambert Company. Mr. Walsh holds
a B.S. degree in Pharmacy from the University of Cincinnati.
Charles W. Ogelsby, 51, joined Cytogen in November 1993 as Controller. He
was elected Corporate Controller in 1994 and Assistant Secretary in 1995. From
1990 until he joined Cytogen, Mr. Ogelsby served as President of Ogelsby &
Company, a Bryn Mawr, Pennsylvania financial consulting firm providing
strategic, operating, financial and accounting services to small companies.
From 1988 through 1990, Mr. Ogelsby was Vice President of Founders Court, a
venture capital firm. Mr. Ogelsby is a Certified Public Accountant and a member
of both the American and Pennsylvania Institutes of Certified Public
Accountants. He holds B.S. and M.B.A. degrees from Temple University.
Charles E. Austin, 67, has been a director of Cytogen since July 1994. Mr.
Austin previously served on the Cytogen Board of Directors from 1983 to 1986.
Now retired, Mr. Austin was Corporate Vice President of American Cyanamid
Company, with responsibility for all aspects of its global agricultural
business, from 1978 until 1988. Mr. Austin also currently serves as a director
of the following publicly-held companies: MGI Pharma, Inc., Embrex, Inc. and
Hyal Pharmaceutical Corp. He graduated from the University of Illinois, where
he received a B.S. in Agronomy and an M.S. in Soil Chemistry.
Robert F. Hendrickson, 62, became a director of Cytogen in March 1995.
Since 1990, Mr. Hendrickson has been a consultant to the pharmaceutical and
biotechnology industries on strategic management and manufacturing issues with a
number of leading biotechnology companies among his clients. He is the Chairman
of the Board of Envirogen, Inc., a director of The Liposome Company, Inc., and a
trustee of the Carrier Foundation, Inc. He also served as a director of
Synergen, Inc., before the recent sale of that company to Amgen, Inc. Prior to
his retirement in 1990, Mr. Hendrickson was Senior Vice President, Manufacturing
and Technology for Merck & Co., Inc. Mr. Hendrickson received an A.B. degree
from Harvard College and an M.B.A. from the Harvard Graduate School of Business
Administration.
Donald E. O'Neill, 69, became a director of Cytogen in May 1995. From 1986
until his retirement in March 1991, Mr. O'Neill served as Executive Vice
President and Chairman, International Operations of Warner-Lambert Company, an
international healthcare and consumer company. He joined Warner-Lambert
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in March 1971 as President, Warner-Chilcott Division, the pharmaceutical
division of Warner-Lambert. He held numerous key management positions at
Warner-Lambert and Parke-Davis and Company, a division of Warner-Lambert, which
includes pharmaceutical and medical devices. Mr. O'Neill currently serves as a
director for several companies, including Alliance Pharmaceutical Corp.,
Fujisawa USA, Immunogen, Inc., MDL Info Systems, Scios Nova Inc., Targeted
Genetics Corp., and New Jersey Resources. Mr. O'Neill also served as Chairman
of the International Section of the Pharmaceutical Manufacturers Association
from 1988 to 1990. Mr. O'Neill holds a B.S. degree from the University of
Washington.
Bruce R. Ross, 54, has served as a director of Cytogen since April 1994.
Mr. Ross was a Senior Vice President of Bristol-Myers Squibb Company's
Pharmaceutical Group until his retirement on March 31, 1994. He joined Bristol-
Myers in 1967 and progressed through a variety of staff and line management
positions in Syracuse, New York; Evansville, Indiana; New York, New York; and
most recently, Princeton, New Jersey. He had responsibility for Bristol-Myers
Squibb's domestic pharmaceutical operations and the development of its oncology
business. Prior to joining Bristol-Myers Squibb, he worked as a researcher in
the field of cancer at Upstate Medical Center in Syracuse, New York. Mr. Ross
is a member of the Board of Directors of Sugen, Inc. and Glycomed Incorporated
and of the Fox Chase Cancer Center in Philadelphia, is actively involved with
the American Cancer Society, and is a member of an Institute of Medicine
advisory board for the development of new drugs and vaccines for AIDS. He holds
a B.S. degree in Microbiology from Syracuse University.
Ronald J. Brenner, 62, will become a director of Cytogen effective as of
the Closing. Dr. Brenner has been President and Chief Executive Officer of
Cellcor since July 1995 and has been a Vice President of Hillman Medical
Ventures, Inc., a venture capital firm, and has been a general partner of the
managing general partner of the Hillman Medical Ventures partnerships since
1989. From 1984 to 1988, Dr. Brenner was President and Chief Executive Officer
of Cytogen. Prior to 1984, he was Vice President, Corporate External Research,
at Johnson & Johnson, a major pharmaceutical company, and also served as
Chairman of McNeil Pharmaceutical, Ortho Pharmaceutical Corp. and the Cilag
Companies, all subsidiaries of Johnson & Johnson. Dr. Brenner is a director of
several privately-held healthcare and environmental companies. He received a
B.S. in Pharmacy from the University of Cincinnati, and an M.S. and Ph.D., both
in Pharmaceutical Chemistry, from the University of Florida.
John E. Bagalay, Jr., 61, will become a director of Cytogen effective as of
the Closing. He has served as the Managing Director of Community Technology
Fund, the venture capital affiliate of Boston University, since September 1989.
From 1984 to 1989, he served as General Counsel of Lower Colorado River
Authority, a regulated electric utility. Dr. Bagalay currently also sits on the
Boards of Directors of Seragen, Inc., Wave Systems Corporation and Hymedix, Inc.
Dr. Bagalay holds a B.A. in Politics, Philosophy and Economics and a Ph.D. in
Political Philosophy from Yale University, and a J.D. from the University of
Texas.
Cytogen has entered into a consulting agreement, dated as of July 1,
1995, with James R. Knill, M.D., the former Vice President of Medical Affairs at
Cytogen who retired as of that date. Under the terms of this consulting
agreement, Dr. Knill will provide consulting and other services relating to
FDA's review and approval of Cytogen's NDA for Quadramet and its PLA for
ProstaScint. Dr. Knill has agreed to provide up to 104 full days of service
during the term of the consulting agreement in consideration of a per diem fee
of $1,850, plus payment or reimbursement for any costs reasonably incurred by
Dr. Knill in furtherance of his duties. The term of the consulting agreement
began on July 1, 1995 and will continue until the earlier of (i) the date on
which Cytogen receives FDA approval of the NDA for Quadramet and (ii) December
31, 1996. The consulting agreement may be extended by Cytogen for an additional
one-year term.
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INFORMATION CONCERNING CYTOGEN
Business of Cytogen
Cytogen is a biopharmaceutical company engaged in the discovery,
development, manufacture and marketing of products that provide targeted
delivery of diagnostic and therapeutic substances directly to the sites of
disease. Cytogen is using its patented and proprietary technologies to develop
specific in vivo cancer imaging and therapeutic products to build a cancer care
franchise. Cytogen may expand from cancer into other therapeutic areas
employing related technologies.
Cytogen's current focus is on: (i) Quadramet, a cancer therapy agent
for the treatment of bone pain associated with bone metastases, for which an NDA
was submitted to FDA and accepted for filing on August 11, 1995; (ii)
ProstaScint, a prostate cancer diagnostic imaging product, for which a PLA was
submitted to and accepted for filing by FDA effective March 13, 1995; and (iii)
OncoScint CR/OV, its 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.
Cytogen has licensed to DuPont Merck the manufacturing and marketing
rights to Quadramet in the United States. Cytogen has retained the right to co-
promote the product to nuclear medicine specialists. Cytogen has assigned high
priority to the product development and commercialization programs for Quadramet
and ProstaScint. Cytogen 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, in both the United States and
European markets since its introduction.
Cytogen's strategic plan also supports continued commitment to its
"linker" technology through ongoing product development efforts for cancer
therapeutic agents. The "linker" technology is basic to Cytogen's proprietary
in vivo delivery methods, which use site-specific attachment of compounds or
agents to antibody molecules that maintain the antibody's ability to target and
bind to antigens such as those expressed by or associated with tumors, blood
clots, infections and other disease sites. Cytogen expects to expand its
current product portfolio through in-licensing complementary products, services
and technologies.
In addition, Cytogen 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 peptides
that are a fraction of the size of typical antibodies, but which retain the
desired features and benefits of protein-like binding to specific target sites
in the human body. Cytogen 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. Due to the broad diversity of this technology, there may be
a number of potential commercial applications for this program as an in-vitro
diagnostic, as a drug discovery method, as a means to conduct screening of drug
candidates and as a source for gene therapy products. Cytogen is pursuing
possible strategic alliances to better advance this technology. There can be no
assurance that Cytogen will be able to negotiate acceptable strategic alliances.
Recent Developments
Fletcher Capital. In May 1994, Cytogen and Fletcher Capital Markets,
Inc. ("Fletcher Capital") entered into a revised investment agreement pursuant
to which, among other things, Fletcher Capital received an option (the "Option")
exercisable until August 12, 1995 to purchase up to that number of shares of
Cytogen Common Stock which, together with the shares previously purchased
pursuant to the investment agreement, would represent up to 9.9% of Cytogen's
outstanding common stock on the date of exercise of the Option. The Option
provides for an exercise price equal to 95% of the average daily closing prices
during the 60 trading days prior to the date Fletcher Capital elects to exercise
the Option. The shares involved in this transaction were registered pursuant to
a registration statement on Form S-3 filed with the Commission in April 1994.
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In August 1995, Fletcher Capital exercised the Option for the purchase
of 1,800,000 shares of Cytogen Common Stock at an aggregate exercise price of
$7,304,400, or $4.058 per share. Cytogen and Fletcher Capital have amended the
Option to extend its term until November 15, 1995. Under the Option, as
amended, Fletcher Capital has the right to purchase up to an additional
1,000,000 shares of Cytogen Common Stock. Fletcher Capital is wholly-owned by
Harvard University and is managed by Harvard Management Company, Inc.
Bracco. In September 1989, Cytogen entered into a research and option
agreement (the "Bracco Agreement") with Bracco Industria Chimica S.p.A.
("Bracco"), pursuant to which Bracco purchased 250,000 shares of Cytogen Common
Stock (the "Bracco Shares") at $8.00 per share. The Bracco Agreement provided
that Cytogen would be obligated to repurchase the Bracco Shares from Bracco
under certain circumstances for an aggregate purchase price of $2,000,000 (the
"Purchase Price"). Bracco had notified Cytogen of its belief that Cytogen had
an obligation to redeem the Bracco Shares and requested that Cytogen repurchase
the Bracco Shares and Cytogen asserted that it did not have an obligation to
repurchase the Bracco Shares. In August 1995, Cytogen and Bracco agreed that
Bracco would sell the Bracco Shares on the Nasdaq National Market and Bracco
sold the Bracco Shares for an aggregate purchase price of $1,375,000 (the
"Shares Sale Price"), or $5.50 per share. At that date, Bracco had an
outstanding account payable due and owing to Cytogen in an amount equal to
$293,407.51 (the "Payable"). Cytogen also agreed to pay to Bracco the amount
equal to the difference between (i) the Purchase Price and (ii) the sum of the
Shares Sales Price plus the Payable (or $331,592.49), in full settlement of the
dispute, which amount has been paid.
Letters of Intent. On August 28, 1995, Cytogen announced that it has
executed letters of intent with CIS bio international ("CIS"), a
radiopharmaceutical company headquartered in France, to market OncoScint CR/OV
in Europe and other countries outside North America, and with Faulding (Canada)
Inc. ("Faulding") to market OncoScint CR/OV in Canada. The proposed agreement
between Cytogen and CIS would grant CIS the exclusive right to promote and sell
OncoScint CR/OV outside North America. OncoScint CR/OV is approved for
marketing in nine Western European countries and four Eastern European
countries. The existing European territory marketing authorizations would be
transferred to CIS. The proposed agreement between Cytogen and Faulding would
grant Faulding the exclusive right to promote, sell and distribute OncoScint
CR/OV in Canada. Faulding would also assume responsibility for a registration
package pending before the Canadian Health Protection Branch and would be
responsible for obtaining all necessary Canadian marketing authorizations.
Under the proposed terms of the agreements, Cytogen would receive revenue from
CIS and Faulding by supplying OncoScint CR/OV at a set price per product kit,
and would also receive royalties based on net revenues. These agreements in
principle are subject to the negotiation and execution of definitive agreements
and all necessary corporate approvals. No assurance can be given that such
definitive agreements will be executed or regarding the timing of such
execution. OncoScint CR/OV is currently marketed in the United States by
Cytogen's sales force.
Fletcher Fund. Cytogen and Fletcher Fund, L.P., a Delaware limited
partnership ("Fletcher Fund"), entered into an Investment Agreement dated as of
September 8, 1995 (the "Investment Agreement") pursuant to which Cytogen (i)
sold to Fletcher Fund 665,352 shares of Cytogen Common Stock on September 11,
1995 for an aggregate purchase price of $2,700,000, and (ii) will have the
right, during the period beginning October 13, 1995 and ending March 29, 1996,
to issue and sell to Fletcher Fund, and Fletcher Fund will be obligated to
purchase, up to 675,000 shares of Cytogen Common Stock from time to time
(collectively, the "Put Rights") at a purchase price per share equal to 101% of
the average of the daily volume weighted average price of Cytogen Common Stock
on the Nasdaq National Market during a designated twenty-one business day
period. Under certain circumstances, Fletcher Fund will have the right to
decrease or increase the number of shares of Cytogen Common Stock to be
purchased in connection with the exercise of a Put Right by Cytogen, but in no
event shall the total number of shares sold by Cytogen and purchased by Fletcher
Fund pursuant to the Investment Agreement exceed 4.9% of the total number of
shares of Cytogen Common Stock outstanding, after giving effect to the proposed
sale and purchase of the shares in question. The shares to be issued and sold
in this transaction were registered pursuant to a registration statement on Form
S-3 filed with the Commission in April 1994.
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CYTORAD
Management's Discussion and Analysis of Financial Condition and Results of
Operations
The following discussion should be read in conjunction with CytoRad
Incorporated Financial Statements (Unaudited) and Audited CytoRad Incorporated
Financial Statements included in this Joint Proxy Statement/Prospectus.
Background. CytoRad was formed in December 1991 and commenced
operations in February 1992. On February 27, 1995, CytoRad merged with and into
a wholly-owned subsidiary of Cytogen.
Results of Operations. CytoRad's financial results for the first
quarter of 1995 reflect the results of operations from January 1, 1995 to
February 27, 1995 (the date of the consummation of CytoRad's merger with and
into a wholly-owned subsidiary of Cytogen). The results of operations for the
first quarter of 1995 reflect investment income of $148,000, which was offset by
general and administrative expenses and merger costs of $529,000 and $1,923,000,
respectively, resulting in a loss of $2,304,000 or $0.57 per share based on
4,025,000 shares outstanding. For the first quarter of 1994, CytoRad recorded a
loss of $372,000 or $0.09 per share based on the same number of shares
outstanding. The $1,932,000 increase in the net loss is attributed to the
merger costs incurred in the first quarter of 1995. General and administrative
expenses decreased to $529,000 in the first quarter of 1995 from $647,000 in the
first quarter of 1994. This decrease is attributed to the shorter period of
operations in 1995 (compared to 1994) due to the consummation of the
aforementioned merger on February 27, 1995.
CytoRad's financial results for fiscal 1994 reflect interest income of
$960,000, which was offset by operating expenses of $2.1 million, resulting in a
loss of $1.2 million or $0.29 per share based on 4,025,000 average shares
outstanding. For 1993, CytoRad recorded a loss of $10.4 million or $2.58 per
share based on the same number of shares outstanding. CytoRad's revenue was
realized from interest earned on its cash and short-term investments. Interest
income declined from $1.3 million in 1993 to $900,000 in 1994 due principally to
the reduction of CytoRad's cash and investment balances. There were no research
and development expenses (which are principally associated with product
development) in 1994 as compared to $11 million in 1993, of which $2 million was
attributable to one-time license fees paid to Cytogen in 1993. The reduction in
research and development expense was due to the discontinuation of research and
development payments to Cytogen. In 1994, merger costs of $696,000 were
incurred in connection with the negotiation and execution of a merger agreement
with Cytogen. There were no merger costs in 1993. General and administrative
expenses were $1.4 million in 1994 as compared to $683,000 in 1993. The
increase in general and administrative expenses was primarily due to a one-time
payment to CytoRad's Chief Executive Officer, William J. Ryan, in connection
with the execution of his employment agreement, the payment of certain fees to
CytoRad's advisors in connection with the merger activities, and increased
CytoRad board of director fees principally relating to additional meetings as a
result of the merger activities, and the cost of maintaining a separate
corporate office, which commenced operations in the second quarter of 1994.
CytoRad's financial results for 1993 reflect interest income of $1.3
million which was offset by operating expenses of $11.7 million, resulting in a
loss of $10.4 million or $2.58 per share based on 4,025,000 average shares
outstanding. For 1992, CytoRad recorded a loss of $10.6 million or $3.10 per
share on 3,400,000 average shares outstanding.
Research and development expense principally associated with product
development efforts was $11 million in 1993 compared to $11.7 million in 1992,
of which $2 million and $3 million was attributable to one-time license fees
paid to Cytogen in 1993 and 1992, respectively.
General and administrative expenses, including payments for
administrative services rendered by Cytogen under a service agreement, were
$683,000 in 1993 as compared to $336,000 in 1992. The increase in general and
administrative expenses was primarily due to an increase in the director and
officer liability
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insurance premiums, an increase in legal fees and expenses and a one-time
payment in connection with a fairness opinion to CytoRad related to the
amendment of the agreements for the ovarian therapy product.
Liquidity and Capital Resources. CytoRad had $13.1 million of cash, cash
equivalents and short-term investments at December 31, 1994. These funds
remained from the CytoRad initial public offering. Cash, cash equivalents and
short-term investments declined by $2.8 million from January 1, 1994 and $23.5
million between the completion of the offering and December 31, 1994. On
February 27, 1995, CytoRad merged with and into a wholly-owned subsidiary of
Cytogen.
MANAGEMENT AND BOARD OF CELLCOR
The following sets forth certain information with respect the current
executive officers and directors of Cellcor:
Gary W. Cashon, 49, has been a director of Cellcor since 1987 and Chairman
of the Cellcor Board of Directors since January 1991. Dr. Cashon served as
Chief Executive Officer of Cellcor from December 1989 to March 1991. He also
served as President of Cellcor from December 1989 to August 1990 and from June
1987 to March 1989. Dr. Cashon has been a General Partner of Cashon Biomedical
Associates, L.P., a general partner of the Hillman Medical Ventures
partnerships, since 1988. From 1983 to 1988, Dr. Cashon was a principal of
Cashon BioMedical Development, Inc., a medical consulting firm. He received a
B.A. in Biology from David Lipscomb College, a Ph.D. in Microbiology and
Immunology from the University of Missouri, and was a post-doctoral fellow at
the Baylor College of Medicine.
Ronald J. Brenner, 62, has been President and Chief Executive Officer of
Cellcor since July 1995. He has been a Vice President of Hillman Medical
Ventures, Inc., a venture capital firm, and has been a general partner of the
managing general partner of the Hillman Medical Ventures partnerships since
1989. From 1984 to 1988, Dr. Brenner was President and Chief Executive Officer
of Cytogen. Prior to 1984, he was Vice President, Corporate External Research,
at Johnson & Johnson, a major pharmaceutical company, and also served as
Chairman of McNeil Pharmaceutical, Ortho Pharmaceutical Corp. and the Cilag
Companies, all subsidiaries of Johnson & Johnson. Dr. Brenner is a director of
several privately-held healthcare and environmental companies. He received a
B.S. in Pharmacy from the University of Cincinnati, and an M.S. and Ph.D., both
in Pharmaceutical Chemistry, from the University of Florida.
Frederick M. Miesowicz, 46, joined Cellcor in October 1992 in the new
position of Senior Vice President of Scientific Affairs. Dr. Miesowicz has an
extensive background in cellular therapies. Most recently he managed the United
States and European SteriCell Division of Terumo and was with E.I. DuPont de
Nemours & Company for over 14 years. He managed DuPont's early development and
production of its diagnostic monoclonal antibodies. In 1986, he assumed
responsibility for DuPont's cellular therapy business, working with the National
Cancer Institute and others on ex vivo immunotherapies (lymphokine activated
killer cells and tumor infiltrating lymphocytes for cancer). He received his
Ph.D. in chemistry from Harvard University.
Bruce P. Babbitt, 41, joined Cellcor in February 1991 as Director of
Immunology Research and was promoted to Vice President of Research and
Development in 1993. From 1986 to 1990, he held a series of scientific and
managerial positions at Lipogen, Inc., a biotechnology company. These positions
included Research Scientist, Program Manager and Group Director, Research and
Development. Previously, Dr. Babbitt pursued post-doctoral studies at Harvard
Medical School and Washington University Medical School at the laboratory of Dr.
Emil Unanue in the field of antigen presentation and processing. He received a
M.S. and a Ph.D. in biochemistry from the University of Tennessee.
Richard E. Kruger, 49, joined Cellcor in 1992 as Vice President of
Regulatory Affairs. Dr. Kruger spent two years at Columbia Research
Laboratories as Director of Regulatory Affairs. From 1986 to 1990 he
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was Director of Regulatory Affairs at Greenwich Pharmaceuticals. He received
his B.A. in Biology from the American International College, his M.S. at Long
Island University, and his Ph.D. at New York University.
Michael J. Kosc, 50, joined Cellcor in 1991 as Director of Accounting. In
July 1995, Mr. Kosc became Cellcor's Treasurer. From 1980 to 1990, he was the
Manager of General Accounting and Operations Controller for Johnson & Johnson.
He received his B.S. in Accounting from St. Peter's College and his M.B.A. from
Rutgers University. Mr. Kosc is licensed as a Certified Public Accountant in
New Jersey and New York.
Russell W. Ayres, III, 45, has been a director of Cellcor since 1991. Mr.
Ayres has been Associate General Counsel of The Hillman Company, a private
corporation engaged in diversified investments, since 1983. Mr. Ayres received
an A.B. from Princeton University, an M.A. in Mathematics from the State
University of New York at Stony Brook and a J.D. from Harvard Law School.
John E. Bagalay, Jr., 61, has been a director of Cellcor since 1991. He
has served as the Managing Director of Community Technology Fund, the venture
capital affiliate of Boston University, since September 1989. From 1984 to
1989, he served as General Counsel of Lower Colorado River Authority, a
regulated electric utility. Dr. Bagalay currently also sits on the Boards of
Directors of Seragen, Inc., Wave Systems Corporation and Hymedix, Inc. Dr.
Bagalay holds a B.A. in Politics, Philosophy and Economics and a Ph.D. in
Political Philosophy from Yale University, and a J.D. from the University of
Texas.
Stephen M. Shortell, 50, has been a director of Cellcor since 1992. Dr.
Shortell is the A. C. Buehler Distinguished Professor of Health Services
Management and Professor of Organization Behavior in the Department of
Organization Behavior at the J. L. Kellogg Graduate School of Management,
Northwestern University, chairs he has held since 1982. Dr. Shortell also holds
appointments in the Departments of Sociology and Community Health and Preventive
Medicine, School of Medicine at Northwestern University. Dr. Shortell is a
member of the National Academy of Sciences Institute of Medicine. Dr. Shortell
received a B.B.A. in Business Administration from the University of Notre Dame,
an M.P.H. in Hospital Administration from the University of California at Los
Angeles and a Ph.D. and an M.B.A. in Behavioral Sciences from the University of
Chicago Graduate School of Business.
As part of Cellcor's effort to restructure and reduce costs prior to the
Merger, Cellcor implemented, with the consent of Cytogen, a staff reduction
program, effective as of July 1, 1995, that will result in the termination of
approximately 15 employees, or 33% of Cellcor's work force, by the Effective
Time. In connection with the reduction program, Mr. D'Antoni and Mr. Wilcox
ceased to serve as Cellcor's President and Chief Executive Officer and Cellcor's
Senior Vice President of Business Development and Chief Financial Officer,
respectively, as of July 14, 1995. Except for Dr. Brenner, Dr. Kruger and Mr.
Kosc, Cellcor's President and Chief Executive Officer, Vice President of
Regulatory Affairs and Treasurer, respectively, who will cease to serve as
executive officers of Cellcor upon consummation of the Merger, the executive
officers of Cellcor immediately prior to the Effective Time will be the
executive officers of the Surviving Corporation after the Effective Time.
Notwithstanding the foregoing, Cellcor anticipates that it will continue to
pursue its core clinical programs for mRCC and chronic hepatitis B.
Dr. McKearn and Mr. Madison, the directors of the Merger Subsidiary
immediately prior to the Effective Time, will be the directors of the Surviving
Corporation and will hold office until their respective successors are duly
elected and qualified.
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INFORMATION CONCERNING CELLCOR
Business of Cellcor
Cellcor is a biotechnology company engaged in the development and
commercialization of cellular therapies. Cellcor's initial cellular therapy
application, ALT, is an outpatient treatment for cancer and has potential
applications in the area of infectious diseases.
Cellcor's development efforts are based upon a novel approach to
disease treatment, the therapeutic use of living human cells, which, to date,
has not received marketing approval by FDA. Cellular therapies involve the use
of the patient's own living cells in a three-step procedure: (i) the collection
of living cells; (ii) the processing of these cells outside the body (ex vivo)
through the use of various procedures; and (iii) the return to the patient of
the ex vivo processed cells. Some physicians, however, have expressed
significant reservations about ALT. Critics of ALT have argued that there is
insufficient scientific explanation of the mechanism of action of ALT and that
there are insufficient clinical data to support the use of ALT. In addition,
some scientists expressed the view that Cellcor's commercialization of ALT prior
to FDA approval, which approval was not required under applicable regulations at
the time of commercialization of ALT, was problematic. Cellcor has sought to
address the concerns of its critics by seeking FDA approval of ALT, including
conducting a Pivotal Phase III clinical trial and other clinical trials in
collaboration with academic and medical institutions, and undertaking further
research into the scientific basis and mechanism of ALT. There can be no
assurance, however, that FDA will grant marketing approval of ALT or that
clinical and scientific studies will yield positive results or, if FDA approval
is obtained, that ALT will be widely accepted by healthcare providers,
physicians or patients.
In January 1994, Cellcor initiated an FDA-designated Pivotal Phase III
clinical trial of ALT in patients with mRCC. The primary objective of this
study is to evaluate the survival of patients with mRCC who receive either ALT
or alpha interferon. The clinical trial is being conducted at more than 20
United States academic centers and one Canadian academic center. Contingent
upon the successful completion of the study, Cellcor intends to apply to FDA for
approval of an ELA/PLA. In addition, Cellcor plans to continue a controlled
clinical trial (the adjuvant clinical trial), begun in November 1990, to
determine if ALT can postpone or prevent the recurrence of cancer in patients
previously diagnosed with non-metastatic renal cell carcinoma who have had
kidneys surgically removed.
Cellcor currently is providing ALT for the treatment of renal cell
carcinoma at over 40 sites in both the United States and Canada. Patients
currently receiving ALT are either enrolled in the Pivotal Phase III clinical
trial or the adjuvant clinical trial or are eligible under a compassionate use
protocol approved by FDA. Cellcor transports the cells between clinical sites
and Cellcor's Good Manufacturing Practices compliant laboratory in Newton,
Massachusetts. As of December 31, 1994, Cellcor had administered over 5,000
cell infusions to over 750 patients.
Cellcor believes its ALT treatment may also strengthen a patient's
immune response to diseases other than cancer, such as a variety of infectious
diseases including chronic hepatitis B and C, genital herpes, shingles and
cytomegalovirus (in both HIV-infected patients and patients receiving a bone
marrow transplant) and certain bacterial infections, such as tuberculosis. In
the first quarter of 1995, Cellcor began a Phase I/II trial of ALT in humans
chronically-infected with hepatitis B. This trial is being conducted under an
Investigational New Drug exemption at St. Louis University School of Medicine.
After publishing the results of a Phase III randomized controlled
trial of 90 patients in the April 1990 edition of The Lancet, Cellcor offered
ALT on a commercial basis for the treatment of mRCC at its Boston clinical site.
During 1991, Cellcor opened two additional centers in Atlanta, Georgia and
Orange, California. The therapy was offered commercially only to patients with
mRCC.
In March 1993, Cellcor announced that it elected to cease providing
ALT to patients on a commercial basis. The 1992 financial statements reflect a
charge of $2.3 million in connection with the decision to
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restructure. The decision to decommercialize reflected regulatory developments
at FDA and the level of physician acceptance that ALT had achieved in the
marketplace. Cellcor has since focused its efforts on obtaining regulatory
approval for ALT and providing additional clinical data to the medical
community. Since March 1993, Cellcor has not accepted new commercial patients
for therapy. During 1993, FDA granted Cellcor a compassionate protocol with
cost recovery for the former commercial patients and those patients who had
received more than six treatments in earlier clinical trials.
Cellcor was incorporated in Delaware in December 1986. Cellcor's
principal office is located at 200 Wells Avenue, Newton, Massachusetts 02159 and
its telephone number is (617) 332-2500.
Recent Developments
Settlement of Lawsuit. On April 24, 1995, Cellcor announced that it
had agreed to settle a stockholder class action suit brought by William L.
Glosser, as representative of a class of Cellcor's stockholders, against
Cellcor, Cellcor's directors and Furman Selz Incorporated, individually and as
the representative of the 26 underwriters of Cellcor's initial public offering.
The suit was originally filed in the Court of Chancery of Delaware on September
18, 1992 and alleged certain securities law violations.
The settlement, which is subject to certain conditions, including
final approval by Delaware's Court of Chancery, provides for a $700,000 cash
payment to the members of the plaintiff class in return for dismissal of all
claims against the defendants. Cellcor's insurance carriers have paid over
$440,000 towards the settlement and Cellcor has paid the balance, all of which
payments have been made into an escrow account, pending the entry of final
judgment by the Chancery Court. The settlement hearing is currently scheduled
to be held on December 18, 1995.
Staff Reduction. As part of Cellcor's effort to restructure and
reduce costs prior to Merger, Cellcor implemented, with the consent of Cytogen,
a staff reduction program effective July 1, 1995. See "MANAGEMENT AND BOARD OF
CELLCOR."
APPROVAL OF CELLCOR'S 1995 STOCK INCENTIVE PLAN
The Cellcor Board of Directors believes that the continued growth and
profitability of Cellcor depends, in large part, upon the ability of Cellcor to
maintain a competitive position in attracting and retaining key personnel.
Accordingly, on October 14, 1994, the Cellcor Board of Directors adopted,
subject to stockholder approval, the 1995 Plan.
The Cellcor Board of Directors believe that the 1995 Plan is in the best
interest of Cellcor and its stockholders and recommends a vote FOR the Plan
Proposal.
The 1995 Plan provides for the grant of incentive stock options,
nonstatutory stock options, stock appreciation rights, performance shares and
awards of restricted stock and unrestricted stock (collectively, "Awards"). The
1995 Plan provides that a total of 1,500,000 shares of Cellcor Common Stock
(subject to adjustment for any dividend, stock split or other relevant changes
in Cellcor's capitalization) may be issued pursuant to the 1995 Plan. The
maximum number of shares of Cellcor Common Stock with respect to which Awards
may be granted to any employee may not exceed 300,000 during any calendar year.
No Award may be made under the 1995 Plan after October 13, 2004, but Awards
previously granted may extend beyond that date. The 1995 Plan may be terminated
at any time by the Cellcor Board of Directors. If the Merger is consummated,
the Board of Directors of the Surviving Corporation has no current intention of
granting additional Awards under the 1995 Plan.
The 1995 Plan has been administered by the Cellcor Board of Directors and
the Compensation Committee of the Board of Directors. The Cellcor Board of
Directors may also delegate to one or more executive officers of Cellcor the
power, subject to certain restrictions, to make Awards to participants who are
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not subject to the reporting provisions of Section 16 ("Reporting Persons").
The Cellcor Board of Directors has the authority to adopt, amend and repeal the
administrative rules, guidelines and practices relating to the 1995 Plan and to
interpret the provisions of the 1995 Plan. No amendment to the 1995 Plan may be
made without stockholder approval if such approval is necessary to comply with
any applicable tax or regulatory requirement, including any requirements for
compliance with Rule 16b-3 promulgated under the Exchange Act.
Description of Awards under the 1995 Plan
Incentive Stock Options and Nonstatutory Options. Optionees will receive
the right to purchase a specified number of shares of Cellcor Common Stock at
some time in the future at an option price and subject to such terms and
conditions as will be specified at the time of the grant. Incentive stock
options and options which the Board or any appointed committee intends to
qualify as performance-based compensation under Section 162(m) of the Code may
not be granted at an exercise price less than the fair market value of the
Cellcor Common Stock on the date of grant (or less than 110% of the fair market
value in the case of incentive stock options granted to optionees holding 10% or
more of the voting stock of Cellcor). All other options may be granted at an
exercise price which may be less than, equal to or greater than the fair market
value of the Cellcor Common Stock on the date of grant. As of August 17, 1995,
672,400 stock options had been granted under the 1995 Plan.
Stock Appreciation Rights and Performance Shares. A stock appreciation
right is the right to receive the excess in value of shares of Cellcor Common
Stock over the exercise price awarded to a participant. A performance share
award entitles the recipient to acquire shares of Cellcor Common Stock upon the
attainment of specified performance goals. No stock appreciation rights or
performance shares have been issued under the 1995 Plan.
Restricted and Unrestricted Stock. Restricted stock awards entitle
recipients to acquire shares of Cellcor Common Stock, which may not be sold,
assigned, transferred, pledged or otherwise encumbered, except as permitted by
the Cellcor Board of Directors, during an applicable restriction period. Awards
of restricted stock are subject to the right of Cellcor to repurchase all or
part of such shares at their purchase price from the recipient in the event that
the conditions specified in the applicable award are not satisfied prior to the
end of the applicable restriction period established for such award. Cellcor
may also grant (or sell at a purchase price not less than 85% of the fair market
value on the date of such sale) to participants shares of Cellcor Common Stock
free of any restrictions under the 1995 Plan. No restricted or unrestricted
stock have been issued under the 1995 Plan.
All of Cellcor's employees, officers, directors, consultants and advisors
who are expected to contribute to Cellcor's future growth and success, other
than persons who have irrevocably elected not to be eligible, are eligible to
participate in the 1995 Plan. Incentive stock options, however, may only be
granted to persons eligible to receive incentive stock options under the Code.
As of July 1, 1995, Cellcor had 37 employees. On August 29, 1995, the last
reported bid price of Cellcor Common Stock on the OTC Bulletin Board was
$2.8125.
The granting of Awards under the 1995 Plan is discretionary, and Cellcor
cannot now determine the number or type of Awards to be granted in the future to
any particular executive officer, all current executive officers as a group, all
non-executive directors as a group, each nominee for director, or all non-
executive officers as a group. If the Merger is consummated, the Board of
Directors of the Surviving Corporation currently intends to grant no additional
Awards under the 1995 Plan. Pursuant to the 1995 Plan, during 1994, all current
executive officers as a group received options to purchase an aggregate of
248,800 shares of Cellcor Common Stock (including 148,000 shares to Dr.
Miesowicz and 100,800 shares to Dr. Babbitt), all at an exercise price of $3.625
per share, and all current employees, including all current officers who are not
executive officers, as a group, received options to purchase 35,200 shares of
Cellcor Common Stock at an exercise price of $3.625 per share. For a discussion
of the treatment of the foregoing options in the event of the consummation of
the Merger, see "THE MERGER--Interest of Certain Persons in the Transaction" and
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"THE MERGER AGREEMENT--Conversion of Shares of Cellcor Capital Stock Pursuant to
Merger; Treatment of Options and Warrants." During 1994, no current director
received options under the 1995 Plan.
In the event of a merger in which all of the outstanding shares of Cellcor
Common Stock are exchanged for securities, cash or other property of any other
entity, the Cellcor Board of Directors, or the board of directors of any
corporation assuming the obligations of Cellcor, may, in its discretion, take
any one or more of the following actions as to outstanding Awards: (i) provide
that such Awards shall be assumed, or substantially equivalent Awards shall be
substituted, by the acquiring or succeeding corporation (or an affiliate
thereof) on such terms as the Cellcor Board of Directors determines to be
appropriate; (ii) upon written notice to participants, provide that all
unexercised options or stock appreciation rights will terminate immediately
prior to the consummation of the merger unless exercised by the participant
within a specified period following the date of such notice; and (iii) provide
that all or any outstanding Awards shall become exercisable or realizable in
full prior to the effective date of the merger. If the Merger is consummated,
Cytogen has agreed to assume all of the outstanding Cellcor Stock Options under
the 1995 Plan. See "THE MERGER AGREEMENT--Conversion of Shares of Cellcor
Capital Stock Pursuant to Merger; Treatment of Options and Warrants."
Federal Income Tax Consequences
Incentive Stock Options. No taxable income will be recognized by an
optionee upon the grant or exercise of an incentive stock option (provided that
the difference between the option exercise price and the fair market value of
the stock on the date of exercise must be included in the optionee's
"alternative minimum taxable income"), and no corresponding expense deduction
will be available to Cellcor. Generally, if an optionee holds shares acquired
upon the exercise of incentive stock options until the later of (i) two years
from the grant of the option or (ii) one year from the date of transfer of the
purchased shares to him (the "Statutory Holding Period"), any gain to the
optionee upon a sale of such shares will be treated as capital gain. The gain
recognized upon the sale of the stock is the difference between the option price
and the sale price of the stock. The net federal income tax effect on the
holder of incentive stock options is to defer, until the stock is sold, taxation
of any increase in the stock's value from the time of grant to the time of
exercise, and to cause all such increase to be treated as capital gain.
If the optionee sells the shares prior to the expiration of the Statutory
Holding Period, he will realize taxable income at ordinary income tax rates in
an amount equal to the lesser of (i) the fair market value of the shares on the
date of exercise less the option price, or (ii) the amount realized on the sale
less the option price, and Cellcor will receive a corresponding business expense
deduction. Any additional gain will be treated as long-term capital gain if the
shares are held for more than one year prior to the sale and as short-term
capital gain if the shares are held for a shorter period. If the optionee sells
the stock for less than the option price, he will recognize a capital loss equal
to the difference between the sale price and the option price. The loss will be
a long-term capital loss if the shares are held for more than one year prior to
the sale and a short-term capital loss if the shares are held for a shorter
period.
For purposes of the "alternative minimum tax" applicable to individuals,
the exercise of an incentive stock option is treated in the same manner as the
exercise of a nonstatutory option. Thus, an optionee must, in the year of
option exercise, include the difference between the exercise price and the fair
market value of the stock on the date of exercise in alternative minimum taxable
income. The alternative minimum tax is imposed upon an individual's alternative
minimum taxable income currently at rates of 26% to 28%, but only to the extent
that such tax exceeds the taxpayer's regular income tax liability for the
taxable year.
Nonstatutory Stock Options. No taxable income is recognized by the
optionee upon the grant of a nonstatutory option. The optionee must recognize
as ordinary income in the year in which the option is exercised the amount by
which the fair market value of the purchased shares on the date of exercise
exceeds the option price (and Cellcor is required to withhold an appropriate
amount for tax purposes). If the optionee is a Reporting Person, then upon the
exercise of an option within six months from the date of grant no income will be
recognized by the optionee until six months have expired from the date the
option was granted, and
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the income then recognized will include any appreciation in the value of the
shares during the period between the date of exercise and the date six months
after the date of grant (unless the optionee makes an election under Section
83(b) of the Code to have the difference between the exercise price and fair
market value at the time of exercise recognized as ordinary income as of the
time of exercise). Cellcor will be entitled to a business expense deduction
equal to the amount of ordinary income recognized by the optionee, subject to
the limitations of Section 162(m) of the Code. Any additional gain or any loss
recognized upon the subsequent disposition of the purchased shares will be a
capital gain or loss, and will be a long-term gain or loss if the shares are
held for more than one year.
Stock Appreciation Rights. No taxable income is recognized by the
recipient upon the grant of a stock appreciation right. The recipient must
recognize as ordinary income any cash delivered and the fair market value of any
shares of Cellcor Common Stock delivered in payment of an amount due under a
stock appreciation right. Special rules apply to Reporting Persons. On the
disposition by the recipient of any Cellcor Common Stock received in payment of
a stock appreciation right, any additional gain or any loss recognized will be a
capital gain or loss, and will be a long-term gain or loss if the shares are
held for more than one year. Cellcor will be entitled to a business expense
deduction equal to the amount of ordinary income recognized by the recipient,
subject to the limitations of Section 162(m) of the Code.
Performance Shares. No taxable income is recognized by the recipient upon
the grant of a performance share award. The recipient must recognize as
ordinary income the fair market value of any shares of Cellcor Common Stock
actually delivered in accordance with the terms of the performance share award.
Special rules apply to Reporting Persons. On the disposition by the recipient
of any Cellcor Common Stock received pursuant to a performance share award, any
additional gain or any loss recognized will be a capital gain or loss, and will
be a long-term gain or loss if the shares are held for more than one year.
Cellcor will be entitled to a business expense deduction equal to the amount of
ordinary income recognized by the recipient, subject to the limitations of
Section 162(m) of the Code.
Restricted Stock. If, under the Plan, an award of stock is subject to
forfeiture provisions and restrictions on transfer (a "Restricted Award"), then
neither Cellcor nor the recipient of the award will realize any federal income
tax consequences at the time such award is granted unless the recipient makes an
election under Section 83(b) of the Code. If the recipient of a Restricted
Award makes a Section 83(b) election within 30 days of the date of grant, or if
the recipient is granted an award that is not subject to forfeiture provisions
and restrictions on transfer, then he will recognize ordinary income, for the
year in which the award is received, in an amount equal to the difference
between the fair market value of the Cellcor Common Stock at the time the award
is made and the purchase price paid for the Cellcor Common Stock. If a Section
83(b) election is made and the recipient subsequently forfeits some or all of
the Cellcor Common Stock, he will not be entitled to any tax refund. If a
Section 83(b) election is not made with respect to a Restricted Award, then the
recipient will recognize ordinary income, at the time that the forfeiture
provisions or restrictions on transfer lapse, in an amount equal to the
difference between the fair market value of the Cellcor Common Stock at that
time and the original purchase price per share. Cellcor will be entitled to
deduct, as compensation expense, subject to the limitations of Section 162(m) of
the Code, the same amount as the recipient must include as ordinary income, and
such deduction shall take place in Cellcor's tax year which includes the last
day (generally December 31) of the recipient's tax year in which the income is
recorded for federal income tax purposes. When the recipient sells the stock,
he will recognize a capital gain or loss at the time of sale on the difference
between his basis (the price paid plus any taxed amount) and the sale price.
Such capital gain or loss will be a long-term capital gain or loss if the stock
is held for more than one year from the date of grant if a Section 83(b)
election is made, and, for all other cases, for more than one year from the date
that the forfeiture provisions or restrictions on transfer lapse.
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EXPERTS
The consolidated financial statements and schedules of Cytogen incorporated
by reference in this Joint Proxy Statement/Prospectus and elsewhere in the
Registration Statement, have been audited by Arthur Andersen LLP, independent
public accountants, as indicated in their reports with respect thereto, and are
incorporated herein in reliance upon the authority of said firm as experts in
giving said reports.
The financial statements of CytoRad included in this Joint Proxy
Statement/Prospectus and elsewhere in the Registration Statement, have been
audited by Arthur Andersen LLP, independent public accountants, as indicated in
their reports with respect thereto, and are included herein upon the authority
of said firm as experts in giving said reports.
The financial statements of Cellcor as of December 31, 1994 and 1993, and
for each of the years in the three-year period ended December 31, 1994, have
been incorporated by reference herein and in the Registration Statement in
reliance upon the report of KPMG Peat Marwick LLP, independent certified public
accountants, incorporated by reference herein, and upon the authority of said
firms as experts in accounting and auditing.
The report of KPMG Peat Marwick LLP covering the December 31, 1994
financial statements contains an explanatory paragraph that states that Cellcor
and certain of its officers are defendants in a class action lawsuit seeking
damages in unspecified amounts, alleging that the prospectus used to sell
Cellcor's stock in the initial public offering contained false and misleading
statements and omitted material facts. Because of the uncertainty of the
outcome of the lawsuit at December 31, 1994, no provision for any liability that
may result upon adjudication had been recognized in the accompanying financial
statements.
The report of KPMG Peat Marwick LLP covering the December 31, 1994
financial statements contains an explanatory paragraph that states that
Cellcor's recurring losses from operations, decreasing cash reserves and need
for additional capital to fund continuing operations raise substantial doubt
about the entity's ability to continue as a going concern. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
LEGAL OPINIONS
The legality of the shares of Cytogen Common Stock to be issued to the
Cellcor stockholders pursuant to the Transaction will be passed upon by Dechert
Price & Rhoads, Princeton, New Jersey.
The Merger Agreement provides that it is a condition to the obligation of
Cytogen and the Merger Subsidiary to consummate the Merger that they receive the
opinion of Hale and Dorr, Boston, Massachusetts to the effect that the Merger
will be treated for federal income tax purposes as a reorganization qualifying
under the provisions of Section 368(a) of the Code, which opinion shall not have
been withdrawn or modified in any effect.
In addition, the Merger Agreement provides that it is a condition to the
obligation of Cellcor to consummate the Merger that it receive the opinion of
Dechert Price & Rhoads to the effect that the Merger will be treated for federal
income tax purposes as a reorganization qualifying under the provisions of
Section 368(a) of the Code, which opinion shall not have been withdrawn or
modified in any effect.
STOCKHOLDER PROPOSALS FOR 1996 CYTOGEN ANNUAL MEETING
Stockholder proposals intended to be presented at Cytogen's 1996 Annual
Meeting of Stockholders, which is expected to be held on May 21, 1996, are
required to be received at the principal executive offices of Cytogen no later
than December 20, 1995 for inclusion in Cytogen's proxy statement and form of
proxy relating to such meeting.
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INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
CYTOGEN CORPORATION AND SUBSIDIARIES, PRO FORMA CONDENSED
COMBINED FINANCIAL STATEMENTS (UNAUDITED)
Cytogen Corporation and Subsidiaries, Pro Forma Condensed Combined
Financial Statements, Basis of Presentation.......................... F-2
Cytogen Corporation and Subsidiaries, Pro Forma Condensed Combined
Balance Sheet as of June 30, 1995.................................... F-3
Cytogen Corporation and Subsidiaries, Pro Forma Condensed Combined
Statement of Operations--For the Year Ended December 31, 1994........ F-4
Cytogen Corporation and Subsidiaries, Pro Forma Condensed Combined
Statement of Operations--For the Six Months Ended June 30, 1995...... F-5
Cytogen Corporation and Subsidiaries, Notes to Pro Forma Condensed
Combined Financial Statements........................................ F-6
AUDITED CYTORAD INCORPORATED FINANCIAL STATEMENTS
CytoRad Incorporated, Report of Independent Public Accountants............ F-9
CytoRad Incorporated, Balance Sheets as of December 31, 1994 and
January 1, 1994...................................................... F-10
CytoRad Incorporated, Statements of Operations--Years Ended December 31,
1994, January 1, 1994, January 2, 1993 and Cumulative from Inception
to December 31, 1994................................................. F-11
CytoRad Incorporated, Statements of Stockholders' Equity--Years Ended
December 31, 1994, January 1, 1994, January 2, 1993 and for the
period from Inception to December 28, 1991........................... F-12
CytoRad Incorporated, Statements of Cash Flows--Years Ended December 31,
1994, January 1, 1994, January 2, 1993 and Cumulative from Inception
to December 31, 1994................................................. F-13
CytoRad Incorporated, Notes to Financial Statements....................... F-14
CYTORAD INCORPORATED FINANCIAL STATEMENTS (UNAUDITED)
CytoRad Incorporated, Statements of Operations--For the period from
January 1, 1995 to February 27, 1995................................. F-19
CytoRad Incorporated, Statements of Cash Flows--For the period from
January 1, 1995 to February 27, 1995................................. F-20
CytoRad Incorporated, Notes to Financial Statements....................... F-21
</TABLE>
F-1
<PAGE>
CYTOGEN CORPORATION AND SUBSIDIARIES
PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
BASIS OF PRESENTATION
(Unaudited)
The accompanying Pro Forma Condensed Combined Balance Sheet as of June 30,
1995, and the related Pro Forma Condensed Combined Statements of Operations for
the year ended December 31, 1994 and for the six months ended June 30, 1995 give
effect to the merger ("Merger A") of CytoRad Incorporated ("CytoRad") into a
wholly-owned subsidiary of Cytogen Corporation ("Cytogen"), which was
consummated on February 27, 1995, and the merger ("Merger B") of Cellcor, Inc.
("Cellcor") with and into a wholly-owned subsidiary of Cytogen, as if these
transactions had occurred as of June 30, 1995 in the case of the Pro Forma
Condensed Combined Balance Sheet or as of January 1, 1994 in the case of the Pro
Forma Condensed Combined Statements of Operations. The Pro Forma Condensed
Combined Balance Sheet as of June 30, 1995 presents only the historical
financial position of Cytogen and Cellcor (and not CytoRad) inasmuch as the
Cytogen Form 10-Q for the quarter ended June 30, 1995 (the "Cytogen June 30,
1995 Form 10-Q"), which reflects the consummation of Merger A, has previously
been filed with the Securities and Exchange Commission.
The Pro Forma Condensed Combined Financial Statements have been prepared by
Cytogen management and should be read in conjunction with the historical
financial statements of Cytogen, CytoRad and Cellcor. The Pro Forma Condensed
Combined Financial Statements are based on certain assumptions and estimates.
These statements do not purport to be indicative of the financial position or
results of operations that might have occurred, nor are they indicative of
future results. See Notes to Pro Forma Condensed Combined Financial Statements.
F-2
<PAGE>
CYTOGEN CORPORATION AND SUBSIDIARIES
PRO FORMA CONDENSED COMBINED BALANCE SHEET
June 30, 1995
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Historical (Note 1) Pro Forma
--------------------- -------------------------
Cytogen Cellcor Adjustments Combined
------- ------- ----------- --------
<S> <C> <C> <C> <C>
ASSETS
------
Current Assets:
Cash and cash equivalents.............................. $ 9,243 $ 949 $ 12,000(H) $ 18,957
(2,235)(C)
(1,000)(I)
Short-term investments................................. 1,321 --- --- 1,321
Accounts receivable, net............................... 533 30 --- 563
Inventory.............................................. 2,157 66 --- 2,223
Other current assets................................... 592 442 --- 1,034
-------- ------- --------- --------
Total current assets................................ 13,846 1,487 8,765 24,098
Property, plant and equipment, net....................... 5,215 957 --- 6,172
Other assets............................................. 1,847 149 --- 1,996
-------- ------- --------- --------
$ 20,908 $ 2,593 $ 8,765 $ 32,266
======== ======= ========= ========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current Liabilities:
Note payable to stockholders....................... $ --- $ 1,000 $ (1,000) $ ---
Accounts payable and accrued liabilities........... 6,741 2,692 780(D) 10,213
Other current liabilities.......................... 2,231 109 --- 2,340
-------- -------- --------- --------
Total current liabilities..................... 8,972 3,801 (220) 12,553
-------- -------- --------- --------
Long-term liabilities.............................. 4,768 396 --- 5,164
-------- -------- --------- --------
Redeemable common stock (pro forma),
250,000 shares issued and outstanding, at
redemption value................................. 2,000 --- --- 2,000
-------- -------- --------- --------
Stockholders' Equity (Deficit):
Preferred stock (pro forma), $.01 par value,
5,400,000 shares outstanding, no shares
issued and outstanding........................... --- --- --- ---
Convertible preferred stock........................ --- --- --- ---
Common stock (pro forma), $.01 par value,
69,600,000 shares authorized, 39,493,000 shares
issued and outstanding........................... 317 55 23(G)(H) 395
Additional paid-in capital......................... 193,911 54,838 (56,410)(E) 230,656
38,317(G)(H)
Deferred compensation.............................. --- (87) --- (87)
Unrealized gains on investments.................... 28 --- --- 28
Accumulated deficit................................ (189,088) (56,410) 56,410(E) (218,443)
(29,355)(F)
-------- -------- --------- --------
Total stockholders' equity (deficit).......... 5,168 (1,604) 8,985 12,549
-------- -------- --------- --------
$ 20,908 $ 2,593 $ 8,765 $ 32,266
======== ======== ========= ========
</TABLE>
See Notes to Pro Forma Condensed Combined Financial Statements
F-3
<PAGE>
CYTOGEN CORPORATION AND SUBSIDIARIES
PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
For the Year Ended December 31, 1994
(Unaudited)
(in thousands, except per share data)
<TABLE>
<CAPTION>
Historical (Note 1) Pro Forma
----------------------------------------- ---------------------------
Cytogen CytoRad Cellcor Adjustments Combined
----------- ----------- ----------- --------------- ----------
<S> <C> <C> <C> <C> <C>
Revenues:
Product related................ $ 1,411 $ --- $ 97 $ --- $ 1,508
License and contract........... 1,047 --- 775 --- 1,822
------- ---------- ------ ----------- --------
Total revenues............ 2,458 --- 872 --- 3,330
------- ---------- ------ ----------- --------
Operating expenses:
Research and development........ 20,321 --- 5,602 --- 25,923
Selling and marketing........... 5,536 --- --- --- 5,536
Reacquisition of technology and
marketing rights............. 4,647 --- --- --- 4,647
General and administrative...... 4,290 1,415 2,427 --- 8,132
Merger costs................... --- 696 --- (696)(A) ---
------- ---------- ------ ----------- --------
Total operating expenses.. 34,794 2,111 8,029 (696) 44,238
------- ---------- ------ ----------- --------
Non-operating income........... (470) 960 136 --- 626
------- ---------- ------ ----------- --------
Net loss....................... $(32,806) $ (1,151) $ (7,021) $ 696 $(40,282)
======== ========== ========= =========== ========
Net loss per common share....... $ (1.38) $ (0.29) $ (1.33) $ (1.07)
========= ========== ========= ========
Weighted average common shares
outstanding................... 23,822 4,025 5,442 37,657
========= ========== ========= ========
</TABLE>
NOTE: The pro forma adjustments exclude a nonrecurring charge of approximately
$19.7 million for acquired research and development resulting from Merger
A, which was charged to the statement of operations in the Cytogen March
31, 1995 Form 10-Q, which has previously been filed with the Securities
and Exchange Commission (see Note 2).
The pro forma adjustments also exclude a nonrecurring charge for acquired
research and development which will be charged to the statement of
operations upon the effective time (the "Effective Time") of Merger B.
Based on $5.25, the last sale price per share of Cytogen Common Stock on
August 29, 1995, this amount would be $29,355,000 or $(0.78) per share.
To the extent the market price of Cytogen Common Stock at the Effective
Time of Merger B is different from $5.25 per share, this charge to
expense would change. In addition, this charge to expense will change due
to other factors including a change from Cellcor's stockholders' deficit
balance at June 30, 1995 (see Note 3).
See Notes to Pro Forma Condensed Combined Financial Statements.
F-4
<PAGE>
CYTOGEN CORPORATION AND SUBSIDIARIES
PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
For the Six Months Ended June 30, 1995
(Unaudited)
(in thousands, except per share data)
<TABLE>
<CAPTION>
Historical (Note 1) Pro Forma
----------------------------------- ----------------------------
Cytogen CytoRad Cellcor Adjustments Combined
----------- --------- ---------- --------------- -----------
<S> <C> <C> <C> <C> <C>
Revenues:
Product related................. $ 728 $ --- $ 52 $ --- $ 780
License and contract............ 792 --- 750 --- 1,542
-------- --------- -------- -------- ---------
Total revenues............... 1,520 --- 802 --- 2,322
-------- --------- -------- -------- ---------
Operating Expenses:
Research and development........ 10,296 --- 3,146 --- 13,442
Selling and marketing........... 1,720 --- --- --- 1,720
Reacquisition of technology
and marketing rights........... 19,663 --- --- (19,663)(B) ---
General and administrative...... 3,189 529 1,883 --- 5,601
Restructuring expense........... --- --- 825 --- 825
Merger costs.................... --- 1,923 --- (1,923)(A) ---
-------- --------- -------- -------- ---------
Total operating expenses..... 34,868 2,452 5,854 (21,586) 21,588
-------- --------- -------- -------- ---------
Non-operating income............ 80 148 16 --- 244
-------- --------- -------- -------- ---------
Net loss........................ $(33,268) $ (2,304) $ (5,036) $ 21,586 $ (19,022)
======== ========= ======== ======== =========
Net loss per common share....... $ (1.11) $ (0.57) $ (0.97) $ (0.48)
======== ========= ======== =========
Weighted average common shares
outstanding.................... 29,982 4,025 5,453 39,792
======== ========= ======== =========
</TABLE>
NOTE: The pro forma adjustments exclude a nonrecurring charge of approximately
$19.7 million for acquired research and development, which was charged to
the statement of operations in the Cytogen March 31, 1995 Form 10-Q,
which has previously been filed with the Securities and Exchange
Commission (see Note 2).
The pro forma adjustments also exclude a nonrecurring charge for acquired
research and development which will be charged to the statement of
operations upon the Effective Time of Merger B. Based on $5.25, the last
sale price per share of Cytogen Common Stock on August 29, 1995, this
amount would be $29,355,000 or $(0.74) per share. To the extent the
market price of Cytogen Common Stock at the Effective Time of Merger B is
different from $5.25 per share, this charge to expense would change. In
addition, this charge to expense will change due to other factors
including a change from Cellcor's stockholders' deficit balance at June
30, 1995 (see Note 3).
See Notes to Pro Forma Condensed Combined Financial Statements.
F-5
<PAGE>
CYTOGEN CORPORATION AND SUBSIDIARIES
NOTES TO PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
(Unaudited)
1. Historical
The historical balances represent the results of operations for each company
and were derived from the respective financial statements for the indicated
periods for Cytogen and Cellcor and for the year ended December 31, 1994 and the
period from January 1, 1995 to February 26, 1995 for CytoRad. The CytoRad
historical results of operations from February 27, 1995 to June 30, 1995 have
been consolidated with those of Cytogen and have previously been filed with the
Securities and Exchange Commission as part of the Cytogen June 30, 1995
Form 10-Q, which reflects Merger A.
2. CytoRad Merger
Merger A was consummated on February 27, 1995 and resulted in the former
CytoRad stockholders obtaining a minority ownership of Cytogen. Merger A was
accounted for as a purchase transaction with Cytogen treated as the acquirer.
Based on the $3.69 per share closing price of Cytogen Common Stock on February
27, 1995, the total purchase price of CytoRad was approximately $30,900,000,
which consisted of the following: (i) the $22,263,000 market value of the
shares of Cytogen Common Stock which were issued to the CytoRad stockholders
(6,037,500 shares of Cytogen Common Stock multiplied by $3.69 per share);
(ii) the $7,446,000 estimated fair value of the warrants to purchase Cytogen
Common Stock and the contingent value rights; and (iii) Cytogen transaction
costs of approximately $1,191,000. In addition, Cytogen charged approximately
$1,400,000 of legal and investment banking fees relating to Merger A to expense
in 1994. The total purchase price has been allocated to the fair market value of
the assets acquired and liabilities assumed. The book value of CytoRad's
tangible assets and liabilities after payment of merger transaction costs
approximated their fair market value. Based on the foregoing purchase price, the
amount allocated to acquired research and development of $19.7 million was
charged to the statement of operations in the Cytogen March 31, 1995 Form 10-Q,
which was previously filed with the Securities and Exchange Commission.
The following pro forma adjustments are reflected as if Merger A had
occurred as of January 1, 1994, in the case of the pro forma condensed combined
statements of operations:
(A) Elimination of nonrecurring merger costs incurred by CytoRad.
(B) Elimination of nonrecurring charge for acquired research and
development.
3. Cellcor Merger
Merger B will result in the former Cellcor stockholders obtaining a minority
ownership of Cytogen. Merger B will be accounted for as a purchase transaction
with Cytogen treated as the acquirer. Based on $5.25, the last sale price per
share of Cytogen Common Stock on August 29, 1995, the estimated total purchase
price of Cellcor would be $26,971,000, which consists of the following: (i) the
$24,736,000 market value of the shares of Cytogen Common Stock which will be
issued to the Cellcor stockholders (4,711,596 shares of Cytogen Common Stock
multiplied by $5.25 per share); and (ii) estimated transaction costs of
$2,235,000. The estimated total purchase price has been allocated to the fair
market value of the assets acquired and liabilities assumed. It is anticipated
that the book value of Cellcor's tangible assets and liabilities after payment
of merger transaction costs will approximate their fair market value except for
the assignment of a value of $780,000 to assumed Cellcor management severance
costs. Based on the foregoing estimated purchase price, the amount allocated to
acquired research and development of $29,355,000 will be charged to the
statement of operations upon the Effective Time of Merger B. To the extent that
the market price of Cytogen Common Stock on the date of the Effective Time of
Merger B is different from $5.25 per share, the amount of the purchase price and
charge to expense would change. In addition, this charge to expense may change
due to other factors including a change from Cellcor's stockholders' deficit
balance at June 30, 1995.
Concurrent with the consummation of Merger B, Cytogen will make an offer
(the "Subscription Offering") to the holders of Cellcor Common Stock enabling
such stockholders to purchase 1.118 shares of Cytogen Common Stock
F-6
<PAGE>
CYTOGEN CORPORATION AND SUBSIDIARIES
NOTES TO PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
(Unaudited)
for each share of Cellcor Common Stock held by such stockholder, at a price of
$3.89 per share of Cytogen Common Stock. As a condition to entering into Merger
B, certain Cellcor stockholders have agreed to purchase 3,084,833 shares of
Cytogen Common Stock for $12,000,000 ($3.89 per share) as part of the
Subscription Offering. Although the Subscription Offering could generate gross
proceeds of approximately $25,800,000, the assumed proceeds from the
Subscription Offering for purposes of the pro forma adjustments is $12,000,000
inasmuch as this represents the contracted minimum amount which will be raised
from the Subscription Offering.
The pro forma financial statements do not reflect any additional
indebtedness (under an available promissory note provided by certain of the
principal stockholders of Cellcor) or interest thereon which will be incurred
between July 1, 1995 and the Effective Time of the Merger for operating
purposes. As of June 30, 1995, Cellcor had incurred $1,000,000 of indebtedness
under this note. The pro forma financial statements also do not reflect the
issuance and sale of 1,800,000 shares of Cytogen Common Stock for $7.3 million
to Fletcher Capital Markets, Inc. ("Fletcher Capital") in August 1995 upon the
exercise of the option granted to Fletcher Capital by Cytogen in May 1994 or of
665,352 shares of Cytogen Common Stock for $2.7 million to Fletcher Fund, L.P.
in September 1995.
The following pro forma adjustments are reflected as if Merger B had
occurred as of June 30, 1995, in the case of the pro forma condensed combined
balance sheet or as of January 1, 1994, in the case of the pro forma condensed
combined statements of operations:
(C) Payment of transaction costs of approximately $2,235,000. Includes
approximately $735,000 of transaction costs incurred by Cellcor that
will be charged to Cellcor's statement of operations in the period when
these costs are incurred.
(D) Application of purchase accounting to record Cellcor management
severance pay liability.
(E) Elimination of Cellcor's accumulated deficit due to the application of
purchase accounting.
(F) Portion of purchase price allocated to acquired research and
development, which will be charged to the statement of operations upon
the consummation of Merger B. This amount is not included in the pro
forma condensed combined statement of operations inasmuch as it
represents a one-time nonrecurring charge.
(G) Issuance of 4,711,596 shares of Cytogen Common Stock to Cellcor
stockholders and related adjustments to additional paid-in capital.
This entry reflects the net increase in the pro forma stockholders'
equity which equals (i) the value of common stock issued to Cellcor
stockholders ($24,736,000) minus (ii) the Cellcor historical
stockholders' deficit as of June 30, 1995 ($1,604,000).
(H) Issuance of 3,084,833 shares of Cytogen Common Stock for $12,000,000 in
connection with the Subscription Offering.
(I) Payment under note payable to shareholders.
4. Income Taxes
The Pro Forma Condensed Combined Statements of Operations do not reflect tax
benefits for the pro forma losses of Cytogen inasmuch as the realization of such
benefits is uncertain. As a result of the consummation of Merger A, the
availability in any one year of CytoRad's net operating loss carryforward will
be limited due to a change in ownership. The effect of the limitation has not
yet been quantified. However, such limitation is not expected to have a
material effect on Cytogen's ability to ultimately utilize this carryforward.
Upon the consummation of Merger B, the availability in any one year of Cellcor's
net operating loss carryforward will be limited due to a change in ownership.
Cellcor's net operating loss carryforward available after the consummation of
Merger B will approximate
F-7
<PAGE>
CYTOGEN CORPORATION AND SUBSIDIARIES
NOTES TO PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
(Unaudited)
the fair market value of Cellcor Common Stock outstanding prior to the
consummation of Merger B, subject to certain annual limitations. The effect of
the limitation is to restrict the future use of the net operating loss to an
amount equal to the fair market value of Cellcor's stock multiplied by a
federally-prescribed interest rate, resulting in the amount of net operating
loss that may be used in each year of the remaining carryforward period.
F-8
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To CytoRad Incorporated:
We have audited the accompanying balance sheets of CytoRad Incorporated (a
Delaware corporation in the development stage) as of December 31, 1994 and
January 1, 1994, and the related statements of operations, stockholders' equity
and cash flows for each of the three years in the period ended December 31,
1994, and for the period from inception (December 2, 1991) to December 31, 1994.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Company as of December 31,
1994 and January 1, 1994, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 1994, and for the
period from inception (December 2, 1991) to December 31, 1994, in conformity
with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Philadelphia, Pa.,
May 17, 1995
F-9
<PAGE>
CYTORAD INCORPORATED
BALANCE SHEETS
<TABLE>
<CAPTION>
December 31, January 1,
ASSETS 1994 1994
------ ------------ ------------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 2,314,970 $ 90,809
Short-term investments 10,747,558 15,794,139
Accrued interest receivable 68,200 135,316
Other current assets 575,204 112,267
------------ ------------
Total current assets 13,705,932 16,132,531
------------ ------------
OTHER ASSETS: 23,122 ---
------------ ------------
$ 13,729,054 $ 16,132,531
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
Due to Cytogen Corporation $ 490,424 $ 490,424
Accrued liabilities 207,816 41,193
------------ ------------
Total current liabilities 698,240 531,617
------------ ------------
LONG-TERM DEBT 100 100
------------ ------------
CONTINGENCIES (Notes 1, 2, 3 and 4)
STOCKHOLDERS' EQUITY:
Callable Common Stock, $.01 par value;
4,025,000 shares authorized, issued
and outstanding 40,250 40,250
Additional paid-in capital 36,536,578 36,536,578
Net unrealized holding loss on short-term
investments (1,419,348) ---
Deficit accumulated during development stage (22,126,766) (20,976,014)
------------ ------------
Total stockholders' equity 13,030,714 15,600,814
------------ ------------
$ 13,729,054 $ 16,132,531
============ ============
</TABLE>
The accompanying notes are an integral part of these balance sheets.
F-10
<PAGE>
CYTORAD INCORPORATED
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Cumulative
from
Inception
Year Ended (December 2,
------------------------------------------- 1991) to
December 31, January 1, January 2, December 31,
1994 1994 1993 1994
----------- ------------ ------------ -------------
<S> <C> <C> <C> <C>
GAIN ON INVESTMENTS, net $ 960,254 $ 1,279,987 $ 1,414,534 $ 3,654,775
----------- ------------ ------------ -------------
OPERATING EXPENSES:
Research and development --- 10,995,907 11,655,814 22,651,721
Merger costs 696,225 --- --- 696,225
General and administrative 1,414,781 683,072 335,742 2,433,595
----------- ------------ ------------ -------------
2,111,006 11,678,979 11,991,556 25,781,541
----------- ------------ ------------ -------------
NET LOSS $(1,150,752) $(10,398,992) $(10,577,022) $(22,126,766)
=========== ============ ============ =============
NET LOSS PER CALLABLE
COMMON SHARE $ (.29) $ (2.58) $ (3.10)
=========== ============ ============
WEIGHTED AVERAGE
CALLABLE COMMON
SHARES OUTSTANDING 4,025,000 4,025,000 3,415,109
=========== ============ ============
</TABLE>
The accompanying notes are an integral part of these statements.
F-11
<PAGE>
CYTORAD INCORPORATED
STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Deficit
Net Unrealized Accumulated
Callable Additional Holding Losses During
Common Paid-in on Short-term Development
Stock Capital Investments Stage
-------- ---------- -------------- -----------
<S> <C> <C> <C> <C>
BALANCE, DECEMBER 2, 1991
(inception) $ --- $ --- $ --- $ ---
Issued 100 shares of callable
common stock 1 99 --- ---
------- ----------- ----------- ------------
BALANCE, DECEMBER 28, 1991 1 99 --- ---
Repurchased 100 shares of callable
common stock (1) (99) --- ---
Issued 4,025,000 shares of callable
common stock 40,250 36,536,578 --- ---
Net loss --- --- --- (10,577,022)
------- ----------- ----------- ------------
BALANCE, JANUARY 2, 1993 40,250 36,536,578 --- (10,577,022)
Net loss --- --- --- (10,398,992)
------- ----------- ----------- ------------
BALANCE, JANUARY 1, 1994 40,250 36,536,578 --- (20,976,014)
Net unrealized holding loss on
short-term investments --- --- (1,419,348) ---
Net loss --- --- --- (1,150,752)
------- ----------- ----------- ------------
BALANCE, DECEMBER 31, 1994 $40,250 $36,536,578 $(1,419,348) $(22,126,766)
======= =========== =========== ============
</TABLE>
The accompanying notes are an integral part of these statements.
F-12
<PAGE>
CYTORAD INCORPORATED
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Cumulative
from
Inception
Year Ended (December 2,
------------------------------------------- 1991) to
December 31, January 1, January 2, December 31,
1994 1994 1993 1994
----------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES:
Net loss $(1,150,752) $(10,398,992) $(10,577,022) $(22,126,766)
Adjustments to reconcile net loss
to cash used for operating
activities
Changes in assets and liabilities-
Accrued interest receivable 67,116 178,108 (313,424) (68,200)
Other current assets (462,937) (80,511) 115,869 (575,204)
Other assets (23,122) --- --- (23,122)
Current liabilities 166,623 (649,773) 1,033,765 698,240
----------- ------------ ------------ ------------
Total adjustments (252,320) (552,176) 836,210 31,714
----------- ------------ ------------ ------------
Net cash used for
operating activities (1,403,072) (10,951,168) (9,740,812) (22,095,052)
----------- ------------ ------------ ------------
INVESTING ACTIVITIES:
(Increase) decrease in short-term
investments 3,627,233 8,587,501 (24,381,640) (12,166,906)
----------- ------------ ------------ ------------
Net cash provided by
(used for) investing
activities 3,627,233 8,587,501 (24,381,640) (12,166,906)
----------- ------------ ------------ ------------
FINANCING ACTIVITIES:
Long-term debt --- --- 100 100
Issuance of (repurchase) of
common stock --- --- (100) ---
Proceeds from issuance of callable
common stock --- --- 36,576,828 36,576,828
----------- ------------ ------------ ------------
Net cash provided by
financing activities --- --- 36,576,828 36,576,928
----------- ------------ ------------ ------------
NET INCREASE (DECREASE) IN
CASH AND CASH
EQUIVALENTS 2,224,161 (2,363,667) 2,454,376 2,314,970
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 90,809 2,454,476 100 ---
----------- ------------ ------------ ------------
CASH AND CASH EQUIVALENTS,
END OF PERIOD $ 2,314,970 $ 90,809 $ 2,454,476 $ 2,314,970
=========== ============ ============ ============
</TABLE>
The accompanying notes are an integral part of these statements.
F-13
<PAGE>
CYTORAD INCORPORATED
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1994
-----------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
-------------------------------------------
Business
--------
CytoRad Incorporated (the "Company") was incorporated on December 2, 1991, in
the State of Delaware and commenced operations in February 1992. The Company's
business consists of the research and development of certain biopharmaceutical
products. Such research and development, which represents certain all of the
Company's business activities, is conducted exclusively pursuant to certain
agreements (see Note 2) with Cytogen Corporation ("Cytogen"). There is no
assurance that any of the Company's products will be successfully developed or
that, if developed, commercialization of any products, which will require
substantial additional funds, will be successful or result in a profitable level
of operations for the Company. In February and March 1992, the Company and
Cytogen completed a public offering of 4,025,000 units, each unit consisting of
one share of the Company's callable common stock and one warrant to purchase one
share of Cytogen's common stock. The Company received all of the approximate
$36.6 million in net proceeds of the offering and was obligated (so long as
Cytogen complies with certain conditions) to pay Cytogen substantially all such
net proceeds to conduct research and development on behalf of the Company.
On November 15, 1994, the Company entered into an Agreement and Plan of Merger
(the "Merger Agreement") with Cytogen Corporation to sell all of the Company's
outstanding units. Each unit consists of one share of callable common stock and
one warrant to purchase one share of the common stock of Cytogen at $24.15 per
share. Pursuant to the Merger Agreement, on January 20, 1995, Cytogen commenced
an exchange offer to exchange for each CytoRad unit (a) 1.5 shares of Cytogen's
common stock, (b) a warrant to acquire one share of Cytogen's common stock for
$8.00 that expires January 31, 1997 and (c) a contingent value right ("CVR") to
receive, under certain circumstances and at no additional cost, up to one-half
share of Cytogen's common stock. The CVR will be triggered in the event that
the aggregate trading price of 1.5 shares of Cytogen's common stock and one new
warrant averages less than $12.00 during any 45 consecutive trading days ending
January 31, 1997. However, the CVR will expire and have no value if the
aggregate trading price for such securities averages $12.00 or more during any
45 consecutive trading days prior to January 31, 1997.
