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As filed with the Securities and Exchange Commission on April 24, 2000
Registration No. 333-____________
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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NEORX CORPORATION
(Exact name of registrant as specified in its charter)
WASHINGTON 91-1261311
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
410 WEST HARRISON STREET
SEATTLE, WASHINGTON 98119-4007
(206) 281-7001
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
RICHARD L. ANDERSON
PRESIDENT AND CHIEF OPERATING OFFICER
NEORX CORPORATION
410 WEST HARRISON STREET
SEATTLE, WASHINGTON 98119-4007
(206) 281-7001
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
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Copies to:
FAITH M. WILSON
MARK C. LAMB
PERKINS COIE LLP
1201 THIRD AVENUE, SUITE 4800
SEATTLE, WASHINGTON 98101-3099
(206) 286-3237
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Approximate date of commencement of proposed sale to the public: AS SOON AS
PRACTICABLE AFTER THIS REGISTRATION STATEMENT BECOMES EFFECTIVE.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any 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 of 1933, please check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act of 1933, 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. [ ]
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CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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Title of Each Class Proposed Maximum Proposed Maximum
of Securities to Be Amount to be Aggregate Offering Per Share Amount of
Registered Registered(1) Price(2) Offering Price(2) Registration Fee
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.02 par
value ................. 1,727,045 shares $17,978,538 $10.41 $4,746
=========================================================================================================
</TABLE>
(1) All 1,727,045 shares registered pursuant to this registration statement are
to be offered by selling shareholders.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) under the Securities Act of 1933 on the basis of the
average of the high and low selling prices of the Common Stock on April 17,
2000, as reported on the Nasdaq National Market.
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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1,727,045 SHARES
NEORX CORPORATION
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COMMON STOCK
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The selling shareholders are offering to sell 1,727,045 shares of our
common stock with this prospectus. NeoRx Corporation will not receive any of the
proceeds from sales of these shares by the selling shareholders.
The selling shareholders acquired the offered shares directly from us in
a private placement that was exempt from the registration requirements of the
federal securities laws. We are required to register these shares under the
terms of the Purchase Agreements, each dated as of April 11, 2000, between us
and the selling shareholders named in this prospectus.
Our common stock is traded on the Nasdaq National Market under the
symbol "NERX." On April 17, 2000, the last sale price of the common stock, as
reported on the Nasdaq National Market, was $10.062 per share.
The selling shareholders may sell their shares from time to time on the
Nasdaq National Market or otherwise. They may sell the shares at prevailing
market prices or at prices negotiated with purchasers. The selling shareholders
will be responsible for any commissions or discounts due to brokers or dealers.
The amount of those commissions or discounts cannot be known now because they
will be negotiated at the time of the sales. We will pay all other offering
expenses.
BEFORE BUYING ANY SHARES YOU SHOULD READ THE DISCUSSION OF MATERIAL
RISKS OF INVESTING IN COMMON STOCK IN "RISK FACTORS" BEGINNING ON PAGE 1.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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The date of this Prospectus is April ___, 2000.
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TABLE OF CONTENTS
<TABLE>
<S> <C>
RISK FACTORS..................................................................1
FORWARD-LOOKING STATEMENTS....................................................6
WHERE YOU CAN FIND MORE INFORMATION...........................................7
INCORPORATION OF INFORMATION WE FILE WITH THE SEC.............................7
USE OF PROCEEDS...............................................................8
DIVIDEND POLICY...............................................................8
SELLING SHAREHOLDERS..........................................................8
PLAN OF DISTRIBUTION.........................................................10
VALIDITY OF COMMON STOCK.....................................................11
EXPERTS......................................................................11
</TABLE>
WE HAVE NOT AUTHORIZED ANY PERSON TO GIVE YOU ANY INFORMATION OR TO MAKE
ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS. YOU SHOULD
NOT RELY ON ANY INFORMATION OR REPRESENTATIONS OTHER THAN THIS PROSPECTUS. THIS
PROSPECTUS IS NOT AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY
SECURITIES OTHER THAN THE COMMON STOCK. IT IS NOT AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY SECURITIES IF THE OFFER OR SOLICITATION WOULD BE
UNLAWFUL. THE AFFAIRS OF NEORX CORPORATION MAY HAVE CHANGED SINCE THE DATE OF
THIS PROSPECTUS. YOU SHOULD NOT ASSUME THAT THE INFORMATION IN THIS PROSPECTUS
IS CORRECT AT ANY TIME SUBSEQUENT TO ITS DATE.
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RISK FACTORS
IN ADDITION TO THE OTHER INFORMATION CONTAINED IN THIS PROSPECTUS, YOU
SHOULD CAREFULLY READ AND CONSIDER THE FOLLOWING RISK FACTORS BEFORE PURCHASING
OUR COMMON STOCK. IF ANY OF THE FOLLOWING RISKS ACTUALLY OCCUR, OUR BUSINESS,
FINANCIAL CONDITION OR RESULTS OF OPERATIONS COULD BE MATERIALLY ADVERSELY
AFFECTED. IN SUCH CASE, THE TRADING PRICE OF OUR COMMON STOCK COULD DECLINE, AND
YOU MAY LOSE ALL OR PART OF YOUR INVESTMENT.
WE EXPECT TO CONTINUE TO OPERATE AT A LOSS, AND WE MAY NEVER BECOME PROFITABLE
We have not been profitable since our inception on May 11, 1984, and we
cannot be certain that we will ever achieve and sustain profitability. To date,
we have been engaged in research and development activities and have not
generated any revenues from product sales. As of December 31, 1999, we had an
accumulated deficit of $147 million. The process of developing our products will
require significant research and development, preclinical testing and clinical
trials, as well as regulatory approvals. We expect these activities, together
with our general and administrative expenses, to result in operating losses for
the foreseeable future. Our ability to achieve profitability will depend, in
part, on our ability to successfully complete development of our proposed
products and on our ability to successfully obtain required regulatory approvals
and manufacture and market our products. We do not expect that any proposed
product which is currently in research and development will be commercially
available for at least several years, if ever.
WE MAY NEED TO RAISE ADDITIONAL CAPITAL WHICH MAY NOT BE AVAILABLE
Based on our current operating plan, we believe that our working capital
will be sufficient to satisfy our capital requirements through at least the
second quarter of 2001. This belief is based on certain assumptions which may
prove to be incorrect. Substantial additional capital will be required for our
operations. We intend to seek additional financing, which may take the form of
public or private financings, including equity financings, which would be
dilutive to existing shareholders, and through other arrangements, including
relationships with corporate partners for the development of certain of our
products. We may not be able to obtain such additional capital or enter into
relationships with corporate partners on a timely basis, on favorable terms, or
at all. If adequate funds are not available, we may be required to delay, reduce
or eliminate expenditures for certain of our programs or products or to enter
into relationships with corporate partners to develop or commercialize products
or technologies that we would otherwise seek to develop or commercialize
independently.
OUR POTENTIAL PRODUCTS MUST UNDERGO RIGOROUS CLINICAL TESTING AND REGULATORY
APPROVALS, WHICH COULD SUBSTANTIALLY DELAY OR PREVENT US FROM MARKETING ANY
PRODUCTS
Before obtaining regulatory approvals for the commercial sale of any of
our proposed products, the products will be subjected to extensive preclinical
and clinical testing to demonstrate their safety and efficacy in humans. Results
of initial preclinical and clinical testing of products under development are
not necessarily indicative of results that will be obtained from subsequent or
more extensive preclinical and clinical testing. Furthermore, we cannot be
certain that clinical trials of products under development will be completed or
will demonstrate the safety and efficacy of such products at all, or to the
extent necessary to obtain regulatory approvals. Companies in the biotechnology
industry have suffered significant setbacks in advanced clinical trials, even
after achieving promising results in earlier trials. The failure to adequately
demonstrate the safety and efficacy of a therapeutic product under development
could delay or prevent regulatory approval of such product.
The rate of completion of clinical trials depends on, among other
factors, the enrollment of patients. Patient enrollment is a function of many
factors, including the size of the patient population, the proximity of patients
to clinical sites, the eligibility criteria for the study and the existence of
competitive clinical trials. Difficulty attaining planned patient enrollment in
our current clinical trials or future clinical trials may result in increased
costs, program delays or both.
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WE MAY NOT BE ABLE TO OBTAIN GOVERNMENT APPROVAL IN A TIMELY MANNER TO MARKET
AND SELL OUR POTENTIAL PRODUCTS OR APPROVAL MAY BE WITHDRAWN
The manufacture and marketing of our proposed products and our research
and development activities are subject to regulation for safety, efficacy and
quality by numerous government authorities in the United States and other
countries. Clinical trials, manufacturing, and marketing are subject to the
rigorous testing and approval processes of the U.S. Food and Drug
Administration, commonly referred to as the FDA, and equivalent foreign
regulatory authorities. Clinical trials and regulatory approvals can take a
number of years to accomplish and require the expenditure of substantial
resources. It may not be possible to start or successfully complete clinical
trials within any specified time period. Delays in obtaining approvals can occur
for a number of reasons, including our failure to obtain necessary supplies of
finished products, monoclonal antibodies or other materials or to the failure
attract a sufficient number of available patients to support the claims
necessary for regulatory approvals.
The FDA approval process is typically lengthy and expensive, and
approval is never certain. Because of the risks and uncertainties in biochemical
development, our potential products could take a significantly longer time to
gain regulatory approvals than we expect or may never gain FDA approval. If we
do not receive these necessary approvals from the FDA, we will not be able to
generate substantial revenues and will not become profitable. We may encounter
significant delays or excessive costs in our efforts to secure regulatory
approvals. FDA approvals may not be obtained on a timely basis, if at all, and
any approvals granted may cover less than all of the clinical indications for
which we sought approval or may contain significant limitations in the form of
warnings, precautions or contraindications with respect to conditions of use.
Delays in obtaining, or the imposition of limitations upon, FDA approvals would
adversely affect or prevent the marketing of products developed by us and our
ability to receive royalty or other product revenues. The manufacture and
marketing of our products would, after approval, be subject to continuing FDA
review, and later discovery of previously unknown problems with a product,
manufacturer or facility may result in restrictions, including potential
withdrawal of the product from the market. In addition, U.S. federal and state
agencies and congressional committees have expressed interest in further
regulation of biotechnology. We are unable to estimate the extent and impact of
regulation in the biotechnology field resulting from any future federal, state
or local legislation or administrative action.
For clinical investigation and marketing outside the United States, we
and our potential collaborative partners also are subject to foreign regulatory
requirements. The requirements governing the conduct of clinical trials, product
licensing, pricing and reimbursement vary widely among countries and can involve
additional testing. The time required to obtain approval may differ from that
required to obtain FDA approvals. The foreign regulatory approval processes
include all of the risks associated with obtaining FDA approvals set forth
above, and approval by the FDA does not ensure approval by the health
authorities of any other country.
IF WE FAIL TO NEGOTIATE AND MAINTAIN COLLABORATIVE ARRANGEMENTS WITH THIRD
PARTIES, OUR MANUFACTURING, SALES AND MARKETING ACTIVITIES MAY BE DELAYED OR
REDUCED
We have no experience in commercial manufacturing, sales, marketing or
distribution. In most cases, our strategy for commercialization of our potential
products requires entering into various arrangements with corporate
collaborators, licensors, licensees and others to manufacture, distribute and
market such products; we will depend on the successful performance of third
parties. Although we believe that parties to our existing and any future
arrangements will have an economic incentive to perform their contractual
responsibilities successfully, these activities will not be within our control.
In February 2000, we engaged International Isotopes, Inc. to build a
manufacturing facility for our Skeletal Targeted Radiation product, which we
refer to as STR, for Phase III clinical trials. International Isotopes will be
responsible for all aspects of the manufacture of STR, including process
qualification, quality control, packaging and shipping, from its Denton, Texas
radiopharmaceutical facility. International Isotopes' failure to perform its
contractual responsibilities effectively could have an adverse effect on our
business.
We cannot assure you that we will be successful in maintaining our
existing relationships or that we will be able to negotiate additional
collaborative arrangements in the future. The absence, suspension or termination
of current or future relationships with collaborative partners could have a
material adverse effect on the development of our products and could result in
the loss of material revenues to us, either of which could have a material
adverse effect on our business, financial
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condition and results of operations. In the biotechnology industry, termination
of relationships, for any reason, has been known to cause material adverse
impacts on a company's share price.
WE ARE DEPENDENT ON SUPPLIERS FOR THE TIMELY DELIVERY OF MATERIALS AND SERVICES
AND WE HAVE EXPERIENCED, AND MAY EXPERIENCE IN THE FUTURE, INTERRUPTIONS IN
SUPPLY
We depend on the timely delivery from suppliers of certain materials and
services. In connection with our research, preclinical studies and clinical
trials, we periodically have experienced interruption in the supply of
monoclonal antibodies. Interruptions in these and other supplies could occur in
the future. We, together with our potential partners, will need to develop
sources for commercial quantities of Holmium-166 and Yttrium-90, the
radionuclides used in our proposed cancer therapeutic products, for the bone
seeking agent used in our STR product, and for the antibody, streptavidin and
clearing agent used in our PRETARGET(R) products. We or our potential partners
may be unable to develop such sources.
UNCERTAINTIES REGARDING HUMAN IMMUNE RESPONSE TO FOREIGN PROTEINS MAY LIMIT THE
EFFECTIVENESS OF OUR PROPOSED CANCER THERAPY PRODUCTS
We plan to use monoclonal antibodies coupled to streptavidin (a protein
of bacterial origin) in our PRETARGET(R) cancer therapy products. These
molecules appear as foreign proteins to the human immune system, which develops
its own antibody in response. We plan to use humanized antibodies, where needed,
to minimize the "human anti-mouse antibody" (HAMA) response which otherwise
might restrict the number of doses that can be safely or effectively
administered, thus limiting the product's efficacy. The "human anti-streptavidin
antibody" (HASA) response may also limit the number of doses. We believe that
modifying streptavidin may reduce HASA. Although we may utilize humanized
antibodies and are modifying streptavidin, we cannot be certain that either
would reduce the extent to which HASA and HAMA may limit the effectiveness of
our cancer therapy products.
WE FACE SUBSTANTIAL COMPETITION IN THE DEVELOPMENT OF CANCER THERAPIES AND MAY
NOT BE ABLE TO SUCCESSFULLY COMPETE AND OUR POTENTIAL PRODUCTS MAY BE RENDERED
OBSOLETE BY RAPID TECHNOLOGICAL CHANGE
The competition for development of cancer therapies is intense. There
are numerous competitors developing products to treat each of the diseases for
which we are seeking to develop products. Some competitors have adopted product
development strategies targeting cancer cells with monoclonal antibodies. Many
emerging companies, including but not limited to IDEC Pharmaceuticals, Cytogen
Corp. and Coulter Pharmaceuticals, have corporate partnership arrangements with
large, established companies to support research, development and
commercialization efforts of products that may be competitive with those which
we are developing. In addition, a number of established pharmaceutical
companies, including, but not limited to SmithKline Beecham, Nycomed Amersham,
Mallinckrodt, Inc. and Bristol-Myers Squibb, 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 treatment of cancer. Many of
our existing or potential competitors have or have access to substantially
greater financial, research and development, marketing and production resources
than we do and may be better equipped than us to develop, manufacture and market
competing products. Our competitors may have, or may develop and introduce, new
products that would render our technology and products under development less
competitive, uneconomical or obsolete.
We also expect to face increasing competition from universities and
other non-profit research organizations. These instructions carry out a
significant amount of research and development in the field of antibody-based
technology. These institutions are becoming increasingly more aware of the
commercial value of their findings and more active in seeking patent and other
proprietary rights, as well as licensing revenues.
OUR SUCCESS IS DEPENDENT UPON OUR ABILITY TO EFFECTIVELY PROTECT OUR PATENTS AND
PROPRIETARY RIGHTS, WHICH WE MAY NOT BE ABLE TO DO
The patent position of biotechnology firms is generally highly uncertain
and involves complex legal and factual questions. Currently, no consistent
policy has emerged regarding the breadth of claims allowed in biotechnology
patents. Products and processes important to us are subject to this uncertainty.
Accordingly, we cannot be certain that our patent
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applications will result in additional patents being issued or that, if issued,
patents will afford protection against competitors with similar technology. We
cannot be certain that any patents issued to us will not be infringed by or
designed around by others or that others will not obtain patents that we would
need to license or design around. Moreover, the technology applicable to our
products is developing rapidly. Research institutes, universities and
biotechnology companies, including our 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 ours. The scope and validity of such patents, the extent to which we
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, they may not be available on commercially reasonable terms, if at
all. We also rely on unpatented proprietary technology. Others may independently
develop substantially equivalent proprietary information and techniques or gain
access to our proprietary technology or disclose such technology. We may not be
able to meaningfully protect our rights in such unpatented proprietary
technology.
