As filed with the Securities and Exchange Commission on July 10, 1998
Registration No. 333-58269
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1 TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
ENZON, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 22-2372868
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
20 Kingsbridge Road, Piscataway, New Jersey 08854
(732) 980-4500
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
--------------
JOHN CARUSO, ESQ.
VICE PRESIDENT, BUSINESS DEVELOPMENT,
GENERAL COUNSEL AND SECRETARY
ENZON, INC.
20 Kingsbridge Road, Piscataway, New Jersey 08854
(732) 980-4500
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
--------------
Copies to:
KEVIN T. COLLINS, ESQ.
DORSEY & WHITNEY LLP
250 Park Avenue, New York, New York 10177
(212) 415-9200
Approximate date of commencement of proposed sale to the public: As soon as
practicable after this Registration Statement becomes effective. If the only
securities being registered on this Form are being offered pursuant to dividend
or interest reinvestment plans, please check the following box. [_]
If any securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [x]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the securities
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
====================================================================================================================================
Title of Each Class Proposed Maximum Proposed Maximum Amount of
of Securities to Amount to Offering Price Aggregate Registration
be Registered be Registered per Share Offering Price Fee
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock $.01 par 3,983,000 shares $5.53(1) $22,025,990 $6,498
value per share
====================================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of computing the amount of the
registration fee in accordance with Rule 457(c) under the Securities Act of
1933, as amended (the "Securities Act"), based on the average of the high
and low sale price for the common stock, $.01 par value per share (the
"Common Stock") as reported by the Nasdaq Stock Market on June 26, 1998.
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED JULY 10, 1998
PROSPECTUS
ENZON, INC.
3,983,000 Shares
Common Stock
($.01 par value)
------------------------
This prospectus (the "Prospectus") relates to the offer and sale of up to
3,983,000 shares (the "Shares") of common stock, $.01 par value (the "Common
Stock"), of Enzon, Inc. (the "Company" or "Enzon") by certain selling
stockholders of the Company (each a "Selling Stockholders"). See "Selling
Stockholders." The Company will not receive any of the proceeds from the sale of
the Shares.
The Selling Stockholders may sell the Shares from time to time in one or
more transactions (which may involve block transactions) in the open market, in
negotiated transactions, through the writing of options on the Shares (whether
such options are listed on an options exchange or otherwise) or by a combination
of these methods, at fixed prices that may be changed, at market prices at the
time of sale, at prices related to market prices or at negotiated prices. The
Selling Stockholders may effect these transactions by selling the Shares to or
through broker-dealers, who may receive compensation in the form of discounts or
commissions from the Selling Stockholders or from the purchasers of the Shares
for whom the broker-dealers may act as agent or to whom they may sell as
principal, or both in amounts to be negotiated immediately prior to the sale.
The Selling Stockholders may also pledge the Shares as collateral for margin
accounts or loans and the Shares could be resold pursuant to the terms of such
accounts or loans. The Selling Stockholders, such brokers or dealers and any
other participating brokers or dealers may be deemed to be "underwriters" within
the meaning of the Securities Act of 1933, as amended (the "Securities Act") in
connection with such sales. See "Plan of Distribution."
In addition, any securities covered by this Prospectus which qualify for
sale pursuant to Rule 144 under the Securities Act ("Rule 144") may be sold
under Rule 144 rather than pursuant to this Prospectus. To the extent required,
the specific shares of Common Stock to be sold, the name of any successor
Selling Stockholders, the public offering price, the names of any such agent,
dealer or underwriter, and any applicable commission or discount with respect to
any particular offer will be set forth in an accompanying Prospectus Supplement.
See "Selling Stockholders" and "Plan of Distribution."
Neither the Company nor the Selling Stockholders can presently estimate the
amount of commissions or discounts, if any, that will be paid by the Selling
Stockholders on account of their sale of the Shares from time to time. The
Company will bear all expenses in connection with the registration of the Shares
herein, which expenses are estimated to be approximately $184,000. The Selling
Stockholders will pay any brokerage compensation in connection with their sale
of the Shares. See "Use of Proceeds."
The Company's Common Stock is traded in the over-the-counter market and is
quoted on The Nasdaq National Market, under the symbol "ENZN." On July 8, 1998
the last reported sale price of the Common Stock, as reported on The Nasdaq
National Market was $6.375 per share.
<PAGE>
AN INVESTMENT IN THE SECURITIES OFFERED HEREBY INVOLVES A HIGH
DEGREE OF RISK. SEE "RISK FACTORS" COMMENCING ON PAGE 7.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
The date of this Prospectus is July __, 1998
<PAGE>
TABLE OF CONTENTS
Page
----
Available Information ................................................... 2
Incorporation of Certain Documents by Reference ......................... 2
Prospectus Summary ...................................................... 4
Risk Factors ............................................................ 7
Use of Proceeds ......................................................... 12
Selling Stockholders .................................................... 12
Plan of Distribution .................................................... 15
Legal Matters ........................................................... 16
Experts ................................................................. 16
No dealer, salesperson or other person has been authorized to give any
not contained or incorporated by reference in this Prospectus in connection with
this offering. Any information or representation not contained or incorporated
by reference herein must not be relied on as having been authorized by the
Company, the Selling Stockholders or their respective agents. This Prospectus
does not constitute an offer to sell or the solicitation of an offer to buy the
securities offered hereby in any state to any person to whom it is unlawful to
make such offer or solicitation. Except where otherwise indicated, this
Prospectus speaks as of its date and neither the delivery of this Prospectus nor
any sale made hereunder shall, under any circumstances, create an implication
that there has been no change in the affairs of the Company since the date
hereof or that the information contained herein is correct as of any time
subsequent to its date.
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed by the Company can be inspected and
copied at the public reference facilities maintained by the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549, and at the following Regional
Offices of the Commission: New York Regional Office, Seven World Trade Center,
Suite 1300, New York, New York 10048; and Chicago Regional Office, Northwestern
Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661-2511. Copies of such material can be obtained from the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 at
prescribed rates. The Commission also maintains a Web site that contains
reports, proxy and information regarding the Company at (http://www.sec.gov).
The Company's Common Stock is listed on the Nasdaq National Market and
reports, proxy and information statements and other information concerning the
Company can be inspected at the National Association of Securities Dealers, 1735
K Street, N.W., 4th Floor, Washington, D.C. 20006-1506.
The Company has filed with the Commission a Registration Statement on Form
S-3 (referred to herein together with all amendments and exhibits thereto as the
"Registration Statement") under the Securities Act, with respect to the shares
of Common Stock offered hereby. This Prospectus which forms a part of the
Registration Statement, does not contain all of the information set forth or
incorporated by reference in the Registration Statement and the exhibits and
schedules thereto, certain parts of which are omitted in accordance with the
rules and regulations of the Commission. For further information with respect to
the Company and the shares of Common Stock offered hereby, reference is hereby
made to the Registration Statement, including the exhibits thereto. Copies of
the Registration Statement, including the exhibits, may be obtained from the
Public Reference Section of the Commission at the aforementioned address upon
payment of the fee prescribed by the Commission. Copies of each document may
also be obtained through the Commission's internet address at
http://www.sec.gov. The summaries contained in this Prospectus of additional
information included in the Registration Statement or any exhibit thereto are
qualified in their entirety by reference to such information or exhibit.
The following trademarks and service marks appear in or are incorporated by
reference into, this Prospectus: ADAGEN(R) and ONCASPAR(R) are registered
trademarks of the Company; PEGNOLOGY(R) is a registered service mark of the
Company; SCA(R) is a registered trademark of Enzon Labs Inc., a wholly-owned
subsidiary of the Company; Intron A(R) is a registered trademark of Schering
Corporation.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company hereby incorporates by reference into this Prospectus (i) its
Annual Report on Form 10-K for the Fiscal Year Ended June 30, 1997, which
contains audited financial statements for the Company's latest fiscal year for
which a Form 10-K was required to have been filed and incorporates by reference
certain portions of the Company's definitive Proxy Statement for the Annual
Meeting of Stockholders held December 2, 1997, (ii) all other reports filed by
the Company pursuant to Section 13(a) or 15(d) of the Exchange Act since June
30, 1997, including but not limited to, the Quarterly Reports on Form 10-Q for
the Quarters Ended September 30, 1997, December 31, 1997 and March 31, 1998 and
the Current Report on Form 8-K filed on June 30, 1998 and (iii) the description
of the Company's Common Stock, $.01 par value, as contained in its registration
statement on Form 8-A, filed with the Commission on October 29, 1984, as amended
by a Form 8 filed with the Commission on October 15, 1990.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14
and 15(d) of the Exchange Act, subsequent to the date hereof and prior to the
filing of a post-effective amendment to the Registration Statement which
indicates that all shares of Common Stock offered hereby have been sold or which
deregisters all shares of Common Stock then remaining unsold, shall be deemed to
be incorporated by reference into this Prospectus and to be a part hereof from
the date of filing of such documents.
2
<PAGE>
Any statement contained herein or in a document incorporated or deemed to
be incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that such statement is modified or
superseded by a statement contained herein or in a subsequently filed document
which also is or is deemed to be incorporated by reference herein. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
The Company will provide, without charge, to each person (including any
beneficial owner) to whom this Prospectus is delivered, upon written or oral
request of such person, a copy of any and all of the information that has been
incorporated by reference in this Prospectus (not including exhibits to such
information unless such exhibits are specifically incorporated by reference into
such information). Such requests should be directed to John Caruso, Vice
President, Administration, General Counsel and Secretary, at the Company's
principal executive offices at 20 Kingsbridge Road, Piscataway, New Jersey
08854, telephone (732) 980-4500.
3
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and the Consolidated Financial Statements and the Notes thereto
appearing elsewhere herein or incorporated by reference in this Prospectus. This
Prospectus and such documents contain various "forward looking statements"
within the meaning of Section 27A of the Securities Act of 1933, as amended (the
"Securities Act"), which represent the Company's intentions, expectations or
beliefs concerning future events, including, but not limited to, statements
regarding management's expectations or beliefs concerning future events. These
forward-looking statements are qualified by important factors that could cause
actual results to differ materially from those in the forward-looking
statements, including, without limitation, those discussed in "Risk Factors."
See "Risk Factors."
The Company
Overview
Enzon is a biopharmaceutical company that develops, manufactures and
markets enhanced therapeutics for life-threatening diseases through the
application of its two proprietary technologies: (i) polyethylene glycol ("PEG")
modification and (ii) single-chain antigen-binding ("SCA") proteins. Enzon is
focusing its research activities primarily in the area of oncology and is
applying its proprietary technologies to compounds of known therapeutic efficacy
in order to enhance the performance of these compounds. The Company is
commercializing its proprietary technologies by developing products internally
and in cooperation with strategic partners. To date, the Company and its
partners have successfully commercialized two products, ONCASPAR and ADAGEN
(described below). The Company currently has two products under development
internally and has established more than 15 strategic alliances and license
relationships for the development of products using the Company's proprietary
technologies. The Company believes that its partners are dedicating substantial
resources to the development of products which incorporate Enzon's proprietary
technologies. These efforts include the development of PEG-Intron A, a PEG
modified version of Schering-Plough Corporation's ("Schering-Plough") product,
INTRON A (interferon alfa 2b), a genetically-engineered anticancer-antiviral
drug, for which Schering-Plough is currently conducting Phase III clinical
trials.
PEG Technology
The PEG process involves chemically attaching PEG, a relatively
non-reactive and non-toxic polymer, to proteins, chemicals and certain other
pharmaceuticals for the purpose of enhancing their therapeutic value (the "PEG
Process"). The attachment of PEG helps to disguise the compound and reduce the
recognition of the compound by the immune system, generally lowering potential
immunogenicity and extending the life of such compounds in the circulatory
system. The PEG Process also increases the solubility of the modified compound
which enhances the delivery of the native compound. To date, Enzon's
commercialized products are PEG modified proteins. Through enhancements, Enzon
is seeking to apply its PEG technology to more traditional organic compounds.
The Company has made significant improvements to the original PEG Process,
collectively referred to as Second Generation PEG Technology, and has applied
for and received certain patents covering some improvements. One of the
components of the Second Generation PEG Technology is new linker chemistries;
the chemical binding of PEG to unmodified proteins. These new linkers provide an
enhanced binding of the PEG to the protein resulting in a more stable compound
with increased circulation life and may result in more activity of the modified
protein.
The Company also has developed a Third Generation PEG Technology that is
designed to enable the technology to be expanded to certain organic compounds
and would give such PEG-modified compounds "Pro
4
<PAGE>
Drug" attributes. This is accomplished by attaching PEG to a compound by means
of a covalent bond that is designed to break down over time, thereby releasing
the active ingredient in the proximity of various tissues.
The Company believes that the "Pro Drug/Transport Technology" has much broader
usefulness in that it can be applied to a wide range of small molecules, such as
cancer chemotherapy agents, antibiotics, anti-fungals and immunosuppressants, as
well as to proteins and peptides, including enzymes and growth factors, although
there can be no assurance that such application will result in safe, effective,
or commercially viable pharmaceutical products.
Marketed PEG Products
The Company has received marketing approval from the United States Food and
Drug Administration ("FDA") for two first generation PEG technology products:
(i) ONCASPAR, the PEG formulation of asparaginase, for the indication of acute
lymphoblastic leukemia ("ALL") in patients who are hypersensitive to native
forms of L-asparaginase and (ii) ADAGEN, the PEG formulation of adenosine
deaminase, the first successful application of enzyme replacement therapy for an
inherited disease to treat a rare form of Severe Combined Immunodeficiency
Disease ("SCID"), commonly known as the "Bubble Boy Disease."
ADAGEN is marketed by Enzon on a worldwide basis. ONCASPAR is marketed in
the U.S. and Canada by Rhone-Poulenc Rorer Pharmaceuticals, Inc. and certain of
its affiliated entities ("RPR") and in Europe by Medac GmbH ("Medac"). The
Company has also granted exclusive licenses to RPR to sell ONCASPAR in the
Pacific Rim and Mexico. The Company is entitled to royalties on the sales of
ONCASPAR in North America by RPR, as well as manufacturing revenue from the
production of ONCASPAR. The Company's agreements with RPR for the Pacific Rim
and with Medac require the partners to purchase ONCASPAR from the Company at a
set price which increases over the term of the agreements. In addition, the
agreements provide for minimum purchase quantities. The Company manufactures
both ADAGEN and ONCASPAR in its South Plainfield, New Jersey facility.
PEG Products under Development
The Company currently has three products created using its Second and Third
Generation PEG Technology in clinical and preclinical trials. The first is
PEG-Intron A, a PEG modified version of Schering-Plough's product, INTRON A
(interferon alfa 2b), a genetically-engineered anticancer-antiviral drug, for
which Schering-Plough is currently conducting Phase III clinical trials for use
in the treatment of hepatitis C. The second product under development is
PEG-hemoglobin, a proprietary bovine hemoglobin-based oxygen-carrier being
developed for the radiosensitization of solid hypoxic tumors, for which the
Company is currently conducting a Phase Ib clinical trial. The third product
under development is PROTHECAN, a PEG-modified version of camptothecin, a potent
topoisomerase-1 inhibitor, for use in certain cancers, which is currently in
preclinical studies.
PEG-Intron A. PEG-Intron A was developed by the Company in conjunction with
Schering-Plough to have longer lasting activity and an enhanced safety profile
compared to the currently marketed form of INTRON A. PEG-Intron A is currently
in a large scale Phase III clinical trial in hepatitis C patients in the United
States and Europe. Other indications being pursued include chronic myelogenous
leukemia and solid tumors. It is expected that PEG-Intron A will be administered
once a week, compared to the current regimen for unmodified INTRON A of three
times a week. Moreover, it is anticipated that PEG-Intron A will provide a more
convenient dosing schedule with an improved side effect profile and an improved
therapeutic index for hepatitis C patients. Currently, some patients on INTRON A
experience debilitating flu-like symptoms.
Pursuant to an agreement with Schering-Plough, the Company will receive
royalties on worldwide sales of PEG-Intron A, receive milestone payments, and
has the option to be the exclusive manufacturer of PEG-Intron A for the U.S.
market. Schering-Plough's sales of INTRON A were approximately $598 million in
1997
5
<PAGE>
for all approved indications. The worldwide market for alpha interferon products
is estimated to be in excess of $1 billion for all approved indications. The
patents covering Schering-Plough's INTRON A will begin to expire in 2001. The
Company's Second Generation PEG Technology patents that cover the modified
product should afford Schering-Plough extended patent life for PEG Intron-A.
SCA Technology
The Company also has an extensive licensing program for its second
proprietary technology, SCA protein technology. SCA proteins are genetically
engineered proteins designed to overcome the problems hampering the diagnostic
and therapeutic use of conventional monoclonal antibodies. Preclinical studies
have shown that certain SCA proteins target and penetrate tumors more readily
than conventional monoclonal antibodies. In addition to these advantages,
because SCA proteins are developed at the gene level, they are better suited for
targeted delivery of gene therapy vectors and fully-human SCA proteins can be
isolated directly, with no need for costly "humanization" procedures. Also, many
gene therapy methods require that proteins be produced in an active form inside
cells. SCA proteins can be produced through intracellular expression (inside
cells) more readily than monoclonal antibodies.
Currently, there are nine SCA proteins in Phase I or II clinical trials by
various corporations and institutions. Two of these corporations and
institutions have existing licenses with the Company with respect to SCA
proteins and others are expected to require similar licenses. Some of the areas
being explored are cancer therapy, cardiovascular indications and AIDS. The
Company has granted non-exclusive SCA licenses to more than a dozen companies,
including Bristol-Myers Squibb Company, Baxter Healthcare Corporation, Eli Lilly
& Co., Alexion Pharmaceuticals Inc., and the Gencell division of RPR. These
licenses generally provide for upfront payments, milestone payments and
royalties on sales of FDA approved products.
The Company's principal executive office and mailing address is 20
Kingsbridge Road, Piscataway, New Jersey 08054, and its telephone number is
(732) 980-4500.
The Offering
Securities Offered............ This Prospectus relates to an offering by the
Selling Stockholders of up to 3,983,000
shares of Common Stock of the Company.
Securities Outstanding(1) As of May 29, 1998 the Company had 31,331,081
shares of Common Stock outstanding. After
giving effect to the completion of the
private offering described in "Selling
Stockholders," the Company would have
35,314,081 shares of Common Stock
outstanding.
Use of Proceeds .............. The Company will not receive any proceeds
from the sale of the Shares offered herein by
the Selling Stockholders. See "Use of
Proceeds."
Risk Factors ................. See "Risk Factors" for a discussion of
certain risk factors that should be
considered by prospective investors in
connection with an investment in the shares
of Common Stock offered hereby.
- ----------
(1) Excludes 5,417,422 shares reserved for issuance upon exercise of options and
warrants outstanding at May 29, 1998, at weighted average exercise prices of
$4.03 and $4.17, respectively.
