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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
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CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
June 10, 1997 0-16132
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Date of Report (Date of earliest event reported) Commission File Number
CELGENE CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 22-2711928
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(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
7 Powder Horn Drive
Warren, New Jersey 07059
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(Address of Principal Executive Offices) (Zip Code)
(908) 271-1001
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(Registrant's telephone number, including area code)
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Item 5. Other Events.
On June 10, 1997, Celgene Corporation (the "Company") issued a press
release announcing that it had negotiated a $20 million financing agreement with
Chancellor LGT Asset Management, Inc. on behalf of certain of its clients. The
Company consummated $5 million of this financing through the sale and issuance
of Series B Convertible Preferred Stock, par value $.01 per share (the
"Preferred Stock")on June 9, 1997. Subject to the satisfaction and waiver of
certain conditions, the Company may, at its option, over the next 12 months,
issue up to an additional $15 million of Preferred Stock in $5 million
increments.
The press release, the Certificate of Designation filed with the
Secretary of State of the State of Delaware, the Securities Purchase Agreement,
the Warrant and the Registration Rights Agreement entered into with the
investors in the private placement are filed as exhibits hereto and are hereby
incorporated by reference.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) not applicable
(b) not applicable
(c) Exhibits
4.1 Certificate of Designation of Series B Convertible Preferred
Stock
10.1 Securities Purchase Agreement dated as of June 9, 1997 between
the Company and the investors (the "Investors") set forth
therein.
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10.2 Form of Warrant to purchase Common Stock to be issued to
Investors
10.3 Registration Rights Agreement dated as of June 9, 1997 between
the Company and the Investors.
99 Press Release, dated June 10, 1997.
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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 hereunto duly authorized.
Date: June 10, 1997 CELGENE CORPORATION
By: /s/ John W. Jackson
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Name: John W. Jackson
Title: Chairman of the Board and
Chief Executive Officer
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EXHIBIT INDEX
Exhibit Description Page
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4.1 Certificate of Designation of Series B Convertible Preferred
Stock
10.1 Securities Purchase Agreement dated as of June 9, 1997
between the Company and the investors (the "Investors") set
forth therein.
10.2 Form of Warrant to purchase Common Stock to be issued to
Investors
10.3 Registration Rights Agreement dated as of June 9, 1997
between the Company and the Investors.
99 Press Release, dated June 10, 1997.
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CELGENE CORPORATION
CERTIFICATE OF DESIGNATION
OF
SERIES B CONVERTIBLE
PREFERRED STOCK
(Pursuant to Section 151 of the Delaware General Corporation Law)
We, Sol J. Barer and Robert C. Butler, the President and the
Secretary, respectively, of Celgene Corporation, a Delaware corporation, in
accordance with the provisions of Section 103 of the Delaware General
Corporation Law do hereby certify that:
1. The name of the corporation (hereinafter called the "Company") is
CELGENE CORPORATION, a corporation duly organized and existing under the laws of
the State of Delaware.
2. The Certificate of Incorporation (as amended) authorizes the
issuance of 5,000,000 shares of Preferred Stock of a par value of $.01 each and
expressly vests in the Board of Directors of the Company the authority provided
therein to issue any or all of said shares in one or more series and by
resolution to establish the designation, number, full or limited voting powers,
or the denial of voting powers, preferences and relative, participating,
optional, and other special rights and the qualifications, limitations,
restrictions, and other distinguishing characteristics of each series to be
issued.
3. The following is a true and correct copy of certain resolutions
duly adopted by the Board of Directors of the Company on May 30, 1997, which
constituted all necessary action on the part of the Company for adoption of such
resolutions.
RESOLVED, that a series of Preferred Stock, par value $.01 per share,
of the Company is hereby created and the designation, number of shares, powers,
preferences, rights, qualifications, limitations, and restrictions thereof (in
addition to any provisions set forth in the Certificate of Incorporation of the
Company which are applicable to the preferred stock of all classes and series)
are as follows:
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Section 1. Designation and Amount. The shares of such series shall be
designated as "Series B Convertible Preferred Stock" (the "Series B Convertible
Preferred Stock") and the number of shares constituting the Series B Convertible
Preferred Stock (the "Shares") shall be Twenty Thousand (20,000); such number of
shares may be increased or decreased by resolution of the Board of Directors;
provided, that no decrease shall reduce the number of Shares to a number less
than the number of shares then outstanding.
Section 2. Rank. All Series B Convertible Preferred Stock shall rank
(i) senior to the Common Stock, par value $.01 per share (the "Common Stock"),
of the Company, now or hereafter issued, as to payment of dividends and
distribution of assets upon liquidation, dissolution, or winding up of the
Company, whether voluntary or involuntary, and (ii) senior to the Series A
Convertible Preferred Stock, par value $.01 per share, of the Company, now or
hereafter issued, both as to payment of dividends and distributions of assets
upon liquidation, dissolution, or winding up of the Company, whether voluntary
or involuntary.
Section 3. Dividends. Each Series B Convertible Preferred Stock will
bear dividends, when, as and if declared by the Board of Directors at the higher
of (i) a rate of 9% of the Original Series B Issue Price (as defined in Section
4(a) below) per annum, compounded quarterly, or (ii) the total of all cash
dividends paid in any one calendar year per share of Common Stock, multiplied by
the number of Conversion Shares into which a share of Series B Convertible
Preferred Stock is convertible on December 31 of such calendar year. Dividends
on the Series B Convertible Preferred Stock shall accrue cumulatively, whether
or not declared, and shall be added to the Liquidation Preference as hereinafter
provided.
Section 4. Liquidation Preference.
(a) In the event of any liquidation, dissolution or winding up
of the Company, either voluntary or involuntary, or the sale of substantially
all of the assets of the Company (an "Event"), the holders of Shares shall be
entitled to receive out of the assets of the Company, whether such assets
constitute stated capital or surplus of any nature, an amount per share of
Series B Convertible Preferred Stock equal to the sum of (i) $1,000 for each
outstanding Share (the "Original Series B Issue Price") and (ii) an amount equal
to the accrued but unpaid dividends on such Share (such amount being referred to
herein as the "Accretion") (the Original Series B Issue Price and Accretion
collectively, the "Liquidation Preference"), and no more, before any payment
shall be made or any assets distributed to the holders of Common Stock or any
other class or series of the Company's capital stock ranking junior as to
liquidation rights to the Series B Convertible Preferred Stock (collectively,
the "Junior Liquidation Stock"); provided, however, that such rights shall
accrue to the holders of Series B Convertible Preferred Stock only in the event
that the Company's payments with respect to the liquidation preference of the
holders of capital stock of the Company ranking senior as to liquidation rights
to the Series B Convertible Preferred Stock (the "Senior Liquidation Stock") are
fully met. After the liquidation preferences of the Senior Liquidation Stock are
fully met, the entire assets of the Company available for distribution shall be
distributed ratably among the holders of the Series B Convertible Preferred
Stock and any other class or series of the Company's
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capital stock having parity as to liquidation rights with the Series B
Convertible Preferred Stock (the "Parity Liquidation Stock") in proportion to
the respective preferential amounts to which each is entitled (but only to the
extent of such preferential amounts). After payment in full of the Liquidation
Preference of the shares of the Series B Convertible Preferred Stock and the
Parity Liquidation Stock, if assets remain in the Company, they shall be
distributed ratably to holders of Series B Convertible Preferred Stock (on an
as-converted basis) and to holders of Junior Liquidation Stock in accordance
with the Company's Certificate of Incorporation including any duly adopted
Certificate(s) of Designation.
(b) Upon consummation of a consolidation, reorganization or
merger (whether or not the Company is the surviving entity) in which the
stockholders of the Company immediately prior to the consolidation,
reorganization or merger do not continue to own more than 50% of the voting
power of the surviving entity, the holder of Shares will be entitled to cash in
the amount of the Liquidation Preference and the Shares will be automatically
converted to the securities to which the holders of Shares would have been
entitled had the Shares been converted immediately prior to the consummation of
such consolidation, reorganization or merger.
Section 5. Conversion. Except as otherwise provided in Section 10, the
recordholders of the Series B Convertible Preferred Stock shall have conversion
rights as follows:
(a) Right to Convert. The record holder of the Series B
Convertible Preferred Stock shall be entitled to convert the shares of Preferred
Stock held by such holder into fully-paid and nonassessable shares of the Common
Stock at the Conversion Rate, as follows:
Conversion Rate = Original Series B Issue Price + Accretion
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Conversion Price
The Conversion Price shall equal $6.50 (the "Initial Conversion
Price"); provided, however, that the Conversion Price may be reset on each Reset
Date in accordance with the following two paragraphs.
A "Reset Date" shall mean one or more of the following dates, if on
any such date(s) the average Closing Price (as defined below) for the ten (10)
trading days ending on such Reset Date is lower than the Initial Conversion
Price (or the Conversion Price as reset in accordance with this paragraph):
(i) the dates of the Second Closing, Third Closing or Fourth Closing
(all as defined in the Securities Purchase Agreement dated June
9, 1997 between the Company and certain investors);
(ii) June 1, 1998; and
(iii) July 9, 2002, with respect to the Shares of Preferred Stock that
have not been redeemed pursuant to Section 6 below.
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Upon the occurrence of a Reset Date, the Conversion Price shall
thereafter equal the average Closing Price for the ten (10) trading days ending
on such Reset Date(s); provided, however, that if the Conversion Price in effect
on any Date of Conversion is lower than the Floor Price in effect on such Date
of Conversion, then the Conversion Price shall equal the Floor Price for such
Date of Conversion. For conversions occurring prior to June 2, 1998, the Floor
Price shall be $6.00; for conversions occurring on a Date of Conversion on or
after June 2, 1998 and prior to June 2, 1999, the Floor Price shall be $5.00;
for conversions occurring on a Date of Conversion on or after June 2, 1999 and
prior to June 9, 2002, the Floor Price shall be 55% of the Initial Conversion
Price. For conversions occurring on a Conversion Date on or after June 9, 2002,
there shall be no Floor Price.
In the event that the Company does not file a Registration Statement
as required by Section 2.a. of the Registration Rights Agreement dated as of
June 9, 1997, within the period therein specified, then the Conversion Price for
all outstanding Series B Convertible Preferred Stock shall be reset to equal the
average Closing Price for the ten trading days beginning on a date that is the
first day after the date that the Securities and Exchange Commission declares
effective such Registration Statement, if such average Closing Price is lower
than the Conversion Price then in effect. The Conversion Price, as adjusted by
this paragraph, shall remain subject to the Floor Price as set forth in the
preceding paragraph.
"Closing Price" shall mean the closing price of the Company's Common
Stock as reported by the Nasdaq National Market System (or, if not reported by
Nasdaq, as reported by such other exchange or market where traded).
No fractional shares of Common Stock shall be issued upon conversion
of this Series B Convertible Preferred Stock. In lieu of any fractional share of
Common Stock to which the Investor would otherwise be entitled, the Company
shall round up to the nearest whole share of Common Stock.
(b) Mechanics of Conversion. In order to convert Series B
Convertible Preferred Stock into shares of Common Stock, the holder shall (i)
fax a copy of the fully executed notice of conversion in the form attached
hereto ("Notice of Conversion") (together with a copy of the first page of each
certificate to be converted) to the Company at the office of the Company and to
American Stock Transfer & Trust Company (the "Exchange Agent") that such holder
elects to convert the same, which notice shall specify the number of shares of
Series B Convertible Preferred Stock to be converted and shall contain a
calculation of the Conversion Rate prior to Midnight, New York City time on the
Date of Conversion specified on the Notice of Conversion and (ii) surrender the
original certificate or certificates therefor, duly endorsed, and the original
Notice of Conversion, no later than Midnight (New York City Time) the next
business day, to a common courier for overnight delivery or 2-day delivery (if
overseas) to the Exchange Agent.
The Company shall issue and deliver or cause to be issued and
delivered within three (3) business days after delivery to the Exchange Agent of
such certificates, to such holder of Series B Convertible Preferred Stock at the
address of the Holder on the books of the Company, a
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certificate for the number of shares of Common Stock to which the Holder shall
be entitled as provided in Section 5(a) above. The date on which conversion
occurs (the "Date of Conversion") shall be deemed to be the date set forth in
such Notice of Conversion, provided (i) that the advance copy of the Notice of
Conversion is faxed to the Company and the Exchange Agent before midnight, New
York City time, on the Date of Conversion and (ii) that the stock certificates
(the "Preferred Stock Certificates") representing the Series B Convertible
Preferred Stock to be converted (or reasonable indemnity reasonably acceptable
to the Company with respect to any lost, stolen or destroyed certificate) are
received by the Exchange Agent within five (5) business days thereafter. The
person or persons entitled to receive the shares of Common Stock issuable upon
such conversion shall be treated for all purposes as the record holder or
holders of such shares of Common Stock on such date. If the original Series B
Convertible Preferred Stock Certificates to be converted (or reasonable
indemnity) are not received by the Exchange Agent or the Company within five (5)
business days after the Date of Conversion, the Company may, at its option,
treat the Notice of Conversion as null and void.
(c) Reservation of Stock Issuable Upon Conversion. The Company
shall at all times reserve and keep available out of its authorized but unissued
shares of Common Stock, solely for the purpose of effecting the conversion of
the Series B Convertible Preferred Stock, such number of its shares of Common
Stock as shall from time to time be sufficient to effect the conversion of all
then outstanding shares of Series B Convertible Preferred Stock; and if at any
time the number of authorized but unissued shares of Common Stock shall not be
sufficient to effect the conversion of all then outstanding shares of Series B
Convertible Preferred Stock, the Company will take such corporate action as may
be necessary to increase its authorized but unissued shares of Common Stock to
such number of shares as shall be sufficient for such purpose.
(d) Automatic Conversion. Each outstanding share of Series B
Convertible Preferred Stock (other than an Excess Share, as defined in Section
10) shall automatically be converted (the "Automatic Conversion") into Common
Stock on the later of (a) June 2, 1998 or (b) the date on which the Company
receives a letter from the United States Food & Drug Administration granting
accelerated approval of the Company's New Drug Application to market Synovir for
the AIDS/cachexia indication, at the Conversion Price in effect on the date of
such automatic conversion; provided, however, that Automatic Conversion shall
not occur prior to June 2, 1999 unless the average Closing Price for the 15
trading days prior to the date of automatic conversion is equal to or above the
Floor Price then in effect. Notwithstanding any of the above, but subject to
Section 10 below (i) any shares of Series B Convertible Preferred Stock
outstanding on June 2, 1999 shall be automatically converted into Common Stock
on any date on or after June 2, 1999 on which the average Closing Price for the
15 preceding trading days is greater than 200% of the Conversion Price then in
effect, at the Conversion Price in effect on the date of such automatic
conversion, and (ii) no shares of Series B Convertible Preferred Stock shall
convert pursuant to this Section 5(d) if, on the date conversion would otherwise
occur pursuant to this Section 5(d), the Common Stock is not listed for
quotation and trading on the Nasdaq National Market; provided, however, that
such conversion shall occur pursuant to this Section 5(d) on such date
thereafter, if any, as the Common Stock shall become listed for quotation and
trading on the Nasdaq National Market.
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(e) Adjustment to Conversion Price. In computing the Conversion
Price for purposes of Section 5(a):
(i) If, prior to the conversion of all of the Series B
Convertible Preferred Stock, the number of outstanding shares of Common Stock is
adjusted by a stock split, stock dividend, or other similar event, the
Conversion Price shall be proportionately adjusted.
(ii) If, prior to the conversion of all Series B Convertible
Preferred Stock, there shall be any merger, consolidation, exchange of shares,
recapitalization, reorganization, or other similar event, as a result of which
shares of Common Stock shall be changed into the same or a different number of
shares of the same or another class or classes of stock or securities of the
Company or another entity, then the holders of Series B Convertible Preferred
Stock shall thereafter have the right to purchase and receive upon conversion of
Series B Convertible Preferred Stock, upon the basis and upon the terms and
conditions specified herein and in lieu of the shares of Common Stock
immediately theretofore issuable upon conversion, such shares of stock and/or
securities as may be issued or payable with respect to or in exchange for the
number of shares of Common Stock immediately theretofore purchasable and
receivable upon the conversion of Series B Convertible Preferred Stock held by
such Holders had the Holders converted their Series B Preferred to Common
immediately prior to such merger, consolidation, exchange of shares,
recapitalization or reorganization, and in any such case appropriate provisions
shall be made with respect to the rights and interests of the Holders of the
Series B Convertible Preferred Stock to the end that the provisions hereof
(including, without limitation, provisions for adjustment of the Conversion
Price and of the number of shares issuable upon conversion of the Series B
Convertible Preferred Stock) shall thereafter be applicable, as nearly as may be
practicable in relation to any shares of stock or securities thereafter
deliverable upon the conversion of Series B Convertible Preferred Stock. The
Company shall not effect any transaction described in this subsection 5(e)
unless the resulting successor or acquiring entity (if not the Company) assumes
by written instrument the obligation to deliver to the Holders of the Series B
Convertible Preferred Stock such shares of stock and/or securities as, in
accordance with the foregoing provisions, the Holders of the Series B
Convertible Preferred Stock may be entitled to purchase.