PRODUCT LIABILITY CLAIMS IN EXCESS OF THE AMOUNT OF OUR INSURANCE WOULD
ADVERSELY AFFECT OUR FINANCIAL CONDITION
The testing, manufacturing, marketing and sale of the human healthcare
products which we have under development entail an inherent risk that product
liability claims will be asserted against us. Although we are insured against
such risks up to a $10 million annual aggregate limit in connection with
clinical trials and commercial sales of our products under development, we
cannot be certain that our present product liability insurance is adequate. A
product liability claim in excess of our insurance coverage could have a
material adverse effect on us and may prevent us from obtaining product
liability insurance in the future on affordable terms. In addition, we cannot be
certain that product liability coverage will continue to be available in
sufficient amounts or at an acceptable cost.
OUR USE OF RADIOACTIVE AND OTHER HAZARDOUS MATERIALS EXPOSES US TO THE RISK OF
MATERIAL ENVIRONMENTAL LIABILITIES, AND WE MAY INCUR SIGNIFICANT ADDITIONAL
COSTS TO COMPLY WITH ENVIRONMENTAL LAWS IN THE FUTURE
Our research and development and clinical manufacturing processes
involve the controlled use of small amounts of hazardous and radioactive
materials. As a result, we are subject to foreign, 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 our research and development
activities and our manufacturing of clinical trial materials. Although we
believe that our safety procedures for handling and disposing of such materials
comply with the standards prescribed by such laws and regulations, we may be
required to incur significant costs to comply with environmental and health and
safety regulations in the future. Further, the risk of accidental contamination
or injury from hazardous and radioactive materials cannot be completely
eliminated. In the event of such an accident, we could be held liable for any
resulting damages, and any such liability could exceed our resources.
EVEN IF WE BRING PRODUCTS TO MARKET, CHANGES IN HEALTH CARE REIMBURSEMENT COULD
ADVERSELY AFFECT OUR ABILITY TO EFFECTIVELY PRICE OUR PRODUCTS OR OBTAIN
ADEQUATE REIMBURSEMENT FOR SALES OF OUR PRODUCTS
The levels of revenues and profitability of pharmaceutical companies may
be affected by the continuing efforts of government 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
we expect that there will continue to be, a number of federal and state
proposals to implement similar governmental controls. 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. We cannot predict the effect
healthcare reforms may have on our business, and we cannot be certain that any
such reforms will not have a material adverse effect on us. 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 our potential
products, our ability to commercialize our 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 we succeed in bringing one
or more
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products to market, we cannot be certain that these products will be considered
cost-effective and that reimbursement to the consumer will be available or will
be sufficient to allow us to sell our products on a competitive or profitable
basis.
THE LOSS OF KEY EMPLOYEES COULD ADVERSELY AFFECT OUR OPERATIONS
Our success will depend in part on the efforts of certain key scientists
and management personnel. Because of the specialized nature of our business, our
ability to maintain our competitive position will depend in part on our ability
to attract and retain qualified personnel. Competition for such personnel is
intense. We cannot be certain that we 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 a material adverse effect on our business. We
do not maintain key person insurance on any of our scientists or management
personnel.
OUR STOCK PRICE IS VOLATILE AND, AS A RESULT, YOU COULD LOSE SOME OR ALL OF YOUR
INVESTMENT
There has been a history of significant volatility in the market prices
of securities of pharmaceutical and biotechnology companies, including our
common stock, and it is likely that the market price of our common stock will
continue to be highly volatile. Announcements by us or our competitors
concerning acquisitions, technological innovations or new commercial products,
results of clinical trials, developments concerning patents, proprietary rights
and potential infringement, and the expense and time associated with obtaining
government approvals for marketing of our products may have a significant effect
on our business and on the relative market price of the our common stock. In
addition, public concern about the safety of the products we develop, comments
by securities analysts, and general market conditions may have a significant
effect on the market price of our common stock. The realization of any of these
risks could have a material adverse impact on the market price of our common
stock and may result in a loss of some, or even all of your investment.
In the past, securities class action litigation has often been brought
against companies following periods of volatility in their stock prices. We may
in the future be the target of similar litigation. Securities litigation could
result in substantial costs and divert our management's time and resources,
which could cause our business to suffer.
CERTAIN PROVISIONS IN OUR RESTATED ARTICLES OF INCORPORATION AND WASHINGTON
STATE LAW COULD DISCOURAGE A CHANGE OF CONTROL OF NEORX
Our restated articles of incorporation authorize our board of directors
to issue up to 3,000,000 shares of preferred stock and to determine the price,
rights, preference, privileges and restrictions, including voting rights, of
those shares without any further vote or action by our shareholders. The
issuance of preferred stock could have the effect or delaying, deferring or
preventing a change of control of NeoRx, even if this change would benefit our
shareholders. In addition, the issuance of preferred stock may adversely affect
the market price of the common stock and the voting and other rights of the
holders of common stock.
We have adopted a Shareholder' Rights Plan intended to protect the
rights of shareholders by deterring coercive or unfair takeover tactics. The
board of directors declared a dividend to holders of our common stock of one
preferred share purchase right for each outstanding share of the common stock.
The right is exercisable 10 days following the offer to purchase or acquisition
of beneficial ownership of 20% of the outstanding common stock by a person or
group of affiliated persons. Each right entitles the registered holder, other
than the acquiring person or group, to purchase from NeoRx one-hundredth of one
share of Series A Junior Participating Preferred Stock at the price of $40,
subject to adjustment. The rights expire April 10, 2006. In lieu of exercising
the right by purchasing one one-hundredth of one share of Series A Preferred
Stock, the holder of the right, other than the acquiring person or group, may
purchase for $40 that number of shares of our common stock having a market value
of twice that price.
Washington law imposes restrictions on some transactions between a
corporation and significant shareholders. Chapter 23B.19 of the Washington
Business Corporation Act prohibits a target corporation, with some exception,
from engaging in particular significant business transactions with an acquiring
person, which is defined as a persons or group of persons that beneficially owns
10% or more of the voting securities of the target corporation, for a period of
five years after the acquisition, unless the transaction or acquisition of
shares is approved by a majority of the members of the target corporation's
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board of directors prior to the acquisition. Prohibited transactions include,
among other things:
- a merger or consolidation with, disposition of assets to, or issuance
or redemption of stock to or from the acquiring person;
- termination of 5% or more of the employees of the target corporation;
or
- receipt by the acquiring person of any disproportionate benefit as a
shareholder.
A corporation may not opt out of this statute. This provision may have
the effect of delaying, deterring or preventing a change in control of NeoRx.
PROBLEMS RELATED TO THE YEAR 2000 ISSUE COULD ADVERSELY AFFECT OUR BUSINESS
Prior to January 1, 2000, we devoted substantial resources in an effort
to ensure that our proprietary software, the third-party software on which we
rely, and the underlying systems and protocols did not contain errors or defects
associated with Year 2000 date functions. Since January 1, 2000, we have not
experienced any disruption to our business as a result of any Year 2000 problems
or otherwise. If problems do arise, they could adversely affect our business.
FORWARD-LOOKING STATEMENTS
Any statement in this prospectus that is not a historical fact should be
considered a forward-looking statement. Forward-looking statements are based on
our current expectations, assumptions, estimates and projections about us and
our industry. When used in this prospectus, the words "expects," "anticipates,"
"estimates" and "intends" and similar expressions are intended to identify
forward-looking statements, but their absence does not mean that a statement is
not forward-looking. These forward-looking statements involve risks and
uncertainties. Our actual results could differ materially from those anticipated
in such forward-looking statements as a result of numerous factors, as more
fully described in "Risk Factors" and elsewhere in this prospectus. You should
not unduly rely on these forward-looking statements, which apply only as of the
date of this prospectus.
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WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the SEC. You may read and copy any document we file at
the SEC's public reference room at 450 Fifth Street, N.W., Washington, DC 20549.
Please call the SEC at 1-800-SEC-0330 for further information on the public
reference room. The SEC maintains an Internet site at http://www.sec.gov that
contains reports, proxy and information statements, and other information,
regarding issuers, including us, that file documents with the SEC
electronically. You can also inspect our SEC filings at the offices of The
Nasdaq Stock Market, 1735 K Street, N.W., Washington DC 20006.
This prospectus is a part of a registration statement on Form S-3 that
we filed with the SEC with respect to the common stock offered by this
prospectus. This prospectus does not contain all the information that is in the
registration statement. We omitted certain parts of the registration statement
as allowed by the SEC. We refer you to the registration statement and its
exhibits for further information about us and the common stock offered by the
selling shareholders.
INCORPORATION OF INFORMATION WE FILE WITH THE SEC
The SEC allows us to "incorporate by reference" the information we file
with it, which means that we can disclose important information to you by
referring to those documents. The information incorporated by reference is an
important part of this prospectus, and the information that we file later with
the SEC will automatically update and supersede this information. We incorporate
by reference the documents listed below and any future filings made with the SEC
under Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934
until this offering is completed:
- our Annual Report on Form 10-K for the fiscal year ended December 31,
1999; and
- our Proxy Statement for the 2000 Annual Meeting of Shareholders.
You may request a copy of these filings, at no cost, by writing to or
telephoning us at the address below. However, we will not provide copies of the
exhibits to these filings unless we specifically incorporated by reference the
exhibits in this prospectus.
Melinda G. Kile
Controller
NeoRx Corporation
410 West Harrison Street
Seattle, Washington 98119-4007
(206) 286-2501
-7-
<PAGE> 12
USE OF PROCEEDS
We will not receive any of the proceeds from the sale of our common
stock offered in this prospectus.
DIVIDEND POLICY
We have never paid dividends on our common stock and do not anticipate
paying any cash dividends on our common stock in the foreseeable future.
SELLING SHAREHOLDERS
We are registering all 1,727,045 shares covered by this prospectus on
behalf of the selling shareholders named in the table below. We issued all the
shares to the selling shareholders in a private placement transaction. We have
registered the shares to permit the selling shareholders and their pledgees,
donees, transferees or other successors in interest that receive their shares
from the selling shareholders as a gift, partnership distribution or another
nonsale-related transfer after the date of this prospectus to resell the shares
when they deem appropriate.
In the purchase agreements, each selling shareholder has represented
that he, she or it acquired the shares of our common stock for investment and
with no present intention of distributing those shares. In addition, each
selling shareholder has represented that he, she or it qualifies as an
"accredited investor" as such term is defined in Rule 501 under the Securities
Act of 1933, as amended. We agreed in the purchase agreements to prepare and
file a registration statement within five business days after the closing date
of the private placement transaction and to bear all expenses, other than fees
and expenses of counsel or other advisors for the selling shareholders and
underwriting discounts and commissions and brokerage commissions and fees.
Accordingly, in recognition of the fact that the selling shareholders, even
though they purchased the shares without a view to distribution, may wish to be
legally permitted to sell the shares when each deems appropriate, we filed with
the SEC a registration statement on Form S-3, of which this prospectus forms a
part. We have also agreed to prepare and file any amendments and supplements to
the registration statement as may be necessary to keep the registration
statement effective until the earlier of:
- two years after the effective date of the registration statement; or
- the date on which the shares offered in this prospectus may be resold
by the selling shareholders without registration or without regard to
volume limitations by reason of Rule 144(k) under the Securities Act
of 1933, as amended, or any other rule of similar effect.
Unless, otherwise noted in the table below, no selling shareholder has
had a material relationship with us within the past three years, except as a
result of the ownership of the shares offered in this prospectus or other of our
securities.
The following table sets forth the name of each selling shareholder, the
number of shares of common stock owned beneficially by each selling shareholder
before and after this offering and the number of shares which may be offered
pursuant to this prospectus. This information is based on information provided
by the selling shareholders. There are currently no agreements, arrangements or
understandings with respect to the sale of any of the shares. The shares are
being registered to permit public secondary trading of the shares, and the
selling shareholders may offer the shares for resale from time to time.
-8-
<PAGE> 13
<TABLE>
<CAPTION>
SHARES BENEFICIALLY NUMBER OF SHARES SHARES BENEFICIALLY
OWNED PRIOR TO OFFERING BEING OFFERED OWNED AFTER OFFERING(1)
----------------------- ---------------- ----------------------
NAME NUMBER PERCENT(2) NUMBER PERCENT
---- ------- ---------- ------ -------
<S> <C> <C> <C> <C> <C>
Clipper Bay & Company 700,000 3.21% 700,000 -- --
Jackson Square Partners L.P. 250,000 1.15% 250,000 -- --
Merlin Biomed, INT'L, LTD 113,500 * 113,500 -- --
Merlin Biomed II L.P. 4,500 * 4,500 -- --
Merlin Biomed, L.P. 82,000 * 82,000 -- --
Vulcan Ventures, Inc. 181,818 * 181,818 -- --
Deephaven Private Placement Trading, LTD 136,363 * 136,363 -- --
Castle Creek Healthcare Partners, LLC 90,909 * 90,909 -- --
JIBS Equities L.P. 50,000 * 50,000 -- --
CCL Fund, LLC 45,455 * 45,455 -- --
Agile Partners, L.P. 30,000 * 30,000 -- --
Jalla Equities, LLP 22,500 * 22,500 -- --
Taunus Enterprises LTD 30,000 * 20,000 10,000 *
Total 1,737,045 -- 1,727,045 10,000 --
</TABLE>
- -------------------
* Less than 1%
(1) Assumes the sale of all shares offered in this prospectus and no other
purchases or sales of our common stock.
(2) Applicable percentage of ownership is based on 21,811,808 shares of our
common stock outstanding on March 31, 2000.
-9-
<PAGE> 14
PLAN OF DISTRIBUTION
The common stock offered by this prospectus may be sold from time to
time by selling shareholders, who consist of the persons named under "Selling
Shareholders" above and those persons' pledgees, donees, transferees or other
successors in interest. We will pay all costs, expenses and fees in connection
with the registration of the common stock offered by this prospectus. The
selling shareholders must pay all brokerage commissions and similar selling
expenses, including fees and expenses of counsel to the selling shareholders,
relating to the sale of their shares. The selling shareholders may sell their
shares on the Nasdaq National Market or otherwise, at market prices or at
negotiated prices. They may sell shares by one or a combination of the
following:
- a block trade in which a broker or dealer so engaged will attempt to
sell the shares as agent, but may position and resell a portion of
the block as principal to facilitate the transaction;
- purchases by a broker or dealer as principal and resale by the broker
or dealer for its account pursuant to this prospectus;
- an exchange distribution in accordance with the rules of an exchange;
- ordinary brokerage transactions and transactions in which a broker
solicits purchasers; and
- in open-market transactions in reliance on Rule 144 under the
Securities Act of 1933, provided they meet the requirements of that
rule.
The selling shareholders may enter into hedging transactions with
broker-dealers in connection with distributions of the shares or otherwise. In
these transactions, broker-dealers may engage in short sales of the shares in
the course of hedging the positions they assume with selling shareholders. The
selling shareholders also may sell shares short and redeliver the shares to
close out short positions. The selling shareholders may enter into option or
other transactions with broker-dealers which require the delivery to the
broker-dealer of the shares. The broker-dealer may then resell or otherwise
transfer the shares under this prospectus. The selling shareholders also may
loan or pledge the shares to a broker-dealer. The broker-dealer may sell the
loaned shares, or upon a default the broker-dealer may sell the pledged shares
under this prospectus.
In effecting sales, brokers or dealers engaged by the selling
shareholders may arrange for other brokers or dealers to participate. Brokers or
dealers will receive commissions or discounts from selling shareholders in
amounts to be negotiated prior to the sale. The selling shareholders and any
broker-dealers that participate in the distribution may be deemed to be
"underwriters" within the meaning of Section 2(11) of the Securities Act of
1933, and any proceeds or commissions received by them, and any profits on the
resale of shares sold by broker-dealers, may be deemed to be underwriting
discounts and commissions. Because the selling shareholders may be deemed to be
underwriters, they will be subject to the prospectus delivery requirements of
the Securities Act of 1933. In addition, any securities covered by this
prospectus which qualify for sale under Rule 144 promulgated under the
Securities Act may be sold under Rule 144 rather than under this prospectus. The
selling shareholders have advised us that they have not entered into any
agreements, understandings or arrangements with any underwriters or
broker-dealers regarding the sale of their securities. There is no underwriter
or coordinating broker acting in connection with the proposed sale of shares by
the selling shareholders.