6
<PAGE>
RISK FACTORS
Information contained and incorporated by reference in this Prospectus
contains "forward-looking statements" which can be identified by the use of
forward-looking terminology such as "believes," "expects," "may," "will,"
"should," or "anticipates" or the negative thereof or other variations thereon
or comparable terminology, or by discussions of strategy. No assurance can be
given that the future results covered by the forward-looking statements will be
achieved. The risk factors set forth below constitute cautionary statements
identifying important factors with respect to such forward-looking statements,
including certain risks and uncertainties, that could cause actual results to
vary materially from the future results indicated in such forward-looking
statements. Other factors could also cause actual results to vary materially
from the future results indicated in such forward-looking statements.
An investment in the Shares offered hereby involves a high degree of risk.
Prospective investors should carefully consider the following risk factors in
addition to the other information set forth and incorporated by reference in
this Prospectus before making any decision to invest in the Shares.
Accumulated Deficit and Uncertainty of Future Profitability. The Company was
originally incorporated in 1981. To date, the Company's sources of cash have
been the proceeds from the sale of its stock through public offerings and
private placements, sales of its FDA approved products, ADAGEN(R) and
ONCASPAR(R); sales of its products for research purposes; contract research and
development fees; technology transfer and license fees; and royalty advances. At
March 31, 1998, the Company had an accumulated deficit of approximately $114.5
million. The Company expects to incur operating losses for the foreseeable
future. To date, ADAGEN and ONCASPAR are the only products of the Company which
have been approved for marketing in the United States by the FDA, having been
approved in March 1990 and February 1994, respectively. In addition, ONCASPAR
has been approved for marketing in Canada, Germany and Russia. In order to
achieve profitable operations on a continuing basis, the Company, either alone
or through its partners, must successfully manufacture, market and sell its
ADAGEN and ONCASPAR products and develop, manufacture and market the Company's
products which are under development. These products are in various stages of
development, and the period necessary to achieve regulatory approval and market
acceptance of any individual product is uncertain and typically lengthy, if
achievable at all. Potential investors should be aware of the difficulties a
biopharmaceutical enterprise such as the Company encounters, especially in view
of the intense competition in the pharmaceutical industry in which the Company
competes. There can be no assurance that the Company's plans will either
materialize or prove successful, that its products under development will be
successfully developed or that its products will generate revenues sufficient to
enable the Company to achieve profitability.
Raw Materials and Dependence Upon Suppliers. Except for PEG-hemoglobin, the
Company purchases the unmodified compounds utilized in its approved products and
products under development from outside suppliers. There can be no assurance
that the purified bovine hemoglobin used in the manufacture of PEG-hemoglobin
can be produced by the Company in the amounts necessary to expand the current
clinical trials. The Company may be required to enter into supply contracts with
outside suppliers for certain unmodified compounds. The Company does not produce
the unmodified adenosine deaminase used in the manufacture of ADAGEN, the
unmodified forms of L-asparaginase used in the manufacture of ONCASPAR and the
unmodified camptothecin used in the Company's PROTHECAN product which is under
development and has a supply contract with an outside supplier for the supply of
each of these unmodified compounds. Delays in obtaining or an inability to
obtain any unmodified compound, including unmodified adenosine deaminase,
unmodified L-asparaginase, unmodified bovine blood, or unmodified camptothecin
on reasonable terms, or at all, could have a material adverse effect on the
Company's business, financial condition and results of operations. In the event
the Company is required to obtain an alternate source for an unmodified compound
utilized in a product which is being sold commercially or which is in clinical
development, the FDA and relevant foreign regulatory agencies
7
<PAGE>
will likely require the Company to perform additional testing, which would cause
delays and additional expenses, to demonstrate that the alternate material is
biologically and chemically equivalent to the unmodified compound previously
used. Such evaluations could include chemical, pre-clinical and clinical studies
and could delay development of a product which is in clinical trials, limit
commercial sales of an approved product and cause the Company to incur
significant additional expenses. If such alternate material is not demonstrated
to be chemically and biologically equivalent to the previously used unmodified
compound, the Company will likely be required to repeat some or all of the
pre-clinical and clinical trials conducted for such compound. The marketing of
an FDA approved drug could be disrupted while such tests are conducted. Even if
the alternate material is shown to be chemically and biologically equivalent to
the previously used compound, the FDA or relevant foreign regulatory agency may
require the Company to conduct additional clinical trials with such alternate
material.
Patents and Proprietary Technology. The Company has licensed, and been issued, a
number of patents in the United States and other countries and has other patent
applications pending to protect its proprietary technology. Although the Company
believes that its patents provide certain protection from competition, there can
be no assurance that such patents will be of substantial protection or
commercial benefit to the Company, will afford the Company adequate protection
from competing products, will not be challenged or declared invalid, or that
additional United States patents or foreign patent equivalents will be issued to
the Company. The scope of patent claims for biotechnological inventions is
uncertain and the Company's patents and patent applications are subject to this
uncertainty. The Company is aware of certain issued patents and patent
applications belonging to third parties, and there may be other patents and
patent applications, containing subject matter which the Company or its
licensees or collaborators may require in order to research, develop or
commercialize at least some of the Company's products. There can be no assurance
that licenses under such patents and patent applications will be available on
acceptable terms or at all. If the Company does not obtain such licenses, it or
its partners could encounter delays in product market introductions while it
attempts to design around such patents or could find that the development,
manufacture or sale of products requiring such licenses could be foreclosed. If
the Company does obtain such licenses it will in all likelihood be required to
make royalty and other payments to the licensors, thus reducing the profits
realized by the Company from the products covered by such licenses. The Company
is aware that certain organizations are engaging in activities that infringe
certain of the Company's PEG technology and SCA patents. There can be no
assurance that the Company will be able to enforce its patent and other rights
against such organizations. The Company expects that there may be significant
litigation in the industry regarding patents and other proprietary rights and,
if Enzon were to become involved in such litigation, it could consume a
substantial amount of the Company's resources. In addition, the Company relies
heavily on its proprietary technologies for which pending patent applications
have been filed and on unpatented know-how developed by the Company. Insofar as
the Company relies on trade secrets and unpatented know-how to maintain its
competitive technological position, there can be no assurance that others may
not independently develop the same or similar technologies. Although the Company
has taken steps to protect its trade secrets and unpatented know-how,
third-parties nonetheless may gain access to such information. The Company has
two research and license agreements with The Green Cross Corporation ("Green
Cross") regarding rHSA. The Company and Yoshitomi Pharmaceutical Industries,
Ltd. ("Yoshitomi"), the successor to Green Cross' business, are currently in
arbitration to resolve the amount of royalties that will be due the Company, if
any. In April 1998, Yoshitomi filed documents in such arbitration seeking a
declaratory judgment that under its agreement with the Company no royalties are
payable. Any adverse decision from such an arbitration proceeding could result
in a material adverse effect to the Company's future business, financial
condition and results of operations. Research Corporation Technologies, Inc.
("Research Corporation") held the original patent upon which the PEG Process is
based and had granted the Company a license under such patent. Research
Corporation's patent for the PEG Process in the United States and its
corresponding foreign patents have expired. Although the Company has obtained
several improvement patents in connection with the PEG Process, there can be no
assurance that any of these patents will enable the Company to prevent
infringement or that competitors will not develop competitive products outside
the protection that may be afforded by these patents. The Company is aware
8
<PAGE>
that others have also filed patent applications and have been granted patents in
the United States and other countries with respect to the application of PEG to
proteins and other compounds. Based upon the expiration of the Research
Corporation patent, other parties will be permitted to make, use, or sell
products covered by the claims of the Research Corporation patent, subject to
other patents, including those held by the Company. There can be no assurance
that the expiration of the Research Corporation patent will not have a material
adverse effect on the business, financial condition and results of operations of
the Company.
Limited Sales and Marketing Experience; Dependence on Marketing Partners. Other
than ADAGEN, which the Company markets on a worldwide basis to a small patient
population, the Company does not engage in the direct commercial marketing of
any of its products and therefore does not have significant sales and marketing
experience. For certain of its products, the Company has provided exclusive
marketing rights to its corporate partners in return for royalties to be
received on sales. With respect to ONCASPAR, the Company has granted exclusive
marketing rights in North America and the Pacific Rim to RPR. The Company has
also granted exclusive marketing rights in Europe and Russia to Medac Gmbh and
in Israel to Tzamal Pharma Ltd.. The Company expects to retain marketing
partners to market ONCASPAR in other foreign markets, principally South America,
and is currently pursuing arrangements in this regard. There can be no assurance
that such efforts will result in the Company concluding such arrangements.
Regarding the marketing of certain of the Company's other future products, the
Company expects to evaluate whether to create a sales force to market certain
products in the United States or to continue to enter into license and marketing
agreements with others for United States and foreign markets. These agreements
generally provide that all or a significant portion of the marketing of these
products will be conducted by the Company's licensees or marketing partners. In
addition, under certain of these agreements, the Company's licensees or
marketing partners may have all or a significant portion of the development and
regulatory approval responsibilities. There can be no assurance that the Company
will be able to control the amount and timing of resources that any licensee or
marketing partner may devote to the Company's products or prevent any licensee
or marketing partner from pursuing alternative technologies or products that
could result in the development of products that compete with the Company's
products and the withdrawal of support for the Company's products. Should the
licensee or marketing partner fail to develop a marketable product (to the
extent it is responsible for product development) or fail to market a product
successfully, if it is developed, the Company's business, financial condition
and results of operations may be adversely affected. There can be no assurance
that the Company's marketing strategy will be successful. Under the Company's
marketing and license agreements, the Company's marketing partners and licensees
may have the right to terminate the agreements and abandon the applicable
products at any time for any reason without significant payments. The Company is
aware that certain of its marketing partners are pursuing parallel development
of products on their own and with other collaborative partners which may compete
with the licensed products and there can be no assurance that the Company's
other current or future marketing partners will not also pursue such parallel
courses.
Reimbursement from Third-Party Payors. Sales of the Company's products will be
dependent in part on the availability of reimbursement from third-party payors,
such as governmental health administration authorities, private health insurers
and other organizations. Government and other third-party payors are
increasingly sensitive to the containment of health care costs and are limiting
both coverage and levels of reimbursement for new therapeutic products approved
for marketing, and are refusing, in some cases, to provide any coverage for
indications for which the FDA and other national health regulatory authorities
have not granted marketing approval. There can be no assurance that such
third-party payor reimbursement will be available or will permit the Company to
sell its products at price levels sufficient for it to realize an appropriate
return on its investment in product development. Since patients who receive
ADAGEN will be required to do so for their entire lives (unless a cure or
another treatment is developed), lifetime limits on benefits which are included
in most private health insurance policies could permit insurers to cease
reimbursement for ADAGEN. Lack of or inadequate reimbursement by government and
other third party payors for the Company's products would have a material
adverse effect on the Company's business, financial condition and results of
operations.
9
<PAGE>
Government Regulation. The manufacturing and marketing of pharmaceutical
products in the United States and abroad is subject to stringent governmental
regulation and the sale of any of the Company's products for use in humans in
the United States will require the prior approval of the FDA. Similar approvals
by comparable agencies are required in most foreign countries. The FDA has
established mandatory procedures and safety standards which apply to the
clinical testing, manufacture and marketing of pharmaceutical products.
Pharmaceutical manufacturing facilities are also regulated by state, local and
other authorities. Obtaining FDA approval for a new therapeutic may take several
years and involve substantial expenditures. ADAGEN was approved by the FDA in
March 1990. ONCASPAR was approved by the FDA in February 1994, in Germany in
November 1994 and in Canada in 1997 in each case for patients with acute
lymphoblastic leukemia who are hypersensitive to native forms of L-asparaginase.
ONCASPAR was approved in Russia for therapeutic use in a broad range of cancers.
Except for these approvals, none of the Company's other products have been
approved for sale and use in humans in the United States or elsewhere. There can
be no assurance that the Company will be able to obtain FDA approval for any of
its other products. In addition, any approved products are subject to continuing
regulation, and noncompliance by the Company with applicable requirements can
result in criminal penalties, civil penalties, fines, recall or seizure,
injunctions requiring suspension of production, orders requiring ongoing
supervision by the FDA or refusal by the government to approve marketing or
export applications or to allow the Company to enter into supply contracts.
Failure to obtain or maintain requisite governmental approvals or failure to
obtain or maintain approvals of the scope requested, will delay or preclude the
Company or its licensees or marketing partners from marketing their products, or
limit the commercial use of the products, and thereby may have a material
adverse affect on the Company's business, financial condition and results of
operations.
Intense Competition and Risk of Technological Obsolescence. Many established
biotechnology and pharmaceutical companies with resources greater than those of
the Company are engaged in activities that are competitive with the Company's
and may develop products or technologies which compete with those of the
Company. The Company is aware that other companies are engaged in utilizing PEG
technology in developing drug products. There can be no assurance that the
Company's competitors will not successfully develop, manufacture and market
competing products utilizing PEG technology or otherwise. Other drugs or
treatment modalities which are currently available or that may be developed in
the future, and which treat the same diseases as those which the Company's
products are designed to treat, may be competitive with the Company's products.
There can be no assurance that the Company will be able to compete successfully
against current or future competitors or that such competition will not have a
material adverse effect on the Company's business, financial condition and
results of operations. Rapid technological development by others may result in
the Company's products becoming obsolete before the Company recovers a
significant portion of the research, development and commercialization expenses
incurred with respect to those products. The Company's success, in large part,
depends upon developing and maintaining a competitive position in the
development of products and technologies in its area of focus. There can be no
assurance that the Company's competitors will not succeed in developing
technologies or products that are more effective than any which are being sold
or developed by the Company or which would render the Company's technologies or
products obsolete or noncompetitive. The Company's failure to develop and
maintain a competitive position with respect to its products and/or technologies
would have a material adverse effect on its business, financial condition and
results of operations.
Uncertainty of Market Acceptance. The Company's products, ONCASPAR and ADAGEN,
have been approved by the FDA to treat patients with acute lymphoblastic
leukemia and a rare form of severe combined immunodeficiency disease,
respectively. Neither product has become widely used due to the small patient
population and limited indications approved by the FDA. The Company's current
research and development efforts are directed towards developing new
technologies to aid in drug delivery. Assuming that the Company is able to
develop such technologies and secure the requisite FDA approvals, the market
acceptance of any such products will depend upon the acceptance by the medical
community of the use of such technologies. There can be no assurance that any
additional products will be approved by the FDA or that, if approved, the
medical
10
<PAGE>
community will use them. In addition, the use of any such new products will
depend upon the extent of third party medical reimbursement, increased awareness
of the effectiveness of such technologies and sales efforts by the Company or
any marketing partner. The Company's proprietary PEG technology has received
only limited market acceptance to date. Failure of the Company to develop new
FDA approved products and to achieve market acceptance for such products would
have a material adverse effect on the Company's business, financial condition
and results of operation.
Potential Product Liability. The use of the Company's products during testing or
after regulatory approval entails an inherent risk of adverse effects which
could expose the Company to product liability claims. The Company maintains
product liability insurance coverage in the total amount of $10 million for
claims arising from the use of its products in clinical trials prior to FDA
approval and for claims arising from the use of its products after FDA approval.
There can be no assurance that the Company will be able to maintain its existing
insurance coverage or obtain coverage for the use of its other products in the
future. There can be no assurance that such insurance coverage and the resources
of the Company would be sufficient to satisfy any liability resulting from
product liability claims or that a product liability claim would not have a
material adverse effect on the Company's business, financial condition or
results of operations.
Future Capital Needs; Uncertainty of Additional Financing. The Company's current
sources of liquidity are its cash reserves, and interest earned on such cash
reserves, sales of ADAGEN and ONCASPAR, sales of its products for research
purposes, and license fees. There can be no assurance as to the level of sales
of the Company's FDA approved products, ADAGEN and ONCASPAR, or the amount of
royalties realized from the commercial sale of ONCASPAR pursuant to the
Company's licensing agreements. Total cash reserves, including short term
investments, as of March 31, 1998, were approximately $6.6 million, and after
giving effect to the approximately $17,600,000 of net proceeds received by the
Company from the private placement of the Shares offered herein, will be
approximately 24,228,000. Based upon its currently planned research and
development activities and related costs and its current sources of liquidity,
the Company anticipates its current cash reserves will be sufficient to meet its
capital and operational requirements for the foreseeable future. The Company's
future needs and the adequacy of available funds will depend on numerous
factors, including without limitation, the successful commercialization of its
products, progress in its product development efforts, the magnitude and scope
of such efforts, progress with preclinical studies and clinical trials, progress
with regulatory affairs activities, the cost of filing, prosecuting, defending
and enforcing patent claims and other intellectual property rights, competing
technological and market developments, and the development of strategic
alliances for the marketing of its products. There can be no assurance that the
Company will not require additional financing for its currently planned capital
and operational requirements. In addition, the Company may seek to acquire
additional technology, enter into strategic alliances and engage in additional
research and development programs, which may require additional financing. The
Company does not have any committed sources of additional financing, and there
can be no assurance that additional funding, if necessary, will be available on
acceptable terms, if at all. To the extent the Company is unable to obtain
financing, it may be required to curtail its activities or sell additional
securities. There can be no assurance that any of the foregoing fund raising
activities will successfully meet the Company's anticipated cash needs. If
adequate funds are not available, the Company's business, financial condition
and results of operations will be materially and adversely affected.
Dividend Policy and Restrictions. The Company has paid no dividends on its
Common Stock, since its inception and does not plan to pay dividends on its
Common Stock in the foreseeable future. Except as may be utilized to pay the
dividends payable on the Company's Series A Cumulative Convertible Preferred
Stock (the "Series A Preferred Stock"), any earnings which the Company may
realize will be retained to finance the growth of the Company. In addition, the
terms of the Series A Preferred Stock restrict the payment of dividends on other
classes and series of stock.
11
<PAGE>
Possible Volatility of Stock Price. Historically, the market price of the
Company's Common Stock has fluctuated over a wide range and it is likely that
the price of the Common Stock will fluctuate in the future. Announcements
regarding technical innovations, the development of new products, the status of
corporate collaborations and supply arrangements, regulatory approvals, patent
or proprietary rights or other developments by the Company or its competitors
could have a significant impact on the market price of the Common Stock. In
addition, due to one or more of the foregoing factors, in one or more future
quarters, the Company's results of operations may fall below the expectations of
securities analysts and investors. In that event, the market price of the
Company's Common Stock could be materially and adversely affected.