Section 6. Redemption. At the option of the Company, any Shares of
Preferred Stock outstanding on June 9, 2002 may be redeemed on that date by the
Company at a redemption price equal to (i) the Original Series B Issue Price,
and (ii) the Accretion. Notice of redemption shall be given not more than 60 nor
less than 30 days prior to June 9, 2002. The number of Shares from each holder
that are to be redeemed shall be in the same proportion as the total number of
Shares to be redeemed bears to the total number of Shares then outstanding.
Section 7. Voting Rights.
(a) Except as otherwise provided in Section 10 below, each share
of Series B Convertible Preferred Stock issued and outstanding shall have the
number of votes equal to the number of shares of Common Stock into which it
shall have been convertible as of the record date
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of the stockholders' meeting at which action is proposed to be taken or for any
stockholder action to be taken by written consent. Except as otherwise provided
in this Section 7 or as otherwise required by law, the holders of Series B
Preferred Stock and the holders of Common Stock shall vote together as one class
upon all matters submitted to stockholders for a vote.
(b) Except as otherwise provided in Section 10 below, until such
time after December 10, 1998 as there are outstanding shares of Series B
Preferred Stock having an aggregate Original Series B Issue Price of less than
$2,000,000:
(i) The holders representing 75% or more of the outstanding
shares of Series B Preferred Stock (other than those which are subject to
Section 10(c)(ii) below), voting as a single class, will be required: (a) to
authorize the incurrence of indebtedness (except for trade payables, lease
financing and other indebtedness incurred in the ordinary course of business),
(b) to authorize the issuance of securities having a preference over, or on a
parity with, the Series B Convertible Preferred or to increase the number of
authorized shares of Series B Preferred, (c) to reclassify any Common Stock or
other securities of the Company into shares or debt (except for trade payables,
lease financing and other indebtedness incurred in the ordinary course of
business) having a preference or priority superior to or on parity with the
Series B Convertible Preferred Stock, or (d) alter or change the rights,
preferences or privileges in its shares of Series B Convertible Preferred or
otherwise amend the Certificate of Incorporation of the Company in either case
whether by merger, consolidation or otherwise so as to adversely affect such
shares.
(ii) The holders representing a majority of the outstanding
shares of Series B Preferred Stock (other than those which are subject to
Section 10(c)(ii) below), voting as a single class, will be required: (a) to
effect a sale or transfer of all or substantially all of the Company's assets or
to effect a merger which results in the holders of the Company's capital stock
prior to the transaction owning less than 50% of the voting power of the
Company's capital stock after the transaction; (b) to declare any dividend or
make any other distribution other than as contemplated herein; (c) to acquire
for more than $5,000,000 in cash or Celgene securities, assets or stock in any
other company; or (d) to enter into any corporate event that could be considered
a "liquidation" or sale of the Company (except for bankruptcy).
Section 8. Status of Redeemed or Converted Stock. In the event any
shares of Series B Convertible Preferred Stock shall be converted or redeemed
pursuant to Section 5 or Section 6 hereof, the shares so converted or redeemed
shall be canceled, shall return to the status of authorized but unissued
Preferred Stock of no designated series, and shall not be issuable by the
Company as Series B Convertible Preferred Stock.
Section 9. No Sinking Fund. The shares of Series B Convertible
Preferred Stock shall not be subject to the operation of a purchase, retirement
or sinking fund.
Section 10. Restrictions on Conversions and Voting Rights.
Notwithstanding anything set forth elsewhere herein, if at any time the
percentage beneficial ownership of LGT Asset Management, Inc. ("LGT") (as
determined in accordance with Regulation 13D-G under the Securities
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Exchange Act of 1934, as may be amended from time to time) of the total
outstanding Common Stock of the Company (the "LGT Beneficial Ownership") exceeds
20% (the "Series B Percentage Restriction"), then the following provisions shall
apply with respect to those shares of Series B Convertible Preferred Stock which
are beneficially owned by LGT and which exceed the Series B Percentage
Restriction (each, an "Excess Share"):
(a) No Excess Share shall (i) be convertible pursuant to Section
5(a) hereof, or (ii) be automatically converted pursuant to the Automatic
Conversion set forth in Section 5(d) hereof;
(b) No Excess Share shall be entitled to vote in an election for
directors of the Company pursuant to the voting rights set forth in Section 7(a)
hereof;
(c) Upon the occurrence of an Automatic Conversion under Section
5(d), (i) the Conversion Rate for each Excess Share shall be fixed at the
Conversion Rate (subject to antidilution adjustments as provided for herein)
(the "Fixed Rate") in effect on the date of such Automatic Conversion and
thereafter such Excess Shares may be converted only, if at all, at such Fixed
Rate; (ii) no Excess Share shall be entitled to the voting rights set forth in
Section 7(b); and (iii) no Excess Share shall accrue dividends pursuant to
Section 3 but shall retain all previously accrued dividends;
(d) Each Excess Share shall continue to accrue liquidation
preference pursuant to Section 4 (whether or not there is an Automatic
Conversion);
(e) Following the passage of any consecutive 75 calendar day
period (the "75-Day Period") during which the LGT Beneficial Ownership is below
and has continuously remained below the Series B Percentage Restriction (the
"Shortfall"), that number of Excess Shares which is equal to the difference
between the Series B Percentage Restriction and the Shortfall shall become
convertible pursuant to Section 5(a) hereof and shall become entitled to the
rights described in (a)(ii) and (b) above (each, a "Restored Share"); provided,
however, that, if an Automatic Conversion has occurred while a share of Series B
Convertible Preferred Stock was an Excess Share (whether before or during the
75-day Period), then, upon expiration of the 75-Day Period, such Excess Share
that becomes a Restored Share following the expiration of the 75-Day Period
shall be automatically converted at the Conversion Rate in effect on the date of
the Automatic Conversion;
(f) Other than as specifically set forth above, each Excess Share
shall be entitled to, and be subject to all of the powers, preferences and
relative, optional, participating, and other special rights and the
qualifications, limitations, restrictions, and other distinguishing
characteristics set forth in this Certificate of Designation; and
(g) In calculating the Series B Percentage Restriction, all
warrants issuable or issued to and held by the Series B Preferred holder
pursuant to the Securities Purchase Agreement with the Company dated of even
date herewith, and shares of Common Stock issuable pursuant to such warrants
shall be excluded from the calculation of the LGT Beneficial Ownership.
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Section 11. Participation Rights. The holders of Series B Convertible
Preferred Stock shall have the right to participate, as provided herein, in any
private placement by the Company of Common Stock or Common Stock equivalents at
a price per share below the then current trading price of Common Stock (a
"Subsequent Placement"). Each such holder shall have the right to participate in
such Subsequent Placement on a pro-rata basis, as provided herein. The Company
shall, at least ten days prior to the closing of any such Subsequent Placement,
deliver written notice to each such holder describing the proposed financing,
the terms thereof, and any and all disclosure or similar materials provided to
proposed investors in the Subsequent Placement. Each such holder shall have the
right to purchase his pro-rata share of the securities to be issued in the
Subsequent Placement on the terms thereof. Each such holder's pro-rata share of
any Subsequent Placement shall be computed as a fraction, the numerator of which
shall be the number of shares of Common Stock into which the Series B
Convertible Preferred Stock of such holder is then convertible, and the
denominator of which shall be the sum of the number of shares of Common Stock or
Common Stock equivalents to be outstanding upon completion of the Subsequent
Placement plus the number of shares of Common Stock into which all outstanding
Series B Convertible Preferred Stock is then convertible.
FURTHER RESOLVED, that the statements contained in the foregoing
resolutions creating and designating the said Series B Convertible Preferred
Stock and fixing the number, powers, preferences and relative, optional,
participating, and other special rights and the qualifications, limitations,
restrictions, and other distinguishing characteristics thereof shall, upon the
effective date of said series, be deemed to be included in and be a part of the
Certificate of Incorporation of the Company pursuant to the provisions of the
General Corporation Law of the State of Delaware.
FURTHER RESOLVED, that the officers of the Company be, and each acting
individually hereby is, authorized and directed to take all actions necessary
and advisable to effect the purpose and intent of the foregoing resolutions.
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IN WITNESS WHEREOF, Celgene Corporation has caused this certificate to
be signed by Sol J. Barer, its President, and attested by Robert C. Butler, its
Secretary, this 9th day of June, 1997.
CELGENE CORPORATION
By
--------------------------------------
Sol J. Barer
President
Attest:
By
--------------------------
Robert C. Butler
Secretary
Each of the undersigned, the President and the Secretary,
respectively, of Celgene Corporation, a Delaware corporation, declares under
penalty of perjury that the matters set forth in this certificate are true and
correct of his own knowledge.
Executed at Warren, New Jersey on June 9, 1997.
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Sol J. Barer
President
------------------------------
Robert C. Butler
Secretary
CELGENE CORPORATION
SECURITIES PURCHASE AGREEMENT
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND
EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT") IN RELIANCE ON EXEMPTIONS THEREFROM PROVIDED BY SECTIONS 4(2)
OF THE SECURITIES ACT AND REGULATION D PROMULGATED THEREUNDER, NOR HAVE SUCH
SECURITIES BEEN QUALIFIED WITH ANY STATE SECURITIES ADMINISTRATOR IN RELIANCE ON
SIMILAR EXEMPTIONS.
THIS SECURITIES PURCHASE AGREEMENT DOES NOT CONSTITUTE AN OFFER TO SELL OR
SOLICITATION OF AN OFFER TO BUY THE SECURITIES IN ANY JURISDICTION IN WHICH SUCH
OFFER OR SOLICITATION WOULD BE UNLAWFUL. THE COMPANY RESERVES THE RIGHT TO
REJECT ANY PROSPECTIVE INVESTOR EVEN IF SUCH INVESTOR SATISFIES ALL SUITABILITY
STANDARDS. THE SECURITIES ARE BEING SOLD FOR INVESTMENT PURPOSE ONLY AND MAY NOT
BE TRANSFERRED, RESOLD OR OFFERED FOR RESALE IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR AN EXEMPTION THEREFROM.
IN MAKING AN INVESTMENT DECISION, INVESTORS MUST RELY ON THEIR OWN EXAMINATION
OF THE COMPANY AND OF THE TERMS OF THIS OFFERING, INCLUDING THE MERITS AND 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
SECURITIES PURCHASE AGREEMENT (this "Agreement"), dated as of June 9, 1997
by and among Celgene Corporation, a Delaware corporation, with headquarters
located at 7 Powder Horn Drive, Warren, New Jersey, 07059 (the "Company"), and
each of the purchasers set forth on the signature pages hereto (each, an
"Investor" and collectively, the "Investors").
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W I T N E S S E T H
WHEREAS, the Company and the Investors are executing and delivering this
Agreement in reliance upon the exemption from securities registration afforded
by Section 4(2) of the Securities Act and Rule 506 under Regulation D
("Regulation D") promulgated by the United States Securities and Exchange
Commission (the "SEC") under the Securities Act;
WHEREAS, the Company has authorized a new series of preferred stock,
designated as its Series B Convertible Preferred Stock (the "Preferred Stock"),
having the powers, rights, preferences and privileges set forth in the
Certificate of Designation attached hereto as Exhibit "A" (the "Certificate of
Designation");
WHEREAS, the Preferred Stock is convertible into, and the accrued dividends
on the Preferred Stock shall be applied exclusively to the purchase of, shares
(the "Conversion Shares") of Common Stock, par value $.01 per share, of the
Company (the "Common Stock") upon the terms and subject to the limitations and
conditions set forth in the Certificate of Designation;
WHEREAS, the Investors desire to purchase from the Company and the Company
desires to issue and sell to the Investors at the First Closing (as defined in
Section 1.a.i.), upon the terms and conditions set forth in this Agreement, an
aggregate of five thousand (5,000) shares of Preferred Stock, at a price per
share equal to One Thousand Dollars ($1,000) (the "Per Share Purchase Price"),
or an aggregate purchase price of Five Million Dollars ($5,000,000);
WHEREAS, the Investors desire to agree to purchase from the Company, and
the Company desires to have the option to issue and sell, at up to three
subsequent closings subject to and upon the terms and conditions set forth in
this Agreement, an aggregate of an additional fifteen thousand (15,000) shares
of Preferred Stock, at the Per Share Purchase Price, or an aggregate additional
purchase price of Fifteen Million Dollars ($15,000,000);
WHEREAS, each Investor desires to purchase from the Company at the First
Closing, upon the terms and conditions stated in this Agreement, the number of
shares of Preferred Stock set forth immediately below its name and address on
the signature pages hereto (for such Investor, its "Subscription Amount"), and
wishes to purchase or agree to purchase the aggregate number of shares of
Preferred Stock equal to the aggregate subscription amount set forth immediately
below the Subscription Amount on the signature pages hereto (for such Investor,
its "Aggregate Subscription Amount"), subject to the satisfaction or waiver of
the conditions set forth in Section 7 of this Agreement;
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WHEREAS, the Company desires to agree to issue to each Investor warrants
(the "Warrants"), in the form attached hereto as Exhibit "B", to acquire a
number of shares (the "Warrant Shares") of Common Stock equal to (i) 7.5% of the
Conversion Shares issuable upon conversion of a number of shares of Preferred
Stock equal to the Aggregate Subscription Amount for such Investor, based on the
Conversion Price (as defined in the Certificate of Designation) in effect on the
date of issuance of such Warrants (the "Warrant Determination Price"), plus (ii)
37.5% of the Conversion Shares issuable upon conversion of all Preferred Stock
actually issued and sold to such Investor pursuant to this Agreement based on
the Warrant Determination Price.
WHEREAS, contemporaneously with the execution and delivery of this
Agreement, the parties hereto are executing and delivering a Registration Rights
Agreement, in the form attached hereto as Exhibit "C" (the "Registration Rights
Agreement"), pursuant to which the Company has agreed to provide to the
Investors certain registration rights under the Securities Act and the rules and
regulations promulgated thereunder, and applicable state securities laws;
NOW THEREFORE, the Company and each of the Investors (severally and not
jointly) hereby agree as follows:
1. PURCHASE AND SALE OF PREFERRED STOCK.
a. Purchase of Preferred Stock.
i. First Closing. The Company shall issue and sell to each
Investor, and each Investor severally agrees to purchase from the Company, the
number of shares of Preferred Stock equal to the Subscription Amount for such
Investor at a price per share equal to the Per Share Purchase Price (the
"Purchase Price"). The issuance, sale and purchase of Preferred Stock pursuant
to this Section 1.a.i. shall take place at a closing (the "First Closing"),
which is subject to the satisfaction (or waiver) of the conditions thereto set
forth in Section 6 and Section 7.a. below.
ii. Second Closing. Subsequent to the First Closing, the Company
shall have the option (which option may be exercised only as to all Investors)
to issue and sell to each Investor, and each Investor severally agrees to
purchase from the Company upon the exercise of such option an additional number
of shares of Preferred Stock equal to the Subscription Amount for such Investor
at the Purchase Price. The issuance, sale and purchase of Preferred Stock
pursuant to this Section 1.a.ii. shall take place at a closing (the "Second
Closing"), which is subject to the satisfaction (or waiver) of the conditions
thereto set forth in Section 7.b. below.
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<PAGE>
iii. Third Closing. Subsequent to the Second Closing, the Company
shall have the option (which option may be exercised only as to all Investors)
to issue and sell to each Investor and each Investor severally agrees to
purchase from the Company upon the exercise of such option an additional number
of shares of Preferred Stock equal to the Subscription Amount for such Investor
at the Purchase Price. The issuance, sale and purchase of the Preferred Stock
pursuant to this Section 1.a.iii. shall take place at a closing (the "Third
Closing"), which is subject to the satisfaction (or waiver) of the conditions
thereto set forth in Section 7.c. below.
iv. Fourth Closing. Subsequent to the Third Closing, the Company
shall have the option (which option may be exercised only as to all Investors)
to issue and sell to each Investor, and each Investor severally agrees to
purchase from the Company upon the exercise of such option an additional number
of shares of Preferred Stock equal to the Subscription Amount for such Investor
at the Purchase Price. The issuance, sale and purchase of Preferred Stock
pursuant to this Section 1.a.iv. shall take place at a closing (the "Fourth
Closing"), which is subject to the satisfaction (or waiver) of the conditions
thereto set forth in Section 7.d. below. Each of the First Closing, Second
Closing, Third Closing and Fourth Closing is sometimes hereinafter referred to
as a "Closing".
b. Form of Payment. On each Closing Date (as defined in Section
1.c.) (i) each Investor shall pay the Purchase Price by wire transfer of
immediately available funds to the Company, in accordance with the Company's
written wiring instructions, against delivery of one or more duly executed
certificate(s) representing the number of shares of Preferred Stock which such
Investor is then purchasing, and (ii) the Company shall deliver such
certificate(s) against receipt of the Purchase Price.
c. Closing Dates. Subject to the satisfaction (or waiver) of the
conditions thereto set forth in Section 6 and Section 7 below, the date and time
of the issuance and sale of the Preferred Stock pursuant to this Agreement (the
"Closing Dates") shall be (i) in the case of the First Closing, 3:00 p.m.
