<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 7, 1996
REGISTRATION NO. 33-_____
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-------------------------
NEORX CORPORATION
(Exact name of registrant as specified in its charter)
WASHINGTON 91-1261311
(State of Incorporation) (I.R.S. Employer Identification Number)
410 WEST HARRISON STREET
SEATTLE, WASHINGTON 98119
(206) 281-7001
(Address and telephone number of registrant's principal executive offices)
JEFFREY J. MILLER, PH.D., J.D.
SENIOR VICE PRESIDENT
BUSINESS DEVELOPMENT AND LEGAL AFFAIRS, AND SECRETARY
410 WEST HARRISON STREET
SEATTLE, WASHINGTON 98119
(206) 281-7001
(Name, address and telephone number of agent for service)
-------------------------
Copies to:
Stephen A. McKeon
Wm. Kenneth McGraw
Perkins Coie
1201 Third Avenue, 40th Floor
Seattle, Washington 98101-3099
(206) 583-8888
-------------------------
Approximate date of commencement of proposed sale to the public:
FROM TIME TO TIME AFTER THIS REGISTRATION STATEMENT BECOMES EFFECTIVE.
-------------------------
If the only Securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the Securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than Securities offered only in connection with
dividend or interest reinvestment plans, check the following box. /X/
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. / / ____________________
<PAGE> 2
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. / / ____________________
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. / /
-------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
==================================================================================================
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF SECURITIES TO AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING AMOUNT OF
BE REGISTERED REGISTERED PER UNIT (1) PRICE (1) REGISTRATION FEE
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.02 par
value per share............ 1,609,761 (2) $9.125 $14,689,069 $5,066
==================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c).
(2) Includes 1,239,860 shares issuable upon conversion of the Series 2
Convertible Preferred Stock, plus a presently indeterminable number of
shares, if any, as shall be issuable from time to time as required
pursuant to adjustments under the terms of the Series 2 Convertible
Preferred Stock.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
================================================================================
<PAGE> 3
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE> 4
Subject to Completion, dated February 7, 1996
PROSPECTUS
1,609,761 SHARES OF COMMON STOCK
OF
NEORX CORPORATION
This Prospectus relates to 1,609,761 shares (the "Shares") of common
stock, $.02 par value per share (the "Common Stock"), of NeoRx Corporation (the
"Company" or "NeoRx"). The Shares may be offered by certain shareholders of the
Company (the "Selling Shareholders") from time to time in transactions in the
over-the-counter market through Nasdaq, in privately negotiated transactions,
through the writing of options on the Shares, or through a combination of such
methods of sale, at fixed prices that may be changed, at market prices
prevailing at the time of sale, at prices relating to such prevailing market
prices or at negotiated prices. The Selling Shareholders may effect such
transactions by selling the Shares to or through broker-dealers, and such
broker-dealers may receive compensation in the form of discounts, concessions or
commissions from the Selling Shareholders and/or the purchasers of the Shares
for whom such broker-dealers may act as agents or to whom they may sell as
principals, or both (which compensation as to a particular broker-dealer may be
in excess of customary commissions). See "Selling Shareholders" and "Plan of
Distribution."
None of the proceeds from the sale of the Shares by the Selling
Shareholders will be received by the Company. The Company has agreed to bear all
expenses (other than selling commissions and fees and certain expenses of
counsel and other advisors to the Selling Shareholders) in connection with the
registration and sale of the Shares being offered by the Selling Shareholders.
The Company has agreed to indemnify the Selling Shareholders against certain
liabilities, including liabilities under the Securities Act of 1933, as amended
(the "Securities Act").
All the Shares were "restricted securities" under the Securities Act
prior to their registration hereunder. The Company sold 369,901 shares of Common
Stock and 46,667 shares of Series 2 Convertible Preferred Stock, $.02 par value
per share (the "Convertible Preferred Stock"), to the Selling Shareholders in
private transactions in January 1996. The 369,901 shares of Common Stock, plus
up to 1,239,860 shares of Common Stock issuable upon conversion of the
Convertible Preferred Stock, constitute the Shares being registered hereunder.
This Prospectus has been prepared so that future sales of the Shares will not be
restricted under the Securities Act. In connection with any sales, the Selling
Shareholders and any brokers participating in such sales may be deemed to be
"underwriters" within the meaning of the Securities Act. See "Selling
Shareholders."
The Common Stock is quoted on the Nasdaq National Market under the
symbol "NERX." On February 6, 1996, the closing sales price for the Common
Stock as reported on the Nasdaq National Market was $9 per share.
--------------------------
THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK. SEE
"RISK FACTORS" BEGINNING ON PAGE 3.
--------------------------
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 __________ , 1996.
<PAGE> 5
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 may be inspected and
copies obtained (at prescribed rates) at the public reference facilities
maintained by the Commission in Washington, D.C. (450 Fifth Street, N.W.,
Judiciary Plaza, Washington, D.C. 20549) and at the Commission's Regional
Offices in New York (7 World Trade Center, 13th Floor, New York, New York 10048)
and Chicago (Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661). Such reports, proxy statements and other information may also
be inspected at the offices of the National Association of Securities Dealers,
Inc., 1735 K Street, N.W., Washington, D.C. 20006.
This Prospectus is part of a Registration Statement on Form S-3
(together with all amendments and exhibits thereto, the "Registration
Statement") filed with the Commission under the Securities Act with respect to
the Shares offered hereby. This Prospectus does not contain all the information
set forth in the Registration Statement, certain portions of which have been
omitted in accordance with the Commission's rules and regulations. For further
information with respect to the Company and the Shares offered hereby, reference
is made to the Registration Statement and the exhibits thereto. The statements
in this Prospectus are qualified in their entirety by reference to the contents
of any agreement or other document incorporated herein by reference, a copy of
which is filed as an exhibit to either the Registration Statement or other
filings by the Company with the Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company will provide without charge to each person to whom a copy
of this Prospectus is delivered, upon such person's written or oral request, a
copy of any or all of the documents incorporated by reference herein (other than
exhibits to such documents, unless such exhibits are specifically incorporated
by reference into the information that this Prospectus incorporates). Requests
should be directed to NeoRx Corporation, 410 West Harrison Street, Seattle,
Washington 98119, Attention: Investor Relations.
The following documents filed with the Commission by the Company are
incorporated by reference into this Prospectus:
(1) The Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1994;
(2) The Company's Quarterly Reports on Form 10-Q for the
three-month periods ended March 31, 1995, June 30, 1995 and
September 30, 1995; and
(3) The description of the capital stock contained in the
Company's Registration Statement on Form 8-A filed with the
Commission on March 21, 1988.
All documents filed with the Commission by the Company pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of
this Prospectus and prior to the termination of the offering of the Common Stock
offered hereby shall be deemed incorporated by reference into this Prospectus
and to be a part hereof from the respective dates of filing such documents. Any
statement contained in a document incorporated or deemed to be incorporated by
reference herein shall be deemed modified, superseded or replaced for purposes
of this Prospectus to the extent that a statement contained herein or in any
subsequently filed document that also is or is deemed to be incorporated by
reference herein modifies, supersedes or replaces such statement. Any statement
so modified, superseded or replaced shall not be deemed, except as so modified,
superseded or replaced, to constitute a part of this Prospectus.
--------------------------
The Company's principal offices are located at 410 West Harrison
Street, Seattle, Washington 98119, and its telephone number is (206) 281-7001.
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<PAGE> 6
RISK FACTORS
Prospective purchasers should carefully consider the risk factors set
forth below as well as the other information set forth in this Prospectus before
purchasing the Shares offered hereby.
EARLY STAGE OF PRODUCT DEVELOPMENT; TECHNOLOGICAL UNCERTAINTY
To date, substantially all of the Company's revenues have consisted of
payments received under agreements with corporate partners and from government
research contracts, none of which provide for material future funding. The
Company has received no revenues to date from product sales, does not expect
regulatory approval for commercial sales of lung cancer imaging products earlier
than mid-1996 and does not expect to seek U.S. regulatory approval for sales of
its cancer and anti-restenosis treatment products before 1999. The Company's
current research and development activities are focused primarily on its
proposed therapeutic products, which are in an early stage of development. In
preclinical studies the Company's pretargeting technology has shown promise for
the treatment of cancer tumors in animals. The Company initiated a Phase I dose
escalation study in humans in mid-1994 and does not expect to complete such
study before mid-1996. Results obtained in preclinical studies are not
necessarily indicative of results that will be obtained in human clinical
trials. The Company's proposed therapeutic products for the prevention of
restenosis are also in an early stage of development. The Company will require
collaborative partners to assist in developing its potential products, and there
can be no assurance that the Company will be able to negotiate acceptable
collaborative arrangements in the future. In addition, the Company's potential
products will require significant additional research and development and
extensive clinical testing prior to commercial use. There can be no assurance
that these potential products will be successfully developed into drugs that can
be administered to humans or that any such drugs or related therapies will prove
to be safe and effective in clinical trials or cost-effective to manufacture.
Further, these potential products may prove to have undesirable and unintended
side effects that may prevent or limit their commercial use.
HISTORY OF LOSSES; NEED FOR ADDITIONAL FUNDS
The Company has been unprofitable since inception and expects to incur
additional operating losses over the next several years. These operating losses
may fluctuate from period to period. For the period from February 13, 1984 (the
Company's inception) to September 30, 1995, the Company incurred net losses
aggregating $102.3 million. The Company's existing capital resources and
interest income thereon are currently expected to be sufficient to fund the
Company's operations through mid-1997. The Company's actual expenditures will
depend on numerous factors, including results of research and development
activities, clinical trials, the levels of resources that the Company devotes to
establishing and expanding marketing and manufacturing capabilities, competitive
and technological developments and the timing and cost of relationships with
parties to collaborative agreements. The Company will require substantial
additional funds to complete the development of its therapeutic products.
Adequate funds for these purposes, whether through additional financings,
collaborative arrangements with corporate sponsors or other sources, may not be
available when needed or on terms favorable to the Company. If funds are raised
by issuing equity securities, purchasers of the Shares issued hereunder may
suffer immediate and substantial dilution.
DEPENDENCE ON SUPPLIERS
The Company depends on the timely delivery from suppliers of certain
materials and services. In connection with its research, preclinical studies and
clinical trials, the Company has periodically experienced interruption in the
supply of monoclonal antibodies, including the 1990 loss of its former sole
supplier of the antibody used in its cancer-imaging products. Interruptions in
these and other supplies could occur in the future. The Company will need to
develop sources for commercial quantities of yttrium-90, and the antibody used
in its proposed cancer-therapeutic products. The catheter used to deliver the
Company's proposed anti-restenosis products has not yet been approved for sale
by the Food and Drug Administration (the "FDA"); commercial use of such catheter
depends on receiving such approval. In addition, the Company depends on the
supply of such catheter from its manufacturer, and there can be no assurance
that the manufacturer will provide a timely and adequate supply of catheters to
the
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<PAGE> 7
Company. Any failure by the manufacturer to timely and adequately supply
catheters would have a material adverse effect on the Company's ability to
commercialize these products.
DEPENDENCE ON OTHERS FOR COMMERCIAL MANUFACTURING AND MARKETING
The Company has no manufacturing facilities for commercial production
of its products under development. The Company also has no experience in sales,
marketing or distribution. The Company's strategy for commercialization of its
products requires entering into various arrangements with corporate
collaborators, licensors, licensees and others to manufacture, distribute and
market its products. The Company will depend on the success of these outside
parties in performing their responsibilities. Although the Company believes that
parties to its existing and any future arrangements will have an economic
motivation to successfully perform their contractual responsibilities, the
amount and timing of resources to be devoted to these activities are not within
the Company's control. There can be no assurance that such parties will perform
their obligations as expected, that the Company will derive any revenues from
such arrangements or that the Company's reliance on others for manufacturing
products will not result in unforeseen problems with product supply. The Company
entered into agreements with Boehringer Ingelheim International GmbH
("Boehringer Ingelheim") and DuPont Merck Pharmaceutical Company ("DuPont
Merck") under which Boehringer Ingelheim has worldwide manufacturing rights and
non-North American marketing rights and DuPont Merck has exclusive North
American marketing rights to the Company's Verluma (formerly OncoTrac) lung
cancer imaging products. The Company intends to seek collaborative partners to
assist in developing, manufacturing and marketing its therapeutic products under
development. There can be no assurance that the Company will be able to
negotiate acceptable collaborative arrangements in the future or that its
current or future collaborative arrangements will be successful.
COMPETITION
Cancer imaging and therapy and anti-restenosis product development is
highly competitive. There are numerous competitors developing products to
detect, stage or treat each of the diseases for which the Company is seeking to
develop products. Some competitors have adopted product development strategies
similar to the Company's approach of targeting cancer cells by linking
radionuclides to monoclonal antibodies. Many emerging companies have corporate
partnership arrangements with large, established companies to support research,
development and commercialization efforts of products that may be competitive
with those being developed by the Company. In addition, a number of established
pharmaceutical and chemical companies are developing proprietary technologies or
have enhanced their capabilities by entering into arrangements with, or
acquiring, companies with proprietary monoclonal antibody-based technology or
other technologies applicable to the imaging or treatment of cancer and
restenosis. Many of the Company's existing or potential competitors have or have
access to substantially greater financial, research and development, marketing
and production resources than those of the Company and may be better equipped
than NeoRx to develop, manufacture and market competing products. The Company's
competitors may develop and introduce products that are more effective than
those of the Company or that would render the Company's technology and products
under development less competitive, uneconomical or obsolete.
TECHNOLOGICAL UNCERTAINTIES REGARDING HUMAN IMMUNE RESPONSE TO FOREIGN PROTEINS
The Company's Avicidin cancer therapy product, which is currently in
Phase I/II clinical testing, uses a monoclonal antibody of murine (mouse) origin
coupled to streptavidin, a protein of bacterial origin. Murine antibodies appear
as foreign proteins to the human immune system, which develops its own antibody
in response to the murine antibody. This so-called "human anti-mouse antibody"
response, or "HAMA," or "human anti-streptavidin antibody" response, or "HASA,"
may limit the number of doses that may be safely or effectively administered to
a patient, thereby limiting a product's efficacy. The Company believes that
humanized antibodies may reduce HAMA and that chemical modification of
streptavidin may reduce HASA. Gene cloning technology permits splicing of human
and murine antibody portions together, thereby yielding humanized molecules.
Although the Company has produced a humanized version of the murine antibody
used in Avicidin, it has not utilized such humanized antibody in clinical trials
to date, and there can be no assurance that such humanized antibody would
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<PAGE> 8
reduce the extent to which HAMA or HASA may limit the effectiveness of the
Company's cancer-therapeutic products or that the Company will successfully
commercialize products incorporating the humanized antibody.
UNCERTAINTY REGARDING PATENTS AND PROPRIETARY RIGHTS
The patent position of biotechnology firms generally is highly
uncertain and involves complex legal and factual questions, and currently no
consistent policy has emerged regarding the breadth of claims allowed in
biotechnology patents. Products and processes important to NeoRx are subject to
this uncertainty. Accordingly, there can be no assurance that the Company's
patent applications will result in additional patents being issued or that, if
issued, patents will afford protection against competitors with similar
technology, nor can there be any assurance that any patents issued to the
Company will not be infringed by or designed around by others or that others
will not obtain patents that the Company would need to license or design around.