The exchange offer was completed on February 24, 1995, pursuant to which
approximately 93% of the Company's outstanding units were validly tendered. On
February 27, 1995, the Company merged with and into a wholly owned subsidiary of
Cytogen. Holders of CytoRad common stock who did not tender their CytoRad units
in the exchange offer became entitled to receive as a result of the merger one
and one-half shares of the Company's common stock and one CVR for each share of
CytoRad common stock owned thereby. Although 2,590 of previously issued Cytogen
warrants forming a part of CytoRad units not tendered in the exchange offer will
remain outstanding after the merger, Cytogen has agreed that such warrants will
be exercisable at $8.00 per warrant share pursuant to the terms of the Merger
Agreement. As a result of the merger, Cytogen reacquired the product rights to
the prostate, ovarian and bladder products it had previously licensed to the
Company.
Fiscal Year
-----------
Beginning in 1994, the Company changed from a fiscal year-end to a calendar
year-end. Previously, the Company operated on a 52-53-week fiscal year ending
on the Saturday nearest to December 31. References to 1993 and 1992 relate to
the fiscal years ended January 1, 1994, and January 2, 1993, respectively.
F-14
<PAGE>
CYTORAD INCORPORATED
NOTES TO FINANCIAL STATEMENTS
Short-Term Investments
----------------------
On January 2, 1994, the Company adopted Statement of Financial Accounting
Standards No. 115 (SFAS No. 115), "Accounting for Certain Investments in Debt
and Equity Securities." As permitted by SFAS No. 115, the Company did not
retroactively restate prior years' financial statements. The Company's
investments are classified as available for sale.
<TABLE>
<CAPTION>
Market Value
Principal of Each Issue
Amount of Cost of at Balance
Name of Issuer and Title of Each Issue Bonds and Notes Each Issue December 31, 1994
--------------------------------------- --------------- ------------- -----------------
<S> <C> <C> <C>
FHLMC 6.25%11/96-CMO $ 993,000 $ 995,000 $ 728,450
FHLMC 5.85% 2/97-CMO 1,000,000 1,001,000 738,050
FHLMC 7.00% 4/97-CMO 1,972,000 1,968,000 1,357,246
FHLMC 6.50% 3/09-CMO 1,000,000 995,860 822,004
FHLMC 6.50% 3/09-CMO 1,000,000 995,255 821,504
FHLMC 6.50% 3/09-CMO 1,000,000 985,614 813,546
FHLMC 6.50% 3/09-CMO 1,075,000 1,023,620 844,918
FHLMC 7.50% 11/21-CMO 350,000 351,612 321,412
FHLMC 7.50% 11/21-CMO 250,000 251,998 230,354
FNMA 6.25% 2/97-CMO 1,000,000 1,001,000 776,730
FNMA 6.50% 12/22-CMO 1,000,000 1,007,328 793,710
FNMA 6.63% 7/12-CMO 719,000 677,486 560,640
FNMA 7.50% 7/24-CMO 898,000 894,622 816,273
US West Capital Funding, Inc. 8.00% 380,000 399,079 380,041
10/96
Government Securities Income Fund 977,211 1,000,000 742,680
----------- ----------- -----------
Total $13,614,211 $13,547,474 $10,747,558
=========== =========== ===========
</TABLE>
CMO--Collateralized Mortgage Obligation
Statement of Cash Flows
-----------------------
The Company considers all highly liquid debt instruments with original
maturities of three months or less to be cash equivalents.
Revenue Recognition
-------------------
To date, the Company's only source of revenue is interest earned on its cash and
short-term investments. Interest income is recognized when earned.
Research and Development
------------------------
Research and development expenditures consist of payments made to Cytogen to
conduct research and product development of proprietary antibody-based products
pursuant to the Development Agreement, described below, for the diagnosis and/or
treatment of prostate and ovarian cancers (the "Products"), as well as one-time
payments to license such technology. All research and development costs are
charged to operations as incurred. Research and development expenditures were
$11.0 million and $11.7 million in 1993 and 1992, respectively, which included
one-time, non-refundable licensing fees of $2.0 million and $3.0 million,
respectively. There were no research and development expenditures in 1994.
F-15
<PAGE>
CYTORAD INCORPORATED
NOTES TO FINANCIAL STATEMENTS
Merger Costs
------------
In connection with the negotiation and execution of the Merger Agreement with
Cytogen, the Company incurred $696,225 of merger costs in 1994 of which
approximately $120,000 are included in accrued liabilities in the accompanying
balance sheet. The merger costs consist principally of investment banker fees,
legal fees, insurance premiums and other professional fees. In order to
consummate the merger, the Company was committed to pay approximately $1,488,000
of additional expenditures for merger costs in 1995.
Loss Per Share
--------------
Net loss per callable common share is based upon the weighted average callable
common shares outstanding during each period.
2. AGREEMENTS AND RELATIONSHIPS WITH CYTOGEN CORPORATION:
------------------------------------------------------
The Company and Cytogen had entered into various agreements described below. As
a result of the Merger Agreement and the completion of the exchange offer, the
agreements discussed below are no longer operative.
Technology License Agreement
----------------------------
Under a Technology License Agreement, as amended and restated, Cytogen granted
to the Company a license to all of Cytogen's antibody-based patent and
proprietary technology rights and know-how to develop and, subject to existing
licensing arrangements of Cytogen, to commercialize the Products for the
indicated applications. Under this agreement, the Company made non-refundable
payments of $2.0 million and $3.0 million to Cytogen in February 1993 and 1992,
respectively.
Development Agreement
---------------------
The Products were being developed pursuant to a Development Agreement, as
amended and restated, under which Cytogen used funds provided by the Company to
conduct development relating to the Products. Under the Development Agreement,
Cytogen was compensated on a fully burdened cost reimbursement basis plus a 10%
management fee. Under this agreement, the Company recorded $9.0 million and
$8.7 million in research and development expense in 1993 and 1992, respectively.
There was no research and development expense in 1994. As of December 31, 1994,
the Company disputed $380,000 of charges made by Cytogen to the Company. Such
charges have not been recorded by the Company.
License Option Agreement
------------------------
Under an amended and restated License Option Agreement, the Company had granted
Cytogen an option to acquire from the Company licenses to commercialize each of
the Products, subject to existing licensing arrangements of Cytogen.
Stock Purchase Option
---------------------
The Company's callable common stock was subject to a purchase option granted to
Cytogen pursuant to an agreement under which Cytogen was entitled to purchase
all (but not less than all) of the shares of the Company's common stock from the
holders of the stock at a fixed option price which was to increase periodically.
F-16
<PAGE>
CYTORAD INCORPORATED
NOTES TO FINANCIAL STATEMENTS
Under the Restated Certificate of Incorporation and a promissory note from the
Company to Cytogen, the Company and its stockholders are prohibited from taking
any action or permitting any action to be taken that is inconsistent with the
rights of Cytogen under the Stock Purchase Option agreement. The Company was
prohibited from issuing additional capital stock; borrowing more than $1 million
in the aggregate; declaring or paying dividends; or merging, liquidating or
selling substantially all of its assets, without the approval of Cytogen.
Services Agreement
------------------
Under a services agreement, Cytogen had provided certain services to the
Company, including financial, legal, investor communications and other
administrative services. Cytogen has received reimbursement for its fully
burdened costs of providing such services. Under this agreement, the Company
has recorded $262,000 and $155,000 for administrative services in 1993 and 1992,
respectively. No administrative services were provided by Cytogen in 1994.
Directors and Officers
----------------------
Certain directors and officers of the Company were also officers of Cytogen
until August and September 1993 when M.D. Cleary, the President, and J.M. Paiva,
the Treasurer, respectively, resigned to pursue other business opportunities.
One director and officer of the Company, William J. Ryan, continued to serve as
an officer of Cytogen until March 1, 1994, when he resigned from Cytogen to
continue his services as director, Chairman of the Board, President and
Secretary of the Company on a full-time basis.
3. EMPLOYMENT AGREEMENT:
---------------------
In 1994, the Company entered into an Executive Employment Agreement (the
"Employment Agreement") with William J. Ryan. The Employment Agreement provides
for a two-year term of employment as Chairman of the Board of Directors and
President of CytoRad, with annual compensation of $276,000. Mr. Ryan received
$300,000 upon execution of the Employment Agreement in compensation for the loss
of certain options to which he was entitled in connection with his former
employment with Cytogen. The Employment Agreement also provides for
acceleration of the payments due thereunder upon a termination of Mr. Ryan's
employment resulting from certain events, including consummation of the Merger
Agreement. Mr. Ryan has also agreed under the Employment Agreement to not
compete with CytoRad for a period of three years. Upon the consummation of the
Merger Agreement and in accordance with the provisions of the Employment
Agreement, Mr. Ryan was entitled to a one-time, lump sum payment in an amount
calculated by multiplying Mr. Ryan's monthly compensation of $23,000 by the
number of months remaining under the Employment Agreement, which would otherwise
expire on March 1, 1996. Mr. Ryan received approximately $283,000 pursuant to
the terms of the Employment Agreement as a result of the consummation of the
Merger.
4. INCOME TAXES:
-------------
Income tax benefits are recognized only when their realization is assured.
Accordingly, potential future income tax benefits resulting from net operating
losses incurred to date will be recognized as taxable income becomes available
to absorb them. The Company characterizes any amounts paid by it to Cytogen
pursuant to the Technology License and Development Agreements as research and
development expenditures deductible for tax purposes in the year incurred.
Accordingly, no provision for or payment of federal or state income taxes has
been recorded. Under certain circumstances, the deductibility may be deferred,
resulting in a tax liability and a reduction in carryforward amounts.
F-17
<PAGE>
CYTORAD INCORPORATED
NOTES TO FINANCIAL STATEMENTS
At December 31, 1994, the Company had net operating loss carryforwards for
income tax purposes of approximately $16.9 million. The net operating loss
carryforwards expire commencing in the year 2007. The annual availability of
net operating loss carryforwards may be limited due to the Merger Agreement.
On January 3, 1993, the Company adopted Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes," retroactively to inception,
which had no impact on its financial statements. The components of the deferred
tax amounts, carryforwards and the valuation allowance at December 31, 1994, is
approximately as follows:
<TABLE>
<S> <C>
Loss carryforwards $ 6,800,000
License fees expense not currently deductible 1,800,000
-----------
Total deferred tax assets 8,600,000
Less- Valuation allowance (8,600,000)
-----------
Net deferred tax asset $ ---
===========
</TABLE>
A valuation allowance has been provided, as it is uncertain whether the Company
will realize the deferred tax asset. The change in total valuation allowance
during the year ended December 31, 1994, was an increase of approximately
$200,000 due to the increase in the deferred tax assets.
F-18
<PAGE>
CYTORAD INCORPORATED
STATEMENTS OF OPERATIONS
(all amounts in thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Cumulative
from
For the period For the Inception
from January 1, three months (December 2,
1995 to ended 1991) to
February 27, March 31, February 27,
1995(1) 1994 1995
---------- ----------- ------------
<S> <C> <C> <C>
GAIN ON INVESTMENTS, net $ 148 $ 275 $ 3,803
------- ------- --------
OPERATING EXPENSES:
Research and development --- --- 22,652
Merger costs 1,923 --- 2,619
General and administrative 529 647 2,963
------- ------- --------
2,452 647 28,234
------- ------- --------
NET LOSS $(2,304) $ (372) $(24,431)
======= ======= ========
NET LOSS PER CALLABLE
COMMON SHARE $ (0.57) $ (0.09)
======= =======
WEIGHTED AVERAGE
CALLABLE COMMON
SHARES OUTSTANDING 4,025 4,025
======= =======
</TABLE>
(1) See Note 1 of the Notes to Financial Statements.
The accompanying notes are an integral part of these statements.
F-19
<PAGE>
CYTORAD INCORPORATED
STATEMENTS OF CASH FLOWS
(all amounts in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Cumulative
from
For the period For the Inception
from January 1, three months (December 2,
1995 to ended 1991) to
February 27, March 31, February 27,
1995(1) 1994 1995
--------- -------- ----------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net loss $ (2,304) $ (372) $ (24,431)
-------- ------- ----------
Adjustments to reconcile
net loss to cash used for
operating activities
Changes in assets and
liabilities:
Accrued interest
receivable 68 17 ---
Other current assets 575 41 ---
Other assets 20 --- (3)
Current liabilities (208) 519 490
-------- ------- ----------
Total adjustments 455 577 487
-------- ------- ----------
Net cash used for
operating activities (1,849) 205 (23,944)
-------- ------- ----------
INVESTING ACTIVITIES:
(Increase) decrease in
short-term
investments 1,129 1,473 (11,038)
-------- ------- ----------
FINANCING ACTIVITIES
Proceeds from issuance of
callable common stock --- --- 36,577
-------- ------- ----------
NET INCREASE (DECREASE) IN
CASH AND CASH
EQUIVALENTS (720) 1,678 1,595
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 2,315 91 ---
-------- ------- ----------
CASH AND CASH EQUIVALENTS,
END OF PERIOD $ 1,595 $ 1,769 $ 1,595
======== ======= ==========
</TABLE>
(1) See Note 1 of the Notes to Financial Statements.
The accompanying notes are an integral part of these statements.
F-20
<PAGE>
CYTORAD INCORPORATED
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
1. BASIS OF PRESENTATION:
----------------------
The accompanying unaudited financial statements have been prepared in
conformity with generally accepted accounting principles. The interim
financial information, while unaudited, reflects all normal recurring
adjustments which are, in the opinion of management, necessary for a fair
presentation of the interim financial statements. On February 27, 1995,
CytoRad merged with and into a wholly-owned subsidiary of Cytogen.
Accordingly, a balance sheet as of March 31, 1995, is not presented herein,
inasmuch as the Cytogen Form 10-Q for the quarter ended March 31, 1995, which
reflects the consummation of the CytoRad merger, has been previously filed
with the Securities and Exchange Commission. The results of operations for
the period from January 1, 1995 to February 27, 1995 and for the three months
ended March 31, 1994 are not necessarily indicative of results for a full
year. These financial statements should be read in conjunction with the
audited financial statements and notes thereto for the year ended December 31,
1994.
F-21
<PAGE>
ANNEX A
CONFORMED COPY
AGREEMENT AND PLAN OF MERGER
DATED JUNE 15, 1995,
AS AMENDED
BY AND AMONG
CYTOGEN CORPORATION,
SMALL-C ACQUISITION CORP.
(whose name has been changed to
CELLCOR ACQUISITION CORP.)
and
CELLCOR, INC.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
ARTICLE 1 The Merger......................................................... 2
Section 1.1 The Merger.................................................. 2
Section 1.2 Closing..................................................... 2
Section 1.3 Effective Time of the Merger................................ 2
Section 1.4 Effects of the Merger....................................... 2
Section 1.5 Certificate of Incorporation; Bylaws; Officers and
Directors................................................................ 2
ARTICLE 2 Conversion of Securities........................................... 3
Section 2.1 Exchange Ratio.............................................. 3
Section 2.2 Exchange of Certificates.................................... 3
Section 2.2.1 Exchange Agent....................................... 4
Section 2.2.2 Exchange Procedures.................................. 4
Section 2.2.3 Distributions with Respect to Unexchanged Shares..... 4
Section 2.2.4 No Further Ownership Rights.......................... 5
Section 2.2.5 No Fractional Shares................................. 5
Section 2.2.6 Termination of Exchange Fund......................... 5
Section 2.2.7 No Liability......................................... 5
Section 2.2.8 Deduction/Withholding................................ 5
Section 2.3 Stock Options............................................... 6
Section 2.4 Warrants.................................................... 6
Section 2.5 Stockholders' Meetings...................................... 6
ARTICLE 3 Representations and Warranties of the Company...................... 7
Section 3.1 Organization................................................ 7
Section 3.2 Qualification; Location of Business and Assets.............. 7
Section 3.3 Authorization and Enforceability............................ 7
Section 3.4 Capitalization.............................................. 7
Section 3.5 No Other Agreements to Sell Assets, Merge, Etc.............. 8
Section 3.6 No Subsidiaries............................................. 8
Section 3.7 No Violation of Laws or Agreements.......................... 8
Section 3.8 Consents.................................................... 8
Section 3.9 SEC Reports; Financial Statements........................... 9
Section 3.10 Absence of Changes......................................... 10
Section 3.11 Taxes...................................................... 10
Section 3.12 No Pending Litigation or Proceedings....................... 11
Section 3.13 Compliance With Laws....................................... 11
Section 3.14 Title; Liens............................................... 11
Section 3.15 Intellectual Property...................................... 12
Section 3.16 Labor Relations; Employment Agreements..................... 13
Section 3.17 Employee Benefits.......................................... 13
Section 3.18 Contracts.................................................. 14
Section 3.19 Environmental Laws......................................... 15
Section 3.20 Takeover Provisions Inapplicable........................... 15
</TABLE>
i
<PAGE>
<TABLE>
<S> <C> <C>
Section 3.21 Action by the Company.................................... 15
Section 3.22 Stock Options and Warrants............................... 15
Section 3.23 Vote Required............................................ 15
Section 3.24 Opinion of Financial Advisor............................. 15
Section 3.25 Brokers and Finders...................................... 16
Section 3.26 Interested Party Transactions............................ 16
Section 3.27 Registration Statement: Proxy Statement/ Prospectus..... 16
Section 3.28 HSR Act Inapplicable..................................... 16
ARTICLE 4 Representation And Warranties of Parent and Sub.................. 17
Section 4.1 Organization.............................................. 17
Section 4.2 Qualification; Location of Business and Assets............ 17
Section 4.3 Authorization and Enforceability.......................... 17
Section 4.4 Capitalization of Parent and Sub.......................... 17
Section 4.5 No Violation of Laws or Agreements........................ 18
Section 4.6 Consents.................................................. 18
Section 4.7 Parent Stock in Merger.................................... 18
Section 4.8 SEC Reports; Financial Statements......................... 18
Section 4.9 Absence of Changes........................................ 19
Section 4.10 Taxes.................................................... 20
Section 4.11 No Pending Litigation or Proceedings..................... 20
Section 4.12 Compliance With Laws..................................... 21
Section 4.13 Title; Liens............................................. 21
Section 4.14 Intellectual Property.................................... 21
Section 4.15 Labor Relations.......................................... 22
Section 4.16 Employee Benefits........................................ 22
Section 4.17 Contracts................................................ 24
Section 4.18 Environmental Laws....................................... 24
Section 4.19 Action by Parent and Sub................................. 24
Section 4.20 Vote Required............................................ 24
Section 4.21 Opinion of Financial Advisor............................. 24
Section 4.22 Brokers and Finders...................................... 24
Section 4.23 Interested Party Transactions............................ 25
Section 4.24 Registration Statement; Proxy Statement/Prospectus....... 25
ARTICLE 5 Certain Obligations Of the Company, Parent and Sub............... 25
Section 5.1 Conduct of Business Pending the Effective Time............ 25
Section 5.1.1 Ordinary Course.................................... 25
Section 5.1.2 Preservation of Business........................... 25
Section 5.1.3 Assets; Insurance; Books, Records and Accounts..... 25
Section 5.1.4 Material Transactions.............................. 26
Section 5.2 No Solicitation........................................... 27
Section 5.3 Access; Confidentiality................................... 28
Section 5.4 Public Announcement....................................... 29
Section 5.5 Filing; Other Actions..................................... 29
Section 5.6 Subscription Offer........................................ 30
Section 5.7 Nasdaq Listing............................................ 30
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C> <C>
Section 5.8 Takeover Provisions Inapplicable.......................... 30
Section 5.9 Tax Free Reorganization................................... 30
Section 5.10 Stock Options and Warrants............................... 30
Section 5.11 Company Technology....................................... 31
Section 5.12 Election of Directors.................................... 32
Section 5.13 Additional Agreements.................................... 32
Section 5.14 Affiliate Agreements..................................... 32
Section 5.15 Service Agreement........................................ 32
Section 5.16 Continuing Benefits...................................... 32
ARTICLE 6 Conditions To Closing............................................ 33
Section 6.1 Conditions Precedent to Each Party's Obligation to Effect
the Merger............................................................ 33
Section 6.1.1 Effectiveness of the Registration Statement........ 33
Section 6.1.2 Company Stockholder Approval....................... 33
Section 6.1.3 Parent Stockholder Approval........................ 33
Section 6.1.4 Approvals.......................................... 33
Section 6.1.5 Blue Sky Approvals................................. 33
Section 6.1.6 Nasdaq............................................. 33
Section 6.2 Conditions Precedent to Obligations of Parent and Sub..... 33
Section 6.2.1 Bringdown of Representations and Warranties........ 34
Section 6.2.2 Performance and Compliance......................... 34
Section 6.2.3 Opinion of Counsel for the Company................. 34
Section 6.2.4 Satisfactory Instruments........................... 34
Section 6.2.5 Litigation......................................... 34
Section 6.2.6 No Material Adverse Change......................... 34
Section 6.2.7 Action by Stockholder.............................. 34
Section 6.3 Conditions Precedent to the Obligations of the Company.... 34
Section 6.3.1 Bringdown of Representations and Warranties........ 35
Section 6.3.2 Performance and Compliance......................... 35
Section 6.3.3 Opinion of Counsel for Sub and Parent.............. 35
Section 6.3.4 Satisfactory Instruments........................... 35
Section 6.3.5 Litigation......................................... 35
Section 6.3.6 Election of Directors.............................. 35
Section 6.3.7 No Material Adverse Change......................... 35
ARTICLE 7 Termination...................................................... 36
Section 7.1 When Agreement May Be Terminated.......................... 36
Section 7.2 Effect of Termination..................................... 37
Section 7.3 Termination and Expense Fee............................... 37
Section 7.4 Amendment................................................. 37
Section 7.5 Extension; Waiver......................................... 37
ARTICLE 8 Certain Additional Covenants..................................... 38
Section 8.1 Expenses.................................................. 38
Section 8.2 Brokers and Finders....................................... 38
Section 8.3 Indemnification........................................... 38
</TABLE>
iii
<PAGE>
<TABLE>
<S> <C> <C>
ARTICLE 9 Miscellaneous.................................................... 39
Section 9.1 Nonsurvival of Representations and Warranties............. 39
Section 9.2 Notices................................................... 39
Section 9.3 Binding Effect............................................ 40
Section 9.4 Governing Law............................................. 40
Section 9.5 Headings.................................................. 40
Section 9.6 Counterparts.............................................. 41
Section 9.7 Further Assurances........................................ 41
Section 9.8 Entire Agreement.......................................... 41
Section 9.9 Parties-in-Interest....................................... 41
Section 9.10 Construction............................................. 41
Section 9.11 Definitions.............................................. 41
</TABLE>
iv
<PAGE>
EXHIBITS
Exhibit A ........................Voting and Subscription Agreement
Exhibit B ........................Promissory Note
Exhibit C ........................Opinion of Counsel for the Company
Exhibit D ........................Opinion of Counsel for Parent and Sub
SCHEDULES
Schedule I ......................Entities Constituting the Stockholder
Schedule 3.2 ....................Qualification
Schedule 3.7 ....................No Violation of Laws/Agreements
Schedule 3.10 ...................Absence of Changes
Schedule 3.11 ...................Taxes
Schedule 3.12 ...................Pending Litigation/Proceedings
Schedule 3.13 ...................Compliance with Laws
Schedule 3.14 ...................Title; Liens
Schedule 3.15 ...................Intellectual Property
Schedule 3.15(c) ................Intellectual Property Litigation
Schedule 3.16 ...................Labor Relations; Employment Agreements
Schedule 3.17 ...................Employee Benefits
Schedule 3.19 ...................Environmental Laws
Schedule 3.25 ...................Brokers and Finders
Schedule 3.26 ...................Interested Party Transactions
Schedule 4.2 ....................Qualification
Schedule 4.9 ....................Absence of Changes
Schedule 4.10 ...................Taxes
Schedule 4.11 ...................Pending Litigation or Proceedings
Schedule 4.12 ...................Compliance with Laws
Schedule 4.13 ...................Title; Liens
Schedule 4.14 ...................Intellectual Property
Schedule 4.14(c) ................Intellectual Property Litigation
Schedule 4.15 ...................Labor Relations
Schedule 4.16 ...................Employee Benefits
Schedule 4.18 ...................Environmental Laws
Schedule 4.23 ...................Interested Party Transactions
Schedule 5.1.4 ..................Budget
v
<PAGE>
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the ``Agreement'') is made June 15,
1995, by and among Cytogen Corporation, a Delaware corporation (``Parent''),
Small-C Acquisition Corp., a Delaware corporation and a wholly-owned subsidiary
of Parent (``Sub''), and Cellcor, Inc., a Delaware corporation (the
``Company'').
Background
Parent, Sub, the Company and their respective Boards of Directors deem
it advisable and to the advantage, welfare and best interests of the
corporations and their respective stockholders to merge Sub with and into the
Company (the ``Merger'') under the General Corporation Law of the State of
Delaware (``DGCL'') pursuant to the terms of this Agreement, with the Company
being the surviving corporation in the Merger (the ``Surviving Corporation'')
and a wholly-owned subsidiary of Parent, and the stockholders of the Company
becoming stockholders of Parent.
For Federal income tax purposes, it is intended that the Merger shall
qualify as a reorganization within the meaning of Sections 368(a)(1)(A) and
368(a)(2)(E) of the Internal Revenue Code of 1986, as amended (the ``Code'').
As a condition to the willingness of Parent and Sub to enter into this
Agreement, the entities listed on Schedule I to this Agreement (collectively,
the ``Stockholder''), the principal stockholders of the Company, have (i)
entered, or caused its Affiliates to enter, into a Voting and Subscription
Agreement (the ``Voting and Subscription Agreement''), dated the date hereof,
with Parent and Sub, substantially in the form of Exhibit A hereto, pursuant to
which Stockholder has agreed, among other things, to (A) vote its shares of
Company Common Stock and Company Preferred Stock (each as defined below) in
favor of the Merger and has granted Sub its proxy for that purpose, and (B)
purchase, or cause its Affiliates to purchase, all of the shares of Parent
Common Stock (as defined below) offered to it under the Subscription Offer (as
defined below) to be made by Parent to all holders of Company Common Stock as
provided in Section 5.6, upon the terms and subject to the conditions set forth
in the Voting and Subscription Agreement, and (ii) agreed to lend funds to the
Company in exchange for the Company's promissory note in substantially the form
of Exhibit B hereto to fund the Company's normal course operations prior to
Closing (as defined below).
Certain capitalized terms are defined in Section 9.11 or cross-
referenced in Section 9.11 to the section of this Agreement in which such terms
are defined.
Terms
Intending to be legally bound and in consideration of the mutual
covenants and agreements contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged by
the parties hereto, the parties hereby agree:
<PAGE>
ARTICLE 1
The Merger
Section 1.1 The Merger. At the Effective Time (as defined below), the
Merger shall be effectuated in accordance with the applicable provisions of the
DGCL, the separate existence of Sub shall thereupon cease and the Company shall
be the Surviving Corporation, as a wholly-owned subsidiary of Parent. Subject to
the terms and conditions hereof, the parties hereto shall take all action
necessary in accordance with applicable law and the respective Certificates of
Incorporation and Bylaws of Sub and the Company to cause the Merger to be
consummated as soon as is reasonably practicable.
Section 1.2 Closing. The closing of the Merger (the ``Closing'') will
take place at 10:00 a.m., Eastern Time, on a date to be specified by Parent and
the Company, which shall be no later than the second business day after
satisfaction of the latest to occur of the conditions set forth in Sections 6.1,
6.2.2 (other than the delivery of the officer's certificate referred to therein)
and 6.3.2 (other than the delivery of the officers' certificate referred to
therein) (provided that the other closing conditions set forth in Article 6 have
been met or waived as provided by Article 6 at or prior to the Closing) (the
``Closing Date''), at the offices of Dechert Price & Rhoads, 997 Lenox Drive,
Lawrenceville, New Jersey, unless another date or place is agreed to in writing
by Parent and the Company.
Section 1.3 Effective Time of the Merger. The Merger shall become
effective upon filing of the properly executed Certificate of Merger under the
DGCL with the Secretary of State of the State of Delaware, which shall occur on
the Closing Date (the ``Effective Time'').
Section 1.4 Effects of the Merger. The Merger shall have the effects set
forth in Section 259 of the DGCL. As of the Effective Time, the Company, as the
Surviving Corporation, shall be a wholly-owned subsidiary of Parent.
Section 1.5 Certificate of Incorporation; Bylaws; Officers and Directors.
(a) The Certificate of Incorporation of the Company as in effect as
of the Effective Time shall be the Certificate of Incorporation of the Surviving
Corporation until altered, amended or repealed.
(b) The Bylaws of the Company as in effect as of the Effective Time
shall be the Bylaws of the Surviving Corporation until altered, amended or
repealed.
(c) The directors of Sub immediately prior to the Effective Time
shall be the directors of the Surviving Corporation and shall hold office from
the Effective Time until their respective successors are duly elected and
qualified in the manner provided in the Certificate of Incorporation of the
Surviving Corporation.
(d) The officers of the Company immediately prior to the Effective
Time shall be the officers of the Surviving Corporation and shall hold office
from the Effective Time until their respective successors are duly elected and
qualified in the manner provided in the Certificate of Incorporation of the
Surviving Corporation.
2
<PAGE>
ARTICLE 2
Conversion of Securities
Section 2.1 Exchange Ratio. As of the Effective Time, by virtue of the
Merger and without any action on the part of any holder thereof:
(i) Each share of common stock of the Company, par value $.01 per
share (``Company Common Stock''), and each share of preferred stock of the
Company, par value $.01 per share, that is held by the Company as treasury
stock or is issued and outstanding and held by Parent or Sub prior to the
Effective Time, shall be cancelled and extinguished without any conversion
thereof and no payment shall be made with respect thereto.
(ii) Each share of common stock of Sub, par value $.01 per share
(``Sub Common Stock''), that is issued and outstanding immediately prior to
the Effective Time shall be converted into one (1) share of common stock of
the Surviving Corporation, par value $.01 per share (``Surviving
Corporation Common Stock''), and each certificate evidencing ownership of
any such shares shall evidence ownership of the same number of shares of
the Surviving Corporation Common Stock.
(iii) Subject to Section 2.2 hereof, each share of Company Common
Stock issued and outstanding immediately prior to the Effective Time (other
than shares of Company Common Stock to be cancelled pursuant to Section
2.1(i)) shall be converted into and represent the right to receive .60 (the
``Common Exchange Ratio'') fully-paid and nonassessable shares of the
common stock of Parent, par value $.01 per share (``Parent Common Stock'');
provided, however, that the Common Exchange Ratio shall be subject to
equitable adjustment in the event of any stock split, stock dividend
(including any dividend of securities convertible into Parent Common
Stock), reverse stock split, or any combination, reclassification,
recapitalization or other like change in respect of shares of Parent Common
Stock occurring after the date of this Agreement and prior to the Effective
Time.
(iv) Subject to Section 2.2 hereof, each share of the series of
preferred stock of the Company, par value $.01 per share, designated as
``Convertible Preferred Stock'' (``Company Preferred Stock''), issued and
outstanding immediately prior to the Effective Time (other than shares of
preferred stock to be cancelled pursuant to Section 2.1(i)) shall be
converted into and represent the right to receive 218.94 (the ``Preferred
Exchange Ratio'') fully-paid and nonassessable shares of Parent Common
Stock; provided, however, that the Preferred Exchange Ratio shall be
subject to equitable adjustment in the event of any stock split, stock
dividend (including any dividend of securities convertible into Parent
Common Stock), reverse stock split, or any combination, reclassification,
recapitalization or other like change in respect of shares of Parent Common
Stock occurring after the date of this Agreement and prior to the Effective
Time.
Section 2.2 Exchange of Certificates. The procedures for exchanging the
certificates representing outstanding shares of Company Common Stock and Company
Preferred Stock for Parent Common Stock pursuant to the Merger are as follows:
3
<PAGE>
Section 2.2.1 Exchange Agent. As of the Effective Time, Parent shall
deposit, or shall cause to be deposited with Mellon Bank, N.A. (or another
financial institution reasonably acceptable to the Company) (the ``Exchange
Agent''), for the benefit of the holders of shares of Company Common Stock and
Company Preferred Stock, certificates representing the shares of Parent Common
Stock, together with cash in lieu of fractional shares of Parent Common Stock
(such shares of Parent Common Stock, together with any cash in lieu of
fractional shares with respect thereto, being hereinafter referred to as the
``Exchange Fund'') to be issued pursuant to Section 2.1 for outstanding shares
of Company Common Stock and Company Preferred Stock.
Section 2.2.2 Exchange Procedures. As soon as reasonably practicable
after the Effective Time, the Exchange Agent shall mail to each holder of record
of a certificate or certificates which immediately prior to the Effective Time
represented outstanding shares of Company Common Stock and Company Preferred
Stock (the ``Certificates'') whose shares were converted pursuant to Section 2.1
into the right to receive shares of Parent Common Stock (i) a letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent and shall be in such form and have such other
provisions as Parent may reasonably specify) and (ii) instructions for use in
effecting the surrender of the Certificates in exchange for certificates
representing shares of Parent Common Stock. Upon surrender of a Certificate for
cancellation to the Exchange Agent or to such other agent or agents as may be
appointed by Parent, together with such letter of transmittal, duly executed,
the holder of such Certificate shall be entitled to receive in exchange therefor
a certificate representing that number of whole shares of Parent Common Stock
which such holder has the right to receive pursuant to the provisions of this
Article 2, and the Certificate so surrendered shall immediately be cancelled. In
the event of a transfer of ownership of Company Common Stock or Company
Preferred Stock which is not registered in the transfer records of the Company,
a certificate representing the proper number of shares of Parent Common Stock
may be issued to a transferee if the Certificate representing such Company
Common Stock or Company Preferred Stock is presented to the Exchange Agent,
accompanied by all documents required to evidence and effect such transfer and
by evidence that any applicable stock transfer taxes have been paid. In the
event that a holder has lost a Certificate, an affidavit of loss thereof
(including an indemnity or surety bond) reasonably satisfactory in form and
substance to the Exchange Agent and Parent shall accompany such letter of
transmittal in lieu of the lost Certificate. Until surrendered as contemplated
by this Section 2.2, each Certificate shall be deemed at any time after the
Effective Time to represent only the right to receive upon such surrender the
certificate representing shares of Parent Common Stock and cash in lieu of any
fractional shares of Parent Common Stock as contemplated by this Section 2.2.
Section 2.2.3 Distributions with Respect to Unexchanged Shares. No
dividends or other distributions declared or made after the Effective Time with
respect to Parent Common Stock with a record date after the Effective Time shall
be paid to the holder of any unsurrendered Certificate with respect to the
shares of Parent Common Stock represented thereby and no cash payment in lieu of
fractional shares shall be paid to any such holder pursuant to subsection 2.2.5
below until the holder of record of such Certificate shall surrender such
Certificate. Subject to the effect of applicable laws, as soon as practicable
following surrender of any such Certificate, there shall be paid to the record
holder of the certificates representing whole shares of Parent Common Stock
issued in exchange therefor, without interest, (i) at the time of such
surrender, the amount of any cash payable in lieu of a fractional share of
Parent Common Stock to which such holder is entitled pursuant to subsection
2.2.5 below and the amount of dividends or other distributions with a record
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date after the Effective Time previously paid with respect to such whole shares
of Parent Common Stock, and (ii) at the appropriate payment date, the amount of
dividends or other distributions with a record date after the Effective Time but
prior to surrender and a payment date subsequent to surrender payable with
respect to such whole shares of Parent Common Stock.
Section 2.2.4 No Further Ownership Rights. All shares of Parent
Common Stock issued upon the surrender for exchange of shares of the Company
Common Stock and Company Preferred Stock in accordance with the terms hereof
(including any cash paid pursuant to subsections 2.2.3 or 2.2.5 of this Section
2.2) shall be deemed to have been issued in full satisfaction of all rights
pertaining to such shares of the Company Common Stock and Company Preferred
Stock, subject, however, to the Surviving Corporation's obligation to pay any
dividends or make any other distributions with a record date prior to the
Effective Time which may have been declared or made by the Company on such
shares of the Company Common Stock and Company Preferred Stock in accordance
with the terms of this Agreement or prior to the date hereof and which remain
unpaid at the Effective Time, and there shall be no further registration of
transfers on the stock transfer books of the Surviving Corporation of the shares
of the Company Common Stock and Company Preferred Stock which were outstanding
immediately prior to the Effective Time. If, after the Effective Time,
Certificates are presented to the Surviving Corporation for any reason, they
shall be cancelled and exchanged as provided in this Section 2.2.
Section 2.2.5 No Fractional Shares. No certificate or scrip
representing fractional shares of Parent Common Stock shall be issued upon the
surrender for exchange of Certificates, and such fractional share interests will
not entitle the owner thereof to vote or to any rights of a stockholder of
Parent. Notwithstanding any other provision of this Agreement, each holder of
shares of Company Common Stock or Company Preferred Stock exchanged pursuant to
the Merger who would otherwise have been entitled to receive a fraction of a
share of Parent Common Stock (after taking into account all Certificates,
delivered by such holder) shall receive, in lieu thereof, cash (without
interest) in an amount equal to such fractional part of a share of Parent Common
Stock multiplied by the average of the last reported sales prices of Parent
Common Stock, as reported on the Nasdaq National Market, on each of the ten
trading days immediately preceding the date of the Effective Time. As promptly
as practicable after determination of the amount of cash to be paid to holders
of fractional share interests, Parent shall deposit such amount with the
Exchange Agent for distribution in accordance with this Section 2.2.
Section 2.2.6 Termination of Exchange Fund. Any portion of the
Exchange Fund which remains undistributed to the stockholders of the Company for
one year after the Effective Time shall be delivered to Parent, upon demand, and
any stockholders of the Company who have not previously complied with this
Section 2.2 shall thereafter look only to Parent for payment of their claim for
Parent Common Stock, any cash in lieu of fractional shares of Parent Common
Stock and any dividends or distributions with respect to Parent Common Stock.
Section 2.2.7 No Liability. Neither Parent nor the Company shall be
liable to any holder of shares of the Company Common Stock, Company Preferred
Stock or Parent Common Stock, as the case may be, for such shares (or dividends
or distributions with respect thereto) delivered to a public official pursuant
to any applicable abandoned property, escheat or similar law.
Section 2.2.8 Deduction/Withholding. Parent and the Exchange Agent
shall be entitled to deduct and withhold from amounts or consideration otherwise
payable pursuant to this
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Agreement to any holder of shares of Company Common Stock or Company Preferred
Stock such amounts as Parent or the Exchange Agent is required to deduct and
withhold with respect to the making of such payment under the Code or any
provision of state, local or foreign tax law. To the extent that amounts are so
withheld by Parent or the Exchange Agent, such withheld amounts shall be treated
for all purposes of this Agreement as having been paid to the holder of the
shares of Company Common Stock or Company Preferred Stock in respect to which
such deduction and withholding was made by Parent or the Exchange Agent.
Section 2.3 Stock Options. At the Effective Time, all then outstanding
employee stock options to purchase the Company Common Stock (``Company Stock
Options''), including options outstanding under the Company's 1988 Stock Option
Plan, 1992 Director Stock Option Plan, 1992 Stock Option and Restricted Stock
Plan and 1995 Stock Incentive Plan (including, without limitation, options
granted under the 1995 Stock Incentive Plan, subject to stockholder approval of
such plan), shall be assumed by Parent in accordance with Section 5.10.
Section 2.4 Warrants. At the Effective Time, the Company's obligations
with respect to each outstanding warrant to purchase shares of the Company
Common Stock (``Company Warrants'') that will not automatically terminate at the
Effective Time, shall be assumed by Parent in accordance with Section 5.10.
Section 2.5 Stockholders' Meetings.
(a) The Company shall take all action necessary, in accordance with
applicable law and its Certificate of Incorporation and Bylaws, to convene a
special meeting of the holders of Company Common Stock and Company Preferred
Stock (the ``Company Meeting'') as promptly as practicable after the
Registration Statement on Form S-4, and/or other applicable form, to be filed
with the United States Securities and Exchange Commission (the ``SEC'') by
Parent in connection with the issuance of Parent Common Stock in the Merger and
Subscription Offer (including the proxy statement and prospectus constituting a
part thereof) (the ``S-4'') is declared effective for the purpose of considering
and taking action to adopt this Agreement and approve the transactions
contemplated hereby and to approve the 1995 Stock Incentive Plan. Subject to
the provisions of Section 5.2, the Board of Directors of the Company will
recommend that holders of Company Common Stock and Company Preferred Stock vote
in favor of and approve the Merger and the adoption of the Agreement at the
Company Meeting.
(b) Parent shall take all action necessary, in accordance with
applicable law and its Certificate of Incorporation and Bylaws, to convene a
special meeting of the holders of Parent Common Stock (the ``Parent Meeting'')
as promptly as practicable after the S-4 is declared effective for the purpose
of considering and taking action to authorize the issuance of Parent Common
Stock pursuant to the Merger and the Subscription Offer (the ``Parent Share
Proposal''). The Board of Directors of Parent will recommend that holders of
Parent Common Stock vote in favor of and approve the Parent Share Proposal at
the Parent Meeting.
(c) The Company and Parent shall coordinate and cooperate with
respect to the timing of the Company Meeting and the Parent Meeting and shall
use their best efforts to hold such meetings on the same day.
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ARTICLE 3
Representations and Warranties of the Company
The Company hereby represents and warrants to Sub and Parent as follows:
Section 3.1 Organization. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has all requisite corporate power and corporate authority to make, execute,
deliver, and, subject to the approval of this Agreement by the stockholders of
the Company, perform this Agreement and to own or lease its properties and
assets as now owned or leased and to carry on its business as and where now
being conducted. The copies of the Company's Certificate of Incorporation and
Bylaws, as amended to date, which have been delivered to Parent or its agents,
are correct and complete and are in full force and effect.
Section 3.2 Qualification; Location of Business and Assets. The Company
is duly qualified and in good standing as a foreign corporation and duly
authorized to do business in the jurisdictions set forth on Schedule 3.2 hereto,
which jurisdictions are the only jurisdictions wherein the character of the
properties owned or leased or the nature of activities conducted by it make such
qualification necessary under applicable law and in which failure to so qualify
would have a Company Material Adverse Effect. As used herein, a ``Company
Material Adverse Effect'' shall mean a material adverse effect on the business,
assets, condition (financial or otherwise), liabilities or operations of the
Company.
Section 3.3 Authorization and Enforceability. The execution, delivery and
performance of this Agreement by the Company have been duly authorized by the
Company's Board of Directors. This Agreement has been duly executed and
delivered by the Company and constitutes the legal, valid and binding obligation
of the Company, enforceable against the Company in accordance with its terms.
Except for the approval of the stockholders of the Company, no other corporate
action on the part of the Company or its stockholders is necessary to authorize
this Agreement, and the transactions contemplated hereby.
Section 3.4 Capitalization. The Company's authorized capital stock
consists of 20,000,000 shares of the Company Common Stock and 1,000,000 shares
of preferred stock of the Company, par value $.01 per share. As of the date of
this Agreement, (i) 5,457,797 shares of Company Common Stock were issued and
outstanding, (ii) 5,250 shares of Company Preferred Stock were issued and
outstanding, (iii) 1,670,983 shares of the Company Common Stock were reserved
for issuance upon the exercise of outstanding Company Stock Options, (iv) 8,500
shares of the Company Common Stock were reserved for issuance upon the exercise
of the Company Warrants and (v) no shares of Company Common Stock were held in
the treasury of the Company. All outstanding shares of Company Common Stock and
Company Preferred Stock have been duly authorized, validly issued and are fully-
paid and nonassessable. Except for Company Preferred Stock, Company Stock
Options and Company Warrants, and except as contemplated by this Agreement or
the Voting and Subscription Agreement, there are no (i) bonds, debentures, notes
or other indebtedness having the right to vote on any matters on which the
Company's stockholders may vote, (ii) outstanding options, warrants, rights,
agreements, calls, commitments or demands of any character relating to the
capital stock of the Company and no securities convertible into or exchangeable
for any of such capital stock, (iii) voting trusts, proxies or other agreements
or understandings with respect to the capital stock of
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the Company, or (iv) outstanding obligations of the Company to repurchase,
redeem or otherwise acquire any shares of capital stock of the Company.
Section 3.5 No Other Agreements to Sell Assets, Merge, Etc.. Except as
provided hereby, the Company has no legal obligation, absolute or contingent, to
sell assets or to effect any merger, consolidation or other reorganization of
the Company or to enter into any agreement with respect thereto.
Section 3.6 No Subsidiaries. The Company does not, directly or
indirectly, own any stock of, or any other interest in, any other corporation,
partnership, joint venture or other business association or entity.
Section 3.7 No Violation of Laws or Agreements. Except for the receipt of
any required approval of the stockholders of the Company, the execution and
delivery of this Agreement do not, and the consummation of the transactions
contemplated by this Agreement and the compliance with the terms, conditions and
provisions of this Agreement by the Company, will not (a) contravene any
provision of the Company's Certificate of Incorporation or Bylaws, (b) conflict
with or result in a breach of or constitute a default (or an event which would,
with the passage of time or the giving of notice or both, constitute a default)
under any of the terms, conditions or provisions of any indenture, mortgage,
loan or credit agreement or any other agreement or instrument which is material
to and to which the Company is a party or by which it or any of its assets may
be bound, (c) conflict with or result in any violation of any statute, law,
regulation, ordinance, writ, injunction, order or Judgment (as defined below) of
any court or Governmental Entity (as defined below) applicable to and binding
upon the Company, (d) result in the creation or imposition of any lien, claim,
security interest, charge, restriction or encumbrance of any nature whatsoever
upon any of the Company's assets, except the Company Permitted Encumbrances (as
defined below), or (e) affect any franchise, license, permit or other
governmental approval that would adversely affect the Company's business. Except
as set forth on Schedule 3.7 hereto, no investigation or review of the Company
by any Governmental Entity or any other Person (as defined below) is pending or,
to the knowledge of the Company, threatened, nor has any Governmental Entity or
any other Person indicated an intention to conduct same.
Section 3.8 Consents. No consent, approval or authorization of, or
registration or filing with, any Person, including any Governmental Entity or
other regulatory agency, is required (a) in connection with the execution and
delivery of this Agreement by the Company or the consummation of the
transactions contemplated hereby, (b) to prevent the termination of any material
right, privilege, license or agreement of the Company, or to prevent any
material loss to the Company's business, by reason of the transactions
contemplated by this Agreement, except for (i) the filing by Parent and the
effectiveness of the S-4 with the SEC in accordance with the Securities Act of
1933, as amended (the ``Securities Act''), (ii) the filing of the Certificate of
Merger with the Delaware Secretary of State, (iii) the filing of the Joint Proxy
Statement with the SEC in accordance with the Securities Exchange Act of 1934,
as amended (the ``Exchange Act''), (iv) the approval of the Merger and the
adoption of this Agreement at the Company Meeting, (v) the filing of the pre-
merger notification report, and the expiration or termination of the waiting
period, under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, by Parent and the Stockholder with respect to the shares of Parent
Common Stock to be purchased by the Stockholder in the Subscription Offer and
(vi) such consents, approvals, orders, authorizations, registrations,
declarations and filings as may be required under applicable federal and state
securities or ``blue sky'' laws.
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Section 3.9 SEC Reports; Financial Statements.
(a) The Company has timely filed all forms, reports and documents
required to be filed by it with the SEC since its initial public offering of
securities on March 13, 1992, and has previously made available to Parent or its
agents, in the form filed with the SEC, true and correct copies of (i) its
Annual Reports on Form 10-K for the fiscal years ended December 31, 1992, 1993
and 1994, (ii) its Quarterly Report on Form 10-Q for the period ended March 31,
1995, (iii) all proxy statements relating to meetings of stockholders (whether
annual or special) held since March 13, 1992 and (iv) all other forms, reports,
registration statements and other documents filed by the Company with the SEC
since December 31, 1992 or such forms, reports, registration statements and
other documents filed with the SEC before December 31, 1992 if they relate to
stock, stock option plans or compensation plans that are in effect as of the
date hereof (the forms, reports, registration statements and other documents
referred to in clauses (i), (ii), (iii) and (iv) above being referred to herein,
collectively, as the ``Company SEC Reports''). The Company SEC Reports and any
other forms, reports and other documents filed by the Company with the SEC after
the date of this Agreement (i) were, or will be, prepared in accordance with the
requirements of the Securities Act and the Exchange Act, as the case may be, and
the rules and regulations thereunder and (ii) did not at the time they were
filed, or will not at the time they are filed, contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading.
(b) The Company has delivered to Sub and Parent, or their respective
agents, the following financial statements (the ``Company Financial
Statements''): (i) audited statements of operations, statements of cash flows
and statements of stockholders' equity (deficit) of the Company for the fiscal
years ended December 31, 1992, 1993 and 1994 and balance sheets of the Company
as at each of such dates (the ``Company Audited Financial Statements''); and
(ii) unaudited statements of operations, statements of cash flows and statements
of stockholders' equity (deficit) of the Company for the three-month period
ended March 31, 1995 and the five-month period ended May 31, 1995. The Company
Financial Statements: (A) fairly present, in all material respects, the
financial condition, assets and liabilities of the Company as at their
respective dates and the results of the Company's operations and changes in
financial position for the periods covered thereby except, in the case of the
interim balance sheet and related unaudited statements of operations and cash
flows, for normal year-end audit adjustments that were not, or are not expected
to be, individually or in the aggregate, material in amount, and (B) have been
prepared in accordance with generally accepted accounting principles
consistently applied (``GAAP'') (except as may be indicated thereon or in the
notes thereto and, in the case of quarterly financial statements, as permitted
by Form 10-Q under the Exchange Act). The Company Audited Financial Statements
have been audited by KPMG Peat Marwick LLP (``KPMG''), the Company's independent
certified public accountants.
(c) Except as disclosed in writing to Parent or as otherwise
disclosed in the Company SEC Reports, the Company does not have any liabilities,
either accrued or contingent (whether or not required to be reflected in
financial statements in accordance with GAAP), and whether due or to become due,
which individually or in the aggregate, would be reasonably likely to have a
Company Material Adverse Effect other than (i) liabilities reflected in the
Company's balance sheet dated December 31, 1994, (ii) liabilities specifically
described in this Agreement or the Schedules hereto, including, but not limited
to, the indebtedness evidenced by the Company's
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promissory note in substantially the form of Exhibit B and (iii) normal or
recurring liabilities incurred since December 31, 1994 in the ordinary course of
business consistent with past practices.
Section 3.10 Absence of Changes. Except as disclosed on Schedule 3.10
hereto and as contemplated by this Agreement, since December 31, 1994, there has
not been (i) any transaction, commitment, dispute or other event or condition
(financial or otherwise) of any character (whether or not in the ordinary course
of business) individually or in the aggregate having a Company Material Adverse
Effect; (ii) any damage, destruction or loss, whether or not covered by
insurance, which, insofar as reasonably can be foreseen, in the future would
have a Company Material Adverse Effect; (iii) any declaration, setting aside or
payment of any dividend or other distribution (whether in cash, stock or
property) with respect to the capital stock of the Company, or (iv) any entry
into any commitment or transaction material to the Company (including, without
limitation, any borrowing or sale of assets) except in the ordinary course of
business consistent with past practice.
Section 3.11 Taxes.
(a) For purposes of this Agreement, (i) ``Taxes'' means any taxes,
and any charges, fees, levies, penalties or other assessments that are in the
nature of a tax, including without limitation, income, gross receipts, excise,
real and personal and intangible property, sales, use, transfer, license,
payroll, recording, ad valorem and franchise taxes, imposed by any United
States, state, local or foreign taxing authority or any agency thereof,
including any interest, penalties or additions attribut able thereto; and (ii)
``Tax Returns'' means returns, reports, or information returns or statements
relating to Taxes (including amendments thereto) required to be filed with the
appropriate United States, state, local or foreign taxing authority or any
agency thereof.
(b) The Company has (i) timely filed all Tax Returns required to be
filed by it on or before the Effective Time for all taxable periods with respect
to all Taxes, (ii) paid all Taxes shown to have become due pursuant to such Tax
Returns and (iii) paid all other Taxes for which a notice of assessment or
demand for payment has been received. All Company Tax Returns have been
prepared in accordance with all applicable laws and requirements and accurately
reflect the taxable income (or other base for tax) of the corporation filing the
same. The Company has withheld and paid all Taxes required to have been
withheld and paid in connection with amounts paid or owing to employees employed
in its business.
(c) The accruals for Taxes contained in the Company's balance sheet
dated December 31, 1994 are adequate to cover all liabilities for Taxes of the
Company for all periods ending on or before that date and include adequate
provision for all deferred Taxes (computed on a net basis after taking into
account any Tax benefits or assets), and nothing has occurred subsequent to that
date to make any of such accruals inadequate. All Taxes for periods ending
after December 31, 1994 and attributable to the Company's operations prior to
the Effective Time have been paid or are adequately reserved against on the
books of the Company. The Company has timely filed all material information
returns or reports, including forms 1099, which are required to be filed and has
accurately reported all information required to be included on such returns or
reports. There are no proposed assessments of Taxes against the Company or
proposed adjustments to any Tax Return filed, pending against the Company, or
any proposed adjustments to the manner in which any Taxes of the Company are
determined. Except as disclosed on Schedule 3.11 hereto, to the knowledge of
the Company, the Company is not currently the object of any audit or examination
relating to Taxes and the Company has received no notice of any such proposed
audit or examination.
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(d) The Company has never (i) filed any consent agreement under
Section 341(f) of the Code, (ii) executed a waiver or consent extending any
statute of limitation for any Tax liability which remains outstanding, (iii)
except as disclosed on Schedule 3.11 hereto, joined in or been required to join
in filing a consolidated or combined federal income Tax Return, (iv) entered
into any Tax allocation or sharing agreement under which Parent or the assets of
the Company could be subject to Tax or other liability after the Closing, or (v)
filed an election under Section 338(g) or Section 338(h)(10) of the Code or
caused a deemed election under Section 338(e) thereof.
Section 3.12 No Pending Litigation or Proceedings. Except as set forth on
Schedule 3.12 hereto, there are no actions, suits, investigations, Litigation
(as hereinafter defined) or proceedings pending or, to the Company's knowledge,
threatened against the Company or any of its assets or affecting the capital
stock of the Company or any rights thereto, at law or in equity, by or before
any court or Governmental Entity (as hereinafter defined) which, if adversely
determined, would have a Company Material Adverse Effect or materially affect
its ability to consummate the transactions contemplated hereby. Except as set
forth on Schedule 3.12 hereto, there are no outstanding Judgments (as
hereinafter defined), decrees or orders of any court or any Governmental Entity
against the Company, or any of its assets or business or affecting the capital
stock of the Company or any rights thereto.
Section 3.13 Compliance With Laws. The Company holds all permits,
licenses, variances, exemptions, orders and approvals of all Governmental
Entities required in the operation of its business as currently conducted,
except for such permits, licenses, variances, exemptions, orders and approvals
the failure of which to hold would not have a Company Material Adverse Effect
(the ``Company Permits''). The Company is in compliance with the terms of the
Company Permits, except for such failure to comply, which individually or in the
aggregate, would not have a Company Material Adverse Effect. Except as set forth
on Schedule 3.13 hereto, the business of the Company is not being conducted in
violation of any law, ordinance or regulation of any Governmental Entity, except
for possible violations which individually or in the aggregate do not and would
not have a Company Material Adverse Effect. Except as set forth in Schedule 3.13
hereto, no investigation or review by any Governmental Entity with respect to
the Company is pending, or, to the knowledge of the Company, threatened, nor has
any Governmental Entity indicated an intention to conduct the same, other than
those the outcome of which would not have a Company Material Adverse Effect.
Except as set forth on Schedule 3.13 hereto, the operation of the Company's
business as currently conducted does not violate or infringe any statute, law,
rule or regulation, federal, state and local, currently in effect, except for
such violations or infringements which would not, individually or in the
aggregate, have a Company Material Adverse Effect or materially affect the
Company's ability to consummate the transactions contemplated hereby.
Section 3.14 Title; Liens. The Company does not own any real estate.
Schedule 3.14 hereto contains a complete and correct list of all real estate
leased by the Company. All such leases are in good standing, valid and effective
in accordance with their terms, and there is no default under any such leases.
Except as set forth on Schedule 3.14 hereto, the Company has good title to all
of its properties and assets, including the properties and assets reflected in
the Company's balance sheet dated December 31, 1994 (except those disposed of in
the ordinary course of business since that date), free and clear of any
mortgage, pledge, lien, restriction, encumbrance, tenancy, license,
encroachment, covenant, condition, right of way, easement, claim, security
interest, charge or any other matter affecting title, other than mortgages,
pledges, liens, charges, security interests or other encumbrances (a) securing
the payment of taxes, assessments or other governmental charges either
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not yet due and payable or the validity of which is being contested in good
faith by appropriate proceedings, (b) incurred under worker's compensation,
unemployment insurance, social security and other similar laws (including
deposits required thereunder), (c) for statutory liens of landlords, carriers,
warehousemen, mechanics, materialmen, repairmen or suppliers, and (d) easements,
rights of way, liens, encumbrances, charges and similar restrictions of record
or imperfections in title which do not have a Company Material Adverse Effect
(collectively, ``Company Permitted Encumbrances''). The assets reflected on the
Company's balance sheet dated December 31, 1994 constitute substantially all of
the assets necessary to permit the Company to operate the business as it is
being operated on the date of this Agreement, with such additions and deletions
thereto as shall have occurred in the ordinary course of the Company's business.
Section 3.15 Intellectual Property.
(a) The Company owns, or is licensed or otherwise possesses legally
enforceable rights to use, all patents, trademarks, trade names, service marks,
copyrights, and any applications for such patents, trademarks, trade names,
service marks and copyrights, mask works, schematics, technology, know-how,
computer software programs or applications and tangible or intangible
proprietary information or material that are necessary to conduct the business
of the Company as currently conducted (the ``Company Intellectual Property
Rights''). Schedule 3.15 hereto lists (i) all patents and patent applications
and all trademarks, registered copyrights, mask works, trade names and service
marks, which the Company considers to be material to its business and included
in the Company Intellectual Property Rights, including the jurisdictions in
which each such Company Intellectual Property Right has been issued or
registered or in which any such application for such issuance and registration
has been filed, (ii) all licenses, sublicenses and other agreements as to which
the Company is a party and pursuant to which any person is authorized to use any
Company Intellectual Property Rights, (iii) all licenses, sublicenses and other
agreements as to which the Company is a party and pursuant to which the Company
is authorized to use any third party patents, trademarks or copyrights,
including software (``Company Third Party Intellectual Property Rights'') which
are incorporated in, are, or form a part of any Company product or service that
is material to its business, (iv) any Company Intellectual Property Rights that
are not licensed to the Company on an exclusive basis, and (v) all licenses,
sublicenses and other grants of rights or licenses that prevent, impair or
hinder the Company's ability to exclusively market any Company product or
service in any country or territory.
(b) The Company is not, nor will it be as a result of the execution
and delivery of this Agreement or the performance of its obligations under this
Agreement, in breach of any license, sublicense or other agreement relating to
the Company Intellectual Property Rights or Company Third Party Intellectual
Property Rights.
(c) To the Company's knowledge, all patents, registered trademarks,
service marks and copyrights held by the Company are valid and subsisting.
Except as set forth on Schedule 3.15(c) hereto, the Company (i) has not been
sued, or threatened to be sued, in any suit, action or proceeding which involves
a claim of infringement of any patents, trademarks, service marks, copyrights or
violation of any trade secret or other proprietary right of any third party, and
(ii) has received no notice and has no knowledge that the manufacturing,
marketing, licensing or sale of its products infringes any patent, trademark,
service mark, copyright, trade secret or other proprietary right of any third
party. To the Company's knowledge, all pending patent applications claim
patentable subject matter.
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Section 3.16 Labor Relations; Employment Agreements. The relations of the
Company with its employees are good. Except as disclosed on Schedule 3.16
hereto, (a) the Company is not a party to any collective bargaining agreement
with any labor union; (b) there is no unfair labor practice complaint against
the Company pending before the National Labor Relations Board; (c) there is no
labor strike, dispute, slow down or stoppage actually pending or, to the
knowledge of the Company, threatened against or involving the Company; (d) no
grievance or arbitration proceedings relating to the employment of labor under
applicable labor laws is pending; (e) the Company has no employment agreements
with any of its employees requiring annual payments in excess of $100,000, (f)
the Company has no agreement with any officer or other key employee of the
Company, the benefits of which are contingent, or the terms of which are
materially altered, upon the occurrence of a transaction involving the Company
of the nature contemplated by this Agreement; or (g) the Company has no
agreement or plan, including any stock option plan, stock appreciation right
plan, restricted stock plan or stock purchase plan, any of the benefits of which
will be increased, or the vesting of the benefits of which will be accelerated,
by the occurrence of any of the transactions contemplated by this Agreement or
the value of any of the benefits of which will be calculated on the basis of any
of the transactions contemplated by this Agreement.
Section 3.17 Employee Benefits.
(a) Schedule 3.17 hereto sets forth all ``employee benefit plans''
(as defined in Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended (``ERISA'')), all bonus, deferred compensation, incentive
compensation, excess benefit, stock, stock option, severance, termination pay,
change in control and death benefit plans, contracts, programs, agreements or
arrangements of any kind and all fringe benefit plans (including but not limited
to those providing medical, dental, vision, disability, life insurance and
vacation benefits) maintained, sponsored, administered or contributed to by the
Company or by any ``person'' (as defined in Section 3(9) of ERISA) that is
regarded with the Company as a single employer under Section 414 of the Code (an
``ERISA Affiliate'') (collectively, the ``Benefit Plans'').
(b) With respect to each Benefit Plan listed on Schedule 3.17 hereto,
the Company has delivered to Parent or its agents, to the extent applicable, a
copy of (i) the plan document for each Benefit Plan as currently in effect (or a
written description of any Benefit Plan for which there is no plan document),
including any related trust agreement and any other agreement entered into in
connection with such Benefit Plan, (ii) the most recent annual report (Form 5500
Series), if any, filed with the Internal Revenue Service, (iii) the most recent
actuarial report, if any, with respect to the most recently completed plan year,
and (iv) the most recent summary plan description, together with each summary of
material modifications.
(c) No Benefit Plan is subject to Title IV of ERISA and no Benefit
Plan is a ``multiemployer plan'' within the meaning of Section 3(37) of ERISA.
(d) All Benefit Plans have been administered in material compliance
with their terms and with the requirements of any applicable law, including, but
not limited to ERISA and the Code. Except as set forth in Schedule 3.17 hereto,
each Benefit Plan intended to be qualified under Section 401(a) of the Code is
so qualified and in addition has received a favorable determination letter or
letters evidencing such qualification. Neither the Company nor any ERISA
Affiliate has taken any action or omitted to take any action and to the
knowledge of the Company, nothing has occurred which is likely to cause the loss
of such qualification or the imposition of any material
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liability, penalty or tax with respect to such Benefit Plans. No prohibited
transaction (as defined in Section 406 of ERISA) has occurred with respect to
any Benefit Plan which would result in material liability to the Company or any
ERISA Affiliate. After the Closing, Parent will not be required, under ERISA,
the Code, or any collective bargaining agreement, to establish, maintain, or
continue any Benefit Plan currently maintained by the Company or any ERISA
Affiliate.
(e) Except as specifically disclosed on Schedule 3.17 hereto, the
Company has made no written or oral representation to any current or former
employee promising or guaranteeing any employer payment or funding for the
continuation of medical, dental, life or disability coverage for any period of
time beyond retirement or termination of employment, except to the extent of
coverage required under Section 4980B of the Code.
(f) Except as specifically disclosed on Schedule 3.17 hereto, the
Company has taken no action with respect to any Benefit Plan that will increase
materially the expense of maintaining such Benefit Plan above the level of
expense reflected in the Annual Report on Form 10-K of the Company for the
fiscal year ended December 31, 1994.
(g) Except as specifically disclosed on Schedule 3.17 hereto, there
is no contract, agreement, plan or arrangement covering any employee or former
employee of the Company that, individually or collectively, may give rise to the
payment of any amount that would not be deductible pursuant to the terms of
Section 280G of the Code, or which creates, accrues or accelerates benefits or
payments by virtue of a change of control of the Company, including, without
limitation, as a result of the transaction contemplated by this Agreement.
(h) Each Benefit Plan which is a ``group health plan'' (as defined in
Section 5000 of the Code) has been maintained in material compliance with
section 4980B of the Code and Title I, Subtitle B, Part 6 of ERISA and no tax
payable on account of Section 4980B of the Code has been incurred.
(i) There are no actions, suits or claims (other than routine claims
for benefits in the ordinary course or actions seeking qualified domestic
relations orders) pending or threatened against any Benefit Plan, or the
administrator or fiduciary of any Benefit Plan, and to the knowledge of the
Company, no facts or circumstances exist which could give rise to any such
actions, suits or claims.
Section 3.18 Contracts. The Company is not a party to or bound by, nor is
any of its properties or assets bound or subject to, any contract or other
agreement required to be disclosed in, or filed as an exhibit to, the Company
SEC Reports that is not filed in the Company SEC Reports. All such contracts and
other agreements are valid, existing, in full force and effect, binding upon the
Company, and, to the knowledge of the Company, binding upon the other parties
thereto in accordance with their terms, and the Company has paid in full or
accrued all amounts now due from them thereunder and have satisfied in full or
provided for all of its liabilities and obligations thereunder that are
presently required to be satisfied or provided for, and is not in default under
any of them, nor, to the knowledge of the Company, is any other party to any
such contract or other agreement in default thereunder nor, to the knowledge of
the Company, does any condition exist that with notice or lapse of time or both
would constitute a default thereunder.
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Section 3.19 Environmental Laws. Except as set forth on Schedule 3.19
hereto, the Company is in compliance with all Environmental Laws (as hereinafter
defined), the Company has not received any written notice of violation of
Environmental Laws from any Governmental Entity with respect to any violation
that has not been fully complied with, and there are no liabilities and
obligations under Environmental Laws incurred prior to the Closing Date by the
Company, or its employees, agents, licensees, contractors or subcontractors, for
releases of Hazardous Materials (as hereinafter defined), except where any such
non-compliance, violations, liabilities or obligations would not, individually
or in the aggregate, result in a Company Material Adverse Effect. As used herein
``Environmental Laws'' shall mean, collectively, all federal, state and local
laws and regulations relating to pollution of the environment (including,
without limitation, ambient air, surface water, groundwater, land surface or
subsurface strata), including, without limitation, laws and regulations relating
to emissions, discharges, releases or threatened releases of Hazardous Materials
(as hereinafter defined) or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Materials. ``Hazardous Materials'' shall mean all materials defined as
``hazardous materials,'' ``hazardous wastes,'' ``toxic substances,'' ``solid
wastes'' or bearing similar or analogous definitions in (i) the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C. (S)(S)
9601, et seq., as amended, (ii) the Resource Conservation and Recovery Act, 42
U.S.C. (S)(S) 6901, et seq., as amended, (iii) the Hazardous Materials
Transportation Act, 49 U.S.C. (S)(S) 1801 et seq., as amended, or (iv) any other
federal, state or local environmental statute.
Section 3.20 Takeover Provisions Inapplicable. As of the date hereof and
at all times on or prior to the Effective Time, Section 203 of the DGCL is, and
shall be, inapplicable to the Merger and the transactions contemplated by this
Agreement.
Section 3.21 Action by the Company. The Board of Directors of the Company
(at a meeting duly called and held) has by the requisite vote of all directors
present (a) determined that the Merger is advisable and fair and in the best
interests of the Company and its stockholders, (b) approved the Merger and this
Agreement in accordance with Section 251 of the DGCL, (c) recommended the
approval of the Merger and adoption of this Agreement by the holders of the
Company Common Stock and Company Preferred Stock and directed that the Merger be
submitted for consideration by the Company's stockholders at the Company
Meeting, and (d) taken any necessary steps to render Section 203 of the DGCL
inapplicable to the Merger and the transactions contemplated by this Agreement.
Section 3.22 Stock Options and Warrants. The Company has taken all action
necessary to permit the assumption of Company Stock Options and Company Warrants
by Parent as contemplated herein.
Section 3.23 Vote Required. The affirmative vote of the holders of a
majority of the outstanding shares of Company Common Stock and at least 66-2/3
percent of the outstanding shares of Company Preferred Stock, voting separately
as two classes, are the only votes of the holders of any class or series of the
Company's capital stock necessary to approve the Merger, adopt this Agreement
and approve the transactions contemplated by this Agreement.
Section 3.24 Opinion of Financial Advisor. The financial advisor of the
Company, CS First Boston Corporation, has delivered to the Company an opinion
dated the date of this Agreement to
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the effect that the consideration to be received by the holders of Company
Common Stock are fair from a financial point of view to the stockholders of the
Company.
Section 3.25 Brokers and Finders. Except for those fees and expenses
payable to CS First Boston Corporation pursuant to the letter agreement, dated
June 12, 1995, no person is entitled to receive from the Company any investment
banking, brokerage or finder's fee in connection with this Agreement or the
transactions contemplated hereby. A copy of the above Agreement has previously
been delivered to Parent or its agents. The estimated fees and expenses
incurred and to be incurred by the Company in connection with this Agreement and
the transactions contemplated by this Agreement (including the fees of legal
counsel) are set forth in Schedule 3.25 hereto, provided, that such estimates
are not binding and represent the Company's good faith approximation of such
fees and expenses. The Company has not made any agreement or taken any other
action which might cause anyone to become entitled to a broker's fee or
commission as a result of the transactions contemplated hereunder other than CS
First Boston Corporation.
Section 3.26 Interested Party Transactions. Except as set forth on
Schedule 3.26 hereto or in the Company SEC Reports, and except with respect to
the transactions contemplated by this Agreement, since the date of the Company's
last proxy statement to its stockholders, no event has occurred that would be
required to be reported by the Company as a Certain Relationship or Related
Transaction, pursuant to Item 404 of Regulation S-K promulgated by the SEC.
Section 3.27 Registration Statement: Proxy Statement/ Prospectus. The
information supplied by the Company for inclusion in the S-4 shall not at the
time the S-4 is declared effective by the SEC contain any untrue statement of a
material fact or omit to state any material fact required to be stated in the S-
4 or necessary in order to make the statements in the S-4, in light of the
circumstances under which they were made, not misleading. The information
supplied by the Company for inclusion in the joint proxy statement/prospectus to
be sent to the stockholders of Parent and the Company in connection with the
Company Meeting and the Parent Meeting to consider the Parent Share Proposal
(the ``Joint Proxy Statement'') shall not, on the date the Joint Proxy Statement
is first mailed to stockholders of Parent and the Company, at the time of the
Company Meeting and the Parent Meeting and at the Effective Time, contain any
statement which, at such time in light of the circumstances under which it shall
be made, is false or misleading with respect to any material fact, or omit to
state any material fact required to be stated in the Joint Proxy Statement or
necessary in order to make the statements in the Joint Proxy Statement not false
or misleading; or omit to state any material fact necessary to correct any
statement in any earlier communication with respect to the solicitation of
proxies for the Company Meeting or Parent Meeting which has become false or
misleading. If at any time prior to the Effective Time any event relating to the
Company or any of its Affiliates, officers or directors should be discovered by
the Company which should be set forth in an amendment to the S-4 or a supplement
to the Joint Proxy Statement, the Company shall promptly inform Parent.
Section 3.28 HSR Act Inapplicable. The Company is its own ``ultimate
parent entity'' within the meaning of the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
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ARTICLE 4
Representation And Warranties of Parent and Sub
Parent and Sub hereby, jointly and severally, represent and warrant to the
Company as follows:
Section 4.1 Organization. Parent and Sub are corporations duly organized,
validly existing and in good standing under the laws of the State of Delaware.
Each of Parent and Sub has all requisite corporate power and corporate authority
to make, execute, deliver and perform this Agreement and to own or lease its
properties and assets as now owned or leased and to carry on its business as and
where now being conducted. The copies of the Certificate of Incorporation and
Bylaws, as amended to date, of each of Parent and Sub, which have been delivered
to the Company or its agents, are correct and complete and are in full force and
effect.
Section 4.2 Qualification; Location of Business and Assets. Parent is
duly qualified and in good standing as a foreign corporation and duly authorized
to do business in the jurisdictions set forth on Schedule 4.2 hereto, which
jurisdictions are the only jurisdictions wherein the character of the properties
owned or leased or the nature of activities conducted by it make such
qualification necessary under applicable law and in which failure to so qualify
would have a Parent Material Adverse Effect. As used herein, a ``Parent Material
Adverse Effect'' shall mean a material adverse effect on the business, assets,
condition (financial or otherwise), liabilities or operations of Parent.
Section 4.3 Authorization and Enforceability. The execution, delivery and
performance of this Agreement by Parent and Sub have been duly authorized by all
necessary corporate action on the part of Parent and Sub. This Agreement has
been duly executed and delivered by Parent and Sub and constitutes the legal,
valid and binding obligation of Parent and Sub, enforceable against each of
Parent and Sub in accordance with its terms. Except for the approval of the
stockholders of Parent, no other corporate action on the part of Parent, Sub or
their respective stockholders is necessary to authorize this Agreement, and the
transactions contemplated hereby.