We have agreed to indemnify each selling shareholder against certain
liabilities, including liabilities arising under the Securities Act of 1933. The
selling shareholders may agree to indemnify any agent, dealer or broker-dealer
that participates in transactions involving shares of the common stock against
certain liabilities, including liabilities arising under the Securities Act of
1933.
-10-
<PAGE> 15
The shares will be sold only through registered or licensed brokers or
dealers if required under applicable state securities laws. In addition, in some
states the shares may not be sold unless they have been registered or qualified
for sale in the applicable state or an exemption from the registration or
qualification requirement is available and complied with.
Under applicable rules and regulations under the Securities Exchange Act
of 1934, as amended, any person engaged in the distribution of the shares may
not simultaneously engage in market making activities with respect to our common
stock for a period of two business days prior to the commencement of the
distribution. In addition, each selling shareholder will be subject to
applicable provisions of the Exchange Act and the associated rules and
regulations under the Exchange Act, including Regulation M, which provisions may
limit the timing of purchases and sales of shares of our common stock by the
selling shareholders. We will make copies of this prospectus available to the
selling shareholders and have informed them of the need to deliver copies of
this prospectus to purchasers at or prior to the time of any sale of the shares.
If any selling shareholder notifies us that a material arrangement has
been entered into with a broker-dealer for the sale of shares through a block
trade, special offering, exchange, distribution or secondary distribution or a
purchase by a broker or dealer, we will file a prospectus supplement, if
required by Rule 424 under the Securities Act of 1933, setting forth:
- the name of each of the selling shareholders and the participating
broker-dealers;
- the number of shares involved;
- the price at which the shares were sold;
- the commissions paid or discounts or concessions allowed to the
broker-dealers, where applicable;
- a statement to the effect that the broker-dealers did not conduct any
investigation to verify the information set out or incorporated by
reference in this prospectus; and
- any other facts material to the transaction.
VALIDITY OF COMMON STOCK
Certain legal matters in connection with the common stock offered by
this prospectus have been passed upon for us by Perkins Coie LLP, Seattle,
Washington.
EXPERTS
Our financial statements as of December 31, 1998 and 1999, and for each
of the years in the three-year period ended December 31, 1999 have been
incorporated by reference in this prospectus and the related registration
statement in reliance upon the report of KPMG LLP, independent auditors,
incorporated by reference herein, and upon the authority of KPMG LLP as experts
in accounting and auditing.
-11-
<PAGE> 16
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the costs and expenses, other than
underwriting discounts payable, by the registrant in connection with the sale of
common stock being registered. All amounts are estimates except the SEC
registration fee and the Nasdaq National Market additional listing fee.
<TABLE>
<S> <C>
SEC registration fee $ 4,746
Legal fees and expenses $15,000
Accounting fees and expenses $ 8,000
Miscellaneous fees and expenses $ 5,000
-------
Total $32,746
=======
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Sections 23B.08.500 through 23B.08.600 of the Washington Business
Corporation Act authorize a court to award, or a corporation's board of
directors to grant, indemnification to directors and officers on terms
sufficiently broad to permit indemnification under certain circumstances for
liabilities arising under the Securities Act of 1933, as amended (the
"Securities Act"). Article XIII of the registrant's restated articles of
incorporation and Section 12 of the registrant's bylaws provide for
indemnification of the registrant's directors, officers, employees and agents to
the maximum extent permitted by Washington law and provide the directors and
officers of the registrant also may be indemnified against liability they may
incur for serving in those capacities pursuant to a liability insurance policy
maintained by the registrant for such purpose.
Section 23B.08.320 of the Washington Business Corporation Act authorizes
a corporation to limit a director's liability to the corporation or its
shareholders for monetary damages for acts or omissions as a director, except in
certain circumstances involving intentional misconduct, knowing violations of
law or illegal corporate loans or distributions, or any transaction from which
the director personally receives a benefit in money, property or services to
which the director is not legally entitled. Article XII of the registrant's
restated articles of incorporation contains provisions implementing, to the
fullest extent permitted by Washington law, such limitations on a director's
liability to the registrant and its shareholders.
ITEM 16. EXHIBITS
<TABLE>
<S> <C>
4.1 Forms of Purchase Agreement
5.1 Opinion of Perkins Coie LLP, counsel to the registrant, regarding
the legality of the common stock
23.1 Consent of KPMG LLP, independent auditors
23.2 Consent of Perkins Coie LLP (contained in the opinion filed as
Exhibit 5.1 hereto)
24.1 Power of attorney (contained on signature page)
</TABLE>
ITEM 17. UNDERTAKINGS
A. The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement to include
any material information with respect to the plan of
II-1
<PAGE> 17
distribution not previously disclosed in this registration statement or any
material change to such information in this registration statement;
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof; and
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
B. The undersigned registrant hereby undertakes that, for purposes
of determining any liability under the Securities Act of 1933, each filing of
the registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
C. Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question of whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
D. The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the
Securities Act of 1933, the information omitted from the form of prospectus
filed as part of this registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part
of this registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
II-2
<PAGE> 18
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, thereunder duly
authorized, in the City of Seattle, State of Washington, on the 20th day of
April, 2000.
NEORX CORPORATION
/s/ Richard L. Anderson
---------------------------------------
By: Richard L. Anderson, President and
Chief Operating Officer
POWER OF ATTORNEY
Each person whose individual signature appears below hereby authorizes
Richard L. Anderson and Paul G. Abrams, or either of them, as attorneys-in-fact
with full power of substitution, to execute in the name and on the behalf of
each person, individually and in each capacity stated below, and to file, any
and all amendments to this registration statement, including any and all
post-effective amendments, and any related Rule 462(b) registration statement
and any amendment thereto.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities indicated below on the 20th day of April, 2000.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
/s/ Fred B. Craves, Ph.D. Chairman of the Board
------------------------------
Fred B. Craves, Ph.D.
/s/ Paul G. Abrams, M.D., J.D. Chief Executive Officer and Director
------------------------------
Paul G. Abrams, M.D., J.D.
/s/ Jack L. Bowman
------------------------------
Jack L. Bowman Director
/s/ Alan A. Steigrod
------------------------------
Alan A. Steigrod Director
/s/ Carl S. Goldfischer, M.D.
------------------------------
Carl S. Goldfischer, M.D. Director
/S/ E. Rolland Dickson, M.D.
------------------------------
E. Rolland Dickson, M.D. Director
</TABLE>
II-3
<PAGE> 19
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number
<S> <C>
4.1 Forms of Purchase Agreement
5.1 Opinion of Perkins Coie LLP, counsel to the registrant, regarding
the legality of the common stock
23.1 Consent of KPMG LLP, independent auditors
23.2 Consent of Perkins Coie LLP (contained in Exhibit 5.1)
24.1 Power of attorney (contained on signature page)
</TABLE>
II-4
<PAGE> 1
EXHIBIT 4.1
NEORX CORPORATION
SHARE PURCHASE AGREEMENT
SHARE PURCHASE AGREEMENT, dated as of April __, 2000, between NeoRx
Corporation, a Washington corporation (the "Company"), and the purchaser listed
on Schedule A attached hereto (the "Purchaser").
1. AUTHORIZATION OF SALE OF THE SHARES
Subject to the terms and conditions of this Agreement, the Company has
authorized the issuance and sale of up to 4,000,000 shares (the "Shares") of
common stock, par value $0.02 per share (the "Common Stock"), of the Company
(the "Offering.").
2. AGREEMENT TO SELL AND PURCHASE THE SHARES
2.1 PURCHASE AND SALE
Subject to the terms and conditions of this Agreement, the Purchaser
agrees to purchase, and the Company agrees to sell and issue to the Purchaser,
at the Closing (as defined below), that number of Shares set forth opposite the
Purchaser's name on Schedule A attached hereto.
2.2 PURCHASE PRICE
The purchase price of each Share (the "Per Share Price") shall be
$11.00.
3. DELIVERY OF THE SHARES AT THE CLOSING
(a) The completion of the purchase and sale of the Shares (the
"Closing"), shall occur at the offices of Perkins Coie LLP, 1201 Third Avenue,
48th Floor, Seattle, Washington 98101, counsel to the Company, at 5:00 p.m. EST
on April __, 2000 or such other time and date as may be agreed by the parties.
(b) At the Closing, the Company shall authorize its transfer
agent (the "Transfer Agent") to issue to the Purchaser one or more stock
certificates registered in the name of the Purchaser, or in such nominee name(s)
as designated by the Purchaser in writing, representing the number of Shares set
forth in Section 2 above and bearing an appropriate legend referring to the fact
that the Shares were sold in reliance upon the exemption from registration
provided by Section 4(2) of the Securities Act of 1933, as amended (the
"Securities Act"), and Rule 506 under the Securities Act. The Company will
deliver certificates representing the number of Shares set forth in Section 2
against delivery of payment for the Shares by the Purchaser via wire transfer to
Bank of America account number 1113703, routing number 125000024.
(c) The Company's obligation to complete the purchase and sale of
the Shares shall be subject to the following conditions, any one or more of
which may be waived by the Company:
1
<PAGE> 2
(i) receipt by the Company of same-day funds in the full
amount of the purchase price for the Shares being
purchased under this Agreement; and
(ii) the accuracy in all material respects of the
representations and warranties made by the Purchaser and
the fulfillment in all material respects of those
undertakings of the Purchaser to be fulfilled on or before
the Closing.
(d) The Purchaser's obligation to accept delivery of such stock
certificates and to pay for the Shares evidenced by the certificates shall be
subject to the following conditions, any one or more of which may be waived by
the Purchaser:
(i) the representations and warranties made by the Company in
this Agreement shall be accurate in all material respects
and the undertakings of the Company shall have been
fulfilled in all material respects on or before the
Closing;
(ii) the Company shall have delivered to the Purchaser a
certificate executed by the president and chief operating
officer or other executive officer of the Company, dated
the Closing date, in form and substance reasonably
satisfactory to the Purchaser, to the effect that the
representations and warranties of the Company set forth in
Section 4 hereof are true and correct in all material
respects as of the date of this Agreement and as of the
Closing Date, and that the Company has complied with all
the agreements and satisfied all the conditions in this
Agreement on its part to be performed or satisfied on or
before the Closing date; and
(iii) the Company shall have obtained aggregate gross proceeds
of at least $11 million from the Offering on the Closing
date.
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the Purchaser as follows:
4.1 ORGANIZATION AND QUALIFICATION
The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the state of Washington. The
Company has the corporate power and authority to own, lease and operate its
properties and to conduct its business as currently conducted and to enter into
and perform its obligations under this Agreement. The Company is duly qualified
as a foreign corporation to transact business and is in good standing in each
jurisdiction in which such qualification is required, whether by reason of the
ownership or leasing of property or the conduct of business, except where the
failure to so qualify would not, singly or in the aggregate, have a material
adverse effect on the condition, financial or otherwise, or the earnings,
assets, business affairs or business prospects of the Company.
2
<PAGE> 3
4.2 CAPITALIZATION
(a) The authorized capital stock of the Company consists of
60,000,000 shares of Common Stock and 3,000,000 shares of Preferred Stock.
(b) As of March 31, 2000, the issued and outstanding capital
stock of the Company consists of 21,811,808 shares of Common Stock and the
shares of Series 1 convertible exchangeable preferred stock described in
subsection (f) below. The shares of issued and outstanding capital stock of the
Company have been duly authorized and validly issued, are fully paid and
nonassessable and have not been issued in violation of or are not otherwise
subject to any preemptive or other similar rights.
(c) The Company has reserved an aggregate of 4,250,000 shares of
Common Stock for issuance upon the exercise of stock options granted or
available for future grant under the Company's 1994 Stock Option Plan and its
1991 Stock Option Plan for Non-Employee Directors, of which options to purchase
an aggregate of 2,890,453 shares of Common Stock have been granted and are
outstanding and an aggregate of 572,184 shares were available for grant at March
31, 2000. The Company has proposed, subject to shareholder approval, to increase
the number of shares issuable under the 1994 Stock Option Plan by 500,000
shares.
(d) The Company has reserved 305,000 shares of Common Stock for
issuance upon the exercise of outstanding warrants to purchase Common Stock.
(e) The Company has reserved 250,000 shares of Common Stock for
issuance under its 1991 Restricted Stock Program, of which 194,000 remained
available for grant at March 31, 2000.
(f) 208,240 shares of Series 1 Convertible Preferred Stock of the
Company were convertible into 236,636 shares of the Common Stock as of March 31,
2000.
(g) The Company has $1,185,000 in principal of convertible
subordinated debentures outstanding, which will be retired in June 2000. The
debentures are convertible at the option of the holder into shares of Common
Stock at a conversion price of $25.80 per share, subject to adjustment under
certain conditions.
With the exception of the foregoing, there are no outstanding
subscriptions, options, warrants, convertible or exchangeable securities or
other rights granted to or by the Company to purchase shares of Common Stock or
other securities of the Company, and there are no commitments, plans or
arrangements to issue any shares of Common Stock or any security convertible
into or exchangeable for Common Stock.
4.3 ISSUANCE, SALE AND DELIVERY OF THE SHARES
(a) The Shares have been duly authorized for issuance and sale to
the Purchaser pursuant to this Agreement and, when issued and delivered by the
Company pursuant to this Agreement against payment of the consideration set
forth in this Agreement, will be validly issued and fully paid and nonassessable
and free and clear of all pledges, liens and
3
<PAGE> 4
encumbrances. The certificates evidencing the Shares are in due and proper form
under Washington law.
(b) The issuance of the Shares is not subject to preemptive or
other similar rights. No further approval or authority of the shareholders or
the Board of Directors of the Company will be required for the issuance and sale
of the Shares to be sold by the Company as contemplated in this Agreement.
Except for shareholders who purchase Shares in the Offering, no shareholder of
the Company has any right (other than any right that has been waived following
notification of the Company's intent to file the Registration Statement (as
hereinafter defined) or has expired by reason of lapse of time) to require the
Company to register the sale of any securities owned by such holder in such
Registration Statement.
(c) Subject to the accuracy of the Purchaser's representations
and warranties in Section 5 of this Agreement, the offer, sale, and issuance of
the Shares in conformity with the terms of this Agreement constitute
transactions exempt from the registration requirements of Section 5 of the
Securities Act and from the registration or qualification requirements of the
laws of any applicable state or United States jurisdiction.
4.4 FINANCIAL STATEMENTS
The financial statements included in the Company Documents (as
hereinafter defined) present fairly the financial position of the Company as of
the dates indicated and the results of their operations for the periods
specified. Except as otherwise stated in such Company Documents, such financial
statements have been prepared in conformity with generally accepted accounting
principles applied on a consistent basis, and any supporting schedules included
with the financial statements present fairly the information stated in the
financial statements. The financial and statistical data set forth in the
Company Documents were prepared on an accounting basis consistent with such
financial statements.
4.5 NO MATERIAL CHANGE
Since December 31, 1999,
(a) there has been no material adverse change or any development
involving a prospective material adverse change in or affecting the condition,
financial or otherwise, or in the earnings, assets, business affairs or business
prospects of the Company, whether or not arising in the ordinary course of
business;
(b) there have been no transactions entered into by the Company
other than those in the ordinary course of business, which are material with
respect to the Company; and
(c) there has been no dividend or distribution of any kind
declared, paid or made by the Company on any class of its capital stock, except
for the approval by the Board of Directors of the payment of the Series 1
Preferred Stock dividend of $1.21875 per share, payable on June 1, 2000 for
shareholders of record on May 19, 2000.
The Company has no material contingent obligations.
4
<PAGE> 5
4.6 ENVIRONMENTAL
Except as would not, singly or in the aggregate, reasonably be expected
to have a material adverse effect on the condition, financial or otherwise, or
the earnings, assets, business affairs or business prospects of the Company,
(a) the Company is in compliance with all applicable
Environmental Laws (as defined below);
(b) the Company has all permits, authorizations and approvals
required under any applicable Environmental Laws and is in compliance with the
requirements of such permits authorizations and approvals; and
(c) there are no pending or, to the best knowledge of the
Company, threatened Environmental Claims against the Company.
For purposes of this Agreement, the following terms shall have the
following meanings: "Environmental Law" means any United States (or other
applicable jurisdiction's) Federal, state, local or municipal statute, law,
rule, regulation, ordinance, code, policy or rule of common law and any judicial
or administrative interpretation thereof, including any judicial or
administrative order, consent decree or judgment, relating to the environment,
health, safety or any chemical, material or substance, exposure to which is
prohibited, limited or regulated by any governmental authority. "Environmental
Claims" means any administrative, regulatory or judicial actions, suits,
demands, demand letters, claims, liens, notices of noncompliance or violation,
investigations or proceedings relating to any Environmental Law.