Shares Eligible for Future Sale. As of May 29, 1998, the Company had
approximately 31,331,000 shares of Common Stock outstanding and after giving
effect to the consummation of the private offering of 3,983,000 shares of Common
Stock described in "Selling Stockholders" which are offered hereby, but assuming
no additional shares are issued pursuant to outstanding options, warrants or
convertible securities, would have had approximately 35,314,081 shares of Common
Stock outstanding. The 3,983,000 shares of Common Stock offered hereby are
"restricted securities," as that term is defined in Rule 144 under the
Securities Act, which when sold pursuant to the Registration Statement will be
freely transferrable without restrictions under the Securities Act, assuming
such Shares are held by non-affiliates of the Company. Of the other shares of
Common Stock outstanding, approximately 31,274,000 shares will be immediately
available for sale without restriction in the public market and approximately
26,000 shares will be eligible for sale under Rule 144 of the Securities Act. In
addition, the approximately 245,000 shares of Common Stock issuable upon
conversion of the Series A Preferred Stock will be immediately available for
sale without restriction in the public market when issued. Certain holders of
the Company's securities are entitled to registration rights with respect to an
aggregate of approximately 1,886,000 shares of Common Stock, including
approximately 1,039,000 shares underlying outstanding warrants. Of such shares,
approximately 989,000 shares are registered currently on Form S-3 registration
statements. The approximately 4,378,000 shares of Common Stock underlying
outstanding options which are held by employees, directors and consultants are
registered on Form S-8 registration statements. Sales of substantial amounts of
such shares in the public market or the prospect of such sales could adversely
affect the market price of the Common Stock.
Anti-takeover Considerations. The Company has the authority to issue up to
3,000,000 shares of Preferred Stock of the Company in one or more series and to
fix the powers, designations, preferences and relative rights thereof without
any further vote of shareholders. The issuance of such Preferred Stock could
dilute the voting powers of holders of Common Stock and could have the effect of
delaying, deferring or preventing a change in control of the Company. Certain
provisions of the Company's Articles of Incorporation and By-laws, including
those providing for a staggered Board of Directors, as well as Delaware law, may
operate in a manner that could discourage or render more difficult a takeover of
the Company or the removal of management or may limit the price certain
investors may be willing to pay for shares of Common Stock.
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of the Shares
offered herein by the Selling Stockholders. Expenses expected to be incurred by
the Company in connection with this offering are estimated to be $184,000.
SELLING STOCKHOLDERS
The Shares covered by this Prospectus were acquired from the Company in a
private offering pursuant to Common Stock Purchase Agreements (the "Purchase
Agreements") for an aggregate purchase price of $18,919,250 ($4.75 per share).
The offer and sale by the Company of the Common Stock to the Selling
Stockholders pursuant to the Purchase Agreements was made pursuant to an
exemption from the registration
12
<PAGE>
requirements of the Securities Act provided by Section 4(2) thereof. The
Purchase Agreements contain representations and warranties as to each Selling
Stockholder's status as an "accredited investor" as such term is defined in Rule
501 promulgated under the Securities Act. Warburg Dillon Read LLC (formerly
known as SBC Warburg Dillon Read Inc.) ("Dillon Read"), the placement agent, was
paid a fee of $900,000 or approximately 4.75% of the aggregate purchase price in
connection with the sale of the Shares by the Company to the Selling
Stockholders pursuant to the Purchase Agreements. In addition, the Company
agreed to reimburse Dillon Read for its travel, legal and other out-of-pocket
expenses incurred in connection with the sale of the Shares by the Company to
the Selling Stockholders pursuant to the Purchase Agreements up to a maximum of
$50,000. The Company paid Evolution Capital, a broker/dealer, a fee of $235,155
or approximately 1.25% of the aggregate purchase price in connection with the
sale of the Shares by the Company to the Selling Stockholders pursuant to the
Purchase Agreements.
Pursuant to the Purchase Agreements, each Selling Stockholder has
represented that he, she or it acquired the Shares for its own account as
principal, for investment purposes only, and not with a present view to, or for,
the resale distribution thereof, in whole or in part, within the meaning of the
Securities Act or any state securities law. The Company agreed, in such Purchase
Agreements, to use its best efforts to prepare and file a registration statement
for the resale of the Shares no later than 10 days after the effective date of
the Purchase Agreements and to bear all expenses in connection with the
offering, other than selling commissions, underwriting fees and stock transfer
taxes applicable to the Shares and all fees and disbursements of counsel for any
Selling Stockholder. Accordingly, in order to permit the Selling Stockholders to
sell the Shares when each deems appropriate, the Company has filed with the
Commission a Registration Statement on Form S-3, of which this Prospectus forms
a part, with respect to the resale of the Shares from time to time as described
herein and has agreed to prepare and file such amendments and supplements to the
Registration Statement as may be necessary to keep the Registration Statement
effective until all Shares offered hereby have been sold pursuant thereto or
until such shares are no longer, by reason of Rule 144 or any other rule of
similar effect, required to be registered for the sale thereof by the Selling
Stockholders.
Except as otherwise described in "Stock Ownership," prior to their
acquisition of the Shares, none of the Selling Stockholders had a material
relationship with the Company.
In connection with the registration of the shares of Common Stock offered
hereby, the Company will supply prospectuses to the Selling Stockholders.
Stock Ownership
The table below sets forth (i) the number of shares of Common Stock owned
beneficially by the Selling Stockholders as of July 1, 1998; (ii) the number of
shares of Common Stock being offered by the Selling Stockholders pursuant to
this Prospectus; (iii) the number of shares of Common Stock to be owned
beneficially by the Selling Stockholders after completion of the offering,
assuming that all of the Shares offered hereby are sold; and (iv) the percentage
of the outstanding shares of Common Stock to be owned beneficially by the
Selling Stockholders after completion of the offering, assuming that all of the
Shares offered hereby are sold.
13
<PAGE>
<TABLE>
<CAPTION>
Number of Percentage of
Shares to be Outstanding Shares
Number of Owned of Common Stock
Shares Beneficially to be Owned
Beneficially Number of After Beneficially After
Owned as of Shares Completion Completion
Selling Stockholders July 1, 1998 Offered of Offering(1) of Offering(1)
- -------------------- ------------ -------- -------------- ------------------
<S> <C> <C> <C> <C>
DCF Life Sciences Fund Ltd. 200,000 200,000 0 0
DCF Partners, L.P. 853,000 853,000 0 0
Oracle Partners, L.P. 589,589 315,789 273,800 *
Oracle Institutional Partners,
L.P. 135,996 78,496 57,500 *
GSAM Oracle Fund, Inc. 306,721 168,721 138,000 *
Hausmann Holdings, N.V. 88,226 50,526 37,700 *
Oracle Offshore Ltd. 36,046 18,046 18,000 *
Warburg Dillon Read, LLC(2) 517,900 500,000 17,900 *
Caduceus Capital, L.P. 105,000 105,000 0 0
Caduceus Capital Ltd. 220,000 220,000 0 0
Marlin BioMed L.P. 21,053 21,053 0 0
Deutsche Vermogen
Sbildungsgesell Shaft mbH 294,737 294,737 0 0
The Aries Trust 1,340,868 747,368 593,500 1.9
Aries Domestic Fund, L.P. 547,964 305,264 242,700 *
Wayne P. Rothbaum(3) 58,000 30,000 28,000 *
Mitchell D. Silber(3) 35,000 15,000 20,000 *
New Technologies Fund 90,000 60,000 30,000 *
</TABLE>
* Less than 1%.
(Notes continued on following page)
14
<PAGE>
(1) Based upon 31,332,831 shares of Common Stock outstanding as of July 1,
1998. Assumes all Shares registered hereby are sold and that no other
shares of Common Stock owned by the Selling Stockholders as of July 1, 1998
are sold. Since the Selling Stockholders may sell all, some or none of
their Shares, no actual determination can be made of the aggregate number
of shares that each Selling Stockholder will own upon completion of the
offering to which this Prospectus relates.
(2) Warburg Dillon Read LLC (formerly known as SBC Warburg Dillon Read Inc.)
acted as the placement agent in the private offering of the Shares to the
Selling Stockholders and received a fee of $900,000 or approximately 4.75%
of the aggregate purchase price and is entitled to reimbursement by the
Company of travel, legal and other out-of-pocket expenses up to a maximum
of $50,000.
(3) Messrs. Rothbaum and Silber are principals with Evolution Capital, a
registered broker-dealer which received a fee of $235,155 or approximately
1.25% of the aggregate purchase price in connection with the sale of the
Shares to the Selling Stockholders. In February 1998, Evolution Capital was
granted options to purchase 50,000 shares of the Company's Common Stock at
an exercise price of $5.9375 per share pursuant to a one year advisory and
consulting agreement which requires Evolution Capital to provide
institutional targeting, dossier reports, institutional surveillance and
overall capital markets intelligence to the Company. In June 1996, The
Carson Group Inc., an affiliate of Mr. Rothbaum, Mr. Silber and Evolution
Capital, received $325,000 in cash and 50,000 five-year warrants to
purchase Common Stock at an exercise price of $4.11 per share as a finder's
fee in connection with the Company's private placement of Common Stock,
preferred stock and warrants in January and March 1996. In addition, The
Carson Group Inc. has received approximately $175,000 in consulting fees
during the past two years for providing institutional targeting, dossier
reports, institutional surveillance and overall capital markets
intelligence to the Company.
The Company has agreed to bear the expenses (other than broker discounts
and commissions, if any, and expenses of counsel and other advisors to certain
of the Selling Stockholders) incurred in connection with the registration of the
Shares.
PLAN OF DISTRIBUTION
The Shares may be sold pursuant to this Prospectus by the Selling
Stockholders. These sales may occur from time to time in one or more
transactions (which may involve block transactions) in the open markets, in
negotiated transactions, through the writing of options on the Shares (whether
such options are listed on an options exchange or otherwise) or by a combination
of such methods of sale, at fixed prices which may be changed, at market prices
prevailing at the time of sale, at prices related to prevailing market prices or
at negotiated prices. The Selling Stockholders may effect these transactions by
selling the Shares to or through broker-dealers, who may receive compensation in
the form of discounts or commissions from the Selling Stockholders or from the
purchasers of the Shares for whom the broker-dealers may act as agent or to whom
they may sell as principal, or both in amounts to be negotiated immediately
prior to the sale. The Selling Stockholders may also pledge the Shares as
collateral for margin accounts or loans and the Shares could be resold pursuant
to the terms of such accounts or loans. There are currently no agreements,
arrangements or understandings with respect to the sale of any of the Shares by
the Selling Stockholders. The Shares are being registered to permit public
secondary trading of the Shares, and the Selling Stockholders may offer the
Shares for resale from time to time. In effecting sales, broker-dealers engaged
by the Selling Stockholders may arrange for other broker-dealers to participate.
Broker-dealers will receive commissions or discounts from the Selling
Stockholders in amounts to be negotiated immediately prior to the sale. Neither
the Company nor the Selling Stockholders can presently estimate the amount of
commissions or discounts, if any, that will be paid by the Selling Stockholders
on account of their sale of the Shares from time to time. In order to comply
with the securities laws of certain states, if applicable, the Shares will be
sold in such jurisdictions only through registered or licensed brokers or
dealers. In addition, in certain states the Shares may not be sold unless they
have been registered or qualified for sale in the applicable state or an
exemption from the registration or qualification requirement is available and is
complied with by the Company and the Selling Stockholders.
15
<PAGE>
The Selling Stockholders and any broker-dealers who execute sales for the
Selling Stockholders may be deemed to be "underwriters" within the meaning of
the Securities Act by virtue of the number of shares of Common Stock to be sold
or resold by such persons or entities or the manner of sale thereof, or both. If
the Selling Stockholders, broker-dealers or other holders were determined to be
underwriters, any discounts or commissions received by them or by brokers or
dealers acting on their behalf and any profits received by them on the resale of
their shares of Common Stock might be deemed underwriting compensation under the
Securities Act.
The Selling Stockholders have represented to the Company that any purchase
or sale of the Common Stock by them will be in compliance with applicable rules
and regulations of the Commission.
In addition, any securities covered by this Prospectus which qualify for
sale pursuant to Rule 144 under the Securities Act may be sold under Rule 144
rather than pursuant to this Prospectus. To the extent required, the specific
shares of Common Stock to be sold, the name of any successor Selling
Stockholders, the public offering price, the names of any such agent, dealer or
underwriter, and any applicable commission or discount with respect to any
particular offer will be set forth in an accompanying Prospectus Supplement. See
"Selling Stockholders."
Under applicable rules and regulations under the Exchange Act, any person
engaged in the distribution of the Shares may not simultaneously engage in
market making activities with respect to the Common Stock of the Company for a
restricted period prior to the commencement of such distribution. In addition
and without limiting the foregoing, the Selling Stockholders and any other
person participating in a distribution will be subject to applicable provisions
of the Exchange Act and the rules and regulations thereunder, including, without
limitation, Regulation M, which provisions may limit the timing of purchases and
sales of shares of the Company's Common Stock by the Selling Stockholders.
The Company has agreed to indemnify the Selling Stockholders against
certain liabilities, including liabilities under the Securities Act. The Selling
Stockholders have agreed to indemnify the Company against certain liabilities,
including liabilities under the Securities Act.
There can be no assurance that the Selling Stockholders will sell all or
any of the Shares offered hereby.
LEGAL MATTERS
The legality of the shares of Common Stock offered hereby has been passed
on for the Company by Dorsey & Whitney LLP, New York, New York.
EXPERTS
The consolidated financial statements of Enzon, Inc. and subsidiaries as of
June 30, 1997 and 1996 and for each of the years in the three-year period ended
June 30, 1997, have been incorporated by reference herein and in the
Registration Statement in reliance upon the report of KPMG Peat Marwick LLP,
independent certified public accountants, incorporated by reference herein, and
upon the authority of said firm as experts in accounting and auditing.
16
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The following table sets forth an itemized estimate of fees and expenses
(other than the Securities and Exchange Commission registration fee and Nasdaq
filing fee) payable by the Registrant in connection with the issuance and
distribution of the securities described in this registration statement, other
than underwriting discounts and commissions.
SEC registration fee ........................................ $ 6,500
Nasdaq filing fee ........................................... $ 17,500
Legal fees and expenses ..................................... $ 90,000
Accounting fees and expenses ................................ $ 10,000
Placement agent expense reimbursement ....................... $ 50,000
Miscellaneous ............................................... $ 10,000
Total .................................................. $184,000
========
Item 15. Indemnification of Directors and Officers
The General Corporation Law of the State of Delaware (the "DGCL") provides
for indemnification as set forth in Section 145 thereof. The Registrant's
By-laws, as amended provide for indemnification of the directors and officers of
the Registrant against all costs, expenses and amounts of liability incurred by
them in connection with any action, suit or proceeding in which they are
involved by reason of their affiliation with the Registrant, to the fullest
extent permitted by law. The Registrant's directors and officers also have
indemnification agreements with the Registrant, which expand the indemnification
protection provided to them under the Registrant's By-laws.
The Company's Certificate of Incorporation provides that a director of the
Company will not be personally liable for monetary damages to the Company or its
stockholders for breach of fiduciary duty as a director, except for liability,
(i) for any breach of the director's duty of loyalty to such 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) for unlawful
payments of dividends or unlawful stock repurchase or redemption as provided in
Section 174 of the DGCL or (iv) for any transaction from which the director
derived an improper personal benefit.
Item 16. Exhibits
--------
Page Number
Exhibit or Incorporation
Number Description By Reference
- ------ ----------- ------------
1.1 Form of Common Stock Purchase Agreement with Selling
Stockholders E-1
4.1 Certificate of Incorporation, as amended *
4.2 Certificate of Amendment of Certificate of Incorporation
filed with the Delaware Secretary of State on
January 5, 1998 E-64
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<PAGE>
4.3 By-laws, as amended **
5.1 Opinion of Dorsey & Whitney LLP regarding legality E-66
23.1 Consent of Dorsey & Whitney LLP (contained
in opinion filed as Exhibit 5.1)
23.2 Consent of KPMG Peat Marwick LLP E-68
24.0 Power of Attorney
* Previously filed as an exhibit to the Company's Quarterly Report on Form
10-Q for the quarter ended March 31, 1996 and incorporated herein by
reference thereto.
** Previously filed as an exhibit to the Company's Registration Statement on
Form S-2 (File No. 33-34874) and incorporated herein by reference thereto.
*** Previously filed.
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<PAGE>
Item 17. Undertakings
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in volume of securities
offered (if the total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in the volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement.
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement:
Provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
registration statement is on Form S-3, Form S-8 or Form F-3, and the information
required to be included in a post-effective amendment by those paragraphs is
contained in the periodic reports filed by the Registrant pursuant to Section 13
or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by
reference in the registration statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
(4) That, for purposes of determining any liability under the Securities
Act of 1933, each filing of the Registrant's annual report pursuant to Section
13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and where
applicable, each filing of an employee benefit plan's annual report pursuant to
Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by
reference in this Registration Statement shall be deemed to be a new
Registration Statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(5) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the
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<PAGE>
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.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of Piscataway, State of New Jersey, on July 9, 1998.
ENZON, INC.
By: /s/ Peter G. Tombros
----------------------
Peter G. Tombros,
President and Chief
Executive Officer
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 Capacity Date
/s/Peter G. Tombros President, Chief July 9, 1998
- ---------------------- Executive Officer and Director
Peter G. Tombros (Principal Executive Officer)
* Chairman of the Board July 9, 1998
- ----------------------
Randy H. Thurman
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<PAGE>
/s/ Kenneth J. Zuerblis Vice President - Finance and July 9, 1998
- ------------------------- Chief Financial Officer
Kenneth J. Zuerblis (Principal Financial Officer
and Principal Accounting Officer)
* Director July 9, 1998
- -------------------------
Rosina B. Dixon
* Director July 9, 1998
- -------------------------
Robert LeBuhn
* Director July 9, 1998
- -------------------------
A.M. "Don" MacKinnon
* Director July 9, 1998
- -------------------------
Rolf A. Classon
* Director July 9, 1998
- -------------------------
David Golde
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<PAGE>
ENZON, INC.
EXHIBIT INDEX
Exhibit No. Description
1.1 Form of Common Stock Purchase Agreement with Selling Stockholders
4.2 Certificate of Amendment of Certificate of Incorporation
5.1 Opinion of Dorsey & Whitney LLP regarding legality
23.1 Consent of Dorsey & Whitney LLP (contained in opinion filed as
Exhibit 5.1)
23.2 Consent of KPMG Peat Marwick LLP
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<PAGE>
==============================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
___________________
EXHIBITS
TO
AMENDMENT NO. 1 TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
___________________
ENZON, INC.
(Exact name of Registrant as specified in its charter)
==============================
-------------------------------
ENZON, INC.