Eastern Standard Time on June 9, 1997 (subject to a three (3) business day grace
period at either party's option) and (ii) in the case of the Second, Third and
Fourth Closings, 10:00 a.m. Eastern Standard Time on the fifteenth (15th)
business day following notification by the Company of satisfaction (or waiver)
of the conditions thereto and its desire to exercise its option to issue and
sell the Preferred Stock to be sold at any such Closing or such other mutually
agreed upon time. The Closings shall occur on the Closing Dates at the offices
of Proskauer Rose LLP, 1585 Broadway, New York, New York, 10036. Notwithstanding
anything herein to the contrary, the Second Closing shall not occur prior to
October 1, 1997, the Third Closing shall not occur prior to January 1, 1998; the
Fourth Closing shall not occur prior to April 1, 1998, and no Closing shall
occur after one year from the date hereof.
d. Issuance of Warrants. At the earlier of (i) June 1, 1998 or (ii)
the date of receipt by the Company of a written request from any Investor that
the Company issue the
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<PAGE>
Warrants that the Investor is entitled to receive pursuant to this Agreement (in
each case, the "Issuance Date"), the Company will issue to such Investor
Warrants to acquire a number of shares of Common Stock equal to (i) 7.5% of the
Conversion Shares issuable upon conversion of a number of shares of Preferred
Stock equal to the Aggregate Subscription Amount for such Investor, based on the
Warrant Determination Price, plus (ii) 37.5% of the Conversion Shares issuable
upon conversion of all shares of Preferred Stock issued and sold to such
Investor pursuant to this Agreement through the Issuance Date for such Warrants
in respect of which Warrants have not previously been issued, based on the
Warrant Determination Price. All Warrants shall have a term of four years from
the Issuance Date for such Warrants and an exercise price equal to 115% of the
Conversion Price in effect (as determined by the Certificate of Designation) on
the Issuance Date for such Warrants.
2. INVESTORS' REPRESENTATIONS AND WARRANTIES.
Each Investor severally represents and warrants to the Company that:
a. Accredited Investor. The Investor is an "accredited
investor" as that term is defined in Rule 501(a) of Regulation D (a copy of
which is annexed hereto immediately following the signature page). Investor has
not been organized for the purpose of investing in securities of the Company,
although such investment is consistent with its purposes.
b. Access to Information. The Investor or its professional
advisor has been granted the opportunity to conduct a full and fair examination
of the records, documents and files of the Company, to ask questions of and
receive answers from representatives of the Company, its officers, directors,
employees and agents concerning the terms and conditions of this offering, the
Company and its business and prospects, and to obtain any additional information
which the Investor or its professional advisor deems necessary to verify the
accuracy of the information received. The Investor or its professional advisor
has received and reviewed the SEC Documents (as defined in Section 3.g).
c. Capability to Evaluate. The Investor has such knowledge and
experience in financial and business matters that it is capable of evaluating
the merits and risks of the prospective investment. The Investor recognizes that
investment in the Preferred Stock involves certain risks, including the
potential loss of the Investor's investment therein, and the Investor has taken
full cognizance of and understands all of the Risk Factors (set forth in Exhibit
"D" hereto) related to the purchase of the securities. The Investor is an
investor in securities of companies in the development stage and has made
investments in securities other than those of the Company. The Investor
acknowledges that it has the ability to bear the economic risk of its investment
pursuant to this Agreement.
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<PAGE>
d. Illiquidity. The Investor is aware that there are legal and
practical limits on the Investor's ability to sell or dispose of the shares of
Preferred Stock and the shares of Common Stock of the Company issuable upon
conversion thereof, and, therefore, that the Investor must bear the economic
risk of the investment for an indefinite period of time.
e. Authority and Due Authorization. The Investor, if executing
this Agreement in a representative or fiduciary capacity, has full power and
authority to execute and deliver this Agreement and each other document included
herein for which a signature is required in such capacity and on behalf of the
subscribing individual, partnership, trust, estate, corporation or other entity
for whom or which the Investor is executing this Agreement. The Investor has
reached the age of majority (if an individual) according to the laws of the
state in which he resides. If the Investor is a corporation, the Investor is
duly and validly organized, validly existing and in good tax and corporate
standing as a corporation under the laws of the jurisdiction of its
incorporation with full power and authority to purchase the Preferred Stock to
be purchased by it and to execute and deliver this Agreement. If the Investor is
a partnership, the representations, warranties, agreements and understandings
set forth above are true with respect to all partners in the Investor (and if
any such partner is itself a partnership, with respect to all persons holding an
interest in such partnership, directly or indirectly, including through one or
more partnerships), and the person executing this Agreement has made due inquiry
to determine the truthfulness of the representations and warranties made hereby.
If the Investor is purchasing in a representative or fiduciary capacity, the
above representations and warranties shall be deemed to have been made on behalf
of the person or persons for whom the Investor is so purchasing. If the
Preferred Stock is to be owned by more than one person in any manner, the
Investor understands and agrees that all of the co-owners of such Preferred
Stock must sign this Agreement.
f. Investment Purpose. The Investor is acquiring the shares of
Preferred Stock, the Conversion Shares, the Warrants, and the Warrant Shares
(collectively, the "Securities") for its own account for investment only and not
with a present view towards the public sale or distribution thereof, except
pursuant to sales registered under the Securities Act.
g. Reliance on Exemptions. The Investor understands that the
Securities are being offered and sold to it in reliance upon specific exemptions
from the registration requirements of United States federal and state securities
laws and that the Company is relying upon the truth and accuracy of, and the
Investor's compliance with, the representations, warranties, agreements,
acknowledgments and understandings of the Investor set forth herein in order to
determine the availability of such exemptions and the eligibility of the
Investor to acquire the Securities.
h. Transfer or Resale. The Investor understands that (i) the
Securities have not been and, except as provided in the Registration Rights
Agreement, will not be
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<PAGE>
registered under the Securities Act or any applicable state securities laws, and
may not be transferred unless (A) subsequently registered thereunder, or (B) the
Investor shall have delivered to the Company an opinion of counsel (which
counsel and opinion shall be reasonably acceptable to the Company) to the effect
that the Securities to be sold or transferred may be sold or transferred
pursuant to an exemption from such registration or (C) sold pursuant to Rule 144
promulgated under the Securities Act (or a successor rule); (ii) any sale of the
Securities made in reliance on Rule 144 may be made only in accordance with the
terms of said Rule and further, if said Rule is not applicable, any resale of
such Securities under circumstances in which the seller (or the person through
whom the sale is made) may be deemed to be an underwriter (as that term is
defined in the Securities Act) may require compliance with some other exemption
under the Securities Act or the rules and regulations of the SEC thereunder; and
(iii) neither the Company nor any other person is under any obligation to
register such Securities under the Securities Act or any state securities laws
or to comply with the terms and conditions of any exemption thereunder (in each
case, other than pursuant to the Registration Rights Agreement).
i. Legends. The Investor understands that the certificates for
the shares of Preferred Stock, Warrants and, until such time as the Conversion
Shares and Warrant Shares have been registered under the Securities Act as
contemplated by the Registration Rights Agreement, the Conversion Shares and
Warrant Shares, may bear a restrictive legend in substantially the following
form (and a stop-transfer order may be placed against transfer of the
certificates for such Securities):
"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended. The
securities have been acquired for investment and may not be sold,
transferred or assigned in the absence of an effective registration
statement for the securities under said Act, or an opinion of counsel,
in form, substance and scope reasonably acceptable to the Company,
that registration is not required under said Act or unless sold
pursuant to Rule 144 under said Act."
The legend set forth above shall be removed and the Company shall issue a
certificate without such legend to the holder of any Security upon which it is
stamped, if, unless otherwise required by applicable state securities laws, (a)
the sale of such Security is registered under the Securities Act, or (b) such
holder provides the Company with an opinion of counsel, in form, substance and
scope reasonably acceptable to the Company, to the effect that a public sale or
transfer of such Security may be made without registration under the Securities
Act or (c) such holder provides the Company with reasonable assurances that such
Security can be sold pursuant to Rule 144 under the Securities Act (or a
successor rule thereto) without any restriction as to the number of Securities
acquired as of a particular date that can then be immediately sold. The Investor
agrees that it will sell all Securities, including those represented by a
certificate(s) from which the legend has been removed, only in compliance with
all applicable securities laws.
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<PAGE>
In addition, the Investor understands that the certificates for any
Conversion Shares or Warrant Shares will at all times bear a restrictive legend
in substantially the following form:
"The shares represented by this Certificate are subject to
restrictions on transfer pursuant to an agreement dated June 9, 1997
between the Company and the Stockholder whose name appears on this
certificate. Copies of this Agreement may be obtained from the offices
of the Company."
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to each Investor that:
a. Organization and Qualification. The Company and its wholly owned,
sole subsidiary are each corporations duly organized and existing in good
standing under the law of the jurisdiction in which they are incorporated, and
have the requisite corporate power to own their properties and to carry on their
business as now being conducted. The Company and its subsidiary are each duly
qualified as foreign corporations to do business and are in good standing in
every jurisdiction in which the nature of the business conducted by them makes
such qualification necessary and where the failure so to qualify would have a
Material Adverse Effect. "Material Adverse Effect" means any material adverse
effect on the business, properties, operations, assets, financial condition or
results of operations of the Company and its subsidiary taken as a whole, or on
the transactions contemplated hereby or by the agreements or instruments to be
entered into in connection herewith. The Company is primarily engaged in the
production or sale of a product or service other than the investment of capital.
b. Authorization; Enforcement. (i) The Company has the requisite
corporate power and authority to file, and to perform its obligations under, the
Certificate of Designation and to enter into and perform this Agreement, the
Registration Rights Agreement and the Warrants, and to issue the Securities, in
accordance with the terms hereof and thereof, (ii) the execution and delivery of
this Agreement, the Registration Rights Agreement and the Warrants by the
Company and the consummation by it of the transactions contemplated hereby and
thereby (including without limitation the filing of the Certificate of
Designation and the issuance of the shares of Preferred Stock and the Warrants
and the issuance and reservation for issuance of the Conversion Shares and
Warrant Shares issuable upon conversion or exercise thereof) have been duly
authorized by the Company's Board of Directors and no further consent or
authorization of the Company or its Board or Directors is required, (iii) this
Agreement has been duly executed and delivered and the Certificate of
Designation has been duly filed by the Company and upon execution and delivery
by the Company of the Registration Rights Agreement and the Warrants, each of
such will be duly executed and delivered, and (iv) each of this Agreement and
the Certificate of Designation constitutes, and upon execution and delivery by
the Company of the Registration Rights
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Agreement and the Warrants, each of such instruments will constitute, a valid
and binding obligation of the Company enforceable against the Company in
accordance with its terms.
c. Capitalization. As of the date hereof, the authorized capital
stock of the Company consists of (i) 20,000,000 shares of Common Stock of which
12,006,020 shares are issued and outstanding as of May 28, 1997, and (ii)
5,000,000 shares of Preferred Stock, 520 of which are designated as Series A
Convertible Preferred Stock and 135 of which are outstanding as of May 28, 1997.
All of such outstanding shares of capital stock are validly issued, fully paid
and nonassessable. Except as disclosed in Schedule 3(c) hereto, as of the
effective date of this Agreement, (i) there are no outstanding options,
warrants, scrip, rights to subscribe for, calls, rights of first refusal or like
commitments relating to, or securities or rights convertible into or
exchangeable for, any unissued shares of capital stock of the Company or any of
its subsidiaries, and (ii) there are no agreements or arrangements under which
the Company or any of its subsidiaries is obligated to register the sale of any
of its or their securities under the Securities Act (except the Registration
Rights Agreement). No preemptive rights will be applicable to the Preferred
Stock, the Warrants, the Conversion Shares or the Warrant Shares.
d. Issuance of Shares. The shares of Preferred Stock, Conversion
Shares and Warrant Shares are duly authorized and, upon issuance in accordance
with the terms of this Agreement, upon conversion of the shares of Preferred
Stock in accordance with the terms of the Certificate of Designation and upon
proper exercise of the Warrants in accordance with the terms of the Warrants, as
applicable, the shares of Preferred Stock, Conversion Shares and Warrant Shares
shall be validly issued, fully paid and non-assessable, free of any
encumbrances, and shall not be subject to preemptive rights of stockholders of
the Company.
The terms, designations, powers, preferences and relative,
participating, and optional or special rights, and the qualifications,
limitations, and restrictions of each series of preferred stock of the Company
are as stated on the Certificate of Incorporation, as amended, the Bylaws, as
amended and restated, and the Certificate of Designation, as amended and
restated, filed on or prior to the date hereof.
The Company has reserved 1,180,000 shares of Common Stock for issuance
to the Investors in connection with the conversion of the Preferred Stock issued
or issuable to the Investors, including the issuance of the Conversion Shares,
and 675,000 shares of Common Stock for issuance to the Investors in connection
with the exercise of the Warrants issued or issuable to the Investors. The
Company shall at all times reserve and keep available out of its authorized but
unissued shares of Common Stock, solely for the purpose of effecting the
conversion of the Preferred Stock, including the issuance of the Conversion
Shares, and exercise of the Warrants such number of its shares of Common Stock
as shall from time to time be sufficient to effect the conversion of all then
outstanding Preferred Stock and to issue the Conversion Shares, and the exercise
of all then outstanding Warrants; and if
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at any time the number of authorized but unissued shares of Common Stock shall
not be sufficient to effect the conversion of all then outstanding shares of
Preferred Stock and to issue the Conversion Shares, and the exercise of all then
outstanding Warrants, the Company will take such corporate action as may be
necessary to increase its authorized but unissued shares of Common Stock to such
number of shares as shall be sufficient for such purposes.
e. No Conflicts. The execution, delivery and performance of this
Agreement and the Registration Rights Agreement by the Company and the
consummation by the Company of the transactions contemplated thereby (including,
without limitation, the filing of the Certificate of Designation and the
issuance and reservation for issuance of the shares of Preferred Stock, the
Warrants, Conversion Shares and Warrant Shares) will not (i) result in a
violation of the Certificate of Incorporation or By-laws of the Company or its
subsidiaries or (ii) conflict with, or constitute a default (or an event which
with notice or lapse of time or both could become a default) under, or give to
others any rights of termination, amendment or cancellation of, any agreement,
indenture or instrument to which the Company or any of its subsidiaries is a
party, or result in a violation of any law, rule, regulation, order, judgment or
decree (including federal and state securities laws and regulations) applicable
to the Company or any of its subsidiaries or by which any material property or
asset of the Company or any of its subsidiaries is bound or affected.
f. Third Party Consents. Except as specifically contemplated by this
Agreement and as required under the Securities Act and any applicable state
securities laws, the Company is not required to obtain any consent,
authorization or order of, or make any filing or registration with, any court or
governmental agency or any regulatory or self regulatory agency in order for it
to execute, deliver or perform any of its obligations under this Agreement or
the Registration Rights Agreement in accordance with the terms hereof or
thereof.
g. SEC Documents, Financial Statements. Since December 31, 1995, the
Company has filed all reports, schedules, forms, statements and other documents
required to be filed by it with the SEC pursuant to the reporting requirements
of the Securities Exchange Act of 1934, as amended (the "Exchange Act") (the
"SEC Documents"). As of their respective dates, none of the SEC Documents
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The financial statements of the Company included in the SEC
Documents were prepared in accordance with generally accepted accounting
principles, consistently applied, during the periods involved (except (i) as may
be otherwise indicated in such financial statements or the notes thereto, or
(ii) in the case of unaudited interim statements, to the extent they may not
include footnotes or may be condensed or summary statements) and fairly present
in all material respects the consolidated financial position of the Company and
its consolidated subsidiaries and results of their operations and cash flows for
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the periods then ended (subject, in the case of unaudited statements, to normal
year-end audit adjustments).
h. Absence of Undisclosed Liabilities. Since the date of the latest
balance sheet included in the SEC Documents, except as reflected in the SEC
Documents, neither the Company nor its subsidiary has undertaken any liability
or obligation, direct or contingent, except for liabilities or obligations
undertaken in the ordinary course of business.
i. Absence of Certain Changes. Since March 31, 1997, there has been
no material adverse change (except for continued operating losses) in the
business, properties, operations, financial condition, results of operations,
assets or liabilities of the Company, except as disclosed in the SEC Documents.