4.7 NO DEFAULTS
The Company is not in violation of its articles of incorporation or
bylaws or in material default in the performance or observance of any
obligation, agreement, covenant or condition contained in any material contract,
indenture, mortgage, loan agreement, deed, trust, note, lease, sublease, voting
agreement, voting trust, or other instrument or agreement to which the Company
is a party or by which it may be bound, or to which any of the property or
assets of the Company is subject.
4.8 LABOR MATTERS
No labor dispute with the employees of the Company exists or, to the
best knowledge of the Company, is imminent.
4.9 NO ACTIONS
There is no action, suit or proceeding before or by any court or
governmental agency or body, domestic or foreign, now pending, or, to the
knowledge of the Company, threatened, against or affecting the Company which,
singly or in the aggregate, would result in any material adverse change in the
condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the Company, or which, singly or in the aggregate, would
materially and
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adversely affect the properties or assets thereof or which would materially and
adversely affect the consummation of this Agreement, nor, to the best knowledge
of the Company, is there any reasonable basis therefor. The Company is not in
default with respect to any judgment, order or decree of any court or
governmental agency or instrumentality which, singly or in the aggregate, would
have a material adverse effect on the assets, properties or business of the
Company.
4.10 INTELLECTUAL PROPERTY
(a) The Company, to the best of its knowledge, owns or is
licensed to use all patents, patent applications, inventions, trademarks, trade
names, applications for registration of trademarks, service marks, service mark
applications, copyrights, know-how, manufacturing processes, formulae, trade
secrets, licenses and rights in any thereof and any other intangible property
and assets (in this Agreement called the "Proprietary Rights") that are material
to the business of the Company as now conducted and as proposed to be conducted.
(b) The Company does not have any knowledge of, and the Company
has not given or received any notice of, any pending conflicts with or
infringement of the rights of others with respect to any Proprietary Rights or
with respect to any license of Proprietary Rights which are material to the
business of the Company.
(c) No action, suit, arbitration, or legal, administrative or
other proceeding, or investigation is pending, or, to the best knowledge of the
Company, threatened, which involves any Proprietary Rights, nor, to the best
knowledge of the Company, is there any reasonable basis therefor.
(d) The Company is not subject to any judgment, order, writ,
injunction or decree of any court or any Federal, state, local, foreign or other
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, or any arbitrator, and has not entered into or is not a
party to any contract which restricts or impairs the use of any such Proprietary
Rights in a manner which would have a material adverse effect on the use of any
of the Proprietary Rights.
(e) No Proprietary Rights used by the Company, and no services or
products sold by the Company, conflict with or infringe upon any proprietary
rights of any third party. The Company has not received written notice of any
pending conflict with or infringement upon such third-party proprietary rights.
(f) The Company has not entered into any consent,
indemnification, forbearance to sue or settlement agreement with respect to
Proprietary Rights other than in the ordinary course of business. No claims have
been asserted by any person with respect to the validity of the Company's
ownership or right to use the Proprietary Rights and, to the best knowledge of
the Company, there is no reasonable basis for any such claim to be successful.
(g) The Proprietary Rights that are material to the business of
the Company are valid and enforceable and no registration relating thereto has
lapsed, expired or been abandoned or cancelled or is the subject of cancellation
or other adversarial proceedings, and all applications therefor are pending and
are in good standing.
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(h) To the best of its knowledge, the Company has complied, in
all material respects, with its obligations relating to the protection of the
Proprietary Rights which are material to the business of the Company used
pursuant to licenses.
(i) To the best knowledge of the Company, no person is infringing
on or violating the Proprietary Rights.
4.11 PERMITS
The Company possesses and is operating in compliance with all material
licenses, certificates, consents, authorities, approvals and permits from all
state, Federal, foreign and other regulatory agencies or bodies necessary to
conduct the businesses now operated by it, and the Company has not received any
notice of proceedings relating to the revocation or modification of any such
permit or any circumstance which would lead it to believe that such proceedings
are reasonably likely which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would materially and adversely affect
the condition, financial or otherwise, or the earnings, assets, business affairs
or business prospects of the Company.
4.12 DUE EXECUTION, DELIVERY AND PERFORMANCE
(a) This Agreement has been duly executed and delivered by the
Company and constitutes a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except as rights
to indemnity and contribution under this Agreement may be limited by Federal or
state securities laws or the public policy underlying such laws.
(b) The execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated in this Agreement and the
fulfillment of the terms of this Agreement have been duly authorized by all
necessary corporate action and will not conflict with or constitute a breach of,
or default under, or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company pursuant to, any
contract, indenture, mortgage, loan agreement, deed, trust, note, lease,
sublease, voting agreement, voting trust or other instrument or agreement to
which the Company is a party or by which it may be bound, or to which any of the
property or assets of the Company is subject, nor will such action result in any
violation of the provisions of the articles of incorporation or bylaws of the
Company or any applicable statute, law, rule, regulation, ordinance, decision,
directive or order.
4.13 PROPERTIES
The Company has good and marketable title to its properties, free and
clear of all material security interests, mortgages, pledges, liens, charges,
encumbrances and claims of record. The properties of the Company are, in the
aggregate, in good repair (reasonable wear and tear excepted), and suitable for
their respective uses. Any real property held under lease by the Company is held
under valid, subsisting and enforceable leases with such exceptions as are not
material and do not interfere with the conduct of the business of the Company.
The Company owns or leases all such properties as are necessary to its business
or operations as now conducted.
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4.14 COMPLIANCE
The Company has conducted and is conducting its business in compliance
with all applicable Federal, state, local and foreign statutes, laws, rules,
regulations, ordinances, codes, decisions, decrees, directives and orders,
except where the failure to do so would not, singly or in the aggregate, have a
material adverse effect on the condition, financial or otherwise, or on the
earnings, assets, business affairs or business prospects of the Company.
4.15 SECURITY MEASURES
The Company takes security measures designed to enable the Company to
assert trade secret protection in its non-patented technology.
4.16 CONTRIBUTIONS
To the best of the Company's knowledge, neither the Company nor any
employee or agent of the Company has made any payment of funds of the Company or
received or retained any funds in violation of any law, rule or regulation.
4.17 USE OF PROCEEDS; INVESTMENT COMPANY
The Company intends to use the net proceeds from the sale of the Shares
for research and development, pre-launch activities, general corporate purposes
and working capital. The Company is not now, and after the sale of the Shares
under this Agreement and under all other agreements and the application of the
net proceeds from the sale of the Shares described in the preceding sentence
will not be, an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
4.18 PRIOR OFFERINGS
All offers and sales of capital stock of the Company before the date of
this Agreement were at all relevant times duly registered or exempt from the
registration requirements of the Securities Act and were duly registered or
subject to an available exemption from the registration requirements of the
applicable state securities or Blue Sky laws.
4.19 TAXES
The Company has filed all material tax returns required to be filed,
which returns are true and correct in all material respects, and the Company is
not in default in the payment of any taxes, including penalties and interest,
assessments, fees and other charges, shown thereon due or otherwise assessed,
other than those being contested in good faith and for which adequate reserves
have been provided or those currently payable without interest which were
payable pursuant to said returns or any assessments with respect thereto.
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4.20 OTHER GOVERNMENTAL PROCEEDINGS
To the Company's knowledge, there are no rulemaking or similar
proceedings before The United States Food and Drug Administration or comparable
Federal, state, local or foreign government bodies that involve or affect the
Company, which, if the subject of an action unfavorable to the Company, would
reasonably be expected to materially and adversely affect the condition,
financial or otherwise, or the earnings, assets, business affairs or business
prospects of the Company.
4.21 NON-COMPETITION AGREEMENTS
To the knowledge of the Company, any full-time employee who has entered
into any non-competition, non-disclosure, confidentiality or other similar
agreement with any party other than the Company is neither in violation of nor
is expected to be in violation of that agreement as a result of the business
currently conducted or expected to be conducted by the Company or such person's
performance of his or her obligations to the Company. The Company has not
received written notice that any consultant or scientific advisor of the Company
is in violation of any non-competition, non-disclosure, confidentiality or
similar agreement.
4.22 TRANSFER TAXES
On the Closing date, all stock transfer or other taxes (other than
income taxes) that are required to be paid in connection with the sale and
transfer of the Shares to be sold to the Purchaser under this Agreement will be,
or will have been, fully paid or provided for by the Company and all laws
imposing such taxes will be or will have been fully complied with.
4.23 INSURANCE
The Company maintains insurance of the type and in the amount that the
Company reasonably believes is adequate for its business, including, but not
limited to, insurance covering all real and personal property owned or leased by
the Company against theft, damage, destruction, acts of vandalism and all other
risks customarily insured against by similarly situated companies, all of which
insurance is in full force and effect.
4.24 GOVERNMENTAL CONSENTS
No registration, authorization, approval, qualification or consent of
any court or governmental authority or agency is necessary in connection with
the execution and delivery of this Agreement or the offering, issuance or sale
of the Shares under this Agreement, except such as may be required under the
Securities Act or the rules and regulations promulgated thereunder or state
securities or Blue Sky laws, or such as may be required by the National
Association of Securities Dealers, Inc.
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4.25 SECURITIES AND EXCHANGE COMMISSION FILINGS
The Company has timely filed with the Securities and Exchange Commission
(the "Commission") all documents required to be filed by the Company under the
Exchange Act of 1934, as amended (the "Exchange Act.")
4.26 ADDITIONAL INFORMATION
The Company represents and warrants that the information contained in
the following documents (the "Company Documents"), which will be provided to
Purchaser before the Closing, is or will be true and correct in all material
respects as of their respective final dates:
(a) the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1999;
(b) the Company's Quarterly Reports on Form 10-Q for the fiscal
quarters ended March 31, 1999, June 30, 1999 and September 30, 1999;
(c) the Company's Proxy Statement for its 1999 Annual Meeting of
Shareholders; and
(d) all other documents, if any, filed by the Company with the
Commission since January 1, 1999 pursuant to the reporting requirements of the
Exchange Act.
4.27 CONTRACTS
The contracts described in the Company Documents or incorporated by
reference therein are in full force and effect on the date hereof, except for
contracts the termination or expiration of which would not, singly or in the
aggregate, have a material adverse effect on the business, properties or assets
of the Company. Neither the Company nor, to the best knowledge of the Company,
any other party is in breach of or default under any such contracts.
5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASER
5.1 SECURITIES LAW REPRESENTATIONS AND WARRANTIES
The Purchaser represents, warrants and covenants to the Company as
follows:
(a) The Purchaser is knowledgeable, sophisticated and experienced
in making, and is qualified to make, decisions with respect to investments in
shares representing an investment decision like that involved in the purchase of
the Shares, including investments in securities issued by the Company, and has
requested, received, reviewed and considered all information it deems relevant
in making an informed decision to purchase the Shares.
(b) The Purchaser is acquiring the number of Shares set forth in
Section 2 above in the ordinary course of its business and for its own account
for investment (as defined for purposes of the Hart-Scott-Rodino Antitrust
Improvement Act of 1976 and the regulations thereunder) only, and has no present
intention of distributing any of the Shares nor any
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arrangement or understanding with any other persons regarding the distribution
of such Shares within the meaning of Section 2(11) of the Securities Act, other
than as contemplated in Section 7 of this Agreement.
(c) The Purchaser will not, directly or indirectly, offer, sell,
pledge, transfer or otherwise dispose of (or solicit any offers to buy, purchase
or otherwise acquire or take a pledge of) any of the Shares except in compliance
with the Securities Act and the Rules and Regulations.
(d) The Purchaser has completed or caused to be completed the
Stock Certificate Questionnaire and the Registration Statement Questionnaire,
attached to this Agreement as Appendices I and II, for use in preparation of the
Registration Statement (as defined in Section 7.3 below), and the answers to the
Questionnaires are true and correct as of the date of this Agreement and will be
true and correct as of the effective date of the Registration Statement;
provided that the Purchaser shall be entitled to update such information by
providing notice thereof to the Company before the effective date of such
Registration Statement.
(e) The Purchaser has, in connection with its decision to
purchase the number of Shares set forth in Section 2 above, relied solely upon
the Company Documents and the representations and warranties of the Company
contained in this Agreement.
(f) The Purchaser is an "accredited investor" within the meaning
of Rule 501 of Regulation D promulgated under the Securities Act.
5.2 RESALES OF SHARES
(a) The Purchaser hereby covenants with the Company not to make
any sale of the Shares without satisfying the requirements of the Securities Act
and the Rules and Regulations, including, in the event of any resale under the
Registration Statement, the prospectus delivery requirements under the
Securities Act, and the Purchaser acknowledges and agrees that such Shares are
not transferable on the books of the Company pursuant to a resale under the
Registration Statement unless the certificate submitted to the transfer agent
evidencing the Shares is accompanied by a separate officer's certificate:
(i) in the form of Appendix III to this Agreement;
(ii) executed by an officer of, or other authorized person
designated by, the Purchaser, and
(iii) to the effect that (A) the Shares have been sold in
accordance with the Registration Statement and (B) the
requirement of delivering a current prospectus has been
satisfied.
(b) The Purchaser acknowledges that there may occasionally be
times when the Company determines the use of the prospectus forming a part of
the Registration Statement (the "Prospectus," as further defined in Section
7.3.1 below) should be suspended until such time as an amendment or supplement
to the Registration Statement or the Prospectus has been filed by
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the Company and any such amendment to the Registration Statement is declared
effective by the Commission, or until such time as the Company has filed an
appropriate report with the Commission pursuant to the Exchange Act. The
Purchaser hereby covenants that it will not sell any Shares pursuant to the
Prospectus during the period commencing at the time at which the Company gives
the Purchaser written notice of the suspension of the use of the Prospectus and
ending at the time the Company gives the Purchaser written notice that the
Purchaser may thereafter effect sales pursuant to the Prospectus. The Company
may, upon written notice to the Purchaser, suspend the use of the Prospectus for
two 30-day periods in any 365-day period based on the reasonable determination
of the Company's Board of Directors that there is a significant business purpose
for such determination, such as pending corporate developments, public filings
with the SEC or similar events. The Company shall in no event be required to
disclose the business purpose for which it has suspended the use of the
Prospectus if the Company determines in its good faith judgment that the
business purpose should remain confidential.
(c) The Purchaser further covenants to notify the Company
promptly of the sale of any of its Shares.
5.3 DUE EXECUTION, DELIVERY AND PERFORMANCE
(a) This Agreement has been duly executed and delivered by the
Purchaser and constitutes a valid and binding obligation of the Purchaser,
enforceable against the Purchaser in accordance with its terms, except as rights
to indemnity and contribution under this Agreement may be limited by Federal or
state securities laws or the public policy underlying such laws.
(b) The execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated in this Agreement and the
fulfillment of the terms of this Agreement have been duly authorized by all
necessary corporate action and will not conflict with or constitute a breach of,
or default under, or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Purchaser pursuant to, any
contract, indenture, mortgage, loan agreement, deed, trust, note, lease,
sublease, voting agreement, voting trust or other instrument or agreement to
which the Purchaser is a party or by which it or any of them may be bound, or to
which any of the property or assets of the Purchaser is subject, nor will such
action result in any violation of the provisions of the charter or bylaws of the
Purchaser or any applicable statute, law, rule, regulation, ordinance, decision,
directive or order.
6. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
Notwithstanding any investigation made by any party to this Agreement,
all covenants, agreements, representations and warranties made by the Company
and the Purchaser in this Agreement and in the certificates for the Shares
delivered pursuant to this Agreement shall survive the execution of this
Agreement, the delivery to the Purchaser of the Shares being purchased and the
payment therefor.