Moreover, the technology applicable to the Company's products is developing
rapidly. Research institutes, universities and biotechnology companies,
including the Company's competitors, have filed applications for, or have been
issued, numerous patents and may obtain additional patents and proprietary
rights relating to products or processes competitive with or relating to those
of the Company. The scope and validity of such patents, the extent to which the
Company may be required to obtain licenses thereunder or under other proprietary
rights and the cost and availability of licenses are unknown. To the extent
licenses are required, there can be no assurance that they will be available on
commercially reasonable terms, if at all. The Company also relies on unpatented
proprietary technology. There can be no assurance that others will not
independently develop substantially equivalent proprietary information and
techniques, that others will not otherwise gain access to the Company's
proprietary technology, or disclose such technology, or that the Company can
meaningfully protect its rights in such unpatented proprietary technology.
DELAYS AND COSTS RESULTING FROM GOVERNMENTAL REGULATION
The manufacture and marketing of the Company's products and its
research and development activities are subject to regulation for safety,
efficacy and quality by numerous governmental authorities in the United States
and other countries. Clinical trials, manufacturing and marketing of products
are subject to the rigorous testing and approval processes of the FDA and
equivalent foreign regulatory authorities. Clinical trials and regulatory
approval can take a number of years to accomplish and require the expenditure of
substantial resources. There can be no assurance that clinical trials will be
started or completed successfully within any specified time period. Delays in
approval can occur for a number of reasons, including the Company's failure to
obtain necessary supplies of monoclonal antibodies or other materials or to
obtain a sufficient number of available patients to support the claims necessary
for regulatory approval. There can be no assurance that requisite FDA approvals
will be obtained on a timely basis, if at all, or that any approvals granted
will cover all the clinical indications for which the Company may seek approval.
Boehringer Ingelheim filed a Product License Application and an Establishment
License Application with the FDA for approval to manufacture and market Verluma
in March 1994. In December 1995, the Oncological Drug Advisory Committee of the
FDA recommended that the FDA approve Verluma. The Company's business would be
adversely affected by delays in FDA approval of the manufacture and marketing of
this product by Boehringer Ingelheim or by failure of the FDA to grant such
approval. Delays or failure to obtain regulatory approval would adversely affect
or prevent the marketing of other products developed by the Company and its
ability to receive royalty or other product revenues. The manufacture and
marketing of drugs are subject to continuing FDA review and later discovery of
previously unknown problems with a product, manufacturer or facility may result
in restrictions, including withdrawal of the product from the market. Marketing
the Company's products abroad will require similar regulatory approvals and is
subject to similar risks. In addition, the Company is unable to predict the
extent of adverse governmental regulations that might arise from future U.S. or
foreign governmental action.
RISK OF PRODUCT LIABILITY
The testing, manufacturing, marketing and sale of human healthcare
products under development by the Company entail an inherent risk that product
liability claims will be asserted against the Company. Although the Company is
insured against such risks up to a $10 million annual aggregate limit in
connection with human clinical trials and commercial sales of its products under
development, there can be no assurance that the Company's present
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<PAGE> 9
product liability insurance is adequate. A product liability claim in excess of
the Company's insurance coverage could have a material adverse effect on the
Company and may prevent the Company from obtaining adequate product liability
insurance in the future on affordable terms. In addition, there can be no
assurance that product liability coverage will continue to be available in
sufficient amounts or at an acceptable cost.
UNCERTAINTY OF PHARMACEUTICAL PRICING, HEALTHCARE REFORM AND REIMBURSEMENT
The levels of revenues and profitability of pharmaceutical companies
may be affected by the continuing efforts of governmental and third-party payors
to contain or reduce the costs of healthcare through various means. For example,
in certain foreign markets pricing or profitability of prescription
pharmaceuticals is subject to governmental control. In the United States, there
have been, and the Company expects that there will continue to be, a number of
federal and state proposals to implement similar governmental control. It is
uncertain what legislative proposals will be adopted or what actions federal,
state or private payors for healthcare goods and services may take in response
to any healthcare reform proposals or legislation. Even in the absence of
statutory change, market forces are changing the healthcare sector. The Company
cannot predict the effect healthcare reforms may have on its business, and there
can be no assurance that any such reforms will not have a material adverse
effect on the Company. Further, to the extent that such proposals or reforms
have a material adverse effect on the business, financial condition and
profitability of other pharmaceutical companies that are prospective
collaborators for certain of the Company's potential products, the Company's
ability to commercialize its products under development may be adversely
affected. In addition, both in the United States and elsewhere, sales of
prescription pharmaceuticals depend in part on the availability of reimbursement
to the consumer from third-party payors, such as governmental and private
insurance plans. Third-party payors are increasingly challenging the prices
charged for medical products and services. If the Company succeeds in bringing
one or more products to market, there can be no assurance that these products
will be considered cost-effective and that reimbursement to the consumer will be
available or will be sufficient to allow the Company to sell its products on a
competitive basis.
RELIANCE ON KEY PERSONNEL
The Company's success will depend in part on the efforts of certain key
scientists and management personnel. Because of the specialized nature of the
Company's business, the Company's ability to maintain its competitive position
will depend in part on its ability to attract and retain qualified personnel.
Competition for such personnel is intense. There can be no assurance that the
Company will be able to hire sufficient qualified personnel on a timely basis or
retain such personnel. The loss of key management or scientific personnel could
have an adverse effect on the Company's business. The Company currently does not
maintain key man insurance on any of its scientists or management personnel.
COMPLIANCE WITH ENVIRONMENTAL REGULATIONS; HAZARDOUS MATERIALS
The Company is subject to federal, state and local laws, rules,
regulations and policies governing the use, generation, manufacture, storage,
air emission, effluent discharge, handling and disposal of certain materials and
wastes in connection with its research and development activities and its
manufacturing of clinical trial materials. Although the Company believes that it
has complied with these laws and regulations in all material respects, there can
be no assurance that it will not be required to incur significant costs to
comply with environmental and health and safety regulations in the future. The
Company's research and development and clinical manufacturing processes involve
the controlled use of small amounts of hazardous and radioactive materials.
Although the Company believes that its safety procedures for handling and
disposing of such materials comply with the standards prescribed by such laws
and regulations, the risk of accidental contamination or injury from these
materials cannot be completely eliminated. In the event of such an accident, the
Company could be held liable for any resulting damages, and any such liability
could exceed the Company's resources.
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POSSIBLE VOLATILITY OF THE PRICE OF THE COMMON STOCK
The market price of the Common Stock may be highly volatile. Factors
such as announcements of technological innovations or new commercial products by
the Company or its competitors, governmental regulation, results and timing of
clinical trials, sales by existing shareholders, regulatory approvals or
developments relating to corporate alliances or patent or proprietary rights may
have a significant impact on the market price of the Common Stock. In addition,
general market price declines, volatility or share illiquidity in the future
could adversely affect the market price of the Common Stock.
DIVIDENDS
The Company has never paid dividends on the Common Stock and does not
anticipate paying any cash dividends on the Common Stock in the foreseeable
future. In addition, under the terms of its $2.4375 Convertible Exchangeable
Preferred Stock, Series 1, cash dividends on the Common Stock may not be paid
unless full cumulative dividends on such preferred stock have been paid.
CAPITALIZATION
The following table sets forth the capitalization of the Company at
September 30, 1995 and as adjusted to give effect to the private sale of the
Common Stock and Convertible Preferred Stock.
<TABLE>
<CAPTION>
AT SEPTEMBER 30, 1995
------------------------------
ACTUAL AS ADJUSTED
--------- -----------
(in thousands)
<S> <C> <C>
Noncurrent liabilities:
9 3/4% Convertible Subordinated Debentures.................................... $ 1,195 $ 1,195
Other noncurrent liabilities.................................................. 74 74
--------- ---------
Total noncurrent liabilities.............................................. 1,269 1,269
--------- ---------
Shareholders' equity:
Series Preferred Stock, $.02 par value per share, 3,000,000 shares
authorized
Series 1, liquidation preference $25.00 per share; 208,240 shares
outstanding................................................................. 4 4
Series 2, liquidation preference $100.00 per share; 46,667 shares
outstanding................................................................. -- 1
Common Stock, $.02 par value per share, 60,000,000 shares authorized,
13,815,387 shares outstanding; 14,185,288 shares outstanding as adjusted (1).. 276 283
Additional paid-in capital.................................................... 125,127 131,819
Deferred compensation......................................................... (162) (162)
Accumulated deficit since inception........................................... (109,611) (109,611)
--------- ---------
Total shareholders' equity................................................ 15,634 22,334
--------- ---------
Total capitalization.............................................. $ 16,903 $ 23,603
--------- ---------
</TABLE>
- ----------------
(1) Does not include (i) 1,033,727 shares of Common Stock reserved for
issuance upon exercise of outstanding warrants; (ii) 2,946,999 shares
of Common Stock reserved for issuance upon exercise of outstanding
stock options; (iii) 46,318 shares of Common Stock reserved for
issuance upon the conversion of the 9 3/4% Convertible Subordinated
Debentures; (iv) 236,636 shares of Common Stock reserved for issuance
upon conversion of the $2.4375 Convertible Exchangeable Preferred
Stock, Series 1; and (v) 1,239,860 shares of Common Stock reserved for
issuance upon conversion of the Convertible Preferred Stock.
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<PAGE> 11
SELLING SHAREHOLDERS
The following table provides the names of the Selling Shareholders and
the number of Shares being offered by each of them.
<TABLE>
<CAPTION>
SELLING SHAREHOLDERS SHARES OFFERED(1)
-------------------- -----------------
<S> <C>
GFL Advantage Fund Ltd............................. 1,062,730
GFL Performance Fund Ltd........................... 317,058
Grace Brothers Limited............................. 206,968
SBSF Biotechnology Partners, L.P................... 23,005
</TABLE>
----------------
(1) Includes Shares that may be issuable upon conversion of the
Convertible Preferred Stock.
After completion of this offering, none of the Selling Shareholders
will own any shares of Common Stock, assuming all the Shares being offered are
sold.
No Selling Shareholder has held any position or office or has had any
other material relationship with the Company or any of its affiliates within the
past three years.
The Company sold 369,901 shares of Common Stock and 46,667 shares of
Convertible Preferred Stock to the Selling Shareholders in private transactions
in January 1996. The Company anticipates that the net proceeds from the sale of
such shares of Common Stock and Convertible Preferred Stock will be used to fund
research and development efforts, losses and working capital requirements
relating to the development and commercialization of the Company's products and
programs and for other general corporate purposes. The 369,901 shares of Common
Stock, plus up to 1,239,860 shares of Common Stock issuable upon conversion of
the Convertible Preferred Stock, constitute the Shares being registered
hereunder. All the Shares being offered by the Selling Shareholders were
acquired by them from NeoRx in private transactions pursuant to individual
purchase agreements dated as of January 26, 1996 and January 30, 1996 at a gross
purchase price of $6.308 per share of Common Stock and $100 per share of
Convertible Preferred Stock.
Each Selling Shareholder has represented to the Company that it
purchased the Shares for investment, with no present intention of distribution.
However, in recognition of the fact that such investors, even though purchasing
the Shares for investment, may wish to be legally permitted to sell their Shares
when they deem appropriate, the Company has filed with the Commission under the
Securities Act the Registration Statement with respect to the resale of the
Shares from time to time in transactions in the over-the-counter market through
Nasdaq, in privately negotiated transactions, through the writing of options on
the Shares, or through a combination of such methods of sale 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 the
earlier of (a) the date as of which the Selling Shareholders may sell all the
Shares without restriction pursuant to Rule 144(k) promulgated under the
Securities Act and (b) the date on which (i) the Selling Shareholders have sold
all the Shares and (ii) none of the Convertible Preferred Stock is outstanding.
PLAN OF DISTRIBUTION
The resale of the Shares by the Selling Shareholders may be effected
from time to time in transactions in the over-the-counter market through Nasdaq,
in privately negotiated transactions, through the writing of options on the
Shares, or through a combination of such methods of sale, at fixed prices that
may be changed, at market prices prevailing at the time of sale, at prices
relating to such prevailing market prices or at negotiated prices. The Selling
Shareholders may effect such transactions by selling the Shares to or through
broker-dealers, and such broker-dealers
-8-
<PAGE> 12
may receive compensation in the form of discounts, concessions or commissions
from the Selling Shareholders and/or the purchasers of the Shares for whom such
broker-dealers may act as agents or to whom they may sell as principals, or both
(which compensation as to a particular broker-dealer may be in excess of
customary commissions). Any broker-dealer may act as a broker-dealer on behalf
of the Selling Shareholders in connection with the offering of certain of the
Shares by the Selling Shareholders. None of the proceeds from the sale of the
Shares by the Selling Shareholders will be received by the Company. In addition,
any of the Shares that qualify for sale pursuant to Rule 144 promulgated under
the Securities Act may be sold in transactions complying with such Rule, rather
than pursuant to this Prospectus.
The Company has the right to suspend use of this Prospectus for a
discrete period of time under certain circumstances.
The Selling Shareholders and any broker-dealers who act in connection
with the sale of the Shares hereunder may be deemed to be "underwriters" within
the meaning of Section 2(11) of the Securities Act, and any commissions received
by them and profit on any resale of the Shares as principal may be deemed to be
underwriting discounts and commissions under the Securities Act. The Company has
agreed to bear all expenses (other than selling commission and fees and certain
expenses of counsel and other advisors to the Selling Shareholders) in
connection with the registration and sale of the Shares being offered by the
Selling Shareholders. The Company has agreed to indemnify the Selling
Shareholders against certain liabilities, including liabilities under the
Securities Act.
There can be no assurance that the Selling Shareholders will sell any
or all of the Shares offered by them hereunder.
DESCRIPTION OF CAPITAL STOCK
The Company is authorized to issue 60,000,000 shares of Common Stock,
$.02 par value per share, and 3,000,000 shares of Series Preferred Stock, $.02
par value per share.
COMMON STOCK
The holders of Common Stock are entitled to one vote per share for each
share held of record on all matters submitted to a vote of shareholders, except
that in elections of directors, shareholders are entitled to cumulate votes by
multiplying the number of votes they are entitled to cast by the number of
directors for whom they are entitled to vote and cast the product for a single
candidate or distribute the product among two or more candidates. The holders of
Common Stock are entitled to receive ratably such dividends as are declared by
the Company's Board of Directors out of funds legally available therefor. In the
event of a liquidation, dissolution or winding up of the Company, holders of
Common Stock have the right to a ratable portion of assets remaining after
payment of liabilities and the liquidation preferences of any outstanding shares
of Series Preferred Stock. The holders of Common Stock have no preemptive rights
or rights to convert their Common Stock into any other securities of the Company
and are not subject to future calls or assessments by the Company. All
outstanding shares of Common Stock are, and the shares of Common Stock issuable
upon conversion of the Series Preferred Stock, upon conversion of debentures
upon issuance and exchange, and upon exercise of warrants, will be, fully paid
and nonassessable. At January 30, 1996, there were approximately 15 million
shares of Common Stock outstanding held of record by approximately [1,300]
shareholders.
SERIES PREFERRED STOCK
The Company is authorized to issue 3,000,000 shares of Series Preferred
Stock, par value $.02 per share, of which 208,240 shares of its $2.4375
Convertible Exchangeable Preferred Stock, Series 1 (the "Series 1 Preferred
Stock"), and 46,667 shares of its Convertible Preferred Stock were outstanding
at January 30, 1996.
If declared by the Company's Board of Directors, holders of Series 1
Preferred Stock are entitled to receive a cash dividend of $2.4375 per share,
payable in semi-annual installments on June 1 and December 1. Dividends are
-9-
<PAGE> 13
cumulative. Each share of Series 1 Preferred Stock is convertible into
approximately 1.14 shares of Common Stock, subject to adjustment in certain
events. The Series 1 Preferred Stock is redeemable at the Company's option at
certain redemption prices, initially $27.44 per share, reducing to $25.00 per
share by 1999. The holders of Series 1 Preferred Stock have no voting rights,
except in limited circumstances.
