<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.20549
(Mark one)
[x] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
-------------- -----------------------
Commission File Number 0-16132
CELGENE CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 22-2711928
------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
7 Powder Horn Drive, Warren, New Jersey 07059
--------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 908-271-1001
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
----- -----
At July 31, 1995, 7,862,689 shares of Common Stock, par value
$.01 per share, were issued and outstanding.
1
<PAGE>
CELGENE CORPORATION
INDEX TO FORM 10-Q
PART I - FINANCIAL INFORMATION
<TABLE>
<CAPTION>
Page No.
--------
<S> <C> <C>
Item 1 Condensed Financial Statements
Balance Sheets as of June 30, 1995
and December 31, 1994 3
Statements of Operations -
Three-Month Periods Ended June 30, 1995
and 1994 4
Statements of Operations -
Six-Month Periods Ended June 30, 1995
and 1994 5
Statements of Cash Flows -
Six-Month Periods Ended
June 30, 1995 and 1994 6
Notes to Unaudited Condensed
Financial Statements 7
Item 2 Management's Discussion and Analysis
of Financial Condition and Results
of Operations 9
PART II - OTHER INFORMATION 12
Signatures 13
</TABLE>
2
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1 - Condensed Financial Statements
CELGENE CORPORATION
BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
June 30 December 31
--------- -----------
1995 1994
---- ----
(Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 896,874 $ 292,925
Marketable securities available
for sale 4,012,155 8,207,161
Accounts receivable 321,313 623,084
Other current assets 480,167 428,844
------------ ------------
Total current assets 5,710,509 9,552,014
Plant and equipment, net 1,575,906 1,954,666
Other assets 41,250 41,250
------------ ------------
$ 7,327,665 $ 11,547,930
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 200,682 $ 439,189
Accrued expenses 1,409,454 1,104,675
------------ ------------
Total current liabilities 1,610,136 1,543,864
------------ ------------
Stockholders' equity:
Preferred stock, par value $.01
per share. Authorized 5,000,000
shares; issued none -- --
Common stock, par value $.01 per share. Authorized 20,000,000 shares; issued
and outstanding 7,862,689 shares at June 30, 1995 and December 31, 1994,
respectively 78,627 78,627
Additional paid-in capital 70,684,768 70,684,768
Unamortized deferred compensation -
restricted stock (12,186) (19,174)
Accumulated deficit (64,876,473) (60,472,877)
Net unrealized loss on marketable
securities available for sale (157,207) (267,278)
------------ ------------
Total stockholders' equity 5,717,529 10,004,066
------------ ------------
$ 7,327,665 $ 11,547,930
============ ============
</TABLE>
3
<PAGE>
CELGENE CORPORATION
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three-Month Period Ended June 30
---------------------------------
1995 1994
------ ------
<S> <C> <C>
Revenues:
Sales of chemical
intermediates $ 223,550 $ 615,845
Research contracts 100,000 20,000
Investment income 80,350 115,004
------------ ------------
403,900 750,849
------------ ------------
Expenses:
Cost of goods sold 203,549 304,073
Research and development 1,768,222 1,604,072
Selling, general and
administrative 689,143 854,624
------------ ------------
2,660,914 2,762,769
------------ ------------
Loss from continuing
operations (2,257,014) (2,011,920)
Discontinued operations
Loss from operations -- (729,421)
Loss on disposal -- (839,000)
------------ ------------
Loss from discontinued
operation -- (1,568,421)
------------ ------------
Net loss ($ 2,257,014) ($ 3,580,341)
============ ============
Per share of Common Stock
Loss from continuing
operations ($ .29) ($ .26)
Loss from discontinued
operation -- (.20)
------ ------
Net loss ($ .29) ($ .46)
====== ======
Weighted average number
of shares of common stock
outstanding 7,863,000 7,843,000
========= =========
</TABLE>
4
<PAGE>
CELGENE CORPORATION
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Six-Month Period Ended June 30
------------------------------
1995 1994
---- ----
<S> <C> <C>
Revenues:
Sales of chemical
intermediates $ 242,138 $ 994,441
Research contracts 240,000 45,000
Investment income 188,740 273,467
------------ ------------
670,878 1,312,908
------------ ------------
Expenses:
Cost of goods sold 363,926 521,098
Research and development 3,346,294 2,966,329
Selling, general and
administrative 1,364,254 1,743,907
------------ ------------
5,074,474 5,231,334
------------ ------------
Loss from continuing
operations (4,403,596) (3,918,426)
Discontinued operations
Loss from operations -- (1,497,088)
Loss on disposal -- ( 839,000)
------------ ------------
Loss from discontinued
operation -- (2,336,088)
------------ ------------
Net loss ($ 4,403,596) ($ 6,254,514)
============ ============
Per share of Common Stock
Loss from continuing
operations ($ .56) ($ .50)
Loss from discontinued
operation -- ( .30)
----- -----
Net loss ($ .56) ($ .80)
====== ======
Weighted average number
of shares of common stock
outstanding 7,863,000 7,843,000
========= =========
</TABLE>
5
<PAGE>
CELGENE CORPORATION
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six-Month Period Ended June 30,
-------------------------------
1995 1994
---- ----
<S> <C> <C>
Cash flows from operating activities:
Loss from continuing operations ($ 4,403,596) ($ 3,918,426)
Adjustments to reconcile loss from continuing
operations to net cash used in operating
activities:
Depreciation and amortization 388,006 332,126
Amortization of deferred compensation 6,988 28,885
(Decrease) increase in accounts payable
and accrued expenses 66,272 21,524
Decrease in accounts receivable 301,771 75,532
Increase in other assets (51,323) (335,441)
---------- ----------
Net cash used in continuing operations (3,691,882) (3,795,800)
---------- ----------
Net cash used in discontinued operation -- (1,736,054)
---------- ----------
Net cash used in operating activities (3,691,882) (5,531,854)
---------- ----------
Cash flows from investing activities:
Continuing operations:
Capital expenditures (9,246) (198,964)
Proceeds from sales and maturities
of marketable securities available
for sale 4,827,327 15,296,989
Purchases of marketable securities
available for sale (522,250) (9,379,646)
---------- ----------
Net cash provided by investing
activities 4,295,831 5,718,379
---------- ----------
Cash flows from financing activities:
Net proceeds from sale of common stock -- 4,417
---------- ----------
Net increase in cash and cash
equivalents $ 603,949 190,942
Cash and cash equivalents at
beginning of period 292,925 789,847
---------- ----------
Cash and cash equivalents at end of period $ 896,874 $ 980,789
---------- ----------
---------- ----------
Net increase in cash and
cash equivalents 603,949 $ 190,942
Decrease in marketable securities
available for sale (4,305,077) (5,917,343)
---------- ----------
Net decrease in cash and cash equivalents
and marketable securities available
for sale ($ 3,701,128) ($ 5,726,401)
========== ==========
Non-cash investing activity - net change
gain (loss) in net unrealized loss on
securities available for sale $ 110,071 ($ 146,395)
========== ==========
</TABLE>
6
<PAGE>
CELGENE CORPORATION
Notes to Unaudited Condensed Financial Statements
June 30, 1995
1. Basis of Presentation
The unaudited financial statements have been prepared from the books and
records of Celgene Corporation (the 'Company') in accordance with generally
accepted accounting principles for interim financial information pursuant to
Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements.
In the opinion of management, all adjustments (consisting only of normal
recurring accruals) considered necessary for a fair presentation have been
included. Interim results may not be indicative of the results that may be
expected for the year.
Where appropriate prior period financial information has been reclassified
to conform to the 1995 presentation.
2. Stock Options
On June 16, 1995, the stockholders of the Company approved the 1995
Non-Employee Directors' Incentive Plan, which provides for the granting of
non-qualified stock options to purchase an aggregate of not more than 250,000
shares of common stock (subject to adjustment under certain circumstances) to
directors of the Company who are not officers or employees of the Company
('Non-Employee Directors'). Each new Non-Employee Director, upon the date of his
election or appointment, receives an option to purchase 20,000 shares of common
stock. Additionally, upon the date of each annual meeting of stockholders, each
continuing Non-Employee Director receives an option to purchase 10,000 shares of
common stock (or a pro rata portion thereof if he has served less than one
year), except that at the 1995 annual meeting of stockholders the Non-Employee
Directors received an option to purchase 6,000 shares of common stock. On April
5, 1995, each Non-Employee Director was granted, under this plan, a
non-qualified option to purchase 20,000 shares of common stock, subject to
stockholder approval which was received on June 16, 1995.
The shares subject to each option grant of 20,000 shares vests in four
equal annual installments commencing on the first anniversary of the date of
grant. The shares subject to an annual meeting option grant vest in full on the
date of the first annual meeting of stockholders held following the date of
grant.
All options are granted at fair market value and expire 10 years after the
date of grant. This plan terminates in 2005 and no additional options or
restricted stock awards may be granted under the Company's 1992 Non-Employee
Directors' Stock Option Plan.