Section 4.4 Capitalization of Parent and Sub. Parent's authorized capital
stock consists of 69,600,000 shares of Parent Common Stock, 5,400,000 of
preferred stock, par value $.01 per share (``Parent Preferred Stock''), and
250,000 shares of Parent Redeemable Common Stock. As of the date of this
Agreement, (i) 31,945,269 shares of Parent Common Stock were issued and
outstanding, (ii) no shares of Parent Preferred Stock were issued and
outstanding, (iii) 6,026,750 shares of Parent Common Stock were reserved for
issuance upon the exercise of stock options (``Parent Stock Options''), of which
3,740,000 underlying shares represented by such options were granted or subject
to exercise, and (iv) 6,296,420 shares of Parent Common Stock were reserved for
issuance upon the exercise of warrants (``Parent Warrants'') and contingent
value rights under a Contingent Value Rights Agreement attached as Exhibit 3 to
an Agreement and Plan of Merger among Parent, CytoRad Acquisition Corp. and
CytoRad Incorporated dated November 15, 1994 (``Contingent Value Rights''). All
outstanding shares have been duly authorized, validly issued and are fully-paid
and nonassessable. Sub's authorized capital stock consists solely of 1,000
shares of common stock, par value $.01 per share, of which 100 shares are
currently issued and outstanding. All such outstanding shares have been duly
authorized, validly issued and are fully-paid and nonassessable. Except for
Parent Common Stock, Parent Stock Options, Parent Warrants and Contingent Value
Rights, there are no (i) bonds, debentures, notes or other indebtedness having
the right to vote on any matters on
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which the stockholders of either Parent or Sub may vote, (ii) outstanding
options, warrants, rights, agreements, calls, commitments or demands of any
character relating to the capital stock of Parent or Sub and no securities
convertible into or exchangeable for any such capital stock, (iii) voting
trusts, proxies or other agreements or understandings with respect to the
capital stock of Parent or Sub, or (iv) outstanding obligations of Parent or Sub
to repurchase, redeem or otherwise acquire any shares of capital stock of Parent
or Sub, as the case may be.
Section 4.5 No Violation of Laws or Agreements. The execution and
delivery of this Agreement do not, and the consummation of the transactions
contemplated by this Agreement and the compliance with the terms, conditions and
provisions of this Agreement by Parent and Sub will not (a) contravene any
provision of the Certificates of Incorporation or Bylaws of Parent or Sub, (b)
conflict with or result in a breach of or constitute a default (or an event
which would, with the passage of time or the giving of notice or both,
constitute a default) under any of the terms, conditions or provisions of any
indenture, mortgage, loan or credit agreement or any other agreement or
instrument which is material to Parent or Sub and to which Parent or Sub is a
party or by which any of them or their assets may be bound, (c) conflict with or
result in any violation of any statute, law, regulation, ordinance, writ,
injunction, order or Judgment of any court or Governmental Entity applicable to
or binding upon Parent or Sub, (d) result in the creation or imposition of any
lien, charge or encumbrance of any nature whatsoever upon any of Sub's or
Parent's assets, except the Parent Permitted Encumbrances (as defined below), or
(e) affect any franchise, license, permit or other governmental approval that
would adversely affect the Parent's business. No investigation or review by any
Governmental Entity or any other Person is pending or, to the knowledge of
Parent, threatened, nor has any Governmental Entity or any other Person
indicated an intention to conduct same.
Section 4.6 Consents. No consent, approval or authorization of, or
registration or filing with, any Person, including any Governmental Entity or
other regulatory agency, is required in connection with the execution and
delivery of this Agreement by Parent or Sub or the consummation of the
transactions contemplated hereby, except for (i) the filing and effectiveness of
the S-4 with the SEC in accordance with the Securities Act, (ii) the filing of
the Certificate of Merger with the Delaware Secretary of State, (iii) the filing
of the Joint Proxy Statement with the SEC in accordance with the Exchange Act,
(iv) the approval of the Parent Share Proposal at the Parent Meeting, (v) the
filing of the pre-merger notification report, and the expiration or termination
of the waiting period, under the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, by Parent and the Stockholder with respect to the shares of
Parent Common Stock to be purchased by the Stockholder in the Subscription Offer
and (vi) such consents, approvals, orders, authorizations, registrations,
declarations and filings as may be required under applicable federal and state
securities or ``blue sky'' laws.
Section 4.7 Parent Stock in Merger. The Parent Common Stock to be issued
and delivered to the stockholders of the Company in the Merger and the
Subscription Offer (as defined below) pursuant to this Agreement will, when so
issued and delivered, be duly authorized and validly issued, fully-paid and
nonassessable and be issued pursuant to an S-4 declared effective by the SEC.
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Section 4.8 SEC Reports; Financial Statements.
(a) Parent has timely filed all forms, reports and documents required
to be filed with the SEC since January 2, 1993 and has previously provided to
the Company, in the form filed with the SEC, true and correct copies of (i) its
Annual Reports on Form 10-K for the fiscal years ended January 2, 1993, January
1, 1994, as amended, and December 31, 1994, (ii) its Quarterly Report on Form
10-Q for the period ended March 31, 1995, (iii) all proxy statements relating to
meetings of stockholders (whether annual or special) held since January 2, 1993
and (iv) all other forms, reports, registration statements and other documents
filed by Parent with the SEC since January 2, 1993 or such forms, reports,
registration statements and other documents filed with the SEC before January 2,
1993 if they relate to stock, stock option plans or compensation plans that are
in effect as of the date hereof (the forms, reports, registration statements and
other documents referred to in clauses (i), (ii), (iii) and (iv) above being
referred to herein, collectively, as the ``Parent SEC Reports''). The Parent
SEC Reports and any other forms, reports and other documents filed by Parent
with the SEC after the date of this Agreement (i) were or will be prepared in
accordance with the requirements of the Securities Act and the Exchange Act, as
the case may be, and the rules and regulations thereunder and (ii) did not at
the time they were filed or amended, or will not at the time they are filed,
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading.
(b) Parent has delivered to the Company the following consolidated
financial statements (the ``Parent Financial Statements''): (i) audited
statements of operations, statements of redeemable common stock, preferred
stock, common stock and accumulated deficit and statements of cash flows of
Parent for the fiscal years ended January 2, 1993, January 1, 1994 and December
31, 1994 and balance sheets of Parent as at each of such dates (the ``Parent
Audited Financial Statements''); and (ii) unaudited statements of operations,
statements of redeemable common stock, preferred stock, common stock and
accumulated deficit and statements of cash flows of Parent for the three-month
period ended March 31, 1995 and the five-month period ended May 31, 1995. The
Parent Financial Statements: (A) fairly present, in all material respects, the
financial condition, assets and liabilities of Parent as at their respective
dates and the results of Parent's operations and changes in financial position
for the periods covered thereby except, in the case of the interim balance sheet
and related unaudited statements of operations and cash flows, for normal year-
end audit adjustments that were not, or are not expected to be, individually or
in the aggregate, material in amount, and (B) have been prepared in accordance
with GAAP. The Parent Audited Financial Statements have been audited by Arthur
Andersen LLP (``Andersen''), Parent's independent certified public accountants.
(c) Except as disclosed in writing to the Company or as otherwise
disclosed in the Parent SEC Reports, Parent does not have any liabilities,
either accrued or contingent (whether or not required to be reflected in
financial statements in accordance with GAAP), and whether due or to become due,
which individually or in the aggregate, would be reasonably likely to have a
Parent Material Adverse Effect other than (i) liabilities reflected in Parent's
balance sheet dated December 31, 1994, (ii) liabilities specifically described
in this Agreement and (iii) normal or recurring liabilities incurred since
December 31, 1994 in the ordinary course of business consistent with past
practices.
Section 4.9 Absence of Changes. Except as disclosed on Schedule 4.9
hereto and as contemplated by this Agreement, since December 31, 1994, there has
not been (i) any transaction,
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commitment, dispute or other event or condition (financial or otherwise) of any
character (whether or not in the ordinary course of business) individually or in
the aggregate having a Parent Material Adverse Effect; (ii) any damage,
destruction or loss, whether or not covered by insurance, which, insofar as
reasonably can be foreseen, in the future would have a Parent Material Adverse
Effect; (iii) any declaration, setting aside or payment of any dividend or other
distribution (whether in cash, stock or property) with respect to the capital
stock of Parent, or (iv) any entry into any commitment or transaction material
to Parent (including, without limitation, any borrowing or sale of assets)
except in the ordinary course of business consistent with past practice.
Section 4.10 Taxes.
(a) Parent (or any group of entities with which Parent files Tax
Returns on a consolidated or combined basis) has (i) timely filed all Tax
Returns required to be filed by it on or before the Effective Time for all
taxable periods with respect to all Taxes, (ii) paid all Taxes shown to have
become due pursuant to such Tax Returns and (iii) paid all other Taxes for which
a notice of assessment or demand for payment has been received. All Parent Tax
Returns have been prepared in accordance with all applicable laws and
requirements and accurately reflect the taxable income (or other base for tax)
of the corporation filing the same. Parent has withheld and paid all Taxes
required to have been withheld and paid in connection with amounts paid or owing
to employees employed in its business.
(b) The accruals for Taxes contained in the Parent's balance sheet
dated December 31, 1994 are adequate to cover all liabilities for Taxes of
Parent (including any liabilities Parent may have for Taxes of any group of
entities with which Parent has filed or does file Tax Returns on a consolidated
or combined basis) for all periods ending on or before that date and include
adequate provision for all deferred Taxes (computed on a net basis after taking
into account any Tax benefits or assets), and nothing has occurred subsequent to
that date to make any of such accruals inadequate. All Taxes for periods ending
after December 31, 1994 and attributable to Parent's operations prior to the
Effective Time have been paid or are adequately reserved against on the books of
Parent. Parent has timely filed all material information returns or reports,
including forms 1099, which are required to be filed and has accurately reported
all information required to be included on such returns or reports. Except as
disclosed on Schedule 4.10 hereto, there are no proposed assessments of Taxes
against Parent or proposed adjustments to any Tax Return filed, pending against
Parent or any proposed adjustments to the manner in which any Taxes of Parent
are determined. To the knowledge of Parent, Parent is not currently the object
of any audit or examination relating to Taxes and Parent has received no notice
of any such proposed audit or examination.
(c) Parent has never (i) filed any consent agreement under Section
341(f) of the Code, (ii) executed a waiver or consent extending any statute of
limitation for any Tax liability which remains outstanding, (iii) except as
disclosed on Schedule 4.10 hereto, joined in or been required to join in filing
a consolidated or combined federal income Tax Return, (iv) entered into any Tax
allocation or sharing agreement under which Parent or the assets of the Company
could be subject to Tax or other liability after the Closing, or (v) filed an
election under Section 338(g) or Section 338(h)(10) of the Code or caused a
deemed election under Section 338(e) thereof.
Section 4.11 No Pending Litigation or Proceedings. Except as set forth on
Schedule 4.11 hereto, there are no actions, suits, investigations, Litigation
(as hereinafter defined) or proceedings
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pending or, to Parent's knowledge, threatened against Parent or any of its
assets or affecting the capital stock of Parent or any rights thereto, at law or
in equity, by or before any court or Governmental Entity (as hereinafter
defined) which, if adversely determined, would have a Parent Material Adverse
Effect or materially affect its ability to consummate the transactions
contemplated hereby. Except as set forth on Schedule 4.11 hereto, there are
currently no outstanding Judgments (as hereinafter defined), decrees or orders
of any court or any Governmental Entity against Parent, or any of its assets or
business or affecting the capital stock of Parent or any rights thereto.
Section 4.12 Compliance With Laws. Parent holds all permits,
licenses, variances, exemptions, orders and approvals of all Governmental
Entities required in the operation of its business as currently conducted,
except for such permits, licenses, variances, exemptions, orders and approvals
the failure of which to hold would not have a material adverse effect (the
``Parent Permits''). Parent is in compliance with the terms of the Parent
Permits, except for such failure to comply, which individually or in the
aggregate, would not have a Parent Material Adverse Effect. Except as set forth
on Schedule 4.12 hereto, the business of Parent is not being conducted in
violation of any law, ordinance or regulation of any Governmental Entity, except
for possible violations which individually or in the aggregate do not and would
not have a Parent Material Adverse Effect. No investigation or review by any
Governmental Entity with respect to Parent is pending, or, to the knowledge of
Parent, threatened, nor has any Governmental Entity indicated an intention to
conduct the same, other than those the outcome of which would not have a Parent
Material Adverse Effect. Except as set forth on Schedule 4.12 hereto, the
operation of Parent's business as currently conducted does not violate or
infringe any statute, law, rule or regulation, federal, state and local,
currently in effect, except for such violations or infringements which would
not, individually or in the aggregate, have a Parent Material Adverse Effect or
materially affect Parent's ability to consummate the transactions contemplated
hereby.
Section 4.13 Title; Liens. Parent has good title to or leasehold estate
in all real properties and improvements material to Parent and reflected in its
balance sheet. All of Parent's leases are in good standing, valid and effective
in accordance with their terms, and there is no default under any such leases.
Except as set forth on Schedule 4.13 hereto, Parent has good title to all of its
properties and assets, including the properties and assets reflected in Parent's
balance sheet dated December 31, 1994 (except those disposed of in the ordinary
course of business since that date), free and clear of any mortgage, pledge,
lien, restriction, encumbrance, tenancy, license, encroachment, covenant,
condition, right of way, easement, claim, security interest, charge or any other
matter affecting title, other than mortgages, pledges, liens, charges, security
interests or other encumbrances (a) securing the payment of taxes, assessments
or other governmental charges either not yet due and payable or the validity of
which is being contested in good faith by appropriate proceedings, (b) incurred
under worker's compensation, unemployment insurance, social security and other
similar laws (including deposits required thereunder), (c) for statutory liens
of landlords, carriers, warehousemen, mechanics, materialmen, repairmen or
suppliers, and (d) easements, rights of way, liens, encumbrances, charges and
similar restrictions of record or imperfections in title which do not have a
Parent Material Adverse Effect (collectively, ``Parent Permitted
Encumbrances''). The assets reflected on Parent's balance sheet dated December
31, 1994 constitute substantially all of the assets necessary to permit Parent
to operate the business as it is being operated on the date of this Agreement,
with such additions and deletions thereto as shall have occurred in the ordinary
course of Parent's business.
Section 4.14 Intellectual Property.
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(a) Parent owns, or is licensed or otherwise possesses legally
enforceable rights to use, all patents, trademarks, trade names, service marks,
copyrights, and any applications for such patents, trademarks, trade names,
service marks and copyrights, mask works, schematics, technology, know-how,
computer software programs or applications and tangible or intangible
proprietary information or material that are necessary to conduct the business
of Parent as currently conducted (the ``Parent Intellectual Property Rights'').
Schedule 4.14 hereto lists (i) all patents and patent applications and all
trademarks, registered copyrights, mask works, trade names and service marks,
which Parent considers to be material to its business and included in the Parent
Intellectual Property Rights, including the jurisdictions in which each such
Parent Intellectual Property Right has been issued or registered or in which any
such application for such issuance and registration has been filed, (ii) all
licenses, sublicenses and other agreements as to which Parent is a party and
pursuant to which any person is authorized to use any Parent Intellectual
Property Rights, (iii) all licenses, sublicenses and other agreements as to
which Parent is a party and pursuant to which Parent is authorized to use any
third party patents, trademarks or copyrights, including software (``Parent
Third Party Intellectual Property Rights'') which are incorporated in, are, or
form a part of any Parent product or service that is material to its business,
(iv) any Parent Intellectual Property Rights that are not licensed to Parent on
an exclusive basis, and (v) all licenses, sublicenses and other grants of rights
or licenses that prevent, impair or hinder Parent's ability to exclusively
market any Parent product or service in any country or territory.
(b) Parent is not, nor will it be as a result of the execution and
delivery of this Agreement or the performance of its obligations under this
Agreement, in breach of any license, sublicense or other agreement relating to
the Parent Intellectual Property Rights or Parent Third Party Intellectual
Property Rights.
(c) To Parent's knowledge, all patents, registered trademarks,
service marks and copyrights held by Parent are valid and subsisting. Except as
set forth on Schedule 4.14(c) hereto, Parent (i) has not been sued, or
threatened to be sued, in any suit, action or proceeding which involves a claim
of infringement of any patents, trademarks, service marks, copyrights or
violation of any trade secret or other proprietary right of any third party, and
(ii) has received no notice and has no knowledge that the manufacturing,
marketing, licensing or sale of its products infringes any patent, trademark,
service mark, copyright, trade secret or other proprietary right of any third
party. To Parent's knowledge, all pending patent applications claim patentable
subject matter.
Section 4.15 Labor Relations. The relations of Parent with its employees
are good. Except as disclosed on Schedule 4.15 hereto, (a) Parent is not a party
to any collective bargaining agreement with any labor union; (b) there is no
unfair labor practice complaint against Parent pending before the National Labor
Relations Board; (c) there is no labor strike, dispute, slow down or stoppage
actually pending or, to the knowledge of Parent, threatened against or involving
Parent, or (d) no grievance or arbitration proceedings relating to the
employment of labor under applicable labor laws is pending.
Section 4.16 Employee Benefits.
(a) Schedule 4.16 hereto sets forth all ``employee benefit plans''
(as defined in Section 3(3) of ERISA), all bonus, deferred compensation,
incentive compensation, excess benefit, stock, stock option, severance,
termination pay, change in control and death benefit plans, contracts, programs,
agreements or arrangements of any kind and all fringe benefit plans (including
but not
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limited to those providing medical, dental, vision, disability, life insurance
and vacation benefits) maintained, sponsored, administered or contributed to by
Parent or by any ``person'' (as defined in Section 3(9) of ERISA) that is
regarded with Parent as a single employer under Section 414 of the Code (a
``Parent ERISA Affiliate'') (collectively, the ``Parent Benefit Plans'').
(b) With respect to each Parent Benefit Plan listed in Schedule 4.16
hereto, Parent has delivered to the Company or its agents, to the extent
applicable, a copy of (i) the plan document for each Parent Benefit Plan as
currently in effect (or a written description of any Parent Benefit Plan for
which there is no plan document), including any related trust agreement and any
other agreement entered into in connection with such Parent Benefit Plan, (ii)
the most recent annual report (Form 5500 Series), if any, filed with the
Internal Revenue Service, (iii) the most recent actuarial report, if any, with
respect to the most recently completed plan year, and (iv) the most recent
summary plan description, together with each summary of material modifications.
(c) No Parent Benefit Plan is subject to Title IV of ERISA and no
Parent Benefit Plan is a ``multiemployer plan'' within the meaning of Section
3(37) of ERISA.
(d) All Parent Benefit Plans have been administered in material
compliance with their terms and with the requirements of any applicable law,
including, but not limited to ERISA and the Code. Except as set forth in
Schedule 4.16 hereto, each Parent Benefit Plan intended to be qualified under
Section 401(a) of the Code is so qualified and in addition has received a
favorable determination letter or letters evidencing such qualification.
Neither Parent nor any Parent ERISA Affiliate has taken any action or omitted to
take any action and to the knowledge of Parent, nothing has occurred which is
likely to cause the loss of such qualification or the imposition of any material
liability, penalty or tax with respect to such Parent Benefit Plans. No
prohibited transaction (as defined in Section 406 of ERISA) has occurred with
respect to any Parent Benefit Plan which would result in material liability to
Parent or any Parent ERISA Affiliate. After the Closing, the Company will not
be required, under ERISA, the Code, or any collective bargaining agreement, to
establish, maintain, or continue any Parent Benefit Plan currently maintained by
Parent or any Parent ERISA Affiliate.
(e) Except as specifically disclosed on Schedule 4.16 hereto, Parent
has made no written or oral representation to any current or former employee
promising or guaranteeing any employer payment or funding for the continuation
of medical, dental, life or disability coverage for any period of time beyond
retirement or termination of employment, except to the extent of coverage
required under Section 4980B of the Code.
(f) Except as specifically disclosed on Schedule 4.16 hereto, Parent
has taken no action with respect to any Parent Benefit Plan that will increase
materially the expense of maintaining such Parent Benefit Plan above the level
of expense reflected in the Annual Report on Form 10-K of Parent for the fiscal
year ended December 31, 1994.
(g) Except as specifically disclosed on Schedule 4.16 hereto, there
is no contract, agreement, plan or arrangement covering any employee or former
employee of Parent that, individually or collectively, may give rise to the
payment of any amount that would not be deductible pursuant to the terms of
Section 280G of the Code, or which creates, accrues or accelerates benefits or
payments by virtue of a change of control of Parent, including, without
limitation, as a result of the transaction contemplated by this Agreement.
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(h) Each Parent Benefit Plan which is a ``group health plan'' (as
defined in Section 5000 of the Code) has been maintained in material compliance
with section 4980B of the Code and Title I, Subtitle B, Part 6 of ERISA and no
tax payable on account of Section 4980B of the Code has been incurred.
(i) There are no actions, suits or claims (other than routine claims
for benefits in the ordinary course or actions seeking qualified domestic
relations orders) pending or threatened against any Parent Benefit Plan, or the
administrator or fiduciary of any Parent Benefit Plan, and to the knowledge of
Parent, no facts or circumstances exist which could give rise to any such
actions, suits or claims.
Section 4.17 Contracts. Parent is not a party to or bound by, nor is any
of its properties or assets bound or subject to, any contract or other agreement
required to be disclosed in, or filed as an exhibit to, the Parent SEC Reports
that is not filed in the Parent SEC Reports. All such contracts and other
agreements are valid, existing, in full force and effect, binding upon Parent,
and, to the knowledge of Parent, binding upon the other parties thereto in
accordance with their terms, and Parent has paid in full or accrued all amounts
now due from them thereunder and have satisfied in full or provided for all of
its liabilities and obligations thereunder that are presently required to be
satisfied or provided for, and is not in default under any of them, nor, to the
knowledge of Parent, is any other party to any such contract or other agreement
in default thereunder nor, to the knowledge of Parent, does any condition exist
that with notice or lapse of time or both would constitute a default thereunder.
Section 4.18 Environmental Laws. Except as set forth on Schedule 4.18
hereto, Parent is in compliance with all Environmental Laws, Parent has not
received any written notice of violation of Environmental Laws from any
Governmental Entity with respect to any violation that has not been fully
complied with, and there are no liabilities and obligations under Environmental
Laws incurred prior to the Closing Date by Parent, or its employees, agents,
licensees, contractors or subcontractors for releases of Hazardous Materials,
except where any such non-compliance, violations, liabilities or obligations
would not, individually or in the aggregate, result in a Parent Material Adverse
Effect.
Section 4.19 Action by Parent and Sub. The Board of Directors of Parent
(at a meeting duly called and held) has by the requisite vote of all directors
present (a) determined that the Parent Share Proposal is advisable and fair and
in the best interests of Parent and its stockholders, (b) approved the Merger in
accordance with Section 251 of the DGCL, and (c) recommended the approval of the
Parent Share Proposal by the holders of Parent Common Stock and directed that
the Parent Share Proposal be submitted for consideration by Parent's
stockholders at the Parent Meeting. The Board of Directors of Sub (at a meeting
duly called and held) has by the requisite vote of all directors present (a)
approved the Merger in accordance with Section 251 of the DGCL and (b)
recommended the approval of the Merger and adoption of this Agreement by the
Parent as the sole stockholder of Sub. Parent, as sole stockholder of Sub, has
approved the Merger and adopted this Agreement .
Section 4.20 Vote Required. The affirmative vote of the holders of a
majority of the outstanding shares of Parent Common Stock is the only vote of
the holders of any class or series of Parent's capital stock necessary to
approve the Parent Share Proposal.
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Section 4.21 Opinion of Financial Advisor. The financial advisor of
Parent, Smith Barney Inc., has delivered to Parent an opinion dated the date of
this Agreement to the effect that, as of the date of this Agreement, the Common
Exchange Ratio, Preferred Exchange Ratio and the consideration to be received by
Parent in the Subscription Offer, taken as a whole, are fair from a financial
point of view to Parent.
Section 4.22 Brokers and Finders. Sub and Parent have not made any
agreement or taken any other action which might cause anyone to become entitled
to an investment banking fee, broker's fee or commission as a result of the
transactions contemplated hereunder other than Smith Barney Inc.
Section 4.23 Interested Party Transactions. Except as set forth in
Schedule 4.23 hereto or in the Parent SEC Reports, since the date of Parent's
last proxy statement to its stockholders, no event has occurred that would be
required to be reported by Parent as a Certain Relationship or Related
Transaction, pursuant to Item 404 of Regulation S-K promulgated by the SEC.
Section 4.24 Registration Statement; Proxy Statement/Prospectus. The
information supplied by Parent for inclusion in the S-4 shall not at the time
the S-4 is declared effective by the SEC contain any untrue statement of a
material fact or omit to state any material fact required to be stated in the S-
4 or necessary in order to make the statements in the S-4, in light of the
circumstances under which they were made, not misleading. The information
supplied by Parent for inclusion in the Joint Proxy Statement shall not, on the
date the Joint Proxy Statement is first mailed to stockholders of Parent or the
Company, at the time of the Parent Meeting and the Company Meeting and at the
Effective Time, contain any statement which, at such time and in light of the
circumstances under which it shall be made, is false or misleading with respect
to any material fact, or omit to state any material fact necessary in order to
make the statements made in the Joint Proxy Statement not false or misleading;
or omit to state any material fact necessary to correct any statement in any
earlier communication with respect to the solicitation of proxies for the Parent
Meeting or the Company Meeting which has become false or misleading. If at any
time prior to the Effective Time any event relating to Parent or any of its
Affiliates, officers or directors should be discovered by Parent which should be
set forth in an amendment to the Registration Statement or a supplement to the
Joint Proxy Statement, Parent shall promptly inform the Company.
ARTICLE 5
Certain Obligations Of the Company, Parent and Sub
Section 5.1 Conduct of Business Pending the Effective Time. From and
after the date hereof and pending the Effective Time, and unless Parent shall
otherwise consent or agree in writing, the Company covenants and agrees that:
Section 5.1.1 Ordinary Course. The business of the Company will be
conducted only in the usual, regular and ordinary course and consistent with
past practices, including billing and collection practices and payment of
accounts payable.
Section 5.1.2 Preservation of Business. The Company will use all
reasonable efforts to preserve the business organization of the Company intact,
to keep available to Parent the services
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of the present officers and employees of the Company, and to preserve for the
Company the good will of the suppliers, customers and others having business
relations with the Company.
Section 5.1.3 Assets; Insurance; Books, Records and Accounts. The
Company will use all reasonable efforts to maintain:
(i) its assets in operating condition, ordinary wear and tear
replacement in the ordinary course excepted;
(ii) in full force and effect, policies of insurance with
respect to the assets and operations of the Company in such amounts and
with respect to such risks as were maintained generally prior to the date
hereof; and
(iii) books, records and accounts with respect to the assets and
operations of the Company in a usual, regular and ordinary manner on a
basis consistent with past practices.
Section 5.1.4 Material Transactions. The Company shall not:
(i) amend its Certificate of Incorporation or Bylaws;
(ii) change its authorized or issued capital stock or issue any
shares of its capital stock (other than shares of Company Common Stock upon
exercise of outstanding Company Stock Options or Company Warrants) or
securities convertible into any such shares or issue any options, warrants
or any other rights to acquire shares of its capital stock;
(iii) enter into any contract or commitment the performance of
which may extend beyond the Closing involving payments in any year
exceeding $5,000, except those made in the ordinary course of business, the
terms of which are consistent with past practice and reasonable in light of
current conditions;
(iv) enter into any employment or consulting contract or
arrangement with any Person which is not terminable at will, without
penalty or continuing obligation;
(v) sell, transfer, lease or otherwise dispose of any of its
assets with a value individually in excess of $5,000;
(vi) incur, create, assume or suffer to exist any mortgage,
pledge, lien, restriction, encumbrance, tenancy, encroachment, covenant,
condition, right-of-way, easement, claim, security interest, charge or
other matter affecting title on any of its assets or other property, except
Company Permitted Encumbrances;
(vii) make, change or revoke any tax election or make any
agreement or settlement with any taxing authority;
(viii) change any of the accounting principles or practices used
by it (except as required by GAAP);
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(ix) declare or pay any dividend or other distribution in
respect of any class of its capital stock, or make any payment to redeem,
purchase or otherwise acquire, or call for redemption, any of such stock or
any securities convertible into or exchangeable for such stock;
(x) increase or otherwise change the compensation payable or
to become payable to any officer or employee;
(xi) make or authorize the making of any capital expenditure in
excess of $3,000 individually or $18,000 in the aggregate;
(xii) incur any debt or other obligation for money borrowed
(other than in an amount not greater than $11,500,000 pursuant to the
Company's promissory note in the form of Exhibit B);
(xiii) guarantee or become a co-maker or accommodation maker or
otherwise become or remain contingently liable in connection with any
liability or obligation of any Person;
(xiv) lend, advance funds or make an investment in or capital
contribution to any Person;
(xv) make or authorize the making of any expenditure of money
or incurrence of any obligation (including, without limitation, borrowing
under the promissory note in the form of Exhibit B) inconsistent with the
budget attached as Schedule 5.1.4. hereto; or
(xvi) enter into any agreement to do any of the foregoing.
Section 5.2 No Solicitation.
(a) The Company shall not, nor shall it authorize or permit any
officer, director or employee of or any investment banker, attorney or other
advisor or representative of the Company to, directly or indirectly, (i)
solicit, initiate or knowingly encourage the submission of any takeover proposal
(as defined below) or (ii) participate in any discussions or negotiations
regarding, or furnish to any person any information with respect to, or take any
other action to facilitate any inquiries or the making of any proposal that
constitutes or may reasonably be expected to lead to any takeover proposal;
provided, however, if the Board of Directors of the Company, after consultation
with outside counsel, determines in good faith that such action is necessary for
the Board of Directors of the Company to comply with its fiduciary duties under
applicable law, the Company may upon receipt by the Company of an unsolicited
written, bona fide takeover proposal, furnish information with respect to the
Company pursuant to a customary confidentiality agreement (containing
``standstill'' provisions no less onerous than those contained in the
Confidentiality Agreement between Parent and the Company dated April 13, 1995)
and participate in negotiations regarding such takeover proposal. For purposes
of this Agreement, ``takeover proposal'' means any proposal for a merger or
other business combination involving the Company or any proposal or offer to
acquire in any manner (including through a joint venture with the Company),
directly or indirectly, an equity interest in not less than 40% of the
outstanding voting securities of or substantial assets of the Company.
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(b) Neither the Board of Directors of the Company nor any committee
thereof shall (i) withdraw or modify, or propose to withdraw or modify, in a
manner adverse to Parent or Sub, the approval or recommendation by such Board of
Directors or any such committee of this Agreement or the Merger, (ii) approve or
recommend, or propose to approve or recommend, any takeover proposal or (iii)
enter into any agreement with respect to any takeover proposal. Notwithstanding
the foregoing, in the event the Board of Directors of the Company receives an
unsolicited written takeover proposal and if the Board of Directors of the
Company, after consultation with outside counsel and with a financial advisor of
nationally recognized reputation, determines in good faith that such action is
necessary for the Board of Directors of the Company to comply with its fiduciary
duties under applicable law, then the Board of Directors may (subject to the
following sentences) withdraw or modify its approval or recommendation of this
Agreement and the Merger taken together, approve or recommend any such takeover
proposal, or terminate this Agreement in order to enter into an agreement with
respect to such a takeover proposal, in each case at any time after Parent's
receipt of written notice (a ``Notice of Takeover Proposal'') advising Parent
that the Board of Directors has received a takeover proposal, specifying the
material terms and conditions of such takeover proposal and identifying the
person making such takeover proposal. Nothing contained in this Section 5.2(b)
shall prohibit the Company or its Board of Directors from taking and disclosing
to the Company's stockholders a position with respect to a tender or exchange
offer by a third party pursuant to Rules 14d-9 and 14e-2 promulgated under the
Exchange Act or from making such disclosure to the Company's stockholders or
otherwise.
(c) In addition to the obligations of the Company set forth in
paragraph (b) above, the Company shall promptly advise Parent orally and in
writing of any request for information or any takeover proposal, the material
terms and conditions of such request or takeover proposal, and the identity of
the person making any such request or takeover proposal.
Section 5.3 Access; Confidentiality.
(a) The Company will give to Parent and to Parent's counsel,
accountants and other representatives access during normal business hours and
upon reasonable advance notice to all of the Company's properties, books, tax
returns, contracts, commitments, records, officers, personnel and accountants
and will furnish to Parent all such documents and copies of documents and all
information with respect to the affairs of the Company as Parent may reasonably
request.
(b) Each party hereto will hold and will cause its consultants and
advisors to hold in strict confidence, unless compelled to disclose by judicial
or administrative process or, in the opinion of its counsel, by other
requirements of law, all documents and information concerning the other party
furnished it by such other party or its representatives in connection with the
transactions contemplated by this Agreement (except to the extent that such
information can be shown to have been (i) previously known by the party to which
it was furnished, (ii) in the public domain through no fault of such party, or
(iii) later lawfully acquired from other sources by the party to which it was
furnished), and each party will not release or disclose such information to any
other person, except its auditors, attorneys, financial advisors, bankers and
other consultants and advisors in connection with this Agreement. If the
transactions contemplated by this Agreement are not consummated, such confidence
shall be maintained except to the extent such information comes into the public
domain through no fault of the party required to hold it in confidence, and such
information shall not be used to the detriment of, or in relation to any
investment in, the other party and all such documents (including copies thereof)
shall be returned to the other party immediately upon the written request
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of such other party. Each party shall be deemed to have satisfied its
obligation to hold confidential information concerning or supplied by the other
party if it exercises the same care as it takes to preserve confidentiality for
its own similar information.
(c) No information or knowledge obtained in any investigation
pursuant to this Section 5.3 shall affect or be deemed to modify any
representation or warranty contained in this Agreement or the conditions to the
obligations of the parties to consummate the Merger.
Section 5.4 Public Announcement. No party will issue or cause the
publication of any press release or other public announcement with respect to
this Agreement or the transactions contemplated hereby without the prior consent
of the Company, Sub and Parent, which consent will not be unreasonably withheld;
provided, however, that nothing herein will prohibit any party from issuing or
causing publication of any such press release or public announcement to the
extent that such party determines such action to be required by law or by the
rules of any national stock exchange applicable to it, in which event the party
making such determination will, if practicable in the circumstances, use all
reasonable efforts to allow the other party hereto reasonable time to comment on
such release or announcement in advance of its issuance.
Section 5.5 Filing; Other Actions.
(a) The Company and Parent shall cooperate to prepare and file
promptly with the SEC the S-4, in which the Joint Proxy Statement will be
included. Each of the Company and Parent shall use all reasonable efforts to
have the S-4 declared effective under the Securities Act as promptly as
practicable after such filing, and thereafter mail the Joint Proxy Statement to
the respective stockholders of the Company and Parent. Parent shall also use
its best efforts to obtain all necessary state securities law or ``blue sky''
permits and approvals required to carry out the transactions contemplated by
this Agreement, and the Company shall furnish all information concerning the
Company and the holders of shares of Company Common Stock and Company Preferred
Stock as may be reasonably requested in connection with any such action.
(b) Each party hereto shall cooperate with each other party and,
subject to the terms and conditions set forth in this Agreement, use its best
efforts to promptly prepare and file all necessary documentation, to effect all
necessary applications, notices, petitions, filings and other documents, and to
obtain as promptly as practicable all necessary permits, consents, orders,
approvals and authorizations of, or any exemption by, all third parties and
Governmental Entities necessary or advisable to consummate the transactions
contemplated by this Agreement and the Voting and Subscription Agreement. Each
party shall have the right to review in advance, and to the extent practicable
each will consult the other on, in each case subject to applicable laws relating
to the exchange of information, all the information relating to the other
parties, and any of their respective subsidiaries, which appear in any filing
made with, or written materials submitted to, any third party or any
Governmental Entity in connection with the transactions contemplated by this
Agreement and the Voting and Subscription Agreement. In exercising the
foregoing right, each of the parties hereto shall act reasonably and as promptly
as practicable. Each party hereto agrees that it will consult with the other
parties hereto with respect to the obtaining of all permits, consents, approvals
and authorizations of all third parties and Governmental Entities necessary or
advisable to consummate the transactions contemplated by this Agreement and the
Voting and Subscription Agreement and each party will keep the other parties
apprised of the status of matters relating to completion of the transactions
contemplated herein.
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(c) Each party shall, upon request, furnish each other party with all
information concerning itself, its subsidiaries, directors, officers and
stockholders and such other matters as may be reasonably necessary or advisable
in connection with the S-4 or any other statement, filing, notice or application
made by or on behalf of each such party or any of its subsidiaries to any
Governmental Entity in connection with the Merger and the other transactions
contemplated by this Agreement and the Voting and Subscription Agreement.
(d) Each party shall promptly furnish each other party with copies of
written communications received by each such party, or any of its subsidiaries,
affiliates or associates (as such terms are defined in Rule 12b-2 under the
Exchange Act as in effect on the date hereof), from, or delivered by any of the
foregoing to, any Governmental Entity in respect of the transactions
contemplated hereby.
(e) The Company shall use all reasonable efforts to cause to be
delivered to Parent a letter of KPMG, dated a date within two business days
before the date on which the S-4 shall become effective and addressed to Parent,
in form reasonably satisfactory to Parent and customary in scope and substance
for letters delivered by independent public accountants in connection with
registration statements similar to the S-4.
(f) Parent shall use all reasonable efforts to cause to be delivered
to the Company a letter of Andersen, dated a date within two business days
before the date on which the S-4 shall become effective and addressed to the
Company, in form reasonably satisfactory to the Company and customary in scope
and substance for letters delivered by independent public accountants in
connection with registration statements similar to the S-4.
Section 5.6 Subscription Offer. Contemporaneously with the solicitation
of proxies for approval of the Parent Share Proposal, Parent shall make an offer
(the ``Subscription Offer'') to the holders of the Company Common Stock,
entitling each such holder to purchase 1.118 shares of Parent Common Stock for
each share of Company Common Stock held at a purchase price of $3.89 per share
of Parent Common Stock.
Section 5.7 Nasdaq Listing. Parent shall use its best efforts to list on
the Nasdaq National Market, upon official notice of issuance, the Parent Common
Stock to be issued pursuant to the Merger and the Subscription Offer.
Section 5.8 Takeover Provisions Inapplicable. The Company and Parent
shall take all actions necessary to ensure that the consummation of the Merger
and the other transactions contemplated hereby shall not render Section 203 of
the DGCL applicable to such transactions.
Section 5.9 Tax Free Reorganization. Each of the Company and Parent shall
use its best efforts to cause the Merger to be treated as a reorganization
within the meaning of Section 368(a) of the Code.
Section 5.10 Stock Options and Warrants.
(a) Prior to the Effective Time, the Company and Parent shall take
such actions with respect to each Company Stock Option as may be necessary to
cause such Company Stock Option to be assumed by Parent, subject to the
amendments described in this Section 5.10. Each
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Company Stock Option shall continue to have, and be subject to, the same terms
and conditions (including, without limitation, the applicable vesting schedule,
as modified to reflect the change in the number of shares covered by such option
as described herein and the acceleration of options specified in Schedule
3.16(f) hereto) as set forth in the stock option plan and agreement (as in
effect immediately prior to the Effective Time) pursuant to which such option
was issued, except that (i) all references to the Company shall be deemed to be
references to Parent, (ii) each option shall be exercisable for that number of
whole shares of Parent Common Stock equal to the product of the number of shares
of Company Common Stock covered by such option immediately prior to the
Effective Time (without regard to vesting of exercise rights) multiplied by the
Exchange Ratio and rounded down to the nearest whole number of shares of Parent
Common Stock and (iii) the exercise price per share of Parent Common Stock under
such option shall be equal to the exercise price per share of Company Common
Stock under the Company Stock Option divided by the Exchange Ratio and rounded
to the nearest cent. The adjustment provided herein with respect to any Company
Stock Option that are ``incentive stock options'' (as defined in Section 422 of
the Code) shall be and is intended to be effected in a manner that is consistent
with Section 424(a) of the Code. Notwithstanding the foregoing, with respect to
each holder of Company Stock Options who is subject to Section 16 of the
Exchange Act (``Section 16''), the assumption of Company Stock Options by Parent
shall be effected in a manner which does not result in any liability of such
holder under Section 16. The shares of Parent Common Stock issuable upon the
exercise of each of the Company Stock Options shall be, from and after the
Effective Time, covered by an effective Registration Statement of Parent on Form
S-8 (or any successor form thereto). Parent shall (i) reserve for issuance the
number of shares of Parent Common Stock that will become issuable upon the
exercise of such Company Stock Options pursuant to this Section 5.10 and (ii)
promptly after the Effective Time issue to each holder of an outstanding Company
Stock Option a document evidencing the assumption by Parent of the Company's
obligations with respect thereto under this Section 5.10. Nothing in this
Section 5.10 shall affect the schedule of vesting with respect to Company Stock
Options to be assumed by Parent as provided in this Section 5.10.
(b) At the Effective Time, the Company Warrants shall continue to
have, and be subject to, the same terms and conditions as set forth in such
warrants as in effect immediately prior to the Effective Time, except that (A)
each such Company Warrant shall be exercisable for that number of whole shares
of Parent Common Stock equal to the product of the number of shares of the
Company Common Stock into which such warrant was exercisable immediately prior
to the Effective Time multiplied by the Common Exchange Ratio and rounded to the
nearest whole number of shares of Parent Common Stock and (B) the exercise price
per share of Parent Common Stock under such warrant shall be equal to the
exercise price per share of the Company Common Stock under such warrant
immediately prior to the Effective Time divided by the Common Exchange Ratio and
rounded to the nearest whole cent. The duration and other terms of the new
warrant shall be the same as the original Company Warrant, except that all
references to the Company shall be deemed to be references to Parent. Parent
shall (i) reserve for issuance the number of shares of Parent Common Stock that
will become issuable upon the exercise of such warrant pursuant to this Section
5.10 and (ii) promptly after the Effective Time, issue to each holder of such an
outstanding warrant a document evidencing the assumption by Parent of the
Company's obligations with respect thereto under this Section 5.10.
Section 5.11 Company Technology. After the Effective Time Parent shall
(i) pursue the development and commercialization of and otherwise exploit
Company technology, including, without limitation, continuing the Pivotal Phase
III clinical trial of the Company's autolymphocyte therapy in
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patients with metastatic renal cell carcinoma and continuing Phase I/II chronic
hepatitis B clinical study in humans, and (ii) seek the authorizations and
approvals of the U.S. Food and Drug Administration appropriate to such
exploitation, including, without limitation, approval of an Establishment
Licensing Application and Product Licensing Application; provided, however, that
Parent's obligations under this Section 5.11 shall be governed by the best
interests of Parent and the holders of Parent Common Stock as determined in good
faith by the Board of Directors of Parent.
Section 5.12 Election of Directors. Effective as of Closing, Ronald J.
Brenner, Ph.D., as the designee of Stockholder, and John E. Bagalay, Jr., Ph.D.,
will be elected to the Board of Directors of Parent. During the two-year period
commencing at the Effective Time and thereafter for so long as Stockholder owns
at least 5% of the outstanding shares of Parent Common Stock, Parent shall use
its best efforts to cause to be nominated Ronald J. Brenner, Ph.D., or such
other person designated by Stockholder, for election or re-election to Parent's
Board of Directors.
Section 5.13 Additional Agreements. Subject to the terms and conditions
of this Agreement, each of the parties hereto agrees to use all reasonable best
efforts to take, or to cause to be taken, all actions and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions contemplated by
this Agreement, including using all reasonable efforts to obtain all necessary,
waivers, consents and approvals, to effect all necessary registrations and
filings (including, but not limited to, required filings with all applicable
Governmental Entities), and to lift any injunction or legal bar to the Merger
(and, in such case, to proceed with the Merger as expeditiously as possible).
Section 5.14 Affiliate Agreements. Within two weeks of the date of this
Agreement, Parent and the Company will provide each other with a list of those
persons who are, in Parent's or the Company's respective reasonable judgment,
``affiliates'' of Parent or the Company, respectively, within the meaning of
Rule 145 (each such person who is an ``affiliate'' of Parent or the Company
within the meaning of Rule 145 is referred to as an ``Affiliate'') promulgated
under the Securities Act (``Rule 145''). Parent or the Company shall provide
each other such information and documents as Parent or the Company shall
reasonably request for purposes of reviewing such list and shall notify the
other party in writing regarding any change in the identity of its Affiliates
prior to the Closing Date. The Company shall use its best efforts to deliver or
cause to be delivered to Parent by June 30, 1995 from each of the Affiliates of
the Company, an executed Affiliate Agreement, in form and substance satisfactory
to Parent and the Company, by which each Affiliate of the Company agrees to
comply with the applicable requirements of Rule 145 (``Affiliate Agreement'').
The Surviving Corporation shall be entitled to place appropriate legends on the
certificates evidencing any Parent Common Stock to be received by such
Affiliates of Parent pursuant to the terms of this Agreement, and to issue
appropriate stop transfer instructions to the transfer agent for the Parent
Common Stock, consistent with the terms of the Affiliate Agreements.
Section 5.15 Service Agreement. Parent and the Company agree to use their
respective best efforts to enter into as promptly as practicable after the date
hereof but not later than July 1, 1995 an agreement providing for Parent to
provide the Company with certain management services prior to the Effective
Time.
Section 5.16 Continuing Benefits. Parent agrees to provide benefits to
employees of the Surviving Corporation at a level substantially similar to the
benefits now offered under the Parent Benefit Plans.
32
<PAGE>
ARTICLE 6
Conditions To Closing
Section 6.1 Conditions Precedent to Each Party's Obligation to Effect the
Merger. The respective obligations of each party to effect the Merger and the
other transactions contemplated by this Agreement shall be subject to the
satisfaction at or prior to the Effective Time of the following conditions, any
or all of which may be waived, in whole or in part, to the extent permitted by
applicable law:
Section 6.1.1 Effectiveness of the Registration Statement. The S-4
shall have been declared effective by the SEC under the Securities Act. No stop
order suspending the effectiveness of the Registration Statement shall have been
issued by the SEC, and no proceedings for that purpose shall have been
initiated, or to the knowledge of the parties, threatened by the SEC.
Section 6.1.2 Company Stockholder Approval. This Agreement, the
Merger and the transactions contemplated hereby shall have been approved and
adopted by the affirmative vote of the holders of the outstanding shares of
Company Common Stock and Company Preferred Stock, voting separately as two
classes, by the requisite vote in accordance with applicable law.
Section 6.1.3 Parent Stockholder Approval. The Parent Share Proposal
shall have been approved by the affirmative vote of the holders of Parent Common
Stock by the requisite vote in accordance with applicable law.
Section 6.1.4 Approvals. Other than the filing of the merger
documents as required by Delaware law, all authorizations, consents, waivers,
orders and approvals required to be obtained, and all filings, notices and
declarations required to be made, by Parent and the Company prior to the
consummation of the Merger and the transactions contemplated hereunder shall
have been obtained from, and made with, all required Governmental Entities and
all other third parties except for such authorizations, consents, waivers,
orders, approvals, filings, notices or declarations which would not have a
Company Material Adverse Effect or Parent Material Adverse Effect at or after
the Effective Time.
Section 6.1.5 Blue Sky Approvals. Parent shall have received all
state securities and ``blue sky'' permits and other authorizations necessary to
consummate the transactions contemplated by this Agreement.
Section 6.1.6 Nasdaq. The shares of Parent Common Stock to be issued
in the Merger and Subscription Offer shall have been approved for quotation on
the Nasdaq National Market.
Section 6.2 Conditions Precedent to Obligations of Parent and Sub. The
obligations of Sub and Parent to proceed with the Closing under this Agreement
are subject to the fulfillment prior to or at Closing of the following
conditions (any one or more of which may be waived in whole or in part by Parent
and Sub at their option):
33
<PAGE>
Section 6.2.1 Bringdown of Representations and Warranties. The
representations and warranties of the Company contained in this Agreement shall
be true and correct in all material respects on and as of the time of Closing
(except where such representations and warranties speak as of an earlier date),
with the same force and effect as though such representations and warranties had
been made on, as of and with reference to such time and Parent shall have
received a certificate signed by the Chief Executive Officer of the Company to
such effect.
Section 6.2.2 Performance and Compliance. The Company shall have
performed all of the covenants and complied with all of the provisions required
by this Agreement to be performed or complied with by it on or before the
Closing, in each case in all material respects, and Parent shall have received a
certificate signed by the Chief Executive Officer of the Company to such effect.
Section 6.2.3 Opinion of Counsel for the Company. Parent shall have
received from Hale and Dorr, counsel for the Company, an opinion dated the
Closing Date in form and substance reasonably satisfactory to Parent, to the
effects set forth in Exhibit C and specifically that the Merger will be treated
as a reorganization qualifying under the provisions of Section 368 of the Code
and that generally neither Parent, Sub nor the Company nor the holders of
Company Common Stock and Company Preferred Stock, other than certain holders in
special circumstances (such as holders who received Company Common Stock upon a
recent exercise of an option) shall recognize any gain or loss for federal
income tax purposes as a result of the Merger (except to the extent holders of
Company Common Stock and Company Preferred Stock receive cash in lieu of
fractional shares of Parent Common Stock).
Section 6.2.4 Satisfactory Instruments. All instruments and
documents required on the Company's part to effectuate and consummate the
transactions contemplated hereby shall be delivered to Parent and Sub and shall
be in form and substance reasonably satisfactory to Parent and Sub and their
counsel.
Section 6.2.5 Litigation. No temporary restraining order,
preliminary or permanent injunction or other order of any court of competent
jurisdiction or other legal or regulatory restraint or prohibition preventing
the consummation of the Merger or limiting or restricting Parent's ownership or
control of the business or the operation of the business of the Company after
the Merger shall have been issued nor shall any proceeding by a Governmental
Entity seeking any of the foregoing be pending; nor shall there be any action
taken, or any statute, rule, regulation or order enacted, entered, enforced or
deemed applicable to the Merger which makes the consummation of the Merger
illegal.
Section 6.2.6 No Material Adverse Change. There is no Company
Material Adverse Change and Parent and Sub shall have received a certificate
signed on behalf of the Company by the Chief Executive Officer of the Company to
the foregoing effect.
Section 6.2.7 Action by Stockholder. Stockholder shall have
fulfilled in all material respects its obligations under the Voting and
Subscription Agreement.
Section 6.3 Conditions Precedent to the Obligations of the Company. The
obligations of the Company to proceed with the Closing hereunder are subject to
the fulfillment prior to or at Closing of the following conditions (any one or
more of which may be waived in whole or in part by the Company at the Company's
option):
34
<PAGE>
Section 6.3.1 Bringdown of Representations and Warranties. The
representations and warranties of Parent and Sub contained in this Agreement
shall be true and correct in all material respects on and as of the time of
Closing (except where such representations and warranties speak as of an earlier
date), with the same force and effect as though such representations and
warranties had been made on, as of and with reference to such time and Sub and
Parent shall have delivered to the Company a certificate, signed by their
Presidents, to such effect.
Section 6.3.2 Performance and Compliance. Parent and Sub shall have
performed all of the covenants and complied with all the provisions required by
this Agreement to be performed or complied with by them on or before the
Closing, in each case in all material respects, and Parent and Sub shall have
delivered to the Company a certificate, signed by each of their Presidents, to
such effect.
Section 6.3.3 Opinion of Counsel for Sub and Parent. The Company
shall have received from Dechert Price & Rhoads, counsel for Parent and Sub, an
opinion dated the Closing Date in form and substance reasonably satisfactory to
the Company, to the effect set forth in Exhibit D and specifically that the
Merger will be treated as a reorganization qualifying under the provisions of
Section 368 of the Code and that generally neither Parent, Sub nor the Company
nor the holders of Company Common Stock and Company Preferred Stock, other than
certain holders in special circumstances (such as holders who received Company
Common Stock upon a recent exercise of an option) shall recognize any gain or
loss for federal income tax purposes as a result of the Merger (except to the
extent holders of Company Common Stock and Company Preferred Stock receive cash
in lieu of fractional shares of Parent Common Stock).
Section 6.3.4 Satisfactory Instruments. All instruments and
documents required on the part of Parent and Sub to effectuate and consummate
the transactions contemplated hereby shall be delivered to the Company and shall
be in form and substance reasonably satisfactory to the Company and its counsel.
Section 6.3.5 Litigation. No temporary restraining order,
preliminary or permanent injunction or other order of any court of competent
jurisdiction or other legal or regulatory restraint or prohibition preventing
the consummation of the Merger shall have been issued nor shall any proceeding
by a Governmental Entity seeking any of the foregoing be pending; nor shall
there be any action taken, or any statute, rule, regulation or order enacted,
entered, enforced or deemed applicable to the Merger which makes the
consummation of the Merger illegal.
Section 6.3.6 Election of Directors. Effective as of Closing, Ronald
J. Brenner, Ph.D., and John E. Bagalay, Jr., Ph.D., shall be elected to the
Board of Directors of Parent.
Section 6.3.7 No Material Adverse Change. There is no Parent
Material Adverse Change and the Company shall have received a certificate signed
on behalf of Parent by the President of Parent to the foregoing effect.
35
<PAGE>
ARTICLE 7
Termination
Section 7.1 When Agreement May Be Terminated. This Agreement may be
terminated at any time prior to Closing:
(i) by mutual consent of the Boards of Directors of Parent and the
Company;
(ii) by either Parent or the Company if any United States federal or
state court of competent jurisdiction or other Governmental Entity shall
have issued an injunction or taken any other action permanently
restraining, enjoining or otherwise prohibiting the Merger and such
injunction or other action shall become final and non-appealable;
(iii) by Parent, if there has been a breach by the Company of any of
its representations, warranties or covenants, or if any of the conditions
specified in Section 6.2 hereof shall not have been fulfilled by the time
required and shall not have been waived by Parent, in either case such that
the conditions to closing set forth in Sections 6.2.1 or 6.2.2 would not be
satisfied, provided, however, that if such breach is curable by the Company
through the exercise of its best efforts, Parent may not terminate this
Agreement under this Section 7.1(iii) unless such breach has not been cured
within fifteen business days after such breach is discovered by the Parent;
(iv) by the Company, if there has been a breach by Parent or Sub of
any of their representations, warranties or covenants, or if any of the
conditions specified in Section 6.3 hereof shall not have been fulfilled by
the time required and shall not have been waived by the Company, in either
case such that the conditions to closing set forth in Sections 6.3.1 or
6.3.2 would not be satisfied, provided, however, that if such breach is
curable by Parent through the exercise of its best efforts, the Company may
not terminate this Agreement under this Section 7.1(iv) unless such breach
has not been cured within fifteen business days after such breach is
discovered by the Company;
(v) by Parent or the Company if the Merger shall not have been
consummated prior to December 31, 1995; provided, however, that Parent or
the Company may terminate this Agreement pursuant to this subparagraph (v)
only if the Merger shall not have occurred by such date for a reason other
than a failure by such party to satisfy the conditions to the Merger of the
other party set forth in Section 6.2 or 6.3 hereof;
(vi) by Parent, if (i) the Board of Directors of the Company (A)
withdraws or modifies, or proposes to withdraw or modify, in a manner
adverse to Parent and Sub, the approval or recommendation by such Board of
Directors (or any committee thereof) of this Agreement or the Merger, (B)
approves or recommends, or proposes to approve or recommend, any takeover
proposal by a third party, or (C) enters into any agreement with respect to
any such takeover proposal, or (ii) any third party (other than the
Stockholder) acquires beneficial ownership or the right to acquire
beneficial ownership of 40% or more of the outstanding shares of the
Company Common Stock;
36
<PAGE>
(vii) by the Company, if the Board of Directors of the Company (A)
withdraws or modifies, or proposes to withdraw or modify, in a manner
adverse to Parent and Sub, the approval or recommendation by such Board of
Directors (or any committee thereof) of this Agreement or the Merger, (B)
approves or recommends, or proposes to approve or recommend, any takeover
proposal by a third party, or (C) enters into any agreement with respect to
any such takeover proposal, but only if the Board of Directors of the
Company, after consultation with outside counsel, determines in good faith
that such action is necessary for the Board of Directors of the Company to
comply with its fiduciary duties under applicable law; or
(viii) by either Parent or the Company if (i) the Merger and this
Agreement shall have failed to receive the requisite vote for approval and
adoption by the stockholders of the Company or (ii) the Parent Share
Proposal shall have failed to receive the requisite vote for approval by
the stockholders of Parent.
Section 7.2 Effect of Termination. In the event of termination of this
Agreement by either Parent or the Company, as provided above, this Agreement
shall forthwith terminate and there shall be no liability on the part of either
Parent or the Company or their respective officers, directors or agents, except
to the extent that such liability arises from a breach of this Agreement;
provided, however, that the obligations of the parties set forth in Sections
5.3(b), 8.2 and 7.3 and Article 9 hereof shall survive such termination.
Section 7.3 Termination and Expense Fee. If (a) this Agreement is
terminated by Parent pursuant to Section 7.1(vi) or by the Company pursuant to
Section 7.1(vii) and (b) at any time on or after the date of this Agreement
until one year following the termination of this Agreement, the Company enters
into a definitive agreement relating to a merger or business combination, the
acquisition by a third party of 40% or more of the outstanding voting securities
of the Company or the sale of substantial assets of the Company, then the
Company shall promptly, but in no event later than one business day after the
first to occur of any such event described in clause (b) (the ``Payment Date''),
pay Parent a fee of $1,000,000 (the ``Termination and Expense Fee'') related to
the transactions contemplated by this Agreement, such amount to be paid on the
Payment Date in cash in immediately available funds by wire transfer to an
account designated by Parent.
Section 7.4 Amendment. To the extent permitted by applicable law, this
Agreement may be amended by action taken by or on behalf of the Boards of
Directors of the Company, Parent and Sub at any time before or after approval of
this Agreement by the stockholders of the Company but, after any such
stockholder approval, no amendment shall be made which by law requires further
approval by such stockholders without such further approval. This Agreement may
not be amended except by an instrument in writing signed on behalf of all the
parties.
Section 7.5 Extension; Waiver. At any time prior to the Effective Time,
the parties hereto, by action taken by or on behalf of the respective Boards of
Directors of the Company, Parent or Sub, may (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties contained
herein by any other applicable party or in any document, certificate or writing
delivered pursuant hereto by any other applicable party or (iii) waive
compliance with any of the agreements or conditions contained herein. Any
agreement on the part of any party to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
party.
37
<PAGE>
ARTICLE 8
Certain Additional Covenants
Section 8.1 Expenses. Except as set forth in Section 7.3, each party
hereto will pay all fees, costs and expenses, including, without limitation,
legal fees, incurred by the parties hereto shall be borne by the party that has
incurred such fees, costs and expenses.
Section 8.2 Brokers and Finders.
(a) The Company has engaged CS First Boston Corporation as a
financial advisor in connection with this transaction, and any fee, commission
or other amount payable to such financial advisor will be paid by the Company.
The Company shall indemnify and hold Parent and Sub harmless from and against
any and all losses, liabilities, claims, obligations, damages, deficiencies,
costs, expenses and fees arising from any employment by it of, or services
rendered to it by, any finder, broker, agency or other intermediary, in
connection with the transactions contemplated hereby, or any allegation of any
such employment or services.
(b) Parent has engaged Smith Barney Inc. as a financial advisor in
connection with this transaction, and any fee, commission or other amount
payable to such financial advisor will be paid by Parent. Parent and Sub shall
indemnify and hold the Company harmless from and against any and all losses,
liabilities, claims, obligations, damages, deficiencies, costs, expenses and
fees arising from any employment by it of, or services rendered to it by, any
finder, broker, agency or other intermediary, in connection with the
transactions contemplated hereby, or any allegation of any such employment or
services.
Section 8.3 Indemnification. (a) From and after the Effective Time,
Surviving Corporation shall indemnify, defend and hold harmless each person who
is now, or has been at any time prior to the date of this Agreement or who
becomes prior to the Effective Time, an officer, director or employee of the
Company (the ``Indemnified Parties'') against (i) all losses, claims, damages,
costs, expenses, liabilities or judgments or amounts that are paid in settlement
with the approval of the indemnifying party (which approval shall not be
unreasonably withheld) of or in connection with any claim, action, suit,
proceeding or investigation based in whole or in part on or arising in whole or
in part out of the fact that such person is or was a director, officer or
employee of the Company, whether pertaining to any matter existing or occurring
at or prior to the Effective Time and whether asserted or claimed prior to, or
at or after, the Effective Time (``Indemnified Liabilities'') and (ii) all
Indemnified Liabilities based in whole or in part on, or arising in whole or in
part out of, or pertaining to this Agreement or the transactions contemplated
hereby, in each case to the full extent a corporation is permitted under the
DGCL to indemnify its own directors, officers and employees, as the case may be
(Surviving Corporation will pay expenses in advance of the final disposition of
any such action or proceeding to each Indemnified Party to the full extent
permitted by law upon receipt of any undertaking contemplated by Section 145(e)
of the DGCL). Without limiting the foregoing, in the event any such claim
action, suit, proceeding or investigation is brought against any Indemnified
Party (whether arising before or after the Effective Time), (i) the Indemnified
Parties may retain counsel satisfactory to them and the Company (or after the
Effective Time, them and the Surviving Corporation), (ii) the Company (or after
the Effective Time, the Surviving Corporation) shall pay all reasonable fees and
expenses of such counsel for the Indemnified Parties promptly as statements
therefor are received, and (iii) the Company (or after the Effective Time, the
Surviving Corporation)
38
<PAGE>
will use all reasonable efforts to assist in the vigorous defense of any such
matter, provided that neither of the Company nor the Surviving Corporation shall
be liable for any settlement of any claim effected without its written consent,
which consent, however, shall not be unreasonably withheld. Any Indemnified
Party wishing to claim indemnification under this Section 8.3, upon learning of
any such claim action, suit, proceeding or investigation, shall promptly notify
the Company or the Surviving Corporation (but the failure so to notify an
Indemnifying Party shall not relieve it from any liability which it may have
under this Section 8.3 except to the extent such failure prejudices such party),
and shall deliver to the Company (or after the Effective Time, the Surviving
Corporation) the undertaking contemplated by Section 145(e) of the DGCL. The
Indemnified Parties as a group may retain only one law firm to represent them
with respect to each such matter unless there is, under applicable standards of
professional conduct, a conflict on any significant issue between the positions
of any two or more Indemnified Parties. Parent hereby guarantees the
performance by the Surviving Corporation of its obligations pursuant to this
Section 8.3(a).
(b) Prior to the Effective Time, the Company may purchase, subject to
Section 5.1.4, a directors' and officers' liability insurance policy at a total
cost of not more than $240,000. Parent will not, after the Effective Time,
cause such policy to be rescinded or materially altered.
(c) The provisions of this Section 8.3 are intended to be for the
benefit of, and shall be enforceable by, each Indemnified Party, his or her
heirs and representatives.
ARTICLE 9
Miscellaneous
Section 9.1 Nonsurvival of Representations and Warranties. The
representations, warranties and agreements in this Agreement or in any
instrument delivered pursuant to this Agreement shall terminate at the Effective
Time or upon termination of this Agreement pursuant to Article 7, except that
the agreements set forth in Sections 1.5, 2.1, 2.2, 2.3, 2.4, 5.3(b), 5.10 5.11,
5.12, 5.13, 5.16, 8.3, the last sentence of Section 7.4, Article 9 and the
Agreements of the Affiliates of the Company delivered pursuant to Section 5.14
shall survive the Effective Time and those set forth in Sections 5.3(b), 7.2,
7.3, 8.2 and Article 9 shall survive termination.
Section 9.2 Notices. All notices, requests, demands, applications,
services of process and other communications which are required to be or may be
given under this Agreement will be in writing and will be deemed to have been
duly given if sent by telecopier or facsimile transmission, answer back
requested, or delivered by courier or mailed, certified first class mail,
postage prepaid, return receipt requested, to the parties hereto at the
following addresses:
To Parent and Sub:
Cytogen Corporation
600 College Road East
Princeton, NJ 08540-5308
Attention: Thomas J. McKearn, M.D., Ph.D.
Telecopy: (609) 951-9298
39
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Copy to:
Dechert Price & Rhoads
1717 Arch Street
4000 Bell Atlantic Tower
Philadelphia, PA 19103-2793
Attention: Christopher G. Karras, Esq.
Telecopy: (215) 994-2222
To the Company:
Cellcor, Inc.
200 Wells Avenue
Newton, MA 02159
Attention: President
Telecopy: (617) 332-9690
Copy to:
Hale and Dorr
60 State Street
Boston, MA 02109
Attention: Steven D. Singer, Esq.
Telecopy: (617) 526-5000
or to such other address as any party will have furnished to the other, notice
given in accordance with this Section. Such notice will be effective, (i) if
delivered in Person or by courier, upon actual receipt by the intended
recipient, or (ii) if sent by telecopy or facsimile transmission, when answer
back is received, or (iii) if mailed, upon the earlier of five days after
deposit in the mail and the date of delivery as shown by the return receipt
therefor.
Section 9.3 Binding Effect. This Agreement, and all rights and powers
granted hereby, will bind and inure to the benefit of the parties hereto and
their respective successors and permitted assigns, except that neither this
Agreement nor any of the rights, interests or obligations hereunder may be
assigned without the prior written consent of the other parties hereto.
Section 9.4 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware without giving
effect to principles of conflicts of laws. The parties hereto irrevocably
consent to the exclusive jurisdiction of the Court of Chancery of Delaware or
the United States District Court for the District of Delaware in any and all
actions and proceedings arising hereunder and irrevocably agree to service of
process by certified mail return receipt requested to the address of such party
set forth herein.
Section 9.5 Headings. The headings preceding the text of the sections and
subsections hereof are inserted solely for convenience of reference, and shall
not constitute a part of this Agreement, nor shall they affect its meaning,
construction or effect.
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Section 9.6 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but which together
shall constitute one and the same instrument.
Section 9.7 Further Assurances. Each party shall cooperate and take such
action as may be reasonably requested by another party in order to carry out the
provisions and purposes of this Agreement and the transactions contemplated
hereby.
Section 9.8 Entire Agreement. This Agreement and the Schedules and
Exhibits hereto, each of which is hereby incorporated herein, set forth all of
the promises, covenants, agreements, conditions and undertakings between the
parties hereto with respect to the subject matter hereof, and supersede all
prior and contemporaneous agreements and understandings, inducements or
conditions, express or implied, oral or written.
Section 9.9 Parties-in-Interest. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto, and nothing in this Agreement,
express or implied, is intended to confer upon any other person any rights or
remedies of any nature whatsoever under or by reason of this Agreement except
for Section 8.3 (which is intended to be for the benefit of the persons entitled
to indemnification and insurance therein, and may be enforced by such persons).
Section 9.10 Construction. This Agreement has been negotiated by the
parties hereto and their respective legal counsel, and legal or equitable
principles that might require the construction of this Agreement or any
provision of this Agreement against the party drafting this Agreement will not
apply in any construction or interpretation of this Agreement.
Section 9.11 Definitions. As used in this Agreement:
(a) ``Affiliate'' shall have the meaning set forth in Rule 12b-2
promulgated by the SEC under the Exchange Act.
(b) ``Governmental Entity'' means the United States of America, any
state, commonwealth, territory, or possession thereof and any political
subdivision or quasi-governmental authority of any of the same, including any
court, tribunal, department, commission, board, bureau, agency, county,
municipality, province, parish or other instrumentality.
(c) ``Judgment'' means any judgment, writ, order, injunction, award
or decree of any court, judge, justice or magistrate, including any bankruptcy
court or judge or the arbitrator in any binding arbitration, and any order of or
by any Governmental Entity.
(d) ``knowledge'' means, when referring to any corporation, the
actual knowledge of the executive officers of such corporation without
independent inquiry, and with respect to any other Person, the actual knowledge
of such Person without independent investigation.
(e) ``Litigation'' means any claim, action, suit, proceeding,
arbitration, hearing or other activity or procedure that could result in a
Judgment, and any notice of any of the foregoing.
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(f) ``Person'' means any human being, Governmental Entity,
corporation, general or limited partnership, limited liability company, joint
venture, trust, association or unincorporated entity of any kind.
(g) The following terms are defined in the Section of this Agreement
noted below:
<TABLE>
<CAPTION>
Term
<S> <C>
Affiliate Agreement....................5.15
Andersen...............................4.8(b)
Benefit Plans..........................3.17(a)
Certificates...........................2.2.2
Closing................................1.2
Closing Date...........................1.2
Code...................................Recitals
Company Audited Financial Statements...3.9(b)
Company Common Stock...................2.1(i)
Common Exchange Ratio..................2.1(iii)
Company Financial Statements...........3.9(b)
Company Intellectual Property Rights...3.15(a)
Company Material Adverse Effect........3.2
Company Meeting........................2.5
Company Permits........................3.13
Company Permitted Encumbrances.........3.14
Company Preferred Stock................2.1(iv)
Company SEC Reports....................3.9(a)
Company Stock Options..................2.3
Company Third Party
Intellectual Property Rights.........3.15(a)
Company Warrants.......................2.4
Contingent Value Rights................4.4
DGCL...................................Recitals
Effective Time.........................1.3
Environmental Laws.....................3.19
ERISA..................................3.17(a)
ERISA Affiliate........................3.17(a)
Exchange Act...........................3.8
Exchange Agent.........................2.2.1
Exchange Fund..........................2.2.1
GAAP...................................3.9(b)
Hazardous Materials....................3.19
Incentive Stock Options................5.10(a)
Indemnified Parties....................8.3
Indemnified Liabilities................8.3
Joint Proxy Statement..................3.2.7
KPMG...................................3.9(b)
Merger.................................Recitals
Notice of Takeover Proposal............5.2(b)
Parent Audited Financial Statements....4.8(b)
Parent Benefit Plans...................4.16
Parent Common Stock....................2.1(iii)
Parent Financial Statements............4.8(b)
Parent Intellectual
Property Rights........................4.14(a)
Parent Material Adverse
Effect.................................4.2
Parent Meeting.........................2.5(b)
Parent Permits.........................4.12
Parent Permitted
Encumbrances...........................4.13
Parent ERISA Affiliate.................4.16(a)
Parent Preferred Stock.................4.4
Parent SEC Reports.....................4.8(a)
Parent Share Proposal..................2.5(b)
Parent Stock Options...................4.4
Parent Third Party
Intellectual Property Rights...........4.14(a)
Parent Warrants........................4.4
Payment Date...........................7.3
Preferred Exchange Ratio...............2.1(iv)
Rule 145...............................5.14
S-4....................................2.5(a)
SEC....................................2.5(a)
Section 16.............................5.10(a)
Securities Act.........................3.8
Stockholder............................Recitals
Sub Common Stock.......................2.1(ii)
Subscription Offer.....................5.6
Takeover Proposal......................5.2(a)
Surviving Corporation..................Recitals
Surviving Corporation
Common Stock...........................2.1(ii)
Taxes..................................3.11(a)
Tax Returns............................3.11(a)
Termination and Expense Fee............7.3
Voting and Subscription Agreement......Recitals
</TABLE>
42
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day
and year first above written.
CYTOGEN CORPORATION
By: /s/ Thomas J. McKearn
-----------------------------------------
Name: Thomas J. McKearn
Title: President and Chief Executive Officer
SMALL-C ACQUISITION CORP.
By: /s/ Thomas J. McKearn
-----------------------------------------
Name: Thomas J. McKearn
Title: President and Chief Executive Officer
CELLCOR, INC.
By: /s/ Richard R. D'Antoni
-----------------------------------------
Name: Richard R. D'Antoni
Title: President and Chief Executive Officer
43
<PAGE>
Annex A
FIRST AMENDMENT TO
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
CYTOGEN CORPORATION,
CELLCOR ACQUISITION CORP.
AND
CELLCOR, INC.
THIS FIRST AMENDMENT TO AGREEMENT AND PLAN OF MERGER (the "First
Amendment") is entered into as of the 7th day of September, 1995 by and among
Cytogen Corporation, a Delaware corporation ("Parent"), Cellcor Acquisition
Corp. (formerly known as Small-C Acquisition Corp.), a Delaware corporation and
a wholly-owned subsidiary of Parent ("Sub"), and Cellcor, Inc., a Delaware
corporation (the "Company").
BACKGROUND
----------
The parties hereto have entered into an Agreement and Plan of Merger dated
as of June 15, 1995 (the "Agreement"). The parties now desire to amend the
Agreement on the terms and conditions set forth herein to provide for the merger
of the Company with and into Sub pursuant to the terms of the General
Corporation Law of the State of Delaware, with Sub as the surviving corporation
in the merger. The merger is intended to qualify as a reorganization within the
meaning of Sections 368(a)(1)(A) and 368(a)(2)(D) of the Internal Revenue Code
of 1986, as amended. Capitalized terms not defined herein shall have the
meanings ascribed to them in the Agreement, as amended hereby.
AGREEMENT
---------
For good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, and intending to be legally bound, the parties hereby
agree as follows:
1. The first paragraph of the Background section of the Agreement is
hereby amended and restated as follows:
"Parent, Sub and the Company and their respective Boards of Directors deem
it advisable and to the advantage, welfare and best interests of said
corporations and their respective stockholders to merge the Company with and
into Sub (the "Merger") under the General Corporation Law of the State of
Delaware ("DGCL") pursuant to the terms of the Agreement, with Sub as the
surviving corporation in the Merger (the "Surviving Corporation") and a wholly-
owned subsidiary of Parent, and the stockholders of the Company becoming
stockholders of Parent;"
<PAGE>
2. Article 1, Section 1.1 of the Agreement is hereby amended and restated
as follows:
"Section 1.1 The Merger. At the Effective Time (as defined in Section
1.3), the Merger shall be effectuated in accordance with the applicable
provisions of the DGCL, the separate existence of the Company shall thereupon
cease and Sub shall be the Surviving Corporation and shall change its name to
Cellcor, Inc. Subject to the terms and conditions hereof, the parties hereto
shall take all action necessary in accordance with applicable law and the
respective Certificates of Incorporation and Bylaws of Sub and the Company to
cause the Merger to be consummated as soon as is reasonably practicable."
3. Article 1, Section 1.4 of the Agreement is hereby amended and restated
as follows:
"Section 1.4 Effects of the Merger. The Merger shall have the effects set
forth in Section 259 of the DGCL. As of the Effective Time, Sub, as the
Surviving Corporation, shall be a wholly-owned subsidiary of Parent."
4. Article 1, Sections 1.5(a) and (b) of the Agreement are hereby amended
and restated as follows:
"(a) The Certificate of Incorporation of Sub as in effect as of the
Effective Time shall be the Certificate of Incorporation of the Surviving
Corporation until altered, amended or repealed.