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7. REGISTRATION; COMPLIANCE WITH THE SECURITIES ACT
7.1 REGISTRATION OF SHARES
7.1.1 REGISTRATION STATEMENT; EXPENSES
The Company shall use its best efforts to:
(a) Within five (5) business days after the Closing, prepare and
file with the Commission a Registration Statement on Form S-3 relating to the
sale of the Shares by the Purchaser from time to time on the Nasdaq National
Market (or the facilities of any national securities exchange on which the
Company's Common Stock is then traded) or in privately negotiated transactions
(the "Registration Statement");
(b) subject to receipt of necessary information from the
Purchaser, to cause the Commission to notify the Company of the Commission's
willingness to declare the Registration Statement effective within 90 days after
the Closing;
(c) prepare and file with the Commission such amendments and
supplements to the Registration Statement and the Prospectus (as defined in
Section 7.3.1 below) and take such other action, if any, as may be necessary to
keep the Registration Statement effective until the earlier of (i) two years
after the effective date of the Registration Statement, (ii) the date on which
the Shares may be resold by the Purchaser without registration or without regard
to any volume limitations by reason of Rule 144(k) under the Securities Act or
any other rule of similar effect or (iii) all of the Shares have been sold
pursuant to the Registration Statement or Rule 144(k) under the Securities Act
or any other rule of similar effect;
(d) furnish to the Purchaser with respect to the Shares
registered under the Registration Statement such reasonable number of copies of
the Prospectus, including any supplements to or amendments of the Prospectus, in
order to facilitate the public sale or other disposition of all or any of the
Shares by the Purchaser; provided, however, that the obligation of the Company
to deliver copies of the Prospectus to the Purchaser shall be subject to the
receipt by the Company of reasonable assurances from the Purchaser that the
Purchaser will comply with the applicable provisions of the Securities Act and
of such other securities or blue sky laws as may be applicable in connection
with any use of the Prospectus;
(e) during the period when copies of the Prospectus are required
to be delivered under the Securities Act or the Exchange Act, will file all
documents required to be filed with the Commission pursuant to Section 13, 14 or
15 of the Exchange Act within the time periods required by the Exchange Act and
the rules and regulations promulgated thereunder;
(f) file documents required of the Company for customary Blue Sky
clearance in states specified in writing by the Purchaser; provided, however,
that the Company shall not be required to qualify to do business or consent to
service of process in any jurisdiction in which it is not now so qualified or
has not so consented; and
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(g) bear all expenses in connection with the procedures in
paragraphs (a) through (f) of this Section 7.1.1 and the registration of the
Shares pursuant to the Registration Statement, other than any fees and expenses
of counsel or other advisers to the Purchaser, brokerage fees and commissions
incurred by the Purchaser.
The Purchaser acknowledges and agrees that the Registration Statement
filed under this Section, in addition to the Shares held by the Purchaser, shall
include Shares held by other purchasers in the Offering and, at the Company's
election, may include shares of Common Stock held by other Company shareholders
or issuable under any warrants, options or convertible securities.
7.1.2 DELAY IN EFFECTIVENESS OF REGISTRATION STATEMENT
In the event that the Registration Statement is not declared effective
within 90 days after the Closing, the Company shall pay to the Purchaser
liquidated damages in an amount equal to 0.25% of the number of Shares purchased
by the Purchaser pursuant to this Agreement for each week thereafter that the
Registration Statement is not declared effective. Such liquidated damages shall
be paid through the issuance of additional Shares at such time as the
Registration Statement is declared effective. No liquidated damages shall be
paid under this Agreement if effectiveness of the Registration Statement is
prevented or delayed due to fire, explosion, flood, riot, labor dispute,
accident, act of God, change in existing regulation or law, or other similar
event beyond the Company's reasonable control.
7.2 TRANSFER OF SHARES AFTER REGISTRATION
The Purchaser agrees that it will not effect any disposition of the
Shares or its right to purchase the Shares that would constitute a sale within
the meaning of the Securities Act, except as contemplated in the Registration
Statement referred to in Section 7.1 or as otherwise permitted by law, and that
it will promptly notify the Company of any changes in the information set forth
in the Registration Statement regarding the Purchaser or its plan of
distribution.
7.3 INDEMNIFICATION
For the purpose of this Section 7.3, the term "Registration Statement"
shall include any preliminary or final prospectus, exhibit, supplement or
amendment included in or relating to the Registration Statement referred to in
Section 7.1.
7.3.1 INDEMNIFICATION BY THE COMPANY
The Company agrees to indemnify and hold harmless the Purchaser and each
person, if any, who controls the Purchaser within the meaning of the Securities
Act, against any losses, claims, damages, liabilities or expenses, joint or
several, to which the Purchaser or such controlling person may become subject,
under the Securities Act, the Exchange Act, or any other federal or state
statutory law or regulation, or at common law or otherwise (including in
settlement of any litigation, if such settlement is effected with the written
consent of the Company, which consent shall not be unreasonably withheld),
insofar as such losses, claims, damages, liabilities or expenses (or actions in
respect thereof as contemplated below) arise out of
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or are based upon any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement, including the Prospectus,
financial statements and schedules, and all other documents filed as a part
thereof, as amended at the time of effectiveness of the Registration Statement,
including any information deemed to be a part thereof as of the time of
effectiveness pursuant to paragraph (b) of Rule 430A, or pursuant to Rule 434,
of the Rules and Regulations, or the Prospectus, in the form first filed with
the Commission pursuant to Rule 424(b) of the Regulations, or filed as part of
the Registration Statement at the time of effectiveness if no Rule 424(b) filing
is required (the "Prospectus"), or any amendment or supplement thereto, or arise
out of or are based upon the omission or alleged omission to state in any of
them a material fact required to be stated therein or necessary to make the
statements in any of them, in light of the circumstances under which they were
made, not misleading, or arise out of or are based in whole or in part on any
inaccuracy in the representations and warranties of the Company contained in
this Agreement, or any failure of the Company to perform its obligations under
this Agreement or under law, and will reimburse the Purchaser and each such
controlling person for any legal and other expenses as such expenses are
reasonably incurred by the Purchaser or such controlling person in connection
with investigating, defending, settling, compromising or paying any such loss,
claim, damage, liability, expense or action; provided, however, that the Company
will not be liable in any such case to the extent that any such loss, claim,
damage, liability or expense arises out of or is based upon (i) an untrue
statement or alleged untrue statement or omission or alleged omission made in
the Registration Statement, the Prospectus or any amendment or supplement of the
Registration Statement or Prospectus in reliance upon and in conformity with
written information furnished to the Company by or on behalf of the Purchaser
expressly for use in the Registration Statement or the Prospectus, or (ii) the
failure of the Purchaser to comply with the covenants and agreements contained
in Sections 5.2 or 7.2 of this Agreement respecting resale of the Shares, or
(iii) the inaccuracy of any representations made by the Purchaser in this
Agreement or (iv) any untrue statement or omission of a material fact required
to make such statement not misleading in any Prospectus that is corrected in any
subsequent Prospectus that was delivered to the Purchaser before the pertinent
sale or sales by the Purchaser.
7.3.2 INDEMNIFICATION BY THE PURCHASER
The Purchaser will indemnify and hold harmless the Company, each of its
directors, each of its officers who signed the Registration Statement and each
person, if any, who controls the Company within the meaning of the Securities
Act, against any losses, claims, damages, liabilities or expenses to which the
Company, each of its directors, each of its officers who signed the Registration
Statement or controlling person may become subject, under the Securities Act,
the Exchange Act, or any other federal or state statutory law or regulation, or
at common law or otherwise (including in settlement of any litigation, if such
settlement is effected with the written consent of the Purchaser, which consent
shall not be unreasonably withheld) insofar as such losses, claims, damages,
liabilities or expenses (or actions in respect thereof as contemplated below)
arise out of or are based upon (i) any failure to comply with the covenants and
agreements contained in Sections 5.2 or 7.2 of this Agreement respecting the
sale of the Shares or (ii) the inaccuracy of any representation made by the
Purchaser in this Agreement or (iii) any untrue or alleged untrue statement of
any material fact contained in the Registration Statement, the Prospectus, or
any amendment or supplement to the Registration Statement or
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Prospectus, or arise out of or are based upon the omission or alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, in each case to the extent, but only
to the extent, that such untrue statement or alleged untrue statement or
omission or alleged omission was made in the Registration Statement, the
Prospectus, or any amendment or supplement thereto, in reliance upon and in
conformity with written information furnished to the Company by or on behalf of
the Purchaser expressly for use therein, and the Purchaser will reimburse the
Company, each of its directors, each of its officers who signed the Registration
Statement or controlling person for any legal and other expense reasonably
incurred by the Company, each of its directors, each of its officers who signed
the Registration Statement or controlling person in connection with
investigating, defending, settling, compromising or paying any such loss, claim,
damage, liability, expense or action.
7.3.3 INDEMNIFICATION PROCEDURE
(a) Promptly after receipt by an indemnified party under this
Section 7.3 of notice of the threat or commencement of any action, such
indemnified party will, if a claim in respect thereof is to be made against an
indemnifying party under this Section 7.3, promptly notify the indemnifying
party in writing of the claim; but the omission so to notify the indemnifying
party will not relieve it from any liability which it may have to any
indemnified party for contribution or otherwise than under the indemnity
agreement contained in this Section 7.3 or to the extent it is not prejudiced as
a result of such failure.
(b) In case any such action is brought against any indemnified
party and such indemnified party seeks or intends to seek indemnity from an
indemnifying party, the indemnifying party will be entitled to participate in,
and, to the extent that it may wish, jointly with all other indemnifying parties
similarly notified, to assume the defense thereof with counsel reasonably
satisfactory to such indemnified party; provided, however, if the defendants in
any such action include both the indemnified party and the indemnifying party
and the indemnified party shall have reasonably concluded that there may be a
conflict between the positions of the indemnifying party and the indemnified
party in conducting the defense of any such action or that there may be legal
defenses available to it or other indemnified parties that are different from or
additional to those available to the indemnifying party, the indemnified party
or parties shall have the right to select separate counsel to assume such legal
defenses and to otherwise participate in the defense of such action on behalf of
such indemnified party or parties. Upon receipt of notice from the indemnifying
party to such indemnified party of its election so to assume the defense of such
action and approval by the indemnified party of counsel, the indemnifying party
will not be liable to such indemnified party under this Section 7.3 for any
legal or other expenses subsequently incurred by such indemnified party in
connection with the defense thereof unless:
(i) the indemnified party shall have employed such counsel in
connection with the assumption of legal defenses in
accordance with the proviso to the preceding sentence (it
being understood, however, that the indemnifying party
shall not be liable for the expenses of more than one
separate counsel, approved by such indemnifying party in
the case of
16
<PAGE> 17
paragraph (a), representing all of the indemnified parties
who are parties to such action) or
(ii) the indemnifying party shall not have employed counsel
reasonably satisfactory to the indemnified party to
represent the indemnified party within a reasonable time
after notice of commencement of action, in each of which
cases the reasonable fees and expenses of counsel shall be
at the expense of the indemnifying party.
7.3.4 CONTRIBUTION
If the indemnification provided for in this Section 7.3 is required by
its terms but is for any reason held to be unavailable to or otherwise
insufficient to hold harmless an indemnified party under this Section 7.3 in
respect to any losses, claims, damages, liabilities or expenses referred to in
this Agreement, then each applicable indemnifying party shall contribute to the
amount paid or payable by such indemnified party as a result of any losses,
claims, damages, liabilities or expenses referred to in this Agreement
(a) in such proportion as is appropriate to reflect the relative
benefits received by the Company and the Purchaser from the placement of Common
Stock or
(b) if the allocation provided by clause (a) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (a) above but the relative
fault of the Company and the Purchaser in connection with the statements or
omissions or inaccuracies in the representations and warranties in this
Agreement that resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations.
The respective relative benefits received by the Company on the one hand
and the Purchaser on the other shall be deemed to be in the same proportion as
the amount paid by the Purchaser to the Company pursuant to this Agreement for
the Shares purchased by the Purchaser that were sold pursuant to the
Registration Statement bears to the difference (the "Difference") between the
amount the Purchaser paid for the Shares that were sold pursuant to the
Registration Statement and the amount received by the Purchaser from such sale.
The relative fault of the Company and the Purchaser shall be determined by
reference to, among other things, whether the untrue or alleged statement of a
material fact or the omission or alleged omission to state a material fact or
the inaccurate or the alleged inaccurate representation or warranty relates to
information supplied by the Company or by the Purchaser and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The amount paid or payable by a party as a
result of the losses, claims, damages, liabilities and expenses referred to
above shall be deemed to include, subject to the limitations set forth in
Section 7.3.3, any legal or other fees or expenses reasonably incurred by such
party in connection with investigating or defending any action or claim. The
provisions set forth in Section 7.3.3 with respect to the notice of the threat
or commencement of any threat or action shall apply if a claim for contribution
is to be made under this Section 7.3.4; provided, however, that no additional
notice shall be required with respect to any threat or action for which notice
17
<PAGE> 18
has been given under Section 7.3 for purposes of indemnification. The Company
and the Purchaser agree that it would not be just and equitable if contribution
pursuant to this Section 7.3 were determined solely by pro rata allocation or by
any other method of allocation which does not take account of the equitable
considerations referred to in this paragraph. Notwithstanding the provisions of
this Section 7.3, the Purchaser shall not be required to contribute any amount
in excess of the amount by which the Difference exceeds the amount of any
damages that the Purchaser has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation.
7.4 TERMINATION OF CONDITIONS AND OBLIGATIONS
The restrictions imposed by Section 5 or this Section 7 upon the
transferability of the Shares shall cease and terminate as to any particular
number of the Shares upon the passage of two years from the effective date of
the Registration Statement covering the Shares or at such time as an opinion of
counsel satisfactory in form and substance to the Company shall have been
rendered to the effect that such conditions are not necessary in order to comply
with the Securities Act.
7.5 INFORMATION AVAILABLE
So long as the Registration Statement is effective covering the resale
of Shares owned by the Purchaser, the Company will furnish to the Purchaser:
(a) as soon as practicable after available (but in the case of
the Company's Annual Report to Shareholders, within 120 days after the end of
each fiscal year of the Company), one copy of
(i) its Annual Report to Shareholders (which Annual Report
shall contain financial statements audited in accordance
with generally accepted accounting principles by a
national firm of certified public accountants);
(ii) if not included in substance in the Annual Report to
Shareholders, its Annual Report on Form 10-K;
(iii) if not included in substance in its Quarterly Reports to
Shareholders, its quarterly reports on Form 10-Q; and
(iv) a full copy of the particular Registration Statement
covering the Shares (the foregoing, in each case,
excluding exhibits);
(b) upon the request of the Purchaser, a reasonable number of
copies of the Prospectus to supply to any other party requiring the Prospectus.
18
<PAGE> 19
7.6 RULE 144 INFORMATION
For two years after the date of this Agreement, the Company shall file
all reports required to be filed by it under the Securities Act, the Rules and
Regulations and the Exchange Act and shall take such further action to the
extent required to enable the Purchaser to sell the Shares pursuant to Rule 144
under the Securities Act (as such rule may be amended from time to time).
8. BROKER'S FEE
The Purchaser acknowledges that the Company intends to pay to Adams,
Harkness & Hill, Inc., the placement agent, a fee in respect of the sale of the
Shares to the Purchaser. Each of the parties to this Agreement hereby represents
that, on the basis of any actions and agreements by it, there are no other
brokers or finders entitled to compensation in connection with the sale of the
Shares to the Purchaser.
9. NOTICES
All notices, requests, consents and other communications under this
Agreement shall be in writing, shall be mailed by first-class registered or
certified airmail, confirmed facsimile or nationally recognized overnight
express courier postage prepaid, and shall be delivered as addressed as follows:
(a) if to the Company, to: NeoRx Corporation
410 West Harrison Street
Seattle, WA 98119
(206) 281-7001
Attn: Richard L. Anderson
with a copy to: Perkins Coie LLP
1201 Third Avenue, 48th Floor
Seattle, Washington 98101
Attention: Faith M. Wilson
or to such other person at such other place as the Company shall designate to
the Purchaser in writing; and
(b) if to the Purchaser, at its address as set forth on the
signature page to this Agreement, or at such other address or addresses as may
have been furnished to the Company in writing.
Such notice shall be deemed effectively given upon confirmation of
receipt by facsimile, one business day after deposit with such overnight courier
or three days after deposit of such registered or certified airmail with the
U.S. Postal Service, as applicable.
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<PAGE> 20
10. MODIFICATION; AMENDMENT
This Agreement may not be modified or amended except pursuant to an
instrument in writing signed by the Company and the Purchaser.
11. TERMINATION
This Agreement may be terminated as to the Purchaser, at the option of
the Purchaser, if the Closing has not occurred on or before thirty (30) days
from the date of this Agreement.
12. EXPENSES
Each party to this Agreement shall pay its own fees and expenses
incident to the negotiation, preparation and execution of this Agreement and
related documents (including legal and accounting fees and expenses).
13. HEADINGS
The headings of the various sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed to be part of
this Agreement.
14. SEVERABILITY
If any provision contained in this Agreement should be held to be
invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained in this Agreement shall not
in any way be affected or impaired thereby.
15. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with the
laws of the state of Washington and the federal law of the United States of
America.