7
<PAGE>
CELGENE CORPORATION
Notes to Unaudited Condensed Financial Statements -- (continued)
3. Subsequent Event
Subsequent to the second quarter ended June 30, 1995, the Company issued
and sold in a private placement offering, 8% convertible debentures due July 31,
1997 in the aggregate principal amount of $12,000,000, and received net
proceeds, after offering costs, of approximately $11,000,000. Such debentures
are convertible into common stock of the Company at the option of either the
holders thereof or the Company. The holders of the convertible debentures may
convert the debentures into common stock of the Company at $8.00 per share until
September 12, 1995, after which time the conversion price varies and is based
upon the market price (as defined) of the common stock on the date of
conversion.
The Company may require the conversion of the convertible debentures
commencing October 15, 1995 through July 30, 1997 at a conversion price which
varies and is based upon the market price of the common stock on the date of
conversion. The Company also has the right to redeem any convertible debenture
after it has received a notice of conversion with respect to such debenture. The
redemption price is the greater of 115% of the principal and accrued interest of
the redeemed debenture and an amount which is based on the appreciation of the
common stock from issuance of the debentures.
The conversion price of the convertible debentures is subject to adjustment
under certain circumstances.
8
<PAGE>
PART I - FINANCIAL INFORMATION
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations
Liquidity and Capital Resources
On June 30, 1995, the Company had available working capital of
approximately $4,100,000, consisting principally of cash, cash equivalents and
marketable securities available for sale, which represents a decrease of
approximately $3,908,000, or 49%, from December 31, 1994 primarily due to
operating losses.
Subsequent to June 30, 1995, the Company issued and sold in a private
placement offering, an aggregate principal amount of $12,000,000 of 8%
convertible debentures due July 31, 1997, and received net proceeds, after
offering costs, of approximately $11,000,000. The proceeds from the sale of
these debentures increased the Company's working capital (on a pro forma basis)
to approximately $15,100,000 as of June 30, 1995. (See Note 2 to the Unaudited
Condensed Financial Statements)
In August 1992, the Company entered into a two-year research and
development agreement with the Rockefeller University. In July 1994 this
agreement was extended for an additional two years. Under terms of the contract
extension, the Company is committed to an annual fee to Rockefeller University
of $504,000 paid semiannually in April and October.
The Company's financial statements for the six-month period ended June 30,
1995 have been prepared on a going concern basis which contemplates the
realization of assets and the settlement of liabilities and commitments in the
normal course of business. The Company incurred a net loss of $4,404,000 for the
six months ended June 30, 1995 and as of June 30, 1995 had an accumulated
deficit of $64,876,000. The Company expects to incur substantial expenditures to
further its immunotherapeutic program and to expand its chiral business. The
Company's working capital at June 30, 1995 and proceeds from the convertible
debenture offering plus limited revenue from product sales and research
contracts from its chiral business will not be sufficient to meet such
objectives as presently structured. Management recognizes that the Company must
generate additional resources or consider modifications to its immunotherapeutic
program or other reductions in operating costs to enable it to continue
operations with available resources. Management's plans include consideration of
the sale of additional securities under appropriate market conditions, alliances
or other partnership agreements with entities interested in and resources to
support the Company's immunotherapeutic or chiral programs, or other business
transactions which would generate sufficient resources to assure continuation of
the Company's operations and research programs.
The Company has retained investment banking counsel to advise it on the
possible sale of securities as well as to introduce and assist in the evaluation
of potential merger and partnering
9
<PAGE>
opportunities. The Company also has retained independent consultants to assist
it to identify other entities interested in its immunotherapeutic and chiral
programs. Management expects that these efforts will result in the introduction
of other parties with interests and resources which may be compatible with that
of the Company. However, no assurances can be given that the Company will be
successful in raising additional capital or entering into a business alliance.
Further, there can be no assurance, assuming the Company successfully raises
additional funds or enters into a business alliance, that the Company will
achieve profitability or positive cash flow. If the Company is unable to obtain
adequate additional financing or enter into such business alliance, management
will be required to sharply curtail the Company's immunotherapeutic program and
to curtail certain other of its operations.
Six-month period ended June 30, 1995 vs.
Six-month period ended June 30, 1994
Revenues for the six-month period ended June 30, 1995 were approximately
$671,000, which was a decrease of approximately $642,000, or 49%, over the
comparable period in 1994. Chiral intermediate revenues decreased $752,000 to
$242,000 for the six-month period ended June 30, 1995 as compared to the
comparable 1994 period. This decrease in chiral intermediate revenues was due
primarily to the sporadic nature of orders from the Company's small customer
base. Chiral research contract revenues for the first six months were $240,000
which was an increase of $195,000 over the first six months of 1994. This
increase in contract revenues was due to the Company entering into research
contracts for new compounds and for expanding development of existing compounds.
Revenue backlog at June 30, 1995, for 1995 sales, for chiral intermediates and
research contracts decreased $73,000 or 11%, to $587,000 as compared to the June
30, 1994 backlog. The Company is negotiating with new and old customers for
additional chiral intermediate and research contract orders; however, there is
no assurance that these efforts will be successful. Investment income decreased,
$85,000, or 31%, to $189,000 in the six months of 1995 as compared to the six
months of 1994 due to the decrease in funds available for investment.
For the six months ended June 30, 1995, cost of goods sold decreased
$157,000, or 30%, to $364,000 (which includes certain fixed manufacturing costs)
as compared to the six months of 1994, due to the low volume of chiral
intermediate revenues. Research and development expenses for the six month
period ended June 30, 1995 increased by $380,000, or 13%, to $3,346,000 as
compared to the same period in 1994, primarily due to an increase in the
Rockefeller University expense and clinical trial expenses for the
immunotherapeutic program. Selling, general and administrative expenses for the
six-month period ended June 30, 1995 decreased $380,000, or 22%, to $1,364,000
as compared to the 1994 comparable
10
<PAGE>
period, primarily due to the absence in 1995 of any incentive bonus expense, as
no cash bonuses are projected to be paid, and lower personnel and facility
expenses.
Net loss for the six-month period ended June 30, 1995 was approximately
$4,404,000 which was a decrease of approximately $1,851,000, or 30%, over the
comparable period in 1994, due primarily to the cessation of the Company's
biotreatment operation at June 30, 1994. Loss from continuing operations during
the six-months period ended June 30, 1995 increased $485,000, or 12%, over the
comparable quarter in 1994, primarily due to reduced chiral intermediates
revenues.
Three-month period ended June 30, 1995 vs.
Three-month period ended June 30, 1994
Revenues for the three-month period ended June 30, 1995 were approximately
$404,000, which was a decrease of approximately $347,000, or 46%, over the
comparable period in 1994. Chiral intermediate revenues decreased $392,000 to
$224,000 for the three-month period ended June 30, 1995 as compared to the
comparable 1994 period. This decrease in chiral intermediate revenues was due
primarily to the sporadic nature of orders from the Company's small customer
base. Chiral research contract revenues for the second quarter of 1995 were
$100,000 which was an increase of $80,000 over the second quarter of 1994. This
increase in contract revenues was due to the Company entering into research
contracts for new compounds and for expanding development of existing compounds.
Investment income decreased, $35,000, or 30%, to $80,000 in the second three
months of 1995 as compared to the second three months of 1994 due to the
decrease in funds available for investment.
For the second quarter ended June 30, 1995, cost of goods sold decreased
$101,000, or 33%, to $204,000 (which includes certain fixed manufacturing costs)
as compared to the second quarter of 1994, due to the low volume of chiral
intermediate revenues. Research and development expenses for the three-month
period ended June 30, 1995 increased by $164,000, or 10%, to $1,768,000 as
compared to the same period in 1994, primarily due to an increase in the
Rockefeller University expense and clinical trial expenses for the
immunotherapeutic program. Selling, general and administrative expenses for the
three-month period ended June 30, 1995 decreased $165,000, or 19%, to $689,000
as compared to the 1994 comparable period, primarily due to the absence in 1995
of any incentive bonus expense, as no cash bonuses are projected to be paid, and
lower personnel and facility expenses.
Net loss for the three-month period ended June 30, 1995 was approximately
$2,257,000 which was a decrease of approximately $1,323,000, or 37%, over the
comparable period in 1994, due primarily to the cessation of the Company's
biotreatment operation at June 30, 1994. Loss from continuing operations during
the three-months period ended June 30, 1995 increased $245,000, or 12%, over the
comparable quarter in 1994, primarily due to reduced chiral intermediates
revenues.