(b) The Bylaws of Sub as in effect as of the Effective Time shall be the
Bylaws of the Surviving Corporation until altered, amended or repealed."
5. Article 2, Section 2.1(ii) of the Agreement is hereby amended and
restated as follows:
"(ii) Each share of common stock of Sub, par value $.01 per
share ("Sub Common Stock"), that is issued and outstanding
immediately prior to the Effective Time shall continue to
be one (1) share of common stock of the Surviving
Corporation, par value $.01 per share ("Surviving
Corporation Common Stock"), and each certificate
evidencing ownership of any such shares shall evidence
ownership of the same number of shares of the Surviving
Corporation Common Stock."
2
<PAGE>
6. Article 5, Section 5.1.4(xii) of the Agreement is hereby amended
and restated as follows:
"(xii) incur any debt or other obligation for money borrowed
(other than in an amount not greater than $4,967,118 pursuant to the Company's
promissory note in the form of Exhibit B);"
7. Exhibits C and D to the Agreement are hereby amended and restated
in the form attached as Exhibit 1 hereto. The Company will also cause its
regulatory counsel to deliver an opinion regarding FDA matters, in a form and
substance reasonably satisfactory to Parent and its counsel.
8. The Company hereby represents and warrants to Parent and Sub as
follows:
8.1 No Violation of Laws or Agreements. Except for the receipt
of any required approval of the stockholders of the Company, the execution and
delivery of the First Amendment do not, and the consummation of the transactions
contemplated by the Agreement, as amended by the First Amendment, and the
compliance with the terms, conditions and provisions of the Agreement, as
amended by the First Amendment, by the Company, will not (a) contravene any
provision of the Company's Certificate of Incorporation or Bylaws, (b) conflict
with or result in a breach of or constitute a default (or an event which would,
with the passage of time or the giving of notice or both, constitute a default)
under any of the terms, conditions or provisions of any indenture, mortgage,
loan or credit agreement or any other agreement or instrument which is material
to and to which the Company is a party or by which it or any of its assets may
be bound, except for those agreements for which consents or waivers shall have
been obtained prior to the Effective Time and copies of which shall have been
provided to Cytogen and its counsel promptly upon a determination being made
that such consents or waivers are required, (c) conflict with or result in any
violation of any Judgment of any court or Governmental Entity applicable to and
binding upon the Company, (d) result in the creation or imposition of any lien,
claim, security interest, charge, restriction or encumbrance of any nature
whatsoever upon any of the Company's assets, except the Company Permitted
Encumbrances, or (e) affect any franchise, license, permit or other governmental
approval that would adversely affect the Company's business. Except as set
forth on Schedule 3.7 to the Agreement, as amended by the First Amendment, no
investigation or review of the Company by any Governmental Entity or any other
Person is pending or, to the knowledge of the Company, threatened, nor has any
Governmental Entity or any other Person indicated an intention to conduct same.
8.2 Consents. No consent, approval or authorization of, or
registration or filing with, any Person, including any Governmental Entity or
other regulatory agency, is required (a) in connection with the execution and
delivery of the First Amendment by the Company or the consummation of the
transactions contemplated by the Agreement, as amended by the First Amendment,
(b) to prevent the termination of any material right, privilege, license or
agreement of the Company, or to prevent any material loss to the Company's
business, by reason
3
<PAGE>
of the transactions contemplated by the Agreement, as amended by the First
Amendment, except for (i) the filing by Parent and the effectiveness of the S-4
with the SEC in accordance with the Securities Act, (ii) the filing of the
Certificate of Merger with the Delaware Secretary of State, (iii) the filing of
the Joint Proxy Statement with the SEC in accordance with the Exchange Act, (iv)
the approval of the Merger and the adoption of the Agreement as amended by the
First Amendment, at the Company Meeting, (v) such consents, approvals, orders,
authorizations, registrations, declarations and filings as may be required under
applicable federal and state securities or "blue sky" laws and (vi) such
consents, approvals, orders, authorizations, registrations, declarations and
filings which shall have been obtained prior to the Effective Time.
9. The Parent and Sub hereby represent and warrant to the Company as
follows:
9.1 No Violation of Laws or Agreements. Except for the receipt
of any required approval of the stockholders of the Company, the execution and
delivery of the First Amendment do not, and the consummation of the transactions
contemplated by the Agreement, as amended by the First Amendment, and the
compliance with the terms, conditions and provisions of the Agreement, as
amended by the First Amendment, by Parent and Sub, will not (a) contravene any
provision of the Certificate of Incorporation or Bylaws of Parent or Sub, (b)
conflict with or result in a breach of or constitute a default (or an event
which would, with the passage of time or the giving of notice or both,
constitute a default) under any of the terms, conditions or provisions of any
indenture, mortgage, loan or credit agreement or any other agreement or
instrument which is material to Parent or Sub and to which Parent or Sub is a
party or by which they or any of their assets may be bound, (c) conflict with or
result in any violation of any Judgment of any court or Governmental Entity
applicable to and binding upon Parent or Sub, (d) result in the creation or
imposition of any lien, claim, security interest, charge, restriction or
encumbrance of any nature whatsoever upon any of Parent's or Sub's assets,
except the Parent Permitted Encumbrances, or (e) affect any franchise, license,
permit or other governmental approval that would adversely affect Parent's
business. No investigation or review of Parent by any Governmental Entity or
any other Person is pending or, to the knowledge of Parent, threatened, nor has
any Governmental Entity or any other Person indicated an intention to conduct
same.
9.2 Consents. No consent, approval or authorization of, or
Registration or filing with, any Person, including any Governmental Entity or
other regulatory agency, is required in connection with the execution and
delivery of the First Amendment by Parent or Sub or the consummation of the
transactions contemplated by the Agreement, as amended by the First Amendment,
except for (i) the filing and effectiveness of the S-4 with the SEC in
accordance with the Securities Act, (ii) the filing of the Certificate of Merger
with the Delaware Secretary of State, (iii) the filing of the Joint Proxy
Statement with the SEC in accordance with the Exchange Act, (iv) the approval of
the Parent Share Proposal at the Parent Meeting, (v) the filing of the pre-
merger notification report, and the expiration or termination of the waiting
period, under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, by Parent and the Stockholder with respect to the shares of Parent
Common Stock to be purchased by the
4
<PAGE>
Stockholder with respect to the shares of Parent Common Stock to be purchased by
the Stockholder in the Subscription Offer, (vi) such consents, approvals,
orders, authorizations, registrations, declarations and filings as may be
required under applicable federal and state securities or "blue sky" laws and
(vii) such consents, approvals, orders, authorizations, registrations,
declarations and filings which shall have been obtained prior to the Effective
Time.
10. Counterparts. The First Amendment may be signed in any number of
counterparts, and by the different parties hereto on separate counterparts, each
of which shall be deemed an original and all of which shall constitute one and
the same instrument, and in pleading or providing any provisions thereof it
shall not be necessary to produce more than one such counterpart. The First
Amendment shall become binding when one or more counterparts hereof,
individually or taken together, shall bear the signatures of all of the parties
reflected thereon as the signatories.
11. Continued Effect. All of the other terms, covenants, and
conditions of the Agreement, unless expressly amended by the First Amendment or
as may be required in order to give effect to the amendments set forth in the
First Amendment, shall remain in full force and effect.
12. Governing Law. The First Amendment shall be governed by and
construed in accordance with the laws of the State of Delaware, without regard
to the conflicts of laws provisions thereof.
5
<PAGE>
IN WITNESS WHEREOF, the parties have executed this First Amendment as
of the date and year first set forth above.
CYTOGEN CORPORATION
By: /s/ Thomas J. McKearn
----------------------------
Name: Dr. Thomas J. McKearn
Title: President and
Chief Executive Officer
CELLCOR ACQUISITION CORP.
By: /s/ Thomas J. McKearn
----------------------------
Name: Dr. Thomas J. McKearn
Title: President
CELLCOR, INC.
By: /s/ Ronald J. Brenner
----------------------------
Name: Dr. Ronald J. Brenner
Title: President and
Chief Executive Officer
6
<PAGE>
ANNEX B
CONFORMED COPY
VOTING AND SUBSCRIPTION AGREEMENT
This is a VOTING AND SUBSCRIPTION AGREEMENT (the "Agreement"), dated June
15, 1995, among CYTOGEN CORPORATION, a Delaware corporation ("Parent"),
SMALL-C ACQUISITION CORP., a Delaware corporation and wholly-owned subsidiary of
Parent ("Sub"), and the entities listed on Schedule I to this Agreement (the
"Stockholders").
Background
A. Concurrently herewith, Parent, Sub and Cellcor, Inc., a Delaware
corporation (the "Company"), are entering into an Agreement and Plan of Merger
of even date herewith (the "Merger Agreement") (all capitalized terms used but
not defined herein shall have the meanings set forth in the Merger Agreement),
providing for the merger (the "Merger") of Sub with and into the Company with
the result that the Company will be the Surviving Corporation and a wholly-owned
subsidiary of Parent.
B. Stockholders directly own of record and beneficially 2,759,379 shares
(the "Common Shares") of common stock of the Company, par value $.01 per share
("Company Common Stock"), representing approximately 50.5% of the shares of
Company Common Stock issued and outstanding on the date hereof and 5,000 shares
(the "Preferred Shares") of the series of preferred stock, par value $.01 per
share, designated as "Convertible Preferred Stock" of the Company ("Company
Preferred Stock") (together with any shares of Company Common Stock or Company
Preferred Stock acquired by Stockholder after the date hereof and prior to the
termination hereof, whether upon the exercise of options, conversion of
convertible securities or otherwise, and as adjusted by any stock split or
similar event, the "Shares").
C. Contemporaneously with the solicitation of proxies for approval of the
Merger and the Merger Agreement by the holders of Company Common Stock and
Company Preferred Stock, Parent shall make an offer (the "Subscription Offer")
to the holders of Company Common Stock enabling such stockholders to purchase
1.118 fully-paid and non-assessable shares of the common stock of Parent, par
value $.01 per share ("Parent Common Stock"), for each share of Company Common
Stock held by such stockholder at a purchase price of $3.89 per share (the
"Offer Price") of Parent Common Stock.
D. As a condition to their willingness to enter into the Merger Agreement,
Parent and Sub have required that the Stockholders agree, and the Stockholders
have agreed, (i) to vote the Shares in favor of the Merger and to adopt the
Merger Agreement, (ii) to grant a proxy to Sub to vote the Shares, (iii) to
refrain from electing to treat the Merger as a liquidation pursuant to the
Certificate of Designation of the Company Preferred Stock, and (iv) to purchase
for cash shares of Parent Common Stock offered to Stockholder as part of the
Subscription Offer, which will be 3,084,833 shares of Parent Common Stock for an
aggregate cash purchase price of $12,000,000, all on the terms and subject to
the conditions provided for herein.
Terms
Intending to be legally bound, in consideration of the premises and the
mutual covenants herein contained, Parent and each Stockholder severally, as to
itself, and not jointly, hereby agree as follows:
<PAGE>
1. Agreement to Vote; No Alternative Sale; Purchase.
(a) Voting. Stockholders hereby agree that, during the time this
Agreement is in effect, at any meeting of the stockholders of the Company,
however called (or to act by consent in lieu of a meeting), Stockholder shall
vote the Shares (i) in favor of the Merger; (ii) against any action or agreement
that would result in a breach of any covenant, representation or warranty or any
other obligation or agreement of the Company under the Merger Agreement; and
(iii) against any action or agreement (other than the Merger Agreement or the
transactions contemplated thereby) that would impede, interfere with, delay,
postpone or attempt to discourage the Merger, including, but not limited to: (A)
any extraordinary corporate transaction, such as a merger, consolidation or
other business combination involving the Company; (B) a sale or transfer of
assets of the Company or a reorganization, recapitalization or liquidation of
the Company; (C) any change in the management or board of directors of the
Company, except as provided in the Merger Agreement or otherwise agreed to in
writing by Parent; (D) any material change in the current capitalization of the
Company; (E) any proposal to declare or pay a dividend or distribution on the
capital stock of the Company; or (F) any other material change in the Company's
corporate structure or business.
(b) No Election. Hillman Medical Ventures 1994 L.P. owns of record and
beneficially 5,000 Preferred Shares and shall not elect, by notice to the
Company or otherwise, to treat the Merger as a "liquidation" pursuant to
Subsection 2(c) of the Certificate of Designation of the Company Preferred
Stock.
(c) Proxy. Each Stockholder hereby grants to Sub a proxy to vote all
Shares held by such Stockholder as indicated in Section 1(a)(i) above (or to act
by consent in lieu of a meeting). Each Stockholder intends this proxy to be
irrevocable and coupled with an interest and will take such further action or
execute such other instruments as may be necessary to effectuate the intent of
this proxy and hereby revokes any proxy previously granted by it with respect to
the Shares.
(d) No Alternative Sale. Each Stockholder agrees that it shall not
contract to sell, sell, or otherwise transfer or dispose of any Shares or any
interest therein or any voting rights with respect thereto, other than pursuant
to the Merger, or with Parent's written consent. Each Stockholder agrees that it
shall not take any action that would adversely affect the voting power of any of
the Shares.
(e) Commitment to Purchase. Subject to the terms and conditions set
forth herein, upon the Effective Time, Juliet Challenger, Inc., and Hillman
Medical Ventures 1995 L.P. shall purchase for cash 3,084,833 shares of Parent
Common Stock offered to the Stockholders for aggregate cash consideration of
$12,000,000; provided, however, that to the extent up to 128,534 shares of
Parent Common Stock are purchased in the Subscription Offer for up to $500,000
by Persons other than the Stockholders, the commitment under this Section 1
shall be reduced by an amount equal to such other purchases, but not to less
than 2,956,299 shares and $11,500,000. It shall be a condition precedent to the
Stockholders' obligation to purchase the shares of Parent Common Stock offered
to the Stockholders in the Subscription Offer that (i) the waiting period under
the HSR Act shall have expired or been terminated and (ii) no order, decree or
ruling issued by any Governmental Entity shall be in effect prohibiting the
purchase or delivery of the shares of Parent Common Stock in the Subscription
Offer.
2
<PAGE>
(f) Holding Period. For a two-year period after the Effective Time, no
Stockholder shall contract to sell, sell or otherwise transfer or dispose of any
shares of Parent Common Stock received upon exchange of the Shares in the Merger
or purchased in the Subscription Offer or any interest therein or any voting
rights with respect thereto (the "Converted Shares"), except a Stockholder may
transfer its Converted Shares after the Effective Time to an affiliate of any
Stockholder who agrees in a writing delivered to the Company to be bound by the
provisions of this Section 1(f). Upon each of the second anniversary of the
Effective Time, six months thereafter and the third anniversary of the Effective
Time, each Stockholder may contract to sell, sell, or otherwise transfer or
dispose of one-third, two-thirds or all of the Converted Shares, respectively.
(g) Repayment of Promissory Note. Parent shall transfer the proceeds of
the Subscription Offer to the Surviving Corporation so as to enable the
Surviving Corporation to perform its obligations under the promissory note in
the form attached as Exhibit B to the Merger Agreement.
(h) Registration Rights. Upon the purchase of the shares of Parent
Common Stock in the Subscription Offer, Parent and the Stockholders shall enter
into a Registration Rights Agreement in the form attached as Exhibit I.
2. Expiration. If the Effective Time shall not have occurred by December
31, 1995, this Agreement and the parties' obligations provided herein (and the
proxy provided for in Section 1(c) hereof) shall terminate on the first to occur
of (a) termination of the Merger Agreement in accordance with its terms, (b)
December 31, 1995, or (c) written notice of termination of this Agreement by
Parent to Stockholder. If the Effective Time shall have occurred, this
Agreement and each of the parties' obligations provided herein shall terminate,
other than the provisions of Sections 1(e), 1(f), 1(g), 1(h), 3, 4, 8 and 9,
which shall not terminate (except as provided in Section 3(d)).
3. Representation and Warranties of Parent. Parent hereby represents and
warrants to each Stockholder as follows:
(a) Organization and Qualification. Parent is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has the requisite corporate power to carry
on its business as it is now being conducted. Parent is duly qualified as a
foreign corporation to do business, and is in good standing, in each
jurisdiction where the character of its properties owned or leased or the nature
of its activities makes such qualification necessary, except where the failure
to be so qualified would not result in a material adverse effect on Parent.
(b) Authority Relative to this Agreement. Each of Parent and Sub has
all requisite corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby. The execution
and delivery by Parent and Sub of this Agreement and the consummation by them of
the transactions contemplated hereby have been duly and validly authorized by
the respective Board of Directors of Parent and no other corporate proceedings
on the part of Parent or Sub are necessary to authorize this Agreement or to
consummate the transactions so contemplated by this Agreement. This Agreement
has been duly and validly executed and delivered by Parent and Sub and, assuming
this Agreement has been duly and validly executed by Stockholder, this Agreement
3
<PAGE>
constitutes a valid and binding agreement of Parent and Sub enforceable against
Parent and Sub in accordance with its terms.
(c) Consents and Approvals; No Violation. Neither the execution and
delivery of this Agreement by Parent nor the consummation of the transactions
contemplated hereby will (i) conflict with or result in any breach of any
provision of the Certificate of Incorporation or Bylaws of Parent, (ii) require
any consent, approval, authorization or permit of, or filing with or
notification to, any governmental or regulatory authority, except (A) in
connection with the HSR Act, (B) pursuant to the Exchange Act, (C) such filings
and approvals as may be required under the "blue sky", takeover or securities
laws of various states, or (E) where the failure to obtain such consent,
approval, authorization or permit, or to make such filing or notification, would
not prevent or delay consummation of the transactions contemplated by this
Agreement or would not otherwise prevent Parent from performing its obligations
under this Agreement; (iii) result in a default (or give rise to any right of
termination, cancellation or acceleration) under any of the terms, conditions or
provisions of any note, license, agreement or other instrument or obligation to
which Parent or any of its subsidiaries is a party or by which any of its
subsidiaries or any of their respective assets may be bound, except for such
defaults (or rights of termination, cancellation or acceleration) as to which
requisite waivers or consents have been obtained or which, in the aggregate,
would not result in a material adverse effect on Parent; or (iv) violate any
order, writ, injunction, decree, statute, rule or regulation applicable to
Parent, any of its subsidiaries or any of their respective assets, except for
violations which would not result in a material adverse effect on Parent.
(d) Additional Representations and Warranties. The representations and
warranties of Parent contained in the Merger Agreement (a copy of which has been
delivered to the Stockholders) are hereby incorporated by reference, and
revised, where necessary, to provide that they are being made to the
Stockholders, provided, however, that all such representations and warranties
other than those contained in Section 4.7 of the Merger Agreement shall
terminate on the first anniversary of the Effective Time.
4. Representations and Warranties of Stockholders. The entities listed on
Schedule I each, severally as to themselves and not jointly, hereby represent
and warrant to Parent as follows:
(a) Ownership of Shares. The Shares shown opposite each Shareholder's
name on Schedule I are owned of record and beneficially by such Stockholder.
Such Shares constitute all of the Company Common Stock and Preferred Common
Stock owned of record or beneficially by such Stockholder. Stockholder has sole
voting power and sole power of disposition with respect to all of the Shares,
with no restrictions, subject to applicable federal securities laws, on
Stockholder's rights of disposition pertaining thereto. Stockholder has good and
valid title to the Shares, free and clear of any Lien, other than pursuant to
this Agreement.
(b) Organization; Authority Relative to this Agreement. Stockholder has
been duly organized and is validly existing under the laws of the jurisdiction
under which it was organized and has the legal capacity, power and authority to
carry on its activities as they are now being conducted. Stockholder has the
legal capacity, power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery by
Stockholder of this
4
<PAGE>
Agreement and the consummation by Stockholder of the transactions contemplated
hereby have been duly and validly authorized by the Board of Directors, the
general partner or the trustees, as appropriate, of Stockholder and no other
proceedings on the part of Stockholder are necessary to authorize this Agreement
or to consummate the transactions so contemplated by this Agreement. This
Agreement has been duly and validly executed and delivered by Stockholder and,
assuming this Agreement has been duly and validly executed and delivered by
Parent, this Agreement constitutes a valid and binding agreement of Stockholder
enforceable against Stockholder in accordance with its terms.
(c) Consents and Approvals; No Violation. Neither the execution and
delivery of this Agreement by Stockholder nor the consummation of the
transactions contemplated hereby will (i) conflict with or result in any breach
of any provision of the Certificate of Incorporation or Bylaws, the Partnership
Agreement or the other organizational documents of Stockholder, as appropriate,
(ii) require any consent, approval, authorization or permit of, or filing with
or notification to, any governmental or regulatory authority, except (A) in
connection with the HSR Act, (B) pursuant to the Exchange Act, (C) such filings
and approvals as may be required under the "blue sky", takeover or securities
laws of various states, or (D) where the failure to obtain such consent,
approval, authorization or permit, or to make such filing or notification, would
not prevent or delay consummation of the transactions contemplated by this
Agreement or would not otherwise prevent Stockholder from performing its
obligations under this Agreement; (iii) result in a default (or give rise to any
right of termination, cancellation or acceleration) under any of the terms,
conditions or provisions of any note, license, agreement or other instrument or
obligation to which Stockholder or any of its subsidiaries, if any, is a party
or by which any of its subsidiaries, if any, or any of their respective assets
may be bound, except for such defaults (or rights of termination, cancellation
or acceleration) as to which requisite waivers or consents have been obtained or
which, in the aggregate, would not result in a material adverse effect on
Stockholder; or (iv) violate any order, writ, injunction, decree, statute, rule
or regulation applicable to Stockholder, any of its subsidiaries, if any, or any
of their respective assets, except for such circumstances in (i) through (iv)
which would not individually or in the aggregate have a material adverse effect.
5. Certain Covenants of Stockholder. Except in accordance with the terms
of this Agreement, each Stockholder severally as to itself but not jointly
hereby covenants and agrees as follows:
(a) No Solicitation. Stockholder shall not, directly or indirectly,
solicit (including by way of furnishing information) any inquiries or the making
of any proposal by any person or entity (other than Parent or any Affiliate of
Parent) which constitutes, or may reasonably be expected to lead to, any sale of
the Shares. If Stockholder receives an inquiry or proposal with respect to the
sale of Shares, then Stockholder shall promptly inform Parent of the terms and
conditions, if any, of such inquiry or proposal and the identity of the person
making it. Stockholder will immediately cease and cause to be terminated any
existing activities, discussions or negotiations with any parties conducted
heretofore with respect to any of the foregoing. This Section 5(a) shall not
restrict the actions of any person acting solely in his capacity as a director
of the Company if the Board of Directors of the Company, after consultation with
outside counsel, determines in good faith that such action is necessary for the
Board of Directors to comply with its fiduciary duties under applicable laws.
5
<PAGE>
(b) Restriction on Transfer, Proxies and Non-Interference. Stockholder
hereby agrees, while this Agreement is in effect, and except as contemplated
hereby, not to (i) sell, transfer, pledge, encumber, assign or otherwise dispose
of, or enter into any contract, option or other arrangement or understanding
with respect to the sale, transfer, pledge, encumbrance, assignment or other
disposition of, any of the Shares or (ii) grant any proxies, deposit any Shares
into a voting trust or enter into a voting agreement with respect to any Shares
or (iii) take any action that would make any representation or warranty of
Stockholder contained herein untrue or incorrect or have the effect of
preventing or disabling Stockholder from performing its obligations under this
Agreement.
(c) Additional Shares. Stockholder hereby agrees, while this Agreement
is in effect, to promptly notify Parent of the number of any new shares of
Company Common Stock and Company Preferred Stock acquired by Stockholder, if
any, after the date hereof.
6. Further Assurances. From time to time, at the other party's request
and without further consideration, each party hereto shall execute and deliver
such additional documents and take all such further action as may be necessary
or desirable to consummate and make effective, in the most expeditious manner
practicable, the transactions contemplated by this Agreement. In furtherance of
the foregoing, Stockholder shall perform such further acts and execute such
further documents and instruments as may be reasonably required to vest in
Parent rights arising under this Agreement, including causing all certificates
representing Shares to bear, until the expiration of this Agreement, in a
conspicuous place the following legend:
THE SHARES REPRESENTED BY THE WITHIN CERTIFICATE MAY NOT BE SOLD,
EXCHANGED, OR OTHERWISE TRANSFERRED OR DISPOSED OF EXCEPT IN COMPLIANCE
WITH THE TERMS AND CONDITIONS OF THE VOTING AND SUBSCRIPTION AGREEMENT,
DATED JUNE 15, 1995 AMONG CYTOGEN CORPORATION, SMALL-C ACQUISITION CORP.
AND THE HOLDER HEREOF.
7. Stop Transfer Order. In furtherance of this Agreement, concurrently
herewith, Stockholders shall and hereby do authorize the Company's counsel to
notify the Company's transfer agent that there is a stop transfer order with
respect to all of the Shares (and that this Agreement places limits on the
voting and transfer of such shares).
8. Election of Director. After the Effective Time, for the two-year
period commencing at the Effective Time and thereafter for so long as the
Stockholders own at least 5% of the outstanding shares of Parent Common Stock,
Parent shall use its best efforts to cause to be nominated Ronald J. Brenner,
Ph.D., or such other person designated by Stockholders, for election or re-
election to Parent's Board of Directors.
9. Indemnification. Reference is made to U.S. Patent No. 5308626 (issued
May 3, 1994) (the "Patent"). The Stockholders who are currently stockholders of
the Company (the "Indemnifying Parties") jointly and severally agree to
indemnify, defend and hold harmless (collectively, "indemnify") Parent and the
Company (the "Indemnified Parties") from and against all loss, damage, liability
or expense (including, without limitation, reasonable attorneys' fees and other
costs of defense)
6
<PAGE>
arising out of any claims that the autolymphocyte therapy utilized by the
Company infringes the Patent ("Covered Claims"), provided that (a) such
-------- ----
indemnification relates solely to such autolymphocyte therapy as practiced at or
prior to the Effective Time (the "Technology"), and (b) the total amount of any
such indemnification shall in no event exceed $12,000,000. The Indemnified
Parties shall provide written notice to the Indemnifying Parties promptly after
the Indemnified Parties receive notice of any potential Covered Claim, and shall
provide the Indemnifying Parties with a copy of any written notice and all
information available to the Indemnified Parties relating thereto. The
Indemnifying Parties shall have the right to assume the defense of any Covered
Claim and any litigation resulting therefrom with counsel of its choosing (which
counsel shall be reasonably satisfactory to the Indemnified Parties), and shall
control the defense or settlement of any Covered Claim. The Indemnified Parties
shall provide reasonable cooperation in connection with the investigation,
defense or settlement of any Covered Claim, and may, at its own expense, employ
counsel to participate in (but not control) the defense or settlement thereof.
Any settlement or compromise of a Covered Claim shall provide for the right of
the Indemnified Parties to continue to use the Technology on commercially
reasonable terms. The Indemnified Parties shall not negotiate or enter into any
agreement relating to the settlement or compromise of a Covered Claim without
the prior written consent of the Indemnifying Parties. The Indemnifying Parties
agree that the indemnification and reimbursement commitments set forth in this
paragraph shall apply whether or not an Indemnified Party is a party to any such
litigation.
10. Miscellaneous.
(a) Entire Agreement; Assignment. This Agreement (i) constitutes the
entire agreement between the parties with respect to the subject matter hereof
and supersedes all other prior agreements and understandings, both written and
oral, among the parties or any of them with respect to the subject matter hereof
and (ii) shall not be assigned by operation of law or otherwise, provided that
Parent may assign any of its rights and obligations to any wholly-owned
subsidiary of Parent, but no such assignment shall relieve Parent of its
obligations hereunder.
(b) Amendment. This Agreement may not be amended except by an
instrument in writing signed on behalf of the parties hereto.
(c) Enforcement of the Agreement. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any federal or state
court located in the State of Delaware (as to which the parties agree to submit
to jurisdiction for the purposes of such action), this being in addition to any
other remedy to which they are entitled at law or in equity.
(d) Validity. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provisions of this Agreement, which shall remain in full force and effect.
(e) Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given when delivered in person, by
7
<PAGE>
cable, telegram, facsimile transmission with confirmation of receipt, or telex,
or by registered or certified mail (postage prepaid, return receipt requested)
to the respective parties as follows:
If to Parent and Sub:
Cytogen Corporation
600 College Road East
Princeton, NJ 08540-5308
Attention: Thomas J. McKearn, M.D., Ph.D.
Telecopy: (609) 951-9298
Copy to:
Dechert Price & Rhoads
1717 Arch Street
4000 Bell Atlantic Tower
Philadelphia, PA 19103-2793
Attention: Christopher G. Karras, Esq.
Telecopy: (215) 994-2222
If to the Stockholders:
At the addresses listed on Schedule I
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above
(provided that notice of any change of address shall be effective only upon
receipt thereof).
(f) Expenses; Documentary Taxes. Each party hereto agrees to pay its
own fees and disbursements in connection with the transactions contemplated by
this Agreement. In addition, each of Stockholders, on one hand, and Parent, on
the other hand, agree to pay one-half of any and all stamp, transfer and other
similar taxes payable or determined to be payable in connection with the
issuance of Parent Common Stock to Stockholder pursuant hereto.
(g) Governing Law. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of Delaware regardless of the
laws that might otherwise govern under principles of conflicts of laws
applicable thereto.
(h) Descriptive Headings. The descriptive headings herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
8
<PAGE>
(i) Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
(j) Performance by Sub. Parent hereby agrees to cause Sub to comply
with its obligations hereunder as contemplated in the Merger Agreement.
<PAGE>
9
IN WITNESS WHEREOF, each of the parties has caused this Agreement to
be executed on its behalf by its officers thereunto duly authorized on the day
and year first above written.
CYTOGEN CORPORATION
By: /s/ Thomas J. McKearn
----------------------------------------------
Title: President and Chief Executive Officer
SMALL-C ACQUISITION CORP.
By: /s/ Thomas J. McKearn
----------------------------------------------
Title: President
Henry L. Hillman, Elsie Hilliard Hillman and C.G.
Grefenstette, Trustees of the Henry L. Hillman
Trust dated November 18, 1985
By: /s/ C. G. Grefenstette
----------------------------------------------
C.G. Grefenstette, Trustee
Hillman 1984 Limited Partnership
BY: Hillman Properties West, Inc.,
general partner
By: /s/ Darlene Clarke
------------------------------------------
Darlene Clarke, Vice President
10
<PAGE>
HCC Investments, Inc.
By: /s/ Darlene Clarke
------------------------------------
Darlene Clarke, Vice President
Juliet Challenger, Inc.
By: /s/ Darlene Clarke
------------------------------------
Darlene Clarke, Vice President
Hillman Medical Ventures 1989 L.P.
BY: Hillman/Dover Limited Partnership,
general partner
BY: Wilmington Securities, Inc.,
general partner
By: /s/ Darlene Clarke
------------------------------------
Darlene Clarke, Vice President
Hillman Medical Ventures 1990 L.P.
BY: Hillman/Dover Limited Partnership,
general partner
BY: Wilmington Securities, Inc.,
general partner
By: /s/ Darlene Clarke
------------------------------------
Darlene Clarke, Vice President
11
<PAGE>
Hillman Medical Ventures 1991 L.P.
BY: Hillman/Dover Limited Partnership,
general partner
BY: Wilmington Securities, Inc.,
general partner
By: /s/ Darlene Clarke
------------------------------------
Darlene Clarke, Vice President
Hillman Medical Ventures 1992 L.P.
BY: Hillman/Dover Limited Partnership,
general partner
BY: Wilmington Securities, Inc.,
general partner
By: /s/ Darlene Clarke
------------------------------------
Darlene Clarke, Vice President
Hillman Medical Ventures 1994 L.P.
BY: Hillman/Dover Limited Partnership,
general partner
BY: Wilmington Securities, Inc.,
general partner
By: /s/ Darlene Clarke
------------------------------------
Darlene Clarke, Vice President
12
<PAGE>
Hillman Medical Ventures 1995 L.P.
BY: Hillman/Dover Limited Partnership,
general partner
BY: Wilmington Securities, Inc.,
general partner
By: /s/ Darlene Clarke
------------------------------------
Darlene Clarke, Vice President
C.G. Grefenstette and Edward A. Craig, III,
Trustees U/A/T dated November 16, 1964 For
Henry L. Hillman, Jr.
By: /s/ C. G. Grefenstette
----------------------------------------
C.G. Grefenstette, Trustee
By: /s/ Edward A. Craig, III
----------------------------------------
Edward A. Craig, III, Trustee
C.G. Grefenstette and Edward A. Craig, III,
Trustees U/A/T dated November 16, 1964 For
William Talbot Hillman
By: /s/ C. G. Grefenstette
----------------------------------------
C.G. Grefenstette, Trustee
By: /s/ Edward A. Craig, III
----------------------------------------
Edward A. Craig, III, Trustee
13
<PAGE>
C.G. Grefenstette and Edward A. Craig, III,
Trustees U/A/T dated November 16, 1964 For
Juliet Lea Hillman
By: /s/ C. G. Grefenstette
----------------------------------------
C.G. Grefenstette, Trustee
By: /s/ Edward A. Craig, III
----------------------------------------
Edward A. Craig, III, Trustee
C.G. Grefenstette and Edward A. Craig, III,
Trustees U/A/T dated November 16, 1964 For
Audrey Hilliard Hillman
By: /s/ C. G. Grefenstette
----------------------------------------
C.G. Grefenstette, Trustee
By: /s/ Edward A. Craig, III
----------------------------------------
Edward A. Craig, III, Trustee
14
<PAGE>
ANNEX C
September 7, 1995
The Board of Directors
Cytogen Corporation
600 College Road East
Princeton, NJ 08540
Members of the Board:
You have requested our opinion as to the fairness, from a financial point of
view, to Cytogen Corporation ("Cytogen") of the consideration to be paid and
received by Cytogen pursuant to the terms and subject to the conditions set
forth in the Agreement and Plan of Merger, dated as of June 15, 1995, as amended
as of September 7, 1995 (the "Merger Agreement"), by and among Cytogen, Cellcor
Acquisition Corp., a wholly owned subsidiary of Cytogen ("Sub"), and Cellcor,
Inc. ("Cellcor"). As more fully described in the Merger Agreement, (A) Cellcor
will be merged with and into Sub (the "Merger") pursuant to which (i) each
outstanding share of the common stock, par value $0.01 per share, of Cellcor
(the "Cellcor Common Stock") will be converted into the right to receive 0.60
(the "Common Exchange Ratio") of a share of the common stock, par value $0.01
per share, of Cytogen (the "Cytogen Common Stock") and (ii) each outstanding
share of the convertible preferred stock, par value $0.01 per share, of Cellcor
(the "Cellcor Preferred Stock") will be converted into the right to receive
218.94 (the "Preferred Exchange Ratio") shares of Cytogen Common Stock and (B)
Cytogen will offer to the holders of Cellcor Common Stock the right to purchase
1.118 shares of Cytogen Common Stock for each share of Cellcor Common Stock held
by such holders at a purchase price of $3.89 per share of Cytogen Common Stock
(the "Subscription Offer" and, together with the Merger, the "Transaction"). It
is our understanding that, pursuant to a Voting and Subscription Agreement,
dated as of June 15, 1995 (the "Voting and Subscription Agreement"), by and
among Cytogen, Cellcor and stockholders of Cellcor beneficially owning
approximately 50.5% of the outstanding shares of Cellcor Common Stock (the
"Principal Stockholders"), the Principal Stockholders have agreed to purchase an
aggregate of 3,084,833 shares of Cytogen Common Stock in the Subscription Offer
for a total purchase price of $12.0 million in cash; provided, that to the
--------
extent up to 128,534 shares of Cytogen Common Stock are purchased in the
Subscription Offer for up to $500,000 by persons other than the Principal
Stockholders, the number of shares to be purchased by the Principal Stockholders
will be reduced by an equal amount, but not less than 2,956,299 shares, for a
total purchase price of $11.5 million in cash (the "Minimum Subscription
Amount").
In arriving at our opinion, we reviewed the Merger Agreement, the Voting and
Subscription Agreement and certain related documents, and held discussions with
certain senior officers, directors and other representatives and advisors of
Cytogen and certain senior officers and other representatives and advisors of
Cellcor concerning the businesses, operations and prospects of Cytogen and
Cellcor. We examined certain publicly available business and financial
information relating to Cytogen and Cellcor as well as certain financial
forecasts and other data for Cytogen and Cellcor which were provided to us by
the respective managements of Cytogen and Cellcor, including information
relating to certain strategic implications and operational benefits anticipated
from the Transaction. We reviewed the financial terms of the Transaction as set
forth in the Merger Agreement in relation to, among other things: current and
historical market prices and trading volumes of the Cytogen Common
<PAGE>
The Board of Directors
Cytogen Corporation
September 7, 1995
Page 2
Stock and the Cellcor Common Stock; the respective companies' historical and
projected earnings and losses; and the capitalization and financial condition of
Cytogen and Cellcor. We considered, to the extent publicly available, the
financial terms of certain other similar transactions recently effected which we
considered comparable to the Transaction and analyzed certain financial, stock
market and other publicly available information relating to the businesses of
other companies whose operations we considered comparable to those of Cytogen
and Cellcor. We considered the capital intense nature of Cytogen's business and
the capital resources available to Cytogen. We also evaluated the potential pro
forma financial impact of the Transaction on Cytogen. In addition to the
foregoing, we conducted such other analyses and examinations and considered such
other financial, economic and market criteria as we deemed appropriate to arrive
at our opinion.
In rendering our opinion, we have assumed and relied, without independent
verification, upon the accuracy and completeness of all financial and other
information publicly available or furnished to or otherwise reviewed by or
discussed with us. With respect to financial forecasts and other information
provided to or otherwise reviewed by or discussed with us, we have been advised
by the managements of Cytogen and Cellcor that such forecasts and other
information were reasonably prepared on bases reflecting the best currently
available estimates and judgments of the respective managements of Cytogen and
Cellcor as to the expected future financial performance of Cytogen and Cellcor
and the strategic implications and operational benefits anticipated from the
Transaction. We have assumed, with your consent, that the Merger will be
treated as a tax-free reorganization for federal income tax purposes and that
Cytogen will receive the Minimum Subscription Amount in the Subscription Offer.
In connection with our evaluation of the Preferred Exchange Ratio, we have, with
your consent, treated the shares of Cellcor Preferred Stock as if such shares
had been fully converted into Cellcor Common Stock prior to consummation of the
Transaction. Our opinion, as set forth herein, relates to the relative values
of Cytogen and Cellcor. We are not expressing any opinion as to what the value
of the Cytogen Common Stock actually will be when issued to Cellcor stockholders
pursuant to the Transaction or the price at which the Cytogen Common Stock will
trade subsequent to the Transaction. We have not made or been provided with an
independent evaluation or appraisal of the assets or liabilities (contingent or
otherwise) of Cytogen or Cellcor nor have we made any physical inspection of the
properties or assets of Cytogen or Cellcor. We were not asked to consider, and
our opinion does not address, the relative merits of the Transaction as compared
to any alternative business strategies that might exist for Cytogen or the
effect of any other transaction in which Cytogen might engage. Our opinion is
necessarily based upon information available to us, and financial, stock market
and other conditions and circumstances existing and disclosed to us, as of the
date hereof.
Smith Barney has been engaged to render financial advisory services to Cytogen
in connection with the Transaction and will receive a fee for our services, a
significant portion of which is contingent upon the consummation of the
Transaction. In the ordinary course of our business, we and our affiliates may
actively trade the securities of Cytogen and Cellcor for our own account or for
the account of our customers and, accordingly, may at any time hold a long or
short position in such securities. We have in the past provided financial
advisory and investment banking services to Cytogen unrelated to the
Transaction, and have received compensation for such services.
Our advisory services and the opinion expressed herein are provided solely for
the use of the Board of Directors of Cytogen in its evaluation of the proposed
Transaction, and our opinion is not intended to be and does not constitute a
recommendation to any stockholder as to how such stockholder
<PAGE>
The Board of Directors
Cytogen Corporation
September 7, 1995
Page 3
should vote on the proposed Transaction. Our opinion may not be published or
otherwise used or referred to, nor shall any public reference to Smith Barney be
made, without our prior written consent.
Based upon and subject to the foregoing, our experience as investment bankers,
our work as described above and other factors we deemed relevant, we are of the
opinion that, as of the date hereof, the Common Exchange Ratio, the Preferred
Exchange Ratio and the consideration to be received by Cytogen in the
Subscription Offer, taken as a whole, are fair, from a financial point of view,
to Cytogen.
Very truly yours,
/s/ Smith Barney Inc.
SMITH BARNEY INC.
<PAGE>
ANNEX D
June 15, 1995
Special Committee of the Board of Directors and
Board of Directors
Cellcor, Inc.
200 Wells Avenue
Newton, MA 02159
Dear Sirs:
You have asked us to advise you with respect to the fairness to the common
stockholders of Cellcor, Inc. (the "Company") from a financial point of view of
the consideration to be received by such stockholders pursuant to the terms of
the Agreement and Plan of Merger, dated June 15, 1995 (the "Acquisition
Agreement"), among the Company, CYTOGEN Corporation (the "Acquiror") and Small-C
Acquisition Corp. (the "Sub"). The Acquisition Agreement provides for the
merger (the "Merger") of the Sub with and into the Company pursuant to which the
Company will become a wholly owned subsidiary of the Acquiror and each
outstanding share of common stock, par value $0.01 per share, of the Company
("Company Common Stock") will be converted into and represent the right to
receive 0.60 shares of common stock, par value $0.01 per share, of the Acquiror
("Acquiror Common Shares") and each share of convertible preferred stock, par
value $0.01 per share, of the Company, including accrued dividends, will be
converted into and represent the right to receive 218.94 Acquiror Common Shares.
The Acquisition Agreement also provides that the Acquiror will make an offer to
the holders of Company Common Stock entitling each such holder to purchase 1.118
Acquiror Common Shares for each share of Company Common Stock held at a purchase
price of $3.89 per Acquiror Common Share (the "Subscription Offer").
In arriving at our opinion, we have reviewed certain publicly available
business and financial information relating to the Company and the Acquiror,
including the Acquisition Agreement and the Voting and Subscription Agreement,
dated as of June 15, 1995, among the Acquiror, the Sub and the entities listed
on Schedule I thereto. We have also reviewed certain other information,
including financial forecasts, provided to us by the Company and the Acquiror,
and have met with the Company's and the Acquiror's respective managements to
discuss the business and prospects of the Company and the Acquiror,
respectively. The Hillman Group has represented to us that it would not provide
further financing to the Company on a stand alone basis such that the Company
could continue its ongoing operations, and we have considered the impact of this
on the value of the Company. We have also considered the marketing activities
conducted by the Company's management and its advisors regarding potential joint
venture partners, merger candidates and equity investors.
<PAGE>
Special Committee of the Board of Directors and
Board of Directors
June 15, 1995
Page 2
We have also considered certain financial and stock market data of the
Company and the Acquiror, and we have compared that data with similar data for
other publicly held companies in businesses similar to those of the Company and
the Acquiror and we have considered the financial terms of certain other
business combinations and other transactions which have recently been effected.
We also considered such other information, financial studies, analyses and
investigations and financial, economic and market criteria which we deemed
relevant.
In connection with our review, we have not assumed any responsibility for
independent verification of any of the foregoing information and have relied on
its being complete and accurate in all material respects. With respect to the
financial forecasts, we have assumed that they have been reasonably prepared on
bases reflecting the best currently available estimates and judgments of the
Company's and the Acquiror's respective managements as to the future financial
performance of the Company and the Acquiror, respectively. In addition, we have
not made an independent evaluation or appraisal of the assets or liabilities
(contingent or otherwise) of the Company or the Acquiror, nor have we been
furnished with any such evaluations or appraisals. Our opinion is necessarily
based upon financial, economic, market and other conditions as they exist and
can be evaluated on the date hereof. We are not expressing any opinion as to
what the value of the Acquiror's Common Shares actually will be when issued to
the Company's stockholders pursuant to the Merger or the prices at which the
Acquiror's Common Shares will trade subsequent to the Merger. We were not
requested to, and did not, solicit third party indications of interest in
acquiring all or any part of the Company, nor did we seek financing for the
Company.
We have been retained by the Company to render this fairness opinion to
the Special Committee of the Board of Directors and the Board of Directors and
will receive a fee for such service.
It is understood that this letter is for the information of the Special
Committee of the Board of Directors and the Board of Directors only in
connection with its consideration of the Merger, does not constitute a
recommendation to any stockholder as to how such stockholder should vote on the
proposed Merger or whether any such stockholder should exercise its rights under
the Subscription Offer. This letter is not to be quoted or referred to, in whole
or in part, in any registration statement, prospectus or proxy statement, or in
any other document used in connection with the offering or sale of securities,
nor shall this letter be used for any other purposes, without our prior written
consent.
<PAGE>
Special Committee of the Board of Directors and
Board of Directors
June 15, 1995
Page 3
Based upon and subject to the foregoing, it is our opinion that, as of the
date hereof, the consideration to be received by the common stockholders of the
Company pursuant to the Acquisition Agreement is fair to such stockholders from
a financial point of view.
Very truly yours,
CS FIRST BOSTON CORPORATION
By: /s/ Carlos A. Ferrer
------------------------
<PAGE>
ANNEX E
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
---------
X Annual report pursuant to Section 13 or 15(d) of the Securities Exchange
---
Act of 1934 For the year ended December 31, 1994 or
-----------------
___ Transition report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
Commission File No. 0-19823
CELLCOR, INC.
-------------
(Exact name of Registrant as specified in its charter)
Delaware
----------------------
(state or other jurisdiction of 04-2967875
incorporation or organization) --------------
(IRS employer ID No.)
200 Wells Avenue, Newton, Massachusetts 02159
---------------------------------------- --------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (617) 332-2500
--------------
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Title of Each Class
---------------------
Common Stock, par value $.01 per share
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding twelve months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES X NO
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained to the best
of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. X
--
Aggregate market value of the Registrant's common stock held by non-affiliates
as of March 15, 1995 was approximately $7,054,000. As of March 15, 1995 there
were 5,452,950 shares outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
-----------------------------------
None.
<PAGE>
TABLE OF CONTENTS
PART I Page
Item 1. Business 1
Item 2. Properties 10
Item 3. Legal Proceedings 10
Item 4. Submission of Matters to a Vote of Security - Holders 10
PART II
Item 5. Market for Registrant's Common Equity and
Related Stockholder Matters 11
Item 6. Selected Financial Data 12
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 12
Item 8. Financial Statements and Supplementary Data 15
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 15
PART III
Item 10. Directors and Executive Officers of the Registrant 16
Item 11. Executive Compensation 17
Item 12. Security Ownership of Certain Beneficial Owners
and Management 20
Item 13. Certain Relationships and Related Transactions 22
PART IV
Item 14. Exhibits, Financial Statement Schedules and
Reports on Form 8-K 23
<PAGE>
PART I
------
ITEM 1. BUSINESS
------- --------
Cellcor, Inc. ("Cellcor" or the "Company") is a biotechnology
company engaged in the development and commercialization of cellular therapies.
The Company's initial cellular therapy application, autolymphocyte therapy
("ALT"), is an outpatient treatment for cancer and has potential applications in
the area of infectious diseases. The Company was incorporated in Delaware in
December 1986. Cellcor's principal office is located at 200 Wells Avenue,
Newton, Massachusetts 02159 and its telephone number is (617) 332-2500.
In January 1994, the Company initiated an FDA designated Pivotal
Phase III clinical trial of its ALT in patients with metastatic renal cell
carcinoma ("mRCC"). The primary objective of this study is to evaluate the
survival of patients with mRCC who receive either ALT or alpha interferon. The
clinical trial is being conducted at more than 20 U.S. and one Canadian academic
centers. The protocol chairman is Michael J. Hawkins, M.D., Associate Professor
of Medicine and Pharmacology at Georgetown University and former Chief of the
Investigational Drug Branch of the National Cancer Institutes (NCI) Cancer
Therapy Evaluation Program. The first patient was accrued to the study in
January of 1994 and as of December 31, 1994, approximately 102 patients had been
accrued to the study. At current rates, the Company expects to accrue the final
patient in the second quarter of 1995.
The study protocol calls for an interim statistical analysis to be
performed one year after the final patient is accrued to the study. The purpose
of this analysis is to determine if there is a statistically significant
difference in the survival of the patients in each arm of the study. In the
event that the results are not statistically significant at that time, it will
be necessary to allow further time to elapse and another analysis would be
undertaken six months later. Contingent upon the successful completion of the
study, the Company intends to apply to the Food and Drug Administration ("FDA")
for approval of an Establishment Licensing Application and Product Licensing
Application ("ELA/PLA").
The Company currently is providing ALT for the treatment of renal cell
carcinoma at over 40 sites in both the U.S. and Canada. It transports the cells
between clinical sites and Cellcor's GMP compliant laboratory in Newton, MA. As
of 12/31/94, the Company had administered over 5,000 cell infusions to over 750
patients.
During the fourth quarter of 1994, the Company completed preclinical
work using ALT on chronic hepatitis B infected primates. The Company is
planning to initiate a Phase I/II chronic hepatitis B clinical study in humans
at St. Louis University during the first quarter of 1995 under an
Investigational New Drug exemption (IND). This will be the Company's initial
activity in a non-cancer indication.
After publishing the results of a Phase III randomized controlled
trial of 90 patients in The Lancet, in April 1990 (the "RCC Study"), the Company
offered ALT on a commercial basis for the treatment of mRCC at its Boston
clinical site. This trial showed that ALT could be provided safely and that
patients treated with ALT had a median survival 2.3 times longer than patients
treated with cimetidine (20 months vs 8 months). During 1991, the Company
opened two additional centers in Atlanta, Georgia and Orange, California. The
therapy was offered commercially only to patients with mRCC.
In March 1993, the Company announced that it elected to cease
providing ALT to patients on a commercial basis. The 1992 financial statements
reflect a charge of $2.3 million in connection with the decision to restructure.
The decision to decommercialize reflected regulatory developments at the FDA and
the level of physician acceptance that ALT had achieved in the marketplace. The
Company has since focused its efforts on obtaining regulatory approval for ALT
and providing additional clinical data to the medical community. In addition,
the Company will continue its efforts to find collaborators to co-develop or
license ALT applications and to utilize its cell processing infrastructure and
expertise.
Since March 1993, the Company has not accepted new commercial patients
for therapy. The Company is committed to the continuity of care for commercial
patients and has made arrangements for all of these patients to receive the full
course of their therapies. During 1993, the FDA granted the Company a
compassionate protocol with cost recovery for the former commercial patients and
those patients who had received six treatments in earlier clinical trials. This
compassionate protocol permits the Company to ship cells interstate to a
patient's physician and to recover certain costs from the patients. Cell
processing for all trials and the compassionate protocol is taking place at the
Company's headquarters in Newton.
<PAGE>
The Company's development efforts are based on a novel approach to
disease treatment, the therapeutic use of living human cells, which, to date,
has been employed on a limited basis only and has not received marketing
approval by the FDA. There can be no assurance that such therapies will become
widely accepted by health care providers or patients. The Company's success
will be dependent upon the acceptance of ALT by urologists and oncologists for
the cellular therapies it is developing for renal cell carcinoma. The Company
has conducted one randomized controlled study and has begun a second trial to
examine the safety and efficacy of treating mRCC patients with ALT. Scientific
and medical evidence has not provided a complete explanation to support why or
how the Company's ALT treatment for mRCC has achieved the clinical results shown
to date. Moreover, when any new drug or therapy (including ALT) is
commercialized and administered to a broader range of patients (as opposed to
the patients selected for participation in clinical studies), clinical outcomes
may not be as favorable as the results of the clinical studies. There can be no
assurance that ALT will be shown to be safe and effective or that health care
providers or patients will accept the Company's therapies. Unanticipated side
effects attributable to Cellcor's therapeutic process, or to any product or
process of others incorporating a similar therapeutic approach, could have an
adverse effect on the Company's ability to achieve physician and patient
acceptance or to obtain necessary regulatory approvals, if any, which may be
required in the future.
Background
Cellular therapies involve the use of living cells for a therapeutic
benefit. The three steps essential to all cellular therapies are the
collection of living cells, the activation, modification or enhancement of these
cells outside the body (ex vivo) through the use of various cell processing
procedures, and the return to the patient of the activated, modified or enhanced
cells. Various forms of cellular therapies have been developed and are
currently utilized in clinical settings, including bone marrow transplantation,
peripheral stem cells, the use of laboratory grown skin and cartilage, and
cancer immunotherapy using lymphocytes. Additional cellular therapies currently
being studied at research institutions and biotechnology companies include gene
therapy, stem cell therapy and the transplantation of various living cells,
including pancreatic islet cells for the treatment of diabetes and myoblasts for
the treatment of muscular dystrophy.
During the past decade, there has been a significant increase in the
understanding of the molecular basis of disease, resulting in the development of
new therapeutic approaches. The technologies of genetic engineering and
recombinant DNA have allowed for the development and production of numerous
biotechnology drugs, including monoclonal antibodies, various interferons,
hematopoietic growth factors and the family of interleukins. Although test
results of these biotechnology drugs in animal studies and clinical trials have
been encouraging, few have demonstrated sufficient effectiveness or safety for
widespread clinical use.
The therapeutic use of living cells that have been modified in the
laboratory represents an approach to the treatment of complex diseases which the
Company believes may be more effective than the direct use of biotechnology
drugs and biologics. Because modified cells are living, they interact with
other cells in the body, respond to changing conditions in the patient, and
generate a series of biologically active molecules that are more likely to be
secreted in the optimal concentration, in the correct sequence, and at the
proper site in the body. This leads to a dynamic, self-regulating therapy that
leverages the body's own response to disease.
Significant recent advances in the understanding of the human immune
system and its role in disease have led to the development of living cells
therapies using lymphocytes, a type of white blood cell. These lymphocyte
therapies can be used when the immune system response is (i) insufficient, such
as in cancer, infectious disease and AIDS; (ii) excessive, such as in allergies
and transplant rejection; or (iii) misdirected, such as in autoimmune diseases,
including rheumatoid arthritis, multiple sclerosis and systemic lupus
erythermatosis.
Government Regulation
The FDA has broad statutory authority under the Federal Food, Drug and
Cosmetic Act and the Public Health Service Act to regulate the distribution,
manufacture, and sale of drugs, including biologics, that are marketed in the
United States.
In early 1993, the FDA established the Division of Cellular and Gene
Therapies within the Office of Therapeutic Research and Review. In discussions
with the FDA, the Company has been informed that ALT will be regulated as a
biologic for which an approved Establishment Licensing Application and approved
Product Licensing Application ("ELA/PLA") are required for marketing. The
current requirements for premarket approval of a biologic based upon living
cell therapies, includes: (i) preclinical laboratory and animal tests conducted
in accordance with GLP requirements; (ii) the submission to the FDA of an IND
application, which must become effective before human clinical trials can
2
<PAGE>
commence; which permits adequate and well-controlled human clinical trials to
establish the safety and efficacy of the biologic; and (iii) the approval of a
PLA by the FDA prior to any commercial sale or shipment of the biologic. In
addition, the FDA will require a living cell therapy production establishment,
such as Cellcor's cell processing center, to concurrently submit an
establishment license application ("ELA") to the FDA. The Company believes that
it has built and is operating its cell processing center in substantial
compliance with standards which would be required to gain approval of an ELA.
On October 14, 1993, the FDA published a policy statement in the
Federal Register which clarified the regulatory approach and provided guidance
to manufacturers of products intended for use in human somatic cell and gene
therapy. This document states: "As biologic products, somatic cell therapy
products are subject to establishment and product licensure to insure product
safety, purity and potency." (Fed. Reg. 53, 248, 249, (1993))
During the fourth quarter of 1993, the Company received authorization
from the FDA to begin a pivotal trial of ALT in mRCC. Approximately 180
patients with mRCC are being recruited to participate in the trial. Cellcor
will provide ALT and Hoffman-LaRoche, Inc. of Nutley, NJ will supply its version
of alpha interferon, Roferon(R)-A. It is Cellcor's intention to submit the
results of this clinical trial along with previous data in its product and
establishment licensure applications. The primary objective of this trial is to
evaluate the survival of patients with mRCC who either receive ALT or alpha
interferon. The clinical trial is being conducted at more than 20 North
American academic centers. The protocol chairman is Michael J. Hawkins, M.D.,
Associate Professor of Medicine and Pharmacology at Georgetown University and
former Chief of Investigational Drug Branch within the National Cancer
Institute's (NCI) Cancer Therapy Evaluation Program. The trial is being
administered by an independent clinical research organization, Quintiles
Pacific, Inc. In addition, the Company has contracted with Arthur D. Little to
conduct a cost effectiveness assessment associated with this trial. As of
February 28, 1995, 127 out of 180 patients had been accrued to the trial.
The Company has received authorization from the FDA for cost recovery
related to the treatment of patients receiving ALT for mRCC under a
compassionate use protocol. The only patients who are eligible to participate
in this program are patients who have already received six or more infusions in
a commercial or research setting. All eligible patients from the Company's
maintenance study, which was completed in February of 1994, will be offered
treatment under the compassionate protocol. The Company was treating
approximately 30 patients under this protocol at the end of 1994.
The FDA approval process for a biologic requires substantial time and
effort and there can be no assurance that any clearances, such as approvals,
will be granted on a timely basis, if at all. To date, the FDA has not approved
any cellular therapy. The FDA may not approve a PLA or an ELA if applicable
regulatory criteria are not satisfied. Authorizations to conduct clinical
studies under an IND or approvals of products may be withheld or withdrawn if
compliance with regulatory standards is not maintained or if problems occur
during clinical testing or following initial marketing.
Technology
There are several different types of white blood cells that are
important to the immune system, including lymphocytes and macrophages. T cells,
a type of lymphocyte, initiate and direct the immune response to cancer and
infectious disease. If T cells are either deficient or dysfunctional, the
immune system may not mount an effective immune response to tumors and invading
pathogens. This situation occurs in patients with cancer and certain infectious
diseases (including recurrent herpetic infections and chronic hepatitis) and is
the basis for the profound immunodeficiency associated with HIV. It has proven
to be difficult to correct and enhance T cell function through the direct use of
biotechnology drugs.
Cellcor has developed a two-stage proprietary process for the ex vivo
activation of T cells. First, white blood cells are collected from the
patient's blood by apheresis and certain of these cells, called peripheral blood
mononuclear cells ("PBMC"), are isolated from the apheresis product. The PBMC
are then cultured for three days with a monoclonal antibody directed against the
CD3 portion of the T cell receptor. Exposure to the monoclonal antibody causes
the PBMCs to release a mixture of natural autologous cytokines and lymphokines.
Important cytokines in this mixture identified by Cellcor to date include
various forms of interleukin (IL-1a, IL-1b, and IL-6), tumor necrosis factor
(TNF(alpha) and TNF(beta)), granulocyte macrophage colony stimulating factor
(GM-CSF) and gamma interferon. The cytokine mixture or immune stimulant, called
T3CS, is then harvested, further processed, divided up into eight equal portions
and frozen at -70(degree) C for use in the second stage of process. The PBMCs
used to develop the T3CS mixture are discarded.
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Next, fresh PBMCs are obtained from the patient and cultured with the
previously prepared T3CS mixture for five days in the presence of two drugs that
enhance T cell function ex vivo. This results in the activation of T cells,
including those T cells directed against the patient's tumor and those cells
that provide a helper function. This stage is performed each time cells are
prepared for patient use.
From the patient's perspective, the current ALT treatment regimen for
mRCC consists of taking oral cimetidine and monthly outpatient visits. During
the first visit, the patient undergoes a standard apheresis procedure comparable
to platelet and plasma donation at a blood bank in order to obtain the PBMCs
used in the production of the T3CS mixture. Next, the patient begins the
treatment cycle by returning to the clinic approximately two weeks later for
another apheresis. During the next five days, the PBMCs derived from the
apheresis are cultured in the Cellcor cell processing laboratory with the
previously prepared T3CS mixture. The activated T cells are then infused into
the patient. Depending upon the protocol, the treatment cycle is repeated each
month for up to twelve months and then quarterly thereafter. In the pivotal
trial, the protocol calls for patients to receive up to 12 monthly treatments.
Patients undergo apheresis and infusions on an outpatient basis, requiring an
average two or three hours per apheresis and one hour per cell infusion.
There are substantial scientific and logistical challenges to be met
in making the transition from providing living cell therapies in a research or
academic setting to delivering these therapies to large numbers of patients on a
safe, consistent, multi-site basis. Although the Company ceased the cell
processing of ALT on a multi-site basis, the QA/QC program and SOPs provide the
Company with the basis for providing uniform and controlled cell processing for
clinical studies. It will also serve as the basis for commercial treatments
which the Company may offer in the future if and when regulatory approvals are
obtained and market acceptance issues have been resolved.
Research and Development
ALT for the Treatment of Metastatic RCC
Renal Cell Carcinoma ("RCC") is the most common malignancy found in
the kidney. The American Cancer Society estimates that during 1995, 28,800 new
cases of RCC and other urinary cancer will be diagnosed in the United States,
and approximately 11,000 people will die as a result. There are few symptoms
early in the disease, and consequently almost one-third of these patients are
diagnosed after the kidney cancer has spread or metastasized to other parts of
the body. Metastatic RCC is resistant to chemotherapy, and once it has
metastasized, the patient's median life expectancy is between six and nine
months. Metastatic RCC afflicts more men than women and occurs most often
between the ages of 50 and 70. The incidence of the disease is expected to grow
with the aging of the population.
ALT for mRCC has been the subject of a series of clinical trials,
including a Company-sponsored Phase III randomized, controlled study conducted
by independent investigators at multiple sites under an IND submitted to the FDA
in 1988 (the "RCC Study"). The RCC Study, whose interim results were published
in The Lancet, was conducted by independent principal investigators at five
sites: Boston University Medical Center, Columbia Presbyterian Medical Center,
Emory University, University of West Virginia and the University of California
at San Diego. The RCC Study included 45 patients who received ALT and
cimetidine over a six month schedule treatment cycle and 45 patients who
received cimetidine alone. The RCC Study showed that patients who received the
Company's ALT for the treatment of mRCC lived on average 2.3 times longer (a
median survival of 21 months) than the control group of patients who did not
receive ALT (a median survival of 9 months). Moreover, 18% of the mRCC patients
who received ALT in the RCC Study had a significant reduction in tumor compared
to 4% in the cimetidine only arm. The study further revealed that ALT did not
prolong dysfunctional time, but instead led to quality survival during which
patients remained functional and productive. The conclusions of the RCC Study
with respect to toxicity and the ability of ALT to prolong survival have been
audited and verified by Theradex Systems, Inc., an independent clinical auditing
firm.
After 29 months of further follow-up, the data from the RCC Study was
submitted to the FDA in the normal course of IND administration. The data, with
a median follow-up time of 44 months, showed a median survival of ALT patients
that was 20 months and for control patients 9 months. The overall difference in
survival between all eligible ALT patients and all eligible control patients
remained statistically significant (p=0.01, generalized Wilcoxon test). The
proportions alive at one year were 67% for ALT and 44% for controls; the
proportions alive at two years were 44% for ALT and 24% for controls; the
proportions alive at three years were 39% for ALT and 20% for controls.
The results of the RCC Study have not yet been replicated by any other
controlled study. As discussed earlier, the Company has commenced a Pivotal
Phase III trial to confirm the results of the RCC Study. If any other
controlled study
4
<PAGE>
shows results materially different from the results of the RCC Study, the
efficacy of ALT for mRCC could be called into question and the Company's
business could be materially adversely affected. Moreover, when any new drug or
therapy (including ALT) is commercialized and administered to a broader range of
patients (as opposed to the patients selected for participation in clinical
studies) clinical outcomes may not be as favorable as the results of clinical
studies.
Based upon the results of the RCC Study, in May 1990 the Company began
providing ALT to metastatic RCC patients on a commercial basis at its clinical
and cell processing facilities. As of December 31, 1993, the Company had
treated 503 commercial patients with mRCC from 42 states and five foreign
countries at its facilities. In March 1993 the Company announced that it would
cease providing ALT to patients on a commercial basis.
The Company has statistically analyzed the survival times of its
patients who had received ALT on a commercial basis several times, most recently
as of March 31, 1994, (519 patients). The analysis of the commercial patients
is not comparable to analysis of the RCC Study because of the lack of a control
group, different prognostic factors and the fact that cimetidine compliance was
not the same as in the RCC Study. Subject to such inherent uncertainties, the
Company believes that its analysis indicates that patients who received ALT on a
commercial basis, who had clinical and immunological characteristics comparable
to those of the patients in the RCC Study, and who took the prescribed doses of
cimetidine during the course of their therapy, received survival benefits from
ALT that are comparable to the survival advantage reported in the RCC Study.
The results of the Company's analysis of its commercial patients were published
in Transplantation Proceedings in December 1992 and furnished to the FDA.
Preliminary evidence from the RCC Study suggested that mRCC patients
may benefit from continued therapy beyond the six month treatment specified by
the RCC Study. Consequently, during 1991, the Company commenced a Phase III
clinical study conducted by five independent investigators under an IND
involving 150 patients with mRCC who had already completed six months of ALT
treatments (the "Maintenance Study.") The purpose of this study is to determine
whether the continuation of ALT treatments following the initial six month
course of treatment, either on a monthly or quarterly basis, would result in the
prolongation of patient survival.
In February 1994, the Maintenance Study was completed. Analysis of
the outcomes of the three arms showed no statistical differences between the
survival of patients in the monthly, quarterly and nine month delayed arms of
the study. All three arms showed extended survival beyond what could be
expected for patients with mRCC. The median period of survival of all three
arms was more than 27 months from the time the patients first received ALT.
Based on the results of this study, the Company is not able to make a definitive
recommendation regarding the advisability of a continued course of therapy
beyond the initial six months. Upon the completion of the study, the patients
were transferred to the compassionate protocol.
ALT for the Treatment of Non-Metastatic RCC
Presently, the standard treatment for non-metastatic RCC consists of
the surgical removal of the cancerous kidney. According to the American Cancer
Society, approximately 14,000 people per year undergo surgery for the removal of
a kidney as a result of non-metastatic RCC. However, despite surgery,
approximately 50% of all non-metastatic RCC patients will ultimately develop
cancer elsewhere in the body. Despite the high incidence of recurrence,
patients receive little or no further treatment after surgery because most
therapeutic approaches have been too toxic to use and the resultant risks
associated with treatment exceed the benefits the patients might experience.
Although the Company's initial application of ALT has been in the
treatment of mRCC, the Company believes ALT will be even more effective in
treating residual or microscopic cancer, because at these stages there are fewer
cancer cells and patients tend to have healthier immune systems than patients
with mRCC. Cellcor is currently sponsoring a Phase III multi-site randomized,
controlled clinical trial under an IND submitted to the FDA in November 1990 to
determine if ALT can postpone or prevent the recurrence of cancer in patients
previously diagnosed with non-metastatic RCC who have had the affected kidney
surgically removed. The study is being conducted by independent principal
investigators at fourteen sites.
As of December 31, 1994, 38 of 94 patients have been accrued to
participate in this trial.
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Other ALT Applications
It may be beneficial to use the Company's ALT treatment to strengthen
a patient's immune response to diseases other than cancer, such as a variety of
infectious diseases including recurrent herpetic infections, genital herpes,
shingles and cytomegalovirus (in both HIV-infected patients and patients
receiving a bone marrow transplant), chronic hepatitis and tuberculosis.
Furthermore, the Company believes that the combined use of ALT and other
therapeutics may provide a more beneficial patient treatment than the use of
either ALT or such therapeutics alone. In 1993, the Company commenced
preclinical work using ALT in chimpanzees infected with chronic hepatitis B.
During 1994, the Company completed its preclinical work in chimpanzees. This
work showed that ALT can be safely delivered in an animal model that has been
infected with human hepatitis B. In the first quarter of 1995, the Company
began a Phase I/II trial of ALT in humans infected with chronic hepatitis B.
This trial is being conducted under an IND with Drs. Bruce Bacon and Adrian
DiBisceglie at St. Louis University School of Medicine.
Diagnostic Assays
Cellcor is developing several diagnostic assays as an adjunct to its
ALT procedures. The Company believes that the coordinated development of
diagnostic procedures which correlate with outcomes from its therapeutic
programs will enhance the effectiveness of the ALT treatments. The diagnostic
assays under development by the Company will be used to measure the
immunological activity and potency of the ex vivo activated T cells, monitor the
effectiveness of ALT treatment in a patient in order to determine optimal dosing
and duration of the treatment, and help pre-select and identify patients who
respond best to ALT. The Company has filed a patent on one of these assays
which is used to quantitatively measure the activation of T cells. The use of
these diagnostics may identify additional clinical settings for the use of ALT,
assist in understanding the mechanism of action of ALT, and help validate and
improve the process of activating T cells.
Process Development
The Company's process development group transforms technologies
developed in the research laboratory into standard cell processing protocols
used in the cell processing laboratories on a regular basis. Cellcor has
developed advanced capabilities in standardizing the materials and procedures
used in living cell therapies to insure consistent and safe results from cell
processing. All changes in the Company's standard operating procedures must be
validated by the Process Development Group and approved by an internal Materials
and Process Review Board.
An important facet of Cellcor's technology has been the development of
a comprehensive quality assurance/quality control (QA/QC) program to insure that
the collection and ex vivo processing of the activated T cells is conducted
safely and reproducibly at all current and future Cellcor facilities. This
program includes the development of new techniques, the application of novel
testing procedures, and the formulation of standard operating procedures (SOPs)
that rigorously describe every aspect of ex vivo cell processing.
Clinical Research
The Company's clinical research group manages all Cellcor-sponsored
clinical trials. This group has the capability to design, implement and monitor
complex clinical trials using living cells. The Company's patient data system
allows it to collect real-time data from the central cell processing lab,
Quality Control and Diagnostic Labs and remote sites. This database contains
information on patient profiles, treatments and clinical outcomes, as well as
data on cell processing, and quality control, referring physicians and
reimbursers. The Company believes that its mRCC database is one of the largest
of its kind. Currently, the Company is utilizing a contract research
organization Quintiles Pacific, Inc., to provide independent monitoring and
administrative services for the Pivotal Phase III trial of ALT in patients with
mRCC.
Company expenditures on research and development were $5,602,000 in
1994, $4,803,000 in 1993, and $4,065,000 in 1992.
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Reimbursement
To facilitate current and future reimbursement for ALT from patients,
third-party insurers and agencies, Cellcor has implemented a business strategy
which includes the assistance of outside specialists with experience in
obtaining reimbursement for new services. As part of the ongoing Phase III
trial of ALT in mRCC, the Company has hired Arthur D. Little, Inc. to perform a
cost effectiveness assessment of ALT. This assessment will compare the cost of
quality adjusted extended survival of ALT to other therapies for mRCC. In
additional, the results of this assessment will be used to assist management in
determining the price of ALT once it is reintroduced in the market.
From 1990 to 1992, substantially all of the Company's revenues were
derived from third-party payors and the Company expects that this trend will
continue at such time as it recommercializes ALT if FDA approval is obtained.
Cellcor's charges were processed through each host hospital's billing system,
indicating the hospital's acceptance of ALT as a valid treatment option.
Approximately 30-40% of the Company's patients were covered by Medicare. The
Company has been notified by the Medicare intermediaries in California and
Georgia that they had concluded that ALT was experimental and therefore not
eligible for reimbursement. Due to the uncertainty surrounding the reviews by
the Medicare intermediaries, the Company decided to fully reserve its Medicare
accounts receivable in December 1992. If Medicare were to retroactively deny
coverage in both locations since inception of the centers, the maximum liability
would be cash reimbursements of approximately $295,000.
Reimbursement usually lags behind medical acceptance and the use of
new services. The Company believes it has satisfied the basic criteria for new
coverage approval that most insurance providers require. The Company believes
that ALT for the treatment of mRCC was provided in a cost-effective manner and
was within total dollar parameters that insurers are accustomed to paying.
Patent and Trade Secrets
The Company's success will partially depend on its ability to obtain
patents, maintain trade secret protection and operate without infringing on the
proprietary rights of third parties. The Company has an active program to
identify and protect discoveries of patentable significance in the course of the
Company's research, process development and clinical efforts. Inventions with
patentable merit are recognized and formally reviewed before their dissemination
to the public. The Company is actively seeking further patent protection for
various aspects of its current and projected processing technology which include
ex vivo cell processing techniques, cell processing materials, methods of
medical treatment based upon ALT and novel antigen stimulation of lymphocytes
for cancer and diagnostic procedures for selecting and monitoring patients.
Three United States patents have been issued to the Company and the Company has
six United States patent applications pending. The Company intends to file
additional patent applications, when appropriate, relating to improvements in
its technology and other specific products that it develops.
The patent position of biotechnology firms, including the Company, is
generally highly uncertain, and involves complex legal and factual questions.
No consistent policy has emerged regarding the breadth or enforceability of
claims in these types of patents. Moreover, the technology applicable to the
Company's products is developing rapidly.
A substantial number of patents have been issued to medical device,
pharmaceutical and biotechnology companies. In addition, others, including
competitors, may have filed applications for, or may have been issued patents or
may obtain additional patents and proprietary rights relating to, products or
processes competitive with those of the Company. Accordingly, there can be no
assurance that the Company's patent applications will result in patents being
issued or that, if issued, the patents will afford significant protection
against competitors with similar technology. There can be no assurance that any
patents issued to the Company will not be infringed or circumvented by others,
or that others will not obtain patents that the Company would need to license or
circumvent. There can be no assurance that licenses that might be required for
the Company's processes or products would be available on reasonable terms. In
addition, there can be no assurance that the Company's patents, if issued, would
be held valid by a court.