The holders of Convertible Preferred Stock are entitled to receive a
dividend of 8% per year of the "Stated Value" ($100 per share) on a cumulative
basis, with quarterly compounding. Dividends shall be paid in cash or Common
Stock, at the Company's option, at the time that such Convertible Preferred
Stock is converted or redeemed. Each share of Convertible Preferred Stock is
convertible into Common Stock at a conversion price equal to 83% of the average
market price of the Common Stock for the five consecutive trading days ending
one day prior to the date of conversion, subject to certain restrictions on
conversion and adjustment in certain circumstances; provided, however, that such
conversion price shall not be less than $4.41 (except in certain circumstances)
nor more than $8.36 per share of Common Stock. The Convertible Preferred Stock
is redeemable by the Company at a price of $120.50 per share of Convertible
Preferred Stock, plus accrued and unpaid dividends. The holders of Convertible
Preferred Stock have no voting rights, except in limited circumstances.
The Company's Board of Directors may, without further action by the
Company's shareholders, issue additional Series Preferred Stock in one or more
series and fix all the rights and preferences thereof, including dividend
rights, dividend rates, conversion rights, voting rights, terms of redemption,
redemption price or prices, liquidation preferences and the number of shares
constituting any series or the designations of such series.
WARRANTS
At January 30, 1996, the Company had 1,634,907 Common Stock purchase
warrants outstanding that have been registered for resale with the Commission.
Every four such warrants entitle the registered holder thereof to purchase one
share of Common Stock at an exercise price of $5.3125. Such warrants are
exercisable until April 25, 1998. Additionally, in conjunction with an
agreement, the Company issued Boehringer Ingelheim warrants to purchase shares
of the Company's Common Stock. At January 30, 1996, 625,000 of such warrants
were outstanding, which warrants are exercisable through September 11, 1997.
375,000 of such warrants entitle the registered holder thereof to purchase
shares of Common Stock at an exercise price of $21.12 per share and 250,000 of
such warrants entitle the registered holder thereof to purchase shares of Common
Stock at an exercise price of $15.84 per share.
The exercise price and, in some cases, the number of shares of Common
Stock issuable upon exercise of the warrants will be appropriately adjusted in
the event of stock splits, stock combinations, rights offerings or stock or
other dividends involving the Common Stock. Fractional shares will not be issued
upon exercise of the warrants and, in lieu thereof, a cash adjustment based on
the fair market value of the Common Stock as reported on the Nasdaq National
Market (or as reported on a national securities exchange, if applicable) on the
date of exercise will be made. In case of any reclassification or capital
reorganization, or in case of any consolidation or merger of NeoRx with or into
another corporation or any sale, lease or transfer to another corporation of all
or substantially all the assets of NeoRx, the holder of each outstanding warrant
will have the right, upon subsequent exercise of a warrant, to purchase the kind
and amount of shares of stock or other securities and property receivable upon
such reclassification, capital reorganization, consolidation, merger, sale,
lease or transfer by a holder of the number of shares of Common Stock that might
have been received upon the exercise of such warrant immediately prior thereto,
and the exercise price will be appropriately adjusted. The warrants do not
confer on the holder any voting or preemptive rights, or any other rights as a
shareholder of NeoRx.
ANTITAKEOVER PROVISIONS
Certain provisions of the Company's Restated Articles of Incorporation
and Bylaws, as well as the Washington Business Corporation Act, could discourage
a third party from attempting to acquire, or make it more difficult for a third
party to acquire, control of the Company without approval of the Company's Board
of Directors. Such provisions could also limit the price that certain investors
might be willing to pay in the future for shares of Common Stock. Certain of
such provisions allow the Board of Directors to authorize the issuance of Series
-10-
<PAGE> 14
Preferred Stock with rights superior to those of the Common Stock. The rights of
the holders of Common Stock will be subject to, and may be adversely affected
by, the rights of holders of any Series Preferred Stock issued in the future.
The issuance of additional Series Preferred Stock, while providing desirable
flexibility in connection with possible acquisitions and other corporate
purposes, could make it more difficult for a party to acquire, or discourage a
party from acquiring, a majority of the Company's outstanding voting shares. The
Company is also subject to the provisions of Chapter 23B.19 of the Washington
Business Corporation Act, which generally prohibits any "significant business
transactions" within five years of the date a person acquires 10% or more of the
outstanding voting shares of a Washington corporation unless the transaction or
the acquisition is approved prior to the acquisition date by a majority of a
corporation's then board of directors. In addition, the Company is subject to
the "fair price" provisions of Chapter 23B.17 of the Washington Business
Corporation Act, which generally prohibits "interested shareholder transactions"
(such as a merger, sale of assets or liquidation) with a person who beneficially
owns 20% or more of a corporation's outstanding voting shares, unless approved
by a majority vote of disinterested directors or a two-thirds vote of
disinterested shareholders.
TRANSFER AGENT
The transfer agent and registrar for the Common Stock, the Series
Preferred Stock and the Warrants is First Interstate Bank of Washington, N.A.
LEGAL OPINIONS
The validity of the Common Stock offered hereby has been passed upon
for the Company by Perkins Coie, Seattle, Washington.
EXPERTS
The audited financial statements of the Company incorporated by
reference in this Prospectus and in the Registration Statement have been audited
by Arthur Andersen LLP, independent public accountants, as indicated in their
report with respect thereto, and are incorporated herein in reliance upon the
authority of said firm as experts in accounting and auditing in giving said
report.
11
<PAGE> 15
================================================================================
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFERING HEREIN CONTAINED AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL,
OR A SOLICITATION OF AN OFFER TO BUY, THE SHARES OFFERED HEREBY IN ANY
JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE AN OFFER OR
SOLICITATION. 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.
--------------------
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information.................................................... 2
Incorporation of Certain Documents
by Reference.......................................................... 2
Risk Factors............................................................. 3
Dividends................................................................ 7
Capitalization........................................................... 7
Selling Shareholders..................................................... 8
Plan of Distribution..................................................... 8
Description of Capital Stock............................................. 9
Legal Opinions........................................................... 11
Experts.................................................................. 11
</TABLE>
================================================================================
================================================================================
NEORX CORPORATION
______ SHARES OF
COMMON STOCK
P R O S P E C T U S
__________, 1996
================================================================================
<PAGE> 16
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the estimated expenses of the registrant
in connection with the issuance and distribution of the securities being
registered (all amounts are estimated except the Securities and Exchange
Commission registration fee).
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee.................. $ 5,066
Blue sky filing fees and expenses.................................... 5,000
Legal fees and expenses.............................................. 10,000
Accountants' fees and expenses....................................... 1,000
Miscellaneous expenses............................................... 934
-------
Total....................................................... $22,000
-------
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Washington Business Corporation Act, Sections 23B.08.510 through
23B.08.570, gives the registrant the power to indemnify directors, officers,
employees and agents of the registrant and those serving at the registrant's
request in similar positions in any other corporation, partnership, joint
venture, trust or other enterprise in terms sufficiently broad to permit such
indemnification under certain circumstances for liabilities (including
reimbursement for expenses incurred) arising under the Securities Act of 1933,
as amended (the "Securities Act"). The registrant's Restated Articles of
Incorporation and Bylaws provide for indemnification of the registrant's
directors, officers, employees and other agents to the maximum extent permitted
by the Washington Business Corporation Act. In addition, the registrant has
obtained directors' and officers' liability insurance.
ITEM 16. EXHIBITS
NUMBER DESCRIPTION
3.1(a) Restated Articles of Incorporation of the registrant*
3.1(b) Amendment to the Restated Articles of Incorporation filed with the
Washington Secretary of State on March 15, 1990***
3.1(c) Articles of Amendment dated November 6, 1991 to Restated Articles of
Incorporation****
3.1(d) Articles of Amendment dated January 25, 1996 to Restated Articles of
Incorporation
3.2 Bylaws, as amended, of the registrant***
4.1 Form of Indenture dated as of June 1, 1989 between NeoRx Corporation
and First Interstate Bank of Washington, N.A., as trustee**
4.2 Statement of Rights and Preferences relating to Convertible
Exchangeable Preferred Stock, Series 1, par value $.02 per share***
4.3 Specimen Warrant Certificate+++
II-1
<PAGE> 17
4.4 Form of Purchase Agreements dated as of April 18, 1995 between NeoRx
Corporation and the Purchasers+++
5.1 Opinion of Perkins Coie as to the legality of the securities being
registered
10.1A 1984 Stock Option Plan, as amended***
10.1B 1994 Stock Option Plan++
10.2 Option and Development Agreement dated September 5, 1985 between NeoRx
Corporation and Merck-Frosst Canada Inc.*
10.3 Amendment dated May 4, 1989 to Option and Development Agreement
between NeoRx Corporation and Merck-Frosst Canada Inc.**
10.4 Lease Agreement for 410 West Harrison facility dated May 16, 1986
between NeoRx Corporation and Stephen C. Gaither*
10.5 Exercise of option to renew lease agreement for 410 West Harrison
facility for five years beginning June 1, 1991****
10.6 Form of Executive Officers' Employment Agreement***
10.7 1991 Stock Option Plan for Non-Employee Directors, as amended++
10.8 1991 Restricted Stock Option Plan*****
10.9 Stock and Warrant Purchase Agreement dated as of September 11, 1992
between NeoRx Corporation and Boehringer Ingelheim International
GmbH*****
10.10 Amendment to Stock and Warrant Purchase Agreement dated as of
September 17, 1992 between NeoRx Corporation and Boehringer Ingelheim
International GmbH+
10.11 Second Amendment to Stock and Warrant Purchase Agreement dated as of
September 29, 1993 between NeoRx Corporation and Boehringer Ingelheim
International GmbH+
10.12 Development and License Agreement dated as of September 11, 1992
between NeoRx Corporation and Boehringer Ingelheim International
GmbH*****
10.13 First Amendment to Development and License Agreement dated as of
September 22, 1994 between NeoRx Corporation and Boehringer Ingelheim
International GmbH++
10.14 Second Amendment to Development and License Agreement dated as of
October 31, 1994 between NeoRx Corporation and Boehringer Ingelheim
International GmbH++
10.15 Technology License Agreement dated as of September 11, 1992 between
NeoRx Corporation and Boehringer Ingelheim International GmbH*****
10.16 License Agreement dated as of September 18, 1992 between NeoRx
Corporation and Sterling Winthrop Inc.*****
II-2
<PAGE> 18
10.17 Collaboration and License Option Agreement dated August 10, 1992
between NeoRx Corporation and Organon International B.V.*****
10.18 Contract for Support of Research Project effective as of July 1, 1992
between NeoRx Corporation and the Curators of the University of
Missouri*****
10.19 Amendment No. 1 to Contract for Support of Research Project effective
as of July 1, 1993 between NeoRx Corporation and the Curators of the
University of Missouri+
10.20 Agreement dated as of March 14, 1987*****
10.21 License Option Agreement dated June 1, 1991 between NeoRx Corporation
and the UAB Research Foundation+
10.22 Research Agreement (With Option to License) dated February 8, 1993
between NeoRx Corporation and Southern Research Institute+
10.23 Consulting Agreement effective March 15, 1993 between NeoRx
Corporation and Oxford Molecular Inc.+
10.24 Agreement dated as of August 1, 1993 between NeoRx Corporation and
Avalon Medical Partners+
10.25 Registration Rights Agreement dated September 1993 between NeoRx
Corporation and Avalon Medical Partners+
10.26 Consulting Agreement dated as of July 7, 1993 between NeoRx
Corporation and Dr. Fred Craves+
10.27 Engagement letter dated as of June 22, 1993 between NeoRx Corporation
and the Placement Agents******
10.28 Purchase Agreements dated as of May 19, 1993 between NeoRx Corporation
and the Purchasers or representatives thereof******
10.29 Stock Purchase Agreement dated as of October 5, 1994 between NeoRx
Corporation and DuPont Merck Pharmaceutical Company++
10.30 License Agreement dated as of October 5, 1994 between NeoRx
Corporation and DuPont Merck Pharmaceutical Company++
10.31 Supply Agreement dated November 10, 1994 between NeoRx Corporation and
Cordis Corporation++
10.32 License Agreement effective as of October 12, 1994 between NeoRx
Corporation and Indiana University Foundation, as amended++
10.33 Agreement dated as of June 1, 1987 between NeoRx Corporation and the
Board of Trustees of the Leland Stanford Junior University, as
amended++
23.1 Consent of Arthur Andersen LLP (included on page II-7)
II-3
<PAGE> 19
23.2 Consent of Perkins Coie (included in the opinion filed as Exhibit 5.1)
24.1 Power of Attorney (see signature page)
99.1 Form of Securities Purchase Agreement
99.2 Form of Registration Rights Agreement
- ----------------
* Filed as an exhibit to the registrant's Registration Statement on Form
S-1 (Registration No. 33-20694) effective August 11, 1988 and
incorporated herein by reference.
** Filed as an exhibit to the registrant's Registration Statement on Form
S-1 (Registration No. 33-28545) effective May 31, 1989 and incorporated
herein by reference.
*** Filed as an exhibit to the registrant's Registration Statement on Form
S-4 (Registration No. 33-33153) effective March 27, 1990 and
incorporated herein by reference.
**** Filed as an exhibit to the registrant's Form 10-K for the fiscal year
ended September 30, 1991 and incorporated herein by reference.
***** Filed as an exhibit to the registrant's Form 10-K for the fiscal year
ended September 30, 1992 and incorporated herein by reference.
****** Filed as an exhibit to the registrant's Registration Statement on Form
S-3 (Registration No. 33-64992) effective August 25, 1993 and
incorporated herein by reference.
+ Filed as an exhibit to the registrant's Registration Statement on Form
S-2 (Registration No. 33-71164) effective December 13, 1993 and
incorporated herein by reference.
++ Filed as an exhibit to the registrant's Form 10-K for the fiscal year
ended December 31, 1994 and incorporated herein by reference.
+++ Filed as an exhibit to the registrant's Registration Statement on Form
S-3 (Registration No. 33-60029) effective August 8, 1994 and
incorporated herein by reference.
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;
(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;
(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.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities
II-4
<PAGE> 20
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 that remain unsold at the termination of
the offering.
That, for purposes of determining any liability under the Securities
Act, each filing of the registrant's annual report pursuant to Section 13(a) or
15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")
(and, where applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Exchange Act), that is incorporated by
reference in the registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be in the initial bona fide offering
thereof.
Insofar as indemnification for liabilities arising under the Securities
Act 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 Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question of whether such indemnification by it is against
public policy as expressed in the Securities Act and will be governed by the
final adjudication of such issue.
II-5
<PAGE> 21
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 Seattle, State of Washington, on February 7, 1996.
NEORX CORPORATION
By /s/ Paul G. Abrams
-----------------------------------------------
Paul G. Abrams
President, Chief Executive Officer and Director
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints
Robert M. Littauer and Jeffrey J. Miller, or either of them, his
attorneys-in-fact, with the power of substitution, for him in any and all
capacities, to sign any amendments to this registration statement, and to file
the same, with exhibits thereto and other documents in connection therewith,
with the Securities and Exchange Commission, hereby ratifying and confirming all
that said attorneys-in-fact, or their substitute or substitutes, may do or cause
to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on the 7th day
of February, 1996 in the capacities indicated.