11
<PAGE>
PART II - OTHER INFORMATION
Item 1. - None
Item 2. - None
Item 3. - None
Item 4. - Submission of Matters to a Vote of Security Holders
The Company held its Annual Meeting of Stockholders on June 16, 1995. At
this meeting stockholders of the Company were asked to vote for the election of
directors, act upon the proposal to approve the adoption of the Corporation's
1995 Non-Employee Directors' Incentive Plan, and for the proposal to ratify the
appointment of KPMG Peat Marwick LLP as the independent certified public
accountants of the Company for the year ending December 31, 1995. All nominated
directors were elected, the proposal to adopt the Corporation's 1995
Non-Employee Directors' Incentive Plan was approved and the proposal regarding
the appointment of auditors was approved, by the following votes:
A. Election of Directors:
<TABLE>
<CAPTION>
Name Number of Shares
---- -------------------------------------
For Withheld Abstained
--- -------- ---------
<S> <C> <C> <C>
Sol J. Barer 6,865,556 92,262 --
Frank T. Cary 6,879,376 78,542 --
Richard C. E. Morgan 6,882,946 74,972 --
Walter L. Robb 6,882,776 75,142 --
Lee J. Schroeder 6,879,726 78,192 --
Richard G. Wright 6,853,622 104,296 --
</TABLE>
B. Adoption of the Corporation's 1995 Non-Employee Directors' Incentive
Plan:
<TABLE>
<CAPTION>
Number of Shares
--------------------------------------
For Against Abstained
--- ------- ---------
<S> <C> <C> <C>
6,225,048 601,704 69,915
</TABLE>
C. Appointment of Auditors:
<TABLE>
<CAPTION>
Number of Shares
--------------------------------------
For Against Abstained
--- ------- ---------
<S> <C> <C> <C>
6,874,429 64,100 17,171
</TABLE>
Item 5. - None
Item 6. - Exhibits
<TABLE>
<S> <C>
4.1 Form of 8% Convertible Debenture due July 31, 1997.
10.1 Form of Registration Rights Agreement.
10.2 Agent's Warrant.
27 Financial Data Schedule - Article 5 for second quarter Form
10-Q.
</TABLE>
12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CELGENE CORPORATION
DATE August 14, 1995 BY /s/ Richard G. Wright
------------------------------ ------------------------------
Richard G. Wright
Chairman of the Board and
Chief Executive Officer
DATE August 14, 1995 BY /s/ Robert B. Eastty
------------------------------ ------------------------------
Robert B. Eastty
Controller
(Chief Accounting Officer)
13
NEITHER THIS DEBENTURE, NOR THE SHARES ISSUABLE UPON CONVERSION OF THIS
DEBENTURE HAVE BEEN REGISTERED WITH THE UNITED STATES SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE PURSUANT TO AN EXEMPTION
FROM REGISTRATION UNDER REGULATION S PROMULGATED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE 'ACT'). THIS DEBENTURE SHALL NOT CONSTITUTE AN OFFER TO
SELL NOR A SOLICITATION OF AN OFFER TO BUY THE SECURITIES IN ANY JURISDICTION IN
WHICH SUCH OFFER OR SOLICITATION WOULD BE UNLAWFUL. THE SECURITIES ARE
'RESTRICTED' AND MAY NOT BE RESOLD OR TRANSFERRED EXCEPT AS PERMITTED UNDER THE
ACT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF SUCH ACT
NEITHER THIS DEBENTURE, NOR THE SHARES ISSUABLE UPON CONVERSION OF THIS
DEBENTURE MAY BE OFFERED OR SOLD IN THE UNITED STATES OR TO U.S. PERSONS (AS
SUCH TERM IS DEFINED IN REGULATION S PROMULGATED UNDER THE ACT) UNLESS THE
SECURITIES ARE REGISTERED UNDER THE ACT OR PURSUANT TO AN AVAILABLE EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE ACT.
THIS DEBENTURE DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF
AN OFFER TO BUY, ANY OF THE SECURITIES OFFERED HEREBY BY ANY PERSON IN ANY
JURISDICTION IN WHICH IT IS UNLAWFUL FOR SUCH PERSON TO MAKE SUCH AN OFFERING OR
SOLICITATION. IN MAKING AN INVESTMENT DECISION, INVESTORS MUST RELY ON THEIR OWN
EXAMINATION OF THE COMPANY AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS
AND THE RISKS INVOLVED. THESE SECURITIES HAVE NOT BEEN RECOMMENDED BY ANY
FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THE
FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY
OF THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
No. $ U.S.
---------- -------
CELGENE CORPORATION
8% CONVERTIBLE DEBENTURE DUE JULY 31, 1997
THIS DEBENTURE is one of a duly authorized issue of Debentures of CELGENE
CORPORATION, a corporation duly organized and existing under the laws of the
State of Delaware (the 'Company'), designated as its 8% Convertible Debentures
Due July 31, 1997, in an aggregate principal amount not exceeding U.S.
$12,000,000
FOR VALUE RECEIVED, the Company promises to pay to __________, the
registered holder hereof (the 'Holder'), the principal sum of
___________________ ($_________ U.S.), on or prior to July 31, 1997 (the
'Maturity Date') and to pay (continued on reverse)
IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed
by an officer thereunto duly authorized.
CELGENE CORPORATION
Dated: July 1995 By:___________________________________
Dr. Sol J. Barer,
President and Chief
Operating Officer
<PAGE>
(page 2 of 4 of Celgene Corporation Convertible Debenture due July 31, 1997)
interest on the principal sum outstanding from time to time in arrears on the
Maturity Date, at the rate of 8% per annum accruing from the date of initial
issuance. Accrual of interest shall commence on the first business day to occur
after the date hereof until payment in full of the principal sum has been made
or duly provided for. The interest so payable will be paid on the Maturity Date
to the person in whose name this Debenture (or one or more predecessor
Debentures) is registered on the records of the Company regarding registration
and transfers of the Debentures (the 'Debenture Register') on the first business
day prior to the Maturity Date: provided, however, that the Company's obligation
to a transferee of this Debenture arises only if such transfer, sale or other
disposition is made in accordance with the terms and conditions of the
Regulation S Subscription Agreement executed by the original Holder or a
subsequent transferee. All accrued and unpaid interest shall bear interest at
the same rate of 8% per annum from the Maturity Date until the date of payment.
The principal of, and interest on, this Debenture are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts, at the address of the Holder
last appearing on the Debenture Register of the Company as designated in writing
by the Holder from time to time. The Debenture Register shall represent the
record of ownership and right to receive principal and interest on this
Debenture. Interest and principal shall be payable only to the registered Holder
as reflected in the Debenture Register. A transfer of the right to receive
principal and interest under this Debenture shall be transferable only through
an appropriate entry in the Debenture Register as provided herein. The
forwarding of such payment shall constitute a payment of interest hereunder and
shall satisfy and discharge the liability for principal and interest on this
Debenture to the extent of the sum represented by such payment.
This Debenture is subject to the following additional provisions:
1. The Debentures are issuable in denominations of One Hundred Thousand
Dollars ($100,000 U.S.) and integral multiples of Fifty Thousand Dollars
($50,000 U.S.) in excess thereof. The Debentures are exchangeable for an equal
aggregate principal amount of Debentures of different authorized denominations,
as requested by the Holders surrendering the same but shall not be issuable in
denominations less than integral multiples of Fifty Thousand Dollars ($50,000
U.S.). No service charge will be made for such registration of transfer or
exchange.
2. The Company shall be entitled to withhold from all payments of principal
of, and interest on, this Debenture any amounts required to be withheld under
the applicable provisions of the United States income tax laws or other
applicable laws at the time of such payments. The Holder shall pay any other
taxes, charges, or levies in connection with the issuance or transfer thereof.
3. This Debenture has been issued subject to investment representations of
the original purchaser hereof and may be transferred or exchanged only in
compliance with the Securities Act of 1933, as amended (the 'Act'), including
Regulation S promulgated under the Act. Any Holder of this Debenture, by
acceptance hereof, agrees to the representations, warranties and covenants
herein. Prior to due presentment to the Company for transfer of this Debenture,
the Company and any agent of the Company may treat the person in whose name this
Debenture is duly registered on the Company's Debenture Register as the owner
hereof for the purpose of receiving payment as herein provided and for all other
purposes, whether or not this Debenture be overdue, and neither the Company nor
any such agent shall be affected by notice to the contrary.
4. The Holder of this Debenture is entitled, at its option, at any time
commencing on July 29, 1995 until September 11, 1995 to convert the principal
amount of this Debenture, in whole but not in part, into shares of Common Stock,
par value $.01 per share (the 'Common Stock') of the Company at a conversion
price (the 'Fixed Conversion Price') for each share of Common Stock equal to
100% of the Closing Bid Price, as defined, on July 28, 1995 and is entitled, at
its option at any time commencing on September 12, 1995 until July 30, 1997
(which is the last business day prior to the Maturity Date hereof) to convert
the principal amount of this Debenture, in whole but not in part, into shares of
Common Stock of the Company at a conversion price ('Variable Conversion Price')
for each share of Common Stock equal to the lesser of (a) Eight-five percent
(85%) of the Market Price (as defined) of the Company's Common Stock, or (b)
100% of the Closing Bid Price, as defined, on July 28, 1995. For purposes of
this Section 4, the 'Closing Bid Price' of the Common Stock for each day shall
be the closing bid price of the Common Stock on such day as reported on the New
York Stock Exchange composite tape, or, if the Common Stock is not listed or
admitted for trading on such Exchange, on the principal national securities
exchange on which is the Common Stock is listed or admitted for trading, or if
not listed or admitted for trading on any national securities exchange, the
closing bid price of the Common Stock as reported by the National Association of
Securities Dealers Automated Quotation System ('NASDAQ') National Market System
(or, if not so reported, the closing price) or, if not admitted for quotation on
the NASDAQ National Market System, the average of the high bid and the low asked
prices as recorded by the National Association of Securities Dealers, Inc.
through NASDAQ, or, if the Common Stock is not traded in the over-the-counter
market, the fair market value of one share of Common Stock on such day as
determined in good faith by the Board of Directors (which decision shall be
conclusive). For purposes of this Section 4, 'Market Price' shall mean the
average of the Closing Bid Price for the five trading days prior to the Date of
Conversion (as herein defined). Such conversion shall be effectuated by
surrendering the Debentures to be converted by overnight courier to the
Company's registrar and transfer agent, American Stock Transfer & Trust Co.