Subsequent to the respective dates as of which information is given in the SEC
Documents, except as described or referred to therein, the Company has not (i)
issued any securities or incurred any liability or obligation, direct or
contingent, for borrowed money, (ii) entered into any transaction not in the
ordinary course of business or (iii) declared or paid any dividend or made any
distribution on any shares of its stock or redeemed, purchased or otherwise
acquired or agreed to redeem, purchase or otherwise acquire any shares of its
stock.
j. Absence of Litigation. There is no action, suit, proceeding,
inquiry or investigation before or by any court, public board, government
agency, self-regulatory organization or body pending or, to the knowledge of the
Company or any of its subsidiaries, threatened against or affecting the Company
or any of its subsidiaries that is reasonably likely to have a Material Adverse
Effect.
k. Patents, Copyrights, etc. Except as disclosed in the SEC
Documents, the Company (i) owns or has the right to use, free and clear of all
liens, claims, encumbrances, pledges, security interests, and other adverse
interests of any kind whatsoever, all patents, inventions, know-how, trade
secrets, trademarks, service marks, trade names, copyrights, technology, and all
licenses and rights with respect to the foregoing, used in the conduct of its
business as now conducted or proposed to be conducted without, to the best
knowledge of the Company and its subsidiary, infringing upon or otherwise acting
adversely to the right or claimed right of any person, Company or other entity,
(ii) is not obligated or under any liability whatsoever to make any payments by
way of royalties, fees or otherwise to any owner or licensee of, or other
claimant to, any patent, trademark, service mark, trade name, copyright,
know-how, technology or other intangible asset, with respect to the use thereof
or in connection with the conduct of its business or otherwise and (iii) has not
received any notice of infringement of or conflict with asserted rights of
others with respect to any of the foregoing which, singly or in the aggregate,
if the subject of an unfavorable decision, ruling or finding, might have a
Material Adverse Effect.
l. Taxes. The Company and its subsidiaries have filed or caused to
be filed all income tax returns which are required to be filed and have paid or
caused to be paid
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all taxes and all assessments received by them to the extent that such taxes and
assessments have become due, except taxes and assessments the validity or amount
of which is being contested in good faith by appropriate proceedings and with
respect to which adequate reserves have been set aside, and except for such
returns for which the failure to file would not have a material adverse effect
upon the Company and its subsidiaries taken as a whole. The federal income tax
returns of the Company and its subsidiaries have been examined and reported on
by the Internal Revenue Service (or closed by applicable statutes) and all tax
liabilities including additional assessments have been satisfied for all fiscal
years prior to and including the fiscal year ended [ ]. The Company and its
subsidiaries have paid or caused to be paid, or have established reserves that
the Company reasonably believes to be adequate in all material respects, for all
federal income tax liabilities and state income tax liabilities applicable to
the Company and its subsidiaries for all fiscal years which have not been
examined and reported on by the taxing authorities (or closed by applicable
statutes).
m. Disclosure. All information relating to or concerning the Company
set forth in this Agreement and provided to the Investors in writing in
connection with the transactions contemplated hereby was true and correct in all
material respects as of the date provided and in light of the circumstances
under which provided and the Company has not omitted to state any material fact
necessary in order to make the information provided herein or therein, in light
of the circumstances under which they were provided, not misleading.
n. No Brokers. The Company has taken no action which would give rise
to any claim by any person for brokerage commissions, finder's fees or similar
payments relating to this Agreement or the transactions contemplated hereby,
except for dealings with Chancellor LGT Asset Management.
o. Assets. Each of the Company and its subsidiaries has good and
marketable title in fee simple to each of the items of personal property which
are reflected in the financial statements as being owned by it and valid and
enforceable leasehold interests in each of the items of real and personal
property which are referred to in the SEC Documents as being leased by it, in
each case free and clear of all liens, encumbrances, claims, security interests
and defects, other than those described in the SEC Documents and other than
those that could not materially affect the value thereof or materially interfere
with the use made or presently contemplated to be made thereof by them.
p. Material Agreements. Each agreement listed as an exhibit to
Company's Annual Report on Form 10-K for the year ended December 31, 1996 and
each agreement entered into by the Company or its subsidiary since the filing of
such Form 10-K that would have been required to be included as an Exhibit to
such Form 10-K had it been entered into on or prior to such filing, is in full
force and effect and is valid and enforceable by the Company or one of its
subsidiaries in accordance with its terms, except where the failure of any such
agreement to be in full force and effect and valid and enforceable by the
Company or one of its subsidiaries in accordance with its terms would not have a
material
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adverse effect on the assets or properties, business, results of operations or
financial condition of the Company and its subsidiaries, taken as a whole,
assuming the due authorization, execution and delivery thereof by each of the
other parties thereto. Neither the Company, nor to the best of the Company's
knowledge, any other party is in default in the observance or performance of any
term or obligation to be performed by it under any such agreement, and no event
has occurred which with notice or lapse of time or both would constitute such a
default which default or event would have a material adverse effect on the
assets or properties, business, results of operations or financial condition of
the Company and its subsidiaries, taken as a whole. No default exists, and no
event has occurred which with notice or lapse of time or both would constitute a
default, in the due performance and observance of any term, covenant or
condition, by the Company of any other indenture, mortgage, deed of trust, note
or any other agreement or instrument to which the Company or any of its
subsidiaries is a party or by which any of them or their properties or
businesses is bound or affected which default or event would have a material
adverse effect on the assets or properties, business, results of operations or
financial condition of the Company and its subsidiaries, taken as a whole.
q. Compliance with Law. Each of the Company and its subsidiaries is
conducting its business in compliance with all applicable laws, rules and
regulations of the jurisdictions in which it is conducting business, including,
without limitation, all applicable local, state and federal environmental laws
and regulations, except where the failure to be so in compliance would not have
a material adverse effect on the assets or properties, business, results of
operations or financial condition of the Company and its subsidiaries, taken as
a whole.
r. Transactions with Affiliates. No transaction has occurred between
or among the Company and any of its officers or directors or any affiliate or
affiliates of any such officer or director that is required to be described in
and is not described in the SEC Documents.
s. Insurance. Each of the Company and its subsidiaries maintains
liability, casualty and other insurance (subject to customary deductions and
retentions) with responsible insurance companies against such risk of the types
and in the amounts customarily maintained by development stage pharmaceutical
companies of comparable size to the Company, all of which insurance is in full
force and effect.
t. Employment Matters. The Company and its subsidiary are in
compliance with all federal, state, local and foreign laws and regulations
respecting employment and employment practices, terms and conditions of
employment and wages and hours. There are no pending investigations involving
the Company or any of its subsidiaries by the U.S. Department of Labor or any
other governmental agency responsible for the enforcement of such federal,
state, local or foreign laws and regulations. There is no unfair labor practice
charge or complaint against the Company or any of its subsidiaries pending
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before the National Labor Relations Board or any strike, picketing, boycott,
dispute, slowdown or stoppage pending or threatened against or involving the
Company or any of its subsidiaries. No representation question exists respecting
the employees of the Company or any of its subsidiaries, and no collective
bargaining agreement or modification thereof is currently being negotiated by
the Company or any of its subsidiaries. No grievance or arbitration proceeding
is pending under any expired or existing collective bargaining agreements of the
Company or any of its subsidiaries. No material labor dispute with the employees
of the Company or any of its subsidiaries exists or, to the knowledge of the
Company, is imminent.
u. ERISA Matters. None of the Company's employee benefit plans
("ERISA Plans") subject to the Employee Retirement Income Security Act of 1974,
as amended ("ERISA") has engaged in a "prohibited transaction" within the
meaning of Section 406 of ERISA or Section 4975 of the Internal Revenue Code of
1986, as amended (the "Code") which could subject the Company or any of its
subsidiaries to any tax penalty on prohibited transactions and which has not
adequately been corrected. No "accumulated funding deficiency" (as defined in
Section 302 of ERISA) or any of the events set forth in Section 4043(b) of ERISA
(other than events with respect to which the 30-day notice under Section 4043 of
ERISA has been waived) has occurred with respect to any employee benefit plan
which might reasonably be expected to have a Material Adverse Effect. Each ERISA
Plan is in compliance with all material reporting, disclosure and other
requirements of the Code and ERISA as they relate to such ERISA Plan.
Determination letters have been received from the Internal Revenue Service with
respect to each ERISA Plan which is intended to comply with Code Section 401(a)
stating that such ERISA Plan and the attendant trust are qualified thereunder.
Neither the Company nor any of its subsidiaries has ever completely or partially
withdrawn from a "multi-employer plan" as so defined.
v. Investment Company Status. The Company is not an "investment
company," a company controlled by an "investment company" or an "affiliated
person" of, or "promoter" or "principal underwriter" for, an "investment
company" as such terms are defined in the Investment Company Act of 1940, as
amended.
w. Environmental. Except as disclosed in the SEC Documents, and
except for instances of noncompliance with or exceptions to the following that
should not have, individually or in the aggregate, a Material Adverse Effect,
(i) the Company and its operations are in full compliance with all environmental
laws; (ii) the Company is not aware of, nor has the Company received notice of,
any past, present, or future conditions, events, activities, practices, or
incidents which may interfere with or prevent the compliance or continued
compliance of the Company with all environmental laws; (iii) the Company has
obtained all permits, licenses, and authorizations that are required under
applicable environmental laws, and all such permits, licenses, and
authorizations are in good standing and the Company is in compliance with all of
the terms and conditions thereof; and (iv) no hazardous materials exist on,
about, or within or have been used, generated, stored,
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transported, disposed of on, or released from any of the properties of the
Company except in compliance with applicable environmental laws. The Company is
not subject to any outstanding or, to the best of the Company's knowledge,
threatened order from or agreement with any governmental authority or other
person or subject to any judicial or administrative proceeding with respect to
(A) failure to comply with environmental laws, (B) remedial action, or (C) any
environmental liabilities.
x. Certain Relationships. To the best knowledge of the Company,
neither David Blech nor any of his affiliates is (i) a stockholder of, or a
lender to, the Company or any of its subsidiaries; (ii) a director, officer,
employee or consultant to the Company or any of its subsidiaries; or (iii) a
party to any agreement, indenture or instrument to which the Company or any of
its subsidiaries is a party.
y. Certain Other Provisions. The issuance of the shares of Preferred
Stock at the First Closing does not, and the issuance of the Conversion Shares
in respect of such Preferred Stock, the issuance of Warrants in respect of such
Preferred Stock issuance and the issuance of the Warrant Shares in respect of
such Warrants will not, assuming no change in applicable facts from those
existing as of the date hereof, result in the acceleration of rights under any
agreement to which the Company or any of its subsidiaries is a party, or by
which any material asset or property of the Company or any of its subsidiaries
is bound, or give rise to an obligation of the Company to make any payments,
other than the acceleration of rights to exercise options issued to the
Company's employees and directors, payments that may be due on the termination
of employment of any employee of the Company or any of its subsidiaries, and
other payments or obligations not in excess of $250,000 in the aggregate.
z. Rights Agreement. Amendment No. 1, dated as of June 9, 1997 to
the Rights Agreement, dated as of September 16, 1996 between the Company and
American Stock Transfer and Trust Company (the "Rights Agreement") has been duly
authorized, executed and delivered by the Company and, subject to the terms
thereof, no Person (as defined in the Rights Agreement) shall become an
Acquiring Person (as defined in the Rights Agreement) solely as a result of the
beneficial ownership of securities to be issued pursuant to this Agreement or
otherwise in connection therewith, including Preferred Stock or the Common Stock
resulting from the conversion of the Preferred Stock and/or the exercise of
Warrants which, if aggregated with other securities beneficially owned on the
date hereof by any Investor and/or Chancellor LGT Asset Management, Inc. and
their Affiliates and Associates, would otherwise result in any such Person being
deemed an Acquiring Person.
4. COVENANTS OF THE INVESTORS.
a. Resale Restrictions During Lock-Up Periods. Each Investor
severally agrees that it will not (A) offer, sell, pledge, hypothecate or
otherwise dispose of any
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Conversion Shares or Warrant Shares or (B) establish or increase any "put
equivalent position" (as defined in Rule 16a-1(h) under the Exchange Act) with
respect to any such securities, during any "Lock-Up Period. This restriction
shall apply during the following Lock-Up Periods:
i. Commencing on the date hereof, and expiring as to 50% of the
Conversion Shares and the Warrant Shares then owned by or issuable to such
Investor upon the earlier of (A) June 1, 1998 or (B) the receipt by the Company
of a letter (a copy of which shall be provided to each Investor promptly upon
receipt) from the United States Food & Drug Administration (the "FDA") granting
accelerated approval of the Company's New Drug Application to market Synovir(R)
for any indication, and expiring as to 100% of the Conversion Shares and the
Warrant Shares then owned by or issuable to Investor upon the earlier of (X)
June 1, 1999 or (Y) any date on which, pursuant to the terms of the Certificate
of Designation, the Closing Price for any fifteen (15) consecutive trading days
is at or above 150% of the Conversion Price then in effect.
ii. Commencing on any date specified by the Company (the
"Commencement Date") following the filing by the Company of a preliminary
registration statement for a registered public offering managed by nationally
recognized underwriters and ending (A) 30 days after the Commencement Date if
the registration statement is not declared effective by the SEC on or prior to
such 30th day, or (B) if the registration statement is declared effective by the
SEC on, or within thirty days after the Commencement Date, a period not to
exceed 90 days following the Effective Date of the registration statement, if
required by the underwriters of the public offering.
b. No Hedging or Short Sales. Each investor severally agrees that
for so long as it owns Preferred Stock hereunder, (i) it does not have the
intention of entering into, nor will enter into, directly or indirectly, any
hedge, put position, short position, or other similar instrument or position
with respect to the Preferred Stock, the Warrants, the Common Stock, any
securities exchangeable for, exercisable into or convertible into Common Stock,
or any other equity security of the Company, or (ii) will use the Conversion
Shares or Warrant Shares to cover any hedge, put position, short position, or
other similar instrument position with respect to the Company's Common Stock.
For purposes of this Agreement, each Investor agrees that a sale of Common Stock
that is expected by such Investor to be settled by delivery of Conversion Shares
or Warrant Shares more than five business days after the sale of such Conversion
Shares or Warrant Shares constitutes a short sale and is prohibited by this
Section 4.b.
c. No Sales of Common Stock Prior to Certain Dates. Each Investor
severally agrees that it will not offer, sell or otherwise dispose of, directly
or indirectly, any shares of Preferred Stock or Common Stock, any securities
exchangeable for, exercisable into or convertible into shares of Common Stock,
or any other securities of the Company that any such Investor beneficially owns,
directly or indirectly, (i) after receiving notice from the
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Company of a Closing Date, during the ten trading days prior to the Closing
Date, or (ii) during the ten trading days prior to June 1, 1998.
d. HSR Act. Each Investor severally agrees that, if either outside
counsel to the Investors or outside counsel to the Company determines that the
Investors and the Company are required to file notifications under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act")
in connection with any proposed acquisition of voting securities of the Company
by the Investors, including, without limitation, any acquisition pursuant to the
conversion of Preferred Stock or exercise of Warrants to be issued by the
Company under this Agreement, the Investor shall promptly and in good faith
prepare and file such notifications, shall cooperate with the Company in
effecting such filings and shall otherwise comply with the applicable
requirements of the HSR Act in connection with such filing.
5. COVENANTS OF THE COMPANY.
The Company covenants and agrees that, as long as the Preferred Stock,
Warrants, Conversion Shares or Warrant Shares are held by the Investor, the
Company will:
a. Form D; Blue Sky Laws. The Company shall file a Form D with
respect to the Securities as required under Regulation D. The Company shall, on
or before each Closing Date, take such action as the Company shall reasonably
determine is necessary to qualify the Securities for sale to the Investors at
the applicable Closing pursuant to this Agreement under applicable securities or
"blue sky" laws of the states of the United States (or to obtain an exemption
from such qualification).
b. Use of Proceeds. The Company shall use the proceeds from the sale
of the shares of Preferred Stock for the further development and
commercialization of the Company's products and for other working capital and
general corporate purposes, including administrative and overhead expenses.
Pending any such use, the Company expects to invest the net proceeds in
short-term, interest-bearing, investment grade securities.
c. Capital Raising Limitations.
i. Subject to the exceptions described below, the Company
agrees that during the period beginning on the date hereof and ending on June 1,
1998, the Company will not, without the prior written consent of a majority in
interest of the Investors, obtain additional equity financing, whether in a
private or public offering, at a price per share of Common Stock that is less
than 100% of the Initial Conversion Price, as defined in Section 5(a) of the
Certificate of Designation, unless it shall first have issued and sold all
shares of Preferred Stock that the Investors have agreed to purchase under this
Agreement.