16. COUNTERPARTS
This Agreement may be executed in two or more counterparts, each of
which shall constitute an original, but all of which, when taken together, shall
constitute but one instrument, and shall become effective when one or more
counterparts have been signed by each party to this Agreement and delivered to
the other parties.
[Signature page follows]
20
<PAGE> 21
IN WITNESS WHEREOF, the parties to this Agreement have caused this
Agreement to be executed by their duly authorized representatives as of the day
and year first above written.
NEORX CORPORATION
By
-------------------------------------
Name:
----------------------------------
Its:
-----------------------------------
PURCHASER:
----------------------------------------
By
-------------------------------------
Its:
-----------------------------------
Address:
--------------------------------
----------------------------------------
----------------------------------------
21
<PAGE> 22
EXHIBIT A
PURCHASER
PURCHASER NUMBER OF SHARES
<PAGE> 23
APPENDIX I
NEORX CORPORATION
STOCK CERTIFICATE QUESTIONNAIRE
Pursuant to Section 3 of the Agreement, please provide us with the
following information:
1. The exact name that your Shares are to be registered in (this is the
name that will appear on your stock certificate(s)). You may use a
nominee name if appropriate: ___________________________________
2. The relationship between the Purchaser of the Shares and the Registered
Holder listed in response to item 1 above:
__________________________________
3. The mailing address of the Registered Holder listed in response to item
1 above:
___________________________________
___________________________________
___________________________________
__________________________________
4. The Social Security Number or Tax Identification Number of the
Registered Holder listed in response to item 1 above:
___________________________________
<PAGE> 24
APPENDIX II
NEORX CORPORATION
REGISTRATION STATEMENT QUESTIONNAIRE
In connection with the preparation of the Registration Statement, please
provide us with the following information:
1. Pursuant to the "Selling Shareholder" section of the Registration
Statement, please state your or your organization's name exactly as it
should appear in the Registration Statement:
_______________________________________________________
2. Please provide the number of shares that you or your organization will
own immediately after Closing, including those Shares purchased by you
or your organization pursuant to this Purchase Agreement and those
shares purchased by you or your organization through other transactions:
_______________________________________________________
3. Have you or your organization had any position, office or other material
relationship within the last three years with the Company or its
affiliates? [ ] Yes [ ] No
If yes, please indicate the nature of any such relationships below:
_______________________________________________________
_______________________________________________________
_______________________________________________________
_______________________________________________________
<PAGE> 25
APPENDIX III
PURCHASER'S CERTIFICATE OF SUBSEQUENT SALE
The undersigned, [an officer of, or other person duly authorized by]
________________________________________________________________________________
[fill in official name of individual or institution]
hereby certifies that he/she/it is the Purchaser of the shares evidenced by the
attached certificate, and as such, sold such shares on [date] in accordance with
Registration Statement number ________________, and complied with the
requirement of delivering a current prospectus in connection with such sale.
Print or Type:
Name of Purchaser (Individual or Institution):
___________________________________________________________
Name of Individual representing Purchaser (if an Institution)
___________________________________________________________
Title of Individual representing Purchaser (if an Institution):
___________________________________________________________
Signature:
Individual Purchaser or Individual representing Purchaser:
___________________________________________________________
-2-
<PAGE> 26
EXHIBIT 4.1
NEORX CORPORATION
SHARE PURCHASE AGREEMENT
SHARE PURCHASE AGREEMENT, dated as of April __, 2000, between NeoRx
Corporation, a Washington corporation (the "Company"), and the purchaser listed
on Schedule A attached hereto (the "Purchaser").
1. AUTHORIZATION OF SALE OF THE SHARES
Subject to the terms and conditions of this Agreement, the Company has
authorized the issuance and sale of up to 4,000,000 shares (the "Shares") of
common stock, par value $0.02 per share (the "Common Stock"), of the Company
(the "Offering.").
2. AGREEMENT TO SELL AND PURCHASE THE SHARES
2.1 PURCHASE AND SALE
Subject to the terms and conditions of this Agreement, the Purchaser
agrees to purchase, and the Company agrees to sell and issue to the Purchaser,
at the Closing (as defined below), that number of Shares set forth opposite the
Purchaser's name on Schedule A attached hereto.
2.2 PURCHASE PRICE
The purchase price of each Share (the "Per Share Price") shall be
$11.00.
3. DELIVERY OF THE SHARES AT THE CLOSING
(a) The completion of the purchase and sale of the Shares (the
"Closing"), shall occur at the offices of Perkins Coie LLP, 1201 Third Avenue,
48th Floor, Seattle, Washington 98101, counsel to the Company, at 5:00 p.m. EST
on April __, 2000 or such other time and date as may be agreed by the parties.
(b) At the Closing, the Company shall authorize its transfer
agent (the "Transfer Agent") to issue to the Purchaser one or more stock
certificates registered in the name of the Purchaser, or in such nominee name(s)
as designated by the Purchaser in writing, representing the number of Shares set
forth in Section 2 above and bearing an appropriate legend referring to the fact
that the Shares were sold in reliance upon the exemption from registration
provided by Section 4(2) of the Securities Act of 1933, as amended (the
"Securities Act"), and Rule 506 under the Securities Act. The Company will
deliver certificates representing the number of Shares set forth in Section 2
against delivery of payment for the Shares by the Purchaser via wire transfer to
Bank of America account number 1113703, routing number 125000024.
(c) The Company's obligation to complete the purchase and sale of
the Shares shall be subject to the following conditions, any one or more of
which may be waived by the Company:
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<PAGE> 27
(i) receipt by the Company of same-day funds in the full
amount of the purchase price for the Shares being
purchased under this Agreement; and
(ii) the accuracy in all material respects of the
representations and warranties made by the Purchaser and
the fulfillment in all material respects of those
undertakings of the Purchaser to be fulfilled on or before
the Closing.
(d) The Purchaser's obligation to accept delivery of such stock
certificates and to pay for the Shares evidenced by the certificates shall be
subject to the following conditions, any one or more of which may be waived by
the Purchaser:
(i) the representations and warranties made by the Company in
this Agreement shall be accurate in all material respects
and the undertakings of the Company shall have been
fulfilled in all material respects on or before the
Closing;
(ii) the Company shall have delivered to the Purchaser a
certificate executed by the president and chief operating
officer or other executive officer of the Company, dated
the Closing date, in form and substance reasonably
satisfactory to the Purchaser, to the effect that the
representations and warranties of the Company set forth in
Section 4 hereof are true and correct in all material
respects as of the date of this Agreement and as of the
Closing Date, and that the Company has complied with all
the agreements and satisfied all the conditions in this
Agreement on its part to be performed or satisfied on or
before the Closing date; and
(iii) the Company shall have obtained aggregate gross proceeds
of at least $11 million from the Offering on the Closing
date.
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the Purchaser as follows:
4.1 ORGANIZATION AND QUALIFICATION
The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the state of Washington. The
Company has the corporate power and authority to own, lease and operate its
properties and to conduct its business as currently conducted and to enter into
and perform its obligations under this Agreement. The Company is duly qualified
as a foreign corporation to transact business and is in good standing in each
jurisdiction in which such qualification is required, whether by reason of the
ownership or leasing of property or the conduct of business, except where the
failure to so qualify would not, singly or in the aggregate, have a material
adverse effect on the condition, financial or otherwise, or the earnings,
assets, business affairs or business prospects of the Company.
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<PAGE> 28
4.2 CAPITALIZATION
(a) The authorized capital stock of the Company consists of
60,000,000 shares of Common Stock and 3,000,000 shares of Preferred Stock.
(b) As of March 31, 2000, the issued and outstanding capital
stock of the Company consists of 21,811,808 shares of Common Stock and the
shares of Series 1 convertible exchangeable preferred stock described in
subsection (f) below. The shares of issued and outstanding capital stock of the
Company have been duly authorized and validly issued, are fully paid and
nonassessable and have not been issued in violation of or are not otherwise
subject to any preemptive or other similar rights.
(c) The Company has reserved an aggregate of 4,250,000 shares of
Common Stock for issuance upon the exercise of stock options granted or
available for future grant under the Company's 1994 Stock Option Plan and its
1991 Stock Option Plan for Non-Employee Directors, of which options to purchase
an aggregate of 2,890,453 shares of Common Stock have been granted and are
outstanding and an aggregate of 572,184 shares were available for grant at March
31, 2000. The Company has proposed, subject to shareholder approval, to increase
the number of shares issuable under the 1994 Stock Option Plan by 500,000
shares.
(d) The Company has reserved 305,000 shares of Common Stock for
issuance upon the exercise of outstanding warrants to purchase Common Stock.
(e) The Company has reserved 250,000 shares of Common Stock for
issuance under its 1991 Restricted Stock Program, of which 194,000 remained
available for grant at March 31, 2000.
(f) 208,240 shares of Series 1 Convertible Preferred Stock of the
Company were convertible into 236,636 shares of the Common Stock as of March 31,
2000.
(g) The Company has $1,185,000 in principal of convertible
subordinated debentures outstanding, which will be retired in June 2000. The
debentures are convertible at the option of the holder into shares of Common
Stock at a conversion price of $25.80 per share, subject to adjustment under
certain conditions.
With the exception of the foregoing, there are no outstanding
subscriptions, options, warrants, convertible or exchangeable securities or
other rights granted to or by the Company to purchase shares of Common Stock or
other securities of the Company, and there are no commitments, plans or
arrangements to issue any shares of Common Stock or any security convertible
into or exchangeable for Common Stock.
4.3 ISSUANCE, SALE AND DELIVERY OF THE SHARES
(a) The Shares have been duly authorized for issuance and sale to
the Purchaser pursuant to this Agreement and, when issued and delivered by the
Company pursuant to this Agreement against payment of the consideration set
forth in this Agreement, will be validly issued and fully paid and nonassessable
and free and clear of all pledges, liens and
3
<PAGE> 29
encumbrances. The certificates evidencing the Shares are in due and proper form
under Washington law.
(b) The issuance of the Shares is not subject to preemptive or
other similar rights. No further approval or authority of the shareholders or
the Board of Directors of the Company will be required for the issuance and sale
of the Shares to be sold by the Company as contemplated in this Agreement.
Except for shareholders who purchase Shares in the Offering, no shareholder of
the Company has any right (other than any right that has been waived following
notification of the Company's intent to file the Registration Statement (as
hereinafter defined) or has expired by reason of lapse of time) to require the
Company to register the sale of any securities owned by such holder in such
Registration Statement.
(c) Subject to the accuracy of the Purchaser's representations
and warranties in Section 5 of this Agreement, the offer, sale, and issuance of
the Shares in conformity with the terms of this Agreement constitute
transactions exempt from the registration requirements of Section 5 of the
Securities Act and from the registration or qualification requirements of the
laws of any applicable state or United States jurisdiction.
4.4 FINANCIAL STATEMENTS
The financial statements included in the Company Documents (as
hereinafter defined) present fairly the financial position of the Company as of
the dates indicated and the results of their operations for the periods
specified. Except as otherwise stated in such Company Documents, such financial
statements have been prepared in conformity with generally accepted accounting
principles applied on a consistent basis, and any supporting schedules included
with the financial statements present fairly the information stated in the
financial statements. The financial and statistical data set forth in the
Company Documents were prepared on an accounting basis consistent with such
financial statements.
4.5 NO MATERIAL CHANGE
Since December 31, 1999,
(a) there has been no material adverse change or any development
involving a prospective material adverse change in or affecting the condition,
financial or otherwise, or in the earnings, assets, business affairs or business
prospects of the Company, whether or not arising in the ordinary course of
business;
(b) there have been no transactions entered into by the Company
other than those in the ordinary course of business, which are material with
respect to the Company; and
(c) there has been no dividend or distribution of any kind
declared, paid or made by the Company on any class of its capital stock, except
for the approval by the Board of Directors of the payment of the Series 1
Preferred Stock dividend of $1.21875 per share, payable on June 1, 2000 for
shareholders of record on May 19, 2000.
The Company has no material contingent obligations.
4
<PAGE> 30
4.6 ENVIRONMENTAL
Except as would not, singly or in the aggregate, reasonably be expected
to have a material adverse effect on the condition, financial or otherwise, or
the earnings, assets, business affairs or business prospects of the Company,
(a) the Company is in compliance with all applicable
Environmental Laws (as defined below);
(b) the Company has all permits, authorizations and approvals
required under any applicable Environmental Laws and is in compliance with the
requirements of such permits authorizations and approvals; and
(c) there are no pending or, to the best knowledge of the
Company, threatened Environmental Claims against the Company.
For purposes of this Agreement, the following terms shall have the
following meanings: "Environmental Law" means any United States (or other
applicable jurisdiction's) Federal, state, local or municipal statute, law,
rule, regulation, ordinance, code, policy or rule of common law and any judicial
or administrative interpretation thereof, including any judicial or
administrative order, consent decree or judgment, relating to the environment,
health, safety or any chemical, material or substance, exposure to which is
prohibited, limited or regulated by any governmental authority. "Environmental
Claims" means any administrative, regulatory or judicial actions, suits,
demands, demand letters, claims, liens, notices of noncompliance or violation,
investigations or proceedings relating to any Environmental Law.
4.7 NO DEFAULTS
The Company is not in violation of its articles of incorporation or
bylaws or in material default in the performance or observance of any
obligation, agreement, covenant or condition contained in any material contract,
indenture, mortgage, loan agreement, deed, trust, note, lease, sublease, voting
agreement, voting trust, or other instrument or agreement to which the Company
is a party or by which it may be bound, or to which any of the property or
assets of the Company is subject.
4.8 LABOR MATTERS
No labor dispute with the employees of the Company exists or, to the
best knowledge of the Company, is imminent.
4.9 NO ACTIONS
There is no action, suit or proceeding before or by any court or
governmental agency or body, domestic or foreign, now pending, or, to the
knowledge of the Company, threatened, against or affecting the Company which,
singly or in the aggregate, would result in any material adverse change in the
condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the Company, or which, singly or in the aggregate, would
materially and
5
<PAGE> 31
adversely affect the properties or assets thereof or which would materially and
adversely affect the consummation of this Agreement, nor, to the best knowledge
of the Company, is there any reasonable basis therefor. The Company is not in
default with respect to any judgment, order or decree of any court or
governmental agency or instrumentality which, singly or in the aggregate, would
have a material adverse effect on the assets, properties or business of the
Company.
4.10 INTELLECTUAL PROPERTY
(a) The Company, to the best of its knowledge, owns or is
licensed to use all patents, patent applications, inventions, trademarks, trade
names, applications for registration of trademarks, service marks, service mark
applications, copyrights, know-how, manufacturing processes, formulae, trade
secrets, licenses and rights in any thereof and any other intangible property
and assets (in this Agreement called the "Proprietary Rights") that are material
to the business of the Company as now conducted and as proposed to be conducted.
(b) The Company does not have any knowledge of, and the Company
has not given or received any notice of, any pending conflicts with or
infringement of the rights of others with respect to any Proprietary Rights or
with respect to any license of Proprietary Rights which are material to the
business of the Company.
(c) No action, suit, arbitration, or legal, administrative or
other proceeding, or investigation is pending, or, to the best knowledge of the
Company, threatened, which involves any Proprietary Rights, nor, to the best
knowledge of the Company, is there any reasonable basis therefor.
(d) The Company is not subject to any judgment, order, writ,
injunction or decree of any court or any Federal, state, local, foreign or other
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, or any arbitrator, and has not entered into or is not a
party to any contract which restricts or impairs the use of any such Proprietary
Rights in a manner which would have a material adverse effect on the use of any
of the Proprietary Rights.
(e) No Proprietary Rights used by the Company, and no services or
products sold by the Company, conflict with or infringe upon any proprietary
rights of any third party. The Company has not received written notice of any
pending conflict with or infringement upon such third-party proprietary rights.
(f) The Company has not entered into any consent,
indemnification, forbearance to sue or settlement agreement with respect to
Proprietary Rights other than in the ordinary course of business. No claims have
been asserted by any person with respect to the validity of the Company's
ownership or right to use the Proprietary Rights and, to the best knowledge of
the Company, there is no reasonable basis for any such claim to be successful.
(g) The Proprietary Rights that are material to the business of
the Company are valid and enforceable and no registration relating thereto has
lapsed, expired or been abandoned or cancelled or is the subject of cancellation
or other adversarial proceedings, and all applications therefor are pending and
are in good standing.
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<PAGE> 32
(h) To the best of its knowledge, the Company has complied, in
all material respects, with its obligations relating to the protection of the
Proprietary Rights which are material to the business of the Company used
pursuant to licenses.