('Transfer Agent'), with the form of conversion notice attached hereto as
Exhibit A (with an advance copy of the Debenture and the conversion notice to
the Transfer Agent and the Company by facsimile), executed by the Holder of this
Debenture evidencing such Holder's intention to convert this Debenture, and
accompanied, in the event the Holder desires to register the shares of Common
Stock in a name other than that of Holder, by proper assignment hereof. The
Company and the Transfer Agent shall make a reasonable effort to deliver the
converted shares to the Holder within three business days from date of receipt
of the conversion notice and the original of this Debenture. In the event the
Holder converts the Debenture at the Fixed Conversion Price or Variable
Conversion Price, the accrued interest shall be payable to the Holder in shares
of Common Stock (unless such Debenture is redeemed for cash under the terms of
Section 5 herein), and the interest and number of shares issued upon conversion
shall be calculated as follows:
Number of shares issued upon conversion = (Principal + Interest)/Conversion
Price, where
Principal = The principal amount of the Debenture to be converted,
Interest = Principal x (N/365) x .08, where N = the number of days
from July 28, 1995 to the date of conversion, and
Conversion Price = Either the Fixed Conversion Price or the Variable
Conversion Price, as defined in this paragraph 4 herein, whichever is
applicable at the time of such conversion.
(continued on attached)
<PAGE>
(page 3 of 4 of Celgene Corporation Convertible Debenture due July 31, 1997)
In all cases the conversion of this Debenture in full shall represent payment of
all interest and principal payable to the Holder hereunder. No fractions of
shares or scrip representing fractions of shares will be issued on conversion,
but the number of shares issuable shall be rounded up to the nearest whole
share. The date on which notice of conversion is given (the 'Date of
Conversion') shall be deemed to be the date set forth in such notice of
conversion if the original of this Debenture is received by the Transfer Agent
within five business days thereafter. If the original of this Debenture is not
received by the Transfer Agent within five business days after the Date of
Conversion, the notice of conversion shall become null and void. In the event of
any stock split, stock dividend payable in securities of the Company, or other
reclassification of the Common Stock, the conversion price shall be equitably
adjusted so that the Holder shall receive, in exchange for the conversion price,
such securities or other property which it would have received had it converted
this Debenture immediately prior to such stock split, dividend or other
reclassification. No service charge will be made for any such conversion.
5. The Company shall have the right to redeem this Debenture for cash by
giving notice (the 'Redemption Notice') to the Holder by facsimile, original to
follow by two-day courier, within one business day from the date facsimile
notice of conversion is received by the Company. The redemption price shall be
paid to Holder within seven calendar days after such facsimile has been given
except in the event the Common Stock price is below $5.00, in which case the
redemption price shall be paid to Holder within 21 calendar days after such
facsimile notice has been given. The redemption price (the 'Redemption Price')
shall be the greater of a) the amount calculated by multiplying the sum of the
Principal and accrued Interest of this Debenture, as those terms are defined in
paragraph 4 above, by a fraction, the numerator of which shall be the Closing
Bid Price on the proposed Date of Conversion, and the denominator of which shall
be the lesser of the conversion prices described in clauses (a) and (b) of
Section 4 above, and b) 115% of the Principal and accrued Interest of this
Debenture. After receipt of the Redemption Notice, all rights with respect to
this Debenture, including, without limitation, the conversion rights contained
herein (notwithstanding the furnishing by the holder hereof of a notice of
conversion to the Company), shall forthwith terminate, except only the right of
the holder to receive the Redemption Price.
6. The Company is entitled, at its option, any time commencing on October
15, 1995 until July 30, 1996 to require the Holder to convert the Principal and
accrued Interest of this Debenture, as those terms are defined in paragraph 4
above, into shares of Common Stock of the Company at a conversion price for each
share of Common Stock equal to the lesser of a) 75% of the Closing Bid Price on
the date the Company provides notice of conversion and b) 100% of the Closing
Bid Price on July 28, 1995. The Company is entitled, at its option, any time
commencing on July 31, 1996 until July 30, 1997 to require the Holder to convert
the Principal and accrued Interest of this Debenture, as those terms are defined
in paragraph 4 above, into shares of Common Stock of the Company at a conversion
price for each share of Common Stock equal to the lesser of (a) or (b) of
Section 4 above. In either case, the Company shall notify the Holder of the
Company's intent to force conversion by giving written notice ('Notice of
Mandatory Conversion') to the Holder by facsimile, original to follow by two-day
courier, before midnight, New York City time, on the date of such mandatory
conversion. The Company is not entitled to require conversion under this Section
6 if the Company makes any planned press release either a) on the day it
provides such Notice of Mandatory Conversion to the Holder or b) prior to the
close of trading on the following business day.
7. Except as expressly provided herein, no provision of this Debenture
shall alter or impair the obligation of the Company, which is absolute and
unconditional, to pay the principal of, and interest on, this Debenture at the
time, place, and rate, and in the coin or currency, herein prescribed. This
Debenture and all other Debentures now or hereafter issued of similar terms are
direct obligations of the Company. This Debenture ranks pari passu with all
other Debentures now or hereafter issued under the terms set forth herein.
8. Except as provided by applicable law, no recourse shall be had for the
payment of the principal of, or the interest on, this Debenture, or for any
claim based hereon, or otherwise in respect hereof, against any incorporator,
shareholder, officer or director, as such, past, present, or future, of the
Company or of any successor corporation, whether by virtue of any constitution,
statute or rule of law, or by the enforcement of any assessment or penalty or
otherwise, all such liability being, by the acceptance hereof and as part of the
consideration for the issue hereof, expressly waived and released.
9. After this Debenture shall have been surrendered for conversion as
herein provided or notice of conversion shall have been given by the Company
pursuant to Section 6 herein, this Debenture shall no longer be deemed to be
outstanding and all rights with respect to this Debenture, including, without
limitation, the right to recei ve interest hereon and the principal hereof,
shall forthwith terminate as of the Date of Conversion, except only the right of
the holder hereof to receive shares of Common Stock in exchange herefor.
10. This Debenture shall not entitle the holder hereof to any of the rights
of a stockholder of the Company, including without limitation, the right to
vote, to receive dividends and other distributions, or to receive any notice of,
or to attend, meetings of stockholders or any other proceedings of the Company.
11. If this Debenture shall be mutilated, lost, stolen or destroyed, the
Company shall execute and deliver, in exchange and substitution for and upon
cancellation of a mutilated Debenture, or in lieu of or in substitution for a
lost, stolen or destroyed Debenture, a new Debenture for the principal amount of
this Debenture so mutilated, lost, stolen or destroyed but only upon receipt of
evidence of such loss, theft or destruction of such Debenture, and of the
ownership thereof, and indemnity, if requested, all reasonably satisfactory to
the Company.
12. Any Holder of this Debenture, by acceptance hereof, agrees that such
Holder will not offer, sell or otherwise dispose of this Debenture or the shares
of Common Stock issuable upon exercise thereof except under circumstances which
will not result in a violation of the Act, including Regulation S promulgated
under the Act, or any applicable state Blue Sky law or similar laws relating to
the sale of securities and the holder agrees to provide the Company with such
documentation as the Company shall deem necessary in accordance with Section 4
of the Regulation S subscription agreement executed by the original holder
hereof to demonstrate that
(continued on attached)
<PAGE>
(page 4 of 4 of Celgene Corporation Convertible Debenture due July 31, 1997)
such offer, sale or disposition complied with applicable securities laws. This
provision shall similarly apply to subsequent transfers of this Debenture.
13.This Debenture shall be governed by and construed in accordance with the
laws of the State of Delaware, without giving effect to conflicts of laws.
14.For purposes hereof, the term 'business day' shall mean any day on which
banks are generally open for business in the State of Delaware, USA and
excluding any Saturday and Sunday.