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ii. [intentionally omitted]
iii. Subject to the exceptions described below, the Company
agrees that during the period beginning on the date hereof and ending on June 1,
1998, if the Company, without the prior written consent of a majority in
interest of the Investors, obtains additional equity financing through a private
or public offering at a price per share of Common Stock that is less than 125%
of the Initial Conversion Price, as defined in Section 5(a) of the Certificate
of Designation, prior to the Company first having issued and sold all shares of
Preferred Stock that the Investors have agreed to purchase under this Agreement,
then the Company shall become obligated to issue to each Investor, all Warrants
not theretofore issued pursuant to Section 1(d)(ii) hereof to which the Investor
would be entitled had all shares of Preferred Stock issuable under this
Agreement actually been issued and sold to such Investor, based on the
Conversion Price in effect (as determined by the Certificate of Designation) on
the closing date of such private offering or the effective date of such public
offering.
iv. The capital raising limitations set forth in ii.-iii. above
shall not apply to any transaction involving (A) issuances of securities in
connection with a merger, consolidation or sale of assets, or (B) the issuance
of securities at a price per share of Common Stock above the Conversion Price
(as determined by the Certificate of Designation) then in effect, in connection
with any strategic partnership or joint venture (the primary purpose of which is
not to raise equity capital), or in connection with the disposition or
acquisition of a business, product or license by the Company.
v. The capital raising limitations set forth in ii.-iii. above
also shall not apply to the issuance of securities upon exercise or conversion
of the Company's options, warrants or other convertible securities outstanding
as of the date hereof, to the grant of additional options or warrants to
employees and directors of, or consultants to, the Company pursuant to a plan
approved by the Board of Directors of the Company, or to the issuance of
securities thereunder.
vi. The capital raising limitations set forth in i.-iii. above
also shall not apply (A) in the event that the rules of the National Association
of Securities Dealers, Inc. require the Company, after the First Closing, to
obtain stockholder approval prior to the issuance and sale of additional
Preferred Stock pursuant to this Agreement, and such stockholder approval is not
obtained despite the Company's best efforts, or (B) the failure of any
conditions to the Second, Third or Fourth Closings, which conditions are not
waived by all of the Investors; provided, however, if the Company, without the
prior written consent of a majority in interest of the Investors, obtains
additional equity financing through a private or public offering at a price per
share of Common Stock that is less than 125% of the Initial Conversion Price, as
defined in Section 5(a) of the Certificate of Designation, prior to having
issued and sold all shares of Preferred Stock that the Investors have agreed to
purchase under this Agreement, in reliance on the exception provided by this
Section 5.c.vi., then the
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Company shall become obligated to issue to each Investor, all Warrants not
theretofore issued pursuant to Section 1(d)(ii) hereof to which the Investor
would be entitled had all shares of Preferred Stock issuable under this
Agreement actually been issued and sold to such Investor, based on the
Conversion Price in effect (as determined by the Certificate of Designation) on
the closing date of such private offering or the effective date of such public
offering.
vii. The capital raising limitations set forth in i.-iii. above
also shall not apply in the event that any Investor breaches its obligation to
purchase its full Subscription Amount at any Closing after the Company provides
proper notice of its exercise of its option to issue and sell Preferred Stock at
such Closing.
viii. The capital raising limitations set forth in i. - iii.
above shall not apply to any issuance of securities by any subsidiary of the
Company.
d. Expenses. The Company shall reimburse Chancellor LGT Asset
Management for all out-of-pocket expenses incurred by it in connection with the
negotiation, preparation, execution, delivery and performance of this Agreement
and the other agreements to be executed in connection herewith, including,
without limitation, attorneys' and consultants' fees and expenses; provided,
however, that the Company's total obligation pursuant to this Section 5(d) is
limited to Sixty Five Thousand Dollars ($65,000) plus reasonable disbursements
not in excess of 10% of such fees.
e. Reservation of Shares. The Company shall at all times have
authorized, and reserved for the purpose of issuance, a sufficient number of
shares of Common Stock to provide for the full conversion of the outstanding
shares of Preferred Stock and issuance of the Conversion Shares in connection
therewith and the full exercise of the Warrants and the issuance of the Warrant
Shares in connection therewith (based on the Conversion Price of the shares of
Preferred Stock and the exercise price of the Warrants in effect from time to
time). The Company shall not reduce the number of shares of Common Stock
reserved for issuance upon conversion of the shares of Preferred Stock and the
full exercise of the Warrants without the consent of each Investor.
f. Listing. The Company shall use its best efforts to promptly
secure the listing of the Conversion Shares and Warrant Shares upon each
national securities exchange or automated quotation system, if any, upon which
the Common Stock is then listed.
g. Maintenance of Property. The Company shall do or cause to be done
all things necessary to obtain, preserve, renew, extend and keep in full force
and effect the rights, licenses, permits, franchises, authorizations, patents,
copyrights, trademarks and trade names material to the conduct of its business;
maintain and operate such business in substantially the manner in which it is
presently conducted and operated; comply in all material respects with all
applicable laws, rules, regulations and orders of any governmental authority,
whether now in effect or hereafter enacted; and at all times maintain and
preserve
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all property material to the conduct of such business and keep such property in
good repair, working order and condition and from time to time make, or cause to
be made, all needful and proper repairs, renewals, additions, improvements and
replacements thereto necessary in order that the business carried on in
connection therewith may be properly conducted at all times.
h. Obligations and Taxes. The Company shall pay its debts and other
obligations promptly and in accordance with their terms and pay and discharge
promptly when due all taxes, assessments and governmental charges or levies
imposed upon it or upon its income or profits or in respect of its property,
before the same shall become delinquent or in default, as well as all lawful
claims for labor, materials and supplies or otherwise which, if unpaid, might
give rise to a lien upon such properties or any part thereof; provided, however,
that such payment and discharge shall not be required with respect to any such
tax, assessment, charge, levy or claim so long as the validity or amount thereof
shall be contested in good faith by appropriate proceedings and the Company
shall have set aside on its respective books adequate reserves with respect
thereto.
i. Financial Statements, Reports, etc. The Company shall furnish to
Investors, promptly upon their becoming available, copies of all (i) financial
statements, reports, notices and proxy statements sent or made available
generally by the Company to its security holders or by any of its Subsidiaries
to its security holders other than the Company or another of its Subsidiaries,
and (ii) regular and periodic reports and all registration statements and
prospectuses, if any, filed by the Company or its Subsidiary with any securities
exchange or with the Commission or any governmental authority succeeding to any
of its functions;
j. Maintaining Records: Access to Properties and Inspections. The
Company shall maintain all financial records in accordance with GAAP and permit
any representatives designated by an Investor to visit and inspect the financial
records and the properties of the Company at reasonable times and as often as
requested and to make extracts from and copies of such financial records, and
permit any representatives designated by the Investor to discuss the affairs,
finances and condition of the Company with the officers thereof.
k. Corporate Existence. The Company and its subsidiary will maintain
their existence as corporations existing in good standing under the laws of the
jurisdiction in which it they are incorporated, and will maintain their status
as duly qualified as foreign corporations to do business and remain in good
standing in every jurisdiction in which the nature of the business conducted by
it makes such qualification necessary and where the failure so to qualify would
have a Material Adverse Effect.
l. SEC Documents, Financial Statements. The Company will file all
reports, schedules, forms, statements and other documents required to be filed
by it with the
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SEC pursuant to the reporting requirements of the Exchange Act of 1934, as
amended. The financial statements of the Company will be prepared in accordance
with generally accepted accounting principles, consistently applied, and will
fairly present in all material respects the consolidated financial position of
the Company and its consolidated subsidiaries and results of their operations
and cash flows for the periods then ended (subject, in the case of unaudited
statements, to normal year-end audit adjustments).
m. Compliance with Law. The Company will conduct its business in
compliance with all applicable laws, rules and regulations of the jurisdictions
in which it is conducting business, including, without limitation, all
applicable local, state and federal environmental laws and regulations.
n. Insurance. The Company shall maintain liability, casualty and
other insurance (subject to customary deductions and retentions) with
responsible insurance companies against such risk of the types and in the
amounts customarily maintained by development stage pharmaceutical companies of
comparable size to the Company.
o. HSR Act. The Company agrees that, if either outside counsel to
the Investors or outside counsel to the Company determines that the Investors
and the Company are required to file notifications under the HSR Act in
connection with any proposed acquisition of voting securities of the Company by
the Investors, including, without limitation, any acquisition pursuant to the
conversion of Preferred Stock or exercise of Warrants to be issued by the
Company under this Agreement, the Company shall promptly and in good faith
prepare and file such notifications, shall cooperate with the Investors in
effecting such filings and shall otherwise comply with the applicable
requirements of the HSR Act in connection with such filing.
p. Announcements. Except as otherwise required by applicable laws,
rules or regulations, neither the Company, nor the Investors shall make any
public announcement with respect to this Agreement or the transactions
contemplated hereby, prior to the First Closing. The Company shall provide to
Chancellor LGT Asset Management, Inc. ("Chancellor") an opportunity to review
any document intended for public dissemination that the Company proposes to
disseminate and which identifies Chancellor or any Investor by name, and the
Company shall make such changes to such proposed public announcement as
Chancellor and/or any Investor shall reasonably request; provided, however, that
nothing in this sentence shall be deemed to restrain the Company from making
any disclosure that, in the good faith determination of the Company, is required
by applicable laws, rules or regulations.
q. Repurchases of Series A Preferred Stock. Notwithstanding anything
to the contrary contained in Section 5.b. hereof, the Company shall not expend,
in the aggregate, more than $3 million to repurchase Series A Convertible
Preferred Stock other than from (A) the net proceeds of a registered public
offering of Common Stock with nationally recognized underwriters and/or (B) the
payments made to the Company and any
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strategic partner or joint venturer contemporaneously with the execution of an
agreement with the Company; provided, any such offering occurs, or payments are
received after the First Closing.
6. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
The Company shall have no obligation to issue and sell the shares of
Preferred Stock at the Second Closing, Third Closing or Fourth Closing. The
obligation of the Company hereunder to issue and sell the shares of Preferred
Stock to an Investor at the First Closing is subject to the satisfaction, at or
before the Closing Date in respect of the First Closing, of each of the
following conditions thereto, provided that these conditions are for the
Company's sole benefit and may be waived by the Company at any time in its sole
discretion.
a. Such Investor shall have executed this Agreement and the
Registration Rights Agreement, and delivered the same to the Company.
b. The Certificate of Designation shall have been accepted for
filing with the Secretary of State of the State of Delaware.
c. Such Investor shall have delivered the full purchase price in
accordance with Section 1.b. above.
d. The representations and warranties of such Investor shall be true
and correct in all material respects as of the date when made and as of the
Closing Date as though made at that time (except for representations and
warranties that speak as of a specific date), and such Investor shall have
performed, satisfied and complied in all material respects with the covenants,
agreements and conditions required by this Agreement to be performed, satisfied
or complied with by the applicable Investor at or prior to the Closing Date.
7. CONDITIONS TO INVESTORS' OBLIGATIONS TO PURCHASE.
The obligation of each Investor hereunder to purchase the shares of
Preferred Stock at each Closing is subject to the satisfaction, at or before the
Closing Date in respect of such closing of each of the following conditions,
provided that these conditions are for such Investor's sole benefit and may be
waived by such Investor at any time in its sole discretion:
a. With respect to the First Closing:
i. The Company shall have executed this Agreement and the
Registration Rights Agreement, and delivered the same to the Investor.
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ii. The Certificate of Designation shall have been accepted for
filing with the Secretary of State of the State of Delaware.
iii. The Company shall have delivered to such Investor duly
executed stock certificates (in such denominations as the Investor shall
request) representing the shares of Preferred Stock being so purchased in
accordance with Section 1.b. above.
iv. The representations and warranties of the Company shall be
true and correct as of the date when made and (except for representations and
warranties that speak as of a specific date) as of the Closing Date as though
made at such time and the Company shall have performed, satisfied and complied
with the covenants, agreements and conditions required by this Agreement to be
performed, satisfied or complied with by the Company at or prior to such Closing
Date. The Investor shall have received a certificate, executed by the chief
executive officer of the Company, dated as of the Closing Date, to the foregoing
effect and as to such other matters as may be reasonably requested by such
Investor.
v. The Investor shall have received an opinion of the Company's
counsel, dated as of such Closing Date, in form, scope and substance reasonably
satisfactory to the Investor and in substantially the same form as Exhibit "E"
attached hereto.
vi. Each of the directors and executive officers of the Company
shall have entered into lock-up agreements, in form, scope and substance
reasonably satisfactory to the Investor, with the Company that provide for
restrictions on the sale of Common Stock during the Lock-Up Periods and the
Investor shall have received copies of all such Lock-Up Agreements.
vii. The Common Stock shall be listed for quotation and trading
on the Nasdaq National Market.
viii. The Company shall have delivered to such Investor a
certificate of the Secretary of the Company (A) as to the incumbency and
signatures of each of the officers of the Company who shall execute on behalf of
the Company any document delivered at such Closing; (B) attaching and certifying
the Certificate of Incorporation and By-laws of the Company, and (C) attaching
and certifying the resolutions of the Board of Directors of the Company with
respect to this Agreement and the transaction contemplated hereby.
b. With respect to the Second Closing:
i. The Company shall have delivered to such Investor duly
executed stock certificates (in such denominations as the Investor shall
request) representing the shares of Preferred Stock being so purchased in
accordance with Section 1.b. above.
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ii. The representations and warranties of the Company shall be
true and correct in all material respects as of the date when made and (except
for representations and warranties that speak as of a specific date) as of the
Closing Date as though made at such time and the Company shall have performed,
satisfied and complied in all material respects with the covenants, agreements
and conditions required by this Agreement to be performed, satisfied or complied
with by the Company at or prior to the Closing Date. The Investor shall have
received a certificate, executed by the chief executive officer of the Company,
dated as of the Closing Date, to the foregoing effect and as to such other
matters as may be reasonably requested by such Investor.
iii. Any waiting period applicable to such Closing under the HSR
Act shall have expired or been terminated, and no action shall have been
instituted by the Department of Justice or Federal Trade Commission challenging
or seeking to enjoin the transactions to be consummated at such Closing, which
action shall have not been withdrawn or terminated.
iv. The Common Stock shall be listed for quotation and trading
on the Nasdaq National Market.
v. The Company shall have represented and warranted to the
Investors that the issuance of all shares of Preferred Stock, Conversion Shares,
Warrants and Warrant Shares does not and will not, assuming no change in
applicable facts from those existing as of the date of such representation and
warranty, result in the acceleration of rights under any agreement to which the
Company or any of its subsidiaries is a party, or by which any material asset or
property of the Company or any of its subsidiaries is bound, or give rise to an
obligation of the Company to make any payments, other than the acceleration of
rights to exercise options issued to the Company's employees and directors,
payments that may be due on the termination of employment of any employee of the
Company or any of its subsidiaries, and other payments or obligations not in
excess of $250,000 in the aggregate.
c. With respect to the Third Closing:
i. The Company shall have received a letter from the FDA
stating that the FDA has granted accelerated approval for the Company's New Drug
Application to market Synovir for any indication.
ii. The Company shall have delivered to such Investor duly
executed stock certificates (in such denominations as the Investor shall
request) representing the shares of Preferred Stock being so purchased in
accordance with Section 1.b. above.
iii. The representations and warranties of the Company shall be
true and correct in all material respects as of the date when made and (except
for representations and warranties that speak as of a specific date) as of the
Closing Date as
24
<PAGE>
though made at such time and the Company shall have performed, satisfied and
complied in all material respects with the covenants, agreements and conditions
required by this Agreement to be performed, satisfied or complied with by the
Company at or prior to the Closing Date. The Investor shall have received a
certificate, executed by the chief executive officer of the Company, dated as of
the Closing Date, to the foregoing effect and as to such other matters as may be
reasonably requested by such Investor.
iv. Any waiting period applicable to such Closing under the HSR
Act shall have expired or been terminated, and no action shall have been
instituted by the Department of Justice or Federal Trade Commission challenging
or seeking to enjoin the transactions to be consummated at such Closing, which
action shall have not been withdrawn or terminated.
v. The Common Stock shall be listed for quotation and trading
on the Nasdaq National Market.
vi. The Company shall have represented and warranted to the
Investors that the issuance of all shares of Preferred Stock, Conversion Shares,
Warrants and Warrant Shares does not and will not, assuming no change in
applicable facts from those existing as of the date of such representation and
warranty, result in the acceleration of rights under any agreement to which the
Company or any of its subsidiaries is a party, or by which any material asset or
property of the Company or any of its subsidiaries is bound, or give rise to an
obligation of the Company to make any payments, other than the acceleration of
rights to exercise options issued to the Company's employees and directors,
payments that may be due on the termination of employment of any employee of the
Company or any of its subsidiaries, and other payments or obligations not in
excess of $250,000 in the aggregate.
d. With respect to the Fourth Closing:
i. The Company shall have received a letter from the FDA
stating that the FDA has granted accelerated approval of the Company's New Drug
Application to market Synovir for any indication.
ii. The Company shall have delivered to such Investor duly
executed stock certificates (in such denominations as the Investor shall
request) representing the shares of Preferred Stock being so purchased in
accordance with Section 1.b. above.
iii. The representations and warranties of the Company shall be
true and correct in all material respects as of the date when made and (except
for representations and warranties that speak as of a specific date) as of the
Closing Date as though made at such time and the Company shall have performed,
satisfied and complied in all material respects with the covenants, agreements
and conditions required by this Agreement to be performed, satisfied or complied
with by the Company at or prior to the
25
<PAGE>
Closing Date. The Investor shall have received a certificate, executed by the
chief executive officer of the Company, dated as of such Closing Date, to the
foregoing effect and as to such other matters as may be reasonably requested by
such Investor.
iv. Any waiting period applicable to such Closing under the HSR
Act shall have expired or been terminated, and no action shall have been
instituted by the Department of Justice or Federal Trade Commission challenging
or seeking to enjoin the transactions to be consummated at such Closing, which
action shall have not been withdrawn or terminated.
v. The Common Stock shall be listed for quotation and trading
on the Nasdaq National Market.
vi. The Company shall have represented and warranted to the
Investors that the issuance of all shares of Preferred Stock, Conversion Shares,
Warrants and Warrant Shares does not and will not, assuming no change in
applicable facts from those existing as of the date of such representation and
warranty, result in the acceleration of rights under any agreement to which the
Company or any of its subsidiaries is a party, or by which any material asset or
property of the Company or any of its subsidiaries is bound, or give rise to an
obligation of the Company to make any payments, other than the acceleration of
rights to exercise options issued to the Company's employees and directors,
payments that may be due on the termination of employment of any employee of the
Company or any of its subsidiaries, and other payments or obligations not in
excess of $250,000 in the aggregate.