COMMON STOCK PURCHASE AGREEMENT
June 25, 1998
-------------------------------
<PAGE>
TABLE OF CONTENTS
Page
----
Section 1
Authorization and Sale of Common Stock ......................... 1
1.1 Authorization ...................................................... 1
1.2 Sale of Common ..................................................... 1
Section 2
Closing Date: Delivery ......................................... 1
2.1 Closing Date ....................................................... 1
2.2 Delivery ........................................................... 1
Section 3
Representations and Warranties of the Company .................. 2
3.1 Organization and Standing .......................................... 2
3.2 Corporate Power, Authorization ..................................... 2
3.3 Issuance and Delivery of the Shares ................................ 2
3.4 Private Placement Offering Memorandum: SEC Documents, Financial
Statements ......................................................... 2
3.5 Governmental Consents .............................................. 3
3.6 No Material Adverse Change ......................................... 3
3.7 Intellectual Property .............................................. 3
3.8 Authorized Capital Stock ........................................... 4
3.9 Litigation ......................................................... 4
3.10 Use of Proceeds .................................................... 4
3.11 Accountants ........................................................ 4
3.12 Compliance With Other Instruments .................................. 5
3.13 Permits ............................................................ 5
3.14 Investment Company ................................................. 5
3.15 Offering Materials ................................................. 5
Section 4
Representations, Warranties and Covenants of the Purchasers .... 5
4.1 Power; Authorization ............................................... 5
4.2 Investment Experience .............................................. 6
4.3 Investment Intent .................................................. 6
4.4 Registration or Exemption Requirements ............................. 6
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<PAGE>
TABLE OF CONTENTS
(continued)
Section 5
Conditions to Closing of Purchasers ............................ 6
5.1 Representations and Warranties ..................................... 7
5.2 Covenants .......................................................... 7
5.3 Blue Sky ........................................................... 7
5.4 Legal Opinion ...................................................... 7
5.5 Patent Opinion ..................................................... 7
5.6 Registration Statement ............................................. 7
5.7 Nasdaq Qualification ............................................... 7
Section 6
Conditions to Closing of Company ............................... 7
6.1 Representations and Warranties ..................................... 8
6.2 Covenants .......................................................... 8
6.3 Blue Sky ........................................................... 8
6.4 Registration Statement ............................................. 8
6.5 Nasdaq Qualification ............................................... 8
Section 7
Affirmative Covenants of the Company ........................... 8
7.1 Financial Information .............................................. 8
7.2 Registration Requirements .......................................... 8
7.3 Indemnification and Contribution ................................... 10
Section 8
Restrictions on Transferability of Shares:
Compliance with Securities Act ................................. 12
8.1 Restrictions on Transferability .................................... 13
8.2 Restrictive Legend ................................................. 13
8.3 Transfer of Shares After Registration .............................. 13
8.4 Purchaser Information .............................................. 13
Section 9
Miscellaneous .................................................. 14
9.1 Waivers and Amendments ............................................. 14
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<PAGE>
TABLE OF CONTENTS
(continued)
9.2 Placement Agent Fee ................................................ 14
9.3 Governing Law ...................................................... 14
9.4 Survival ........................................................... 14
9.5 Successors and Assigns ............................................. 14
9.6 Entire Agreement ................................................... 14
9.7 Notices, etc ....................................................... 14
9.8 Severability of this Agreement ..................................... 15
9.9 Counterparts ....................................................... 15
9.10 Further Assurances ................................................. 15
9.11 Termination ........................................................ 15
9.12 Expenses ........................................................... 15
9.13 Currency ........................................................... 15
Exhibit A - Schedule of Purchasers
Exhibit B - Form of Purchaser's Questionnaire
Exhibit C - Opinion of Company Counsel
Exhibit D - Opinions of Patent Counsel
Exhibit E - Form of Purchaser's Legend Removal Certificate
Exhibit F - Form of Purchaser's Certificate of Subsequent Sale
Exhibit G - Description of Capital Stock
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<PAGE>
ENZON, INC.
COMMON STOCK PURCHASE AGREEMENT
This Common Stock Purchase Agreement (the "Agreement") is made as of June
25, 1998, by and among Enzon, Inc., a Delaware corporation (the "Company"), with
its principal office at 20 Kingsbridge Road, Piscataway, New Jersey, and the
persons listed on the Schedule of Investors attached hereto as Exhibit A (the
"Purchasers").
Section 1
Authorization and Sale of Common Stock
1.1 Authorization. The Company has authorized the sale and issuance of
3,985,000 shares of its Common Stock, $0.01 par value per share (the "Common
Stock") pursuant to this Agreement (the "Shares").
1.2 Sale of Common. Subject to the terms and conditions of this Agreement,
the Company agrees to issue and sell to each Purchaser and each Purchaser
severally agrees to purchase from the Company the number of Shares set forth
opposite such Purchaser's name on Exhibit A for $4.75 per share.
Section 2
Closing Date: Delivery
2.1 Closing Date. The closing of the purchase and sale of the Shares
hereunder (the "Closing") shall be held at the offices of Dorsey & Whitney LLP,
250 Park Avenue, New York, NY 10177, at or before 10:00 a.m. New York Time, on
that date that is two business days after the date on which the Registration
Statement (as defined herein) is declared effective or at such time and place
upon which the Company and SBC Warburg Dillon Read Inc. (the "Placement Agent")
shall agree. The date of the Closing is hereinafter referred to as the "Closing
Date."
2.2 Delivery. At the Closing, the Company will deliver to each Purchaser a
certificate, registered in the Purchaser's name as shown on Exhibit A,
representing the number of Shares to be purchased by the Purchaser. Such
delivery shall be against payment of the purchase price therefor by wire
transfer to the Company's bank account in the amount set forth on Exhibit A.
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<PAGE>
Section 3
Representations and Warranties of the Company
The Company represents and warrants to the Purchasers as of the Closing
Date as follows:
3.1 Organization and Standing. The Company is a corporation duly organized
and validly existing under, and by virtue of, the laws of the State of Delaware
and is in good standing as a domestic corporation under the laws of said state
and has all requisite corporate power and authority to conduct its business as
currently conducted and disclosed in the Offering Memorandum (as defined below).
3.2 Corporate Power, Authorization. The Company has all requisite legal and
corporate power and has taken all requisite corporate action to execute and
deliver this Agreement, to sell and issue the Shares and to carry out and
perform all of its obligations under this Agreement. This Agreement constitutes
the legal, valid and binding obligation of the Company, enforceable in
accordance with its terms, except (i) as limited by applicable bankruptcy,
insolvency, reorganization or similar laws relating to or affecting the
enforcement of creditors' rights generally and (ii) as limited by equitable
principles generally. The execution and delivery of this Agreement does not, and
the performance of this Agreement and the compliance with the provisions hereof
and the issuance, sale and delivery of the Shares by the Company will not,
conflict with or result in a breach or violation of the terms, conditions or
provisions of, or constitute a default under, or result in the creation or
imposition of any lien pursuant to the terms of, the Certificate of
Incorporation or Bylaws of the Company or any statute, law, rule or regulation
or any state or federal order, judgment or decree or any indenture, mortgage,
lease or other agreement or instrument to which the Company or any of its
properties is subject.
3.3 Issuance and Delivery of the Shares. The Shares, when issued in
compliance with the provisions of this Agreement, will be validly issued, fully
paid and nonassessable. The issuance and delivery of the Shares is not subject
to preemptive or any other similar rights of the stockholders of the Company or
any liens or encumbrances.
3.4 Private Placement Offering Memorandum: SEC Documents, Financial
Statements. Each complete or partial statement, report, or proxy statement
included within the Company's Private Placement Offering Memorandum dated June
4, 1998 (the "Offering Memorandum") is a true and complete copy of or excerpt
from such document as filed by the Company with the Securities and Exchange
Commission (the "SEC"). The Company has filed in a timely manner all documents
that the Company was required to file with the SEC under Sections 13, 14(a) and
15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
during the twelve (12) months preceding the date of this Agreement. As of their
respective filing dates, all documents filed by the Company with the SEC (the
"SEC Documents") complied in all material respects with the requirements of the
Exchange Act or the
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<PAGE>
Securities Act of 1933, as amended (the "Securities Act"), as applicable.
Neither the Offering Memorandum nor any of the SEC Documents as of their
respective dates contained any untrue statement of material fact or omitted to
state a material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances under which they were
made, not misleading. As of their respective filing dates, the financial
statements of the Company included in the SEC Documents (the "Financial
Statements") complied as to form in all material respects with applicable
accounting requirements and with the published rules and regulations of the SEC
with respect thereto. The Financial Statements have been prepared in accordance
with generally accepted accounting principles consistently applied and fairly
present the consolidated financial position of the Company and any subsidiaries
at the dates thereof and the consolidated results of their operations and
consolidated cash flows for the periods then ended; provided, however, that the
unaudited Financial Statements are subject to normal recurring year-end
adjustments (which in any case will not be material) and do not contain all
footnotes required under generally accepted accounting principles.
3.5 Governmental Consents. No consent, approval, order or authorization of,
or registration, qualification, designation, declaration or filing with, any
federal, state, or local governmental authority on the part of the Company is
required in connection with the consummation of the transactions contemplated by
this Agreement except for (a) compliance with the securities and blue sky laws
in the states in which Shares are offered and/or sold, (b) the filing of the
Registration Statement and all amendments thereto with the SEC as contemplated
by Section 7.2 of this Agreement and (c) all required filings with The Nasdaq
Stock Market necessary for the listing of the Shares.
3.6 No Material Adverse Change. Except as otherwise disclosed in the
Offering Memorandum, since March 31, 1998, there have not been any changes in
the assets, liabilities, financial condition or operations of the Company from
those reflected in the Financial Statements, except changes in the ordinary
course of business which have not been, either individually or in the aggregate,
materially adverse.
3.7 Intellectual Property. Except as disclosed in the Offering Memorandum,
the Company owns or possesses sufficient rights to use all existing patents,
patent rights, inventions, trade secrets, know-how, proprietary rights and
processes that are necessary for the conduct and proposed conduct of its
business as described in the Offering Memorandum (the "Company's Proprietary
Rights") without any conflict with or infringement of the rights of others which
would result in a material adverse effect on the condition (financial or
otherwise), earnings, operations, business or business prospects of the Company.
The Company believes that there are no third parties who have or will be able to
establish rights to any of the Company's Proprietary Rights, except for (i) the
ownership rights of the third party licensors to the Company's Proprietary
Rights which are licensed to the Company by such third party licensors and (ii)
the third party licensees of the Company's Proprietary Rights. Except as
disclosed in the Offering Memorandum, to the knowledge of the Company, there is
no infringement by any third parties of any of the Company's Proprietary Rights.
Except as disclosed in the Offering Memorandum, the Company has not received any
notice of, and has
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<PAGE>
no knowledge of any basis for, any infringement of or conflict with asserted
rights of others with respect to any patent, patent right, invention, trade
secret, know-how or other proprietary rights that, individually or in the
aggregate, would have a material adverse effect on the condition (financial or
otherwise), earnings, operations, business or business prospects of the Company.
3.8 Authorized Capital Stock. All outstanding shares of capital stock of
the Company have been duly authorized and validly issued and are fully paid and
nonassessable, have been issued in compliance with all federal and state
securities laws, were not issued in violation of or subject to any preemptive
rights or other rights to subscribe for or purchase securities, and the
authorized and outstanding capital stock of the Company conforms, as of the
dates for which such information is given, in all material respects to the
statements relating thereto contained in Exhibit G hereto; there is no capital
stock outstanding as of such dates other than as described in Exhibit G hereto;
and all issued and outstanding shares of capital stock of the Company have been
duly authorized and validly issued and are fully paid and nonassessable. Except
as disclosed in or contemplated by the Offering Memorandum and the Financial
Statements and the related notes thereto included in the Offering Memorandum or
in Exhibit G hereto, the Company does not have outstanding any options to
purchase, or any preemptive rights or other rights to subscribe for or to
purchase, any securities or obligations convertible into, or any contracts or
commitments to issue or sell, shares of its capital stock or any such options,
rights, convertible securities or obligations. Except as described in Exhibit G
hereto, no stockholder of the Company, other than the Purchasers, has any right
(which has not been waived or has not expired by reason of lapse of time
following notification of the Company's intent to file the Registration
Statement) to require the Company to register the sale of any shares owned by
such stockholder under the Securities Act in the Registration Statement.
3.9 Litigation. Except as set forth in the Offering Memorandum, there are
no actions, suits, proceedings or investigations pending or, to the best of the
Company's knowledge, threatened against the Company or any of its properties
before or by any court or arbitrator or any governmental body, agency or
official in which there is the possibility of an adverse decision that (a) would
reasonably be expected to have a material adverse effect on the Company's
properties or assets or the business of the Company as presently conducted or
proposed to be conducted or (b) would reasonably be expected to impair the
ability of the Company to perform its obligations under this Agreement.
3.10 Use of Proceeds. The Company will apply the net proceeds from the sale
of the Shares in the manner set forth under the caption "Use of Proceeds" in the
Offering Memorandum.
3.11 Accountants. KPMG Peat Marwick LLP, who have expressed their opinion
with respect to the audited financial statements and schedules to be filed with
the SEC as a part of the Registration Statement and included in the Registration
Statement and the Prospectus which forms a part thereof, are independent
accountants as required by the Securities Act and the rules and regulations
promulgated thereunder (the "Rules and Regulations").
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<PAGE>
3.12 Compliance With Other Instruments. Except as to defaults, violations
and breaches which individually or in the aggregate would not be material to the
Company, the Company is not in violation or default of any provision of its
Articles of Incorporation or Bylaws, each as amended to date, or of any
agreement, license, permit, instrument, judgment, order, writ or decree to which
it is a party or by which it is bound, or, to the best of its knowledge, of any
provision of any federal or state statute, rule or regulation applicable to the
Company.
3.13 Permits. The Company has all franchises, permits, licenses, and any
similar authority necessary for the conduct of its business as now being
conducted by it, the lack of which could materially and adversely affect the
business, properties, prospects, or financial condition of the Company. The
Company is not in default in any material respect under any of such franchises,
permits, licenses, or other similar authority.
3.14 Investment Company. The Company is not an "investment company" within
the meaning of the Investment Company Act of 1940, as amended.
3.15 Offering Materials. The Company has not distributed and will not
distribute prior to the Closing Date any offering material in connection with
the offering and sale of the Shares other than the Offering Memorandum.
Section 4
Representations, Warranties and Covenants of the Purchasers
Each Purchaser hereby severally represents and warrants to the Company,
effective as of the Closing Date, as follows:
4.1 Power; Authorization. (i) Such Purchaser has all requisite legal and
corporate or other power and capacity and has taken all requisite corporate or
other action to execute and deliver this Agreement, to purchase the Shares to be
purchased by it and to carry out and perform all of its obligations under this
Agreement; and (ii) this Agreement constitutes the legal, valid and binding
obligation of such Purchaser, enforceable in accordance with its terms, except
(a) as limited by applicable bankruptcy, insolvency, reorganization, or similar
laws relating to or affecting the enforcement of creditors' rights generally and
(b) as limited by equitable principles generally.
4.2 Investment Experience. Such Purchaser is an "accredited investor" as
defined in Rule 501(a) under the Securities Act. Such Purchaser has received and
reviewed the Offering Memorandum, is aware of the Company's business affairs and
financial condition and has had access to and has acquired sufficient
information about the Company to reach an informed and knowledgeable decision to
acquire the Shares. Purchaser has such business and financial experience as is
required to permit it to protect its own interests in connection with the
purchase of the Shares.
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<PAGE>
4.3 Investment Intent. Such Purchaser is purchasing the Shares in the
ordinary course of its business for its own account as principal, for investment
purposes only, and not with a present view to, or for, the resale distribution
thereof, in whole or in part, within the meaning of the Securities Act or any
state securities laws. Purchaser understands that its acquisition of the Shares
has not been registered under the Securities Act or registered or qualified
under any state law in reliance on specific exemptions therefrom, which
exemptions may depend upon, among other things, the bona fide nature of such
Purchaser's investment intent as expressed herein. Such Purchaser has completed
or caused to be completed the Purchaser Questionnaire attached hereto as Exhibit
B for use in preparation of the Registration Statement (as defined below), and
the responses provided therein shall be true and correct as of the effective
date of the Registration Statement and as of the Closing Date. Purchaser has, in
connection with its decision to purchase the number of Shares set forth in
Exhibit A hereto, relied solely upon the Offering Memorandum and the documents
attached as appendices thereto and the representations and warranties of the
Company contained herein. Such Purchaser will not, directly or indirectly,
offer, sell, pledge, transfer or otherwise dispose of (or solicit any offers to
buy, purchase or otherwise acquire or take a pledge of) any of the Shares except
in compliance with the Securities Act, and the rules and regulations promulgated
thereunder and applicable state securities laws.
4.4 Registration or Exemption Requirements. Such Purchaser further
acknowledges, understands and agrees that the Shares may not be resold or
otherwise transferred except in a transaction registered under the Securities
Act or unless an exemption from such registration is available. Such Purchaser
understands that the certificate(s) evidencing the Shares will be imprinted with
a legend that prohibits the transfer of the Shares unless (i) they are
registered or such registration is not required, and (ii) if the transfer is
pursuant to an exemption from registration other than Rule 144 under the
Securities Act and, if the Company shall so request in writing, an opinion of
counsel reasonably satisfactory to the Company is obtained to the effect that
the transaction is so exempt.
Section 5
Conditions to Closing of Purchasers
Each Purchaser's obligation to purchase the Shares at the Closing is, at
the option of such Purchaser, subject to the fulfillment or waiver as of the
Closing Date of the following conditions:
5.1 Representations and Warranties. The representations and warranties made
by the Company in Section 3 hereof shall be true and correct in all material
respects when made, and shall be true and correct in all material respects on
the Closing Date with the same force and effect as if they had been made on and
as of said date.
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5.2 Covenants. All covenants, agreements and conditions contained in this
Agreement to be performed by the Company on or prior to the Closing Date shall
have been performed or complied with in all respects.
5.3 Blue Sky. The Company shall have obtained all necessary blue sky law
permits and qualifications, or secured exemptions therefrom, required by any
state or foreign or other jurisdiction for the offer and sale of the Shares.
5.4 Legal Opinion. The Purchasers shall have received a legal opinion of
Dorsey & Whitney LLP, counsel to the Company, with respect to the matters set
forth on Exhibit C.
5.5 Patent Opinion. The Purchasers shall have received legal opinions of
patent counsel to the Company with respect to the matters set forth on Exhibit
D.
5.6 Registration Statement. The Registration Statement (as defined below)
registering the resale of the Shares by the Purchasers shall have been filed
with and declared effective by the SEC, and no stop order suspending the
effectiveness thereof and no proceedings therefor shall be pending or threatened
by the SEC.
5.7 Nasdaq Qualification. The Shares shall be duly authorized for listing
by the Nasdaq Stock Market.
Section 6
Conditions to Closing of Company
The Company's obligation to sell and issue the Shares at the Closing is, at
the option of the Company, subject to the fulfillment or waiver of the following
conditions:
6.1 Representations and Warranties. The representations made by the
Purchasers in Section 4 hereof shall be true and correct in all material
respects when made, and shall be true and correct in all material respects on
the Closing Date with the same force and effect as if they had been made on and
as of such date.
6.2 Covenants. All covenants, agreements and conditions contained in this
Agreement to be performed by the Purchasers on or prior to the Closing Date
shall have been performed or complied with in all material respects.
6.3 Blue Sky. The Company shall have obtained all necessary blue sky law
permits and qualifications, or secured exemptions therefrom, required by any
state for the offer and sale of the Shares.
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<PAGE>
6.4 Registration Statement. The Registration Statement (as defined below)
registering the resale of the Shares by the Purchasers shall have been filed
with and declared effective by the SEC, and no stop order suspending the
effectiveness thereof and no proceedings therefor shall be pending or threatened
by the SEC.