15. In the event of a merger, reorganization, recapitalization or similar
event of or with respect to the Company (a 'Corporate Change') (other than a
Corporate Change in which all or substantially all of the consideration received
by the holders of the Company's equity securities upon such Corporate Change
consists of cash or assets other than securities issued by the acquiring entity
or any affiliate thereof), this Debenture shall be assumed by the acquiring
entity and thereafter this Debenture shall be convertible into such class and
type of securities as the Holder would have received had the Holder converted
this Debenture immediately prior to such Corporate Change.
16. Any notice or other communication required or permitted to be given
hereunder shall be given as provided herein or delivered against receipt if to
(i) the Company at, 7 Powder Horn Drive, Warren, New Jersey 07059, Telecopy No.
(908) 805-3931 and (ii) the holder of this Debenture, to such holder at its last
address as shown on the Debenture Register (or to such other address as the
party shall have furnished in writing in accordance with the provisions of this
Section 16). Any notice or other communication mail shall be deemed given at the
time of receipt thereof.
17. Any waiver by the Company or the holder hereof of a breach of any
provision of this Debenture shall not operate as or be construed to be a waiver
of any other breach of such provision or of any breach of any other provision of
this Debenture. The failure of the Company or the holder hereof to insist upon
strict adherence to any term of this Debenture on one or more occasions shall
not be considered a waiver or deprive that party of the right thereafter to
insist upon strict adherence to that term or any other term of this Debenture.
Any waiver must be in writing.
18. If any provision of this Debenture is invalid, illegal or
unenforceable, the balance of this Debenture shall remain in effect, and if any
provision is inapplicable to any person or circumstance, it shall nevertheless
remain applicable to all other persons and circumstances.
<PAGE>
EXHIBIT A
NOTICE OF CONVERSION
(To be Executed by the Registered Holder
in order to Convert the Debenture)Holder
The undersigned hereby irrevocably elects to convert the above Debenture No.
___________ into shares of Common Stock, par value $.01 per share (the 'Common
Stock'), of Celgene Corporation (the 'Company') according to the conditions
hereof, as of the date written below. If shares are to be issued in the name of
a person other than undersigned, the undersigned will pay all transfer taxes
payable with respect thereto and is delivering herewith such certificates and
opinions as reasonably requested by the Company. No fee will be charged to the
Holder for any conversion, except for transfer taxes, if any.
If this Debenture is being converted during the Restricted Period (as that term
is defined in the subscription agreement executed by the original purchaser of
this Debenture), the undersigned represents that it is not a U.S. Person as
defined in Regulation S promulgated under the United States Securities Act of
1933, as amended (the 'Act') and is not converting the Debenture on behalf of
any U.S. Person. The undersigned also represents and warrants that all offers
and sales by the undersigned of the shares of Common Stock issuable to the
undersigned upon conversion of the Debenture shall be made in compliance with
Regulation S, pursuant to registration of the Common Stock under the Act or
pursuant to an exemption from registration under the Act.
Conversion calculations: --------------------------------
Date of Conversion
--------------------------------
Applicable Conversion Price
--------------------------------
Signature
--------------------------------
Name
Address
--------------------------------
--------------------------------
* The original Debenture and Notice of Conversion must be received by the
Company's Transfer Agent before any shares of Common Stock will be issued. If
the original of this Debenture is not received by the Transfer Agent (or such
other person as the Company may specify) within five business days after the
date of conversion specified above, this notice of conversion shall become null
and void.
Celgene Corporation
Registration Rights Agreement
THIS REGISTRATION RIGHTS AGREEMENT (the 'Agreement') is entered into as
of July ___, 1995, by and among Celgene Corporation, a Delaware corporation (the
'Company'), and the persons and entities listed on Exhibit A attached hereto
(the 'Investors').
Recitals:
WHEREAS, pursuant to a Regulation S Subscription Agreement (the 'Subscription
Agreement'), by and among the Company and the Investors, the Company has agreed
to sell and the Investors have agreed to purchase up to an aggregate of
$12,000,000 U.S. principal amount 8% Convertible Debentures due July 31, 1997
(the 'Debentures') of the Company convertible into shares of the Company's
Common Stock, par value $.01 per share (the 'Shares');
WHEREAS, pursuant to the terms of, and in partial consideration for, the
Investors' agreement to enter into the Subscription Agreement, the Company has
agreed to provide the Investors with certain registration rights with respect to
the Shares;
NOW THEREFORE, in consideration of the mutual promises, representations,
warranties, covenants and conditions set forth in the Subscription Agreement and
this Registration Rights Agreement, the Company and the Investors agree as
follows:
Agreement:
1. Certain Definitions. As used in this Agreement, the following terms
shall have the following respective meanings:
'Commission' shall mean the Securities and Exchange Commission or any
other Federal agency at the time administering the Securities Act.
'Common Stock' shall mean the Company's Common Stock, par value $.01
per share.
'Initiating Holders' shall mean holders of Debentures having an
aggregate principal amount of $3 million or more.
'Other Registrable Securities' shall mean those shares of Common Stock
heretofore or hereafter issued pursuant to one or more agreements granting the
purchasers of such securities the right to have the Company register such
securities or include such securities in any other registration of the Company's
equity securities.
'Registrable Shares' shall mean (i) the Shares, (ii) the Warrant
Shares, and (iii) any Common Stock of the Company issued or issuable in respect
of the Shares or the Warrant Shares or upon any stock split, stock dividend,
recapitalization or similar event; provided, however, that shares of Common
Stock or other securities shall no longer be treated as Registrable Shares if
(A) they have been sold to or through a broker or dealer or underwriter in a
public distribution or a public securities transaction, (B) they have been sold
in a transaction exempt from the registration and prospectus delivery
requirements of the Securities Act so that all transfer restrictions and
restrictive legends with respect thereto are
<PAGE>
removed upon consummation of such sale or (C) the Shares are available for sale
under Rule 144, in the opinion of counsel to the Company, without compliance
with the registration and prospectus delivery requirements of the Securities Act
so that all transfer restrictions and restrictive legends with respect thereto
may be removed upon the consummation of such sale.
The terms 'register', 'registered' and 'registration' shall refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act and applicable rules and regulations
thereunder, and the declaration or ordering of the effectiveness of such
registration statement.
'Registration Expenses' shall mean all expense incurred by the Company
in compliance with Section 2 hereof, including, without limitation, all
registration and filing fees, printing expenses, fees and disbursements of
counsel for the Company, blue sky fees and expenses, reasonable fees and
disbursements (not to exceed $10,000) of one counsel for all the selling holders
of Registrable Shares for a limited 'due diligence' examination of the Company,
and the reasonable expenses of any special audits incident to or required by any
such registration (but excluding the compensation of regular employees of the
Company, which shall be paid in any event by the Company).
'Securities Act' shall mean the Securities Act of 1933, as amended, or
any similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
'Selling Expenses' shall mean all underwriting discounts and selling
commissions applicable to the sale of Registrable Shares and all fees and
disbursements of one counsel for the selling holders of Registrable Shares
(other than the fees disbursements of such counsel included in Registration
Expenses).
'Warrant Shares' shall mean the shares of Common Stock issuable on
exercise of Warrant(s) issued to Swartz Investments, Inc., in connection with
the issuance of the Debentures.
2. Requested Registration.
The following registration rights will apply only if at any time prior
the expiration of these rights, Regulation S promulgated under the Securities
Act is rescinded or modified so as to preclude non-United States persons from
reselling in United States public securities markets shares received from the
Company, or if, for any other reason, the Company refuses to issue unrestricted
Shares to an Investor after the Restricted Period, as that term is defined in
the Debentures:
(a) Request for Registration. If the Company shall receive
from Initiating Holders, at any time after four (4) months following the final
closing of the sale of Debentures pursuant to the Subscription Agreements, a
written request that the Company effect a registration with respect to all, but
not less than all, of the Registrable Shares held by such Initiating Holders
(which notice shall specify the intended method of disposition), the Company
shall:
(i) promptly give written notice of the proposed
registration to all other holders of Registrable Shares; and
(ii) as soon as practicable use its best efforts to
effect such registration (including, without limitation, the execution of an
undertaking to file post-
<PAGE>
effective amendments, appropriate qualification under applicable blue sky or
other state securities laws and appropriate compliance with applicable
regulations issued under the Securities Act) as may be so requested and as would
permit or facilitate the sale and distribution of all or such portion of such
Registrable Shares as are specified in such request, together with all or such
portion of the Registrable Shares of any holder or holders of Registrable Shares
joining in such request as are specified in a written request given within 15
days after receipt of such written notice from the Company; provided that the
Company shall not be obligated to effect, or to take any action to effect, any
such registration pursuant to this Section 2:
(A) after the Company has effected one such
registration pursuant to this Section 2 (a) and such
registration has been declared or ordered effective
by the Commission and the sale of such Registrable
Shares shall have closed; or
(B) within the period starting with the date
60 days prior to the Company's good faith estimated
date of filing of, and ending 180 days following the
effective date of, any registered offering of the
Company's securities to the general public.