8. MISCELLANEOUS.
a. Purchase Price Allocation. The parties to the Agreement agree to
cooperate to determine, within ten (10) days of the date hereof, an allocation
of the Purchase Price between the Series B Convertible Preferred Stock and the
Warrants (the "Unit Allocation"), and (ii) to file all U.S. federal, state and
local income and franchise tax returns ("Tax Returns") consistent with the Unit
Allocation (unless required otherwise by a "determination" within the meaning of
section 1313(a) of the Code). The parties to the Agreement further agree to
treat the Series B Convertible Preferred Stock as stock other than "preferred
stock" for purposes of section 305 of the Code and the Regulations thereunder
and to file all Tax Returns consistent with such treatment (unless required
otherwise by a "determination" within the meaning of section 1313(a) of the
Code).
b. Equitable Relief. The Company and the Investor each recognize
that in the event that either party fails to perform, observe, or discharge any
or all of its obligations under this Agreement, any remedy at law may prove to
be inadequate relief to the aggrieved party. The Company and the Investor
therefore agree that an aggrieved party under this
26
<PAGE>
Agreement, if such party so requests, shall be entitled to temporary and
permanent injunctive relief in any such case without the necessity of proving
actual damages.
c. Governing Law. This Agreement shall be governed by and
interpreted in accordance with the laws of the State of New York without regard
to the principles of conflict of laws. The parties hereto hereby submit to the
exclusive jurisdiction of the United States Federal Courts located in New York,
New York with respect to any dispute arising under this Agreement, the
agreements entered into in connection herewith or the transactions contemplated
hereby or thereby.
d. Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each party and
delivered to the other party.
e. Headings. The headings of this Agreement are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Agreement.
f. Severability. If any provision of this Agreement shall be invalid
or unenforceable in any jurisdiction, such invalidity or unenforceability shall
not affect the validity or enforceability of the remainder of this Agreement or
the validity or enforceability of this Agreement in any other jurisdiction.
g. Entire Agreement; Amendments. This Agreement and the instruments
referenced herein contain the entire understanding of the parties with respect
to the matters covered herein and therein and, except as specifically set forth
herein or therein, neither the Company nor any Investor makes any
representation, warranty, covenant or undertaking with respect to such matters.
No provision of this Agreement may be waived or amended other than by an
instrument in writing signed by the party to be charged with enforcement.
h. Notices. Any notices required or permitted to be given under the
terms of this Agreement shall be sent by certified or registered mail (return
receipt requested), by facsimile, or delivered personally or by courier and
shall be effective upon receipt. Each party shall provide notice to the other
party of any change in address. The addresses for such communications shall be:
If to the Company:
Celgene Corporation
7 Powder Horn Drive
Warren, NJ 07059
Attention: Chief Executive Officer
Telecopy: (908) 271-1001
27
<PAGE>
With copy to:
Arnold S. Jacobs, Esq.
Proskauer Rose LLP
1585 Broadway
New York, NY 10036-8299
Telecopy: (212) 969-2900
If to an Investor: To the address set forth immediately below such Investor's
name on the signature pages hereto.
i. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their successors and assigns.
Neither the Company nor any Investor shall assign this Agreement or any rights
or obligations hereunder without the prior written consent of the other.
j. Third Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective permitted successors and
assigns, and is not for the benefit of, nor may any provision hereof be enforced
by, any other person.
k. Survival. The representations and warranties of the Company and
the agreements and covenants set forth herein shall survive each closing
hereunder notwithstanding any due diligence investigation conducted by or on
behalf of the Investors. The Company agrees to indemnify and hold harmless each
of the Investors for loss or damage or costs, including reasonable attorneys'
fees, arising as a result of or related to any breach or alleged breach by the
Company of any such representation, warranty, agreement or covenant herein.
l. Further Assurances. Each party shall do and perform, or cause to
be done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
m. Termination. In the event that the First Closing shall not have
occurred on or before June 13, 1997, unless the parties agree otherwise, this
Agreement shall terminate at the close of business on such date.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
28
<PAGE>
IN WITNESS WHEREOF, the undersigned Investors and the Company have
caused this Agreement to be duly executed as of the date first above written.
Celgene Corporation
By:
----------------------------------
NAME OF INVESTOR: Chancellor LGT Private Capital III, L.P.
SIGNATURE:
By:
----------------------------------
Name:
--------------------------------
Its:
---------------------------------
ADDRESS:
--------------------
c/o Chancellor LGT Asset Management, Inc.
1166 Avenue of the Americas
New York, New York 10036
Facsimile:_(212)
Telephone: -------------
SUBSCRIPTION AMOUNT PER CLOSING:
Number of Shares of Series B Convertible Preferred Stock: ----------
Purchase Price: ----------
AGGREGATE SUBSCRIPTION AMOUNT:
Aggregate Number of Shares of
Series B Convertible Preferred Stock: ----------
Aggregate Purchase Price: ----------
29
<PAGE>
SCHEDULE 3(c)
Securities or rights convertible into or exchangeable for
any unissued shares of capital stock of the Company
Stock Options 2,192,633
Warrants 384,056
Series A Convertible Preferred Stock (as of May 31, 1997) 922,415
Total: 3,569,104
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAW, THIS WARRANT HAS
BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS (i) A REGISTRATION STATEMENT UNDER
THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS SHALL HAVE BECOME
EFFECTIVE WITH REGARD THERETO, OR (ii) AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS IS AVAILABLE IN CONNECTION
WITH SUCH OFFER, SALE OR TRANSFER.
Warrant to Purchase
_____ shares
Warrant to Purchase Common Stock
of
CELGENE CORPORATION
THIS CERTIFIES that __________________ or any subsequent holder
("Holder") hereof, has the right to purchase from CELGENE CORPORATION, a
Delaware corporation (the "Company"), not more than ___ fully paid and
nonassessable shares of the Company's common stock, par value $.01 per share
("Common Stock"), at the Exercise Price (as defined in Section 2(a)) in effect
on the Date of Exercise (as defined in Section 1(b)) at any time before 5:00
p.m., New York, New York time, on [four years from the Issuance Date].
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.
(a) Manner of 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 Exercise Form attached hereto duly
executed, together with the full Exercise Price (as defined in Section 2(a))
for each share of Common Stock as to which this Warrant is exercised, at the
office of the Company, Celgene Corporation, 7 Powder Horn Drive, Warren, New
Jersey 07059, Attention: Chief Executive Officer, Telephone (908) 271-1001 (or
at such other office or agency as the Company may designate in writing).
<PAGE>
(b) Date of Exercise. Subject to the restrictions on
exercisability contained in Section 8 hereof, the "Date of Exercise" of the
Warrant shall be defined as (i) the date that the Exercise Form (attached as
"Exhibit A" hereto) is sent by facsimile to the Company, provided that the
original Warrant, Exercise Form and Exercise Price are received by the Company
within five (5) business days thereafter, or (ii) if Holder has not sent
advance notice by facsimile, the date the original Warrant, Exercise Form and
Exercise Price are received by the Company. The Company shall issue and
deliver or cause to be issued and delivered within three (3) business days
after delivery to the Company of such original Warrant, Exercise Form and
Exercise Price, to the address set forth in the Exercise Form, a certificate
for the number of shares of Common Stock to which the Holder hereof is
entitled pursuant to such exercise.
(c) Cancellation of Warrant. This Warrant shall be canceled upon
its Exercise, and, as soon as practicable after the Date of Exercise, the
Holder hereof shall be entitled to receive Common Stock for the number of
shares of Common Stock purchased upon such Exercise, and if this Warrant is
not exercised in full, the Holder shall also be entitled to receive a new
Warrant (containing terms identical to those of this Warrant) representing any
unexercised portion of this Warrant.
(d) Holder of Record. Each person in whose name any Warrant for
shares of Common Stock is issued shall, for all purposes, be deemed to have
become the holder of record of such shares on the Date of Exercise of this
Warrant. Nothing in this Warrant shall be construed as conferring upon the
Holder hereof any rights as a shareholder of the Company prior to exercise of
any portion hereof.
2. EXERCISE PRICE.
(a) Exercise Price. The Exercise Price per share of Common Stock
shall be $_____ [115% of the Conversion Price as defined in, and as determined
by the terms of, the Celgene Corporation Certificate of Designation of Series
B Convertible Preferred Stock in effect on the date of issuance of the
Warrant] until the occurrence of an event specified in subsection (a), (b),
(c) or (d) of Section 4 and thereafter shall mean said price as adjusted from
time to time in accordance with the provisions of said subsections.
(b) Payment of Exercise Price. Payment of the Exercise Price
shall be made only by cash, certified check, cashiers' check or wire transfer
of immediately available funds.
3. TRANSFER AND REGISTRATION.
(a) Transfer Rights. 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. 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 as to the portion of this Warrant
transferred, and the Holder of this Warrant shall be entitled to receive a new
Warrant as to the portion hereof retained.
-2-
<PAGE>
(b) Registrable Securities. The Common Stock issuable upon the
exercise of this Warrant constitute "Registrable Securities" under that certain
Registration Rights Agreement dated as of June __, 1997 between the Company and
certain investors and, accordingly, has the benefit of certain registration
rights pursuant to that agreement.
4. ANTI-DILUTION ADJUSTMENTS.
(a) Stock Dividend. 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 (taking into account any
proportionate adjustment to the Exercise Price).
(b) Recapitalization or Reclassification. If the Company shall at
any time effect a recapitalization, reclassification or other similar
transaction of such character that shares of Common Stock shall be changed
into or become exchangeable for a larger or smaller number of shares of Common
Stock, 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 adjusted, in direct proportion to the adjustment in the
number of shares of Common Stock by reason of such recapitalization,
reclassification or similar transaction, and the Exercise Price shall be
proportionately adjusted.
(c) Distributions. If the Company shall at any time distribute to
Holders of Common Stock any cash, evidences of indebtedness or other
securities or assets (other than cash dividends or distributions payable out
of earned surplus or net profits for the current or preceding year) 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 (the
"Determination Date").
(d) Consolidation, Merger or Sale. In case of any consolidation
of the Company with, or merger of the Company into any other company, or in
case of any sale or conveyance of all or substantially all of the assets of
the Company other than in connection with a plan of complete liquidation of
the Company, then as a condition of such consolidation, merger or sale or
conveyance, adequate provision will be made whereby the holder of this Warrant
will have the right to purchase and receive upon exercise of this Warrant in
lieu of the shares of Common Stock immediately theretofore acquirable upon the
exercise of this Warrant, such shares of stock, securities or assets as may be
issued or payable with respect to or in exchange for the number of shares of
Common Stock immediately theretofore purchasable and receivable upon exercise
of this Warrant had such consolidation, merger or sale or conveyance not taken
place. In any such case, the Company will make appropriate provision to insure
that the provisions of this Section 4 hereof will thereafter be
-3-
<PAGE>
applicable as nearly as may be in relation to any shares of stock or securities
thereafter deliverable upon the exercise of this Warrant. The Company will not
effect any consolidation, merger or sale or conveyance unless prior to the
consummation thereof, the successor company (if other than the Company) assumes
by written instrument the obligations under this Section 4 and the obligations
to deliver to the holder of this Warrant such shares of stock, securities or
assets as, in accordance with the foregoing provisions, the holder may be
entitled to acquire.
(e) Adjustments: Additional Shares, Securities or Assets. 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. If, on Exercise of this
Warrant, the Holder hereof would be entitled to a fractional share of Common
Stock or a right to acquire a fractional share of Common Stock, such
fractional share shall be disregarded and the number of shares of Common Stock
issuable upon conversion shall be the next higher number of shares.
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 and if at any time the number of authorized but
issued shares of Common Stock shall not be sufficient to permit the exercise
in full of this Warrant, the Company will take such corporate action as may be
necessary to increase its authorized but unissued shares of Common Stock to
such number of shares as shall be sufficient for such purpose. 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
and nonassessable.
7. RESTRICTIONS ON TRANSFER.
(a) Registration or Exemption Required. This Warrant has not been
registered under the Securities Act 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 the Securities Act.
(b) Assignment. Assuming the conditions of Section 7(a) above
regarding registration or exemption have been satisfied, the Holder may sell,
transfer, assign, pledge or otherwise dispose of this Warrant, in whole or in
part. Holder shall deliver a written notice to
-4-
<PAGE>
Company, substantially in the form of the Assignment attached hereto as Exhibit
B, indicating the person or persons to whom the Warrant shall be assigned and
the respective number of warrants to be assigned to each assignee. The Company
shall effect the assignment within ten days, and shall deliver to the
assignee(s) designated by Holder a Warrant of like tenor and terms for the
appropriate number of shares.
8. CERTAIN RESTRICTIONS ON EXERCISABILITY OF THIS WARRANT.
Notwithstanding anything set forth elsewhere herein, if at any time
the percentage beneficial ownership of LGT Asset Management, Inc. ("LGT") (as
determined in accordance with Regulation 13D-G under the Securities Exchange
Act of 1934, as may be amended from time to time) of the total outstanding
Common Stock of the Company (the "LGT Beneficial Ownership") exceeds 20%
("Warrant Percentage Restriction"), and if this Warrant is beneficially owned
by LGT, this Warrant shall not be exercisable with respect to that number of
shares of Common Stock by which such beneficial ownership exceeds the Warrant
Percentage Restriction (each, an "Excess Share"). Following the passage of any
consecutive 75 calendar day period during which such beneficial ownership is
below and has continuously remained below the Warrant Percentage Restriction
(the "Shortfall"), this Warrant shall become exercisable for that number of
Excess Shares equal to the difference between the Warrant Percentage
Restriction and the Shortfall (each, a "Restored Share"), but in no event
shall this Warrant be exercisable for a number of shares of Common Stock in
excess of the total number of shares of Common Stock issuable under this
Warrant as set forth on page 1 hereof as adjusted pursuant to Section 4
hereof. Other than as specifically set forth in this Section 8, this Warrant
shall be entitled to all rights set forth in this Warrant. In calculating the
LGT Beneficial Ownership for purposes of the Warrant Percentage Restriction,
preferred stock and warrants issuable or issued pursuant to the Securities
Purchase Agreement with the Company dated of even date herewith, Common Stock
issuable upon the conversion or exercise thereof, and other securities
required to be included in the calculation pursuant to Regulation 13D-G shall
be included.
9. 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.
10. 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 New York, without
giving effect to conflict of law provisions thereof.
-5-
<PAGE>
11. LOSS OF WARRANT.
Upon receipt by the Company of evidence of the loss, theft,
destruction or mutilation of this Warrant, and of indemnity or security
reasonably satisfactory to the Company, the Company shall execute and deliver
a new Warrant of like tenor and date.
12. NOTICE OR DEMANDS.
Notices required or permitted to be given hereunder shall be sent by
certified or registered mail (return receipt requested), facsimile, or
delivered personally or by courier and shall be effective upon receipt. Each
party shall provide notice to the other party of any change in address. The
addresses for such communications shall be:
if to the Company:
Celgene Corporation
7 Powder Horn Drive
Warren, New Jersey
Attention: Chief Executive Officer
Telecopy: (908) 271-1001
With copy to:
Arnold S. Jacobs, Esq.
Proskauer Rose Goetz & Mendelsohn LLP
1585 Broadway
New York, New York 10036-8299
Telecopy: (212) 969-2900
and if to any Investor, at such address as such Investor shall have provided in
writing to the Company, or at such other address as each such party furnishes by
notice given in accordance with this Section 12, and shall be effective upon
receipt.
-6-
<PAGE>
IN WITNESS WHEREOF, this Warrant is hereby executed and effective as
of the date set forth below.
Dated as of [Issuance Date] CELGENE CORPORATION
By:
--------------------------
Name:
Title:
-7-
<PAGE>
EXHIBIT A
EXERCISE FORM
TO: CELGENE CORPORATION
The undersigned hereby irrevocably exercises the right, evidenced by
the attached warrant (the "Warrant"), to purchase ________ of the shares of
Common Stock, par value $.01 per share (the "Common Stock"), of CELGENE
CORPORATION, and herewith makes payment of the Exercise Price with respect to
such shares in full, all in accordance with the conditions and provisions of
the Warrant.
The undersigned agrees not to offer, sell, transfer or otherwise
dispose of any shares of Common Stock, except in compliance with all
applicable securities laws.