6.5 Nasdaq Qualification. The Shares shall be duly authorized for listing
by the Nasdaq Stock Market.
Section 7
Affirmative Covenants of the Company
The Company hereby covenants and agrees as follows:
7.1 Financial Information. The Company will mail the following reports to
each Purchaser until such Purchaser transfers, assigns or sells the Shares
purchased by such Purchaser pursuant to this Agreement:
(a) Within one hundred (100) days after the end of each fiscal year, a
copy of its Annual Report on Form 10-K.
(b) Within fifty-five (55) days after the end of the first, second and
third quarterly accounting periods of each fiscal year of the Company, a
copy of its Quarterly Report on Form 10-Q.
(c) Within ten (10) days after the Company files any Current Report on
Form 8-K with the SEC, such Current Report on Form 8-K
7.2 Registration Requirements.
(a) The Company shall use its best efforts to prepare and file a
registration statement with the SEC under the Securities Act to register
the resale of the Shares by the Purchasers (the "Registration Statement")
no later than ten (10) days after the date hereof.
(b) The Company shall pay all Registration Expenses (as defined below)
in connection with any registration, qualification or compliance hereunder,
and each Purchaser shall pay all Selling Expenses (as defined below) and
other expenses that are not Registration Expenses relating to the Shares
resold by such Purchaser. Registration Expenses shall mean all expenses,
except for Selling Expenses, incurred by the Company in complying with the
registration provisions herein described, including, without limitation,
all registration, qualification and filing fees, printing expenses, escrow
fees, fees and disbursements of counsel for the Company, blue sky fees and
expenses, and the expense of any special audits incident to or required by
any such registration. Selling Expenses shall mean all selling commissions,
E-11
<PAGE>
underwriting fees and stock transfer taxes applicable to the Shares and all
fees and disbursements of counsel for any Purchaser.
(c) In the case of the registration effected by the Company pursuant
to these registration provisions, the Company will use its reasonable best
efforts to: (i) cause the Registration Statement to become effective within
sixty (60) days of the date hereof, (ii) keep such registration effective
until the earlier of (a) the second anniversary of the Closing Date, (b)
such date as all of the Shares have been resold by the original Purchasers
thereof, or (c) such time as all of the Shares held by the Purchasers can
be sold within a given three-month period without compliance with the
registration requirements of the Securities Act pursuant to Rule 144 under
the Securities Act; (iii) prepare and file with the SEC such amendments and
supplements to the Registration Statement and the prospectus used in
connection with the Registration Statement as may be necessary to comply
with the provisions of the Securities Act with respect to the disposition
of all securities covered by the Registration Statement; (iv) furnish such
number of prospectuses and other documents incident thereto, including any
amendment of or supplement to the prospectus, as a Purchaser from time to
time may reasonably request; (v) cause all Shares registered as described
herein to be listed on each securities exchange and quoted on each
quotation service on which similar securities issued by the Company are
then listed or quoted; (vi) provide a transfer agent and registrar for all
Shares registered pursuant to the Registration Statement and a CUSIP number
for all such Shares; (vii) otherwise use its best efforts to comply with
all applicable rules and regulations of the SEC; and (viii) file the
documents required of the Company and otherwise use its best efforts to
maintain requisite blue sky clearance in (A) all jurisdictions in which any
of the Shares are originally sold and (B) all other states reasonably
specified in writing by a Purchaser, provided as to clause (B), however,
that in no event shall the Company be required to qualify to do business or
consent to service of process in any state in which it is not now so
qualified or has not so consented.
(d) The Company shall furnish to each Purchaser upon request a
reasonable number of copies of a supplement to or an amendment of such
prospectus as may be necessary in order to facilitate the public sale or
other disposition of all or any of the Shares held by such Purchaser.
(e) With a view to making available to the Purchasers the benefits of
Rule 144 promulgated under the Securities Act ("Rule 144") and any other
rule or regulation of the SEC that may at any time permit a Purchaser to
sell Shares to the public without registration or pursuant to a
registration on Form S-3, the Company covenants and agrees to: (i) make and
keep public information available, as those terms are understood and
defined in Rule 144 under the Securities Act, until the earlier of (A) the
second anniversary of the Closing Date or (B) such date as all of the
Shares shall have been resold by the original Purchasers thereof; (ii) file
with the SEC in a timely manner all reports and other documents required of
the Company under the Securities Act and the Exchange Act; and (iii)
furnish to any Purchaser upon request, as long as the Purchaser owns any
Shares, (A) a written statement by the Company that it has complied with
the reporting requirements of the Securities Act and the Exchange Act, (B)
a copy of the most recent annual or quarterly report of the Company, and
E-12
<PAGE>
(C) such other information as may be reasonably requested in order to avail
any Purchaser of any rule or regulation of the SEC that permits the selling
of any such Shares without registration or pursuant to such Form S-3.
(f) At any time the Company may refuse to permit a Purchaser to resell
any Shares pursuant to the Registration Statement; provided, however, that
in order to exercise this right, the Company must deliver a certificate in
writing to the Purchasers and the Placement Agent to the effect that a
cessation of the ability to sell under, or a withdrawal of, such
Registration Statement is necessary because a sale pursuant to the
Registration Statement in its then-current form would constitute a
violation of the federal securities laws. In such an event, the Company
shall use its best efforts to promptly amend the Registration Statement if
necessary and take all other actions necessary to allow such sale under the
federal securities laws, and shall notify the Purchasers and the Placement
Agent promptly after it has determined that such sale has become
permissible under the federal securities laws. Notwithstanding the
foregoing, the Company shall not under any circumstances be entitled to
exercise its right to withdraw the registration statement more then one (1)
time in any twelve (12) month period, and the period during which such
Registration Statement may be withdrawn shall not exceed sixty (60) days.
Each Purchaser hereby covenants and agrees that it will not sell any Shares
pursuant to the Registration Statement during the periods the Registration
Statement is withdrawn or the ability to sell thereunder is suspended as
set forth in this Section 7.2(f).
7.3 Indemnification and Contribution.
(a) The Company agrees to indemnify and hold harmless each Purchaser
from and against any losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) to which such Purchaser may become subject
(under the Securities Act or otherwise) insofar as such losses, claims,
damages or liabilities (or actions or proceedings in respect thereof) arise
out of or are based upon, any untrue statement of a material fact contained
in the Registration Statement, on the effective date thereof, or arise out
of any failure by the Company to fulfill any undertaking included in the
Registration Statement, and the Company will, as incurred, reimburse such
Purchaser for any legal or other expenses reasonably incurred in
investigating, defending or preparing to defend any such action, proceeding
or claim; provided, however, that the Company shall not be liable in any
such case to the extent that such loss, claim, damage or liability arises
out of or is based upon (i) an untrue statement made in such Registration
Statement in reliance upon and in conformity with written information
furnished to the Company by or on behalf of such Purchaser specifically for
use in preparation of the Registration Statement, (ii) the failure of such
Purchaser to comply with the covenants and agreements contained in Section
8.3 hereof, or (iii) any untrue statement in any Prospectus that is
corrected in any subsequent Prospectus that was delivered to the Purchaser
prior to the pertinent sale or sales by the Purchaser.
(b) Each Purchaser, severally and not jointly, agrees to indemnify and
hold harmless the Company from and against any losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) to which the
Company may become subject (under the
E-13
<PAGE>
Securities Act or otherwise) insofar as such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) arise out of or
are based upon (i) an untrue statement made in such Registration Statement
in reliance upon and in conformity with written information furnished to
the Company by or on behalf of such Purchaser specifically for use in
preparation of the Registration Statement, provided, however, that no
Purchaser shall be liable in any such case for any untrue statement
included in any Prospectus which statement has been corrected, in writing,
by such Purchaser and delivered to the Company before the sale from which
such loss occurred, (ii) the failure of such Purchaser to comply with the
covenants and agreements contained in Section 8.3 hereof, or (iii) any
untrue statement in any prospectus that is corrected in any subsequent
Prospectus that was delivered to the Purchaser prior to the pertinent sale
or sales by the Purchaser, and each Purchaser, severally and not jointly,
will, as incurred, reimburse the Company for any legal or other expenses
reasonably incurred in investigating, defending or preparing to defend any
such action, proceeding or claim.
(c) Promptly after receipt by any indemnified person of a notice of a
claim or the beginning of any action in respect of which indemnity is to be
sought against an indemnifying person pursuant to this Section 7.3, such
indemnified person shall notify the indemnifying person in writing of such
claim or of the commencement of such action, and, subject to the provisions
hereinafter stated, in case any such action shall be brought against an
indemnified person and the indemnifying person shall have been notified
thereof, the indemnifying person shall be entitled to participate therein,
and, to the extent that it shall wish, to assume the defense thereof, with
counsel reasonably satisfactory to the indemnified person. After notice
from the indemnifying person to such indemnified person of the indemnifying
person's election to assume the defense thereof, the indemnifying person
shall not be liable to such indemnified person for any legal expenses
subsequently incurred by such indemnified person in connection with the
defense thereof, provided, however, that if there exists or shall exist a
conflict of interest that would make it inappropriate in the reasonable
judgment of the indemnified person for the same counsel to represent both
the indemnified person and such indemnifying person or any affiliate or
associate thereof, the indemnified person shall be entitled to retain its
own counsel at the expense of such indemnifying person.
(d) If the indemnification provided for in this Section 7.3 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) referred to
therein, then each indemnifying party shall contribute to the amount paid
or payable by such indemnified party as result of such losses, claims,
damages or liabilities (or actions in respect thereof) in such proportion
as is appropriate to reflect the relative fault of the Company on the one
hand and the Purchasers on the other in connection with the statements or
omissions which resulted in such losses, claims, damages or liabilities (or
actions in respect thereof), as well as any other relevant equitable
considerations. The relative fault shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company on the one hand or a
Purchaser on the other and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or
E-14
<PAGE>
omission. The Company and the Purchasers agree that it would not be just
and equitable if contribution pursuant to this subsection (d) were
determined by pro rata allocation (even if the Purchasers were treated as
one entity for such purpose) or by any other method of allocation which
does not take account of the equitable considerations referred to above in
this subsection (d). The amount paid or payable by an indemnified party as
a result of the losses, claim, damages, or liabilities (or actions in
respect thereof) referred to above in this subsection (d) shall be deemed
to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this subsection (d), no
Purchaser shall be required to contribute any amount in excess of the
amount by which the net amount received by the Purchaser from the sale of
the Shares to which such loss relates exceeds the amount of any damages
which such Purchaser has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. The
Purchasers' obligations in this subsection (d) to contribute are several in
proportion to their respective sales of Shares to which such loss relates
and not joint.
(e) The obligations of the Company and the Purchasers under this
Section 7.3 shall be in addition to any liability which the Company and the
respective Purchasers may otherwise have and shall extend, upon the same
terms and conditions, to each person, if any, who controls the Company or
any Purchaser within the meaning of the Act.
Section 8
Restrictions on Transferability of Shares:
Compliance with Securities Act
8.1 Restrictions on Transferability. The Shares shall not be transferable
in the absence of a registration under the Securities Act or an exemption
therefrom or in the absence of compliance with any term of this Agreement. The
Company shall be entitled to give stop transfer instructions to its transfer
agent with respect to the Shares in order to enforce the foregoing restrictions.
8.2 Restrictive Legend. Each certificate representing Shares shall bear
substantially the following legends (in addition to any legends required under
applicable securities laws):
THE SHARES REPRESENTED BY THIS CERTIFICATE
HAVE BEEN ACQUIRED FOR INVESTMENT PURPOSES
ONLY AND HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933. THE SHARES MAY NOT BE
SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN EXEMPTION THEREFROM.
E-15
<PAGE>
ADDITIONALLY THE TRANSFER OF THE SHARES
REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO
CERTAIN RESTRICTIONS SPECIFIED IN THE COMMON
STOCK PURCHASE AGREEMENT DATED JUNE 25, 1998
BETWEEN THE COMPANY AND THE ORIGINAL
PURCHASER, AND NO TRANSFER OF SHARES SHALL BE
VALID OR EFFECTIVE ABSENT COMPLIANCE WITH
SUCH RESTRICTIONS. ALL SUBSEQUENT HOLDERS OF
THIS CERTIFICATE WILL HAVE AGREED TO BE BOUND
BY CERTAIN OF THE TERMS OF THE AGREEMENT,
INCLUDING SECTIONS 7.2 AND 8.3 OF THE
AGREEMENT. COPIES OF THE AGREEMENT MAY BE
OBTAINED AT NO COST BY WRITTEN REQUEST MADE
BY THE REGISTERED HOLDER OF THIS CERTIFICATE
TO THE SECRETARY OF THE COMPANY.
The legend contained in this Section 8.2 may be removed from a certificate
either in accordance with Section 8.3 or immediately upon receipt by the
Transfer Agent of a certificate substantially in the form attached hereto as
Exhibit E.
8.3 Transfer of Shares After Registration. Each Purchaser hereby covenants
with the Company not to make any sale of the Shares except either (i) in
accordance with the Registration Statement, in which case Purchaser covenants to
comply with the requirement of delivering a current prospectus, or (ii) in
accordance with Rule 144, in which case Purchaser covenants to comply with Rule
144. Purchaser further acknowledges and agrees that such Shares are not
transferable on the books of the Company unless the certificate submitted to the
Company's transfer agent evidencing such Shares is accompanied by a separate
certificate executed by an officer of, or other person duly authorized by, the
Purchaser in the form attached hereto as Exhibit F.
8.4 Purchaser Information. Each Purchaser covenants that it will promptly
notify the Company of any changes in the information set forth in the
Registration Statement regarding such Purchaser or such Purchaser's "Plan of
Distribution."
Section 9
Miscellaneous
9.1 Waivers and Amendments. With the exception of Sections 7.1 and 7.2
hereof, the terms of this Agreement may be waived or amended with the written
consent of the Company and each Purchaser. With respect to Sections 7.1 and 7.2
hereof, with the written consent of the Company and the record holders of more
than fifty percent (50%) of the Shares then outstanding and held by Purchasers,
the terms of the Agreement may be waived or amended
E-16
<PAGE>
and any such amendment or waiver shall be binding upon the Company and all
holders of Shares.
9.2 Placement Agent Fee. Each Purchaser acknowledges that the Company
intends to pay a fee to SBC Warburg Dillon Read Inc. and Evolution Capital in
respect of the sale of the Shares to the Purchaser. Each of the parties hereto
hereby represents that, on the basis of any actions and agreements by it, there
are no other brokers or finders entitled to compensation in connection with the
sale of the Shares to the Purchasers.
9.3 Governing Law. This Agreement shall be governed in all respects by and
construed in accordance with the laws of the State of New York without any
regard to conflicts of laws principles.
9.4 Survival. The representations, warranties, covenants and agreements
made in this Agreement shall survive any investigation made by the Company or
the Purchasers and the Closing.
9.5 Successors and Assigns. The provisions hereof shall inure to the
benefit of, and be binding upon, the successors, assigns, heirs, executors and
administrators of the parties to this Agreement. Notwithstanding the foregoing,
no Purchaser shall assign this Agreement without the prior written consent of
the Company.
9.6 Entire Agreement. This Agreement constitutes the full and entire
understanding and agreement between the parties with regard to the subjects
thereof.
9.7 Notices, etc. All notices and other communications required or
permitted under this Agreement shall be effective upon receipt and shall be in
writing and may be delivered in person, by telecopy, overnight delivery service
or registered or certified United States mail addressed to the Company or the
Purchasers, as the case may be, at their respective addresses set forth at the
beginning of this Agreement or on Exhibit A or at such other address as the
Company or the Purchasers shall have furnished to the other party in writing.
All notices and other communications shall be effective upon the earlier of
actual receipt thereof by the person to whom notice is directed or (i) in the
case of notices and communications sent by personal delivery or telecopy, one
business day after such notice or communication arrives at the applicable
address or was successfully sent to the applicable telecopy number, (ii) in the
case of notices and communications sent by overnight delivery service, at noon
(local time) on the second business day following the day such notice or
communication was sent, and (iii) in the case of notices and communications sent
by United States mail seven days after such notice or communication shall have
been deposited in the United States mail.
9.8 Severability of this Agreement. If any provision of this Agreement
shall be judicially determined to be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
E-17
<PAGE>
9.9 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
9.10 Further Assurances. Each party to this Agreement shall do and perform
or cause to be done and performed all such further acts and things and shall
execute and deliver all such other agreements, certificates, instruments and
documents as the other party hereto may reasonably request in order to carry out
the intent and accomplish the purposes of this Agreement and the consummation of
the transactions contemplated hereby.
9.11 Termination. In the event that the Closing shall not have occurred on
or before sixty (60) days from the date hereof, the Purchasers shall have the
option to terminate this Agreement at the close of business on such date, and in
the event that the Closing shall not have occurred on or before ninety (90) days
from the date hereof, this Agreement shall terminate at the close of business on
such date.
9.12 Expenses. The Company and each such Purchaser shall bear its own
expenses incurred on its behalf with respect to this Agreement and the
transactions contemplated hereby, including fees of legal counsel.
9.13 Currency. All references to "dollars" or "$" in this Agreement shall
be deemed to refer to United States dollars.
E-18
<PAGE>
The foregoing agreement is hereby executed as of the date first above
written.
"COMPANY"
ENZON, INC.
a Delaware corporation
By:
------------------------------------------
Title:
---------------------------------------
"PURCHASERS"
THE DCF LIFE SCIENCES FUND, LTD.
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
DCF PARTNERS, L.P.
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
E-19
<PAGE>
ARIES DOMESTIC FUND, L.P.
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
THE ARIES TRUST
By:
------------------------------------------
Name:
---------------------------------------
Title:
---------------------------------------
HAUSMANN HOLDINGS, N.V.
By:
------------------------------------------
Name:
---------------------------------------
Title:
---------------------------------------
E-20
<PAGE>
ORACLE OFFSHORE LTD.
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
ORACLE PARTNERS L.P.
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
ORACLE INSTITUTIONAL PARTNERS
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
E-21
<PAGE>
GSAM ORACLE FUND, INC.
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
SBC WARBURG DILLON READ, INC.
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
SBC WARBURG DILLON READ, INC.
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
E-22
<PAGE>
CACLUCEUS CAPITAL L.P.
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
CACLUCEUS CAPITAL LTD.
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
MERLIN BIOMED L.P.
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
E-23
<PAGE>
DEUTSCHE VERMOGEN SBILDUNGSGESELL
SCHAFT MBH
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
WAYNE P. ROTHBAUM
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
MITCHELL D. SILBER
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
E-24
<PAGE>
NEW TECHNOLOGIES FUND
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
E-25
<PAGE>
Exhibit A
to CSPA
<TABLE>
<CAPTION>
Purchaser Shares Purchase Price
--------- ------ --------------
<S> <C> <C>
DCF Life Sciences Fund Ltd. 200,000 $ 950,000
DCF Partners, L.P. 853,000 $ 4,051,750
C/O DCF Capital
660 Steamboat Road
Greenwich, CT 06830
Attn: Mr. Doug Floren
Facsimile: (203) 618-1495
Oracle Partners, L.P. 315,789 $ 1,499,997.75
Oracle Institutional Partners, L.P. 78,496 $ 372,856
GSAM Oracle Fund, Inc. 168,721 $ 801,424.75
Haussmann Holdings, N.V 50,526 $ 239,998.50
Oracle Offshore Ltd. 18,046 $ 85,718.50
C/O Oracle Partners, L.P.