(i) To the best knowledge of the Company, no person is infringing
on or violating the Proprietary Rights.
4.11 PERMITS
The Company possesses and is operating in compliance with all material
licenses, certificates, consents, authorities, approvals and permits from all
state, Federal, foreign and other regulatory agencies or bodies necessary to
conduct the businesses now operated by it, and the Company has not received any
notice of proceedings relating to the revocation or modification of any such
permit or any circumstance which would lead it to believe that such proceedings
are reasonably likely which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would materially and adversely affect
the condition, financial or otherwise, or the earnings, assets, business affairs
or business prospects of the Company.
4.12 DUE EXECUTION, DELIVERY AND PERFORMANCE
(a) This Agreement has been duly executed and delivered by the
Company and constitutes a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except as rights
to indemnity and contribution under this Agreement may be limited by Federal or
state securities laws or the public policy underlying such laws.
(b) The execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated in this Agreement and the
fulfillment of the terms of this Agreement have been duly authorized by all
necessary corporate action and will not conflict with or constitute a breach of,
or default under, or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company pursuant to, any
contract, indenture, mortgage, loan agreement, deed, trust, note, lease,
sublease, voting agreement, voting trust or other instrument or agreement to
which the Company is a party or by which it may be bound, or to which any of the
property or assets of the Company is subject, nor will such action result in any
violation of the provisions of the articles of incorporation or bylaws of the
Company or any applicable statute, law, rule, regulation, ordinance, decision,
directive or order.
4.13 PROPERTIES
The Company has good and marketable title to its properties, free and
clear of all material security interests, mortgages, pledges, liens, charges,
encumbrances and claims of record. The properties of the Company are, in the
aggregate, in good repair (reasonable wear and tear excepted), and suitable for
their respective uses. Any real property held under lease by the Company is held
under valid, subsisting and enforceable leases with such exceptions as are not
material and do not interfere with the conduct of the business of the Company.
The Company owns or leases all such properties as are necessary to its business
or operations as now conducted.
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<PAGE> 33
4.14 COMPLIANCE
The Company has conducted and is conducting its business in compliance
with all applicable Federal, state, local and foreign statutes, laws, rules,
regulations, ordinances, codes, decisions, decrees, directives and orders,
except where the failure to do so would not, singly or in the aggregate, have a
material adverse effect on the condition, financial or otherwise, or on the
earnings, assets, business affairs or business prospects of the Company.
4.15 SECURITY MEASURES
The Company takes security measures designed to enable the Company to
assert trade secret protection in its non-patented technology.
4.16 CONTRIBUTIONS
To the best of the Company's knowledge, neither the Company nor any
employee or agent of the Company has made any payment of funds of the Company or
received or retained any funds in violation of any law, rule or regulation.
4.17 USE OF PROCEEDS; INVESTMENT COMPANY
The Company intends to use the net proceeds from the sale of the Shares
for research and development, pre-launch activities, general corporate purposes
and working capital. The Company is not now, and after the sale of the Shares
under this Agreement and under all other agreements and the application of the
net proceeds from the sale of the Shares described in the preceding sentence
will not be, an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
4.18 PRIOR OFFERINGS
All offers and sales of capital stock of the Company before the date of
this Agreement were at all relevant times duly registered or exempt from the
registration requirements of the Securities Act and were duly registered or
subject to an available exemption from the registration requirements of the
applicable state securities or Blue Sky laws.
4.19 TAXES
The Company has filed all material tax returns required to be filed,
which returns are true and correct in all material respects, and the Company is
not in default in the payment of any taxes, including penalties and interest,
assessments, fees and other charges, shown thereon due or otherwise assessed,
other than those being contested in good faith and for which adequate reserves
have been provided or those currently payable without interest which were
payable pursuant to said returns or any assessments with respect thereto.
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4.20 OTHER GOVERNMENTAL PROCEEDINGS
To the Company's knowledge, there are no rulemaking or similar
proceedings before The United States Food and Drug Administration or comparable
Federal, state, local or foreign government bodies that involve or affect the
Company, which, if the subject of an action unfavorable to the Company, would
reasonably be expected to materially and adversely affect the condition,
financial or otherwise, or the earnings, assets, business affairs or business
prospects of the Company.
4.21 NON-COMPETITION AGREEMENTS
To the knowledge of the Company, any full-time employee who has entered
into any non-competition, non-disclosure, confidentiality or other similar
agreement with any party other than the Company is neither in violation of nor
is expected to be in violation of that agreement as a result of the business
currently conducted or expected to be conducted by the Company or such person's
performance of his or her obligations to the Company. The Company has not
received written notice that any consultant or scientific advisor of the Company
is in violation of any non-competition, non-disclosure, confidentiality or
similar agreement.
4.22 TRANSFER TAXES
On the Closing date, all stock transfer or other taxes (other than
income taxes) that are required to be paid in connection with the sale and
transfer of the Shares to be sold to the Purchaser under this Agreement will be,
or will have been, fully paid or provided for by the Company and all laws
imposing such taxes will be or will have been fully complied with.
4.23 INSURANCE
The Company maintains insurance of the type and in the amount that the
Company reasonably believes is adequate for its business, including, but not
limited to, insurance covering all real and personal property owned or leased by
the Company against theft, damage, destruction, acts of vandalism and all other
risks customarily insured against by similarly situated companies, all of which
insurance is in full force and effect.
4.24 GOVERNMENTAL CONSENTS
No registration, authorization, approval, qualification or consent of
any court or governmental authority or agency is necessary in connection with
the execution and delivery of this Agreement or the offering, issuance or sale
of the Shares under this Agreement, except such as may be required under the
Securities Act or the rules and regulations promulgated thereunder or state
securities or Blue Sky laws, or such as may be required by the National
Association of Securities Dealers, Inc.
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4.25 SECURITIES AND EXCHANGE COMMISSION FILINGS
The Company has timely filed with the Securities and Exchange Commission
(the "Commission") all documents required to be filed by the Company under the
Exchange Act of 1934, as amended (the "Exchange Act.")
4.26 ADDITIONAL INFORMATION
The Company represents and warrants that the information contained in
the following documents (the "Company Documents"), which will be provided to
Purchaser before the Closing, is or will be true and correct in all material
respects as of their respective final dates:
(a) the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1999;
(b) the Company's Quarterly Reports on Form 10-Q for the fiscal
quarters ended March 31, 1999, June 30, 1999 and September 30, 1999;
(c) the Company's Proxy Statement for its 1999 Annual Meeting of
Shareholders; and
(d) all other documents, if any, filed by the Company with the
Commission since January 1, 1999 pursuant to the reporting requirements of the
Exchange Act.
4.27 CONTRACTS
The contracts described in the Company Documents or incorporated by
reference therein are in full force and effect on the date hereof, except for
contracts the termination or expiration of which would not, singly or in the
aggregate, have a material adverse effect on the business, properties or assets
of the Company. Neither the Company nor, to the best knowledge of the Company,
any other party is in breach of or default under any such contracts.
5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASER
5.1 SECURITIES LAW REPRESENTATIONS AND WARRANTIES
The Purchaser represents, warrants and covenants to the Company as
follows:
(a) The Purchaser is knowledgeable, sophisticated and experienced
in making, and is qualified to make, decisions with respect to investments in
shares representing an investment decision like that involved in the purchase of
the Shares, including investments in securities issued by the Company, and has
requested, received, reviewed and considered all information it deems relevant
in making an informed decision to purchase the Shares.
(b) The Purchaser is acquiring the number of Shares set forth in
Section 2 above in the ordinary course of its business and for its own account
for investment (as defined for purposes of the Hart-Scott-Rodino Antitrust
Improvement Act of 1976 and the regulations thereunder) only, and has no present
intention of distributing any of the Shares nor any
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<PAGE> 36
arrangement or understanding with any other persons regarding the distribution
of such Shares within the meaning of Section 2(11) of the Securities Act, other
than as contemplated in Section 7 of this Agreement.
(c) The Purchaser will not, directly or indirectly, offer, sell,
pledge, transfer or otherwise dispose of (or solicit any offers to buy, purchase
or otherwise acquire or take a pledge of) any of the Shares except in compliance
with the Securities Act and the Rules and Regulations.
(d) The Purchaser has completed or caused to be completed the
Stock Certificate Questionnaire and the Registration Statement Questionnaire,
attached to this Agreement as Appendices I and II, for use in preparation of the
Registration Statement (as defined in Section 7.3 below), and the answers to the
Questionnaires are true and correct as of the date of this Agreement and will be
true and correct as of the effective date of the Registration Statement;
provided that the Purchaser shall be entitled to update such information by
providing notice thereof to the Company before the effective date of such
Registration Statement.
(e) The Purchaser has, in connection with its decision to
purchase the number of Shares set forth in Section 2 above, relied solely upon
the Company Documents and the representations and warranties of the Company
contained in this Agreement.
(f) The Purchaser is an "accredited investor" within the meaning
of Rule 501 of Regulation D promulgated under the Securities Act.
5.2 RESALES OF SHARES
(a) The Purchaser hereby covenants with the Company not to make
any sale of the Shares without satisfying the requirements of the Securities Act
and the Rules and Regulations, including, in the event of any resale under the
Registration Statement, the prospectus delivery requirements under the
Securities Act, and the Purchaser acknowledges and agrees that such Shares are
not transferable on the books of the Company pursuant to a resale under the
Registration Statement unless the certificate submitted to the transfer agent
evidencing the Shares is accompanied by a separate officer's certificate:
(i) in the form of Appendix III to this Agreement;
(ii) executed by an officer of, or other authorized person
designated by, the Purchaser, and
(iii) to the effect that (A) the Shares have been sold in
accordance with the Registration Statement and (B) the
requirement of delivering a current prospectus has been
satisfied.
(b) The Purchaser acknowledges that there may occasionally be
times when the Company determines the use of the prospectus forming a part of
the Registration Statement (the "Prospectus," as further defined in Section
7.3.1 below) should be suspended until such time as an amendment or supplement
to the Registration Statement or the Prospectus has been filed by
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the Company and any such amendment to the Registration Statement is declared
effective by the Commission, or until such time as the Company has filed an
appropriate report with the Commission pursuant to the Exchange Act. The
Purchaser hereby covenants that it will not sell any Shares pursuant to the
Prospectus during the period commencing at the time at which the Company gives
the Purchaser written notice of the suspension of the use of the Prospectus and
ending at the time the Company gives the Purchaser written notice that the
Purchaser may thereafter effect sales pursuant to the Prospectus. The Company
may, upon written notice to the Purchaser, suspend the use of the Prospectus for
two 30-day periods in any 365-day period based on the reasonable determination
of the Company's Board of Directors that there is a significant business purpose
for such determination, such as pending corporate developments, public filings
with the SEC or similar events. The Company shall in no event be required to
disclose the business purpose for which it has suspended the use of the
Prospectus if the Company determines in its good faith judgment that the
business purpose should remain confidential.
5.3 DUE EXECUTION, DELIVERY AND PERFORMANCE
(a) This Agreement has been duly executed and delivered by the
Purchaser and constitutes a valid and binding obligation of the Purchaser,
enforceable against the Purchaser in accordance with its terms, except as rights
to indemnity and contribution under this Agreement may be limited by Federal or
state securities laws or the public policy underlying such laws.
(b) The execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated in this Agreement and the
fulfillment of the terms of this Agreement have been duly authorized by all
necessary corporate action and will not conflict with or constitute a breach of,
or default under, or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Purchaser pursuant to, any
contract, indenture, mortgage, loan agreement, deed, trust, note, lease,
sublease, voting agreement, voting trust or other instrument or agreement to
which the Purchaser is a party or by which it or any of them may be bound, or to
which any of the property or assets of the Purchaser is subject, nor will such
action result in any violation of the provisions of the charter or bylaws of the
Purchaser or any applicable statute, law, rule, regulation, ordinance, decision,
directive or order.
6. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
Notwithstanding any investigation made by any party to this Agreement,
all covenants, agreements, representations and warranties made by the Company
and the Purchaser in this Agreement and in the certificates for the Shares
delivered pursuant to this Agreement shall survive for a period of two years
following the execution of this Agreement, the delivery to the Purchaser of the
Shares being purchased and the payment therefor.
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7. REGISTRATION; COMPLIANCE WITH THE SECURITIES ACT
7.1 REGISTRATION OF SHARES
7.1.1 REGISTRATION STATEMENT; EXPENSES
The Company shall use its best efforts to:
(a) Within five (5) business days after the Closing, prepare and
file with the Commission a Registration Statement on Form S-3 relating to the
sale of the Shares by the Purchaser from time to time on the Nasdaq National
Market (or the facilities of any national securities exchange on which the
Company's Common Stock is then traded) or in privately negotiated transactions
(the "Registration Statement");
(b) subject to receipt of necessary information from the
Purchaser, to cause the Commission to notify the Company of the Commission's
willingness to declare the Registration Statement effective within 90 days after
the Closing, immediately notify the Purchaser of such effectiveness, and furnish
to the Purchaser one copy of the current prospectus within five business days of
effectiveness of the Registration Statement;
(c) prepare and file with the Commission such amendments and
supplements to the Registration Statement and the Prospectus (as defined in
Section 7.3.1 below) and take such other action, if any, as may be necessary to
keep the Registration Statement effective until the earlier of (i) two years
after the effective date of the Registration Statement, (ii) the date on which
the Shares may be resold by the Purchaser without registration or without regard
to any volume limitations by reason of Rule 144(k) under the Securities Act or
any other rule of similar effect or (iii) all of the Shares have been sold
pursuant to the Registration Statement or Rule 144(k) under the Securities Act
or any other rule of similar effect;
(d) furnish to the Purchaser with respect to the Shares
registered under the Registration Statement such reasonable number of copies of
the Prospectus, including any supplements to or amendments of the Prospectus, in
order to facilitate the public sale or other disposition of all or any of the
Shares by the Purchaser;
(e) during the period when copies of the Prospectus are required
to be delivered under the Securities Act or the Exchange Act, will file all
documents required to be filed with the Commission pursuant to Section 13, 14 or
15 of the Exchange Act within the time periods required by the Exchange Act and
the rules and regulations promulgated thereunder;
(f) file documents required of the Company for customary Blue Sky
clearance in states specified in writing by the Purchaser; provided, however,
that the Company shall not be required to qualify to do business or consent to
service of process in any jurisdiction in which it is not now so qualified or
has not so consented; and
(g) bear all expenses in connection with the procedures in
paragraphs (a) through (f) of this Section 7.1.1 and the registration of the
Shares pursuant to the Registration
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<PAGE> 39
Statement, other than any fees and expenses of counsel or other advisers to the
Purchaser, brokerage fees and commissions incurred by the Purchaser.
The Purchaser acknowledges and agrees that the Registration Statement
filed under this Section, in addition to the Shares held by the Purchaser, shall
include Shares held by other purchasers in the Offering and, at the Company's
election, may include shares of Common Stock held by other Company shareholders
or issuable under any warrants, options or convertible securities.
7.1.2 DELAY IN EFFECTIVENESS OF REGISTRATION STATEMENT
In the event that the Registration Statement is not declared effective
within 90 days after the Closing, the Company shall pay to the Purchaser
liquidated damages in an amount equal to 0.25% of the number of Shares purchased
by the Purchaser pursuant to this Agreement for each week thereafter that the
Registration Statement is not declared effective. Such liquidated damages shall
be paid through the issuance of additional Shares at such time as the
Registration Statement is declared effective. No liquidated damages shall be
paid under this Agreement if effectiveness of the Registration Statement is
prevented or delayed due to fire, explosion, flood, riot, labor dispute,
accident, act of God, change in existing regulation or law, or other similar
event beyond the Company's reasonable control.
7.2 TRANSFER OF SHARES AFTER REGISTRATION
The Purchaser agrees that it will not effect any disposition of the
Shares or its right to purchase the Shares that would constitute a sale within
the meaning of the Securities Act, except as contemplated in the Registration
Statement referred to in Section 7.1 or as otherwise permitted by law, and that
it will promptly notify the Company of any changes in the information set forth
in the Registration Statement regarding the Purchaser or its plan of
distribution.
7.3 INDEMNIFICATION
For the purpose of this Section 7.3, the term "Registration Statement"
shall include any preliminary or final prospectus, exhibit, supplement or
amendment included in or relating to the Registration Statement referred to in
Section 7.1.