SIGNATURE TITLE
/s/ Paul G. Abrams President, Chief Executive Officer and Director
- ----------------------
Paul G. Abrams
/s/ Robert M. Littauer Senior Vice President, Chief Financial Officer
- ---------------------- and Treasurer
Robert M. Littauer
/s/ Fred B. Craves Chairman of the Board
- ----------------------
Fred B. Craves
/s/ James G. Andress Director
- ----------------------
James G. Andress
/s/ Jack L. Bowman Director
- ----------------------
Jack L. Bowman
/s/ Lawrence H.N. Kinet Director
- ----------------------
Lawrence H.N. Kinet
Director
- ----------------------
Carl-Heinz Pommer
II-6
<PAGE> 22
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference in this registration statement of our report dated
February 22, 1995 incorporated by reference in NeoRx Corporation's Form 10-K for
the year ended December 31, 1994 and to all references to our firm included in
this registration statement.
Arthur Andersen LLP
Seattle, Washington
February 6, 1996
II-7
<PAGE> 1
Exhibit 3.1 (d)
ARTICLES OF AMENDMENT
OF
NEORX CORPORATION
Pursuant to RCW 23B.06.020, NeoRx Corporation, a Washington
corporation, hereby states that the Designation of Rights and Preferences of
Series 2 Convertible Preferred Stock attached hereto as Exhibit A duly adopted
by the Board of Directors of the corporation on January 25, 1996.
These Articles of Amendment are executed by said corporation by its
duly authorized officer.
DATED: January 25, 1996
NEORX CORPORATION
By /s/ Robert M. Littauer
----------------------------------
Robert M. Littauer
Senior Vice President
<PAGE> 2
EXHIBIT A
DESIGNATION OF RIGHTS AND PREFERENCES OF
SERIES 2 CONVERTIBLE PREFERRED STOCK
A series of Preferred Stock is hereby designated as Series 2
Convertible Preferred Stock which series shall consist of 50,000 shares, par
value $.02 per share (the "Series 2 Shares"), and which shall have the rights,
preferences, privileges and limitations as set forth below:
(1) Dividends. The holders of the Series 2
Shares shall be entitled to a dividend of eight percent (8%)
per annum of the Stated Value (as defined below), on a
cumulative basis with quarterly compounding (prorated for any
portion of the applicable period during which the Series 2
Shares are outstanding). Dividends shall accrue from the date
of issuance of the Series 2 Shares and shall be paid on each
Series 2 Share at the time that such Series 2 Share is
converted or redeemed. Dividends (including dividends payable
to holders of Series 2 Shares as of the date such holder
elects to convert the Series 2 Shares into Common Stock as
provided in Section 2 below) may be paid at the Company's
option in cash or Common Stock valued based on the Average
Market Price (as defined below) of the Common Stock for the
period of five (5) consecutive trading days ending on the
trading day before the dividend payment dates or the date of
conversion or redemption, as the case may be; provided,
however, that in no event shall accrued dividends be paid in
shares of Common Stock if, after giving effect to such
distribution, the number of shares of Common Stock
beneficially owned by such holder and all other holders whose
holdings would be aggregated with such holder for purposes of
calculating beneficial ownership in accordance with Sections
13(d) and 16 of the Securities Exchange Act of 1934, as
amended, and the regulations thereunder ("Sections 13(d) and
16"), including, without limitation, any person serving as an
adviser to any holder (collectively, the "Related Persons"),
would exceed four and nine-tenths percent (4.9%) of the
outstanding shares of Common Stock (calculated in accordance
with Sections 13(d) and 16); cash shall be paid in lieu of any
shares which cannot be issued pursuant to this proviso. The
Company shall not issue any fraction of a share of Common
Stock in payment of a dividend, but shall pay cash therefor.
The Company shall, so long as any of the Series 2 Shares are
outstanding, reserve and keep available out of its authorized
and unissued Common Stock, such number of shares of Common
Stock as shall
<PAGE> 3
from time to time be sufficient to pay dividends hereunder.
Every reference herein to the Common Stock of the Company
(unless a different intention is expressed) shall be to the
shares of the Common Stock of the Company, $.02 par value, as
such stock exists immediately after the issuance of the Series
2 Shares provided for hereunder, or to stock into which such
Common Stock may be changed from time to time thereafter.
"Average Market Price" of any security for any period
shall be computed as the arithmetic average of the closing bid
prices for such security for each trading day in such period
on the National Association of Securities Dealers Automated
Quotation National Market System (the "Nasdaq-NMS"), or, if
the Nasdaq-NMS is not the principal trading market for such
security, on the principal trading market for such security,
or, if market value cannot be calculated for such period on
any of the foregoing bases, the Average Market Price shall be
the average fair market value during such period as reasonably
determined in good faith by the Board of Directors of the
Company (all as appropriately adjusted for any stock dividend,
stock split or other similar transaction during such period or
between the end of such period and the date of conversion or
dividend payment, as applicable).
(2) Conversion of Series 2 Shares. The holders
of the Series 2 Shares shall have the right, at their option,
to convert the Series 2 Shares into shares of Common Stock on
the following terms and conditions:
(a)(i) Each Series 2 share shall be
convertible at any time after the date of issuance (or, if
such Series 2 Share is called for redemption, at any time up
to and including, but not after, the close of business on the
fifth full business day prior to the date filed for such
redemption, unless default shall be made by the Company in
providing the funds for the payment of the redemption price),
into fully paid and nonassessable shares (calculated to the
nearest whole share) of Common Stock at the conversion price
(the "Conversion Price") in effect at the time of conversion
determined as hereinafter provided; provided, however, that in
no event shall any holder be entitled to convert Series 2
Shares if, after giving effect to such conversion, the number
of shares of Common Stock beneficially owned by such holder
and all Related Persons would exceed four and nine-tenths
percent (4.9%) of the outstanding shares of Common Stock
(calculated in accordance with Sections 13(d) and 16). Each
Series 2 Share shall have a value of One Hundred Dollars
($100) (the "Stated Value") for the purpose of such
conversion.
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<PAGE> 4
(ii) Commencing on the later of (A) 180
days after the date of original issue of Series 2 Shares or
(B) 90 days after the effective date of the Registration
Statement (the "Registration Statement") filed by the Company
pursuant to the Registration Rights Agreement between the
Company and the original purchasers of the Series 2 Shares,
the Company may at any time cause the automatic conversion of
all outstanding Series 2 Shares pursuant to written notice to
the holders given not less than 30 days and not more than 60
days prior to the date fixed in the notice. Any and all
Series 2 Shares which have not been previously converted by
the holders shall be automatically converted into shares of
Common Stock as provided in Section (2)(a)(i) at the close of
business on the date fixed in such notice, at the Conversion
Price which is eighty-three percent (83%) (the "Conversion
Percentage") of the Average Market Price for the Common Stock
for the five (5) consecutive trading days ending one trading
day prior to the date of automatic conversion; provided,
however, that in no event shall the Conversion Price be an
amount more than one hundred ten percent (110%) of the Average
Market Price for the Common Stock for the five (5) consecutive
trading days ending one trading day prior to the date of
original issue of Series 2 Shares. The Conversion Price Floor
described in Section (2)(b) shall not be applicable to an
automatic conversion pursuant to this Section (2)(a)(ii).
(b) The Conversion Price shall be
eighty-three percent (83%) of the Average Market Price for the
Common Stock for the five (5) consecutive trading days ending
one trading day prior to the date the Conversion Notice (as
defined below) is received by the Company, subject to
adjustment as provided herein; provided, however, in no event
shall the Conversion Price be an amount less than $4.41 per
share of Common Stock (the "Conversion Price Floor") or more
than one hundred ten percent (110%) of the Average Market
Price for the Common Stock for the five (5) consecutive
trading days ending one trading day prior to the issuance of
the Series 2 Shares.
(c) If the Company shall consolidate
with or merge into any corporation or reclassify its
outstanding shares of Common Stock (other than by way of
subdivision or reduction of such shares) (each a "Major
Transaction"), then each Series 2 Share shall thereafter be
convertible into the number of shares of stock or securities
(the "Resulting Securities") or property of the Company, or of
the entity resulting from such consolidation or merger, to
which
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<PAGE> 5
a holder of the number of shares of Common Stock delivered
upon conversion of such Series 2 Share would have been
entitled upon such Major Transaction, had the holder of such
Series 2 Share exercised its right of conversion and had such
Common Stock been issued and outstanding and had such holder
been the holder of record of such Common Stock at the time of
such Major Transaction, and the Company shall make lawful
provision therefor as a part of such consolidation, merger or
reclassification; provided, however, that during the period
commencing on the date of original issue of Series 2 Shares
and ending on the later of (A) 180 days after the date of
original issue of Series 2 Shares or (B) 90 days after the
effective date of the Registration Statement, the Company
shall not consummate a Major Transaction without the approval
of the holders of a majority of the outstanding Series 2
Shares, unless (A) the Resulting Securities (or the securities
into which the Resulting Securities are immediately
convertible without the payment of additional consideration)
are, at the date of the giving of the notice referred to in
clause (B) below, listed or included for quotation on
NASDAQ-NMS, the New York Stock Exchange or the American Stock
Exchange (and are, at the date of the giving of such notice,
reasonably expected to continue to be so listed or included
for quotation for at least the six (6) month period subsequent
to the closing of the Major Transaction); and (B) the Company
gives such holder notice of such Major Transaction at least
thirty (30) trading days prior to the closing thereof
(excluding any trading days that sales cannot be made pursuant
to the Registration Statement for any reason); provided,
further, that in any event the Company shall give the holders
of the Series 2 Shares written notice of any Major Transaction
not less than 30 days prior to its consummation.
(d) The Company shall not issue any
fraction of a share of Common Stock upon any conversion, but
shall pay cash therefor at the Conversion Price then in effect
multiplied by such fraction.
(e) On presentation and surrender to the
Company (or at any office or agency maintained for the
transfer of the Series 2 Shares) of the certificates of Series
2 Shares so to be converted, duly endorsed in blank for
transfer or accompanied by proper instruments of assignment or
transfer in blank (a "Conversion Notice"), with signatures
guaranteed, the holder of such Series 2 Shares shall be
entitled, subject to the limitations herein contained, to
receive in exchange therefor a certificate or certificates for
fully paid and
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<PAGE> 6
nonassessable shares, which certificates shall be delivered by
the second trading day after the date of delivery of the
Conversion Notice, and cash for fractional shares, of Common
Stock on the foregoing basis. The Series 2 Shares shall be
deemed to have been converted, and the person converting the
same to have become the holder of record of Common Stock, for
all purposes as of the date of delivery of the Conversion
Notice.
(f) The Company shall, so long as any of
the Series 2 Shares are outstanding, reserve and keep
available out of its authorized and unissued Common Stock,
solely for the purpose of effecting the conversion of the
Series 2 Shares, such number of shares of Common Stock as
shall from time to time be sufficient to effect the conversion
of all of the Series 2 Shares then outstanding.
(g) The Company shall pay any and all
taxes which may be imposed upon it with respect to the
issuance and delivery of Common Stock upon the conversion of
the Series 2 Shares as herein provided. The Company shall not
be required in any event to pay any transfer or other taxes by
reason of the issuance of such Common Stock in names other
than those in which the Series 2 Shares surrendered for
conversion are registered on the Company's records, and no
such conversion or issuance of Common Stock shall be made
unless and until the person requesting such issuance has paid
to the Company the amount of any such tax, or has established
to the satisfaction of the Company and its transfer agent, if
any, that such tax has been paid.
(3) Voting Rights. Holders of Series 2 Shares
shall have no voting rights, except as required by law.
(4) Redemption. The Company may, at any time
subsequent to ninety (90) days after the issuance of the
Series 2 Shares, redeem the whole or any part of the Series 2
Shares then outstanding at a redemption price of One Hundred
Twenty Dollars and Fifty Cents ($120.50) per Series 2 Share,
plus in each case a sum equal to all accrued and unpaid
dividends thereon through the date fixed for redemption, in
accordance with the following redemption procedures:
(a) In case of redemption of only part
of the Series 2 Shares at any time outstanding, the Company
shall designate the amount of Series 2 Shares so to be
redeemed and shall redeem
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<PAGE> 7
such Series 2 Shares on a pro rata basis. Subject to the
limitations and provisions herein contained, the Board of
Directors shall have the power and authority to prescribe the
terms and conditions upon which the Series 2 Shares shall be
redeemed from time to time.
(b) Notice of every redemption shall be
given by mail to every holder of record of any Series 2 Shares
then to be redeemed, at least thirty (30), but no more than
ninety (90), days prior to the date fixed as the date for the
redemption thereof, at the respective addresses of such
holders as the same shall appear on the stock transfer books
of the Company. The notice shall state that the Series 2
Shares shall be redeemed by the Company at the redemption
price specified above, upon the surrender for cancellation, at
the time and place designated in such notice, of the
certificates representing the Series 2 Shares to be redeemed,
properly endorsed in blank for transfer, or accompanied by
proper instruments of assignment and transfer in blank, with
signatures guaranteed, and bearing all necessary transfer tax
stamps thereto affixed and cancelled. On and after the date
specified in the notice described above, each holder of Series
2 Shares called for redemption shall be entitled to receive
therefor the specified redemption price upon presentation and
surrender at the place designated in such notice of the
certificates for Series 2 Shares called for redemption,
properly endorsed in blank for transfer or accompanied by
proper instruments of assignment or transfer in blank, with
signatures guaranteed, and bearing all necessary transfer tax
stamps thereto affixed and cancelled.
(c) If the Company shall give notice of
redemption as aforesaid (and unless the Company shall fail to
pay the redemption price of the Series 2 Shares presented for
redemption in accordance with such notice), all Series 2
Shares called for redemption shall be deemed to have been
redeemed on the date specified in such notice, whether or not
the certificates for such Series 2 Shares shall be surrendered
for redemption, and such Series 2 Shares so called for
redemption shall from and after such date cease to represent
any interest whatsoever in the Company or its property, and
the holders thereof shall have no rights other than the right
to receive such redemption price without any interest thereof
from and after such date.
(5) Liquidation, Dissolution, Winding Up. In the
event of any voluntary or involuntary liquidation, dissolution
or winding up
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<PAGE> 8
of the Company, the holders of the Series 2 Shares shall 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 (the "Series 2 Funds"),
before any amount shall be paid to the holders of the Common
Stock, an amount equal to the Stated Value per Series 2 Share
plus any accrued and unpaid dividends, provided that, if the
Series 2 Funds are insufficient to pay the full amount due to
the holders of Series 2 Shares and holders of shares of other
classes or series of preferred stock of the Company that are
of equal rank with the Series 2 Shares as to payments of
Series 2 Funds (the "Pari Passu Shares"), then each holder of
Series 2 Shares and Pari Passu Shares shall receive a
percentage of the Series 2 Funds equal to the full amount of
Series 2 Funds payable to such holder as a percentage of the
full amount of Series 2 Funds payable to all holders of Series
2 Shares and Pari Passu Shares. The purchase or redemption by
the Company of stock of any class, in any manner permitted by
law, shall not, for the purposes hereof, be regarded as a
liquidation, dissolution or winding up of the Company.
Neither the consolidation nor merger of the Company with or
into any other corporation or corporations, nor the sale or
transfer by the Company of less than substantially all of its
assets, shall, for the purposes hereof, be deemed to be a
liquidation, dissolution or winding up of the Company. No
holder of Series 2 Shares shall be entitled to receive any
amounts with respect thereto upon any liquidation, dissolution
or winding up of the Company other than the amounts provided
for herein.