712 Fifth Avenue, 45th Floor
New York, NY 10019
Attn: Mr. Norman Schleffer
Facsimile: (212) 459-0863
SBC Warburg Dillon Read, Inc. 500,000 $ 2,375,000
141 West Jackson Blvd.
Chicago, IL 60604
Attn: Mr. James Del Medico
Facsimile: (312) 554-6332
Caduceus Capital L.P. 105,000 $ 498,750
Caduceus Capital Ltd. 220,000 $ 1,045,000
C/O Orbimed Advisors LLC
767 Third Avenue, 6th Floor
New York, NY 10017
Attn: Mr. Sven H. Borho
Facsimile: (212) 739-6444
Merlin BioMed LP 21,053 $ 100,001.75
Deutsche Vermogen 294,737 $ 1,400,000.75
Sbildungsgesell Shaft mbH
C/O Merlin Biomed
237 Park Avenue, Suite 801
New York, NY 10017
Attn: Ms. Jennifer Stoler
Facsimile: (212) 808-7422
The Aries Trust 747,368 3,549,998
Aries Domestic Fund, L.P. 305,264 1,450,004
C/O Paramount Capital Asset
Management, Inc.
787 Seventh Avenue
New York, NY 10019
Attn: Mr. David Tanen
Facsimile: (212) 554-4355
Wayne P. Rothbaum 30,000 $ 142,500
Mitchell D. Silber 15,000 $ 71,250
C/O The Carson Group
156 West 56th Street
10th Floor
New York, NY 10019
Attn: Mr. Wayne Rothbaum
New Technologies Fund 60,000 $ 285,000
C/O Emerging Growth
Management Co.
One Embarcadero Center
Suite 2410
San Francisco, CA 94111
Attn: Mr. Marc Pentopoulos
Facsimile: (415) 782-9645
---------- --------------
3,983,000 $18,919,250
========== ==============
</TABLE>
E-26
<PAGE>
Exhibit B
INSTRUCTION SHEET FOR PURCHASER
(to be read in conjunction with the entire
Common Stock Purchase Agreement)
A. Complete the following items in the Common Stock Purchase Agreement:
1. Provide the information regarding the Purchaser requested on the
signature page. The Agreement must be executed by an individual
authorized to bind the Purchaser.
2. Exhibit B-1 - Stock Certificate Questionnaire:
Provide the information requested by the Stock Certificate
Questionnaire;
3. Exhibit B-2 - Registration Statement Questionnaire:
Provide the information requested by the Registration Statement
Questionnaire.
4. Exhibit B-3 - Purchaser Certificate:
Provide the information requested by the Certificate for Individual
Purchasers or the Certificate for Corporate, Partnership, Trust,
Foundation and Joint Purchasers, as applicable.
5. Return the signed Purchase Agreement including the properly completed
Exhibit 4.2 to:
Brobeck, Phleger & Harrison LLP
1633 Broadway, 47th Floor
New York, New York 10019
Telephone: (212) 581-1600
Attn: Heather Willens, Esq.
B. Instructions regarding the transfer of funds for the purchase of Shares
will be telecopied to the Purchaser by the Placement Agent at a later date.
C. Upon the resale of the Shares by the Purchaser after the Registration
Statement covering the Shares is effective, as described in the Purchase
Agreement, the Purchaser:
(i) must deliver a current prospectus, and annual and quarterly
reports of the Company to the buyer (prospectuses, and annual and
quarterly reports may be obtained from the Company at the
Purchaser's request); and
(ii) must send a letter in the form of Exhibit D to the Company so
that the Shares may be properly transferred.
E-27
<PAGE>
Exhibit B-1
ENZON, INC.
STOCK CERTIFICATE QUESTIONNAIRE
Pursuant to Section 4.3 of the Agreement, please provide us
with the following information:
1. The exact name that the Shares are to be
registered in (this is the name that will
appear on the stock certificate(s)). You may
use a nominee name if appropriate: _____________________________
2. The relationship between the Purchaser of the
Shares and the Registered Holder listed in
response to item 1 above: _____________________________
3. The mailing address of the Registered Holder
listed in response to item 1 above: _____________________________
_____________________________
_____________________________
_____________________________
_____________________________
4. The Tax Identification Number of the
Registered Holder listed in response to item
1 above: _____________________________
E-28
<PAGE>
Exhibit B-2
ENZON, INC.
REGISTRATION STATEMENT QUESTIONNAIRE
In connection with the preparation of the Registration Statement, please
provide us with the following information regarding the Purchaser.
1. Please state your organization's name exactly as it should appear in the
Registration Statement:
2. Have you or your organization had any position, office or other material
relationship within the past three years with the Company or its affiliates
other than as disclosed in the prospectus included in the Registration
Statement?
_____ Yes _____ No
If yes, please indicate the nature of any such relationship below:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
E-29
<PAGE>
Exhibit B-3
ENZON, INC.
CERTIFICATE FOR INDIVIDUAL PURCHASERS
If the investor is an individual Purchaser (or married couple) the
Purchaser must complete, date and sign this Certificate.
CERTIFICATE
I certify that the representations and responses below are true and
accurate:
In order for the Company to offer and sell the Shares in conformance with
state and federal securities laws, the following information must be obtained
regarding your investor status. Please initial each category applicable to you
as an investor in the Company.
___ (1) A natural person whose individual net worth, or joint net worth
with that person's spouse, at the time of his purchase exceeds $1,000,000;
___ (2) A natural person who had an individual income in excess of $200,000
in each of the two most recent years, or joint income with that person's spouse
in excess of $300,000, in each of those years, and has a reasonable expectation
of reaching the same income level in the current year;
___ (3) An executive officer or director of the Company.
Dated: __________________ ____________________________________________
Name(s) of Purchaser
____________________________________________
Signature
____________________________________________
Signature
E-30
<PAGE>
Exhibit B-4
ENZON, INC.
CERTIFICATE FOR CORPORATE, PARTNERSHIP,
TRUST, FOUNDATION AND JOINT PURCHASERS
If the investor is a corporation, partnership, trust, pension plan,
foundation, joint purchaser (other than a married couple) or other entity, an
authorized officer, partner, or trustee must complete, date and sign this
Certificate.
CERTIFICATE
The undersigned certifies that the representations and responses below are
true and accurate:
(a) The investor has been duly formed and is validly existing and has full
power and authority to invest in the Company. The person signing on behalf of
the undersigned has the authority to execute and deliver the Common Stock
Purchase Agreement on behalf of the Purchaser and to take other actions with
respect thereto.
(b) Indicate the form of entity of the undersigned:
____ Limited Partnership
____ General Partnership
____ Corporation
____ Revocable Trust (identify each grantor and indicate under what
circumstances the trust is revocable by the grantor):
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
________. (Continue on a separate piece of paper, if necessary.)
____ Other type of Trust (indicate type of trust and, for trusts other
than pension trusts, name the grantors and beneficiaries):_______
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
________. (Continue on a separate piece of paper, if necessary.)
E-31
<PAGE>
____ Other form of organization (indicate form of organization (____
_______________________________________________________________).
(c) Indicate the approximate date the undersigned entity was formed: ______
____________________.
(d) In order for the Company to offer and sell the Shares in conformance
with state and federal securities laws, the following information must be
obtained regarding your investor status. Please initial each category applicable
to you as an investor in the Company.
____ 1. A bank as defined in Section 3(a)(2) of the Securities Act, or
any savings and loan association or other institution as defined
in Section 3(a)(5)(A) of the Securities Act whether acting in its
individual or fiduciary capacity;
____ 2. A broker or dealer registered pursuant to Section 15 of the
Securities Exchange Act of 1934;
____ 3. An insurance company as defined in Section 2(13) of the
Securities Act;
____ 4. An investment company registered under the Investment Company
Act of 1940 or a business development company as defined in
Section 2(a)(48) of that Act;
____ 5. A Small Business Investment Company licensed by the U.S. Small
Business Administration under Section 301(c) or (d) of the Small
Business Investment Act of 1958;
____ 6. A plan established and maintained by a state, its political
subdivisions, or any agency or instrumentality of a state or its
political subdivisions, for the benefit of its employees, if such
plan has total assets in excess of $5,000,000;
____ 7. An employee benefit plan within the meaning of the Employee
Retirement Income Security Act of 1974, if the investment
decision is made by a plan fiduciary, as defined in Section 3(21)
of such Act, which is either a bank, savings and loan
association, insurance company, or registered investment advisor,
or if the employee benefit plan has total assets in excess of
$5,000,000 or, if a self-directed plan, with investment decisions
made solely by persons that are accredited investors;
____ 8. A private business development company as defined in Section
202(a)(22) of the Investment Advisers Act of 1940;
E-32
<PAGE>
____ 9. An organization described in Section 501(c)(3) of the Internal
Revenue Code, corporation, Massachusetts or similar business
trust, or partnership, not formed for the specific purpose of
acquiring the Shares, with total assets in excess of $5,000,000;
____ 10. A trust, with total assets in excess of $5,000,000, not
formed for the specific purpose of acquiring the Shares, whose
purchase is directed by a sophisticated person as described in
Rule 506(b)(2)(ii) of the Exchange Act;
____ 11. An entity in which all of the equity owners qualify under any
of the above subparagraphs. If the undersigned belongs to this
investor category only, list the equity owners of the
undersigned, and the investor category which each such equity
owner satisfies:
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
________________________________________________________________.
(Continue on a separate piece of paper, if necessary.)
Dated: _________________________, 19__
______________________________________
Name of investor
_____________________________________________________________
Signature and title of authorized officer, partner or trustee
E-33
<PAGE>
Exhibit C
Opinion of Company Counsel
E-34
<PAGE>
EXHIBIT C
DRAFT
[Closing Date], 1998
[ ]
Re: Enzon, Inc. - Sale of Common Stock
Ladies and Gentlemen:
We have acted as counsel to Enzon, Inc. (the "Company") in connection with
the sale by the Company of shares of common stock of the Company (the "Shares")
pursuant to the Common Stock Purchase Agreement (the "Purchase Agreement"),
dated as of June [ ], 1998, by and between the Company and the investors listed
on Schedule A thereto (the "Purchasers"). This opinion is being delivered
pursuant to Section 5.4 of the Purchase Agreement. All capitalized terms used
herein and not defined herein have the meanings assigned to such terms in the
Purchase Agreement.
We have examined such documents and have reviewed such questions of law as
we have considered necessary and appropriate for the purposes of our opinions
set forth below.
In rendering our opinions set forth below, we have assumed the authenticity
of all documents submitted to us as originals, the genuineness of all signatures
and the conformity to authentic originals of all documents submitted to us as
copies. We have also assumed the legal capacity for all purposes relevant hereto
of all natural persons and, with respect to all parties to agreements or
instruments relevant hereto other than the Company, that such parties had the
requisite power and authority (corporate or otherwise) to execute, deliver and
perform such agreements or instruments, that such agreements or instruments have
been duly authorized by all requisite action (corporate or otherwise) on the
part of such parties and have been duly executed and delivered by such parties
and that such agreements or instruments are the valid, binding and enforceable
obligations of such parties. As to questions of fact material to our opinions,
we have relied upon the representations made in the Purchase Agreement and upon
certificates of officers of the Company and of public officials (including,
without limitation, those certificates delivered to others at the Closing).
E-35
<PAGE>
Our opinions expressed below as to certain factual matters are qualified as
being limited "to our knowledge" or by other words to the same or similar
effect. Such words, as used herein, mean the information known to the attorneys
in the firm who have principally represented the Company in connection with the
transactions contemplated by the Purchase Agreement. In rendering such opinions,
we have not conducted any independent investigation or consulted with other
attorneys in our firm with respect to the matters covered thereby. No inference
as to our knowledge with respect to such matters should be drawn from the fact
of our representation of the Company.
Based on the foregoing, we are of the opinion that:
1. The Company is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Delaware.
2. The Company has the corporate power and authority to enter into the
Purchase Agreement and to issue, sell and deliver to the Purchasers the Shares
to be issued and sold by it thereunder.
3. The Purchase Agreement has been duly authorized by all necessary
corporate action on the part of the Company and has been duly executed and
delivered by the Company.
4. The performance by the Company of the Purchase Agreement and the
consummation by the Company of the transactions therein contemplated will not
(a) violate any provision of the Company's charter or bylaws or any applicable
statute, rule or regulation, or (b) result in the material breach or violation
of any of the terms and provisions, or constitute a default under, any
indenture, mortgage, deed of trust, loan agreement, bond, debenture, note
agreement or other evidence of indebtedness, or any lease, contract or other
agreement or instrument known to us to which the Company is a party or by which
its properties are bound, or, to our knowledge, any order, writ or decree of any
court or governmental agency or body having jurisdiction over the Company, or
over any of its properties or operations; provided, however, that we express no
opinion herein regarding state or foreign securities or Blue Sky laws.
5. The Purchase Agreement constitutes a valid and binding obligation of the
Company, enforceable against the Company according to its terms.
E-36
<PAGE>
6. The Shares to be issued by the Company pursuant to the terms of the
Purchase Agreement will be, upon issuance and delivery against payment therefor
in accordance with the terms thereof, duly authorized and validly issued and
fully paid and nonassessable, and the stockholders of the Company have no
preemptive or other rights to purchase any of the Shares.
The opinions set forth above are subject to the following qualifications
and exceptions:
(a) Our opinions are subject to the effect of any applicable
bankruptcy, insolvency, reorganization, moratorium or other similar law of
general application affecting creditors' or secured creditors' rights,
including (without limitation) applicable fraudulent transfer laws.
(b) Our opinions are subject to the effect of general principles of
equity, including (without limitation) concepts of materiality,
reasonableness, good faith and fair dealing, and other similar doctrines
affecting the enforceability of agreements generally (regardless of whether
considered in a proceeding in equity or at law).
(c) Our opinions are subject to possible judicial action giving effect
to governmental actions or foreign laws affecting creditors' rights.
(d) Our opinions, insofar as they relate to indemnification
provisions, are subject to the effect of federal and state securities laws
and public policy relating thereto.
Our opinions expressed above are limited to the law of the State of New
York, the Delaware General Corporation Law, and the federal laws of the United
States of America.
The foregoing opinions are being furnished to you solely for your benefit
and may not be relied upon by, nor may copies be delivered to, any other person
without our prior written consent.
Very truly yours,
E-37
<PAGE>
Exhibit D
OPINIONS OF PATENT COUNSEL
E-38
<PAGE>
[LETTERHEAD OF ROBERTS & MERCANTI, L.L.P.]
June 25, 1998
The Purchasers in the
Enzon, Inc. Common Stock
Purchase Agreement
dated June 25, 1998
and
SBC Warburg Dillon Read, Inc
535 Madison Avenue
New York, New York 10022
Re: Opinion of Intellectual Property Counsel with Respect to
Enzon's PEG INTRON A Technologies and Proprietary Rights
Our Reference 213 1092
Ladies and Gentlemen:
Our client, Enzon, Inc., a Delaware corporation (the "Company"), has
requested that we furnish to you our opinion in respect of certain matters
relating to the Company's PEG INTRON A technologies, and pursuant to Section 5.5
of the Common Stock Purchase Agreement, dated June 25, 1998, between SBC
Warburg Dillon Read, Inc. (the "Placement Agent") and the Company (the Placement
Agent Agreement"). Capitalized terms not otherwise defined herein shall have the
meaning ascribed to them, in the Purchase Agreement.
For the purposes of rendering the opinions set forth below, we have either
reviewed the following in the course of preparing this opinion or else we have
reviewed the following in the course of our representation of the Company
(collectively the "Documents"):
1. the Purchase Agreement;
2. that certain Private Placement Offering Memorandum (the "Memorandum")
dated June 2, 1998, together with any and all exhibits and amendments
thereto;
3. the patents and patent applications listed on Schedule 1 attached
hereto, which include all of the patents and patent applications
referred to in the memorandum (the "Patents and Patent Applications")
with respect to the Company's PEG
E-39
<PAGE>
SBC Warburg Dillon Read, Inc.
June 25, 1998
Page 2
INTRON A technologies and which are divided into category A, which are
the patents and patent applications owned by the Company and the
Company's subsidiaries listed on Schedule 2 attached hereto (the
"Subsidiaries") (collectively, the "Owned Patent Rights")
collectively, and category B, which are the patents and patent
applications licensed by the Company and its Subsidiaries
(collectively, the "Licensed Patent Rights");
4. copies of the license agreements listed on Schedule 3 attached hereto
(collectively, the "License Agreements");
5. copies of assignments relevant to ownership of the Patents and Patent
Applications,
6. the results of searches in the United States Patent and Trademark
Office ("USPTO"), completed on June 4, 1998 in relation to the USPTO's
record of title to the United States patents and patent applications
within the Patents and Patent Applications;
7. any and all references cited to, or by, the USPTO during the
prosecution of the United States patents and patent applications
included within the Patents and Patent Applications;
8. the documents referred to in those opinions of this firm which we
delivered to the Company relating to the Owned Patent Rights or
relating to whether the PEG INTRON A products or proposed products of
the Company infringe patents belonging to any third parties;
9. the internal files of this firm pertaining to the Owned Patent Rights.
Whenever our opinions herein are qualified by the phrase "to our best
knowledge," except as may be further qualified below, such language means
that based upon the Documents, the actual knowledge of attorneys within our firm
(i.e., not including matters as to which such attorneys could be deemed to have
constructive knowledge) and inquiries of officers, directors and employees of
the Company, we believe that such opinions are factually correct.
(1) To our best knowledge, the Company and its Subsidiaries are the sole
owners of the Owned Patent Rights and have obtained currently
effective licenses to the Licensed Patent Rights pursuant to the
License Agreements.
E-40
<PAGE>
SBC Warburg Dillon Read, Inc.
June 25, 1998
Page 3
(2) The Company and its Subsidiaries are listed in the records of the
USPTO as the sole owners of the United States patents and patent
applications within the Owned Patent Rights.
(3) The Licensors are listed in the records of the USPTO as the sole
owners of the United States patents and patent applications within the
Licensed Patent Rights.
(4) To our best knowledge, the Company and its Subsidiaries have good and
marketable title to the Owned Patent Rights, free of any liens,
pledges, claims, security interests or other encumbrances, but
excluding those licenses set forth on Schedule 4.
(5) To our best knowledge, there is no information which would preclude
the grant of patent from each of the patent applications within the
Patents and Patent Applications, it being understood that there can be
no certainty as to which adjustments may be made to the claims as part
of the prosecution process within the PTO.
(6) To our best knowledge, the Company, the Subsidiaries and the Licensors
have all complied with USPTO's duty of candor and disclosure for each
of the United States patents and patent applications included in the
Patents and Patent Applications.