Many aspects of the Company's cell processing procedures are
maintained as trade secrets, including its proprietary Standard Operating
Procedures (SOPs) and related aspects of its cell processing operations. The
Company believes that, due to the complexity of its cell processing procedures,
it would be difficult for a competitor to replicate these procedures without
devoting substantial time and resources to such effort. However, no assurance
can be given that others will not independently develop substantially equivalent
proprietary information and techniques, or otherwise gain access to the
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Company's trade secrets or disclose such technology, or that the Company can
meaningfully protect its rights to any unpatented trade secrets.
It is Cellcor's policy to require its employees, consultants and
advisors to execute a confidentiality agreement upon the commencement of an
employment or consulting relationship with the Company. Each agreement provides
that all confidential information developed or made known to the individual
during the course of the employment or consulting relationship will be kept
confidential and not disclosed to third-parties except in specified
circumstances. The agreements provide that all inventions conceived by the
individual while an employee or consultant shall be the exclusive property of
the Company. There can be no assurance, however, that these agreements will
provide meaningful protections for the Company's trade secrets in the event of
unauthorized use or disclosure of such information.
Marketing
Cellcor's strategy is to obtain FDA approval for ALT and position it
as the treatment of choice for advanced kidney cancer patients. Cellcor will
market ALT for mRCC primarily to the approximately 18,000 urologists and
oncologists practicing in the United States. Cellcor is currently building
physician awareness and support for its therapies through scientific
publications, presentations of clinical results at national medical meetings and
conventions.
The Company utilized a corporate marketing and a direct sales staff
working out of its corporate and regional centers during 1992, 1991 and 1990.
In connection with the decision to restructure the Company the corporate
marketing group and the sales force were terminated effective April 1, 1993.
The Company's strategy is to seek a corporate partner to assist in the sales and
marketing of ALT for mRCC; however, there can be no assurance that the Company
will be able to identify an appropriate corporate partner or enter into an
agreement with such an entity.
Competition
The Company faces competition from conventional types of immunotherapy
and non-immunotherapy treatments for mRCC and other types of cancer and
infectious diseases that are being developed and marketed by biotechnology
companies, medical companies and research institutions, many of which have
significantly greater financial and other resources than the Company. Until the
approval of Interleukin-2 ("IL-2") in 1992, there had been no effective
commercial treatments for metastatic solid tumors, including RCC, and
consequently, Cellcor faces competition from academic institutions and companies
performing clinical trials involving a variety of drugs and biological response
modifiers, including various dosages of IL-2 to attempt to reduce toxic side
effects, various interferons, lymphokine activated killer cells (LAK), tumor
infiltrating lymphocytes (TIL), combinations of chemotherapy drugs, new
chemotherapeutics and new uses for old chemotherapeutics. There can be no
assurance that ALT will successfully compete with these treatments.
The most publicized competing treatment for mRCC involves the use of
IL-2, a recombinant substance that is produced by Chiron Corp. On May 5, 1992,
the FDA announced the approval of Chiron's IL-2 for the treatment of advanced
kidney cancer. However, the approved dosage requires inpatient administration,
often requires admission to the intensive care unit, and is associated with
significant morbidity and mortality. Moreover, IL-2, while producing a small
percentage (approximately 4%) of complete tumor response and 11% partial tumor
responses, has never been proven to produce prolonged survival in the patients.
In 1992, the Company's estimated cost of high dose IL-2 treatment, including
associated hospitalization, substantially exceeded the cost of outpatient ALT
treatment. Consequently, Cellcor believes that ALT offers both the physician
and the patient several advantages over high dose IL-2, including outpatient
delivery, low toxicity, reduced costs, enhanced efficacy and a better quality of
life during treatment.
Other companies are involved in the development of cellular and gene
therapies and the devices used in cellular therapies. Some of the public
companies include Applied Immune Sciences, Vical, Baxter, CellPro, Somatix and
Systemix. These companies have taken different strategies with regard to the
development of devices and therapies. Applied Immune Sciences, Somatix and
Vical have ongoing clinical trials in metastatic renal cell carcinoma.
The fields of medicine, pharmaceuticals and biotechnology have
undergone and are expected to continue to undergo rapid and significant
technological change. The Company expects that the technology associated with
the Company's living cell therapies and competing therapeutic approaches will
continue to develop rapidly, and the Company's future success will depend in
large part on its ability to maintain a competitive position with respect to
competing therapies.
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Reliance On Third Party Suppliers
The Company's cellular therapies require the use of devices and
materials manufactured by third parties. The Company seeks to maintain multiple
sources of supply for such devices and materials. However, in a few instances,
including an important monoclonal antibody used in the Company's cell processing
procedures, the Company relies on a single source of supply. In addition, the
Company does not have long term supply arrangements with any manufacturer.
Therefore, there can be no assurance that products or devices necessary to
implement the Company's living cell therapies will be continuously available or
available upon terms favorable to the Company in the future.
Employees
As of December 31, 1994, Cellcor employed 47 people of which 35 were
engaged in research and development, manufacturing and quality control, and 12
in general administration. In connection with the March 1993 restructuring, the
Company reduced its work force by approximately 43 employees, 35 at its
treatment centers and the remainder at the corporate headquarters. Cellcor
believes its employee relations are satisfactory.
Executive Officers
The current executive officers of the Company are as follows:
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
Richard R. D'Antoni........... 47 President, Chief Executive Officer, and Director
Frederick M. Miesowicz, Ph.D.. 46 Senior Vice President of Scientific Affairs
Harry W. Wilcox, III.......... 40 Sr. Vice President, Business Development and
Chief Financial Officer, Treasurer and Secretary
Bruce P. Babbitt, Ph.D........ 41 Vice President of Research & Development
Gary C. du Moulin, Ph.D....... 47 Vice President of Quality Control
Richard E. Kruger, Ph.D....... 48 Vice President of Regulatory Affairs
</TABLE>
Mr. D'Antoni joined Cellcor in August 1990 as President and a Director
and became Chief Executive Officer in March 1991. From 1981 to 1985, he served
as Executive Vice President of Operations at Medical Care International, an
owner/operator of freestanding outpatient surgery centers. From 1985 to 1987,
Mr. D'Antoni was Group Vice President and Director of the Houston region of
American Medical International, a national operator of health care facilities.
From 1987 to 1990, Mr. D'Antoni was a health care partner at Korn/Ferry
International, an executive search firm.
Dr. Miesowicz joined Cellcor in October 1992 in the new position of
Senior Vice President of Scientific Affairs. Dr. Miesowicz has an extensive
background in cellular therapies. Most recently he managed the U.S. and
European SteriCell Division of Terumo and was with E.I. duPont de Neumours &
Company for over 14 years. He managed duPont's early development and production
of its diagnostic monoclonal antibodies. In 1986 he assumed responsibility for
duPont's cellular therapy business, working with the National Cancer Institute
(NCI) and others on ex vivo immunotherapies (lymphokine activated killer cells
and tumor infiltrating lymphocytes for cancer). He received his Ph.D. in
chemistry from Harvard University.
Mr. Wilcox joined Cellcor in December 1990 as Vice President, Finance
and Chief Financial Officer and became Treasurer in January 1992. In March of
1994, he assumed the additional title of Senior Vice President of Business
Development. From 1988 to 1990, he was General Partner and Chief Financial
Officer of Highland Capital Partners, L.P., a venture capital firm. From 1983
to 1987, Mr. Wilcox was Controller, Vice President of Finance and Chief
Financial Officer at Charles River Ventures, Inc. a venture capital firm. Mr.
Wilcox is a Certified Public Accountant in Massachusetts.
Dr. Babbitt joined Cellcor in February 1991 as Director of Immunology
Research and was promoted to Vice President of Research and Development in 1993.
From 1986 to 1990, he held a series of scientific and managerial positions at
Lipogen, Inc., a biotechnology company. These positions included Research
Scientist, Program Manager and Group Director, Research and Development.
Previously, Dr. Babbitt pursued post-doctoral studies at Harvard Medical School
and Washington University Medical School at the laboratory of Dr. Emil Unanue in
the field of antigen presentation and processing. He received a M.S. and a
Ph.D. in biochemistry from the University of Tennessee.
9
<PAGE>
Dr. du Moulin joined Cellcor in 1988, became Director of Quality
Control in 1991 and was promoted to Vice President of Quality Control in 1992.
Dr. du Moulin spent 15 years in the Department of Anesthesia at Beth Israel
Hospital in Boston, where he directed safety assessment of all anesthesia and
respiratory therapy equipment and led the hospital's infection control team.
During this period, Dr. du Moulin also was an Assistant Professor of Anesthesia
at Harvard Medical School. He received an M.S. degree from Northeastern
University, a M.P.H. from Boston University School of Public Health and a Ph.D.
in microbiology from Boston University School of Medicine.
Dr. Kruger joined Cellcor in 1992 as Vice President of Regulatory
Affairs. Dr. Kruger spent two years at Columbia Research Laboratories as
Director of Regulatory Affairs. From 1986 to 1990 he was Director of Regulatory
Affairs at Greenwich Pharmaceuticals. He received his B.A. in Biology from the
American International College, his M.S. at Long Island University, and his
Ph.D. at New York University.
ITEM 2. PROPERTIES.
------- -----------
Cellcor's corporate headquarters is located at 200 Wells Avenue in
Newton, Massachusetts. The Company leases 21,500 square feet of space which
houses all of Cellcor's administrative staff, the cell processing and QA/QC
laboratories, and the clinical research, process development and diagnostic
groups. The Company has subleased approximately 25% of this space under a short
term lease arrangement. The lease for this facility expires in 2000.
ITEM 3. LEGAL PROCEEDINGS.
------- ------------------
On September 18, 1992, William L. Glosser, a stockholder of the
Company, brought suit against the Company, the Company's directors and Furman
Selz Incorporated, individually and as representative of the 26 underwriters of
the Company's initial public offering, in the Court of Chancery of Delaware as a
class action (on behalf of all other stockholders similarly situated). The suit
alleges, among other things, that the prospectus used to sell the Company's
Common Stock in the initial public offering contained false and misleading
statements and omitted material facts necessary to make statements contained in
the prospectus not misleading and that the defendants violated Sections 11 and
12(2) of the Securities Act of 1933. The plaintiffs are seeking, among other
relief, rescission of their purchases of Cellcor Common Stock in the public
offering. The plaintiffs amended their complaint on November 3, 1992 and again
on January 17, 1994. Under the terms of the Underwriting Agreement among the
Company and the underwriters of the public offering, the Company is required to
indemnify Furman Selz Incorporated and the other underwriters for losses, costs
and damages arising out of the lawsuit.
The Company filed a motion for summary judgment in The Court of
Chancery of the State of Delaware seeking the dismissal of this lawsuit. On
September 9, 1994, the court dismissed 23 out of 26 allegations in the lawsuit.
On March 10, 1995, the Court entered an order allowing the Section 11 claim to
proceed on a class basis but declined to certify a class on the Section 12(2)
and state law claims. The trial is scheduled to begin on April 24, 1995.
Management will continue to vigorously contest this action.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS.
------- ----------------------------------------------------
None.
10
<PAGE>
PART II
-------
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
------ -------------------------------------------------
STOCKHOLDER MATTERS
-------------------
The Company's Common Stock was quoted for trading on March 13, 1992 on
the Nasdaq National Market under the symbol CLTX. The high and low sales prices
per share of Common Stock for each quarter of 1994 and 1993, as reported on the
Nasdaq National Market, were as follows:
<TABLE>
<CAPTION>
1994 High Low 1993 High Low
---- ---- --- ---- ---- ---
<S> <C> <C> <C> <C> <C>
First Quarter $1.31 $ .68 First Quarter $2.87 $.88
Second Quarter 2.93 1.25 Second Quarter 1.03 .56
Third Quarter 4.50 1.44 Third Quarter .94 .38
Fourth Quarter 7.25 3.50 Fourth Quarter 1.69 .50
</TABLE>
There were approximately 107 holders of record of the Company's Common
Stock as of March 15, 1995. Included in the number of stockholders of record
are stockholders who hold shares in "nominee" or "street name." The closing
price of the Common Stock on March 15, 1995 was $2.625 per share as reported by
the Nasdaq National Market.
The Company has not paid any cash dividends since its inception and
does not anticipate paying cash dividends in the foreseeable future.
11
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA.
------ ------------------------
The selected financial data presented below for, and as of, each of
the years in the five-year period ended December 31, 1994, are derived from the
financial statements of the Company, which financial statements have been
audited by KPMG Peat Marwick, LLP, independent certified public accountants.
The financial statements as of December 31, 1994 and 1993, and for each of the
years in the three-year period ended December 31, 1994 and the independent
auditors' report thereon, are included elsewhere in this report.
<TABLE>
<CAPTION>
Years Ended December 31,
--------------------------------------------------------
1994 1993 1992 1991 1990
(In thousands, except per share data)
<S> <C> <C> <C> <C> <C>
Statement of Operations
Data:
Net revenue $ 872 $ - $ 2,690 $ 1,534 $ 412
Operating loss (7,125) (7,640) (12,713) (9,411) (7,353)
Net loss $(7,021) $(7,406) $(12,519) $(9,826) $(7,147)
Net loss per common
share $(1.33) $(1.36) $(2.65) $(3.97) $(3.11)
Weighted average number of shares
used in the calculation 5,442 5,436 4,718 2,472 2,297
Balance Sheet Data:
Working capital (deficit) $ 2,587 $ 3,852 $ 10,684 $(8,919) $ 1,502
Total assets 5,368 $ 6,561 $ 15,959 4,782 4,547
Short-term debt, including
current maturities of long-term debt - 83 475 9,046 -
Long-term debt - - - 194 -
Capital lease obligations 457 612 810 927 831
Stockholders' equity (deficit) $ 3,332 $ 4,868 $ 12,066 $(6,729) $ 2,938
</TABLE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
------- ---------------------------------------------------------------
RESULTS OF OPERATIONS.
---------------------
During 1994, the Company continued to focus on three goals: (1)
obtaining FDA approval of ALT in mRCC, (2) developing an infectious disease
application for ALT, and (3) seeking corporate partners. As of December 31,
1994, the Company was conducting the Pivotal Trial of ALT in mRCC at 23 sites,
including a site in Canada. A total of 127, out of approximately 180 patients
necessary to complete the trial had been enrolled as of February 28, 1995. In
conjunction with the clinical trial a cost effectiveness assessment is also
being conducted.
During 1994, a preclinical study was completed that assessed the
safety of ALT in chimpanzees infected with human hepatitis B. These chimps
received higher doses (larger number of cells) on a more frequent basis than the
standard course of ALT therapy. It was important to assess the safety of ALT in
a primate model before proceeding to human trials using ALT to treat hepatitis
B. In the first quarter of 1995, the company began a Phase I/II trial of ALT in
hepatitis B. This trial is being conducted by Drs. Bruce Bacon and Adrian
DiBisceglie at St. Louis University Medical School.
12
<PAGE>
The Company entered into one corporate partnering relationship during
1994. SRL, Inc., a Japanese diagnostic firm, and Cellcor entered into a two
part agreement. In the first part of the agreement, SRL paid Cellcor
approximately $1,000,000 and Cellcor provided information that would assist SRL
in building a GMP compliant cell processing facility and training two SRL
scientists in general cell processing skills. In the second part of the
agreement, SRL has the right to select from several options. The options range
from developing an ALT application in Japan to jointly developing a non-Cellcor
application worldwide. Upfront and royalty payments by SRL are due Cellcor
depending on the option SRL selects. The Company expects that it is unlikely at
this time that SRL will elect an option that will have a significant impact on
its operations or capital needs in 1995.
As of December 31, 1994, the Company had $3,896,000 in cash and short
term investments. At its current spending rate, this capital will fund the
Company's operations through approximately May of 1995. Management is actively
evaluating courses of action to provide additional capital and/or to reduce the
level of spending. However, there can be no assurance that the Company will be
able to obtain additional capital or to reduce such levels of spending.
RESULTS OF OPERATIONS
Years ended December 31, 1994 and 1993
--------------------------------------
Revenue and Gross Profit
------------------------
In March 1994, the Company signed a technology licensing and service
agreement with SRL, Inc., a leading clinical laboratory testing service based in
Tokyo. There are two major components to the agreement: (1) SRL will have the
non-exclusive right and license in Japan to Cellcor's know-how and expertise
relating to building, validating and operating GMP cell processing facilities
for patient-specific living cell therapies; and (2) there are four development
options describing how both parties would jointly pursue the cellular therapy
market worldwide. The options cover development of applications using Cellcor's
proprietary technology, autolymphocyte therapy (ALT); applications developed or
acquired by SRL; applications jointly developed by both companies; and
applications developed by a third party. The Company is recognizing the revenue
from the SRL agreement over the contractual period as specified by the
agreement, net of related commissions. Cellcor recognized $775,000 of revenue
during 1994 and none in 1993.
The Company received authorization in September 1993 from the FDA for
cost recovery related to the treatment of patients receiving ALT under a
compassionate protocol. The only patients who are eligible to participate in
this program are the patients who had already received ALT in a commercial or
research setting as of March 30, 1993. During 1994, approximately 35 patients
were receiving treatment under the compassionate protocol. Cellcor recognized
$96,900 of revenue during 1994 and none in 1993.
Research and Development
------------------------
Research and development expense increased 17% during 1994 to
$5,602,000 from $4,803,000 in 1993. This increase represents costs associated
with the clinical research organization (CRO) hired to monitor the pivotal trial
and other costs related to the pivotal Phase III randomized controlled trial
involving the use of ALT for metastatic renal cell carcinoma. During 1994, 102
patients were accrued to the pivotal trial with over 200 treatments
administered. No patients were accrued to the pivotal trial in 1993.
In addition, the Company is conducting a Phase III trial in patients
with non-metastatic renal cell carcinoma. This controlled multi-site trial is
designed to evaluate the use of ALT in non-metastatic patients who have received
a nephrectomy. The two arms of the trial are ALT and observation. The end
point of the trial is progression to metastatic disease.
The Company completed its primate study in chronic hepatitis B in the
fourth quarter of 1994 and will start the Phase I/II trial in the first quarter
of 1995. The hepatitis trial will involve nine patients and the clinical
portion of the trial will be conducted at St. Louis University Medical School.
As with all other ongoing Cellcor trials, cell processing will take place at the
Company's Newton cell processing laboratory.
The Phase I/II trial in advanced kidney cancer utilizing Organon
Teknika/Biotechnology Research Institute (OT/BRI) Active Specific Immunotherapy
(ASI) followed by Cellcor's ALT was initiated in the second quarter of 1994 and
continues to accrue patients.
13
<PAGE>
The Company expects that research and development costs related to the
Phase III pivotal trial, the Phase I/II trial in chronic hepatitis B and the
Phase I/II trial with Organon will increase in 1995. This increase will be
driven by the increased requirement to monitor the pivotal trial sites and the
increased number of cell processing procedures required by growing number of
patients in the Pivotal, Adjuvant, Hepatitis and BRI/Cellcor trials. The
largest factor in the increase in cell processing procedures is the continued
treatment and new patients joining the Pivotal Trial. Continued development of
ALT and cellular therapies for other indications will be dependent upon
additional external funding sources in 1995.
General and Administrative
--------------------------
General and administrative expenses decreased 16% to $2,395,000 in
1994 from $2,837,000 in 1993. The decline in expenses is attributable to the
decrease in the marketing and operations activity brought about by the
restructuring of the Company.
Interest Income and Expense
---------------------------
Interest income declined in 1994 to $136,000 compared to $316,000 in
1993 as the Company had lower cash and investment balances. Interest expense
declined to $40,000 in 1994 versus $83,000 in 1993, as notes and leases payable
continue to decline.
Loss Per Share
--------------
Loss per share declined 2% in 1994 to $1.33 from $1.36 in 1993. The
1994 loss of $7,021,000 was $385,000 lower than the 1993 loss of $7,406,000 and
the weighted average outstanding shares remained approximately the same during
1994 and 1993. Cumulative dividends on the preferred stock of $234,700 ($.04
per share) were included in the 1994 loss per share calculation, none in 1993.
Years ended December 31, 1993 and 1992
--------------------------------------
Revenue and Gross Profit
------------------------
In conjunction with its March 30, 1993 decision to restructure,
Cellcor closed its commercial operations and recorded no revenues in 1993. The
revenue related to services provided to patients from January 1 to April 30,
1993 were offset against the $2.3 million restructuring charge recorded in 1992.
Revenues totaled $2,690,000 in 1992.
Research and Development
------------------------
Research and development expense increased 18% during 1993 to
$4,804,000 from $4,065,000 in 1992. This increase represents costs associated
with the clinical research organization and other costs related to the second
Phase III randomized controlled trial involving the use of ALT for metastatic
renal cell carcinoma and the cost of a primate study of ALT in chronic hepatitis
B. The Company's research and development expenses related to the Phase III
pivotal trial and a Phase I trial in chronic hepatitis B will increase in 1995.
General and Administrative
--------------------------
General and administrative expenses declined 37% to $2,837,000 in 1993
from $4,507,000 in 1992. The decline in expenses is attributable to the lower
levels of staffing and a decrease in the marketing and operations activity
brought about by the restructuring of the Company.
Interest Income and Expense
---------------------------
Interest income declined to $316,000 in 1993 compared to $539,000 in
1992 as the Company continued to utilize the proceeds of its equity financing.
Interest expense declined to $83,000 in 1993 versus $152,000 in 1992, as notes
and leases payable continued to decline.
14
<PAGE>
Loss Per Share
--------------
Loss per share decreased in 1993 to $1.36 compared to $2.65 in 1992.
The 1993 loss of $7,406,000 was $5,113,000 lower than 1992 loss of $12,519,000,
this coupled with a 15% increase in the weighted average shares outstanding
during 1993 also accounted for the decline.
LIQUIDITY AND CAPITAL RESOURCES
At December 31, 1994 the Company had $3,896,000 in cash and short term
investments. At December 31, 1994, working capital decreased to $2,587,000 from
$3,852,000 at December 31, 1993. Total assets during the period decreased to
$5,368,000 from $6,561,000 at the end of 1993.
While the Company believes that its current cash balance will be
sufficient to meet its capital requirements into the second quarter of 1995, the
Company will need to raise substantial additional funds to complete the Pivotal
Phase III trial and to maintain its other clinical trials. Adequate funds for
these purposes, whether through equity or debt financing, collaborative or other
arrangements with corporate partners or from other sources, may not be available
when needed or on terms acceptable to the Company. As of the date hereof, the
Company has not received any commitments from corporate partners, investors or
other sources for any financing. The Company's inability to raise sufficient
funds could require it to delay, scale back or eliminate certain clinical
studies, research and development programs or to license third parties to
commercialize products or technologies that the Company would otherwise develop
or commercialize itself or to discontinue its operations altogether. The
Company's cash requirements may vary materially from those now planned because
of results of clinical testing, changes in focus and direction of the Company's
research and development programs, competitive and technological advances,
patent developments, the FDA regulatory process or other developments.
There can be no assurances that the Company will be able to raise
additional funds to complete its clinical development program or maintain its
current level of operation. The Company's longer term working capital
requirements will depend on numerous factors including the timely and
satisfactory completion of its clinical trials.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
------- -------------------------------------------
See Index to the Company's Financial Statements and the accompanying
financial statements, notes and schedules which are filed as part of this Form
10-K and are incorporated herein.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
------- -----------------------------------------------------------
AND FINANCIAL DISCLOSURE
------------------------
Not applicable.
15
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
-------- --------------------------------------------------
The information under the caption "Executive Officers" in Item 1 of
this report is incorporated herein by reference.
For each member of the Board of Directors of the Company, the
following table sets forth the name, age, length of service as a director,
information given by each concerning his principal occupation and business
experience for the past five years and the names of other publicly held
companies of which he serves as a director:
<TABLE>
<CAPTION>
First Became Director
---------------------
<S> <C>
Gary W. Cashon, Ph.D.................................................... 1987
Age 49, Chairman of the Board of Directors of the Company since
January 1991; Chief Executive Officer of the Company from December
1989 to March 1991; President of the Company from December 1989
to August 1990 and June 1987 to March 1989; General Partner
of Cashon Biomedical Associates, L.P., a general partner of Hillman
Medical Ventures, since 1988; Principal of Cashon BioMedical
Development, Inc., a medical consulting firm from 1983 to 1988.
Richard R. D'Antoni..................................................... 1990
Age 47; Chief Executive Officer of the Company since March, 1991;
President of the Company since August 1990; health care partner at
Korn Ferry International, an executive search firm, from 1987 to 1990;
Group Vice President and Director of the Houston region of American
Medical International, a national operator of health care facilities,
from 1985 to 1987.
Russell W. Ayres, III................................................... 1991
Age 45; Associate General Counsel of The Hillman Company, a private
corporation engaged in diversified investments, since October 1983.
John E. Bagalay, Jr., Ph.D. ............................................ 1991
Age 61; Managing Director of Community Technology Fund, the venture
capital affiliate of Boston University, since September 1989;
General Counsel of Lower Colorado River Authority, a regulated electric
utility, from October 1984 to September 1989; Director of Seragen, Inc.,
Wave Systems Corporation and Hymedix, Inc.
Stephen M. Shortell, Ph.D. ............................................. 1992
Age 50; A.C. Buehler Distinguished Professor of Health Services
Management and Professor of Organization Behavior in the Department
of Organization Behavior at the J.L. Kellogg Graduate School of
Management, Northwestern University since 1982; also holds
appointments in the Department of Sociology and the Department of
Community Health and Preventive Medicine, School of Medicine at
Northwestern University. In addition, Dr. Shortell is a member of
the National Academy of Sciences' Institute of Medicine.
</TABLE>
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's directors, executive officers and
holders of more than 10% of the Company's Common Stock to file with the
Securities and Exchange Commission initial reports of ownership and reports of
changes in ownership of Common Stock and other equity securities of the Company.
The Company believes that during 1994 its officers, directors and holders of
more than 10% of the Company's Common Stock complied with all Section 16(a)
filing requirements.
16
<PAGE>
ITEM 11. EXECUTIVE COMPENSATION
-------- ----------------------
Director Compensation
Directors who are neither employees of the Company nor affiliated with
The Hillman Company or Boston University are entitled to an annual retainer fee
of $10,000 and $1,000 for each Board meeting attended, plus travel expenses. In
addition, the 1992 Director Stock Option Plan (the "Director Plan") provides for
the automatic grant of options to purchase Common Stock of the Company to
outside directors of the Company who are not affiliated with The Hillman Company
or Boston University. The Director Plan authorizes the issuance of a maximum of
100,000 shares of Common Stock and is administered by the Board of Directors.
Under the Director Plan, Dr. Shortell received options for 10,000 shares at
$8.75 per share on April 9, 1992 and at $1.1875 per share on April 9, 1994 and
will receive an option for 10,000 shares on each successive second anniversary
of the original grant date. Each eligible director first elected to the Board
of Directors after March 20, 1992 (the closing date of the Company's initial
public offering of Common Stock) will receive an option for 10,000 shares on the
initial election date and on each successive second anniversary of such date.
The exercise price per share for all options granted under the Director Plan
will be equal to the fair market value of the Common Stock on the date of grant.
Each option is exercisable with respect to one-third of the shares covered by it
on the first anniversary of the date of grant, and thereafter one-eighth of the
remaining unvested shares at the end of each succeeding quarter until fully
exercisable. The term of each option will be for a period of five years from
the date of grant. Options may not be assigned or transferred except by will or
by the laws of descent and distribution.
Severance Plan and Employment Agreements
On November 1, 1991, the Board of Directors adopted a severance plan
for all employees of the Company terminated in the event of a merger, sale or
consolidation of the Company or a general layoff. Under this plan, and
modifications thereto, Mr. D'Antoni, Dr. Miesowicz and Mr. Wilcox would receive
12 months' severance pay. Other officers are entitled to receive six month
compensation under the plan. In addition, if any officer's position were
eliminated as a result of a merger, all of such officer's stock options would
fully vest and the officer would have 36 months to exercise the options.
Employees who are not executive officers are entitled to receive severance pay
ranging from one month's salary for every year of service to the Company to a
maximum of six months' salary.
Pursuant to Mr. D'Antoni's employment agreement, Mr. D'Antoni's
options will fully vest in the event the Company is acquired or there is a
change in control (as defined in the agreement). Mr. D'Antoni is bound by
certain non-competition obligations for a period of two years following his
termination of employment.
17
<PAGE>
The following table sets forth for the fiscal years ended December 31,
1994, 1993 and 1992 the total cash compensation paid by the Company, as well as
stock option grants, to the Chief Executive Officer of the Company and each of
the four most highly compensated executive officers of the Company who received
compensation in excess of $100,000 during 1994:
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation (1)
------------------------- ----------------
Awards
Securities
Other Annual Underlying All Other
Name and Year Salary Bonus Compensation (2) Options (3) Compensation (4)
Principal Position ($) ($) ($)
----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Richard R. D'Antoni 1994 $260,000 -- $55,940 240,400 $1,249
President and 1993 244,700 -- 55,060 90,000 1,177
Chief Executive Officer 1992 231,000 -- 60,940 60,000 1,110
Frederick M. Miesowicz 1994 174,900 -- 5,400 148,000 440
Senior Vice President, 1993 166,300 -- 5,400 50,000 235
Scientific Affairs 1992 26,800 -- 900 50,000 --
Harry W. Wilcox, III 1994 144,900 -- 5,400 168,000 204
Senior Vice President, 1993 130,900 -- 5,400 50,000 109
Business Development, 1992 121,000 $20,000 5,192 30,000 753
Chief Financial Officer
Richard E. Kruger 1994 121,500 -- 5,400 73,600 267
Vice President, 1993 117,200 -- 5,400 25,000 143
Regulatory Affairs 1992 49,500 -- 2,250 10,000 --
Bruce P. Babbitt 1994 117,500 -- 5,400 100,800 149
Vice President, 1993 105,900 -- 5,400 50,000 133
Research & Development 1992 93,000 -- -- 10,000 66
</TABLE>
__________
(1) The Company does not have a long-term compensation program that includes
long-term incentive payouts. No restricted stock awards or stock
appreciation rights were granted to any of the named executive officers
during 1994.
(2) Amounts in this column represent the partial forgiveness of loans,
automobile allowances and fitness club dues. $40,547, $43,922 and $47,296 of
Mr. D'Antoni's Other Annual Compensation for 1994, 1993 and 1992,
respectively, represented the cancellation of indebtedness in connection
with a relocation loan made by the Company in 1991. See "Certain
Relationships and Related Transactions" in Item 13 below.
(3) On March 2, 1993, the Compensation Committee of the Board of Directors voted
to offer all employees who received options to purchase Common Stock at the
time of the initial public offering (March 1992) the right to exchange those
options for new options to purchase 10% of the number of shares covered by
their respective options. With the exception of Drs. Miesowicz and Kruger,
all the options shown in this column as being granted in 1992 were canceled
and replaced by new options which, in turn, are reflected within the 1993
grants.
(4) This column includes the taxable portion of long-term disability insurance
and group life insurance paid by the Company. The taxable portion of the
long-term disability insurance paid by the Company to Mr. D'Antoni for the
last fiscal year was $519. The taxable portion of group life insurance paid
by the Company to each of Messrs. D'Antoni and Wilcox and Drs. Miesowicz,
Kruger and Babbitt for the last fiscal year was $729, $204, $440, $267 and
$149, respectively.
18
<PAGE>
The following tables summarize options granted during 1994 to each of
the executive officers named in the Summary Compensation Table above, and the
number and value of options held by such persons at the end of 1994. No stock
appreciation rights (SARs) were granted or exercised during 1994 and no options
were exercised by any named executive officer during 1994.
Option Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Individual Grants
------------------------------------------------------
Number of
Securities % of Total
Underlying Options
Options Granted to Exercise or
Granted Employees Base Price Expiration
Name (1) (2) in Fiscal Year ($/Share) Date
---- ------- -------------- --------- --------
<S> <C> <C> <C> <C>
Richard R. D'Antoni 240,400 26.8% $3.625 10/14/04
Frederick Miesowicz 148,000 16.5% 3.625 10/14/04
Harry W. Wilcox, III 20,000 2.2% 1.125 03/31/04
148,000 16.5% 3.625 10/14/04
Richard E. Kruger 73,600 8.2% 3.625 10/14/04
Bruce P. Babbitt 100,800 11.2% 3.625 10/14/04
</TABLE>
(1) In the event of a change in control of the Company (as determined by the
Board of Directors), the Board of Directors in its discretion may, at the
time an option is granted or at any time thereafter, take one or more of the
following actions: (a) provide for the acceleration of any time period
relating to the exercise of the option, (b) provide for the purchase of the
option upon the optionee's request for an amount of cash or other property
that could have been received upon the exercise of the option had the option
been currently exercisable, (c) adjust the terms of the option in a manner
determined by the Board of Directors to reflect the change in control, (d)
cause the option to be assumed, or (e) make such other provision as the
Board of Directors may consider equitable and in the best interests of the
Company.
(2) In the Board of Directors' discretion, tax obligations of the optionee may
be paid in whole or in part in shares of Common Stock, including shares
retained from the option creating the tax obligation, valued at their fair
market value on the date of delivery.
Aggregated Option Exercises
in Last Fiscal Year and
FY-End Option Values
<TABLE>
<CAPTION> Number of Securities
Underlying Value of Unexercised
Unexercised Options In-the-Money Options
at FY-End At FY-End (1)
($)
--------------------------- ---------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Richard R. D'Antoni 213,857 296,543 $536,578 $230,822
Frederick M. Miesowicz 66,650 181,350 104,655 119,595
Harry W. Wilcox, III 55,573 192,427 137,620 173,130
Richard E. Kruger 22,258 86,342 38,268 54,957
Bruce P. Babbitt 32,916 121,384 85,293 91,807
---------
</TABLE>
(1) Value based on market value of the Company's Common Stock at December 30,
1994 ($4.00 per share) minus the exercise price.
19
<PAGE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
-------- --------------------------------------------------------------
The following tables sets forth certain information as of January 31,
1995 with respect to the beneficial ownership of the Company's Common Stock by
(i) each person known by the Company to own beneficially more than 5% of the
outstanding shares of Common Stock, (ii) the directors and director nominees of
the Company, (iii) the Chief Executive Officer of the Company and each of the
four executive officers of the Company listed in the "Summary Compensation
Table" above, (iv) the directors and executive officers of the Company as a
group and (v) the percent of all outstanding shares of Common Stock beneficially
owned by each on such date.
<TABLE>
<CAPTION>
Percent of
Amount and Nature of Common Stock
Name of Beneficial Owner Beneficial Ownership(1) Outstanding
------------------------ ----------------------- -----------------------
<S> <C> <C>
Henry L. Hillman, Elsie Hilliard Hillman and C.G.
Grefenstette, Trustees (2) 4,289,361 59.2%
2000 Grant Building
Pittsburgh, PA 15219
Hillman Medical Ventures Partnerships (3) 3,684,869 50.9%
824 Market Street, Suite 900
Wilmington, DE 19801
Gary W. Cashon, Ph.D. (4) 3,714,869 51.1%
Two Walnut Grove Drive, Suite 130
Horsham, PA 19044
Hal S. Broderson, M.D. (5) 3,685,869 50.9%
Two Walnut Grove Drive, Suite 130
Horsham, PA 19044
Ronald J. Brenner, Ph.D. (5) 3,686,869 51.0%
Two Walnut Grove Drive, Suite 130
Horsham, PA 19044
Charles G. Hadley (5) 3,684,869 50.9%
Two Walnut Grove Drive, Suite 130
Horsham, PA 19044
B.U.N.P. (6) 328,850 5.9%
Boston University
147 Bay State Road
Boston, MA 02215
John E. Bagalay, Jr., Ph.D. (6) 328,850 5.9%
Boston University
147 Bay State Road
Boston, MA 02215
Richard R. D'Antoni (7) 244,486 4.3%
Russell W. Ayres, III 1,000 *
Stephen M. Shortell, Ph.D. (8) 9,167 *
Frederick M. Miesowicz, Ph.D. (9) 74,987 1.4%
Harry W. Wilcox, III (10) 67,652 1.2%
Richard E. Kruger, Ph.D. (11) 25,212 *
Bruce P. Babbitt, Ph.D. (12) 37,158 *
All directors and executive officers as a 4,547,206 58.0%
group (10 persons) (13)
</TABLE>
__________________
* Less than 1%
20
<PAGE>
(1) The inclusion herein of any shares deemed beneficially owned does not
constitute an admission of beneficial ownership of those shares. Unless
otherwise indicated, each stockholder referred to above has sole voting and
investment power with respect to the shares listed.
(2) Includes 193,875 shares of Common Stock held by a trust for the benefit of
Henry L. Hillman (the "HLH Trust"), 34,375 shares of Common Stock held by
Hillman 1984 Limited Partnership ("Hillman 1984"), 6,875 shares of Common
Stock held by HCC Investments, Inc. ("HCC"), 363,985 shares of Common Stock
held by Juliet Challenger, Inc. ("JCI"), 612,409 shares of Common Stock held
by Hillman Medical Ventures 1989 L.P. ("HMV 1989"), 294,118 shares of
Common Stock held by Hillman Medical Ventures 1990 L.P. ("HMV 1990"),
811,038 shares of Common Stock held by Hillman Medical Ventures 1991 L.P.
("HMV 1991"), 184,204 shares of Common Stock held by Hillman Medical
Ventures 1992 L.P. ("HMV 1992"), 5,382 shares of Common Stock purchasable
upon exercise of a warrant held by Wilmington Securities, Inc.
("Wilmington") and 1,783,100 shares of Common Stock that may be acquired by
Hillman Medical Ventures 1994 L.P. ("HMV 1994") pursuant to Convertible
Preferred Stock convertible within 60 days after January 31, 1995. JCI,
Wilmington (which is an affiliate of the sole general partner of Hillman
1984 and also the sole general partner of one of the general partners of HMV
1989, HMV 1990, HMV 1991, HMV 1992 and HMV 1994 (collectively, "Hillman
Medical Ventures")) and HCC are private investment companies owned by The
Hillman Company, a firm engaged in diversified investments and operations,
which is controlled by the HLH Trust. The Trustees of the HLH Trust are
Henry L. Hillman, Elsie Hilliard Hillman and C.G. Grefenstette (the "HLH
Trustees"). The HLH Trustees share voting and investment power with respect
to the shares held of record by the HLH Trust, Hillman 1984, HCC, JCI,
Hillman Medical Ventures and Wilmington and may be deemed to be the
beneficial owners of such shares. Does not include an aggregate of 258,500
shares of Common Stock held by four irrevocable trusts for the benefit of
members of the Hillman family (the "Family Trusts"), as to which shares the
HLH Trustees (other than Mr. Grefenstette) disclaim beneficial interest.
C.G. Grefenstette and Edward A. Craig, III are trustees of the Family Trusts
and share voting and dispositive power over the assets of the Family Trusts.
(3) Includes 612,409 shares of Common Stock held by HMV 1989, 294,118 shares of
Common Stock held by HMV 1990, 811,038 shares of Common Stock held by HMV
1991, 184,204 shares of Common Stock held by HMV 1992 and 1,783,100 shares
of Common Stock that may be acquired by HMV 1994 pursuant to a Convertible
Preferred Stock convertible within 60 days after January 31, 1995.
(4) Includes 3,684,869 shares of Common Stock held by Hillman Medical Ventures
and 30,000 shares of Common Stock issuable within the 60-day period from
January 31, 1995 upon exercise of options granted to Dr. Cashon. Dr. Cashon
is a general partner of Cashon Biomedical Associates L.P., which is the
managing general partner of Hillman Medical Ventures and, therefore, may be
deemed to be the beneficial owner of such shares. Drs. Cashon, Broderson
and Brenner and Mr. Hadley share investment and voting power with respect to
the shares held by Hillman Medical Ventures. Dr. Cashon disclaims
beneficial ownership of the 862,992 shares beneficially owned by the HLH
Trustees and the Family Trusts referred to in note 2 above.
(5) Includes 3,684,869 shares of Common Stock held by Hillman Medical Ventures.
Each of Drs. Broderson and Brenner and Mr. Hadley is a general partner of
Cashon Biomedical Associates L.P., which is the managing general partner of
Hillman Medical Ventures and, therefore, may be deemed to be the beneficial
owner of such shares. Drs. Cashon, Broderson and Brenner and Mr. Hadley
share voting and investment power with respect to the shares held by Hillman
Medical Ventures.
(6) Includes 239,695 shares of Common Stock held by B.U.N.P., a partnership
acting as nominee for Boston University, and 89,155 shares of Common Stock
that may be acquired by B.U.N.P. pursuant to Convertible Preferred Stock
convertible within 60 days after January 31, 1995. Dr. Bagalay, a partner
of B.U.N.P., disclaims beneficial ownership of such shares. Dr. Bagalay
shares voting and investment control.
(7) Includes 228,861 shares of Common Stock which may be acquired pursuant to
stock options exercisable within 60 days after January 31, 1995.
(8) Consists of 9,167 shares of Common Stock which may be acquired pursuant to
stock options exercisable within 60 days after January 31, 1995.
21
<PAGE>
(9) Consists of 74,987 shares of Common Stock which may be acquired pursuant to
stock options exercisable within 60 days after January 31, 1995.
(10) Consists of 67,652 shares of Common Stock which may be acquired pursuant to
stock options exercisable within 60 days after January 31, 1995.
(11) Consists of 25,212 shares of Common Stock which may be acquired pursuant to
stock options exercisable within 60 days after January 31, 1995.
(12) Consists of 37,158 shares of Common Stock which may be acquired pursuant
to stock options exercisable within 60 days after January 31, 1995.
(13) Includes an aggregate of 2,389,117 shares of Common Stock which may be
acquired pursuant to stock options exercisable, and Convertible Preferred
Stock convertible, within 60 days after January 31, 1995.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
-------- ----------------------------------------------
In 1991, the Company made relocation loans to Mr. D'Antoni, President and
Chief Executive Officer of the Company, in the aggregate principal amount of
$150,000, in connection with his relocation from Houston to the Boston area.
The loans bear interest at the rate of 9% per annum and are to be forgiven over
four years at the rate of $37,500 per year. The largest amount of indebtedness
outstanding during 1994 was approximately $50,000. As of December 31, 1994,
approximately $13,500 of indebtedness remained outstanding. During 1994, the
Company did not make loans to any other executive officers which, singly or in
the aggregate, exceeded $60,000.
22
<PAGE>
PART IV.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
-------- ---------------------------------------------------------------
(a) Documents filed as a part of this Form 10-K.
--------------------------------------------
1. Financial Statements. The Financial statements listed in the Index to
---------------------
Financial Statements and Financial Statement Schedules are filed as
part of this Annual Report on Form 10-K.
2. Exhibits. The exhibits listed in the Exhibit Index immediately
---------
preceding such Exhibits are filed as part of this Annual Report on Form
10-K. The Company has filed all management contracts and compensatory
plans in response to Item 14(a)(3) of Form 10-K as indicated on the
Exhibit Index.
(b) Reports on Form 8-K
-------------------
NONE.
-----
23
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned on its behalf, thereunto duly authorized.
Cellcor, Inc.
Dated: March 28, 1995 By: /s/ Harry W. Wilcox, III
----------------------------
Harry W. Wilcox, III
Sr., Vice President, Business Development
and Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated below.
<TABLE>
<CAPTION>
Signature Title Date
-----------------------------------------------------------------------------------------
<S> <C> <C>
/s/ Gary W. Cashon, Ph.D. Chairman of the Board March 28, 1995
-------------------------
Gary W. Cashon, Ph.D.
/s/ Richard R. D'Antoni President, March 28, 1995
----------------------- Chief Executive Officer and Director
Richard R. D'Antoni (Principal Executive Officer)
/s/ Harry W. Wilcox, III Senior Vice President, Business March 28, 1995
------------------------ Development and Chief Financial
Harry W. Wilcox, III Officer, Treasurer, and Secretary
(Principal Accounting Officer and
Principal Financial Officer)
/s/ Russell W. Ayres, III Director March 28, 1995
-------------------------
Russell W. Ayres, III
/s/ John E. Bagalay, Jr. Ph.D. Director March 28, 1995
-------------------------------
John E. Bagalay, Jr. Ph.D.
/s/ Stephen M. Shortell, Ph.D. Director March 28, 1995
------------------------------
Stephen M. Shortell, Ph.D.
</TABLE>
24
<PAGE>
<TABLE>
<CAPTION>
FORM 10-K ITEM 14(a)(1) and (2) Page
CELLCOR, INC. ----
LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
<S> <C>
The following financial statements of Cellcor are included herein and
incorporated into Item 8 of this Annual Report on Form 10-K:
Independent Auditors' Report 26
Balance Sheets at December 31, 1994 and 1993 27
Statements of Operations for the years ended
December 31, 1994, 1993 and 1992 28
Statements of Cash Flows for the years ended
December 31, 1994, 1993 and 1992 29
Statements of Stockholders Equity (Deficit) for the years ended
December 31, 1994, 1993 and 1992 30
Notes to Financial Statements 31
The following financial statement schedules of Cellcor are included
herein and incorporated into Item 14(a) of this Annual Report on
Form 10-K:
Schedule II - Valuation and Qualifying Accounts and Reserves 40
</TABLE>
25
<PAGE>
Independent Auditors' Report
----------------------------
The Board of Directors
Cellcor, Inc.:
We have audited the financial statements of Cellcor, Inc. as listed in the
accompanying index. In connection with our audits of the financial statements,
we also audited the financial statement schedule as listed in the accompanying
index. These financial statements and financial statement schedule are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statement and financial statement schedule based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Cellcor, Inc. as of December
31, 1994 and 1993, and the results of its operations and its cash flows for each
of the years in the three-year period ended December 31, 1994, in conformity
with generally accepted accounting principles. Also in our opinion, the related
financial statement schedule, when considered in relation to the basic financial
statements taken as a whole, presents fairly, in all material respect, the
information set forth therein.
As discussed in note 13 to the financial statements, the Company and certain of
its officers are defendants in a class action lawsuit, seeking damages in
unspecified amounts, alleging that the prospectus used to sell the Company's
common stock in the initial public offering contained false and misleading
statements and omitted material facts. It is impossible to predict the outcome
of the lawsuit at this time. Accordingly, no provision for any liability that
may result upon adjudication has been recognized in the accompanying financial
statements.
The accompanying financial statements have been prepared assuming that Cellcor,
Inc. will continue as a going concern. As discussed in note 3 to the financial
statements, the Company's recurring losses from operations, decreasing cash
reserves and need for additional capital to fund continuing operations raise
substantial doubt about the entity's ability to continue as a going concern.
Management's plans in regard to these matters are also described in Note 3. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
KPMG PEAT MARWICK LLP
Boston, Massachusetts
January 20, 1995
26
<PAGE>
CELLCOR, INC. 1994 ANNUAL REPORT
FORM 10-K
<TABLE>
<CAPTION>
BALANCE SHEETS
December 31,
------------
ASSETS 1994 1993
---------------------------
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 1,225,674 $ 4,668,046
Marketable securities at cost (market
value of $2,668,241 in 1994) 2,669,873 -
Certificate of deposit (note 8) - 125,000
Accounts receivable, net of allowances 22,177 1,182
Inventories 73,072 69,084
Prepaid expenses and other current
assets 252,121 157,369
Current portion of notes receivable
(Note 6) 13,542 48,754
------------ ------------
Total current assets 4,256,459 5,069,435
------------ ------------
Property and equipment (Notes 5 and 9) 3,009,192 2,979,911
Less accumulated depreciation and
amortization 2,016,085 1,615,694
------------ ------------
Net property and equipment 993,107 1,364,217
------------ ------------
Other assets:
Notes receivable, less current portion
(Note 6) - 13,542
Other assets 118,447 113,681
------------ ------------
118,447 127,223
------------ ------------
Total assets $ 5,368,013 $ 6,560,875
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities: $ $
Notes payable (Note 8) - 83,331
Accounts payable 300,191 425,311
Accrued expenses (Note 7) 1,124,069 571,808
Deferred revenue (Note 4) 155,000 -
Current maturities of capital lease
obligation (Note 9) 90,177 137,332
------------ ------------
Total current liabilities 1,669,437 1,217,782
Capital lease obligation, less current
maturities (Note 9) 366,432 474,818
------------ ------------
Total liabilities 2,035,869 1,692,600
------------ ------------
Commitments and Contingencies (Notes 4,
9, and 13)
Stockholders' equity (Note 10):
Convertible Preferred stock, $.01 par
value. Authorized 1,000,000 shares;
issued 5,250 in 1994 and 0 in 1993 53 -
Common stock, $.01 par value. Authorized
20,000,000 shares; issued 5,452,797
in 1994 and 5,436,276 in 1993 54,528 54,363
Additional paid-in capital 54,825,489 49,548,334
Unearned stock option compensation (173,805) (381,372)
Accumulated deficit (51,374,121) (44,353,050)
------------ ------------
Total stockholders' equity 3,332,144 4,868,275
------------ ------------
Total liabilities and stockholders'
equity $ 5,368,013 $ 6,560,875
============ ============
</TABLE>
See accompanying notes to financial statements.
27
<PAGE>
CELLCOR, INC. 1994 ANNUAL REPORT
FORM 10-K
<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS
Years ended December 31,
-----------------------------------------
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Revenue (Note 4)
Technology Development Fees $ 775,000 - -
Net Product Revenue 96,859 - 2,689,992
------------ ----------- ------------
Total Revenue 871,859 - 2,689,992
------------ ----------- ------------
Cost of patient services - - 4,530,541
Research and development 5,602,053 4,803,028 4,065,288
General and administrative 2,394,588 2,836,851 4,506,787
Restructuring expense (Note 14) - - 2,300,000
------------ ----------- ------------
Loss from operations (7,124,782) (7,639,879) (12,712,624)
------------ ----------- ------------
Other income (expense):
Interest income 135,513 316,319 539,473
Other income 8,000 - -
Interest expense (39,802) (82,524) (151,684)
Interest expense - stockholders - - (194,121)
------------ ----------- ------------
Total other income 103,711 233,795 193,668
------------ ----------- ------------
Net loss ($7,021,071) ($7,406,084) ($12,518,956)
============ =========== ============
Net loss per share (Note 2(j)) ($1.33) ($1.36) ($2.65)
============ =========== ============
Weighted average shares used in
calculation 5,441,853 5,436,191 4,718,299
============ =========== ============
</TABLE>
See accompanying notes to financial statements.
28
<PAGE>
CELLCOR, INC. 1994 ANNUAL REPORT
FORM 10-K
<TABLE>
<CAPTION>
STATEMENTS OF CASH FLOWS
Years ended December 31,
---------------------------------------------
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss ($7,021,071) ($7,406,084) ($12,518,956)
Adjustments to reconcile net loss to net cash used
in operating activities:
Write down of fixed assets - - 745,100
Depreciation and amortization 408,010 425,520 632,594
Deferred compensation expense 207,567 207,569 207,567
Changes in assets and liabilities:
(Increase) decrease in accounts receivable, net (20,995) 420,964 390,615
(Increase) decrease in inventories (3,988) 76,428 50,897
(Increase) decrease in prepaid expense and other
current assets (94,752) 229,763 (229,267)
Increase (decrease) in accounts payable (125,120) 151,817 (36,008)
Increase (decrease) in accrued expenses 552,261 (1,762,381) 1,854,001
Increase in deferred revenue 155,000 - -
------------ ------------ -------------
Net cash used in operating activities $ (5,943,088) $ (7,656,404) $ (8,903,457)
------------ ------------ -------------
Cash flows from investing activities:
Proceeds from the maturity of certificate of deposit 125,000 - -
Additions to property and equipment, net (36,900) (21,599) (189,490)
(Increase) decrease in other assets (4,766) 44,345 (23,166)
Decrease in notes receivable 48,754 65,542 33,491
(Increase) decrease in marketable securities (2,669,873) 9,063,306 (9,063,306)
------------ ------------ -------------
Net cash provided by (used in) investing
activities (2,537,785) $ 9,151,594 (9,242,471)
------------ ------------ -------------
Cash flows from financing activities:
Proceeds from sale of convertible preferred
stock 5,250,000 - -
Principal payments under capital lease obligations (155,541) (198,157) (184,911)
Proceeds from notes payable from stockholders - - 2,000,000
Principal payments on notes payable (83,331) (391,731) (264,758)
Proceeds from the exercise of stock options 2,373 501 64,280
Proceeds from sale of common stock 25,000 - 19,988,048
------------ ------------ -------------
Net cash provided by (used in) financing
activities 5,038,501 $ (589,387) 21,602,659
------------ ------------ -------------
Net increase (decrease) in cash and cash equivalents (3,442,372) 905,803 3,456,731
Cash and cash equivalents at beginning of year 4,668,046 3,762,243 305,512
------------ ------------ -------------
Cash and cash equivalents at end of year $ 1,225,674 $ 4,668,046 $ 3,762,243
============ ============ =============
Supplemental disclosure of cash flow information:
Interest paid $ 39,802 $ 82,524 $ 151,684
============ ============ =============
Property and equipment acquired under capital
leases $ - $ - $ 68,395
============ ============ =============
Conversion of notes payable to stockholders
and accrued interest payable to common stock $ - $ - $ 11,053,922
============ ============ =============
</TABLE>
See accompanying notes to financial statements.
29
<PAGE>
CELLCOR INC. 1994 ANNUAL REPORT
10-K
STATEMENT OF STOCKHOLDERS EQUITY (DEFICIT)
<TABLE>
<CAPTION>
Class A Class B Class C Class D
Convertible Convertible Convertible Convertible Convertible
preferred stock preferred stock preferred stock preferred stock preferred stock
Shares Par Value Shares Par Value Shares Par Value Shares Par Value Shares Par Value
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1991 687,500 $68,750 383,142 $38,314 644,641 $64,464 319,118 $31,912
Conversion of preferred
shares to common stock [687,500] [68,750][383,142] [38,314][644,641] [64,464] [319,118] [31,912]
Sale of common stock - - - - - - - -
Conversion of notes and
interest payable to
stockholders (Note 8) - - - - - - - -
Common stock options
exercised - - - - - - - -
Deferred compensation
expense - - - - - - - -
Net Loss - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1992 - - - - - - - -
Sale of common stock - - - - - - - -
Deferred compensation
expense - - - - - - - -
Net Loss - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1993 - - - - - - - -
Sale of Common Stock
Sale of Preferred Stock 5,250 53
Deferred Compensation
Expense
Net Loss
------------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1994 - - - - - - - - 5,250 53
====================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Additional Unearned Total
Common stock paid in stock option Accumulated stockholder's
Shares Par Value capital compensation deficit equity (deficit)
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1991 293,092 $2,931 $18,289,575 [$796,508] [$24,428,010] [$6,728,572]
Conversion of preferred
shares to common stock 2,034,396 20,344 183,096 - -
Sale of common stock 2,000,000 20,000 19,968,048 - - 19,988,048
Conversion of notes and
interest payable to
stockholders (Note 8) 1,004,905 10,049 11,043,873 - - 11,053,922
Common stock options
exercised 103,215 1,032 63,248 - - 64,280
Deferred compensation
expense - - - 207,567 - 207,567
Net Loss - - - - [12,518,956] [12,518,956]
------------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1992 5,435,608 54,356 49,547,840 [588,941] [36,946,966] 12,066,289
Sale of common stock 668 7 494 - - 501
Deferred compensation
expense - - - 207,569 - 207,569
Net Loss - - - - [7,406,084] [7,406,084]
------------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1993 5,436,276 $54,363 $49,548,334 [$ 381,372] [$44,353,050] $4,868,275
Sale of Common Stock 16,521 165 27,208 27,373
Sale of Preferred Stock 5,249,947 5,250,000
Deferred Compensation
Expense 207,567 207,567
Net Loss [7,021,071] [7,021,071]
------------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1994 5,452,797 $54,528 $54,825,489 [$173,805] [$51,374,121] $3,332,144
====================================================================================================================================
</TABLE>
See accompanying notes to financial statements.
30
<PAGE>
CELLCOR, INC.
NOTES TO FINANCIAL STATEMENTS
(1) Nature of Business
Cellcor, Inc. (the "Company") is a biotechnology company engaged in the
development and commercialization of cellular therapies ("ALT") with initial
application in the treatment of various forms of cancer and potential
application in the areas of infectious disease and AIDS.
(2) Summary of Significant Accounting Policies
(a) Technology Development Fees
Technology Development Fees are recorded over the applicable contractual
periods as specified by the agreement, net of related commissions.
(b) Net Product Revenue
The Company is recording the cost recovery related to treatment of patients
receiving ALT for metastatic Renal Cell Carcinoma under a compassionate protocol
based on expected payments from third-party payors and patients.
(c) Cash and Cash Equivalents
Cash and cash equivalents includes cash, money market funds and marketable
securities with original maturity dates of three months or less.
(d) Marketable Securities
Marketable securities are purchased with the intention to hold to maturity
and are stated at amortized cost which approximates market. These securities
include only United States Treasury government securities. Accordingly, the
investments are subject to minimal credit and market risk.
(e) Property and Equipment
Property and equipment is carried at cost and depreciated using the
straight-line method over the estimated useful lives of the related assets.
Leasehold improvements are amortized over the shorter of the useful life, or the
lease term.
(f) Inventories
Inventories are stated at the lower of cost (first-in, first-out) or market
(g) Intangibles
Patents are amortized using the straight-line method over a five-year period
from the date the patent is granted.
(h) Research and Development
Research and development costs are charged to expense as incurred.
(i) Income Taxes
In February 1992, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 109, "Accounting for Income Taxes."
Statement 109 requires a change from the deferred method of accounting for
income taxes of APB Opinion 11 to the asset and liability method of accounting
for income taxes. Under the asset and liability method of Statement 109,
deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their
31
<PAGE>
CELLCOR, INC.
NOTES TO FINANCIAL STATEMENTS
respective tax bases and operating loss and tax credit carryforwards. Deferred
tax assets and liabilities are measured using enacted tax rates expected to
apply to taxable income in the years in which those temporary differences are
expected to be recovered or settled. Under Statement 109, the effect on deferred
tax assets and liabilities of a change in tax rates is recognized in income in
the period that includes the enactment date.
Effective January 1, 1993, the Company adopted Statement 109. There
was no net cumulative effect associated with this change.
Pursuant to the deferred method under APB 11, which was applied in
1992 and prior years, deferred income taxes are recognized for income and
expense items that are reported in different years for financial reporting
purposes and income tax purposes using the tax applicable in the year of
calculation. Under the deferred method, deferred taxes are not adjusted for
subsequent changes in tax rates.
Research and development tax credits are reflected as a reduction of
federal income taxes in the year utilized.
(j) Net Loss Per Common Share
The net loss per common share is computed by dividing net loss after
adjusting for preferred stock dividends by the weighted average number of common
shares outstanding. Common stock equivalent shares are not included in the per
share calculations where the effect of their inclusion would be antidilutive.
(3) Liquidity
While the Company believes that its current cash balance will be
sufficient to meet its operating requirements through the middle of 1995, the
Company will need to raise substantial additional funds to support its product
development and commercialization programs. The Company is currently pursuing
additional equity or debt financing, collaborative or other arrangements with
corporate partners or from other sources, which may not be available when needed
or on terms acceptable to the Company. The Company's inability to raise
sufficient funds could require it to delay, scale back or eliminate certain
clinical studies, research and development programs or to license third parties
to commercialize products or technologies that the Company would otherwise
develop or commercialize itself. The Company's cash requirements may vary
materially from those now planned because of results of clinical testing,
changes in focus and direction of the Company's research and development
programs, competitive and technological advances, patent developments, the FDA
regulatory process or other developments.
There can be no assurances that the Company will be able to raise
additional funds to complete its clinical development program or maintain its
current level of operation. The Company's longer term working capital
requirements will depend on numerous factors including the timely and
satisfactory completion of its clinical trials.
(4) Revenue
Technology Development Fees
In March 1994, the Company signed a technology licensing and service
agreement with SRL Inc. of Tokyo. Under this agreement, Cellcor will help SRL
establish a core capability in patient specific Good Manufacturing Practices
(GMP) cell processing in Japan. The agreement provides for periodic payments to
Cellcor, and, if SRL exercises more than one of the development options
contained in the agreement, additional payments. Cellcor is recognizing the
revenue from the SRL agreement over applicable contractual periods as specified
by the agreement, net of related commissions. Cash payments received by the
Company prior to being earned are recognized as deferred revenue.
Product Revenue
In September 1993, Cellcor received authorization from the Food and
Drug Administration for cost recovery related to treatment of patients receiving
autolymphocyte therapy (ALT) for metastatic Renal Cell Carcinoma (mRCC) under a
32
<PAGE>
CELLCOR, INC.
NOTES TO FINANCIAL STATEMENTS
compassionate protocol. During 1994, revenue is recorded in net product revenue.
The cost of sales related to the treatments is recorded in research and
development expense.
During 1992, ALT was provided to patients on a commercial basis and a
substantial majority of the Company's revenue was received from third-party
payors. This revenue was recognized net of contractual allowances. The cost to
treat these patients is recorded in cost of patient services.
During and prior to 1992, the Company received Medicare reimbursement
through host hospitals from certain Medicare intermediaries. However, the
ultimate Medicare reimbursement amount is not determined until those
intermediaries review the cost reports submitted to the hospitals, which
generally does not occur for at least one year after the initial payment is
made. It is possible that after reviewing certain cost reports, Medicare may
deny reimbursement for ALT. If this were to occur, the host hospital would be
required to repay any amounts previously reimbursed by Medicare. The Company
would have a maximum liability to reimburse approximately $295,000 to host
hospitals.
(5) Property and Equipment
Property and equipment consists of the following at December 31:
<TABLE>
<CAPTION>
1994 1993
---- ----
<S> <C> <C>
Laboratory equipment $1,142,346 $1,137,027
Furniture and fixtures 758,183 740,852
Leasehold improvements 1,108,663 1,102,032
---------- ----------
3,009,192 $2,979,911
========== ==========
</TABLE>
The repair and maintenance expense was $69,800, $64,000 and $76,000 in
1994, 1993 and 1992, respectively.
(6) Notes Receivable
The following is a summary of notes receivable at December 31:
<TABLE>
<CAPTION>
1994 1993
---- ----
<S> <C> <C>
9% demand note due from an officer.
This note is being forgiven on a pro
rata basis through June 1995 as long
as the officer remains an employee. 13,542 51,042
9% demand note due from an officer.
This note is being forgiven on a pro
rata basis through March 1994 . - 1,254
Non interest-bearing note due from a
stockholder on November 1, 1995. This
note is being forgiven beginning
November 1992 on a prorate basis
through October 1994 - 10,000
------- -------
13,542 62,296
Less current portion 13,542 48,754
------- -------
Notes receivable, less current portion $ - $13,542
======= =======
</TABLE>
33
<PAGE>
CELLCOR, INC.
NOTES TO FINANCIAL STATEMENTS
(7) Accrued Expenses
Accrued expenses consist of the following at December 31:
<TABLE>
<CAPTION>
1994 1993
---- ----
<S> <C> <C>
Accrued clinical trial expense $ 643,579 $ 43,624
Accrued payroll 110,614 87,565
Accrued vacation expense 64,612 64,612
Accrued rent 70,349 83,965
Accrued restructuring expense - 60,000
Other accruals 234,915 232,042
---------- --------
$1,124,069 $571,808
========== ========
</TABLE>
(8) Notes Payable
Notes Payable, Bank
The Company had a note payable with a bank, payable in monthly installments of
$16,667 plus interest at the bank's prime rate plus 3% through April 1994. The
note was secured by certain corporate assets, plus cash collateral equivalent of
at least 25% of amounts outstanding to be held at the bank. At December 31,
1993, a certificate of deposit of $125,000 was restricted for that purpose.
During 1994, the note was paid off in full.
Notes Payable, Stockholders
In 1991 and 1992, the Company borrowed $10,500,000 from certain stockholders.
The demand notes payable were at an interest rate of 9%. In conjunction with
the Company's initial public offering, the $10,500,000 of notes payable and
$554,000 of related interest were converted to common stock.
34
<PAGE>
CELLCOR, INC.
NOTES TO FINANCIAL STATEMENTS
(9) Lease Commitments
The Company leases its facilities and certain equipment under noncancelable
agreements which expire at various dates through 2000. The assets and
liabilities under capital leases are recorded at the lower of the present value
of the minimum lease payments or the fair value of the asset. The assets are
amortized over the lower of their related lease terms or their estimated
productive lives. Amortization of assets under capital leases is included in
depreciation expense.
Property and equipment include the following amounts for leases which have
been capitalized at December 31:
<TABLE>
<CAPTION>
1994 1993
---- ----
<S> <C> <C>
Laboratory equipment $ 234,890 $ 234,890
Leasehold improvements 800,000 800,000
---------- ----------
1,034,890 1,034,890
Less accumulated amortization (496,091) (373,033)
---------- ----------
$ 538,799 $ 661,857
========== ==========
</TABLE>
At December 31, 1994, future minimum lease payments under all noncancelable
capital and operating leases were as follows:
<TABLE>
<CAPTION>
Capital Operating
Leases Leases
------ ------
<S> <C> <C>
Year ended December 31:
1995 $123,128 $ 411,379
1996 114,554 409,489
1997 105,981 409,489
1998 98,974 408,747
1999 91,967 408,500
Thereafter 14,645 204,250
-------- ----------
Total minimum lease payments 549,249 $2,251,854
==========
Less amount representing interest 92,640
--------
456,609
Less current maturities 90,177
--------
Capital lease obligation, less current
maturities $366,432
========
</TABLE>
Rental expense was approximately $327,000, $431,000 and $638,000 for years
ended December 31, 1994, 1993 and 1992.
(10) Stockholders' Equity
Capital Stock
In March 1992, the Company completed a public offering of 2,000,000 shares of
its common stock at a price of $11.00 per share. The proceeds of the offering,
after deducting offering related costs, were approximately $19,988,000. In
conjunction with the closing of the public offering all outstanding shares of
convertible preferred stock of the Company were converted to common stock.
On January 28, 1992, the Company's Board of Directors adopted, and its
stockholders approved, an amendment to the Company's Certificate of
Incorporation authorizing the issuance of up to 1,000,000 shares of blank check
preferred stock subject to any limitations prescribed by law, without further
stockholder approval. Each such series of preferred stock shall have such
rights, preferences, privileges and restrictions, including voting rights,
dividend rights, conversion rights, redemption privileges and liquidation
preferences, as shall be determined by the Board of Directors.
35
<PAGE>
CELLCOR, INC.
NOTES TO FINANCIAL STATEMENTS
On July 20, 1994, the Company sold 5,250 shares of convertible preferred
stock, $.01 par value, for $1,000 per share to certain existing stockholders.
Dividends accrue annually at $100 per share and are payable when and as declared
by the Board of Directors. Such dividends shall accrue and shall be cumulative
from the date of issuance of each share of convertible preferred stock whether
or not declared. At December 31, 1994, cumulative preferred stock dividends
totaled $234,700. The preferred stockholders have liquidation preference over
common stockholders but have no voting rights other than as provided by Delaware
law and other than for certain events that would adversely affect the rights of
the preferred stock.
The preferred stock is convertible into common stock at any time at the option
of the holders. The number of shares of common stock is determined by dividing
the preferred stock purchase price plus accrued and unpaid dividends thereon by
$3.00. If the Company sells at least $2,000,000 of an equity security to
investors unaffiliated with the preferred stock investors, all outstanding
shares of preferred stock automatically convert into such equity security. The
number of shares of the equity security into which a share of preferred stock is
convertible is determined by dividing the purchase price of the preferred stock,
plus accrued but unpaid dividends thereon, by the lesser of (i) $3.00 or (ii)
the purchase price of the equity security.
Stock Options and Warrants
In January 1988, the Company adopted the 1988 Stock Option Plan (the "1988
Plan"). The 1988 Plan provides for the issuance of incentive stock options, as
defined in Section 422 of the Internal Revenue Code of 1986, to key employees
and the issuance of non-qualified options to directors, officers, employees and
consultants. Incentive stock options must be granted at not less than the fair
market value of the common stock at the time of the grant (110% in the case of a
10% owner). Non-qualified options must be granted at not less than 90% of the
fair market value of the common stock at the time of grant, and option price
shall not be less than par value per share. A total of 600,000 shares of common
stock may be subject to options granted under the 1998 Plan. As of December 31,
1994, 352,985 options were granted at exercise prices ranging from $.01 to
$9.50.
During 1991, the Company granted options for 161,908 shares of its common
stock at an option price below fair market value. Accordingly, the Company
recorded deferred compensation expense of $830,268 for the difference between
the market value of the stock at the time of the grants and the option prices.
The Company is amortizing the deferred compensation expenses over a four-year
period.
On January 28, 1992, the Company adopted the 1992 Director Stock Option Plan
(the "Director Plan"). The Director Plan provides for the automatic grant of
options to purchase common stock of the Company to non-employee directors who
are unaffiliated with The Hillman Company or Boston University. There are
100,000 shares of common stock reserved for issuance upon exercise of options
granted under the Director Plan. Under the Director Plan, each eligible
director as of the closing of the Company's initial public offering in March
1992 received an option for 10,000 shares of common stock on such date and will
receive an option for 10,000 shares on each successive second anniversary of
such date. Each eligible director first elected to the Board of Directors after
the closing of the Company's public offering will receive an option for 10,000
shares on the initial election date and on each successive second anniversary of
such date. The exercise price per share for all options granted under the
Director Plan is equal to the fair market value of the value of the common stock
as of the date of grant. One-third of the shares covered by an option vest on
the first anniversary of the date of grant, and one-eighth of the remaining
shares vest on each succeeding quarter thereafter until fully vested on the
third anniversary of the date of grant. The term of each option will be for a
period of ten years from the date of grant. As of December 31, 1994, 20,000
options were granted under this plan, at an exercise prices ranging from $1.18
to $8.75.
On January 28, 1992, the Company adopted the 1992 Stock Option and Restricted
Stock Plan (the "1992 Plan") for employees of the Company. A maximum of 500,000
shares of common stock may be issued pursuant to the 1992 Plan upon the exercise
of options or in connection with awards of restricted stock. Under the 1992
Plan, incentive stock options may be granted to employees and officers of the
Company and non-qualified stock options and awards of stock may be granted to
consultants, employees and officers of the Company. As of December 31, 1994,
508,735 options were granted under the 1992 Plan, at exercise prices ranging
from $.50 to $11.00.
36
<PAGE>
CELLCOR, INC.
NOTES TO FINANCIAL STATEMENTS
On March 2, 1993, the Compensation Committee of the Board of Directors voted
to offer all employees who received options to purchase shares of common stock
at the initial public offering price ($11.00 per share) the right to exchange
those options for new options to purchase 10% of the number of shares covered by
their respective options (the "New Options"). The exercise price of the New
Options is $1.38 per share (the closing sale price for the Company's common
stock on the Nasdaq National Market on March 2, 1993). The New Options are the
same type as the existing options, with the same vesting schedule. Pursuant to
this offer, New Options for the purchase of an aggregate of 19,000 shares of
Common Stock were granted to the officers in exchange for the options for the
190,000 shares listed in the table below. The transaction was treated as
cancellation of 171,000 shares in the table below.
On October 14, 1994, the Board of Directors adopted, subject to stockholder
approval, the 1995 Stock Incentive Plan (the "1995 Plan") which provides for the
grant of incentive stock options, non-qualified stock options, stock
appreciation rights, performance shares and awards of restricted and
unrestricted stock (collectively, the "Awards"). The 1995 Plan provides that a
total of 1,500,000 shares of common stock may be issued under the 1995 Plan.
The maximum number of shares of common stock with respect to which Awards may be
granted to any employee may not exceed 300,000 during any calendar year.
Incentive stock options must be granted at not less than the fair market value
of the common stock at the time of the grant and option price shall not be less
than the par value per share. Under the 1995 Plan, incentive stock options may
be granted to employees and officers of the Company and non-qualified stock
options and other Awards may be granted to consultants, employees and officers
of the Company. Pursuant to the 1995 Plan, the Board of Directors voted to
grant to certain officers of the Company, options to purchase 819,600 shares of
common stock at $3.63, the fair market value of the stock on date of grant. The
stock option grants are subject to the approval of the 1995 Plan by stockholders
of the Company at its 1995 Annual Meeting.
A summary of stock option activity is as follows:
<TABLE>
<CAPTION>
Exercise
Shares Price Range
------ -----------
<S> <C> <C>
Options outstanding at December 31, 1991 480,715 $ .01- 1.70
Options granted 418,496 $1.70- 11.50
Options canceled (16,628) $ .75- 8.75
Options exercised (103,215) $ .01- 1.70
Options outstanding at December 31, 1992 779,368 $ .01- 11.50
Options granted 327,853 $ .50- 2.00
Options canceled (260,917) $ .01- 11.50
Options exercised (668) $ .75- 1.25
Options outstanding at December 31, 1993 845,636 $ .50 - $11.00
Options granted 898,425 $ .94 - 3.63
Options canceled (40,033) $ .50 - 8.75
Options exercised (2,708) $ .50 - 1.70
---------
Options outstanding at December 31, 1994 1,701,320
=========
Weighted average exercise price $3.05
=====
Exercisable December 31, 1994 611,361
=========
</TABLE>
In February 1990, the Company granted to an affiliate of its majority
stockholder a warrant in exchange for the stockholder's guarantee of certain
obligations under its lease agreement for office and lab space. The warrant,
which expires on February 15, 1995, allows the stockholder to purchase up to 15%
of the principal balance of the obligations guaranteed, at an exercise price of
$12.41 per share.
37
<PAGE>
CELLCOR, INC.
NOTES TO FINANCIAL STATEMENTS
In June 1991, the Company issued a warrant for the purchase of 8,500 shares of
common stock to a bank in connection with a long-term debt agreement. The
exercise price of the warrant is $14.00 per share, and the warrant expires in
June 1996.
(11) Income Taxes
As discussed in Note 2, the Company adopted Statement 109 as of January 1,
1993. There was no cumulative effect in adopting Statement 109. Accordingly,
there is no cumulative effect of a change in accounting method reflected in the
statement of operations for the year ended December 31, 1993. Prior years'
financial statements have not been restated to apply the provisions of Statement
109. The reconciliation of differences between the statutory U.S. federal
income tax rate and the Company's effective tax rate under Statement 109 is
immaterial.