(6) Series 2 Rank. All shares of Common Stock
shall be of junior rank to all Series 2 Shares in respect to
the preferences as to dividends, distributions and payments
upon the liquidation, dissolution or winding up of the
Company. The rights of the shares of Common Stock shall be
subject to the preferences and relative rights of the Series 2
Shares. The Series 2 Shares shall rank junior to the
Company's Convertible Exchangeable Preferred Stock, Series 1
in respect of dividends and distributions and payments upon
the liquidation, dissolution or winding up of the Company. The
Company may authorize and issue additional or other preferred
stock which is of equal rank with the Series 2 Shares in
respect of the preferences as to dividends and distributions
and payments upon the liquidation, dissolution or winding up
of the Company. In the event of the merger or consolidation
of the Company with or into another corporation, the Series 2
Shares shall maintain their relative powers, designations and
preferences provided for herein.
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<PAGE> 9
(7) Vote to Change the Terms of Series 2 Shares.
The affirmative vote at a meeting duly called for such purpose
of the written consent without a meeting of the holders of the
not less than two-thirds (2/3) of the then outstanding Series
2 Shares shall be required to amend, alter, change or repeal
any of the powers, designations, preferences and rights of the
Series 2 Shares.
(8) Amendments Upon Conversion or Redemption of
Outstanding Series 2 Shares. When, as a result of the
conversion or redemption of the Series 2 Shares, no Series 2
Shares remain outstanding, the Board of Directors may, at its
discretion and without a vote of the shareholders of the
Company, withdraw this Designation in its entirety by
providing for the filing of the applicable amendment or
restatement of the Company's Restated Articles of
Incorporation, and the Series 2 Shares designated hereby shall
thereby return to the status of authorized but unissued and
undesignated shares of Preferred Stock of the Company.
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<PAGE> 1
Exhibit 5.1
February 7, 1996
Board of Directors
NeoRx Corporation
410 West Harrison Street
Seattle, WA 98119-4007
RE: REGISTRATION OF 1,609,761 SHARES OF COMMON STOCK
Dear Ladies and Gentlemen:
We have acted as counsel to NeoRx Corporation (the "Company") in
connection with the proceedings to register for resale under the Securities Act
of 1933, as amended, (i) 369,901 previously issued and outstanding shares of
the Company's Common Stock (the "Shares") and (ii) 1,239,860 shares of the
Company's Common Stock issuable upon conversion of the Company's Series 2
Convertible Preferred Stock (the "Conversion Shares"). We have also reviewed
the corporate proceedings related to the issuance of the Shares.
Based on the foregoing, it is our opinion that (i) the Shares are
validly issued, fully paid and non-assessable and (ii) the Conversion Shares,
upon the issuance and delivery of the Conversion Shares in accordance with the
terms of the Company's Series 2 Convertible Preferred Stock, will be validly
issued, fully paid and nonassessable.
We consent to the filing of this opinion as an exhibit to the
Company's registration statement for Form S-3 with respect to the Shares and to
the reference to our firm in the registration statement under the caption
"Legal Matters."
Sincerely,
PERKINS COIE
<PAGE> 1
Exhibit 99.1
FORM OF SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT (this "AGREEMENT"), dated as of January
__, 1996 by and among NEORX CORPORATION, a Washington corporation, with
headquarters located 410 West Harrison, Seattle, WA 98119-4007 (the "COMPANY"),
and the undersigned (the "BUYER").
WHEREAS:
A. The Company and the Buyer are executing and delivering this
Agreement in reliance upon the exemption from securities registration afforded
by Rule 506 under Regulation D ("REGULATION D") as promulgated by the United
States Securities and Exchange Commission (the "SEC") under the Securities Act
of 1933, as amended (the "1933 ACT");
B. The Buyer wishes to purchase, in the amounts and upon the
terms and conditions stated in this Agreement, (i) shares of the Company's
common stock, par value $.02 per share (the "COMMON STOCK"), and (ii) shares of
the Company's preferred stock, $.02 par value per share (the "PREFERRED
STOCK"); and
C. Contemporaneous with the execution and delivery of this
Agreement, the parties hereto are executing and delivering a Registration
Rights Agreement (the "REGISTRATION RIGHTS AGREEMENT") pursuant to which the
Company has agreed to provide certain registration rights under the 1933 Act
and the rules and regulations promulgated thereunder, and applicable state
securities laws;
NOW THEREFORE, the Company and the Buyer hereby agrees as follows:
1. PURCHASE AND SALE OF COMMON STOCK AND PREFERRED STOCK.
a. Purchase of Common Stock. The Company shall issue and sell to
the Buyer and the Buyer shall purchase 47,559 shares of Common Stock (the
"COMMON SHARES") at a per share purchase price of $6.308.
b. Purchase of Preferred Stock. The Company shall issue and sell
to the Buyer and the Buyer shall purchase 6,000 shares of Series 2 Convertible
Preferred Stock (the "PREFERRED SHARES"), in accordance with the terms of the
Articles of Amendment, attached hereto as EXHIBIT A (the "ARTICLES OF
AMENDMENT"), at a per
<PAGE> 2
share purchase price for the Preferred Shares of One Hundred Dollars ($100.00).
The Common Shares and the Preferred Shares are hereafter collectively referred
to as the "SECURITIES")
c. Form of Payment. The Buyer shall pay the purchase price for
the Common Shares and the Preferred Shares (the "PURCHASE PRICE") by wire
transfer of United States Dollars to the Company.
On the Closing Date (as defined below), the Company shall deliver to
First Interstate Bank of Washington, N.A., as transfer agent and registrar for
the Company, irrevocable instructions to promptly deliver stock certificates,
duly executed on behalf of the Company, representing the Common Shares and the
Preferred Shares (the "STOCK CERTIFICATES") to the Buyer.
e. Closing Date. The date and time of the issuance and sale of
the Common Shares and the Preferred Shares (the "CLOSING DATE") shall be 12:00
noon Eastern Standard Time on January 30, 1996.
2. BUYER'S REPRESENTATIONS AND WARRANTIES
The Buyer represents and warrants to the Company that:
a. Investment Purpose. The Buyer is purchasing the Securities
for its own account for investment only and not with a view towards the public
sale or distribution thereof except pursuant to sales registered under the 1933
Act.
b. Accredited Investor Status. The Buyer is an "accredited
investor" as that term is defined in Rule 501(a)(3) of Regulation D.
c. Reliance on Exemptions. The Buyer understands that the
Securities are being offered and sold to it in reliance on specific exemptions
from the registration requirements of United States federal and state
securities laws and that the Company is relying upon the truth and accuracy of,
and the Buyer's compliance with, the representations, warranties, agreements,
acknowledgments and understandings of the Buyer set forth herein in order to
determine the availability of such exemptions and the eligibility of the Buyer
to acquire the Securities.
d. Information. The Buyer and its advisors, if any, have been
furnished with all materials relating to the business, finances and operations
of the Company and materials relating to the offer and sale of the Securities
which have been requested by the Buyer. The Buyer and its advisors, if any,
have been afforded the opportunity to ask questions of the Company and have
received complete and satisfactory answers
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<PAGE> 3
to any such inquiries. The Buyer understands that its investment in the
Securities involves a high degree of risk.
e. Governmental Review. The Buyer understands that no United
States federal or state agency or any other government or governmental agency
has passed on or made any recommendation or endorsement of the Securities.
f. Transfer or Resale. The Buyer understands that (i) except as
provided in the Registration Rights Agreement, the Common Shares, the Preferred
Shares, and the shares of Common Stock that would be issuable to the Buyer upon
conversion of the Preferred Shares (the "CONVERSION SHARES"), and the shares of
Common Stock that may be issued to the Buyer pursuant to Section 1 of the
Articles of Amendment (the "DIVIDEND SHARES"), have not been and are not being
registered under the 1933 Act or any state securities laws, and may not be
transferred unless (a) subsequently registered thereunder, or (b) the Buyer
shall have delivered to the Company an opinion of counsel, reasonably
satisfactory in form, scope and substance to the Company, to the effect that
the securities to be sold or transferred may be sold or transferred pursuant to
an exemption from such registration; (ii) any sale of such securities made in
reliance on Rule 144 promulgated under the 1933 Act may be made only in
accordance with the terms of said Rule and further, if said Rule is not
applicable, any resale of such securities under circumstances in which the
seller (or the person through whom the sale is made) may be deemed to be an
underwriter (as that term is defined in the 1933 Act) may require compliance
with some other exemption under the 1933 Act or the rules and regulations of
the SEC thereunder; and (iii) neither the Company nor any other person is under
any obligation to register such securities (other than pursuant to the
Registration Rights Agreement) under the 1933 Act or any state securities laws
or to comply with the terms and conditions of any exemption thereunder.
g. Legends. The Buyer understands that the Preferred Shares and,
until such time as the Common Shares, the Conversion Shares and the Dividend
Shares (collectively, the "REGISTRABLE SECURITIES") have been registered under
the 1933 Act as contemplated by the Registration Rights Agreement, the stock
certificates for the Registrable Securities may bear a restrictive legend in
substantially the following form (and a stop-transfer order may be placed
against transfer of such stock certificates):
The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended. The
securities have been acquired for investment and may not be
sold, transferred or assigned in the absence of an effective
registration statement for the securities under said Act, or
an opinion of
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<PAGE> 4
counsel, reasonably satisfactory in form, scope and substance
to the Company, that registration is not required under said
Act.
h. Authorization; Enforcement. This Agreement has been duly and
validly authorized, executed and delivered on behalf of the Buyer and is a
valid and binding agreement of the Buyer enforceable in accordance with its
terms, subject as to enforceability to general principles of equity and to
bankruptcy, insolvency, moratorium, and other similar laws affecting the
enforcement of creditors' rights generally.
i. Residency. The Buyer is a resident of that state or country
specified in its address on the signature page hereof.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to the Buyer that:
a. Organization and Qualification. The Company is a corporation
duly organized and existing in good standing under the laws of the jurisdiction
in which it is incorporated, and has the requisite corporate power to own its
properties and to carry on its business as now being conducted. The Company
has no subsidiaries. The Company is duly qualified as a foreign corporation to
do business and is in good standing in every jurisdiction in which the nature
of the business conducted by it makes such qualification necessary and where
the failure so to qualify would have a Material Adverse Effect. "MATERIAL
ADVERSE EFFECT" means any material adverse effect on the operations, properties
or financial condition of the Company.
b. Authorization; Enforcement. (i) The Company has the requisite
corporate power and authority to enter into and perform this Agreement and the
Registration Rights Agreement, and to issue the Registrable Securities and the
Preferred Shares in accordance with the terms hereof and thereof, (ii) the
execution and delivery of this Agreement by the Company and the consummation by
it of the transactions contemplated hereby have been duly authorized by the
Company's Board of Directors and no further consent or authorization of the
Company, its Board or Directors, or its stockholders is required, (iii) this
Agreement has been duly executed and delivered by the Company, and (iv) this
Agreement constitutes a valid and binding obligation of the Company enforceable
against the Company in accordance with its terms, except as such enforceability
may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium, liquidation or similar laws relating to, or affecting generally,
the enforcement of creditors' rights and remedies or by other equitable
principles of general application.
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<PAGE> 5
c. Capitalization. As of January 30, 1996, the authorized
capital stock of the Company consists of (i) 60,000,000 shares of Common Stock
of which 14,963,176 shares were issued and outstanding, and (ii) 3,000,000
shares of Preferred Stock of which 1,120,000 shares have been designated as
$2.4375 Convertible Exchangeable Preferred Stock, Series 1, of which 208,240
were issued and outstanding, and 50,000 shares have been designated as Series 2
Convertible Preferred Stock, of which 40,000 are issued and outstanding and
6,000 will be issued and outstanding under this Agreement. All of such
outstanding shares have been validly issued and are fully paid and
nonassessable. No shares of Common Stock or Preferred Stock are subject to
preemptive rights or any other similar rights of the stockholders of the
Company or any liens or encumbrances. Except as disclosed in SCHEDULE 2(C), as
of the effective date of this Agreement, (i) there are no outstanding options,
warrants, scrip, rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities or rights convertible into, any shares of
capital stock of the Company, or arrangements by which the Company is or may
become bound to issue additional shares of capital stock of the Company, and
(ii) there are no agreements or arrangements under which the Company is
obligated to register the sale of any of its securities under the 1933 Act
(except the Registration Rights Agreement). The Company has furnished to the
Buyer true and correct copies of the Company's Articles of Incorporation, as
amended, as in effect on the date hereof ("ARTICLES OF INCORPORATION") and the
Company's Bylaws, as in effect on the date hereof (the "BYLAWS"). The Company
shall provide the Buyer with a written update of this representation signed by
the Company's Chief Executive or Chief Financial Officer on behalf of the
Company as of the Closing Date.
d. Issuance of Shares. The Registrable Securities and the
Preferred Shares are duly authorized and, upon issuance in accordance with the
terms hereof and thereof, shall be validly issued, fully paid and
non-assessable, and free from all taxes, liens and charges with respect to the
issue thereof.
e. No Conflicts. The execution, delivery and performance of this
Agreement by the Company and the consummation by the Company of the
transactions contemplated hereby will not (i) result in a violation of the
Articles of Incorporation or Bylaws or (ii) conflict with, or constitute a
default (or an event which with notice or lapse of time or both would become a
default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, any agreement, indenture or instrument to
which the Company is a party, or result in a violation of any law, rule,
regulation, order, judgment or decree (including federal and state securities
laws and regulations) applicable to the Company or by which any property or
asset of the Company is bound or affected (except for such conflicts, defaults,
terminations, amendments, accelerations, cancellations and violations as would
not,
-5-
<PAGE> 6
individually or in the aggregate, have a Material Adverse Effect). The
business of the Company is not being conducted, and shall not be conducted
through the latest of (i) the Closing Date or (ii) the conversion or redemption
of the last of the Preferred Shares, in violation of any law, ordinance or
regulation of any governmental entity, except for possible violations which
either singly or in the aggregate do not have a Material Adverse Effect.
Except as required under the 1933 Act and any applicable state securities laws,
the Company is not required to obtain any consent, authorization or order of,
or make any filing or registration with, any court or governmental agency in
order for it to execute, deliver or perform any of its obligations under this
Agreement in accordance with the terms hereof.
f. SEC Documents, Financial Statements. Since January 1, 1993,
the Company has filed all reports, schedules, forms, statements and other
documents required to be filed by it with the SEC pursuant to the reporting
requirements of the Exchange Act of 1934, as amended (the "1934 ACT") (all of
the foregoing filed prior to the date hereof and all exhibits included therein
and financial statements and schedules thereto and documents (other than
exhibits) incorporated by reference therein, being hereinafter referred to
herein as the "SEC DOCUMENTS"). The Company has delivered to the Buyer true
and complete copies of the SEC Documents, except for such exhibits, schedules
and incorporated documents. As of their respective dates, the SEC Documents
complied in all material respects with the requirements of the 1934 Act and the
rules and regulations of the SEC promulgated thereunder applicable to the SEC
Documents, and none of the SEC Documents, at the time they were filed with the
SEC, contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. As of their respective dates, the financial statements of the
Company included in the SEC Documents complied as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto. Such financial statements have
been prepared in accordance with generally accepted accounting principles,
consistently applied, during the periods involved (except (i) as may be
otherwise indicated in such financial statements or the notes thereto, or (ii)
in the case of unaudited interim statements, to the extent they may include
footnotes or may be condensed or summary statements) and fairly present in all
material respects the financial position of the Company as of the dates thereof
and the results of its operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments). No other information provided by or on behalf of the Company to
the Buyer and referred to in Section 2(d) of this Agreement contains any untrue
statement of a material fact or omits to state any material fact necessary in
order to make the
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<PAGE> 7
statements therein, in the light of the circumstance under which they are made,
not misleading.
g. Absence of Certain Chances. Since September 30, 1995, there
has been no material adverse change and no material adverse development in the
business, properties, operations, financial condition, results of operations or
prospects of the Company.
h. Absence of Litigation. Except as set forth in its Form 10-Q
for the quarter ended September 30, 1995, there is no action, suit, proceeding,
inquiry or investigation before or by any court, public board or body pending
or, to the knowledge of the Company, threatened against or affecting the
Company, wherein an unfavorable decision, ruling or finding would have a
Material Adverse Effect or which would adversely affect the validity or
enforceability of, or the authority or ability of the Company to perform its
obligations under, this Agreement or any of the documents contemplated herein.