(7) To our best knowledge, there is no information which forms a basis for
a finding of unenforceability or invalidity of any of the claims of
the Patents and Patent. Applications except for with regard to U.S.
Patent No. 5,324,614; prior art uncovered after the '614 patent issued
may be deemed to be such information either by itself or in
combination with other information.
(8) There is no pending or, to our best knowledge, threatened action,
suit, proceeding, or claim by others challenging the Company's or its
Subsidiaries' ownership or license rights in or to any of the Owned
Patent Rights or Licensed Patent Rights.
(9) There is no pending or, to our best knowledge, threatened action,
suit, proceeding or claim by others challenging the validity or scope
of any of the Owned Patent Rights or Licensed Patent Rights.
(1O) There is no pending or, to our best knowledge, threatened action,
suit, proceeding or claim by the Company or its Subsidiaries that a
third party has or will infringe or otherwise violate any of the Owned
Patent Rights or Licensed Patent Rights.
E-41
<PAGE>
SBC Warburg Dillon Read, Inc.
June 25, 1998
Page 4
(11) There is no pending or, to our best knowledge, threatened action,
suit, proceeding or claim by any third party that the Company or its
Subsidiaries or their products and processes infringe or otherwise
violate any patent, trademark, copyright, trade secret or other right
of such third party.
(12) To our best knowledge, the statements in the Memorandum under the
captions "Risk Factors - Patents and Proprietary Rights" and
"Executive Summary" and other references in the Memorandum to the
Intellectual Property and other patent, trade secret, trademark and
licensing matters, insofar as such statements constitute a summary of
the legal matters, documents or proceedings referred to therein, are
accurate in all material respects and fairly present the information
purported to be disclosed therein.
We have participated in conferences with officials and other
representatives of the Company, Company's counsel and others, at which
conferences the contents of the Memorandum and related matters were discussed,
and although we have not verified the accuracy or completeness of the statements
contained in the Memorandum, nothing has come to our attention which leads us to
believe that the Memorandum or exhibits thereto (other than the financial
statements including supporting schedules and other financial and statistical
information derived therefrom) contained any untrue statement of a material fact
or omitted to state a material fact necessary to make the statements therein not
misleading.
Sincerely,
ROBERTS & MERCANTI, L.L.P.
/s/MICHAEL N. MERCANTI
----------------------
Michael N. Mercanti
MNM/aap
E-42
<PAGE>
DRAFT
June 25, 1998
The Purchasers in the Enzon, Inc.
Common Stock
Purchase Agreement Dated June 25, 1998
and
SBC Warburg Dillon Read, Inc.
535 Madison Avenue
New York, New York 10022
Ladies and Gentlemen:
Our client, Enzon, Inc., a Delaware corporation (the "Company"), has
requested that we furnish to you our opinion in respect of certain matters
relating to the Company's single chain antigen binding protein ("SCA")
technologies, and pursuant to Section 5.5 of the Common Stock Purchase
Agreement, dated June 25, 1998, between SBC Warburg Dillon Read, Inc. (the
"Placement Agent") and the Company (the "Placement Agent Agreement").
Capitalized terms not otherwise defined herein shall have the meaning ascribed
to them in the Purchase Agreement.
For the purposes of rendering the opinions set forth below, we have either
reviewed the following in the course of preparing this opinion or else we have
reviewed the following in the course of our representation of the Company
(collectively the "Documents"):
1. the Purchase Agreement;
E-43
<PAGE>
The Purchasers in the Enzon, Inc. Common Stock
and SBC Warburg Dillon Read, Inc.
June 25, 1998
Page 2
2. that certain Private Placement Offering Memorandum (the "Memorandum")
dated June 2, 1998, together with any and all exhibits and amendments
thereto;
3. the patents and certain patent applications listed on Schedule 1
attached hereto, which include all of the patents and patent
applications referred to in the Memorandum (the "Patents and Patent
Applications") with respect to the Company's SCA technologies and
which are divided into category A, which are the patents and patent
applications owned by the Company and the Company's subsidiaries
listed on Schedule 2 attached hereto (the "Subsidiaries")
(collectively, the "Owned Patent Rights") collectively, and within
category B, the issued U.S. patents licensed by the Company and its
Subsidiaries no pending applications were examined in category B
(collectively, the "Licensed Patent Rights");
4. copies of the license agreements listed on Schedule 3 attached hereto
(collectively, the "License Agreements");
5. copies of assignments relevant to ownership of the Patents and Patent
applications;
6. the results of searches in the United States Patent and Trademark
Office ("USPTO"), completed on June 25, 1998 in relation to the
USPTO's record of title to the United States patents and patent
applications within the Patents and Patent Applications;
7. any and all references cited to, or by, the USPTO during the
prosecution of the United States patents and patent applications
included within Owned Patent Rights of the Patents and Patent
Applications;
8. the documents referred to in those opinions of this firm which we
delivered to the Company relating to the Owned Patent Rights or
relating to whether the SCA products or proposed products of the
Company infringe patents belonging to any third parties;
9. the internal files of this firm pertaining to the Owned Patent Rights.
Whenever our opinions herein are qualified by the phrase "to our best
knowledge," except as may be further qualified below, such language means that
based upon the Documents, the
E-44
<PAGE>
The Purchasers in the Enzon, Inc. Common Stock
and SBC Warburg Dillon Read, Inc.
June 25, 1998
Page 3
actual knowledge of attorneys within our firm (i.e., not including matters as to
which such attorneys could be deemed to have constructive knowledge) and
inquiries of officers, directors and employees of the Company, we believe that
such opinions are factually correct.
(1) To our best knowledge, the Company and its Subsidiaries are the
sole owners of the Owned Patent Rights and have obtained currently
effective licenses to the Licensed Patent Rights pursuant to the License
Agreements.
(2) The Company and its Subsidiaries are listed in the records of the
USPTO as the sole owners of the United Stated patents and patent
applications within the Owned Patent Rights.
(3) The Licensors are listed in the records of the USPTO as the sole
owners of the United Stated patents within the Licensed Patent Rights. The
undersigned can make no representation about the ownership of any pending
patent applications of Licensors.
(4) To our best knowledge, the Company and its Subsidiaries have good
and marketable title to the Owned Patent Rights, free of any liens,
pledges, claims, security interests or other encumbrances, but excluding
those licenses set forth on Schedule 4.
(5) To our best knowledge, there is no information which would
preclude the grant of a patent from each of the patent applications within
the Owned Patent Rights, it being understood that there can be no certainty
as to which adjustments may be made to the claims as part of the
prosecution process within the PTO. The undersigned can make no
representation about the granting of any pending patent applications of
third parties, such as Licensors.
(6) To our best knowledge, the Company, and the Subsidiaries have all
complied with USPTO's duty of candor and disclosure for each of the United
Stated patents and patent applications included in the Owned Patent Rights.
No representation can be made with respect to complying with the duty of
candor by any Licensor.
(7) To our best knowledge, there is no information which forms a basis
for a finding of unenforceability or invalidity of any of the claims of the
Owned Patent Rights.
(8) There is no pending or, to our best knowledge, threatened action,
suit, proceeding or claim by others challenging the Company's or its
Subsidiaries' ownership or license rights in or to any of the Owned Patent
Rights or Licensed Patent Rights.
E-45
<PAGE>
The Purchasers in the Enzon, Inc. Common Stock
and SBC Warburg Dillon Read, Inc.
June 25, 1998
Page 4
(9) There is no pending or, to our best knowledge, threatened action,
suit, proceeding or claim by others challenging the validity or scope of
any of the Owned Patent Rights.
(10) There is no pending or, to our best knowledge, threatened action,
suit, proceeding or claim by the Company or its Subsidiaries that a third
party has or will infringe or otherwise violate any of the Owned Patent
Rights or Licensed Patent Rights. However, the Company is constantly
evaluating the activity of third parties and intends to enforce its patent
rights when necessary and appropriate.
(11) There is no pending or, to our best knowledge, threatened action,
suit, proceeding or claim by any third party that the Company or its
Subsidiaries or their products and processes infringe or otherwise violate
any patent, trademark, copyright, trade secret, or other right of such
third party.
(12) To our best knowledge, the statements in the Memorandum under the
captions "Risk Factors - Patents and Proprietary Rights" and "Executive
Summary" and other references in the Memorandum to the Intellectual
Property and other patent, trade secret, trademark and licensing matters,
insofar as such statements constitute a summary of the legal matters,
documents or proceedings referred to therein, are accurate in all material
respects and fairly present the information purported to be disclosed
therein.
We have participated in conferences with officials and other
representatives of the Company, Company's counsel and others, at which
conferences the contents of the Memorandum and related matters were discussed,
and although we have not verified the accuracy or completeness of the statements
contained in the Memorandum, nothing has come to our attention which leads us to
believe that the Memorandum or exhibits thereto (other than the financial
statements including supporting schedules and other financial and statistical
information derived therefrom) contained any untrue statement of a material fact
or omitted to state a material fact necessary to make the statements therein not
misleading.
Very truly yours,
STERNE, KESSLER, GOLDSTEIN & FOX P.L.L.C.
DRAFT
Jorge A. Goldstein
JAG/aye
E-46
<PAGE>
Confidential
ENZON SCA(R) PROTEINS PATENT RIGHTS
-----------------------------------
<TABLE>
<CAPTION>
DATE DATE
TITLE INVENTOR COUNTRY FILED SERIAL NO. PATENT NO. ISSUED
- ----- -------- ------- ----- ---------- ---------- ------
<S> <C> <C> <C> <C> <C> <C>
Single Ladner, Bird US 09/02/86 06/902,971 Abandoned
Polypeptide US 09/02/87 07/902,110 Abandoned
Chain Molecules PCT 09/02/87 PCT/US87/02208
EP 09/02/87 87906006.9 0281604 03/31/93
Austria 09/02/87 87906006.9 0281604 03/31/93
Belgium 09/02/87 87906006.9 0281604 03/31/93
France 09/02/87 87906006.9 0281604 03/31/93
Germany 09/02/87 87906006.9 0281604 03/31/93
Italy 09/02/87 87906006.9 0281604 03/31/93
Luxembourg 09/02/87 87906006.9 0281604 03/31/93
Netherlands 09/02/87 87906006.9 0281604 03/31/93
Sweden 09/02/87 87906006.9 0281604 03/31/93
Switzerland 09/02/87 87906006.9 0281604 03/31/93
U. Kingdom 09/02/87 87906006.9 0281604 03/31/93
CA 09/04/87 546,164
Japan 09/02/88 219589 Abandoned
US 01/19/89 07/299,617 4,946,778 08/07/90
US 04/25/90 07/512,910 5,260,203 11/09/93
US 04/01/93 08/040,440 5,455,030 10/03/95
US 06/06/95 08/468,988 5,518,889 05/21/96
US 06/06/95 08/468,992 5,534,621 07/09/96
Computer Based Ladner US 09/02/86 06/902,970 4,704,692 11/03/87
System and PCT 09/02/87 PCT/US87/02211
Method for EP 09/02/87 87906007.7 Abandoned
Determining US 11/02/87 07/115,919 Abandoned
Possible US 06/09/88 07/204/940 4,881,175 Abandoned
Chemical
Structures
Organism Ladner, Glick US 03/02/87 07/021,046 Abandoned
Carrying a Bird PCT 03/02/88 PCT/US88/00716
Single Chain EP 03/02/88 88903058.1 034978 11/30/94
Antibody France 03/02/88 88903058.1 034978 11/30/94
Domain Germany 03/02/88 88903058.1 034978 11/30/94
at its Surface U. Kingdom 03/02/88 88903058.1 034978 11/30/94
US 07/30/89 07/373,702 Abandoned
US 04/02/91 07/680,009 Abandoned
US 11/04/91 07/802,631 Abandoned
US 10/13/94 08/322,352 Abandoned
Incremental Hardman US 09/02/87 07/092,147 4,939,666 07/03/90
Macromolecule CA 09/01/88 576,286 Abandoned
Construction Method JP 09/02/88 221223 Abandoned
</TABLE>
E-47
<PAGE>
Confidential
ENZON SCA(R) PROTEINS PATENT RIGHTS
-----------------------------------
<TABLE>
<CAPTION>
DATE DATE
TITLE INVENTOR COUNTRY FILED SERIAL NO. PATENT NO. ISSUED
- ----- -------- ------- ----- ---------- ---------- ------
<S> <C> <C> <C> <C> <C> <C>
JP 11/20/92 510157
Multivalent Whitlow, US 11/25/91 07/796,936 Abandoned
Antigen- Wood CA 11/20/92 2,122,732
Binding Hardman US 11/20/92 07/989,846 Abandoned
Proteins PCT 11/20/92 PCT/US92/09965
EP 11/20/92 93900545.I
US 02/22/95 08/392,338
Linkers for Whitlow, US 11/20/92 07/980,529 Abandoned
Linked fusion Filpula US 01/15/93 08/002,845 Abandoned
Polypeptides PCT 11/17/93 PCT/US93/11138 Abandoned
US 04/07/94 08/224,591
US 09/10/97 08/926,789
Antigen Binding Whitlow, US 10/13/94 08/232,445 5,763,733 06/09/98
Fusion Proteins Filpula, Shorr US 08/16/95 08/515,903
PCT 10/13/95 PCT/US95/12840
Protein Lee US 04/07/95 08/417,855 5,656,730 08/12/97
Stabilized US 03/17/97 08/819,033
by Histidine
Production and Filpula, US 04/30/97 60/044,449 Abandoned
Uses of Wang, US 10/27/97 60/063,074
Glycosylated Shorr, US 12/02/97 60/067,341
Single Chain Whitlow, US 04/30/98 09/069,842
Fv Proteins Lee PCT 04/30/98
Polyalkylene Shorr, US 06/23/97 60/050,472
Glyco-Modified Whitlow, US 04/30/98 09/069,842
Single Chain Filpula, PCT 04/30/98 08654
Polypeptides Lee
</TABLE>
June 2, 1998
u:\sca.con
E-48
<PAGE>
SCHEDULE 1B
-----------
6/25/92 OIA Patent Applications/Issued Patents Page 1
- --------------------------------------------------------------------------------
File No./ Docket No. MSKCC Inventor(s)
Title of Disclosure
- --------------------------------------------------------------------------------
SK 340 25562 Lloyd et al
Monoclonal Antibodies to Human Gastrointestinal Cancer
Status of Disclosure: Abandoned for SK 340.1
- --------------------------------------------------------------------------------
Canada Serial #: 507,097 Filing Date: 4/18/86
Patent #: Issue Date:
Status of Application:
- --------------------------------------------------------------------------------
PO
Serial #: 86104321.4 Filing Date: 3/27/86
Patent #: Issue Date:
Status of Application:
- --------------------------------------------------------------------------------
Japan Serial #: 091154/86 Filing Date: 4/19/86
Patent #: Issue Date:
Status of Application:
- --------------------------------------------------------------------------------
U.S. Serial #: 724,991 Filing Date: 4/19/85
Patent #: Issue Date:
Status of Application: Abandoned for SK 340.1
- --------------------------------------------------------------------------------
SK 340.1 25562-A Lloyd et al
Monoclonal Antibodies to Human Gastrointestinal Cancer
Status of Disclosure: Abandoned for SK 340.2. Continuation of SK 340
- --------------------------------------------------------------------------------
U.S. Serial #: 118,411 Filing Date: 11/06/87
Patent #: Issue Date:
Status of Application: Abandoned for SK 340.2,
Continuation of SK 340
- --------------------------------------------------------------------------------
E-49
<PAGE>
6/25/92 OIA Patent Applications/Issued Patents Page 2
- --------------------------------------------------------------------------------
File No./ Docket No. MSKCC Inventor(s)
Title of Disclosure
- --------------------------------------------------------------------------------
SK 340.2 25562-B Welt et al
Method of Imaging Colorectal Carcinoma Lesion and Composition for use
therein
Status of Disclosure: Active. CIP of SK 340.1
- --------------------------------------------------------------------------------
U.S. Serial #: 327,765 Filing Date: 3/23/89
Patent #: Issue Date:
Status of Application: Abandoned for SK 340.3
and SK 340.4, CIP of SK
- --------------------------------------------------------------------------------
SK 340.3 25562-C Welt et al
Method of Imaging Colorectal Carcinoma Lesion and Composition for use
therein
Status of Disclosure: Active. Continuation of SK 340.2
- --------------------------------------------------------------------------------
U.S. Serial #: 673,155 Filing Date: 3/18/91
Patent #: Issue Date:
Status of Application: Divisional of SK 340.2
Abandoned
- --------------------------------------------------------------------------------
SK 340.4 25562-D Welt et al
Method of Imaging Colorectal Carcinoma Lesion and Composition for use
therein
Status of Disclosure: Active. Divisional of SK 340.2
- --------------------------------------------------------------------------------
U.S. Serial #: 671,132 Filing Date: 3/18/91
Patent #: Issue Date:
Status of Application: Divisional of SK 340.2
U.S. Patent 5,160,723
- --------------------------------------------------------------------------------
U.S. Serial #: 020,223
Patent #: 5,431,897
Status of Application: U.S. Patent 5,432,897
- --------------------------------------------------------------------------------
U.S. Serial #: 312,633
Patent #: 5,643,550
Status of Application: U.S. Patent 5,643,550
- --------------------------------------------------------------------------------
E-50
<PAGE>
SCHEDULE 1B
PROTEIN ENGINEERING CORPORATION
-------------------------------
Title Inventor Patent No. Date Issued
- ----- -------- ---------- -----------
Directed Evolution Ladner, et. al. 5,223,409 06/29/93
AGEN BIOMEDICAL LIMITED
-----------------------
Title Country Serial No.
- ----- ------- ----------
Immunological Use AU S0949/90
of Microwaves (640634)
Int'l PCT/AU90/00040
CA 2,046,621
EU 90902980.3
US 07/792,578
MOLECULAR ONCOLOGY, INC.
U.S. Patent application Ser. No. 06/836,414; filed March 5, 1986
E-51
<PAGE>
SCHEDULE 1B
XOMA PATENT RIGHTS
<TABLE>
<CAPTION>
DATE
TITLE INVENTOR COUNTRY FILED SERIAL NO. PATENT NO.