The tax effects of temporary differences that give rise to significant
portions of gross deferred tax assets at December 31, 1994 and 1993 are
presented below:
<TABLE>
<CAPTION>
1994 1993
Current Non-Current Current Non-Current
------------------------ ------------------------
<S> <C> <C> <C> <C>
Deferred tax assets
Reserves and accruals (cash basis) $ 518,851 $ - $ 352,339 $ -
Accelerated depreciation on property
equipment - 574,740 - 492,307
Deferred revenue - 247,586 - 162,771
Federal net operating loss carryforwards - 16,232,017 - 13,783,799
General business credits - 722,698 - 635,306
State net operating loss carryforwards - 2,034,498 - 1,311,858
State credit carryforwards - 177,318 - 135,689
--------- ------------ --------- ------------
Total gross deferred tax assets $ 518,851 $ 19,988,857 $ 352,339 $ 16,521,730
--------- ------------ --------- ------------
Less valuation allowance (518,851) (19,988,857) (352,339) (16,521,730)
--------- ------------ --------- ------------
Net deferred tax assets after valuation $ - $ - $ - $ -
========= ============ ========= ============
</TABLE>
The valuation allowance for deferred tax assets as of January 1, 1994 was
$16,874,069. The net change in the total valuation allowance for the years
ended December 31, 1994 and 1993 was an increase of $3,633,639 and 2,951,560,
respectively.
At December 31, 1994, the Company had net operating loss carryforwards and
research credit forwards for federal income tax purposes of approximately
$47,700,000 and $723,000, respectively. The operating loss and research credit
carryforwards will expire in varying amounts through the year 2009. However, if
changes in the company's stock ownership exceed 50% of the value of the
Company's stock during any three-year period, the utilization of the net
operating loss and research credit carryforwards may be subject to limitation.
38
<PAGE>
CELLCOR, INC.
NOTES TO FINANCIAL STATEMENTS
(12) Malpractice
The Company maintains a claims-made basis insurance policy to provide
professional liability insurance in the aggregate amount of $5 million per
occurrence and per year. The cost of the insurance policy is recognized as
expense over the effective period of the policy.
(13) Legal Proceedings
On September 18, 1992, a stockholder of the Company brought suit against the
Company, the Company's directors and Furman Selz Incorporated, individually and
as representative of the 26 underwriters of the Company's initial public
offering in March 1992, in the Court of Chancery of Delaware as a class action
(on behalf of all other stockholders similarly situated). The suit alleges
among other things, that the prospectus used to sell the Company's Common Stock
in the initial public offering contained false and misleading statements and
omitted material facts necessary to make statements contained in the prospectus
not misleading and that the defendants violated Sections 11 and 12(2) of the
Securities Act of 1933. The plaintiffs are seeking, among other relief,
rescission of their purchases of Common Stock in the public offering. The
plaintiffs amended their complaint on November 3, 1992 and again in January
1994. Under the terms of the Underwriting Agreement among the Company and the
underwriters of the public offering, the Company is required to indemnify Furman
Selz Incorporated and the other underwriters for losses, costs and damages
arising out of the lawsuit. The Company has filed a motion for summary judgment
with the court and seeks to have all the plaintiffs' claims dismissed.
On September 9, 1994, the Court dismissed 23 out of the 26 allegations in the
lawsuit. On March 10, 1995, the Court entered an order allowing the Section 11
claim to proceed on a class basis but declined to certify a class on the Section
12(2) and state law claims. The trial is scheduled to begin on April 24, 1995.
Management will continue to vigorously contest this action. At this time, the
Company's legal counsel can offer no opinion regarding the eventual outcome of
this case and no estimate of the Company's potential liability. Accordingly, no
provision for any liability that may result upon adjudication has been
recognized in the accompanying financial statements.
(14) Company Restructuring
In 1992, the Company recorded at $2.3 million restructuring charge relating to
its decision in March 1993 to cease commercial operations of ALT. The Company
restructured its operations in order to focus on its strategy of achieving
regulatory approval of ALT and providing additional confirmatory data to the
medical community on the effectiveness of ALT. The restructuring charge
included the net loss from patient service incurred in the first quarter of
1993, severance costs and the disposition of various assets at its facilities.
39
<PAGE>
CELLCOR, INC. 1994 ANNUAL REPORT
FORM 10-K
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
Accounts Receivable Allowances
For the year ended Provisions for
December 31 Doubtful
Balance at Accounts and Balance at
Beginning of Contractual Accounts End of
Period Allowances Written Off Period
---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1994 $2,784 $72,828 $75,612 -
1993 $1,929,237 $348,556 $2,275,009 $2,784
1992 $860,375 $2,327,696 $1,258,834 $1,929,237
</TABLE>
40
<PAGE>
ANNEX F
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
-----
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
-------------
OR
_____ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission file number 0-19823
-------
Cellcor, Inc.
--------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 04-2967875
-------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
200 Wells Avenue, Newton, Massachusetts 02159
-------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (617) 332-2500
--------------
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No _____.
-----
The number of shares outstanding of the registrant's common stock, $.01 par
value, as of July 31, 1995 was 5,463,429 shares.
<PAGE>
CELLCOR, INC.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE NO.
<S> <C>
PART I. FINANCIAL INFORMATION
---------------------
ITEM 1 - Financial Statements
Balance Sheets as of June 30, 1995 and December 31, 1994...... 1
Statements of Operations for the Three Months Ended
and Six Months Ended June 30, 1995 and June 30, 1994.......... 2
Statements of Cash Flows for the Six Months
Ended June 30, 1995 and June 30, 1994......................... 3
Notes to Financial Statements................................. 4
ITEM 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations................. 6
PART II. OTHER INFORMATION
-----------------
ITEM 1 - Legal Proceedings.................................... 8
ITEM 5 - Other Information.................................... 8
ITEM 6 - Exhibits and Reports on Form 8-K..................... 8
</TABLE>
<PAGE>
CELLCOR, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, 1995 December 31, 1994
------------- -----------------
(unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $949,102 $1,225,674
Marketable securities at cost - 2,669,873
Accounts receivable-net of allowances 29,624 22,177
Inventories 65,854 73,072
Prepaid expenses and other current assets 441,697 252,121
Current portion of notes receivable - 13,542
---------- ----------
Total current assets 1,486,277 4,256,459
Property and equipment 3,088,363 3,009,192
Less: accumulated depreciation and amortization (2,131,277) (2,016,085)
---------- ----------
Net property and equipment 957,086 993,107
Other assets 149,478 118,447
---------- ----------
Total assets $2,592,841 $5,368,013
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Note payable to stockholders (Note 5) $1,000,000 $ -
Accounts payable 799,360 300,191
Accrued restructuring expenses (Note 4) 819,328 -
Accrued expenses 1,073,252 1,124,069
Deferred revenue - 155,000
Current maturities of capital lease obligations 109,076 90,177
---------- ----------
Total current liabilities 3,801,016 1,669,437
Capital lease obligations, less current maturities 396,021 366,432
------- -------
Total liabilities 4,197,037 2,035,869
--------- ---------
Stockholders' equity (deficit):
Convertible preferred stock 53 53
Common stock 54,634 54,528
Additional paid-in capital 54,838,189 54,825,489
Unearned stock option compensation (86,905) (173,805)
Accumulated deficit (56,410,167) (51,374,121)
----------- -----------
Total stockholders' equity (deficit) (1,604,196) 3,332,144
---------- ----------
Total liabilities and stockholders' equity $2,592,841 $5,368,013
========== ==========
</TABLE>
See accompanying notes to financial statements.
1
<PAGE>
CELLCOR, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30, 1995 June 30,1994 June 30, 1995 June 30, 1994
-------------- ------------- -------------- --------------
<S> <C> <C> <C> <C>
Revenue
Net technology development fees $95,000 $232,500 $750,000 $310,000
Net product sales 23,656 28,308 51,707 45,187
------------- ----------- ----------- -----------
Total revenue 118,656 260,808 801,707 355,187
------------- ----------- ----------- -----------
Research and development expenses 1,571,543 1,144,668 3,145,917 2,339,378
General and administrative expenses 914,973 597,448 1,882,970 1,273,193
Restructuring expense 825,250 - 825,250 -
------------- ----------- ----------- -----------
Total operating costs and
expenses 3,311,766 1,742,116 5,854,137 3,612,571
------------- ----------- ----------- -----------
Operating loss (3,193,110) (1,481,308) (5,052,430) (3,257,384)
Other income (expense):
Interest income 7,516 17,294 42,979 38,642
Other income - 3,000 - 6,000
Interest expense (15,157) (8,946) (26,594) (19,595)
----------- ----------- ----------- -----------
Total other income (expense) (7,641) 11,348 16,385 25,047
----------- ----------- ----------- -----------
Net loss $(3,200,751) $(1,469,960) $(5,036,045) $(3,232,337)
============ ============ ============ ============
Net loss per common share* $ (0.61) $ (0.27) $ (0.97) $ (0.59)
Weighted average shares 5,453,390 5,436,432 5,453,132 5,436,354
</TABLE>
* 1995 net loss per common share is computed by dividing net loss after
adjusting for undeclared dividends on the convertible preferred stock of
$130,725 in the second quarter and $260,400 for the six months.
See accompanying notes to financial statements.
2
<PAGE>
CELLCOR INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six months ended
June 30, 1995 June 30, 1994
-------------- --------------
<S> <C> <C>
Cash flows from operating activities:
Net loss $(5,036,045) $(3,232,337)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization 160,179 202,683
Deferred compensation expense 86,900 103,783
Increase in accounts receivable (7,447) (17,411)
Increase in prepaid expenses and other
current assets (176,034) (178,633)
(Increase) decrease in accounts payable 499,169 (238,654)
(Increase) decrease in accrued expenses 768,511 (128,596)
(Decrease) increase in deferred revenue (155,000) 341,000
Decrease in inventory 7,218 3,982
----------- -----------
Net cash used in operating activities (3,852,549) (3,144,183)
----------- -----------
Cash flows from investing activities:
Maturity and sale of short-term investments 2,669,873 125,000
Purchases of property and equipment (24,659) (18,897)
(Increase) decrease in other assets (31,031) 24,666
----------- -----------
Net cash provided by investing activities 2,614,183 130,769
----------- -----------
Cash flows from financing activities:
Proceeds from notes payable from stockholder 1,000,000 -
Capital lease obligation payments (51,012) (101,273)
Payments of notes payable - (83,331)
Sale of stock 12,806 85
----------- -----------
Net cash provided by (used in) financing activities 961,794 (184,519)
----------- -----------
Net decrease in cash and cash equivalents (276,572) (3,197,933)
Cash and cash equivalents beginning of period 1,225,674 4,668,046
----------- -----------
Cash and cash equivalents end of period $ 949,102 $ 1,470,113
=========== ===========
Supplemental cash flow information
Interest paid $ 26,594 $ 19,595
Supplemental schedule of non-cash
Investing and financing activities:
Property and equipment acquired under
capital lease $ 99,500
</TABLE>
See accompanying notes to financial statements.
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CELLCOR, INC.
NOTES TO FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
a. The unaudited financial statements presented herein should be read in
conjunction with the financial statements and notes thereto included in the
Cellcor, Inc. (the "Company" or "Cellcor") Annual Report on Form 10-K. Certain
information and footnote disclosure normally included in the financial
statements prepared in accordance with generally accepted accounting principles
has been condensed or omitted pursuant to the Securities and Exchange Commission
rules and regulations, although the Company believes the disclosures which have
been made are adequately presented and not misleading.
The financial statements for the three months ended June 30, 1995 and
1994 and the six months ended June 30, 1995 and 1994 are unaudited. However, in
the opinion of management, all adjustments (consisting of only normally
recurring adjustments) necessary for a fair presentation of the Company's
financial position and results of operations for the periods presented have been
made. Interim results are not necessarily indicative of results for a full year.
b. Loss Per Share
The net loss per common share is computed by dividing net loss after
adjusting for preferred stock dividends by the weighted average number of shares
outstanding. Common stock equivalent shares are not included in the per share
calculations where the effect of their inclusion would be antidilutive.
2. REVENUE RECOGNITION
a. Technology development fees.
Revenues from technology development fees were derived from a
collaborative agreement with SRL, Inc., a Japanese corporation. The Company is
recognizing the revenue from the SRL Agreement over contractual periods as
specified by the agreement, net of related commissions.
3. SALE OF COMPANY
Cellcor entered into an Agreement and Plan of Merger dated June 15,
1995 with a wholly-owned subsidiary of Cytogen Corporation (the "Merger
Subsidiary"), which provides that, upon the satisfaction or waiver of certain
conditions set forth therein, the Merger Subsidiary will be merged with and into
Cellcor (the "Merger"), whereupon Cellcor will become a wholly-owned subsidiary
of Cytogen. At that time, each outstanding share of Cellcor common stock will be
converted into the right to receive .60 shares of Cytogen common stock and each
outstanding share of Cellcor Convertible Preferred Stock will be converted into
the right to receive 218.94 shares of Cytogen common stock. Hillman Medical
Ventures partnerships and certain of their affiliates (collectively, the
"Principal Stockholders") own 50.5% of the Cellcor common stock and 95.2% of the
Cellcor preferred stock. The Principal Stockholders have agreed to vote such
shares in favor of the Merger.
In connection with the Merger, holders of record of Cellcor common
stock on August 17, 1995, will be granted the non-transferable right to purchase
for cash shares of Cytogen common stock (the "Subscription Offering"). Each
holder of Cellcor common stock will be entitled to purchase 1.118 shares of
Cytogen common stock for each share of Cellcor common stock held by such holder
at the close of business on August 17, 1995, the Subscription Offering record
date (rounded down to the nearest whole number) at a price of $3.89 per share of
Cytogen common stock. Consummation of the Merger is conditioned upon the
purchase of at least $12.0 million of
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the Subscription Offering. Certain of the Principal Stockholders have committed
to purchase $12.0 million of the shares in the Subscription Offering. These
transactions also remain subject to, among other things, the effectiveness of a
registration statement and a joint proxy statement, which has been filed with
the Securities and Exchange Commission (the "SEC"), certain other regulatory
approvals, and the approval of both sets of stockholders
4. RESTRUCTURING
The Company restructured its operations in June 1995, in anticipation
of the Merger. The Company's primary goal remains achieving regulatory approval
for ALT, with a secondary goal of completing the Phase I/II trial in chronic
hepatitis B. The Phase I/II trial in advanced kidney cancer utilizing Organon
Teknika/Biotechnology Research Institute's Active Specific Immunotherapy
followed by ALT was discontinued. The Company accrued the following expenses
related to this restructuring at June 30, 1995:
<TABLE>
<S> <C>
Employee severance related to personnel reductions in operations andadministration $817,000
Operational costs related to discontinuing clinical trial 8,250
--------
$825,250
=======
</TABLE>
5. NOTE PAYABLE TO STOCKHOLDERS
During June 1995, the Company issued a promissory note to certain
affiliates of the Hillman Medical Ventures partnerships in the aggregate
principal amount of $4,967,118 (the "Promissory Note"). This note allows Cellcor
to draw down funds for research and development and working capital, from time
to time aggregating not more than $4,967,118. Cellcor will pay interest at an
annual rate of 6.37% on the borrowed funds. The note shall be due and payable
upon the later of (i) effectiveness of the Merger and the closing of the
Subscription Offering, provided however, that the Subscription Offering produces
aggregate proceeds to Cytogen of not less than $12,000,000, and (ii) December
31, 1995. At June 30, 1995, Cellcor had utilized $1,000,000 of the $4,967,118
available.
6. LEGAL PROCEEDINGS
On September 18, 1992, a stockholder of the Company brought suit
against the Company, the Company's directors and Furman Selz Incorporated,
individually and as representative of the 26 underwriters of the Company's
initial public offering in March 1992, in the Court of Chancery of Delaware as a
class action (on behalf of all other stockholders similarly situated). The suit
alleged, among other things, that the prospectus used to sell the Company's
Common Stock in the initial public offering contained false and misleading
statements and that the defendants violated Sections 11 and 12(2) of the
Securities Act of 1933. The plaintiffs were seeking, among other relief,
rescission of their purchase of Common Stock in the public offering. The
plaintiffs amended their complaint on November 3, 1992 and again in January
1994. Under the terms of the Underwriting Agreement among the Company and the
underwriters of the public offering, the Company is required to indemnify Furman
Selz Incorporated and the other underwriters for losses, costs and damages
arising out of the lawsuit. The Company filed a motion for summary judgment with
the court and sought to have all the plaintiffs' claims dismissed.
On September 9, 1994, the Court dismissed 23 out of the 26 allegations
in the lawsuit. On March 10, 1995, the Court entered an order allowing the
Section 11 claim to proceed on a class basis but declined to certify a class on
the Section 12(2) and state law claims.
On April 24, 1995, the Company announced it had reached agreement to
settle this stockholder class action litigation. The settlement which is subject
to certain conditions, including final approval by Delaware's Court of Chancery,
provides for a $700,000 cash payment to the members of the plaintiff class in
return for dismissal of all claims against the defendants. Of the payment,
almost two-thirds have been made by the Company's insurance carrier, with the
balance paid by the Company. The amount paid by the Company was accrued for at
March 31, 1995.
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<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1995 AND JUNE 30, 1994
REVENUE
In March 1994, the Company announced the signing of a non-exclusive technology
licensing and service agreement with SRL, Inc. of Tokyo, Japan. Under this
multi-year agreement, Cellcor will help SRL establish a capability in patient
specific GMP (good manufacturing practices) cell processing. The agreement
provides for periodic payments to Cellcor, and, if SRL exercises more than one
of the development options contained in the agreement, additional payments.
Cellcor is recognizing the revenue from the SRL agreement over applicable
contractual periods as specified by the agreement, net of related commissions.
In September 1993, Cellcor received authorization from the Food and Drug
Administration for cost recovery related to treatment of patients receiving
autolymphocyte therapy (ALT) for metastatic Renal Cell Carcinoma (mRCC) under a
compassionate protocol. The patients who are eligible to participate in this
program are the 190 patients who already received ALT in a commercial or
research setting. Revenue is recorded in net product sales. The cost of sales
related to the treatments is recorded in research and development expense.
RESEARCH AND DEVELOPMENT
Research and development expense increased in the three months ended June 30,
1995 to $1,571,543 compared to $1,144,668 for the three months ended June 30,
1994. This increase of 37% reflects costs related to both the Pivotal Phase III
mRCC trial and the Phase I/II trial relating to chronic hepatitis B.
GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses increased 53% to $914,973 for the three
months ended June 30, 1995 from $597,448 in the three months ended June 30,
1994. The increase in general and administrative expenses was attributable to
the $450,000 legal and investment advisory costs incurred in connection with the
Merger.
INTEREST INCOME AND EXPENSE
Interest income declined to $7,516 in the second quarter of 1995 from $17,294 in
the second quarter of 1994. This decline reflects the utilization of cash and
short-term investments to sustain ongoing operations. Interest expense increased
to $15,157 for the second quarter of 1995 from $8,946 during the second quarter
of 1994, because the Company entered into a new equipment lease and executed the
Promissory Note (see Note 5 of Notes to Financial Statements).
LOSS PER SHARE
The net loss per share in the second quarter of 1995 increased 125% to $0.61
compared to $0.27 in the second quarter of 1994. The increase in the loss per
share is primarily attributable to the restructuring expenses, legal and
investment advisory costs in connection with the Merger and additional Pivotal
Phase III mRCC trial costs as the patient accrual continues to increase.
6
<PAGE>
SIX MONTHS ENDED JUNE 30, 1995 AND JUNE 30, 1994
REVENUE
Net technology development fees are being recognized over the applicable
contractual period as specified in the agreement with SRL, Inc. Net product
sales for the compassionate treatments are from the compassionate protocol.
Costs of sales related to the compassionate protocol are included in research
and development expenses.
During 1994, an international biotechnology company and Cellcor agreed to
investigate areas of mutual interest in cell processing and the development of
ALT in Europe. This entity agreed to pay Cellcor a $500,000 fee in the event
that it decided not to pursue an agreement with Cellcor. In the first quarter of
1995, the Company received this payment and recognized it as revenue. The
payment was a one-time payment and no further revenue is currently expected from
this entity.
RESEARCH AND DEVELOPMENT
Research and development expenses increased to $3,145,917 for the six months
ended June 30, 1995 from $2,339,378 for the six months ended June 30, 1994. The
34% increase is primarily attributable to the $725,000 increase in costs
relating to the Pivotal Phase III mRCC trial and a $28,000 increase in the costs
relating to the chronic hepatitis B trial.
GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses for the first six months ended June 30, 1995
increased to $1,882,970 from $1,273,193 for the six months ended June 30 1994.
This 48% increase reflects both the Company's portion of the legal fees and
settlement arising under the agreement to settle a securities class action
lawsuit ($260,000) and the legal and investment advisory costs related to the
Merger ($450,000).
INTEREST INCOME AND EXPENSE
Interest income increased to $42,979 for the six months ended June 30, 1995 from
$38,642 for the six months ended June 30, 1994 as the Company continued to
invest the proceeds of its preferred stock equity financing. Interest expense
increased to $26,594 in 1995 from $19,595 in 1994 because the Company entered
into a new equipment lease and executed the Promissory Note. See Note 5 of Notes
to Financial Statements.
LOSS PER SHARE
The net loss per share for the first six months of 1995 increased to $0.97 from
$0.59 for the first six months of 1994. The 64% increase in loss per share is
primarily attributable to the restructuring expenses, legal and investment
advisory costs in connection with the Merger and the additional Pivotal Phase
III mRCC trial costs as the patient accrual continues to increase.
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 1995, the Company had $949,102 of cash and short-term investments
which is a decrease of $2,946,445 from December 31, 1994. As of June 30, 1995,
the working capital deficit was $2,314,739, reflecting a decrease of $4,901,761
from December 31, 1994. Total assets during the same period declined from
$5,368,013 to $2,592,841. These declines reflect the Company's use of cash for
operations.
If the Merger is not consummated, Cellcor's current cash balance will be
insufficient to meet its working capital requirements through the third quarter
of 1995. In that event Cellcor will be required to scale back or eliminate
certain clinical studies, research and development programs or to license third
parties to commercialize products or
7
<PAGE>
technologies that Cellcor would otherwise develop or commercialize itself or to
cease its operations completely. Cellcor's cash requirements may increase
materially from those now planned because of results of clinical testing,
changes in focus and direction of Cellcor's research and development programs,
competitive and technological advances, patent developments, the Food and Drug
Administration regulatory process or other developments.
PART II.
ITEM 1 - LEGAL PROCEEDINGS
On April 24, 1995, Cellcor announced that it had agreed to settle a stockholder
class action suit brought by William L. Glosser, as representative of a class of
Cellcor's stockholders, against Cellcor, Cellcor's directors and Furman Selz
Incorporated, individually and as the representative of the 26 underwriters of
Cellcor's initial public offering. The suit was originally filed in the Court of
Chancery of Delaware on September 18, 1992 and alleged certain securities law
violations.
The settlement, which is subject to certain conditions, including final approval
by Delaware's Court of Chancery, provides for a $700,000 cash payment to the
members of the plaintiff class in return for dismissal of all claims against the
defendants. Cellcor's insurance carriers have paid over $440,000 towards the
settlement and Cellcor has paid the balance, all payments of which have been
made into an escrow account, pending the entry of final judgment by the Chancery
Court.
ITEM 5 - OTHER INFORMATION
As part of Cellcor's decision to reduce its operating costs prior to the
anticipated Merger, Cellcor implemented a staff reduction program. In connection
with this effort, Richard R. D'Antoni, President and Chief Executive Officer,
and Harry W. Wilcox, III, Senior Vice President of Business Development and
Chief Financial Officer, ceased to serve in their respective capacities as of
July 14, 1995. Mr. D'Antoni also resigned from Cellcor's Board of Directors.
The staff reduction program will reduce Cellcor's staff from 46 to 30 employees
by the effective date of the proposed Merger. The majority of these reductions
will occur in Cellcor's operations, administrative and financial groups. Cytogen
has agreed to provide certain management consulting services to Cellcor's
remaining scientific, clinical and manufacturing groups.
Ronald J. Brenner, Ph.D., the Managing Partner of the managing general partner
of Hillman Medical Ventures partnerships, was elected Cellcor's President and
Chief Executive Officer.
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Agreement and Plan of Merger, dated June 15, 1995, among Cellcor,
Inc., Cytogen Corporation and Small-C Acquisition Corp.
(Incorporated by reference to Exhibit (2) to the Company's
Current Report on Form 8-K dated June 15, 1995).
(b) Reports on Form 8-K
(i) Current Report on Form 8-K dated April 24, 1995 (relating to
settlement of class action suit);
(ii) Current Report on Form 8-K dated May 25, 1995 (relating to
delisting from Nasdaq Stock Market); and
(iii) Current Report on Form 8-K dated June 15, 1995 (relating to
merger agreement between Cellcor and Cytogen)
8
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CELLCOR, INC.
DATE: August 10, 1995 BY: /s/ Ronald J. Brenner
---------------------- ---------------------------
Ronald J. Brenner
President and Chief Executive Officer
DATE: August 10, 1995 BY: /s/ Michael J. Kosc
---------------------- ---------------------------
Michael J. Kosc
Treasurer
(Principal Financial and Accounting
Officer)
9
<PAGE>
ANNEX G
DGCL Section 262. APPRAISAL RIGHTS.
(a) Any stockholder of a corporation of this State who holds shares of
stock on the date of the making of a demand pursuant to subsection (d) of this
section with respect to such shares, who continuously holds such shares through
the effective date of the merger or consolidation who has otherwise complied
with subsection (d) of this section and who has neither voted in favor of the
merger or consolidation nor consented thereto in writing pursuant to (S)228 of
this title shall be entitled to an appraisal by the Court of Chancery of the
fair value of his shares of stock under the circumstances described in
subsections (b) and (c) of this section. As used in this section, the word
"stockholder" means a holder of record of stock in a stock corporation and also
a member of record of a nonstock corporation; the words "stock" and "share" mean
and include what is ordinarily meant by those words and also membership or
membership interest of a member of a nonstock corporation; and the words
"depository receipt" mean a receipt or other instrument issued by a depository
representing an interest in one or more shares, or fractions thereof, solely of
stock of a corporation, which stock is deposited with the depository.
(b) Appraisal rights shall be available for the shares of any class or
series of stock of a constituent corporation in a merger or consolidation to be
effected pursuant to (S)251, 252, 254, 257, 258, 263 or 264 of this title:
(1) Provided, however, that no appraisal rights under this section shall be
available for the shares of any class or series of stock, which stock, or
depository receipts in respect thereof, at the record date fixed to determine
the stockholders entitled to receive notice of and to vote at the meeting of
stockholders to act upon the agreement of merger or consolidation, were either
(i) listed on a national securities exchange or designated as a national market
system security on an interdealer quotation system by the National Association
of Securities Dealers, Inc. or (ii) held of record by more than 2,000 holders;
and further provided that no appraisal rights shall be available for any shares
of stock of the constituent corporation surviving a merger if the merger did not
require for its approval the vote of the holders of the surviving corporation as
provided in subsection (f) of (S)251 of this title.
(2) Notwithstanding paragraph (1) of this subsection, appraisal rights
under this section shall be available for the shares of any class or series of
stock of a constituent corporation if the holders thereof are required by the
terms of an agreement of merger or consolidation pursuant to (S)(S)251, 252,
254, 257, 258, 263 and 264 of this title to accept for such stock anything
except:
a. Shares of stock of the corporation surviving or resulting from such
merger or consolidation, or depository receipts in respect thereof;
b. Shares of stock of any other corporation, or depository receipts in
respect thereof, which shares of stock or depository receipts at the effective
date of the merger or consolidation will be either listed on a national
securities exchange or designated as a national market system security on an
interdealer quotation system by the National Association of Securities Dealers,
Inc. or held of record by more than 2,000 holders;
c. Cash in lieu of fractional shares or fractional depository receipts
described in the foregoing subparagraphs a. and b. of this paragraph; or
d. Any combination of the shares of stock, depository receipts and cash
in lieu of fractional shares or fractional depository receipts described in the
foregoing subparagraphs a., b. and c. of this paragraph.
(3) In the event all of the stock of a subsidiary Delaware corporation
party to a merger effected under (S)253 of this title is not owned by the parent
corporation immediately prior to the merger, appraisal rights shall be available
for the shares of the subsidiary Delaware corporation.
(c) Any corporation may provide in its certificate of incorporation that
appraisal rights under this section shall be available for the shares of any
class or series of its stock as a result of an amendment to its certificate of
incorporation, any merger or consolidation in which the corporation is a
constituent corporation or the
1
<PAGE>
sale of all or substantially all of the assets of the corporation. If the
certificate of incorporation contains such a provision, the procedures of this
section, including those set forth in subsections (d) and (e) of this section,
shall apply as nearly as is practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal rights are
provided under this section is to be submitted for approval at a meeting of
stockholders, the corporation, not less than 20 days prior to the meeting, shall
notify each of its stockholders who was such on the record date for such meeting
with respect to shares for which appraisal rights are available pursuant to
subsections (b) or (c) hereof that appraisal rights are available for any or all
of the shares of the constituent corporations, and shall include in such notice
a copy of this section. Each stockholder electing to demand the appraisal of
his shares shall deliver to the corporation, before the taking of the vote on
the merger or consolidation, a written demand for appraisal of his shares. Such
demand will be sufficient if it reasonably informs the corporation of the
identity of the stockholder and that the stockholder intends thereby to demand
the appraisal of his shares. A proxy or vote against the merger or
consolidation shall not constitute such a demand. A stockholder electing to
take such action must do so by a separate written demand as herein provided.
Within 10 days after the effective date of such merger or consolidation, the
surviving or resulting corporation shall notify each stockholder of each
constituent corporation who has complied with this subsection and has not voted
in favor of or consented to the merger or consolidation of the date that the
merger or consolidation has become effective; or
(2) If the merger or consolidation was approved pursuant to (S)228 or 253
of this title, the surviving or resulting corporation, either before the
effective date of the merger or consolidation or within 10 days thereafter,
shall notify each of the stockholders entitled to appraisal rights of the
effective date of the merger or consolidation and that appraisal rights are
available for any or all of the shares of the constituent corporation, and shall
include in such notice a copy of this section. The notice shall be sent by
certified or registered mail, return receipt requested, addressed to the
stockholder at his address as it appears on the records of the corporation. Any
stockholder entitled to appraisal rights may, within 20 days after the date of
mailing of the notice, demand in writing from the surviving or resulting
corporation the appraisal of his shares. Such demand will be sufficient if it
reasonably informs the corporation of the identity of the stockholder and that
the stockholder intends thereby to demand the appraisal of his shares.
(e) Within 120 days after the effective date of the merger or
consolidation, the surviving or resulting corporation or any stockholder who has
complied with subsections (a) and (d) hereof and who is otherwise entitled to
appraisal rights, may file a petition in the Court of Chancery demanding a
determination of the value of the stock of all such stockholders.
Notwithstanding the foregoing, at any time within 60 days after the effective
date of the merger or consolidation, any stockholder shall have the right to
withdraw his demand for appraisal and to accept the terms offered upon the
merger or consolidation. Within 120 days after the effective date of the merger
or consolidation, any stockholder who has complied with the requirements of
subsections (a) and (d) hereof, upon written request, shall be entitled to
receive from the corporation surviving the merger or resulting from the
consolidation a statement setting forth the aggregate number of shares not voted
in favor of the merger or consolidation and with respect to which demands for
appraisal have been received and the aggregate number of holders of such shares.
Such written statement shall be mailed to the stockholder within 10 days after
his written request for such a statement is received by the surviving or
resulting corporation or within 10 days after expiration of the period for
delivery of demands for appraisal under subsection (d) hereof, whichever is
later.
(f) Upon the filing of any such petition by a stockholder, service of a
copy thereof shall be made upon the surviving or resulting corporation, which
shall within 20 days after such service file in the office of the Register in
Chancery in which the petition was filed a duly verified list containing the
names and addresses of all stockholders who have demanded payment for their
shares and with whom agreements as to the value of their shares have not been
reached by the surviving or resulting corporation. If the petition shall be
filed by the surviving or resulting corporation, the petition shall be
accompanied by such a duly verified list. The Register in Chancery, if so
ordered by the Court, shall give notice of the time and place fixed for the
hearing of such petition by registered or certified mail to the surviving or
resulting corporation and to the stockholders shown on the list at the addresses
therein stated. Such notice shall also be given by 1 or more publications at
least 1 week before the day of the hearing, in a newspaper of general
circulation published in the City of Wilmington, Delaware or such publication
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<PAGE>
as the Court deems advisable. The forms of the notices by mail and by
publication shall be approved by the Court, and the costs thereof shall be borne
by the surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall determine the
stockholders who have complied with this section and who have become entitled to
appraisal rights. The Court may require the stockholders who have demanded an
appraisal for their shares and who hold stock represented by certificates to
submit their certificates of stock to the Register in Chancery for notation
thereon of the pendency of the appraisal proceedings; and if any stockholder
fails to comply with such direction, the Court may dismiss the proceedings as to
such stockholder.
(h) After determining the stockholders entitled to an appraisal, the Court
shall appraise the shares, determining their fair value exclusive of any element
of value arising from the accomplishment or expectation of the merger or
consolidation, together with a fair rate of interest, if any, to be paid upon
the amount determined to be the fair value. In determining such fair value, the
Court shall take into account all relevant factors. In determining the fair
rate of interest, the Court may consider all relevant factors, including the
rate of interest which the surviving or resulting corporation would have had to
pay to borrow money during the pendency of the proceeding. Upon application by
the surviving or resulting corporation or by any stockholder entitled to
participate in the appraisal proceeding, the Court may, in its discretion,
permit discovery or other pretrial proceedings and may proceed to trial upon the
appraisal prior to the final determination of the stockholder entitled to an
appraisal. Any stockholder whose name appears on the list filed by the
surviving or resulting corporation pursuant to subsection (f) of this section
and who has submitted his certificates of stock to the Register in Chancery, if
such is required, may participate fully in all proceedings until it is finally
determined that he is not entitled to appraisal rights under this section.
(i) The Court shall direct the payment of the fair value of the shares,
together with interest, if any, by the surviving or resulting corporation to the
stockholders entitled thereto. Interest may be simple or compound, as the Court
may direct. Payment shall be so made to each such stockholder, in the case of
holders of uncertificated stock forthwith, and the case of holders of shares
represented by certificates upon the surrender to the corporation of the
certificates representing such stock. The Court's decree may be enforced as
other decrees in the Court of Chancery may be enforced, whether such surviving
or resulting corporation be a corporation of this State or of any state.
(j) The costs of the proceeding may be determined by the Court and taxed
upon the parties as the Court deems equitable in the circumstances. Upon
application of a stockholder, the Court may order all or a portion of the
expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorney's fees and the
fees and expenses of experts, to be charged pro rata against the value of all
the shares entitled to an appraisal.
(k) From and after the effective date of the merger or consolidation, no
stockholder who has demanded his appraisal rights as provided in subsection (d)
of this section shall be entitled to vote such stock for any purpose or to
receive payment of dividends or other distributions on the stock (except
dividends or other distributions payable to stockholders of record at a date
which is prior to the effective date of the merger or consolidation); provided,
however, that if no petition for an appraisal shall be filed within the time
provided in subsection (e) of this section, or if such stockholder shall deliver
to the surviving or resulting corporation a written withdrawal of his demand for
an appraisal and an acceptance of the merger or consolidation, either within 60
days after the effective date of the merger or consolidation as provided in
subsection (e) of this section or thereafter with the written approval of the
corporation, then the right of such stockholder to an appraisal shall cease.
Notwithstanding the foregoing, no appraisal proceeding in the Court of Chancery
shall be dismissed as to any stockholder without the approval of the Court, and
such approval may be conditioned upon such terms as the Court deems just.
(l) The shares of the surviving or resulting corporation to which the
shares of such objecting stockholders would have been converted had they
assented to the merger or consolidation shall have the status of authorized and
unissued shares of the surviving, or resulting, corporation.
3
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. 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, 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, with respect to 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 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 145 further permits a Delaware corporation to purchase and maintain
insurance on behalf of any persons who are or were directors, officers,
employees or agents of the corporation, or are or were serving at the request of
the corporation as directors, officers, employees or agents of another
corporation, partnership, joint venture, trust or other enterprise against any
liability asserted against them and incurred by them in any such capacity, or
arising out of their status as such, whether or not the corporation would have
the power to indemnify them against such liability under the other provisions of
Section 145.
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.
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
II-1
<PAGE>
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 would have the power to
indemnify such person under the DGCL. The Registrant currently maintains such
insurance.
Pursuant to that certain Purchase Agreement by and between the Registrant
and Nomura Securities International, Inc. ("Nomura"), dated March 28, 1995,
Nomura has agreed 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.
II-2
<PAGE>
Item 21. Exhibits and Financial Statement Schedules.
(a) Exhibits
2.1.1 -- Agreement and Plan of Merger dated as of June 15, 1995
by and among Cytogen Corporation, Small-C Acquisition
Corp. and Cellcor, Inc.(1)
2.1.2 -- First Amendment to Agreement and Plan of Merger dated
as of September 7, 1995 by and among Cytogen
Corporation, Cellcor Acquisition Corp. and Cellcor,
Inc.(2)
2.2 -- Voting and Subscription Agreement, dated June 15,
1995, among Cytogen Corporation, Small-C Acquisition
Corp. and the entities listed on Schedule I thereto(2)
4.1 -- Restated Certificate of Incorporation, as amended(4)
4.2 -- By-laws of Cytogen Corporation, as amended(4)
4.3 -- Specimen of Common Stock Certificates(5)
5.1 -- Opinion of Dechert Price & Rhoads regarding legality
of securities being registered
8.1 -- Opinion of Dechert Price & Rhoads as to federal income
tax matters
8.2 -- Opinion of Hale and Dorr as to federal income tax
matters
21 -- Subsidiaries of Cytogen Corporation(3)
23.1.1 -- Consent of Arthur Andersen LLP
23.1.2 -- Consent of Arthur Andersen LLP
23.2 -- Consent of KPMG Peat Marwick LLP
23.3 -- Consent of Dechert Price & Rhoads (included in Exhibits
5.1 and 8.1)
23.4 -- Consent of Hale and Dorr (included in Exhibit 8.2)
24 -- Power of Attorney (contained on the signature pages to
the Registration Statement)
27.1 -- Financial Data Schedule (submitted for filing only in
electronic format with the Securities and Exchange
Commission)
99.1 -- Consulting and Management Agreement between Cytogen
Corporation and Cellcor, Inc.
99.2 -- Opinion of Smith Barney Inc.(2)
99.3 -- Opinion of CS First Boston Corporation(2)
99.4 -- Form of Proxy Card of Cytogen
99.5 -- Form of Proxy Cards of Cellcor
99.6 -- Form of Registration Rights Agreement for Common Stock
between Cytogen Corporation and certain persons listed
on Schedule A thereto
99.7 -- Exchange Agent Agreement
99.8 -- Subscription Offering Agent Agreement
99.9 -- Form of Subscription Offering Purchase Form
99.10 -- Amendment to Option Agreement between Cytogen
Corporation, and Fletcher Capital Markets, Inc. dated
August 10, 1995
99.11 -- Consent of Ronald J. Brenner, Ph.D.
99.12 -- Consent of John E. Bagalay, Jr., Ph.D.
99.13 -- Investment Agreement between Cytogen Corporation and
Fletcher Fund, L.P. dated as of September 8, 1995
II-3
<PAGE>
----------
(1) Filed as an exhibit to Cytogen's Current Report on Form 8-K, filed with
the Commission on June 27, 1995, and incorporated herein by reference.
(2) Filed as an Annex to the Joint Proxy Statement/Prospectus constituting part
of this Registration Statement and incorporated herein by reference.
(3) Filed as an exhibit to Cytogen's Annual Report on Form 10-K for the year
ended December 31, 1994 and incorporated herein by reference.
(4) Filed as an exhibit to Form S-4 Registration Statement (No. 33-88612) and
incorporated herein by reference.
(5) Filed as an exhibit to Amendment No. 1 to Form S-1 Registration Statement
(No. 33-5533) and incorporated herein by reference.
(b) Financial Statement Schedules
Financial Statement Schedules are omitted because they are not
applicable or are not required or because the requested information is
immaterial or the required information is included in the financial statements
or notes thereto.
(c) 4(b) Information
The opinions of Smith Barney Inc. and CS First Boston Corporation are
included as Annex C and Annex D, respectively, to the Joint Proxy
Statement/Prospectus included in Part I of this Registration Statement.
Item 22. Undertakings.
(1) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the undersigned 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.
(2) The undersigned Registrant hereby undertakes:
(a) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or the most
recent post-effective amendment thereof) which, individually or in
the aggregate, represent a fundamental change in the information set
II-4
<PAGE>
forth in the Registration Statement. Notwithstanding the foregoing,
any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that which
was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more than
a 20 percent change in the maximum aggregate offering price set forth
in the "Calculation of Registration Fee" table in the effective
Registration Statement.
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement:
Provided, however, that paragraphs B.(1)(i) and B.(1)(ii)
-------- -------
immediately above do not apply if the registration statement is on
Form S-3 or Form S-8, and the information required to be included in
a post-effective amendment by those paragraphs is contained in
periodic reports filed with or furnished to the Commission by the
Registrant pursuant to Section 13 or Section 15(d) of the Exchange
Act that are incorporated by reference in the registration statement.
(b) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at the time shall be deemed to be the
initial bona fide offering thereof.
(c) 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.
(3) 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
Exchange Act (and where applicable, each filing of an employee benefit plan's
annual report pursuant to section 15(d) of the Exchange Act 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.
(4) The undersigned Registrant hereby undertakes as follows: that prior to
any public reoffering of the securities registered hereunder through used of a
prospectus which is a part of this Registration Statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
Registrant undertakes that such reoffering prospectus will contain the
information called for by the applicable registration form with respect to
reofferings by persons who may be deemed underwriters, in addition to the
information called for by the other Items of the applicable form.
(5) The Registrant undertakes that every prospectus (i) that is filed
pursuant to paragraph (4) immediately preceding, or (ii) that purports to meet
the requirements of Section 10(a)(3) of the Securities Act and is used in
connection with an offering of securities subject to Rule 415, will be filed as
a part of an amendment to this Registration Statement and will not be used until
such amendment is effective, and that, for purposes of determining any liability
under the Securities Act, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities
II-5
<PAGE>
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(6) The undersigned Registrant hereby undertakes to respond to requests
for information that is incorporated by reference into the prospectus pursuant
to Items 4, 10(b), 11 or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of this Registration Statement through
the date of responding to the request.
(7) The undersigned Registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in this Registration Statement when it became effective.
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Act, the Registrant 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 the 11th day of September, 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.
Signature Title Date
--------- ----- ----
/s/ William C. Mills III Chairman of the Board September 11, 1995
------------------------- of Directors
William C. Mills III
/s/ Thomas J. McKearn President, Chief Executive September 11, 1995
------------------------- Officer and Director (Principal
Thomas J. McKearn Executive Officer)
/s/ T. Jerome Madison Vice President, Chief Financial September 11, 1995
------------------------- Officer, Secretary and Director
T. Jerome Madison (Principal Financial and Accounting
Officer)
/s/ Robert F. Hendrickson Director September 11, 1995
-------------------------
Robert F. Hendrickson
/s/ Donald E. O'Neill Director September 11, 1995
-------------------------
Donald E. O'Neill
/s/ Charles E. Austin Director September 11, 1995
-------------------------
Charles E. Austin
/s/ Bruce R. Ross Director September 11, 1995
-------------------------
Bruce R. Ross
II-7
<PAGE>
EXHIBIT INDEX
-------------
<TABLE>
<CAPTION>
Sequentially
Exhibit Numbered
Number Description Page
------- ----------- ------------
<C> <S> <C>
5.1 Opinion of Dechert Price & Rhoads regarding legality of securities being
registered .............................................................
8.1 Opinion of Dechert Price & Rhoads as to federal income tax matters .....
8.2 Opinion of Hale and Dorr as to federal income tax matters ..............
23.1.1 Consent of Arthur Andersen LLP .........................................
23.1.2 Consent of Arthur Andersen LLP .........................................
23.2 Consent of KPMG Peat Marwick LLP .......................................
27.1 Financial Data Schedule (submitted for filing only in electronic format
with the Securities and Exchange Commission)
99.1 Consulting and Management Agreement between Cytogen Corporation and
Cellcor, Inc. ..........................................................
99.4 Form of Proxy Card of Cytogen ..........................................
99.5 Form of Proxy Cards of Cellcor .........................................
99.6 Form of Registration Rights Agreement for Common Stock between Cytogen
Corporation and certain persons listed on Schedule A thereto ...........
99.7 Exchange Agent Agreement ...............................................
99.8 Subscription Offering Agent Agreement ..................................
99.9 Form of Subscription Offering Purchase Form ............................
99.10 Amendment to Option Agreement between Cytogen Corporation and
Fletcher Capital Markets, Inc. dated August 10, 1995 ...................
99.11 Consent of Ronald J. Brenner, Ph.D. ....................................
99.12 Consent of John E. Bagalay, Jr., Ph.D. .................................
99.13 Investment Agreement between Cytogen Corporation and Fletcher Fund, L.P.
dated as of September 8, 1995 ..........................................
</TABLE>
<PAGE>
Exhibit 5.1
September 13, 1995
Cytogen Corporation
600 College Road East
Princeton, New Jersey 08540-5308
Re: Registration Statement on Form S-4
----------------------------------
Gentlemen and Ladies:
We have acted as counsel to Cytogen Corporation (the "Company") in
connection with the preparation of a Registration Statement on Form S-4
(including the proxy statement and prospectus forming a part thereof) (the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act"), relating to the issuance of an aggregate of up to 11,961,980
shares of common stock, par value $.01 per share, of the Company (the "Common
Stock") in connection with the merger (the "Merger") of Cellcor, Inc.
("Cellcor") with and into Cellcor Acquisition Corp. ("Sub") and the offer to
holders of the common stock of Cellcor, par value $.01 per share ("Cellcor
Common Stock"), entitling each such holder to purchase 1.118 shares of Common
Stock for each share of Cellcor Common Stock held at a purchase price of $3.89
per share of Common Stock (the "Subscription Offer") pursuant to an Agreement
and Plan of Merger, dated June 15, 1995, as amended (the "Merger Agreement"),
among the Company, Cellcor and Sub.
We have examined such corporate records and documents and other matters as
we have deemed necessary in order to render this opinion.
Based upon the foregoing, it is our opinion that, when issued in the Merger
and when issued and delivered to subscribing holders of Cellcor Common Stock
against payment therefor in the Subscription Offer pursuant to the Merger
Agreement, the Common Stock will be validly issued, fully paid and non-
assessable.
<PAGE>
Cytogen Corporation
September 13, 1995
Page 2
We hereby consent to the filing of this opinion as Exhibit 5.1 to the
Registration Statement and to the use of our name in respect thereof under the
caption "LEGAL OPINIONS" in the Joint Proxy Statement/Prospectus constituting a
part of the Registration Statement (the "Joint Proxy Statement/Prospectus"). In
giving such consent, we do not thereby admit that we are in the category of
persons whose consent is required under Section 7 of the Securities Act.
Very truly yours,
DECHERT PRICE & RHOADS
<PAGE>
Exhibit 8.1
September 13, 1995
Board of Directors
Cellcor, Inc.
200 Wells Avenue
Newton, MA 02159
Re: Proposed Merger of Cellcor, Inc. with and into Cellcor
Acquisition Corp., a wholly-owned subsidiary of Cytogen
Corporation.
Gentlemen:
We have acted as counsel to Cytogen Corporation, a Delaware
corporation ("Cytogen"), in connection with the contemplated merger (the
"Merger") of Cellcor, Inc. with and into Cellcor Acquisition Corp., a Delaware
corporation and wholly-owned subsidiary of Cytogen ("Merger Sub"), pursuant to
an Agreement and Plan of Merger, dated as of June 15, 1995, as amended, by and
among Cytogen, Merger Sub and Cellcor (the "Merger Agreement"). This opinion is
being delivered pursuant to section 6.2.3 of the Merger Agreement.
All capitalized terms used herein, unless otherwise specified, have
the meanings assigned to them in the Proxy Statement/Prospectus of Cytogen and
Cellcor issued with respect to the Merger (the "Proxy Statement/Prospectus").
The elements of the Merger are as follows:
1. Merger Sub was organized as a wholly-owned subsidiary of Cytogen,
for the sole purpose of consummating the Merger.
2. Pursuant to the Merger Agreement:
a. Cellcor will be merged with and into Merger Sub, the separate
existence of Cellcor shall cease and Merger Sub shall be the surviving
corporation in the Merger;
<PAGE>
Board of Directors
Cellor, Inc.
September 13, 1995
Page 2
b. Each outstanding share of Cellcor Common Stock (other than
shares held by Cellcor as treasury stock or by Cytogen or Merger Sub)
shall be converted into .60 shares of Cytogen Common Stock;
c. Each outstanding share of Cellcor Preferred Stock (other than
shares held by Cellcor as treasury stock or by Cytogen or Merger Sub)
shall be converted into 218.94 shares of Cytogen Common Stock; and
d. Each share of Cellcor Common Stock and Cellcor Preferred Stock
that is held by Cellcor as treasury stock or that is held by Cytogen
or Merger Sub shall be cancelled.
3. Shares of Cellcor Common Stock or Cellcor Preferred Stock
(collectively referred to herein as "Cellcor Shares") held by persons who
properly demand appraisal rights under Delaware law ("Dissenting Shares") will
be cancelled and retired, and the holders will receive only those payments to
which they are entitled under Section 262 of the Delaware General Corporation
Law.
4. No fraction of a share of Cytogen Common Stock will be issued in
the Merger. In lieu thereof, each holder of a share of Cellcor Shares who would
otherwise be entitled to a fraction of a share of Cytogen Common Stock will
receive an amount of cash equal to the value (determined by taking the average
of the last reported sale price of the Cytogen Common Stock as reported on the
Nasdaq National Market on each of the ten trading days immediately preceding the
date of the Effective Time) of such fractional share.
5. Pursuant to the Merger Agreement, holders of record of
Cellcor Common Stock will be given the opportunity to purchase 1.118 shares of
Cytogen Common Stock for each share of Cellcor Common Stock held on the record
date at the price of $3.89 per share of Cytogen Common Stock (the "Subscription
Rights"). The grant of the Subscription Rights in connection with the
transaction is treated, for purposes of this opinion, as being issued, in
addition to the shares of Cytogen Common Stock, to the holders of Cellcor Common
Stock pursuant to the Merger.
The obligation of Cytogen to effect the Merger is subject to a number
of conditions contained in the Merger Agreement, including, among others, the
receipt of this opinion.
We have assumed the following facts to be true:
<PAGE>
Board of Directors
Cellcor, Inc.
September 13, 1995
Page 3
a. The fair market value of the Cytogen Common Stock and other
consideration received by each Cellcor stockholder will be
approximately equal to the fair market value of the Cellcor Shares
surrendered in the exchange.
b. The payment of cash in lieu of fractional shares of Cytogen
Common Stock is solely for the purpose of avoiding the expense and
inconvenience to Cytogen of issuing fractional shares and does not
represent separately bargained-for consideration. The total cash
consideration that will be paid in the transaction to the stockholders
of Cellcor instead of issuing fractional shares of Cytogen Common
Stock will not exceed one percent of the total consideration that will
be issued in the transaction to the stockholders of Cellcor in
exchange for their Cellcor Shares. The fractional share interests of
each Cellcor stockholder will be aggregated, and no Cellcor
stockholder will receive cash in an amount greater to or greater than
the value of one full share of Cytogen Common Stock.
c. There is no plan or intention by the stockholders of Cellcor
who own five percent or more of the Cellcor Shares, and to the best of
the knowledge of the management of Cellcor, there is no plan or
intention on the part of the remaining stockholders of Cellcor to
sell, exchange, or otherwise dispose of a number of shares of Cytogen
Common Stock received in the Merger that would reduce the Cellcor
stockholders' ownership of Cytogen Common Stock to a number of shares
having a value, as of the Effective Time, of less than 50 percent of
the value of all of the formerly outstanding stock of Cellcor as of
the same date. For this purpose, Cellcor Shares exchanged for cash
(i.e., in lieu of fractional shares), considered exchanged in part for
the Subscription Rights, and surrendered by dissenters will be treated
as outstanding Cellcor Shares as of the Effective Time. Cellcor
Shares and shares of Cytogen Common Stock held by stockholders of
Cellcor and otherwise sold, redeemed, or disposed of prior or
subsequent to the Effective Time in contemplation of the Merger will
also be considered.
d. Merger Sub will acquire at least 90 percent of the fair
market value of the net assets and at least 70 percent of the fair
market value of the gross assets held by Cellcor immediately prior to
the Merger. For this purpose, amounts paid by Cellcor to dissenters,
to
<PAGE>
Board of Directors
Cellcor, Inc.
September 13, 1995
Page 4
pay reorganization expenses, and all redemptions and distributions
(except for regular, normal dividends) made by Cellcor will be
included as assets of Cellcor immediately prior to the Effective Time.
e. Prior to the Effective Time, Cytogen will be in control of
Merger Sub within the meaning of Section 368(c) of the Internal
Revenue Code of 1986, as amended (the "Code").
f. Merger Sub has no plan or intention to issue additional
shares of its stock that would result in Cytogen losing control of
Merger Sub within the meaning of Section 368(c) of the Code.
g. Cytogen has no plan or intention to reacquire any of its
stock issued in the Merger.
h. Cytogen has no plan or intention to liquidate Merger Sub; to
merge Merger Sub with or into another corporation; to sell or
otherwise dispose of the stock of Merger Sub except for transfers of
stock to corporations controlled by Cytogen; or to cause Merger Sub to
sell or otherwise dispose of any of its assets or of any of the assets
acquired from Cellcor, except for dispositions made in the ordinary
course of business or transfers described in Section 368(a)(2)(C) of
the Code.
i. The liabilities of Cellcor assumed by Merger Sub, and the
liabilities to which the transferred assets of Cellcor were subject,
were incurred by Cellcor in the ordinary course of its business.
j. Following the Effective Time, Merger Sub will continue the
historic business of Cellcor, or will use a significant portion of
Cellcor's historic business assets in a business.
k. Cytogen, Merger Sub, Cellcor and the stockholders of Cellcor
will pay their respective expenses, if any, incurred in connection
with the transaction.
l. There is no intercorporate indebtedness existing between
Cytogen and Cellcor or between Merger Sub and Cellcor that was issued,
acquired, or will be settled at a discount.
<PAGE>
Board of Directors
Cellcor, Inc.
September 13, 1995
Page 5
m. No two parties to the Merger are investment companies as
defined in Sections 368(a)(2)(F)(iii) and (iv) of the Code.
n. No stock of Merger Sub will be issued in the Merger.
o. On the date of the Merger, the fair market value of the
assets of Cellcor transferred to Merger Sub will exceed the sum of the
liabilities assumed by Merger Sub, plus the amount of liabilities, if
any, to which the transferred assets are subject.
p. Cellcor is not under the jurisdiction of a court in a Title
11 or similar case within the meaning of Section 368(a)(3)(A) of the
Code.
q. Cytogen, Cellcor and Merger Sub are entering into the Merger
for good and valid business reasons.
*******
This opinion is based on the facts and assumptions set forth above.
In rendering our opinion, we have examined and relied upon but have not
independently verified the accuracy and completeness of the facts, information,
covenants and representations contained in the Merger Agreement, the Proxy
Statement/Prospectus, and such other documents as we have deemed necessary or
appropriate as a basis for our opinion. In addition, we have relied upon
certain representation letters furnished to us by Cytogen and Cellcor. Where
such statements and representations are made to the best knowledge and belief of
the person making such statement or representation, we have assumed the facts to
be as so stated and represented. We have also assumed that the Merger will be
consummated in accordance with the Merger Agreement and as described in the
Proxy Statement/Prospectus. Our opinion is conditioned on the initial and
continuing accuracy of such facts, information, covenants, representations,
statements and assumptions.
In rendering our opinion, we have considered the applicable provisions
of the Code, Treasury Regulations promulgated thereunder, pertinent judicial
authorities, and interpretive rulings as we have considered relevant. Statutes,
regulations, judicial decisions and administrative interpretations are subject
to change at any time and, in some circumstances, with retroactive effect. A
material change in the
<PAGE>
Board of Directors
Cellcor, Inc.
September 13, 1995
Page 6
authorities upon which our opinion is based could affect our conclusions.
*******
Based solely upon the foregoing, we are of the opinion that, provided
that the fair market value of the Subscription Rights granted in connection with
the transaction plus the amount of cash received by the Cellcor shareholders
pursuant to the exercise of applicable dissenters' appraisal rights or in lieu
of fractional shares of Cytogen Common Stock does not exceed 50% of the sum of
(i) the fair market value of the Cytogen Common Stock issued in connection with
the Merger, (ii) the fair market value of the Subscription Rights and (iii) the
amount of cash received by the Cellcor shareholders pursuant to the exercise of
applicable dissenters' appraisal rights or in lieu of fractional shares of
Cytogen Common Stock, under current law for federal income tax purposes:
i) The Merger will constitute a reorganization within the
meaning of Section 368(a) of the Code, and Cytogen, Merger Sub and Cellcor will
each be a party to the reorganization within the meaning of Section 368(b) of
the Code;
ii) No gain or loss will be recognized by Cytogen, Merger Sub or
Cellcor as a result of the Merger;
iii) No gain or loss will be recognized by any stockholder of
Cellcor in connection with the Merger (except as described in paragraph (iv)
below with respect to the grant of the Subscription Rights, in paragraph (vii)
below with respect to cash, if any, received in lieu of any fractional share
interest of Cytogen Common Stock, and in paragraph (viii) below with respect to
cash received for Dissenting Shares);
iv) Upon receipt of the Subscription Rights, a holder of Cellcor
Common Stock will recognize gain, if any, equal to the lesser of (1) the gain
realized by the holder with respect to the Merger, measured by the difference
between (a) the fair market value of the Subscription Rights and Cytogen Common
Stock (including the amount, if any, of cash received in lieu of a fractional
share) received in connection with the transaction and (b) the holder's adjusted
tax basis in the shares of Cellcor capital stock surrendered in connection with
the Merger and (2) the fair market value of the Subscription Rights received.
Provided the shares of Cellcor Common Stock are held as a capital asset, any
such gain will be capital gain, provided that all or a
<PAGE>
Board of Directors
Cellcor, Inc.
September 13, 1995
Page 7
portion of such gain may be characterized as a dividend (taxable at ordinary
income rates) to the extent of the accumulated earnings and profits of Cellcor
at the Effective Time, subject to the provisions and limitations of Section 302
of the Code;
v) The tax basis of the shares of Cytogen Common Stock received
in the Merger by any stockholder of Cellcor will be the same as the tax basis of
such stockholder's Cellcor Shares exchanged therefor, increased by the amount of
gain, if any, recognized by the stockholder as a result of the receipt of the
Subscription Rights and reduced by the fair market value of the Subscription
Rights received and further reduced by the basis of any fractional share
interest for which cash is received in the Merger;
vi) The holding period of the Cytogen Common Stock received by a
stockholder of Cellcor in the Merger will include the holding period of the
Cellcor Shares exchanged therefor, provided the Cellcor Shares are held as a
capital asset by the stockholder as of the Effective Time;
vii) Cash received in lieu of a fractional share of Cytogen
Common Stock will be treated as a distribution in redemption of a fractional
share of Cytogen Common Stock received pursuant to the Merger, subject to the
provisions of Section 302 of the Code; and
viii) Cash received by a stockholder of Cellcor who has perfected
his rights as a dissenting stockholder under the Delaware General Corporation
Law will be treated as a distribution in redemption of the Dissenting Shares,
subject to the provisions and limitations of Section 302 of the Code.
*******
The foregoing opinion may not be applicable to Cellcor stockholders
who are subject to special treatment under the federal income tax laws
(including, for example, persons who acquired Cellcor Shares pursuant to the
exercise of employee stock options or otherwise as compensation, financial
institutions, broker-dealers, insurance companies, non-United States persons,
and tax-exempt organizations).
Except as set forth above, we express no opinion as to the federal,
state, local or foreign tax consequences of the Merger or of any transactions
related thereto. This opinion is solely for the benefit of you and your
shareholders and is not to
<PAGE>
Board of Directors
Cellcor, Inc.
September 13, 1995
Page 8
be used, quoted, circulated or otherwise referred to without our express written
permission. Notwithstanding the previous sentence, we hereby consent to the
reference to us under the caption "Certain Federal Income Tax Consequences" in
the Proxy Statement/Prospectus forming a part of the Registration Statement
filed on Form S-4 by Cytogen with the Securities and Exchange Commission in
connection with this transaction. We also consent to the filing of a copy of
this opinion as an exhibit to the Registration Statement. In giving such
consent, we do not thereby admit that we are in the category of persons whose
consent is required under section 7 of the Securities Act.
Very truly yours,
DECHERT PRICE & RHOADS
<PAGE>
Exhibit 8.2
September 13, 1995
Cytogen Corporation
600 College Road East
CN 5308
Princeton, New Jersey 08540-5308
Attn: President
Re: Proposed Merger among Cytogen Corporation, Cellcor Acquisition Corp.
and Cellcor, Inc.
Ladies and Gentlemen:
This opinion is being delivered to you in connection with the Agreement and
Plan of Merger dated June 15, 1995, as amended (the "Agreement"), by and among
Cytogen Corporation, a Delaware corporation ("Cytogen"), Cellcor Acquisition
Corp., a Delaware corporation and wholly-owned subsidiary of Cytogen (the
"Merger Sub"), and Cellcor, Inc., a Delaware corporation ("Cellcor"). Pursuant
to such Agreement, Cellcor will merge with and into the Merger Sub. Except as
otherwise provided, capitalized terms not defined herein have the meanings set
forth in the Agreement or in the certificates of even date herewith delivered to
Hale and Dorr by Cytogen, the Merger Sub, and Cellcor containing certain
representations of Cytogen, the Merger Sub, and Cellcor relevant to this opinion
(the "Certificates of Representations"). All section references, unless
otherwise indicated, are to the Internal Revenue Code of 1986, as amended (the
"Code").
In our capacity as counsel to Cellcor in the Merger, and for purposes of
rendering this opinion, we have examined and relied upon the Agreement, the
Certificates of Representations, and such other documents as we considered
relevant to our analysis. We have assumed that all parties to the Agreement and
to any other documents examined by us have acted, and will act, in accordance
<PAGE>
Cytogen Corporation
September 13, 1995
Page 2
with the terms of such Agreement or documents, and that the Merger will be
consummated at the Effective Time pursuant to the terms and conditions set forth
in the Agreement. Further, we have assumed that all representations contained
in the Agreement, as well as those representations contained in the Certificates
of Representations are true and complete in all material respects as of the
Effective Time. We have not attempted to verify independently such
representations, but in the course of our representation, nothing has come to
our attention which would cause us to question the accuracy thereof.
In our examination of documents, we have assumed the authenticity of
original documents, the accuracy of copies, and the genuineness of signatures.
We have also assumed that there is no plan or intention on the part of Cellcor's
shareholders to engage in a sale, exchange, or other disposition of shares of
Cytogen common stock to be received in the Merger that would reduce the Cellcor
shareholders' ownership of Cytogen common stock to a number of shares having an
aggregate fair market value, as of the Effective Time of the Merger, of less
than fifty percent (50%) of the value of all of the stock of Cellcor outstanding
immediately prior to the Merger. Shares of Cellcor stock with respect to which
dissenters' appraisal rights are exercised in the Merger, or which are sold,
redeemed, or disposed of in a transaction that is in contemplation of or related
to the Merger, will be considered shares of Cellcor stock held by shareholders
of Cellcor immediately before the Merger which are exchanged in the Merger for
shares of Cytogen common stock which are then disposed of pursuant to a plan.
The conclusions expressed herein represent our judgment as to the proper
treatment of certain aspects of the Merger under the income tax laws of the
United States based upon the Code, Treasury Regulations, case law, and rulings
and other pronouncements of the Internal Revenue Service (the "IRS") as in
effect on the date of this opinion. No assurances can be given that such laws
will not be amended or otherwise changed prior to the Effective Time of the
Merger, or at any other time, and that such changes will not affect the
conclusions expressed herein. Our opinion relates solely to the tax
consequences of the Merger under the federal laws of the United States, and we
express no opinion (and no opinion should be inferred) regarding the tax
consequences of the Merger under the laws of any other jurisdiction.
Our opinions represent our best judgment as to how a court would decide if
presented with the issues addressed herein and are not binding upon either the
IRS or any court. Thus, no assurances can be given that a position taken in
reliance on our
<PAGE>
Cytogen Corporation
September 13, 1995
Page 3
opinions will not be challenged by the IRS or rejected by a court.
On the basis of, and subject to the foregoing, and in reliance upon the
representations described above, we are of the opinion that, provided that the
fair market value of rights granted to the Cellcor shareholders pursuant to the
Subscription Offer (the "Subscription Rights") plus the amount of cash received
by the Cellcor shareholders pursuant to the exercise of applicable dissenters'
appraisal rights or in lieu of fractional shares of Cytogen common stock will
not exceed 50% of the sum of (A) the fair market value of the Cytogen common
stock issued in connection with the Merger, (B) the fair market value of the
Subscription Rights and (C) the amount of cash received by the Cellcor
shareholders pursuant to the exercise of applicable dissenters' appraisal rights
or in lieu of fractional shares of Cytogen common stock:
1. The Merger will constitute a reorganization within the meaning of
Section 368(a) of the Code;
2. No gain or loss will be recognized by Cytogen, Cellcor, or the Merger
Sub as a result of the Merger;
3. Except as provided in paragraphs 4 and 5, below, no gain or loss will
be recognized by the Cellcor shareholders upon the exchange of Cellcor stock for
shares of Cytogen common stock as a result of the Merger;
4. Each Cellcor shareholder (other than shareholders that exercise
dissenter's appraisal rights) will recognize gain in an amount equal to the
lesser of (i) the excess, if any, of (A) the fair market value of the Cytogen
common stock received in the Merger (including for this purpose, the amount of
any cash received in lieu of fractional shares) plus the fair market value of
the Subscription Rights received by such shareholder over (B) the adjusted tax
basis of the shares of Cellcor surrendered by the shareholder in the Merger and
(ii) the fair market value of the Subscription Rights received by the
shareholder. Such gain will generally be capital gain if the shares of Cellcor
stock surrendered were held as capital assets, provided that all or a portion of
such gain may be characterized as a dividend (taxable at ordinary income rates)
to the extent of the accumulated earnings and profits of Cellcor at the
Effective Time under the principles contained in Section 302 of the Code;
5. Cash received by the Cellcor shareholders in lieu of fractional shares
of Cytogen common stock, will be treated as received as a distribution in
redemption of shares of Cytogen common stock having a fair market value equal to
the amount of
<PAGE>
Cytogen Corporation
September 13, 1995
Page 4
cash received, subject to the provisions of Section 302 of the Code;
6. The tax basis of the shares of Cytogen common stock received by each
Cellcor shareholder in the Merger will be equal to the tax basis of the shares
of Cellcor stock exchanged therefor in the Merger, (A) reduced by (i) the fair
market value of the Subscription Rights received by the shareholder, and (ii)
any basis allocable to a fractional share of Cytogen common stock treated as
sold or exchanged under Section 302 of the Code, and (B) increased by the amount
of any gain recognized upon the exchange under paragraph 4, above; and
7. The holding period of the shares of Cytogen common stock received by a
Cellcor shareholder in the Merger will include the holding period for the shares
of Cellcor stock exchanged therefor in the Merger, provided that the shares of
Cellcor stock were held as capital assets on the date of the Effective Time.
8. Cash received by a Cellcor shareholder who has perfected his appraisal
rights as a dissenting shareholder will be treated as a distribution in
redemption of the shareholders shares of Cellcor stock, subject to the
provisions and limitations of Section 302 of the Code.
The foregoing opinions may not be applicable to Cellcor shareholders who
are subject to special treatment under the federal income tax laws (including,
for example, persons who acquired Cellcor shares pursuant to the exercise of
employee stock options or otherwise as compensation, certain financial
institutions, broker-dealers, insurance companies, non-United States persons and
tax-exempt organizations).
No opinion is expressed as to any federal income tax consequence of the
Merger except as specifically set forth herein, and this opinion may not be
relied upon except with respect to the consequences specifically discussed
herein. This opinion is solely for your benefit and is not to be used, quoted,
circulated or otherwise referred to without our express written consent.
Notwithstanding the previous sentence, we hereby consent to the reference to us
under the caption "Certain Federal Income Tax Consequences" in the
Proxy/Prospectus forming a part of the Registration Statement filed on form S-4
by Cytogen with the Securities and Exchange Commission in connection with the
Merger. We also consent to a filing of a copy of this opinion as an exhibit to
the Registration Statement. In giving such
<PAGE>
Cytogen Corporation
September 13, 1995
Page 5
consent, we do not thereby admit that we are in the category of persons whose
consent is required under section 7 of the Securities Act.
Very truly yours,
HALE AND DORR
<PAGE>
Exhibit 23.1.1
ARTHUR ANDERSEN LLP
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.
Philadelphia, Pennsylvania ARTHUR ANDERSEN LLP
September 12, 1995
<PAGE>
Exhibit 23.1.2
ARTHUR ANDERSEN LLP
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
-----------------------------------------
As independent public accountants, we hereby consent to the use of our reports
and to all references to our Firm as it relates to CytoRad Incorporated included
in or made a part of this Registration Statement.
Philadelphia, Pennsylvania ARTHUR ANDERSEN LLP
September 12, 1995
<PAGE>
Exhibit 23.2
The Board of Directors
Cellcor, Inc.
We consent to the use of our report included herein and to the reference to our
firm under the heading "Experts" in the S-4 registration statement.
Our report dated January 20, 1995, contains an explanatory paragraph that states
the Company and certain of its officers are defendants in a class action lawsuit
seeking damages in unspecified amounts, alleging that the prospectus used to
sell the Company's stock in the initial public offering contained false and
misleading statements and omitted material facts. It is impossible to predict
the outcome of the lawsuit at this time. Accordingly, no provision for any
liability that may result upon adjudication has been recognized in the
accompanying financial statements.
Our report dated January 20, 1995, contains an explanatory paragraph that states
that the Company's recurring losses from operations, decreasing cash reserves
and need for additional capital to fund continuing operations raise substantial
doubt about the entity's ability to continue as a going concern. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
KPMG PEAT MARWICK LLP
Boston, Massachusetts
September 12, 1995
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED STATEMENTS OF OPERATIONS FOR THE TWO MONTHS ENDED FEBRUARY 27, 1995
AND THE AUDITED BALANCE SHEETS AS OF DECEMBER 31, 1994 AND THE AUDITED
STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1994 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C> <C>
<PERIOD-TYPE> 2-MOS 12-MOS
<FISCAL-YEAR-END> FEB-27-1995 DEC-31-1994
<PERIOD-START> JAN-01-1995 JAN-02-1994
<PERIOD-END> FEB-27-1995 DEC-31-1994
<CASH> 0 2,314,970
<SECURITIES> 0 10,747,558
<RECEIVABLES> 0 68,200
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 0 575,204
<PP&E> 0 0
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 0 13,729,054
<CURRENT-LIABILITIES> 0 698,240
<BONDS> 0 0
<COMMON> 0 40,250
0 0
0 0
<OTHER-SE> 0 12,990,464
<TOTAL-LIABILITY-AND-EQUITY> 0 13,729,054
<SALES> 0 0
<TOTAL-REVENUES> 148,000 960,254
<CGS> 0 0
<TOTAL-COSTS> 2,452,000 2,111,006
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> (2,304,000) (1,150,752)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> 0 0
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (2,304,000) (1,150,752)
<EPS-PRIMARY> (0.57) (0.29)
<EPS-DILUTED> 0 0
</TABLE>
<PAGE>
Exhibit 99.1
CONSULTING AND MANAGEMENT AGREEMENT
-----------------------------------
CONSULTING AGREEMENT, dated as of July 1, 1995, between CYTOGEN
CORPORATION ("Cytogen"), a Delaware corporation having an office at 600 College
Road East, Princeton, NJ 08540, and CELLCOR, INC. ("Cellcor"), a Delaware
corporation having an office at 200 Wells Avenue, Newton, MA 02159.
WHEREAS, the parties hereto entered into that certain Agreement and
Plan of Merger dated June 15, 1995 (the "Merger Agreement"); and
WHEREAS, Section 5.15 of the Merger Agreement provides that the
parties will use their best efforts to enter into an agreement on or by July 1,
1995 whereby Cytogen will provide certain management services to Cellcor; and
WHEREAS, Cellcor desires to obtain certain management consulting
services in the clinical, regulatory, financial and human resources areas; and
WHEREAS, Cytogen is capable of providing such management consulting
services and is willing to provide such services to Cellcor in accordance with
the terms and conditions of this Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements hereinafter set forth and the mutual benefits to be
derived herefrom, Cytogen and Cellcor hereby agree as follows:
<PAGE>
1. Engagement. Upon the terms and subject to the conditions set
----------
forth in this Agreement, Cellcor hereby retains Cytogen to provide and Cytogen
shall provide all necessary management consulting services in connection with
the operation of Cellcor's business with a primary focus on (i) the Pivotal
Phase III clinical trials of Cellcor's autolymphocyte therapy ("ALT") in
patients with renal cell carcinoma, (ii) the preparation by Cellcor of an
Establishment Licensing Application and Product Licensing Application for such
therapy ("ELA/PLA") for submission to the Food and Drug Administration ("FDA"),
and (iii) the conduct of a Phase I/II clinical trial using ALT for the treatment
of chronic hepatitis B, including those services which are more fully set forth
in Schedule A attached hereto (the "Services"). All Services rendered pursuant
to this Agreement shall be subject to oversight and control by the Cellcor Board
of Directors and all significant decisions relating to the business of Cellcor
shall require the approval of the Cellcor Board of Directors or Cellcor's
Chairman.