4. COVENANTS
a. Best Efforts. The parties shall use their best efforts timely
to satisfy each of the conditions described in Section 6 and 7 of this
Agreement.
b. Form D; Blue Sky Laws. The Company agrees to file a Form D
with respect to the Securities as required under Regulation D and to provide a
copy thereof to the Buyer promptly after such filing. The Company shall, on or
before the Closing Date, take such action as the Company shall reasonably
determine is necessary to qualify the Securities for, or obtain exemption for
the Securities for, sale to the Buyer at the closing pursuant to this Agreement
under applicable securities or "blue sky" laws of the states of the United
States, and shall provide evidence of any such action so taken to the Buyer on
or prior to the Closing Date.
c. Reporting Status. Until the earlier of (i) the date as of
which the Investors may sell all the Registrable Securities without restriction
pursuant to Rule 144(k) promulgated under the 1933 Act, or (ii) the date on
which (A) the Investors have sold all the Registrable Securities and (B) none
of the Preferred Shares is outstanding (the "REGISTRATION PERIOD"), the Company
shall file all reports required to be filed with the SEC pursuant to the 1934
Act, and the Company shall not terminate its status as an issuer required to
file reports under the 1934 Act even if the 1934 Act or the rules and
regulations thereunder would permit such termination. The Investors shall give
notice to the Company when they have sold all of the Registrable Securities.
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<PAGE> 8
d. Use of Proceeds. The Company will use the proceeds from the
sale of the Common Shares and the Preferred Shares for the Company's internal
working capital purposes and shall not directly or indirectly, use such
proceeds for any loan to or investment in any other corporation, partnership,
enterprise or other person.
e. Expenses. Each party shall pay its respective expenses
incurred in connection with the negotiation, preparation, execution, delivery
and performance of this Agreement and Registration Rights Agreement.
f. Financial Information. The Company agrees to send the
following reports to the Buyer until the Buyer transfers, assigns, or sells all
of the Registrable Securities: (i) within five (5) days after the filing with
the SEC, a copy of its Annual Report on Form 10-K, its Quarterly Reports on
Form 10-Q and any Current Reports on Form 8-K; and (ii) within one day after
release, copies of all press releases issued by the Company or any of its
subsidiaries.
g. Reservation of Shares. The Company shall at times have
authorized, and reserved for the purpose of issuance, a sufficient number of
shares of Common Stock to provide for the conversion of the Preferred Shares
and issuance of the Dividend Shares.
h. Listing. The Company shall promptly secure the listing of the
Registrable Securities upon each national securities exchange or automated
quotation system, if any, upon which shares of Common Stock are then listed
(subject to official notice of issuance) and shall maintain, so long as any
other shares of Common Stock shall be so listed, such listing of all shares of
Registrable Securities from time to time issuable under the terms of this
Agreement and the Registration Rights Agreement.
5. TRANSFER AGENT INSTRUCTIONS
The Company shall irrevocably instruct its transfer agent to issue
certificates for the Conversion Shares and Dividend Shares in such amounts as
specified from time to time by the Company to the transfer agent. Prior to
registration of the Registrable Securities under the 1933 Act, all such
certificates shall bear the restrictive legend specified in Section 2(g) of
this Agreement. The Company warrants that no instruction other than such
instructions referred to in this Section 5, and stop transfer instructions to
give effect to Section 2(f) hereof prior to registration of the Registrable
Securities under the 1933 Act, will be given by the Company to its transfer
agent and that the Registrable Securities and the Preferred Shares shall
otherwise be freely transferable on the books and records of the Company as and
to the extent provided in this Agreement and the Registration Rights Agreement.
Nothing in this Section shall affect in any way the Buyer's obligations and
agreement
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<PAGE> 9
to comply with all applicable securities laws upon resale of the Registrable
Securities and the Preferred Shares. If the Buyer provides the Company with an
opinion of counsel, reasonably satisfactory in form, scope and substance to the
Company, that registration of a resale by the Buyer of any of the Registrable
Securities or the Preferred Shares is not required under the 1933 Act, the
Company shall permit the transfer, and, in the case of the Common Shares, the
Preferred Shares, the Conversion Shares or the Dividend Shares, promptly
instruct its transfer agent to issue one or more certificates in such name and
in such denominations as specified by the Buyer.
6. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL
The obligation of the Company hereunder to sell the Common Shares and
the Preferred Shares is subject to the satisfaction, at or before the Closing
Date, of each of the following conditions, provided that these conditions are
for the Company's sole benefit and may be waived by the Company at any time in
its sole discretion:
a. The parties shall have executed this Agreement and the
Registration Rights Agreement, and delivered the same to each other.
b. The Buyer shall have delivered the Purchase Price to the
Company.
c. The representations and warranties of the Buyer shall be true
and correct in all material respects as of the date when made and as of the
Closing Date as though made at that time (except for representations and
warranties that speak as of a specific date), and the Buyer shall have
performed, satisfied and complied in all material respects with the covenants,
agreements and conditions required by this Agreement to be performed, satisfied
or complied with by the Buyer at or prior to the Closing Date.
7. CONDITIONS TO THE BUYER'S OBLIGATION TO PURCHASE
The obligation of the Buyer hereunder to purchase the Common Shares
and the Preferred Shares is subject to the satisfaction, at or before the
Closing Date, of each of the following conditions, provided that these
conditions are for the Buyer's sole benefit and may be waived by the Buyer at
any time in its sole discretion:
a. The parties shall have executed this Agreement and the
Registration Rights Agreement, and delivered the same to each other.
b. Until the Closing Date, the Common Stock shall be authorized
for quotation on Nasdaq-NMS, and trading in the Common Stock (or on Nasdaq-NMS
generally) shall not have been suspended by the SEC or Nasdaq.
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<PAGE> 10
c. The representations and warranties of the Company shall be
true and correct in all material respects as of the date when made and as of
the Closing Date as though made at that time (except for representations and
warranties that speak as of a specific date) and the Company shall have
performed, satisfied and complied in all material respects with the covenants,
agreements and conditions required by this Agreement to be performed, satisfied
or complied with by the Company at or prior to the Closing Date. The Buyer
shall have received a certificate, executed by the chief financial officer of
the Company, dated as of the Closing Date, to the foregoing effect and as to
such other matters as may be reasonably requested by the Buyer.
d. The Buyer shall have received opinions of the Company's
counsel and General Counsel, each dated as of the Closing Date, in form, scope
and substance reasonably satisfactory to the Buyer and in substantially the
same forms as EXHIBITS B AND C, respectively, attached hereto.
e. The Buyer shall have received the officer's certificate
described in Section 3(c) above, dated as of the Closing Date.
8. GOVERNING LAW; MISCELLANEOUS
a. Governing Law. This Agreement shall be governed by and
interpreted in accordance with the laws of the State of Washington without
regard to the principles of conflict of laws.
b. Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each party and
delivered to the other party. In the event any signature page is delivered by
facsimile transmission, the party using such means of delivery shall cause two
(2) additional original executed signature pages to be physically delivered to
the other party within five (5) days of the execution and delivery hereof.
c. Headings. The headings of this Agreement are for convenience
of reference and shall not form part of, or affect the interpretation of, this
Agreement.
d. Severability. If any provision of this Agreement shall be
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement or the validity or enforceability of this Agreement
in any other jurisdiction.
e. Entire Agreement; Amendments. This Agreement and the
instruments referenced herein contain the entire understanding of the parties
with respect to the
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<PAGE> 11
matters covered herein and therein and, except as specifically set forth herein
or therein, neither the Company nor the Buyer makes any representation,
warranty, covenant or undertaking with respect to such matters. No provision
of this Agreement may be waived or amended other than by an instrument in
writing signed by the party to be charged with enforcement.
f. Notices. Any notices required or permitted to be given under
the terms of this Agreement shall be sent by mail or delivered personally or by
courier and shall be effective five days after being placed in the mail, if
mailed, or upon receipt, if delivered personally or by courier, in each case
addressed to a parry. The addresses for such communications shall be:
If to the Company:
NeoRx Corporation
410 West Harrison
Seattle, WA 08119-4007
Telecopy: (206) 284-7112
Attention: Robert M. Littauer
With copy to:
Perkins Coie
1201 Third Avenue, 40th Floor
Seattle, WA 98101
Telecopy: (206) 583-8500
Attention: Steve McKeon, Esq.
If to the Buyer, at the address on the signature page.
Each party shall have provide notice to the other party of any change in
address.
g. Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties and their successors and assigns.
Neither the Company nor the Buyer shall assign this Agreement or any rights or
obligations hereunder without the prior written consent of the other (which
consent may be withheld for any reason in the sole discretion of the party from
whom consent is sought). Notwithstanding the foregoing, the Buyer may assign
its rights hereunder to any of its "affiliates," as that term is defined under
the 1934 Act, without the consent of the Company.
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<PAGE> 12
h. Third Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective permitted successors and
assigns, and is not for the benefit of, nor may any provision hereof be
enforced by, any other person.
i. Survival. The representations and warranties of the Company
and the Buyer contained in Sections 2 and 3 and the agreements and covenants
set forth in Sections 4, 5, 8(g), 8(h) and 8(k), and this subsection shall
survive the closing.
k. Publicity. The Company and the Buyer shall have the right to
approve before issuance any press releases or any other public statements with
respect to the transactions contemplated hereby; provided, however, that the
Company shall be entitled, without the prior approval of the Buyer, to make any
press release with respect to such transactions as is required by applicable
law and regulations (although the Buyer shall be consulted by the Company in
connection with any such press release prior to its release and shall be
provided with a copy thereof).
l. Further Assurances. Each party 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 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.
m. Termination. In the event that the closing shall not have
occurred on or before five (5) days from the date hereof, this Agreement shall
terminate at the close of business on such date.
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<PAGE> 13
IN WITNESS WHEREOF, the Buyer and the Company have caused this
Agreement to be duly executed as of the day and year first above written.
NEORX CORPORATION
By
-------------------------------------
-------------------------------------
Senior Vice President
BUYER
By
-------------------------------------
Name:
--------------------------------
Title:
-------------------------------
Address:
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<PAGE> 1
Exhibit 99.2
FORM OF REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT"), dated as of January
__, 1996 by and among NEORX CORPORATION, a Washington corporation, with
headquarters located at 410 West Harrison, Seattle, WA 98119-4007 (the
"COMPANY"), and the undersigned (the "BUYER").
WHEREAS:
A. In connection with the Securities Purchase Agreement by and
among the parties of even date herewith (the "SECURITIES PURCHASE AGREEMENT"),
the Company has agreed, upon the terms and subject to the conditions of the
Securities Purchase Agreement, (i) to issue and sell to the Buyer shares (the
"COMMON SHARES") of the Company's common stock (the "COMMON STOCK") and (ii) to
issue and sell to the Buyer shares of the Company's Series 2 Convertible
Preferred Stock (the "PREFERRED SHARES") which will be convertible into shares
of Common Stock (as converted, the "CONVERSION SHARES") and on which dividends
may be-paid in shares of Common Stock (the "DIVIDEND SHARES"); and
B. To induce the Buyer to execute and deliver the Securities
Purchase Agreement, the Company has agreed to provide certain registration
rights under the Securities Act of 1933, as amended, and the rules and
regulations thereunder, or any similar successor statute (collectively, the
"1933 ACT"), and applicable state securities laws;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and the
Buyer hereby agree as follows:
1. DEFINITIONS
a. As used in this Agreement, the following terms shall
have the following meanings:
(i) "EXCLUDED PERIOD" means any period during
which the Company is entitled to suspend trading of the Common Stock by the
Investors pursuant to Sections 3(g) and 4(e).
<PAGE> 2
(ii) "INVESTOR" means the Buyer and any transferee
or assignee who agrees to become bound by the provisions of this Agreement in
accordance with Section 8 hereof.
(iii) "REGISTER," "REGISTERED," and "REGISTRATION"
refer to a registration effected by preparing and filing a Registration
Statement or Statements in compliance with the 1933 Act and pursuant to Rule
415 under the 1933 Act or any successor Rule providing for offering securities
on a continuous basis ("RULE 415"), and the declaration or ordering of
effectiveness of such Registration Statement by the United States Securities
and Exchange Commission (the "SEC").
(iv) "REGISTRABLE SECURITIES" means the Common
Shares, the Conversion Shares, and the Dividend Shares.
(v) "REGISTRATION STATEMENT" means a registration
statement of the Company under the 1933 Act.
b. Capitalized terms used herein and not otherwise
defined herein shall have the respective meanings set forth in the Securities
Purchase Agreement.
2. REGISTRATION
a. Mandatory Registration. The Company shall prepare,
and, on or prior to the date which is fifteen (15) days after the date of the
closing under the Securities Purchase Agreement (the "CLOSING DATE"), file with
the SEC a Registration Statement on Form S-3 covering the resale of the
Registrable Securities, which Registration Statement shall state that, in
accordance with Rule 416 promulgated under the 1933 Act, such Registration
Statement also covers such indeterminate number of additional shares of Common
Stock as may become issuable upon conversion of the Preferred Shares to prevent
dilution resulting from stock splits, stock dividends or similar transactions.
The Registration Statement (and each amendment or supplement thereto, and each
request for acceleration of effectiveness thereof) shall be provided to and
approved by the Buyer and its counsel prior to its filing or other submission.
b. Underwritten Offering. If any offering pursuant to a
Registration Statement pursuant to Section 2(a) hereof involves an underwritten
offering, the Investors who hold a majority in interest of the Registrable
Securities subject to such underwritten offering shall have the right to select
one legal counsel and an investment banker or bankers and manager or managers
to administer the offering, which investment banker or bankers or manager or
managers shall be reasonably satisfactory to the Company.