The undersigned requests that such shares of Common Stock be issued,
and a replacement warrant representing any unexercised portion of the Warrant
be issued, pursuant to the Warrant in the name of the Registered Holder and
delivered to the undersigned at the address set forth below:
------------------- -----------------------------------
Date Signature of Warrant Holder
(must correspond exactly to the name as
written upon the face of the Warrant)
-------------------------------------------
Name of Warrant Holder (Print)
-------------------------------------------
Street Address
-------------------------------------------
City State Zip Country
-8-
<PAGE>
EXHIBIT B
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.
The undersigned acknowledges that the Common Stock issuable on Exercise of the
Warrant will not be 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. All shares of Common Stock issued upon Exercise of
the Warrant shall bear an appropriate legend to such effect.
---------------- ----------------------------------
Date Signature of Warrant Holder
(must correspond exactly to the name as
written upon the face of the Warrant)
Fill in for new Registration of Warrant:
----------------------------------------
Name
----------------------------------------
Street Address
----------------------------------------
City, State, Zip Country
-9-
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of June
9, 1997 by and among Celgene Corporation, a Delaware corporation, with
headquarters located at 7 Powder Horn Drive, Warren, NJ 07059 (the "Company"),
and each of the undersigned (together with their respective affiliates and any
assignee or transferee of all of their respective rights hereunder, the
"Investors").
W I T N E S S E T H
WHEREAS, in connection with the Securities Purchase Agreement by and
among the parties hereto of even date herewith (the "Securities Purchase
Agreement"), the Company has agreed, upon the terms and subject to the
conditions contained therein, to issue and sell to the Investors shares of its
Series B Convertible Preferred Stock (the "Preferred Stock") that are
convertible into shares (the "Conversion Shares") of the Company's common
stock, par value $.01 per share (the "Common Stock"), upon the terms and
subject to the limitations and conditions set forth in the Certificate of
Designation with respect to such Preferred Stock (the "Certificate of
Designation"); and
WHEREAS, the Company has agreed, upon the terms and subject to the
conditions contained in the Securities Purchase Agreement, to issue to the
Investors warrants (the "Warrants") that are exercisable for shares (the
"Warrant Shares") of Common Stock; and
WHEREAS, to induce the Investors to execute and deliver the
Securities Purchase Agreement, the Company has agreed to provide certain
registration rights under the Securities Act of 1933, as amended, and the
rules and regulations thereunder, or any similar successor statute
(collectively, the "Securities Act"), and applicable state securities laws;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and each
of the Investors hereby agree as follows:
1. DEFINITIONS.
a. As used in this Agreement, the following terms shall have the
following meanings:
(i) "register," "registered," and "registration" refer to a
registration effected by preparing and filing a Registration Statement or
Statements in compliance with
<PAGE>
the Securities Act and pursuant to Rule 415 under the Securities Act or any
successor rule providing for offering securities on a continuous basis ("Rule
415"), and the declaration or ordering of effectiveness of such Registration
Statement by the United States Securities and Exchange Commission (the "SEC").
(ii) "Registrable Securities" means the Conversion Shares and
the Warrant Shares issued or issuable, and any shares of capital stock issued
or issuable as a dividend on or in exchange for or otherwise with respect to
any of the foregoing.
(iii) "Registration Statement" means a registration statement
of the Company under the Securities Act.
b. Capitalized terms used herein and not otherwise defined herein
shall have the respective meanings set forth in the Securities Purchase
Agreement.
2. REGISTRATION.
a. Mandatory Registration. The Company shall prepare, and, (i)
on or prior to the date which is thirty (30) days after the date of the First
Closing, (ii) during the ten-day period ending after each of the Second, Third
and Fourth Closings, all as defined in the Securities Purchase Agreement (a
"Closing Date"), and June 1, 1998, and (iii) upon the request of Investors
owning more than 51% of the then outstanding shares of Preferred Stock, on or
prior to up to the date that is ten days after the receipt by the Company of
such a request ("Request Date") (any such filing deadline being hereinafter
referred to as a "Filing Deadline"), file with the SEC a Registration Statement,
on such form of Registration Statement as is then available to effect a
registration of the Registrable Securities, covering the resale of the
Registrable Securities underlying the securities issued at the Closing, on or
prior to the Request Date, on June 1, 1998 or otherwise issued pursuant to the
Securities Purchase Agreement, in each case, to the extent not theretofore
covered by a Registration Statement. Any Registration Statement filed pursuant
hereto, to the extent allowable under the Securities Act and the Rules
promulgated thereunder (including but not limited to Rule 416), shall state that
such Registration Statement also covers such indeterminate number of additional
shares of Common Stock as may become issuable upon conversion of the Preferred
Stock or upon exercise of the Warrants to prevent dilution resulting from stock
splits, stock dividends recapitalizations, reclassifications, distributions,
consolidations, mergers or similar transactions. The number of shares of Common
Stock initially included in each Registration Statement shall equal the maximum
number of Conversion Shares and Warrant Shares issuable upon conversion of all
shares of Preferred Stock and exercise of all Warrants issued or issuable in
respect of the Closing.
b. Underwritten Offering. If any offering pursuant to a
Registration Statement pursuant to Section 2.a. hereof involves an
underwritten offering, the Investors who hold a majority in interest of the
Registrable Securities subject to such underwritten
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offering shall have the right to select legal counsel and an investment banker
or bankers and manager or managers to administer the offering, which investment
banker or bankers or manager or managers shall be reasonably satisfactory to the
Company.
c. Payments by the Company. The Company shall use its best
efforts to obtain effectiveness of each Registration Statement as soon as
practicable. If, except as provided in Section 2.d., (i) any Registration
Statement(s) covering Registrable Securities required to be filed by the
Company pursuant to Section 2.a. hereof is not declared effective by the SEC
within one hundred thirty-five (135) days after the Closing Date (other than
by reason of delay caused by (a) a change in a relevant policy, procedure,
interpretation, position, practice or rule of the SEC announced after the
Closing Date, or (b) any act or failure to act by the Investors) or if, after
the Registration Statement has been declared effective by the SEC, sales
cannot be made pursuant to the Registration Statement (by reason of stop
order, the Company's failure to update the Registration Statement or any other
reason), then the Company will make payments to the Investors in such amounts
and at such times as shall be determined pursuant to this Section 2.c. as
relief for the damages to the Investors by reason of any such delay in or
reduction of their ability to sell the Registrable Securities. The Company
shall pay to each holder of Registrable Securities an amount equal to the
aggregate "Purchase Price" (as defined below) of the Preferred Stock then held
by such Investors (the "Aggregate Share Price") multiplied by two thousandths
(.0020) times the sum of: (i) the number of months (prorated for partial
months) after the end of such 135-day period and prior to the date the
Registration Statement is declared effective by the SEC, provided, however,
that there shall be excluded from such period any delays which are solely
attributable to changes required by the Investors in the Registration
Statement with respect to information relating to the Investors, including,
without limitation, changes to the plan of distribution, or to the failure of
the Investors to conduct their review of the registration statement pursuant
to Section 3.h. below in a reasonably prompt manner; and (ii) the number of
months (prorated for partial months) that sales cannot be made pursuant to the
Registration Statement after the Registration Statement has been declared
effective; such amounts shall be paid in cash. Payments pursuant hereto shall
be made within five (5) days after the end of each period that gives rise to
such obligation, provided that, if any such period extends for more than
thirty (30) days, interim payments shall be made for each such thirty (30) day
period. The term "Purchase Price" means the purchase price paid by the
Investors for the Preferred Stock.
d. Delay Periods; Suspension of Sales.
(i) If at any time prior to the expiration of the Registration
Period (as defined in Section 3.a.), counsel to the Company has determined in
good faith that it is reasonable to conclude that the filing of the
Registration Statement or the compliance by the Company with its disclosure
obligations in connection with the Registration Statement may require the
disclosure of information which the Board of Directors of the Company has
identified as material and which the Board of Directors has determined that
the Company has
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<PAGE>
a bona fide business purpose for preserving as confidential, then the Company
may delay the filing or the effectiveness of the Registration Statement (if not
then filed or effective, as applicable) and shall not be required to maintain
the effectiveness thereof or amend or supplement the Registration Statement and
no payments specified in Section 2.c. shall accrue for a period (a "Delay
Period") expiring after the earlier to occur of (A) the date which is three
business days after such material information is disclosed to the public or
ceases to be material or the Company is able to so comply with its disclosure
obligations and Commission requirements or (B) 45 days after the date which
commences any period that ends on a Filing Deadline. There shall not be more
than three Delay Periods during the Registration Period, and there shall not be
two Delay Periods during any period of 135 consecutive days.
(ii) The Company will give prompt written notice thereof to
each Investor of each Delay Period. Such notice shall be given as soon as
practicable after the Board of Directors makes the determination referenced in
Section 2.d.(i). Such notice shall state to the extent, if any, as is
practicable, an estimate of the duration of such Delay Period. Each Investor,
by his acceptance of any Registrable Securities, agrees that (i) upon receipt
of such notice of a Delay Period it will forthwith discontinue disposition of
Registrable Securities pursuant to the Registration Statement, and will not
deliver any prospectus forming a part of the Registration Statement in
connection with any sale of Registrable Securities until the expiration of
such Delay Period.
(iii) In the event that the Company does not file a
Registration Statement as required by Section 2.a. within the period
specified, then the Conversion Price for all Preferred Stock may be reset, in
accordance with Section 5(a) of the Certificate of Designation.
3. OBLIGATIONS OF THE COMPANY.
In connection with the registration of the Registrable Securities,
the Company shall have the following obligations:
a. The Company shall prepare promptly, and file with the SEC,
within the time periods provided for in Section 2.a hereof, a Registration
Statement, and thereafter use its best efforts to cause such Registration
Statement to become effective as soon as possible after such filing, and keep
the Registration Statement effective pursuant to Rule 415 at all times until
such date as is the earlier of (i) the date on which all of the Registrable
Securities registered thereby have been sold and (ii) the date on which all of
the Registrable Securities registered thereby (in the opinion of counsel to the
Company) may be immediately sold without registration or other legal restriction
(the "Registration Period"). Each such Registration Statement (including any
amendments or supplements thereto and prospectuses contained therein) shall not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein, or necessary to make the statements therein not
misleading.
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b. The Company shall prepare and file with the SEC such
amendments (including post-effective amendments) and supplements to the
Registration Statement and the prospectus used in connection with the
Registration Statement as may be necessary to keep the Registration Statement
effective at all times during the Registration Period, and, during such
period, comply with the provisions of the Securities Act with respect to the
disposition of all Registrable Securities of the Company covered by the
Registration Statement until such time as all of such Registrable Securities
have been disposed of in accordance with the intended methods of disposition
by the seller or sellers thereof as set forth in the Registration Statement.
c. The Company shall furnish to each Investor whose Registrable
Securities are included in the Registration Statement and its legal counsel
such number of copies of a prospectus, including a preliminary prospectus, and
all amendments and supplements thereto and such other related documents as
such Investor may reasonably request in order to facilitate the disposition of
the Registrable Securities owned by such Investor.
d. The Company shall use reasonable efforts to (i) register and
qualify the Registrable Securities covered by each Registration Statement
under such other securities or "blue sky" laws of such jurisdictions in the
United States as the Investors who hold a majority in interest of the
Registrable Securities being offered reasonably request, (ii) prepare and file
in those jurisdictions such amendments (including post-effective amendments)
and supplements to such registrations and qualifications as may be necessary
to maintain the effectiveness thereof during the Registration Period, (iii)
take such other actions as may be necessary to maintain such registrations and
qualifications in effect at all times during the Registration Period, and (iv)
take all other actions reasonably necessary or advisable to qualify the
Registrable Securities for sale in such jurisdictions; provided, however, that
the Company shall not be required in connection therewith or as a condition
thereto to (a) qualify to do business in any jurisdiction where it would not
otherwise be required to qualify but for this Section 3.d., (b) subject itself
to general taxation in any such jurisdiction, (c) file a general consent to
service of process in any such jurisdiction, (d) provide any undertakings that
cause the Company undue expense or burden, or (e) make any change in its
certificate of incorporation or bylaws, which in each case the Board of
Directors of the Company determines to be contrary to the best interests of
the Company and its stockholders.
e. In the event Investors who hold a majority in interest of the
Registrable Securities being offered in an offering being registered pursuant
to Section 2.a. hereof select underwriters for the offering, the Company shall
enter into and perform its obligations under an underwriting agreement, in
usual and customary form, including, without limitation, customary
indemnification and contribution obligations, with the underwriters of such
offering.
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<PAGE>
f. As promptly as practicable after becoming aware of such event,
the Company shall notify each Investor of the happening of any event, of which
the Company has knowledge, as a result of which the prospectus included in a
Registration Statement, as then in effect, includes an untrue statement of a
material fact or omission to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, and use
its best efforts promptly to prepare a supplement or amendment to the
Registration Statement to correct such untrue statement or omission, and
deliver such number of copies of such supplement or amendment to each Investor
as such Investor may reasonably request.
g. The Company shall use its best efforts to prevent the issuance
of any stop order or other suspension of effectiveness of a Registration
Statement, and, if such an order is issued, to obtain the withdrawal of such
order at the earliest possible moment and to notify each Investor who holds
Registrable Securities being sold (or, in the event of an underwritten
offering, the managing underwriters) of the issuance of such order and the
resolution thereof.
h. The Company shall permit a single firm of counsel designated
by the Investors to review each Registration Statement and all amendments and
supplements thereto (as well as all requests for acceleration or effectiveness
thereof) a reasonable period of time prior to their filing with the SEC.
i. The Company shall make generally available to its security
holders as soon as practicable, but not later than ninety (90) days after the
close of the period covered thereby, an earnings statement (in form complying
with the provisions of Rule 158 under the Securities Act) covering a
twelve-month period beginning not later than the first day of the Company's
fiscal quarter next following the effective date of a Registration Statement.
j. At the request of any Investor, the Company shall furnish, in
connection with any underwritten offering on the date that Registrable
Securities are delivered to the underwriter for sale in connection with a
Registration Statement on the date of effectiveness thereof (i) an opinion,
dated as of such date, from counsel representing the Company for purposes of
such Registration Statement, in form, scope and substance as is customarily
given in an underwritten public offering, addressed to the underwriters, and
(ii) a letter, dated such date, from the Company's independent certified
public accountants in form and substance as is customarily given by
independent certified public accountants to underwriters in an underwritten
public offering, addressed to the underwriters.
k. The Company shall make available for inspection by (i) any
Investor, (ii) any underwriter participating in any disposition pursuant to a
Registration Statement, (iii) one firm of attorneys and one firm of
accountants or other agents retained by the Investors, and (iv) one firm of
attorneys retained by all such underwriters (collectively, the "Inspectors")
all pertinent financial and other records, and pertinent corporate documents
and properties of the Company (collectively, the "Records"), as shall be
reasonably deemed necessary by
6
<PAGE>
each Inspector to enable each Inspector to exercise its due diligence
responsibility, and cause the Company's officers, directors and employees to
supply all information which any Inspector may reasonably request for purposes
of such due diligence; provided, however, that each Inspector shall hold in
confidence and shall not make any disclosure (except to the Inspectors) of any
Record or other information which the Company determines in good faith to be
confidential, and of which determination the Inspectors are so notified,
unless (a) the disclosure of such Records is necessary to avoid or correct a
misstatement or omission in any Registration Statement, (b) the release of
such Records is ordered pursuant to a subpoena or other order from a court or
government body of competent jurisdiction, or (c) the information in such
Records has been made generally available to the public other than by
disclosure in violation of this or any other agreement. The Company shall not
be required to disclose any confidential information in such Records to any
Inspector until and unless such Inspector shall have entered into
confidentiality agreements (in form and substance satisfactory to the Company)
with the Company with respect thereto, substantially in the form of this
Section 3.k. Each Investor agrees that upon learning that the release of such
Records is ordered pursuant to a subpoena or other order from a court or
government body of competent jurisdiction, it shall give prompt notice to the
Company and allow the Company, at its expense, to undertake appropriate action
to prevent disclosure of, or to obtain a protective order for, the Records
deemed confidential. Nothing herein shall be deemed to limit the Investor's
ability to sell Registrable Securities in a manner which is otherwise
consistent with applicable laws and regulations.
l. The Company shall hold in confidence and not make any
disclosure of information concerning an Investor provided to the Company
unless (i) disclosure of such information is necessary to comply with federal
or state securities laws, (ii) the disclosure of such information is necessary
to avoid or correct a misstatement or omission in any Registration Statement,
(iii) the release of such information is ordered pursuant to a subpoena or
other order from a court or governmental body of competent jurisdiction, or
(iv) such information has been made generally available to the public other
than by disclosure in violation of this or any other agreement. The Company
agrees that it shall, upon learning that disclosure of such information
concerning an Investor is sought in or by a court or governmental body of
competent jurisdiction or through other means, give prompt notice to such
Investor prior to making such disclosure, and allow the Investor, at its
expense, to undertake appropriate action to prevent disclosure of, or to
obtain a protective order for, such information.
m. The Company shall use its best efforts either to (i) cause all
the Registrable Securities covered by the Registration Statement to be listed
on each national securities exchange on which securities of the same class or
series issued by the Company are then listed, if any, if the listing of such
Registrable Securities is then permitted under the rules of such exchange, or
(ii) secure the designation and quotation of all the Registrable Securities
covered by the Registration Statement on the Nasdaq-NMS or, if not eligible
for the Nasdaq-NMS,on the Nasdaq Small Cap.