2. Cytogen's Duties and Obligations. Cytogen hereby agrees, during
--------------------------------
the term of this Agreement, to provide the Services in a diligent and
professional manner to Cellcor and to devote the services and time of that
number of employees necessary to perform the Services on a timely and
professional basis.
- 2 -
<PAGE>
3. Compensation; Expenses. In consideration of providing the
----------------------
Services to Cellcor hereunder, Cellcor agrees to pay Cytogen, during the term of
this Agreement, the following fees:
a. A fixed consulting fee in the amount of $30,000 per month.
b. The fees payable hereunder shall be paid on the last day of
each month.
c. Cellcor shall reimburse Cytogen for all documented out-of-
pocket expenses reasonably incurred by Cytogen in connection
with providing the Services hereunder.
Notwithstanding any provisions in the Merger Agreement to the contrary, the
expenditure of the amounts set forth in this Section 3 shall not be included in
the budgeted amounts set forth in Schedule 5.1.4 of the Merger Agreement and
Cytogen hereby waives any and all covenants or agreements in the Merger
Agreement which may be inconsistent with the payment of such amounts by Cellcor.
4. Term. The initial term of Cytogen's engagement under this
----
Agreement shall commence on the date hereof and shall continue, subject to
Section 5 hereof, through and until December 31, 1995 (the "Initial Term"), and
the engagement shall thereafter be renewed automatically on a month-to-month
basis,
- 3 -
<PAGE>
unless terminated after the Initial Term upon 30 days prior written notice by
either party to the other.
5. Termination. Except for the obligations set forth in Sections 6
-----------
and 8 hereof, this Agreement shall terminate and, except to the extent
previously accrued, all rights and obligations of Cytogen and Cellcor shall
cease (i) within thirty (30) days of delivery of the notice referred to in
Section 4 hereof, (ii) within thirty (30) days of written notice of a material
default of any material provision of this Agreement, (iii) immediately upon
termination of the Merger Agreement, or (iv) immediately upon closing of the
transactions contemplated by the Merger Agreement.
6. Indemnification.
---------------
a. Cellcor shall indemnify and hold harmless Cytogen and its
affiliates, employees, agents, directors and officers against and from any and
all claims, demands, losses, damages, lawsuits and other proceedings, judgments
and awards, costs and expenses (including reasonable attorneys' fees), arising
from Cytogen's performance of its duties hereunder, except insofar as such may
arise either from Cytogen's gross negligence or intentional wrongdoing.
b. Cytogen shall indemnify and hold harmless Cellcor and its
affiliates, employees, agents, directors and officers against and from any and
all claims, demands, losses,
- 4 -
<PAGE>
damages, lawsuits and other proceedings, judgments and awards, costs and
expenses (including reasonable attorneys' fees), arising from Cytogen's gross
negligence or intentional wrongdoing in performance of its duties hereunder,
provided, however, that Cytogen's liability under this indemnification shall be
limited to an amount equal to the aggregate fees paid to Cytogen pursuant to
Section 3 hereof.
7. Nature of Cytogen's Undertaking; No Joint Venture or Partnership.
-----------------------------------------------------------------
Cytogen and Cellcor hereby represent that neither Cytogen's entering into this
Agreement nor Cytogen's providing of Services to Cellcor shall be construed to
have created either a joint venture or a partnership for the purpose of
providing such Services. The relationship of Cytogen and Cellcor is that of
independent contractors.
8. Confidentiality. Cytogen shall not disclose or use, and Cytogen
---------------
shall cause others retained by Cytogen not to disclose or use (other than as may
be authorized by Cellcor) any confidential information or other proprietary
knowledge concerning Cellcor which is received in the course of providing the
Services hereunder, including (without limitation) technology and know-how,
employees, agents, customers and suppliers; provided, however, that such
obligation of confidentiality shall not apply to information which (i) is in the
public domain (other
- 5 -
<PAGE>
than as a result of a disclosure by Cytogen in violation of this Agreement),
(ii) is known to Cytogen prior to disclosure by Cellcor (other than disclosures
made by Cellcor to Cytogen pursuant to the Confidentiality Agreement dated as of
April 13, 1995 or the Merger Agreement), (iii) is received from a third party
having a right to make disclosure thereof, or (iv) is disclosed by Cytogen in
connection with the performance of its duties hereunder, provided that Cellcor
management has authorized such disclosure. Except as specifically stated above,
Cytogen shall not be limited in any way in the conduct of the business of
Cytogen.
9. Notices. Any notice, report or payment required or permitted to
-------
be given or made under this Agreement by one party to the other shall be deemed
to have been sufficiently given or made for all purposes hereof if (i) mailed,
by certified mail, postage prepaid, addressed to such party at its address
indicated below or to such other address as the addressee shall have theretofore
furnished in writing to the other party, (ii) when sent by telecopy (without
receipt confirmed), or (iii) when receipt is signed for at the address shown
below when sent by overnight courier service:
CYTOGEN CORPORATION
600 College Road East
Princeton, NJ 08540-5308
Attention: Thomas J. McKearn
- 6 -
<PAGE>
If the to Company:
CELLCOR, INC.
200 Wells Avenue
Newton, MA 02159
Attention: Chairman
10. Agreement. This Agreement (a) contains the complete and entire
---------
understanding and agreement of Cytogen and Cellcor respecting the subject matter
hereof; (b) supersedes and cancels all other understandings or agreements, oral
or written, respecting the subject matter hereof; and (c) may not be modified
except by an instrument in writing executed by Cytogen and Cellcor.
11. Waiver of Breach. The waiver by either party of a breach or any
----------------
provision of this Agreement by the other party shall not operate or be construed
as a waiver or any subsequent breach of that provision or any other provision
hereof.
12. Assignment. Cytogen and Cellcor may not assign their respective
----------
rights or obligations under this Agreement without the express written consent
of the parties hereto.
13. Section Headings. All section headings herein have been inserted
----------------
for convenience or reference only and shall in no way modify or restrict any of
the terms or provisions hereof.
14. Governing Law. This Agreement shall be deemed to be a contract
-------------
made under the laws of the State of New Jersey and
- 7 -
<PAGE>
for all purposes shall be governed by, construed, interpreted and enforced
according to the laws of the State of New Jersey.
15. Counterparts. This Agreement may be executed in multiple
------------
counterparts and each copy, when fully executed, shall be deemed an original for
all purposes.
- 8 -
<PAGE>
IN WITNESS WHEREOF, Cytogen and Cellcor have caused this Agreement to
be duly executed and delivered on the date and year first above written.
CYTOGEN CORPORATION
By: /s/ Thomas J. McKearn
------------------------------
Name: Thomas J. McKearn
Title: President and CEO
CELLCOR, INC.
By: /s/ Richard R. D'Antoni
------------------------------
Name: Richard R. D'Antoni
Title: President and CEO
- 9 -
<PAGE>
Exhibit 99.4
PROXY
PROXY SOLICITED BY THE BOARD OF DIRECTORS
CYTOGEN CORPORATION
THOMAS J. McKEARN, T. JEROME MADISON, and WILLIAM C. MILLS III, and each of
them, with full power of substitution, are hereby appointed the Proxies of, and
authorized to represent, the undersigned and to vote all of the shares of
Common Stock of CYTOGEN CORPORATION entitled to be voted by the undersigned as
of August 17, 1995 as directed on the reverse side and, in their discretion, on
all other matters which may properly come before the Special Meeting of
Stockholders to be held on Monday, October 16, 1995, at 2:00 p.m. (local time)
at The Holiday Inn Princeton, 4355 Route One at Ridge Road, Princeton, New
Jersey 08540 and at any adjournment thereof as if the undersigned were present
and voting at the meeting.
Whether or not you expect to attend the meeting, you are urged to execute and
return this proxy, which you may revoke at any time prior to its use.
TO BE VOTED, YOU MUST SIGN ON THE REVERSE SIDE
(CONTINUED ON THE REVERSE SIDE)
<PAGE>
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED BY THE
STOCKHOLDER. WHERE NO DIRECTION IS GIVEN WHEN THE DULY EXECUTED PROXY IS
RETURNED, SUCH SHARES WILL BE VOTED FOR ALL ITEMS.
I plan to attend
the meeting
[ ]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE FOLLOWING PROPOSAL:
1. To approve the issuance of up to (i) an aggregate of 5,324,487 shares of
Cytogen common stock, par value $.01 per share ("Cytogen Common Stock"), in
order to effect the proposed acquisition of Cellcor, Inc. ("Cellcor") by
Cytogen pursuant to an Agreement and Plan of Merger dated June 15, 1995, as
amended, among Cytogen, Cellcor Acquisition Corp., a wholly-owned subsidiary
of Cytogen and Cellcor and (ii) an aggregate of 6,637,493 shares of Cytogen
Common Stock in connection with an offering by Cytogen to holders of
Cellcor's common stock of rights to subscribe for and purchase shares of
Cytogen Common Stock.
For Against Abstain
[ ] [ ] [ ]
2. To consider and transact such other business as may properly come before the
Special Meeting.
IF YOU PLAN TO ATTEND THE SPECIAL
MEETING CHECK THE BOX ABOVE.
Dated: _____________________, 1995
__________________________________
__________________________________
SIGNATURE(S) OF STOCKHOLDER(S)
NOTE: THE SIGNATURE(S) SHOULD
APPEAR THE SAME AS IT (THEY)
APPEAR(S) ON THE ADDRESS LABEL
ON THIS PROXY. WHEN SIGNING AS
EXECUTOR, ADMINISTRATOR, TRUSTEE,
GUARDIAN, OR ATTORNEY, PLEASE GIVE
FULL TITLE AS SUCH. FOR JOINT
ACCOUNTS OR CO-FIDUCIARIES, ALL
JOINT OWNERS OR CO-FIDUCIARIES
"PLEASE MARK INSIDE BLUE BOXES SO SHOULD SIGN.
THAT DATA PROCESSING EQUIPMENT THIS PROXY IS SOLICITED ON BEHALF
WILL RECORD YOUR VOTES" OF THE BOARD OF DIRECTORS
<PAGE>
Exhibit 99.5
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
CELLCOR, INC.
COMMON STOCK
SPECIAL MEETING OF STOCKHOLDERS--OCTOBER 16, 1995
The undersigned, revoking all prior proxies, hereby appoint(s) Gary W.
Cashon, Russell W. Ayres, III and Steven D. Singer, Esq., and each of them,
with full power of substitution, as proxies to represent and vote as designated
herein, all shares of Common Stock, par value $.01 per share, of Cellcor, Inc.
(the "Company") which the undersigned would be entitled to vote if personally
present at the Special Meeting of Stockholders of the Company to be held at the
offices of Hale and Dorr, 60 State Street, Boston, Massachusetts 02109, on
Monday, October 16, 1995, at 2:00 p.m. (local time) and at any adjournment
thereof.
In their discretion, the proxies are authorized to vote upon such other
matters as may properly come before the meeting or any adjournment thereof.
(CONTINUED, AND TO BE SIGNED ON THE REVERSE SIDE)
<PAGE>
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE
VOTED FOR PROPOSALS 1, 2 AND 3. ATTENDANCE OF THE UNDERSIGNED AT THE MEETING OR
ANY ADJOURNMENT THEREOF WILL NOT BE DEEMED TO REVOKE THIS PROXY UNLESS THE
UNDERSIGNED SHALL REVOKE THIS PROXY IN WRITING.
I plan to attend
the meeting
[ ]
1. To approve and adopt (i) an Agreement and Plan of Merger dated as of June 15,
1995, as amended, among Cytogen Corporation ("Cytogen"), Cellcor Acquisition
Corp., a wholly-owned subsidiary of Cytogen (the "Merger Subsidiary"), and
the Company, and (ii) the merger of the Company with and into the Merger
Subsidiary.
For Against Abstain
[ ] [ ] [ ]
2. To approve the Company's 1995 Stock Incentive Plan.
For Against Abstain
[ ] [ ] [ ]
3. To transact such other business as may properly come before the meeting or
any adjournment thereof.
For Against Abstain
[ ] [ ] [ ]
UNLESS OTHERWISE INSTRUCTED, THIS PROXY
WILL BE VOTED IN FAVOR OF THE PROPOSALS
SET FORTH ABOVE Please sign exactly as
name appears hereon. When shares are
held by joint owners, both should
sign. When signing as attorney,
executor, administrator, trustee or
guardian, please give full title as
such. If a corporation, please sign in
full corporate name by President or
other authorized officer. If a
partnership, please sign in partnership
name by authorized person.
"PLEASE MARK INSIDE BLUE BOXES SO
THAT DATA PROCESSING EQUIPMENT Signature ________________ Date ________
WILL RECORD YOUR VOTES"
Signature ________________ Date ________
<PAGE>
Exhibit 99.5
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
CELLCOR, INC.
CONVERTIBLE PREFERRED STOCK
SPECIAL MEETING OF STOCKHOLDERS--OCTOBER 16, 1995
The undersigned, revoking all prior proxies, hereby appoint(s) Gary W.
Cashon, Russell W. Ayres, III and Steven D. Singer, Esq., and each of them,
with full power of substitution, as proxies to represent and vote as designated
herein, all shares of Convertible Preferred Stock, par value $.01 per share, of
Cellcor, Inc. (the "Company") which the undersigned would be entitled to vote
if personally present at the Special Meeting of Stockholders of the Company to
be held at the offices of Hale and Dorr, 60 State Street, Boston, Massachusetts
02109, on Monday, October 16, 1995 at 2:00 p.m. (local time) and at any
adjournment thereof.
In their discretion, the proxies are authorized to vote upon such other
matters as may properly come before the meeting or any adjournment thereof.
(CONTINUED, AND TO BE SIGNED ON THE REVERSE SIDE)
<PAGE>
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE
VOTED FOR SUCH PROPOSAL. ATTENDANCE OF THE UNDERSIGNED AT THE MEETING OR ANY
ADJOURNMENT THEREOF WILL NOT BE DEEMED TO REVOKE THIS PROXY UNLESS THE UNDER-
SIGNED SHALL REVOKE THIS PROXY IN WRITING.
I plan to attend
the meeting
[ ]
To approve and adopt (i) an Agreement and Plan of Merger dated as of June 15,
1995, as amended, among Cytogen Corporation ("Cytogen"), Cellcor Acquisition
Corp., a wholly-owned subsidiary of Cytogen (the "Merger Subsidiary"), and the
Company and (ii) the merger of the Company with and into the Merger Subsidiary.
For Against Abstain
[ ] [ ] [ ]
UNLESS OTHERWISE INSTRUCTED, THIS PROXY
WILL BE VOTED IN FAVOR OF THE PROPOSAL
SET FORTH ABOVE Please sign exactly as
name appears hereon. When shares are
held by joint owners, both should
sign. When signing as attorney,
executor, administrator, trustee or
guardian, please give full title as
such. If a corporation, please sign in
full corporate name by President or
other authorized officer. If a
partnership, please sign in partnership
name by authorized person.
"PLEASE MARK INSIDE BLUE BOXES SO Signature _________________ Date _______
THAT DATA PROCESSING EQUIPMENT
WILL RECORD YOUR VOTES" Signature _________________ Date _______
<PAGE>
Exhibit 99.6
REGISTRATION RIGHTS AGREEMENT
FOR
COMMON STOCK
Dated as of , 1995
by and among
CYTOGEN CORPORATION
and
THE STOCKHOLDERS LISTED ON SCHEDULE A
<PAGE>
REGISTRATION RIGHTS AGREEMENT FOR COMMON STOCK
This Registration Rights Agreement for Common Stock (the
"Agreement") is made and entered into as of , 1995, by and among Cytogen
Corporation, a Delaware corporation (the "Company"), and the persons listed on
Schedule A to this Agreement (herein referred to collectively as the
"Stockholders" and each individually as a "Stockholder").
This Agreement is made pursuant to the Voting and Subscription
Agreement.
The parties hereby agree as follows:
1. Definitions
As used in this Agreement, the following capitalized terms shall have
the following meanings:
Common Stock: The Common Stock, par value $.01 per share, of the
------------
Company.
Demand Registration: See Section 3(b).
-------------------
Exchange Act: The Securities Exchange Act of 1934, as amended from
------------
time to time.
Voting and Subscription Agreement: Voting and Subscription Agreement,
---------------------------------
dated June __, 1995, providing for the acquisition of the Common Stock by the
Stockholders pursuant to the Merger and the Subscription Offer (as such terms
are defined therein).
NASD: The National Association of Securities Dealers, Inc.
----
person: An individual, partnership, corporation, trust or
------
unincorporated organization, or a government or agency or political subdivision
thereof.
Piggy-Back Registration: See Section 3(a).
-----------------------
Prospectus: The prospectus included in any Registration Statement, as
----------
amended or supplemented by any prospectus supplement with respect to the terms
of the offering of any portion of the Registrable Securities covered by such
Registration Statement and all other amendments and supplements to the
Prospectus, including post-effective amendments, and all material incorporated
by reference in such Prospectus.
Registrable Securities: All Common Stock beneficially owned by any
----------------------
Stockholder until such time as such Registrable Securities cease to be
Registrable Securities as provided in Section 2.
Registration Expenses: See Section 6.
---------------------
Registration Statement: Any registration statement of the Company
----------------------
which covers any of the Registrable Securities pursuant to the provisions of
this Agreement, including the Prospectus, amendments and supplements to such
Registration Statement, including post-effective amendments, all exhibits and
all material incorporated by reference in such Registration Statement.
SEC: The Securities and Exchange Commission.
---
<PAGE>
Securities Act: The Securities Act of 1933, as amended from time to
--------------
time.
underwritten registration or underwritten offering: A registration in
------------------------- ---------------------
which securities of the Company are sold to an underwriter for reoffering to the
public.
2. Securities Subject to this Agreement. The securities entitled to the
------------------------------------
benefits of this Agreement are the Registrable Securities but, with respect to
any particular Registrable Security, only until such security (i) has been
effectively registered under the Securities Act and disposed of in accordance
with the Registration Statement covering it, or (ii) has been distributed to the
public pursuant to Rule 144 (or any similar provisions then in force) under the
Securities Act.
3. Registration Rights.
-------------------
(a) Piggy-Back Registration.
-----------------------
(1) Right to Include Registrable Securities. If the Company at any
---------------------------------------
time or from time to time proposes to register shares of its Common Stock under
the Securities Act (other than in a registration on Forms S-3 (relating to sales
of securities to participants in a Company dividend reinvestment plan), S-4 or
S-8 or any successor form to such forms or in connection with an exchange offer
or an offering of securities solely to the existing stockholders or employees of
the Company), whether or not for sale for its own account, the Company shall
deliver prompt written notice to all holders of Registrable Securities of its
intention to undertake such registration. The Company shall use its best efforts
to effect the registration under the Securities Act of all Registrable
Securities with respect to which the Company receives a request for registration
from the holders thereof by written notice to the Company within fifteen (15)
days after the date of the Company's notice to holders of its intended
registration (which notice by holders shall specify the amount of Registrable
Securities to be registered and the intended method of disposition thereof),
necessary to the extent to permit the disposition in accordance with the
intended methods thereof of all such Registrable Securities by including such
Registrable Securities in the registration statement pursuant to which the
Company proposes to register the shares of Common Stock (a "Piggy-Back
Registration"); provided, however, that if such registration involves an
underwritten offering, all holders of Registrable Securities requesting
inclusion in the registration shall be required to sell their Registrable
Securities to the underwriters selected by the Company at the same price and on
the same terms of underwriting applicable to the Company and any other persons
selling shares of Common Stock. Notwithstanding the foregoing, if, at any time
after giving written notice of its intention to register Common Stock and prior
to the effectiveness of the registration statement filed in connection with such
registration, the Company determines for any reason either not to effect such
registration or to delay such registration, the Company may, at its election, by
the delivery of written notice to each holder of Registrable Securities, (i) in
the case of a determination not to effect registration, relieve itself of its
obligation to register the Registrable Securities in connection with such
registration, or (ii) in the case of a determination to delay the registration,
delay the registration of such Registrable Securities for the same period as the
delay in the registration of such other shares of Common Stock. The holders
requesting inclusion in a registration pursuant to this Section 3(a) may, at any
time prior to the effective date of the registration statement relating to such
registration, revoke such request by delivering written notice to the Company
revoking such requested inclusion (which notice shall be effective only upon
receipt by the Company notwithstanding the provisions of Section 10(d)).
- 2 -
<PAGE>
Stockholders will only be entitled to participate in any Demand Registration (as
defined in paragraph (b) below) in accordance with paragraph (b) below and will
have no right to participate therein pursuant to this paragraph (a)(1) (except
as provided in paragraph (b)(3) below).
(2) Priority in Piggy-Back Registrations. If any of the Registrable
------------------------------------
Securities registered pursuant to any Piggy-Back Registration are to be sold in
one or more firm commitment underwritten offerings, and the managing
underwriters advise in writing the Company and the holders of such Registrable
Securities that in its or their opinion or, in the case of a Piggyback
Registration not being underwritten, the Company shall reasonably determine (and
notify the holders of Registrable Securities of such determination), after
consultation with an investment banker of nationally recognized standing, that
the number of shares of Common Stock (including Registrable Securities) proposed
to be sold in such offering exceeds the maximum number of shares of Common Stock
that can be sold in such offering, the Company shall include in such
registration only such maximum number of shares of Common Stock (including
Registrable Securities) which, in the opinion of such underwriter or
underwriters, or the Company, as the case may be, selected in the following
order of priority: (i) first, all of the shares of Common Stock that the Company
proposes to sell for its own account, if any, and (ii) second, the Registrable
Securities requested to be included in such registration by Stockholders that
have requested their Registrable Securities to be included therein together with
such other shares of Common Stock as to which the Company may have a
registration obligation held by persons who requested such securities be
included in such registration, or in their sole and absolute discretion, such of
such shares as the managing underwriters shall in their reasonable discretion
deem advisable. To the extent that shares of Common Stock to be included in the
Piggyback Registration must be allocated pursuant to clause (ii) above, such
shares shall be allocated pro rata based on the number of shares of Common Stock
that each holder shall have requested to be included therein; provided, however,
that if a Piggyback Registration is an underwritten offering, the managing
underwriter or underwriters may select shares for inclusion in such Piggyback
Registration on a basis other than a pro rata basis if, in the reasonable
opinion of such underwriter or underwriters, selection on such other basis would
be material to the success of the offering.
(b) Demand Registration.
-------------------
(1) Right to Demand Registration. At any time after the second
----------------------------
anniversary of the date of this Agreement, the Stockholders may make a written
request for registration with the SEC under and in accordance with the
provisions of the Securities Act of all or part of their Registrable Securities
(a "Demand Registration"); provided, that (x) the Company need not effect the
Demand Registration unless (A) such Demand Registration shall include at least
20% of the aggregate Registrable Securities held on the date of such written
request by the Stockholders and (B) the Registrable Securities requested to be
so registered shall constitute at least 5% of the outstanding shares of Common
Stock, (y) the Company may, if the Board of Directors so determines in the
exercise of its reasonable judgment that due to a pending or contemplated
acquisition, disposition or other corporate event it would be inadvisable to
effect such Demand Registration at such time, defer such Demand Registration for
a single period not to exceed 180 days, and (z) if the Company elects not to
effect the Demand Registration pursuant to the terms of this sentence, no Demand
Registration shall be deemed to have occurred for purposes of this Agreement.
Within 10 days after receipt of the request for a Demand Registration, the
Company will serve written notice (the
- 3 -
<PAGE>
"Notice") of such registration request to all Stockholders who are holders of
Registrable Securities and, subject to paragraph (3) below, the Company will
include in such registration all Registrable Securities of such Stockholders
with respect to which the Company has received written requests for inclusion
therein from such Purchasers within 15 business days after the receipt by the
applicable holder of the Notice. All requests made pursuant to this paragraph
(b)(1) will specify the aggregate number of the Registrable Securities to be
registered and will also specify the intended methods of disposition thereof.
(2) Number of Demand Registrations. The Stockholders shall be
------------------------------
entitled to two Demand Registrations, and the expenses (including the fees and
expenses of counsel for the Stockholders) thereof shall be borne by the
Stockholders as set forth in Section 6.
(3) Priority on Demand Registration. If any of the Registrable
-------------------------------
Securities registered pursuant to a Demand Registration are to be sold in a firm
commitment underwritten offering and the managing underwriter or underwriters of
a Demand Registration advise the Company and the holders of such Registrable
Securities in writing that in its or their reasonable opinion the number of
securities proposed to be sold in such Demand Registration exceeds the number
which can be sold in such offering, the Company shall include in such
registration only such maximum number of Registrable Securities which, in the
reasonable opinion of such underwriter or underwriters can be sold in the
following orders of priority: (i) first, the Registrable Securities requested to
be included in such Demand Registration by the Stockholders and (ii) second,
other shares of Common Stock held by persons other than Stockholders requested
to be included in such Demand Registration; provided that if all shares
requested to be included in such Demand Registration by members of any group set
forth above are not to be included, selection of shares to be included from
within such group shall be made pro rata based on the number of shares that each
member of such group shall have requested to be included therein.
4. Hold-Back Agreements.
--------------------
(a) Restrictions on Public Sale by Holder of Registrable Securities.
---------------------------------------------------------------
Each holder of Registrable Securities whose Registrable Securities are eligible
for inclusion in a Registration Statement filed pursuant to Section 3 agrees, if
requested by the managing underwriter or underwriters in an underwritten
offering of any Registrable Securities, not to effect any public sale or
distribution of Registrable Securities, including a sale pursuant to Rule 144
(or any similar provision then in force) under the Securities Act (except as
part of such underwritten registration), during the 10-day period prior to, and
during the 120-day period (or such shorter period as may be agreed to by the
parties hereto) beginning on, the effective date of such Registration Statement,
to the extent timely notified in writing by the Company or the managing
underwriter or underwriters.
(b) Restrictions on Public Sale by the Company and Others. The
-----------------------------------------------------
Company agrees not to effect any public sale or distribution of any of its
Common Stock for its own account during the 10-day period prior to, and during
the 90-day period beginning on, the effective date of a Registration Statement
filed pursuant to Section 3 (except as part of such underwritten registration or
pursuant to registrations on Forms S-3 (relating to sales of securities to
participants in a Company dividend reinvestment plan), S-4 or S-8 or any
successor form to such Forms or in connection with
- 4 -
<PAGE>
an exchange offer or an offering of securities solely to the existing
stockholders or employees of the Company).
5. Registration Procedures
-----------------------
Once the Company incurs registration obligations under Section 3, the
Company will use its best efforts to effect such registrations to permit the
sale of such Registrable Securities in accordance with the intended method or
methods of distribution thereof, and pursuant thereto the Company will as
expeditiously as possible:
(a) prepare and file with the SEC a Registration Statement relating
to such registration on any appropriate form under the Securities Act, which
form shall be available for the sale of the Registrable Securities by the
holders thereof in accordance with the intended method or methods of
distribution thereof, and use its best efforts to cause such Registration
Statement to become effective; provided, however, that before filing a
Registration Statement or Prospectus or any amendments or supplements thereto,
including documents incorporated by reference after the initial filing of any
Registration Statement, the Company will furnish to the holders of the
Registrable Securities covered by such Registration Statement, their counsel and
the underwriters, if any, copies of all such documents proposed to be filed
sufficiently in advance of filing to provide them with a reasonable opportunity
to review such documents and comment thereon;
(b) prepare and file with the SEC such amendments and post-effective
amendments to a Registration Statement as may be necessary to keep such
Registration Statement effective for a period of not less than 6 months (or such
shorter period which shall terminate when all Registrable Securities covered by
such Registration Statement have been sold or withdrawn, but not prior to the
expiration of the 90-day period referred to in Section 4(3) of the Securities
Act and Rule 174 thereunder, if applicable); cause the related Prospectus to be
supplemented by any required Prospectus supplement, and as so supplemented to be
filed pursuant to Rule 424 under the Securities Act; and comply with the
provisions of the Securities Act applicable to it with respect to the
disposition of all securities covered by such Registration Statement during the
applicable period in accordance with the intended methods of disposition by the
sellers thereof set forth in such Registration Statement or supplement to such
Prospectus;
(c) notify each holder of Registrable Securities, their counsel and
the managing underwriters, if any, promptly, and (if requested by any such
Person) confirm such notice in writing, (1) when a Prospectus or any Prospectus
supplement or post-effective amendment has been filed, and, with respect to a
Registration Statement or any post-effective amendment, when the same has become
effective, (2) of any request by the SEC for amendments or supplements to a
Registration Statement or related Prospectus or for additional information, (3)
of the issuance by the SEC of any stop order suspending the effectiveness of a
Registration Statement or the initiation of any proceedings for that purpose,
(4) of the receipt by the Company of any notification with respect to the
suspension of the qualification of any of the Registrable Securities for sale in
any jurisdiction or the initiation or threatening of any proceeding for such
purpose, (5) of the happening of any event as a result of which the Prospectus
included in the Registration Statement (as then in effect) contains any untrue
statement of a material fact or omits to state any material fact required to be
stated therein or necessary to make the statements therein (in the case of the
Prospectus or any preliminary
- 5 -
<PAGE>
Prospectus, in light of the circumstances under which they were made) not
misleading and (6) of the Company's reasonable determination that a post-
effective amendment to a Registration Statement would be appropriate or that
there exist circumstances not yet disclosed to the public which make further
sales under such Registration Statement inadvisable pending such disclosure and
post-effective amendment;
(d) upon the occurrence of any event contemplated by Section 5(c)(2)-
(6), prepare a supplement or post-effective amendment to the Registration
Statement or related Prospectus or any document incorporated therein by
reference or file any other required document so that, as thereafter delivered
to the purchasers of the Registrable Securities being sold thereunder, such
Prospectus will not contain an untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein not misleading;
(e) make every reasonable effort to obtain the withdrawal of any
order suspending the effectiveness of the Registration Statement, or the lifting
of any suspension of the qualification of any of the Registrable Securities for
sale in any jurisdiction, at the earliest possible moment;
(f) if reasonably requested by a managing underwriter or any holder
of Registrable Securities, immediately incorporate in a Prospectus supplement or
post-effective amendment such information concerning such holder of Registrable
Securities, the managing underwriter or underwriters or the intended method of
distribution as the managing underwriter or underwriters or the holder of
Registrable Securities reasonably requests to be included therein and as is
appropriate in the reasonable judgment of the Company, including, without
limitation, information with respect to the number of shares of the Registrable
Securities being sold to such underwriter or underwriters, the purchase price
being paid therefor by such underwriter or underwriters and with respect to any
other terms of the underwritten (or best efforts underwritten) offering of the
Registrable Securities to be sold in such offering; make all required filings of
such Prospectus supplement or post-effective amendment as soon as notified of
the matters to be incorporated in such Prospectus supplement or post-effective
amendment; and supplement or make amendments to any Registration Statement if
requested by a managing underwriter of such Registrable Securities;
(g) furnish to each holder of Registrable Securities included in such
Registration Statement and each managing underwriter, if any, one manually-
signed copy of the Registration Statement and any post-effective amendments
thereto, including financial statements and schedules, and, upon request, all
documents incorporated therein by reference and all exhibits (including those
incorporated by reference);
(h) deliver to each holder of Registrable Securities included in such
Registration Statement, their counsel and the underwriters, if any, as many
copies of the Prospectus or Prospectuses (including each preliminary prospectus)
and any amendment or supplement thereto as such Persons may reasonably request;
the Company consents to the use of such Prospectus or any amendment or
supplement thereto by each of the holder of Registrable Securities included in
the Registration Statement and the underwriters, if any, in connection with the
offering and sale of the Registrable Securities covered by such Prospectus or
any amendment or supplement thereto;
- 6 -
<PAGE>
(i) prior to any public offering of Registrable Securities, use its
best efforts to register or qualify, or cooperate with the holders of
Registrable Securities included in the Registration Statement, the underwriters,
if any, and their respective counsel in connection with the registration or
qualification of, such Registrable Securities for offer and sale under the
securities or blue sky laws of such jurisdictions as any holder or underwriter
reasonably requests in writing; use its best efforts to keep each such
registration or qualification effective, including through new filings or
amendments or renewals, during the period such Registration Statement is
required to be kept effective and do any and all other acts or things necessary
or advisable to enable the disposition in such jurisdictions of the Registrable
Securities covered by the applicable Registration Statement; provided, however,
that the Company will not be required to qualify to do business or take any
action that would subject it to taxation or general service of process in any
jurisdiction where it is not then so qualified or subject;
(j) cooperate with the holders of Registrable Securities included in
the Registration Statement and the managing underwriter or underwriters, if any,
to facilitate the timely preparation and delivery of certificates representing
Registrable Securities to be sold under the Registration Statement; and enable
such Registrable Securities to be in such denominations and registered in such
names as the managing underwriter or underwriters, if any, or such holders may
request at least two business days prior to any sale of Registrable Securities;
(k) furnish, at the request of any Stockholder requesting
registration of Registrable Securities pursuant to this Agreement, on the date
that such Registrable Securities are delivered to the underwriters for sale in
connection with a registration pursuant to this Agreement, if such securities
are being sold through underwriters, or, if such securities are not being sold
through underwriters on the date that the registration statement with respect to
the securities becomes effective, (i) an opinion, dated such date, of the
counsel representing the Company for the purposes of such registration, in form
and substance as is customarily given by company counsel to the underwriters in
any underwritten public offering, addressed to the underwriters, if any, and to
the Stockholder requesting registration of Registrable Securities, and (ii) a
letter dated such date, from the independent certified public accountants of the
Company in form and substance as is customarily given by independent certified
public accountants to underwriters in an underwritten public offering, addressed
to the underwriters, if any, and to the Stockholder requesting registration of
Registrable Securities;
(l) use its best efforts to cause the Common Stock to continue to be
included in the Nasdaq National Market or, at the option of the Company, to be
listed on a national securities exchange (provided, however, that the Company
-------- -------
shall have no obligation to apply for the listing of its Common Stock on a
national securities exchange);
(m) provide a transfer agent and registrar for all such Registrable
Securities not later than the effective date of such registration statement;
(n) make available for inspection by a representative of the holders
of Registrable Securities included in the Registration Statement, any
underwriter participating in any disposition pursuant to such Registration
Statement and any lawyer or accountant retained by such selling holders or
underwriter, all pertinent financial and other records, pertinent corporate
documents and properties of the Company as they may reasonably request, and
cause the Company's officers,
- 7 -
<PAGE>
directors and employees to supply all information reasonably requested by any
such representative, underwriter, lawyer or accountant in connection with such
Registration Statement, provided, however, that any records, information or
documents that are furnished by the Company and that are non-public shall be
used only in connection with such registration and shall be kept confidential by
such Persons except to the extent disclosure of such records, information or
documents is required by law; and
(o) otherwise use its best efforts to comply with all applicable
rules and regulations of the SEC and make generally available to its security
holders earning statements satisfying the provisions of Section 11(a) of the
Securities Act, no later than 90 days after the end of any 12-month period (1)
commencing at the end of any fiscal quarter in which Registrable Securities are
sold to underwriters in a firm or best efforts underwritten offering and (2)
beginning with the first day of the Company's first fiscal quarter next
succeeding each sale of Registrable Securities after the effective date of a
Registration Statement, which statements shall cover said 12-month periods.
The Company may require each seller of Registrable Securities as to
which any registration is being effected to furnish promptly to the Company such
information regarding the distribution of such securities as the Company may
from time to time reasonably request in writing.
Each holder of Registrable Securities agrees by acquisition of such
Registrable Securities that, upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 5(c)(2)-(6), such holder
will forthwith discontinue disposition of such Registrable Securities covered by
such Registration Statement or Prospectus until such holder's receipt of the
copies of the supplemented or amended Prospectus contemplated by Section 5(d),
or until it is advised in writing by the Company that the use of the applicable
Prospectus may be resumed, and has received copies of any additional or
supplemental filings which are incorporated by reference in such Prospectus,
and, if so directed by the Company, such holder will, or will request the
managing underwriter or underwriters, if any, to, deliver to the Company all
copies, other than permanent file copies then in such holder's possession, of
the Prospectus covering such Registrable Securities current at the time of
receipt of such notice.
6. Registration Expenses. All expenses incident to the Company's performance
---------------------
of or compliance with this Agreement, including without limitation all
registration and filing fees, including fees with respect to filings required to
be made with the National Association of Securities Dealers, Inc., fees and
expense of compliance with securities or blue sky laws (including reasonable
fees and disbursements of counsel for the underwriters or selling holders in
connection with blue sky qualifications of the Registrable Securities under the
laws of such jurisdictions as the managing underwriter or underwriters or
holders of a majority of the shares of the Registrable Securities being sold may
designate), printing expenses, messenger, telephone and delivery expenses, and
fees and disbursements of counsel for the Company and for the sellers of the
Registrable Securities and of all independent certified public accountants of
the Company (including the expenses of any special audit and "cold comfort"
letters required by or incident to such performance) (all such expenses being
herein called "Registration Expenses") shall be borne by the holders of
Registrable Securities included in the registration Statement whether or not the
Registration Statement becomes effective. The Company will, in any event, pay
its internal expenses (including, without limitation, all salaries and expenses
of its officers and employees performing legal or accounting duties), the
expense of any
- 8 -
<PAGE>
annual audit, the fees and expenses incurred in connection with the listing of
the securities to be registered on any securities exchange on which similar
securities issued by the Company are then listed and the fees and expenses of
any Person, including special experts, retained by the Company.
7. Indemnification.
---------------
(a) Indemnification by the Company. The Company agrees to indemnify
------------------------------
and hold harmless each holder of Registrable Securities registered pursuant to
any registration hereunder, its officers, directors and agents and each Person
who controls such holder or agents (within the meaning of the Securities Act)
against all losses, claims, damages, liabilities and expenses caused by any
untrue or alleged untrue statement of a material fact contained in any
Registration Statement, Prospectus or preliminary Prospectus or any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein (in the case of a Prospectus or any
preliminary Prospectus, in the light of the circumstances under which they were
made) not misleading, except insofar as the same are caused by or contained in
any information furnished in writing to the Company by such holder or its
representative expressly for use therein; provided, however, that the Company
shall not be liable in any such case to the extent that any such loss, claim,
damage, liability or expense arises out of or is based upon an untrue statement
or alleged untrue statement or omission or alleged omission in a Prospectus, if
such untrue statement or alleged untrue statement, omission or alleged omission
is corrected in an amendment or supplement to the Prospectus and the holder of
Registrable Securities thereafter fails to deliver such Prospectus as so amended
or supplemented prior to or concurrently with the sale of the Registrable
Securities to the person asserting such loss, claim, damage, liability or
expense. The Company will also indemnify underwriters, selling brokers, dealer
managers and similar securities industry professionals participating in the
distribution, their officers and directors and each Person who controls such
Persons (within the meaning of the Securities Act) to the same extent as
provided above with respect to the indemnification of the holders of Registrable
Securities; provided, however, that if pursuant to an underwritten public
offering of Registrable Securities, the Company and any underwriters enter into
an underwriting or purchase agreement relating to such offering which contains
provisions relating to indemnification and contribution between the Company and
such underwriters, such provisions shall be deemed to govern indemnification and
contribution as between the Company and such underwriters.
(b) Indemnification by Holders of Registrable Securities. In
----------------------------------------------------
connection with any registration hereunder, each holder of Registrable
Securities participating in such registration will promptly furnish to the
Company in writing such information and affidavits with respect to such holder
as the Company reasonably requests for use in connection with any Registration
Statement or Prospectus and agrees to indemnify the Company, its directors,
officers and agents and each Person who controls the Company (within the meaning
of the Securities Act) against any losses, claims, damages, liabilities and
expenses caused by any untrue or alleged untrue statement of a material fact or
any omission or alleged omission of a material fact required to be stated in any
Registration Statement or Prospectus or preliminary Prospectus or necessary to
make the statements therein (in the case of a Prospectus, in the light of the
circumstances under which they were made) not misleading, to the extent that
such untrue statement or omission is contained in any information or affidavit
with respect to such holder so furnished in writing by such holder or its
representatives to the Company expressly for inclusion in such Registration
Statement or Prospectus. In no event
- 9 -
<PAGE>
shall the liability of any selling holder of Registrable Securities hereunder be
greater in amount than the dollar amount of the proceeds received by such holder
upon the sale of the Registrable Securities giving rise to such indemnification
obligation. The Company shall be entitled to receive indemnities from
underwriters, selling brokers, dealer managers and similar securities industry
professionals participating in the distribution to the same extent as provided
above with respect to information so furnished in writing by such persons or
their representatives to the Company specifically for inclusion in any
Prospectus or Registration Statement.
(c) Conduct of Indemnification Proceedings. Any Person entitled to
--------------------------------------
indemnification hereunder will (i) give prompt written notice to the
indemnifying party of any claim with respect to which it seeks indemnification
and (ii) permit such indemnifying party to assume the defense of such claim with
counsel reasonably satisfactory to the indemnified party, provided, however,
that any Person entitled to indemnification hereunder shall have the right to
employ separate counsel and to participate in the defense of such claim, but the
fees and expenses of such counsel shall be at the expense of such Person unless
(x) the indemnifying party has agreed in writing to pay such fees or expenses,
or (y) the indemnifying party shall have failed to assume the defense of such
claim and employ counsel reasonably satisfactory to such Person or (z) in the
reasonable judgment of any such Person and the indemnifying party, based upon
advice of their respective counsel, a conflict of interest may exist between
such Person and the indemnifying party with respect to such claims (in which
case, if the Person notifies the indemnifying party in writing that such Person
elects to employ separate counsel at the expense of the indemnifying party, the
indemnifying party shall not have the right to assume the defense of such claim
on behalf of such Person). If such defense is not assumed by the indemnifying
party, the indemnifying party will not be subject to any liability for any
settlement made without its consent (but such consent will not be unreasonably
withheld). No indemnifying party will be required to consent to entry of any
judgment or enter into any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to the indemnified party of
a release from all liability in respect to such claim or litigation. An
indemnifying party who is not entitled to, or elects not to, assume the defense
of a claim will not be obligated to pay the fees and expenses of more than one
counsel for all parties indemnified by such indemnifying party with respect to
such claim, unless in the reasonable judgment of any indemnified party a
conflict of interest may exist between such indemnified party and any other of
such indemnified parties with respect to such claim, in which event the
indemnifying party shall be obligated to pay the fees and expenses of such
additional counsel or counsels.
(d) Contribution. If the indemnification provided for in this
------------
Section 7 from the indemnifying party is unavailable to an indemnified party
hereunder in respect of any losses, claims, damages, liabilities or expense
referred to therein, then the indemnifying party in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages, liabilities or
expenses in such proportion as is appropriate to reflect the relative fault of
the indemnifying party and indemnified parties in connection with the actions
which resulted in such losses, claims, damages, liabilities or expenses, as well
as any other relevant equitable considerations. The relative fault of such
indemnifying party and indemnified parties shall be determined by reference to,
among other things, whether any action in question, including any untrue or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact, has been made by, or relates to information supplied by,
such indemnifying party or indemnified parties, and the parties' relative
intent, knowledge, access to information and
- 10 -
<PAGE>
opportunity to correct or prevent such action; provided, however, that in no
event shall the liability of any selling holder of Registrable Securities
hereunder be greater in amount than the difference between the dollar amount of
the proceeds received by such holder upon the sale of the Registrable Securities
giving rise to such contribution obligation and all amounts previously
contributed by such holder with respect to such losses, claims, damages,
liabilities and expenses. The amount paid or payable by a party as a result of
the losses, claims, damages, liabilities and expenses referred to above shall be
deemed to include, any legal or other fees or expenses reasonably incurred by
such party in connection with any investigation or proceeding.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 7(d) were determined by pro rata
allocation or by any other method of allocation which does not take into account
the equitable considerations referred to in the immediately preceding paragraph.
No person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any Person
who was not guilty of such fraudulent misrepresentation.
8. Rule 144
--------
The Company agrees that it will file the reports required to be filed
by it under the Securities Act and the Exchange Act and the rules and
regulations adopted by the SEC thereunder, and it will take such further action
as any holder of Registrable Securities may reasonably request, all to the
extent required from time to time to enable such holder to sell Registrable
Securities without registration under the Securities Act within the limitation
of the exemptions provided by (a) Rule 144 under the Securities Act, as such
Rule may be amended from time to time, or (b) any similar rule or regulation
hereafter adopted by the SEC. Upon the request of any holder of Registrable
Securities, the Company will deliver to such holder a written statement as to
whether it has complied with such information and requirements. Notwithstanding
the foregoing, the Company may deregister any class of its equity securities
under Section 12 of the Exchange Act or suspend its duty to file reports with
respect to any class of its securities pursuant to Section 15(d) of the Exchange
Act if it is then permitted to do so pursuant to the Exchange Act and the rules
and regulations thereunder.
9. Underwritten Registration
-------------------------
If any of the Registrable Securities covered by any Piggy-Back
Registration or Demand Registration are to be sold in an underwritten offering,
the investment banker or investment bankers and manager or managers that will
administer the offering will be selected by the Company.
Notwithstanding anything herein to the contrary, no Person may
participate in any underwritten registration hereunder unless such Person (a)
agrees to sell such Person's securities on the basis provided in any
underwritten arrangements approved by the Persons entitled hereunder to approve
such arrangement and (b) accurately completes and executes all questionnaires,
powers of attorney, indemnities, custody agreements, underwriting agreements and
other documents required under the terms of such underwriting arrangements.
- 11 -
<PAGE>
10. Miscellaneous.
-------------
(a) Remedies. In the event of a breach by the Company of its
--------
obligation under this Agreement, each holder of Registrable Securities, in
addition to being entitled to exercise all rights granted by law, including
recovery of damages, will be entitled to specific performance of its rights
under this Agreement. The Company agrees that monetary damages would not be
adequate compensation for any loss incurred by reason of a breach by it of any
of the provisions of this Agreement and hereby agrees to waive the defense in
any action for specific performance that a remedy at law would be adequate.
(b) Termination of Agreement. This Agreement shall terminate on the
------------------------
earliest to occur of (a) the termination of the Merger Agreement in accordance
with its terms prior to the consummation of the Merger and (b) the date as of
which each Stockholder is entitled to sell all remaining Registrable Securities
held by such Stockholder, without limitation as to volume, pursuant to Rule 144
under the 1933 Act (but in no event earlier than the third anniversary of the
Effective Time).
(c) Amendments and Waivers. The provisions of this Agreement,
----------------------
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless the Company has obtained the written consent of holders
of at least a majority of the shares of the Registrable Securities.
Notwithstanding the foregoing, a waiver or consent to depart from the provisions
hereof with respect to a matter which relates exclusively to the rights of
holders of Registrable Securities whose securities are being sold pursuant to a
Registration Statement and which does not directly or indirectly affect the
rights of other holders of Registrable Securities may be given by the holders of
a majority of the shares of the Registrable Securities being sold by such
holders, provided that the provisions of this sentence may not be amended,
modified, or supplemented except in accordance with the provisions of the
immediately preceding sentence.
(d) Notices. All notices provided for or permitted hereunder shall
-------
be made in writing by hand-delivery, registered or certified first-class mail,
telex, telecopier or air courier guaranteeing overnight delivery:
(i) if to a holder of Registrable Securities, at the
most current address given by such holder to the Company in accordance
with the provisions of this Section 10(d), which address initially is,
with respect to each Purchaser, the address set forth in Schedule B
hereto; and
(ii) if to the Company, at
Cytogen Corporation
600 College Road East
Princeton, NJ 08540-5308
Attention: Secretary
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<PAGE>
and thereafter at such other address, notice of which is given in
accordance with the provisions of this Section 10(d) with copies to:
Dechert Price & Rhoads
Princeton Pike Corporate Center
P.O. Box 5218
Princeton, NJ 08543-5218
Attention: James J. Marino
All such notices shall be deemed to have been duly given: when
delivered by hand, if personally delivered; five business days after being
deposited in the U.S. mail, postage prepaid, if mailed; when answered back, if
telexed; when receipt acknowledged, if telecopied; and on the next business day,
if timely delivered to an air courier guaranteeing overnight delivery.
(e) Successors and Assigns. This Agreement shall inure to the
----------------------
benefit of and be binding upon the successors and assigns of each of the
parties, including without limitation, subsequent holders of Registrable
Securities.
(f) Counterparts. This Agreement may be executed in two or more
------------
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same instrument.
(g) Headings. The headings in this Agreement are for convenience of
--------
reference only and shall not constitute a part of this Agreement, nor shall they
affect their meaning, construction or effect.
(h) Governing Law. The validity, performance, construction and
-------------
effect of this Agreement shall be governed by and construed in accordance with
the internal law of the State of New York, without giving effect to principles
of conflicts of law.
(i) Severability. In the event that any one or more of the
------------
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired thereby.
(j) Entire Agreement. This Agreement is intended by the parties as a
----------------
final expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. This Agreement supersedes all prior
agreements and understandings between the parties with respect to such subject
matter.
(k) Attorneys' Fees. In any action or proceeding brought to enforce
---------------
any provision of this Agreement, or where any provision hereof is validly
asserted as a defense, the successful party shall be entitled to recover
reasonable attorneys' fees in addition to its costs and expenses and any other
available remedy.
- 13 -
<PAGE>
(l) Securities held by the Company or its Affiliates. Whenever the
------------------------------------------------
consent or approval of holders of a specified percentage of Registrable
Securities is required hereunder, Registrable Securities held by the Company or
its affiliates (other than the Purchasers or subsequent holders of Registrable
Securities if such subsequent holders are deemed to be such affiliates solely by
reason of their holdings of such Registrable Securities) shall not be counted in
determining whether such consent or approval was given by the holders of such
required percentage.
IN WITNESS WHEREOF, the parties have executed this Agreement on the
date first written above.
CYTOGEN CORPORATION
By:__________________________
STOCKHOLDERS:
- 14 -
<PAGE>
SCHEDULE A
----------
- 15 -
<PAGE>
SCHEDULE B
----------
Name of Purchaser Address
----------------- -------
- 16 -
<PAGE>
Exhibit 99.7
EXCHANGE AGENT AGREEMENT
------------------------
AGREEMENT dated as of September 14, 1995 between Cytogen Corporation,
a Delaware corporation ("Cytogen"), and Mellon Securities Trust Company, a New
York trust company ("Mellon").
WHEREAS, Cytogen, Cellcor Acquisition Corp., a Delaware corporation
(the "Merger Subsidiary"), and Cellcor, Inc., a Delaware corporation
("Cellcor"), are parties to an Agreement and Plan of Merger dated June 15, 1995,
as amended (the "Merger Agreement"), pursuant to which, (i) Cellcor will be
merged with and into the Merger Subsidiary (the "Merger"), and the Merger
Subsidiary will change its name to Cellcor, Inc., and (ii) each then outstanding
share of Cellcor common stock, par value $.01 per share ("Cellcor Common Stock")
(other than shares held by Cellcor as treasury stock or by Cytogen or the Merger
Subsidiary), will be converted into the right to receive .60 shares of Cytogen
common stock, par value $.01 per share ("Cytogen Common Stock"), and each then
outstanding share of Cellcor Convertible Preferred Stock, par value $.01 per
share ("Cellcor Preferred Stock") (other than shares held by Cellcor as treasury
stock or by Cytogen or the Merger Subsidiary), will be converted into the right
to receive 218.94 shares of Cytogen Common Stock (together with any cash payable
in lieu of fractional shares of Cytogen Common Stock, collectively, the "Merger
Consideration").
WHEREAS, the Merger is subject to the satisfaction or waiver of
certain conditions to the closing set forth in the Merger Agreement, including
that (i) Cytogen stockholders approve the issuance of Cytogen Common Stock in
the Merger, and (ii) the holders of a majority of the outstanding shares of
Cellcor Common Stock and the holders of 66-2/3% of the outstanding shares of
Cellcor Preferred Stock, voting separately as two classes, approve the Merger.
WHEREAS, Cytogen desires to retain Mellon to serve as the exchange
agent (the "Exchange Agent") with respect to the surrender of certificates
representing Cellcor Common Stock and Cellcor Preferred Stock in exchange for
the Merger Consideration pursuant to the Merger.
NOW, THEREFORE, the parties agree as follows:
1. The Merger. Upon satisfaction or waiver of each of the conditions to
-----------
the Merger set forth in the Merger Agreement, Cellcor will be merged with and
into the Merger Subsidiary. The
<PAGE>
time at which the Merger will become effective is hereinafter referred to as the
"Effective Time." The Exchange Agent will be informed by Cytogen of the
occurrence of the Effective Time on such date. In carrying out its duties as
Exchange Agent in connection with the Merger, the Exchange Agent is to act in
accordance with the following:
(a) As soon as practicable after the Effective Time, the Exchange Agent
will mail by first class mail to each holder of record of Cellcor
Common Stock and Cellcor Preferred Stock as of the Effective Time
(collectively, the "Cellcor Stockholders") the following materials:
(i) A letter substantially in the form attached hereto as
Exhibit A, dated the date of the Effective Time, advising
Cellcor Stockholders that the Merger has become effective
and describing how such Cellcor Stockholders may exchange
their shares of Cellcor Common Stock or Cellcor Preferred
Stock, as the case may be (collectively, the "Former
Shares"), for the Merger Consideration.
(ii) A Letter of Transmittal substantially in the form attached
hereto as Exhibit B, to be executed by Cellcor
Stockholders and returned to the Exchange Agent with such
holders' certificates representing shares of Cellcor
Common Stock or Cellcor Preferred Stock.
(iii) Return envelopes addressed to the Exchange Agent.
(b) The Exchange Agent is to examine the Letters of Transmittal and
certificates for the Former Shares received by it to ascertain whether
the Letters of Transmittal are filled out and executed in accordance
with instructions set forth therein and that certificates for the
Former Shares represent validly issued and outstanding Cellcor Common
Stock or Cellcor Preferred Stock, as the case may be. In each case
where the Letter of Transmittal has been improperly filled out or
executed or, for any other reason, is not in proper form, or some
other irregularity exists, the Exchange Agent will endeavor to take
such action as may be necessary to cause such irregularity to be
corrected. All questions as to the form of documents
- 2 -
<PAGE>
and the eligibility for exchange of Cellcor Common Stock or Cellcor
Preferred Stock, as the case may be, in connection with the Merger
will be determined by Cytogen, in its sole discretion, which
determination shall be final and binding.
With the written approval of any of the employees of Cytogen
identified or named in Section 6(a) of this Agreement, or any other
person designated by Cytogen, the Exchange Agent is authorized to
waive irregularities in connection with the exchange of the Former
Shares pursuant to the Merger.
(c) The Exchange Agent will issue, register, countersign and mail by
first-class mail, insured under a blanket surety bond protecting the
Exchange Agent and Cytogen from loss or liability arising out of non-
receipt or non-delivery (or by registered mail insured separately), to
the Cellcor Stockholders submitting (i) valid certificates for Cellcor
Common Stock accompanied by properly executed Letters of Transmittal,
certificates for whole shares of Cytogen Common Stock in the number
equal to the product of (x) the number of shares of Cellcor Common
Stock for which certificates are surrendered and (y) .60 and (ii)
valid certificates for Cellcor Preferred Stock accompanied by properly
executed Letters of Transmittal, certificates for whole shares of
Cytogen Common Stock in the number equal to the product of (x) the
number of shares of Cellcor Preferred Stock for which certificates are
surrendered and (y) 218.94, along with any checks for Fractional
Proceeds (as defined in Section 1(d) hereof) and any Post-Merger
Distributions (as defined in, and as provided for, in Section 1(e)
hereof), and will cancel the Former Shares so surrendered, all in
accordance with Section 2.2 of the Merger Agreement. The Exchange
Agent will establish a stockholder register file consisting of an open
stockholder account detail for those holders remaining on the
stockholder register of Bank of Boston, Cellcor's transfer agent at
the Effective Time (the "Share Register"), and debit the share
certificates from the register as they are presented for exchange.
(d) With respect to any fractional share interests created when the number
of shares of Cytogen Common Stock issuable to any Cellcor Stockholder
exchanging Former
- 3 -
<PAGE>
Shares are not whole shares (after taking into account all
certificates representing Cellcor Common Stock or Cellcor Preferred
Stock delivered by a holder) (such holder, a "Fractional
Stockholder"), no fractional shares to which such Fractional
Stockholders would otherwise be entitled will be issued and in lieu
thereof, the Exchange Agent, as agent for the Fractional Stockholders,
will remit to each Fractional Stockholder cash in lieu of fractions,
without interest ("Fractional Proceeds"), in an amount equal to (i)
the applicable fractional part of a share of Cytogen Common Stock
multiplied by (ii) the average of the last reported sales prices of
Cytogen Common Stock as reported on the Nasdaq National Market, on
each of the ten trading days immediately preceding the date of the
Effective Time, in accordance with Section 2.2.5 of the Merger
Agreement, and mail a check or checks for the Fractional Proceeds
along with any full share certificates representing Cytogen Common
Stock as provided in Section 1(c).
(e) The Exchange Agent will calculate and keep records of any dividends or
other distributions on Cytogen Common Stock with a record date after
the Effective Time ("Post-Merger Distributions") with respect to full
shares of Cytogen Common Stock which remain unissued because the
holders thereof have not properly surrendered their Former Shares for
exchange. Upon surrender to the Exchange Agent of any Former Shares
properly submitted for exchange, the Exchange Agent will pay to the
holder of certificates formerly representing Cellcor Common Stock or
Cellcor Preferred Stock, as the case may be, and, after the Effective
Time, representing whole shares of Cytogen Common Stock (i)
concurrently with effecting the exchange, any Post-Merger
Distributions with a record date after the Effective Time previously
paid with respect to such whole shares of Cytogen Common Stock and
(ii) at the appropriate payment date, Post-Merger Distributions with
respect to such whole shares of Cytogen Common Stock with a record
date after the Effective Time but prior to such surrender and with a
payment date subsequent to such surrender.
(f) Payments of Fractional Proceeds and Post-Merger Distributions shall be
made by the Exchange Agent from an account to be maintained at Mellon
in the name of
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<PAGE>
Cytogen (the "Exchange Fund"). With respect to Fractional Proceeds,
the Exchange Agent shall request from Cytogen in writing, from time to
time, an amount of funds necessary for the payment of Fractional
Proceeds reasonably expected to become payable in respect of
unexchanged Former Shares during the following 60-day period. Cytogen
shall then cause funds to be deposited in the Exchange Fund in such
amount and as soon as practicable upon receipt of such funds, the
Exchange Agent shall distribute such funds in accordance with this
paragraph and Section 1(d) hereof. With respect to Post-Merger
Distributions, the Exchange Agent will make requisition of Cytogen for
the amounts of any Post-Merger Distributions in respect of whole
shares of Cytogen Common Stock which have not been exchanged in
accordance with the other provisions of this Section 1 in a manner to
be mutually agreed upon and shall hold such amounts in trust for the
benefit of the holders of unexchanged shares of Cellcor Common Stock
or Cellcor Preferred Stock, as the case may be. Any portion of the
Exchange Fund which remains undistributed to the Cellcor Stockholders
for one year after the Effective Time shall be delivered to Cytogen,
upon demand, unless previously delivered pursuant to Section 1(g)
hereof.
(g) Upon termination of this Agreement pursuant to Section 8(b) hereof,
all certificates representing Cytogen Common Stock, all amounts
representing Post-Merger Distributions in respect of whole shares of
Cytogen Common Stock and any Fractional Proceeds, in each case, which
are held by the Exchange Agent because former holders of Cellcor
Common Stock or Cellcor Preferred Stock, as the case may be, have not
surrendered their shares for exchange, and which remain undistributed
shall be repaid or redelivered by the Exchange Agent to Cytogen within
5 business days of termination.
(h) The Exchange Agent will report periodically (but no less frequently
than weekly) to Cytogen regarding the number of exchanges made, the
number of Former Shares surrendered for exchange, the number of shares
of Cytogen Common Stock issued, and the amount of any payments of
Fractional Proceeds and Post-Merger Distributions.
- 5 -
<PAGE>
(i) The Exchange Agent will not be required to and will make no
representations as to the validity, value or genuineness of the Merger
or the Merger Consideration.
(j) The Exchange Agent is not authorized, and has no obligation, to pay
brokers, dealers or soliciting fees to any person in connection with
the Merger.
(k) The Exchange Agent shall accept and comply with telephone and mail
requests for information concerning the proper surrender of
certificates in connection with the Merger and the exchange of Former
Shares for the Merger Consideration.
(l) In the event of any inconsistency between this Agreement, on the one
hand, and the Merger Agreement (as it may be amended from time to
time), on the other hand, with respect to the Merger, such
inconsistency shall be resolved in favor of the Merger Agreement,
except with respect to the duties, liabilities and rights of Mellon as
Exchange Agent in connection with the Merger.
2. Lost Certificates; Discrepancies in Ownership.
----------------------------------------------
(a) If any holder of Cellcor Common Stock or Cellcor Preferred Stock, as
the case may be, is unable to locate his or her certificates, the
Exchange Agent is authorized upon receipt of an otherwise proper
Letter of Transmittal, an affidavit of loss and a bond of indemnity,
satisfactory to the Exchange Agent, Cytogen and the surety company(s)
engaged by the Exchange Agent, to exchange such holder's Former Shares
pursuant to the Merger and in accordance with the terms of this
Agreement.
(b) The Exchange Agent will follow its regular procedures to attempt to
reconcile any discrepancies between the number of Cellcor Common Stock
or Cellcor Preferred Stock, as the case may be, that any Letter of
Transmittal received by the Exchange Agent in connection with the
Merger may indicate are owned by a holder of such securities and the
number of such securities indicated as owned by such person in the
Share Register described in Section 1(c) hereof with respect to such
securities. In any instance where the Exchange Agent cannot reconcile
such discrepancies by
- 6 -
<PAGE>
following such procedures, (i) the Exchange Agent may exchange such
holder's Former Shares, if a transfer of ownership of those Former
Shares had occurred and a certificate representing the proper number
of such Former Shares is presented to the Exchange Agent, accompanied
by all documents required to evidence and effect such transfer and by
evidence that any applicable stock transfer taxes have been paid, and
(ii) in all other cases, the Exchange Agent will consult with Cytogen
for instructions as to the number of Cellcor Common Stock or Cellcor
Preferred Stock, as the case may be, the Exchange Agent is authorized
to accept for exchange in the Merger. In the absence of such
instructions, the Exchange Agent is not authorized to make any such
exchange.
3. Fees and Expenses of Exchange Agent. Cytogen shall pay fees for the
------------------------------------
services performed hereunder by the Exchange Agent in connection with the
Merger in the amounts set forth in Exhibit C hereto.
4. Indemnification. Cytogen shall indemnify and hold Mellon and its
----------------
officers, directors, employees, agents, subsidiaries and affiliates harmless
against any loss, liability, damage or reasonable costs and expense incurred
without negligence, willful misconduct or bad faith on Mellon's part, arising
out of or in connection with the administration of Mellon's duties under this
Agreement, including the reasonable cost of defending Mellon against any action,
proceeding, suit or claim related thereto, but such indemnity shall not extend
to any losses of certificates or other documents occurring in the process of
delivery of certificates representing Cellcor Common Stock or Cellcor Preferred
Stock, as the case may be, to Mellon in connection with the Merger. In no case
shall Cytogen be liable under this indemnity with respect to any action, suit,
proceeding or claim against Mellon unless Cytogen shall be notified by Mellon,
by letter or by telex or facsimile transmission confirmed by letter, of the
written assertion of an action, suit, proceeding or claim made or commenced
against Mellon, promptly after Mellon shall have been served with the summons or
other first legal process or have received the first written assertion giving
information as to the nature and basis of the section, proceeding, suit or
claim, but failure so to notify Cytogen shall not release Cytogen of any
liability which it may have on account of any other provisions of this
Agreement. Cytogen shall be entitled to participate at its own expense in the
defense of any such action, suit, proceeding or claim and, to
- 7 -
<PAGE>
the extent that it may wish, to assume the defense thereof, with counsel
reasonably satisfactory to Mellon, and after notice from Cytogen to Mellon of
its election to assume the defense thereof, Cytogen will not be liable to Mellon
under this Section for any legal or other expenses subsequently incurred by
Mellon in connection with the defense thereof. Cytogen shall not be liable for
any settlement of any such action, proceeding, suit or claim effected without
its written consent.
5. Additional Duties and Obligations of Exchange Agent.
----------------------------------------------------
(a) The Exchange Agent shall have no duties or obligations other than
those specifically set forth in this Agreement except for any duties
customarily a part of such engagement, including good faith and due
care, or as may subsequently be agreed to by the Exchange Agent and
Cytogen with respect to the Merger.
(b) The Exchange Agent shall not be obligated to take any legal action
hereunder which might in its judgment involve any expense or liability
(other than de minimis expenses), unless the Exchange Agent shall have
been furnished with such indemnity as shall be reasonably satisfactory
to it.
6. Reliance by Exchange Agent on Instructions, Certificates, Opinions,
-------------------------------------------------------------------
Etc.
----
(a) The Exchange Agent may rely on and shall be protected in acting upon
written instructions from Thomas J. McKearn, T. Jerome Madison,
Charles W. Ogelsby and Catherine Poole, each of whom has been
authorized to act on behalf of Cytogen.
(b) The Exchange Agent may rely on and shall be protected in acting in
reliance upon any certificate, instrument, opinion, notice, letter,
telegram, or other document delivered to it and reasonably believed by
it to be genuine and to have been signed by the proper party or
parties.
(c) The Exchange Agent may consult counsel satisfactory to it (including
counsel in its employ), and any action taken, suffered, or omitted by
the Exchange Agent hereunder in good faith and in accordance with the
opinion of such counsel, which such opinion shall be furnished in
writing to Cytogen prior to any such
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<PAGE>
action, shall be full and complete authorization and protection in
respect thereto.
7. Tax Matters.
-----------
(a) The Exchange Agent will arrange to comply with the various information
reporting and backup withholding requirements of the Internal Revenue
Service (the "IRS") and the Treasury Regulations in connection with
the Merger. In this regard, Cytogen understands that the Exchange
Agent is required to withhold 31% on payments (i) to U.S. holders of
Cellcor Common Stock or Cellcor Preferred Stock, as the case may be,
(I) that have not theretofore supplied the Exchange Act with their
correct Taxpayer Identification Number ("TIN") on an IRS Form W-9 (or
a substitute form containing all required information) or (II) for
whom the Exchange Agent has been instructed by the IRS to withhold and
(ii) to foreign stockholders that have not theretofore filed with the
Exchange Agent a properly completed IRS Form W-8. If such backup
withholding is required, the Exchange Agent will forward the
appropriate funds to the IRS.
(b) The Exchange Agent will pay, on behalf of Cytogen, any New York stock
transfer taxes payable by Cytogen in connection with the Merger.
8. Miscellaneous.
--------------
(a) This Agreement shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors and assigns, except
that Mellon shall not assign its rights or duties hereunder without
the prior written consent of Cytogen.
(b) This Agreement may be terminated by Cytogen at any time after the
Effective Time by giving written notice of its decision so to
terminate to Mellon.
(c) Unless otherwise expressly provided herein, all notices, statements
and other communications hereunder shall be in writing, signed by a
duly authorized officer of the party sending such notice, and shall be
deemed given when delivered by hand or by facsimile, addressed or
transmitted as follows:
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<PAGE>
TO MELLON: By Hand
-------
Mellon Securities Trust Company
120 Broadway
33rd Floor
New York, New York 10271
By Facsimile
------------
Mellon Securities Trust Company
85 Challenger Road
Ridgefield, New Jersey 07660
Attention: 2nd Floor
Reorganization Department
Fax: (201) 296-4062
TO CYTOGEN: T. Jerome Madison
Vice President-Finance and Chief
Financial Officer
Cytogen Corporation
600 College Road East
CN 5308
Princeton, New Jersey 08540
Fax: (609) 951-9298
(d) If any provision of this Agreement shall be held illegal, invalid, or
unenforceable by any court, this Agreement shall be construed and
enforced as if such provision had not been contained herein and shall
be deemed an Agreement among the parties hereto to the full extent
permitted by applicable law.
(e) This Agreement shall be governed by and construed in accordance with
the laws of the State of New Jersey, without giving effect to conflict
of laws, rules and principles.
(f) No provision of this Agreement may be amended, modified or waived,
except in writing signed by each of the parties hereto.
(g) This Agreement may be executed in one or more counterparts, which in
the aggregate shall constitute one Agreement.
- 10 -
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the date first above written.
CYTOGEN CORPORATION
By: /s/ T. Jerome Madison
_______________________________
T. Jerome Madison
Vice President, Chief Financial
Officer and Secretary
MELLON SECURITIES TRUST COMPANY
By: /s/ Frederick B. Ollett, III
_______________________________
Frederick B. Ollett, III
Chief Financial Officer
- 11 -
<PAGE>
<TABLE>
<S> <C>
Exhibit 1 Notice of Merger
Exhibit 2 Letter of Transmittal
Exhibit 3 Exchange Agent Fees
</TABLE>
- 12 -
<PAGE>
Exhibit 99.8
SUBSCRIPTION OFFERING AGENT AGREEMENT
Date: September 14, 1995
Mellon Securities Trust Company
85 Challenger Road
Overpeck Centre
Ridgefield Park, NJ 07660
Attn: Reorganization Department
-------------------------
Gentlemen:
Cytogen Corporation, a Delaware corporation ("Cytogen"), is granting
to the holders of record (each, a "Record Holder") of Cellcor, Inc. ("Cellcor")
common stock, par value $.01 per share (the "Cellcor Common Stock"), at the
close of business on August 17, 1995 (the "Subscription Record Date"), the non-
transferable right to purchase 1.118 shares of common stock, par value $.01 per
share, of Cytogen (the "Cytogen Common Stock") for each share of Cellcor Common
Stock held by such Record Holder on the Subscription Record Date at a purchase
price of $3.89 per share of Cytogen Common Stock (the "Subscription Price").
Payment of the Subscription Price shall be by check, bank draft or money order,
payable to the order of Mellon Securities Trust Company, as Subscription
Offering Agent (the "Subscription Offering Agent") for Cytogen, or by wire
transfer to the Subscription Offering Agent pursuant to the Instructions as to
Use of Subscription Offering Purchase Form (the "Letter of Instruction"), which
accompany the Subscription Offering Purchase Form. Payment may not be made in
cash and may only be made on business days. The funds representing the
aggregate Subscription Price for all shares purchased by the Record Holders
pursuant to the Subscription Offering (the "Subscription Funds") will be held by
you as escrow agent (the "Escrow Agent") in a segregated account at Mellon Bank
(the "Escrow Account").
The term "Subscribed" shall mean the exercise of the right to purchase
shares of Cytogen Common Stock from Cytogen by a Record Holder by submission of
a properly completed, executed and delivered Subscription Offering Purchase Form
in accordance with the terms of the Subscription Offering, and the term
"Subscription" shall mean any such submission. The Subscription Offering will
expire at 5:00 p.m., New York City Time, on October 13, 1995 (the "Expiration
Date"). Once a Record Holder has delivered a completed Subscription Offering
Purchase Form, together with payment, to you, the purchase of shares of Cytogen
Common Stock represented thereby is not revocable for any reason. The Agreement
and Plan of Merger dated June 15, 1995, as amended ("Merger Agreement"), by and
among Cytogen, Cellcor and a wholly-owned subsidiary of Cytogen ("Merger
Subsidiary") provides for the merger of Cellcor with and into Merger Subsidiary
(the "Merger"), and the issuance of the shares of Cytogen Common Stock
<PAGE>
pursuant to the Subscription Offering is conditioned upon consummation of the
Merger.
Cytogen filed a Registration Statement relating to the Cytogen Common
Stock to be issued and sold in connection with the Subscription Offering with
the Securities and Exchange Commission under the Securities Act of 1933, as
amended, on or about September 13, 1995. The Registration Statement was
declared effective as of the date of this Agreement. The terms of the
Subscription Offering are more fully described in the Joint Proxy
Statement/Prospectus forming part of the Registration Statement, as it was
declared effective, and the Letter of Instruction. Copies of the Joint Proxy
Statement/Prospectus, the Subscription Offering Purchase Form and the Letter of
Instruction are annexed hereto as Exhibits 1, 2 and 3, respectively. All
capitalized terms used and not defined herein have the same meaning as in the
Joint Proxy Statement/Prospectus. Promptly after the Subscription Record Date,
Cellcor shall provide to you or cause to be provided to you by the transfer
agent and registrar for the Cellcor Common Stock a list of Record Holders as of
the Subscription Record Date (the "Subscription Record Holders List").
The right to purchase shares of Cytogen Common Stock in the
Subscription Offering is not transferable. No certificates representing such
right will be issued. The right granted to Record Holders entitles such holders
to purchase, upon payment of the Subscription Price, shares of Cytogen Common
Stock at the rate of 1.118 shares for each share of Cellcor Common Stock (the
"Subscription Right"). No fractional shares will be issued. To determine the
number of shares of Cytogen Common Stock that may be purchased by a Record
Holder of Cellcor Common Stock, you shall multiply the number of shares of
Cellcor Common Stock held by such Record Holder at the close of business on the
Subscription Record Date by 1.118 and round down to the nearest whole number. A
Record Holder may purchase as few as one share and as many as the full number of
shares represented by the Subscription Right. Reference is made to the Joint
Proxy Statement/Prospectus for a complete description of the Subscription
Offering.
If the Merger Agreement is terminated pursuant to its terms, the
Subscription Offering will be terminated without any shares of Cytogen Common
Stock being issued pursuant thereto, and all funds deposited with you will be
returned to the depositing Record Holders without interest or deduction.