Subject to the foregoing limitations in clauses (A)
and (B) above, the Company shall file a registration statement covering the
Registrable Shares so requested to be registered as soon as practicable after
receipt of the request or requests of the Initiating Holders, but no later than
45 days following receipt of such request or requests; provided, however, that
if the Company shall furnish to such holders of Registrable Shares a certificate
signed by the President of the Company stating that in the good faith judgment
of the Board of Directors it would be seriously detrimental to the Company and
its stockholders for such registration statement to be filed within such 45 day
period and it is therefore advisable to defer the filing of such registration
statement, the Company shall have an additional period of up to 45 days (and not
to exceed the period reasonably determined by the Company to be necessary),
after the expiration of such initial 45-day period within which to file such
registration of such initial 45-day period, provided that during such time the
Company may not file a registration statement for securities to be issued and
sold for its own account.
The registration statement filed pursuant to the request of the
Initiating Holders may, subject to the provision of Section 2(b) below, include
Other Registrable Securities, other securities of the Company which are held by
officers or directors of the Company or which are held by other holders of
registration rights, and may include securities of the Company being sold for
the account of the Company.
(b) Underwriting. If the Initiating Holders intend to distribute the
Registrable Shares covered by their request by means of an underwriting, they
shall so advise the Company as a part of their request made pursuant to Section
2 and the Company shall include such information in the written notice referred
to in Section 2 (a) (i) above. The right of any holder of Registrable Shares to
registration pursuant to Section 2 shall be conditioned upon such holder's
participation in such underwriting and the inclusion of such holder's
Registrable Shares in such underwriting (unless other wise mutually agreed by a
majority in interest of the Initiating Holders and such holder with respect to
such participation and inclusion) to the extent provided herein. A holder of
Registrable Shares may elect to include in such underwriting all or a part of
the Registrable Shares it holds.
(i) If the Company shall request inclusion in any registration
pursuant to Section 2 of securities being sold for its own account, or if
officers or directors of the
<PAGE>
Company holding other securities of the Company or other holders of registration
rights, shall request inclusion in any registration pursuant to Section 2, the
Initiating Holders shall, on behalf of all holders of Registrable Shares, offer
to include Other Registrable Securities and the securities of the Company, such
officers and directors and such other holders of registration rights in the
underwriting and may condition such offer on their acceptance of the further
applicable provisions of this Agreement. The Company shall (together with all
holders of Registrable Shares, officers and directors, other holders of
registration rights and holders of Other Registrable Securities proposing to
distribute their securities through such underwriting) enter into an
underwriting agreement in customary form with the underwriter or representative
of the underwriters selected for such underwriting by the Company, which
underwriter(s) shall be reasonably acceptable to a majority in interest of the
Initiating Holders.
(ii) Notwithstanding any other provision of this Section 2, if
the representative of the underwriters advises the Company in writing that
marketing factors require a limitation on the number of shares to be
underwritten, the Company shall so advise all holders of Registrable Shares and
other shareholders whose securities would otherwise be underwritten pursuant
hereto, and the number of Registrable Shares and other securities that may be
included in the registration and underwriting shall be allocated in the
following manner: the securities of the Company held by officers and directors
of the Company (other than Registrable Shares) shall be excluded from such
registration and underwriting to the extent required by such limitation, and, if
a limitation on the number of shares is still required, the Other Registrable
Securities shall be excluded pro rata with Registrable Shares, unless another
method of determining such exclusion is specified in the agreements governing
the Other Registrable Securities, according to the relative number of Other
Registrable Securities requested to be included in such registration and
underwriting, from such registration and underwriting to the extent required by
such limitation, and, if a limitation on the number of shares is still required,
the number of Registrable Shares that may be included in the registration and
underwriting shall be allocated among all holders of Registrable Shares in
proportion, as nearly as practicable, to the respective amounts of Registrable
Shares which they had requested to be included in such registration at the time
of filing the registration statement. No Registrable Shares or any other
securities excluded from the underwriting by reason of the underwriter's
marketing limitation shall also be included in such registration.
(iii) If the Company or any officer, director or holder of
Registrable Shares or Other Registrable Securities who has requested inclusion
in such registration and underwriting as provided above disapproves of the terms
of the underwriting, such person may elect to withdraw therefrom by written
notice to the Company, the underwriter and the Initiating Holders. The
securities so withdrawn shall also be withdrawn from registration.
3. Expenses of Registration. The Company shall bear all Registration
Expenses incurred in connection with any registration, qualification or
compliance of the Registrable Shares pursuant to this Agreement. All Selling
Expenses shall be borne by the holder of the securities so registered pro rata
on the basis of the number of their shares so registered.
4. Registration Procedures. Pursuant to this
Agreement, the Company will keep each holder of Registrable Shares advised in
writing as to the initiation of a registration under this Agreement and as to
the completion thereof. At its expense, the Company will:
(a) Use reasonable efforts to keep such registration effective
for a period of 180 days or until the holder or holders of Registrable Shares
have completed the distribution described in the registration statement relating
thereto, whichever first occurs;
<PAGE>
(b) Prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Securities Act with respect to the disposition of securities
covered by such registration statement; and
(c) Furnish such number of prospectuses and other documents
incidental thereto, including any amendment of or supplement to the prospectus,
as a holder of Registrable Securities from time to time may reasonably request.
5. Indemnification.
(a) The Company will indemnify each holder of Registrable
Shares, each of its officers, directors and partners, and each person
controlling such holder of Registrable Shares, with respect to which
registration has been effected pursuant to this Agreement, and each underwriter,
if any and each person who controls any underwriter, and their respective
counsel against all claims, losses, damages and liabilities (or actions,
proceedings or settlements in respect thereof) arising out of or based on any
untrue statement (or alleged untrue statement) of a material fact contained in
any prospectus, or other document incident to any such registration, or based on
any omission (or alleged omission) to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading, or
any violation by the Company of the Securities Act or any rule or regulation
thereunder applicable to the Company in connection with any such registration
and will reimburse each such holder of Registrable Shares, each of its officers,
directors and partners, and each person controlling such holder of Registrable
Shares, each such underwriter and each person who controls any such underwriter,
for any legal and any other expenses as they are reasonably incurred in
connection with investigating and defending any such claim, loss, damage,
liability or action, provided, however, that the indemnity contained in this
Section 5(a) shall not apply to amounts paid in settlement of any such claim,
loss, damage, liability or action if such Settlement is effected without the
consent of the Company; and provided further that the Company shall not be
liable in any such case to the extent that any such claim, loss, damage,
liability or expense arises out of or is based on any untrue statement or
omission based upon written information furnished to the Company by such holder
of Registrable Shares or underwriter and stated to be specifically for use
therein. The foregoing indemnity agreement is further subject to the condition
that insofar as it relates to any untrue statement, alleged untrue statement,
omission or alleged omission made in a preliminary prospectus, such indemnity
agreement shall not inure to the benefit of the foregoing indemnified parties if
copies of a final prospectus correcting the misstatement, or alleged
misstatement, omission or alleged omission upon which such loss, liability,
claim or damage is based is timely delivered to such indemnified party and a
copy thereof was not furnished to the person asserting the loss, liability,
claim or damage.
(b) Each holder of Registrable Shares will, if Registrable Shares held
by it are included in the securities as to which such registration is being
effected, indemnify the Company, each of its directors and officers and each
underwriter, if any, of the Company's securities covered by such a registration
statement, each person who controls the Company or such underwriter within the
meaning of the Securities Act and the rules and regulations thereunder, each
other such holder of Registrable Shares and each of its officers, directors and
partners, and each person controlling such holder of Registrable Shares, and
their respective counsel against all claims, losses, damages and liabilities (or
actions, proceedings or settlements in respect thereof) arising out of or based
on any untrue statement (or alleged untrue statement) of a material fact
relating to such Holder contained in any such registration statement,
prospectus, offering circular or other document, or any omission (or alleged
omission) to state therein a material fact required to be stated therein
relating to such holder or necessary
<PAGE>
to make the statements therein relating to such holder not misleading or any
violation by such holder of any rule or regulation promulgated under the
Securities Act applicable to such holder and relating to action or inaction
required of such holder in connection with any such registration; and will
reimburse the Company, such holders of Registrable Shares, directors, officers,
partners, persons, underwriters or control persons for any legal or any other
expense reasonably incurred in connection with investigating or defending any
such claim, loss, damage, liability or action , in each case to the extent, but
only to the extent, that such untrue statement (or alleged untrue statement) or
omission (or alleged omission) relating to such holder is made in such
registration statement, prospectus, offering circular or other document in
reliance upon and in conformity with written information furnished to the
Company by such holder of Registrable Shares and stated to be specifically for
use therein; provided, however, that the obligations of such holders of
Registrable Shares hereunder shall be limited to an amount equal to the proceeds
to each such holder of Registrable Shares of securities sold under such
registration statement, prospectus, offering circular or other document as
contemplated herein and provided further that such indemnification obligations
shall not apply if the Company modifies or changes to a material extent written
information furnished by such Holder.