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<PAGE>
n. The Company shall cooperate with the Investors who hold
Registrable Securities being offered and the managing underwriter or
underwriters, if any, to facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be offered pursuant to the
Registration Statement and enable such certificates to be in such
denominations or amounts, as the case may be, as the managing underwriter or
underwriters, if any, or the Investors may reasonably request and registered
in such names as the managing underwriter or underwriters, if any, or the
Investors may request, and, within three (3) business days after a
Registration Statement which includes Registrable Securities is ordered
effective by the SEC, the Company shall deliver, and shall cause legal counsel
selected by the Company to deliver, to the transfer agent for the Registrable
Securities an opinion of such counsel regarding the transferability of the
Registrable Securities.
o. The Company shall take all other reasonable actions necessary
to expedite and facilitate disposition by the Investors of Registrable
Securities pursuant to the Registration Statement.
4. OBLIGATIONS OF THE INVESTORS.
In connection with the registration of the Registrable Securities,
the Investors shall have the following obligations:
a. It shall be a condition precedent to the obligations of the
Company to complete the registration pursuant to this Agreement with respect
to the Registrable Securities of a particular Investor that such Investor
shall furnish to the Company such information regarding itself, the
Registrable Securities held by it and the intended method of disposition of
the Registrable Securities held by it as shall be reasonably required to
effect the registration of such Registrable Securities and shall execute such
documents in connection with such registration as the Company may reasonably
request. At least ten (10) business days prior to the first anticipated filing
date of the Registration Statement, the Company shall notify each Investor of
the information the Company requires from each such Investor if such Investor.
b. Each Investor, by such Investor's acceptance of the
Registrable Securities, agrees to cooperate with the Company as reasonably
requested by the Company in connection with the preparation and filing of the
Registration Statement hereunder, unless such Investor has notified the
Company in writing of such Investor's election to exclude all of such
Investor's Registrable Securities from the Registration Statement.
c. In the event Investors holding a majority in interest of the
Registrable Securities being registered determine to engage the services of an
underwriter, each Investor agrees to enter into and perform such Investor's
obligations under an underwriting agreement, in usual and customary form,
including, without limitation, customary indemnification and contribution
obligations, with the managing underwriter of such offering and take such other
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<PAGE>
actions as are reasonably required in order to expedite or facilitate the
disposition of the Registrable Securities, unless such Investor has notified
the Company in writing of such Investor's election to exclude all of such
Investor's Registrable Securities from the Registration Statement.
d. Each Investor agrees that, upon receipt of any notice from the
Company of the happening of any event of the kind described in Section 3.f. or
3.g., such Investor will immediately discontinue disposition of Registrable
Securities pursuant to the Registration Statement covering such Registrable
Securities, until such Investor's receipt of the copies of the supplemented or
amended prospectus contemplated by Section 3.f. or 3.g., and, if so directed
by the Company, such Investor shall deliver to the Company (at the expense of
the Company) or destroy (and deliver to the Company a certificate of
destruction) all copies in such Investor's possession of the prospectus
covering such Registrable Securities current at the time of receipt of such
notice.
e. No Investor may participate in any underwritten registration
hereunder unless such Investor (i) agrees to sell such Investor's Registrable
Securities on the basis provided in any underwriting arrangements in usual and
customary form, (ii) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements, and (iii) agrees
to pay its pro rata share of all underwriting discounts and commissions and
any expenses in excess of those payable by the Company pursuant to Section 5
below.
5. EXPENSES OF REGISTRATION.
All reasonable expenses, other than underwriting discounts and
commissions, incurred in connection with registrations, filings or
qualifications pursuant to Sections 2 and 3, including, without limitation,
all registration, listing and qualifications fees, printers fees, the fees and
disbursements of counsel and accountants for the Company and the fees and
disbursements of one firm of attorneys and one firm of accountants retained by
the Investors shall be borne by the Company.
6. INDEMNIFICATION AND CONTRIBUTION.
a. Indemnification by Company. In the event of any registration
of any Registrable Securities under the Securities Act pursuant to this
Agreement, the Company shall indemnify and hold harmless each Investor, such
Investor's directors and officers, and each other Person (including each
underwriter) who participated in the offering of such Registrable Securities
and each other Person, if any, who controls such Investor or such
participating Person within the meaning of the Securities Act, against any
losses, claims, damages or liabilities, joint or several, to which such
Investor or any such director or officer or participating Person or
controlling Person may become subject under the Securities Act or any other
statute or at common law, insofar as such losses, claims, damages or
liabilities (or
9
<PAGE>
actions in respect thereof) arise out of or are based upon (i) any alleged
untrue statement of any material fact contained in any Registration Statement
under which such Registrable Securities were registered under the Securities
Act, any preliminary prospectus or final prospectus contained therein, or any
amendment or supplement thereto, or (ii) any alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and shall reimburse Investor or such director, officer
or participating Person or controlling Person for any legal or any other
expenses reasonably incurred by Investor or such director, officer or
participating Person or controlling Person in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that the Company shall not be liable in any such case to the extent that any
such loss, claim, damage or liability arises out of or is based upon any alleged
untrue statement or alleged omission made in such Registration Statement,
preliminary prospectus, prospectus or amendment or supplement in reliance upon
and in conformity with written information furnished to the Company by such
Investor specifically for use therein, and provided further, that the Company
shall not be liable in any such case to the extent that any such loss, claim,
damage or liability arises out of or is based upon the failure of such Investor
to deliver a prospectus in compliance with applicable securities law or the
failure of such Investor to comply with Section 4.d. hereof. Such indemnity
shall remain in full force and effect regardless of any investigation made by or
on behalf of such Investor or such director, officer or participating Person or
controlling Person, and shall survive the transfer of such securities by
Investor.
b. Indemnification by Investor. In the event of any registration
of any Registrable Securities under the Securities Act pursuant to this
Agreement, each Investor severally and not jointly shall indemnify and hold
harmless the Company, its directors and officers, and each other Person
(including each underwriter) who participated in the offering of such
Registrable Securities and each other Person, if any, who controls the Company
or such participating Person within the meaning of the Securities Act, against
any losses, claims, damages or liabilities, joint or several, to which the
Company or any such director or officer or participating Person or controlling
Person may become subject under the Securities Act or any other statute or at
common law, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon any alleged untrue
statement of any material fact contained in any Registration Statement under
which such securities were registered under the Securities Act, any
preliminary prospectus or final prospectus contained therein, or any amendment
or supplement thereto, where such statement is in conformity with written
information provided by such Investor expressly for use therein, or where such
losses, claims, damages or liability arise out of or are based upon the
failure of an Investor to deliver a prospectus in compliance with applicable
securities law or the failure of such Investor to comply with Section 4.d.
hereof, and, in any such case, the Investor shall reimburse the Company or
such director, officer or participating Person or controlling Person for any
legal or any other expenses reasonably incurred by the Company or such
director, officer or participating Person or controlling Person in connection
with investigating or defending any such loss, claim, damage, liability or
action; provided, however, that no Investor shall be liable for
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<PAGE>
any amounts in excess of the net proceeds received by such Investor for the sale
of its Registrable Securities. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of the Company or
such director, officer or participating Person or controlling Person, and shall
survive the transfer of such securities by such Investor.
c. Contribution. If the indemnification provided for in this
Section 6 is unavailable to an indemnified party hereunder in respect of any
losses, claims, damages, liabilities or expenses referred to therein, then the
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities or expenses in such proportion as
is appropriate to reflect the relative fault of the indemnifying party and
indemnified parties in connection with the actions which resulted in such
losses, claims, damages, liabilities or expenses, as well as any other
relevant equitable considerations. The relative fault of such indemnifying
party and indemnified parties shall be determined by reference to, among other
things, whether any action in question, including any untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a
material fact, has been made by, or relates to information supplied by, such
indemnifying party or indemnified parties, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
action. The amount paid or payable by a party as a result of the losses,
claims, damages, liabilities and expenses referred to above shall be deemed to
include any legal or other fees or expenses reasonably incurred by such party
in connection with any investigation or proceeding. Notwithstanding anything
else in this paragraph (c), no Investor shall be liable for any amounts in
excess of the net proceeds received by such Investor for the sale of its
Registrable Securities.
d. Equitable Considerations. The parties hereto agree that it
would not be just and equitable if contribution pursuant to this Section 6
were determined by pro rata allocation or by any other method of allocation
which does not take account of the equitable considerations referred to in the
immediately preceding paragraph. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not also guilty of
such fraudulent misrepresentation.
7. REPORTS UNDER THE EXCHANGE ACT.
With a view to making available to the Investors the benefits of
Rule 144 promulgated under the Securities Act or any other similar rule or
regulation of the SEC that may at any time permit the investors to sell
securities of the Company to the public without registration ("Rule 144"), the
Company agrees to:
a. make and keep public information available, as those terms are
understood and defined in Rule 144; and
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b. file with the SEC in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange
Act so long as the Company remains subject to such requirements and the filing
of such reports and other documents is required for the applicable provisions
of Rule 144.
8. AMENDMENT OF REGISTRATION RIGHTS.
Provisions of this Agreement may be amended and the observance thereof
may be waived (either generally or in a particular instance and either
retroactively or prospectively), only with written consent of the Company and
Investors who hold a majority interest of the Registrable Securities. Any
amendment or waiver effected in accordance with this Section 8 shall be binding
upon each Investor and the Company.
9. MARKET STAND-OFF AGREEMENT.
Notwithstanding any other provision of this Agreement, each Investor
severally agrees that it will not sell any Conversion Shares or Warrant Shares
during any "Lock-Up Period. This restriction shall apply during the following
Lock-Up Periods: Commencing on any date specified by the Company (the
"Commencement Date") following the filing by the Company of a preliminary
registration statement for a registered public offering managed by nationally
recognized underwriters and ending (A) 30 days after the Commencement Date if
the registration statement is not declared effective by the SEC on or prior to
such 30th day, or (B) if the registration statement is declared effective by
the SEC on, or within thirty days after the Commencement Date, a period not to
exceed 90 days following the Effective Date of the registration statement, if
required by the underwriters of the public offering.
10. MISCELLANEOUS.
a. A person or entity is deemed to be a holder of Registrable
Securities whenever such person or entity owns of record such Registrable
Securities. If the Company receives conflicting instructions, notices or
elections from two or more persons or entities with respect to the same
Registrable Securities, the Company shall act upon the basis of instructions,
notice or election received from the registered owner of such Registrable
Securities.
b. Notices required or permitted to be given hereunder shall be
sent by certified or registered mail (return receipt requested), facsimile, or
delivered personally or by courier and shall be effective upon receipt. Each
party shall provide notice to the other party of any change in address. The
addresses for such communications shall be:
if to the Company:
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Celgene Corporation
7 Powder Horn Drive
Warren, New Jersey
Attention: Chief Executive Officer
Telecopy: (908) 271-1001
With copy to:
Arnold S. Jacobs, Esq.
Proskauer Rose LLP
1585 Broadway
New York, New York 10036-8299
Telecopy: (212) 969-2900
and if to any Investor, at such address as such Investor shall have provided in
writing to the Company, or at such other address as each such party furnishes by
notice given in accordance with this Section 10(b), and shall be effective upon
receipt.
c. Failure of any party to exercise any right or remedy under
this Agreement or otherwise, or delay by a party in exercising such right or
remedy, shall not operate as a waiver thereof.
d. This Agreement shall be enforced, governed by and construed in
accordance with the laws of the State of New York, without giving effect to
conflict of law provisions thereof. In the event that any provision of this
Agreement is invalid or unenforceable under any applicable statute or rule of
law, then such provision shall be deemed inoperative to the extent that it may
conflict therewith and shall be deemed modified to conform with such statute
or rule of law. Any provision hereof which may prove invalid or unenforceable
under any law shall not affect the validity or enforceability of any other
provision hereof. The parties hereto hereby submit to the exclusive
jurisdiction of the United States Federal Courts located in New York, New York
with respect to any dispute arising under this Agreement or the transactions
contemplated hereby.
e. This Agreement and the Securities Purchase Agreement
(including all schedules and exhibits thereto) constitute the entire agreement
among the parties hereto with respect to the subject matter hereof and
thereof. There are no restrictions, promises, warranties or undertakings,
other than those set forth or referred to herein and therein. This Agreement
and the Securities Purchase Agreement supersede all prior agreements and
understandings among the parties hereto with respect to the subject matter
hereof and thereof.
f. No assignment, transfer or delegation, whether by operation of
law or otherwise, of any rights or obligations under this Agreement by the
Company or any Investor respectively, shall be made without the prior written
consent of the majority in interest of the
13
<PAGE>
Investors or the Company, respectively; provided that the rights of an
Investor may be transferred to a subsequent holder of the Investor's
Registrable Securities (provided such transferee shall provide to the Company,
together with or prior to such transferee's request to have such Registrable
Securities included in a Registration, a writing executed by such transferee
agreeing to be bound as an Investor by the terms of this Agreement); and
provided further that the Company may transfer its rights and obligations
under this Agreement to a purchaser of all or a substantial portion of its
business if the obligations of the Company under this Agreement are assumed in
connection with such transfer, either by merger or other operation of law
(which may include, without limitation, a transaction whereby the Registrable
Securities are converted into securities of the successor in interest) or by
specific assumption executed by the transferee in form and substance
reasonably acceptable to a majority in interest of the Investors; and
provided, further, that in the event that the Company transfers its rights and
obligations under this Agreement pursuant to the preceding clause, it shall
remain liable for its obligations hereunder.
g. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
h. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original but all of which shall constitute
one and the same agreement. This Agreement, once executed by a party, may be
delivered to the other party hereto by facsimile transmission of a copy of
this Agreement bearing the signature of the party so delivering this
Agreement.
i. Each party shall do and perform, or cause to be done and
performed, all such further acts and things, and shall execute and deliver all
such other agreements, certificates, instruments and documents, as the other
party may reasonably request in order to carry out the intent and accomplish
the purposes of this Agreement and the consummation of the transactions
contemplated hereby.
j. All consents and other determinations to be made by the
Investors pursuant to this Agreement shall be made by Investors holding a
majority of the Registrable Securities, determined as if all shares of
Preferred Stock and Warrants then outstanding have been converted into or
exercised for Registrable Securities.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the Company and the undersigned Investor have
caused this Agreement to be duly executed as of the date first above written
CELGENE CORPORATION
By:
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Name:
---------------------------------
Its:
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By:
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Name:
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Its:
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[Celgene LOGO]
Celgene Corporation
7 Powder Horn Drive
Warren, New Jersey 07059
Tel 908-271-1001
Fax 908-271-4184
FOR IMMEDIATE RELEASE Contact: Robert C. Butler
- --------------------- Celgene Corporation
(908) 271-4102
CELGENE CORPORATION ANNOUNCES NEW FINANCING
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WARREN, NJ (June 10, 1997) - Celgene Corporation (NASDAQ: CELG) today
announced that it has negotiated a $20.0 million financing agreement with
Chancellor LGT Asset Management Inc. on behalf of certain of its clients.
Under the terms of the agreement Celgene will issue a Series B convertible
preferred stock to be purchased by funds managed by Chancellor LGT.
The financing will be done in $5.0 million tranches, at the Company's option, in
specific periods over 12 months subject to certain terms and conditions. Celgene
closed on the initial $5.0 million tranche yesterday. The stock will bear a 9%
accreted dividend and warrants will be issued to the preferred holders.
"This financing arrangement provides Celgene with the certainty and
flexibility necessary to support the market introduction of SYNOVIR(R) our
lead therapeutic and to pursue other strategic initiatives", noted John W.
Jackson, Chairman and CEO of Celgene. "I am also delighted to be associated
with the Chancellor LGT organization".
In December 1996, Celgene submitted a New Drug Application (NDA) to the US
Food and Drug Administration (FDA) for the use of SYNOVIR(R) (thalidomide) to
treat erythema nodosum lepsorum (ENL), a severely debilitating inflammatory
disorder associated with leprosy. The Company also anticipates submitting an
NDA this year for the use of SYNOVIR(R) in the treatment of HIV related weight
loss (cachexia). Celgene is a leading company in developing thalidomide, as
well as a whole new family of compounds called selective cytokine inhibitory
drugs (SelCIDs(TM)) for the treatment of immune related and inflammatory
diseases.
Celgene is also a leader in chiral chemistry using its patented biocatalytic
process to develop chirally pure pharmaceuticals and agrochemicals.
To receive Celgene's latest news and other corporate developments via fax at no
cost, please call 1-800-PRO-INFO. Use Company code CELG.
This release contains certain forward-looking statements which involve known
and unknown risks, delays, uncertainties and other factors not under the
Company's control which may cause actual results, performance or achievements
of the Company to be materially different from the results, performance or
other expectations implied by these forward-looking statements. These factors
include results of current or pending clinical trials, actions by the FDA and
those factors detailed in the Company's filings with the Securities and
Exchange Commission.