1. Subscription Offering. Cytogen hereby appoints you as
---------------------
Subscription Offering Agent for the Subscription Offering and agrees with you as
follows:
- 2 -
<PAGE>
(a) As Subscription Offering Agent, you are authorized and directed
to:
(i) Promptly after you receive the Subscription Record
Holders List,
(A) mail or cause to be mailed, by first class mail, to
each Record Holder whose address of record is within the United States
and Canada, and by air mail, to each Record Holder whose address of
record is outside the United States or Canada, or is an A.P.O. or
F.P.O. address (i) a copy of the Joint Proxy Statement/Prospectus,
(ii) a Subscription Offering Purchase Form, (iii) a Letter of
Instruction, (iv) other related forms and (v) a return envelope
addressed to the Subscription Offering Agent; and
(B) mail or cause to be mailed with the materials described
in (A) above to each Record Holder whose address of record is within
the States listed on Schedule A hereto, the letters from Smith Barney
----------
Inc.
(ii) Maintain the "800" telephone number set forth in the
Joint Proxy Statement/Prospectus, accept transmissions via the facsimile
transmission number set forth in the Joint Proxy Statement/Prospectus and
respond to telephone inquiries regarding the Subscription Offering.
(iii) Maintain the dedicated P.O. Box set forth in the Joint
Proxy Statement/Prospectus.
(iv) Accept telephone and mail requests for additional
information concerning the Subscription Offering and promptly forward such
requests to Corporate Investor Communications, Inc.
(v) Date/time stamp the Subscription Offering Purchase
Forms received by you.
(vi) Accept Subscriptions (including payment of the
Subscription Price) on or prior to the Expiration Date in accordance with the
terms of the Joint Proxy Statement/Prospectus.
(vii) Maintain accurate and complete records of the name and
address of each subscribing Record Holder (each, a "Subscribing Record Holder")
and the amount of funds representing the Subscription Price delivered to you.
(viii) Accept Subscriptions from Record Holders whose
Subscription Offering Purchase Forms are alleged to
- 3 -
<PAGE>
have been lost, stolen or destroyed upon receipt by you of an affidavit of
theft, loss or destruction and a bond of indemnity in form and substance
satisfactory to you and Cytogen, accompanied by payment of the Subscription
Price for the total number of shares of Cytogen Common Stock Subscribed for.
(ix) Refer to Cytogen for specific instructions as to acceptance or
rejection of Subscriptions received after the Expiration Date, Subscriptions not
authorized to be accepted pursuant to this Section 1, and Subscriptions
otherwise failing to comply with the requirements of the Joint Proxy
Statement/Prospectus.
(x) Upon acceptance of a Subscription:
(A) deliver all funds to, and hold all Subscription Funds
received in, the Escrow Account;
(B) advise Cytogen daily by telecopy and confirm by letter
to the attention of T. Jerome Madison, Vice President (the "Company
Representative"), of (x) the number of shares of Cytogen Common Stock
Subscribed for upon exercise of the Subscription Rights, and (y) the
amount of Subscription Funds received, with cumulative totals for
each; and
(C) as promptly as possible but in any event at or before
3:30 p.m., New York City Time, on the first full business day
following the Expiration Date, advise the Company Representative in
accordance with (B) above of the number of shares of Cytogen Common
Stock Subscribed for and the number of shares of Cytogen Common Stock
not Subscribed for.
(xi) Upon completion of the Subscription Offering and closing of the
Merger (notice of which shall be provided to you by Cytogen and Cellcor in
accordance with Section 2 hereof), cause Mellon Securities Trust Company, as the
transfer agent and registrar for the Cytogen Common Stock, to prepare and issue
certificates evidencing the shares of Cytogen Common Stock purchased in the
Subscription Offering and promptly distribute the Subscription Funds in
accordance with the terms and conditions of Section 2 hereof with respect to
which Subscriptions have been accepted, and if the Merger has not been
consummated, promptly distribute the funds in accordance with the terms and
conditions of Section 2 hereof.
(b) You will follow your regular procedures to attempt to reconcile
any discrepancies between the number of shares of Cytogen Common Stock that any
Subscription Offering Purchase Form indicates are to be issued to a Record
Holder and
- 4 -
<PAGE>
the number that the Subscription Record Holders List indicates may be issued to
such Record Holder. In any instance where you cannot reconcile such
discrepancies by following such procedures, you will consult with Cytogen for
instructions as to the number of shares of Cytogen Common Stock, if any, you are
authorized to issue. In the absence of such instructions, you are not
authorized to issue any shares of Cytogen Common Stock to such Record Holder.
(c) You will examine the Subscription Offering Purchase Forms received
by you as Subscription Offering Agent to ascertain whether they appear to you to
have been completed and executed in accordance with the Letter of Instruction.
In the event you determine that any Subscription Offering Purchase Form does not
appear to you to have been properly completed or executed, or where the
Subscription Offering Purchase Form does not appear to you to be in proper form
for Subscription, or any other irregularity in connection with the Subscription
appears to you to exist, you will follow, where possible, your regular
procedures to attempt to correct, or cause the irregularity to be corrected.
You are not authorized to waive any irregularity in connection with the
Subscription, unless you first receive from Cytogen the Subscription Offering
Purchase Form which was delivered, duly dated and signed by an authorized
officer or employee of Cytogen, set forth on Schedule A hereto, indicating that
any irregularity in such Subscription Offering Purchase Form has been cured or
waived and that such Subscription Offering Purchase Form has been accepted by
Cytogen. Cytogen reserves the absolute right to reject any or all Subscription
Offering Purchase Forms not properly submitted or the acceptance of which would,
in the opinion of Cytogen, be unlawful. If any such irregularity is neither
corrected nor waived, and if time permits, you will return to the Subscribing
Record Holder to such Record Holder's address as set forth in the Subscription
Record Holders List any Subscription Offering Purchase Form surrendered in
connection therewith and any other documents received with such Subscription
Offering Purchase Form, and a letter of notice to be furnished by Cytogen
explaining the reasons for the return of the Subscription Offering Purchase Form
and other documents.
(d) You shall not accept any alternative, conditional or contingent
purchase of shares.
(e) (i) For so long as this Agreement is in effect,
Cytogen shall reserve for issuance and keep available free from preemptive
rights a sufficient number of shares of Cytogen Common Stock to permit the
exercise in full of the right to purchase shares of Cytogen Common Stock granted
in the Subscription Offering.
(ii) Cytogen shall from time to time take all action necessary or
appropriate to comply in all
- 5 -
<PAGE>
material respects with all applicable securities laws and rules and regulations
of the Securities and Exchange Commission and any other governmental agency or
authority and make any necessary or appropriate filings under Federal and state
laws in connection with the issuance, sale, transfer and delivery of the Cytogen
Common Stock issued upon exercise of the Subscription Rights.
(f) In the event any issues arise regarding federal income tax
reporting or withholding, you will take such action as Cytogen instructs you in
writing.
(g) As agent for Cytogen under this Section 1, you:
(i) shall have no duties or obligations other than those
specifically set forth herein or as may subsequently be agreed to in writing by
you and Cytogen;
(ii) shall be regarded as making no representations and having no
responsibilities as to the validity, sufficiency, value, or genuineness of any
Subscription Offering Purchase Forms surrendered to you hereunder or shares of
Cytogen Common Stock issued in respect thereof, and will not be required to or
be responsible for and will make no representations as to, the validity,
sufficiency, value or genuineness of the Subscription Offering;
(iii) shall not be obligated to take any legal action; if, however,
you determine to take any legal action, and where the taking of such action
might, in your judgment, subject or expose you to any expense or liability you
shall not be required to act unless you have been furnished with an indemnity
satisfactory to you;
(iv) may rely on and shall be fully authorized and protected in
acting upon any certificate, instrument, opinion, notice, letter, telegram,
telex, facsimile transmission or other document or security delivered to you and
reasonably believed by you to be genuine and to have been signed by the proper
party or parties;
(v) shall not be liable or responsible for any recital or
statement contained in the Joint Proxy Statement/Prospectus or any other
document relating thereto;
(vi) shall not be liable or responsible for any failure on the
part of Cytogen to comply with any of its covenants and obligations relating to
the Subscription Offering, including without limitation obligations under
applicable securities laws;
- 6 -
<PAGE>
(vii) may rely on and shall be fully authorized and protected in
acting upon the written, telephonic or oral instructions or complying with
Cytogen's written, telephonic or oral instructions to refrain from action with
respect to any matter relating to your acting as Subscription Offering Agent
under this Agreement of officers of Cytogen;
(viii) may consult with counsel satisfactory to you, including your
in-house counsel and the advice of such counsel shall be full and complete
authorization and protection in respect of any action taken, suffered, or
omitted by you hereunder in good faith and in accordance with the advice of such
counsel; and
(ix) are not authorized, and shall have no obligation, to pay any
brokers, dealers, or soliciting fees to any person.
(h) Any instructions given to you orally, as permitted by any provision
of this Agreement, shall be confirmed in writing by Cytogen as soon as
practicable, unless such confirmation is waived by you or your representatives.
(i) Whether or not any Subscription Offering Purchase Forms are
surrendered to you, for your services as Subscription Offering Agent hereunder,
Cytogen shall pay to you fees in accordance with Schedule B attached hereto.
(j) Cytogen covenants to indemnify and hold you and your officers,
directors, employees, agents, contractors, subsidiaries and affiliates harmless
from and against any loss, liability, damage or expense incurred (a) without
gross negligence, bad faith or willful disregard of this Agreement or (b) as a
result of your acting upon Cytogen's instructions, or complying with Cytogen's
instructions to refrain from action, arising out of or in connection with the
Subscription Offering or the administration of your duties as Subscription
Offering Agent hereunder, including without limitation the costs and expenses of
defending and appealing against any action, proceeding, suit or claim in the
premises. In no case shall Cytogen be liable under this indemnity with respect
to any action, proceeding, suit or claim against you unless Cytogen shall be
notified by you, by letter or by telex or facsimile transmission confirmed by
letter, of the written assertion of any action, proceeding, suit or claim made
or commenced against you promptly after you shall have been served with the
summons or other first legal process or have received the first written
assertion giving information as to the nature and basis of the action,
proceeding, suit or claim, but failure so to notify Cytogen shall not relieve
Cytogen of any liability which it may otherwise have on account of this
Agreement. Cytogen shall be entitled to participate at its own expense in the
defense of any such action, proceeding, suit or
- 7 -
<PAGE>
claim. Cytogen shall not be liable for any settlement effected by you in such
action, proceeding, suit or expense undertaken without Cytogen's prior written
consent.
2. Escrow Arrangement. Cytogen and Cellcor hereby appoint you as
------------------
Escrow Agent for the Subscription Funds on behalf of Subscribing Record Holders
and agree with you as follows:
(a) As Escrow Agent, you shall:
(i) receive the Subscription Funds and hold the same in escrow as
Escrow Agent in the Escrow Account in conformity with all applicable laws and
regulations in a segregated, non-interest-bearing account with a federally-
insured New Jersey, New York or national banking or savings institution
acceptable to Cytogen and Cellcor established for such purpose;
(ii) maintain accurate and complete records of the name and address
of each Subscribing Record Holder and the amount of funds representing the
Subscription Price delivered to you;
(iii) hold the Escrow Amounts until (A) closing of the Merger
in accordance with the terms of the Merger Agreement, at which time you shall
receive joint written instructions from Cytogen and Cellcor instructing you to
release the Subscription Funds to Cytogen (and Cellcor agrees with Cytogen that
it shall promptly execute such written instructions), or (B) termination of the
Merger Agreement in accordance with its terms, at which time you shall receive a
joint written direction from Cytogen and Cellcor instructing you to return the
Subscription Funds to the Subscribing Record Holders. Prior to receipt of the
written instructions set forth in (A) and (B) of the preceding sentence, the
Escrow Agent shall have the right at any time to deposit such funds with the
clerk of the appropriate court in an action to determine the proper disposition
thereof. The Escrow Agent shall give written notice of such deposit to Cytogen
and Cellcor. Upon making payment or deposit with the court as above provided,
the Escrow Agent shall be relieved and discharged of all further obligations and
responsibilities as Escrow Agent hereunder.
(b) To induce you to act as Escrow Agent hereunder:
(i) Each of Cytogen and Cellcor acknowledges that you are acting
as Escrow Agent solely at their request and for their convenience, that you
shall not be deemed to be the agent of either of Cytogen or Cellcor, and that
you shall not be liable to either of them for any act or omission on your part
unless taken or suffered in bad faith, in willful disregard of this Agreement or
involving gross negligence. Each of Cytogen
- 8 -
<PAGE>
and Cellcor hereby jointly and severally indemnifies and holds you and your
officers, directors, employees, agents, contractors, subsidiaries and affiliates
harmless from and against all loss, liability, damage or expense, including
reasonable attorneys' fees, incurred by you in connection with the performance
of your duties as Escrow Agent hereunder, except with respect to actions or
omissions taken or suffered by you in bad faith or in willful disregard of this
Agreement or involving gross negligence. In no case shall Cytogen or Cellcor be
liable under this indemnity with respect to any action, proceeding, suit or
claim against you unless Cytogen and Cellcor shall be notified by you, by letter
or by telex or facsimile transmission confirmed by letter, of the written
assertion of any action, proceeding, suit or claim made or commenced against you
promptly after you shall have been served with the summons or other first legal
process or have received the first written assertion giving information as to
the nature and basis of the action, proceeding, suit or claim, but failure so to
notify Cytogen and Cellcor shall not release Cytogen and Cellcor from any
liability which it may otherwise have on account of this Section 2. Each of
Cytogen and Cellcor shall be entitled to participate at its own expense in the
defense of any such action, proceeding, suit or claim. Cytogen and Cellcor
shall not be liable for any settlement effected by you in such action,
proceeding, suit or expense undertaken without Cytogen's and Cellcor's prior
written consent.
(ii) Your only responsibility as Escrow Agent hereunder shall be the
safekeeping of the Subscription Funds and the full and faithful performance of
your duties hereunder. This Agreement sets forth your duties as Escrow Agent
with respect to any and all matters pertinent hereto and no implied duties or
obligations of Escrow Agent shall be inferred from or read into this Agreement.
(iii) You shall not be obligated or required to determine any
question of fact or law. If a dispute shall arise as to the disposition of any
of the Subscription Funds, or if you shall be uncertain as to your duties or
rights hereunder, you are authorized but not obligated to turn over all of the
Subscription Funds to any court of competent jurisdiction and thereupon be
relieved from all responsibilities with respect thereto.
(iv) Upon disposing of the Subscription Funds in accordance with the
provisions of this Agreement, you shall be relieved and discharged of all
obligations, responsibilities, claims and liabilities as Escrow Agent relating
to such Subscription Funds, and shall not be subject to any claims or surcharges
made by or on behalf of any of the parties hereto.
- 9 -
<PAGE>
3. General.
-------
(a) If any provision of this Agreement is held illegal, invalid, or
unenforceable by any court, this Agreement shall be construed and enforced as if
such provision had not been contained herein and shall be deemed an Agreement
among us to the full extent permitted by applicable law.
(b) Each of Cytogen and Cellcor represents and warrants that (i) it is
duly incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation, (ii) the execution, delivery and performance of
this Agreement have been duly authorized by all necessary corporate action and
will not result in a breach of or constitute a default under the certificate of
incorporation or bylaws of Cytogen or Cellcor or any indenture, agreement or
instrument to which it is a party or is bound, and (iii) this Agreement has been
duly executed and delivered by each of Cytogen and Cellcor and constitutes the
legal, valid, binding and enforceable obligation of it, except as such
enforceability may be limited by bankruptcy, insolvency or other laws affecting
creditors' rights generally. Cytogen represents and warrants that (i) the
Subscription Offering will comply in all material respects with all applicable
requirements of law and (ii) to the best of its knowledge, there is no
litigation pending or threatened as of the date hereof in connection with the
Subscription Offering.
(c) In the event that any claim of inconsistency between this
Agreement and the terms of the Subscription Offering arise, as they may from
time to time be amended, the terms of the Subscription Offering as set forth in
the Joint Proxy Statement/ Prospectus shall control, except with respect to the
duties, liabilities and rights, including compensation and indemnification of
you as Subscription Offering Agent, which shall be controlled by the terms of
this Agreement.
(d) Set forth in Schedule B hereto is a list of the names and specimen
signatures of the officers and employees of Cytogen and Cellcor authorized to
act for Cytogen and Cellcor under this Agreement. The Secretary of each of
Cytogen and Cellcor shall, from time to time, certify to you the names and
signatures of any other persons authorized to act for Cytogen under this
Agreement.
(e) Except as expressly set forth elsewhere in this Agreement, all
notices, instructions and communications under this Agreement shall be in
writing, shall be effective upon receipt and shall be addressed, if to Cytogen
or Cellcor, to its respective address set forth beneath its signature to this
Agreement, or, if to the Subscription Offering Agent, to Mellon Securities Trust
Company, 85 Challenger Road, Overpeck Centre,
- 10 -
<PAGE>
Ridgefield Park, New Jersey 07660, Attention: Reorganization Department, or to
such other address as a party hereto shall notify the other parties.
(f) This Agreement shall be governed by and construed in accordance
with the laws of the State of New Jersey, without giving effect to conflict of
laws, rules or principles, and shall inure to the benefit of and be binding upon
the successors and assigns of the parties hereto; provided that this Agreement
may not be assigned by any party without the prior written consent of all other
parties.
(g) No provision of this Agreement may be amended, modified or waived,
except in a written document signed by both parties.
(h) Cytogen and Cellcor may terminate this Agreement at any time by so
notifying you in writing. You may terminate this Agreement upon 45 days' prior
notice to Cytogen and Cellcor. Upon any such termination, you shall be relieved
and discharged of any further responsibilities with respect to your duties
hereunder. Upon payment of all your outstanding fees and expenses, you will
promptly forward to Cytogen or its designee any Subscription Offering Purchase
Forms or other document relating to your duties hereunder that you receive after
your appointment has terminated. Sections 1(h), 1(j), 1(k) and 2(b) of this
Agreement will survive termination of this Agreement.
- 11 -
<PAGE>
Please acknowledge receipt of this letter and confirm your agreement
concerning your appointment as Subscription Offering Agent and Escrow Agent, and
the arrangements herein provided, by signing and returning the enclosed copy
hereof, whereupon this Agreement and your acceptance of the terms and conditions
herein provided shall constitute a binding Agreement among us.
Very truly yours,
CYTOGEN CORPORATION
By:/s/ Thomas J. McKearn
--------------------------------
Name: Dr. Thomas J. McKearn
Title: President and CEO
Address for Notices:
600 College Road East
Princeton, NJ 08540
CELLCOR, INC.
By:/s/ Ronald J. Brenner
--------------------------------
Name: Dr. Ronald J. Brenner
Title: President and CEO
Address for Notices:
200 Wells Avenue
Newton, MA 02159
Accepted as of the date
above first written:
MELLON SECURITIES TRUST COMPANY
As Subscription Offering Agent
By:/s/ Frederick B. Ollett
-----------------------------
Name: Frederick B. Ollett
Title: Chief Financial Officer
- 12 -
<PAGE>
Exhibit 1 Joint Proxy Statement/Prospectus
Exhibit 2 Letter of Instruction
Exhibit 3 Form of Subscription Offering Purchase Form
Exhibit 4 Smith Barney Inc. Letters
Schedule A List of States
Schedule B Specimen Signatures
Schedule C Schedule of Fees
- 13 -
<PAGE>
Exhibit 99.9
<TABLE>
<S> <C> <C> <C>
-------- -------------- ----------------------- --------------------------
Sequence Account Key Subscription Offering Shares of Cytogen Common
Number Purchase Form No. Stock Eligible for Purchase
</TABLE>
SUBSCRIPTION OFFERING PURCHASE FORM
To Purchase Shares of Common Stock, par value $.01 per share,
of
CYTOGEN CORPORATION
To: Mellon Securities Trust Company, Subscription Offering Agent
<TABLE>
<CAPTION>
<S> <C> <C>
By Mail: By Overnight Delivery: By Hand:
Mellon Securities Trust Mellon Securities Trust Mellon Securities
Company Company Trust Company
P.O. Box 837 c/o Reorganization 120 Broadway
Midtown Station Department 13th Floor
New York, New York 10018 85 Challenger Road New York, New York
Overpeck Centre 10271
Ridgefield Park, New
Jersey 07660
By Facsimile Transmission:
(In connection with Wire
Transfers Only)
(201) 296-4062
Confirm by telephone to:
(800) 684-8824
</TABLE>
THE TERMS AND CONDITIONS OF THE SUBSCRIPTION OFFERING ARE SET FORTH IN
THE JOINT PROXY STATEMENT/PROSPECTUS DATED SEPTEMBER 14, 1995 (THE "JOINT PROXY
STATEMENT/PROSPECTUS") AND ARE INCORPORATED HEREIN BY REFERENCE. COPIES OF THE
JOINT PROXY STATEMENT/PROSPECTUS ARE AVAILABLE UPON REQUEST FROM THE
SUBSCRIPTION OFFERING AGENT, MELLON SECURITIES TRUST COMPANY, AT (800) 684-8824.
THIS FORM IS TO BE USED ONLY BY THE RECORD HOLDER OF CELLCOR, INC. COMMON
STOCK, PAR VALUE $.01 PER SHARE ("CELLCOR COMMON STOCK"), ON THE SUBSCRIPTION
RECORD DATE (EACH, A "RECORD HOLDER") WHOSE NAME APPEARS ABOVE TO EXERCISE THE
NON-TRANSFERABLE RIGHT TO PURCHASE SHARES OF CYTOGEN CORPORATION COMMON STOCK,
PAR VALUE $.01 PER SHARE ("CYTOGEN COMMON STOCK"), IN THE SUBSCRIPTION OFFERING.
THIS SUBSCRIPTION OFFERING PURCHASE FORM MUST BE RECEIVED BY THE
SUBSCRIPTION OFFERING AGENT WITH PAYMENT IN FULL BY 5:00 P.M., NEW YORK CITY
TIME, ON OCTOBER 13, 1995 (THE "EXPIRATION DATE").
DELIVERY OF THIS SUBSCRIPTION OFFERING PURCHASE FORM TO AN ADDRESS OR
FACSIMILE NUMBER OTHER THAN AS SET FORTH ABOVE DOES NOT CONSTITUTE A VALID
DELIVERY. IF DELIVERY IS MADE BY MAIL, THE RECORD HOLDER BEARS THE RISK OF LATE
DELIVERY. COMPLETED SUBSCRIPTION OFFERING PURCHASE FORMS MAY ONLY BE SENT BY
----
FACSIMILE TRANSMISSION IN CONNECTION WITH A WIRE TRANSFER OF FUNDS AND THE
ORIGINAL MUST THEN BE FORWARDED TO THE SUBSCRIPTION OFFERING AGENT. COMPLETED
SUBSCRIPTION OFFERING PURCHASE FORMS SHOULD NOT BE SENT TO CELLCOR OR CYTOGEN.
---
PLEASE READ CAREFULLY THE JOINT PROXY STATEMENT/PROSPECTUS AND THE
INSTRUCTIONS ACCOMPANYING THIS SUBSCRIPTION OFFERING PURCHASE FORM.
<PAGE>
Gentlemen and Ladies:
The undersigned hereby represents that it is the Record Holder
of shares of Cellcor Common Stock and is entitled to submit this Subscription
Offering Purchase Form for the purchase of shares of Cytogen Common Stock in the
Subscription Offering. Upon the terms and subject to the conditions set forth in
the Joint Proxy Statement/Prospectus, receipt of which is hereby acknowledged,
the undersigned hereby irrevocably elects to exercise the right to purchase
shares of Cytogen Common Stock, as indicated below. The undersigned understands
that payment of the Subscription Offering price of $3.89 per share for each
share of Cytogen Common Stock subscribed for and purchased (the "Subscription
Price") pursuant to the Subscription Offering must be received by the
Subscription Offering Agent at or before 5:00 p.m., New York City time, on the
Expiration Date.
<TABLE>
<C> <S> <C>
(a) Number of shares of Cytogen Common Stock subscribed to be purchased: ______
(b) Total Subscription Price (total number of shares in (a) times $3.89): $_____
</TABLE>
The undersigned hereby represents that payment of the total Subscription
Price either (check appropriate box):
[_] is delivered herewith or [_] was delivered separately;
in the manner set forth below (check appropriate box and complete information
relating thereto):
[_] wire transfer of funds
- name of transferor institution.....................................
- date of transfer...................................................
- confirmation number (if available).................................
[_] money order
[_] uncertified check (Payment by uncertified check will not be deemed to
have been received by the Subscription Offering Agent until such check
has cleared. Record Holders paying by such means are urged to make
payment sufficiently in advance of the Expiration Date to ensure that
such payment clears by such date).
[_] certified check or [_] bank draft (cashier's check)
- name of maker.......................................................
- date and number of check, draft or money order number...............
- bank on which check is drawn or issuer of money order...............
--------------------------------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
To be completed ONLY if Certificates for shares of Cytogen Common Stock are to
be MAILED to an address other than the address shown above (see Sections 2 and
3(c) of Instructions).
Deliver certificates for shares of Cytogen Common Stock to:
Name:
---------------------------------------------------------------------------
(Please Type or Print)
Address:
------------------------------------------------------------------------
--------------------------------------------------------------------------------
(Zip Code)
--------------------------------------------------------------------------------
2
<PAGE>
--------------------------------------------------------------------------------
IMPORTANT:
RECORD HOLDER(S) SIGN HERE
(ALSO COMPLETE SUBSTITUTE FORM W-9 BELOW)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
(Signature(s) of Record Holder(s))
(See guarantee requirement below)
Dated: ,1995
---------------
(Must be signed by Record Holder(s) exactly as name(s) appear(s) on this
Subscription Offering Purchase Form. If signature is by an officer of a
corporation, attorney-in-fact, executor, administrator, trustee, guardian or
other persons acting in a fiduciary or representative capacity, please set forth
title).
Name(s):
------------------------------------------------------------------------
(Please Type or Print)
Capacity (full title):
----------------------------------------------------------
Address:
------------------------------------------------------------------------
------------------------------------------------------------------------
(Zip Code)
Area Code and Tax Identification
Tel. No.: or Social Security No.:
----------------- -----------------------------
GUARANTEE OF SIGNATURE(S)
(If Required--See Section 3(c) of Instructions)
Authorized Signature:
-----------------------------------------------------------
Name:
---------------------------------------------------------------------------
(Please Type or Print)
Name of Firm:
-------------------------------------------------------------------
Address:
------------------------------------------------------------------------
-------------------------------------------------------------------------------
(Zip Code)
Area Code and Tel. No.:
---------------------------------------------------------
Dated: , 1995
---------------
--------------------------------------------------------------------------------
TO BE EXECUTED ONLY BY NON-UNITED STATES RESIDENTS:
I hereby certify that the foregoing purchase of Cytogen Common Stock has been
effected in accordance with the applicable laws of the jurisdiction in which I
reside.
Dated: , 1995
---------------- ---------------------------------------------
---------------------------------------------
-------------------------------------------------------------
For Subscription Offering Agent Use Only:
Date/Time Received
------------------------------
Number of Shares of Cytogen
Common Stock Subscribed for in
Subscription Offering
------------------------------
3
<PAGE>
IMPORTANT TAX INFORMATION
Under federal income tax law, dividend payments that may be made by Cytogen
on shares of Cytogen Common Stock issued upon exercise of the non-transferable
right to purchase shares of Cytogen Common Stock in the Subscription Offering,
may be subject to backup withholding. Generally, such payments will be subject
to backup withholding unless (i) the holder is exempt from backup withholding or
(ii) the holder further certifies that such holder is not subject to backup
withholding due to prior underreporting of interest or dividend income. Each
Record Holder who exercises the right to purchase shares of Cytogen Common Stock
in the Subscription Offering and wishes to avoid backup withholding should
provide the Subscription Offering Agent (as Cytogen's agent) with such Record
Holder's correct Taxpayer Identification Number ("TIN") and with a certification
that such Record Holder is not subject to backup withholding by completing
Substitute Form W-9 below. If such Record Holder is an individual, the TIN is
his or her social security number. The Certificate of Awaiting Taxpayer
Identification Number should be completed if such Record Holder has not been
issued a TIN and has applied for a number or intends to apply for a number in
the near future. Failure to furnish timely a correct TIN or include all
required information may subject the taxpayer to a $50 penalty for each failure.
There are civil and criminal penalties for giving false information to avoid
backup withholding. A Record Holder who provides false information may be
subject to a civil penalty of up to $500 and a criminal penalty, upon
conviction, of a fine up to $1,000 or imprisonment of up to one year, or both.
Certain Record Holders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. For a foreign individual to qualify as an exempt recipient, that
Record Holder must submit a Form W-8, signed under penalties of perjury,
attesting to that individual's exempt status. A Form W-8 can be obtained from
the Subscription Offering Agent. See the attached Guidelines for Certification
of Taxpayer Identification Number on Substitute Form W-9 for additional
instructions.
If (i) the Record Holder does not furnish the Subscription Offering Agent
with a TIN in the required manner; (ii) the IRS notifies the Subscription
Offering Agent the TIN provided is incorrect; or (iii) the Record Holder is
required, but fails, to certify it is not subject to backup withholding, backup
withholding will apply. If backup withholding applies the Subscription Offering
Agent is required to withhold 31% of any payments made to the Record Holder.
Backup withholding is not an additional tax. Rather, the tax liability of
persons subject to backup withholding will be reduced by the amount of tax
withheld. If withholding results in an overpayment of taxes, a refund may be
obtained from the Internal Revenue Service.
Purpose of Substitute Form W-9
To prevent backup federal income tax withholding with respect to cash
payments that may be made in the future in respect of shares of Cytogen Common
Stock, a Record Holder must (i) provide the Subscription Offering Agent with his
or her correct TIN by completing the Substitute Form W-9 below certifying that
the TIN provided on Substitute Form W-9 is correct (or that such Record Holder
is awaiting a TIN) and certifying that he or she is not subject to backup
withholding due to prior underreporting of interest or dividend income or (ii)
claim exemption from backup withholding.
What Number to Give the Subscription Offering Agent
The Record Holder is required to give the Subscription Offering Agent the
social security number or employer identification number of the record holder of
the Cellcor Common Stock entitled to exercise the right to purchase Cytogen
Common Stock (the "Cellcor Shares"). If the Cellcor Shares are in more than one
name or are not in the name of the actual owner, consult the attached Guidelines
for Certification of Taxpayer Identification Number on Substitute Form W-9 for
additional guidance on which number to report.
4
<PAGE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
PAYER'S NAME: MELLON SECURITIES TRUST COMPANY
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
SUBSTITUTE Part 1--PLEASE PROVIDE YOUR TIN IN
FORM W-9 THE BOX AT RIGHT AND CERTIFY BY SIGNING ------------------------------
AND DATING BELOW Social Security Number(s)
Department of the Treasury OR
Internal Revenue Service ------------------------------
Employer Identification Number
Payer's Request for
Taxpayer Identification --------------------------------------------------------------------------------------------
Number ("TIN")
Part 2--Certification--Under penalties of perjury,
I certify that:
1. the number shown on this form is my correct taxpayer identification number
(or I am waiting for a number to be issued for me); and
2. I am not subject to backup withholding because (a) I am exempt from backup
withholding or (b) I have not been notified by the Internal Revenue Service that I
am subject to backup withholding as a result of a failure to report all interest
and dividends, or (c) the Internal Revenue Service has notified me that I am no
longer subject to backup withholding.
Certification Instruction -- You must cross out item 2 above if you have been notified by
the IRS that you are currently subject to backup withholding because of underreporting
interest or dividends on your tax return.
---------------------------------------------------------------------------------------------
SIGNATURE DATE Part 3--Awaiting TIN [_]
--------------------------- ------------------
---------------------------------------------------------------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF 31
PERCENT OF ANY FUTURE CASH PAYMENTS MADE TO YOU IN RESPECT OF CYTOGEN COMMON
STOCK. PLEASE REVIEW THE ATTACHED GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
====================================================================================================================================
</TABLE>
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART 3 OF
THE SUBSTITUTE FORM W-9.
--------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number
has not been issued to me, and either (1) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or
(2) I intend to mail or deliver an application in the near future. I
understand that if I do not provide a taxpayer identification number by the
time of payment, 31 percent of all payments that I am otherwise entitled to
receive will be withheld until I provide a number.
Signature Date
-------------------------- ------------------------
--------------------------------------------------------------------------------
5
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE PAYER.--
Social Security numbers have nine digits separated by two hyphens: i.e. 000-00-
0000. Employer identification numbers have nine digits separated by only one
hyphen: i.e. 00-0000000. The table below will help determine the number to give
the payer.
<TABLE>
<CAPTION>
----------------------------------------------------------------- ---------------------------------------------------------
Give the Give the EMPLOYER
For this type of account: SOCIAL SECURITY For this type of account: IDENTIFICATION
number of-- number of--
----------------------------------------------------------------- ---------------------------------------------------------
<S> <C> <C> <C>
1. An individual's account The individual 6. A valid trust, The legal entity (Do not
estate, or furnish the identifying
pension trust number of the personal
representative or trustee
unless the legal entity
itself is not designated in
the account title.)/4/
2. Two or more individuals The actual owner 7. Corporate account The corporation
(joint account) of the account or,
if combined funds,
any one of the
individuals/1/
3. Custodian account of a The minor/2/ 8. Religious, charitable, The organization
minor (Uniform Gift to or educational
Minors Act) organization account
4a. The usual revocable The grantor-trustee/1/ 9. Partnership The partnership
savings trust account
(grantor is also trustee)
4b. So-called trust The actual owner/1/ 10. Association, The organization
account that is not a club, or other
legal or valid trust tax-exempt organization
under State law
5. Sole proprietorship The owner/3/ 11. A broker or The broker or nominee
account registered nominee
12. Account with the The public entity
Department of
Agriculture in the name
of a public entity (such
as a State or local
government, school
district, or prison)
that receives
agricultural program
payments
----------------------------------------------------------------- ---------------------------------------------------------
</TABLE>
/1/ List first and circle the name of the person whose number you furnish.
/2/ Circle the minor's name and furnish the minor's social security number.
/3/ Show the name of the owner. You may also enter your business name. You
may use your Social Security number or Employer Identification Number.
/4/ List first and circle the name of the legal trust, estate, or pension
trust.
NOTE: If no name is circled when there is more than one name, the number will
be considered to be that of the first name listed.
6
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
Obtaining a Number
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number card, or Form
SS-4, Application for Employer Identification Number, at the local office of the
Social Security Administration or the Internal Revenue Service and apply for a
number.
Payees Exempt from Backup Withholding
Payees specifically exempted from backup withholding on ALL payments include the
following:
. A corporation
. A financial institution
. An organization exempt from tax under section 501(a) or an individual
retirement plan
. The United States or any agency or instrumentality thereof
. A State, the District of Columbia, a possession of the United States, or
any subdivision or instrumentality thereof
. A foreign government, a political subdivision of a foreign government, or
agency or instrumentality thereof
. An international organization or any agency, or instrumentality thereof
. A registered dealer in security or commodities registered in the U.S. or a
possession of the U.S.
. A real estate investment trust
. A common trust fund operated by a bank under section 584(a)
. An exempt charitable remainder trust or a non-profit trust described in
section 4947(a)(1)
. An entity registered at all times under the Investment Company Act of 1940
. A foreign central bank of issue
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
. Payments to nonresident aliens subject to withholding under Section 1441
. Payments to partnership not engaged in a trade or business in the U.S. and
which have at least one nonresident partner
. Payments of patronage dividends where the amount received is not paid in
money
. Payments made by certain foreign organizations
. Payments made to a nominee
Payments of interest not generally subject to backup withholding include the
following:
. Payment of interest on obligations issued by individuals. Note: You may be
subject to backup withholding if this interest is $600 or more and is paid
in the course of the payer's trade or business and you have not provided
your correct taxpayer identification number to the payer.
. Payments of tax-exempt interest (including exempt-interest dividends under
section 852)
. Payments described in section 6049(b)(5) to non-resident aliens
. Payments on tax-free covenant bonds under section 1451
. Payments made by certain foreign organizations
Exempt payees described above should file Form W-9 to avoid possible erroneous
backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND RETURN IT
TO THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS OR PATRONAGE DIVIDENDS,
ALSO SIGN AND DATE THE FORM. If you are a nonresident alien or a foreign entity
not subject to backup withholding, give the requester a completed Form W-8,
Certificate of Foreign Status.
Certain payments other than interest, dividends, and patronage dividends that
are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041A(a),
6045 and 6050A.
Privacy Act Notice.--Section 6109 requires most recipients of dividend, interest
or other payments to give taxpayer identification numbers to payers who must
report the payments to IRS. IRS uses the numbers for identification purposes.
Payers must be given the numbers whether or not recipients are required to file
tax returns. Payers must generally withhold 31% of taxable interest, dividend,
and certain other payments to a payee who does not furnish a taxpayer
identification number to a payer. Certain penalties may also apply.
Penalties
(1) Penalty for Failure to Furnish Taxpayer Identification Number.--If you fail
to furnish your taxpayer identification number to a payer, you are subject to a
penalty of $50 for each such failure unless your failure is due to reasonable
cause and not to willful neglect.
(2) Civil Penalty for False Information With Respect to Withholding.--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(3) Criminal Penalty for Falsifying Information.--Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
7
<PAGE>
Exhibit 99.10
AMENDMENT TO OPTION AGREEMENT
-----------------------------
This Amendment to the Option Agreement dated as of May 6, 1994 (the
"Original Agreement") by and between CYTOGEN CORPORATION, a Delaware corporation
(the "Company"), and FLETCHER CAPITAL MARKETS, INC., a New York corporation (the
"Investor"), is made this 10th day of August, 1995.
WHEREAS, the Company and the Investor have entered into an Amended and
Restated Investment Agreement dated as of May 6, 1994 (the "Investment
Agreement") providing for the issue and sale by the Company to the Investor of
an aggregate of 1,400,000 shares of the Company's Common Stock, par value $.01
per share (the "Common Stock"); and
WHEREAS, the Investor (or its assignees) has acquired all 1,400,000
shares of the Common Stock pursuant to the terms of the Investment Agreement;
and
WHEREAS, on July 28, 1995, the Investor delivered an Election Notice
to the Company whereby the Investor exercised its option to purchase an
additional 1,800,000 shares of Common Stock at an aggregate purchase price of
$7,304,400.00, or $4.058 per share; and
WHEREAS, the parties hereto wish to extend the Expiration Date of the
Option and to permit the Investor to acquire additional shares of Common Stock
at the Per Share
<PAGE>
Exercise Price and upon the other terms and conditions set forth in the Original
Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereto agree as follows:
Section 1. All capitalized terms used herein and not defined shall
have the respective meanings ascribed to them in the Original Agreement.
Section 2. Section 1 of the Original Agreement is amended to read in
its entirety as follows:
Grant of Option. The Company hereby grants to the Investor an
---------------
irrevocable option (the "Option") to purchase up to the number of
shares of Common Stock specified in Section 2 below (the "Option
Shares") at the Exercise Price (as defined herein). The Option may be
exercised by the Investor, in whole or in part and from time to time,
after the Second Closing and prior to the Expiration Date (as defined
below), by delivering an Election Notice (as defined below) to the
Company; provided, that, if at any time following 180 days after the
--------
date of the Second Closing, any person shall commence a tender offer
for Common Stock and such
- 2 -
<PAGE>
tender offer shall contain a condition that the Investor shall not
exercise the Option prior to the consummation of such tender offer,
then the Investor shall not thereafter deliver an Election Notice to
the Company until such tender offer has been consummated or abandoned.
The Option shall expire on November 15, 1995 (the "Expiration Date").
Section 3. Section 2 of the Original Agreement is amended to read as
follows:
Right to Exercise Option, Number of Shares, Exercise Price. Subject
----------------------------------------------------------
to the provisions of this Option Agreement, the Investor shall have
the right to purchase from the Company, and the Company shall issue
and sell to the Investor the Option Shares, in whole or in part and
from time to time, but with a minimum of the lesser of, (i) 500,000
shares of Common Stock, or (ii) the remaining Option Shares available
under the Option Agreement in each Election Notice, at the Per Share
Exercise Price (as defined in this Section). The number of shares of
Common Stock that shall constitute the Option Shares shall be
2,800,000. The Investor shall be entitled to exercise the Option on
any Exercise Dates prior to the Expiration Date, on which
- 3 -
<PAGE>
dates the Investor shall be entitled to elect to purchase all or any
portion of the Option Shares. The Per Share Exercise Price shall be
equal to the product of (i) the average per share daily closing price
of the Common Stock as reported on the Nasdaq National Market
("Nasdaq") for the period beginning sixty (60) trading days prior to
an Exercise Date and ending on the Nasdaq trading day next preceding
the Exercise Date, and (ii) 0.95.
The Company shall use its best efforts to keep the Registration
Statement (as defined in the Investment Agreement) continuously
effective from the date on which it is first declared effective
through the date of the Option Closing. In the event that the
Investor wishes to exercise all or part of the Option, Investor shall
deliver to the Company a written notice substantially in the form
attached hereto as Exhibit A (the "Election Notice"). The Election
Notice shall specify the number of Option Shares the Option is being
exercised for.
Section 4. Except as specifically set forth herein, the terms and
conditions of the Original Agreement remain unchanged and in full force and
effect.
- 4 -
<PAGE>
Section 5. This Amendment may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed to be an original and all
of which taken together shall constitute but one and the same instrument.
- 5 -
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed as of the date first above written.
CYTOGEN CORPORATION
By: /s/ Thomas J. McKearn
-----------------------------
FLETCHER CAPITAL MARKETS, INC.
By: /s/ Verne O. Sedlacek
-----------------------------
- 6 -
<PAGE>
Exhibit 99.11
September 12, 1995
Board of Directors
Cytogen Corporation
600 College Road East
CN 5308
Princeton, NJ 08540-5308
I, Ronald J. Brenner, hereby consent to being named in the Registration
Statement on Form S-4, to be filed with the Securities and Exchange Commission
on or about September 12, 1995 to register shares of its Common Stock under the
Securities Act of 1933, as amended (the "Securities Act"), as a nominee for
director of the Board of Directors of Cytogen Corporation and to the filing of
this consent with the Registration Statement pursuant to Rule 438 promulgated
under the Securities Act, and agree to serve as a director if elected.
Sincerely yours,
/s/ Ronald J. Brenner
Ronald J. Brenner
<PAGE>
Exhibit 99.12
September 12, 1995
Board of Directors
Cytogen Corporation
600 College Road East
CN 5308
Princeton, NJ 08540-5308
I, John E. Bagalay, Jr., hereby consent to being named in the Registration
Statement on Form S-4, to be filed with the Securities and Exchange Commission
on or about September 12, 1995 to register shares of its Common Stock under the
Securities Act of 1933, as amended (the "Securities Act"), as a nominee for
director of the Board of Directors of Cytogen Corporation and to the filing of
this consent with the Registration Statement pursuant to Rule 438 promulgated
under the Securities Act, and agree to serve as a director if elected.
Sincerely yours,
/s/ John E. Bagalay, Jr.
John E. Bagalay, Jr.
<PAGE>
Exhibit 99.13
INVESTMENT AGREEMENT
Between
CYTOGEN CORPORATION
and
FLETCHER FUND, L.P.
--------------------------------------
Dated as of September 8, 1995
<PAGE>
INVESTMENT AGREEMENT dated as of September 8, 1995 between FLETCHER
FUND, L.P., a Delaware limited partnership (the "Investor"), and CYTOGEN
CORPORATION, a corporation organized and existing under the laws of the State of
Delaware (the "Company").
WHEREAS, the parties desire that the Investor become an equity
investor in the Company by acquiring 665,352 shares of common stock, par value
$.01 per share (the "Common Stock"), of the Company (the "Initial Shares") on
the terms and subject to the conditions set forth below; and
WHEREAS, the parties have agreed that the Company will have the right
to sell, from time to time, shares of Common Stock to the Investor and the
Investor will have the obligation to purchase such shares on the terms and
subject to the conditions set forth below.
NOW, THEREFORE, the parties hereto intending to be legally bound
hereby agree as follows:
ARTICLE I
Purchase and Sale of Initial Shares
-----------------------------------
Section 1.1 Purchase and Sale of Initial Shares. Upon the terms
-----------------------------------
and conditions set forth herein, the Company shall issue and sell the Initial
Shares to the Investor pursuant to that certain Registration Statement on Form
S-3, No. 33-77396 (the "Registration Statement") under the Securities Act of
1933, as amended (the "Securities Act"), and the Investor shall purchase from
the Company the Initial Shares.
Section 1.2 Purchase Price. The aggregate purchase price for
--------------
the Initial Shares shall be $2,700,000. The purchase price per Initial Share
shall be $4.058.
Section 1.3 The Initial Closing.
-------------------
(a) The closing of the purchase and sale of the
Initial Shares (the "Initial Closing") shall take place at the
offices of Dechert Price & Rhoads, Princeton Pike Corporate
Center, 997 Lenox Drive, Building 3, Suite 210, Lawrenceville,
<PAGE>
New Jersey 08648, at 10:00 a.m., on September 11, 1995 (the
"Initial Closing Date").
(b) At the Initial Closing, (i) the Company
shall, as directed in writing by the Investor, either (x) deliver to the
Investor one or more stock certificates representing the Initial Shares,
registered in the name as designated by the Investor, or (y) deposit the Initial
Shares to an account of the Investor (or a nominee account of the Investor)
through the Depository Trust Company, and (ii) the Investor shall deliver to the
Company $2,700,000 in immediately available funds by wire transfer to such
account as shall be designated in writing by the Company. In addition, each of
the Company and the Investor shall deliver all other documents, instruments and
writings required to be delivered by either of them under this Agreement at or
prior to the Initial Closing.
ARTICLE II
Purchase and Sale of Put Shares
-------------------------------
Section 2.1 Put Shares.
----------
2.1.1 Definitions. Except as otherwise expressly provided
-----------
herein, capitalized terms used herein shall have the following meanings:
"Business Day" shall mean any trading day on
the Nasdaq National Market ("Nasdaq") during which trading in the shares of
Common Stock is not suspended or limited for more than 60 minutes.
"Pricing Period" shall mean the twenty-one (21)
Business Day period beginning on the second Business Day following the date on
which the Put Notice (defined below) is delivered to the Investor and ending at
the close of business on the twenty-second (22nd) Business Day following the
date on which the Put Notice is delivered. For purposes of determining the
Pricing Period, the Business Day on which the Put Notice is delivered shall not
be counted.
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<PAGE>
"Trading Price" shall mean 101% of the average of the daily
volume weighted average price (rounded to the nearest thousandth of a dollar) of
the Common Stock as reported on Nasdaq (as published by Bloomberg Financial
Markets) during the Pricing Period.
2.1.2 Put Rights.
----------
(a) Subject to the terms and conditions set forth herein,
the Company shall have the right (each, a "Put Right") to issue and sell to the
Investor pursuant to the Registration Statement under the Securities Act, and
the Investor shall be obligated to purchase, an aggregate of 225,000 shares of
Common Stock (as adjusted in accordance with the terms of this Agreement), from
time to time and at any time, upon delivery by the Company to the Investor of a
written notice (the "Put Notice"); provided, however, that, except as provided
-------- -------
in Section 2.1.2(d) hereof, the Company shall not exercise more than three (3)
Put Rights during the period beginning on October 13, 1995 and ending on March
29, 1996 (the "Expiration Date"). By delivery of the Put Notice, the Company
shall be obligated to sell to the Investor, and the Investor shall be obligated
to purchase from the Company (even if the related Put Closing Date (defined
below) occurs after the Expiration Date), at the applicable Trading Price, that
number of shares of Common Stock (the "Put Shares" and together with the Initial
Shares, collectively, the "Shares") equal to the Final Put Amount (defined
below). Each purchase of the Put Shares shall occur on the related Put Closing
Date.
(b) To exercise a Put Right, the Company shall, on any
Business Day, deliver a Put Notice to the Investor, at the address of the
Investor specified in Section 7.5 hereof, specifying the number of shares of
Common Stock to be sold by the Company upon exercise of the Put Right (the "Put
Amount"), which, except as provided in Sections 2.1.2(d) and (h) hereof, shall
be 225,000 shares. No Put Notice shall be delivered on any date subsequent to
the Expiration Date and, without Investor's prior consent, not more than one Put
Right may be exercised during any period of twenty-five (25) consecutive
Business Days. Without the Investor's prior consent, no Put Notice shall be
delivered if any person shall have (i) publicly announced a tender offer or
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exchange offer for all the Common Stock, (ii) publicly announced plans for a
merger or consolidation in which the Company is not the surviving entity, or a
potential change in control of the Company, or (iii) publicly announced the
delisting of the Common Stock from Nasdaq, until the tender offer, exchange
offer, merger or consolidation is completed or the Common Stock is again listed
on a national securities exchange.
(c) No later than 5:00 p.m. on the next Business Day following
the last Business Day of the applicable Pricing Period, the Investor shall
deliver a written notice (the "Purchase Notice") to the Company, at the address
of the Company specified in Section 7.5 hereof, specifying which of the
following options the Investor, in its sole discretion, elects to exercise. The
Investor may:
(i) elect to purchase the Put Amount;
(ii) subject to Section 2.1.2(e) hereof, elect to increase
the Put Amount (specifying in the Purchase Notice the total
number of Put Shares proposed to be purchased by the
Investor (the "Specified Shares")) by up to that number of
Put Shares (the "Additional Shares"), which, when added to
225,000 shares
of Common Stock, equals 2.0% (rounded down to the nearest
share) of the sum of (x) the total number of outstanding
shares of Common Stock on the date of delivery of the
Purchase Notice and (y) the number of Specified Shares set
forth in the Purchase Notice; provided, however, that any
-------- -------
Additional Shares available to be so purchased but not
elected to be purchased by the Investor in connection with a
Put Right exercise may be added to the Additional Shares
calculated in connection with, and shall remain available
for purchase by the Investor at the time of, a subsequent
Put Right exercise, subject to Section 2.1.2(e) hereof; or
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<PAGE>
(iii) elect to reduce the Put Amount (setting forth in the
Purchase Notice the Specified Shares); provided, however,
-------- -------
that in no event shall the Investor reduce the Put Amount to
less than twice the average daily reported trading volume of
the Common Stock on Nasdaq during the relevant Pricing
Period (the difference between the original Put Amount
specified by the Company and the Final Put Amount (defined
below) shall be referred to herein as the "Remaining
Shares").
In any case, the final number of Put Shares to be sold and purchased in
connection with a Put Right exercise, after giving effect to the Investor's
right to increase or reduce the Put Amount, shall be referred to herein as the
"Final Put Amount."
(d) Subject to Section 2.1.2(e) hereof, the Company shall
be entitled to (i) one additional Put Right, if the total number of Remaining
Shares on a cumulative basis shall be 225,000 shares or fewer (but said Put
Right shall only be exercisable for the actual number of Remaining Shares), or
(ii) that number of additional Put Rights equal to the total number of Remaining
Shares on a cumulative basis divided by 225,000, if the total number of
Remaining Shares shall be greater than 225,000 shares, plus an additional Put
Right for any fractional remainder of the Remaining Shares (but said Put Right
shall only be exercisable to the extent of the number of Remaining Shares in
such fractional remainder).
(e) In no event shall the aggregate of the Shares sold by
the Company and purchased by the Investor pursuant to this Agreement exceed 4.9%
(rounded down to the nearest share) of the total number of shares of Common
Stock outstanding on the applicable Closing Date (defined below), after giving
effect to any proposed sale and purchase of the Shares in question (the
"Purchase Limit"). In any such event, the Final Put Amount proposed to be sold
by the Company or purchased by the Investor shall be deemed reduced to the
extent necessary to maintain the Purchase Limit.
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<PAGE>
(f) No later than 11:00 a.m. on the next Business Day
following the last Business Day of each Pricing Period, the Company shall notify
the Investor of the applicable Trading Price for such Pricing Period. In the
event of a dispute between the Company and the Investor concerning the Trading
Price, which cannot in good faith be resolved between the Company and the
Investor, the Company shall appoint a firm of independent certified public
accountants of recognized national standing or other independent third party
agreed upon by the Company and the Investor which shall give their opinion upon
the determination of the Trading Price, which opinion shall be conclusive.
(g) No fractions of Put Shares shall be issued and delivered.
In lieu thereof, any such fraction shall be rounded down to the nearest whole
number and a whole Put Share shall be issued and delivered.
Section 2.1.3 The Put Closings.
----------------
(a) Each closing of the purchase and sale of the Put Shares
(each, a "Put Closing") shall take place at the offices of Dechert Price &
Rhoads, Princeton Pike Corporate Center, 997 Lenox Drive, Building 3, Suite 210,
Lawrenceville, New Jersey 08648, at 10:00 a.m., no earlier than the second and
no later than the fifth business day following the end of the related Pricing
Period (each, a "Put Closing Date" and together with the Initial Closing Date,
collectively, the "Closing Dates"), which date shall be determined by agreement
between the Investor and the Company.
(b) At each Put Closing, (i) the Company shall, as directed
in writing by the Investor, either (x) deliver to the Investor one or more stock
certificates representing the Put Shares, registered in the name as designated
by the Investor, or (y) deposit the Put Shares to an account of the Investor (or
a nominee account of the Investor) through the Depository Trust Company, and
(ii) the Investor shall deliver to the Company the applicable Trading Price for
the Put Shares multiplied by the number of Put Shares in immediately available
funds by wire transfer to such account as shall be designated in writing by the
Company. In addition, each of the Company and the Investor shall
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<PAGE>
deliver all other documents, instruments and writings required to be delivered
by either of them under this Agreement at or prior to each Put Closing.
ARTICLE III
Representations and Warranties
------------------------------
Section 3.1 Representations and Warranties of the Company. The
---------------------------------------------
Company hereby makes the following representations and warranties to the
Investor:
(a) Organization and Qualification. Each of the Company and its
-------------------------------
subsidiaries is a corporation duly organized and existing in good standing under
the laws of the jurisdiction in which it is incorporated and has the requisite
corporate power to own its properties and to carry on its business as now being
conducted. As of the date hereof, the Company does not have any subsidiaries,
other than CytoRad Acquisition Corp. and Cytogen UK Limited. Each of the
Company and its subsidiaries is duly qualified as a foreign corporation to do
business and is in good standing in every jurisdiction in which the nature of
the business conducted or property owned by it makes such qualification
necessary and where the failure so to qualify would have a Material Adverse
Effect. "Material Adverse Effect" means any material adverse effect on the
operations, properties, prospects, or financial condition of the Company and its
subsidiaries taken as a whole.
(b) Authorization; Enforcement. (i) The Company has the
---------------------------
requisite corporate power and authority to enter into and perform this Agreement
and to issue the Shares in accordance with the terms hereof, (ii) the execution
and delivery of this Agreement by the Company and the consummation by it of the
transactions contemplated hereby have been duly authorized by the Company's
Board of Directors and no further consent or authorization of the Company or its
Board of Directors or stockholders is required, (iii) this Agreement has been
duly executed and delivered by the Company and (iv) this Agreement constitutes a
valid and binding obligation of the Company enforceable against the Company in
accordance with its terms, except as such enforceability may be limited by
applicable
-7-
<PAGE>
bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws
relating to, or affecting generally the enforcement of, creditors' rights and
remedies or by other equitable principles of general application.
(c) Capitalization. As of the date hereof, the authorized
--------------
capital stock of the Company consists of (i) 69,600,000 shares of Common
Stock, of which as of the close of business on August 17, 1995, 33,747,501
shares were issued and outstanding; and (ii) 5,400,000 shares of Preferred
Stock, $.01 par value (the "Preferred Stock"), of which as of the close of
business on August 17, 1995, no shares were issued and outstanding. All of such
outstanding shares of Common Stock have been validly issued and are fully paid
and nonassessable. No shares of Common Stock are entitled to preemptive rights.
Except as disclosed in Schedule 3.1(c), as of the date of this Agreement there
are no outstanding options, warrants, scrip, rights to subscribe for, calls or
commitments of any character whatsoever relating to, or securities or rights
convertible into, any shares of capital stock of the Company, or contracts,
commitments, understandings, or arrangements by which the Company is or may
become bound to issue additional shares of capital stock of the Company or
options, warrants, scrip, rights to subscribe for, or commitments to purchase or
acquire, any shares or securities or rights convertible into shares, of capital
stock of the Company. The Company has furnished to the Investor true and correct
copies of the Company's Amended and Restated Certificate of Incorporation as in
effect on the date hereof (the "Certificate of Incorporation"), and the
Company's By-laws, as amended, as in effect on the date hereof (the "By-laws").
(d) Issuance of Shares. The Shares are duly authorized, and
------------------
when paid for and delivered in accordance with the terms hereof shall be
validly issued, fully paid and non-assessable.
(e) No Conflicts. The execution, delivery, and performance
------------
of this Agreement by the Company and the consummation by the Company of the
transactions contemplated hereby do not (i) result in a violation of the
Company's Certificate of Incorporation or By-laws or (ii) conflict with, or
constitute a default (or an event which with notice or lapse of time or both
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<PAGE>
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any agreement, indenture or
instrument to which the Company or any of its subsidiaries is a party, or result
in a violation of any law, rule, regulation, order, judgment or decree
(including Federal and state securities laws and regulations) applicable to the
Company, any of its subsidiaries, or by which any property or asset of the
Company or any of its subsidiaries is bound or affected (except for such
conflicts, defaults, terminations, amendments, accelerations, cancellations and
violations as would not, individually or in the aggregate, have a Material
Adverse Effect or for which consent to this Agreement has been obtained). The
businesses of the Company and its subsidiaries are not being conducted in
violation of any law, ordinance or regulation of any governmental entity, except
for possible violations which either singly or in the aggregate do not have a
Material Adverse Effect. Except as required under the Securities Act and any
applicable state securities laws, the Company is not required to obtain any
consent, authorization or order of, or make any filing or registration with, any
court or governmental agency in order for it to execute, deliver or perform its
obligations under this Agreement or to issue and sell the Shares in accordance
with the terms of this Agreement.
(f) SEC Documents, Financial Statements. Since December 31,
-----------------------------------
1993, the Company has filed all reports, schedules, forms, statements and other
documents (including any amendments thereto) required to be filed by it with the
Securities and Exchange Commission (the "SEC") pursuant to the reporting
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act") (all of the foregoing being hereinafter referred to as the "SEC
Documents"). The Company has delivered to the Investor true and complete copies
of the SEC Documents. As of their respective dates, the SEC Documents (as the
same may have been amended) complied in all material respects with the
requirements of the Exchange Act and the rules and regulations of the SEC
promulgated thereunder applicable to such SEC Documents, and, as of their
respective dates, none of the SEC Documents taken as a whole (when read together
with all exhibits included therein and financial statement schedules thereto and
documents (other than exhibits) incorporated by reference) contained any untrue
statement of a material fact or omitted to state a
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<PAGE>
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. As of their respective dates, the financial statements of the
Company included in the SEC Documents (as the same may have been amended)
complied as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto. Such financial statements have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis during
the periods involved (except (i) as may be otherwise indicated in such financial
statements or the notes thereto or (ii) in the case of unaudited interim
statements, to the extent they may not include footnotes or may be condensed or
summary statements) and fairly present in all material respects the financial
position of the Company and its consolidated subsidiaries as of the dates
thereof and the results of its operations and cash flows for the periods then
ended (subject, in the case of unaudited statements, to normal year-end audit
adjustments).
(g) Registration Statement. The Registration Statement became
----------------------
effective on April 22, 1994 and, to the Company's best knowledge, no stop order
suspending the effectiveness of the Registration Statement has been issued and
no proceeding for that purpose has been initiated by the SEC. On the date of its
effectiveness and on each of the Closing Dates, the Registration Statement (as
it may have been amended) complied or will comply in all material respects with
the applicable requirements of the Securities Act and the Exchange Act and the
respective rules thereunder; on the date of its effectiveness, the Registration
Statement (as it may have been amended) did 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, the
final prospectus contained in the Registration Statement, if not filed pursuant
to Rule 424(b), did not or will not, and on the date of any filing pursuant to
Rule 424(b) and on each of the Closing Dates, such 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,
-------- -------
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<PAGE>
that the Company makes no representations and 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 to the Company by the Investor or its representatives or agents,
specifically for inclusion in the Registration Statement or the Final Prospectus
(or any supplement thereto).
Section 3.2 Representations and Warranties of the Investor. The
----------------------------------------------
Investor hereby makes the following representations and warranties to the
Company:
(a) Authorization; Enforcement. (i) The Investor has the
--------------------------
requisite partnership power and authority to enter into and perform this
Agreement, (ii) the execution and delivery of this Agreement by the Investor and
the consummation by it of the transactions contemplated hereby have been duly
authorized by all necessary action, including without limitation, the action of
its corporate general partner, and no further consent or authorization of the
Investor, its limited partners or the Board of Directors or stockholders of its
corporate general partner is required, (iii) this Agreement has been duly
authorized, executed and delivered by the Investor and (iv) this Agreement
constitutes a valid and binding obligation of the Investor enforceable against
the Investor in accordance with its terms, except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation or similar laws relating to, or affecting generally the enforcement
of, creditors' rights and remedies or by other equitable principles of general
application.
(b) No Conflicts. The execution, delivery and performance
------------
of this Agreement and the consummation by the Investor of the transactions
contemplated hereby or relating hereto do not (i) result in a violation of the
Investor's organizational documents or (ii) conflict with, or constitute a
default (or an event which with notice or lapse of time or both would become a
default) under, any agreement, indenture or instrument to which the Investor or
its general partner is a party, or result in a violation of any law, rule,
regulation, order, judgment or decree of any court or governmental agency
(including Federal and state securities laws and regulations)
-11-
<PAGE>
applicable to the Investor, its general partner or their respective
properties (except for such conflicts, defaults and violations as would not,
individually or in the aggregate have a material adverse effect on the
Investor). The businesses of the Investor and its general partner are not being
conducted in violation of any law, ordinance or regulation of any governmental
entity, except for possible violations which either singly or the aggregate do
not have a material adverse effect on the Investor. The Investor is not
required to obtain any consent, authorization or order of, or make any filing or
registration with, any court or governmental agency in order for it to execute,
deliver or perform any of its obligations under this Agreement or to purchase
the Shares in accordance with the terms of this Agreement.
(c) Investor Information. All information relating to
--------------------
the Investor furnished by the Investor or its representatives or agents in
writing to the Company expressly for use in the Registration Statement or any
prospectus supplement included therein is or will be true and complete in all
material respects and 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. The Shares are being
purchased for the Investor's own account for investment only and not with a view
to, or for assignment or resale in connection with, the distribution or other
disposition thereof.
ARTICLE IV
Covenants
---------
Section 4.1 Registration.
------------
(a) The Company shall (i) cause the sale of the Shares to be
qualified under the "blue sky" laws of the State of New York, (ii) not take any
action, or omit from taking any action, which could reasonably be expected to
result in the issuance of any stop order suspending the effectiveness of the
Registration Statement and, if such an order is issued, obtain the withdrawal of
such order at the earliest possible moment, and
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<PAGE>
(iii) provide Nasdaq with notice of the issuance of the Shares, if necessary.
(b) The Company shall pay all out-of-pocket expenses incurred
in connection with the registration statements in which Shares are included
pursuant to this Agreement including, without limitation, all SEC and blue sky
registration and filing fees, Nasdaq fees, printing expenses, transfer agents'
and registrars' fees, commissions and expenses attributable to securities sold
for the account of the Company pursuant to such registration, fees and
disbursements of the Company's counsel and accountants and fees and
disbursements of experts used by the Company in connection with such
registration.
(c) The Company will furnish to the Investor, without charge,
two copies of the Registration Statement and any amendments or supplements
thereto, promptly upon filing thereof. The Company shall permit the Investor
to review any amendments or supplements to the Registration Statement before
filing such documents with the SEC.
(d) The Investor will cooperate with the Company in the
performance of its obligations under this Section 4.1 and will furnish such
information and other materials as the Company may reasonably require.
Section 4.2 Common Stock. From the date hereof through the final
------------
Put Closing Date, the Company shall not (i) amend its organizational documents;
(ii) split, combine or reclassify its outstanding capital stock; (iii) declare
or set aside or pay any dividend or other distribution with respect to the
Common Stock; or (iv) make plans or enter into any agreement with respect to the
foregoing.
Section 4.3 Compliance with Law. Each of the Company and the
-------------------
Investor shall comply with all applicable Federal and state securities and other
laws applicable to transactions contemplated by this Agreement.
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<PAGE>
ARTICLE V
Conditions
----------
Section 5.1 Conditions Precedent to the Obligation of the Company
-----------------------------------------------------
to Sell the Shares. The obligation hereunder of the Company to sell the Shares
------------------
to the Investor is further subject to the satisfaction in all material respects,
at or before each of the Initial Closing and the Put Closings, of each of the
following conditions set forth below. These conditions are for the Company's
sole benefit and may be waived by the Company at any time in its sole
discretion.
(a) Accuracy of the Investor's Representations and Warranties.
---------------------------------------------------------
The representations and warranties of the Investor shall be true and correct in
all material respects as of the date when made and as of each applicable Closing
Date as though made at that time (except for representations and warranties that
speak as of a particular date).
(b) Performance by the Investor. The Investor shall
---------------------------
have performed, satisfied and complied with in all material respects, all
covenants, agreements and conditions required by this Agreement to be performed,
satisfied or complied with by the Investor at or before each applicable Closing
Date.
(c) No Injunction. No statute, rule, regulation, executive
-------------
order, decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court or governmental authority of competent
jurisdiction which prohibits the consummation of any of the transactions
contemplated by this Agreement.
Section 5.2 Conditions Precedent to the Obligation of the Investor
------------------------------------------------------
to Purchase the Shares. The obligation of the Investor hereunder to acquire
----------------------
and pay for the Shares is subject to the satisfaction in all material
respects, at or before each of the Initial Closing and the Put Closings, of
each of the following conditions set forth below. These conditions are for
the Investor's sole benefit and may be waived by the Investor at any time in
its sole discretion.
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(a) Accuracy of the Company's Representations and Warranties.
--------------------------------------------------------
The representations and warranties of the Company shall be true and correct in
all material respects as of the date when made and as of each applicable Closing
Date as though made at the time (except for representations and warranties that
speak as of a particular date).
(b) Performance by the Company. The Company shall have
--------------------------
performed, satisfied and complied with in all material respects, all covenants,
agreements and conditions required by this Agreement to be performed, satisfied
or complied with by the Company at or prior to each of the Initial Closing and
the Put Closings.
(c) Registration Statement. The Registration Statement
----------------------
pursuant to which the Company will issue and sell, and the Investor shall
purchase, the Shares shall be effective under the Securities Act and no stop
order suspending the effectiveness of the Registration Statement shall have been
issued and no proceeding for that purpose shall have been initiated by the SEC.
(d) Nasdaq. The Company shall have given notice of the issuance
------
of the Shares to Nasdaq and Shares shall be authorized for trading on Nasdaq;
during any Pricing Period, trading in the Common Stock shall not be suspended by
the SEC or Nasdaq (except for any suspension of trading of limited duration
agreed to between the Company and Nasdaq solely to permit dissemination of
material information regarding the Company); and trading in securities generally
as reported by Nasdaq shall not have been suspended or limited or minimum prices
shall not have been established on securities whose trades are reported by
Nasdaq.
(e) No Injunction. No statute, rule, regulation, executive
-------------
order, decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court or governmental authority of competent
jurisdiction which prohibits the consummation of any of the transactions
contemplated by this Agreement.
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ARTICLE VI
Termination
-----------
Section 6.1 Termination by Mutual Consent. This Agreement may be
-----------------------------
terminated at any time by the mutual consent of the Company and the Investor by
action of the boards of directors of the Company and of the corporate general
partner of the Investor, as the case may be.
ARTICLE VII
Miscellaneous
-------------
Section 7.1 Fees and Expenses. Each party shall pay the fees and
-----------------
expenses of its advisers, counsel, accountants and other experts, if any, and
all other expenses incurred by such party incident to the negotiation,
preparation, execution, delivery and performance of this Agreement.
Section 7.2 Severability. If any term, provision, covenant or
------------
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain in full force and
effect.
Section 7.3 Specific Enforcement; Consent to Jurisdiction.
---------------------------------------------
(a) The Company and the Investor acknowledge and agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent or cure breaches of the provisions of
this Agreement and to enforce specifically the terms and provisions hereof, this
being in addition to any other remedy to which they may be entitled by law or
equity.
(b) Each of the Company and the Investor (i) hereby irrevocably
submits to the exclusive jurisdiction of the Chancery Court of the State of
Delaware for the purposes of
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<PAGE>
any suit, action or proceeding arising out of or relating to this Agreement and
(ii) hereby waives, and agrees not to assert in any such suit, action or
proceeding, any claim that it is not personally subject to the jurisdiction of
such court, that the suit, action or proceeding is brought in an inconvenient
forum or that the venue of the suit, action or proceeding is improper. Each of
the Company and the Investor consents to process being served in any such suit,
action or proceeding by mailing a copy thereof to such party at the address in
effect for notices to it under this Agreement and agrees that such service shall
constitute good and sufficient service of process and notice thereof. Nothing in
this paragraph shall affect or limit any right to serve process in any other
manner permitted by law.
Section 7.4 Entire Agreement; Amendments. This Agreement contains
----------------------------
the entire understanding of the parties with respect to the matters covered
hereby and, except as specifically set forth herein, neither the Company nor the
Investor makes any representation, warranty, covenant or undertaking with
respect to such matters. No provision of this Agreement may be waived or
amended other than by a written instrument signed by the party against whom
enforcement of any such amendment or waiver is sought.
Section 7.5 Notices. Any notice or other communication required or
-------
permitted to be given hereunder must be in writing and shall be effective (a)
upon hand delivery or delivery by telex (with correct answerback received),
telecopy or facsimile at the address or number designated below (if delivered on
a business day during normal business hours where such notice is to be
received), or the first business day following such delivery (if delivered other
than on a business day during normal business hours where such notice is to be
received) or (b) on the first business day following the date of mailing by
express courier service, fully prepaid, addressed to such address, or upon
actual receipt of such mailing, whichever shall first occur. The addresses for
such communications shall be:
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If to the Company:
Cytogen Corporation
600 College Road East
Princeton, New Jersey 08540
Telecopy: (609) 951-9298
Attention: President
With copies to:
Dechert Price & Rhoads
Princeton Pike Corporate Center
997 Lenox Drive
Building 3, Suite 210
Lawrenceville, New Jersey 08648
Telecopy: (609) 520-3259
Attention: James J. Marino, Esq.
If to the Investor:
Fletcher Fund, L.P.
767 Fifth Avenue, 48th Floor
New York, New York 10153
Telecopy: (212) 758-7090
Attention: Alphonse Fletcher, Jr.
With copies to:
Skadden, Arps, Slate, Meagher & Flom
1440 New York Avenue, N.W.
Washington, DC 20005
Telecopy: (202) 371-7963
Attention: Stephen W. Hamilton, Esq.
Either party hereto may from time to time change its address for notice under
this Section 7.5 by giving at least 10 days' written notice of such changed
address to the other party hereto.
Section 7.6 Waivers. No waiver by either party of any default with
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respect to any provision, condition or requirement of this Agreement shall be
deemed to be a continuing waiver in the future or a waiver of any other
provision,
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condition or requirement hereof; nor shall any delay or omission of either party
to exercise any right hereunder in any manner impair the exercise of any such
right accruing to it thereafter.
Section 7.7 Headings. The headings herein are for convenience
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only, do not constitute a part of this Agreement and shall not be deemed to
limit or affect any of the provisions hereof.
Section 7.8 Successors and Assigns. This Agreement shall be
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binding upon and inure to the benefit of the parties and their successors and
assigns. The parties hereto may amend this Agreement without notice to or the
consent of any third party. Neither the Company nor the Investor may assign this
Agreement or any rights or obligations hereunder without the prior written
consent of the other (which consent shall be withheld for any reason in the sole
discretion of the party from whom consent is sought). The assignment by a party
of this Agreement or any rights hereunder shall not affect the obligations of
such party under this Agreement.
Section 7.9 No Third Party Beneficiaries. This Agreement is
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intended for the benefit of the parties hereto and their respective permitted
successors and assigns and is not for the benefit of, nor may any provision
hereof be enforced by, any other person.
Section 7.10 Governing Law. This Agreement shall be governed by and
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construed and enforced in accordance with the internal laws of the State of
Delaware without regard to the principles of conflict of laws.
Section 7.11 Survival. The agreements and covenants of the Company
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contained in Section 7.1 and this Section 7.11 shall survive the termination of
this Agreement. The representations and warranties of the Company and the
Investor contained in Article III and the agreements and covenants set forth in
Sections 4.2, 4.3, 7.1, 7.14 and this Section 7.11 shall survive the final
Closing Date.
Section 7.12 Execution. This Agreement may be executed in one or
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more counterparts, all of which shall be
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considered one and the same agreement and shall become effective when
counterparts have been signed by each party and delivered to the other party, it
being understood that both parties need not sign the same counterpart. In the
event any signature is delivered by facsimile transmission, the party using such
means of delivery shall cause four additional executed signature pages to be
physically delivered to the other party within five days of the execution and
delivery hereof.
Section 7.13 Publicity. The Company and the Investor shall consult
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with each other prior to issuing any press release or otherwise making public
statements with respect to the transactions contemplated hereby.
Section 7.14 Reasonable Efforts. The Company and the Investor agree
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to use all reasonable efforts promptly to take, or cause to be taken, all
actions and, to do or cause to be done, all things necessary, proper or
advisable to consummate and make effective the transactions contemplated by this
Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the date hereof.
CYTOGEN CORPORATION
By: /s/ T. Jerome Madison
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Name: T. Jerome Madison
Title: Vice President, Chief
Financial Officer and Secretary
FLETCHER FUND, L.P.
By: Fletcher Asset Management, Inc.,
its general partner
By: /s/ Alphonse Fletcher, Jr.
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Name: Alphonse Fletcher, Jr.
Title: President
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