(c) Each party entitled to indemnification under this Section 5 (the
'Indemnified Party') shall give notice to the party required to provide
indemnification (the 'Indemnifying Party') promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or any litigation resulting
therefrom, shall be approved by the Indemnified Party, (whose approval shall not
unreasonably be withheld or delayed), and the Indemnified Party may participate
in such defense at such indemnified party's expense, and provided further that
the failure of any Indemnified Party to give notice as provided herein shall not
relieve the Indemnifying Party of its obligations under this Agreement. No
Indemnifying Party, in the defense of any such claim or litigation, shall except
with the consent of each Indemnified Party, consent to entry of any judgment or
enter into any settlement which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such Indemnified Party of a
release from all liability in respect to such claim or litigation. Each
Indemnified Party shall furnish such information regarding itself or the claim
in question as an Indemnifying Party may reasonably request in writing and as
shall be reasonably required in connection with defense of such claim and
litigation resulting therefrom.
6. Information by Holder of Registrable Shares. Each holder of
Registrable Shares shall furnish to the Company such information regarding such
holder of Registrable Shares and the distribution proposed by such holder of
Registrable Shares as the Company may reasonably request in writing and as shall
be reasonably required in connection with any registration referred to in this
Agreement.
7. No transfer or Assignment of Registration Rights. Each Investor's
rights under this Agreement to cause the Company to register the Registrable
Shares may be transferred or assigned by an Investor (other than to affiliates
of such Investors) only to a purchaser of a Debenture in the principal amount of
at least $1,000,000 or at least 125,000 shares and such assignment shall only be
effective upon delivery of written notice of such assignment to the Company
within thirty (30) days of the assignment.
<PAGE>
8. Miscellaneous.
8.1 Governing Law. This agreement shall be governed by and
construed in accordance with the laws of the State of Delaware without giving
effect to conflict of laws.
8.2 Successors and Assigns. Except as otherwise provided herein, the
provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors and administrators of the parties hereto.
8.3 Entire Agreement. This Agreement constitutes the full and entire
understanding and agreement between the parties with regard to the subject
matter hereof.
8.4 Notices, etc. All notices and other communications required or
permitted hereunder shall be in writing and shall be mailed by first-class mail,
postage prepaid, or delivered by hand or by messenger or courier delivery
service, addressed (a) if to an Investor, at such Investor's address set forth
on Exhibit A hereof, or at such other address as such Investor shall have
furnished to the Company in writing, or (b) if to the Company, at the address
set forth on the signature page hereof or at such other address as the Company
shall have furnished to each Investor and each such other holder in writing.
8.5 Delays or Omissions. No delay or omission to exercise any right,
power or remedy accruing to any holder of any Registrable Shares, upon any
breach or default of the Company under this Agreement, shall impair any such
right, power or remedy of such holder nor shall it be construed to be a waiver
of any such breach or default, or an acquiescence therein, or of or in any
similar breach or default thereunder occurring; nor shall any waiver of any
single breach or default be deemed a waiver of any other breach or default
thereafter occurring. Any waiver, permit, consent or approval of any kind or
character on the part of any holder of any breach or default under this
Agreement, or any waiver on the part of any party of any provisions or
conditions of this Agreement, must be in writing and shall be effective only to
the extent specifically set forth in such writing. All remedies, either under
this Agreement, or by law or otherwise afforded to any holder, shall be
cumulative and not alternative.
8.6 Counterparts. This agreement may be executed in any number of
counterparts, each of which may be executed by less than all of the Investors,
each of which shall be enforceable against the parties actually executing such
counterparts, and all of which together shall constitute one instrument.
8.7. Severability. In the case any provision of this agreement shall
be invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.
8.8 Amendments. The provisions of this Agreement may be amended at
any time and from time to time, and particular provisions of this Agreement may
be waived, with and only with an agreement or consent in writing signed by the
Company and by the Investors currently holding 50% of the Registrable Shares as
of the date of such amendment or waiver.
8.9 Termination of Registration Rights. This Agreement shall
terminate at the earlier of July 28, 1997 and at such time as there cease to be
any outstanding shares which constitutes Registrable Shares as defined herein.
The foregoing Registration Rights Agreement is hereby executed as of the date
first above written.
<PAGE>
Celgene Corporation Investors
By: ___________________________ _________________________________
Title: __________________________ By: ____________________________
Address: 7 Powder Horn Drive Name: __________________________
Warren, NJ 07059
Attn: Mr. Richard G. Wright Title: ___________________________
Fax: (908)805-3931
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED,
PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF REGISTRATION OR
THE AVAILABILITY OF AN EXEMPTION FROM REGISTRATION UNDER SAID ACT.
Warrant to Purchase
105,000 shares
Warrant to Purchase Common Stock
of
CELGENE CORPORATION
THIS CERTIFIES that Swartz Investments, Inc. ('Holder') or any
subsequent holder hereof, has the right to purchase from Celgene Corporation, a
Delaware corporation (the 'Company'), not more than 105,000 fully paid and
nonassessable shares of the Company's Common Stock, par value $.01 per share
('Common Stock'), at a price of $9.60 per share subject to adjustment as
provided in Section 4 below (the 'Exercise Price'), at any time on or before
5:00 p.m., Atlanta, Georgia time, on July 31, 2000.
The holder of this Warrant agrees with the Company that this Warrant is
issued and all rights hereunder shall be held subject to all of the conditions,
limitations and provisions set forth herein.
1. Exercise.
This Warrant may be exercised as to all or any lesser number of full
shares of Common Stock covered hereby upon surrender of this Warrant, with the
Subscription Form attached hereto duly executed, together with the full Exercise
Price (as hereinafter defined) in cash, or by certified or official bank check
payable in New York Clearing House Funds for each share of Common Stock as to
which this Warrant is exercised, at the office of the Company, 7 Powder Horn
Drive, Warren, N.J. 07059, or at such other office or agency as the Company may
designate in writing, by overnight mail, with an advance copy of the
Subscription Form by facsimile (such surrender and payment hereinafter called
the 'exercise of this Warrant'). The 'Date of Exercise' of the Warrant shall be
defined as the date set forth in the Subscription Form provided that the
original Warrant and Subscription Form are received by the Company within five
business days thereafter. The original Warrant and Subscription Form must be
received within five days of the Date of Exercise, or the Subscription Form
shall be considered void. This Warrant shall be canceled upon its exercise, and,
as soon as practical thereafter, the holder hereof shall be entitled to receive
a certificate or certificates for the number of shares of Common Stock purchased
upon such exercise and a new Warrant or Warrants (containing terms identical to
this Warrant) representing any unexercised portion of this Warrant. Each person
in whose name any certificate for shares of Common Stock is issued shall, for
all
<PAGE>
purposes, be deemed to have become the holder of record of such shares on the
Date of Exercise of this Warrant, irrespective of the date of delivery of such
certificate. The person in whose name this Warrant is registered shall be deemed
the owner therof and of the Warrant evidenced hereby for all purposes. Nothing
in this Warrant shall be construed as conferring upon the holder hereof any
rights as a shareholder of the Company.
2. Payment of Warrant Price.
Payment of the Exercise Price may be made by any of the following, or a
combination thereof, at the election of Holder:
(i) cash, check or wire transfer; or
(ii) surrender of this Warrant at the principal office of the Company
together with notice of election, in which event the Company shall issue Holder
a number of shares of Common Stock computed using the following formula:
X = Y (A-B)/A
where: X = the number of shares of Common Stock to be issued to Holder.
Y = the number of shares of Common Stock for which this Warrant
is exercisable.
A = the Market Price of one share of Common Stock (for
purposes of this Section 2(ii), the 'Market Price' shall be
defined as the closing bid price of the Common Stock for the
five trading days prior to the Date of Exercise of this
Warrant, as reported by the National Association of Securities
Dealers Automated Quotation System ('NASDAQ'), or if the
Common Stock is not traded on NASDAQ, the closing bid price in
the over-the-counter market; provided, however, that if the
Common Stock is listed on a stock exchange, the Market Price
shall be the closing price on such exchange).
B = the Exercise Price.
3. Transfer and Registration.
Subject to the provisions of Section 7 of this Warrant, this Warrant
may be transferred on the books of the Company, wholly or in part, in person or
by attorney, upon surrender of this Warrant properly endorsed, with signature
guaranteed. This Warrant shall be canceled upon such surrender and, as soon as
practicable thereafter, the person to whom such transfer is made shall be
entitled to receive a new Warrant or Warrants as to the portion of this Warrant
transferred, and the holder of this Warrant shall be entitled to receive a new
Warrant or Warrants as to the portion hereof retained.
<PAGE>
4. Anti-Dilution Adjustments.
(a) If the Company shall at any time declare a dividend payable in
shares of Common Stock, then the holder hereof, upon exercise of this Warrant
after the record date for the determination of holders of Common Stock entitled
to receive such dividend, shall be entitled to receive upon exercise of this
Warrant, in addition to the number of shares of Common Stock as to which this
Warrant is exercised, such additional shares of Common Stock as such holder
would have received had this Warrant been exercised immediately prior to such
record date.