7.3.1 INDEMNIFICATION BY THE COMPANY
The Company agrees to indemnify and hold harmless the Purchaser and each
person, if any, who controls the Purchaser within the meaning of the Securities
Act, against any losses, claims, damages, liabilities or expenses, joint or
several, to which the Purchaser or such controlling person may become subject,
under the Securities Act, the Exchange Act, or any other federal or state
statutory law or regulation, or at common law or otherwise (including in
settlement of any litigation, if such settlement is effected with the written
consent of the Company, which consent shall not be unreasonably withheld),
insofar as such losses, claims, damages, liabilities or expenses (or actions in
respect thereof as contemplated below) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in the
Registration Statement, including the Prospectus, financial statements and
schedules, and
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<PAGE> 40
all other documents filed as a part thereof, as amended at the time of
effectiveness of the Registration Statement, including any information deemed to
be a part thereof as of the time of effectiveness pursuant to paragraph (b) of
Rule 430A, or pursuant to Rule 434, of the Rules and Regulations, or the
Prospectus, in the form first filed with the Commission pursuant to Rule 424(b)
of the Regulations, or filed as part of the Registration Statement at the time
of effectiveness if no Rule 424(b) filing is required (the "Prospectus"), or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state in any of them a material fact required to be
stated therein or necessary to make the statements in any of them, in light of
the circumstances under which they were made, not misleading, or arise out of or
are based in whole or in part on any inaccuracy in the representations and
warranties of the Company contained in this Agreement, or any failure of the
Company to perform its obligations under this Agreement or under law, and will
reimburse the Purchaser and each such controlling person for any legal and other
expenses as such expenses are reasonably incurred by the Purchaser or such
controlling person in connection with investigating, defending, settling,
compromising or paying any such loss, claim, damage, liability, expense or
action; provided, however, that the Company will not be liable in any such case
to the extent that any such loss, claim, damage, liability or expense arises out
of or is based upon (i) an untrue statement or alleged untrue statement or
omission or alleged omission made in the Registration Statement, the Prospectus
or any amendment or supplement of the Registration Statement or Prospectus in
reliance upon and in conformity with written information furnished to the
Company by or on behalf of the Purchaser expressly for use in the Registration
Statement or the Prospectus, or (ii) any untrue statement or omission of a
material fact required to make such statement not misleading in any Prospectus
that is corrected in any subsequent Prospectus that was delivered to the
Purchaser before the pertinent sale or sales by the Purchaser.
7.3.2 INDEMNIFICATION BY THE PURCHASER
The Purchaser will indemnify and hold harmless the Company, each of its
directors, each of its officers who signed the Registration Statement and each
person, if any, who controls the Company within the meaning of the Securities
Act, against any losses, claims, damages, liabilities or expenses to which the
Company, each of its directors, each of its officers who signed the Registration
Statement or controlling person may become subject, under the Securities Act,
the Exchange Act, or any other federal or state statutory law or regulation, or
at common law or otherwise (including in settlement of any litigation, if such
settlement is effected with the written consent of the Purchaser, which consent
shall not be unreasonably withheld) insofar as such losses, claims, damages,
liabilities or expenses (or actions in respect thereof as contemplated below)
arise out of or are based upon any untrue or alleged untrue statement of any
material fact contained in the Registration Statement, the Prospectus, or any
amendment or supplement to the Registration Statement or Prospectus, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, in each case to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or alleged
omission was made in the Registration Statement, the Prospectus, or any
amendment or supplement thereto, in reliance upon and in conformity with written
information furnished to the Company by or on behalf of the Purchaser expressly
for use therein, and the Purchaser will reimburse the Company, each of its
directors, each of its officers who signed the Registration Statement or
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<PAGE> 41
controlling person for any legal and other expense reasonably incurred by the
Company, each of its directors, each of its officers who signed the Registration
Statement or controlling person in connection with investigating, defending,
settling, compromising or paying any such loss, claim, damage, liability,
expense or action. Notwithstanding the foregoing, the Purchaser shall not be
liable for any indemnification obligation hereunder in excess of the net
proceeds received by such Purchaser in respect of the Shares.
7.3.3 INDEMNIFICATION PROCEDURE
(a) Promptly after receipt by an indemnified party under this
Section 7.3 of notice of the threat or commencement of any action, such
indemnified party will, if a claim in respect thereof is to be made against an
indemnifying party under this Section 7.3, promptly notify the indemnifying
party in writing of the claim; but the omission so to notify the indemnifying
party will not relieve it from any liability which it may have to any
indemnified party for contribution or otherwise than under the indemnity
agreement contained in this Section 7.3 or to the extent it is not prejudiced as
a result of such failure.
(b) In case any such action is brought against any indemnified
party and such indemnified party seeks or intends to seek indemnity from an
indemnifying party, the indemnifying party will be entitled to participate in,
and, to the extent that it may wish, jointly with all other indemnifying parties
similarly notified, to assume the defense thereof with counsel reasonably
satisfactory to such indemnified party; provided, however, if the defendants in
any such action include both the indemnified party and the indemnifying party
and the indemnified party shall have reasonably concluded that there may be a
conflict between the positions of the indemnifying party and the indemnified
party in conducting the defense of any such action or that there may be legal
defenses available to it or other indemnified parties that are different from or
additional to those available to the indemnifying party, the indemnified party
or parties shall have the right to select separate counsel to assume such legal
defenses and to otherwise participate in the defense of such action on behalf of
such indemnified party or parties. Upon receipt of notice from the indemnifying
party to such indemnified party of its election so to assume the defense of such
action and approval by the indemnified party of counsel, the indemnifying party
will not be liable to such indemnified party under this Section 7.3 for any
legal or other expenses subsequently incurred by such indemnified party in
connection with the defense thereof unless:
(i) the indemnified party shall have employed such counsel in
connection with the assumption of legal defenses in
accordance with the proviso to the preceding sentence (it
being understood, however, that the indemnifying party
shall not be liable for the expenses of more than one
separate counsel, approved by such indemnifying party in
the case of paragraph (a), representing all of the
indemnified parties who are parties to such action) or
(ii) the indemnifying party shall not have employed counsel
reasonably satisfactory to the indemnified party to
represent the indemnified party within a reasonable time
after notice of commencement of action, in each
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of which cases the reasonable fees and expenses of counsel
shall be at the expense of the indemnifying party.
7.3.4 CONTRIBUTION
If the indemnification provided for in this Section 7.3 is
required by its terms but is for any reason held by a court of competent
jurisdiction to be unavailable to hold harmless an indemnified party under this
Section 7.3 in respect to any losses, claims, damages, liabilities or expenses
referred to in this Agreement, then each applicable indemnifying party shall
contribute to the amount paid or payable by such indemnified party as a result
of any losses, claims, damages, liabilities or expenses referred to in this
Agreement in such proportion as is appropriate to reflect the relative fault of
the Company and the Purchaser in connection with the statements or omissions or
inaccuracies in the representations and warranties in this Agreement that
resulted in such losses, claims, damages, liabilities or expenses, as well as
any other relevant equitable considerations.
The relative fault of the Company and the Purchaser shall be determined
by reference to, among other things, whether the untrue or alleged statement of
a material fact or the omission or alleged omission to state a material fact or
the inaccurate or the alleged inaccurate representation or warranty relates to
information supplied by the Company or by the Purchaser and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The amount paid or payable by a party as a
result of the losses, claims, damages, liabilities and expenses referred to
above shall be deemed to include, subject to the limitations set forth in
Section 7.3.3, any legal or other fees or expenses reasonably incurred by such
party in connection with investigating or defending any action or claim. The
provisions set forth in Section 7.3.3 with respect to the notice of the threat
or commencement of any threat or action shall apply if a claim for contribution
is to be made under this Section 7.3.4; provided, however, that no additional
notice shall be required with respect to any threat or action for which notice
has been given under Section 7.3 for purposes of indemnification. The Company
and the Purchaser agree that it would not be just and equitable if contribution
pursuant to this Section 7.3 were determined solely by pro rata allocation or by
any other method of allocation which does not take account of the equitable
considerations referred to in this paragraph. Notwithstanding the provisions of
this Section 7.3, the Purchaser shall not be required to contribute any amount
in excess of the net proceeds received by the Purchaser in respect of the
Shares.. No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
7.4 TERMINATION OF CONDITIONS AND OBLIGATIONS
The restrictions imposed by Section 5 or this Section 7 upon the
transferability of the Shares shall cease and terminate as to any particular
number of the Shares upon the passage of two years from the effective date of
the Registration Statement covering the Shares or at such time as an opinion of
counsel satisfactory in form and substance to the Company shall have been
rendered to the effect that such conditions are not necessary in order to comply
with the Securities Act.
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7.5 INFORMATION AVAILABLE
So long as the Registration Statement is effective covering the resale
of Shares owned by the Purchaser, the Company will furnish to the Purchaser:
(a) as soon as practicable after available (but in the case of
the Company's Annual Report to Shareholders, within 120 days after the end of
each fiscal year of the Company), one copy of
(i) its Annual Report to Shareholders (which Annual Report
shall contain financial statements audited in accordance
with generally accepted accounting principles by a
national firm of certified public accountants);
(ii) if not included in substance in the Annual Report to
Shareholders, its Annual Report on Form 10-K;
(iii) if not included in substance in its Quarterly Reports to
Shareholders, its quarterly reports on Form 10-Q; and
(iv) a full copy of the particular Registration Statement
covering the Shares (the foregoing, in each case,
excluding exhibits);
(b) upon the request of the Purchaser, a reasonable number of
copies of the Prospectus to supply to any other party requiring the Prospectus.
7.6 RULE 144 INFORMATION
For two years after the date of this Agreement, the Company shall file
all reports required to be filed by it under the Securities Act, the Rules and
Regulations and the Exchange Act and shall take such further action to the
extent required to enable the Purchaser to sell the Shares pursuant to Rule 144
under the Securities Act (as such rule may be amended from time to time).
8. BROKER'S FEE
The Purchaser acknowledges that the Company intends to pay to Adams,
Harkness & Hill, Inc., the placement agent, a fee in respect of the sale of the
Shares to the Purchaser. Each of the parties to this Agreement hereby represents
that, on the basis of any actions and agreements by it, there are no other
brokers or finders entitled to compensation in connection with the sale of the
Shares to the Purchaser.
9. NOTICES
All notices, requests, consents and other communications under this
Agreement shall be in writing, shall be mailed by first-class registered or
certified airmail, facsimile (with telephonic confirmation) or nationally
recognized overnight express courier postage prepaid, and shall be delivered as
addressed as follows:
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NeoRx Corporation
410 West Harrison Street
(a) if to the Company, to: Seattle, WA 98119
(206) 281-7001
Attn: Richard L. Anderson
with a copy to: Perkins Coie LLP
1201 Third Avenue, 48th Floor
Seattle, Washington 98101
Attention: Faith M. Wilson
or to such other person at such other place as the Company shall designate to
the Purchaser in writing; and
(b) if to the Purchaser, at its address as set forth on the
signature page to this Agreement, or at such other address or addresses as may
have been furnished to the Company in writing.
Such notice shall be deemed effectively given upon confirmation of
receipt of confirmation by facsimile, one business day after deposit with such
overnight courier or three days after deposit of such registered or certified
airmail with the U.S. Postal Service, as applicable.
10. MODIFICATION; AMENDMENT
This Agreement may not be modified or amended except pursuant to an
instrument in writing signed by the Company and the Purchaser.
11. TERMINATION
This Agreement may be terminated as to the Purchaser, at the option of
the Purchaser, if the Closing has not occurred on or before thirty (30) days
from the date of this Agreement.
12. EXPENSES
Each party to this Agreement shall pay its own fees and expenses
incident to the negotiation, preparation and execution of this Agreement and
related documents (including legal and accounting fees and expenses).
13. HEADINGS
The headings of the various sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed to be part of
this Agreement.
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14. SEVERABILITY
If any provision contained in this Agreement should be held to be
invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained in this Agreement shall not
in any way be affected or impaired thereby.
15. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with the
laws of the state of Washington and the federal law of the United States of
America.
16. COUNTERPARTS
This Agreement may be executed in two or more counterparts, each of
which shall constitute an original, but all of which, when taken together, shall
constitute but one instrument, and shall become effective when one or more
counterparts have been signed by each party to this Agreement and delivered to
the other parties.
[Signature page follows]
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IN WITNESS WHEREOF, the parties to this Agreement have caused this
Agreement to be executed by their duly authorized representatives as of the day
and year first above written.
NEORX CORPORATION
By
-------------------------------------
Name:
----------------------------------
Its:
-----------------------------------
PURCHASER:
----------------------------------------
By
-------------------------------------
Its:
-----------------------------------
Address:
--------------------------------
----------------------------------------
----------------------------------------
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EXHIBIT A
PURCHASER
PURCHASER NUMBER OF SHARES
<PAGE> 48
APPENDIX I
NEORX CORPORATION
STOCK CERTIFICATE QUESTIONNAIRE
Pursuant to Section 3 of the Agreement, please provide us with the
following information:
1. The exact name that your Shares are to be registered in (this is the
name that will appear on your stock certificate(s)). You may use a
nominee name if appropriate: __________________________________
2. The relationship between the Purchaser of the Shares and the Registered
Holder listed in response to item 1 above:
__________________________________
3. The mailing address of the Registered Holder listed in response to item
1 above:
___________________________________
___________________________________
___________________________________
___________________________________
4. The Social Security Number or Tax Identification Number of the
Registered Holder listed in response to item 1 above:
___________________________________
<PAGE> 49
APPENDIX II
NEORX CORPORATION
REGISTRATION STATEMENT QUESTIONNAIRE
In connection with the preparation of the Registration Statement, please
provide us with the following information:
1. Pursuant to the "Selling Shareholder" section of the Registration
Statement, please state your or your organization's name exactly as it
should appear in the Registration Statement:
_____________________________________________
2. Please provide the number of shares that you or your organization will
own immediately after Closing, including those Shares purchased by you
or your organization pursuant to this Purchase Agreement and those
shares purchased by you or your organization through other transactions:
_____________________________________________
3. Have you or your organization had any position, office or other material
relationship within the last three years with the Company or its
affiliates? [ ] Yes [ ] No
If yes, please indicate the nature of any such relationships below:
_________________________________________________________
_________________________________________________________
_________________________________________________________
_________________________________________________________
<PAGE> 50
APPENDIX III
PURCHASER'S CERTIFICATE OF SUBSEQUENT SALE
The undersigned, [an officer of, or other person duly authorized by]
________________________________________________________________________________
[fill in official name of individual or institution]
hereby certifies that he/she/it is the Purchaser of the shares evidenced by the
attached certificate, and as such, sold such shares on [date] in accordance with
Registration Statement number ________________, and complied with the
requirement of delivering a current prospectus in connection with such sale.
Print or Type:
Name of Purchaser (Individual or Institution):
___________________________________________________________
Name of Individual representing Purchaser (if an Institution)
___________________________________________________________
Title of Individual representing Purchaser (if an Institution):
___________________________________________________________
Signature:
Individual Purchaser or Individual representing Purchaser:
___________________________________________________________
-2-
<PAGE> 1
Exhibit 5.1
April 20, 2000
NeoRx Corporation
410 West Harrison Street
Seattle, Washington 98119-4007
(206) 281-7001
RE: REGISTRATION STATEMENT ON FORM S-3
Ladies and Gentlemen:
We have acted as counsel to you in connection with the preparation of a
Registration Statement on Form S-3 (the "Registration Statement") under the
Securities Act of 1933, as amended (the "Act"), which you are filing with the
Securities and Exchange Commission for the resale of up to 1,727,045 shares of
common stock of NeoRx Corporation (the "Company"), $.02 par value per share (the
"Shares"). We have examined the Registration Statement and such documents and
records of the Company as we have deemed necessary for the purpose of this
opinion.
Based upon the foregoing, we are of the opinion that upon the happening
of the following events:
(a) the filing and effectiveness of the Registration Statement and
any amendments thereto;
(b) due execution by the Company and registration by its registrar of
the Shares;
(c) receipt by the Company of the consideration required for the
Shares; and
(d) the Shares will be duly authorized, validly issued, fully paid
and nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and any amendment thereto, including any and all
post-effective amendments, and to the reference to our firm in the Prospectus of
the Registration Statement under the heading "Validity of Common Stock." In
giving such consent, we do not thereby admit that we are in the category of
persons whose consent is required under Section 7 of the Securities Act.
Very truly yours,
/s/ Perkins Coie LLP
Perkins Coie LLP
II-5
<PAGE> 1
Exhibit 23.1
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
NeoRx Corporation:
We consent to the use of our report incorporated herein by reference and
to the reference to our firm under the heading "Experts" in the prospectus.
/s/ KPMG LLP
-------------------------------------
KPMG LLP
Seattle, Washington
April 20, 2000
II-6