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<PAGE> 3
c. Payments by the Company. If the Registration
Statement covering the Registrable Securities required to be filed by the
Company pursuant to Section 2(a) hereof is not declared effective by the SEC
within seventy (70) days after the Closing Date or if, after the Registration
Statement has been declared effective by the SEC, sales cannot be made pursuant
to the Registration Statement (by reason of stop order, the Company's failure
to update the Registration Statement or otherwise), or if the Common Stock is
not listed or included for quotation on the National Association of Securities
Dealers Automated Quotation National Market System (the "NASDAQ-NMS"), the New
York Stock Exchange (the "NYSE") or the American Stock Exchange (the "AMEX"),
then the Company will make payments to the Buyer in such amounts and at such
times as shall be determined pursuant to this Section 2(c) as partial relief
for the damages to the Buyer by reason of any such delay in or reduction of its
ability to sell the Registrable Securities (which remedy shall not be exclusive
of any other remedies available at law or in equity). The Company shall pay in
cash to each holder of Registerable Securities an amount equal to the purchase
price of the Common Shares and the Preferred Shares purchased by such holder
(the "PURCHASE PRICE") multiplied by three-hundredths (.03) the sum of: (i)
the number of months (prorated for partial months) after the end of such 70 day
period and prior to the date the Registration Statement is declared effective
by the SEC; (ii) the number of months (prorated for partial months) that sales
cannot be made pursuant to the Registration Statement after the Registration
Statement has been declared effective (excluding any Excluded Period); and
(iii) the number of months (prorated for partial months) that the Common Stock
is not listed or included for quotation on the Nasdaq-NMS, NYSE or AMEX after
the Registration Statement has been declared effective. (For example, if the
Registration Statement becomes effective one and one-half (1-1/2) months after
the end of such 70 day period, the Company would pay $45,000 for each
$1,000,000 of Purchase Price until any subsequent adjustment; if thereafter,
sales could not be made pursuant to the Registration Statement for a period of
two (2) months, the Company would pay an additional $60,000 for each $1,000,000
of Purchase Price.) Payments pursuant hereto shall be made within five (5) days
after the end of each period that gives rise to such obligation, provided that,
if any such period extends for more than thirty (30) days, interim payments
shall be made for each such thirty (30) day period. Any such payments shall be
reduced proportionately to the extent the holder has previously sold
Registrable Securities pursuant to the Registration Statement.
d. Eligibility for Form S-3. The Company represents and
warrants that it meets the requirements for the use of Form S-3 for
registration of the sale by the Buyer and any other Investor of the Registrable
Securities and the Company shall file all reports required to be filed by the
Company with the SEC in a timely manner so as to maintain such eligibility for
the use of Form S-3.
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<PAGE> 4
3. OBLIGATIONS OF THE COMPANY
In connection with the registration of the Registrable Securities, the
Company shall have the following obligations:
a. The Company shall prepare promptly, and file with the
SEC not later than fifteen (15) days after the Closing Date, a Registration
Statement with respect to the number of Registrable Securities provided in
Section 2(a), and thereafter to use its best efforts to cause each Registration
Statement relating to Registrable Securities to become effective as soon as
possible after such filing, and keep the Registration Statement effective
pursuant to Rule 415 at all times until the earlier of (i) the date as of which
the Investors may sell all the Registrable Securities without restriction
pursuant to Rule 144(k) promulgated under the 1933 Act, or (ii) the date on
which (A) the Investors have sold all the Registrable Securities and (B) none
of the Preferred Shares are outstanding (the "REGISTRATION PERIOD"), which
Registration Statement (including any amendments or supplements thereto and
prospectuses contained therein) shall not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein,
or necessary to make the statements therein, in light of the circumstances in
which they were made, not misleading. The Investors shall give notice to the
Company when they have sold all of the Registrable Securities.
b. The Company shall prepare and file with the SEC such
amendments (including post-effective amendments) and supplements to the
Registration Statement and the prospectus used in connection with the
Registration Statement as may be necessary to keep the Registration Statement
effective at all times during the Registration Period, and, during such period,
comply with the provisions of the 1933 Act with respect to the disposition of
all Registrable Securities of the Company covered by the Registration Statement
until such time as all of such Registrable Securities have been disposed of in
accordance with the intended methods of disposition by the seller or sellers
thereof as set forth in the Registration Statement.
c. The Company shall furnish to each Investor whose
Registrable Securities are included in the Registration Statement and its legal
counsel (i) promptly after the same is prepared and publicly distributed, filed
with the SEC, or received by the Company, one copy of the Registration
Statement and any amendment thereto each preliminary prospectus and prospectus
and each amendment or supplement thereto, and (ii) such number of copies of a
prospectus, including a preliminary prospectus, and all amendments and
supplements thereto and such other documents as such Investor may reasonably
request in order to facilitate the disposition of the Registrable Securities
owned by such Investor.
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<PAGE> 5
d. In the case of the Registration Statement referred to
in Section 2(a), the Company shall furnish to the counsel of each Investor each
letter written by or on behalf of the Company to the SEC or the staff of the
SEC, and each item of correspondence from the SEC or the staff of the SEC, in
each case relating to such Registration Statement (other than any portion of
any thereof which contains information for which the Company has sought
confidential treatment).
e. The Company shall use reasonable efforts to (i)
register and qualify the Registrable Securities covered by the Registration
Statement under such other securities or "blue sky" laws of such jurisdictions
in the United States as the Investors who hold a majority in interest of the
Registrable Securities being offered reasonably request, (ii) prepare and file
in those jurisdictions such amendments (including post-effective amendments)
and supplements to such registrations and qualifications as may be necessary to
maintain the effectiveness thereof during the Registration Period, (iii) take
such other actions as may be necessary to maintain such registrations and
qualifications in effect at all times during the Registration Period, and (iv)
take all other actions reasonably necessary or advisable to qualify the
Registrable Securities for sale in such jurisdictions; provided, however, that
the Company shall not be required in connection therewith or as a condition
thereto to (a) qualify to do business in any jurisdiction where it would not
otherwise be required to qualify but for this Section 3(e), (b) subject itself
to general taxation in any such jurisdiction, (c) file a general consent to
service of process in any such jurisdiction, (d) provide any undertakings that
cause more than nominal expense or burden to the Company, or (e) make any
change in its charter or bylaws, which in each case the Board of Directors of
the Company determines to be contrary to the best interests of the Company and
its stockholders.
f. In the event Investors who hold a majority in
interest of the Registrable Securities being offered in the offering select
underwriters for the offering, the Company shall enter into and perform its
obligations under an underwriting agreement, in usual and customary form,
including, without limitation, customary indemnification and contribution
obligations, with the underwriters of such offering. The incremental costs
incident to such an underwritten offering shall be paid one-half (-1/2) by the
Company and one-half (1/2) by the participating Investors, pro rata based on
the number of Registrable Securities sold by them.
g. As promptly as practicable after becoming aware of
such event, the Company shall notify each Investor of the happening of any
event, of which the Company has knowledge, as a result of which the prospectus
included in the Registration Statement, as then in effect, includes an untrue
statement of a material fact or omission to state a material fact required to
be stated therein or necessary to
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<PAGE> 6
make the statements therein, in light of the circumstances under which they
were made, not misleading, and use its best efforts promptly to prepare a
supplement or amendment to the Registration Statement to correct such untrue
statement or omission, and deliver such number of copies of such supplement or
amendment to each Investor as such Investor may reasonably request. If such
event is the conduct of negotiations with respect to a transaction, the
disclosure of which the Company reasonably concludes would be detrimental to
the Company (each, a "NEGOTIATION EVENT"), the Company shall be entitled, upon
giving notice of a Negotiation Event to each holder (the "NEGOTIATION NOTICE")
and upon the reasonable determination of the Company, after consulting with
counsel, that failure to disclose the Negotiation Event would constitute an
omission to state a material fact required to be stated in the Registration
Statement, to require the Investors to suspend sales of the Common Stock
pursuant to the Registration Statement for a period of up to fifteen (15) days
after the giving of the Negotiation Notice; provided, however, that the Company
shall not give more than two (2) Negotiation Notices in any calendar year and
not more than four (4) Negotiation Notices during the Registration Period.
h. The Company shall use its best efforts to prevent the
issuance of any stop order or other suspension of effectiveness of a
Registration Statement, and, if such an order is issued, to obtain the
withdrawal of such order at the earliest possible moment and to notify each
Investor who holds Registrable Securities being sold (or, in the event of an
underwritten offering, the managing underwriters) of the issuance of such order
and the resolution thereof.
i. The Company shall permit a single firm of counsel,
designated as selling stockholders' counsel by the Investors who hold a
majority in interest of the Registrable Securities being sold, to review the
Registration Statement and all amendments and supplements thereto a reasonable
period of time prior to their filing with the SEC, and not file any document in
a form to which such counsel reasonably objects. To the extent that the
failure of such counsel to respond promptly hereunder results in a delay in the
filing of the Registration Statement beyond the 15 day period specified in
Section 2(a) or results in a delay in the effective date thereof beyond the 70
day period specified in Section 2(c), the 15 day period and the 70 day period
shall be extended by the amount of such resulting delay.
j. The Company shall make generally available to its
security holders as soon as practicable, but not later than ninety (90) days
after the close of the period covered thereby, an earnings statement (in form
complying with the provisions of Rule 158 under the 1933 Act) covering a
twelve-month period beginning not later than the first day of the Company's
fiscal quarter next following the effective date of the Registration Statement.
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<PAGE> 7
k. At the request of the Investors who hold a majority
in interest of the Registrable Securities being sold, the Company shall
furnish, on the date that Registrable Securities are delivered to an
underwriter, if any, for sale in connection with the Registration Statement (i)
if required by an underwriter, a letter, dated such date, from the Company's
independent certified public accountants in form and substance as is
customarily given by independent certified public accountants to underwriters
in an underwritten public offering, addressed to the underwriters, and (ii) an
opinion, dated as of such date, from counsel representing the Company for
purposes of such Registration Statement, in form, scope and substance as is
customarily given in an underwritten public offering, addressed to the
underwriters and the Investors.
l. The Company shall make available for inspection by
(i) any Investor, (ii) any underwriter participating in any disposition
pursuant to the Registration Statement, (iii) one firm of attorneys and one
firm of accountants or other agents retained by the Investors, and (iv) one
firm of attorneys retained by all such underwriters (collectively, the
"INSPECTORS") all pertinent financial and other records, and pertinent
corporate documents and properties of the Company (collectively, the
"RECORDS"), as shall be reasonably deemed necessary by each Inspector to enable
each Inspector to exercise its due diligence responsibility, and cause the
Company's officers, directors and employees to supply all information which any
Inspector may reasonably request for purposes of such due diligence; provided,
however, that each Inspector shall hold in confidence and shall not make any
disclosure (except to an Investor) of any Record or other information which the
Company determines in good faith to be confidential, and of which determination
the Inspectors are so notified, unless (a) the disclosure of such Records is
necessary to avoid or correct a misstatement or omission in any Registration
Statement, (b) the release of such Records is ordered pursuant to a subpoena or
other order from a court or government body of competent jurisdiction, or (c)
the information in such Records has been made generally available to the public
other than by disclosure in violation of this or any other agreement. The
Company shall not be required to disclose any confidential information in such
Records to any Inspector until and unless such Inspector shall have entered
into confidentiality agreements (in form and substance satisfactory to the
Company) with the Company with respect thereto, substantially in the form of
this Section 3(l). Each Investor agrees that it shall, upon learning that
disclosure of such Records is sought in or by a court or governmental body of
competent jurisdiction or through other means, give prompt notice to the
Company and allow the Company, at its expense, to undertake appropriate action
to prevent disclosure of, or to obtain a protective order for, the Records
deemed confidential.
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<PAGE> 8
m. The Company shall hold in confidence and not make any
disclosure of information concerning an Investor provided to the Company hereof
unless (i) disclosure of such information is necessary to comply with federal
or state securities laws, (ii) the disclosure of such information is necessary
to avoid or correct a misstatement or omission in any Registration Statement,
(iii) the release of such information is ordered pursuant to a subpoena or
other order from a court or governmental body of competent jurisdiction, or
(iv) such information has been made generally available to the public other
than by disclosure in violation of this or any other agreement. The Company
agrees that it shall, upon learning that disclosure of such information
concerning an Investor is sought in or by a court or governmental body of
competent jurisdiction or through other means, give prompt notice to such
Investor, at its expense, to undertake appropriate action to prevent disclosure
of, or to obtain a protective order for, such information.
n. The Company shall use its best efforts either to (i)
cause all the Registrable Securities covered by the Registration Statement to
be listed on a national securities exchange and on each additional national
securities exchange on which securities of the same class or series issued by
the Company are then listed, if any, if the listing of such Registrable
Securities is then permitted under the rules of such exchange, or (ii) secure
designation and quotation of all the Registrable Securities covered by the
Registration Statement on the Nasdaq-NMS or, if, despite the Company's best
efforts to satisfy the preceding clause (i) or (ii), the Company is
unsuccessful in satisfying the preceding clause (i) or (ii), to secure listing
on a national securities exchange or Nasdaq authorization and quotation for
such Registrable Securities and, without limiting the generality of the
foregoing, to arrange for at least two market makers to register with the
National Association of Securities Dealers, Inc. ("NASD") as such with respect
to such Registrable Securities.
o. The Company shall provide a transfer agent and
registrar, which may be a single entity, for the Registrable Securities not
later than the effective date of the Registration Statement.
p. The Company shall cooperate with the Investors who
hold Registrable Securities being offered and the managing underwriter or
underwriters, if any, to facilitate the timely preparation and delivery of
certificates (not bearing any restrictive legends) representing Registrable
Securities to be offered pursuant to the Registration Statement and enable such
certificates to be in such denominations or amounts, as the case may be, as the
managing underwriter or underwriters, if any, or the Investors may reasonably
request and registered in such names as the managing underwriter or
underwriters, if any, or the Investors may request, and, within three (3)
business days after a Registration Statement which includes Registrable
Securities is
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ordered effective by the SEC, the Company shall deliver, and shall cause legal
counsel selected by the Company to deliver, to the transfer agent for the
Registrable Securities (with copies to the Investors whose Registrable
Securities are included in such Registration Statement) an instruction in the
form attached hereto as EXHIBIT 1 and an opinion of such counsel in the form
attached hereto as EXHIBIT 2.
q. The Company shall take all other reasonable actions
necessary to expedite and facilitate disposition by the Investors of
Registrable Securities pursuant to the Registration Statement.
4. OBLIGATIONS OF THE INVESTORS
In connection with the registration of the Registrable Securities, the
Investors shall have the following obligations:
a. It shall be a condition precedent to the obligations
of the Company to complete the registration pursuant to this Agreement with
respect to the Registrable Securities of a particular Investor that such
Investor shall furnish to the Company such information regarding itself, the
Registrable Securities held by it and the intended method of disposition of the
Registrable Securities held by it as shall be reasonably required to effect the
registration of such Registrable Securities and shall execute such documents in
connection with such registration as the Company may reasonably request. At
least five (5) days prior to the first anticipated filing date of the
Registration Statement, the Company shall notify each investor of the
information the Company requires from each such Investor if such Investor
elects to have any of such Investor's Registrable Securities included in the
Registration Statement.
b. Each Investor by such Investor's acceptance of the
Registrable Securities agrees to cooperate with the Company as reasonably
requested by the Company in connection with the preparation and filing of the
Registration Statement hereunder, unless such Investor has notified the Company
in writing of such Investor's election to exclude all of such Investor's
Registrable Securities from the Registration Statement.
c. In the event Investors holding a majority in interest
of the Registrable Securities being registered determine to engage the services
of an underwriter, each Investor agrees to enter into and perform such
Investor's obligations under an underwriting agreement, in usual and customary
form, including, without limitation, customary indemnification and contribution
obligations, with the managing underwriter of such offering and take such other
actions as are reasonably required in order to expedite or facilitate the
disposition of the Registrable Securities, unless such Investor has notified
the Company in writing of such Investor's election to exclude all
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<PAGE> 10
of such Investor's Registrable Securities from the Registration Statement. The
incremental costs incident to such an underwritten offering shall be paid by
the Investor to the extent provided in Section 3(f).
d. Subject to the Company's obligations under Section
2(c), each Investor agrees that, upon receipt of any notice from the Company of
the happening of any event of the kind described in Section 3(g) or 3(h), such
Investor will immediately discontinue disposition of Registrable Securities
pursuant to the Registration Statement covering such Registrable Securities
until such Investor's receipt of the copies of the supplemented or amended
prospectus contemplated by Section 3(g) or 3(h) and, if so directed by the
Company, such Investor shall deliver to the Company (at the expense of the
Company) or destroy (and deliver to the Company a certificate of destruction)
all copies in such Investor's possession, of the prospectus covering such
Registrable Securities current at the time of receipt of such notice.
e. Each Investor agrees that, so long as such Investor
has been notified (the "Filing Notice") within five (5) days after filing of
the Registration Statement relating to an underwritten sale of Common Stock by
the Company and such Investor then holds at least one percent (1%) of the
Company's outstanding Common Stock, during a forty (40) day period commencing
on a date specified in a notice to such holder (which date shall be at least
fifteen (15) days subsequent to the date of the Filing Notice), provided that
such period shall not extend more than thirty (30) days after the effective
date of such Registration Statement, such Investor shall not, to the extent
requested by the managing underwriter with respect to the securities registered
pursuant to such Registration Statement, sell or otherwise transfer or dispose
of any Common Stock held by such Investor except Common Stock included in such
Registration Statement. In order to enforce the foregoing covenant, the
Company may impose a stop-transfer instructions with respect to the Common
Stock held by each Investor until the end of such period.
f. No Investor may participate in any underwritten
registration hereunder unless such Investor (i) agrees to sell such Investor's
Registrable Securities on the basis provided in any underwriting arrangements
approved by the Investors entitled hereunder to approve such arrangements, (ii)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents reasonably required under the terms
of such underwriting arrangements, and (iii) agrees to pay its pro rata share
of all underwriting discounts and commissions.
g. Each Investor agrees that, after the Registration
Statement required to be filed pursuant to Section 2(a) has been declared
effective by the SEC, for a period of five (5) trading days prior to the
delivery by such Investor of each
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<PAGE> 11
Conversion Notice, such Investor shall not trade or contract to trade any
equity security of the Company, including, without limitation, any put, call,
straddle, option or warrant with respect to equity securities of the Company
held by such Investor.