- ----- -------- ------- ------ ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Modular Assembly Robinson, Liu, *United States 11/01/85 06/793,980
of Antibody Genes, Horwitz, Wall, Australia 10/27/86 65981/86 606,320
Antibodies Prepared Better Austria 10/27/86 EP 86906676.1 0247091
Thereby and Use Belgium 10/27/86 EP 86906676.1 0247091
Canada 10/31/86 521,909
Denmark 10/27/86 3385/87
Europe 10/27/86 EP 86906676.1 0247091
Europe 10/27/86 92115754.1
France 10/27/86 EP 86906676.1 0247091
Germany 10/27/86 EP 86906676.1 0247091
Italy 10/27/86 EP 86906676.1 0247091
Japan 10/27/86 505887/86
Luxembourg 10/27/86 EP 86906676.1 0247091
Netherlands 10/27/86 EP 86906676.1 0247091
PCT 10/27/86 PCT/US88/02269
(WO 87/02671)
Sweden 10/27/86 EP 86906676.1 0247091
Switzerland/
Liechtenstein 10/27/86 EP 86906676.1 0247091
Taiwan 11/27/86 75105650 51922
United Kingdom 10/27/86 EP 86906676.1 0247091
Modular Assembly Robinson, Liu, Australia 07/25/88 23244/88 632462
of Antibody Genes, Horwitz, Wall, Austria 07/25/88 EP 88907510.7 0371998
Antibodies Prepared Better Belgium 07/25/88 EP 88907510.7 0371998
Thereby and Use Canada 07/24/88 572,398
Denmark 07/25/88 0192/90
Europe 07/25/88 EP 88907510.7 0371998
Europe 07/25/88 EP 93100041.8
France 07/25/88 EP 88907510.7 0371998
Germany 07/25/88 EP 88907510.7 0371998
Italy 07/25/88 EP 88907510.7 0371998
Japan 07/24/88 506481/88
Luxembourg 07/25/88 EP 88907510.7 0371998
Netherlands 07/25/88 EP 88907510.7 0371998
PCT 07/25/88 PCT/US88/02514
(WO 89/00999)
Sweden 07/25/88 EP 88907510.7 0371998
Switzerland/
Liechtenstein 07/25/88 EP 88907510.7 0371998
United Kingdom 07/25/88 EP 88907510.7 0371998
*United States 07/24/87 07/077,528
United States 03/28/90 07/501,092
United States 12/08/92 07/987,555
United States 04/17/92 07/870,404
United States 02/22/93 08/020,671
United States 04/29/94 08/235,225
United States 08/18/94 08/299,085
United States 12/09/94 08/367,234
AraB Promoters Lai, Lee, Lin Austria 01/24/86 EP 86900983.7 0211047
and Method of Ray, Wilcox Belgium 01/24/86 EP 86900983.7 0211047
Producing Europe 01/24/86 EP 86900983.7 0211047
Polypeptides Finland 01/24/86 863891
Including France 01/24/86 EP 86900983.7 0211047
Cecropins by Germany 01/24/86 EP 86900983.7 0211047
Microbiological Italy 01/24/86 EP 86900983.7 0211047
Techniques Japan 01/24/86 500818/88
Luxembourg 01/24/86 EP 86900983.7 0211047
Netherlands 01/24/86 EP 86900983.7 0211047
Norway 01/24/86 863808
PCT 01/24/86 PCT/US86/00131
</TABLE>
E-52
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
(WO 86/04356)
Sweden 01/24/86 EP 86900983.7 0211047
Switzerland/
Liechtenstein 01/24/86 EP 86900983.7 0211047
United Kingdom 01/24/86 EP 86900983.7 0211047
*United States 01/28/85 06/695,309
*United States 11/13/85 06/797,472
United States 02/05/90 07/474,304 5,028,530
Novel Plasmid Lei, Wilcox Australia 01/09/89 29377/89 627443
Vector With Canada 01/10/89 587,885
Pectate Lyase Europe 01/09/89 EP 89901763.6
Signal Sequence Japan 01/09/89 501661/89
PCT 01/09/89 PCT/US89/00077 (WO 89/06283)
*United States 01/11/88 07/142,089
</TABLE>
E-53
<PAGE>
SCHEDULE 2
----------
Subsidiaries
------------
Enzon Labs, Inc.
Symvex, Inc.
Enzon GmbH
E-54
<PAGE>
SCHEDULE 3
----------
IN-LICENSES - SCA
-----------------
Agen Biomedical Limited
Memorial Sloan Kettering
Protein Engineering Corporation
XOMA
E-55
<PAGE>
SCHEDULE 4
----------
OUT-LICENSES - SCA
------------------
Alexion Pharmaceuticals, Inc.
Baxter Healthcare Corporation
Bristol-Myers Squibb Corporation
Cambridge Antibody Technology Limited
Creative BioMolecules
Cell Genesys, Inc.
Cytoclonal Pharmaceutics, Inc.
Hybritech Incorporated
Invitrogen, Inc.
Neoprobe Corporation
PanVera Corporation
Pharmacia Biotech, Inc.
Pharmacia P-L Biochemicals, Inc.
Rhone Poulenc Rorer (Gencell)
Molecular Oncology, Inc. (MOI)
XOMA
E-56
<PAGE>
Exhibit E
PURCHASER'S LEGEND REMOVAL CERTIFICATE
To: [Transfer agent name and address]
Attention: ______________
The undersigned, the Purchaser or an officer of, or other person duly
authorized by the Purchaser, hereby certifies that _____________________________
(fill in name of Purchaser)
institution was the Purchaser of the Shares evidenced by the attached
certificate, and in order to induce the Company to remove the legends contained
on the certificates representing the Common Stock purchased by such Purchaser,
Purchaser will sell such Shares (i) in accordance with the registration
statement, file number in which case the Purchaser will satisfy the requirement
of delivering a current prospectus in connection with such sale, or (ii) in
accordance with Rule 144 under the Securities Act of 1933 ("Rule 144"), in which
case the Purchaser certifies that it has complied with or will comply with the
requirements of Rule 144. Print or type:
Name of Purchaser: _______________________________________________________
Name of Individual
representing
Purchaser (if an
Institution): _______________________________________________________
Title of Individual
representing
Purchaser (if an
Institution): _______________________________________________________
Signature by:
Purchaser or
Individual representing
Purchaser: _______________________________________________________
E-57
<PAGE>
Exhibit F
PURCHASER'S CERTIFICATE OF SUBSEQUENT SALE
To: [Transfer agent name and address]
Attention: _____________
The undersigned, the Purchaser or an officer of, or other person duly
authorized by the Purchaser, hereby certifies that _____________________________
(fill in name of Purchaser)
institution was the Purchaser of the Shares evidenced by the attached
certificate, and as such, proposes to transfer such Shares on or about
______________________ either (i) in accordance with the registration statement,
(date)
file number _____________, in which case the Purchaser certifies that the
requirement of delivering a current prospectus has been complied with or will be
complied with in connection with such sale, or (ii) in accordance with Rule 144
under the Securities Act of 1933 ("Rule 144"), in which case the Purchaser
certifies that it has complied with or will comply with the requirements of Rule
144.
Print or type:
Name of Purchaser: ___________________________________________________
Name of Individual
representing
Purchaser (if an
Institution): ___________________________________________________
Title of Individual
representing
Purchaser (if an
Institution): ___________________________________________________
Signature by:
E-58
<PAGE>
Exhibit G
DESCRIPTION OF CAPITAL STOCK
E-59
<PAGE>
EXHIBIT G
Description of Capital Stock
Under its Certificate of Incorporation, the Company is authorized to issue
60,000,000 shares of Common Stock, par value $.01 per share, and 3,000,000
shares of preferred stock, par value $.01 per share. As of May 29, 1998, there
were 31,331,081 shares of Common Stock, and 108,000 shares of preferred stock
designated as Series A Preferred Stock, outstanding. Other than the Series A
Preferred Stock, there are no other classes of preferred stock designated and no
other shares of preferred stock outstanding. Holders of shares of Common Stock
and Series A Preferred Stock are entitled to one vote per share on matters to be
voted upon by the stockholders of the Company. There are no cumulative voting
rights and, accordingly, the holders of a majority of the combined Common Stock
and Series A Preferred Stock may elect all of the directors. The Common Stock
and the Series A Preferred Stock shall be voted as one class, except (i) with
respect to any action amending or repealing any of the powers, designations,
preferences and rights of the Series A Preferred Stock, which requires the
affirmative vote of holders of not less than two-thirds of the then outstanding
Series A Preferred Stock and (ii) with respect to any action increasing or
decreasing the authorized shares or the par value of the Common Stock or
preferred stock or altering or changing adversely the powers, preferences, or
special rights of such shares, which pursuant to Section 242 of the Delaware
General Corporation Law requires the affirmative vote of a majority of the
outstanding shares of the class so being affected, voting as a class and the
affirmative vote of a majority of the combination of the outstanding Common
Stock and Series A Preferred Stock, voting as one class.
Common Stock
Holders of shares of Common Stock will be entitled to receive dividends
when, as and if declared by the Board of Directors and to share ratably in the
assets of the Company legally available for distribution to its stockholders in
the event of the liquidation, dissolution or winding up of the Company, in each
case subject to the rights of the holders of the Series A Preferred Stock.
Holders of Common Stock have no preemptive, subscription, redemption or
conversion rights. All of the issued and outstanding shares of Common Stock are
duly authorized, validly issued, fully-paid and non-assessable.
The registrar and transfer agent for the Common Stock is Continental Stock
Transfer and Trust Company, 2 Broadway, New York, New York 10004.
The authorized but unissued preferred stock may be issued by the Board of
Directors from time to time in one or more series with such preferences, terms
and rights as the Board of Directors may determine without further action by the
stockholders of the Company. Accordingly, the Board of Directors has the power
to fix the dividend rate and to establish the provisions, if any, relating to
voting rights,
E-60
<PAGE>
redemption rates, sinking fund, liquidation preferences and conversion rights
for any series of preferred stock issued in the future.
It is not possible to state the actual effect of the authorization of the
preferred stock upon the rights of holders of the Common Stock until the Board
of Directors determines the specific rights of the holders of a series of the
preferred stock. The issuance of the preferred stock may have the effect of
delaying, deferring or preventing a change in control of the Company without
further action by the stockholders.
Series A Preferred Stock
The holders of the Series A Preferred Stock are entitled to an annual
dividend of $2.00 per share, payable semi-annually but only when and if declared
by the Board of Directors out of funds legally available therefor. Dividends on
the Series A Preferred Stock are cumulative and accrue and accumulate. No
dividends are to be paid or set apart for payment on the Common Stock, nor are
any shares of Common Stock to be redeemed, retired or otherwise acquired for
valuable consideration unless the Company has paid in full, or made appropriate
provision for the payment in full of, all dividends which have then accumulated
on the Series A Preferred Stock.
Since the Company did not make cash dividend payments for eight semi-annual
periods from the date of issuance of the Series A Preferred Stock, any holder of
Series A Preferred Stock may elect, upon written notice to the Company, to be
paid all or any part of such accrued and unpaid dividends, and any dividends
which accrue but are not paid in cash within thirty days of the scheduled
payment date thereafter, in shares of the Company's Common Stock. Accrued and
unpaid dividends payable to holders of Series A Preferred Stock as of the date
such holder elects to convert the Series A Preferred Stock into Common Stock
may, at the Company's option, be paid by the Company's issuance of Common Stock
to such holder. In all cases the number of shares of Common Stock to be received
in lieu of accrued dividends shall be determined by dividing the aggregate
amount of the accrued and unpaid dividends by the conversion rate of the Series
A Preferred Stock in effect on the date of election. To date, the Company has
paid no dividends on the Series A Preferred Stock, except for accrued dividends
payable on Series A Preferred Stock which has been converted, all of which have
been paid with Common Stock. The Company does not presently intend to pay cash
dividends on the Series A Preferred Stock. There were 1,733,000 of accrued and
unpaid dividends on the Series A Preferred Stock as of March 31, 1998. Dividends
on the Series A Preferred Stock currently accrue at the rate of $216,000 per
year.
Each share of Series A Preferred Stock is convertible at any time prior to
redemption. For purposes of conversion, each share of Series A Preferred Stock
is deemed to have a value of $25.00. The Series A Preferred Stock is convertible
into Common Stock at a conversion rate of $11.00 per share of Common Stock.
The
E-61
<PAGE>
conversion rate will be adjusted upon the Company's payment of dividends on its
Common Stock in Common Stock, the subdivision or reduction of the Company's
outstanding Common Stock, the reclassification of the Common Stock or the merger
or consolidation of the Company, provided, however, that no such adjustment to
the conversion rate will be made unless the net effect on the conversion price
per share of all such events is at least $.50 in the aggregate.
The Company may at any time, redeem the whole or any part of the Series A
Preferred Stock then outstanding at a redemption price of $25.00 per share, plus
in each case a sum equal to all accumulated and unpaid dividends thereon through
the date fixed for redemption. In case of redemption of only part of the Series
A Preferred Stock at any time outstanding, the Company shall designate the
amount of Series A Preferred Stock so to be redeemed and shall redeem such
Series A Preferred Stock on a pro rata basis. Subject to certain limitations,
the Board of Directors shall have the power and authority to prescribe the terms
and conditions upon which the Series A Preferred Stock shall be redeemed from
time to time.
In the event of any voluntary or involuntary liquidation, dissolution or
winding up of the Company, the holders of Series A Preferred Stock will be
entitled to receive in cash out of the assets of the Company, whether from
capital or from earnings, available for distribution to its stockholders, before
any amount shall be paid to the holders of the Common Stock, the sum of $25.00
per share of Series A Preferred Stock, plus an amount equal to all accumulated
and unpaid dividends thereon through the date fixed for payment of such
distributive amount.
All shares of Common Stock are of junior rank to Series A Preferred Stock
in respect of the preferences as to dividends, distributions and payments upon
the liquidation, dissolution or winding up of the Company. The rights of the
holders of the Common Stock are subject to the preferences and relative rights
of the Series A Preferred Stock. The Company may authorize and issue additional
or other Preferred Stock which is of equal rank with the Series A Preferred
Stock in respect of the preferences as to dividends, distributions and payments
upon the liquidation, dissolution or winding up of the Company; provided,
however, that for so long as any Series A Preferred Stock remains outstanding,
the Company shall not issue any capital stock which is more senior in rank than
the Series A Preferred Stock in respect of the foregoing preferences or which
shall have greater voting rights than the Series A Preferred Stock. In the event
of a merger or consolidation of the Company with or into another corporation,
the Series A Preferred Stock shall maintain its relative powers, designations
and preferences.
Common Stock Purchase Warrants
As of May 29, 1998 the Company had outstanding warrants to purchase an
aggregate of 1,038,686 shares of Common Stock at exercise prices ranging from
$2.50 to $ 5.63 per share.
E-62
<PAGE>
Options to Purchase Common Stock
As of May 29, 1998 the Company had outstanding options to purchase an
aggregate of 4,378,736 shares of Common Stock at exercise prices ranging from
$1.88 to $14.88 per share held by employees, directors and consultants under the
Company's Non-Qualified Stock Option Plan.
Independent Directors Stock Plan
Under the terms of the Company's Independent Directors Stock Plan (approved
by stockholders in December 1996) each independent director is granted shares of
Common Stock equivalent to $2,500 per quarter, plus $500 for Board of Directors'
meeting attended. The number of shares issued is based on the fair market value
of the Common Stock on the last trading day of the applicable quarter.
Registration Rights
Schering Corporation has piggyback registration rights with respect to
847,489 shares of Common Stock. Such shares are eligible under Rule 144(k) of
the Securities Act of 1933, as amended.
E-63
Exhibit 4.2
CERTIFICATE OF AMENDENT
OF
CERTIFICATE OF INCORPORATION
OF
ENZON, INC.
Enzon, Inc., a corporation organized and existing under and by virtue of
the General Corporation Law of the State of Delaware (the "Corporation"), DOES
HEREBY CERTIFY:
FIRST: That the Board of Directors of said Corporation, at a meeting of its
members, adopted resolutions proposing and declaring advisable the following
amendments to the Certificate of Incorporation of said Corporation:
RESOLVED, that the first sentence of Article 4 of the Certificate of
Incorporation be amended to read in its entirety as set forth below:
"4. Number if Shares. The total number of shares of capital stock
which the Corporation shall have authority to issue is sixty-three million
(63,000,000) shares, of which sixty million (60,000,000) shares shall be
Common stock, par value $.01 per share."
SECOND: That the remainder of Article 4 of the Certificate of Incorporation
of said Corporation shall remain unchanged.
THRID: That at the Annual Meeting of Stockholders of the Corporation, the
holders of a majority of the outstanding stock entitled to vote thereon voted in
favor of said amendments in accordance with the provisions of Section 215 of the
General Corporation Law of the State of Delaware.
FOURTH: That the aforesaid amendments were duly adopted in accordance with
the applicable provisions of sections 242 and 216 of the General Corporation Law
of the State of Delaware.
E-64
<PAGE>
IN WITNESS WHEREOF, Enzon, Inc. has caused this certificate to be signed by
Peter G. Tombros, its President and attested to by John A. Caruso, Secretary of
the Corporation, this 18th of December, 1997.
By: /s/ Peter G. Tombros
------------------------
Peter G. Tombros
President
ATTEST
By: /s/ John A. Caruso
----------------------
John A. Caruso
Secretary
E-65
EXHIBIT 5.1
[DORSEY & WHITNEY LLP LETTERHEAD]
July 9, 1998
Enzon, Inc.
20 Kingsbridge Road
Piscataway, New Jersey 08854
Re: Registration Statement on Form S-3 (File No. 333-58269)
-------------------------------------------------------
Ladies and Gentlemen:
You have requested our opinion with respect to the registration by
Enzon, Inc. (the "Company") pursuant to a Registration Statement on Form
S-3 (the "Registration Statement") under the Securities Act of 1933, as
amended (the "Act"), of an aggregate of 3,983,000 shares (the "Shares") of
the Company's Common Stock, $.01 par value per share (the "Common Stock")
which may be sold from time to time by the selling stockholders named
therein (the "Selling Stockholders").
In so acting, we have examined originals or copies, certified or
otherwise identified to our satisfaction, of such documents, corporate
records, certificates of public officials and other instruments and have
conducted such other investigations of fact and law as we have deemed
relevant and necessary to form a basis for the opinions hereinafter
expressed. In conducting such examination, we have assumed (i) that all
signatures are genuine, (ii) that all documents and instruments submitted
to us as copies conform with the originals, and (iii) the due execution and
delivery of all documents where due execution and delivery are a
prerequisite to the effectiveness thereof. As to any facts material to this
opinion, we have relied upon statements and representations of officers and
other representatives of the Company and certificates of public officials
and have not independently verified such facts.
Based solely upon the foregoing, it is our opinion that the Shares,
when issued in accordance with the terms of the Common Stock Purchase
Agreement dated as of June 25, 1998 by and among the Company and the
Selling Stockholders, will constitute validly issued, fully paid and
non-assessable shares of Common Stock of the Company.
Our opinions expressed above are limited to the law of the State of
New York, the Delaware General Corporation Law, and the federal laws of the
United States of America.
E-66
<PAGE>
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement, and to the reference to our firm under the heading
"Legal Matters" in the Prospectus constituting part of the Registration
Statement relating to the registration of the Shares.
Very truly yours,
/S/ DORSEY & WHITNEY LLP
------------------------
Dorsey & Whitney LLP
E-67
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Enzon, Inc.
We consent to the use of our reports incorporated herein by reference and to the
reference to our firm under the heading "Experts" in the Prospectus.
/s/ KPMG Peat Marwick LLP
-------------------------
KPMG Peat Marwick LLP
Short Hills, New Jersey
July 9, 1998
E-68