(b) If the Company shall at any time effect a recapitalization or
reclassification of such character that the shares of Common Stock shall be
changed into or become exchangeable for a larger or smaller number of shares,
then upon the effective date thereof, the number of shares of Common Stock which
the holder hereof shall be entitled to purchase upon exercise of this Warrant
shall be increased or decreased, as the case may be, in direct proportion to the
increase or decrease in the number of shares of Common Stock by reason of such
recapitalization or reclassification, and the Exercise Price shall be, in the
case of an increase in the number of shares, proportionately decreased and, in
the case of a decrease in the number of shares, proportionally increased.
(c) If the Company shall at any time distribute to holders of Common
Stock cash, evidences of indebtedness or other securities or assets (other than
cash dividends or distributions payable out of earned surplus) then, in any such
case, the holder of this Warrant shall be entitled to receive, upon exercise of
this Warrant, with respect to each share of Common Stock issuable upon such
exercise, the amount of cash or evidences of indebtedness or other securities or
assets which such holder would have been entitled to receive with respect to
each such share of Common Stock as a result of the happening of such event had
this Warrant been exercised immediately prior to the record date or other date
fixing shareholders to be affected by such event.
(d) If the Company shall at any time consolidate or merge with any
other corporation or transfer all or substantially all of its assets, then the
Company shall deliver written notice to the Holder of such merger, consolidation
or sale of assets at least thirty (30) days prior to the closing of such merger,
consolidation or sale of assets and this Warrant shall terminate and expire
immediately prior to the closing of such merger, consolidation or sale of
assets.
(e) As used in this Warrant, the term 'Exercise Price' shall mean the
purchase price per share specified in this Warrant until the occurrence of an
event stated in subsection (b) of this Section 4 and thereafter shall mean said
price as adjusted from time to time in accordance with the provisions of said
subsection. No such adjustment shall be made unless such adjustment would change
the Exercise Price at the time by $.01 or more; provided, however, that all
adjustments not so made shall be deferred and made when the aggregate thereof
would change the Exercise Price at the time by $.01 or more. No adjustment made
pursuant to any provision of this Section 3 shall have the effect of
<PAGE>
increasing the total consideration payable upon exercise of this Warrant in
respect of all the Common Stock as to which this Warrant may be exercised.
(f) In the event that at any time, as a result of an adjustment made
pursuant to this Section 4, the holder of this Warrant shall, upon exercise of
this Warrant, become entitled to receive shares and/or other securities or
assets (other than Common Stock) then, wherever appropriate, all references
herein to shares of Common Stock shall be deemed to refer to and include such
shares and/or other securities or assets; and thereafter the number of such
shares and/or other securities or assets shall be subject to adjustment from
time to time in a manner and upon terms as nearly equivalent as practicable to
the provisions of this Section 4.
5. Fractional Interests.
No fractional shares or scrip representing fractional shares
shall be issuable upon the exercise of this Warrant, but on exercise of this
Warrant, the holder hereof may purchase only a whole number of shares of Common
Stock. The Company shall make a payment in cash in respect of any fractional
shares which might otherwise be issuable upon exercise of this Warrant,
calculated by multiplying the fractional share amount by the Market Price of the
Company's Common Stock on the Date of Exercise.
6. Reservation of Shares.
The Company shall at all times reserve for issuance such
number of authorized and unissued shares of Common Stock (or other securities
substituted therefor as herein above provided) as shall be sufficient for
exercise of this Warrant. The Company covenants and agrees that upon exercise of
this Warrant, all shares of Common Stock issuable upon such exercise shall be
duly and validly issued, fully paid, nonassessable and not subject to preemptive
rights of any shareholders..
7. Restrictions on Transfer.
This Warrant and the Common Stock issuable on exercise hereof
have not been registered under the Securities Act of 1933, as amended, and may
not be sold, transferred, pledged, hypothecated or otherwise disposed of in the
absence of registration or the availability of an exemption from registration
under said Act and the Holder has furnished to the Company an opinion of counsel
reasonably satisfactory to the Company to such effect, and any shares of Common
Stock issued upon exercise of this Warrant shall bear an appropriate legend to
that effect. This Warrant may not be exercised, and any shares of Common Stock
issuable on exercise hereof may not be transferred unless such exercise or
transfer would not result in a violation of the provisions of the Securities Act
of 1933, as amended.
<PAGE>
8. Benefits of this Warrant.
Nothing in this Warrant shall be construed to confer upon any
person other than the Company and the holder of this Warrant any legal or
equitable right, remedy or claim under this Warrant and this Warrant shall be
for the sole and exclusive benefit of the Company and the holder of this
Warrant.
9. Applicable Law.
This Warrant is issued under and shall for all purposes be
governed by and construed in accordance with the laws of the State of Delaware,
without giving effect to conflicts of law.
10. Loss of Warrant.
Upon receipt by the Company of evidence of the loss, theft,
destruction or mutilation of this Warrant, and (in the case of loss, theft or
destruction) of indemnity or security reasonably satisfactory to the Company,
and upon surrender and cancellation of this Warrant, if mutilated, the Company
shall execute and deliver a new Warrant of like tenor and date.
11. Notice to Company.
Notices or demands pursuant to this Warrant to be given or
made by the holder of this Warrant to or on the Company shall be sufficiently
given or made if sent by certified or registered mail, return receipt requested,
postage prepaid or by overnight delivery (with personal delivery acknowledged),
and addressed, until another address is designated in writing by the Company to
Celgene Corporation, 7 Powder Horn Drive, Warren, NJ 07059 ; Attention: Chairman
of the Board and Chief Executive Officer.
<PAGE>
IN WITNESS WHEREOF, this Warrant is hereby executed effective as of the
date set forth below.
Dated as of: August ___, 1995
CELGENE CORPORATION
By: ______________________________
Print Name: ________________________
Its: _______________________________
<PAGE>
SUBSCRIPTION FORM
TO: CELGENE CORPORATION
The undersigned hereby irrevocably exercises the right to purchase
____________ shares of Common Stock of CELGENE CORPORATION evidenced by the
attached Warrant, and herewith makes payment of the Exercise Price with respect
to such shares in full, all in accordance with the conditions and provisions of
said Warrant.
The undersigned agrees not to offer, sell, transfer or otherwise
dispose of any of such Common Stock, except in accordance with the provisions of
Section 7 of the Warrant, and consents that the following legend may be affixed
to the certificates for the Common Stock hereby subscribed for, if such legend
is applicable:
'The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended, and may not be
sold, transferred, pledged, hypothecated or otherwise disposed of in
the absence of registration or the availability of an exemption from
registration under said Act.'
The undersigned requests that certificates for such shares be issued,
and a warrant representing any unexercised portion thereof be issued, pursuant
to the Warrant in the name of and delivered to:
--------------------------------------------------------------------------------
Name
--------------------------------------------------------------------------------
Address
Dated:
--------------------------------------------------------------------------------
Signature of Registered Holder
--------------------------------------------------------------------------------
Name of Registered Holder (Print)
--------------------------------------------------------------------------------
Address
--------------------------------------------------------------------------------
The attached Warrant and the securities issuable on exercise thereof have not
been registered under the Securities Act of 1933, as amended, and may not be
sold, transferred, pledged, hypothecated or otherwise disposed of in the absence
of registration or the availability of an exemption from registration under said
Act.
--------------------------------------------------------------------------------
ASSIGNMENT
(To be executed by the registered holder
desiring to transfer the Warrant)
FOR VALUE RECEIVED, the undersigned holder of the attached Warrant hereby sells,
assigns and transfers unto the person or persons below named the right to
purchase ___________ shares of the Common Stock of CELGENE CORPORATION evidenced
by the attached Warrant and does hereby irrevocably constitute and appoint
_______________________ attorney to transfer the said Warrant on the books of
the Company, with full power of substitution in the premises.
Dated: ______________________________
Signature
Fill in for new Registration of Warrant:
-----------------------------------------
Name
-----------------------------------------
Address
-----------------------------------------
Please print name and address of assignee
(including zip code number)
--------------------------------------------------------------------------------
NOTICE
The signature to the foregoing Subscription Form or Assignment must correspond
to the name as written upon the face of the attached Warrant in every
particular, without alteration or enlargement or any change whatsoever.
--------------------------------------------------------------------------------
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 896,874
<SECURITIES> 4,012,155
<RECEIVABLES> 321,313
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 5,710,509
<PP&E> 8,430,712
<DEPRECIATION> 6,854,806
<TOTAL-ASSETS> 7,327,665
<CURRENT-LIABILITIES> 1,610,136
<BONDS> 0
<COMMON> 78,627
0
0
<OTHER-SE> 5,638,902
<TOTAL-LIABILITY-AND-EQUITY> 7,327,665
<SALES> 242,138
<TOTAL-REVENUES> 670,878
<CGS> 363,926
<TOTAL-COSTS> 363,926
<OTHER-EXPENSES> 4,710,548
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> (4,403,596)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4,403,596)
<EPS-PRIMARY> (.56)
<EPS-DILUTED> 0
</TABLE>