5. INDEMNIFICATION
In the event any Registrable Securities are included in a Registration
Statement under this Agreement:
a. To the extent permitted by law, the Company will
indemnify, hold harmless and defend (i) each Investor who holds such
Registrable Securities, (ii) the directors, officers and each person who
controls any Investor within the meaning of the 1933 Act or the Securities
Exchange Act of 1934, as amended (the "1934 ACT"), if any, and (iii) any
underwriter (as defined in the 1933 Act) for the Investors; and the directors,
officers and each person who controls any such underwriter within the meaning
of the 1933 Act or the 1934 Act, if any, (each, an "INDEMNIFIED PERSON"),
against any losses, claims, damages, liabilities or expenses (joint or several)
(collectively, "CLAIMS") to which any of them may become subject insofar as
such Claims (or actions or proceedings, whether commenced or threatened, in
respect thereof) arise out of or are based upon: (i) any untrue statement or
alleged untrue statement of a material fact in a Registration Statement or the
omission or alleged omission to state a material fact therein required to be
stated or necessary to make the statements therein not misleading, (ii) any
untrue statement or alleged untrue statement of a material fact contained in
any preliminary prospectus if used prior to the effective date of such
Registration Statement,' or contained in the final prospectus (as amended or
supplemented, if the Company files any amendment thereof or supplement thereto
with the SEC) or the omission or alleged omission to state therein any material
fact necessary to make the statements made therein, in light of the
circumstances under which the statements therein were made, not misleading, or
(iii) any violation or alleged violation relating to the offer or sale of the
Registrable Securities by the Company of the 1933 Act, the 1934 Act, any other
law, including, without limitation, any state securities law, or any Rule or
regulation thereunder (the matters in the foregoing clauses (i) through (iii)
being, collectively, "VIOLATIONS"). Subject to the restrictions set forth in
Section 5(d) with respect to the number of legal counsel, the Company shall
reimburse the Investors and each such underwriter or controlling person,
promptly as such expenses are incurred and are due and payable, for any legal
fees or other reasonable expenses incurred by them in connection with
investigating or defending any such Claim. Notwithstanding anything to the
contrary contained herein, the indemnification agreement contained in this
Section 5(a): (i) shall not apply to a Claim arising out of or based upon a
Violation which occurs in reliance upon and in conformity with information
furnished in writing to the Company
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<PAGE> 12
by any Indemnified Person or underwriter for such Indemnified Person expressly
for use in connection with the preparation of the Registration Statement or any
such amendment thereof or supplement thereto, if such prospectus was timely
made available by the Company pursuant to Section 3(c) hereof; (ii) with
respect to any preliminary prospectus, shall not inure to the benefit of any
such person from whom the person asserting any such Claim purchased the
Registrable Securities that are the subject thereof (or to the benefit of any
person controlling such person) if the untrue statement or omission of material
fact contained in the preliminary prospectus was corrected in the prospectus,
as then amended or supplemented, if such prospectus was timely made available
by the Company pursuant to Section 3(c) hereof; (iii) shall not be available to
the extent such Claim is based on a failure of the Investor to deliver or to
cause to be delivered the prospectus made available by the Company; and (iv)
shall not apply to amounts paid in settlement of any Claim if such settlement
is effected without the prior written consent of the Company, which consent
shall not be unreasonably withheld. Such indemnity shall remain in full force
and effect regardless of any investigation made by or on behalf of the
Indemnified Person and shall survive the transfer of the Registrable Securities
by the Investors pursuant to Section 9.
b. In connection with any Registration Statement in
which an Investor is participating, each such Investor agrees to indemnify,
hold harmless and defend, to the same extent and in the same manner set forth
in Section 5(a), the Company, each of its directors, each of its officers who
signs the Registration Statement, each person, if any, who controls the Company
within the meaning of the 1933 Act or the 1934 Act, any underwriter and any
other stockholder selling securities pursuant to the Registration Statement or
any of its directors or officers or any person who controls such stockholder or
underwriter within the meaning of the 1933 Act or the 1934 Act (collectively
and together with an indemnified Person, an "INDEMNIFIED PARTY"), against any
Claim to which any of them may become subject, under the 1933 Act, the 1934 Act
or otherwise, insofar as such Claim arises out of or is based upon any
Violation, in each case to the extent (and only to the extent) that such
violation occurs in reliance upon and in conformity with written information
furnished to the Company by such Investor expressly for use in connection with
such Registration Statement; and such Investor will reimburse any legal or
other expenses reasonably incurred by them in connection with investigating or
defending any such Claim; provided, however, that the indemnity agreement
contained in this Section 5(b) shall not apply to amounts paid in settlement of
any Claim if such settlement is effected without the prior written consent of
such Investor, which consent shall not be unreasonably withheld; provided,
further, however, that the Investor shall be liable under this Section 5(b) for
only that amount of a Claim as does not exceed the net proceeds to such
Investor as a result of the sale of Registrable Securities pursuant to
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<PAGE> 13
such Registration Statement. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of such Indemnified
Party and shall survive the transfer of the Registrable Securities by the
Investors pursuant to Section 8. Notwithstanding anything to the contrary
contained herein, the indemnification agreement contained in this Section 5(b)
with respect to any preliminary prospectus shall not inure to the benefit of
any Indemnified Party if the untrue statement or omission of material fact
contained in the preliminary prospectus was corrected on a timely basis in the
prospectus, as then amended or supplemented.
c. The Company shall be entitled to receive indemnities
from underwriters, selling brokers, dealer managers and similar securities
industry professionals participating in any distribution, to the same extent as
provided above, with respect to information such persons so furnished in
writing by such persons expressly for inclusion in the Registration Statement.
d. Promptly after receipt by an Indemnified Person or
Indemnified Party under this Section 5 of notice of the commencement of any
action (including any governmental action), such Indemnified Person or
Indemnified Party shall, if a Claim in respect thereof is to made against any
indemnifying party under this Section 5, deliver to the indemnifying party a
written notice of the commencement thereof, and the indemnifying party shall
have the right to participate in, and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party similarly noticed, to assume
control of the defense thereof with counsel mutually satisfactory to the
indemnifying party and the Indemnified Person or the Indemnified Party, as the
case may be; provided, however, that an Indemnified Person or Indemnified Party
shall have the right to retain its own counsel with the fees and expenses to be
paid by the indemnifying party, if, in the reasonable opinion of counsel
retained by the indemnifying party, the representation by such counsel of the
Indemnified Person or Indemnified Party and the indemnifying party would be
inappropriate due to actual or potential differing interests between such
Indemnified Person or Indemnified Party and any other party represented by such
counsel in such proceeding. The Company shall pay for only one separate legal
counsel for the Investors, and such legal counsel shall be selected by the
Investors holding a majority in interest of the Registrable Securities included
in the Registration Statement to which the Claim relates. The failure to
deliver written notice to the indemnifying party within a reasonable time of
the commencement of any such action shall not relieve such indemnifying party
of any liability to the Indemnified Person or Indemnified Party under this
Section 5, except to the extent that the indemnifying party is prejudiced in
its ability to defend such action. The indemnification required by this
Section 5 shall be made by periodic payments of the amount thereof during the
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<PAGE> 14
course of the investigation or defense, as such expense, loss, damage or
liability is incurred and is due and payable.
6. CONTRIBUTION
To the extent any indemnification by an indemnifying party is
prohibited or limited by law, the indemnifying party agrees to make the maximum
contribution with respect to any amounts for which it would otherwise be liable
under Section 5 to the fullest extent permitted by law; provided, however, that
(i) no contribution shall be made under circumstances where the maker would not
have been liable for indemnification under the fault standards set forth in
Section 5, (ii) no seller of Registrable Securities guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall
be entitled to contribution from any seller of Registrable Securities who was
not guilty of such fraudulent misrepresentation, and (iii) contribution by any
seller of Registrable Securities shall be limited in amount to the net amount
of proceeds received by such seller from the sale of such Registrable
Securities.
7. REPORTS UNDER THE 1934 ACT
With a view to making available to the Investors the benefits of Rule
144 promulgated under the 1933 Act or any other similar Rule or regulation of
the SEC that may at any time permit the investors to sell securities of the
Company to the public without registration ("RULE 144"), the Company agrees to:
a. make and keep public information available, as those
terms are understood and defined in Rule 144;
b. file with the SEC in a timely manner all reports and
other documents required of the Company under the 1933 Act and the 1934 Act so
long as the Company remains subject to such requirements (it being understood
that nothing herein shall limit the Company's obligations under Section 4(c) of
the Securities Purchase Agreement) and the filing of such reports and other
documents is required for the applicable provisions of Rule 144; and
c. furnish to each Investor so long as such Investor
owns Registrable Securities, promptly upon request, (i) a written statement by
the Company that it has complied with the reporting requirements of Rule 144,
the 1933 Act and the 1934 Act, (ii) a copy of the most recent annual or
quarterly report of the Company and such other reports and documents so filed
by the Company, and (iii) such other information as may be reasonably requested
to permit the investors to sell such securities pursuant to Rule 144 without
registration.
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<PAGE> 15
8. ASSIGNMENT OF REGISTRATION RIGHTS
The rights to have the Company register Registrable Securities
pursuant to this Agreement shall be automatically assignable by the Investors
to any transferee of all or any portion of Registrable Securities if: (i) the
Investor agrees in writing with the transferee or assignee to assign such
rights, and a copy of such agreement is furnished to the Company within a
reasonable time after such assignment, (ii) the Company is, within a reasonable
time after such transfer or assignment, furnished with written notice of (a)
the name and address of such transferee or assignee, and (b) the securities
with respect to which such registration rights are being transferred or
assigned, (iii) immediately following such transfer or assignment the further
disposition of such securities by the transferee or assignee is restricted
under the 1933 Act and applicable state securities laws, (iv) at or before the
time the Company receives the written notice contemplated by clause (ii) of
this sentence the transferee or assignee agrees in writing with the Company to
be bound by all of the provisions contained herein, (v) such transfer shall
have been made in accordance with the applicable requirements of the Securities
Purchase Agreement, (vi) such transferee shall be an "ACCREDITED INVESTOR" as
that term defined in Rule 501 of Regulation D promulgated under the 1933 Act;
and (vi) in the event the assignment occurs subsequent to the date of
effectiveness of the Registration Statement required to be filed pursuant to
Section 2(a), the transferee agrees to pay its all reasonable expenses of
amending or supplementing such Registration Statement to reflect such
assignment.
9. AMENDMENT OF REGISTRATION RIGHTS
Provisions of this Agreement may be amended and the observance thereof
may be waived (either generally or in a particular instance and either
retroactively or prospectively), only with written consent of the Company and
Investors who hold a majority in interest of the Registrable Securities. Any
amendment or waiver effected in accordance with this Section 9 shall be binding
upon each Investor and the Company.
10. MISCELLANEOUS
a. A person or entity is deemed to be a holder of
Registrable Securities whenever such person or entity owns of record such
Registrable Securities. If the Company receives conflicting instructions,
notices or elections from two or more persons or entities with respect to the
same Registrable Securities, the Company shall act upon the basis of
instructions, notice or election received from the registered owner of such
Registrable Securities.
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<PAGE> 16
b. Notices required or permitted to be given hereunder
shall be in writing and shall be deemed to be sufficiently given when
personally delivered (by hand, by courier, by telephone line facsimile
transmission or other means) or sent by certified mail, return receipt
requested, properly addressed and with proper postage pre-paid,
if to the Company:
NeoRx Corporation
410 West Harrison
Seattle, WA 98119-4007
Telecopy: (206) 284-7112
Attention: Robert M. Lattauer
with copy to:
Perkins Coie
1201 Third Avenue, 40th Floor
Seattle, WA 98101
Telecopy: (206) 583-8500
Attention: Steve McKeon, Esq.
if to the Buyer, at the address listed on the signature page
and if to any other Investor, at such address as such Investor shall have
provided in writing to the Company, or at such other address as each such party
furnishes by notice given in accordance with this Section 10(b), and shall be
effective, when personally delivered, upon receipt and, when so sent by
certified mail, four days after deposit with the United States Postal Service.
c. Failure of any party to exercise any right or remedy
under this Agreement or otherwise, or delay by a party in exercising such right
or remedy, shall not operate as a waiver thereof.
d. This Agreement shall be enforced, governed by and
construed in accordance with the laws of the State of Washington applicable to
agreements made and to be performed entirely within such State. In the event
that any provision of this Agreement is invalid or unenforceable under any
applicable statute or rule of law, then such provision shall be deemed
inoperative to the extent that it may conflict therewith and shall be deemed
modified to conform with such statute or rule of law. Any provision hereof
which may prove invalid or unenforceable under any law shall not affect the
validity or enforceability of any other provision hereof.
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<PAGE> 17
e. This Agreement and the Securities Purchase Agreement
constitute the entire agreement among the parties hereto with respect to the
subject matter hereof and thereof. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein
and therein. This Agreement and the Securities Purchase Agreement supersede
all prior agreements and understandings among the parties hereto with respect
to the subject matter hereof and thereof.
f. Subject to the requirements of Section 8 hereof, this
Agreement shall inure to the benefit of and be binding upon the successors and
assigns of each of the parties hereto.
g. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
h. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same agreement. This Agreement, once executed by a
party, may be delivered to the other party hereto by facsimile transmission of
a copy of this Agreement bearing the signature of the party so delivering this
Agreement.
i. Each party 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 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.
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<PAGE> 18
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the day and year first above written.
NEORX CORPORATION
By
-------------------------------------
-------------------------------------
Senior Vice President
BUYER
By
-------------------------------------
Name:
--------------------------------
Title:
-------------------------------
Address:
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